blue chips | the call: Monday 25 May

[MUSIC] The call is brought to you by Centuria, an ASX-listed property fund manager with $21 billion in assets under management. Want to diversify beyond equities? Explore the Centuria Sydney CBD Prime Office Fund at centuria.com.au. [MUSIC] Good Monday to you. A very warm welcome to the call. It's nice to be here with you again when we talk about 10 stocks that you've nominated with my two expert guests over 60 minutes. And today, we're going to be taking a specific look at blue ships, basically companies in the bigger end of town. So to do so, very pleased to welcome Raymond Chan, who's joining us from Oregon. Nice to see you, Ray. And also we have David Lane from Ord Minette, David. Great to have you here with us as well. Raymond, I will start with you though, because there seems to be a little bit of optimism today about what it could mean if we see a resolution to the war in Iran. If we do, do you think equities will spike or do you think some of that optimism now is being priced in with just passing in the ASX up by half a percent? >> Yeah, Nadine, thanks for asking a question. I think we have to go back one step. We look at the three key themes that I'm seeing on the market, especially for the ASX 200 at the moment. First of all, higher for longer inflation, like it would stay. So what it means is yes, that could be a rally, if there's a deal coming out. However, the higher for longer inflation still provide a headwind for the long-dew vision ASS. This means your growth investment that could still be headwind. Second of all is the big picture, the US and Australia central bank divergence. What I mean by that is the reserve ban on Australia continues to be on a tightening cycle. However, the US the fact, we think that a bit of flexibility still for the 25 business point, because it's better productivity growth in the state. Number three is the fair value, which the most important one. The fair value I've been mentioned is around 1,200 points. So whenever the market should all the way up about 9,000, that's why it will lock down. Usually closer to the fair value. The good news, okay. I want to end with a good news. The good news is we are toward the end of the financial year. What it means is the FY27 Consense will roll in about 1.5 months. And the market continues to expect earning growth for FY27. That we should see higher fair value. So don't expect the market to shoot a lot higher than the fair value at this stage. However, that's certainly a bit more positive going into the new financial year. He's given me a silver lining to all of that. David, how does that all sit with you? When you look at the equity market at an index level in particular? Yeah, I think all the points that Raymond made are very good points. And I think that the Australian market is a little bit more circumspect. And somewhat skeptical about the truth social announcements that come out. So whereas the US market seems to rally strongly on news and doesn't necessarily get sold off as much in recent times either. So we are seeing that divergence between the two markets. As Raymond said, possibly due to the fact that we're in different interest rate environments and that we're focused a little bit more on the local issues. We've obviously had the budget, which has had a big impact across the media discussion. And could well actually have a bit of an impact on the market as we head into that end of financial year as Raymond said. Because one of the benefits that the share market does have is the ability to control that cost-based and control your CGT implications more than you can in the property market. So it's possible we see some more sell-offs in those stocks that have been sold off to crystallise those losses. So yeah, fairly volatile market. It's positive that we're hopefully getting towards the end of the Iran conflict. But we have been here before. So I think that's really what the market's saying today. Look, Aussies are known for being realists, right? So we'll see what the headlines bring and react accordingly. Let's go guys, get to the stock of the day, which is Fortescue. So yes, a blue chip, but also out with a bit of C-suite news today. So do you remember former chief executive Elizabeth Gaines? Well, when she left the CEO role, she did become an executive director. So she's actually resigned from the board following that exit from the CEO position in 2022. She'll be leaving the board at the end of June. So Fortescue has appointed Sigrid Koch, a former Dutch finance minister and diplomat to the Fortescue board as non-executive director. So a bit of news there, but Raymond cracked me if I'm wrong, the overarching news when it comes to Fortescue is always the iron ore price and the iron ore price has held up well. What are the fortunes for Fortescue right now? The iron ore basis for Fortescue is really highly profitable. I think the latest trading updates suggest 53% margin, so massive. The dividend also surprised on the upside on the last update. So that Fortescue actually featured in a lot of funds manager income portfolio surprisingly. So the old saying you don't buy resources for income, but that's not the case for Fortescue. However, we have a whole recommendation. We are a little bit more cautious, partly because what you suggested. So today's announcement is just another example of staff turnover that we are seeing with Fortescue basis in recent times. So that's certainly, you know, less bullish about the situation. And of course, Fortescue need to spend a lot of kebics on the long, long profit generating area like the green energy or that. So that will certainly drain on the cash flow. So at this stage, yes, well aware, the positive about the iron ore basis, however, we still have a whole recommendation. We prefer to look at it at a lower price. Again, okay. So Fortescue at a lower price. I'm just looking at some of the research reports. I mean, we've got an outperform from Macquarie and accumulate up a lead from Ordmanette. So what is the thesis behind that accumulate recommendation, David? Yeah, we'll work quite positive on the business and think that it is an excellent business. They've got great resources. As Raymond said, their production is pretty strong. In their last production result, it was pretty much in line with expectations. Although the company did announce a further $680 million US capital expenditure in relation to their green energy projects in the Pilgros. So that is a fairly large expense that they're going through. I think that the announcement today is, although Elizabeth Gaines has been involved with the company for a long time and is very well respected, I think it's an interesting appointment that Sigrid Carg has a lot of international experience. As you mentioned, as a financial finance minister and actually deputy prime minister of the Netherlands for a while as well. So certainly there's a lot of political influence and the global nature of the business. So I think that's a positive. I guess similar to Raymond, that accumulate recommendation really means buy on weakness. So we like the business. Our target price on the company is $20 and they're currently trading at $21.87. So they're actually trading a little bit above where we think they should be. So yeah, that accumulate is a bit of a soft buy and again looking for buy on weakness. So taking advantage of some of the volatility in the markets wouldn't be buying them today. They're up about 1.7% looking at hopefully trying to get close to that $20 mark. Well, I'm going to call that a hold for today then because you know the rules of the game. So to speak, our buy holder sell on the day and just for our viewers out there as well, don't forget this is information only. This is not personal financial advice by any stretch of the imagination. You do need to do your own research or get advice because we don't know exactly what you've gotten your portfolio or your risk tolerance all of the usual. So do keep that in mind. As we take a look at the first five companies that we will be talking about this program. Again, all in the big end of town, Rio Tinto, Woodside, Origin, Combank and GPT Group. So let's kick it off with Rio Tinto. Raymond Chan, we just talked about Fordescue. We talked about the iron ore price. Rio Tinto, it's just a stalwart and looking to diversify further. Do you like it? We like it as a core portfolio company. So the way we look at Rio Tinto is purely on the EBITDA line, roughly 70% of the EBITDA come from I know the remaining 30% is the same. come from a combination of copper and aluminium. So both have this interesting dynamic at the moment, but sort of you know you know you know uptrend at this stage. We like real tinto. The only thing we don't like at the moment is this price. So we have a whole recommendation for real tinto. At the moment the target price is around you know 156 dollars. So if it drops below the 160 dollars, general advice only you know we will be more interested to lift the position in real tinto, but really nothing wrong with real tinto. It's just the price we don't like at this stage. Yeah I guess that's David how I should have phrased the question. Yeah do you like Rio Tinto, but do you like the price? And I suppose you've got to have a belief whether we're in this so-called commodities. Super cycle you know can the price just continue to push on from here? Well it's one of those questions that the the iron ore price a lot of the analysts have been suggesting that it should be lower for 18 months or so, but it hasn't been. It's been you know relatively consistent and reasonably strong. A number of people point into China and the fact that you know China on the industrial production side seems to be slowing, but China is also changing the way their economy runs and heading a lot more towards technology and leading the world in a lot of the AI and robotics rather than being more of the industrial nation. So yeah we do like Rio Tinto, but similar to Raymond we do think it is expensive at the moment. We've got a again an accumulate recommendation and our target price is $172. So a little bit a little bit higher than what Raymond was saying, but yeah still below where they're currently trading out at the moment. So get $188. I wouldn't necessarily be selling it, but I don't think I'd be buying it. So yeah for the purposes of this show we could probably put that on to a hold again. I just wrote down hold and got some agreement on Rio Tinto. Let's see if they continue to agree with the next on the list. And for those of you who watched last week and you heard me struggling taking notes on my computer, you'll be very I'm very pleased to have this pen back in my hand old school. All right let's get to the next on the list that is Woodside WDS is the ticker code. This one is for Brett. So interesting if we are talking about some sort of a resolution in the Middle East David and we're talking about oil prices, you know potentially Brent returning to about $90. Now I know Woodside is LNG, but it does move in lockstep with what's happening on oil markets in particular. So what does it's a hard one isn't it? What does the future hold for Woodside which also you know is looking to diversify its big cap expend in Louisiana and the like. Yes it is difficult and it's a stop that we actually think is quite expensive at the moment. So we've got a sell recommendation on Woodside. We think the fair values around 24/75. Interestingly as you said they do have some oil exposure, but in the case of Woodside that's actually been a little bit of a negative for them because they've had oil hedging in place and with the spike of the oil price that's actually a cost to them. So in our latest analysis of the company we've actually downgraded our expectations based on that hedging cost that they have. The LNG price has been moving up but not to the extent that the oil price has. So the Woodside predominantly is that LNG as far as the long-term contracts are concerned. So yeah it is a stock that we think is too expensive at the moment. Yeah we'd be looking at that selling or at least taking some profits on the portfolio. It's a good quality business that a lot of people have in their portfolio but yeah we do think at the moment too expensive. Raymond, I mean is it too expensive? I think so. We recently died and graded from buy-to-hold on Woodside. I mean in 2025 you remember we have a big core on Woodside at that time you know it's nothing to do with the energy price. We just think the market is too concerned about the cash fall. So some investors are buying Woodside for the yield but you know if they have so many growth projects where do they have where do they find enough cash fall to to sustain the dividend paying. So the management what we're saying was the management is doing all the right thing by selling that is growth project including the Louis NLNG that you mentioned a moment ago. Yeah they brought those partners in. Exactly. So the cash fall become more sustainable and we think you know you need to turn your medium turn they will generate pretty significant cash fall from those growth projects. Now because of the share price rally we we we we don't want to speculate on the outcome on the US and the right war. That will become more like a betting in terms rather than investing in our opinion that's why we're done ready to hold at the moment. Okay got it so that is a hold on the South for Woodside. Hi Andrew here. Did you know you can get your stockpicks straight to the front of the queue and to the guests you choose if you become an Osby's contributor. It's our small way of saying thanks for your support. The link is in the show notes and while I've got you we'd love it if you could leave us a review. Thanks for listening. Let's get to the next one on the list and this one is origin energy. This one's for Omar Omar thank you for writing in I don't know if you already own it or if you're looking to get into it but um I suppose there was a bit of a surprise when it came to a downgrading of expectations for the octopus part of the business which had been a big growth driver for origin energy just looking at sort of the broker commentary on this one coming through. You know pretty strong for the Australia APLNG because we get an update from origin early in the month but again like how does origin does it benefit from the whole data center push the whole electrification of everything Raymond? I do love to comment on origin but we don't formally cover the stock so I'm unable to talk about it but certainly you know we in the past a lot focused on was on the APLNG and it likely continued to be the case but in just case I would rely on Davy to give us a hex up on our origin okay into here all right so Morgan's not covering origin right now what is the jewel in the crown David for origin energy these days or has it been sort of tarnished by that octopus downgrade? Well certainly has yeah the the jewel in the crown previously was actually there octopus business and that was where a lot of the potential growth was to come but it does seem as if the yeah the focus is now shifted as far as investors are concerned in that APLNG business is probably that the more consistent not necessarily a growth driver but it is a very strong business and quite a solid one there as you said and indeed that they recently gave an update and the production from that APLNG business was quite positive and the outlook was good but similar to Woodside they actually have been caught due to some of the the hedging costs because the origin don't own all of APLNG that's a joint venture but they are responsible for the portion of the hedging costs there so that will be a bit of a dampness on that side of the business but back to octopus our origin owns about 23% of that business and the the downgrade was fairly significant so it was a business that was supposed to be generating strong profits it now looks like it will be lost making in the in the short term and some of the issues were in relation to the crack and software and the rollout there so yeah a little bit of a negative in the in the business but then having said that the share prices come down quite a bit in recent times anyway so we think they're probably around for value at the moment we've got a whole recommendation on our target price is $10.40 they're trading a little bit above that but yeah again given that the share prices come back quite a bit yeah we think they're trading with that about where they should be at the moment okay fair enough that's origin energy so really going to the big big end of town now let's talk about stock number four and this is combat for Bart David I'll start with you on this one because really interesting I had a conversation earlier today with Richard Heming from Under the Radar report and he was pointing to you know the share price falls that we've seen for Commonwealth Bank and CSL so he was comparing and contrasting the two and he reckons that Commonwealth Bank still isn't looking that great value what about you yeah we agree I still think that they're relatively expensive but obviously had a big sell-off last week the week before but they have actually bounced off that low which is different to CSL because obviously we've seen CSL have numerous downgrades over the last 12 months. I hope that CBA isn't the same, but yeah, we still think it's fairly expensive. We've done a review of all of the banks following their recent updates. And there's been a significant change in the outlook for all of the banks as far as the businesses concerned compared to the last half-year updates with the higher interest rates and the fact that the economy is showing signs of slowing. There are a few more concerns about the revenue growth there and the margins still not necessarily growing particularly strongly. So overall, we're not fans of any of the major banks. And we do actually have a sell recommendation on CBA. So our target price for CBA is $120. They can't even know their fall and we still think that they're trading above that. It's trading on a P ratio of 25 times. And for a business that isn't growing, they're earnings by a significant amount. That's too expensive. So yeah, I think it's priced as a growth stock but it's not generating that growth. So although it's large and it gets a lot of focus in our market, we still think that they're too expensive. Not a fan of the banks, David. Are you a fan of the banks, Raymond? I totally agree with what David suggested. In fact, the target price, our target price is the same as David's target price. - Oh, it's it. - $120. And we have a sale recommendation on the stock. So before we go into re-ad on that, I have to take a step back. So yes, it's a sale on valuation ground and we have a negative total shareholder return. That's why we have to put it at a sale. In the old share analysis, we can only have two recommendations. We are the buy or sell. We couldn't even do whole. - Yeah. - Then the next thing we have to look at is index waiting. So obviously, CBA has an index waiting of a bit of a 10%. So when we say sell, it should more mean underway. So if you have significant more than 10% of CBA, again, this is just general information. You should not overweight CBA in your portfolio. But if you have an underway position, you should not loss sleep out of it. Another thing to put in the perspective with your early comment about CSL. CSL pick index waiting about 7%. Today it below 2%. So having a big index waiting does not give investor any margin of safety. In fact, it may go and harm them when there's earning downgrade. But what take me more comfort about CBA was recently we have a presentation from a curry bank. They are saying they are winning the market share from three out of the four banks. So we know which banks defending their market share well. So to me, yes, CBA is a stock where we think it likely to be what it called correction in time rather than a correction in price. So for patient investor, you know, at a lower price, you know, it could be a buying opportunity. But for now, unfortunately, we have a sale recommendation which has seen agreement with David and he's available inside as well. Yeah, and I think you bring up a good point. Look at the waiting, you know, and again, this is a very personal thing. It's determined by your portfolio and your portfolio positioning. But yes, you can unexpectedly become overweight to some of these big, big companies that we're talking about today. In this blue chip special, which I'm having fun, I'm enjoying. OK, we get to another one, GPT Group. I might start with you on this one, Raymond. GPT not a classic blue chip, but definitely in the bigger end of town. Do you like it or not? I like it at the moment. I know there's lots of headwinds in poverty. No one really wants to talk about commercial property anymore. But this is exactly where the discount to NTA coming in. So the NTA for GPT, I think, is around 550 at a moment and is trading well over 10%. Discon to the NTA at the moment. Usually, over the past 27 years, in the old days, we call it LPT, today we call it REIT. I'm not interested to buy into the REIT when the basket trading below NTA. But of course, today we got Goodman, which distraught that. But purely, look at it. If it is a discount to NTA, I'd be interested using around 5%. And importantly, today we don't pay for the funds management business. So we're buying a portfolio at SS, which is premium grade or high grade. And you've got a free option for the funds management business. So for me, it's a buy. Knowning the headwind that we're facing at the moment. OK, yeah, because you were the one that was talking about rising interest rates. But I think to Raymond's point, there is still demand for this commercial property. And if you can get it at a cheaper price than when everybody is sort of piling into that narrative, I mean, does it asset appeal to you? Does the fund management business appeal to you, David? We're really a bit of both. I think GPT is a well-diversified business. They've got high quality assets. A lot of office property. But then they've also got some retail industrial. So it's a well-diversified. Most Raymond said you are buying into those assets at a discount. And the funds management business has performed strongly as well. They've recently raised $500 million for one of their wholesale funds. So they are a very good business. Those rising interest rates do have an impact. But we've done a review of not just GPT, but the whole sector and reviewed our expectations. And fact, that that into our forecast and even in light of that, we've got an accumulate recommendation. And our target price is 5.25. So again, let's call that a buy. And I'll agree with Raymond. And we can put it up to the investment. Oh, I like it when you come along to the party. So you guys are getting along pretty well on this blue chip special. And I note that Raymond has coordinated his outfit to the theme of the day. So listen, you guys take a bit of a break. I'll just remind our viewers what we've learned so far. We began with Fortescue, which does have a bit of news at today. At the board level, Raymond actually points to the staff turnover that Fortescue has been going through for quite a while. So it makes them a bit less bullish. That always brings uncertainty. But think about Fortescue in terms of income these days, he says, all that being said, it's a hold for Raymond. It is a hold for David Lane as well. Price target $20. So what you want to do with Fortescue-- both of them say this, actually-- is you want to buy on weakness, so not today. Rio Tinto, $170, $2 price target. It's a hold for David because it's expensive. Corporate fully a holding, Raymond says. But again, it's a hold because the price target they've got is $156. So you want to buy it, sort of, sub 160. Woodside, it is a sell for David. It's expensive at the moment. He would say sell or take some profits. That's another way to look at it. Downgraded to hold recently by the team at Morgan's, look, you just need to be a bit more careful with Woodside right now, Origin. Raymond's-- he actually remained out of this one, but they used to cover it. And he points to the APL and G holdings. David says that the tarnish-- it has been tarnished a bit by this octopus, which is lost making still. He would hold it, price target $10.40. So it's around fair value now. CBA, a sell for both of my guests. Look, it's just because of the price target. It's just where it's trading right now. And David is not a big fan of the banks. GPT, it is a buy for Raymond. He likes the discount. You get to NTA. He likes commercial property and the funds management business. Well, Divers Fied says, David Lane, it is a buy from him, as well. So a $5.25 price target there. So that is the first half of the program. Now is when I update you on the Fantasy Portfolio. And the entire Fantasy Portfolio will be updated when the committee meets later this week. So last chance to watch May's edition, which is still up online. The committee used high levels of cash to buy two new stocks in the small end of the market, two, smaller, I should say, Clinile Vell Farma, and Delta Lithium reduced its exposure to McCory, Raymond was saying is gaining market share. Cash position sits at 7.7%. So the fund is up by 31.5%. Since we started tracking it way, way back in 2022. So keep your requests coming in. Double buys as David indicated, get sent to the Investment Committee. And as I said, we'll have a new edition of that for you. Come Monday. You've worked hard for your money all your life. Now your money needs to work hard for you. Whether you're building, transferring, or drawing down, the right information makes all the difference. At Osby's Retire, you'll find the latest news and insight from trusted experts all in one place. Osby's Retire is powered by RAN. Retirement income done differently. Welcome back. It's been interesting in this video. next half of the program as well because we talk about some really beaten down blue chips, ResMed, ProMedicus, QB Insurance, Coles and West Farmers. So, looking forward to this one. This one is for Basel and the stock is ResMed R&D. I mean, the Naysayers, Raymond, hate to say it, but they've been proven right as far as the share price goes anyway. So, the trend is not your friend when it comes to ResMed. Absolutely. Usually, ResMed reacts to the quarterly resale. So, even like the recent quarterly resale, you can see a bit expectation. The share price can still go down. Why? Yeah. So, what happened in the world now is the all the medical device being treated as a basket. Havily inference by the ETF. So, when we have caught clear, you know, being done from over $300 to below $100, they actually dragged down and that created a negative feedback loop into the business. So, if we purely look at the fundamentals of ResMed, let's start with the recommendation. With a buy recommendation, the PE is well below is 10 year average, 5 year average. And when we look at the target price, we have around $41 on the target price. What we see now at the moment is that a lot of noise about the stocks. You know, the GLP1 drugs is being won. However, we argue that actually is a tailwind, not a headwind, because they raised awareness of the sleep apnea. But what happened now is the investor will have to be patient, especially we're going toward the end of the financial year. Given the stocks being under perform since the beginning of the year, I won't be surprised there will be further selling. Going into the end of financial year. So, that funny enough will create a even better attrategifying opportunity. So, we think we're not too worried about, you know, we look at the growth, we look at the numbers, you know, we think respect is a buy at the moment. Okay. So buy for ResMed. I mean, why though, David wouldn't you just wait for the tide to turn, because it does feel a little bit baby out with the bath water-ish, but it could go further, right? Yeah, it certainly has felt like that, and it's felt like that for most of the year, that the share price has been falling quite a bit. And I assure you that Ramin and I didn't get together before the show to get us for a straight, but I agree with him. We've also got a buy recommendation, and our target price is $4,140. So, very similar sort of target price there. If you look at that chart, there is the potential that the tide has already started to turn, and we are hopefully starting to see it bounce off the bottom. That quarterly result was actually a really, really strong result. The income was up by 20%, when their revenue was only up by 11%. So they're showing that they're able to leverage their operating business, and do very well in this current environment. We think that ResMed is an excellent business. At current levels, it does look very good value. So, yeah, we've got a buy recommendation on it as well. Okay, so that's a double buy for ResMed Henry Jennings from Marcus today, member of the committee. Boy, he is on the other end of the equation. He just cannot be convinced about this ResMed story. So we'll try it again. All right, let's get to stock number seven, and that is pro-medicist for Josh. I mean, I don't blame David Josh for writing in, and wondering if it's time to buy pro-medicist because it too has been so beaten down. Although, unlike say CSL, someone argue it's still pretty expensive. How do you view pro-medicists now? Yeah, you're right on both fronts in the day. It's been sold off significantly. It's down about 54% already this year. But when you look at it from a fundamental point of view, they are on a P ratio of 92.5 times. However, we do think it is a business that's growing very, very strongly, and I think that's the difference between pro-medicists and CSL. If you look at CSL a number of years ago, they were growing their earnings substantially, and that's why they commanded such a high P ratio. I think pro-medicist is in that camp now that they are signing on new hospitals in the US, predominantly, and the technology we think will actually be a net beneficiary of AI. So, we have seen a cell off in both medical stocks and technology related stocks, and I think pro-medicist probably falls in both of those camps. But we do think that AI will be a improvement to their business and will help hospitals improve their productivity. So, yeah, we think that it is good value or a good business at current levels. We've got a buy recommendation. Our target price is $210, so we think that it should go a lot higher. Probably the one thing I'd question is, I'm not necessarily sure that it's a traditional blue chip. It is a fairly early stage, I suppose, business, and that it does carry more risk than a traditional blue chip would, but again, at current levels, we think it's good buying opportunity. Yeah, I take your point on that one. So, Raymond, here's the thing, is that when pro-medicist was way more expensive than it is right now, there were those that said, "Bye." Because, you never know, it's always going to seem expensive. It's always going to seem expensive when it comes to pro-medicist because of that growth that is being factored into its PE. So, it's now a time to buy, even though on traditional metrics, it seems expensive when it keeps winning contracts. I guess for the viewer, it will be interesting. If they do not know, they would have thought, "Derek and I have a coordinator approach." So, we have the exactly same recommendation and packet price. Really? Yep, exactly same for pro-medicists. We really enjoy David's insight. I agree with him. One thing we need to add on is pro-medicists, the software itself, is being extensively used. Even for the uni-student, when they train as a part of the cost, they use the pro-medicists software to train. So, it's heavily in that with the system itself. And also, privacy is an important thing. Once you sign up with a hospital, yes, you assign in a contract, say it like five years. But once you are on that contract, you are very likely, as you can see from recent announcements, it's quite easy for them to renew, despite its public tender. And they continue to grow on the US. Not many ASX companies can meaningfully grow their business. And in US, you can ask GYG. Because of that lack of success, that makes pro-medicists more valuable. But the key point, David, right, it point out is the high-payee. So, definitely not for everyone. But purely on the research perspective, we have a buy-rinkment recommendation on pro-medicists. Okay, so $2.10 price target for both of my guests. Let's get to the next on the list, Josh, by the way, I hope that helped. This one's for Oliver. Thanks for writing in. And it's QBE insurance. I'm not getting a lot of perspective from these guys today. So, not sure if Oliver already owns it or if he's looking to buy it. And again, I know, right? This is information only, not financial advice. But when you're looking at QBE, what do you reckon these days? First of all, we don't cover QBE ASS stock. However, I would love to talk about insurance company as generally. So, the way we think about insurance company is what Warren Buffet suggested flowed, which is the premium they received upfront. So, because they received the premium upfront, if they invest wisely with that money, they can make more money for the shareholder. In the world of the insurance company that we know, especially those that list on ASSix, mostly they put it in, you know, chersury to make, you know, interest return. So, in a rising interest rate environment, that will be better. However, I did mention at the beginning of the program, we have a divergence of central bank action at the moment. So, compared with QBE, in fact, I'm more positive about SunCorp because they predominantly just Australian business. As such, Australian New Zealand, they've gone through similar trend at the moment. So, we think the potential high RBA interest rate will likely benefit the company like IG and Sanko from which we think we are more positive about SunCorp. But specifically on QBE, we do not formally cover so I cannot speak more, but of course, they are more global businesses. And the way we understand, analyze the insurance company, we will heavily look at that as well, the interest rate cycle. Yep. Okay. So, preferred picks in the insurance space is for Australian exposure via IG, but preference SunCorp. So, you can talk to us about insurance in general. I would though like to get a buy hold cell call from you and QBE, but you can as well, David, compare and contrast to some of the other listed insurance names here. Yeah. Raymond rises some very good points about the differences between the two and all the three, I guess. And one of the The other reasons that we do like QBE is that they are global, so they don't have as much of a local impact. And what we saw in Suncorp's results and to a lesser extent in IAG's results is the fact that they were very pampered by the natural hazards in Australia, but specifically in Queensland. So that did have an impact on their result, whereas QBE tends to be a lot more diversified more in general insurance and then also a lot globally, as Raymond said. That investment income, the last result, they earned $305 million US on their investments, which was actually down a little bit. So those interest rates are having an impact, but they are anticipating that their investment income will improve from that going forward. Their last result from a premium perspective was actually fairly positive, so their earnings were up 11%. Then their premiums rose by about 2%, which is less than what we've seen previously, but still reasonable as far as the overall business is concerned. So we think it is a good quality business. Even though their share prices are quite well, we do think that they're good value. They're still trading on a PE ratio of 12.4 times, dividend yield of 4.2%. So reasonable fundamentals there. So we've actually got a buyer recommendation on it with an attacker price of $26. So we think that there is some further upside to where they're currently trading yet. Okay, great. Thank you. Thank you for that. They disagree. David likes the global exposure brought about by QBE, so it's not. Has not all been manipulated prior to the show. All right, let's get to number 9 on the list being calls. And this one's first stand. So yeah, interesting, because we had that atCC ruling against calls recently, but I was chatting to a guest last week who said, "Look, that actually removes some of the uncertainty, even though it wasn't a favorable decision for calls. We've got food price inflation." Although it appears as if those grocery stores are trying to, I guess, wear some of the burden on behalf of their shoppers. What do you make of calls, David? And I know we will inevitably compare it to Woolies, so go for it. Yes, well, you're right, Nadine, that the two do tend to trade in lockstep and trade against each other, interestingly as far as that atCC will see. And then, we're not sure if the funding will worser also going through a similar process, but their funding hasn't been announced as yet. So yeah, we're probably of a similar view that the. It is a slight positive if you like that we're now out of the woods as far as the atCC funding is concerned. There'll obviously be some negative impact and negative media coverage about it, but from an earnings point of view, we don't think it has any material impact on calls. It was historic. The period that they were looking at was February 2022 to May 2023. We probably all know that the supermarket's advertised specials that aren't necessarily specials, so probably wasn't earth shattering as far as the news is concerned. We actually do like calls, we've got an accumulate recommendation on them. Our target price is $23, so we think that they're reasonable value at the moment. And similarly, with bullies, we've also got an accumulate recommendation on them as well. Both have been very, very volatile this year as far as their share price is concerned. Our preference out of the three is actually Metcash. Metcash is, doesn't have as much market share as calls or more words do, but we think that they're probably better value. The purpose of the show, let's call calls are hold, because we've got that buy on Metcash. That's a hold for calls. Buy call yourself for calls. This one's for Stan, right? Yeah, we have a whole recommendation on calls. Starting a defensive business, they should do well in a time of uncertainty. The question we have is, if the time becomes less uncertain, so those defensive holding may likely do underperform. So that's the first thing we have to be mindful of. The other thing when we talk to some of the selective supplier to both supermarket, up P, Woolies certainly is playing a big catch up after a period of underperformance. So this is something to be mindful of as well. And also the last point is when we look at the FY27 PE, the Woolies, I think it's around 23 times and calls is around 21 times based on the forecast burning. Given Woolies have a bigger supermarket network, it's not too much difference among the two. So we have a preference of Woolies over calls, but for calls we have a whole recommendation. Got it. Yeah, we can't mention one without mentioning the other. All right, let's get to the next and actually lucky last on the list. And this one is for Emma. So I'll start with you, Ray, because we do focus a lot on West farmers in relation to a three-tail business. So that would be the K-Marts and the bunnings, of course, bunnings. But it's really interesting that West farmers has this chemical division and the lithium plays as well. So, yeah, does that factor into how you view West farmers at all? I don't think the market would really factor into lithium business that John Vanshirt and the old sink humans, I think business. The market would still mostly look at it as a consumer stock. That certainly got sold out along with the rest of the market. At the moment, we have a trim recommendation on West farmers. So if we fit into the program, it would be by sale or whole. It would likely to be a whole. At this stage. But remember, analysts don't change the recommendation before the next result. So I can see when we have that recommendation that was in the last result. And since the share price has gone down, I believe a lot of analysts will sit on the fan and wait for the next result before they make changes to the earnings. So the target price we have at the moment is $80. So now on a slide, this can't. That's why I think it's more, feel more like a whole recommendation on West farmers. And for long-term investors, further weakness, likely to be a buying opportunity. Because West farmers has been a good, long-term SS allocator for the shareholder. And this is the type of company we should always look into it when there's a witness. Yeah. And I think that the weakness has taken some by surprise. I mean, David, we know that the consumer is facing headwinds for all of the aforementioned reasons. But Bunnings is a bit of its own beast. And Kmart, you've got to say, is, you know, everybody loves Kmart these days, including, you know, teenagers and kids alike. So do you think that it's been unfairly treated by the market to some extent? Not really. No, I think that they're still a little bit expensive from where they should be. You're right that Bunnings and Kmart are very good businesses. But you know, even management themselves have said that they're expecting a bit of a slowdown in sales. And the consumer is being impacted by higher interest rates, higher inflation, fuel costs, etc. There is a bit of a tailwind from the stronger Australian dollar for Bunnings and Kmart, because a lot of their goods are actually import. So that's a positive for them. So yeah, we're probably look warm on the retail side of the business. Interestingly though, the lithium and ammonia, fertilizer type business that they've also got exposure to, we've actually just upgraded our earnings based on our expectations there. So our commodity analysts are quite positive on the outlook for lithium. And they've input that into the model and actually upgraded our earnings forecast for West Farmers because it is a conglomerate. It does have a lot of tentacles and the business has a lot of moving parts. So that's one of the business we think is positive. But overall, I still think they're expensive. They're trading on a P ratio of 30 times with the concern about the outlook for the consumer. Yeah, we've got a whole recommendation on it. So Raymond I agree on the whole recommendation, but our target price is actually different. We've got a $70 target price. So we actually think that they're trading above where they should be at the moment and possibly have a little bit more weakness before we look at adding to West Farmers. Yeah. And Raymond's point, I mean, as I said to start, we're almost June. We've been through some, I guess, of confession season. But would you be wise to sort of wait for the August reporting season, tell the proof is in the pudding, so to speak? Yeah, I think that's certainly the case that we are in an environment where those interest rate hikes have been announced haven't necessarily had the impact as yet. We obviously saw the change in unemployment number last week. So over the coming months we could well see a little bit more impact on that consumer sentiment and potentially on the outlook for West farmers. So yeah, I think at the moment it probably would be a good time to be holding off on some of those consumer discretionary type stocks. Yeah, okay, great. And Raymond, just a final thought, when it comes to earning season, I mean, every year there's sort of this is what we'll be watching for, you know, margins, you know, or, you know, pricing power, which is pretty much the same thing, or, you know, AI spend. Like, what do you think is going to be the go to when it comes to August reporting season for bigger companies? Yeah, for bigger companies, certainly I would look at how the big cloud provider in the world will spend the money on Québec. So that's number one thing that likely to flow through an impact, you know, our dollar cents have related investment like range from Goodman next easy all the way through. So that's the first thing. The other thing of course is the transportation cost, the cost of doing pieces. So we have high energy causes, we're high interest rate, how are they fairing? So that will be the number two thing. So that will hit the margin on on those pieces. Number three, David rightly point out, how's the consumer reacting? Are they spending more? Are they spending less? What happened there? Because high interest rate were both way for the retiree baby boomer. They're likely to have more money to spend. So that's that mean that they will spend more money on coffee machine. But, you know, for the younger generation, they will find harder to meet the mortgage payment. So for those who are on a 5% deposit last year and buying into the property, then maybe now in a negative equity, how are they going to react? So those are the three key things I will look at going into the August reporting season. Yeah, and David knocking on our door really, if I'm 5/5 this year's everything to go by. So far, look, we're out of time. David Lane, or it's thank you so much for joining us. Great to have you joining us. Thanks for having us. Always Raymond Chan from Morgan's as well. I forgot to review what we've learned, but I will do so now quickly. Resmed by for both of my guests, ProMedicus, a buy for both of my guests and a price target of $210.00. You heard it here twice. So take that away. QBE, it is a buy for David. Still below its price target. Raymond would prefer, although he's not giving a rating on QBE. It would prefer Suncorp really in the insurance space locally calls. It is a hold for both of my guests and West farmers. It is still a bit expensive, as you just heard David saying. It's a hold or a trim technically, but Raymond said, you know, sort of, reticent to make a big call ahead of earning season. Thank you for watching. We'd love it if you could tell your friends about us the best way to ensure that we can continue making this wonderful content for you is for us to grow our audience or you can choose to support Osbus and you can do so by that button that you'll find on the website top right hand corner. Osbus.com.au for any of you listening in podcast form. Have a wonderful day. We'll see you tomorrow. 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