Logistics company Brambles, glass bottle manufacturer Orora and waste business Cleanaway - three very different companies, but three fascinating stories.
Jakob Cakarnis, Director of Equity Research at Jarden Australia, tells Sean Aylmer what he likes and dislikes about them.
This is Fear & Greed's summer investing series. All information is general in nature - you should seek independent professional advice before making investment decisions.
Welcome to Fear and Greed. Some are investing series brought to you by VANTA specialists in compliance lead Growth. I'm Sean Elmer. There are some fascinating stories and great opportunities for investors in mid market stocks on the AX, So today we're getting an insight into a few of those companies. As always, this is general information only and you should seek independent advice before making investment decisions.
That.
Jacob Kkanas is the director of Equity Research at Jardin Australia. Jacob, welcome back to Fear and Greed.
Hi, Sean, thanks for having me.
Let's jump right into it. Well, actually, bid market. I'm defining that as kind of after the top thirty stocks and probably before the top before one hundred and twenty or thereabouts, if we jump into it. Brambles one of my favorite companies because all I do is make palettes. Well they probably do more than that, but I think that's a pretty cool thing to do.
Absolutely, it's phenomenal still for a post war technology that a few pieces of lumber dictate global supply chain. So I think it's one of Australa's great exports stories. Ship in its own rights is the leading market share for palettes in the US and one of the greatest continental contenders over in Europe. So it's phenomenal, Like I said, for an increasingly technocratic and technology driven society, that we've got four boards of wood beang together that orientate, however, on acts in the supply chain.
Where is Brambles up to? Because it's had its ups and downs over the years, what do you think of it as we of end twenty twenty four heading to next year, what do you think about Brambles?
Yeah, we've got a record higher share price sean, we're starting to see the stock trade back in line with its historical averages from a multiple spaces, which is usually how investors look at these things and look. I'd summarize it as Graham Chipchase, the company CEO, and John Mullen, its current chair, as doing an amazing job not only to generate cashlow out of a very capital intensive business, but to also keep its moat defended and its moat as a network business, so it relies on having the most palettes in the most areas so that customers can use them. It's defended its moat really intelligently through proper disciplines around capital, but also making sure that they price for the risks in their market. And as we spoke just before we ramp up, this is a company that can lose palettes. You reflected Sean that once upon a time they lost a million palettes one year. This is a common phenomenon and I think it's one of the challenges where you've got physical assets in a global supply chain that things can go missing. But to Graham and John's credit, they've done an excellent job ensuring that there's not that much leakage out of the business anymore.
Jacob, I know you like Aurora. Explain what Aurora does and the good and bad of Aurora.
Yeah, it looks simplistically now, Shawn. Aurora is a global beverage bottling company. Historically they've been many things. It had come out of amcor Are also another famous Australian export. Originally it had focused on fiber. It had a distribution and value added marketing services business in the US that it just solved. It announced a couple of weeks ago that they're going to commit capital to buying ten percent of their shares outstanding with the proceeds from the North American sale. So now it's a glass bottler really, and Can's business focused on the beverage segment.
Wait, so where does that men do? I don't know how it makes its money?
How does it make its money? Okay, this is a great question. So Penfolds is a great example for the Australian business. They're one of the great Australian wine exporters. Aurora will exclusively provide them the bottles for their red wine, a lot of the prestige but also a lot of the mass market wines that get exported out of Australia. They also purchased a business called Savior Glass that's based out of France, but it has a global production supply chain and the way to think about Savaglasses that services the premium beverage market. So if you've ever had an expensive cognac, or if you've ever had an expensive tequila or vodka, chances are it's Aurora's product from Savaglass. So brands that come to mind there would be Grey Goose, which is one of their famous bottles that they do with the nice shaded and frosted glass. That's proprietary technology to Aurora.
Wow, what are the risks on Aurora.
The risks at the moment, Sean. Obviously with the global demand environment, as interest rates had come up, people would pulled back surprise, surprise, on their eight hundred dollars bottles of Cognac all of a sudden. It's not o fay to have Hennessey sitting around the house in a cost of living crisis. So one of the risks still is that there's a little bit of a wash of those inventories that lvmh Remy Contro had anticipating that demand would stay higher and what it has been.
So from your top shelf Cognacs to clean Away, Yeah, that's quite the jump.
Look, there's a lot of money to be made in both. Clean Away is a really interesting company for many reasons Sean. It's the last remaining listed global waste player in Australia. So as our super funds grow and as they look for sustainable investments but also defensive investments, Kleanaway's one that seems to be screening really well. It's got two parts of its business that are really interesting. There's a solid waste collection, so the blue trucks that come and wake everyone up at five am in.
The morning, that's clean Away.
They do the council runs, but they also have a really interesting duo ballistic health business. So there's two companies in Australia that collect all the medical waste from elective surgeries. Kleanaway is one of them. And what I'd never knew before I started covering the companies, a lot of this waste is really heavy, but it has to go away and get incinerated so that it stays healthy for all of us and prevents contamination. So Kleanway's in a really interesting spot. It's got great management. It's seen through some really disruptive times from labor and operating disynergies, but it feels like we're getting through the end of those. It's just that investors are in this current debate about whether or not that's priced into the share.
Price valuations everything. Jacob, thank you for joining us this morning.
Thank you, Sean.
That was Jacob kakanis Director of Equery Research at Jarden Australia. Remember to get your own independent advice before making investment decisions. This is fear and greed. Some are investing series brought to you by Vanta. Vanta automates compliance for frameworks like ISO twenty seven one, SoC two, CPS two three four and Essential eight. Saving time and money while building trust. Join over eight thousand companies like at Lassian, Dovetail, Fireant, and tac teat dot io managing real time risk, get one thousand dollars advant dot com, slash fear and greed. I'm Sean Elmer. Enjoy your day,