1 00:00:03,350 --> 00:00:06,649 Sean Aylmer: Welcome to the Fear and Greed Daily Interview. I'm Sean Aylmer. Well, 2 00:00:06,800 --> 00:00:10,130 Sean Aylmer: reporting season is nearly at an end, which means it's 3 00:00:10,130 --> 00:00:13,129 Sean Aylmer: time to check in with Matthew Kidman. Matthew is principal 4 00:00:13,130 --> 00:00:16,520 Sean Aylmer: at Centennial Asset Management, and it's always worthwhile finding out 5 00:00:16,520 --> 00:00:20,030 Sean Aylmer: what he liked, didn't like and where the opportunities might be. Matthew, 6 00:00:20,030 --> 00:00:20,810 Sean Aylmer: welcome back to Fear and Greed. 7 00:00:21,560 --> 00:00:22,490 Matthew Kidman: Hi, Sean. How are you? 8 00:00:23,030 --> 00:00:25,009 Sean Aylmer: I'm well. What do you reckon of earnings season? How 9 00:00:25,010 --> 00:00:25,700 Sean Aylmer: would you describe it? 10 00:00:26,180 --> 00:00:29,210 Matthew Kidman: Yeah, well, it's an interesting one because of where June 11 00:00:29,210 --> 00:00:31,490 Matthew Kidman: 30 falls. Now, that sounds strange. It falls on the same 12 00:00:31,490 --> 00:00:33,020 Matthew Kidman: day every year, but... 13 00:00:33,080 --> 00:00:33,370 Sean Aylmer: True. 14 00:00:33,530 --> 00:00:36,620 Matthew Kidman: But on this occasion, of course, domestically, a couple of 15 00:00:36,620 --> 00:00:39,710 Matthew Kidman: things happened around June 30 that don't normally happen, which was 16 00:00:39,710 --> 00:00:43,490 Matthew Kidman: Sydney shutting down. Then Victoria and then obviously we had 17 00:00:43,760 --> 00:00:46,220 Matthew Kidman: Queensland in and out of shutdowns and then regional New 18 00:00:46,220 --> 00:00:49,670 Matthew Kidman: South Wales. So what the market was looking for was 19 00:00:49,670 --> 00:00:52,790 Matthew Kidman: that update from a lot of companies that are domestic focused. 20 00:00:53,150 --> 00:00:55,280 Matthew Kidman: So that first six or seven weeks, because by the 21 00:00:55,280 --> 00:00:58,700 Matthew Kidman: time they report, they've got those numbers. And beyond that, 22 00:00:58,700 --> 00:01:01,970 Matthew Kidman: the international facing stocks, everyone wanted to know how the 23 00:01:01,970 --> 00:01:04,640 Matthew Kidman: reopening was going, especially in the US. How is it going 24 00:01:04,640 --> 00:01:07,370 Matthew Kidman: in the UK? So the numbers that were actually printed, 25 00:01:07,370 --> 00:01:09,590 Matthew Kidman: they're always important, but they were to June 30. A 26 00:01:09,590 --> 00:01:13,940 Matthew Kidman: lot has happened since that date that had investors very interested. 27 00:01:14,360 --> 00:01:17,060 Sean Aylmer: So if you take the domestic focused companies so far, 28 00:01:17,390 --> 00:01:20,030 Sean Aylmer: it seems to me that there's a lot of uncertainty 29 00:01:20,060 --> 00:01:23,630 Sean Aylmer: about where earnings are up to these first couple of 30 00:01:23,630 --> 00:01:24,800 Sean Aylmer: months of this half year. 31 00:01:25,040 --> 00:01:28,789 Matthew Kidman: That's definitely the case, especially the consumer facing type of companies, 32 00:01:29,180 --> 00:01:34,160 Matthew Kidman: retailers and the like, car retailers and so on, because 33 00:01:34,160 --> 00:01:37,430 Matthew Kidman: they did actually have a terrific June half as a whole. 34 00:01:37,700 --> 00:01:40,580 Matthew Kidman: But the market was all waiting for, well you are cycling these massive 35 00:01:40,580 --> 00:01:42,830 Matthew Kidman: numbers that came out of the COVID shutdowns last year. 36 00:01:43,040 --> 00:01:46,790 Matthew Kidman: Everyone started to go online. You know, margins and sales would 37 00:01:46,790 --> 00:01:49,490 Matthew Kidman: start to adjust back to normal. Then, of course, we 38 00:01:49,490 --> 00:01:51,890 Matthew Kidman: get another lockdown. And a lot of those companies reported 39 00:01:51,890 --> 00:01:55,790 Matthew Kidman: the first six, seven weeks where sales were down say, in Sydney which has been 40 00:01:55,790 --> 00:02:00,080 Matthew Kidman: in the hardest lockdown for the longest period, down 20 odd per cent. Interestingly, 41 00:02:00,080 --> 00:02:03,260 Matthew Kidman: investors took that in a strange way. For some companies, 42 00:02:03,260 --> 00:02:05,540 Matthew Kidman: it was a bad thing for others they just said, well, 43 00:02:05,540 --> 00:02:07,970 Matthew Kidman: that's fine. We know you will recover. We've seen the 44 00:02:07,970 --> 00:02:10,610 Matthew Kidman: playbook now. We saw it last year, what happens. We're 45 00:02:10,610 --> 00:02:12,859 Matthew Kidman: looking at it again. We know what's going to happen. They 46 00:02:13,280 --> 00:02:17,270 Matthew Kidman: were very, very relaxed about it. And off we go. 47 00:02:17,270 --> 00:02:19,760 Matthew Kidman: And we know what will happen next year. So it will be interesting to see what happens. 48 00:02:20,030 --> 00:02:22,400 Matthew Kidman: I think a lot of investors and a lot of 49 00:02:22,400 --> 00:02:26,060 Matthew Kidman: companies as well, are complacent. A couple of media companies, old 50 00:02:26,060 --> 00:02:29,030 Matthew Kidman: world media companies I listen to, they said when we reopen, things 51 00:02:29,030 --> 00:02:31,190 Matthew Kidman: bounce back and so when we reopen again, it'll bounce 52 00:02:31,190 --> 00:02:33,619 Matthew Kidman: back again. I don't know. Depends how long this lasts 53 00:02:33,780 --> 00:02:36,200 Matthew Kidman: and depends on how the consumer is feeling at the 54 00:02:36,200 --> 00:02:37,670 Matthew Kidman: end of it. I don't know whether it will be the same 55 00:02:37,669 --> 00:02:38,090 Matthew Kidman: as last year. 56 00:02:38,540 --> 00:02:42,560 Sean Aylmer: Taking those media companies, so if you listen to Seven and to Nine Entertainment, 57 00:02:42,860 --> 00:02:47,120 Sean Aylmer: they were reasonably upbeat about the outlook, though absolutely hammered 58 00:02:47,120 --> 00:02:49,790 Sean Aylmer: by the market on the day of their results. Is 59 00:02:49,790 --> 00:02:53,180 Sean Aylmer: it that investors weren't buying their story? What do you reckon? 60 00:02:53,510 --> 00:02:55,580 Matthew Kidman: Yeah, I think it's a bit unfair. To use an 61 00:02:55,580 --> 00:02:59,150 Matthew Kidman: American expression, these days results on the day and the 62 00:02:59,150 --> 00:03:01,220 Matthew Kidman: couple of days following is a bit of a crapshoot. 63 00:03:01,580 --> 00:03:03,770 Matthew Kidman: A lot of it is driven by machines that get 64 00:03:03,810 --> 00:03:07,430 Matthew Kidman: fed information that they disseminate. It takes about a week 65 00:03:07,430 --> 00:03:10,250 Matthew Kidman: or 10 days for investors to get their minds around 66 00:03:10,250 --> 00:03:12,710 Matthew Kidman: results because the knee jerk reaction on the day it's 67 00:03:12,710 --> 00:03:15,519 Matthew Kidman: become more pronounced over the last four or five years. 68 00:03:15,530 --> 00:03:19,010 Matthew Kidman: And now someone like me who looks at results from 69 00:03:19,010 --> 00:03:21,280 Matthew Kidman: the ground up and says, well, that's a solid result. 70 00:03:21,290 --> 00:03:24,650 Matthew Kidman: The valuation is good. We kind of fear the first 71 00:03:24,650 --> 00:03:27,980 Matthew Kidman: couple of days of an announcement around reporting season because 72 00:03:27,980 --> 00:03:31,130 Matthew Kidman: of the volatility. I think they were unfair. Nine was 73 00:03:31,130 --> 00:03:35,000 Matthew Kidman: interesting because NEC, as it is now, obviously owns Fairfax, 74 00:03:35,000 --> 00:03:38,810 Matthew Kidman: owns the Nine Network. It also owns Stan. And believe 75 00:03:38,810 --> 00:03:41,060 Matthew Kidman: it or not, hidden among all those Stan is not one of 76 00:03:41,060 --> 00:03:43,990 Matthew Kidman: the big profit contributors. But it's definitely a big contributor 77 00:03:44,000 --> 00:03:47,300 Matthew Kidman: to the valuation. People were disappointed with Stan. They knocked 10 78 00:03:47,300 --> 00:03:50,690 Matthew Kidman: per cent off on day one. Seven was a bit more interesting. Obviously, 79 00:03:50,690 --> 00:03:53,810 Matthew Kidman: they've come through a quarter or the half where they 80 00:03:53,810 --> 00:03:56,360 Matthew Kidman: reported pretty strong growth. They got their balance sheet back 81 00:03:56,360 --> 00:03:58,490 Matthew Kidman: in order, which was always a worry with Seven. And 82 00:03:58,490 --> 00:04:02,330 Matthew Kidman: then they've obviously blown the doors off the barn with one of 83 00:04:02,330 --> 00:04:04,520 Matthew Kidman: the great Olympics as we're all shut down in Sydney 84 00:04:04,520 --> 00:04:06,860 Matthew Kidman: and Melbourne watching the Olympics and how well they did. Normally, 85 00:04:06,860 --> 00:04:09,140 Matthew Kidman: that can be a black hole. So I think it 86 00:04:09,140 --> 00:04:11,150 Matthew Kidman: was a bit unfair how they sold them. And there's 87 00:04:11,150 --> 00:04:13,700 Matthew Kidman: probably some reasonable value in both companies. 88 00:04:14,030 --> 00:04:16,490 Sean Aylmer: What about the international facing stocks? And the miners are 89 00:04:16,490 --> 00:04:18,680 Sean Aylmer: the big ones? Some of the health care guys like 90 00:04:18,800 --> 00:04:21,080 Sean Aylmer: Sonic had a cracking result, I think. CSL was pretty 91 00:04:21,080 --> 00:04:23,360 Sean Aylmer: upbeat about where it was going. What did you think 92 00:04:23,360 --> 00:04:25,490 Sean Aylmer: about those offshore focused companies? 93 00:04:26,060 --> 00:04:28,369 Matthew Kidman: Yeah, so it was interesting because the results season has 94 00:04:28,370 --> 00:04:30,740 Matthew Kidman: been bookended by a couple of things. First, at the 95 00:04:30,740 --> 00:04:33,770 Matthew Kidman: front end of that was the decline of the iron 96 00:04:33,770 --> 00:04:36,680 Matthew Kidman: ore price after one of the great runs. So that 97 00:04:36,680 --> 00:04:41,240 Matthew Kidman: really impacted that sector going into results. We don't really 98 00:04:41,240 --> 00:04:43,550 Matthew Kidman: care too much about results from the big iron ore miners. 99 00:04:43,640 --> 00:04:46,279 Matthew Kidman: We care about the commodity price. And it fell over 100 00:04:46,279 --> 00:04:48,770 Matthew Kidman: at the start of the month and they've been massive underperformers. 101 00:04:49,220 --> 00:04:52,880 Matthew Kidman: Add to that, we saw what BHP did, our biggest company in Australia. 102 00:04:53,000 --> 00:04:56,270 Matthew Kidman: They collapsed their dual listing structure. And for some reason that 103 00:04:56,390 --> 00:04:58,880 Matthew Kidman: no one's ever been able to explain why Australia always 104 00:04:58,880 --> 00:05:02,029 Matthew Kidman: trades at a premium. That meant that stocks, compared to 105 00:05:02,029 --> 00:05:04,670 Matthew Kidman: the U.K. that is, that meant the stock collapsed down to 106 00:05:04,670 --> 00:05:07,580 Matthew Kidman: the UK price, so that was a disaster. In terms 107 00:05:07,580 --> 00:05:09,620 Matthew Kidman: of the big health care companies, which are global. You've 108 00:05:09,620 --> 00:05:14,930 Matthew Kidman: got Sonic, CSL, Resmed, Cochlear, the device companies. That was really, really mixed. 109 00:05:15,020 --> 00:05:18,170 Matthew Kidman: The results as a whole were very strong. And there's 110 00:05:18,180 --> 00:05:20,330 Matthew Kidman: no reason to get off those companies in the long run. 111 00:05:20,330 --> 00:05:24,020 Matthew Kidman: They're great long term growth stories but CSL was sold heavily 112 00:05:24,020 --> 00:05:26,590 Matthew Kidman: on day one. It missed. Guess what? They all bought it back. 113 00:05:26,600 --> 00:05:29,299 Matthew Kidman: It's like, well, you can do whatever you want. CSL they are the 114 00:05:29,300 --> 00:05:31,909 Matthew Kidman: favoured child in the Australian market. We'll buy you anyway, we'll 115 00:05:31,910 --> 00:05:34,370 Matthew Kidman: look after you. We'll buy you the lollipop or the 116 00:05:34,370 --> 00:05:36,500 Matthew Kidman: ice cream when we go to the zoo. Others not 117 00:05:36,500 --> 00:05:39,410 Matthew Kidman: so well. Sonic had had that big run. Obviously, COVID 118 00:05:39,410 --> 00:05:43,219 Matthew Kidman: enhanced with all the testing, and it disappointed in the 119 00:05:43,220 --> 00:05:46,369 Matthew Kidman: sense that the expectations were so high. Cochlear was a 120 00:05:46,370 --> 00:05:49,460 Matthew Kidman: bit the same. Everyone had this massive rebound because hospitals 121 00:05:49,460 --> 00:05:52,640 Matthew Kidman: were closed last year and this was a rebound and 122 00:05:52,640 --> 00:05:55,440 Matthew Kidman: it was a little bit disappointing. While Resmed was the opposite way. 123 00:05:55,730 --> 00:05:58,400 Matthew Kidman: Everyone thought that was a terrific result. I think once 124 00:05:58,400 --> 00:06:01,730 Matthew Kidman: you see through those big health care companies, nothing much 125 00:06:01,730 --> 00:06:04,370 Matthew Kidman: has changed. They've all got their own growth stories. They're 126 00:06:04,370 --> 00:06:07,310 Matthew Kidman: all chugging through COVID okay. You've just got to work 127 00:06:07,310 --> 00:06:09,500 Matthew Kidman: out the valuation. So I think a tick for those guys. 128 00:06:10,010 --> 00:06:11,960 Sean Aylmer: Stay with me, Matthew. We'll be back in a minute. 129 00:06:16,900 --> 00:06:19,750 Sean Aylmer: My guest this morning is Matthew Kidman, principal of Centennial 130 00:06:19,750 --> 00:06:22,839 Sean Aylmer: Asset Management. Now, the company I like most was WiseTech 131 00:06:23,290 --> 00:06:27,219 Sean Aylmer: simply because it reported better than expected results, but not 132 00:06:27,460 --> 00:06:30,790 Sean Aylmer: significantly better. And it jumped 50 per cent and then it 133 00:06:30,790 --> 00:06:33,100 Sean Aylmer: came off a bit. But, you know, its founder ended 134 00:06:33,100 --> 00:06:35,860 Sean Aylmer: up with about $2.7 billion dollars extra worth of funds 135 00:06:35,860 --> 00:06:36,940 Sean Aylmer: in his equities account. 136 00:06:37,180 --> 00:06:40,060 Matthew Kidman: I think old Richard's (Richard White) got very wise to how the 137 00:06:40,060 --> 00:06:44,440 Matthew Kidman: market thinks and around results. Look WiseTech's an interesting one. 138 00:06:44,470 --> 00:06:47,110 Matthew Kidman: It was just a rollercoaster ride. It was a lot 139 00:06:47,110 --> 00:06:49,599 Matthew Kidman: of fun watching it. We're neither long nor short, that 140 00:06:49,600 --> 00:06:51,760 Matthew Kidman: stock but you get the feeling that a lot of 141 00:06:51,760 --> 00:06:54,040 Matthew Kidman: people were short and there was a massive covering. And 142 00:06:54,040 --> 00:06:56,170 Matthew Kidman: how they did it was sales were quite good but 143 00:06:56,170 --> 00:06:58,720 Matthew Kidman: it was the margins that surprised everyone. The leverage in 144 00:06:58,720 --> 00:07:01,150 Matthew Kidman: that company, which for a long time hasn't come through. 145 00:07:01,150 --> 00:07:04,330 Matthew Kidman: It's been criticised, even though a global company that most 146 00:07:04,330 --> 00:07:07,690 Matthew Kidman: of its earnings growth and earnings leverage comes from acquisitions. 147 00:07:07,690 --> 00:07:10,060 Matthew Kidman: And it hasn't got much organic growth as the market 148 00:07:10,060 --> 00:07:13,270 Matthew Kidman: likes to talk about. But on this occasion, it just 149 00:07:13,270 --> 00:07:16,660 Matthew Kidman: went bang with its margin and everyone stood back and went, wow, 150 00:07:16,690 --> 00:07:19,900 Matthew Kidman: this thing is really, really operating well and there is 151 00:07:19,900 --> 00:07:22,550 Matthew Kidman: leverage in it. And I think all the shorts, because 152 00:07:22,550 --> 00:07:24,970 Matthew Kidman: it's quite a big tech stock for Australia. There's been 153 00:07:24,970 --> 00:07:27,790 Matthew Kidman: questions around their accounts. They've been called out before. They 154 00:07:27,790 --> 00:07:29,620 Matthew Kidman: all got taken out, and that's why. So I think 155 00:07:29,900 --> 00:07:34,750 Matthew Kidman: it rallied 55 per cent and by the end of the day, it was up 40. The intraday moves 156 00:07:35,050 --> 00:07:37,930 Matthew Kidman: were ridiculous. And that's what I mean sometimes just got 157 00:07:37,930 --> 00:07:40,000 Matthew Kidman: to stand back and let the dust settle on these results, 158 00:07:40,000 --> 00:07:43,330 Matthew Kidman: because the knee jerk reaction, the trigger gun action. But 159 00:07:43,480 --> 00:07:47,410 Matthew Kidman: WiseTech definitely a good result. Definitely surprising on the margins. And 160 00:07:47,590 --> 00:07:49,390 Matthew Kidman: you would think it's going to have a pretty good 161 00:07:49,390 --> 00:07:51,940 Matthew Kidman: year ahead of it once this dust settles and the share 162 00:07:51,940 --> 00:07:53,320 Matthew Kidman: price finds where it wants to be. 163 00:07:53,650 --> 00:07:55,810 Sean Aylmer: Something else that I thought was interesting and it came 164 00:07:55,810 --> 00:08:00,160 Sean Aylmer: through in A2 Milk and Blackmore's, the vitamins group. A2 165 00:08:00,160 --> 00:08:02,680 Sean Aylmer: Milk said it was channel to market, channel to China 166 00:08:02,680 --> 00:08:05,650 Sean Aylmer: particularly was worse or as bad as everyone expected. And 167 00:08:05,650 --> 00:08:07,990 Sean Aylmer: it got hammered, whereas Blackmores said actually we've sold a bit 168 00:08:07,990 --> 00:08:11,200 Sean Aylmer: more to China and its share price took off. It's 169 00:08:11,200 --> 00:08:13,780 Sean Aylmer: amazing the influence China has on some of these companies. 170 00:08:14,350 --> 00:08:16,810 Matthew Kidman: Yeah, and that's been probably one of the biggest changes 171 00:08:16,810 --> 00:08:19,330 Matthew Kidman: that's happened in the Australian economy market over the last 172 00:08:19,330 --> 00:08:22,630 Matthew Kidman: couple of years. If you remember going back to 2015 173 00:08:22,630 --> 00:08:25,690 Matthew Kidman: through to probably 2019 and pre COVID, you had to 174 00:08:25,690 --> 00:08:26,800 Matthew Kidman: have a China story. 175 00:08:26,990 --> 00:08:27,180 Sean Aylmer: Yeah. 176 00:08:27,190 --> 00:08:30,280 Matthew Kidman: That was the only way you could grow. And that's 177 00:08:30,280 --> 00:08:33,940 Matthew Kidman: been flipped on its head for obvious reasons, political mainly, and 178 00:08:33,940 --> 00:08:37,600 Matthew Kidman: all the tariffs and the anti-Australian feeling. So with those 179 00:08:37,600 --> 00:08:40,390 Matthew Kidman: two companies, it's quite interesting. Blackmore's has been a struggler 180 00:08:40,400 --> 00:08:42,970 Matthew Kidman: for a long time. It was the first kind of 181 00:08:42,970 --> 00:08:45,100 Matthew Kidman: bottle to fall off the wall. It just didn't quite 182 00:08:45,100 --> 00:08:47,770 Matthew Kidman: get as they changed regulations in China in regards to 183 00:08:48,070 --> 00:08:51,760 Matthew Kidman: imports they didn't quite get it right. They tried to 184 00:08:51,760 --> 00:08:55,689 Matthew Kidman: circumvent things like the daigou market and, you know, have direct 185 00:08:55,690 --> 00:08:59,199 Matthew Kidman: distribution in China. It didn't work. They couldn't get their 186 00:08:59,200 --> 00:09:03,250 Matthew Kidman: stock right. Everyone questioned whether the brands were strong. Meanwhile, 187 00:09:03,250 --> 00:09:06,670 Matthew Kidman: A2 Milk was the opposite. They really supported that daigou market 188 00:09:06,670 --> 00:09:09,189 Matthew Kidman: and went through the roof. That's kind of flipped. Now, 189 00:09:09,190 --> 00:09:12,160 Matthew Kidman: the daigou market is pretty well dead. Not completely, but it's 190 00:09:12,160 --> 00:09:15,589 Matthew Kidman: close to dead in Australia and probably New Zealand. The 191 00:09:15,640 --> 00:09:17,920 Matthew Kidman: people are not moving backwards and forwards between the two 192 00:09:17,920 --> 00:09:21,429 Matthew Kidman: countries because of the virus and obviously because of political constraints. 193 00:09:21,610 --> 00:09:23,800 Matthew Kidman: And so their channel to market has been cut off 194 00:09:23,800 --> 00:09:27,150 Matthew Kidman: all of a sudden. While Blackmore's maybe they're not there yet. 195 00:09:27,160 --> 00:09:28,630 Matthew Kidman: I think it was just a little bit of a surprise. 196 00:09:28,630 --> 00:09:31,449 Matthew Kidman: It wasn't that bad. And the stock ticked up, but 197 00:09:31,450 --> 00:09:34,630 Matthew Kidman: they've kind of built their own way into China and 198 00:09:34,630 --> 00:09:37,870 Matthew Kidman: that is starting to look okay. I wouldn't say it's there. 199 00:09:38,200 --> 00:09:40,660 Matthew Kidman: The one that's quite interesting that had a pretty good result, 200 00:09:40,660 --> 00:09:44,349 Matthew Kidman: was Treasury Wines. And that's another one facing China, which 201 00:09:44,590 --> 00:09:47,079 Matthew Kidman: I think it's worth a look because their brands are 202 00:09:47,080 --> 00:09:49,750 Matthew Kidman: proving to be so strong that they've been able to 203 00:09:49,750 --> 00:09:52,330 Matthew Kidman: do some incredible things in a short space of time. 204 00:09:52,330 --> 00:09:54,820 Matthew Kidman: We know the tariff, the two hundred per cent tariff that 205 00:09:54,820 --> 00:09:58,809 Matthew Kidman: was placed on Australian wines. It absolutely killed the Penfolds brand, 206 00:09:58,809 --> 00:10:01,570 Matthew Kidman: in particular for Treasury, which had been a boom product 207 00:10:01,570 --> 00:10:03,760 Matthew Kidman: in China. They like the numbers. They like the colour. 208 00:10:03,760 --> 00:10:05,740 Matthew Kidman: They thought the brand was as good as any in the world. 209 00:10:05,740 --> 00:10:07,450 Matthew Kidman: They were buying it. You couldn't get enough of it. 210 00:10:07,630 --> 00:10:09,849 Matthew Kidman: And Treasury played the game a bit. They used to bundle up 211 00:10:09,850 --> 00:10:11,380 Matthew Kidman: all their other wines and say, well, you've got to 212 00:10:11,380 --> 00:10:13,960 Matthew Kidman: take the lot if you're gonna get Penfolds. And eventually, that 213 00:10:13,960 --> 00:10:16,270 Matthew Kidman: came unstuck with the tariffs and the Chinese got cranky 214 00:10:16,270 --> 00:10:19,300 Matthew Kidman: with them. Lo and behold, they've started to build channels 215 00:10:19,300 --> 00:10:22,660 Matthew Kidman: into the US with new brands, and that's got traction. 216 00:10:22,660 --> 00:10:25,989 Matthew Kidman: And believe it or not Penfolds through other channels, is starting to 217 00:10:25,990 --> 00:10:28,780 Matthew Kidman: find its way into China. It's being landed in other 218 00:10:28,780 --> 00:10:31,960 Matthew Kidman: countries who then export it into China. It's been quite 219 00:10:31,960 --> 00:10:34,900 Matthew Kidman: an amazing change. And you kind of think maybe the 220 00:10:34,900 --> 00:10:37,300 Matthew Kidman: power of a good brand is winning out over a 221 00:10:37,300 --> 00:10:39,550 Matthew Kidman: government in the short term. We know that might not last. 222 00:10:40,000 --> 00:10:42,250 Sean Aylmer: You can't talk about Treasury without talking about Snoop Dogg. 223 00:10:43,730 --> 00:10:45,910 Matthew Kidman: Yeah. Snoop Dogg helps everyone! 224 00:10:46,210 --> 00:10:49,900 Sean Aylmer: He does! Snoop Dogg was the brand ambassador for 19 Crimes, one of 225 00:10:49,900 --> 00:10:51,190 Sean Aylmer: the brands they sell into the US. 226 00:10:51,220 --> 00:10:54,310 Matthew Kidman: Is that correct? So he's done an incredible job and 227 00:10:54,309 --> 00:10:56,590 Matthew Kidman: got it off to a flying start. And that was smart marketing. That's what I mean. 228 00:10:57,400 --> 00:11:00,670 Matthew Kidman: This management has, they were down on their knees not long ago. 229 00:11:00,850 --> 00:11:05,050 Matthew Kidman: That whole growth path was into China. And, you know, 230 00:11:05,080 --> 00:11:07,090 Matthew Kidman: I don't know whether they got together with Snoop Dogg 231 00:11:07,150 --> 00:11:10,239 Matthew Kidman: and it was Snoop Dogg's idea, but someone got it right. And 232 00:11:10,240 --> 00:11:13,270 Matthew Kidman: now it looks like the US is a genuine market 233 00:11:13,510 --> 00:11:15,819 Matthew Kidman: for them, which was never the case. They've never been 234 00:11:15,820 --> 00:11:17,960 Matthew Kidman: up to break into and it's not a big wine drinking market. 235 00:11:18,140 --> 00:11:20,210 Matthew Kidman: They tend to drink what comes out of the Napa Valley, 236 00:11:20,420 --> 00:11:23,510 Matthew Kidman: especially at the more expensive end but Treasury's on its way. 237 00:11:23,860 --> 00:11:26,090 Sean Aylmer: Yeah, I mean, just shows that the benefit of good management, 238 00:11:26,090 --> 00:11:26,510 Sean Aylmer: I suppose. 239 00:11:27,050 --> 00:11:29,720 Matthew Kidman: I think so. Yeah, I think so. I think what 240 00:11:29,720 --> 00:11:33,110 Matthew Kidman: the markets been surprised is, how quick it's happened. Yeah. Good management 241 00:11:33,110 --> 00:11:36,020 Matthew Kidman: can make good decisions. And if they're vindicated, bang off 242 00:11:36,020 --> 00:11:36,380 Matthew Kidman: you go. 243 00:11:36,740 --> 00:11:39,199 Sean Aylmer: Now, one of my favourite stocks is Domino's. Always has been. 244 00:11:39,350 --> 00:11:41,420 Sean Aylmer: In fact, I remember I did some work for Domino's 245 00:11:41,420 --> 00:11:43,880 Sean Aylmer: and I ran into you at an investor briefing where 246 00:11:43,880 --> 00:11:45,650 Sean Aylmer: you were listening to its story. Now, this is a few 247 00:11:45,650 --> 00:11:48,679 Sean Aylmer: years ago. So not really telling tales out of school here. 248 00:11:49,010 --> 00:11:51,320 Sean Aylmer: I mean, they had a strong result and it just keeps 249 00:11:51,320 --> 00:11:54,350 Sean Aylmer: seeming to be able to add stores to its network. 250 00:11:54,800 --> 00:11:59,810 Matthew Kidman: Yeah, incredible story again. I've underestimated Domino's and Don Meij and his team. 251 00:12:00,470 --> 00:12:00,560 Sean Aylmer: You're not alone though. You're not alone. 252 00:12:02,300 --> 00:12:05,360 Matthew Kidman: No. And cheap pizzas, I mean, they've been interesting. They've effectively 253 00:12:05,360 --> 00:12:09,040 Matthew Kidman: disrupted market after market they go into by basically having 254 00:12:09,050 --> 00:12:13,280 Matthew Kidman: cheap pizzas and really quick delivery. You know, price is 255 00:12:13,280 --> 00:12:16,040 Matthew Kidman: still a disruptor it's just not technology. But what's happened 256 00:12:16,040 --> 00:12:19,610 Matthew Kidman: here is they've got their international avenues firing. It took 257 00:12:19,610 --> 00:12:22,610 Matthew Kidman: a long time to get France and the Netherlands going 258 00:12:22,630 --> 00:12:25,550 Matthew Kidman: and into Germany. But more recently, as we know, they've 259 00:12:25,550 --> 00:12:30,040 Matthew Kidman: taken up the Japanese franchise for Domino's, Domino's coming out 260 00:12:30,040 --> 00:12:32,270 Matthew Kidman: of the US. But the Australian group has got the Japanese 261 00:12:32,270 --> 00:12:36,679 Matthew Kidman: distribution agreement, and they've somehow convinced the Japanese to fall 262 00:12:36,679 --> 00:12:40,250 Matthew Kidman: in love with pizza. The growth, which is another amazing 263 00:12:40,250 --> 00:12:44,030 Matthew Kidman: sales story, because it's not natural for the Japanese to 264 00:12:44,030 --> 00:12:46,699 Matthew Kidman: come home on a Saturday night late and say, well, let's 265 00:12:46,700 --> 00:12:46,880 Matthew Kidman: have a pizza. 266 00:12:47,630 --> 00:12:51,050 Sean Aylmer: Well, it's about the equivalent to Breville selling coffee makers 267 00:12:51,260 --> 00:12:53,420 Sean Aylmer: to Italians. I think that's another great story. 268 00:12:53,660 --> 00:12:56,840 Matthew Kidman: Yeah, Breville is a powerhouse. It was always a good brand. 269 00:12:57,080 --> 00:13:00,679 Matthew Kidman: And what people underestimate is that Australian kitchen appliances are 270 00:13:00,700 --> 00:13:04,370 Matthew Kidman: very high quality kitchen appliances. In our world, the Australian 271 00:13:04,370 --> 00:13:07,400 Matthew Kidman: world, Breville has been around forever, everyone had a Breville sandwich maker, 272 00:13:07,400 --> 00:13:10,400 Matthew Kidman: toaster maker. But they've done a terrific job. And it's 273 00:13:10,400 --> 00:13:13,370 Matthew Kidman: been an overnight success that took like 15 years in 274 00:13:13,370 --> 00:13:15,589 Matthew Kidman: the US. But they've taken it everywhere. As you said, 275 00:13:15,590 --> 00:13:20,210 Matthew Kidman: they've gone into Europe. And their quality. They're not the Bentley 276 00:13:20,210 --> 00:13:23,990 Matthew Kidman: or the Rolls-Royce, but they're definitely a BMW. People like what 277 00:13:23,990 --> 00:13:27,440 Matthew Kidman: they've got. And they've changed management four or five years ago. 278 00:13:27,440 --> 00:13:31,300 Matthew Kidman: And once again, they've done a terrific job. And during lockdowns, 279 00:13:31,309 --> 00:13:32,930 Matthew Kidman: what else are you going to do? We're all drinking 280 00:13:32,929 --> 00:13:36,010 Matthew Kidman: 17 cups of coffee a day. And if we're drinking 17, you 281 00:13:36,020 --> 00:13:38,620 Matthew Kidman: would imagine the Italians are drinking 30 or 40. 282 00:13:40,340 --> 00:13:42,079 Sean Aylmer: Matthew, thank you for talking to Fear and Greed. 283 00:13:42,620 --> 00:13:43,579 Matthew Kidman: Thanks, guys. Thanks, Sean. 284 00:13:43,790 --> 00:13:47,180 Sean Aylmer: That was Matthew Kidman, principal of Centennial Asset Management. This 285 00:13:47,179 --> 00:13:49,490 Sean Aylmer: is the Fear and Greed Daily Interview. Join me every morning for 286 00:13:49,490 --> 00:13:52,040 Sean Aylmer: the full Fear and Greed podcast with all the business 287 00:13:52,040 --> 00:13:55,040 Sean Aylmer: news you need to know. I'm Sean Aylmer. Enjoy your day.