EM Chat: ASX Reporting Season – Winners & Losers

Bryce: [00:01:28] Welcome to another episode of Equity Mates, a podcast where we help you learn to invest in 45 minutes or less. We break down the world of investing from beginning to dividend so that you can hopefully make some returns. My name is Bryce and as always, I'm joined by my equity buddy Ren. How's it going? [00:01:42][14.6]

Alec: [00:01:43] I'm very good. Bryce good to be back and discussing our favourite time of the year. The market's favourite time of the year. Earnings season. [00:01:51][7.7]

Bryce: [00:01:51] Earnings season. Yes. Your favourite time of [00:01:53][2.0]

Alec: [00:01:53] the year is it? It's up there. It's up the top three favourite times of the year outside. Yeah. Oh. What are the other two East has done well over the years. Oh Halloween and Christmas and then reporting season. So all of those for take take you take the top three. [00:02:13][19.9]

Bryce: [00:02:14] Well earnings season fits in the top three. Nice. Well yes. We are here to bring earnings season back home. Last week we spoke about the earnings that are going on and the reports that are coming out in the US spoke about the impact that covid has had on many of the businesses over there. Retail we spoke about big tech earnings season here in Australia has really ramped up. So we've had some pretty interesting results from some of the bigger companies over the last seven days or so. We've still got a lot to come, but we thought we'd touch on some of the main ones that have interested us both the good and the bad. But before we do a bit of housekeeping, as always, if you've just joined the show, welcome to Equity Mates investing podcast. If you're right at the beginning of your journey, then we suggest you go over and listen to our standalone twelve part series called Get Started Investing feed, a series that we think will give you the confidence. Actually, we guarantee that it'll give you the confidence to start your investing journey. So search that in your podcast plan. Now it's called Get Started Investing. And equally, we're dipping our toes into the water over on YouTube. So head over and check out our channel. We've got a few conversations over some BS about all things finance and stocks. So keep an eye on that Ren [00:03:26][71.6]

Alec: [00:03:26] wherever channel you are, we're going to try and be including Brice's Tik-tok Dancing and his Twitch gaming channel, where he loses games of FIFA while trying to educate the person he's playing against on discounted cash flow calculations. [00:03:42][15.5]

Bryce: [00:03:43] Exactly. I can't multitask and luckily [00:03:45][2.3]

Alec: [00:03:46] you just can't drive FIFA. [00:03:46][0.7]

Bryce: [00:03:48] This is true. Finally, you said some truth about the right. So earnings season, Aussie earning season, ASX. A lot of reports of, as I said, been coming through before we jump into it. Ren, what's your headlines? Key takeaways. [00:04:03][15.2]

Alec: [00:04:04] I might even just hijack that question and take a step further back. For those who didn't listen to our last episode on the US earnings season, I don't really know what we're talking about once every six months or sometimes every quarter, especially in the US. They report quarterly, but every six months in Australia, basically every publicly listed company has to tell the market how they've been going because we enjoy our summers at the end of the year in the Southern Hemisphere, a lot of companies report their full year results now. So halfway through the year, their financial year is 1st of July to the 30th of June. Yeah. And so around this time every year, most Australian companies are telling us their full year results, which gives us a wealth of information to go off. It's an important one that you will sometimes get caught out on. And I've definitely got caught out on when U.S. companies are reporting quarterly numbers and Australian companies are reporting full year numbers. So you just have to be careful about what period the companies are reporting on. But, yeah, today, most of the companies are going to talk about a full year F twenty first of July, twenty nineteen to 30th of June. Twenty twenty results. [00:05:20][75.6]

Bryce: [00:05:21] Yes. So sort of tail end of picking up the sort of start of the Covid period. But the first half results will probably be a better reflection of what's going on. Druken. [00:05:31][10.5]

Alec: [00:05:32] Yeah. When it Covid start end of February. [00:05:34][2.1]

Bryce: [00:05:35] Well I think it really ramped up. The market bottomed on March 23. So yeah, in March, I think it its peak. But I mean, look what's happening in Victoria and you know. Yeah. It's going to come. [00:05:45][10.4]

Alec: [00:05:46] That's true. I mean, yeah, you're right. But there's plenty of covid information in these in these numbers. So don't worry, this will be a Covid heavy conversation. If you feel like you're not getting enough. Not good in your day to day news. Rest assured it will get mentioned in this podcast call. [00:06:05][19.7]

Bryce: [00:06:06] So back to the question. Can you take away from you Ren. [00:06:09][3.3]

Alec: [00:06:10] Yes. Yeah. All right. So I guess from a high level, a lot of the reporting was as sort of expected, I guess, given the Covid situation, what we saw in terms of some industry shutting down, the oil price going neg. Of people not commuting to work, people panic buying. We saw a lot of those trends play out in real time and I think a lot of these earnings results reflect what we expected to see. Some businesses did very well during the Covid period and some businesses not so much. So for me, my first major takeaway was a lot of it really was as expected. And then I guess my second takeaway was a lot of businesses, especially consumer facing businesses, so better say selling things to everyday people rather than, you know, the business to business businesses. The consumer facing businesses have shown quite a lot of resilience and probably more resilience than I would have thought. We're going to get stuck into some Aussie retail stocks because you love retail. You are the retail king. And some of the numbers were surprisingly strong. And I think for me, it just shows how important job Kepa was and how that's really put a floor under consumer spending. And so I think my second big high level takeaway is watching job. Kepa is going to be really important and it may end up being the number one factor for flight. Twenty one results for some of the companies, depending on how long Covid loss and how long it takes until we can reopen the economy. But I think that policy response shouldn't be underestimated when we're looking at some of these companies and their results. So what about you? What about some key takeaways from the retail king himself? [00:08:03][113.5]

Bryce: [00:08:04] Well, I mean, it's interesting looking at the stocks that have performed well in the retail space. And to your point, Ren, you're saying consumer facing businesses have shown a lot of resilience, but it's consumer facing businesses with a very strong online presence and ability to deliver to customers through an online experience. So I think that would be a caveat to that comment. I also think in terms of a lot of industries have done what has been, as expected, a question, I guess, is that in line with their updated guidance that they sent through prior to, you know, covid hit and everyone came out with guidance updates because they've just obviously been smashed? Or is that what you're sort of referring to? [00:08:45][41.1]

Alec: [00:08:46] Look, guidance is important when earnings season comes around. Don't get me wrong, I don't really pay too much heed to that. I mean, if you're going to take a really long term focus and you're going to try and find really good businesses dating guidance or not beating guidance is less important than the underlying business performance. So I probably couldn't answer that question in terms of how many how many underperformed and how many resulted in line with that guidance. But I'm going to assume, given you asked me that question, you have an answer for that. So I'm going to defer to you on that one. [00:09:19][32.8]

Bryce: [00:09:19] I was just curious because in terms of a lot of businesses or industries meeting expectations, those expectations were readjusted by all the businesses very close to the reporting season. [00:09:33][13.4]

Alec: [00:09:33] So let me be clear what I'm talking about expectations. I just mean, like the ordinary thing, the expectations that I had and that ordinary people had watching covid, like we saw panic buying. We saw people no longer commuting. We saw the oil price go to zero. I'm not talking about how businesses were forecasting. I'm just saying, like what the ordinary people could have expected watching Covid. [00:09:56][22.3]

Bryce: [00:09:57] Yeah, nice. Well, my takeaway obviously falls in the retail space Ren. But something a bit different that I've noticed that's coming out of this and I've never seen before is many businesses are refraining from actually providing an FBI. Twenty one guidance. Now, you know, Macquarie won a couple of the retail businesses as well that we'll dive into, given that it's so sort of topsy turvy out there at the moment and it's hard to predict what is going on. A lot of the businesses are holding back from suggesting what their revenues are going to be for the FBI. Twenty one period at this stage, I don't know where it falls in terms of obligations as a public company to actually update the market on guidances. But for the moment, some of them are withholding, which I've never seen before. So it's an interesting development, given that a lot of people often look to the guidance as an indicator of sort of things to come over the next 12 months. [00:10:44][47.2]

Alec: [00:10:44] Now, I could be wrong, though. I'm pretty sure the rule is if you provide guidance and then there are material changes, you have to update that guidance. You can't. Yes. So so you have to there's like continuous disclosure obligations. On the other hand, you can choose not to provide guidance in the first place. And I don't think there's any obligation to provide guidance. So I think that's perfectly fine. Obviously, investors and analysts want guidance because it helps them with their models. It helps them understand where the company is going. It helps them value companies. There's a book that I read a while ago. It's called The Outsiders, and it's about eight of the best capital allocators as CIOs. Most of them were American from memory, but one thing that none of them did or the majority of them just refused to provide guidance because they just thought it was an unnecessary thing to do. You know, their results would speak for themselves. They wanted to focus purely on capital allocation. And, you know, if investors didn't want to invest in them because they didn't provide guidance for, then so be it. So there's definitely no obligation to provide guidance. I mean, it makes complete sense that if you have no idea how long Covid is going to last, why would you give yourself an unnecessary headache? [00:11:59][74.8]

Bryce: [00:12:00] Yeah, well, when in Equity Mates goes public, we certainly won't be providing God knows for sure. [00:12:04][4.5]

Alec: [00:12:05] We'll be the ninth business profiled in The Outsiders 2021 edition. [00:12:11][5.7]

Bryce: [00:12:13] So let's get into some of the good Ren, you know, very much dominated by retail, which would be surprising if you'd told us that at the start of Covid that retail would be some of the companies that have performed very well. But do you want to kick things off with some of the ones that you've noticed as being some standout perform well, performance going well? Yeah, stand up. [00:12:36][23.6]

Alec: [00:12:37] Yes. Well, look, we're recording on Tuesday, the 18th of August, and I'm going to start with one that's very close to home for me, Kohl's reported this morning. And I want to start with a quiet. Here we go very far. I just love it here. I just want to get your reaction to this quote. So here it is from the IFR, not from me. And I quote, [00:13:00][23.4]

Bryce: [00:13:01] I'll bet you write this up for [00:13:02][1.0]

Alec: [00:13:03] sure. Chief executive Steven Kane is well on the way to making calls the digital leader in consumer staples with the integration of automated world lighting, distribution and fulfilment centres. [00:13:15][12.3]

Bryce: [00:13:16] What does the iPhone? [00:13:17][0.5]

Alec: [00:13:18] You know, not with the IFR, but obviously I have an allegiance to colours. You have an allegiance to Woollies, so I'll just rip through some of those numbers because they are quite impressive, I think impartially so. Fifty one quarters of same store sales growth, which is pretty unprecedented. Fifty one quarters in a row of growing same store sales, which is probably the most important metric when you're looking at retailers. And then the Covid period obviously saw big growth. So supermarkets, same store sales up seven point one percent, liquor stores, same store sales up twenty point two percent, revenue up about seven percent to thirty seven billion dollars for the year. And profit just shy of a billion dollars, up seventy seven point one percent. So things are obviously good in the supermarket space when customers are literally stripping the shelves bare. And I would expect Woollies, they're reporting in a couple of weeks. The twenty seventh of August, I think is next week. I would expect them to have similar numbers, maybe slightly worse, because they're just slightly worse run. [00:14:26][67.1]

Bryce: [00:14:27] I would say they're going to be significantly better. Watch this space. We'll report on that next. [00:14:31][4.5]

Alec: [00:14:31] All right. Do want to put a B on the show. [00:14:33][1.6]

Bryce: [00:14:34] I would have been on same store sales growth. I'd love to look at online as well, because I think we would have pumped you in. [00:14:39][5.2]

Alec: [00:14:39] All right. We put a beer on supermarket, same store sales growth [00:14:42][2.8]

Bryce: [00:14:43] and online to be [00:14:44][1.1]

Alec: [00:14:45] all right to find [00:14:45][0.9]

Bryce: [00:14:47] anything else that has caught your attention. [00:14:48][1.3]

Alec: [00:14:49] Well, let's go one for one here, I reckon. [00:14:50][1.6]

Bryce: [00:14:51] OK, we'll all start with Kagen, if you don't mind, because I actually tuned in to Nir Rosen Kokorin giving his investor presentation yesterday. Thirty minutes, which if you find the link to you can see most of these companies give their press I but nothing majorly interesting, but. [00:15:09][18.0]

Alec: [00:15:09] Oh jeez, that's a bit wrong. [00:15:11][1.1]

Bryce: [00:15:12] Well, I mean, I was expecting him to come on screen, but it was just a prerecording of him going through a slideshow. When I say interesting, I mean it would have been better to actually see. [00:15:20][8.3]

Alec: [00:15:21] Also, he wasn't asked questions by analysts. [00:15:22][1.7]

Bryce: [00:15:23] No, it was just like an investor presentation where he just spoke through the summary of the results in PowerPoint. [00:15:30][6.7]

Alec: [00:15:30] Yeah, right. OK, yeah. Most companies or most big companies will also do an earnings call with analysts where analysts can ask questions. [00:15:39][8.3]

Bryce: [00:15:40] Still haven't found how to actually get involved in them. But if anyone knows, please let us know. [00:15:44][4.6]

Alec: [00:15:45] Yeah, yeah, yeah. [00:15:46][0.7]

Bryce: [00:15:46] Well, I think listen in. [00:15:47][0.9]

Alec: [00:15:47] I think they prioritised the Goldman Sachs and Morgan Stanley's of the world, but one day Equity Mates will have a team of analysts underneath us. Yeah. Until that you can just dial in and listen to the investment banks. Analysts ask questions, which I find really interesting, because they've obviously done the work. They know the business as well and in many cases can ask some pretty probing questions. I don't listen to many, but yeah, they're definitely good to listen to. [00:16:13][26.6]

Bryce: [00:16:14] So I Cogan's been one of those businesses that consistently chips away and performs well a year on year. They continuously add vertically to their business. They're in so many different streams of. The moment insurance, mobile Internet, obviously, they've got the they've just acquired a whole bunch of furniture companies, so they've got a fair bit of cash on the balance sheet. And Roslyn was indicating that that's somewhat going to be their strategy going forward. But revenue up thirteen point five percent, active customers up thirty five point seven percent. He was saying that they got about two point three million active customers a month, which in the grand scheme of things for online retail isn't huge. I think they only make up about two percent. [00:16:56][42.5]

Alec: [00:16:57] Sorry, two point three million active customers. Yeah. In Australia. Yeah. You're saying that's not huge? [00:17:02][5.0]

Bryce: [00:17:03] Yeah, it's well, I mean, if you're if you're looking at Woolworths or Coles, for example, or, you know, Amazon's or two point [00:17:09][6.3]

Alec: [00:17:09] three million customers, the population of Australia is like twenty five million. [00:17:13][3.4]

Bryce: [00:17:14] Yeah. He was admitting that it's not large. He's like we have we're just scraping the surface here. He wasn't harping on about that. [00:17:20][6.4]

Alec: [00:17:21] So anyway, you are the retail king. I'll I'll defer to you [00:17:24][3.0]

Bryce: [00:17:25] profit up fifty five percent. So their share price is absolutely gone bonkers during the Covid period, trading up in the 20s I think now. So look, just one of those companies to keep an eye on, pretty aggressive growth plans. [00:17:37][12.1]

Alec: [00:17:38] It's blown past a two billion dollar valuation. [00:17:40][2.4]

Bryce: [00:17:41] Yeah, nice Ren. What do you got? [00:17:43][1.9]

Alec: [00:17:43] Let's close out retail with two companies that you have picked in our mastermind series, which we are going to bring back. Julie is just a little busy with the reporting season at the moment. Yes. So in keeping with the theme of today's episode of you picking good retail stocks, JB Hi-Fi, the electronics retailer, revenue up 11 percent, profit up twenty one percent, online sales up forty nine percent, beat earnings expectations. That was one that you picked recently in a mastermind episode and another retailer that you have enjoyed watching after picking baby bunting, the baby retailer revenue up 10 percent. Same store sales up four point nine percent. Net profit was down fourteen percent, which actually maybe now's a good time to touch on. I don't know if you've noticed this as well, but a lot of companies are reporting two sets of twenty numbers. They're reporting if twenty and then twenty, excluding the new accounting standard, which is you say, as I say, six, eight. Have you have you been noticing that? [00:18:54][70.3]

Bryce: [00:18:54] I haven't. But I recall Andrew Brown speaking about this in the impact that it's going to be. [00:18:59][5.3]

Alec: [00:19:00] Yeah. So I'm not 100 percent sure of baby buntings profit would have been up or down without this accounting standard, but I Googled it after saying it a few times. And basically this accounting standard requires companies to recognise losses on their balance sheet and that then has a flow on effect to their profitability numbers and stuff like that. So if you're flicking through companies earnings results and you saying that code is sixteen, that's why. So, yeah, you know, companies that have a lot of leases, i.e. physical retailers, will see some movement from that new accounting standard. But yet back to the original point. Baby bunting profit was down, but revenue and sales were up and JB Hi-Fi was flying again this year. [00:19:46][46.7]

Bryce: [00:19:47] Yeah, I just can't believe how JB continues again to just do so well, time after time. It's just a very well-run business. Nice. So, I mean, I'll let you also do Magellan Ren. It's your baby. You love this company, [00:20:01][13.9]

Alec: [00:20:02] although I think you're letting me pump Magellan up because you're getting ready to knock it down. [00:20:09][6.8]

Bryce: [00:20:09] So no, not really. Knock it down. I like [00:20:13][3.2]

Alec: [00:20:13] it. So yeah, Magellan had another good year. So Magellan, for people who aren't familiar, is Magellan Financial Group, which is a fund manager. The funds under management was up 12 percent. Revenue was up twelve point four percent. Profit was up five percent. Dividend was up sixteen percent. But really, the thing that strikes me about the business is they published their last five years of numbers in their report to the market. And it's just consistent growth. It's every year it's growing. Obviously, there are some questions about how can they sustain the growth in the funds under management, which leads to some of the new products that they're introducing. They announced three ETF style products with a lower cost and then they're also working on a retirement income products. There's some questions about I know actually you've specifically when we've spoken offline, you've specifically asked that question, will these lower cost ATFP products cannibalise their higher fee of market funds? Will people switch to a lower cost option? And so funds under management may increase, but their revenue from fees will actually decrease. So I'm. I'm sure they've thought about that, Hamish Douglass, the chairman and chief investment officer at Magellan, came up pretty strongly and said if people think that, then they don't understand our fee structure or something like that. So they've obviously thought about it. It'll be interesting to see how it all plays out. But Magellan, at least for 20, just continues flying. [00:21:46][93.1]

Bryce: [00:23:41] So just to close out the good, we had JB Hi-Fi, [00:23:43][2.6]

Alec: [00:23:44] come on, so you're not going to say what you told me before we started recording about Magellan [00:23:48][4.2]

Bryce: [00:23:49] Magellan. Yeah, I'll I'll throw that in there. I was just recapping the good companies that we're interested in. Obviously, there's a bunch of others that have reported out there. You can head to F and Irana dot com if you'd like to get a bit more of an understanding of who has reported and when you use Equity Mates for a four week free trial for that when you sign up. But yeah, Ren just watching the call over on NBC and they were discussing that as a company. Magellan is actually trading quite high on an earnings basis, 26 times earnings, which apparently for a fund manager is quite a premium price to pay. And they also raised similar concerns to you that you just spoke about in terms of their ability to continue to increase funds under management and also change in their structure. But at the end of the day, they made it very clear that they are one of, if not the premium fund manager in Australia at them. [00:24:43][54.4]

Alec: [00:24:44] Yeah, that's you overpay for quality. That's been the story of the market. [00:24:47][3.6]

Bryce: [00:24:48] Exactly. Nice, Reg. So that leads us to the bad. [00:24:52][3.4]

Alec: [00:24:52] Yeah. [00:24:52][0.0]

Bryce: [00:24:53] Who has who's absolutely sunk. [00:24:54][1.7]

Alec: [00:24:55] Well, property. I'll kick it off. One company that sunk to use your term but then has continued sinking is Treasury Wine Estates, who for years were a market darling. And you know that the shine has definitely not rubbed off like they've still got lots of potential. But they had a bad year. Their revenue was down seven percent, their profit was down 36 percent. But then this morning they really got whacked. And it looks like they're going to get caught up in the growing trade tensions between Australia and China. So basically, China is investigating Australia for anti-dumping. Yeah. Where basically China accusing Australia of lowering the cost of their wine or maybe broader than wine, but specifically for Treasury, that wine and then dumping it into the Chinese market to undercut local producers. So the Treasury Wine Estates share price is down 14 percent as of the time of recording. And it will be interesting to see how it all plays out. I'm pretty sure the company entered a trading halt after it fell this morning. [00:26:03][67.9]

Bryce: [00:26:04] Yeah, it was quite significant and worrying enough that, yeah, they they put themselves into a trading halt or maybe the ASX did, given what's now going on over in China. So, you know, there's no guarantee that they are guilty of dumping. But it's something that your point is the Chinese are on the search for this well, you know, trade sort of trade war at the moment. So if you're a shareholder of Treasury wines, probably being a pretty uncomfortable ride. But you also notice something interesting with the way that they report Ren. [00:26:35][31.3]

Alec: [00:26:35] Sorry, I'm just thinking about the whole trade war thing. And before we get into how they report, I just think that if trade tensions continue, if, you know, Trump gets re-elected and he keeps increasing tensions with China, keeps putting tariffs back on things like this will happen more often, like the more politicised trade becomes, the more it becomes a geopolitical lever to pull Treasury wine estates won't be the last company that gets caught up in this, regardless of how much merit there is to this claim. So I think if trade tensions continue to build, I know we haven't really seen the effect of them so far, but we will eventually also apologise if people can hear birds and moaning in the background from me. That's the risk of not recording under a blanket when I'm at home. [00:27:22][46.2]

Bryce: [00:27:24] All right. So, yes, you picked up something interesting with Treasury. [00:27:26][2.1]

Alec: [00:27:26] Yeah, OK, yeah. So normally we say companies report revenue Ibut earnings before interest in taxes, EBITDA earnings before interest, taxes, depreciation and amortisation and then net profit. They're generally the four metrics that you say a lot of companies report. But Treasury Wine Estates had a different one rather than a bit and a bit da they had a bit with an S on the end and a bit with an S on the end as well, and I've never come across that term before. And so I Googled it. And then there was another acronym, S.J iRace Sagara. So then I had to Google that. So that acronym stands for self generating and regenerating assets wasn't something I'd come across. Is it a term you've seen before? [00:28:14][48.2]

Bryce: [00:28:15] No, not at all. [00:28:16][0.8]

Alec: [00:28:16] So it turns out that it's a complicated way of saying the vineyards basically totally unnecessary. [00:28:23][6.8]

Bryce: [00:28:24] But anyway. All right, so moving on, Ren a couple of other companies that have been hit for good reason. Well, obvious reasons. Transurban being one. They're one of the major owners of toll roads here in Australia. And I think they have a couple overseas, but average daily traffic in Australia. He's been down eight point six per cent, which obviously severely impacts the revenue that they can make from toll roads. So their revenues down thirteen point two percent as well. Their profit is down one hundred and ninety percent, giving them a net loss of 153 million bucks. So Transurban has been one of always been one of those sort of bond stocks where people buy into them, given the yield on the dividend that they pay out. And it's always been a pretty consistent stock, but some pretty tough times for Transurban at the moment. [00:29:08][44.7]

Alec: [00:29:09] Yeah, yeah. To the earlier point around, you know, things that we expected to happen did happen. This is one where there's less commuting and and this is a result. This is just going to be a win Covid. And what happens and I guess if a whole bunch of companies in Bryce working from home and average daily traffic stays lower than what it was pré Covid, then that's going to hurt Transurban for the long term. [00:29:33][23.8]

Bryce: [00:29:33] Yeah. So Ren some pretty phenomenal numbers coming from Woodside. [00:29:36][2.7]

Alec: [00:29:37] Yes. Yes. [00:29:37][0.7]

Bryce: [00:29:38] What's the deal as that local Woodside reporter anyway. Continue. [00:29:45][6.8]

Alec: [00:29:46] So Woodside is Australia's largest oil and gas producer. So I'm pretty sure that the largest but one of Australia's largest oil and gas producers, I should say, just to be safe. And obviously the oil price fell massively during Covid. The West Texas Intermediate, which is the US benchmark oil price, went negative for the first time in history just because there was such a collapse in demand for oil and nowhere else to store it, that they were literally paying people to take it from them. And that then had reverberations around the world. So Woodside f y 20, their revenue was down 16 percent, their free cash flow was down 70 percent and their profit was down over a thousand percent, meaning that they made a loss of about four billion dollars. When we're talking about companies that were hurt by covid, Woodside is high up the list with probably a lot of global oil companies as well. [00:30:47][60.7]

Bryce: [00:30:47] Yeah, I mean, it's been absolutely picked up and dumped by Covid in a big way. So, yeah, a lot of work to be done now. Ren again, property, another one that we were interested to see how it panned out. We've spoken a bit about real estate investment trusts and the impact that Covid is going to have on trusts that, you know, on things like shopping centres and office blocks and those sorts of property assets that will be impacted by not as many people going to them. So we had Shopping Centres Australasia report and there's some pretty interesting numbers coming out of their supermarkets. Sales up five percent, discount department stores up seven, speciality retail down one. Interestingly, they collected rent from 77 per cent of tenants during Covid, which is a lot higher than I thought it would be. Perhaps that is the result of the likes of Job Kaper and some government support that's out there and will be interesting to see how that impacts this figure going forward. But I think the more importantly than net profit is down 22 percent. So, yeah, pretty interesting results. [00:31:54][66.9]

Alec: [00:31:55] Yeah, I think with all these property players, really, it depends on what kind of property we're talking about. There's been a lot of interest in the Equity Mates community around what will happen to the property market. And I think the fact of the matter is it just depends on what we're talking about. So Shopping Centres Australasia owns, you know, basically rent space to a whole bunch of different types of retailers. And some have done incredibly well. Those that are selling essentials like supermarkets and, you know, those that were able to stay open and trade and probably ones that particularly sold a lot of homeowners and home focussed things like discount department stores. I imagine Bunnings, when they report, will probably do pretty well as well, given people had a lot of time at home and that was probably a lot of day Iwai projects to be done. So I think that sector of the shopping centre landscape did quite well, but then speciality retailers that were forced to close or, you know, premium offerings, they struggled. So I think that it's probably just too broad a category to talk about property. And I mean, similarly, we saw results from GPT, which manage a lot of office space officers, obviously not occupied as much. A lot of businesses wouldn't have been paying rent or wouldn't be paying full rent. Their revenue was down almost 10 percent and their profit was down two hundred forty seven percent. They made a loss for the year, but then there were others that did quite well. Chart a whole has a real estate investment trust that's focussed on long term leases with quality tenants. So they focus on the likes of Coles and Woollies or government tenants and stuff like that. They have a lot of industrial property and they blew the lights out. This year. Their revenue was up forty eight percent, net profit was up seventy two percent. This particular rate, not shithole as a whole. So it goes to show that depending on who the tenant is, how they are affected by covid, what the type of property was, how that affected valuations, it was a real mixed bag for property. So hopefully you held a rate that that had a lot of warehouses and a lot of offices in it. [00:33:55][120.1]

Bryce: [00:33:55] Yeah. So that's some of the bad as I said, no major surprises there. You can certainly understand why these companies are reporting other losses or significant decline in revenue given the impact that Covid has had on their businesses. So Ren, I thought we'd finished the episode with a pretty interesting quote that I heard from a CEO when he was trying to explain what their approach is to the next 12 months. I'll read it out to you. And I mean, you will be forgiven for thinking that I am talking about Justin Langer at a press conference regarding the Australian cricket team, keeping in mind this is what a CEO of Altium Altium, one of the market darlings on the ASX tech stock, their CEO came out to say, for us to win, we need to take 20 wickets. No matter how many runs we make, we won't be able to win the Test match unless we take 20 wickets. And this means that we have to be prepared to pitch the ball up and occasionally drop it short. We might give a few runs away here and there, but we're not going to win by playing defensively. So I mean, as an investor in Aldi and you say comes out saying something like that, what you do with that is entirely up to you. But I think it's interesting that he's used such a heavy cricket analogy. [00:35:12][76.2]

Alec: [00:35:13] I'm going to say is that you start the episode by saying Russ Kogan was boring on his investor presentation and now the LTM CEO tries to, you know, add a bit of colour into his presentation and you similarly criticise them. I think you can't win with you [00:35:28][15.9]

Bryce: [00:35:29] own a nice mesh between the two. This is the this is the far extreme of wrasslin. Anyway, I thought it was a pretty interesting way to finish the episode. [00:35:37][8.3]

Alec: [00:35:37] Yeah. So what do you take from that? That they're going to take 20 wickets? They are not going to play defensively. So what they're going to keep being aggressive during Covid [00:35:44][7.0]

Bryce: [00:35:45] take some risks. But he also keeps talking about line and length and more cricket analogies from the same article that I read. So ability to take risks, I think where necessary is what I'm sort of taking out from it. [00:35:56][11.5]

Alec: [00:35:57] Well, let's extend the analogy. You're not going to take 20 wickets just with one stock. You need a bit of variety. You need Glenn McGrath. You need to you need to Shane Warne. And that's why you need to be diversified, because to take 20 wicket, you need multiple bowlers. So I could say, is that a lead [00:36:14][16.8]

Bryce: [00:36:14] into our next episode? [00:36:15][0.8]

Alec: [00:36:16] Yeah, well, that is a good Segway because we're going to do another episode on our hypothetical portfolio next week if people want to track it online. Equity Mates dot com portfolio. We're saving all the episodes there. We're including our write ups on companies as we do them. And you can see how the portfolio is going. At this stage. We've just got the core portfolio and next episode we get stock into the satellite portfolio, the individual stocks [00:36:42][26.0]

Bryce: [00:36:43] where the magic really starts to happen. So looking forward to that. As I said at the start of the show. Join us on YouTube, listen to Get Started Investing feed if you haven't already and make sure you're following us across all of the social channels to keep up to date with everything that's going on in the Equity Mates community on Ren. Well, we'll leave it there. And looking forward to chatting next week. [00:37:02][19.7]

Alec: [00:37:03] Sounds good. [00:37:03][0.4]

Speaker 4: [00:37:04] Thanks for listening to Equity Mates investing podcast production of Equity Mates Media. Please remember that everything here in Equity Mates investment podcast was general advice. Only the content has been prepared without knowing the personal objectives, specific financial circumstances or goals. The host of Equity Mates investment podcast may maintain positions in the companies discussed before considering any investment. Please read the product disclosure statement and consider speaking to a licenced financial professional. [00:37:04][0.0]

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