Briefly noted —
Puig — Sales Rose 19% to €4.3 billion in 2023. Of particular note is the group’s beauty sales, which grew +23%, partially fuelled by its 2020 acquisition of Charlotte Tilbury. Fragrance and fashion grew +17% — I suspect they will need to strip out the divisions into two for reporting purposes as privately owned family company grows. A stark contrast to Esteè Lauder’s v flat sales. Puig is hotly tipped to list later this year.
The Miu Miu of it all — sales at Prada’s sister brand rose an eye popping 82%, versus growth for the whole company of 17%. Miu Miu had one of the best collections this season in Paris — think pyjamas and pearls, perfect black dresses — womanhood, in all its forms. Miu Miu, I suspect, is becoming like what Gucci was a few years ago. The trouble is that can all be gone in a speck of dust. But this Miu Miu collection was one of Prada’s best — it left you feeling typically off kilter and felt like a harbinger of what’s to come.
Wondering what my preference for luxury stocks are, in order of least to most? Please watch the below video, as expressed via the following scene from American Psycho…don’t say I never give you anything (That’s bone. And the lettering is something called Silian Rail.)
Uranium — enjoyed this piece on BusinessDesk via Bloomberg about one of the things I’ve been talking about for a while; Uranium. There’s a push to open long-dormant mines. As I’ve been saying, the push to open a mine doesn’t happen overnight. China has just started building another ten nuclear power plants. The long term (until 2028) imbalance of supply/demand for uranium remains.
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How many roads must a boomer walk down?
I was having a conversation the other night and the topic turned to how many people in NZ are turning 65 in the next five years. It’s an interesting brain teaser — that’s a lot of KiwiSaver pots and superannuations being paid out, and it’s likely a lot of transfer of wealth and down the track it’ll be happy days for the retirement home providers. I turned the question over to my sometimes intern and analyst — he ran the numbers. The precise figures are a little more difficult (we’d need birth records from specific years, as well as death records for the corresponding years). Anyway, here’s what he wrote — he is a clever boy — in 30 years I predict he will be running the country as a one-man dictatorship:
‘the population aged 65+ (0.79 million in 2020) has a 90 percent probability of increasing to between 1.34 and 1.46 million in 2048 and to between 1.65 and 2.06 million in 2073”. From 2020 to 2024 is a 28 year horizon. And 0.79 million turns into 1.34 million in 28 years with a 1.9% CAGR. So I can assume that to get the population to be 65+ for 2029 I’ll just take the 0.79 million for 2020 and compound that at 1.9% for 7 years which comes to an estimated number of 65+ population of 0.9 million.
That’s a few more oldies! Food for thought. I think the retirement villages — RYM, OCA, ARV ought to be net beneficiaries of this (if you want to see an ageing population, look to Japan — most NZers are too selfish to look after their elderly parents; they don’t have the same culture as Japan, so into the retirement home they go.
A few other thought experiments — how many of those about-to-be retirees have deep knowledge in their field that the country might lose to the land of bowls and Rotary Club? And another — how many of them intend to spend their dosh? The boomers, as we all know, benefitted from an economy that wasn’t yet destroyed by successive neoliberal governments (Rogernomics — someone grab me a bowl, I might puke). How many have a KiwiSaver, and how much of those liquidated assets will flow into the economy? All questions worth pondering.
The figure that struck me the most, though, was that ~1.4mn figure cast out not that far long into the future — you know, regardless of interest rates and so on, there’s the undeniable fact that aged care demand will have increased significantly. It’s like the Charlie Munger Coke thesis — everyone needs to drink liquid, a certain percentage take of them are going to choose Coca-Cola, and as the world population grows, so does the number of being choosing said liquid. It just depends on your time horizon.
Related…boomers and gen X still own the lion’s share of Aussie property (source: AFR)
Home and Away
NZ — all quiet on the Western Front…
AUS — It’s never quiet in Aussie (it’s always sunny in Philly) — I have to say, if you thought self-storage companies are boring, think again! Here’s a doozy from the AFR about National Storage REIT — it could’ve been ripped from the pages of a pulpy paperback you buy at a second rate airport —
That brings us to the unfolding HR house of horrors at National Storage. The Brisbane-based ASX-listed storage company founded by Andrew Catsoulis has been grappling with an extramarital affair between the two executives whose main job is juggling legal exposure and conflicts of interest. National Storage claims company secretary (and board member) Claire Fidler and chief people officer Manny Lynch disclosed their affair in December last year. After questions from this column about corporate offsites, a company spokesman revealed that external lawyers had been brought in to investigate. That investigation continues. There’s also a second relationship between senior managers, which was confirmed about the same time. None of this has been disclosed to shareholders of the $3 billion market cap firm . Mind you, for executives at National Storage, perhaps mixing work and their family life is all business as usual. All three of Catsoulis’ adult daughters have worked, or continue to work on the National Storage payroll. The company’s chief financial officer , Stuart Owen, has two children who work or once worked for National Storage. No one’s trying especially hard to hide it; they proudly praise the ‘‘ NS Working Dads’ ’ on the company blog. Look, it’s a family company. In Brisvegas. Surely, the shareholders would expect no less! Besides, there’s no reason the offspring aren’t up to the job.
Who ever said storage was boring! Can David Zaslav please commission a TV show about this lot? I mean, it sort of makes me like the company more. There’s also a new player on the block — Singaporean-based StorHub is planning to expand in the Aus storage market — they’ve raised about $460mn in new capital. They’re a big player in Asia — competition is never a bad thing…and we like boring businesses…
Speaking of boring — DGL — trading around the 61c mark. Results were flat but this is throwing the baby out with the bathwater…see below…trading at around 9.5x EV/EBIT…
Another boring one for you … Duratec … trading at 10x EV/EBIT. Has dropped 19% in the past month — as the saying goes, if you like steak at $20, you’re going to love it at 19% off…
I like Duratec because they do incredibly boring and sticky maintenance work. Australia has ageing infrastructure. It needs to be serviced. Downer are a chronic bureaucracy and Duratec can be lean and nimble — we like that. They just reported record half-year revenue of A$292 million and net profit after tax that was up 56% year-on-year at $12.2 million — reasons to be cheerful. The Aussie market really is bi-polar at the moment. Also worth noting Downer have engaged Duratec on occasion, like at BHP’s Finucane Island operations — when it doubt, call in the best..
Why I will never invest in Downer
I am from Oamaru. Oamaru is a tiny town and it is very parochial and beautiful, and the council owns its own contracting business — Whitestone Contracting. It’s very profitable and they do a good job — they have built a Mainfreight-esque culture on a much smaller scale. The council is obligated to put jobs up for tender, though, so they did — Downer undercut the council’s own contractor, and the council was obliged to give the tender to Downer. Downer then did a terrible job — the public gardens became overgrown and messy and they started mowing just around the edges and making a single path in the parks, claiming it was more eco-friendly when they really were just lazy. Everyone got annoyed and Downer had to apologise, and it just underscores the insanity of local politics — they gave the tender to a company that would, I assume, distribute all its excess capital to shareholders, rather than awarding it to council-owned Whitestone Contracting that pays back its profits to the council that owns it. The brain-rot is astounding. Anyway, this is why I don’t like Downer, and why I do like Duratec.
Newshub and the insularity of NZ
I’ve been amused to read a dozen thinkpieces (kill me now) about the demise of Newshub, how it was a failure of kowtowing to advertisers, how it was a failure of NZ, etc. It reminds me that we live in country that is so very insular that nobody thought to think that to Zaz and his Teutonic counterpart at WBD, Newshub is a rounding error on a balance sheet. It wasn’t personal. It was business. Newshub didn’t make money. They had a banal 7pm show — I would rather listen to Andrew Lloyd Weber on loop — and the whole rebranding to “Newshub” reeks of brain dead consultant rot. Media needs an overhaul. BusinessDesk is without a doubt the gold standard of biz journalism here, but the NZ Herald is not what it used to be. The best daily paper remains the ODT, which is independently owned and still retains the same high standards of journalism that’d make Katherine Graham proud. Anyway, my point is that NZ is a very, very small concern form the debt-laden WBD empire. They’ve got bigger fish to fry.
Source post: Blackbull Research - Substack