the call: Friday 29 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 day and welcome to the call. 10 stocks, people are you two experts one hour. It is Friday, the 29th of May. I'm Andrew Gagan. Thanks for joining us on, we're going to get across a small caps today. Our experts on the show, Dean Furgit from Science Investment Management, and you're by BlueFry and TenCat. Welcome to both of you. Great to have you in this journey. Thank you for joining us. I'm Andrew Gagan. Our experts on the show. Thank you for joining us on, we're going to get across a small caps today. Look, Australia market certainly seems a lot more cautious. That's simply because our market, our economy was going through slow down, high inflation to start with and then we have the oil. So our market is more economically sensitive to what's happening with war. So that's why we're seeing a bit of selling. Also don't forget, for Australia normally may and June, we're heading to Texas loss selling and the light. So there is a bit of selling pressure in this market. But look, all of this is just provides catch up opportunity for our market. Look at what's happening today, some of the sectors that's been really, really, really sold off in recent weeks, that has really shown really significant reversal. I think a market is getting to a point where we like the US so much. And with the clarity, hopefully, with the war and the straight, we will see more stabilization and then people willing to put money to work. So I actually think that our market is getting very close to that point now. Always an opportunity. I guess a lot of opportunities in our market there. Well, that's what we like to hear on this show. So, how are you seeing it? And I guess particularly the performance of the small caps. Yeah, I mean, the US market's really interesting. It seems like every morning I wake up in the NASDAQ is up one or two percent. And what's up? Is it a record every day? The graphs, the extra, it's gone bang. So I think Australian investors are pretty cautious and don't get carried away with all the optimism and excitement. And potentially there's less of a kind of just a runaway enthusiasm for the market. There's been a number of companies that are kind of downgraded. So I think it's tempered quite a lot in Australia. Whether that's an opportunity or not, or maybe not quite so optimistic because I think maybe I'm even more depressed being from Melbourne. But you've got so much debt, like consumers are still struggling. I think there's not a lot of confidence, housing, struggling. So that I don't think flows through into a lot of market confidence at the moment. But there's always opportunities we'll see. We've got 10 stocks and we'll be number that should perform pretty well. And on June base point, resources are still kicking along really, really nicely. So that's sector of the market strong. So yes, some competing factors. All right. Well, let's see if we're going to get across some of those opportunities today. 10 stocks has been mentioned there. Plus our stock of the day. Let's get to it. It is IDP education at Tickicoat, IEL. Now this is in the context of student visa approvals coming down. Look at across a number of countries, Canada, or here in Australia, the UK, the US. Now my quarry, downgrading IDP education to underperformance, price target from $5.45 to $2.35, Cali Stingett, to $22 there. That global crackdown on visa steam. How do you see it? Is there more to go? We'll look at the share prices down some 60% over the past 12 months. Is it a buying opportunity? Would you go there? What do you see? Yeah, it's a real catcher for in off scenario. Look at IDP education. I picked $38. It's now at $2. So a couple of things. Not often you see brokers putting under performance on stock. Maybe this is a little bit of catch up. But to see them going, I think this is going to underperform Mark. Given how far it's fallen, is a real sign that there's some trouble there. The company, you know, really surprisingly, they are downwarks on 15-20% today. The last thing they did was upgrade their earnings guidance. So on a this year's basis, it does look really cheap. But it's kind of like this government driven business. So my government's drive. How many students can come in? What like child care? When things start going the other way, it really impacts the market. The company is pretty well-shorted. It does have some net data around 200 million. So I think the fear at the moment is a capital race is potentially coming. Yeah, look, I think momentum is such a strong factor in the market that it's not one you probably want to be in at the moment. But you look, if you're going to do 130 E-Bit on a market cap of 600 million, it looks really, really cheap. But just a lot of government headwinds both here, UK and Canada. All right, so potentially a value trap. I definitely value trap. Yeah. If you're already there, though, what would you do with it? I'll be very depressed. I think it's trading at a record like listed in 2015 at like three bucks a share or something. As I said, went up more than 10 times. So amazing result. But it's just going backwards. I'd say, you know, at the end of May, take some tax losses. You know, you realize those, realize those losses. Get some tax back and move on to something that's going up. So, jump base. So specifically McPore, they're quoting obviously those change to student visa volumes. Plus a stronger Aussie dollar as well, which has hurt it. Overall, softer demand. Overall, those headwinds. Therefore, derailing its earnings guidance, the spiders didn't say that it did upgrade most recently in terms of its guidance there. So, how you say? Yeah, so I spoke to the company and spoke to the Macquarie. So I think the downgrade is particularly recently. A lot of visa has been rejected. So I don't know if it's come from the top or maybe just a quality of the student application. So there's high rejection that's coming through at the moment. So that's why Macquarie came for and say, look, it's actually looking very weak. But speaking to the company, it's actually because IDP's high quality operator. So their application is a little bit higher than the rest of the industry. So they have said that there's really not much change from what it was. So things are still tracking as expectations. So potentially there's no downgrade as the market is indicating. I think tactically it's a buy, you know, for 34 to 16% are on that downgrade. You know, people really worry about earnings downgrade. And I think the downgrade is probably not going to eventually. However, if you're going to take a longer-term view what's happening though, this company is really impacted by all the government's outlook for population growth. Now Australia's been talking about trying to curb population. The easiest way to curb population is students. So unfortunately, I think every country is still going through it with its UK. It's here. I think Canada's maybe moving to a little bit more friendly policy now. Well, but it has cracked down a bit. It has cracked down. Yeah, exactly. So I think everyone's looking forward to the change in policy. And unfortunately, that's still going to be very tough for the next 12 to 18 month. Australia is being the biggest market for them. It is going to be tough as well. So, look, tactically, I'm saying you probably got, you know, 15% upside here when they don't downgrade. The things are still tracking, okay? But it just got to watch out all the policies for this company. You know, it used to be market darling. I just don't see how it can turn very quickly in terms of the outlook. Yeah, not with the success of Paul and Hanson and one nation recently. That's not going to help. He's it by end up like well, that is a global trend. Yeah, that's a lot of things against immigration. So are you calling that then a short term buy? It's a short term buy. Yeah, okay. All right. So it's a lot of different perspective there on IDP education. That is our stock of the day. Now let's turn to the first five as chosen by you. So we're going to get across GR engineering, reliance, worldwide, smart parking, gentrack and service strength. All right. So let's begin in the engineering space. It is a GR engineering. Aaron asking about this one, engineering procurement and construction has recently been awarded several contracts. Disassembles, refurbishes, relocates, recommissions, particularly mining service sites. Yeah, that's a buy. So let's put into a few growth trends within our market at the moment. One of the biggest one is the contractors. So whether it's mining contractors or data center contractors and if you engineer, you highly sought after. They just so much work there is and to be one. And this company plays very well. Supplies to some of the largest mining companies and with high commodity prices minus our spending. And you know, even though it looks a little bit expensive, it's on 23 times earnings. But the growth pipelines looking very strong. You know, this compared to some of the larger names if you look at Monodelphas or 25 times. You've got, which is growing slower now because it's huge. You know, down there's a little bit cheaper. So, you know, compares quite favorably and that it's coming off low base. So high growth, you know, I'll put it in the by territory. - Dean. Has run heart. Yeah, they all have, like look at the man, Simon, like a podium, monodil for the CINWH. There are a lot of these WA based mining contractors, you know, engineering procurement construction. You know, reasonable margins. They've won some really big deals, like vault minerals, 150 mil, Genesis minerals, 250. Clearly a lot of tar winds, but I really struggle knowing what I've seen, like drew my life cycle as an investor, the ups and downs in the resource space. You know, contractors make a lot of money, what's going well then, there's no work around. They've got high fixed costs. I don't like paying anymore than kind of high teens for this business. Maybe I'm old school, like that's the way people used to value them, they're all getting carried away. But for me, it just seems a little bit too much for potentially what's mid-high cycle, plus 20 times is too much for that kind of business. Or albeit there's a lot of momentum there, and it's arguably a less risky way to play kind of the commodities boom. So for maybe just a little bit more conservative on it. - All right, to the point of trimming or selling, I would do something. - Yeah, I wouldn't, I would be looking at other things to buy, 'cause I think it's probably a little bit too expensive. - All right, bit of a trend emerging early here. It's been more cautious, you'll be seeing the opportunity. Let's see if that continues with our next stock, it is. But Alliance worldwide, George asking about this, designs manufacture supplies those water flow plumbing solutions in particular, it's a shark bite fittings. - I did reaffirmance for your trading outlook there, noting the impact of tariffs were within their expected range. And obviously what's going on in the Middle East, to the same managing that through price adjustments, Dean. - What do you think? - Yeah, it's, I mean, you've got to think of reliance worldwide as pretty much, I think, a play on the US housing market. With the headwind of potential tariffs, or albeit these look like they've been reversed and maybe not so much of an issue. Earnings have been kinda going sideways, slash backwards to the last few years. Margians have been getting worse, they're now about sort of 17%. For me, like I don't have a really strong positive view, or negative view from that amount on US housing, I'm just not close enough to a no. So for me, it's probably one I'd put in the, I might say too hard basket, but if you've got a view on housing in the US, it's probably a good way to play it, and it's a bit of depressed share price. But at the moment, probably stay away from it. It's decent dividend yield, but a lot of headwinds, probably not a lot of growth in the near term, so not one I'd like. - Jumbo, how do you say it? - Yeah, I agree, that's a tough one. I will place that in the probably value stock. I'll put that in the buy, in the buy camp. Look, it is facing a lot of headwinds. Copper is a big input into its shock buy. Although these days they reduce some more, and then they hedge a bit better, but we are talking about how high the copper price is going to grow, so that's always an impact on this company. They do pass through the prices, because they click to, if shock buy click to connect, cost about $3 or $5, so they do pass through some of the copper increases. To their customers, and they have already done so. Terrifying impacted it seems like everything that can go wrong is going wrong for this company, and that has been doing so for the last couple of years, and it's like a slow motion going wrong. It is very, very, very cheap in this market. I think in the multiple, something like 10 times. So it's quite rare to see that now. The UK housing market is also a big component of it. It's about 30, 40%. So the UK seems to be seeing some green shoots now, and they're around the world, the green shoots, and the US is definitely still soft. But then James Hardy is probably more directly to what's happening in the US market, Australia is somewhat tracking sideways. So market doesn't look like it's going to improve, but it's just 10 times earnings, it's quite a nice dividend yield. They've got a huge buyback program that is in, right now it's being suspended. Everyone's asking why. There's been previously being private equity interest in this one. So I think the interest is real as well. So I think this is a proper value stock and might take a little while to worse through, but it's a buy. - All right, once again, difference of opinion there on Reliance Worldwide. So make it what you will, let's turn now to our fourth stock. We're going to take a look at, no, third stock in fact, I'm getting ahead of myself. - Hi Nadine here. Thanks for listening to the call. Did you know becoming an Osbus contributor gets your stock picks straight to the front of the queue and to the expert of your choice? It's our very small way of saying thanks for your support. The link to become a contributor is in the show notes or you can go to osbus.co/contributors. That's osbus.co/contributors. And while I've got you, we'd love it if you could leave us a review. And thanks for listening. We're going to take a look at smart parking. Well, is that technology innovative there within parking management systems? And it has embarked on a bit of an acquisition strategy at the moment. This is part or part of its global expansion if you like with the presence in the UK, Denmark, Germany, Australia and the like. And the US, Jumei, what do you think? - Yeah, that's a sell. So the company bought lots of businesses when you put them together, they couldn't make it work. They recently had three downgrades in the row. Really caused a lot of, you know, or caused a lot of, investors lost a lot of confidence in the management. One of the worst thing is that when company bought all these businesses, they couldn't integrate them and then you start having downgrades, then people ask a lot of questions. So I think it's, you know, it's, you know, and marketcaps now sitting at around 300 millions, pretty small now. I think it would take a lot for people to turn around and you know, think this is a great business. So I, I avoid that one. - Mm-hmm. Okay. Interesting. Dean. Go on, it's a surprise. Is she gonna go the other way, aren't you? - It's what makes a market people who support you, isn't it? - Yeah, I'm sorry. - So it's actually good. I come on here with Luke, we agree on everything. It's kind of boring. I like this business fundamentally, but it's, it's expensive. Still, even though it's come from $1.20 to kind of 80 cents, it's still on about 10 times a bit, duh. I mean, I think sometimes when you look at a business and you've got your own sort of personal experience going, this is like getting parking tickets is really annoying and I hate having to pay for parking all the time. And then being on the other side, that's a good business. Like if you hate bank fees, you hate paying tolls on roads, then good businesses, because you don't have a choice. So smart parking is a kind of center of that. Technology based a little bit. So a lot of automatic number plate recognition, this market's changing pretty quickly now that it's all being automated. So technically, I like it. You could argue that their acquisition into the US while it's hasn't gone as well as expected. If you want to be doing parking revenue generation, US is where you go. And when I was researching this, I didn't realize there are two billion parking spots in America. So I don't expect smart marketing to get all of them, but I think there's enough potential momentum in this business for it to go pretty well. Some people look at like a tech software business and you could argue there is a bit of that. The geographical diversified, so UK, US, New Zealand, Germany, Switzerland, Denmark. If I could buy it cheaper, I would like to. So I don't think it's quite at the price where you go, this is a screaming buy, but I like the longer term thematic. So I'd probably be accumulating it. - All right, I'm going to call it a buy, just the interest. - Yeah, that's a nice balance. - So we've got a nice balance. Let's do it. - Well, we have it. You can be broker all our share, try and stick this. - That's great. - I'll clip it as it goes through. Thanks very much. All right, well, let's see. There continues with the next one. Then it is GenTrack is the stock. Aloe, I'll ask you about this. It develops integrates and support of enterprise billing and customer management software, particularly servicing, where utilities and also airports as well. Although doing it was caught up in the SaaS Pocalypse, wasn't it? Interestingly also has made some recent acquisitions. - Yeah, it's been a bit of a SaaS Pocalypse story, but it's also operation not performing as well as they had sort of suggested. So I think it was in their AGM in 2014. So this is a New Zealand based business that does sort of utilities billing airport management solution, so a high end software business with, you know, pretty strong revenues and what had been really, really strong growth. They said that they were going to do pretty much annualized growth of about 15% per annum and margins of about 15 to 20%, which is quite reasonable for a software company. A few things have gone wrong, they've lost some contracts, raving it. have gone backwards and the EBITDA margin slips. I think this year is going to be about 7%. So like half of the bottom in though are suggesting. So this is not a company that trades on big multiples anymore because it's lost market confidence. It does look pretty inexpensive but you know to come back it was kind of a four billion dollar stock or something like that I think. And I know it was one and a half is that right and now it's like 350 mil so it's not much but I think the market confidence is not there unlike kind of I did per education. It's potentially a value trap but I wouldn't be there until there's some clarity on the sustainability of their margins and a return to some sort of revenue growth for the business. Sell. Sell. All right now at your bay I saw you nodding then. Does that many agree with Zane? Yeah I do agree with the way with you. You know I think it's a sell and I think the biggest problem for me is that we are going through the biggest AI or software transition at the moment. This company is not on top of it. I think if they do pivot now I don't know how long we'll take and I don't know if it will be enough to reverse the trend. I think the biggest problem is the majority of its its software is embedded into Salesforce and these days I don't know how many agente AI agents you use. You know you got to be built into every single one of those agents because we don't know which one eventually your user will be the you know the delivery HD moment right so we don't know which one. So you know Salesforce share price has collapsed because Salesforce now need to work out the ways to build into the other agents and then you know this business was the entirely designed and built into Salesforce so you know they need to find ways to to survive to find you know life after Salesforce. You know I think that's the biggest problem for this company that's why they're losing a lot of share to crack in to you know a number of others private businesses. So you know I think it's they need to spend a lot more money to build into its interface into something else and seems like they're not really on the path to do that so I think I wouldn't be there. Anything on software now it's like such a fast race at the moment and it's changing so quickly if you're a legacy you know embedded software company not moving quickly you just get left behind and the market is either going to value really highly or not at all so yeah it's it's a tricky one and management of just going to be so agile across all of the services. I think so. It's either it's you've got to spend a lot of money first to work out which one and at the same time you've got to find efficiency in your own business because you've been disrupted. How do you keep your margin together? So we're watching Wyse Tech doing this in real time right they're cutting their workforce and then they trying to stay to be the user interface for their industry hoping they not start using a gentec AI. So you know so I think it's really interesting we're watching it unfolding in front of eyes. Zero is signing up with everyone they can think of which is great and but it's it's really really fascinating. Yeah it is interesting isn't it because yeah I mean you take a look at the hyperscale I'm sorry absolutely everything at AI at the moment in terms of capex at the lower end this small company so though it's a hit in the misseason though if you don't throw enough money out at the end as you say to end you know you could be behind and even the bigger ones I can even real estate and seek have been smash-ed by as well as because it's just such a competitive fast market. Well it illustrates the revolution that we are in at the moment all right let's now turn to service stream. They're asking out this one provides the essential network services particularly the telco utilities and also the transportation sectors there so essential infrastructure services recently made a new acquisition expanding its industrial services footprint particularly into the defense sector. Jumbe. Oh I like it it's a buy again this is belong to the whole the trend in terms of electrification of our economy or you know some of the infrastructure defense spend that need to take place. This company you're okay I know the share price look like it's suddenly had a hockey step but if you look across all of them this one is actually pretty cheap relative to every other one that's actually running at the moment. The share price actually took a long time to really for people to realize this company is exposure and its earnings growing you know it's growing double digit actually it's quite rare rare it's actually one of the really highlight of our you know our indexes that seeing some of those construction businesses you know doing so well and the pipeline is very very strong you know the company this company is actually have a great management team rarely they I wouldn't say never but they rarely disappointed market at all you know it's probably one of the the best quality you know mining service or you know sort of construction engineering business there is and it's reasonable multiple and it give you a good growth it's a buy. Totally disagree. A lot of these business have been running really well so I think in Australia don't have AI businesses you can invest in so people looking for kind of backdoor ways of getting in there and I think you know look at SKS which is you know involved in data center construction something across electrical the same. Service stream kind of fits into that I mean they do a lot of NBN connections wireless broadband you know gas water meter electrical a lot of sort of transport maintenance so it's not I don't think it says exciting tech businesses investors might like to make out it's quite large now so they do a up to enough billion dollars in revenue at reasonable margins it is paying a modest yield to an a half percent I can't quite see where they're going to get massive growth to justify kind of a 20 times P.M. multiple so for me it's one I don't really see a reason to be there albeit that they are making a few acquisitions I think the last one are EGRIP was sort of electrical high voltage so that's probably where investors have got excited yeah for me I'll let tune by by them and we can touch base this time in six or 12 months and see who's right. Well to that point given how you guys have played this I'm going to get through all these stocks in about six or 12 months to see you know who comes here. All right let's set out the first half of the show then it has been interesting isn't that given the diversity of opinion all right we began with our stock of the day IDP education that broke down great there it is a sell from Dean saying looks cheap but it is a value trap. Junbei is seeing as a tactical buyer at this point at least in the short term but it is obviously policy dependent in terms of immigration numbers. G.O. engineering services that are by from Junbei are seeing the growth for contractors particularly in the mining space and Dean saying essentially he sees that yeah good business but too expensive running with that momentum so he would sell it. Alliance worldwide no Dean not interested in it to particularly given its exposure there in the US housing market earnings are going backwards he says whereas Junbei is seeing as a value stock pretty cheap so she would buy it. Smart parking once again a diverse opinion there whereas Junbei would avoid or sell this stock given it's just had what three downgrades in a row whereas Dean saying the upside here and he would be willing to buy it so given it's gone to and Gentrak group that is once we've had agreement on so both would sell and say look it's not performing a bit of a value trap there and well behind the AO revolution and finally their service stream. Bye from Junbei and a sell from Dean. All right let's catch up with their own high conviction fund it is picked by our investments committee ladies episode is live here to watch it on osp.com just letting you know in fact the new episode is about to be recorded as we head into June but before we get there let's check in on the portfolio update so going into May the committee used high levels of cash to buy two new stocks clinical farmer and Delta Lithium out of it did cut its exposure in McQuarry leaving the cash position at 7.7% so you can find out the reasoning behind those decisions if you head to the investment committee drop down menu at osp.com.au and so if our the fund is up but just over 30% on a commuter return basis since it began in March 2022 so you know the deal send your stock request in any double buys goes to the investment committee. 10 sites picked by you two experts one out. Let's get to the companies I think the number will buy you. Put a little in both because you never know where the land mines hidden. We've also some upgrades in the next six to twelve months and I still want to pay catch up so I'm going to call this one and buy. The call is brought to you by Centuria an ASX listed property fund manager with $21 billion in assets under management. All right let's get into the second half of the show. We are going to take a look at skin candy, dickadada, bit makers, did you go infrastructure reeks and Metcash. so I've been in with SkinCandy, which recently IPO'd in fact, and this was Dean's suggestion so do you pay a bit of electricity? What do you think about it? So it's piercing and jewelry retailer, completed one of the most anticipated IPOs on the market, operates around 100 stores in Australian New Zealand with ambitious plans to looking to open 200 plus stores in its own plus, then go to a global expansion of some 500 stores, very ambitious. Dean, is it going to meet these targets? Potentially. So everyone is looking at SkinCandy as the next Lavisa. Or all bit slightly different markets, but the MD of SkinCandy, Dane Freisi was an ex-Lavisa CLO. They're looking to go into the same market South Africa, you know, from a good base in Australia. Look, I think it's risky and it's probably priced a little bit too high for the moment, given where they are on the cycle. It's been pretty successful. One thing I like about really, really strong margins in this business, so they operate like little subsalons. It's been interesting to think about this business because I don't know really the finance market, lots of people going and getting tattoos and sort of pissings on the weekend kind of thing, so it's this really foreign market. But like, you know, really, really good numbers. Maybe one of the orange flags has been like, it's been a big sell down at IPO, so they raised 150 and most of that went to the P firm that was selling out. But good established base, I think it's one you keep a close eye on because if they start getting success overseas and arguably pretty low risk kind of thing, you know, it could go well. So I wouldn't be buying it now, but I definitely wouldn't be selling because I can't see the upside there. So hold, yes, yeah. Do you mind? Look, I saw the company maybe four months ago, then I saw them again two months ago. I think the biggest thing, well, actually, I did go, you went to Skiing Candy for the first time in December, get my helix piercing and I ended up going back three more times and every time I go back, they charge me more. So, you know, so. And they were very happy. Exactly. They were very happy. Oh, that's great. But that's so much for us after service. But, you know, so I think it's the company has been truly being corporatized properly, it was really only two years, track record. Four months ago, it was doing double digit, like for like. And two months ago, it was doing high single digit, like for like. Now, we don't know this business what it's like through cycle. So we are in a retail condition, things are slowing down. So, and obviously the company think they can do, you know, still high single digit, probably the worst, the worst they could ever do. And then they said, we got all these store roll out. You can put in, you know, they believe they can get to the target, which is quite a high growth. That's why they should be on the visa multiple. But the challenge is they're not putting those forecast out there. They're only forecasting two months. Yeah. May and June. So, well, then why wouldn't you forecast 2027? The old days, they provide 18 month forecast. And now with only two month forecast, to me, it's very hard to see when a company doesn't commit to their own targets. And then you ask investors to put money for it. So, and 28 times, it's just way too expensive for near term, you know, earnings. And I might as well buy a visa. I think a little bit of a visa looks very cheap. And don't forget, a visa was losing money in one of the UK division. So if you take out those losses, it's not expensive. And it's, you know, probably cheaper to say, ever being. And it's still got really good, you know, the foot traffic and things that are still doing pretty well. I think if I want to buy, put my money in the visa, then this company, you know, I like to see it trade longer to see how it goes through cycle. The visa was seen up before. And the visa's got much better track record. And I don't go to skin candy to get my trinkets. I got a visa to get trinkets when there's an event. Sin candy are going there for a piercing. So, you know, it's really just for piercing sort of driven sort of traffic. So, yeah, I'll be watching. I think it's a, it's should be a cheaper business. It's just not price properly. To the point you'd sell it. I sell it, putting it to the visa. Yeah. Well, until you point out, yes, if the company itself doesn't have confidence to give a long term forecast, then why should investors have confidence? Exactly. Well, they said, we'll give you the numbers. You can pluck it in. But still, you've got to, you've got to be accountable to your forecast. Yeah. And it doesn't have that track record as a listed business either. I mean, it's been listed for what two or three weeks. So there's not that history, that confidence. So, you probably write that it's just a cart justify a high rating at the moment on a trust be basis until the load of actually proves it. Yeah. All right, let's get into something completely different. Now, we're going to dick it to our to it is the tech hardware software and cloud distributor, particularly IT hardware, cloud access control and surveillance as well. And has an accelerating profitability surging on AI related demand as the case may be, what do you think, Jumbe? Yeah, it's actually pretty cheap. I am a little bit undecided because I feel it's in the right place as a middleman to distribute the wholesale of all these technology that's coming through the cloud. Clearly, businesses are going through this whole new space and requiring all these services. So for the time being, it looks really, really good. However, we are seeing globally those technology consultants and the like are being de-rated because the ease of using the agentech AI. So in the future, you just, it's been like lawyers in the countenance, right? So you can't price it more like lawyers. You just can't price the number of hours you require to do a scope or for any project. So I think that's the challenge. So for me, I'm probably more neutral and probably more on the sell side and putting to something else if you want to gain exposure properly to the cloud and technological growth. I tend to disagree a little bit. I haven't invested in this business. It's obviously pretty found a led founder own, David Dickers, not there anymore. But the moral looked into it. The more I kind of like it, like look at this and you think, are they just sort of resell computers and software and that sort of stuff? That's pretty boy. It's almost like a really old school business. But then you go, well, everyone's getting new laptops. They're refreshing data centers. There's a lot of money still going into IT. This might not be cutting edge kind of stuff, but it's a big business. They do three and a half billion dollars in revenue, really, really strong EBITDA. 160 mil EBITDA, they're going to do this here on a 1.6 billion valuation. So it's not overly expensive. Continue to grow both at the top line and the bottom line so that the numbers are there in a business that you might think otherwise was going sideways or backwards. And a really strong dividend yield. They pay out 80 to 100% of their business. So they've got a lot of confidence in their cash flow. So I think you can be there for the growth. You can be there for the dividend. You can be there for the potential IT tailwinds that we're seeing across the economy in a diversified established business. So for me, there's enough data like and I probably have it as a buy. And so it goes. A buy and a set of tickets data. Let's turn to better makers. It is the next stock. And look, this is essentially develops in fried software, data and analytics. It's clear for the B2B, wagering markets. And more recently, has seen a bit of a transformation as business returned to positive EBITDA. Dean, what do you think? Yeah, it's an interesting one. I mean, it's had a bit of a run recently, bit makers because there was speculation that the tabcorp were going to buy into it. So bit makers is not a front-end gambling business, but they do all the back-end, all the engines for other online gaming businesses, in which there are around thousands out there. But probably their marquee client is crown bet. The business has been losing money, you know, significantly for last few years and has just turned profitable and also operationally cash flow positive. It's a bit of a crowd at space. You know, it got a lot in there. And if you've got any ESG kind of issues, then you're going to wipe this out immediately. It's maybe got a slight premium for the potential takeover, but I think that's an advantage. So for me, you know, probably look at acquiring it at these levels. I know it's gone a little bit higher, but it's looking at kind of 70% margins on software. If they continue to build out a new client base and the whole gambling industry continues to grow, which seems to just be unstoppable at the moment. I think this is not a bad way to play it, being at the technology back end. With a potential takeover target there. So, you know, the smart market cap with like a couple hundred mil with net cash of 15, you can simply as much or more upside down. Look, I have to take the other side. Look, it is very, very cheap. It's two times revenue. So, you know, clearly I just reached in cash flow break even. And it did take them many, many years to get here. You know, I just remember this business when it first started, which is a couple guys really in the garage, right? Started this business. And, you know, they've done, and then they thought about going to many different markets and they just didn't work. So I think they reached, you know, reached, finally reached the scale, but I think the whole industry is a very tough industry now. You're seeing the regulation, you're seeing the consumer, you're seeing everywhere is really turning against this industry. We recently seen what's happening with tap call. We've seen what's happening with pubs and clubs now They're going through it and we see what's happening with the casino market Just overall I think the regulatory front is turning against this sector You know and they investors are obviously already you know Investors was the first one to bolt and then you kind of see the whole regulatory things are coming through And then the consumers a little bit more sort of turning away from us So I think the company is you know It's it's probably necessary for the area. It is very very competitive as you mentioned I just think that's the easier way to make money You know, I think eventually what will happen to this company is you will get taken out But it just I'm not sure when it's harder to wait It has the same sort of issues as like an IDP education or or child care that that a lot of is based on the government's approval or or Clamping down on these industries and yeah, I agree I've seen bit of a risk but Maybe not as top of mind as as Immigration or some of the child care issues. So yeah, I don't say that is quite a risk But then it's definitely there for sure All right, so I buy and a cell for bedmakers Let me stop you right there Okay, so pretty much every stock you guys have screened up. Yeah, what is it about your individual investment philosophy? Do you think you are you're taking your different stance here? I think I can actually see clear because my I'm a farm manager. So my benchmarks the ASX 200 So my goal is to so when I invest in something I say to buy my idea is it's got to be do better than the index Right, so you know if if a stock for example, it's expensive, you know those engineering business It's expensive in my mind. It doesn't matter. I know it will grow and that growth is compared to what you pay for the data center It's actually a whole lot cheaper. That's my way of playing data center or you know mining spend So you know, so I think these stock will do better than the market. So I'm always thinking that in terms of market sense But maybe I don't know if you're you know when you're thinking about buying sell whether it's in the you know more absolute return sort of Yeah, yeah, that's exactly right look. I don't look at the business and so that's in the index Do I need to be at weight or below or above? I'm like if I don't really like it. I just want buy it So I have a lot of cells out there and only a few bars, which is contrary to a lot of other people Yeah, it's interesting because I think sometimes I'm looking at momentum and you're looking at value and then sometimes it's a bit vice versa So it might just be coincidental that we're agreeing or not But but it is really important because I don't know people that that match an index And if you're under weight sectors that are going bananas then you want to perform well It doesn't matter if you do all the right things if something you haven't done that's going well And you look at people have invested in gold and you know some of these mining services You have to be there. So yeah, that's right. So yeah, so for far managers We kind of need to cover every sector making sure we have you know if we have understanding and because we do long shorts as well So we do a lot of those you know, you know Those companies just long short even within the sector as well just making sure we covers those areas And it makes for an interesting show so well done all right Let's turn to our ninth target is digiko infrastructure Read what we are asking about this one and Jumbo you were just talking about data centers It's certainly now focused There Particularly a racially scaling is Australian US data center footprint winning some Hopscale and government clients there. What do you think? I think that was a sell But I put that money again in my relative thinking I put that money into the GOOOMEN group I think or your infertile is another way to play data center Digiko haven't even built their data center yet and then they're talking about it. They don't have enough funding They don't have recently shaped price performed little bit because they saw one asset So you know, so that is the probably your lower tier lowest tier quality data center play And you know ultimately there's a lot of money going to data center It's great, but you want to find the data center builder that has funding and partnership right and there's secure energy Goodman group and ift and infertile are the two that have access to that Even next DC doesn't have it even though they recently or they they've demonstrated recently they raise our money But are very very expensive, you know rate like almost, you know, very expensive rate and they don't and only that's Guarantee for a couple of years and so once after a couple years you run out of run out of money again You have to raise money. So you'd rather to be in those defensive ones and then they will continue to To to grow Completely agree Yeah, I mean did you guys been a but just been a wild ride since it listed so it was a list of sort of 455 bucks And it felt a sort of a dollar Yeah, it fell day one and just kept going went down to a dollar 68 and it's recovered to kind of two 262 70 and you see the other that the company that's backed at David de Pillars HMC has gone from 12 dollars to three So this has been um a real forum aside for for a lot of investors You know, and you basically exactly right like I think it's on to low low quality kind of data center play they kind of refurbishing existing centers they Like she said that they sold the Chicago one for 750 mil to pay off debt. So that's kind of Kind of thing any industry is going But not as it's it's data centers. They're selling it to raise money to pay off debt You're not within a good position. So despite the fact that it's bounced a bit Um, I don't see any reason to be there Um, you know, there are better ways to play that industry rather than this one So yeah, probably just stay away from it All right, well there we go. That is a point of agreement in terms of did you go infrastructure reviews a double sell Well, it's finally gets to met cash. This is in the defensive sector Uh, staples that he asking about um this one particularly as it supplies um at the iGA uh, Sudanogat chain Also as that presence in hardware as well and uh, in fact just getting the latest it um, it's major updates four-year results there or no um, it's may trading update there Uh, just trying to get across what we saw there, but um, oh look I'll hand it over to you guys. I can't it's not coming up on my screen Um, but I mean obviously you'd make that point of comparison with the two majors in in calls and mollies as well Do you think yeah, I mean it's clearly like you third tier third fourth tier play with with hourly So you've got more worse about sort of 35% with groceries calls about 26 So there's a 60 and then the sort of the iJs independence make up the rest They've got a really good diversified um, portfolio of assets obviously all the iGAs and I think the iJs do a really really good job might attend total tools um, celebrations um, and it is Like kind of trading on like two thirds or half the multiple of of the calls or woollies So always as long as kind of high 20s calls around 25 times make cash about 15 and about Twice the yield as well. So so for me um Those valuation metrics kind of outweigh the fact that it's a third tier player I think also there's a growing kind of You know consumer rhetoric that you just don't want to keep giving more money to these You know Big big players Well, I'm in the wake of that to core decision on calls with the deceptive pricing practices Yeah, and I I think you know sometimes you don't have a choice about whether you shop there And I've got a calls up the road and I go to all the time But yeah, you're lucky going you guys are you know really dodgy kind of corporate players I would I would like to support you some independent grosser That that often offers sort of a similar pricing and in a tough market Maybe people go to the cheapest players and so you know Aldi's probably that one but but for me Yeah, like I like the portfolio of assets. I really like the pricing of this business versus The nearest competitors out there. So I'd be um a buyer of it. Yes. Yeah. Okay. Interesting To in fact, maybe it's where I live, but I find that ija is the most expensive supermarket. Yeah Uh, should buy what do you think? Yeah, so I um I wanted to put on the neutral but since we have no neutral. I put this one on the cell. We did hold what a elsewhere Uh, it's very probably a hold because it is very cheap on 12 times earnings um the little bit so 40% of business is minor 10 so hardware now the problem with hardware is that they they you know They collapse in terms of earnings in the last few years and now people are waiting for the turnaround for the earning to be uplifted And that doesn't look like it's coming because housing now again We're turning into a bit of a downturn again house prices come off and with the entry free increase in life So that part of business is not showing silver lining um the call uh to uh call business Actually was under a lot of pressure because of tobacco um, you know going to the black channel That was like collapse 70% so you know that was a huge part of the earning and that's all gone now So what's really driving earnings back should now back down to the you know the core traffic So people are actually now started shopping a bit more, you know at the supermarket instead of going out So that's benefiting them that actually looks pretty good Uh, but the challenges next 12 month i do think the supermarket has put through incredible amount of price increases And i do think these will have to come out so so what with them already talk about price freezes Um, although privately they say oh, we're not really doing it, but they what had they have to um, you know Consumers it is deterring the consumer in terms of you know how much price uh they put through it And then now I can see there's definitely there's a lot more discount across both calls and worth when there's a price war What gets really impacted is iGA um because they had their price tickets they have they have to really match uh what happened with the majors So um, so i think that the tough time is coming um, you know I put on a hold kind of it's cheap, you know 12 times Warthrow still on 24 times calls on you know 19 um, you know It is really really cheap, but share price not going anywhere. Yeah, I mean the markets in that kind of view that if you're downgrading earnings, it doesn't matter if you're on 12 times or five, it doesn't, it'll still go down. So yeah, I see point. - Yeah. - Now, let's wrap up the second half of the show, it began with skin candy, which is only been listed for two or three weeks. It is a hold from Dean. So look at his risky, it is too expensive, but he sees it, but he'd be willing to hang on it at this point, looking at it as potentially the next levice, whereas Tombay sees that, potentially it's a negative, she would refer to the visa, and also points out, look, they're only one of the forecasts, two months ahead, so that's a negative as far as she's concerned, she would sell it. Digit data, it is a sell from Tombay, although it does point out that it looks cheap, whereas Dean is saying, what does, examining some strong, even though they're, see some growth potential, so would buy it, bedmakers, it is a buy from Dean, potential M and A target there as well, which Junbei also points out it is cheap, but she says, look, it's tough, she would sell it. Digit code, read both in agreement, I would sell it saying, it's the poor equality, if you want that exposure, particularly to data centers, there are better plays, Junbei mentioning Goodman Group and Infertil, and finally the Metcash, it is a buy from Dean and a hold from Junbei. Great show guys, thanks for joining us, Suddien. Coming all the way from Melbourne, thanks for joining us from Sign of Assignment. Yeah, it's been great. And likewise, Junbei, it was great to see you in the studio as well. Thank you for joining us from TechCab. Thank you for having me. And thanks to you for watching. The call is brought to you by Centuria, an ASX listed property fund manager with $21 billion in assets under management. [MUSIC]