Coronavirus has wreaked havoc on business plans and sharemarkets worldwide. The economic hit is likely to be staggering. In Australia, job advertisements halved in April and it is estimated almost a million jobs have been lost since lockdowns began. Unemployment is predicted to rise to up to 10%.
We’re now operating on a different spectrum, one in which changing needs and behaviours will fundamentally shift the way some companies operate. There are a number of possible futures, which will depend on how government and society respond to the coronavirus crisis and its economic impact.
The reset button has been hit on globalisation as countries focus on critical supply chains. Interest in economic self-sufficiency has been revitalised as people realise they may not want to rely on imports in a crisis. Public ownership of critical industries has come back on the agenda. Foreign investment rules are being tightened, impacting the mobility of global capital.
Some of the temporary measures brought in to fight coronavirus might provide opportunity. This could allow for the development of new industries and new ways of doing business. Already companies forced into remote working are experimenting with more sophisticated and flexible uses of technology.
So who will be the winners in this new reality?
We take a look at 3 ASX shares primed to take on the post COVID-19 world.
Mesoblast Limited (ASX: MSB)
Mesoblast recently commenced its second trial of a drug used to treat COVID-19. Researchers have given Mesoblast’s drug remestemcel-L to the first of 300 COVID-19 patients in the United States.
Mesoblast develops allogeneic (off-the-shelf) cellular medicines to treat inflammatory diseases. The company has leveraged its proprietary mesenchymal cell therapy technology to establish a portfolio of commercial products and product candidates. Mesenchymal stem cells can differentiate into a variety of cell types including bone, cartridge, and muscle cells.
Mesoblast’s remestemcel-L medicine is being used to treat COVID-19 infected patients with moderate to severe acute respiratory distress syndrome (ARDS) who are on ventilator support. Promising results were received under an initial trial of the treatment at Mount Sinai Hospital in New York. The efficacy of the treatment will be assessed according to survival rates and number of days alive and off medical support.
Dr Moskowitz, who is overseeing the trial, said:
The rapid mobilization of major medical centres across the United States reflects the urgent need to treat the very large numbers of people in hospital intensive care units suffering with COVID-19 ARDS and requiring ventilation. We expect quick enrollment in this trial to determine whether remestemcel-L can reduce mortality in these patients.
Whispir Ltd (ASX: WSP)
Whisper provides a software-as-a-service (SaaS) communications workflow platform that is now being used by the government for COVID-19 communications. The platform automates interactions between businesses and people, and boasts more than 500 enterprise clients.
Clients include Telstra Corporation Ltd (ASX: TLS), which communicates with customers and staff using the platform, and Qantas Airways Limited (ASX: QAN) which uses the platform to manage critical incidents.
Whispir has shown resilience in the current downturn. A record 49 new customers were added in the March quarter. This was thanks to increased demand for communications software due to the coronavirus pandemic. Many Whispir customers are utilising the platform to activate and coordinate their COVID-19 business continuity plans.
Victoria’s Department of Health and Human Services (DHHS) is using the platform to communicate with Victorians who have been in contact with someone with COVID-19 or with someone who meets criteria for self-isolation. Real time and data driven communications provide DHHS with insight into the health of those in isolation or who have been in contact with someone with COVID-19.
Whispir added 8 international brands as customers during the quarter, demonstrating how the platform can expand into multiple use cases for customers. The company is well funded and on track to achieve its FY20 prospectus forecast of revenue of $37.84 million. Revenues increased by 20% in the most recent half while annualised recurring revenue increased 22% to $36.7 million.
Businesses are increasingly turning to “low code” or “no code” solutions like Whispir’s to automate communications without the need for high-quality software developers. Increasing numbers of connected devices will increase potential touchpoints for companies and stakeholders. A technologically enabled solution will be required to manage all these communication points.
JB Hi-Fi Limited (ASX: JBH)
The majority of JB Hi-Fi Australia and the JB Hi-Fi-owned The Good Guys stores have continued to trade through lockdown, providing customers with essential remote working and entertainment supplies. Performance across both brands has remained strong with elevated sales growth driven by a significant acceleration in online sales.
Sales surged in late March as customers prepared for potential increases to government restrictions. In 3QFY20, JB Hi-Fi saw sales grow 11.6%, while The Good Guys increased sales by 13.9%. Strong sales growth seen in Australia has continued into April and May as customers seek appliances and technology required to work and learn from home.
Growth in Australian sales has been particularly impressive given the business closed 3 airport stores and 7 CBD stores due to a shift in foot traffic away from airports and CBD locations. In New Zealand, government restrictions meant 14 stores, online and commercial operations were closed on 26 March.
The New Zealand online business was permitted to resume trading to provide customers with a limited number of ‘essential’ products from 2 April. Trading resumed across all products on 28 April. The New Zealand business does not make a material financial contribution to the Group, representing only around 3% of annual sales.
A conservative approach is being taken to balance sheet management. To further strengthen liquidity, JB Hi-Fi has secured $260 million of short term debt facilities on favourable terms. Full year guidance was withdrawn in March due to the uncertainty caused by COVID-19. Given ongoing disruptions to shopping patterns, JB Hi Fi has not provided full year guidance, but remains in a strong financial and operational position.
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Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Whispir Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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