NZ
The NZ govt and global asset manager BlackRock have announced a new $2bn “clean energy” investment fund. Risk of overbuild seems likely, and we roll our eyes a little at BlackRock’s “clean energy” play — lots of words and little hard info — virtue signaling. Prefer GNE as a value gentailer play with a healthy dividend. NZ equities — we like THL and SKC as tourism plays (recent holistic data suggests the boom hasn’t ended — tourists still streaming into NZ), GNE as a “boring” gentailer (as said before). Scales we like under $3.20.
Australia
James Hardie shares jumped +14% to fresh 12-month highs after revealing better-than-expected quarterly results.
Despite sales falling -5% from last year to US$954.3m due to subdued construction activity which was expected, earnings (EBIT) surprised to the upside jumping to a record US$234.2m, up +12.4% from last year. Cost-saving initiatives and a shift to high-value product mix saw margins improve to deliver earnings growth.
CEO Aaron Erter provided an optimistic view for the company’s second quarter. Erter said:
“I believe our last two quarterly results are proof points that we are accelerating through this cycle. We have a superior value proposition with the right products and solutions that help our customers grow profitably.”
We remain HOLD rated on James Hardie and are still wary of housing activity down-turn getting worse. Think of recent prestige asset sales + mortgages still to roll over in Sept…who is building in an environment like this??Aus equities — we like CSL given recent weakness, DGL as a clearly undervalued chemical company (sub-4x earnings), and ANZ, MQG as bank + divvy plays.
US
Disney reports earnings tomorrow – expectations are muted as the content powerhouse has come under fire in the last year – flagging Disney+ subscriptions, a string of flops, and the writer’s strike all haven’t helped. We’re expecting weak earnings but note the stock is trading around a 5 year low – it’s hard not to see value there, even if the “turnaround” takes longer than expected.
We note Disney-owned ESPN’s recent deal with Penn betting (~$2bn) as one way the company can capitalise on its valuable sport assets – the recently inked deal uses ESPN’s coverage + brand for Penn’s betting platform, and they will pay Disney ~$1.5bn for the privilege, alongside $500m in warrants to buy stock in Penn. Worth noting that this is starting to feel like a “post-woke” moment for the company. Betting is not “woke”, but it makes money.US equities — avoiding adding to tech, but like Starbucks, Dominos, Dis, WarnerBrothersDiscovery, Paramount, etc. Recent additions to the model portfolio include Dollar General and Leslie’s.
Chart – employees eclipse GDP in the US – last time this happened was the mid-70s
