This Stock Can Grow Further 15% In February Amid Coronavirus Fears

This Stock Can Grow Further 15% In February Amid Coronavirus Fears

  • Private jet operators overloaded with requests for transportation of cargo and passengers
  • Despite huge costs, many tourists see private jets as their only opportunity to get out of China
  • Air Partner, a publicly-traded British company, is looking for a recovery in its stock price given the disastrous performance from the beginning of the year

Coronavirus has thus far killed more than 2,000 people and has infected more than 75,000 people. As a result, South Asian countries continue to take extraordinary measures in response to the novel coronavirus.

Mongolia announced today it will keep all schools closed until the end of March after two persons living in China, and close to the border with Mongolia, were diagnosed with coronavirus.

Private jet companies are booming

In the businessworld, there are several industries that are expected to take the biggest hits, such as hotel chains, big airliners, car producers, and cruise line companies. On the other hand, it is apparent that pharma companies are to benefit the most as they are racing to develop treatments that have the potential to beat the coronavirus.

However, there is also one industry that is unexpectedly registering a notable uptick in business – private and charter jet companies.

It has been reported that operators of private jets have received a significant uptick in requests and orders to help those stuck in the country get out.

“Many simply do not want to send their aircraft and crews into mainland China. Aside from the risk of exposure for the crews, the operational and business concern is that when they return from mainland China they will essentially be unable to work for two weeks as they will have to go into quarantine immediately,” said Darin Voyles of Paramount Business Jets, an Australia-based private jet company.

Many countries, including Hong Kong, have set a mandatory two-week quarantine for anyone arriving from mainland China in a bid to contain the virus from spreading further.

Similarly, MyJet Asia from Singapore said it registered an increase of “80%-90%” in requests in the last month. However, they face the same problems – travel restrictions and planes and crew shortages.

“A lot of people went away for Chinese New Year and are now struggling to get back to China. But we are massively restricted on where we can fly to, while the airlines are not letting us charter their planes despite the money,” Logan Ravishkansar, chief executive of MyJet Asia, said.

British companies are also seeing an increase in requests due to conventional travel disruptions. Air Charter Service said it has been operating at full capacity for the past few weeks. Besides passengers, private jet operators are also overloaded with requests for transportation of medical cargo to China.

Air Charter Service says it transported 100 metric tons of surgical masks, in addition to passenger transportation.

“Since the outbreak our offices around the world have been arranging flights on local charter aircraft as the world deals with the travel disruption and overall cut to capacity to the region,” said Justin Lancaster, the company’s commercial director.

Air Partner: A chance at redemption

While many private jet operators do not want to disclose information about requests and orders relating to coronavirus, the UK-based Air Partner said it has flown 338 passengers out of Wuhan, in addition to the transportation of 608 boxes of medical supplies to the city.

“Over the last four weeks, the number of coronavirus related inquiries Air Partner has received across the business has increased. We are very pleased to have safely repatriated a large number of British and EU nationals on behalf of the U.K. government,” Mark Briffa, the CEO of Air Partner.

Air Partner is also one of the very few private jet operators that is a publicly traded company. Shares of the company are trading 0.4% lower this month after registering a drop of around 20% in January on lower-than-expected full-year earnings.

The company reported a profit before tax of at least £4.3 million for the period ending January 31st, which is below the company’s previous expectations. Air Partner cited “slower than expected Q4 trading” and a soft UK private jet market as key factors behind the earnings miss.

Still, revenue rose 4.2% to £77.5 million from £74.3 million a year earlier.

“While it is disappointing that the last quarter has not traded in line with the board’s expectations, we are encouraged by our forward order book and the increasing levels of visibility that we are gaining through the continued growth of our Safety & Security division,” the company said.

Technical analysis: Plenty of room for a recovery

As seen in the chart below, the price action created a huge gap lower on the lower-than-expected earnings. As a result, Air Partner stock printed a 22-month low last week when it hit £0.68.

Air Partner stock daily chart (TradingView)

The bulls are now looking to push the price higher as investors may look to shift the funds from traditional airlines towards private jet operators. If this proves to be the case, and investors continue the trend from the previous few days of buying Air Partner stock, we may quickly see a test of the major resistance zone between £0.84 and £0.87.

Hence, the price stock has a clear potential to add a further 15% to its stock value in the coming days.

Summary

Private jet operators are surprisingly seeing an uptick in business orders as trapped tourists scramble for an exit out of mainland China. Travel restrictions and planes and crew shortages are the main obstacles to responding positively to a large number of requests, but these companies are still finding ways to transport passengers and cargo to and from China.

Air Partner is one of the very few private jet operators which is a publicly traded company. Its shares fell sharply in January on lower-than-expected earnings for the full 2019 year. However, the coronavirus outbreak may help the company recover in the first half of 2020, while its shares have plenty of room to stage a recovery.

By Michael Harris
I began trading in my early 20's at a local company and since then have combined my knowledge and love of content to become a news writer. I am passionate about bringing insightful articles to readers and hope to add some value to your portfolios!

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