UMG
Noting the UMG presentation.
Firstly, I suppose I like the framing described below on malt, mindful that 90% of it goes straight into beers.
The next 5% goes into whisky. Still, it’s not the point of the note. Instead, our focus is the outlook statement, shown below.
I am thinking that in a market looking for pricing power, none of this screams “easy pass through”.
Beer consumption, in general, has been declining for a long time per capita, but unlike, say, cigarettes (where prices rise as volumes decline), this is a clear consumption preference shift over time towards wine, cider, and well, anything else.
The point (perhaps clumsily made) is that consumer preference shifts don’t auger well for pricing power when something acute hits, like barley prices going to the moon, which they have.
UMG is very interesting to us and is a fine play for an absolute return oriented strategy, although not quite yet one for the flagship core portfolio.
The valuation support is there, the “reopening play” thematic is there, the company itself is a good operator within the industry, and when UKR-RUS hostilities cease, a solid catalyst will present itself (the falling wheat/barley prices).
But not quite yet.
Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.
This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.
Please note that past performance is not a reliable indicator of future performance.
General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.
Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.