COVID-19 Recovery Dominates Markets

This is now the fifth Industry Watch where COVID-19 has been the main influence on company performance and market trends, and this situation is unlikely to change any time soon.

Although the pandemic is global, the situation, like the weather, differs greatly from one region to another and it is not easy to predict accurately what will affect market sentiment next, This generally leads to turbulence rather than a trend, and we have seen this in the first period of 2021 (see below).

Using end December as the start point (0%) for all markets, most reached a high point mid-January but then lost value and by month-end were showing a loss. The exceptions were the Asian markets, which all gained between 7% and 15%.

In February the general trend was upward, with all markets positive at some time in the month and the Asian markets showing higher gains.

In March most markets continued to gain in value but were still experiencing volatility, but only two markets – NASDAQ and Shanghai FX Xinhua – spent any time in a loss situation.

Companies

The quoted companies in our market all showed gains over their value at the end of the last period with only one minor exception, and only two underperformed their market’s performance in the period. The changes in company values in the 12-month period were also mostly positive, only three of the 11 underperforming.

We have lost G4S from Industry Watch. The company’s shareholders accepted a 245p cash bid from Allied Universal Topco, representing a premium of approximately 60% compared with G4S’s last closing price of 146p on 11 September before the offer (see page 7).

However, we have now included Nanotech Security Corporation, a Canadian security feature company based in Vancouver that is supplying products in the banknote industry.

Substrates and banknotes

De La Rue continues to impress investors. In the period the company’s share price gained 32% in value, moving from 151.4p to 200.5p, increasing its market value from £295.3 million to £337.2 million. It also outperformed its market by 18% and in the year by 300%, one of the highest one-year improvements we have seen.

Crane Co’s year end results showed a revenue reduction of 11% due to COVID-19, but its operating profit of $263 million including special items exceeded that of 2019 by $53 million (+25%). Shareholders were impressed and in the period its share price increased by 22.4% from $76.2 to $93.3.

In the period it outperformed its market by 14% and in the full year by a notable 62%.

Orell Füssli’s share price increased by CHF 13 (+12.8%), taking its market value to CHF 223.4 million. The gain was achieved despite a fall in revenue and operating profit in 2020 due to the pandemic (see page 6), which it stated to be a robust achievement given the circumstances.

It outperformed its market in the period by 1.5% and in the full year by 3.9%.

Spectra Systems Corp’s share price and market value has shown consistent and not insubstantial growth in the last three periods. This period its share price fell by 8% from186p to 171p, reducing its market value by £8 million to £76.5 million.

Although the company underperformed its market in the period by 5%, it outperformed it in the full year by 15%.

Nanotech Security Corp is a new company to Industry Watch, having supplied security features to central banks with new customer orders in the pipeline. It starts with an impressive gain in value in the period, its share price outperforming its market by 41.5% and in the full year by 190%. 

Changes in Stock Market Values – January-March 2021

Gains for three CIT companies

Brinks reported its full year in the period (see CN February 2021) and, despite the pandemic, achieved revenue equal to 2019 (which at 2019 exchange rates, would have been 7% greater). Its operating profit, however, fell by 10%.

Nevertheless, the market was impressed, and its share price increased by 16% to $4.09 billion. In the period it outperformed its market by 8% and in the full year by 10%.

Loomis’ full year results also impressed its shareholders and market despite a reduction in revenue and operating profit, which given the effects of the pandemic on business volumes was regarded as a good result.

Revenue for 2020 was down 10.6% and operating profit by 31.7%. The company’s share price increased by 13.2% to SEK 30.8, taking its market value to SEK 19.98 billion.

The company outperformed its market in the period by 11 % and in the full year by 3%.

In Prosegur’s 2020 results, like Brinks it noted that its revenue was adversely affected by negative exchange rates. Revenue fell 17.5% to €3.56 billion and operating profit by 28.7% to £258 million.

The market reaction was nevertheless positive, and in the period the company’s share price and market value increased by 7.7%. It also outperformed its market by 3%, but in the full year underperformed by 22%.

ATM and service providers – all show gains

Diebold Nixdorf announced its results for last year in the period, and although its revenue declined by 11.5% to $3.9 billion, operating profit increased by 13% to $453 million. Its share price increased by 28.7%, taking its market value to $1.11 billion.

In the period it outperformed its market by 16% and in the full year by 170%.

COVID-19 adversely affected NCR’s annual results for 2020, with sales declining by 10% to $6.2 billion and adjusted operating profit by $162 million to $896 million. Despite these reductions, in the period its share price increased by 8.5%, taking its market value to $4.81 billion.

However, it underperformed its market in the period by 6% but in the year, it outperformed it by 100%.

Glory’s share price gained 23.5% in the period, taking its market value to ¥158.9 billion. It outperformed its market by 10.5% but in the full year it underperformed by 60%. 

Company Performances – March 2021