Latest / What the Flux / Jetstar crashes out of Asia | Cochlear’s small whisper of growth | Cettire loses 85% of its market value

Transcript

Jetstar crashes out of Asia | Cochlear’s small whisper of growth | Cettire loses 85% of its market value · What the Flux

• 0:05
  Speaker 1: This is what the Flux. I'm Brett and I'm Justin
• 0:07
  Speaker 1: and it's Friday, the thirteenth of June.
• 0:09
  Speaker 2: Bookie, Juzzy Boy, Another day, another embryo bungle by monash IVF.
• 0:14
  Speaker 2: They've admitted to a second embryo transfer issue this year alone.
• 0:18
  Speaker 2: Next minute, share price falls another twenty percent. The following minute,
• 0:21
  Speaker 2: CEO steps down. Bad news after bad news for this lot.
• 0:24
  Speaker 1: Jesuits not looking good, b manu app. This is our
• 0:27
  Speaker 1: last episode until July ninth. But if you still want
• 0:29
  Speaker 1: to get your Flux fix, we have a heap of
• 0:32
  Speaker 1: new content and courses and videos rolled out in the
• 0:34
  Speaker 1: Flux app each and every day. We're talking tax time
• 0:37
  Speaker 1: tips to eachf courses. The Flux app is updated each
• 0:40
  Speaker 1: day with the things that you need to know about money.
• 0:43
  Speaker 1: To make sure it's down with the Flux app to
• 0:44
  Speaker 1: check it out and get your Flux fix.
• 0:46
  Speaker 2: Three inspiring stories today Juzzy Boy for our first. Jetstar
• 0:52
  Speaker 2: Asia is being shut down after twenty years of trying
• 0:55
  Speaker 2: to break into the Asian market and failing.
• 0:57
  Speaker 1: Geez in for a rough landing, it seems, b Man,
• 0:59
  Speaker 1: so tell me more well.
• 1:00
  Speaker 2: Jetstar Airways is the resident budget Airline of Australia.
• 1:03
  Speaker 1: You want some flight entertainment, that'll cost you.
• 1:05
  Speaker 2: You want some nibbles? Oh you bet that'll cost you.
• 1:08
  Speaker 1: You want to choose your seat cough in.
• 1:10
  Speaker 2: It was created by Quantus in two thousand and three
• 1:12
  Speaker 2: to step into the budget airline space to compete with
• 1:14
  Speaker 2: Virgin Blue.
• 1:15
  Speaker 1: And in two thousand and four Quantas also launched Jetstar Asia,
• 1:18
  Speaker 1: which is based in Singapore and flies all around Southeast
• 1:21
  Speaker 1: Asia and Jazzyboy.
• 1:22
  Speaker 2: Up until now they've been competing with other budget airlines
• 1:24
  Speaker 2: in Asia.
• 1:25
  Speaker 1: Your scoots, my favorite, your air Asias and do not
• 1:27
  Speaker 1: ever forget viet Jet as well.
• 1:29
  Speaker 2: No, but in the post COVID world, Jetstar Asi's costs
• 1:32
  Speaker 2: have spiked nearly two hundred percent and.
• 1:34
  Speaker 1: At the same time, intense competition in Asia keeps driving
• 1:37
  Speaker 1: flight prices down.
• 1:39
  Speaker 2: In fact, Jazzy Boy, in twenty years they've only turned
• 1:42
  Speaker 2: a profit six times wow.
• 1:43
  Speaker 1: And this financial year alone, Jetstar Asia is reported to
• 1:46
  Speaker 1: lose another thirty five million dollars yaikarinis.
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  Speaker 2: That can't be good for shareholder's confidence.
• 1:51
  Speaker 1: Nope, not at all, And that's why Quantus a CEO,
• 1:53
  Speaker 1: is finally making the call to shut down Jetstar Asia for.
• 1:57
  Speaker 2: Good Quantus reckons this will unlock five hundred million dollar
• 2:00
  Speaker 2: in capital that can be reinvested in the local business.
• 2:03
  Speaker 1: So what is the key learning here?
• 2:04
  Speaker 2: Just like in sport, businesses usually have a home ground
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  Speaker 2: advantage when they operate in their domestic market, so be man.
• 2:10
  Speaker 1: While it's tempting for ossie companies to expand into international orders,
• 2:14
  Speaker 1: it's not always an easy market to crack.
• 2:16
  Speaker 2: Jetstar Asia was a foreign company operating against budget airlines
• 2:20
  Speaker 2: that were operating on their very own.
• 2:22
  Speaker 1: Turf, which means Scoot and Air Asia had the upper
• 2:24
  Speaker 1: hand in terms of understanding the culture and the regulations
• 2:27
  Speaker 1: in Asia.
• 2:28
  Speaker 2: Having higher brand loyalty and lower labor costs as well,
• 2:31
  Speaker 2: which made it possible to operate their services on razor
• 2:34
  Speaker 2: thin margins.
• 2:34
  Speaker 1: But be man, they say. The first time that an
• 2:36
  Speaker 1: oussie business has gone knocking on Asia's door.
• 2:39
  Speaker 2: Back in twenty sixteen, and Z announced a major celldown
• 2:42
  Speaker 2: of its retail banks in Asia.
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  Speaker 1: Yep, and they had some pretty big expectations when they
• 2:46
  Speaker 1: came in, but the CEO all the time admitted the
• 2:48
  Speaker 1: returns didn't quite match their expectation. Now that Jetstar's back
• 2:51
  Speaker 1: to focusing on domestic flights. Maybe those home field advantages
• 2:55
  Speaker 1: will give them a little extra competitive edge. For our
• 2:58
  Speaker 1: second story, Cochlear, the ASEX listed medical device company as
• 3:02
  Speaker 1: senor shares take a hit, but it's hoping that it's
• 3:04
  Speaker 1: bionic ear will save the day.
• 3:06
  Speaker 2: Implants help people tune in, but right now investors are
• 3:09
  Speaker 2: tuning out, So tell me more.
• 3:11
  Speaker 1: Okay. So Cocklear is the ASEX listed medical device company
• 3:14
  Speaker 1: to make some of the world's leading hearing implant.
• 3:17
  Speaker 2: In fact, Cockley has sold over seven hundred and fifty
• 3:19
  Speaker 2: thousand hearing implants worldwide in more than one hundred and
• 3:22
  Speaker 2: eighty countries.
• 3:23
  Speaker 1: Man, you may remember that Cochlear was originally spun out
• 3:26
  Speaker 1: of the CSIRO and it listed on the ASEX in
• 3:29
  Speaker 1: nineteen ninety five, and since then it has boomed YEP.
• 3:31
  Speaker 2: Its market cap was under two hundred million bucks back
• 3:34
  Speaker 2: then and now it's more than seventeen bill But.
• 3:37
  Speaker 1: Be Man, Cocklear's FI twenty five profit guidance is making
• 3:40
  Speaker 1: a lot less noise than expected.
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  Speaker 2: YEP. It has downgraded profit expectations from up to four
• 3:45
  Speaker 2: hundred and thirty million dollars down to a max of
• 3:48
  Speaker 2: four hundred mil and that.
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  Speaker 1: Means they're barely a whisper above last year's three hundred
• 3:52
  Speaker 1: and eighty seven million dollars in revenue.
• 3:54
  Speaker 2: Growth, so small you'd need a hearing aid to pick
• 3:56
  Speaker 2: it up. And why the slow growth use boy, Well,
• 3:59
  Speaker 2: it's been losing a bit market share to competitors, and
• 4:01
  Speaker 2: it's also been facing a shift towards lower margin products
• 4:04
  Speaker 2: in emerging markets. But there is hope for twenty six
• 4:07
  Speaker 2: b man because Cochlear is planning to launch a world
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  Speaker 2: first hearing implant which can stream mobile calls directly to
• 4:14
  Speaker 2: the implant devices.
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  Speaker 1: And it also has automatic firmware updates like an iPhone
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  Speaker 1: in your ear.
• 4:19
  Speaker 2: High margin product alert.
• 4:22
  Speaker 1: And while Cochlear is promising this will be big, investors
• 4:24
  Speaker 1: were still selling off Cochlear shares in the meantime.
• 4:27
  Speaker 2: So what is the key learning here?
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  Speaker 1: Sales volume is vanity? Well, profit is sanity?
• 4:31
  Speaker 2: Does it way? Cochlear is growing implant volumes by about
• 4:34
  Speaker 2: ten percent, but a lot of that growth is coming
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  Speaker 2: from emerging market.
• 4:37
  Speaker 1: Which typically offer lower prices per.
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  Speaker 2: Unit, and that creates some margin pressure.
• 4:41
  Speaker 1: In other words, the cost of making a product doesn't
• 4:43
  Speaker 1: change much, but the price you can charge it goes down.
• 4:46
  Speaker 2: A company might grow sales overall, but end up making
• 4:49
  Speaker 2: less money if the mix tilts towards lower margin region.
• 4:52
  Speaker 1: That's why Cochlear's next move is all about the premium plate.
• 4:55
  Speaker 2: They're hoping that its fancy new product might shift the
• 4:57
  Speaker 2: product mix back towards premium product.
• 5:00
  Speaker 1: But for now, investors and turning the volume down.
• 5:02
  Speaker 2: For our third and final story, Satire, the online luxury
• 5:07
  Speaker 2: fashion retailer, has seen its chairs news dive thirty percent
• 5:10
  Speaker 2: after a slowdown in sales, profit, and US luxury purchases.
• 5:14
  Speaker 1: The US is too busy watching Trump and Musco head
• 5:16
  Speaker 1: to head. Vhan no time to buy luxury bags.
• 5:19
  Speaker 2: Tell me what well. Satire is the ASX listed luxury
• 5:22
  Speaker 2: marketplace selling all the big fashion houses.
• 5:24
  Speaker 1: We've been talking Gucci, Montclair, Dalmain, Fendy, Voluntin, o Versachi,
• 5:27
  Speaker 1: and a whole lot more.
• 5:28
  Speaker 2: It runs on a drop shipping model, meaning it doesn't
• 5:31
  Speaker 2: actually stock any of its items.
• 5:32
  Speaker 1: And be Man. While their market cap rocketed to over
• 5:35
  Speaker 1: one point eight bill during COVID, it's fair to say
• 5:37
  Speaker 1: it's now on the clearance rout.
• 5:38
  Speaker 2: We're talking a value of less than one hundred and
• 5:40
  Speaker 2: thirty mili.
• 5:41
  Speaker 1: But ben Man things got messy out because Setaire's revenue
• 5:43
  Speaker 1: rose just one point seven percent in the last eleven
• 5:46
  Speaker 1: months to the thirty first of May.
• 5:47
  Speaker 2: But most concerning was that it made a six point
• 5:50
  Speaker 2: nine million dollar loss in March and April this year.
• 5:52
  Speaker 1: Through on top of that a decline in their active
• 5:54
  Speaker 1: customers since March, and investors are very worried.
• 5:57
  Speaker 2: So what is the key learning here?
• 5:58
  Speaker 1: In e commerce? Retailers can pull a few key levers
• 6:01
  Speaker 1: to drive revenue, but every lever has a trader.
• 6:03
  Speaker 2: You can cut prices to get more sales and bring
• 6:06
  Speaker 2: in new customers, but if you do it.
• 6:07
  Speaker 1: Too often, your profits will vanish faster than a deal
• 6:09
  Speaker 1: bag at a sample sale.
• 6:11
  Speaker 2: Or you can hold prices steady and protect your margins,
• 6:13
  Speaker 2: but you.
• 6:14
  Speaker 1: Risk watching your customers disappear to cheaper pastures aka the czaras.
• 6:19
  Speaker 2: So in Seti's case, they've been pulling on all the
• 6:22
  Speaker 2: levers all at once and still not seeing results.
• 6:24
  Speaker 1: Yeah, it's been discounting heavily, but active users still fell
• 6:27
  Speaker 1: three and a half percent since March. So be man.
• 6:29
  Speaker 1: With poor performance and no Burkan sized miracle insight, it's
• 6:32
  Speaker 1: no surprise that Seti's share price has fallen by eighty
• 6:35
  Speaker 1: five percent since the start of this year alone. But Sam,
• 6:38
  Speaker 1: just a reminder. We'll be back on July ninth, after
• 6:41
  Speaker 1: a bit of a break of the pod, but there
• 6:42
  Speaker 1: is absolutely no break in the Flux app. We've got
• 6:45
  Speaker 1: a heap of new content and courses and videos rolled
• 6:47
  Speaker 1: out each and every day. To make sure to download
• 6:49
  Speaker 1: the app to check it out and stay on top
• 6:51
  Speaker 1: of your money.
• 6:52
  Speaker 2: Thanks for listening, and we'll see you on July than nine.