Crown profit slumps 28pc as high rollers leave the table ...

Team has been involved in a substantial number of the digital media, sports, entertainment, leisure and gaming industries’ most significant merger and acquisition transactions, holding key positions at, and transacting with Scientific Games Corp, Inspired Gaming Group, FOX Bets, Ocean Casino Resort, Resorts International Holdings, PokerStars, DraftKings, Mohegan Sun, Caesars Entertainment Corporation, Harrah’s Entertainment, Tropicana Entertainment, Inc., TSG/Sky Betting & Gaming, Facebook, Inc, Wynn Resorts, Dubai World/MGM Resorts
Here's all the Bios. These guys are stellar! TEKK closed at $10.30 today. Still cheap!
If you don't like to read... you don't like to make money!!!!
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Matthew Davey — Chief Executive Officer and Director
Mr. Davey has over 25 years of experience within the digital media, sports, entertainment, leisure and gaming ecosystems, as well as experience in the public sector. He is an experienced public company executive officer and board member. He has served in executive management positions across the gaming technology arena. Over the course of Mr. Davey’s career, he oversaw more than ten mergers and acquisitions and over $1.2 billion in debt and equity capital raised to support the companies he has led.
Most recently, Mr. Davey was Chief Executive Officer of SG Digital, the Digital Division of Scientific Games Corp. (“Scientific Games”) (Nasdaq: SGMS). SG Digital was established following the purchase by Scientific Games of NYX Gaming Group Limited (“NYX”) (formerly TSXV: NYX), where Mr. Davey served as Chief Executive Officer and Director. The NYX acquisition provided Scientific Games with a vehicle to significantly accelerate the scale and breadth of its existing digital gaming business, including the strategic expansion into sports betting. In his capacity as Chief Executive Officer of NYX, Mr. Davey developed and implemented a corporate strategy that generated strong revenue growth. Mr. Davey shaped company strategy to focus on digital gaming supplier platforms and content that provided various gaming operators with the underlying gaming and sports betting systems for their online gaming business. In 2014, Mr. Davey oversaw the initial public offering of NYX, and his experience in the digital media, sports, entertainment, leisure and gaming industries helped NYX recognize momentum as a public company. After the public offering, from 2014 to 2018, Mr. Davey oversaw seven acquisitions which helped establish NYX as one of the fastest growing global B2B real-money digital gaming and sports betting platforms. These acquisitions included:
• OpenBet: In 2016, NYX completed the $385 million acquisition of OpenBet. This was one of the more complex and transformative acquisitions that Mr. Davey oversaw at NYX. Through securing co-investments from William Hill (LSE: WMH), Sky Betting & Gaming and The Stars Group (formerly Nasdaq: TSG, TSX: TSGI), Mr. Davey was able to get the acquisition from Vitruvian Partners completed successfully, winning the deal against much larger and well capitalized competitors. By combining two established and proven B2B betting and gaming suppliers, NYX was well positioned to provide customers with exciting player-driven solutions across all major product verticals and distribution channels. This allowed NYX to become the leading B2B omni-channel sportsbook platform in the market and the supplier to over 300 gaming operators globally with an extensive library of desktop and mobile game titles, including more than 700 on NYX platforms and more than 2,000 on the OpenBet platform.
• Cryptologic/Chartwell: In 2015, NYX completed the $119 million acquisition of Cryptologic and Chartwell. The acquisition provided NYX with more than 400 titles of additional leading gaming content, a broader customer base, and direct exposure to PokerStars and Intercasino, part of the Gamesys Group (LSE: GYS) — two of the world’s largest online casino offerings.
• OnGame: In 2014, NYX completed the distressed acquisition of OnGame, a premier poker content, platform and service provider. This acquisition provided NYX with one of the best poker products in the industry, access to several regulated jurisdictions, and a valuable talent pool that was instrumental in the growth of NYX. The addition of OnGame further established a path for NYX to continue its growth in both European and U.S. markets.
These acquisitions, together with meaningful organic growth, increased NYX’s revenue from $24 million in 2014 to $184 million annualized in 2017. During that time, Mr. Davey helped build NYX to have over 200 customers in the global gaming industry and a team of 1,000 employees. Mr. Davey’s success at NYX ultimately led to its sale to Scientific Games for $631 million in 2018.
Mr. Davey joined Next Gen Gaming, the predecessor to NYX, in 2000 as the Vice President of Technology, was appointed as Executive Director in 2003 and named Chief Executive Officer in 2005. Prior to that, he was the Senior Consultant for Access Systems, a company that specializes in the provision of back-end software for licensed online casinos. Prior to joining Access, Mr. Davey worked for the Northern Territory Government specializing in matters pertaining to the internet and e-commerce along with roles in the Department of Racing and Gaming. Mr. Davey received a Bachelor of Electrical & Electronic Engineering from Northern Territory University, Australia (also known as Charles Darwin University).
Robin Chhabra — President
Mr. Chhabra has been at the forefront of corporate acquisition activity within the digital gaming landscape for over a decade. His prior experience includes leading corporate strategy, M&A, and business development at two of the global leaders in the digital gaming industry, The Stars Group (“TSG”) and William Hill, and a leading supplier, Inspired Gaming Group (Nasdaq: INSE). Mr. Chhabra served on the Group Executive Committees of each of these companies. From 2017 to May 2020, Mr. Chhabra served as Chief Corporate Development Officer at TSG and, from 2019 to August 2020, he also served as the Chief Executive Officer of Fox Bet, a leading U.S. online gaming business which is the product of a landmark partnership between TSG and FOX Sports, a transaction which he led. During that period, Mr. Chhabra led several transactions which transformed TSG into the largest publicly listed online gambling operator in the world by both revenue and market capitalization and one of the most diversified from a product and geographic perspective with revenues of over $2.5 billion. Mr. Chhabra’s M&A experience is extensive and covers multiple global geographies across the digital gaming value chain and includes the following:
• TSG/Flutter Entertainment Merger: In 2019, Mr. Chhabra led the TSG M&A team that was responsible for TSG’s $12.2 billion merger with Flutter Entertainment (LSE: FLTR). The merger between TSG and Flutter Entertainment is the largest transaction in the digital gaming industry to date. The combination created the largest publicly listed online gaming company with approximately 13 million active customers and leading product offerings, which include sports betting, online casino, fantasy sports and poker. The combined entity includes some of the world’s most iconic digital gaming brands such as Fanduel, Fox Bet, Sky Bet, PaddyPower, Betfair, PokerStars and SportsBet. TSG/Flutter Entertainment is one of the most geographically diverse digital gaming and media companies with leading positions in the United States, United Kingdom, Australia, Ireland, Italy, Spain, Germany and Georgia.
• TSG/Sky Betting and Gaming (“SBG”): In 2018, Mr. Chhabra led the acquisition of SBG from CVC Capital Partners and Sky plc, Europe’s largest media company, in a transaction valued at $4.7 billion. At the time of the acquisition SBG was the largest mobile gambling operator in the United Kingdom and one of the fastest growing of the major operators having doubled its online market share in three years. The acquisition of SBG provided TSG with (a) greater revenue diversification, significantly enhanced expertise and exposure to sports betting just ahead of the judicial overturn of The Professional and Amateur Sports Protection Act of 1992 (PASPA) by the U.S. Supreme Court, (b) a leading position within the United Kingdom, the world’s largest regulated online gaming market, (c) improved products and technology as a result of the addition of SBG’s innovative casino and sports book offerings and a portfolio of popular mobile apps, and (d) expertise in deeply integrating sports betting with leading sports media companies, positioning TSG to create more engaging content, deliver faster growth and decrease customer acquisition costs.
• William Hill (LSE: WMH): At William Hill, from 2010 to 2017, Mr. Chhabra served as Group Director of Strategy and Corporate Development where he led several transactions which contributed to William Hill’s transformation from a land-based gambling operator in the United Kingdom to a leading online-led international business. Mr. Chhabra led William Hill’s entry into the U.S. sports betting and online lottery markets with the acquisition of four businesses, including the simultaneous acquisitions of three U.S. sportsbooks, Cal Neva, American Wagering and Brandywine Bookmaking, in 2011 for an aggregate purchase price of $55 million. These businesses ultimately led William Hill to achieve a leading position in the U.S. sports betting market with a market share of 24% in 2019. Additionally, Mr. Chhabra played a key role in structuring William Hill’s successful joint venture with PlayTech Plc (LSE: PTEC) in 2008. The combined entity created one of the largest online gambling businesses in Europe at the time of its formation and led to William Hill’s buyout of Playtech’s interest for $637 million in 2013. Prior to the transaction, William Hill had struggled in its attempt to establish a strong online gaming platform and a meaningful presence outside the United Kingdom.
Mr. Chhabra has also successfully completed four transactions worth over $1.2 billion in Australia, the world’s second largest regulated online gambling market, and various partnerships in Asia. Additionally, he completed several technology and media related transactions, including William Hill’s investment in NYX, where he worked with Mr. Davey on NYX’s transformational acquisition of OpenBet.
Prior to working in the gaming sector, Mr. Chhabra was an equities analyst and a management consultant. Mr. Chhabra received a Bachelor of Science in Economics from the London School of Economics and Political Science.
Eric Matejevich — Chief Financial Officer
Mr. Matejevich is a seasoned gaming executive with extensive experience in both the online gaming and traditional casino industries. From February to August 2019, he served as Trustee and Interim-Chief Executive Officer of Ocean Casino Resort (“Ocean”) (formerly Revel Casino, which had a construction cost of $2.4 billion) in Atlantic City, where he successfully led the management team through an ownership change and operational turnaround effort. Over the course of seven months, Mr. Matejevich managed to reduce the property’s weekly cash burn of $1.5 million to an annualized cash flow run rate in excess of $20 million.
Prior to Ocean, from 2016 to 2018, Mr. Matejevich served as the Chief Financial Officer of NYX. At NYX, he focused his efforts on integrating the company’s many acquisitions and multiple debt refinancings to simplify its capital structure and provided liquidity for growth initiatives. Additionally, Mr. Matejevich was instrumental to the executive team that sold NYX to Scientific Games for $631 million.
Prior to NYX, from 2004 to 2014, Mr. Matejevich was the Chief Financial Officer of Resorts International Holdings and later, from 2011, also the Chief Operating Officer of the Atlantic Club Casino, a property under the Resorts International Holdings umbrella — a Colony Capital (NYSE: CLNY) entity. As Chief Financial Officer, he provided managerial oversight for all finance functions for a six-property casino company with annual gaming revenue exceeding $1.3 billion, 10,000 gaming positions, 7,000 hotel rooms and over 11,000 staff members during his tenure. Mr. Matejevich led the transition effort to integrate a four-casino, $1.3 billion acquisition from Harrah’s Entertainment and Caesars Entertainment (Nasdaq: CZR). As Chief Operating Officer of Atlantic Club, he lobbied for and was successful in obtaining the first internet gaming legislation passed in the United States. The Atlantic Club was the sole New Jersey casino proponent of the legislation.
Prior to serving in various gaming positions, Mr. Matejevich was a Vice President of High Yield Research for Merrill Lynch, where he managed the corporate bond research effort for the gaming and leisure sectors and marketed high yield and other debt transactions totaling $4.8 billion. Mr. Matejevich received a Bachelor of Science in Economics from The Wharton School and a Bachelor of Arts in International Relations from The College of Arts and Sciences at the University of Pennsylvania.
Our Board of Directors
Morris Bailey — Chairman
Over the past 10 years, Mr. Bailey has been a leader in turning around Atlantic City, as well as being among the first gaming executives to embrace online gaming and sports betting in the United States. In his efforts, Mr. Bailey partnered with two of the largest digital gaming companies in the world, PokerStars, part of the Stars Group, and DraftKings (Nasdaq: DKNG). In 2010, Mr. Bailey bought Resorts Atlantic City (“Resorts”) and initiated a comprehensive renovation which allowed for the property to be rebranded and repositioned. In 2012, Mr. Bailey signed an agreement with Mohegan Sun to manage the day-to-day operations of the casino. In addition to Mohegan Sun’s operational expertise and ability to reduce costs via economies of scale, Resorts gained access to their robust customer database. Soon thereafter, Mr. Bailey and his team focused on bringing online gaming to the property. In 2015, Resorts established a platform to engage in online gaming by partnering with PokerStars, now part of the $24 billion Flutter Entertainment, PLC (LSE: FLTR), to operate an online poker room in Atlantic City. In 2018, Resorts announced deals with DraftKings and SBTech to open a sportsbook on-property and online. For 2020 year-to-date, Resorts has performed in the top quartile in internet gross gaming revenue in New Jersey. Mr. Bailey’s efforts in New Jersey helped set the framework for expansion of online sports and gaming throughout the United States.
In addition to his gaming interests, Mr. Bailey has over 50 years of experience in all facets of real estate development, asset M&A, capital markets and operations and is the founder, Chief Executive Officer and Principal of JEMB Realty, a leading real estate development, investment and management organization. Mr. Bailey has notable investment experience within the energy, finance and telecommunications sectors through investments in the Astoria Energy Plant, Basis Investment Group and Xentris Wireless.
Tony Rodio — Director Nominee
Mr. Rodio has nearly four decades of experience in the gaming industry. Most recently, Mr. Rodio served as the Chief Executive Officer and director of Caesars Entertainment Corporation (“Caesars”) (Nasdaq: CZR), one of the world’s most diversified casino-entertainment providers and the most geographically diverse U.S. casino-entertainment company, from April 2019 until its acquisition by Eldorado Resorts, Inc. in July 2020. Mr. Rodio led Caesars through its $17.3 billion merger with Eldorado Resorts, one of the largest transactions in the gaming industry to date. Additionally, Mr. Rodio was instrumental to Caesars’ expansion into the digital gaming industry and oversaw the implementation of new digital segments such as its Scientific Games powered retail sportsbook solution that now operates in various states throughout the U.S. From October 2018 to May 2019, Mr. Rodio served as Chief Executive Officer of Affinity Gaming. Prior to Affinity Gaming, he served as President, Chief Executive Officer and a director of Tropicana Entertainment, Inc. (“Tropicana”) for over seven years, where he was responsible for the operation of eight casino properties in seven different jurisdictions. During his time at Tropicana, Mr. Rodio oversaw a period of unprecedented growth at the company, improving overall financial results with net revenue that increased more than 50% driven by both operational improvements and expansion across regional markets. Mr. Rodio led major capital projects, including the complete renovation of Tropicana Atlantic City and Tropicana’s move to land-based operations in Evansville, Indiana. Each of these initiatives, among others, generated substantial value for Tropicana. Ultimately, Mr. Rodio’s efforts at Tropicana led to its sale to Eldorado Resorts in 2018 for $1.85 billion. Prior to Tropicana, Mr. Rodio held a succession of executive positions in Atlantic City for casino brands, including Trump Marina Hotel Casino, Harrah’s Entertainment (predecessor to Caesars), the Atlantic City Hilton Casino Resort and Penn National Gaming. He has also served as a director of several professional and charitable organizations, including Atlantic City Alliance, United Way of Atlantic County, the Casino Associations of New Jersey and Indiana, AtlantiCare Charitable Foundation and the Lloyd D. Levenson Institute of Gaming Hospitality & Tourism. Mr. Rodio brings extensive knowledge of and experience in the gaming industry, operational expertise, and a demonstrated ability to effectively design and implement company strategy. Mr. Rodio received a Bachelor of Science from Rider University and a Master of Business Administration from Monmouth University.
Marlon Goldstein — Director Nominee
Mr. Goldstein is a licensed attorney with nearly 20 years of experience in the gaming space. He joined The Stars Group (Nasdaq: TSG)(TSX: TSGI) in January 2014 as its Executive Vice-President, Chief Legal Officer and Secretary until his retirement from the company in July 2020 following the merger of TSG with Flutter Entertainment, PLC (LSE: FLTR). Mr. Goldstein also previously served as the Executive Vice-President, Corporate Development and General Counsel of TSG. Mr. Goldstein was also the senior TSG executive based in the United States and was one of the primary architects of TSG’s strategic vision for its U.S.-facing business. During his tenure, TSG grew from an approximately $500 million market-cap company to an approximately $7 billion market-cap company through a combination of organic growth and strategic mergers and acquisitions. Mr. Goldstein participated in numerous M&A transactions and capital markets offerings at TSG, including several transformational transactions in the digital gaming industry. Notable transactions in which Mr. Goldstein was involved include:
• TSG/Flutter Merger: In 2019, TSG merged with Flutter for a $12.2 billion transaction value, the largest transaction in the digital gaming industry to date.
• TSG/Fox Bet Partnership: In 2019, TSG entered into a partnership with FOX Sports to create FOX Bet in the U.S., a leading U.S. online gaming business. Wall Street Research estimates an approximate $1.1 billion valuation for Fox Bet post-partnership with The Stars Group.
• TSG/Sky Betting & Gaming: In 2018, TSG acquired Sky Betting & Gaming, the largest mobile gambling operator in the United Kingdom at the time, for $4.7 billion.
• TSG/CrownBet and William Hill: In 2018, TSG simultaneously acquired CrownBet and William Hill, two Australian operators, for a total of $621 million in a multi-part transaction.
• TSG/PokerStars and Full Tilt Poker: In 2014, TSG acquired The Rational Group, which operated PokerStars and Full Tilt and was the world’s largest poker business, for $4.9 billion.
Through his ability to legally structure large and complex transactions, Mr. Goldstein was integral to TSG’s vision of becoming a full-service online gaming company. Additionally, he assisted in structuring TSG’s capital markets activity, which generated liquidity for acquisitions and strengthened its balance sheet.
Prior to joining TSG, Mr. Goldstein was a principal shareholder in the corporate and securities practice at the international law firm of Greenberg Traurig P.A., where he practiced for almost 13 years. Mr. Goldstein’s practice focused on corporate and securities matters, including mergers and acquisitions, securities offerings, and financing transactions. Additionally, Mr. Goldstein was the founder and co-chair of the firm’s Gaming Practice, a multi-disciplinary team of attorneys representing owners, operators and developers of gaming facilities, manufacturers and suppliers of gaming devices, investment banks and lenders in financing transactions, and Indian tribes in the development and financing of gaming facilities.
Mr. Goldstein brings experience and insight that we believe will be valuable to a potential initial business combination target business. Mr. Goldstein received a Bachelor of Business Administration with a concentration in accounting from Emory University and a Juris Doctorate with highest honors from the University of Florida, College of Law.
Sean Ryan — Director Nominee
Mr. Ryan is a digital media and technology operator with extensive global experience in online payments, e-commerce, marketplaces, mobile ad networks, digital games, enterprise collaboration platforms, blockchain, real money gaming and online music. Since 2014, Mr. Ryan has been serving as Vice President of Business Platform Partnerships at Facebook, Inc. (“Facebook”) (Nasdaq: FB), where he leads a more than 500 person global organization that manages the Payments, Commerce, Novi/Blockhain, Workplace and Audience Network businesses. Prior to his current role, Mr. Ryan was hired in 2011 as the Director of Games Partnerships to lead and grow the global Games business at Facebook. While the Director of Games Partnerships, Mr. Ryan focused on re-shaping Facebook’s games and monetization strategies to derive more value for Facebook, its users and its partners, including the addition of a Real Money Gaming offering in regulated markets. Mr. Ryan’s team helped accelerate a major trend in engagement through cross-platform games and therefore the opportunity to increase users through establishing games on multiple platforms. Prior to joining Facebook, Mr. Ryan created the new social and mobile games division at News Corp, an American multinational mass media corporation controlled by Rupert Murdoch. While at News Corp, Mr. Ryan led the acquisition of Making Fun, a San Francisco social-game start-up, that created News Corp’s games publishing division.
Before joining News Corp., Mr. Ryan founded multiple digital businesses such as Twofish, Meez, Open Wager and SingShot Media. Mr. Ryan co-founded Twofish in 2009, a virtual goods and services platform that provided developers with data analytics and insights for individual application’s digital economies. Twofish was later sold to online payments provider Live Gamer, where Mr. Ryan served on the board of directors. From 2005 to 2008, Mr. Ryan founded and led Meez.com, a social entertainment service combining avatars, web games and virtual worlds. The white label social casino gaming company Open Wager was spun out of Meez and was later sold to VGW Holdings, Mr. Ryan also co-founded SingShot Media, an online karaoke community, which was sold to Electronic Arts (Nasdaq: EA) and merged into its Sims division.
We believe Mr. Ryan’s experience will be valuable to a potential initial business combination target and would provide an expanded perspective on the digital gaming landscape. Mr. Ryan received a Bachelor of Arts from Columbia University and a Master of Business Administration from the University of California, Los Angeles.
Tom Roche — Director Nominee
Mr. Roche has more than 40 years of experience in the gaming industry as a regulator, advisor and independent auditor. Mr. Roche joined Ernst & Young (“EY”) as a partner in 2003 and opened its Las Vegas office. He was subsequently appointed as the Office Managing Partner and Global Gaming Industry Market Leader. In 2016, Mr. Roche relocated to the EY Hong Kong office to supervise the expansion of the EY Global Gaming Industry practice in the Asia Pacific region. Mr. Roche has been integral to numerous transactions that have shaped the current gaming landscape, including:
• Wynn Resorts (Nasdaq: WYNN) initial public offering: Mr. Roche was the lead partner on Wynn Resort’s initial public offering, which raised $450 million in 2002.
• Harrah’s Entertainment/Apollo Management Group & Texas Pacific Group: Mr. Roche headed the regulatory advisory services on the buyout of Harrah’s Entertainment, the world’s largest casino company at the time, for $17.1 billion.
• Dubai World/MGM Resorts: Mr. Roche headed the regulatory and due diligence advisory services to Dubai World in its approximately $5.1 billion investment in MGM. Dubai World bought 28.4 million MGM shares, or 9.5 percent of the casino operator, for $2.4 billion. It then invested $2.7 billion to acquire a 50% stake in MGM’s CityCenter Project, a $7.4 billion 76-acre Las Vegas development of hotels, condos and retail outlets.
• MGM Growth Properties (NYSE: MGP) initial public offering: Mr. Roche provided tax and structural transaction services to MGM Resorts in the creation of MGM Growth Properties, a publicly traded REIT engaged in the acquisition, ownership and leasing of large-scale destination entertainment and leisure resorts. MGM Growth Properties raised $1.05 billion in its 2016 initial public offering.
Mr. Roche also directed EY advisory services to boards and management teams for profit improvement and technology related initiatives. In addition, Mr. Roche provided advisory support to the American Gaming Association on several research projects, including those specifically related to sports betting, the revocation of The Professional and Amateur Sports Protection Act of 1992 (PASPA) and anti-money laundering best practices in the gaming industry. Equally, he has assisted government agencies in numerous international locations with enhancing their regulatory approach to governing the industry especially in the online gambling sector.
Prior to joining Ernst & Young, Mr. Roche served as Deloitte’s National Gaming Industry Leader and as the co-head of Andersen’s Gaming Industry Practice in Las Vegas. In 1989, Mr. Roche was appointed by then Governor of the State of Nevada, Robert Miller, to serve as one of three members of the Nevada State Gaming Control Board for a four-year term, where he was directly responsible for the Audit and New Games Lab Divisions. As a board member, he spent a substantial amount of time assisting global jurisdiction regulators enact gaming legislation in the design of their regulatory structure. During his career, Roche has been involved in numerous public and private offerings of equity and debt securities. His background includes providing casino regulatory consulting services to casino licensees and to federal and state agencies including the National Indian Gaming Commission and the Nevada State Gaming Control Board, and industry associations such as the Nevada Resort Association and the American Gaming Association.
We believe Mr. Roche’s highly regarded reputation as a gaming auditor and advisor in the gaming industry will be valuable for us and a potential business combination target. Mr. Roche is a member of the American Institute of Certified Public Accountants and is licensed by the Nevada State Board of Accountancy and Mississippi State Board of Public Accountancy. He received his Bachelor of Science degree in Accounting from the University of Southern California.

Hello, you may know me from DD posts about IVZ and 3DP. I'm still heavily in these. But today I bring you SBW.
Ok for real, this might be the laziest DD you've read because it was copy pasted direct from hotcopper. But it will also be the best DD you've read (no offence to u/bigjimbeef recent DD on this but he's always drunk and while his DD did get me interested in this, I think maybe some people didn't take his post seriously because the post read like he had a beer in one hand and his dick in the other).
But I've been thinking lately... wouldn't it be nice if I could, for once, jump on a stock, before it rockets? Like... Every stock I've been in so far has holders who are already 10 bagging. How do they find these stocks and how can I become one of them?
Well, here is your chance. Full disclosure, I'm in at 26.5c, closing price today is 24.5c. It IPOd at 35c so we are still at bargain prices. No rocket yet. If you can think of a reason not to buy, please say so, before I take a larger position tmw morning, as I am trying to keep myself from getting overly keen on yet another stock but so far I can't find a good reason to put money anywhere else.
Copy pasta below:
I thought it was about time that I made the “Ultimate Guide to SBW” and consolidated months of research and analysis into one comprehensive post. Then we can add bits to it from there as more positive news develops.
Let us start with capital structure.
Capital Structure and Why This Is Important!
There are currently 139 million shares on issue, sitting at a price of 32 cents.
This gives a Market Capitalization of approximately ~45 million AUD.
Keep this in mind when we discuss partners and peers later - it’s arguably a more important metric than share price.
The Top 20 shareholders of SBW (which includes key management as the Top 2 holders) have about 90% of the stock on issue. The interests of management are well-aligned with shareholders.
What does this mean in plain English? It means management are extremely incentivized to perform, and are not just idly sitting by collecting an easy paycheck like so many other ASX companies. They have as much at stake as you do! Probably more.
The Core Business
The core business is a profitable operation which has been selling weighing systems to both retail and healthcare sectors – with reliable recurring revenue from customers including, but not limited to, household names like Toshiba and Fujitsu.
SBW have a combination of weighing + artificial intelligence + advanced mathematics which cannot be easily duplicated. The company was first founded in 1971 and was one of the first to shift from mechanical to digital weighing and ultra-thin IoT load sensors.
If you are interested in reading up on some of their patents, please see this link:
https://patents.justia.com/search?q=Shekel scales
I found 11 separate patents here, which are probably not an exhaustive list, but ranging from weighing vehicles in motion, to load cell devices (this is the flagship technology), point of sale apparatus and infant weight systems (for their medical customers)
SBW's three main technology pillars, including patented ultra-thin high precision load sensors, can distinguish between Coke, Fanta & Pepsi - even if they are all in 1.5 litre bottles!
The Hitachi Project (Hitachi’s Market Cap = roughly ~33 billion USD at time of writing, SBW = ~45 million AUD)
http://hlds.co.jp/product-eng/1079
[Translated from Japanese] Hitachi-LG Data Storage. Inc. exhibited in “NRF 2020 Retail’s Big Show” which took place at Jacob K. Javits Convention Center in New York from 1/12-1/14/2020, where Unmanned Store solution using 3D LiDAR(TOF) was jointly exhibited with Hitachi America, Hitachi Vantara, and Shekel Brainweigh (Israel).
Some quotes I found from Hitachi themselves
“Micro-markets are the fastest growing segment of convenience shopping. We see them exploding in high traffic areas, such as workplaces, campuses, train stations and airports,” said Hideki Hayashi, Sales and Marketing Manager, Hitachi EU Ltd.
“Deploying the joint Shekel-Hitachi solution enables retailers and micro-market operators to provide the 24/7 frictionless shopping experience consumers demand without sacrificing accuracy, performance or profitability.”
“As the manager responsible for LiDAR products in EMEA markets, I consider the R&D and commercial collaboration with Shekel Brainweigh to be the perfect partnership as we both bring our respective capabilities to develop a seamless consumer shopping experience. We are extremely pleased to collaborate with Shekel Brainweigh, which we believe is the best digital weighing technology developer globally."
“The collaboration builds on our expertise in optical motion sensors, together with Shekel’s advanced Product Aware Technology, and further strengthens our commitment to overcome the challenges, and address the significant opportunities, in global retail store automation.”
https://www.youtube.com/watch?v=P-uxk2Ycoqw
The Open Retail Initiative
https://www.lfedge.org/2020/02/13/n...ensor-fusion-for-intelligent-loss-prevention/
For the one-year anniversary of ORI, six initiative members Edgify, Flooid, Shekel and LF Edge members HP, IOTech and Intel inspired by the initiative, worked together on a demo for the Intel booth that showcased the value of Real Time Sensor Fusion for a loss prevention use case at self-checkout. The retail environment has become incredibly complex. The latest technologies enable data-driven experiences and unlock business value like never before, yet there is still a lack of interoperability making it difficult for retailers to deploy integrated solutions with speed and ease. The demo illustrates how integration roadblocks can be a thing of the past.
The demo pulls together real time data through the EdgeX middleware from different common systems including POS real-time transaction log, CV-based object detection, scale solution, and RFID, and data fusion—all in a single pane of glass.
Here are some PowerPoint slides of IBM, Intel & Hewlett-Packard talking about the joint solution
https://wiki.edgexfoundry.org/downl...amp;modificationDate=1579904283000&api=v2
The Fast Track Project
https://www.edgify.ai/retail/
Reduce time at till and selection at self-checkout by up to 98%. Computer vision-based product recognition, that continuously learns directly on the till, so the accuracy of the detection always increases.
Friction-less stores are great in theory but extremely complicated to scale in practice. Our edge training solution makes autonomous stores scalable, by having all the AI train directly on the camera. No infrastructure costs and no added complications.
Reduce incorrect selections by up to 90%. Either intentional or unintentional, use computer vision that is trained directly on the SCO itself to reduce loss by more than half!
No barcodes, no packaging, no worries. Simple USB cameras can detect the produce at close to 100% accuracy. Use as a decision support for cashiers, or to avoid consumers having to go through long and confusing menus.
https://www.edgify.ai/wp-content/uploads/2019/08/Retail_Intro.pdf
https://twitter.com/Edgify_AI/status/1277859718413930505
https://twitter.com/Edgify_AI/status/1230534216133332997
Shekel’s Visual Recognition Platform embedded with Edgify’s machine-learning training framework is the world’s first cloudless software that automatically recognises products, including fresh produce, at a retail self-checkout.
This ~45 million AUD Market Cap company allows retailers to potentially bypass expensive cloud services from Microsoft, Google and Amazon.
Sending data to the cloud is a very costly process with the Google Cloud Platform charging 1,000 stores more than US$7.2 million in cloud computing power per annum.
https://www.youtube.com/watch?v=FrpZ56IdFtg
https://www.youtube.com/watch?v=lpqwqQ1tJ4A
You can see the Shekel system 35 seconds in.
Patnership with Madix (2nd Largest Retail Shelves Manufacturer in NA)
https://www.bloomberg.com/press-rel...ade-product-aware-cabinets-to-retail-industry
NEW YORK -- January 13, 2020
Madix Inc., the second largest retail shelves manufacturer in North America, and Shekel Brainweigh Ltd. (ASX: SBW), the leader in advanced weighing technology, today announced the availability of ready-made Product Aware shelves and solutions for the retail industry.
“By seamlessly integrating Product Aware shelves into our hardware, our customers are armed with accessible data giving them reliable inventory visibility and assisting them in addressing over-stock and out-of-stock problems, as well as better control over shrinkage” said Steve Kramer, VP Sales, Madix.
“For the retail industry, this is a defined competitive edge that promotes the opportunity to increase profitability.”
Conclusion
So, remember - the core scales business is what drives the revenue we see today, but the innovation division is where the real potential resides. That will take a few more months/years to play out. I think most people are buying for the fully autonomous frictionless retail technology which comes with a huge addressable market. That’s still being undervalued in my humble opinion.
Considering there are quite a few ASX-listed tech companies with no revenue and over 100 million market cap (some even @ 1 billion market cap right now…
I don’t see why SBW couldn’t move past ~45m market cap in the near future.
Now if you read all this - links included- I commend you for your diligence. It should be obvious now that the Capsule (in partnership with Hitachi) is the “crown jewel” or “holy grail” of retail disruption technology plays (look at the success of Amazon GO for example).
So you are probably thinking: "This sounds great @verce but it’s all just aspirational and hypothetical. When will it be put into operation?" Well I’m glad you asked. The answer might surprise you. And it may be sooner than you think.
The SBW Half Year Report from 31 August 2020 had a little snippet that I think a lot of people missed. Specifically, the following text:
“Flagship micro-market project Capsule is in an advanced stage of pilot in Europe, and expected to be open to the public for trial in the second half of 2020.”
Now you are probably wondering: "That’s great but what if it’s just some obscure insignificant corner store somewhere?" Again, the answer may surprise you, and requires a little digging.
Enter Groupe Casino. A historic player in French retailing since 1898, the Casino Group is one of the world leaders in food retailing with more than 12,200 stores worldwide, located in France, Latin America and the Indian Ocean and a turnover of 37.8 billion euro.
In their Annual Report this year, they mentioned an exciting new disruptive project they were working on with a relatively obscure company.
https://www.groupe-casino.fwp-content/uploads/2020/06/RapportActivite_Casino_2019_EN.pdf
And we have some commentary from SBW featured on Page 42-43 of their Annual Report plugging "the first fully autonomous store in Europe". I'll leave it to readers to determine the significance of being mentioned in the Annual Report of a leading mass-market retail group with billions of Euro in revenue.
The same group who claim to be the source of many innovations such as the first distributor's brand in 1901, the first self-service store in 1948 or even the display of a sell-by date on consumer products in 1959. They are always pushing the boundaries of innovation, and it's an exciting partner to have.
It’s also worth keeping in mind that issuing shares are not the only mechanism by which to raise money. And that a placement at a premium to a sophisticated cornerstone investor can yield great results. Kind of like what happened with 3DP and IHR.
If I was them, I’d be asking Hitachi to chip in.
SBW also have the luxury of generating enough revenue (we are talking USD millions) in 2H20 from the core scales division, that a capital raising may not actually be necessary at this point in time. So they can wait for a better outcome.
Source: “Post 30 June 2020, the business has seen a resurgence of orders for Shekel’s products, resulting in July 2020 sales exceeding July 2019 sales by approximately 18%.”
The final thing I would like to add (if you have in fact read my other two posts which are worth reading) is coming to an appropriate valuation. This is the tricky part, especially with microcap stocks which are valued on their future potential.
We do know that there are medium to high barriers to entry, and that SBW have accumulated a competitive edge with their technology iterated over several decades, with certain patents in place.
We also know that the opportunity is global in scope with a huge total addressable market (TAM) - and that traditional retail is ripe for disruption.
Remember when there were more human checkout lanes at supermarkets than self-checkout? Now it's the other way around. We are even starting to see self-checkout in Bunnings. The trend for autonomous and friction-less shopping - what some term "Grab & Go" - was inevitable. And coronavirus has only accelerated this trend.
https://www.ibtimes.com/5-tech-tren...-end-year-result-coronavirus-pandemic-3011819
5 Tech Trends Expected To Shape Retail Through The End Of The Year As Result Of The Coronavirus Pandemic
“Retailers and brands will need to collaborate more than ever with technology startups to futureproof their businesses and be better equipped to meet fast-changing consumer demand and behavior,” Coresight said.
Coresight reported the pandemic has piqued consumer interest in cashierless models.
Technology firm Shekel Brainweigh said 87% of respondents to its global consumer survey indicated they would choose stores with self-checkout over those with only cashier lines.
So if you ask me, when you consider all the different technology projects SBW are working on - most of which we now know are "close to commercialisation*" - is 45m AUD market cap really fair value for something that has the potential to roll out globally? I personally think it is still undervalued, but the market will eventually decide one way or the other.
Even at 70 cents per share, the implied market cap with only 139 million shares on issue is about ~97 million AUD. Which is still less than 100m. And still quite low when you compare SBW's proven technology and revenue to a lot of unproven technology companies with no real customers whatsoever. And extremely low when you compare SBW's market cap to their collaborative partner Hitachi (ranked 38th in the 2012 Fortune Global 500).
Even at 32 cents as it currently stands, we are still below the IPO price when SBW first listed at 35 cents per share. How does that make any sense?

By: Medea Benjamin and Nicolas J. S. Davies - May 30, 2020
Read the article here: https://www.nationofchange.org/2020/05/30/who-are-the-secret-puppet-masters-behind-trumps-war-on-iran/
On May 6th, President Trump vetoed a war powers bill specifying that he must ask Congress for authorization to use military force against Iran. Trump’s “maximum pressure” campaign of deadly sanctions and threats of war against Iran has seen no let-up, even as the U.S., Iran and the whole world desperately need to set aside our conflicts to face down the common danger of the Covid-19 pandemic.
So what is it about Iran that makes it such a target of hostility for Trump and the neocons? There are many repressive regimes in the world, and many of them are close U.S. allies, so this policy is clearly not based on an objective assessment that Iran is more repressive than Egypt, Saudi Arabia or other monarchies in the Persian Gulf.
The Trump administration claims that its “maximum pressure” sanctions and threats of war against Iran are based on the danger that Iran will develop nuclear weapons. But after decades of inspections by the International Atomic Energy Agency (IAEA) and despite the U.S.’s politicization of the IAEA, the Agency has repeatedly confirmed that Iran does not have a nuclear weapons program.
If Iran ever did any preliminary research on nuclear weapons, it was probably during the Iran-Iraq War in the 1980s, when the U.S. and its allies helped Iraq to make and use chemical weapons that killed up to 100,000 Iranians. A 2007 U.S. National Intelligence Estimate, the IAEA’s 2015 “Final Assessment on Past and Present Outstanding Issues” and decades of IAEA inspections have examined and resolved every scrap of false evidence of a nuclear weapons program presented or fabricated by the CIA and its allies.
If, despite all the evidence, U.S. policymakers still fear that Iran could develop nuclear weapons, then adhering to the Iran Nuclear Deal (JCPOA), keeping Iran inside the Non-Proliferation Treaty, and ensuring ongoing access by IAEA inspectors would provide greater security than abandoning the deal.
As with Bush’s false WMD claims about Iraq in 2003, Trump’s real goal is not nuclear non-proliferation but regime change. After 40 years of failed sanctions and hostility, Trump and a cabal of U.S. warhawks still cling to the vain hope that a tanking economy and widespread suffering in Iran will lead to a popular uprising or make it vulnerable to another U.S.-backed coup or invasion.

United against a Nuclear Iran and the Counter Extremism Project

One of the key organizations promoting and pushing hostility towards Iran is a shadowy group called United Against a Nuclear Iran (UANI). Founded in 2008, it was expanded and reorganized in 2014 under the umbrella of the Counter Extremism Project United (CEPU) to broaden its attacks on Iran and divert U.S. policymakers’ attention away from the role of Israel, Saudi Arabia, the United Arab Emirates and other U.S. allies in spreading violence, extremism and chaos in the greater Middle East.
UANI acts as a private enforcer of U.S. sanctions by keeping a “business registry” of hundreds of companies all over the world—from Adidas to Zurich Financial Services—that trade with or are considering trading with Iran. UANI hounds these companies by naming and shaming them, issuing reports for the media, and urging the Office of Foreign Assets Control to impose fines and sanctions. It also keeps a checklist of companies that have signed a declaration certifying they do not conduct business in or with Iran. Proving how little they care about the Iranian people, UANI even targets pharmaceutical, biotechnology, and medical-device corporations—includingBayer, Merck, Pfizer, Eli Lilly, and Abbott Laboratories—that have been granted special U.S. humanitarian aid licenses.

Where does UANI get its funds?

UANI was founded by three former U.S. officials, Dennis Ross, Richard Holbrooke and Mark Wallace. In 2013, it still had a modest budget of $1.7 million, nearly 80% coming from two Jewish-American billionaires with strong ties to Israel and the Republican Party: $843,000 from precious metals investor Thomas Kaplan and $500,000 from casino owner Sheldon Adelson. Wallace and other UANI staff have also worked for Kaplan’s investment firms, and he remains a key funder and advocate for UANI and its affiliated groups.
In 2014, UANI split into two entities: the original UANI and the Green Light Project, which does business as the Counter Extremism Project. Both entities are under the umbrella of and funded by a third, Counter Extremism Project United (CEPU). This permits the organization to brand its fundraising as being for the Counter Extremism Project, even though it still regrants a third of its funds to UANI.
CEO Mark Wallace, Executive Director David Ibsen and other staff work for all three groups in their shared offices in Grand Central Tower in New York. In 2018, Wallace drew a combined salary of $750,000 from all three entities, while Ibsen’s combined salary was $512,126.
In recent years, the revenues for the umbrella group, CEPU, have mushroomed, reaching $22 million in 2017. CEPU is secretive about the sources of this money. But investigative journalist Eli Clifton, who starting looking into UANI in 2014 when it was sued for defamation by a Greek ship owner it accused of violating sanctions on Iran, has found evidence suggesting financial ties with Saudi Arabia and the United Arab Emirates.
That is certainly what hacked emails between CEPU staff, an Emirati official and a Saudi lobbyist imply. In September 2014, CEPU’s president Frances Townsend emailed the UAE Ambassador to the U.S. to solicit the UAE’s support and propose that it host and fund a CEPU forum in Abu Dhabi. Four months later, Townsend emailed again to thank him, writing, “And many thanks for your and Richard Mintz’ (UAE lobbyist) ongoing support of the CEP effort!” UANI fundraiser Thomas Kaplan has formed a close relationship with Emirati ruler Bin Zayed, and visited the UAE at least 24 times. In 2019, he gushed to an interviewer that the UAE and its despotic rulers “are my closest partners in more parts of my life than anyone else other than my wife.”
Another email from Saudi lobbyist and former Senator Norm Coleman to the Emirati Ambassador about CEPU’s tax status implied that the Saudis and Emiratis were both involved in its funding, which would mean that CEPU may be violating the Foreign Agents Registration Act by failing to register as a Saudi or Emirati agent in the U.S.
Ben Freeman of the Center for International Policy has documented the dangerously unaccountable and covert expansion of the influence of foreign governments and military-industrial interests over U.S. foreign policy in recent years, in which registered lobbyists are only the “tip of the iceberg” when it comes to foreign influence. Eli Clifton calls UANI, “a fantastic case study and maybe a microcosm of the ways in which American foreign policy is actually influenced and implemented.”
CEPU and UANI’s staff and advisory boards are stocked with Republicans, neoconservatives and warhawks, many of whom earn lavish salaries and consulting fees. In the two years before President Trump appointed John Bolton as his National Security Advisor, CEPU paid Bolton $240,000 in consulting fees. Bolton, who openly advocates war with Iran, was instrumental in getting the Trump administration to withdraw from the nuclear deal.
UANI also enlists Democrats to try to give the group broader, bipartisan credibility. The chair of UANI’s board is former Democratic Senator Joe Lieberman, who was known as the most pro-Zionist member of the Senate. A more moderate Democrat on UANI’s board is former New Mexico governor and UN ambassador Bill Richardson.
Norman Roule, a CIA veteran who was the National Intelligence Manager for Iran throughout the Obama administration was paid $366,000 in consulting fees by CEPU in 2018. Soon after the brutal Saudi assassination of journalist Jamal Khassoghi, Roule and UANI fundraiser Thomas Kaplan met with Crown Prince Mohammed Bin Salman in Saudi Arabia, and Roule then played a leading role in articles and on the talk-show circuit whitewashing Bin Salman’s repression and talking up his superficial “reforms” of Saudi society.
More recently, amid a growing outcry from Congress, the UN and the European Union to ease U.S. sanctions on Iran during the pandemic, UANI chairman Joe Lieberman, CEPU president Frances Townsend and CEO Mark Wallace signed a letter to Trump that falsely claimed, “U.S. sanctions neither prevent nor target the supply of food, medicine or medical devices to Iran,” and begged him not to relax his murderous sanctions because of COVID-19.
This was too much for Norman Roule, who tossed out his UANI script and told the Nation, “the international community should do everything it can to enable the Iranian people to obtain access to medical supplies and equipment.”
Two Israeli shell companies to whom CEPU and UANI have paid millions of dollars in “consulting fees” raise even more troubling questions. CEPU has paid over $500,000 to Darlink, located near Tel Aviv, while UANI paid at least $1.5 million to Grove Business Consulting in Hod Hasharon, about 10% of its revenues from 2016 to 2018. Neither firm seems to really exist, but Grove’s address on UANI’s IRS filings appears in the Panama Papers as that of Dr. Gideon Ginossar, an officer of an offshore company registered in the British Virgin Islands that defaulted on its creditors in 2010.

Selling a corrupted picture to U.S. policymakers

UANI’s parent group, Counter Extremism Project United, presents itself as dedicated to countering all forms of extremism. But in practice, it is predictably selective in its targets, demonizing Iran and its allies while turning a blind eye to other countries with more credible links to extremism and terrorism.
UANI supports accusations by Trump and U.S. warhawks that Iran is “the world’s worst state sponsor of terrorism,” based mainly on its support for the Lebanese Shiite political party Hezbollah, whose militia defends southern Lebanon against Israel and fights in Syria as an ally of the government.
But Iran placed UANI on its own list of terrorist groups in 2019 after Mark Wallace and UANI hosted a meeting at the Roosevelt Hotel in New York that was mainly attended by supporters of the Mujahedin-e-Kalqh (MEK). The MEK is a group that the U.S. government itself listed as a terrorist organization until 2012 and which is still committed to the violent overthrow of the government in Iran – preferably by persuading the U.S. and its allies to do it for them. UANI tried to distance itself from the meeting after the fact, but the published program listed UANI as the event organizer.
On the other hand, there are two countries where CEPU and UANI seem strangely unable to find any links to extremism or terrorism at all, and they are the very countries that appear to be funding their operations, lavish salaries and shadowy “consulting fees”: Saudi Arabia and the United Arab Emirates.
Many Americans are still demanding a public investigation into Saudi Arabia’s role in the crimes of September 11th. In a court case against Saudi Arabia brought by 9/11 victims’ families, the FBI recently revealed that a Saudi Embassy official, Mussaed Ahmed al-Jarrah, provided crucial support to two of the hijackers. Brett Eagleson, a spokesman for the families whose father was killed on September 11th, told Yahoo News, “(This) demonstrates there was a hierarchy of command that’s coming from the Saudi Embassy to the Ministry of Islamic Affairs [in Los Angeles] to the hijackers.”
The global spread of the Wahhabi version of Islam that unleashed and fueled Al Qaeda, ISIS and other violent Muslim extremist groups has been driven primarily by Saudi Arabia, which has built and funded Wahhabi schools and mosques all over the world. That includes the King Fahd Mosque in Los Angeles that the two 9/11 hijackers attended.
It is also well documented that Saudi Arabia has been the largest funder and arms supplier for the Al Qaeda-led forces that have destroyed Syria since 2011, including CIA-brokered shipments of thousands of tons of weapons from Benghazi in Libya and at least eight countries in Eastern Europe. The UAE also supplied arms funding to Al Qaeda-allied rebels in Syria between 2012 and 2016, and the Saudi and UAE roles have now been reversed in Libya, where the UAE is the main supplier) of thousands of tons of weapons to General Haftar’s rebel forces. In Yemen, both the Saudis and Emiratis have committed war crimes. The Saudi and Emirati air forces have bombed schools, clinics, weddings and school buses, while the Emiratis tortured detainees in 18 secret prisons in Yemen.
But United Against a Nuclear Iran and Counter Extremism Project have redacted all of this from the one-sided worldview they offer to U.S. policymakers and the American corporate media. While they demonize Iran, Qatar, Hezbollah and the Muslim Brotherhood as extremists and terrorists, they depict Saudi Arabia and the UAE exclusively as victims of terrorism and allies in U.S.-led “counterterrorism” campaigns, never as sponsors of extremism and terrorism or perpetrators of war crimes.
The message of these groups dedicated to “countering extremism” is clear and none too subtle: Saudi Arabia and the UAE are always U.S. allies and victims of extremism, never a problem or a source of danger, violence or chaos. The country we should all be worrying about is – you guessed it – Iran. You couldn’t pay for propaganda like this! But on the other hand, if you’re Saudi Arabia or the United Arab Emirates and you have greedy, corrupt Americans knocking on your door eager to sell their loyalty, maybe you can.

Wide Moat, what is that ? Before starting this blog post please read this wide moat businesses explanation here
Okay, now that we are up to speed, before you invest in any wide moat company you need to ensure financials of the business are solid as well, I’ll cover the topic of How to understand the financials of the business in the upcoming blogs so subscribe (here) to know when the blog is out.
Let’s see if we can spot any wide moat business listed on NZX.

Auckland International Airport Limited (NZE: AIA)

Auckland International airport holds a virtual monopoly as the largest airport in NZ and processes the most number of passengers. This is located in the largest city in NZ as well, making it an ideal destination for travelers, With travelers expected to increase in the coming decades, you can clearly see the wide moat around this business.

WILL THE MOAT SHRINK IN THE NEAR FUTURE ?

The likely hood of the moat shrinking is very low since construction of another international airport in Auckland is highly unlikely. Thing to look out for is debt, since airport need vast amounts of money for up keep and improvements( ex: loss of unnecessary capital due to project over runs and delays).
Read a more in depth analysis on Auckland International Airport here

Chorus Limited (NS) - (NZE: CNU)

Chorus manages and builds telecommunications infrastructure in NZ, for ex: when ever you sign up for fiber broadband plan with your ISP, Chorus is contracted to install the connections to your house. As copper cables are replaced by fiber optic cables around NZ, the cost of maintaining these new infrastructure grids are less than before.( Fiber vs Copper wiring: cost of copper and fiber optic cables are stronger requiring less maintenance).

WILL THE MOAT SHRINK IN THE NEAR FUTURE ?

I don’t think the moat will shrink in the near future as setting up a telecom infrastructure company with years of know how is quite difficult, the only way I can see this moat shrinking is if international companies what a piece of NZ infrastructure, but I don’t think the government would allow key infrastructure projects to be outsourced.

NZME Limited (NZE: NZM)

NZME is a New Zealand media company which owns brands such as:

1. NZ herald
2. Newstalk ZB
3. ZM
4. The Hits
5. Grab one etc…..

The moat exists but it is a very small one, this moat would have been huge during the hay day of print newspaper readership.
So what has happened here ? Internet….
Print newspaper is virtually dead, newspapers all around the world are struggling to make money as subscribers dwindle.
Due to the drop in readership, less and less ads are placed in the newspaper hence lower revenue.
All the eye balls have moved to “ Social Media”, that’s where the ads are now a days.
The only saving light I can see is Grab One, the popular coupon site in NZ. I do believe this will provide a strong source of revenue to the company but I am not sure if this can offset the losses in the other divisions.

The New Zealand Refining Company Limited (NZE: NZR)

Refining NZ is New Zealand’s only oil refinery and the leading supplier of refined petroleum products to the New Zealand market, including petrol, diesel, aviation fuel and other products As a critical piece of national energy infrastructure, Refining NZ is responsible for supplying:

• around 85% country’s jet fuel
• around 67% of diesel
• around 58% of all petrol
• between 75 and 85% of bitumen for roading
• all fuel oil for ships
• sulphur for farm fertilizer
• CO2 for the carbonated drinks industry

Moat exists because this is the only oil refinery in New Zealand, It also suppliers around 85% of NZ’s aviation fuel.
I believe the number of travelers to New Zealand will only increase, Provide refining NZ a solid moat, however as electric cars are bound to make in roads in New Zealand, the demand for petrol and diesel will gradually decrease.
So we need to keep an eye out on the financial performance on an annual basis to make sure the business can still maintain the moat.

Port of Tauranga Limited (NS) (NZE: POT)

The Port of Tauranga Located Tauranga (about 200 km away from Auckland) is the largest port in New Zealand in terms of total cargo volume, and the second largest in terms of container throughput.
Total exports:
📷
Total Exports from POT
As you can see the number of tonnes being exported from port of Tauranga is increasing.
Total imports:
📷
Total Imports from POT
As you can see the number of tonnes being imported from port of Tauranga is increasing as well.
I see this trend continuing as the demand for NZ products especially in emerging markets increases and demand for imports increases as NZ population continues to grow.
So the Moat around POT should be in tact for many years to come.

Restaurant Brands New Zealand Limited (NZE: RBD)

Restaurant Brands operates the New Zealand franchises for KFC, Pizza Hut and Carl's Jr. It also operate a KFC franchise in New South Wales, Australia and Taco Bell and Pizza Hut franchise in Hawaii, Guam and Saipan.
As of October 2018, Restaurant Brands has 261 stores: 94 KFC New Zealand, 61 KFC Australia 29 Pizza Hut New Zealand, 18 Carl's Jr., 36 Taco Bell Hawaii and 45 Pizza Hut Hawaii stores. It employs nearly 8,000 staff across New Zealand, Australia and Hawaii and serves 120,000 customers worldwide every day. Since RBD operates the NZ franchises for KFC, Pizza Hut and Carl’s Jr and if you wanted to be a franchisee in NZ then you would have to go through them , this gives RBD an economic moat.
Will the moat shrink in the near future ?
I think the moat will certainly shrink, this is due to the fact that many people are moving away from processed foods to more organic and more healthier options, this will cause sales in fast foods such as KFC, Pizza hut etc to shrink, which in turn means less new franchises opening up. There might even be closures around the corner. So I see the moat being broken pretty soon in the years to come.

SKYCITY Entertainment Group Limited (NS) (NZE: SKC)

SKYCITY Entertainment Group Limited is New Zealand’s largest tourism, leisure and entertainment company. It is one of three major publicly listed casino operators in Australasia.
It has entertainment complexes in:

1. Auckland
2. Hamilton
3. Queenstown
4. Adelaide
5. Darwin

SkyCity also owns one of Auckland’s best know attractions “Sky Tower”. Although the revenue generated from sky tower to the overall business is small, it is still a jewel in the sky city crown.
Will the moat shrink in the near future ?
Considering SKC is New Zealand’s largest tourism, leisure and entertainment company, it has all the basis covered for tourists that enter into NZ. It also has large convention centers where numerous conferences are held, I don’t see the moat shrinking any time soon. As they in casino lingo “ House always wins”.

South Port New Zealand Limited (NS) ( NZE: SPN)

SPN is the southern most commercial port in NZ located at Bluff. It is situated in the highly productive province of Southland which is responsible for producing a sizeable proportion of New Zealand’s total exports by value. The region’s major exporters are all situated within 80km of the port.
All the moat characteristics explained for Port of Tauranga (POT) exist here as well.

Trade Me Group Limited (NZE: TME)

Trade me is the largest internet auction website in NZ. It has Trade me property, motors, jobs etc.
Trade me had held a monopoly on internet auctions for quite some time in NZ, but it’s moat has been slowly eroding away, how ?
Trade me jobs is competing against Seek, LinkedIn
Trade me property is competing against realestate.co.nz, oneroof etc.
Trade me market place is competing against Facebook marketplace.
Looking at all the competitions trade me is facing it seems quite difficult to hold down the moat in the future.

Vector Limited (NZE: VCT)

Vector is New Zealand's largest distributor of electricity and gas, owning and operating networks which span the Auckland region.This distribution system gives Vector an economic moat.
Vector has been involved in electrification projects - charging stations for electric cars, which I think is great for future growth. As number of electric cars increase, there will definitely be a need for more and more charging stations which vector can deliver. The moat seems to be very much intact.

Wide Moat, what is that ? Before starting this blog post please read this wide moat businesses explanation here
Okay, now that we are up to speed, before you invest in any wide moat company you need to ensure financials of the business are solid as well, I’ll cover the topic of How to understand the financials of the business in the upcoming blogs so subscribe (here) to know when the blog is out.
Let’s see if we can spot any wide moat business listed on NZX.

Auckland International Airport Limited (NZE: AIA)

Auckland International airport holds a virtual monopoly as the largest airport in NZ and processes the most number of passengers. This is located in the largest city in NZ as well, making it an ideal destination for travelers, With travelers expected to increase in the coming decades, you can clearly see the wide moat around this business.

WILL THE MOAT SHRINK IN THE NEAR FUTURE ?

The likely hood of the moat shrinking is very low since construction of another international airport in Auckland is highly unlikely. Thing to look out for is debt, since airport need vast amounts of money for up keep and improvements( ex: loss of unnecessary capital due to project over runs and delays).
Read a more in depth analysis on Auckland International Airport here

Chorus Limited (NS) - (NZE: CNU)

Chorus manages and builds telecommunications infrastructure in NZ, for ex: when ever you sign up for fiber broadband plan with your ISP, Chorus is contracted to install the connections to your house. As copper cables are replaced by fiber optic cables around NZ, the cost of maintaining these new infrastructure grids are less than before.( Fiber vs Copper wiring: cost of copper and fiber optic cables are stronger requiring less maintenance).

WILL THE MOAT SHRINK IN THE NEAR FUTURE ?

I don’t think the moat will shrink in the near future as setting up a telecom infrastructure company with years of know how is quite difficult, the only way I can see this moat shrinking is if international companies what a piece of NZ infrastructure, but I don’t think the government would allow key infrastructure projects to be outsourced.

NZME Limited (NZE: NZM)

NZME is a New Zealand media company which owns brands such as:

1. NZ herald
2. Newstalk ZB
3. ZM
4. The Hits
5. Grab one etc…..

The moat exists but it is a very small one, this moat would have been huge during the hay day of print newspaper readership.
So what has happened here ? Internet….
Print newspaper is virtually dead, newspapers all around the world are struggling to make money as subscribers dwindle.
Due to the drop in readership, less and less ads are placed in the newspaper hence lower revenue.
All the eye balls have moved to “ Social Media”, that’s where the ads are now a days.
The only saving light I can see is Grab One, the popular coupon site in NZ. I do believe this will provide a strong source of revenue to the company but I am not sure if this can offset the losses in the other divisions.

The New Zealand Refining Company Limited (NZE: NZR)

Refining NZ is New Zealand’s only oil refinery and the leading supplier of refined petroleum products to the New Zealand market, including petrol, diesel, aviation fuel and other products As a critical piece of national energy infrastructure, Refining NZ is responsible for supplying:

• around 85% country’s jet fuel
• around 67% of diesel
• around 58% of all petrol
• between 75 and 85% of bitumen for roading
• all fuel oil for ships
• sulphur for farm fertilizer
• CO2 for the carbonated drinks industry

Moat exists because this is the only oil refinery in New Zealand, It also suppliers around 85% of NZ’s aviation fuel.
I believe the number of travelers to New Zealand will only increase, Provide refining NZ a solid moat, however as electric cars are bound to make in roads in New Zealand, the demand for petrol and diesel will gradually decrease.
So we need to keep an eye out on the financial performance on an annual basis to make sure the business can still maintain the moat.

Port of Tauranga Limited (NS) (NZE: POT)

The Port of Tauranga Located Tauranga (about 200 km away from Auckland) is the largest port in New Zealand in terms of total cargo volume, and the second largest in terms of container throughput.
Total exports:
📷
Total Exports from POT
As you can see the number of tonnes being exported from port of Tauranga is increasing.
Total imports:
📷
Total Imports from POT
As you can see the number of tonnes being imported from port of Tauranga is increasing as well.
I see this trend continuing as the demand for NZ products especially in emerging markets increases and demand for imports increases as NZ population continues to grow.
So the Moat around POT should be in tact for many years to come.

Restaurant Brands New Zealand Limited (NZE: RBD)

Restaurant Brands operates the New Zealand franchises for KFC, Pizza Hut and Carl's Jr. It also operate a KFC franchise in New South Wales, Australia and Taco Bell and Pizza Hut franchise in Hawaii, Guam and Saipan.
As of October 2018, Restaurant Brands has 261 stores: 94 KFC New Zealand, 61 KFC Australia 29 Pizza Hut New Zealand, 18 Carl's Jr., 36 Taco Bell Hawaii and 45 Pizza Hut Hawaii stores. It employs nearly 8,000 staff across New Zealand, Australia and Hawaii and serves 120,000 customers worldwide every day. Since RBD operates the NZ franchises for KFC, Pizza Hut and Carl’s Jr and if you wanted to be a franchisee in NZ then you would have to go through them , this gives RBD an economic moat.
Will the moat shrink in the near future ?
I think the moat will certainly shrink, this is due to the fact that many people are moving away from processed foods to more organic and more healthier options, this will cause sales in fast foods such as KFC, Pizza hut etc to shrink, which in turn means less new franchises opening up. There might even be closures around the corner. So I see the moat being broken pretty soon in the years to come.

SKYCITY Entertainment Group Limited (NS) (NZE: SKC)

SKYCITY Entertainment Group Limited is New Zealand’s largest tourism, leisure and entertainment company. It is one of three major publicly listed casino operators in Australasia.
It has entertainment complexes in:

1. Auckland
2. Hamilton
3. Queenstown
4. Adelaide
5. Darwin

SkyCity also owns one of Auckland’s best know attractions “Sky Tower”. Although the revenue generated from sky tower to the overall business is small, it is still a jewel in the sky city crown.
Will the moat shrink in the near future ?
Considering SKC is New Zealand’s largest tourism, leisure and entertainment company, it has all the basis covered for tourists that enter into NZ. It also has large convention centers where numerous conferences are held, I don’t see the moat shrinking any time soon. As they in casino lingo “ House always wins”.

South Port New Zealand Limited (NS) ( NZE: SPN)

SPN is the southern most commercial port in NZ located at Bluff. It is situated in the highly productive province of Southland which is responsible for producing a sizeable proportion of New Zealand’s total exports by value. The region’s major exporters are all situated within 80km of the port.
All the moat characteristics explained for Port of Tauranga (POT) exist here as well.

Trade Me Group Limited (NZE: TME)

Trade me is the largest internet auction website in NZ. It has Trade me property, motors, jobs etc.
Trade me had held a monopoly on internet auctions for quite some time in NZ, but it’s moat has been slowly eroding away, how ?
Trade me jobs is competing against Seek, LinkedIn
Trade me property is competing against realestate.co.nz, oneroof etc.
Trade me market place is competing against Facebook marketplace.
Looking at all the competitions trade me is facing it seems quite difficult to hold down the moat in the future.

Vector Limited (NZE: VCT)

Vector is New Zealand's largest distributor of electricity and gas, owning and operating networks which span the Auckland region.This distribution system gives Vector an economic moat.
Vector has been involved in electrification projects - charging stations for electric cars, which I think is great for future growth. As number of electric cars increase, there will definitely be a need for more and more charging stations which vector can deliver. The moat seems to be very much intact.