WEBVTT - Quick bite: Infratil on concentration risk & AI

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<v Speaker 1>Investing involves the risk you might lose the money you

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<v Speaker 1>start with. We recommend talking to a licensed financial advisor.

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<v Speaker 1>We also recommend reading product disclosure documents before deciding to invest.

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<v Speaker 2>A good old share price every CEO's dread when somebody

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<v Speaker 2>asks them, it's fair to say that it had a

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<v Speaker 2>bit of a beating when you did release your consolidated earnings.

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<v Speaker 2>I think it was down nearly six percent on the day.

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<v Speaker 2>I think it's recovered somewhat since. If we do look

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<v Speaker 2>at that, though, the shareholder return is minus two point

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<v Speaker 2>six percent, I think is what I saw. I think

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<v Speaker 2>it was in the annual report that.

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<v Speaker 3>Was the twelve months to thirty or March.

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<v Speaker 2>Yeah, Now that does seem to be a discount, and

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<v Speaker 2>you do talk about this in their new report. Between

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<v Speaker 2>the share price and the asset values. What can be

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<v Speaker 2>done about that.

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<v Speaker 3>Discount?

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<v Speaker 4>And there is an interesting topic. I'd talk to at

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<v Speaker 4>least a third of people I'd talk to, So there's

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<v Speaker 4>no discount. It's always rome, which there's some truth to

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<v Speaker 4>that rome. And there's definitely a difference between the value

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<v Speaker 4>for one share today versus a majority or the whole

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<v Speaker 4>business in five years time.

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<v Speaker 3>Really the listed price is the price.

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<v Speaker 4>Today for any given volume of shares, right, So it's

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<v Speaker 4>not really the long term value of the assets, and

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<v Speaker 4>it's the difference between that long term value and the

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<v Speaker 4>current value that.

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<v Speaker 3>People talk about the discount.

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<v Speaker 4>For us, it's really a signal for us to think about,

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<v Speaker 4>is there something about our business that's not understood well

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<v Speaker 4>and should we therefore be issuing some communications or bringing

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<v Speaker 4>people into cur assets so that we can take that

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<v Speaker 4>stuff off the table and over. I think the start

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<v Speaker 4>of this year there was a lot of worries about

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<v Speaker 4>AI and deep seeking implications for CDC, which we thought

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<v Speaker 4>was what was going on with a number of share

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<v Speaker 4>prices in our sector at the time, and so through

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<v Speaker 4>April we had a number of we hare to site

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<v Speaker 4>visit to our big development of Melbourne for CDC and

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<v Speaker 4>a few other communications with the team to try and

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<v Speaker 4>make sure people understood how CITYC was placed.

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<v Speaker 3>And actually that's you saw.

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<v Speaker 4>Actually I think the market react quite nicely did that

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<v Speaker 4>and the sharp post kind of move up. So really

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<v Speaker 4>it is for us it's where we should focus our communications.

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<v Speaker 4>Intention is where we first go to. Obviously, every day,

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<v Speaker 4>like any normal human, you re examine every decision you

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<v Speaker 4>made the day before, so you do a bit of

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<v Speaker 4>that as well, but mostly it's for communications.

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<v Speaker 2>Say the well, CDC, it is now forty percent of

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<v Speaker 2>the portfolio. Is it a concentration risk?

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<v Speaker 4>It is a big part of the portfolio. We've had

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<v Speaker 4>assets that have been a bigger proportion in the past.

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<v Speaker 4>So TrustPower is over fifty percent for a lot of

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<v Speaker 4>the early history of fort till I would say it's

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<v Speaker 4>about as big as you'd want it to be. If

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<v Speaker 4>you stood back over a long term period of time

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<v Speaker 4>we talked about the results.

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<v Speaker 3>We try and manage the stuff.

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<v Speaker 4>Over the medium term rather than really reacting really quickly

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<v Speaker 4>to these things. And what we do see is other

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<v Speaker 4>opportunities within the business growing, having the potential to grow

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<v Speaker 4>quite quickly I think over the next two or three years,

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<v Speaker 4>which should balance CDC's weight in the portfolio, if you like.

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<v Speaker 4>But if I stand back, you know, having a big

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<v Speaker 4>proportion of your portfolio and literally the most exciting investment

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<v Speaker 4>sector in the world at the moment.

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<v Speaker 3>Is actually a pretty good place to be.

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<v Speaker 4>And you know, you just have to ask yourself is

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<v Speaker 4>there going to be more or less AI tomorrow? And

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<v Speaker 4>you kind of know the answer, right and so I

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<v Speaker 4>think being right there in a business which, as I

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<v Speaker 4>said before, is incredibly well placed to just pick up

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<v Speaker 4>these contracts as and when they come, I'd still do

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<v Speaker 4>it every day of the week.

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<v Speaker 2>But I is volatile and risky and rapidly changing, as

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<v Speaker 2>you know, So there are surely there are risks there,

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<v Speaker 2>but it's what you're prepared to trade off.

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<v Speaker 4>Yeah, I think the risk is more timing, and even

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<v Speaker 4>then the risk is not very high, and that we

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<v Speaker 4>know where capacity is at with our clients. We know

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<v Speaker 4>that demand is growing incredibly strongly. Therefore there will be contracts,

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<v Speaker 4>and so really the question for us is we're doing

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<v Speaker 4>my weather contracts today, end of the year, early next year. No,

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<v Speaker 4>if you put that in a thirty year valuation model,

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<v Speaker 4>that moves the valuation literally not at all. So as

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<v Speaker 4>long as you fundamentally believe AI is going to be

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<v Speaker 4>a thing and that CDC will pick up more than

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<v Speaker 4>its fair share, then we're on an incredibly great spot.

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<v Speaker 3>You know, I would be patient personally,