Forbar upgrades NZX | Disney, Pfizer, German Jobless Claims
NZX — Noting Forbar has upgraded the stock to outperform, citing much of the valuation case that we have previously written. Price target $1.39 — slightly ahead of our valuation of $1.30. Estimating FY24 to FY26 EPS CAGR of +22% — due to increased market activity and organic growth in their SmartShares business. We have met with management recently and like the direction they are heading in — they have internalised much of funds mgmt, which is a +$1mn saving, and we also note the KiwiSaver space in NZ is still relatively young — we see $20bn FUM as an achievable goal for SmartShares/SuperLife given growth of balances + govt contributions. Note our chart below — FUM has grown at a good clip, and we see this as the major source of the NZX’s growth in the next few years…ASB master trust is a ‘mature’ scheme but growth within SS/SL is still relatively young. Retaining conviction buy.
Also noting that cashflows are the primary driver of SMS growth…
Genesis — Big focus at investor day was growth in its renewable energy generation with a goal to be 95% renewable by 2035. GNE plans to get there with a $1.1b investment programme in grid scale batteries and further generation. The strategy update includes material updates to financial guidance seeing itself change from “limited growth outlook and high dividend pay out” to “growth opportunities with reliable dividend returns”. Remains our favourite gentailer…if you must own one, own this…
Macro - German job claims — Heilige Arbeitslosigkeit, Batman!
Disney — Iger has rejected activist Nelson Peltz’s advances, seeking to get ahead of a Peltz incursion by nominating two new directors to its board: outgoing Morgan Stanley chief executive James Gorman and former Sky boss Jeremy Darroch. While Iger has cut +$7bn in costs (and counting) the broader issue of Disney’s flagging entertainment portfolio is front-and-center of most investor’s minds. “Go woke, go broke” is an easy explanation, but it doesn’t really capture the issues at hand — Star Wars, Marvel — even Pixar — are just not working as they used to. We think Iger is starting to “right the ship”, but there’s a long runway ahead…we like the stock under $90, if you can hold on for the next few years…we think ESPN is an underutilised asset and on the plus side, we have been seeing thousands of mouse-ear wearing Disney cruise ship tourists docking off in Auckland as of late…the brand still has pull.
Pfizer - discontinuing its twice-a-day weight loss pill after many users reported adverse side effects. We wonder if Ozempic will end up being the same (disclaimer: we are not scientists) — long CSL…buy it at 3 yr lows.
The resto game
Highly local (apologies, non-Auckland readers) but we had to note K Rd stalwart Cotto closing down suddenly, after being a mainstay of locals, politicians and business leaders alike. The lamb ribs and dumplings were always on point (though the menu could’ve been changed up a bit more). It’s the latest in a series of hospo closures — Brothers Beer recently filed for liquidation, as did Epic Brewery. Is it a sign that the recession is starting to hit?
We often have coffee at The Store down in Britomart — couldn’t help but notice that what was formerly Sass and Bide is now an empty glass storefront. And so it goes.
Links & things
How Jensen Huang’s Nvidia Is Powering the A.I. Revolution — Nvidia Nvida Nvidia
Erewhon’s Secrets — On the cultish LA supermarket chain that sells powders for the price of your soul
Turning $2 Million Into $2 Trillion — Charlie Munger’s classic thought experiment on Coca-Cola
When Mark Met Nick & Shane: Three Horsemen Of The Apocalypse — Vail Shane MacGowan, singer of The Pogues…we were playing Dirty Old Town in the office yesterday for him