the call: Monday 22 June

Hi, I'm Juliette Sali. Stay with us after today's episode of the call for a bonus conversation with Australian vintage CEO Tom Dusseldorg. It's a company taking a fresh approach to the wine industry. That's coming up at the end of the show. Cheers. Hello and a warm welcome to the call. You know the deal 10 stocks picked by you two expert guests over 60 minutes. I'm Juliette Sali. Great to have your company and let's introduce our two experts on today's show Jonathan Takadena from MPC Market sitting next to me and Zach Ria's from Banyan Tree. Investment who's joining us remotely today. So great to have you with us. Guys on what has been a quite interesting talk to the week's trade really with these headlines still about the peace deal. Exactly. The deal or no deal basically. Deal or no deal indeed. All right, we'll get more into it but let's get now straight into what we've been seeing with our stock of the day and it is wise tech falling quite heavily today. The Australian Financial Review reporting that Wise Tech found a Richard Wyshe is being investigated by the Australian Federal Police in a human trafficking investigation. The media organization reporting that Federal Police are investigating wide over claims he allegedly exploited a woman's immigration status and financial insecurity for sex and provided false information on a visa application. The AFP's human exploitation task force has launched the investigation into White after a complaint from a former executive from another company. White alleged to have used his power and influence to co-est Caroline Hartman, a Brazilian once employed by Wise Tech as a cleaner into a sexual relationship allegedly. Hartman making similar claims against White last year but ultimately reached a settlement with the businessman and Wise Tech shares have hit a five year low today. So at a five year low, Jonathan, is it a bye? I was on the call, probably maybe four months ago and I asked his question and I said that, okay, so if Richard White can stay out of the headlines for about six months, I think it's a good bite because obviously the company, the fundamentals still, yeah, it's still a solidly run company. Unfortunately when I open up the AFP this morning and I saw his photo, I'm like, oh no, he's added again and I was just like, here we go. So basically for me, he needs to go. Simple as that. And there's plenty of companies that look once they're found to leave, they go on to greater and better things and that's what the board has to do now and just have to get him out of there, get out of headlines and get back to business. Unfortunately, till that newer headline comes to light, for me it's an avoid at these levels. Like if you still got it and you've held on for this long, I would probably still hold on because as I said, it's still a great company but yeah, unfortunately, we are in an attention economy now. It's all about attention and unfortunately this is not all good news. It's marketable. So unfortunately, at this stage, yeah, it's an avoid. An avoid but a hold if you have. Exactly. And as I said, it's just more, he has another piece of news pops out. He has to go once he gets, you know, brooted. I think, you know, that will be low for the run and why is that called bounce from me? All right, Zach, what do you reckon? Yeah, what? We lost that. Great company. Yeah. And you know, a great company, great product and it's become an absolute shambles case studies for NBA classes around the world, frankly. And I agree with Jonathan. Either the founder needs to leave or he can use his 34% you know, share holding and take this private do whatever you want to do as a private company then. But you know, it's interesting. There was a lot of shareholders when, you know, where there's fire, where there's smoke, this fire and when this this whole notion originally started, a lot of the big shareholders said, no, we want him to stay. That was about $70, $90 what it was. Well, congratulations. This is where we're at now. So I think the best outcome for existing investors is private equity comes and takes us out. I mean, they're already getting rid of a third of their workforce. I mean, that's private equity playbook and yeah, take a private or this love founder really needs to abdicate his position. It's an absolute shambles. Yeah, at best, this is a neutral. We have a small holding in it. It's a small holding in the hope that honestly that someone takes this private because the the governance issues are just too extensive to be honest. Yeah. All right. Well, a shambles for according to Zaka, both my guests saying really avoid this stock. That does have a small holding, hoping for private equity to come in and Jonathan says, hold it if you have it, but Richard White has to go. So that does it for our stock of the day, why is tech? Let's start straight in then to the first five stocks. So we've had quite a few viewers calling in with some stock picks today. Greg asked for ASX, Ruben asked for vicinity centers, Damien asked for technology one, Marvin asked for the lottery corporation, and then we chose Metcash as well to round things out. So sticking with you, Jonathan, and looking at ASX. So trading volumes are covering there's a lot of regulatory scrutiny. Do you see this as a buyhold or sell here? For me, and yeah, it's I've been dealing with ASX for a very long time, being in the markets quite a bit and ASX. As I said, on the call before, it's a very, very lazy monopoly. You have a look at some of the exchanges around the world. They're all at record highs. You've got trading volumes through the roof. New products coming in. Basically, they're still struggling to get a new chest system of the ground. It looks like it's here. So you can't just white label another piece of software from another country and just replace that. If it was a private sector, that problem would have been fixed a long time ago, but it just got cost overruns. It's just amazing that it's not high. For me, it's at best the whole, but just because of my history, and I've seen that this asset be squandered for so long in the past, it's more of an avoid for me. Avoid it, but hold it if you've got it. What about you, Zach? When it's down 33% is that look attractive? Yeah, it looks interesting, but it's hard to get any more positive. If you've got a new CEO, still to come, it's on key metrics as a high quality business. Jonathan does describe it appropriately. It's a lazy monopoly, but it's got a very high margins and whatnot. Because of all those factors, I think it does find a floor, I think anything below $50 or $45, I think you have a swing as a trader. But in terms of fundamental, is this going to year-on-eat compound? I think you got to get the new CEO come in. The recent asset settlement probably removes one headwind, but the new CEO's going to come in depends on what the new CEO will do with the cost-based. The investments is probably required as well. There's a lot of things that need to be sorted out. It's a neutral for us. It's not trading on, you know, you should trade on a very hefty premiums to the global competitors and it's time to trade more in line with its global peers. The valuation is not flumping the table cheap. I think forward earnings 20 times and yield of about 3.7%. Overall, I'm okay with the neutral, but it's not one that would be jumping in and in time soon given the new CEO starting in and whatnot. I'll put your both down maybe for a hold on that one. vicinity centers. So I'll stick with you now, Zach. So property conditions for retail, potentially improving. Does that set vicinity maybe up for looking attractive? Yeah, so we own vicinity centers and our dividend strategy has been a good one. We really like retail space and to be honest, we put central group in the same bucket. It has obviously been on a trading range as you can see on your chart, but the supply of new retail coming quality retail is limited. So, you know, I was looking at a statistic. Sydney and Melbourne supply over the last sort of from 2010 to 2019 has grown at a K-GRA, about two and a half to 2.7% per annum. The next sort of five, six, seven years is basically growing 0.1 to 0.5%. So there's no new supply coming on and this whole narrative around that everyone shots from home absolutely not go to your centers on the weekend. People are out there, people want experiences. Yes, the makeup of what your retail space looks like has changed, but high quality retail assets in densely populated areas are very attractive. So yeah, we like vicinity as a dividend player, but also the retail spot. And I think some of the cyclical and structural issues, like I said, the lack of new supply that's coming on and still the demand. And the final point that I will make that, you know, I want to walk to these retail centers and some of these DFOs. I keep an eye on what's happening. And recently in the last three or four months, I've noticed new shops coming and old shops closing and they're saying there's a waiting list for people to get into this hide, obviously, food traffic area. And we can't pay for the new lease spreads that are coming. And so the lease spreads are starting to become positive as well for good retail space. So yes, for us. Now, in terms of it's a buy or neutral, obviously, I think if you're looking for a dividend strategy, it's a buy for us. But on valuation guys, probably a bit neutral, but we are positive on the space. All right, you positive. So I like, you know, income here, because they're obviously the booms are looking for income. I think there are better ways to get income. But in terms of REITs, this is actually a good quality one itself. I see paid about a 4.7% div yield, no franking, from what I see, 17 PE. And to Zach's point, what you're going to see going into the future is that yes, there will be more people shopping online. But the thing is the high quality centers where it is an experience, people will still go to those because it's still a destination. From what I saw in some of the research, some of the bigger brokers actually went out to the new chats with Chase where they have a new high end section. Is that open now? I think it's close to it. So they've got all the top-tier brands, Tiffany's, I'm going to butcher this on this. You said it right, isn't it? Yeah, so my wife keeps asking for a bag, but I can't even pronounce it. But yeah, there's a whole high end section that's just being built there. So it just shows that that whole disparity, like a lot of the local shops where it's just the normal, they might have a camera, so look at that, they're in trouble, but all the higher end stores, I think they're going to do well in the future. So with that, if you are looking for income and you are looking for a read in the retail space, the vicinity does tick the boxes for me. So that would be a buy. I do prefer getting my income in other ways, but yeah, for what it is, it is a good read. All right, Ring the Bell, Marius, we just got a double buy for vicinity centers. Hi, Andrew here. Did you know you can get your stoppicks straight to the front of the queue and to the guest 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 move on then to technology one, and I'm actually not following the prompt. There's probably a question from a viewer that I've forgotten to ask, so let me just quickly check. No, Damien though asked for this dog. I'll ask my question then, Jonathan. So consistent earnings growth, rich multiples, what do you think about T&E? Technology one. So this is probably the most consistent, SaaS name that was kind of involved in the SaaS Poc ellipse. I think that was the term of it. That's all turned around now, and a lot of these names have bounced, and you can just see technology on back at 30. And from the lows, it's actually been the strongest bounce. Unfortunately, the weakest one has been voice taken. We know why. It's in that space. But in terms of quality, the main reason why technology one sort of bounced back the best is that they have a very, very sticky customer base. So the self-to-government's large corporations, and the whole thing with the SaaS Poc ellipse was, the headline was AI is going to start eating software. And unfortunately, and I've said this before, is that software is not just code. So a lot of these companies, they need good compliance, you need good relationships. There's a natural mode there, and that's where technology one proved that, and that's why it's bounced from the lows here. So for me, I think if this whole AI run continues, this SaaS sort of bounced continues. So I think it's a buy from here. I think there's a bit of a move higher in technology one. Zach, are you going to give me a second double buy? I would love to, but I just, everything Jonathan said, and the only thing I'll add, we recently run the numbers on this, and it is very hard to get across to a thumping bite on valuation grounds, right? You know, margin expansion, we've got in and out numbers, them achieving the $1 billion revenue line, we've got a head, a one year head. We've got double digit earnings growth revenue growth, and top line growth, except for we've got it. And so we've got an average KGAR of nearly 15% per annum on revenue, and nearly 22% per annum in terms of bottom line. So really growth numbers. Now, some may go, I would take this at any price, but you know, to justify a price from a EVE bit of multiple perspective, and a P multiple perspective, you have to plug in at least around 60 times P number, and you have to plug in about 30 to 32 times EVE bit of number to get above $30, $33. So if you're comfortable with that, knowing that, well, then that's fine. But we feel like this is definitely a stock that can be a core holding, but it's just not a thumping vibe because of those valuation metrics. And we are moving into a different regime, different world, and I think we're just very much mindful of the macro here as well. So yeah, look, it's a neutral, but any price weakness on this. Unfortunately, we missed the absolute bargain by at $20, where it was. But yeah, for us, it's a neutral looking to go more positive on valuation. All right, neutral. So hold, buy from Jonathan. Gosh, we are racing through this hour, gentlemen. We might need to put the brakes on a little bit. What are we up to now? We're up to the lottery corporation. So Zach, I'll stay with you. Some defensive earnings here, dividend appeal. What do you think about TLC? Yeah, look, it's a company we've liked for a very long time. It's in our dividend strategy. It's been there for a while, provides low bidder as well. The defensive quality of its end market, obviously, it's the biggest revenue, sorry, EBIT driver is the lottery's business. But it is a low growth. I know at the recent, at the recent investor day, management is looking to get that top line growth, accelerated to more that single mid single digit growth versus low double, low single digit growth. But at the end of the day, I can't see this from a top-line growth perspective, accelerating in a meaningful way. And I think because it already trades on a pretty hefty P in multiple, that means I think there is a ceiling of sorts. Now, we're underneath that. Certainly, digitalisation, new parks, the way you communicate to your clients, how you turn the yield can absolutely make the earnings growth numbers a little bit more attractive than what the top line numbers may suggest. But yeah, for us, if you're looking for a low beta defensive play, and with yield, it's not something that table on the yield either. But yeah, this is in our dividend strategy. And so for me, it's a neutral for those reasons. All right, so we go a hold, but it's a new dividend strategy. What about you, Jonathan? Solid company. I mean, like the thing is, it's pretty much got a monopoly on the whole loggeries. Big positive, they got a 40-year licence from the Victorian Government, and obviously, the politicians kicked up the stinks saying that, "Did we actually get a good deal?" Giving them that 40-year deal, I think it was over a billion dollars worth, but the thing is, now TLC have that cash flow locked in for the next four years, and it saloonifies their position. It is still kind of expensive. It's trading at a 35 PE, but if you do like the business model, I think anytime you, it dips, you have to buy it. That being said, though, it's not exactly an exciting trading stock because it just tends to go sideways as well. So it's not, it's a quality business, but not an exciting one. Just a hold for me at the current levels. But anytime it dips, you just know that someone else will follow you from those lows. All right, yeah. As you say, a bit of a monopoly there, potentially, too, in terms of where you can actually look in that space. Let's get into Metcash then. I believe Metcash has got a bit of news out today, doesn't it? My brain is on its Monday. Do you know what the news is? For your earnings. For your earnings, that's right. Okay. So let's get into Metcash and and see what you think there, Jonathan, about that. Well, I scrambled to find the news about Metcash. I did read it this morning that that was two hours ago. Here we go. One and a half percent fall in net profit to 279.1 million for the 2026 financial year. So softer conditions, hardware and liquor divisions offsetting growth in food. You know, of course, also living starting to bite maybe. - Absolutely, and don't forget it's like in hardware, they're up against bindings. Licka, there's also the next generation or the younger generation just aren't drinking as much. Is that also tailwind? So food is their main sort of growth area, but I do think that they're struggling against the juopoly that is cause and what's in terms of distribution. I mean, they are great numbers, but if you can just see from the lows, the balancing will works and calls has been a lot higher. So I prefer to be in the juopoly if I do want some exposure to this sector. That being said though, it's still a decent business that they're getting good numbers in, but as I said, it's a good solid business, but not exciting. And I often say that the stock market is a bit of a popularity contest. - Yeah. And the calls awards have that in spades in that space. - I mean, I can't even remember going past a Metcash. Like you always see a calls and woollys, right? - Well, look, if there's plenty of IGAs about that. - Yeah, that's true, yeah. - And that's their main, that's the brand that you do see. - Yeah. - So they're up, they do have a food space out there, but just against the juopoly out there, they do struggle. And you do see that in the share price in the returns. And obviously the big insta investors, they agree with me. And that's why you see the money going in that space. So for me, Metcash at these levels, the numbers that yearly earnings looks like they've done well, but just a hold for me. - A hold, all right. Zach, your calls are woollys and IGA men. - So we are a swinging voter, wherever the value is. But to be honest, something I've certainly noticed in our spending behavior, and why we actually put back some of our exposure to these guys is we've gone more towards Audi. So we were staunch calls with Woolworths, or predominantly calls, but then wherever the value is, I just follow what my wife does. And she's from Colz, Woolworths, and now a large chunk from Audi. So what you've had a couple of issues here, you've had Woolworths and Colz who control their own stores and therefore control their supply chains and therefore can compete on price. Metcash has a business where it is the wholesale provider to guys that run IGA. Those guys are sometimes one storeperson or they have multiple stores. So they've got to manage their cost. They can only do certain, compete on certain pricing. And then you've got Audi that's coming to the business, an international player that's got financial backing has taken, I would say 20 to 30% of our grocery, and basket, that's a big chunk. So IGA struggles in that. But nonetheless, the IGA team, the Metcash team, has done a good job turning this business around, but it is a struggles. So the results were okay. Yeah, I mean, the numbers in the sense EUR&E is one thing, but they came in line with market expectations. And that's why I think the share price has gone nowhere today. It gives you a decent newt. And so it is in our different strategy when we feel like Colz and Woolworths, are just training at very other Elevated P. I mean, you can't really have some of these guys, but Woolworths was training at a very Elevated P, getting yield of 2.5%. It's a staple, but it's not really giving you a dividend. That's when we went into Metcash in a dividend strategy. So it's still there, yield of 6%. Interesting around the trading update. They had obviously a soft April, a March and April on the back of the whole Iran issue. The trading update suggests that consumers are coming back again with the June EUR&E today trading update. And again, hardware business is the one that's feeling most loved. So look, it's a neutral for us. It's a dividend half star. And even when Metcash gets to a certain multiple, you want to start trimming it because it's not a compounded because of the setup of the industry structure. All right, I'm with you while I found an Audi woman too, but I've had to start doing it on Door Dash because if I take myself to Audi, I end up in that middle aisle and then end up with a whole lot of stuff I do not need. All right, but I do love an Audi. All right, let's go through the first five stocks then. ASX was from Greg, Jonathan saying here, well, actually both guests are whole, but Jonathan was saying, look, there are a bit of a lazy monopoly. The cost overruns here, a little bit worrying too. And Zach saying, look, there's still got a bit of a turnaround to come with the new CEO, but he did say anything below $50 have a little look at it there. Our vicinity was a buyer, double buyer from both. Jonathan saying, good value, REIT, got a 4.7% dividend yield. We're talking about Chatswood Chase too. I'm an old North Shore girl. Gotta go have a look at that new Founts, he Chatswood Chase. And Zach saying he likes retail. There's a good trading range here. Supply for quality retail is limited. And even though he thinks they're neutral on the valuation, he does see it as a buy. Technology one, Jonathan is a buy here too, saying it's one of the big names from the SaaS POC ellipse, but that sort of turned around, and it's quite consistent in this space. Zach, pretty neutral here, though. He's saying it's not a thumping buy very hard to get a cross to or buy on the valuation. And it has double digit earnings gross. He's a little bit neutral here. And the average keger, trading towards 15%, so a hold for Zach on that one. The lottery corporation, Jonathan saying, look, you're a little bit expensive at 35 times a PE, but anytime it dips, you should buy it. It's a quality company. He's got a hold on that. Zach also pretty neutral, a hold, saying that pretty low beta on this one. And then Matt Cash getting back to whether or not you're an IGA or Coles or Woolies, an Audi person, not exciting for Jonathan. It's a hold. He says they're up against bunnings, talking about their younger generation, not drinking that much either. And then Zach very much saying, he's a swinging voter when it comes to where he shops is following his wife, who seems to be looking for the bargains. But in terms of this company, the hardware aspect looks good, but he's pretty neutral, so a hold for that one. But we did get one double buy out of those five stocks for the first half hour. The call, of course, is tracking our own high conviction fund, which is picked by our investment committee. And the latest episode of the committee meeting is available for you to watch at osbiz.com.au. Let's check in on the portfolio update. And going into June, the committee left the level of cash unchanged, around 8% of the portfolio, and two stocks out of the portfolio, Santos and Judo Capital. Instead, the panel added energy one and site minder. And of course, you can watch the latest episode and get behind all of those investment decisions. Just go to the website osbiz.com.au. There's a drop down menu, the investment committee. So far, our fund is up 34.28% on a cumulative return basis since inception on the 1st of March 2022. So do keep sending in your requests, keep the call switched on to see which stocks the committee will be looking at next. In a world of market noise and uncertainty, a disciplined approach to investing matters more than ever. Wealthy and Wise brings team invests value investing playbook to osbiz on pack how the macro environment impacts business analysis. These are the conditions of major global bubbles. When you suspend this belief and say, the earnings will come one day. Just not now. Put similar stocks head to head and make a call on which one rings. I think it's a good time to be a stock picker. What better time to buy than when the market is ignoring what is a wonderful company. Plus, ask the team investor experts to deep dive into a stock or topic of your choice. Just email us your questions live from 1 p.m. every Wednesday. Wealthy and Wise is your guide to value investing powered by team invest. You are watching the call. Great to have your company. I guess Jonathan Takadena from MPC Market, Zach Rias from Banyan Tree Investment. We're getting into the last five stocks of the hour with advanced energy minerals, which came to us from Jonathan himself, Greatland Gold. Eva Astas about that. Eva Energy came from Max, Omedia from Vikram, and Rose Astas to do a deep dive into Qantas. So Jonathan, this was your pick. So we'll start with you, Advanced Energy Minerals AEM, Critical Minerals Exposure, Early Stage Development Story. I'm guessing you like this one. Yeah, so I actually had this on the trade last week. So what I did was obviously Elon's taking all the attention at the moment with SpaceX and IPOs. So I just went through some of the more recent IPOs in Australia and just found some names I like. AEM is actually about six months old. So I listed, I think, Chris received from AEM. So it's been trading for about six months. Opened up at-- sorry, the initial IPO was at 53 cents. And started dropping down to about the low threes. And then that's when it kind of just popped up on my radar, currently trading 46 and on the buy here. So the thing about Advanced Energy Minerals that doing high-purity alumina, there's two companies on the exchange, which are the main proponents of that. It's A4N and AEM. A4N is trading at about 1.25 billion market cap. AEM is trading about a fifth of that. And about 250 to 80. market cap and they're going to go into production before A4N and actually have a more proven sort of process to produce A4N. So for me and I've seen the research on this is I think that's a pretty good bargain in terms of valuations if you want some exposure to high-periody alumina. So that's why I liked it on the trade last week and I talked about it then and that's why I thought yeah the viewers on the call might want to know about this one. So it is a pretty thin stock unfortunately you have to put your bids in and kind of just way to get filled but yeah there is you know they raised from memory just over 80 million dollars in the IPO so it's not a small company with a patch of dirt looking for things they've actually got the plant there and also the plant in Canada I forget the name of the actual area it's very close to hydroelectric power so as well so their cost of actual development for HBA will be on the lower sort of third or quarter going forward so a lot going for it and good value at these levels. Good value all right had you heard of AEMZAC and now you have and you've got the the elevator picture and Jonathan what do you think? Yeah look it's never heard of it before and yeah it's more a case of it's not one that probably falls through our watch list or our screens but more in high level from a high level perspective you know generally I get production and ramp up of you know revenue with these kind of names normally comes with execution risk potential funding risk and then there's the commodity and market risk added to that and so from our perspective these are ones that unless you really have some deep insight into the stock the company management teams we've seen some really good companies with very strong management management teams and assets and their ramp up and they're not obviously as a liquid or small as this and they still run into trouble so just from that high level perspective you know I trust Jonathan's very trustworthy in face so I'll be on neutral on this but for us to get any more I guess I mean just from a liquidity perspective it would be tough to get any more positive on it but if you have some insights and happy to look at a speculative plate it could be worth it yeah all right Jonathan always bringing us the ones under the radar and speaking of Jonathan this was the first stock I'd ever heard you tell me that was really exciting to Greatland Gold so recent project developments Gold price strength do you think that it might be a bit of a comeback here yeah absolutely so if you have a look at Greatland compared to most of the other producers or the large cap names they the share prices definitely held up probably one of the best out there like you have a look at say Northern star in comparison that's been beaten down Greatland keeps ticking on now good thing about Greatland they've actually got production and in near production and both tier one mines as well which is why yeah the company you know hasn't fallen through the cracks while we're going through this sort of period where Gold's not on the on the up and up so overall I think Gold you know I don't think it's gonna collapse anytime soon but you know just in general as I said it's the attention economy at the moment and Gold just doesn't have the attention like everyone was lining up outside ABC bullion like late last year and early this year and we're not seeing those lines anymore so what's happened is that you know the market has moved on to the next theme and what that means is that I think Gold will probably just go sideways for about six months which is what it did last year like it was pretty much sideways from March to September and then we had that massive run and I think we'll you know have a consolidation period are the same so the the pullback was from say about February so I think August September is when the next time we'll see you run so Greatland I think it's a buy but I do think that if it does get up to the highs I don't think it's gonna you know keep going so you know maybe tanks and props as well but overall you know I'm still a Gold bug and and the main reason is that the dead situation has not been solved for some reason Gold is trading like a risk asset at the moment which I think it yeah it's more of a monetary store of value which is more of my reasoning but at the moment you know every time that the the war comes back on it goes risk off and Gold gets sold off but every time it gets around that four thousand there's a bit there so that's where I think that's the level to buy it if you're you know you're looking to buy some say spot Gold exposure but anytime that Greatland dips buy that and you know once they get their second mind up right which is called Havarian I forget I'm butcher the name there so but either way that shows there there's future growth there as well. Alright Zach what do you think about GGP? Yeah look it's a great company obviously I think the asset to high quality they've got obviously one of the assets from X Newmont or New Crest sorry and and so nothing more of the assets the only couple concerns we have and look at the Gold Copper mixes is always I think pretty attractive given the world we're in I totally agree with Jonathan with with outlook for Gold we did we did take profits and on God at the start of the year we moved it to a broader commodities basket from asset allocation point of view and and that's materially that's up like 10% this year versus Gold I think year to date I could be wrong is that down like 7%. So but now and we didn't expect Gold to be weaker this year if you if you keep getting upward pressure on interest rates that's going to put pressure on Gold price along with risk assets and so in fact we were showing clients that the correlation between risk and Gold had turned positive so it wasn't going to provide you any defensive qualities from asset allocation point of view but I think we're getting to a stage where the tourist and Gold have left and it finds a floor here where the trade sideways and then trends up remains to be seen but the what happens in the Middle East is going to be a key determinant of that and if we get a peace talk I think it gets a bit more fresh air to run so that's from a top-line perspective but yeah with this particular company T1 asset it is coming to again that asset period CapEx cycle I think it's meant to spend about one to one point five billion dollars again you know we like it when cash flow is increasing or your your peak CapEx and then you're starting to just monetize the free cash flow I think that's probably a year or two way for this company obviously it's rallied it's much travel it's traded much better than some of its Gold Gold peers and I think it's you know that's been because it was also trading at a fairly and relatively attractive multiple relative to the other guys but I think the recent rally both absolute and relative means the valuation is looking a bit more neutral at these levels and so I'd be a neutral on this but definitely be part of a mix of your resources and exposure certainly gold all right well sticking with resources and stick with you is that now Viva Energy so yeah looking at these refining margins normalize somewhat the convenience retail side of the business as well what do you think about Viva Energy yeah look that that's just I mean you've hit it on the head there the volatility the refining margins you know can make or break a really attractive for this company but if you just cut couple of things I'd call out here the return investor capital is pretty low it's pretty close to where it's it's cost of capital is and and then if you get any sort of moving around in refining margins you know that can move the Delta very quickly on that and we like quality quality companies should be having should be owning all above their cost of capital and I think that then invariably gets reflected in your share price over the long term and therefore return so that's one part the other big part about this company is net debt is very high 4.5 times and you know that's net debt to EBITDA you start getting the EBITDA earnings like moving around that debt structure or those covenants certainly start to become in question now obviously it's got good quality assets the retail fuels business is going to grow at a steady pace but yeah from our perspective we prefer ample in this space AOD which is where we've been recommending investing in but this for us the debt level and their return investor capital level is a bit too skinny and too high so avoid or what do you think it's a void it's a void for us do not want to be around leverage planes all right what about you Jonathan I'm slightly different tacked on that so my main sort of thesis is that the whole energy sector has been under invested and very very cheap and as I said markets are populated conscious and non-wants energy and then now with you know talks of a peace deal which isn't a peace deal we're not too sure but we did see on the back of that crude oil prices rise from 60 to you know 110 and then now we're back at 75 and you know that's the market is deciding is the other straights ever going to open up or will they stay close. I know Trump keeps saying that, "Yeah, yeah, we've got to deal," but tell the guys that actually keep the thing closely if they actually agree. So with that, I do think that there's a flaw here going forward where crude will just be slightly higher. And with that, I think the margins will increase for a lot of energy companies. So I think the flaw, as we've seen, is probably around the 75 of barrel. And then every time it gets around to 9,100, that's kind of where you want to sell it as well. So with that, Viva had the fire in Jalong earlier on this year. It was kind of like sus that there were so many fires in so many refineries right around that time. But it's recovered since, and I think that actual part of the plant is back in production in August. So yeah, so they recovered from that. So I think that last time I was here, I said when I had Viva, is that energy is too cheap and any dips have to be bought. And I think this is a dip where you want to get long bit of Viva energy. I mean, like, it's not my preferred exposure in the energy space. I do prefer woodside. But I do think that there's a bounce he'd coming in the energy space. And I do think that we'll see crude pop back up to 90, 100 again. You know, as the straight sort of close, and then we'll see those strategic patholony reserves getting to crucial levels. So I do see a spike in energy coming. So for me, I buy at these levels. Yeah, I buy at these levels. What's interesting is that, yeah, when this name popped up, because I know when an IPO, I think it was $2.50, we did a thorough report on it because we were looking at it. And we obviously had a good experience with Ampole at that time as well. And I just went back and looked at our valuation, our DC effect then was saying 240. And this share price is at $2.13. So, you know, there's something to be said, these companies do trade in line with fundamental value. And back then, when an IPO would telling you, this is worth about $2.50. And that includes $2.40. That includes a 10 year earnings forecast and whatnot. So I think it's very hard to get this kind of stock as a compounder. And I think that's where the value still is probably around that $2.30 to $2.50 mark. All right. Well, let's move from resources to media. And this is an interesting one, stock nine, because O media Vikram's asked us about this. I mean, it's got a four way shootout here. Takeover bids about $845 million. It's extended due diligence for four private equity seashors and says it has a number of offers at $1.60 a share. Always interesting to talk about something that might be a takeover, but would you be involved, Jonathan? Well, it's interesting because it's trading so cheap. And that's kind of the reason why a lot of private equity will keep picking off the ASX names. Because as Mark always says, we need the actual mid-level fund managers to actually take a risk out here and actually get into some of these companies. Otherwise, private equity just comes in and says, "Okay, well, if you don't want these companies with big modes, large, sort of, or we'll call them monopolies, but large, great business models trading at very low values. They'll just come in and apply that private equity model where they'll strip it out, add a bunch of debt to it and sell it back to the public market at a higher multiple." So $1.60 is the bid. I'm not a good M&A expert. What I find is that the market is very, very good at sniffing out whether the takeover will take place. If you've already got the stock, I'll just hold on and see if a count of bid comes in a little bit higher than $1.60. But for me, trying to buy it here, I think it's trading $1.46, $1.60 bid, once that's a 10% move. If that bid gets pulled, then it probably drops 15-20. For me, that's not really a favorable risk-to-reward ratio. Not to say that the business is bad, but the market's just found it too cheap and that's why there's all these bids here. So for me, just to hold, if you've already got it, just hold on as well and hopefully there's a higher bid and you can make some more money here. Look, we've been positive on this stuff for a long time. We've been very positive on the app to a media space. We did a lot of work there. That was one area that was actually picking up market share. And then, Omedia is obviously a market leader in all of its key segments, airports, traffic. And what not. So, you showed a chart earlier on, has been a frustrating ride for investors because it is a cyclical business. Tenders come in, tenders go out, tender pressure, processing, etc, etc. So even if the top-down view is right, the cyclicality as this chart shows, depending on what's happening with this, so an economy, certainly can have an impact. But we've maintained this as a bit, really good business. And in February, we wrote a note to our client saying, "At $7 or anything below $1, this stock is a closureized and swing hard at it because it is a high quality business." And obviously since then, it's got a bid. So, we got lucky. We own it in our small cap strategy. A bid, I feel almost feel like sometimes, especially when the share price like that is a bit of a get out of jail card. Absolutely, someone else has recognised the value in it. But, yeah, look, like the space, like the business, it's probably an opportunistic play with the M&A. Look, a lot of other companies under M&A threat right now, digging their hills and saying, "Doesn't properly value our company." And like Jonathan said, if people walk away, this probably has 10, 15, 20% downside. So I'd be taking some profits here. But we would be neutral, but I would definitely take some profits here. I think there's a ceiling to this business as well because of the cyclicality. And if you then look at, and this is an important part, I think, to note as well. And I think, hopefully, the board and management understand this as well, the Australian economy means outlook and the Australian broader economy's outlook is not really that rosy at the moment. Yes, opportunistic, but things could remain tough from a consumer perspective for a long time. So it's a fine balance for the board and management team, but it's certainly be taking profits here. And I'd be neutral. Well, that kind of brings both those things together, the oil price aspect and the consumer when we look at the final stock, Quantis, that Rose wants to know about. So there's often always their question as well, which airline do you buy, Quantis versus Virgin, but just looking at Quantis itself, particularly if some of these fuel pressures is, what do you think about this one? Yeah, look, we've never liked airlines as a compounding business. So we first question, we ask any, when we're looking at stock, would we own the stock in the five years time? And what we really want that is a compounding effect growth over that earnings and hopefully dividends at the same time. Quantis, obviously, is a good quality company. I would say the industry structure has changed a fair bit. It was a lot more irrational, Virgin's gone in and out of administration, Tiger Airways has come and gone. And I think we are a juncture where the overall industry setup is a little bit better. And I think the PMO, if you look at it, I think if you go all the way back, I think Quantis used to train a range bound between $1 and $7. But I think since then, it's started to become elevated. The company has improved its cost structures, the way it runs its business. The management has changed and obviously the industry structure has improved. In terms of the latest issues around airlines being sold on the back of fuel cost, Quantis is one of them highly hedged airlines. In fact, the Asian Airlines are much more exposed to this movement in spot prices. So from that perspective, Quantis is really well placed in fact in line with any Zealand. So we like the business. Before us right now, it's more of a trading business because anything that happens in the Middle East or any geopolitical blow up anywhere in the world, airlines, consumer facing stocks, global supply chain, facing companies will instantly get a bit of a derating. So Quantis has bounced back. But yeah, we would manage your position in Quantis knowing that's high volatile stock, but it's more of a trading stock for us, high quality trading stock. All right. What am I taking from that? A buy or a buy? So a neutral. No, no. It's okay. Trailing because people have realized it's not as exposed to the spot price in jet fuels because of its hedging structure. All right. Yes. Similar to Zach, it's a trading stock. So airlines traditionally are very, very tough business. Like you've got to put so much money down, you know. The margins are tiny. There's competition from all over the world for that traffic. So that's why I tend to avoid it. Doesn't mean that it's not a great business though, but what does mean though is that it's volatile and you get great swings on it. So I remember when I was at the COVID lows and they had to pretty much put all of the new brand new, forget the double-decker flights out into the desert. And I was just like, wow, that's incredible. - Oh, the A38. - Yeah, yeah, that's the one. But the key with that is that the government won't ever let it collapse. So I was like, oh, well, look, this is gonna be a business that, okay, fair enough. COVID's here, but once we do normalize, it should recover and that's why it's had that nice run from about 23 to these levels. So with that, I wouldn't be buying it here, 'cause as Zach said, we're still in a deal or no deal. So in a period, we don't know the whole Middle East situation. So I think that will bring out trading opportunities. So anytime that there's a dip there, and we can see a bit of support by here. But at these levels, especially from that run from 23, all the way up to, where is it now about to $10? I remember catching some of that run. I'd be trimming here and just waiting for the next trade opportunity. - Yeah, the long way from those COVID lows, isn't it? All right, well, let's recap the last five stocks that we had kicking it off with Jonathan's pick their advanced energy minerals that was very much a buy, of course, from Jonathan listed on Christmas Eve, 53 cents popped up, they got in around the 30s. He says it's looking like a bargain, but it is very thinly traded. So the liquidity issue here is what makes Zach a little bit nervous or about it says that he hadn't actually heard of it, but he would be pretty neutral, but he did trust Jonathan our little rare earth sell gold bug that we like to call you as finding these winners for us. Greatland Gold, another one, which is up 108% year to date. And this was a buy from Jonathan saying that it hasn't fallen through the cracks here. The gold price, of course, has been going sideways, but still likes this stock, still a gold bug at heart. Zach, though, was more of a hold here, said it does have some good high quality X new press mining assets, but of course, they're sort of not as much momentum in what we've seen in the gold trade. So he's pretty neutral on that. We'll call that a hold in Viva Energy, a buy from Jonathan really likes the energy space prefers woodside, does think oil though is going to get back towards $90. So there should be a little bit of a buy the dip or some more momentum coming through in the energy space. I'm going to sort of say an avoid slash sell here from Zach, though, saying that volatility can make or break this, he thinks the ROE is low as well. The net debt is high. And in the space, he prefers or Benin Tree prefers ample ALD. All right, when it came to OMEDIA, OML, a hold for both, of course, is some got take over targets, asset, but Jonathan was saying that if they do walk away, that stock could drop by 10 to 20%. They trying, you could try it by at around $1.46. Is that what you were looking at? - I was saying it's $1.46. - It's around $1.46, but the bid is $1.60, right? Yeah, so trading private equity market coming in to pick up the names here. And Zach saying the bid could be a get out of jail card. He's positive on the outdoor media space. He likes it as an opportunistic look. They got in below $1.00 and I loved this. Anything below $1.00, close your eyes and swing high, but of course it's $1.46 at the moment, but they do have a hold. They're owning it in their small cap strategy over at Benin Tree. And then Qantas would say, well, really an avoid from you there, Jonathan. Airlines are tough, wouldn't be buying at the moment given that we don't have a lot of certainty over the Middle East peace deal, but trim at some of these levels, if you've done quite well from those COVID lows, similarly with Zach doesn't really like airlines, doesn't see them as compounding. Would you still be owning it in five years, highly doubtful? But says it is a highly hedged airline and very well placed. So a good trading business and I'm going to put that down for a hold. So I think over the course of the day, we had what one double buy there with vicinity centers. Not stock number three. All right, 12. Thank you to our panels, Zach Rias from Benin Tree, Jonathan Takadena from MPC Markets. Great to see you, bye. Thanks for having me, you good? Yeah, we'll see you again soon. Keep it on. We've got more news and views on Ausbez. And before we go, a bonus conversation for our The Call listeners. We know many of you are always looking for your next investment idea. So we're bringing you a deeper discussion with the leaders behind some of the ASX's emerging companies today, where joined by Australian vintage CEO Tom Düsseldorf. Great to have you with us Tom. Great to see you. So you've just secured refinancing through 2028. Tell us about this and how important it is to your success story. Yeah, I think, you know, I've been in the role now one year. When I took over a CEO, we had kind of a year to run on our financing with our partner. That whole strategy or that support was not necessarily aligned with the new direction. You know, we announced a turnaround. We were focusing on our inventory innovation. But we need to bring our finance partners along for the journey. So for the last kind of six months, we've been working collaboratively around what those next one to three plans look like, what kind of funding do we need? How do we secure it? How we align all the covenants and all of the checks in line with that strategy? And so now that we've announced that we've secured it and we've secured it for two years with a one year option, we now have finance aligned totally with our strategic direction as a business. So it's a really big positive reinforcement reinforcement. Investors, though, have heard turnaround stories before how confident that can they be in this one? Yeah, I mean, it was all about the numbers. You know, the half result that we announced showed us in decline and we'd never spent more cash. And we said in the full year, we'd be in growth and we would save more cash than we've ever saved. So, you know, that was always my measure at the half was to say, don't judge us on the first judges on the full year and the pleasing thing is without refinance, we gave guidance for the full year to say we are growing. So we're looking around four to five percent growth in the second half. So minus 1.7 to a four percent to five percent swing shows the directionality of the growth of the business, which is a big tick. So we are growing. And the cash turnaround has been massive. So we have saved roughly 20 to 25 million in cash in the second half, but it's the same time last year. So we're on track to hit our free cash flow target for the full year of this financial year, which was a massive check that the investors wanted to see that we could control our costs and our spending and at the same time drive revenue for the business. So those two metrics will, we guided that we would achieve in the full financial year. - And how quickly do you expect that business to move from stabilization to that cash flow? - No, I mean, that's the next step. So the first year was always free cash flow. So targeting neutral cash on an underlying basis. If we could show that we could do that, we are doing better than we've ever done since 2021 in COVID. So it's quite a big turnaround. It's probably a $35 million cash swing, which is facts. These are in our results. And so people were looking for that tangible demonstration that we're able to do it. And I actually think there's quite a lot more to come. I've been very active in the business, understanding every lever from how we order our packaging, which seems very basic all the way through to optimizing how great supply, how we utilize our wine. So I now am clear on every lever within the business. And I think we're just at the beginning of how we can optimize that cash utilization and protection going forward. - It's interesting you touched on COVID, 'cause this week we saw consumer confidence at its lowest level since records go back 50 years. We know millennials, Gen Z aren't drinking as much. As they used to, people have less cash. Interest rates are rising, petrol prices are rising. How does all of that and that gloominess kind of hurt your business and how do you turn that around? - Yeah, I mean, it's, if everyone in senior leadership in consumer goods are not talking about all those things, you have a major problem. And so that's a big part of our kind of strategic plan is how do we address what is looking like a downward trend on our category or our sector as an alcohol industry. But then within all those macrochanges, always substories. You know, like yes, people are drinking less overall, but they're not not drinking. So occasions are changing. The way that people are connecting over alcohol is more important than ever. So sociability, portability. So what you're seeing is people are making decisions about how they consume alcohol much more differently now than they did. So traditional forms of service, so standard 750 mil bottles of wine have their place. At home with a meal is still a very big part of the wine industry, but it's declining. People aren't opening that bottle Monday to Thursday because they'll either finish it and not really love it or they won't and they won't love that either. So wine has really got to start to evolve and learn from other categories that are growing. So RTD, small format, flavoured cans, where you can buy one to four or six or case, what's up to you are doing really, really well. RTD globally offers smaller bases continuing to grow. Beer's pretty flat, but still showing good buoyancy some emerging markets because it's more social. It's more casual. You know, so wine is a sector that we're in. You know, we need to learn from all of these cues that are happening beyond our industry and adapt. And there is growth to be had. And I think the thing people forget is that wine out of all of the categories within liquor have emotional connection to people. You know, I constantly reinforce its connection with food is unbreakable. Wine and food is a love that will last forever. And we all want to eat. We all want great meals. We've just got to be turning up in ways that people are looking for now more than ever. And I think that's been the big change in our business. And part of that adaption has been these smaller bottles. So Hoko Vino, somewhat the star of the turnaround story, how much of your successful future growth that Australian vintage require, I guess, depends on this brand. Massively. Yeah. I mean, I joke, you know, I've sat with every major customer in the world and I've said, I bet my career on this. Like I literally bet my career on it. I said, with absolute conviction that format is one of the big souls for wine. You know, everything I articulated about why we do or don't open bottles of wine often are influenced by the size and the volumetric nature of that drink. We don't want to go a bottle of champagne. It's just a lot of champagne. And I think where smalls have lost their way in wine is that wine makers perceive it to be a lesser quality vessel. So it will make the wine not as good, which isn't true because technology and filling technologies, the way you get air out of bottles is so much more sophisticated than it ever was. And so, you know, what I looked at was said, okay, this is the opportunity, but it had to be executed in a way that solve problems for everyone. You know, if you're going to solve or fulfill a need, you may as well solve all aspects of those challenges. And that's why Poco's so unique. It's skinny and flat. It merchandises on its side. It's helpful for retailers. It's aesthetically premium for consumers. It's portable for people that want to go. You've got a broad range. And the price point is not crazy. You know, we're not asking people to pay two, three times what they would for a bottle of wine. It's slightly more expensive, as you would expect. Smaller things tend to be because you lose the efficiencies of kind of scale, but it looks great. And I think what we're finding is that people don't want to compromise on the quality of the thing that they consume. Just give it to me in the way I want it. And so, so far, it's exceeded all of our expectations. So how important to answer your question? It is absolutely critical. The question is not, will it be big? The question is how big will it be and how quickly? And that's my focus. So you don't think it's a niche market. You think this is the future of consumption? It's the future. I mean, the UK and the great thing about our business, people think we're just an Aussie wine business. We do over 120 million revenue in the UK. You know, we're at the forefront of some of the most advanced and exciting consumer markets in the world. And so what we see is that that trend is being far more accelerated in the UK. So they have dedicated smalls base. Australia is just getting up to speed with that. They're starting to get destinations. If you see on checkout now and all your favourite spirits are being sold in little bottles, they always were sold in little bottles. But we kind of looked at them like a gift or something we wouldn't engage with. Now they're becoming more and more the volumetric consumption of spirits, because people don't want to buy a 700 mil bottle. Yeah. Those are happening in front of us. And I think wine was just very slow at looking at what they could learn and change, because it is very traditional. You know, a wine maker says a burgundy needs to be in a burgundy bottle. And no one questioned it. Yeah. Well, you know, myself and my colleague Nadine Blaney like to say that we're journalists that do the hard yards that we do our research. We tasted some of the poke of inner thanks to Australian vintage in yourself. But also we went looking for it. So Nadine lives on the Northern Beach. She said that she found it in her local liquor store and it's quite popular. She asked the retailer. I have to say in mine, I couldn't find it, but that was because the small bottles were hidden. So if that's happening, you know, consumers can't see that. How much of that is a hindrance to people not buying things that they can't see? It's massive. You know, I think, you know, the challenge we have now is not a question of, you know, more exposure. It's about working with retailers to build destinations that serve as consumer shopping needs, right? This is what grocery does incredibly well. Licka in Australia has its own retail footprint. You go into liquor stores to buy liquor. In the UK, you must go into grocery stores to buy liquor in the vast majority of cases. We don't have that in Australia. And so what that means is liquor stores have huge choice. You know, there's a lot of selection. It's quite overwhelming. And you can get lost in that space even with something as disruptive as Pocovino. So we're working with our partners, with our retail partners who fully believe in this trend and this movement to create destinations to sign posts for people. You know, here's where you can buy one or two. You can get a light or a red together. You don't have to go variety around the store. You know, all of these things are inherent barriers to one consumption. When you see an aisle of just wine bottles that all of the same except for their labels and price points and maybe it'll be a regionality, you don't know what to buy. Yeah. You're guessing. You're going to get a load of things that you're comfortable with. And I think we've kind of really cracked that now in terms of simplifying the choice. But the job we've got to do also is to not just expand the range, but make it easier to shop and easier to find. But what I say is we're selling more than we've ever sold that we thought we would now and people still can't find it. And people still don't know what it is. We haven't advertised yet. We haven't done any above the line. We needed to build a critical massive distribution and then we're going to invest behind this brand and make it mean something to people there. Maybe any year everyone knows what Pocovino is. What about some of your other disruptors, Lensseco and the light? Lensseco continues to perform like there's two stories. Pocovino we drove distribution. We agreed with part as it went everywhere. Lensseco has just been growing organically. It's a good product because it's been made with just fresh lemon, concentrate and Prosecco. So it's a very simple natural combination that just gives a kind of authenticity. And so we've now expanded across all of the Australian retail landscape. We're also now shipping into the US. So we're in 13 states in the US now with Lensseco at $12 USD on shelf. And believe it or not, it is more economical for us to make it here, ship it there. And so then it is to make it there and ship it out from domestic production. So even with all this tariff talk and all of these macroeconomic issues, it is still quite compelling in terms of shipping into the US. If you can get a really good kind of trade going. So Lensseco is looking really positive there. We've shipped our first 10 containers into China. So that's going through Shanghai and Tier 1 cities. And so we're pretty optimistic about what that can do. But Pocco is still going to be by far and away our biggest bet. Yeah. Going back to the fact that people are drinking less and some people aren't drinking at all. Do you think the biggest challenge to your business is potentially not another one company, another listed one company, but maybe the wellness culture? Yeah. Look, we're all aspiring to be healthier. That is a fact. But that's been a trend going for a very long time. I mean, I worked in food for a number of years. And the healthier aisle has now become just the store. You think about the growth of gluten free, fat free, sugar free. That's been moving through food. And then as it gets into liquor, what we're seeing is, yes, people are drinking less in total volume. But they're still drinking. And so even on premise out and about sociability, these occasions are growing at home with a family member partner over dinner. That's where the decline is predominantly taking place. People are choosing to opt out of drinking in those occasions. So there's still plenty of opportunity. And just take one, the decline is actually being driven by Shiraz and Cabanet. So heavy reds. They're the one shrinking. So, sex, pinagrigio, rosé, sparkling, pinot noir, all in growth. So at some point, wine actually on total is in growth again in Australia and the UK on the latest data by 1.2%, which is meaningful. But what we'll see is we'll actually see a faster growth once the shift between red and white kind of completes. They just haven't been big enough to overcome the sheer volume of red wine that Boomer's drank for so many years. Love the Boomer's. Look, there'd be companies have done a really good job with zero alcohol. There's some really good zero free spirits as well. Why has the wine industry lagged? Are you working on anything like that? Yeah, it's a big part of our mix, actually. I mean, you probably would know where the number one still zero alcohol wine in the UK. We do half a million cases. Like it's a big part of our business. High margin. It's a good product. But when I say a good product, you know, I judge zero alcohol and it's proximity to the real thing. If you're pretending to be something you aren't. Yeah. You've got to get really close to that thing. Otherwise, it doesn't quite work. In beer, it's in the 80 to 90%. When you have a zero out beer, you can kind of convince yourself you're in that occasion. With wine, it's still sub 50. Yeah. You know, it doesn't have the same palette. It's a bit sweet. You know, it just doesn't deliver as in the way that beer is managed to really tap into that opportunity. So I think it's still going to be a meaningful part of the category, but not a massive solution. You know, the things that are exciting, the wine industry are lighter wine. So mid-strength, you know, lower ABVs are starting to get a bit of traction, but still relatively small. My view is, if you want to have a glass of wine, let's give people one glass of wine, which is why Pocovino works. Don't cut out wine completely. Don't drink the whole bottle. Just have one. And what we're seeing is that's bringing people back into wine because they're happy to have one glass and no stress of having to finish the rest of it. So that's where we're going to see, I think, the most movement. start to see brands move small as we continue. you to try and invite people back to that midweek. Everything in moderation, as our mothers always say, including moderation. (laughs) If you were launching Australian vintage from scratch today, what would you do differently Tom? It's a really good question. I mean, I look back on the legacy of this business and I kind of thank the heavens that they did invest so heavily in infrastructure. People say, oh, to have big factories is a bit of a noose or a bit of a challenge, but actually what it gives us is an incredible capacity to serve us huge volume potential. So Paco, for example, you know, we're now pushing nearly 10 million units. Like our company, no other company could do that unless they were the size of us. Does that make sense? You know, it would take them years of capital installations and investment to get there. So I kind of look back and I could criticize how big the company went, you know, chasing that massive volume, but without it we kind of couldn't be where we are. But if I had a clean slate, I think what I probably would have done is I would say my relationship with growers was a lot more pragmatic. It wasn't like 10 year agreements that kind of ignored how consumer trends can change in any other consumer goods industry. I think that's been a big learning for the industries that everyone went, oh, maybe a 10 year deals, maybe a little bit long in the volatile nature of the world that we live in. The good thing is we've got a handle on it now. You know, our wine supply is now in what we're calling a structural deficit. We're bringing in less than we need, which is a good thing, not a bad thing because it allows us to get into what I call the spot wine market. So where it's finished and it's in tanks, we can draw on those at any point in time, freeze up cash and working capital. So I think that part of the industry has been I think the biggest wake up call to every major wine company. And would be the thing I would have focused on if I could do it. So you know, I think Australia is producing too much wine now. I mean, there was a glut for so long. We definitely are. This I think I've heard numbers of nearly two billion leases of excess supply, mainly in red wine. That's going to change over the next two years. It sounds like a big number and it is, but we have capacity to hold nearly 200 million leases. So it gives you the context that there's lots of tanks and lots of space for this to be moved through the industry. We're seeing wine being pulled out. We're seeing growers make tough decisions to rip up vines. That's a five to seven year investment. If you install vines, you don't see a product for five years that you can viably kind of utilize off that land. So to pull that out is a big commitment to go, right, I don't know longer in this industry. So that is happening. You know, that's the sad part of a structural oversupply when consumers move away. And it's predominantly in shiraz and reds, places like Barossa Valley. You're reading in the press around Bordeaux. I mean, there's not anything they can do about it. The flip side is burgundy's never been more expensive because pin and wire is absolutely invoked. So there's still opportunity. It's now about looking to the future and saying, okay, where do we need to secure long term supply of things we know are trending in the right way and will for a while? Prosecco and Pinagregeoa are going nowhere. - Yeah. - You know, Saved Long and Shardinay go through this constant kind of up and down over the decades. Pin and wire is not going anywhere. There's a definite shortage. And so how we're doing those deals now are going to be critical to the long term, but I've been phenomenally beneficial from a cash flow perspective in the short term. And so that's what we've been really focused in on. - Whether or not you like so in your long or Shardinay is such a contentious issue as well on Mug's friends, can't it be? - Yeah. - What export markets excite you? - Do you know, that's actually one of the bigger opportunities for our business. AVL never really went outside of ANZ and UK and Ireland. That's been the court that does 90% of our dollars and our volume. So when I go around Asia and I talk to them about trends in spritz, I show them small formats and disruptive self-solutions. They're a huge retailers very excited about what that will mean for the industry in the Asia region. And I say Asia region because every market has its local nuance when it comes to alcohol consumption occasions, route to market, taxation and legals, marketing and cultural relativity. What we're finding with POCO is we've launched in Thailand, we're in Malaysia, Singapore, we're about to go into South Korea, Philippines, we're selling way more than we thought we would because it is a totally new way for people that are not in a mature wine market to approach the category. - Yes. - Fun, it's colourful, it's not complicated and it's bite-size. It's not asking them to commit a huge amount of money and drink a lot of alcohol. And so we're actually getting quite a lot of momentum because culturally, they're really open to these changes in the industry. So Asia for me is going to be a phenomenon. I think we're targeting, we're going to roughly call around 20% to 30% growth this financial year, but I think we could double it. These are off small bases, like 20 million in revenue. The other one is North America. It's going through a phenomenal reset, lots of declining consumption, lots of pessimism. Around the alcohol industry, look at treasuries announcements in terms of their business and what Sam, who's the new CEO there, has had to really re-shift the focus of treasurer in the US because it's so big it can break businesses. But I also think it's so dynamic that it can also make them. And so we're big enough to do something in the US, but small enough to do it quickly. - Yeah. - And so Poco will run off the line in California, in July, this financial year. And so that's a big part of our focus for next year. If we can get a viable Poco Vino business in the US, it's a game changer for our organization. - Yeah, ding-ding. - They're exciting me. - Now, you are excited about Poco Vino, and that's a big part of your leadership. But you took over during a challenging period. How do you think your team would describe your leadership style? - Oh, wow. Well, to my face, very complimentary, I would say. But if you are seeing them in the back room, they'd say I'm very direct, very hands-on. - So you're opinion in you? - Yeah, I think, look, very passionate. You've got to believe in what you're doing. I think that's a big part of leadership, is you've got to be the one running over the hill, carrying the flag, and people have got to, you know, want to follow you and believe in it. But also, you know, I think I'm super fair. You know, everyone's got a chance to execute on the agreed strategy and get a chance to be helped along the way. But if not, I'm pretty decisive. You know, we don't have the opportunity to make too many mistakes. We've got to execute kind of flawlessly. And so there has been quite a bit of restructuring going on through the organization. You know, a lot of it has been focused on potential kind of new ways of working. And so we're, it's trying to lead in a time that phenomenal change internally and externally. And I think just being transparent, totally clear and communicating to everyone where we're going and why. And I think the response has been pretty good. And leadership is a challenging role as well. What's the toughest lesson you think you've learned? In leadership, as you don't always know the answer, I think sometimes I would hold on to beliefs because I felt I needed in some ego-driven way to be proven right. But actually admitting you're wrong quickly in the face of un-irreffutable data is sometimes the best leadership trait. So I hold my opinions, but I hold them very loosely based on what data comes at me at any point in time. And I think in the past I've held on to things maybe a bit too long to the detriment of me and potentially those ideas. And just a final question. We'll just sort of bring it back to the beginning. Some millennials drinking last-gen Z drinking last-health conscious consumers reshaping the market. But you're still very confident that this is going to be a growth industry. Look, I look at our business. I look at wine, you know, where a 250 million revenue company that has huge potential globally has the right footprint to do new things and create scale even in the market that might macro be coming down on certain edge parts of the industry. What that converts to is a sustainable net free cash flow company that will be reducing debt and have mobility in a time of consolidation. Like, I'm excited by that. I look at us and go, we could be a natural acquirer, consolidate a partner. We could be the benefit of what is coming in an industry dynamic. And so that, to me, is really compelling. And if all we end up doing is spitting out really good cash flow and dividends to shareholders over a long period of time because we're a good, profitable business, there's nothing wrong with that. But I think we'll be part of a bigger game. And so that's the bit that I keep kind of looking to. So yeah, I think we've got a bright future but we had to get the fundamentals right first. Well, cheers to that Tom Australian vintage CEO, Tom Dussordel. [BLANK_AUDIO]