Latest / What the Flux / ASX200 telco falls 63% on merger news | Birkenstock's luxury slip | Ethical Everlane joins Shein

Transcript

ASX200 telco falls 63% on merger news | Birkenstock's luxury slip | Ethical Everlane joins Shein · 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 Wednesday, the twentieth of May. Doesn't wait.
• 0:09
  Speaker 2: Shakira is a wakawaky in all the way to the bank.
• 0:12
  Speaker 2: Get this one. The Spanish High Court has forced the
• 0:14
  Speaker 2: tax authority to repay fifty five million euros to Shakira
• 0:18
  Speaker 2: after it made mistakes over her tax status. She's been
• 0:21
  Speaker 2: battling the tax office for over ten years and now
• 0:23
  Speaker 2: getting her money back plus interest.
• 0:25
  Speaker 1: Catching whaka wackery all the way to the bank. Uh huh,
• 0:29
  Speaker 1: Flux Sam. If you're still reeling over all the different
• 0:31
  Speaker 1: changes from last week's federal budget, capital gain, sex discount,
• 0:34
  Speaker 1: the negative gearing, the discretionary trust changes, we have it
• 0:37
  Speaker 1: all covered in the Flux app. So if you want
• 0:39
  Speaker 1: to learn more about how the federal budget impacts you,
• 0:41
  Speaker 1: I shout it, Download the Flux app and check out
• 0:42
  Speaker 1: our latest.
• 0:43
  Speaker 2: Articles three monster stories today, Dozy boy, let's do it
• 0:47
  Speaker 2: for our first ASX listed to us has seen it
• 0:50
  Speaker 2: shares full sixty three percent after Singapore's a regulator warned
• 0:53
  Speaker 2: that it's a one point five billion dollar merger is
• 0:55
  Speaker 2: on the ropes.
• 0:56
  Speaker 1: That is a big big four for an ASEX two
• 0:58
  Speaker 1: hundred company b maan. So tell me what's happening here, all.
• 1:00
  Speaker 2: Right, Josie boy. So, TuS is an asxisted Singapore telco
• 1:04
  Speaker 2: that was spun out of TPG Telecom in twenty twenty.
• 1:07
  Speaker 1: That was when TPG merged with Votaphone here in Australia.
• 1:10
  Speaker 2: And TuS, which is still run by the founder of TPG,
• 1:13
  Speaker 2: David Teo, owns a budget mobile brand in Singapore called Simba.
• 1:17
  Speaker 1: Now ben to Us agreed last August to buy a
• 1:20
  Speaker 1: Singapore telco called m One for one and a half
• 1:23
  Speaker 1: billion dollars and.
• 1:24
  Speaker 2: When I announced this acquisition, it shares jumped thirty percent.
• 1:27
  Speaker 1: That would have made to Us the second biggest mobile
• 1:29
  Speaker 1: operator in Singapore behind Singchel, which also owns Optics here
• 1:32
  Speaker 1: in Australia. But plot twist, Singapore's regulator just found out
• 1:35
  Speaker 1: that Simba may have been using radio spectrum that it
• 1:38
  Speaker 1: wasn't licensed to use.
• 1:40
  Speaker 2: So now the regulator has suspended the merger review and the.
• 1:43
  Speaker 1: Man, might I remind you the deal must close by
• 1:45
  Speaker 1: May twenty one.
• 1:47
  Speaker 2: Which by my calculations is tomorrow.
• 1:49
  Speaker 1: Q the panic for investors YEP.
• 1:51
  Speaker 2: TuS share price fell six fifty percent in one day
• 1:54
  Speaker 2: on Monday, and it bounds.
• 1:55
  Speaker 1: Twenty percent yesterday. But it's still in a world of
• 1:58
  Speaker 1: regulatory pain.
• 1:59
  Speaker 2: So what is the keyler here?
• 2:00
  Speaker 1: Radio spectrum is basically invisible real estate, and every telco
• 2:04
  Speaker 1: in the world is fighting for a slice of spectrum.
• 2:06
  Speaker 2: Is the range of radio frequencies used to transmit wireless signals.
• 2:11
  Speaker 1: Think your phone calls, your data, your five G they
• 2:14
  Speaker 1: all travel on this radio spectrum.
• 2:16
  Speaker 2: Now, Dosi boy, think of like lanes on a motorway.
• 2:19
  Speaker 2: Every telco is assigned specific lanes by the government and
• 2:21
  Speaker 2: these radio spectrum options are big business. In twenty twenty four,
• 2:25
  Speaker 2: a loan the Australian government generated nearly seven hundred and
• 2:27
  Speaker 2: twenty two mil in spectrum options from Telstra, TBG and Optus.
• 2:31
  Speaker 1: And the total value of spectrum licenses in Australia is
• 2:34
  Speaker 1: eight point two billion dollars.
• 2:35
  Speaker 2: So when you use frequencies assigned to another paying operator,
• 2:38
  Speaker 2: it gets very personal.
• 2:39
  Speaker 1: Yeah, So when a company allegedly uses the spectrum without
• 2:42
  Speaker 1: a license, the regulator is now wondering whether they should
• 2:45
  Speaker 1: be operating at all.
• 2:46
  Speaker 2: And it's coming down the wire for two US and
• 2:48
  Speaker 2: it's big merger deal for.
• 2:50
  Speaker 1: Our second story. Birkenstock shares have fallen more than fourteen
• 2:53
  Speaker 1: percent and hit record lows as its luxury status is
• 2:56
  Speaker 1: being called into question.
• 2:58
  Speaker 2: Heaven Boles, Berkenstone and their impenetrable shoes. Josie Boy, tell
• 3:02
  Speaker 2: me more.
• 3:02
  Speaker 1: Okay, So, Birkenstock is actually traced back to a German
• 3:05
  Speaker 1: shoemaker named Johannas Birkinstock Wait back in seventeen seventy four, and.
• 3:09
  Speaker 2: The company spent the next two hundred plus years perfecting
• 3:12
  Speaker 2: the sandal.
• 3:12
  Speaker 1: In fact, be man It's nineteen sixty three shoe model
• 3:15
  Speaker 1: is still the one that's very popular today and he's
• 3:17
  Speaker 1: basically worn by everyone and their mom as well.
• 3:20
  Speaker 2: Uh huh and Jessie Boy. Birkenstock debut on the New
• 3:22
  Speaker 2: York Stock ex Changed in twenty twenty three with a
• 3:24
  Speaker 2: market cap of over eight point six billion US dollars
• 3:27
  Speaker 2: after cameoing in the Barbie film.
• 3:29
  Speaker 1: Which obviously caused a huge jump in global demand. But
• 3:32
  Speaker 1: less than three ys later, Birkinstock's market positioning is being
• 3:35
  Speaker 1: called into question.
• 3:37
  Speaker 2: That's after it reported lower quarterly growth and stalling and
• 3:39
  Speaker 2: your sales and what are the issues for the birkby Man, Well,
• 3:42
  Speaker 2: it produces most of its shoes in Germany, so it
• 3:44
  Speaker 2: has higher costs than rivals that produce in Asia. And
• 3:47
  Speaker 2: right now Josie Boy price sensitive shoppers are walking away barefooted.
• 3:51
  Speaker 1: And now Birkenstocks are going from a high growth luxury
• 3:54
  Speaker 1: star of the portfolio. So just another really solid shoe company.
• 3:58
  Speaker 2: So what's the key learning here?
• 3:59
  Speaker 1: When investors perception of a brand shifts, often the share
• 4:02
  Speaker 1: price follows.
• 4:03
  Speaker 2: Birkinstock debut on the New York Stock ex Chains as
• 4:05
  Speaker 2: a luxury growth footwear but now the market is not buying.
• 4:08
  Speaker 1: And that shifting sentiment is showing up in Birkinstock's evaluation,
• 4:11
  Speaker 1: which has fallen forty two percent in the past twelve months.
• 4:14
  Speaker 2: And Jesse what Birkenstock's biggest competitor, CrOx avoided a similar
• 4:18
  Speaker 2: fate because it never pretended to be luxury For.
• 4:20
  Speaker 1: Example, be Man. When Birkenstock went public, it listed with
• 4:23
  Speaker 1: a price to earnings ratio of forty five.
• 4:25
  Speaker 2: That is luxury level ratios.
• 4:27
  Speaker 1: Yeah, compare that to Crozilla, whose PE ratio was around
• 4:31
  Speaker 1: seven x. Big difference. Right now, Birkinstock's ratio has dropped
• 4:34
  Speaker 1: to under fifteen so clearly investors are now seeing Birkenstock
• 4:37
  Speaker 1: as a mid market brand and not quite a luxury contender.
• 4:41
  Speaker 2: For our third and final story, Everlane, the brand that
• 4:44
  Speaker 2: built its whole identity on radical sustainability, has just been
• 4:47
  Speaker 2: acquired by none other than she In.
• 4:49
  Speaker 1: Oh, ethical fashion just turned into a bit of a
• 4:52
  Speaker 1: villain here, So what's going on here?
• 4:53
  Speaker 2: Everlane launched in twenty eleven on a promise of radical transparency.
• 4:57
  Speaker 1: Yeah, they were one of the pioneers of the eco friendly,
• 4:59
  Speaker 1: sustain nimble fashion with ethical labour practices.
• 5:02
  Speaker 2: As part of this, they listed every products of material costs,
• 5:04
  Speaker 2: labour costs, transport costs, and even their own margin and.
• 5:07
  Speaker 1: Be man consumers aid it up. It became one of
• 5:09
  Speaker 1: the most popular direct consumer brands in the early twenty tens.
• 5:12
  Speaker 2: Back in September twenty twenty, L Catton, the private equity investor,
• 5:16
  Speaker 2: led a series F round for Everlaine.
• 5:17
  Speaker 1: Yeah they invested at a valuation of five hundred and
• 5:20
  Speaker 1: fifty million dollars.
• 5:21
  Speaker 2: But now Everlain is selling the entire business to she
• 5:24
  Speaker 2: In for just one hundred mil. The company has been
• 5:26
  Speaker 2: called the single biggest polluter in fast fashion. According to
• 5:29
  Speaker 2: Yale University.
• 5:31
  Speaker 1: So you can just imagine that within hours of this announcement,
• 5:33
  Speaker 1: Everlane's sustainable Instagram was flooded by horrified fans.
• 5:37
  Speaker 2: So what is the key learning year?
• 5:38
  Speaker 1: When a brand leads with its values, it also needs
• 5:41
  Speaker 1: to live by these.
• 5:42
  Speaker 2: Values and jasiboy of values led brand can lose customers
• 5:45
  Speaker 2: when it makes any decision that contradicts what it stands for.
• 5:48
  Speaker 1: Like when you sell that ethical brand to the world's
• 5:50
  Speaker 1: biggest polluter in fast fashion, to a company that's been
• 5:52
  Speaker 1: accused of unsafe working conditions and also been accused of
• 5:55
  Speaker 1: stealing designs from independent designers.
• 5:57
  Speaker 2: Josie Boy in the textbook case here is Volkswagen. From
• 6:00
  Speaker 2: two thousand and nine, they run a massive campaign that
• 6:02
  Speaker 2: marketed their cars as eco friendly and fuel efficient and
• 6:05
  Speaker 2: benefit the planet.
• 6:06
  Speaker 1: Then in twenty fifteen, the US EPA found that Volkswagen
• 6:09
  Speaker 1: had secretly installed software so it's cars would pass submission
• 6:12
  Speaker 1: tests in labs.
• 6:13
  Speaker 2: But during normal driving they were pumping out nitrogenoxides that
• 6:16
  Speaker 2: were five to thirty five times the legal limit. The
• 6:18
  Speaker 2: total cost of diesel Gate to Volkswagen was estimated to
• 6:22
  Speaker 2: cost more than thirty one billion euros.
• 6:23
  Speaker 1: So v Man Everland would be hoping their seller to
• 6:26
  Speaker 1: sheen doesn't entirely break their trust with their.
• 6:28
  Speaker 2: Customers, but given the comments on their instapage, kind of
• 6:31
  Speaker 2: looks like it might.
• 6:32
  Speaker 1: Fam If you're hearing a lot about capital gains, tax
• 6:35
  Speaker 1: negative gearing, discretionary trusts and you're not familiar with these
• 6:38
  Speaker 1: terms or how it impacts you, the Flux app breaks
• 6:40
  Speaker 1: it down and tells you what the impact will be.
• 6:42
  Speaker 1: So if you want to learn more about how the
• 6:44
  Speaker 1: federal budget might impact your wallet and your investments, and
• 6:46
  Speaker 1: make sure to download the Flux app and check out
• 6:48
  Speaker 1: our latest articles.
• 6:49
  Speaker 2: Thanks for listening and we'll see you on Friday