Regal Partners Global Investments Limited · ASX:RG1
Regal Partners Global Investments — VGI Partners Global Investments — VG1 Investor Webinar October 2024
40 slides from Regal Partners Global Investments's conference presentation, Oct 3, 2024
Slide 1: VG1 Investor Webinar Presentation
VGI Partners Global Investments Ltd ABN 91 619 660 721 Level 47 Gateway, 1 Macquarie Place Sydney NSW 2000 Australia T. +61 2 8197 4390 www.vgipartners.com/lics/VG1 3 October 2024 ASX Market Announcements Office ASX Limited Exchange Centre 20 Bridge Street Sydney NSW 2000 VG1 Investor Webinar Presen
Slide 2: VG1 Global Investments Investor Update and Webinar
VG1 Global Investments (ASX: VG1) Investor Update and Webinar October 2024
Slide 3: Welcome
Welcome Charlie Aitken Investment Director, Regal Partners
Slide 4: Disclaimer
Disclaimer This document (Information) is provided by Regal Partners Marketing Services Pty Ltd (ACN 637 448 072) (Regal Partners Marketing), a corporate authorised representative of Attunga Capital Pty Ltd (ABN 96 117 683 093) (AFSL 297385) (Attunga). Regal Partners Marketing and Attunga are busine
Slide 5: Speakers
Speakers Philip Marco Hao Glen Shannon Henry King Anselmi Do Barnes McConaghy Hill Co-Founder & Portfolio Manager, Senior Analyst, Head of Asian Equities Senior Analyst, Senior Analyst, Chief Investment VG1 Financials Asia Global Equities Officer, Regal Funds 4
Slide 6: Strong recent performance across all listed investment vehicles
Strong recent performance across all listed investment vehicles 1 yr portfolio TOTAL SHAREHOLDER RETURN2 Fund Launch Description return1 150 PGF VG1 RF1 RG8 PGF 2013 Global L/S Equities 29.2% 140 140 VG1 +40% 131 RF1 +31% 130 129 PGF +29% Global L/S High 123 RG8 VG1 2017 Conviction 28.4% 120 +23% 11
Slide 7: Premium/discount to NTA: global equity LICs
Global equity LICs 5% 12 MONTH PRE-TAX NTA RETURN Peer 3 Peer 8 0% -5% 0% 5% 10% 15% 20% 25% 30% PREMIUM/DISCOUNT TO NTA -5% Peer 1 Peer 2 Peer 7 Peer 5 -10% Peer 11 Peer 4 Peer 6 Peer 9 -15% Peer 10 -20% Source: Bell Potter analysis as at 30 June 2024. Vertical axis represents the share price premi
Slide 8: VG1: Strong performance, discount to NTA improving
VG1: Strong performance, discount to NTA improving A$/share Premium/(Discount) to NTA Key statistics as at 30 September 2024 2.20 10% VG1 pre-tax NTA adjusted for dividends (LHS) Portfolio Size VG1 share price adjusted for dividends (LHS) VG1 share price premium/(discount) to VG1 post-tax NTA (RHS)
Slide 9: Market update
Market update Key takeaways 1 Market rally broadens as monetary conditions ease 2 Strong bond market makes equities more attractive 3 Passive investing bubble continues to provide long and short opportunities 4 VG1 benefiting from Resources and Asian exposure 8
Slide 10: US market marches higher
US market marches higher 200 S&P 500 STOXX Europe 600 MSCI Asia Pacific 195 180 160 140 133 126 120 100 80 60 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 Sep-22 Mar-23 Sep-23 Mar-24 Sep-24 Source: Bloomberg as at 30 September 2024 (weekly data). Index levels rebased to 100. Past performance is not a r
Slide 11: US market rally starting to broaden
US market rally starting to broaden 800 S&P 500 ex Magnificent 7 (LHS) Magnificent 7 (LHS) Magnificent 7 quarterly relative return (RHS) 50% 700 40% 600 30% 500 20% 400 10% 300 0% Rally broadening with Mag 7 underperforming 200 rest of S&P 500 -10% 100 -20% 0 -30% Sep-19 Mar-20 Sep-20 Mar-21 Sep-21
Slide 12: US equities attractive vs Tech bubble
US equities attractive vs Tech bubble 9.0% Equity risk premium Pre-GFC avg (1998-2007) Post-GFC avg (2008-2017) 8.0% 7.0% 6.0% 5.0% 4.5% 4.0% 3.0% 2.0% 1.0% 0.7% 0.0% -1.0% -2.0% -3.0% 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 Source: Bloomberg as at 30 September 202
Slide 13: Best opportunities outside of the US
Best opportunities outside of the US EQUITY RISK PREMIUM 10.0% 8.0% 7.6% 6.0% 6.0% 5.5% 4.4% 4.0% 2.0% 1.4% 0.8% 0.0% US Australia Japan Hong Kong Germany UK P/E 21.8x 18.6x 14.5x 9.6x 13.2x 11.9x Corporate earnings yield 4.6% 5.4% 6.9% 10.4% 7.6% 8.4% 10 year government yield 3.8% 4.0% 0.9% 2.8% 2.
Slide 14: Bearish China sentiment too extreme
Bearish China sentiment too extreme BLOOMBERG CHINA INDEX / BLOOMBERG WORLD INDEX P/E (NEXT 12 MONTHS) 1.4x 50.0x Alibaba Meituan Baidu 1.2x 40.0x 1.0x 30.0x 0.8x 23.5x 0.6x 0.58 20.0x 0.4x 11.7x 10.0x 9.8x 0.2x 0.0x 0.0x 2004 2008 2012 2016 2020 2024 2021 2022 2023 2024 Source: LHS – Bloomberg as a
Slide 15: China – Parallels of 1990's Japan?
China – Parallels of 1990’s Japan? RESIDENTIAL PROPERTY PRICES TOTAL POPULATION Japan (LHS) (RHS) China (RS) Million Million 2003 2005 2007 2009 1975 1977 1979 1983 1985 1987 1989 1993 1995 1997 1999 2013 2015 2017 2019 2001 2021 1981 1991 2011 140 1,600 300 300 Japan (rebased to 100 in 1975) 2009 2
Slide 16: Chinese equities never experienced the bubble of Japan in 1990
…but Chinese equities never experienced the bubble of Japan in 1990 PRICE INDEX OVER TIME TRAILING P/E 2003 2005 2007 2009 2023 1972 1973 1974 1975 1976 1977 1978 1979 1980 1982 1983 1984 1985 1986 1987 1988 1989 1990 1992 1975 1977 1979 1983 1985 1987 1989 1993 1995 1997 1999 2013 2015 2017 2019 20
Slide 17: Unwind of Japanese carry trade provided opportunity to increase exposure to Japan
Unwind of Japanese carry trade provided opportunity to increase exposure to Japan 140 TOPIX Index Japanese Yen 130 120 110 100 90 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 Jul-24 Aug-24 Sep-24 Source: Bloomberg as at 30 September 2024 (rebased to 100). Past performance is not a reliable indic
Slide 18: Passive bubble creates opportunity
Passive bubble creates opportunity AUSTRALIAN ETFS ASX 200 BANKS VS MATERIALS PERFORMANCE ASSETS UNDER MANAGEMENT INDEX LEVELS REBASED TO 100 150 140 Billions $180 133 $160 130 $140 $120 120 $100 $80 110 $60 106 $40 100 $20 $0 2013 2018 2023 90 80 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Source: LHS – Van
Slide 19: CBA earnings starting to fall
CBA earnings starting to fall A$ EARNINGS PER SHARE P/E (NEXT 12 MONTHS) 7.00 25.0x 6.00 20.0x 5.00 15.0x 4.00 3.00 10.0x 2.00 5.0x 1.00 0.00 0.0x 1994 1998 2002 2006 2010 2014 2018 2022 2026 2005 2008 2011 2014 2018 2021 2024 Source: LHS – Bloomberg, Regal estimates. RHS – Bloomberg as at 30 Septem
Slide 20: Resources: Supply constrained, demand predicted to increase
Resources: Supply constrained, demand predicted to increase MAJOR COPPER DISCOVERIES (1990-2023) COPPER DEMAND (Mt) Copper in recent initial resources (MMt) 60 ~1.7x Copper in reserves, resources and past production (MMt, LHS) Copper exploration budget ($m, RHS) 180 5,000 50 Copper discoveries (MMt)
Slide 21: VG1: Increase in gross and net exposure provides greater leverage
VG1: Increase in gross and net exposure provides greater leverage to market movements 220% Gross exposure Net exposure 200% 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Source: Regal as at 30 September 2024. Past performance is not a reli
Slide 22: VG1: Shorts working well in difficult environment
VG1: Shorts working well in difficult environment S&P 500 UP S&P 500 DOWN 6% 6% 4.0% 4% 4% 2.1% 2% 2% 0% 0% -0.5% -2% -2% -4% -4% -3.7% -6% -6% S&P 500 S&P 500 Source: Regal as at 31 August 2024. Average of monthly returns over the last 12 months. Past performance is not a reliable indicator of futu
Slide 23: Stock positions
Stock positions Longs: Shorts: Rightmove Mercedes-Benz Group Entain United Parcel Service GQG Partners TSMC SK Hynix Shimadzu Corp
Slide 24: Long: Rightmove
Long: Rightmove SHARE PRICE PERFORMANCE £ 750.00 £617.40 £4.9b 22.0x Share price Market cap P/E (NTM) 700.00 650.00 • Dominant UK online property portal • Thesis: 1 yr perf: – Competitive concerns overblown 600.00 +10% – New CEO reigniting growth ambitions – Improving UK housing backdrop 550.00 – Lo
Slide 25: Long: Entain
Long: Entain SHARE PRICE PERFORMANCE £ 1,200.00 £763.20 £4.9b 19.4x Share price Market cap P/E (NTM) 1,100.00 1,000.00 • Leading global online gaming business • Thesis: 900.00 +52% – Growth at positive inflection point after difficult period since early evidence of successful turnaround August 800.0
Slide 26: Long: Entain
Long: Entain US ONLINE GAMING PEER COMPARISON VALUATION – CLOSE TO ALL-TIME LOWS REVENUE/PROFITABILITY COMPARISON FOR LEADING US DIGITAL OPERATIONS EV/EBITDA (BLENDED 24 MONTHS FORWARD) $m Revenue Profit/(loss) 16.0x 6,500 5,500 14.0x 4,500 12.0x 3,500 10.0x 2,500 8.0x 1,500 500 6.0x -500 FanDuel Dr
Slide 27: Long: GQG Partners
Long: GQG Partners SHARE PRICE PERFORMANCE A$ 3.40 A$2.81 A$8.3b 11.8x Share price Market cap P/E (NTM) 3.20 3.00 1 yr perf: 2.80 +104% 2.60 • Best in class active asset manager specialising in global equities 2.40 with US$161b of FUM 2.20 • Majority owned by staff – Rajiv Jain (Chair, CIO) ~70.1%,
Slide 28: Long: GQG Partners
Long: GQG Partners CUMULATIVE FUM GROWTH SINCE LISTING CUMULATIVE NET INCOME GROWTH FUM (US$b, LHS) Cumulative growth % (RHS) Net income before tax (US$b, LHS) Cumulative growth % (RHS) 160 80% 600 800% 140 60% 500 600% 120 40% 400 100 20% 300 400% 80 0% 200 200% 60 -20% 100 Apr-22 Apr-23 Apr-24 Jan
Slide 29: Long: TSMC
Long: TSMC SHARE PRICE PERFORMANCE TWD 1,200 TWD 957 TWD 24.8tn 18.9x Share price Market cap P/E (NTM) 1,100 1 yr perf: 1,000 +83% 900 • Global leader in contract semiconductor chip manufacturing • Clear leader in leading edge chip manufacturing technologies 800 • Crucial player in the supply chain
Slide 30: Long: TSMC
Long: TSMC SEMICONDUCTOR STOCK PRICES VS. REVENUE GROWTH TSMC BLENDED WAFER AVERAGE SELLING PRICE (ASP) % YoY growth SOX YoY performance % US$ 80% 160% 4,000 Semiconductor stock prices tend to move in a similar direction to their revenue growth rates 3,500 60% 120% 3,000 TSMC’s ASP is less volatile
Slide 31: Long: SK Hynix
Long: SK Hynix SHARE PRICE PERFORMANCE KRW 280,000 KRW 174,600 KRW 127.1tn 5.1x Share price Market cap P/E (NTM) 260,000 240,000 220,000 • Second largest memory company globally 200,000 • Currently the leader in AI related memory and a key partner for Nvidia 180,000 1 yr perf: • Strong growth profil
Slide 32: Long: SK Hynix
Long: SK Hynix MEMORY PRICE HYNIX QUARTERLY PROFIT US$ Billion KRW 10 10,000 Hynix’s profits are 9 8,000 recovering, with AI related demand a 8 key driver 6,000 Memory upcycle has 7 moderately slowed in recent months, 4,000 6 although we think there is more to go in this upcycle 2,000 5 4 0 3 -2,000
Slide 33: Long: Shimadzu Corp
Long: Shimadzu Corp SHARE PRICE PERFORMANCE ¥ 5,000 ¥4,774 ¥1.4tn 22.9x Share price Market cap P/E (NTM) 1 yr perf: 4,800 +20% 4,600 4,400 • Dominant player in Analytical & Measuring Instruments in Asia • Leveraged to rising demand from pharmaceutical development, 4,200 food safety testing and envir
Slide 34: Long: Shimadzu Corp
Long: Shimadzu Corp LEVERAGED TO GROWTH IN PHARMA AND FOOD TESTING RISING RATIO OF RECURING REVENUE MASS SPECTROMETRY MARKET BY END USE SHIMADZU'S CONSUMABLES SALES RATIO US$b 55% Others (ANALYTICAL AND MEASURING INSTRUMENTS SEGMENT) 14 Government & Academic Institutions 50% 12 Pharmaceutical & Biot
Slide 35: Short: Mercedes-Benz Group
Short: Mercedes-Benz Group SHARE PRICE PERFORMANCE € 80.00 €58.04 €57.6b 5.7x Share price Market cap P/E (NTM) 75.00 70.00 • China has been the primary source of unit growth for Mercedes over the past decade • Chinese automakers have taken share in the mass market and 65.00 quality of domestically p
Slide 36: Short: Mercedes-Benz Group
Short: Mercedes-Benz Group MBG TOTAL CARS SOLD AND % SOLD OF CARS SOLD IN CHINA AUTO OEMS UNITS SOLD IN CHINA: FOREIGN MASS (LHS), EURO PREMIUM (RHS) Million Total cars sold (LHS) % of cars sold in China (RHS) 3.00 40% 35% 2.50 2.37 2.38 2.39 2.20 30% 2.09 2.00 2.04 2.04 2.00 1.94 25% 1.73 1.55 1.50
Slide 37: Short: United Parcel Service
Short: United Parcel Service SHARE PRICE PERFORMANCE US$ 170.00 US$136.34 US$116.8b 16.1x Share price Market cap P/E (NTM) 160.00 • The small package market in the US has excess capacity after 150.00 increased capital spend during COVID • UPS recently provided medium term margin targets of ~12%, dri
Slide 38: Short: United Parcel Service
Short: United Parcel Service US SMALL PACKAGE MARKET – SUPPLY AND DEMAND UPS ADJUSTED OPERATING MARGIN AVERAGE DELIVERY VOLUME (ADV) 15.0% 14.0% 13.8% 13.5% 13.0% 12.0% 11.8% 11.3% 11.0% 10.9% 11.0% 10.8% 10.3% 10.3% 10.0% 9.4% 9.0% 8.0% 7.0% 6.0% 5.0% 2017 2018 2019 2020 2021 2022 2023 2024E 2025E
Slide 39: Investor Q&A
Wel) ALI 7 ‘| uf Investor Q&A
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