Corona Capital: Vaccines, Fast fashion, Renault

Cupani Metals

14/01/2021 11:39

(The authors are Reuters Breakingviews columnists.  The
opinions expressed are their own.)
    By Breakingviews columnists
    HONG KONG/LONDON, Jan 14 (Reuters Breakingviews) - Corona
Capital is a column updated throughout the day by Breakingviews
columnists around the world with short, sharp pandemic-related
insights.

    LATEST
    - Indonesia
    - Boohoo/Primark
    - Renault

    JAB CAMPAIGN. Indonesia is pushing ahead with its mass
vaccination rollout after a recent surge in cases. Southeast
Asia’s most populous country is set to vaccinate close to 1.5
million health workers  urn:newsml:reuters.com:*:nL4N2JN1I4, the first to be immunised
using China’s Sinovac Biotech  SVA.O  Covid-19 vaccine,
according to Reuters. The country is also choosing to vaccinate
young workers ahead of the ageing population, partly because
Sinovac does not have enough efficacy data for the elderly, and
perhaps also because young people will probably do more to
revive economic activity.
    Questions about relative effectiveness, however, have sowed
some scepticism among citizens. On Wednesday, President Joko
Widodo tried to alleviate concerns in a televised ceremony by
taking the shot himself. Assuming that inspires public
confidence, the next challenge will be delivering vaccines
across some 17,000 islands, where the cold chain is rickety.
That will be far more difficult than vaccine photo ops. (By
Sharon Lam)

    VOTING WITH CLICKS. The fast-fashion sector typifies the
winners and losers of the pandemic. Online purveyor of stretchy
clothes Boohoo  BOOH.L  said sales rose https://www.boohooplc.com/sites/boohoo-corp/files/all-documents/result-centre/2021/p3-trading-update-2021.pdf
 40% year-on-year in the four months to Dec. 31. Meanwhile,
Primark owner Associated British Foods  ABF.L  on Thursday
warned https://www.abf.co.uk/media/news/2021/trading_update_jan_2021
 of a 1 billion pound hit to sales if its shops stay shut until
the end of February.
    One thing the two have in common is benefitting from the
British public’s continuing demand for very cheap clothes – even
when there are fewer occasions to show them off. Primark
recorded higher-than-expected sales when stores were open last
year.
    Boohoo’s customers, meanwhile, are shrugging off a scandal
over its suppliers in Leicester paying workers less than the
minimum wage  urn:newsml:reuters.com:*:nL8N2EF29O. A Guardian report https://www.theguardian.com/business/2020/dec/22/boohoo-selling-clothes-made-by-pakistani-workers-who-earned-29p-an-hour
 last year said workers making Boohoo clothes in Pakistan were
paid well below the local legal limit. With Boohoo’s share price
up around 70% since the Leicester story, investors seem to have
short memories, too. (By Dasha Afanasieva)

    BACK FROM THE DEAD. Renault’s  RENA.PA  cringe-inducingly
named “Renaulution” has had the opposite of its intended effect
on investors. Shares in the 11 billion euro French carmaker
dropped by 3% on Thursday morning after newish boss Luca de Meo
revealed his much-trailed turnaround plan https://en.media.groupe.renault.com/news/groupe-renault-renaulution-strategic-plan-ddc1-989c5.html,
 the first phase of which is aptly named “Resurrection”. De Meo
is shortly expected to announce a 7 billion euro net loss in
2020  urn:newsml:reuters.com:*:nL4N2HE2CE.
    True, much of the damage is due to wounds at alliance
partner Nissan Motor  7201.T , in which Renault owns a 43% stake
 urn:newsml:reuters.com:*:nL8N2JN2JT. And de Meo’s plan to cut the number of models,
slash costs and focus on profitability is sound. But even with
an extra 500 million euros in cost savings planned by 2023, a 3%
operating margin goal the same year is roughly half what
Germany’s Volkswagen  VOWG_p.DE  targets. With newly merged
Franco-Italian rival Stellantis likely to increase competition
in Europe  urn:newsml:reuters.com:*:nS8N2AH04O, shareholders are wisely sceptical of de
Meo’s touted salvation. (By Christopher Thompson)
    
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 (Editing by Neil Unmack, Pete Sweeney and Oliver Taslic)