More than the Amazon of South America – Mercado Libre | Summer Series

Bryce: [00:00:22] Welcome to the Equity Mates Summer Series. Proudly brought to you by Sharesies over 12 episodes where diving into some of the most exciting, interesting and well-known companies from Australia and the US. Each episode we're also joined by an expert to help us unpack the key metrics, the bull case and the bear case for each company. My name is Bryce, and as always, I'm joined by my equity buddy, Ren. 

Alec: [00:00:43] How are you? I'm very good, Bryce. I'm excited for this episode. This is a company that I don't know. I've had my eyes on for a while. Haven't bought it.

Bryce: [00:00:52] But now I thought you had. 

Alec: [00:00:55] I don't. Yeah, yeah, yeah. 

Bryce: [00:00:57] You have had this on your radar for a long time, so I'm also excited to jump into this. Today we're diving into Mercadolibre, and our expert is David Halpert, founder, portfolio manager and chief investment officer at Prince Street Capital, a specialist emerging and frontier market asset manager based in New York and Singapore. And that will become relevant once we start unpacking Mercadolibre. But the Equity Mates summer series is proudly supported by Sharesies, and we love Sharesies. These for a couple of reasons, but primarily because it's an easy and approachable platform, especially with their auto invest feature where you can truly execute dollar cost averaging. And in an environment like we are at the moment, DCA is certainly a strategy that you should be thinking about. And so DCA is the way you get access to Australian, US and New Zealand shares. All the markets are available, you can pick an order, the amount you want to regularly invest and let auto investing do the rest. How good you can use the code GROW when you sign up to the Sharesies platform for $10 into your account. Ready to invest, Taison says applause and download the Sharesies app or visit Sharesies.com.au to learn more. Thank you Sharesies for the support. 

Alec: [00:02:07] We're in. A real rhyming mood today. DCA is the way auto invest and let it do the rest. Mercadolibre.

Bryce: [00:02:19] Today is the day. While we are licensed we are not aware of your personal circumstances. All information on the show is for education, entertainment purposes only. Any advice is general advice only. But Ren in one sentence, what does Mercado liberate do? 

Alec: [00:02:38] It's the most popular e-commerce platform in South America. It's often brackets, not not full stop brackets.

Bryce: [00:02:45] Okay.

Alec: [00:02:46] Often called the Amazon of South America. 

Bryce: [00:02:49] Right? Yeah, The Amazon of South America. 

Alec: [00:02:52] Which I have, which I have a little bit of a cry for it because I actually think it's more like the eBay of South America. 

Bryce: [00:02:59] Because of the functionality of. 

Alec: [00:03:01] It, because it's more of a marketplace. Now, obviously, eBay has gone more into first party sellers and Amazon has gone more into third party sellers. Yeah, but if you think about like when they were started, the difference between Amazon and eBay, Amazon was an online retailer. It was an online version of Wal Mart or Woollies or, you know, it in-source things into its warehouse and then it sold them, whereas eBay was a platform that connected buyers and sellers. I think Mercado Labour, at least in its original formation when it was founded in 99, was more eBay than Amazon. 

Bryce: [00:03:35] Yes. Okay.

Alec: [00:03:36] Yes. 

Bryce: [00:03:36] Interesting. Well, let's unpack it. So history. The company was founded in 1999 by a guy called Marcos Galperin. Pronunciation unsure, but that's the best we can do.

Alec: [00:03:49] Argentina's richest man.

Bryce: [00:03:50] Argentina's richest man. 

Alec: [00:03:52] Now. Yeah, yeah, yeah. 

Bryce: [00:03:55] He was attending Stanford at the time and got funding from H.M. Capital Partners. Partners, Jp morgan Partners, Goldman Sachs J Capital and Santander Group. 

Alec: [00:04:05] It is a story of being in the right place at the right time, being surrounded by the right people, being at Stanford. For those who are unfamiliar with where Stanford is, it's basically San Francisco in 1999, peak of the tech boom. Yeah, that's where you want to be. And he clearly saw models that were getting funding at the time, you know, Amazon and eBay and stuff, but they were some of the hottest companies in the nineties, the start-ups in the nineties. And he said, Why can't I do this in South America? And he did it. 

Bryce: [00:04:36] And he's done this. 

Alec: [00:04:38] And Jp Morgan Goldman Sachs J Capital, which was big Friday. So Santander Group, H.M. Capital Partners, not really familiar with them, but still they all. Pitched in. 

Bryce: [00:04:49] Pretty well. He did it pretty well. So so that was back in 1999. In 2001, eBay came in and purchased 19.5% of the company really helping them on their expansion story. And then eBay sold their stake in 2016, what, 15 years later? Yeah. 

Alec: [00:05:08] And we don't have the return. But I reckon they eBay did better on Mercado Labour than McDonald's did on Chipotle. 

Bryce: [00:05:20] Be both of. Which it feels like they've got. They've gotten out a little bit. aIf we too early. 

Alec: [00:05:24] If we release this episode before the Chipotle I want. That's a little taste for surgery. 

Bryce: [00:05:30] It listed on the Nasdaq in 2007. The ticker is MELI. So you can you can buy it over on any broker particularly Sharesies if it's access to the US market and they are the first Latin American tech company to be listed on the Nasdaq. Yeah.

Alec: [00:05:44] By 2016 it had 174 million users in Latin America. And it has just been the story of expanding into more countries and really more recently expanding its offerings around its core marketplace. So its offer in 2019, it opened its first distribution centres in Argentina, Brazil and Mexico. In 2020, it opened new distribution centres in Chile and Colombia. There was a deck and we didn't include some of the numbers, but about just the uplift during COVID and you can see it on their investor Relations website. It was like ten weeks into Covid early 2020, and they were just like, We're shooting the lights out here. 

Bryce: [00:06:25] Like, had they prepared for it? 

Alec: [00:06:29] Was anyone prepared for COVID? 

Bryce: [00:06:30] No.

Alec: [00:06:31] Well, there you go. But the reason I didn't include a bunch of that stuff in there, it's because it feels like what we've learned this year is that a lot of those COVID gains, yeah, people are regressing to like their pre-COVID states. Yeah, they're not keeping Peloton. They're going back to the gym, they're getting off Zoom calls and slowly going back to the office and they're leaving online shopping and going back in the store. Sort of.

Bryce: [00:06:56] Sort of.

Alec: [00:06:56] Yeah. 

Bryce: [00:06:57] Yes. Well, fair point. So when you said at the top it's the Amazon or eBay of South America and they are in eight countries in alphabetical order, Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Mexico, Spain, Ecuador, Guatemala, Honduras, Peru, Panama, Uruguay, and Venezuela. They're everywhere. 

Alec: [00:07:18] Yeah, mainly in one, one part of the world. The South America. Yeah, but Spain. Obviously not in South America. 

Bryce: [00:07:23] That's true. That's true. But not a insignificant part of the world. Main markets, Argentina, Brazil and Mexico, but pretty massive population. 

Alec: [00:07:31] Yeah. So Mercado's report, Argentina, Brazil, Mexico and other. So that's how important those three markets off of them. so Mercado I was probably butchering the pronunciation throughout this episode. For Key business units talk me through.

Bryce: [00:07:47] Mercadolibre is there is the first business stream which is their marketplace yeah so it's similar to eBay, Amazon, the e-commerce platform, Mercado in Spanish and video and video. It's a DE logistics business. So they've opened distribution centres. They've shipped 276 million items in Q3. Not bad. Then they've got the Mercado Pago payo their payments platform and then Mercado credito their credit line. 

Alec: [00:08:18] They offer yeah. Credit to small business and yeah so they're there for K business lines. Yeah. And you can sort of say they're building an ecosystem for e-commerce retail. They have the, the, the e-commerce marketplace where you buy and sell, they have a logistics business to fulfil that, They have a payments platform to process the payments. And I have a credit line business to help. Know what I think more to help retailers. So you can sort of see how they're trying to own the ecosystem. They're trying to be Amazon and eBay, but they're also trying to be like Shopify and Square for South America. And they're trying to just own that ecosystem and they've got like a start up fund the way that if people use the Mercadolibre API, they can get funding from Mercado and stuff like that so that they're really trying to build out and own that ecosystem. They've got two other smaller business units, Mercado Publicada, which is their advertising business, similar to Amazon. That search box is incredibly valuable and being the first result on Amazon.com is incredibly valuable. Being the first result on Mercado is Marketplace is incredibly valuable as well. Then they've also got Mercado shops, which are tools designed to allow small and medium companies to open virtual stores on their existing websites. So when you think Shopify they're Like rather than Red Bull listing Red Bull on Amazon, they sell Red Bull stuff through their own website with a Shopify backend. How is that Mercado shop? 

Bryce: [00:09:53] Yeah it's why they say that there's four business units plus two others.

Alec: [00:09:57] Well, so those are two other business units. But when I was reading their Q3 report, they split out those four main business units. I don't really worry about the other two. 

Bryce: [00:10:07] Yeah, not sizable enough yet. 

Alec: [00:10:09] Yeah, that was my interpretation of what their main business units are. Yeah. 

Bryce: [00:10:13] Yeah. So where is MercadoLibre, they say. It's the future and it's in Latin America. Large population Internet penetration is only increasing. I mean, it's a story of just expansion, isn't it? Yeah. [00:10:28][15.5]

Alec: [00:10:29] So 600 more than 650 million people in Latin America is a big market, one of the fastest growing Internet penetration rates in the world. I would imagine South East Asia pips it at the post.

Bryce: [00:10:41] Yeah, it'd be close.

Alec: [00:10:42] Yeah. So we found numbers from 2019, but e-commerce penetration in 2019. So you got remember this is pre-COVID. Yeah. So these are jumped up but Argentina 7.6%. Brazil 6.6%. Chile 5.6%. Ecuador 9.9%. Peru 3.7%. So you can say they're all in the single digits still, at least they were in 2019. 

Bryce: [00:11:06] So what you're saying is plenty of room? 

Alec: [00:11:08] Well, that's right. 

Bryce: [00:11:12] Yeah. So the thesis is that the more people come online, more people start using the platform. 

Alec: [00:11:17] Yeah, yeah, yeah. We want to be dominant in an emerging market and.

Bryce: [00:11:22] So in Q3, merchandise volume grew 32% year on year. And look, we hate to say that you love a super app. 

Alec: [00:11:31] I do. I love to drive. 

Bryce: [00:11:32] Us. Is that where this is going? 

Alec: [00:11:36] Maybe. 

Bryce: [00:11:36] We've got payments, we've got e-commerce we've got. 

Alec: [00:11:38] If you read it we've got David Halpert coming on so yeah he might say the word there So they've got the same site. I have a lot of the building blocks. Mm hmm. The other big potential one that is spoken about in South America is rapid. Yeah. The food delivery platform also got a payment spine, an app used by hundreds of millions of people. So, you know, maybe. But it's just as likely in all of these situations that there's no super app developed like Australia has developed or America has developed all. Yeah, that no app can dominate in that same way. Yeah, but if you were going to, you would call up Sportsbet and ask for them to make a market on the first South American Super app. Mercado would have been short on it. Equity Mates app launch in 2024 would be long. 

Bryce: [00:12:35] Now there was a slide that grabbed our attention and grabbed our attention in their quarterly report, and it was titled What You Can't Miss. Yeah, a real key call out this slide you made. Yeah. 

Alec: [00:12:46] And it was just like, all of their best things. Yeah. For the quarter. And I was like, why don't more businesses just first? 

Bryce: [00:12:53] This is it. You don't need to read past this slide. It's just a good reminder as well. If you are listening along at home that the annual reports that these companies put out on their website Investor Relations is a great resource to find all this information as well. You don't need to do reams and reams of research to get some of the high level stuff that's going on. But then what are the key numbers?

Alec: [00:13:12] Well, I think the key takeaway for me was just growth. Like, this is a fast growing business that the top line, the revenue number is growing at an incredible clip. And if we turn through the numbers, you can really say that. So normally in this section we start with market cap, but let's just start with the revenue because it tells the story 7 billion us. So all those numbers of US dollars 7 billion in revenue in 2021, 4 billion in 2020. 

Bryce: [00:13:39] Wow almost double. 

Alec: [00:13:40] Almost 22. 2 billion in 2019. Wow. So almost double. 

Bryce: [00:13:45] Yeah. 

Alec: [00:13:45] Five years ago. 844 million. Now it's 7 billion. It's grown 738% in the past five years. That's how much it's revenue has grown. 

Bryce: [00:13:55] I love to say that. Yeah, this is a growth company. 

Alec: [00:13:58] This is a growth company. Say again, if you.

Bryce: [00:14:01] Haven't listened to the episode, a bit of a teaser there, but 738%, are they profitable? 

Alec: [00:14:06] They are surprisingly well, yeah. So 83 million in profit of 7 billion in revenue. 

Bryce: [00:14:12] Are not not huge margins. 

Alec: [00:14:14] It's like a fraction over 1%.

Bryce: [00:14:16] Yeah, not great. Yeah, but they're profitable. 

Alec: [00:14:20] That's right. They were profitable in 2021, the three years before that. Not profitable 2020 1918. No profitable were in 17 and 16. 

Bryce: [00:14:32] So but if you look at that growth number, you kind of would expect that looking at revenue growth of almost 100% year on year. 

Alec: [00:14:40] Well, I think the story here is that their costs are scaling with the revenue. And there's two parts. There's two ways to interpret that. One is they're spending and investing for growth. The second is retail doesn't have good operating leverage and your cost to scale with your revenue. 

Bryce: [00:14:57] You're always and.

Alec: [00:14:58] You're never going to break free and become so profitable. The truth is probably somewhere in the middle of those two. They're definitely investing for growth. And retail also is not a business with great operating leverage.

Bryce: [00:15:08] Yes, but it's also, I guess, a fear that if they continue just doing more and more business units as well, like there's just more and more investment in. It's to come with that. 

Alec: [00:15:19] Yeah, yeah, yeah. But that's the revenue and profit. What about the number that gets investors going in the morning? What's happened to their share price? 

Bryce: [00:15:28] Market cap of $43 billion. Down 35% year to date. No surprises. Stay in line with most, most other companies. 

Alec: [00:15:37] It actually surprised me. It wasn't more.

Bryce: [00:15:39] Really? 

Alec: [00:15:40] Yeah, Because you look at the high growth US listed tech stocks, like e-commerce software stocks, they're down like 60, 70, 80%. 

Bryce: [00:15:49] Yeah, well, they're also not growing 100% year on year. 

Alec: [00:15:52] They're also not profitable. 

Bryce: [00:15:53] They're also not profitable. There we go. There we go. It is up to 212% over the past five years and was a big Covid winner. As Ren said at the top of the show, up more than 200% from the start of 2020 through to September 2021. It has then come off a little bit over 50% from there, but still nonetheless, pretty, pretty impressive revenue growth. It's profitable and share price growth over the past five years. So this is certainly a growth story.

Alec: [00:16:23] So, Bryce, we were about to turn to David. Is there anything else that we need to cover before we get the experts' view on this stock? 

Bryce: [00:16:30] No other than MercadoLibre is listed on the Nasdaq. The ticker is email and you can access the US stock market plus Australia and New Zealand markets on the Sharesies platform with no investment minimum. You can use promo code GROW when you sign up to the Sharesies platform for $10 in your account ready to invest. All investing involves risk. This is not a recommendation and you should perform. Your own research promotes and sees apply. But then we're going to take a quick break and we'll be right back to discuss MercadoLibre with David Halpert. It is our pleasure to welcome David Halpert, founder, portfolio manager and chief investment officer at Prince Street Capital, a specialist emerging and frontier market asset manager based in New York and Singapore. I got the itch today and we're excited to get David because he does specialise in this part of the market. And so, David, welcome. 

David: [00:17:30] Thank you. 

Alec: [00:17:30] Now David, before the break, we were unpacking Mercado Labour as a company. Now we really want to turn to it as an investment and we are glad that we've got an expert here to help us unpack it. We really want to start with how to analyse the company. When you look at a company like Mercado, what metrics matter? What ones don't? Where do you start with a company like this? 

David: [00:17:52] So we've had a change. Nasdaq crashed. The Fed raised interest rates in the way that you think about A stock like Meli has to change with that, you have to be aware of the external environment as an investor. A previously was about growth and market share and innovation, and now it's about growth and cash flow and innovation. So the market share battle, which really defined this stock in the Gogo years, is still there, but it's not as important as it used to be. And we always used to talk about MercadoLibre versus Amazon. MercadoLibre versus Shopee MercadoLibre versus new bank, MercadoLibre versus Rupay. And even in a certain way, those are no longer the important questions. And the important questions are how much money can this company make? How fast is it growing? And most interestingly, and most recently, what's the dividend going to look like?

Alec: [00:18:50] It's paying a dividend now. 

David: [00:18:51] It is not paying a dividend, but it is projected to begin paying a dividend in 2024.

Alec: [00:18:57] Okay. Okay. 

David: [00:18:58] Well, now I understand 2024 is so far in the future, it's almost not worth thinking about. But I can tell you some other companies that are not projected to be paying a dividend in 2024 and they are Amazon Sea Limited. My dear friends, Gojek Tokopedia and most of the e-commerce complex. So MercadoLibre is projected to pay a dividend. Also, the other company that you should be thinking about them relative to is a company called Nubank, which is Warren Buffett's digital bank investment for South America, and New Bank is paying a dividend. So as you see this transition from the Nasdaq bubble or whatever you want to call it, to more of a normal market, you're going to see more and more of these e-commerce titans actually paying dividends and moderating growth expectations to be sustainable growth as opposed to just pedal to the metal flat out. And you see this very efficiently reflected in stock prices. When a management team gets on the call and says, you know, we're managing for cash flow, you know, we're managing for sustainability, we're managing for, God forbid, dividend, the stock stops going down. And when a management team likes in limited or grab or some of these other guys gets up and says, No, we don't care about that, it's still about market share. The stock keeps going down and MercadoLibre has outperformed SI Limited by about 50% in the last 12 months, which is a huge move. Now, there are other issues and they have some other mix of markets and mix of businesses and so forth. But I think the basic question is how is the CEO and to a certain extent the CFO and perhaps the board thinking about cash flow dividend sustainability? Incidentally, I find it bizarre that Amazon isn't paying a dividend given how much cash flow there. 

Alec: [00:21:02] Yeah, they're they aren't. They're just trying to right size their costs from the last few years.

David: [00:21:06] They have plenty of cash flow. They're projected to make 20 billion of free cash flow in 2023 and they're projected not to pay a dividend. I think it just has to do with still this legacy assumption in the US that stock buybacks are better than dividends because they're more tax effective. But Mercado Libre coming more out of the Latin tradition seems to be suggesting a dividend. Hmm. 

Bryce: [00:21:28] Let's touch on bookcase. How is it trying to build sustainable advantage? We've spoken about the different business units that they're creating. Yeah. What's the what's the bookcase? 

David: [00:21:37] So they have built sustainable advantage. They are the leading e-commerce company in a part of the world that most people don't care about. But that is still a $5 trillion GDP. And they're the leaders there. They now acknowledge they're not going to be the leading digital bank because new bank is funded and is smart and is really well-run. But I think they're. Going to build a meaningful number two in digital banking, and I think they are building that. And that represents a lot of the upside in the stock is, as you realise, the fact that you get both the shrimp and the steak to speak in Australia in terms of this combination and the synergies to the extent that they are able to realise them between Mercado Pago Mercado, Credito and MercadoLibre, you know, represents significant upside their case. It's a Nasdaq company. It belongs to all the same people who own Amazon and CE and all that. So as these indices go down, it's getting shorter. You know, there are passive investor flows flowing out of it and so forth. So that's really you have to look at this and say, I'm taking Nasdaq risk. And if you go and buy, I don't know, goldmines in Australia or Treasury bills or even, you know, health care or I don't know Woolworths or something, you know, you're not taking the same degree of Nasdaq risk. Nasdaq risk has been awful for the last 12 months. Avocado Libra has had Alpha to Nasdaq, but not enough to justify, you know, a risk averse investor holding this. 

Alec: [00:23:21] Yeah, when you think about the business risk less than the stock risk, are there other e-commerce players that we should be watching in South America? Obviously, you know, Amazon is a global player and they're playing down there. But are there other native South American companies that you keep your eye on?

David: [00:23:42] Well, new bank, which is listed and it's a native South American company and has all the same brains and strategic savvy that MercadoLibre has. And you banks launch a new banks presence, you know, significantly changes the long term upside case for MercadoLibre because they're just not going to be the number one digital bank from. 

Alec: [00:24:07] A retail perspective. 

David: [00:24:09] Yeah, I don't think they're I mean, maybe they can they can do stuff, but if I were them, what I would do right now is take Mercado Pago Mercado credit and offer it up to merge with one of the other digital banks probably in Brazil and say, you know, it's nice you built what you built. Honestly, ours is bigger and better, but we can merge and you can have a minority stake. We'll have the majority stake in that. And that probably that combination probably brings both companies to profit. And if they don't bring it to profit, they shouldn't do it. And then you'll have something that might be the number one, might be the number one and a half digital bank, and then you'll have the number one e-commerce company and you'll have them both listed one. 

Alec: [00:24:57] Well, hopefully the Mercado executives are listening. I'm sure they are. So hopefully they hear that. But but one other thing we notice when we're looking through the numbers is just the incredible revenue growth they've seen in the Covid period and the few years before that. But they've gone from, you know, quarterly millions of dollars of revenue to the most recent quarter, what, 2.6, $2.7 billion in revenue. It's been a pretty incredible growth right now. You mentioned that they're now managing for cash flow, potentially even managing for a dividend. What do you say that growth story going forward? Do you say obviously not that growth run rate continued, but a meaningfully good growth run rate continue? Or do you see it really coming back down? 

David: [00:25:43] So consensus is that they'll grow 21.9% revenue in US dollars for 2023. And consensus is that Amazon will grow 10.6% in US dollars for 2023. I think they'll grow faster than Amazon. They've certainly grown faster than Amazon for the last five years and they are in a GDP environment which is growing faster and they're in a less competitive GDP. The offline retailer in Latin America is much dumber than the offline retailer. U.S. and the bank in Latin America is much dumber than the bank in the U.S.. I mean, the last time I spoke to you, the bank apps weren't as good as they are. I mean, we have a bank here in Singapore called DBS. I mean, they essentially this is as good as a digital bank, same day, cross-border fund transfers, for example, which is a very important thing in Latin America. I think they're going to grow faster than Amazon. I think they can pay a dividend and still maintain a growth rate faster than Amazon. Will they grow as fast as some cash burning, SoftBank funded e-commerce company like a coupon or something? You know, I don't know. They definitely compete with Rocky, which is the SoftBank vehicle. And my understanding is Raffy is never going to see profit. 

Alec: [00:27:03] All right. And God. 

David: [00:27:05] Well, that's the SoftBank tradition is. Don't try to make. [00:27:08][2.6]

Alec: [00:27:09] SoftBank maybe the worst investors of over the last decade. 

David: [00:27:13] There's also technical, but. This mentality of market share at all costs. Burn, baby, burn. That made sense at a certain point in history when capital was free and all that. That's just no longer a viable way to think about your company. I've done this stuff, as you know, and and I'm currently wrestling with my vyxeos to see kind of who really gets it and who doesn't. And if they don't get it, either we're going to get a new CEO or we're going to get a new investment. You just can't do this anymore. You can burn for a year or two to sort of get your thing up and running. You know, everybody has to invest it for a certain period of time, but you can't have an indefinite investment period anymore.

Bryce: [00:28:00] Well, David, to close out, it would be great to get your views on where this McCotter Libra would be in ten years should it, you know, tick all the boxes and do what it says it's going to do. Where do you expect it to be in ten years time?

David: [00:28:14] The stock price five times over ten years.

Bryce: [00:28:18] Nice. 

Alec: [00:28:18] You take that. 

David: [00:28:19] One and a half already. So I think it can double. I think it'll probably take three years to double and then it'll probably grow a little more slowly in the out years. But if the guys currently running it can keep their focus. As you may know, this country, this company changed domiciles, right? They left Argentina and moved to Uruguay and we haven't spoken about that enough. How significant that can be for them. So if they can remain engaged and entrepreneurial and focussed on this and they don't go run for president or, you know, by Twitter or whatever, they can still build a lot of value there. Their market cap is currently less than the market cap of Itau, which is the consumer bank in Brazil, where they touch on GDP, which is twice Itau, and they probably have more customers than a town. And then there's the retailer, and then there's the energy business, which I expect them to build. They are maybe not facing that much CapEx on that yet. So there's a lot that these guys can still do. And you have to understand it in the context of what Latin America is. Latin America is not as developed and rich as Singapore or Australia, the United States. It's still basically a poor place and it still has people moving around looking for work and all this. And this is absolutely great for an e-commerce business or for a digital and digital bank business because it's dynamic. It's going to grow. Mm hmm. 

Bryce: [00:29:50] Nice. 

Alec: [00:29:50] Just one question. Just something that just before we leave, you said people don't speak enough about the move from Argentina to Uruguay. Why is that so significant? 

David: [00:29:59] Well, because being an Argentine company is one thing. And being a Latin American company is a very different thing. And this positions them more to be a regional power. Also, this significantly reduces the amazing governance risk that Argentina represents. So Argentina can default again because they default every couple of years and they can default again and accordingly very potentially doesn't really need to worry about that. 

Alec: [00:30:29] Hmm. 

David: [00:30:30] Don't forget Mexico. You know, Mexico is in this US Canada free trade system. It's by far the biggest beneficiary of this. It will be the fastest growing economy. It'll be the fastest industrial story. And MercadoLibre is the e-commerce company and can soon be the digital bank for Mexico. Now, again, I have to know there's competition. There are other smart people in Mexico. I don't just assume they will win this, but that's part of the upside for them. 

Bryce: [00:30:59] Well, David, no doubt it's a pretty compelling story or certainly has been over the last few years for macaque, mercado Labour. And it feels like there's a great opportunity there for if it can stay focussed over the next decade or so. But we have run out of time. So thank you so much for for joining us all the way from Singapore. We appreciate you taking the time to chat to the Equity Mates community as always. So thank you very much. 

David: [00:31:24] Thank you. 

Bryce: [00:31:24] All right, Ren. Well, a lot to think about from David there. If you're interested in what David does, make sure you check out Princes Street Capital. 

Alec: [00:31:33] Yeah, I'm glad we got David on. We'll look. I'm glad we got all these experts on because they constantly demonstrate why they're experts. But we obviously prepped Mercado as a e-commerce retailer. And David, thinking about them in the future is thinking about the more as a bank. 

Bryce: [00:31:48] Yeah fascinating. 

Alec: [00:31:50] Connector through our research out and start again. 

Bryce: [00:31:52] Yeah don't pay any attention to the first half of the episode.

Alec: [00:31:54] Oh yeah yeah. 

Bryce: [00:31:56] Yeah it is. Yeah. I'm certainly enjoying having the experts on the show, but. That brings. It does bring us to the end of our episode. Shout out to Sharesies for supporting the Equity Mates summer series. Head to sharesies.com.au Or download the Sharesies app. You can use the promo code GROW when you sign up to the Sharesies platform for $10 in your account ready to invest in promotion, T's and C's apply, but Ren will leave it there and as always, will pick it up next week. 

Alec: [00:32:22] Sounds good.