ATM — everyone who reads this newsletter will know that I have been hating on A2 Milk and every other commodity company since time immemorial, so it’s time for me to eat some humble pie and confess I didn’t see such a strong result coming. Mea culpa! One of our quants is very happy today as he owns a lot of ATM. Stock is up near 13.00% as of writing. I know a lot of you are still underwater on this thing — how many people bought it at $12.00?…I still don’t see a path to $12.00 anytime soon. Today is a good day to get out if you got in and are still underwater, but yes, I eat my humble pie and admit when I am wrong — EBITDA of $113.1mn, and NPAT well ahead of consensus at $85.3mn for 1HY24. China looking strong (hence why I wonder if Comvita is trading below value) but the US segment still losing money and weak growth — only +9%. Still, a good result and I now owe someone lunch. Humble pie indeed. Bottom line is China is stronger than we expected — across the board — still prefer exposure to China via luxury stocks. I’ll cry over my spilt milk now.
Speaking of Chy-na — check out travel; that’s not a bad chart you got there Bloomie…
I mean — is China back, baby?
There’s still the whole issue of ghost cities and Evergrande collapsing…not getting too excited.
RYM — expecting FY24 underlying profit to be in the range of $265 – $285 million. This compares to previous guidance of $300 – $330 million. Lower volumes of sales of occupational rights agreements contributing. We’ve never loved Ryman but think the stock is hitting a bottom here — after a disastrous year last year the company is overseeing a turnaround — we hear that residents rave about the quality of Ryman’s facilities. “Don’t dream it’s over” as those Crowded House fullas said. We actually think there’s value in RYM at $4.90 or so — trading below NTA of $6.80 — preferred list of retirement providers remains ARV SUM OCA RYM…but let’s be honest, they’re all obvious ways to play RE without the inherent risks of dwindling office capacities, etc.
Air NZ — guiding and expecting earnings before tax for FY24 to be between $200mn-240mn…main impact is the US big boys offering routes. More competition, etc. AIA/THL are better ways to take advantage of tourism. As Buffett used to say, take me to Airlines Anonymous if I ever buy an airline. Greg Foran is an excellent manager and Air NZ couldn’t ask for a better CEO… but it’s still an airline.
Westpac — $1.5 billion in cash profit over the first quarter of its calendar year, 6% lower than the average of its two previous halves…competition for loans and deposits squeezed the net interest margin to 1.78 per cent — we prefer Macquarie (the silver donut) and internationally we still prefer JP Morgan…just look at the recent earnings from other Aussie banks — competition for mortgages is the main issue — per the AFR
Bendigo and Adelaide Bank has posted a 5 per cent fall in interim cash profits to $268.2 million as competition in mortgages took a big toll on profit margins.
Star — in (another) trading halt facing a second Bell inquiry…the first report was damning to say the least:
a case study of unethical conduct and cultural failure”.
Hard to love casinos when you put it that way…
URNM — has dipped a little in the last few days…nice time to get back in. Supply/demand dynamics remain the same.
MBAs — sent from a reader…
We all want PSDs…Bear Sterns may be no more but what a memo…
One last thing… our pod is back…Jess and I go through recent portfolio changes, as well as why she loves Lululemon so much and how I fell out of love with Estée Lauder
Source post: Blackbull Research - Substack