COVID-19 means less cars on roads, and it’s bad news for ASX traffic small caps
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Traffic management stocks are the latest to reveal the impact COVID-19 is having on their businesses, with less cars on the road putting a dent in revenues.
Parking tech specialist Smart Parking (ASX:SPZ) told investors today it was feeling the pinch.
Hear ‘smart parking’ and you may think of car park billboards showing how many spots are available and red or green lights at the top of each spot so you don’t have to go down a lane where there are no spots.
Indeed this small cap does this and more. But it’s all powered by an internet of things based gateway called SmartSpots which it sells to car parks.
Last year business appeared to be going well enough to receive take over interest. But fewer cars on the roads means fewer cars in car parks, and in the UK it has seen a 60 per cent drop in visiting cars.
Because Britain’s lockdown began towards the end of the March quarter, Smart Parking says it will still meet its guidance. But it has been forced to defer some contracts, including one with Gatwick Airport, until the next financial year and slash $6.7m in costs.
Shares slid 5.5 per cent on Thursday morning and have dropped over 60 per cent since the crisis began.
Less tolls and speeding fines may leave more money in people’s pockets but not in shareholders of stocks that make speeding cameras.
Earlier this week another traffic small cap, Redflex Holdings (ASX:RDF), said it anticipated 15 per cent of its revenue to be affected being dependant on volume-based projects.
It has also seen a recent deployment in Pennsylvania adjourned, although it’s business as usual in Australia and the UK.
Large cap toll operator Transurban (ASX:TCL) is also seeing less money come in as people stay at home.
However, its six-week fall is modest compared to the broader market at just under 30 per cent. In contrast Redflex has shed nearly half of its value.