In its report, Wilsons found consumer behaviour would change as the economy adapts to the vaccine rollout with a likely benefit flowing to services companies.
“In our view, the consumer behaviour change will simply be the directing of spend from household (ie. a new couch) to a local holiday in Australia until overseas travel becomes viable in early 2022,” the report said.
The claim coincides with the prospect of a New Zealand-Australia travel bubble likely to emerge this week.
NZ Prime Minister Jacinda Adern is expected to make an announcement today on the trans-Tasman bubble.
ANZ also today tipped that travel to Fiji could return by the end of the year.
Many of the services-based companies had experienced declines in revenue of 50 per cent in revenue because of the lockdowns.
These include companies in tourism and transport, accommodation, entertainment, sports recreation and catering services.
The report said the “service re-opening” story was likely to increase in the second half of this year and into 2022.
“This is likely to be accompanied by sizeable returns in revenue and earnings for many services-based businesses,” the Wilsons report said.
“We estimate the across just three sectors, there is almost $40 billion in market cap that could be impacted if investors were to rotate out of goods-focused companies.”
It said while some of the additional spending that has boosted goods-related companies was likely to remain, the relative growth rates between the goods and services sectors was likely to change. Wilsons said goods consumption growth would soften and potentially go negative.
“This could present a challenge for goods-focused companies which have seen strong price performance.”
It expected evidence of the shift to emerge in the current quarter. Crucial factors would be the re-opening of international travel in 2021-22, an increase in activity within the services companies and the goods-based companies reporting a slowing of demand.
But the report said the tourism stocks like Flight Centre, Corporate Travel, Qantas and Webjet would not see much change in their market values from the switch in spending because investors had already factored it in.
In the goods sector, Wilsons said Reliance Worldwide and Queensland-based Super Retail Group would benefit from earnings upgrades. Dominos growth rates were also likely to be well supported.
In the services sector, it said Sydney Airport would benefit, as would Aristocrat Leisure.Jump to next article