Tuesday Insights

12 September 2023

NZ

PEB > public comment period ended Sept 9; mgmt has pushed back against its US Medicare administrator saying there are “substantial misunderstandings” in the use and validity of its product. We view this as a last-ditch attempt at securing coverage…stock price target 10c or less…sell.

FRW > Freightways announced last week that their ASX dual-listing would be effective TODAY – FRW trades under FRW on both the NZX and ASX exchanges. Prefer Mainfreight.

Noting E-Road continues to sink post-capital raise. All bets are off as to whether Volaris/Constellation will up its stake (now diluted to ~12%).   Retaining our hold rec on Heartland Bank — prefer the bonds yielding ~7.50%. Preference to banks remains WBC, MQG, ANZ.


Aus

Ramsay Healthcare > Bloomberg reporting Ramsay and its Malaysian partner, Sime Darby Bhd, have shortlisted candidates for the sale of their hospital unit, which could fetch ~$1.5bn.

Liontown Resources > As Albemarle kicks off four weeks of due diligence following its $3.00/share all cash offer made last week, Gina Rinehart has confirmed an increased 7.72% stake and not ruled out launching a rival bid. Aus housing > With construction costs up >30% and borrowing capacity down 30%+, new supply is badly needed although higher interest rates and construction cost means many potential buyers cannot afford new housing. Read through is pretty bad here — this predicates a crisis in our opinion.


US

Noting Apple has signed a deal with Qualcom for its 5G modem chips until 2026, suggesting the company’s own internally-made chips are taking longer to implement that previously thought. It’s hard to be a buyer of Apple at the moment — China worries + saturation of its products. The iPhone 15 hardly feels interesting. Co. is a cash machine but where to from here…? Does it buy DIS?

Instacart pt. II

Yesterday we wrote about Instacart’s IPO target valuation, which was about $9bn. As of last night it has fallen to $7.8bn. It’s amazing what a day can do. It goes without saying, but we’re avoiding this thing like the plague…almost a short.

Credit dries up

We found the below chart interesting — the share of households reporting it’s harder to obtain credit that a yr. ago. If consumer savings are being drained, then the next line of defense is credit. Without credit, what’s the read-through for consumer spend? Feels like we will see the answer in the next 2-3 quarters. We think the consumer has at least another quarter of ‘spend’ in them…COVID-fuelled revenge spending delusions…


Europe continues to lag… (source: the FT)

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