Introducing the Tamweel Covid Index…and the results for July

We are pleased to announce the launch of Tamweel’s Covid Index. A new measure of investor sentiment and confidence across the UK’s leisure and hospitality sectors. The chart above illustrates how the Index has performed since 31 December 2019. More on this later.

Interested? Then keep reading…

The Covid Index has been prepared in response to a question we are often asked: “when will things return to a pre-Covid normal?”.

I’m afraid our guess is as good as yours. However, whilst we can’t answer that question, we can shed some light on how far from “normal” things are.

So here we go….

The Covid Index is a share price performance tracker, of 28 UK quoted leisure and hospitality businesses. Month on month, it will illustrate the average share price movements of companies in the cohort before, during and after the start of the crisis. And when the tracker eventually posts a result to show that the sector is ahead of pre-Covid levels we will be the first to celebrate its redundancy and consign it to the scrap heap. We live in hope, but until then…

How does it work?

It’s simple, it’s basic, it’s transparent. You don’t need to be a corporate finance boffin to understand it. You don’t need to be a capital markets guru to calculate it. It’s a measure that will provide an indication of investor sentiment, sector performance and direction of travel as operators navigate their way through and out of the pandemic.

The Index is anchored at 31 December 2019 with a score of 100. This date has been selected as a suitable pre-Covid benchmark, on the basis that the sector remained unaffected by the virus at that date. An Index value of 70 tells us, that companies in the cohort have share prices that are, on average, trading at 70% of their pre-Covid, 31 December 2019 levels. An Index value of 110 tells us, that on average, they are trading at 110% of their pre-Covid, 31 December 2019 levels. You get the picture.

We will be sharing the results of the Index monthly, starting with 31 July 2020, which posted an Index of 51. To review our analysis and commentary dive into our report below.

Click here to access July’s Tamweel Covid Index report

We’ve also broken the cohort down into several component parts; such as restaurants, pubs and bars; cinemas, competitive socialising and others. So that we can track performance on a more sector specific basis.

Tamweel’s take…

July’s Covid Index of 51 represents the lowest daily Index value since 06 April 2020, reflecting a recent downturn in the average share price performance of the operators included in the Index. Prior to July the Index had experienced a slow but steady recovery, increasing almost 50% from its low in mid-March to a post-lockdown high of 64 in early June. This had been driven by a series of government support measures, continued loosening of the lockdown and positive developments in respect of potential vaccines and treatments, which also supported a broader market rally.

The sub sector to have performed the best is QSR / Takeaway / Grab & Go with an Index value of 76; whilst Cinemas performed the worst with an Index value of 31, driven by a significant drop in the share price of Cineworld whose recovery has been impacted by a delay of several new film releases.

Adam Spencer, from Tamweel, comments: “Trading fortunes for leisure and hospitality businesses since the depths of the crisis have been mixed, with operators reliant on travel hubs or city centre footfall being worst hit; whilst those with regional, suburban estates or strong multi-channel formats are broadly faring better. We expect that the prevalence of more localised lockdowns may subdue consumer confidence, cause disruption for some businesses in their reopening plans and increase the volatility of share price performance. But with continued and positive progress with respect to treatments, vaccines and new testing methods we expect to see confidence creeping back into the market in the longer term.”

It will be interesting to see whether the Eat out to Help out scheme has any impact on the August 2020 Index. Tune in next month to find out!