Insightful Insights

  • We are delighted by Silver Chef

    Russell Muldoon
    December 20, 2012

     

    We are delighted by the trading update provided late Wednesday night by Silver Chef’s (ASX: SIV) – a business I mentioned just last week on the Sky Business Channel as a ‘Stock to Watch’. It is also one we own in the both The Montgomery Fund and The Montgomery [Private] Fund.

    Management have forecast strong EPS growth of 12.7% to 18.3% for the first half. This would be an excellent achievement in what many have dubbed a tough retailing environment. Clearly not everyone in the retail sector deserve to be tarred with the same brush.

    Our expectations are for the business to report earnings at the top-end of this range given the underlying momentum and demand for their product suite.

    Silver Chef provides lease financing to hospitality businesses under the Silver Chef brand and more recently, for commercial businesses under its GoGetta brand and excellent risk management processes appear to be in place. Both brands enjoy a growing a reputation as industry-leading financing product providers. In particular Rent-Try-Buy and Rent-Grow-Own put less stress on a businesses cash flow in their start-up phases, a large reason for their take-up.

    Management have indicated to us that they believe their potential market is equivalent to about $250m in revenue per annum. At the full year 2012, SIV reported $85m in revenue. With the potential to expand by a factor of 3x from here, we are long-term holders and anticipate many more positive future updates. Keep watching this space.

    A word of caution. We have a large holding across our two well-diversified funds in Silver Chef and as shown, the share price has performed spectacularly well recently. Please therefore seek professional advice and understand the risks.

    by Russell Muldoon Posted in Companies, Insightful Insights, Market Valuation, Value.able.

  • A 2012 Report Card

    Tim Kelley
    December 20, 2012

    At this time of year, many of us are inclined to take stock of highlights and lowlights of the year gone by, and perhaps to consider what we might wish for the year ahead. Accordingly, we thought it might be interesting to look at the best and worst performing ASX stocks during the past 12 months, and see what sort of story they tell.

    The list below sets out the top performers according to Bloomberg. We have limited the analysis to stocks with a market capitalization of at least $200m.
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    by Tim Kelley Posted in Insightful Insights, Market Valuation, Value.able.

  • Liberal Democratic Party of Japan is back

    Roger Montgomery
    December 19, 2012

    After the 11 March 2011 earthquake and tsunami saw the Fukashima Daiichi nuclear reactor disaster, 53 other Japanese reactors were closed down. Prior to to the Fukashima disaster, nuclear energy accounted for 25% of Japan’s electricity supply.

    In response, Germany announced in May 2011, it was abandoning its nuclear energy pursuits completely by 2022. Nuclear energy accounted had for 22% of the German electricity supply in 2010.

    The spot uranium price has since declined from US$65/lb to US$41/lb (-37%).

    Victory at last weekend’s election by the Liberal Democratic Party had the Australian uranium explorers and and producers cheering given the expectation the Japanese nuclear industry will be “turned back on”.

    The Liberal Democratic Party has been in government in Japan since 1955, except on two occasions; eleven months during 1993 and 1994 and between 2009 and 2012.

    by Roger Montgomery Posted in Insightful Insights.

  • Chinese share market up 10% in 8 business days

    David Buckland
    December 18, 2012

    The Chinese share market, as measures by the Shanghai Composite Index, spent forty months between late-July 2009 and early- December 2012 declining 44% from 3,478 points to 1,949 points.

    In the past eight business days the Index has rallied 200 points or 10% to 2,150.
    The preliminary HSBC China Manufacturing Purchasing Managers Index, released Friday, rose to a 14 month high in December, at 50.9  This is the second consecutive month the Index is in expansion territory (i.e. above 50).
    Some headwinds remain with pressure on new export orders.  China’s export growth decelerated from an annual rate of 11.6 per cent in October to 2.9 per cent in November due to reduced demand from their major customers.

    by David Buckland Posted in Insightful Insights.

  • Are Large Caps Becoming Expensive?

    Tim Kelley
    December 17, 2012

    We have the luxury of a broad mandate in the Montgomery Fund. We are not tied to small caps or large caps, but can allocate capital to the best opportunities we find, wherever they may be.

    Recently, we have found better value at the smaller end of the market, and the chart below may help explain why.
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    by Tim Kelley Posted in Insightful Insights.

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  • The shifting focus from inflation to jobs

    Ben MacNevin
    December 14, 2012

    The Federal Open Market Committee stated in its latest release that it is willing to continue with its easing measures until the unemployment rate is below 6 ½ per cent. This is remarkable, as is it officially states that the Federal Reserve is using its monetary policy tools to bring down the unemployment rate to below a certain level, when historically its focus has been on maintaining stable inflation – effectively, if inflation is maintained at a certain rate, unemployment should take care of itself.
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    by Ben MacNevin Posted in Insightful Insights.

  • Webjet expands its footprint in the fast growing Asian travel market

    David Buckland
    December 14, 2012

    Yesterday, Webjet announced the acquisition of Zuji for US$25m, or 4.6X estimated EBITDA of $5.4m, from Sabre Holdings.

    Zuji adds $300m of Total Transaction Value (TTV) and expands Webjet’s footprint in the fast growing Asian travel market. For context, Webjet’s TTV for the year to June 2012 was $768m, up 30% year on year.

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    by David Buckland Posted in Companies, Insightful Insights, Tourism.

  • Successful Branding: Bulls vs Dinosaurs

    Ben MacNevin
    December 13, 2012

    Players at next week’s Australian PGA Championship have been reminded to be careful of their comments of the event with social media. Ironically, it has become one of the most talked about events in Australian sport – and this all due to the erection of a few dinosaurs around the golf course.

    With all the comments about whether this detracts from the traditional form of the game or whether it is good for the game itself, it is generating “buzz”. And in business, sustainable value can be generated by transforming “buzz” into intangible assets – just look at the story of Red Bull.
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    by Ben MacNevin Posted in Insightful Insights.

  • Heads in the Sand on LNG Economics?

    Tim Kelley
    December 12, 2012

    One of the issues attracting media and analyst commentary recently is the potential impact of American shale gas exports to the economics of Australia’s large LNG projects.

    The theme of many of the comments is that there is no cause for alarm, at least for the time being. Some of the reasons advanced include: the reluctance of US policymakers to permit exports; the time taken to ramp up supply if the US does export; and the fact that LNG contracts tend to be linked to oil, rather than gas prices.

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    by Tim Kelley Posted in Energy / Resources, Insightful Insights, Value.able.

  • NOT FUNNY!

    Roger Montgomery
    December 11, 2012

    In my late twenties I stopped listening to commercial radio. It was ‘breakfast radio’ that turned me off. As a bit of a fan of music in all its forms, all I wanted to hear was the next song. Inevitably I arrived (at my destination) long before any music did. But worse it was the nonsense proffered as humour by some amateur comedian hosting the breakfast show that was the last straw.

    Spend a bit of time listening to comedians and the very best make you laugh at no-one’s expense. Its a special skill that not many have. The very worse do the opposite. With the exception of a few, breakfast hosts are simply not funny and so the only way they can attract an audience is to make fun of others. It is puerile.

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    by Roger Montgomery Posted in Insightful Insights.