NZ/AUS
Noting Black Pearl Group has raised $1.74mn from institutions and wholesale investors and is now seeking another $2.87mn from retail investors under a share purchase plan.
Also noting Tourism Holdings CFO Nick Judd has resigned (4th CFO to go in recent times). Judd is off to Infratil-owned gem One NZ. Speaking of telcos, we are seeing reports that Punakaiki Fund is looking to sell its stake in broadband provider Devoli — Devoli is that rare thing in venture capital — a firm that actually makes money. Expecting plenty of interest for this — we wonder if Aussie Broadband will enter the fray (Aussie Broadband, alongside Duratec, has been a great winner for small cap fundies this year). Also would make sense for Morrison and co to sharpen their pencils on this…as they say, may the odds be ever in your favour.
No reports yet of who the international “man of mystery” suitor for SkyTV might be. PE might be first in line, but we can’t help but speculate on the synergies that the ever-cable-loving Roberts family who own Comcast might find in the deal…nice entry into the NZ market. Continues to trade like a “value” stock but we’d rather find value elsewhere…
NZ preference list — continue to be skewed towards THL, NZX, IFT (quote of the year — “just buy Infratil and go on holiday for ten years…”). Large cap-wise Mainfreight looks tasty under the $63.00 mark…worth a nibble. Thematics for tourism still stack up, etc. AUS preference list — continue to see value in DGL, DUR, CSL…CSL is just clearly oversold (buy a compounder on sale!) while DGL and DUR are small caps which offer value in v. boring industries.
Tesla, Netflix — a tale of two halves
Weak results from Tesla – margins sat at 7%, revenues were largely flat YoY, and net income sat roughly flat at $1.9bn — nothing to get excited about here. Part of the issue is that Tesla’s competing in a increasingly cut-throat market; other EV makers have pulled the price of a car down and Tesla is now being forced to compete. They’re also selling less cars – this quarter saw the production of ~430,000 vehicles (basically flat when compared to the last three quarters). The business isn’t growing. It’s hard to see how TSLA is valued at ~70x earnings when its operating metrics are worse than most “trad” competitors and its sales sit stagnant. We are not interested in the auto industry –- the CapEx is intensive and the competition is fierce. Better buying elsewhere. Note the chart below…revenues are stagnant …there is no value in buying this at these levels…
Strong earnings from Netflix – +8.7mn new subscribers added (largely due to the crackdown on password sharing). Revenues grew 8%, with net income margin sitting at 22%. It’s a pleasantly good result — we think management has repositioned very well and competitors like Disney and WarnerBrothersDiscovery ought to be taking note. On a valuation basis we still don’t love Netflix — trading at 36x earnings…
Going up and up — credit card debt…
We had to stop and look at this chart for a bit — what happens when (US) initial jobless claims start spiking? Nothing good, we posit…