Talking chips, Micron, the Kospi and SpaceX, plus bids for easyJet, IP Group, Ramsdens and Segro.

The guys talk through choppy tech markets, how Korea's Kospi index has become a tech play in its own right, what chipmaker Micron might say tonight, plus speculation around a SpaceX/Tesla merger. Also on the agenda, M&A activity in the UK has ratcheted up this week with bids for easyJet, IP Group, Ramsdens and Segro.

Transcript

SPEAKER_02 0:04

Hello and welcome to the latest midweek edition of the She Pipe Podcast on as always by James and Steve. How are you, chaps?

unknown 0:13

Very good.

SPEAKER_00 0:13

All good Ian.

SPEAKER_02 0:15

Good, good. And uh Steve, uh sound a bit like American record, but another copy we tech.

SPEAKER_01 0:22

Yeah, I mean it seems to have been led largely by what's been going on in the South Korean market, the Cosby. And um, I think it just sent jitters through um other tech markets. Uh bear in mind the Cosby is still up in the last month about five percent, but it's up year today almost a hundred percent. Now, put this into context, um, Samsung Electronics, SK Heinex, really big in HBM memory, right? So we understand this dynamic, they represent more than half the index weighting. So the Cosby really is not a um a measure of of South Korean, uh, the economy, the stock market, it's about it is about memory. So it'd be really interesting to watch this evening when uh Micron Technology uh got their earnings uh to May. It'd be interesting to see what they say. They had a big bump um earlier in the week, was it late last week, um, simply because of what Tim Cook was saying. We've we've mentioned this on our website, etc. So it'd be interesting to see what reaction goes to to their results uh overnight and um after the closure play.

SPEAKER_02 1:29

Yeah, that's fascinating, actually, what you say, uh Cosby. So it's basically um you know another tech proxy. People have been playing that as much as they have the uh the uh the NASDAQ or the QQQ. Wow, fascinating. Um, so James, um, highlights for you this week quite a bit of consumer news.

SPEAKER_00 1:48

Yeah, some still some surprisingly strong prints from those consumer names, particularly at the small cap end. Yeah, um, so gear for music, you know, another confident update. Um that has benefited from a tailwind from some demise of some competitors. So you know, I'll be keen to see if they can keep that momentum up. Um, an upgrade from Virtue Motors this morning. That's despite you know weak consumer confidence and all the noise around zero vehicle mandates and that sort of thing. Um, and then some blistering numbers from Procook this morning, bit of a turnaround going on there. This is the kitchenware brand rolling out new stores, uh, but again, a little bit of a cautious outlook. So I'm not getting too carried away. But I guess the big story there was the takeover bid for Ramsden's, which is one we flagged on the pod before. Um, and the buyer is first cash, which also took out HT last year. So a very eventful week so far.

SPEAKER_01 2:34

So that I mean that is a bit of a kind of a sort of a play on gold, isn't it, Ramsdons? Because obviously they they're dealing in lots and lots of gold. So presumably the buyers must think gold price is being slightly more depressed than they were a few months back. Maybe they're thinking this is a good opportunistic opportunity to play a longer sustained growth in the gold price.

SPEAKER_00 2:54

Yeah, that's a great point you make, Stephen. I think in the um the commentary from the Ramsden board, they said no, it that they sort of want to offer shareholders the immediate cash now rather than wait for that gold price-induced upgrade cycle, maybe to peter out. So I think you know, it's you know, take the money and run at this point.

SPEAKER_02 3:10

I hadn't realized they were the same buyers that took H T private last year. Yeah. This consolidation, yeah. This consolidation, it's coming. It's and actually, um, you lucky boy, you're a Ramsey's holder as well and a virtue holder, aren't you?

SPEAKER_00 3:27

I am, but yeah, there's a bit of noise around virtue as well. With um uh Constellation Automotive has upped its stake, so we'll be keeping a you know a close eye on that one. That's the company that also owns Marshall Motor, We Buy Any Car, um uh BCA, I think is the other one. So interesting times in the automotive retail sector too.

SPEAKER_02 3:44

Crikey, yeah. Well, look, this MA has been um has been spreading. Um, we had what about three weeks ago, I think there was rumoured to be an intro. You know, there was uh a US phone called Castle Lake said it might make a bid for EasyJet. The the difficulty with that, and we talked about at the time on the podcast, is that Castle Lake's owned by Brickfield Asset Management, and it's American. And you can't, as an American, own a majority in a European airline. Well, they're kind of getting around that by hiring two guys who used to be airline execs, and they're gonna own they're Irish nationals, so as Irish nationals, they're gonna set up a firm, they're gonna own the majority, Castle Late will own the minority. Um, easyJet have rejected the bid, it's a four billion pound bid, so we're not talking you know, small change here. This is quite a big bid. Interesting to see how that one plays out. Uh, then we have the railway pension scheme um making, I think, four offers in total for IP group. Now, this is the science and technology um intellectual uh property group, and it's it's the it's the group that owned Oxford Nanopore before it spun out some onto the market. Now, Railpen, I don't know, it the first time they made an offer, they didn't even have the money put aside to do the deal, they didn't have any plan whatsoever, but they've been a long-term shareholder, and I think what they want to do is they want to turn a much bigger platform to monetize the IP that the group owns. So that's uh another one. Then to tell we got Prologis in the US, then this is the world's biggest industrial real estate investment trust. And suggests Prologis, it's quite big in logistics, it's about $140 billion market cap, and they've proposed uh an all-share takeover of Seagrow at £9.25. Now that sounds quite good because the shares were trading around £740 or around the seven pound mark earlier this week, and it's it's level with the NAV. But the board think quite rightly have said uh you know, you're not really facting in the growth that we've got, and it's I know reasonably well I've looked at very very steady earnings growth. Blow the doors off, it's kind of five six percent growth, but incredibly predictable, and I think that's what logists like the predictability of this income stream, and they can see that going on project's got four classes out to twenty twenty-eight on his website, and it completely consistent with the historic trend. So I think that's they're going for, but I the weather, and somebody suggested to me actually this morning whether it wouldn't be a good idea for C to maybe team up with somebody else as a defense that showed a European real estate has said it's gonna have a managed wine down. That's a huge surprise because I've been talking with Jeff O'Doire all year, and he's been very bullish about the prospects for the properties they've been buying, particularly in Germany. So to me, that's a big surprise. But there's another merger potentially on the cards, is there, Steve, or isn't there?

SPEAKER_01 6:54

Um, well, I mean, it's speculation only, but um, you know, we we we can't go through podcasts, can we, without mentioning SpaceX and and the and the Eagle Musk premium, right? Um, I mean that there's it's it this is not a new news story in fairness, but the idea that that Musk might try to merge Tesla with SpaceX, and I say it's been knocking around for for a good while now, anyway. Um, but it does seem that there's uh a growing feeling amongst the analyst community that this is is is going to happen at some point or other, probably sometime next year. Uh and and the question is really is is what what are the benefits for for each group of shareholders? And um, you know, they they don't necessarily have lots of commonality. But if you look at the undercurrent of what both firms are doing, they're both really moving into AI in their own ways. And I think that is going to be a really big lever for or justifying a merger. And also think about what Starlink can do, satellites around the world, talk about uh Tesla and its navigation of its cars, autumn uh self-driving cars. Um, there could be some big crossovers there as well. So I mean there are lots of value added, lots of value added potential, but whether it comes to fruition or not, who's to say?

SPEAKER_02 8:11

Yeah, tricky one, isn't it? Um what else have we got to look forward to this week then, James?

SPEAKER_00 8:16

Yeah, so more reads into the consumer tomorrow in. So we've got the Halford's four-year results. Uh, I think we've also got Moonpig, and there's a card factory AGM. So whether they put out a statement, I'm not entirely sure, but you know, there'll be another, you know, a good uh good window into how the consumer is feeling. What about you? What you got your eye on?

SPEAKER_02 8:34

Um, me, not a great deal, I have to say. Um, I mean, Steve, is anything popping up for you? I see why.

SPEAKER_01 8:42

Um, the one that I mean, I know on this on this on this side of the pond, I mean that the Y has got results um later this week, and it's the this is the remittance payments platform. Um, it's it's been growing really rapidly um in terms of revenue, in terms of its earnings. It's got some really impressive uh fundamentals, uh, return on equity, return on capital employed, etc. Um, but um it's it's I don't know if the market just doesn't quite trust the business model. And um this reminds me of another business uh a few years back called Earthport. They worked in the remittance market, they ended up getting bought out by visa on pretty depressed valuation. And I just wonder if if remittances, transferring money from you know across borders effectively, is an area that investors feel very comfortable with. So it'd be interesting to see what they say, um, what kind of growth they put up, and can they justify uh maintaining the share price where it is?

SPEAKER_02 9:38

Yeah, and and I know there have been some questions over um some money transfers. I think they've been asked by uh European regulator and the Belgian regulator to sort of give them some details on some financial transactions. Um, but James, actually, what I am um busy with uh tonight actually is our very first webinar with AVI Japan Opportunities and um JP Morgan European growth and income. Now, Jegy, as it's known, put out some very, very good results this week. Uh five years now in a row, it's beaten the market and by some distance. So I really urge everybody, if you can register for that. Details are on our website, ask the fund managers lots of questions. Um, it's totally free to take part. Starts at 6 p.m. this evening.

SPEAKER_01 10:30

And just to just to make the listeners aware, uh the system is you just send in your questions via um an email service, effectively, and then we'll Ian will pitch those questions to the fund managers in real time. So, you know, anything that's on your mind, um, this is a great opportunity to talk Japan to talk European equities. Uh, and one of the big questions you might wonder is you know, is there any chance that the uh the European discount to US is going to narrow? That'd be an interesting point to hear from.

SPEAKER_02 11:00

Absolutely. Yep, so we look forward to getting questions and we hopefully we'll um see you all later on. Cheers. Cheers.