Australia is winning the battle against Covid 19. Although the politicians want to keep us on our toes by saying the worst is yet to come, the numbers say otherwise. Where 2-3 weeks ago new cases were growing by 10-30% per day, they are now declining by the same amount. The end of the importation of COVID 19 cases has been the biggest source of the disease and now these cases are subsiding this has been the major factor in the new daily cases. However, social isolation/distancing is now having its desired effects and community transmission appears to have turned a corner as well. The chart below shows the trend with a 7 day moving average with imported cases removed. NSW has turned the corner and Victoria has had some encouraging days in the past two to three. See below.
The eradication of Covid 19 in Australia is sensational news for the aged care sector - the reasons too obvious to state them. This sector will be the first to recover as revenue is stable and the extra costs associated with providing care will subside (although it is too early to actually gauge how much impact additional measures have had on expenses).
The royal commission has also been a drag on the share price, but this is also a big boogeyman. My reasons are two-fold;
1) Look at the banking royal commission. All the big bank's sp grew by 25-50% in the months that followed (albeit with some favorable tailwinds from Wall Street). What's more, these businesses were acting much worse than the aged care sector.
2) Even if the Royal Commission does find that more care hours need to be put into the elderly - it's not like it will be coming from the margins of the aged care providers (what's left of them anyway). If the govt wants more care, they will need to find the budget for it.
For me, all of these headwinds are turning to tailwinds and the investment community can remember why these stocks performed so well in the past - Australia's rapidly aging population. Please, someone, tell me I'm wrong as I can't see any medium and long term downside risk
REG Price at posting:
$1.23 Sentiment: Buy Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)