Glennon Small Companies Ltd · ASX:GC1
Glennon Small Companies — Investor Presentation (July 2020)
31 slides from Glennon Small Companies's investor presentation, Jul 15, 2020
Slide 1: Quarterly Webinar Amendment to Presentation
For personal use only Wednesday, 15 July 2020 Company Announcements Australian Securities Exchange Level 4, 20 Bridge Street Sydney NSW 2000 Glennon Small Companies Limited (ASX: GC1) – Quarterly Webinar Amendment to Presentation Please find attached a copy of the amended Company’s Quarterly Webinar
Slide 2: Glennon Capital Quarterly Webinar July 2020
For personal use only Glennon Capital Quarterly Webinar July 2020 1
Slide 3: Agenda
AGENDA For personal use only 1. Market Overview 2. Portfolio Overview 3. Stock Overview 4. Questions 2
Slide 4: Market Overview
MARKET OVERVIEW For personal use only 1. Market Performance 2. Government Stimulus 3. Buy Now Pay Later (BNPL) 4. 90’s Tech Boom 3
Slide 5: Market Performance (10-Year): Big Cap vs Small Cap
MARKET PERFORMANCE (10-YEAR) For personal use only Big Cap vs Small Cap 200% 150% 100% 50% 0% -50% 2010 2011 2012 2013 2014 2015 2016 2018 2019 2020 Small Ordinaries Accumulation Index Emerging Companies Accumulation Index ASX200 Accumulation Index 4
Slide 6: Government Stimulus
GOVERNMENT STIMULUS For personal use only Money injected directly from government: Support employment, consumption Support from banking sectors: Waive fees to deferred business loans and overdraft repayments QE from Central Banks: Reduce long term interest rate and provide liquidity to corporations
Slide 7: Buy Now Pay Later (BNPL)
BUY NOW PAY LATER (BNPL) For personal use only Revenue FY20E Profit FY20E EV/Rev 12-Mth Price (Growth) Movement Afterpay 514.3 Mil -32.6 Mil 37.21 200.04% (94.7%) Openpay 20.6 Mil -41.8 Mil 15.77 172.93% (87.3%) Zip 161.6 Mil -53.8 Mil 23.65 148.85% (94.9%) Sezzle 44.0 Mil -16.6 Mil 22.0 268.64% (27
Slide 8: 90's Tech Boom
90’s TECH BOOM For personal use only Revenue in 1999 EV/Rev Peak to Trough Time to Recover (Growth) Amazon 609.8 Mil 27.93 -94.40% 9 Years (412.6%) Ebay 86.1 Mil 344.52 -77.1% 3.5 Years (N/A) Oracle 10,130.1 Mil 19.18 -84.2% 16 Years (14.5%) Source: Bloomberg as on 13/07/2020 7
Slide 9: 90's Tech Boom: NASDAQ fall
90’s TECH BOOM For personal use only NASDAQ 6,000 5,000 4,000 Fall by 78%! 3,000 2,000 1,000 0 1998 1999 2000 2001 2002 2003 8
Slide 10: 90's Tech Boom: NASDAQ recovery
90’s TECH BOOM For personal use only NASDAQ 6,000 It took 15 Years to recover! 5,000 4,000 3,000 2,000 1,000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 9
Slide 11: Portfolio Overview
PORTFOLIO OVERVIEW For personal use only 1. GC1 Portfolio Characteristics 2. GC1 Performance 3. What We Did Last Quarter 4. GC1 Share Price vs NTA 5. GC1 Returns 6. GC1 Cash Weighting 10
Slide 12: GC1 Portfolio Characteristics
GC1 PORTFOLIO CHARACTERISTICS For personal use only Portfolio Characteristics As at 30/06/2020 Number of stocks 27 Top 3 positions 1. City Chic Collective 2. Credit Corp Group 3. Resolute Mining Cash weight 35.43% Median Market Cap $412 mil Microcap weight 16% 11
Slide 13: GC1 Performance: Discount to NTA vs Market Capitalisation
GC1 PERFORMANCE For personal use only Discount to NTA vs Market Capitalisation 450 MIR FSI 400 CDM 350 TOP GC1 Market Capitalisation ($ million) RYD 300 Market Cap: $30 million TEK Discount to NTA: -17% WAX WAA 250 NAC QVE NSC 200 CDM WMI ACQ 150 SNC TGF 100 MIR TOP NSC RYD TGF SNC TEK QVE 50 ACQ FS
Slide 14: What We Did Last Quarter
WHAT WE DID LAST QUARTER For personal use only 1. Increase gold exposure 2. Selectively participate in placements 3. Reduce nano & micro cap exposure 4. Reduce some value companies 13
Slide 15: Gold Exposure
GOLD EXPOSURE For personal use only • Overweight on gold: 14.1% in GC1 vs 8.9% in Small Ordinaries • Gold price supported by QE: Increase in money supply weakens the U.S. dollars • Geopolitical uncertainty: Safe haven assets Company Returns since first entry Ramelius Resources Limited 72.73% Perseus
Slide 16: Placement
PLACEMENT For personal use only • Companies offering discount: Opportunities for investors with cash • Being selective: Invest in high quality companies with short term liquidity problems Company Discount Returns Spirit Telecom 19% 127.3%* IDP Education 2% 39.5% Credit Corp 12% 32.2%* Capitol Health
Slide 17: Reduction in Nanocap & Microcap
REDUCTION IN NANOCAP & MICROCAP For personal use only • Nanocap & Microcap underperformed during downturn: Defensive move and capturing the upside return • Market liquidity problem: When the market turned south, positions became more difficult to sell 2018 Downturn: Emerging Companies vs Small Ordin
Slide 18: Reduction in Value Companies
REDUCTION IN VALUE COMPANIES For personal use only • Value stocks underperformed during recovery 2 Years: Growth vs Value 20% 10% 0% -10% -20% -30% -40% -50% Jun 2018 Sep 2018 Dec 2018 Mar 2019 Jun 2019 Sep 2019 Dec 2019 Mar 2020 Jun 2020 MSCI Australian Small Growth Index MSCI Australian Small Valu
Slide 19: GC1 Share Price v NTA
GC1 SHARE PRICE V NTA For personal use only GC1 Share Price vs NTA $1.30 $1.20 $1.10 $1.00 $0.90 $0.80 17% Discount $0.70 $0.60 $0.50 $0.40 Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016 Mar 2017 Jun 2017 Sep 2017 Dec 2017 Mar 2018 Jun 2018 Sep 2018 Dec 2018 Mar 2019 Jun 2019 Sep 2019 Dec 201
Slide 20: Contribution to Return for the Quarter
CONTRIBUTION TO RETURN FOR THE QUARTER For personal use only As on 30/06/2020 19
Slide 21: Return for the Quarter
RETURN FOR THE QUARTER For personal use only Company Absolute Returns since first entry Ramelius Resources 72.73% Spirit Telecom 56.25% City Chic Collective 50.55% Uniti Group 46.39% As on 30/06/2020 20
Slide 22: GC1 Cash Weighting
GC1 CASH WEIGHTING For personal use only 60% 10,000 9,000 50% 8,000 7,000 40% 6,000 30% 5,000 4,000 20% 3,000 2,000 10% 1,000 0% 0 Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun 2015 2015 2016 2016 2016 2016 2016 2016 2017 2017 201
Slide 23: Stock Overview
STOCK OVERVIEW For personal use only 1. City Chic Collective 2. Credit Corp Group 3. Resolute Mining 22
Slide 24: City Chic Collective
City Chic Collective (M.Cap: $634 m) For personal use only • Reduced competitive pressure: Recent high-profile US bankruptcies in retail sectors • Strong online platform: 57% online sales growth versus the same period last year • Cost reduction: Rental negotiations and store closure • Strong balance
Slide 25: City Chic Collective share price
City Chic Collective (M.Cap: $634 m) For personal use only City Chic Collective 4.00 3.50 3.00 2.50 2.00 1.50 1.00 Initial Purchase 0.50 0.00 Jun 2019 Sep 2019 Dec 2019 Mar 2020 Jun 2020 24
Slide 26: Credit Corp Group
Credit Corp Group (M.Cap: $1,027 m) For personal use only • Strong US cash collections: US-listed debt collectors show strong cash collections, reflecting an improving industry outlook • Positive commentary from Australian banks: Past due loans and losses remain modest • Strong support from governme
Slide 27: Credit Corp Group share price
Credit Corp Group (M.Cap: $1,027 m) For personal use only Credit Corp Group 40.00 35.00 30.00 25.00 20.00 15.00 10.00 Initial Purchase 5.00 0.00 Jun 2019 Sep 2019 Dec 2019 Mar 2020 Jun 2020 26
Slide 28: Resolute Mining
Resolute Mining (M.Cap: $1,318 m) For personal use only • Gold exposure: Benefit from QE from Central Banks and recent gold price movement • Minor impact from COVID-19: Improvement in production from 105.3 koz in December quarter to 110.8 koz in March quarter. Guidance maintained • Strong balance sh
Slide 29: Resolute Mining share price
Resolute Mining (M.Cap: $1,676 m) For personal use only Resolute Mining 2.50 2.00 1.50 Initial Purchase 1.00 0.50 0.00 Jun 2019 Sep 2019 Dec 2019 Mar 2020 Jun 2020 28
Slide 30: Questions
For personal use only QUESTIONS 29
Slide 31: Important Information
IMPORTANT INFORMATION For personal use only This presentation is prepared by Glennon Capital Pty Ltd (AFSL 338567, ABN 84 137 219 866) Nothing in this presentation is or is to be taken to be a solicitation, offer, invitation or other (Glennon Capital) for general information purposes only and has be
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