The Propel (ASX: PFP) share price is up 6% after the company gave a trading update.
What does the company do?
Propel is the second largest death care services in Australia and New Zealand. It currently has operations in 130 locations including 31 cremation facilities and 9 cemeteries. It is using an acquisition strategy to expand its operations.
Why the Propel share price is up
The company announced this morning that the easing of funeral attendance COVID-19 limits in Australia and New Zealand has contributed to an increase of around 8% in Propel’s average revenue per funeral in May 2020 compared to April 2020, with total funeral volumes only up by 1%.
In early June 2020 funeral attendance limits were removed in New Zealand and increased to at least 50 people in most states in Australia.
Propel’s funeral volumes are expected to be more than 13,000 in FY20, up from 11,304 in FY19.
It’s on track for another record year in FY20 and provides guidance of approximately $110 million and operating EBITDA (click here to learn what EBITDA means) of approximately $32 million.
However, the company has warned that social distancing measures and increased focus on personal hygiene may (thankfully) result in a benign flu season and “a deferral of death volumes into future periods”.
Over the longer term, death volumes are expected to rise due to the growing and ageing populations in both Australia and New Zealand.
I think Propel is an interesting, conservative long term idea which could also be a solid dividend idea. Particularly at a share price of around (or under) $3.
[ls_content_block id=”14945″ para=”paragraphs”]
Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned.
