Category: Sectors

Fidelity Australian Equities Fund – Fidelity International offers world class investment solutions and retirement expertise

Investment Objective

The investment objectives of the Fund are to achieve returns in excess of the S&P/ASX 200 Accumulation Index over the medium to long term, a core holding which invests in a diversified selection of around 30 – 50 Australian companies, uses a bottom-up stock-selection approach that focuses on undiscovered earnings potential, value and growth and to conducts regular company, factory and competitor visits to assess business strength, earnings quality and long-term growth outlook.

Approach of sustainable investing

The approach to sustainable investing has three-fold

The use of proprietary sustainability ratings, input from large specialist ESG team and external analysis and ratings to inform of a company’s ESG performance.
The approach demands direct dialogue with companies and stakeholders on issues such as shareholder rights, modern slavery, supply chain management, bribery and corruption and climate change/risk. Where necessary they use proxy voting and shareholder resolutions to help improve practices.
They work closely with external ESG-related bodies in Australia and around the world that seek to improve the way industries are regulated, how companies are managed, and to promote sustainable investing and social development.

Engagement is at the heart of the approach to sustainability. As active stewards of investors’ capitals that one should be making a positive impact on those companies in which one invests. The rigorous bottom-up research process means to understand ESG issues at a company level and believe that companies focused on these issues are more resilient and are more likely to perform better over the long-term.

Portfolio

Investment Team

At Fidelity, one understands the value of connected networks. Their 400+ investment experts share their insights in real time across asset classes, sectors and regions, connected by one powerful global research platform. From London to Mumbai, Shanghai to Sydney, the unique local insights from team of more than 170 research professionals around the world to identify unique market patterns and trends and find the best global investment opportunities for you.

Fund Performance and Pricing

Past performance is not a reliable indicator of future results. The value of investments and the income from them can go down as well as up and investors may not get back the amount invested. Data shown does not take into account any Initial Charge that may apply. Fluctuations in currency exchange rates may affect the value of an investment. Please note that the shares are denominated in their respective share class currency and that the currency conversion provides an indicative price only.

About the Fund

The value of your investment may fall as well as rise and you may get back less than you originally invested. The use of financial derivative instruments may result in increased gains or losses within the fund. This fund invests in a relatively small number of companies. This can make the fund more volatile than other funds that are more diversified. There is a risk that the issuers of bonds may not be able to repay the money they have borrowed or make interest payments. When interest rates rise, bonds may fall in value. Rising interest rates may cause the value of your investment to fall.

(Source: Fidelity International and Investing.Com)

DISCLAIMER for General Advice: (This document is for general advice only).

This document is provided by Laverne Securities Pty Ltd T/as Investor Desk. Laverne Securities Pty Ltd, CAR 001269781 of Laverne Capital Pty Ltd AFSL No. 482937.

The material in this document may contain general advice or recommendations which, while believed to be accurate at the time of publication, are not appropriate for all persons or accounts. This document does not purport to contain all the information that a prospective investor may require. The material contained in this document does not take into consideration an investor’s objectives, financial situation or needs. Before acting on the advice, investors should consider the appropriateness of the advice, having regard to the investor’s objectives, financial situation, and needs. The material contained in this document is for sales purposes. The material contained in this document is for information purposes only and is not an offer, solicitation or recommendation with respect to the subscription for, purchase or sale of securities or financial products and neither or anything in it shall form the basis of any contract or commitment. This document should not be regarded by recipients as a substitute for the exercise of their own judgment and recipients should seek independent advice.

The material in this document has been obtained from sources believed to be true but neither Investor Desk and Banyan Tree nor its associates make any recommendation or warranty concerning the accuracy or reliability or completeness of the information or the performance of the companies referred to in this document. Past performance is not indicative of future performance. Any opinions and or recommendations expressed in this material are subject to change without notice and, Investor Desk and Banyan Tree are not under any obligation to update or keep current the information contained herein. References made to third parties are based on information believed to be reliable but are not guaranteed as being accurate.

Investor Desk and Banyan Tree and its respective officers may have an interest in the securities or derivatives of any entities referred to in this material. Investor Desk and Banyan Tree do and seek to do, business with companies that are the subject of its research reports. The analyst(s) hereby certify that all the views expressed in this report accurately reflect their personal views about the subject investment theme and/or company securities.

Although every attempt has been made to verify the accuracy of the information contained in the document, liability for any errors or omissions (except any statutory liability which cannot be excluded) is specifically excluded by Investor Desk and Banyan Tree, its associates, officers, directors, employees, and agents. Except for any liability which cannot be excluded, Investor Desk and Banyan Tree, its directors, employees and agents accept no liability or responsibility for any loss or damage of any kind, direct or indirect, arising out of the use of all or any part of this material. Recipients of this document agree in advance that Investor Desk and Banyan Tree are not liable to recipients in any matters whatsoever otherwise; recipients should disregard, destroy or delete this document. All information is correct at the time of publication. Investor Desk and Banyan Tree do not guarantee reliability and accuracy of the material contained in this document and is not liable for any unintentional errors in the document.

The securities of any company(ies) mentioned in this document may not be eligible for sale in all jurisdictions or to all categories of investors. This document is provided to the recipient only and is not to be distributed to third parties without the prior consent of Investor Desk and Banyan Tree.

Tags Australian Market, Street Talks

Funds Funds

Zurich Australian Property Securities Fund: is a portfolio of Australian property securities

Post author By lvc-admin
Post date February 17, 2023
No Comments on Zurich Australian Property Securities Fund: is a portfolio of Australian property securities

Investment Objective

To provide investors with an income stream and capital growth over the medium to long term. The Fund aims to outperform the S&P/ASX 300 AREIT Accumulation Index over a period of five years.

Investment Process

The Fund uses a detailed and rigorous investment process with the Managers employing an active, value-based investment style, characterized by incorporating bottom-up investment research into individual securities, with a particular focus on analyzing and forecasting the present and potential future income generation of each underlying property investment. The process consists of two fundamental stages as depicted in the diagram below:

The investment objective of the strategy is two-fold:

Research – The investment team gathers information through property inspections, company visits, industry analysis, macro-economic analysis and using relevant external research (research from stockbrokers and real estate research houses), before creating financial models of each stock in detail to determine the current and potential future income and to analyse its financial condition. The outputs from the models are then used in Renaissance Property Securities’ proprietary Value Ranking Model.
Portfolio Construction – In this stage the Portfolio Managers meet regularly to determine the size of the active positions to be taken in each stock. The factors which determine the size of active positions within the portfolio include the following: (1) The relative value of each security versus other securities, as determined by Renaissance Property Securities’ Value Ranking Model; (2) Stock specific risks; (3) Size and liquidity of individual stocks; (4) Portfolio risk and; (5) Strength of conviction of the portfolio managers on each individual stock recommendation.

Portfolio

Investment Team

Zurich Investments provides exclusive access to specialist managers recognised as being amongst the best in their area of expertise. The Company appointed Renaissance Property Securities Pty Ltd (Renaissance) as the strategic investment partner for the fund in November 2005, which is owned by two experienced investment professionals who directly manage the Zurich Australian Property Securities Fund. With over 45 years’ combined experience, investors benefit from the Fund Managers’ successful track record and focused expertise in Australian property securities investing. Below are the provided the bios of Portfolio Managers.

Carlos Cocaro – Portfolio Manager. Carlos has over 30 years of experience in managing, analyzing, and researching listed property securities. He began analysing listed property securities in 1986 as part of Armstrong Jones’ Australian equities team and joined Rothschild Australia Asset Management in 1994 as a specialist in listed property securities analysis and portfolio management. In 1997 he was promoted to Director, heading up the growing property securities team, a position he held until he formed Renaissance Property Securities in 2003.
Damien Barrack – Portfolio Manager. Damien has over 20 years’ experience managing, analyzing and researching listed property companies. Damien joined Carlos Cocaro in the Rothschild property securities team in 1998 where they worked together until 2003. Damien co-founded Renaissance Property Securities in 2003.

Fund Performance and Positioning

Asset Allocation

About Fund

The Zurich Australian Property Securities Fund is a portfolio of Australian property securities, spread across retail, commercial and industrial property sectors, with an objective to provide investors with an income stream and capital growth over the medium to long term. The Fund aims to outperform the S&P/ASX 300 Property Trusts Accumulation Index over a period of five years.

(Source: Banyantree and Investment centre)

DISCLAIMER for General Advice: (This document is for general advice only).

This document is provided by Laverne Securities Pty Ltd T/as Investor Desk. Laverne Securities Pty Ltd, CAR 001269781 of Laverne Capital Pty Ltd AFSL No. 482937.

Tags Australian Market, Recommendations

Funds Funds

JPMorgan Global Macro Opportunities Fund- multi-asset macro thematic fund targets positive returns in various market conditions

Investment Objective

To achieve capital appreciation in excess of its cash benchmark by investing primarily in securities, globally, using financial derivative instruments where appropriate.

Investment Process

The Fund’s investment process is driven by the investment team’s proprietary macroeconomic research agenda. The process is best summarized by the diagram below. The added advantage is the investment team’s ability to leverage JP Morgan’s extensive global platform for insights and reach. The team is regularly assessing existing and new investment strategies via daily meetings, weekly macro discussion, monthly core views updates and then also a quarterly strategy summit.

A macro theme must be sufficiently different to existing themes already in the portfolio and the team needs to be able to measure the trends of changes it captures.

Investment strategy. A strategy can be sourced from anywhere including the investment team or JP Morgan’s broader global investment network. Each recommended strategy has a clearly defined macro-theme. The team categorizes each strategy into two broad categories – Traditional (e.g. long-only exposure) and Sophisticated (e.g. derivatives, directional).

Portfolio construction and management

Portfolio Construction & Management. The lead portfolio manager has the ultimate decision-making power on which investment strategies are included in the portfolio, the team does generally tend to follow a consensus approach. The portfolio can have exposure across all major asset classes – equity, fixed income, commodities, currency and advanced derivatives – and exposure to both developed and emerging markets. The portfolio at any one time is expected to be made up of 6 to 10 macro-economic themes, which can equate to between 20 – 40 strategies. This means the overall portfolio can hold at any one time, typically, 100-150 securities. While monitoring the macro is continual, much of the macro debate is at a monthly meeting, where the teams might discuss risks to their core theses and potential paths of evolution in the macro landscape, as well as making changes to the macro themes, including removing or adding a new theme.

Investment Team

Shrenick Shah: Shrenick Shah, managing director, is head of the Macro Strategies team at J.P. Morgan Asset Management, based in London. An employee since September 2010, Shrenick previously worked in the equity divisions at Deutsche Bank and Credit Suisse. Shrenick obtained a M.Sc. in Econometrics and Mathematical Economics from the London School of Economics.

Benoit Lanctot: Benoit Lanctot, Executive Director, is a portfolio manager in the Macro Strategies team, based in London. An employee since July 2011, Benoit previously worked as a senior analyst in the Convertible Bond team within Multi-Asset Solutions, responsible for the implementation of the fundamental analysis framework with global coverage. Prior to that, Benoit worked in investment banking for the Diversified Industries Group of Scotia Capital Inc. based in Montreal, Canada. He obtained a B.BA with a major in Finance from HEC Montreal and a Masters in Finance from London Business School. Benoit is a CFA and a CAIA charter holder.

Josh Berelowitz: Josh Berelowitz, executive director, is a portfolio manager in the Macro Strategies team, based in London. An employee since September 2011, Josh has been focused on the macro portfolios since inception of the strategy in November 2012. Josh obtained a B.Sc. in Economics from the University of Nottingham and is a CFA charter holder.

Virginia Heriz: Virginia Heriz, executive director, portfolio manager in the Macro Strategies team, based in London. An employee since November 2019, Virginia previously was a portfolio manager at Aberdeen Standard Investments where she was responsible for tactical asset allocation portfolios and segregated multi asset mandates. Prior to that, Virginia was an analyst covering global financials at Martin Currie Investment Management. Virginia has a Diplôme d’Ingénieur from the École Nationale Supérieure des Telecommunications, Paris and a Masters in Telecommunications Engineering form the Universidad Politécnica de Madrid.

Fund Performance and Positioning

About Fund

The Fund employs a macro-thematic investment framework to achieve capital appreciation in excess of its cash benchmark by investing primarily in global securities, with the ability to use financial derivatives. The Fund targets +7.0% p.a. annualized over the medium term (net of fees) and/or above the Bloomberg AusBond Bank Bill Index, with a volatility of less than 10% p.a.

(Source: Banyantree and Investment centre)

DISCLAIMER for General Advice: (This document is for general advice only).

This document is provided by Laverne Securities Pty Ltd T/as Investor Desk. Laverne Securities Pty Ltd, CAR 001269781 of Laverne Capital Pty Ltd AFSL No. 482937.

Tags Australian Market, Top Stocks

Funds Funds

T. Rowe Price Global Equity Fund- T. Rowe Price Group provides a broad array of mutual funds

Post author By lvc-admin
Post date February 17, 2023
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investment stockbroker risk analysis using multiple devices. Financial analysis using phone app and laptop. Market trading profit.

The Fund’s investment objective is to provide long-term capital appreciation by investing primarily in a portfolio of securities of companies which are traded, listed or due to be listed, on recognised exchanges and/or markets throughout the world. The portfolio may include investments in the securities of companies traded, listed or due to be listed, on recognised exchanges and/or markets, of developing countries. The Investment Manager may seek to achieve the Fund’s objective through investment of up to 100% of the Fund’s assets in one or more managed investment schemes, managed by the Investment Manager or an affiliate of the Investment Manager, that have the same or similar investment objectives as the Fund. The Investment Manager will seek, where material and to the extent reasonable, to reduce the Fund’s exposure to the fluctuation between its currency of denomination (ie AUD) and the currencies of investment of the Fund through the use of various techniques including the use of Derivatives such as forward currency contracts, currency options and futures.

Process

The investment process involves determining the Fund’s investment universe, which includes companies traded, listed or due to be listed, on recognised exchanges and/or markets, of countries which T Rowe Price has determined are developed or developing countries. T. Rowe Price leverages the proprietary fundamental research and analysis performed by the organisation’s integrated worldwide network of more than 400 equity investment professionals to identify highly recommended companies. T. Rowe Price engages equity investment professionals to identify superior investment ideas, assess opportunities in a global sector context, overlay macroeconomic and local market factors to refine industry and company analysis, and select what it believes to be investments with the most attractive risk-reward characteristics. The Investment Manager is actively involved with the network of equity investment professionals during the idea generation and refinement process. Ultimately, the portfolio manager applies judgment to construct a focused global portfolio consisting of the highest conviction investment ideas, within a diversified framework of country, sector and company guidelines.

People

Chris Di Leva, CFA Director, Portfolio Manager, Andrew Bascand Managing Director, Portfolio Manager, Lewis Fowler, CFA Investment Analyst.

Performance

To provide long-term capital growth by investing primarily in a portfolio of securities which are traded, listed or due to be listed, on recognised exchanges and/or markets throughout the world.

Price

They have partnered with Baltimore-based fund manager T. Rowe Price to offer this global equity fund in New Zealand. It contains a broadly diversified portfolio of global equities, typically comprising around 150 stocks. This high conviction portfolio contains companies which the T. Rowe Price team believe exhibit above-average and sustainable growth characteristics

Asset Allocation

About Fund

The T. Rowe Price Global Equity Fund is a high conviction, truly global portfolio seeking to invest in durable quality growth companies in some of the most fertile industries around the world. T. Rowe Price Australia Limited (“Investment Manager” or “T. Rowe Price”) is a subsidiary of the Baltimore-based T. Rowe Price Group, Inc. which is a global investment management organisation with $2.16 trillion in assets under management as of June 30, 2021. T. Rowe Price Group provides a broad array of mutual funds, sub-advisory services, and separate account management for individual and institutional investors, retirement plans and financial intermediaries. The organisation also offers sophisticated investment planning and guidance tools. T. Rowe Price’s disciplined and risk-aware investment approach focuses on diversification, style consistency and fundamental research.

(Source: Banyantree)

DISCLAIMER for General Advice: (This document is for general advice only).

This document is provided by Laverne Securities Pty Ltd T/as Investor Desk. Laverne Securities Pty Ltd, CAR 001269781 of Laverne Capital Pty Ltd AFSL No. 482937.

Tags Australian Market, Top Stories

ETFs ETFs

BetaShares Global Robotics and Artificial Intelligence ETF – RBTZ aims to track the performance of an index that includes global companies

Approach

In seeking to achieve the investment objective for each Fund, the Responsible Entity will employ a passive management approach that aims to track the performance of the relevant Index, before fees and expenses. Unless otherwise set out in the Product Supplement, each Fund will generally invest in the securities that comprise the relevant Index in proportion to the weightings of the securities in the Index. This is known as a “full replication” strategy. For such Funds, the timing and nature of any changes to the composition of the Fund’s investments will generally correspond with the timing and nature of changes to the relevant Index. In a variety of circumstances, however, the holdings of a Fund may not exactly replicate its Index. For example, it may not be possible or practical to do so in some circumstances, such as where investment restrictions apply which would prevent direct investment in a particular security. A Fund, from time to time, may not hold all of the securities comprising the Index and may hold securities in weightings which differ from the Index. Some Funds will generally not hold all of the securities comprising the relevant Index and may hold securities in weightings which differ from the Index. This is referred to as a “sampling” strategy. A sampling strategy is often used for funds tracking an index that is too broad to efficiently purchase all of the index’s securities. For Funds where a sampling strategy is used, this is noted in the relevant Product Supplement. For such Funds, the sampling strategy is based on a portfolio of securities that may be a sub-set of the constituents of the Index and that aims to be representative of the characteristics of the constituents of the Index as a whole. The aim of a sampling strategy is to construct a portfolio that provides a return profile comparable to that of the Index.

Portfolio

The Index seeks to track the price movements of a portfolio containing the top 50 technology and online retail stocks, by free float market capitalization, that have their main area of business in Asia excluding Japan.The Index is normally reconstituted and rebalanced semi-annually, with the new portfolio becoming effective at the close of trading on the first Wednesday in May and November each year.

Portfolio Holdings

People

Adam O’Connor is a member of the BetaShares Distribution team responsible for supporting Institutional and Intermediary Broker and Adviser channels. Alex is a member of the BetaShares Sales & Distribution team, responsible for assisting with client inquires and providing portfolio analytics support to the sales team. Alex is a member of the BetaShares Distribution team, responsible for supporting Institutional and Intermediary Broker channels.

Performance

RBTZ aims to track the Indxx Global Robotics & Artificial Intelligence Thematic Index before fees and expenses. The Index focuses on identifying the industries and sub-themes positively impacted by robotics and A.I. The Index includes companies involved in Industrial Robotics and Automation, Non-Industrial Robots, Artificial Intelligence and Unmanned Vehicles and Drones. To qualify for inclusion in the Index, a constituent must have a minimum market capitalisation of US$100 million.

About the Fund

Robotics involves the idea, design, creation, and application of programmable mechanical devices that can perform tasks and interact with their environments without human input. A.I. is a division of computer science that emphasises the conception of intelligent machines that can work, react, and learn like humans in order to recognise speech, plan, and solve problems. Robotics and Artificial Intelligence is a transformational technological development, with the ability to disrupt multiple industries due to significant economic incentives related to ageing populations, rising labour costs, and opportunity for performance improvements.

DISCLAIMER for General Advice:

DISCLAIMER for General Advice: (This document is for general advice only).

This document is provided by Laverne Securities Pty Ltd T/as Investor Desk. Laverne Securities Pty Ltd, CAR 001269781 of Laverne Capital Pty Ltd AFSL No. 482937.

Tags Australian Market, Top Stories

Global stocks

Endeavour’s retail segment is also vertically integrated, supported by Pinnacle Drinks private-label portfolio

Post author By lvc-admin
Post date February 3, 2023
No Comments on Endeavour’s retail segment is also vertically integrated, supported by Pinnacle Drinks private-label portfolio

Business Strategy & Outlook

Endeavour is Australia’s pre-eminent omnichannel liquor retailer, operating the largest network of brick-and-mortar stores throughout the country, with more than 1,600 liquor outlets across the well-known Dan Murphy’s and BWS brands. Endeavour also has substantial interests in hotels and electronic gaming machines, operating more than 12,000 gaming machines across its portfolio of more than 300 hotels, pubs, and clubs. Endeavour is one of Australia’s leading employers, with staff of more than 28,000 throughout Australia. Endeavour’s business is divided into two segments. Its retail segment is Australia’s leading omnichannel liquor retailer, while its hotels segment provides hospitality services and gambling operations. Endeavour’s retail segment is also vertically integrated, supported by Pinnacle Drinks private-label portfolio, which operates several wineries, as well as bottling and packaging facilities. Products produced are supplied exclusively to Dan Murphy’s, BWS, and ALH Group in Australia and provide a source high-margin differentiation while also minimizing supply chain risks in the wine category. Shifting consumer trends toward online shopping and convenience have led to strategic investments in online shopping platforms and delivery capabilities, such as smartphone applications for each brand and online pure-play retailers Jimmy Brings and Shorty’s Liquor. Almost 9% of all Endeavour’s liquor sales are transacted online.

Endeavour’s revenue is highly skewed to the retail segment, which will contribute approximately 85% of revenue over the next decade, with the balance coming from the hotels segment. The split is more evenly balanced at an EBT level due to the higher margins achieved in the hotels business, with approximately 65% of EBT derived through the retail business and 35% through the hotels business.

Financial Strengths

Endeavour Group is in reasonable financial shape. Endeavour’s leverage ratio, measured as net debt/EBITDA, including lease liabilities, was approximately 3.5 at the end of June 2022. Endeavour Group’s strong market positioning and wide economic moat provide us with confidence that current gearing levels are maintainable. Interest coverage —defined as reported EBITDA/interest expense—of approximately 6 times at fiscal 2023 year-end. A material increase, isn’t expected in the level of gearing as consistent with the investment-grade credit profile Endeavour is targeting.

Bulls Say

Endeavour’s dominant retail market share of about 50% is multiples of its closest competitor and provides a source of long-term maintainable cost advantage.
Endeavour’s partnership agreements with Woolworths allow the business to leverage the scale and capabilities of Australia’s largest supermarket.
Endeavour’s wide economic moat, strong competitive positioning and strong balance sheet will underpin a maintainable and steadily growing dividend.

Company Description

An investment in wide-moat-rated Endeavour Group provides investors with exposure to one of the most well entrenched dividend-paying businesses in the Australian retail landscape. Following decades of enduring organic growth through store rollouts, Endeavour’s off-premises retail segment—with more than 1,600 retail outlets mainly across its Dan Murphy’s and BWS brands—accounts for approximately half of all off-premises retail liquor sales within Australia. Endeavour’s immense scale in the off-premises retail segment is unrivaled within Australia. Indeed, Endeavour’s sales are almost three times larger than its nearest retail competitor, Coles.

(Source: Morningstar)

DISCLAIMER for General Advice: (This document is for general advice only).

This document is provided by Laverne Securities Pty Ltd T/as Laverne Investing. Laverne Securities Pty Ltd, CAR 001269781 of Laverne Capital Pty Ltd AFSL No. 482937.The material in this document may contain general advice or recommendations which, while believed to be accurate at the time of publication, are not appropriate for all persons or accounts. This document does not purport to contain all the information that a prospective investor may require. The material contained in this document does not take into consideration an investor’s objectives, financial situation or needs. Before acting on the advice, investors should consider the appropriateness of the advice, having regard to the investor’s objectives, financial situation, and needs. The material contained in this document is for sales purposes. The material contained in this document is for information purposes only and is not an offer, solicitation or recommendation with respect to the subscription for, purchase or sale of securities or financial products and neither or anything in it shall form the basis of any contract or commitment. This document should not be regarded by recipients as a substitute for the exercise of their own judgment and recipients should seek independent advice. The material in this document has been obtained from sources believed to be true but neither Laverne and Banyan Tree nor its associates make any recommendation or warranty concerning the accuracy or reliability or completeness of the information or the performance of the companies referred to in this document. Past performance is not indicative of future performance. Any opinions and or recommendations expressed in this material are subject to change without notice and, Laverne and Banyan Tree are not under any obligation to update or keep current the information contained herein. References made to third parties are based on information believed to be reliable but are not guaranteed as being accurate.

Laverne and Banyan Tree and its respective officers may have an interest in the securities or derivatives of any entities referred to in this material. Laverne and Banyan Tree do and seek to do business with companies that are the subject of its research reports. The analyst(s) hereby certify that all the views expressed in this report accurately reflect their personal views about the subject investment theme and/or company securities.

Although every attempt has been made to verify the accuracy of the information contained in the document, liability for any errors or omissions (except any statutory liability which cannot be excluded) is specifically excluded by Laverne and Banyan Tree, its associates, officers, directors, employees, and agents. Except for any liability which cannot be excluded, Laverne and Banyan Tree, its directors, employees and agents accept no liability or responsibility for any loss or damage of any kind, direct or indirect, arising out of the use of all or any part of this material. Recipients of this document agree in advance that Laverne and Banyan Tree are not liable to recipients in any matters whatsoever otherwise; recipients should disregard, destroy or delete this document. All information is correct at the time of publication. Laverne and Banyan Tree do not guarantee reliability and accuracy of the material contained in this document and are not liable for any unintentional errors in the document.

Tags Australian Market

Dividend Stocks

Equitrans Highlights Need for Permitting Reform to Move MVP Forward

Post author By lvc-admin
Post date February 2, 2023
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Business Strategy & Outlook:

Equitrans’ biggest challenge is moving the deeply troubled Mountain Valley Pipeline, or MVP, into service. Equitrans sees Sen. Joe Manchin’s support as helpful and has been in frequent contact with the West Virginia Democratic senator. The recently announced proposed energy permitting provisions (separate legislation from the Inflation Reduction Act of 2022) contains direct benefits for MVP, thanks to Senator Manchin’s support, given the pipeline’s presence in West Virginia. A similar legislative proposal has also been introduced by the republican senator of West Virginia, Shelley Moore Capito. The Fourth Circuit remains the primary roadblock presently, as it has overruled state and federal agencies’ technical conclusions more than 10 times at this stage. Both legislative proposals address the judicial review. Manchin’s proposal moves the MVP case to the DC Circuit court, while Capito’s simply states that none of the approvals issued by the federal agencies as it relates to the MVP are subject to judicial review. It is observed that the two legislative proposals are indicative of fairly broad support for overall pipeline permitting reform. If either version were to pass as written, they would move the MVP into service, so it is seen the uncertainty primarily around obtaining enough political support to pass likely via adding or deleting certain provisions, which will likely be a razor-thin margin given the current political environment.

Risk and Uncertainty:

The Mountain Valley Pipeline represents the largest risk to Equitrans from a financial and reputational perspective, given the numerous permitting issues it faces. The pipeline also recently resolved an over two-year criminal investigation into its activities without any issues. Another investigation was settled with $2.15 million in fines and court-ordered monitoring. The MVP bet is made bigger because of the over $500 million committed to several related projects that are explicitly tied to the MVP becoming operational. Customer concentration risk with EQT is a concern, as EQT makes up about 70% of Equitrans’ revenue. The firm recently resolved a dispute regarding the Hammerhead pipeline via an arbitration panel. The firm wrote off over $1.2 billion in 2018 and 2019, and another $2.5 billion in 2021 and 2022 related to MVP. Given the difficulty in valuing long-term 10- to 20-year contracts for gathering and processing assets due to the challenges in planned drilling and production,it is believed future write-downs are possible. From an ESG perspective, it is considered a major risk to Equitrans to be managing its carbon emissions profile and stakeholder management. Equitrans’ carbon emissions profile becomes important especially if the United States seeks to implement a national carbon tax. From a stakeholder management perspective, the legal, community, and regulatory challenges over the MVP have added billions of dollars in costs to the pipeline, and the damaged stakeholder relationships could also influence future projects.

Bulls Say:

The integration of Rice Energy Midstream offers optimization opportunities, given the geographic closeness of the assets, representing $300 million to $500 million in potential capital avoidance over the next five years.
With the cancellation of the Atlantic Coast Pipeline, the MVP can take advantage of higher shipper demand and launch additional expansion efforts.
Equitrans has been very successful at driving down unit costs at its gathering operations, with a 45% decline since 2015.

Company Description:

Equitrans acquired EQM Midstream in mid-2020, consolidating the midstream family. Equitrans now own EQM assets directly versus just unit ownership. EQM Midstream provides gathering, transmission, and water services to primarily Appalachian producers in Pennsylvania, West Virginia, and Ohio.

(Source: Morningstar)

DISCLAIMER for General Advice: (This document is for general advice only).

This document is provided by Laverne Securities Pty Ltd T/as Laverne Investing. Laverne Securities Pty Ltd, CAR 001269781 of Laverne Capital Pty Ltd AFSL No. 482937.

The material in this document has been obtained from sources believed to be true but neither Laverne and Banyan Tree nor its associates make any recommendation or warranty concerning the accuracy or reliability or completeness of the information or the performance of the companies referred to in this document. Past performance is not indicative of future performance. Any opinions and or recommendations expressed in this material are subject to change without notice and, Laverne and Banyan Tree are not under any obligation to update or keep current the information contained herein. References made to third parties are based on information believed to be reliable but are not guaranteed as being accurate.

Although every attempt has been made to verify the accuracy of the information contained in the document, liability for any errors or omissions (except any statutory liability which cannot be excluded) is specifically excluded by Laverne and Banyan Tree, its associates, officers, directors, employees, and agents. Except for any liability which cannot be excluded, Laverne and Banyan Tree, its directors, employees and agents accept no liability or responsibility for any loss or damage of any kind, direct or indirect, arising out of the use of all or any part of this material. Recipients of this document agree in advance that Laverne and Banyan Tree are not liable to recipients in any matters whatsoever otherwise; recipients should disregard, destroy or delete this document. All information is correct at the time of publication. Laverne and Banyan Tree do not guarantee reliability and accuracy of the material contained in this document and are not liable for any unintentional errors in the document.

Tags Top Stories

Global stocks

DoorDash Reports Solid Q3 Results as Consumer Demand Remains Strong as Pandemic Wanes

Post author By lvc-admin
Post date February 2, 2023
No Comments on DoorDash Reports Solid Q3 Results as Consumer Demand Remains Strong as Pandemic Wanes

Business Strategy & Outlook:

DoorDash holds the number one position as an online food order aggregator in the U.S., ahead of Uber Technologies’ Uber Eats and Grubhub. The firm is at the early stages in trying to attract a larger piece of what is estimated to be $1 trillion worth of goods and services by 2025 to its platform. DoorDash benefits from the network effects between merchants, deliverers (or “dashers”), and consumers, plus intangible assets, in the form of data, which together warrant narrow moat ratings. Consumers use DoorDash’s app to order food for pickup or delivery from restaurants. Based on data from Second Measure, DoorDash currently is the market leader in the U.S., with 56% share, above Uber’s 26% and Grubhub’s 18%. The firm has over 450,000 merchants, more than 20 million consumers, and more than 1 million dashers on its platform. It is seen that the primary market DoorDash is targeting aggressively, consumer spending on food and beverages away from home, as attractive and expect it to grow 4%-5% annually during the next five years. DoorDash has also begun to provide similar service to businesses in verticals other than restaurants, such as grocery, retail, pet supplies, and flowers. With strengthening of the network effect, it is expected that DoorDash will maintain its leadership position in a market where there will be only one other viable player, Uber Eats, in the long run. The firm’s network effect should also lower consumer and deliverer acquisition costs, resulting in further operating leverage and GAAP profitability in 2023.

Risk and Uncertainty:

DoorDash is also susceptible to blame for possible missteps in data utilization and/or lack of data privacy and security, which is also considered an ESG risk. In addition, as deliveries to consumers by DoorDash on behalf of merchants are made mainly by gig workers, the firm is likely to face continuing pressure from lawmakers to provide higher pay and more benefits, and to possibly categorize those contractors as employees, all of which is seen as another ESG risk. While voters in California sided with firms such as DoorDash and with gig workers in 2020 by approving Proposition 22, it remains uncertain what actions other voters, and other states, and federal lawmakers are likely to take. Whether the immediate change in consumer dining behavior that was observed in 2020, mainly driven by the COVID-19 pandemic, will last is also a risk. A return to the pre-pandemic normalcy could decelerate or completely stop DoorDash’s growth.

Bulls Say:

Consumer behavior will continue to shift away from in-restaurant dining as the variety of food and speed of delivery available at home increase. As demand for DoorDash services pushes higher, the firm should quickly reach profitability.
DoorDash will succeed in delivering other goods and services, strengthening its number-one position in the U.S.
More regulations such as minimum wages or more benefits may pass, but they will also create a barrier to entry and force out subscale players.

Company Description:

Founded in 2013 and headquartered in San Francisco, DoorDash is an online food order demand aggregator. Consumers can use its app to order food on-demand for pickup or delivery from merchants mainly in the U.S. The firm provides a marketplace for the merchants to create a presence online, market their offerings, and meet demand by making the offerings available for pickup or delivery. The firm provides similar service to businesses in addition to restaurants, such as grocery, retail, pet supplies, and flowers. At the end of 2020, DoorDash had over 450,000 merchants, 20 million consumers, and over 1 million dashers on its platform. In 2020, the firm generated $24.7 billion in gross order volume (up 207% year over year) and $2.9 billion in revenue (up 226%)

(Source: Morningstar)

DISCLAIMER for General Advice: (This document is for general advice only).

This document is provided by Laverne Securities Pty Ltd T/as Laverne Investing. Laverne Securities Pty Ltd, CAR 001269781 of Laverne Capital Pty Ltd AFSL No. 482937.

Although every attempt has been made to verify the accuracy of the information contained in the document, liability for any errors or omissions (except any statutory liability which cannot be excluded) is specifically excluded by Laverne and Banyan Tree, its associates, officers, directors, employees, and agents. Except for any liability which cannot be excluded, Laverne and Banyan Tree, its directors, employees and agents accept no liability or responsibility for any loss or damage of any kind, direct or indirect, arising out of the use of all or any part of this material. Recipients of this document agree in advance that Laverne and Banyan Tree are not liable to recipients in any matters whatsoever otherwise; recipients should disregard, destroy or delete this document. All information is correct at the time of publication. Laverne and Banyan Tree do not guarantee reliability and accuracy of the material contained in this document and are not liable for any unintentional errors in the document.

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Equity Residential Should Continue to Report High Revenue Growth While Inflation Remains Elevated

Post author By lvc-admin
Post date February 2, 2023
No Comments on Equity Residential Should Continue to Report High Revenue Growth While Inflation Remains Elevated

Business Strategy & Outlook:

Equity Residential has repositioned its portfolio over the past decade to focus on owning and operating high-quality multifamily buildings in urban, coastal markets with demographics that allow the company to maintain high occupancies and drive strong rent growth. The company has sold out of inland and southern markets and increased its operations in high-growth core markets: Los Angeles, San Diego, San Francisco, Washington, D.C., New York, Boston, and Seattle. These markets exhibit traits that create demand for apartments, like job growth, income growth, decreasing homeownership rates, high relative cost of single-family housing, and attractive urban centers that draw younger people. The company regularly recycles capital by selling non core assets or exiting markets and using the proceeds for its development pipeline or acquisitions with strong growth prospects, a strategy that has produced strong returns. While Equity Residential has repositioned its portfolio into markets with strong demand drivers, it is advised to be cautious on its long-term growth prospects, given that many markets have historically seen high supply growth. The urban, luxury end of the apartment market where Equity Residential traditionally operates has seen the highest amount of new supply, competing directly with the company’s portfolio. Additionally, the pandemic has caused many millennials to consider moves to the suburbs, either into suburban apartments or their own single-family homes, though demand for new urban apartments has remained resilient. Equity Residential has created significant shareholder value through development, though rising interest rates may cut into the expected return on new projects. However, high inflation has driven revenue significantly higher as apartment leases are generally only a year long, allowing Equity Residential to push rate growth that has matched inflation. While revenue growth is expected to decelerate as inflation growth is brought under control and also expect a period of higher than normal expense growth, the company’s funds from operations per share are already above pre pandemic levels and continued same-store growth is expected to push FFO even higher

Risk and Uncertainty:

Demand for multifamily assets in urban, coastal markets has benefited over the past decade from demographic trends such as a falling homeownership rate, the rising relative cost of single-family housing, and urban gentrification. Millennials have been driving many of these trends, and as the generation acquires enough capital to own single-family homes or if tastes change significantly, these trends could reverse and hurt demand for apartments. The company’s portfolio is also sensitive to any changes to the economies of its core markets. If job growth slows or industries experience significant layoffs, then demand for apartments falls. The Northern California and Seattle markets have seen significant job and income growth generated by the technology industry, which has created substantial apartment demand. A downturn in this industry would significantly affect the economies of these markets and affect the fundamentals for Equity Residential’s assets. Many of Equity Residential’s markets are seeing significant new supply. While the current level of supply is expected to be absorbed by existing demand growth and help moderate the market, increased new supply will pressure operations and asset values. Equity Residential has around $860 million in development project commitments scheduled for delivery over the next few years. The economics of these projects have marginal room for error and will depend heavily on market conditions at delivery meeting today’s expectations.

Bulls Say:

Equity Residential’s portfolio of high quality assets should see relatively consistent levels of demand long term from high-income earners and will likely see just a small hit to fundamentals during the current pandemic as most residents have not experienced job losses.
Equity Residential has a history of finding accretive development opportunities to bolster its growth prospects.
While current supply deliveries are near peak levels, rising construction costs and tighter lending standards should lead to lower supply growth.

Company Description:

Equity Residential owns a portfolio of 308 apartment communities with around 80,000 units and is developing five additional properties with 1,361 units. The company focuses on owning large, high-quality properties in the urban and suburban submarkets of Southern California, San Francisco, Washington, D.C., New York, Seattle, and Boston.

(Source: Morningstar)

DISCLAIMER for General Advice: (This document is for general advice only).

This document is provided by Laverne Securities Pty Ltd T/as Laverne Investing. Laverne Securities Pty Ltd, CAR 001269781 of Laverne Capital Pty Ltd AFSL No. 482937.

Although every attempt has been made to verify the accuracy of the information contained in the document, liability for any errors or omissions (except any statutory liability which cannot be excluded) is specifically excluded by Laverne and Banyan Tree, its associates, officers, directors, employees, and agents. Except for any liability which cannot be excluded, Laverne and Banyan Tree, its directors, employees and agents accept no liability or responsibility for any loss or damage of any kind, direct or indirect, arising out of the use of all or any part of this material. Recipients of this document agree in advance that Laverne and Banyan Tree are not liable to recipients in any matters whatsoever otherwise; recipients should disregard, destroy or delete this document. All information is correct at the time of publication. Laverne and Banyan Tree do not guarantee reliability and accuracy of the material contained in this document and are not liable for any unintentional errors in the document.

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Baxter Announces Renal Spinoff to Unlock Value in Discounted Shares

Post author By lvc-admin
Post date February 2, 2023
No Comments on Baxter Announces Renal Spinoff to Unlock Value in Discounted Shares

Business Strategy & Outlook:

Following the spinoff of Baxalta in mid-2015, Baxter’s new management team has focused on increasing efficiencies and innovating in medical products. That focus has resulted in much-improved profitability and cash flow generation since then. In the intermediate term, the company aims for mid-single-digit sales growth primarily through new product launches and for double-digit adjusted earnings per share and free cash flow growth compounded annually. Acquisitions, like the recent combination with Hill Rom (medical equipment like hospital beds with digital connection capabilities), could add to those prospects. Baxter’s renal and acute care technology supports patients with failing organs, most often kidneys. Baxter generates most of its revenue in these segments from at-home patients using its peritoneal dialysis, or PD, tools. However, it also sells hemodialysis products to dialysis clinics and continuous renal replacement therapy and other organ support equipment to intensive care units, which saw a boost in demand during the coronavirus pandemic. While some new product launches were delayed during the pandemic, this segment should continue to benefit from new hemo-and peritoneal-dialysis launches in the future. Additionally, increased demand for at-home dialysis tools should benefit Baxter in PD generally. Baxter also provides many injectable therapies. In pharmaceuticals, Baxter is pursuing an ambitious growth strategy to roughly double the number of molecules it sells through a variety of delivery options, including premixes. In advanced surgery, Baxter sells wound closure and bleeding control products. New products aim to help clinicians save time in the operating room. In medication delivery and nutrition, management has turned around these operations after recent hurricanes and regulatory concerns damaged Baxter’s reputation as a reliable supplier of these critical therapies. New product launches, including several infusion pumps, may boost growth in these segments in a post pandemic environment, too.

Risk and Uncertainty:

It is believed that Baxter shed its riskier assets through the Baxalta spinoff, leaving a well-diversified company that participates in markets with limited risk of significant disruption. However, some of Baxter’s product lines, particularly IV solutions, nutritional products, and generic injectables, have been commodified and face significant quality control issues that contribute to the firm’s environmental, social, and governance risks. If new competitors decide to make the substantial up-front and ongoing investments needed to participate in these markets, it is thought pricing pressures, which have been manageable through volume increases or mix benefits on differentiated delivery systems, may accelerate, especially in an increasingly cost conscious healthcare system—another one of Baxter’s key ESG-related risks. It is also believed that Baxter must innovate to maintain its competitive advantages, particularly in renal care, infusion pumps, acute therapy, and advanced surgery. If the company does not invest appropriately in these product sets, its peers may surpass Baxter’s technology enough to affect market share eventually. The Hill Rom acquisition has also put some pressure on Baxter’s ROICs and added leverage to its balance sheet, which highlights another ESG risk for Baxter: corporate governance-related risks surrounding acquisitions.

Bulls Say:

New management has revved up Baxter’s growth engine, primarily around evolutionary goals in all of the major business lines.
Emerging markets are a prime source of growth for many of Baxter’s products, especially its peritoneal dialysis and nutrition solutions.
The company continues to strive for even higher profitability, which should keep earnings growth above sales growth for the foreseeable future

Company Description:

Baxter offers a variety of medical instruments and supplies to caregivers. It enhanced its portfolio of hospital-focused offerings by acquiring Hill Rom in late 2021. Legacy Baxter offers tools to help patients with acute and chronic kidney failure. It also sells a variety of injectable therapies for use in care settings, such as IV pumps, administrative sets, and solutions; nutritional products; and surgical sealants and hemostatic agents. The company offers contract manufacturing services to pharmaceutical companies. The Hillrom transaction has added basic equipment, including hospital beds, to the portfolio, although about half of Hillrom’s 2021 revenue came from more digitally connected offerings like its smart beds and Voalte medical communications app.

(Source: Morningstar)

DISCLAIMER for General Advice: (This document is for general advice only).

This document is provided by Laverne Securities Pty Ltd T/as Laverne Investing. Laverne Securities Pty Ltd, CAR 001269781 of Laverne Capital Pty Ltd AFSL No. 482937.

Although every attempt has been made to verify the accuracy of the information contained in the document, liability for any errors or omissions (except any statutory liability which cannot be excluded) is specifically excluded by Laverne and Banyan Tree, its associates, officers, directors, employees, and agents. Except for any liability which cannot be excluded, Laverne and Banyan Tree, its directors, employees and agents accept no liability or responsibility for any loss or damage of any kind, direct or indirect, arising out of the use of all or any part of this material. Recipients of this document agree in advance that Laverne and Banyan Tree are not liable to recipients in any matters whatsoever otherwise; recipients should disregard, destroy or delete this document. All information is correct at the time of publication. Laverne and Banyan Tree do not guarantee reliability and accuracy of the material contained in this document and are not liable for any unintentional errors in the document.

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