In July, the S&P/ASX 200 (ASX: XJO) saw a halt to previous gains. Rising coronavirus infections in Victoria tempered investor appetite with the index ending the month 29.9 points down. On that note, let’s take a look at the worst performing ASX 200 shares in July.
Avita Therapeutics Inc (ASX: AVH)
The Avita Therapeutics share price fell 32.56% in July to close the month at $6.07. Avita Therapeutics is a regenerative medicine company. It produces the ‘Recell System’ which is essentially a spray-on skin therapy. Currently used to treat burns, it is also being assessed for the treatment of vitiligo, scar reconstruction, and aesthetic applications. Growth in sales of the Recell System slowed significantly in the face of coronavirus, with sales revenue of US$3.79 million in the fourth quarter compared to US$3.78 million in the third quarter.
Lockdown measures drove a reduction in accidents leading to burn injuries, which the Recell System is used to treat. Patient and facility access was also limited due to the onset of the pandemic. Sales had been growing strongly prior to COVID-19; over the full year, Recell System sales grew 213% to US$13.79 million. The reprioritisation of hospital resources meant April results were the lowest seen this calendar year. Fortunately, the benefits of the Recell System, including reduced hospital stays and fewer surgeries, enabled a recovery in procedural volume growth in May and June.
IDP Education Ltd (ASX: IEL)
The IDP Education share price fell 14.14% in July to finish the month at $13.30. IDP Education operates in international education services, helping international students study in English speaking countries. The company is also a co-owner of IELTS, the world’s most popular English language test, and operates English language teaching courses across South East Asia. There was no news out of the education provider to prompt the price fall. The growing realisation that coronavirus restrictions may be in place long term, however, probably turned investors off the company which relies on international mobility.
IDP Education conducted an emergency capital raise at the start of the coronavirus crisis and took measures to reduce operational expenditure. Travel restrictions and school closures in destination markets caused uncertainty regarding the timing of future intakes. With restrictions still in place, IDP Education is hoping to capture expected deferred demand once lockdowns are lifted. In June, major shareholder, the Board of Education Australia Limited, sold shares equivalent to 5.1% of IDP Education’s issued capital. The Board said that its motivation to reduce its holding in IDP Education did not relate to its view of the potential of the company or its business.
AMP Limited (ASX: AMP)
The AMP share price dropped 21.51% in July to close the month at $1.46. The embattled wealth manager saw shares dip sharply last week following an update on its 1H FY20 results. Underlying profit for retained businesses is expected to be in the order of $140 – $150 million. Results have been impacted by factors including market volatility and a credit loss provision for AMP Bank. AMP did complete the sale of AMP Life during the half, which serves to simplify the portfolio and free up capital. The post-Royal Commission remediation program remains on track and is expected to be 80% complete by the end of 2020.
The wealth unit saw net cash outflows of $4.4 billion, impacted by the early release of superannuation scheme and the loss of corporate super mandates. AMP reported expected assets under management of $126 billion, 6% lower than 2H FY19. The capital unit is expected to see performance and transaction fees fall by around 40% due to market impacts. The banking unit has reported a credit loss provision of $25 million for COVID-19 related macro-economic conditions. First half results have been impacted by market volatility, but according to CEO Francesco De Ferrari, significant progress was made in delivering on strategy with the simplified portfolio setting the business up well for the future.
Monadelphous Group Limited (ASX: MND)
The Monadelphous Group share price declined 17.65% in July to finish the month at $8.91. Monadelphous is an engineering group providing construction, maintenance, and industrial services to the resources, energy and infrastructure sectors. The Monadelphous share price is now just 7 cents above its March low of $8.84. The company has seen delays, suspensions, and reductions in services across its projects and worksites as a result of COVID-19. Monadelphous advised in May that if COVID-19 disruptions continued, revenue would be similar to that of the prior corresponding period.
In June, the company announced it had secured a number of contracts in the resources and energy sectors with a combined value of $150 million. Monadelphous was awarded construction and maintenance contracts in the Pilbara with BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO), and Fortescue Metals Group Limited (ASX: FMG). The company has also been awarded a contract by Newcrest Mining Limited (ASX: NCM) to provide capital project services at gold mining operations in Papua New Guinea.
oOh!Media Ltd (ASX: OML)
The oOh!Media share price fell 17.58% in July to close the month at 75 cents. Shares in the outdoor media company have fallen from above $3 pre-pandemic as continued lockdowns take their toll. oOh!Media manages advertising in public spaces, however demand for its services has taken a dive as the public spends more time at home. Prior to the pandemic, out of home advertising had seen a growing audience and market share. The sudden impact of the COVID-19 pandemic on revenue meant the company’s cost base had to be rapidly adjusted.
oOh!Media has reduced discretionary spend, negotiated rent savings, and reduced capital expenditure to manage cash flow. The out of home market has been disproportionately impacted compared to other forms of media. This impact has been particularly pronounced in specific areas such as airports. Around 85% of advertisers due to run campaigns in April and May deferred them to the second half of the year. Nonetheless, the advertiser did see a significant uplift in activity in June and July as restrictions were eased outside Victoria.
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Kate O'Brien owns shares of Avita Medical Limited, BHP Billiton Limited, and Rio Tinto Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Avita Medical Limited and Idp Education Pty Ltd. The Motley Fool Australia has recommended Avita Medical Limited and oOh!Media 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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