Portfolio Holdings

What does it do?

Auckland International Airport (AIA) owns and operates New Zealand’s major gateway as well as 1500 hectares of land surrounding the airport. AIA operates under a ‘dual till’ regulatory regime, meaning that the company’s aeronautical operations are subject to light-handed regulation, whereas the other non-aeronautical operations are unregulated. Most of AIA’s revenue is derived from non-aeronautical operations, such as retail, parking, hotel accommodation and property rental.

Why do we own it?

AIA is well-positioned to benefit from New Zealand’s positive long-term tourism outlook. AIA has a robust aeronautical business, supported by a dominant share of long-haul international traffic and refreshed terminal infrastructure. This is paired with a duty free and retail business which has a very attractive return on capital, and a property landbank which will support earnings growth for many years to come.

What does it do?

Contact Energy is a large electricity generator, producing approximately 20-25% of New Zealand’s electricity in an average year. The vast majority of its electricity is from hydro and geothermal resources.

Why do we own it?

Contact Energy has a balanced portfolio of quality renewable generation assets across both islands, and this is matched by demand from a strong electricity retailing business plus commercial and industrial customers. Its established business provides solid cash flows which underpin an attractive level of dividends. Contact has an attractive pipeline of generation projects, from a variety of renewable sources including geothermal in the near term, plus wind and solar longer term.

What does it do?

Delegat Group produces and distributes super-premium wine internationally under the Oyster Bay and Barossa Valley Estate brands. Oyster Bay is a leading New Zealand wine brand in the UK, Australia, Canada and the US.

Why do we own it?

Delegat has invested for continued growth by expanding its winery capacity and increasing vineyard plantings to meet its goals for growth in case sales towards five million cases. A large part of the growth is likely to be driven by the US market, which remains relatively immature in penetration of the sauvignon blanc and pinot gris varietals.

What does it do?

EBOS is Australasia’s largest diversified pharmaceutical and medical care products group, focusing primarily on wholesale logistics and distribution of pharmaceuticals, medical devices and other products. The company typically has a leading market position in each market segment it operates in. EBOS also operates in the animal care sector as a veterinary wholesaler, distributor and retailer of animal healthcare products, pet accessories and premium foods across Australasia.

Why do we own it?

EBOS’ scale and market position mean that it is a low-cost operator, which it complements with a leading service proposition which has allowed it to take market share over time. The sector has a tailwind from the ageing population demographic and the increasing prevalence of chronic diseases. It has a strong track record of supplementing the growth in its core operations with moves into higher growth adjacencies and successful acquisitions.

What does it do?

Fisher & Paykel Healthcare is a leading designer, manufacturer and distributor of innovative medical devices for patients who require acute respiratory and obstructive sleep apnoea care. Over 95% of its products are sold outside New Zealand from dedicated manufacturing facilities in Auckland and Mexico.

Why do we own it?

We are attracted to the demand for Fisher & Paykel Healthcare’s innovative care products as the worldwide population ages and the incidence of chronic respiratory illness and other health issues rises. Through its own research and development, Fisher & Paykel Healthcare has continued to develop products that significantly expand its potential patient base, while maintaining high returns on invested capital.

What does it do?

Freightways operates a range of nationwide express delivery operations in New Zealand with brands including NZ Couriers, Post Haste and Big Chill, as well as Allied Express in Australia. The company has also developed ancillary businesses on both sides of the Tasman, encompassing document storage, data services, secure destruction and waste renewal.

Why do we own it?

Freightways is one of two dominant players in the New Zealand courier market and its information management business has a trans-Tasman footprint. The company has a track record of stable organic growth and value-accretive acquisitions that leverage off its existing infrastructure.

What does it do?

Infratil invests in 'ideas that matter', with a portfolio of infrastructure investments focused on key long-term structural thematics such as digital connectivity and the transition to renewable energy. It is externally managed by an experienced management team in Morrison, which has deep global expertise in global infrastructure markets.

Why do we own it?

Infratil has a high-quality portfolio of growth infrastructure assets coupled with a strong record of delivering returns to shareholders. This has been delivered via smart capital allocation to 'core' and 'growth' opportunities, balanced by realising asset value at opportune times.

What does it do?

Mainfreight is a global supply chain logistics company. Its services primarily span domestic transport, managed warehousing, and international air and sea freight. Its operations span New Zealand, Australia, the Americas, Europe, and Asia.

Why do we own it?

Mainfreight is a well-run company with a special culture that has delivered strong performance over time. It has strong positions in New Zealand and Australia and continues to open new trade lanes as it spreads its logistics footprint ever wider. Growth should come organically as it takes market share and works further towards its 100- year vision of becoming a leading global logistics provider.

What does it do?

Mercury is one of the five key New Zealand electricity generator-retailers (‘gentailers’). Mercury’s core economic 'moat' is its irreplaceable low-cost hydro assets, with 9 power plants on the Waikato River. Mercury also has a significant proportion of wind generation versus other gentailers and a modest amount of geothermal which nicely balances its generation portfolio.

Why do we own it?

Mercury’s hydro system on the Waikato River (including some storage) provides a differentiated generation profile to other gentailers and realises higher pricing due to its proximity to higher priced and growing upper North Island power demand. It also has a strong wind farm development pipeline, and the possibility to expand geothermal generation, which leaves it well placed for profitable growth.

What does it do?

Meridian Energy is New Zealand’s largest electricity generator, producing approximately 30% of the country’s electricity in an average year, sourced 100% from renewable hydro and wind resources. The company also has a retail business in New Zealand, operating under the Meridian and Powershop brands.

Why do we own it?

Meridian is a well-run company, with a portfolio of long-dated, quality hydro and wind generation assets which give it the advantage of being amongst the lowest cost marginal electricity producers.

What does it do?

Port of Tauranga is the natural gateway to and from international markets for many of New Zealand’s major businesses. It is close to many important exporters in the forestry, dairy, meat and fruit industries. Its investment in port facilities in Timaru and an inland port near Christchurch opens up the South Island for exports to be hubbed out of Tauranga.

Why do we own it?

Port of Tauranga is New Zealand's premier port, dominating exports and also a strong presence in imports. The company has a long track record as the most efficient container port in New Zealand, while its bulk business is supported by proximity to key cargo such as Central North Island forests. Future growth will be supported by capacity extension and increasing share of out of region cargo (via transshipment and a new inland port at Ruakura in the Waikato).

What does it do?

Summerset is an integrated retirement village builder, owner and operator. The company has retirement villages spread around New Zealand and is a leading developer of retirement villages in New Zealand with a significant land bank. Summerset has entered Australia and is in the process of building out a portfolio of villages from its land bank there too.

Why do we own it?

Summerset successfully operates a continuum of care model with aged care integrated into its villages. It has developed a strong and consistent track record of growth in its build rate and earnings, with a geographically diverse approach and focus on broadacre sites that promote the timely recycling of capital into new villages. Summerset is well placed to meet the growing needs of ageing populations in both New Zealand and Australia, where it has an emerging pipeline.

What does it do?

The a2 Milk Company sells ‘a2’-branded fresh milk and infant milk formula internationally. As the name suggests, its products contain only A2 beta-casein protein, on the basis that it is more comfortably digested than normal milk (which contains a mix of both A1 and A2 proteins). In recent years, the company has grown sales and market share rapidly in Australia and China and is currently also focused on its growing business in the US.

Why do we own it?

The a2 Milk Company has a growing share of the lucrative Chinese infant formula market. We expect its market share to continue growing across a range of market segments. In addition, there is potential for further upside from new products and geographies.

What does it do?

Vista Group is an innovative software company primarily providing operating solutions to cinema exhibitors. It has a leading worldwide market share with clients in around 100 countries. Its integrated software systems allow cinema exhibitors to run wide-ranging functions such as ticketing, food and beverage sales, staff and film scheduling, loyalty schemes, digital signage as well as external customer interfaces like websites, mobile apps and call centres. Vista Group also has a range of smaller group businesses that leverage its depth of data and cinema industry intellectual property.

Why do we own it?

We are attracted to Vista’s core business which provides sophisticated specialist software to cinema operators of all sizes and software and data products to movie studios. We believe that this business still has many years of growth ahead of it as it benefits from migrating customers to its next generation cloud-based offering.

What does it do?

Vulcan Steel is the leading steel and aluminium distributor and value-add processing player in New Zealand and Australia. Its business model involves providing industry-leading customer service, for which it commands a premium.

Why do we own it?

Vulcan has grown to command the leading position in the New Zealand steel and aluminium distribution markets. In Australia there is ample runway to take market share in the fragmented Australian market from a very low base using its proven strategy. It is an impressive business in an unexciting industry.