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Picking an NZX winner this Olympic Year

20 Jul 2021 by Stuart Williamsn , Head of Equities

In a week’s time, some of the best sportspeople in the world will gather in Tokyo to compete to become Olympic Champion in their chosen discipline. With so many elite performers to choose from, picking an Olympic team to represent your country can be difficult enough at the best of times. But at the worst of them, when preparation, organisation and the ability to remain focused are at the mercy of a global pandemic, then the task of picking a winner can be even tougher.

Those that have been selected to compete will not only have had to meet certain performance metrics, but also demonstrate an array of qualities over the lead-up period that have made them stand out as ambassadors for their respective countries. An unwavering focus on winning. A sense of fair play. Commitment to striving to do better day after day. The ability to adapt and thrive under pressure. All will be exacting criteria they have been judged on.

As an investment fund manager, my role is essentially that of selector - constantly making hard choices as to which companies we back (and to what extent), based on data, personality and wider environmental factors. Working for a Japanese-owned investment management company headquartered in Tokyo, this got me thinking. What if there were to be a Listed Company Olympics right now? Who would I pick from the NZX to take on the world on behalf of New Zealand? And what characteristics would I base my selections on?

Arbitrarily I’ve decided to pick a team of six. With so many great companies to choose from, others could of course make a strong case for their inclusion in the team, but this selection reflects a significant amount of research and time spent getting to know all those under consideration. So in no particular order …

1. Summerset Group

Who doesn’t love a winning veteran storyline at the Olympics?! Having just posted its best ever half year results, we’re talking here about a proven performer in a competitive industry in the form of its life! What elevates and sustains Summerset is its impressive management team and board of directors, who retain a clear focus on talent development. With our ageing population, Summerset enjoys a large and growing addressable market and has a landbank to match.

2. Infratil

The fields in which Infratil competes could be considered the blue riband events – highly relevant to today’s world and tomorrow’s. Its latest foray into healthcare is both timely and scalable and their approach – and to some degree their corporate roots in telecoms and data centres – gives us strong cause for confidence in their ability to last the distance. Indeed, the way Infratil has recycled capital recently and the momentum it has generated makes it an attractive long-term proposition that fully justifies its higher management fee.

3. Fisher & Paykel Healthcare

The global superstardom of this New Zealand business is demonstrated by the year it has just delivered in the cross hairs of a pandemic. The company today stands on the shoulders of decades of R&D, and it continues to deploy human capital and investment funds to build future growth into its operating strategy. F&P’s culture is the epitome of the Olympic Spirit. Enough said!

4. Spark

A combination of its business model, management team and board makes Spark an easy pick to take on the world we see ahead. While the certainty of an all-weather dividend of 25 cps provides an attractive running yield, its infrastructure assets, IT, connectivity and cloud solutions (to name just a few) provide attractive growth channels. On top of this, when we factor in mobility and, when they ultimately return, roaming revenues, this Spark should fly.

5. Mainfreight

With a culture that cannot be replicated, given the entire company lives it every day, this is another easy pick for my Olympic squad and comes laden with the favourite’s tag. The Mainfreight team is fiercely competitive internally and externally, always looking to better itself and provide service and solutions to clients. In the lead up to these Olympics it has been continually invited to compete all over the world, by clients seeking to solve more problems in new markets.

6. Ingenia Communities

No Olympics is complete without a controversial pick, so I’m going to risk stoking some fires here by including Australian company Ingenia Communities in my team. I do so to reflect that we operate in an Australasian investment universe – and I can also fall back on invoking the spirit of 1908, when a combined Australasian team was picked for the London Olympics. Ingenia (INA.ASX) owns, operates and develops lifestyle and holiday communities in key urban and coastal areas, and is a company we know and like. Extremely well run by an experienced and trustworthy management, it has earned its selection through the way it presents quality product to a large addressable market.

So that’s our team. While each has its individual merits, they share common traits that are often hailed as the hallmarks of success, notably: years of dedication; the development of skills; and an understanding of self.

The Olympics can throw up surprise results, as winning will come down to performance on one day – and people or teams can have an off day, or see a rival perform better than them. By contrast my Company Olympics would need to be judged over a full Olympic cycle. Over this medium term, I’d back these six to emerge as winners.

Stuart Williams is Head of Equities at Nikko AM NZ. He is also a former Olympic cyclist, having represented New Zealand at the 1988 and 1992 Olympic Games.

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