WEBVTT 1 00:00:07.500 --> 00:00:10.600 Hello and welcome to this educational film which 2 00:00:10.600 --> 00:00:13.700 is diverted to an iconic brand in 3 00:00:13.700 --> 00:00:16.100 the luxury business lover. 4 00:00:17.700 --> 00:00:20.600 Nova is today control by a Chinese company's name 5 00:00:20.600 --> 00:00:23.300 is fassoon, and we are going to observe the 6 00:00:23.300 --> 00:00:26.400 evolution and the financial track of Nova within 7 00:00:26.400 --> 00:00:29.500 for soon as a conglomerate the listing the 8 00:00:29.500 --> 00:00:33.500 ipu of lava to place last December the 9 00:00:32.500 --> 00:00:35.800 15th of December. The company is 10 00:00:35.800 --> 00:00:38.700 listed at the price which is ten dollars 11 00:00:38.700 --> 00:00:41.100 why ten dollars because it comes from the 12 00:00:41.100 --> 00:00:44.100 business combination with respect. I will elaborate on this 13 00:00:44.100 --> 00:00:47.300 point a little bit later immediately stock price 14 00:00:47.300 --> 00:00:50.600 goes a dramatically Beyond 20 dollars 15 00:00:50.600 --> 00:00:53.700 per share and then crashes down to seven point 16 00:00:53.700 --> 00:00:56.500 six dollars closing price on the 15th of 17 00:00:56.500 --> 00:00:59.300 December 16th of December. It starts at 18 00:00:59.300 --> 00:01:02.500 7.6 gets back to 10 the 19 00:01:02.500 --> 00:01:04.400 initial issue price. 20 00:01:05.300 --> 00:01:08.700 And what's going to happen after not a 21 00:01:08.700 --> 00:01:11.500 very nice story and if we look at the stock 22 00:01:11.500 --> 00:01:14.600 price today, what do we observe the company was 23 00:01:14.600 --> 00:01:16.000 listed on a NASDAQ? 24 00:01:16.300 --> 00:01:19.300 Generous speaking. It's a little bit more for tech companies 25 00:01:19.300 --> 00:01:22.500 and luxury but no matter no problem. 26 00:01:22.500 --> 00:01:26.200 What happened to the NASDAQ in between NASDAQ 27 00:01:25.200 --> 00:01:28.800 was reasonably a Breakeven plus 3% 28 00:01:28.800 --> 00:01:31.700 over the period but in the meantime the stock 29 00:01:31.700 --> 00:01:34.600 price of lava went down from 10 to a little 30 00:01:34.600 --> 00:01:38.100 bit more than six which represents more than 35% 31 00:01:37.100 --> 00:01:40.500 of downside now 32 00:01:40.500 --> 00:01:44.000 lava is a very prestigious name. It 33 00:01:43.300 --> 00:01:46.400 comes from the person who created the 34 00:01:46.400 --> 00:01:50.900 company John Nova in 1889 at 35 00:01:49.900 --> 00:01:52.700 the very beginning janova was 36 00:01:52.700 --> 00:01:55.900 designing and Manufacturing producing hats 37 00:01:55.900 --> 00:01:58.900 then she gradually became a star 38 00:01:58.900 --> 00:02:01.700 in the old Couture High fashion business. 39 00:02:01.700 --> 00:02:04.400 She was a rival of the very 40 00:02:04.400 --> 00:02:07.800 famous Coco Chanel and the apology 41 00:02:07.800 --> 00:02:10.700 of the group was in the 1920s in Paris. 42 00:02:11.500 --> 00:02:14.500 Today it is the oldest miss all 43 00:02:14.500 --> 00:02:17.600 the Couture still alive. As far as the name 44 00:02:17.600 --> 00:02:20.500 is concerned. So history is there what 45 00:02:20.500 --> 00:02:24.600 about the evolution of the owners? Obviously Genova 46 00:02:23.600 --> 00:02:26.400 was the owner At first. She had 47 00:02:26.400 --> 00:02:30.300 a unique daughter Margaret. Margarit Margaret 48 00:02:29.300 --> 00:02:32.400 is an artist and she's going 49 00:02:32.400 --> 00:02:36.200 to become the inspiration of her mother to 50 00:02:35.200 --> 00:02:39.700 the moment. She passed away in 1958 51 00:02:38.700 --> 00:02:41.600 then later on their 52 00:02:41.600 --> 00:02:45.000 family love and more or less stead at 53 00:02:44.200 --> 00:02:46.800 the control of the Mason. 54 00:02:48.300 --> 00:02:51.900 But what is interesting when you look at the logo of the law 55 00:02:51.900 --> 00:02:54.800 Vine company you see Jan and 56 00:02:54.800 --> 00:02:57.600 you see her daughter Margaret so they 57 00:02:57.600 --> 00:02:59.800 are both on the logo of the company. 58 00:03:00.700 --> 00:03:03.800 Later on, there are some difficulties Midland bank 59 00:03:03.800 --> 00:03:07.700 takes an equity stake of 40% in 1989. 60 00:03:06.700 --> 00:03:09.400 It does not work that 61 00:03:09.400 --> 00:03:12.300 well, then the transfer is going to come to the 62 00:03:12.300 --> 00:03:16.100 Louis Vuitton family through the Family holding a 63 00:03:15.100 --> 00:03:19.100 coffee in 1990. Laurel is 64 00:03:18.100 --> 00:03:22.000 going to be also a controlling interest from 65 00:03:21.500 --> 00:03:25.400 1996 to 2001 in 66 00:03:24.400 --> 00:03:28.000 2001 business woman a 67 00:03:27.300 --> 00:03:30.400 Chinese entrepreneur Shoreland one 68 00:03:30.400 --> 00:03:33.700 is going to take the control of lava then. 69 00:03:35.100 --> 00:03:38.400 I'll take yours under the leadership of the designer 70 00:03:38.400 --> 00:03:41.700 Albert Albert. There will be good years. But 71 00:03:41.700 --> 00:03:45.300 no thanks going to progressively lose speed especially 72 00:03:44.300 --> 00:03:47.800 after the expulsion of a bear 73 00:03:47.800 --> 00:03:50.500 and bad. The company is not doing well. When 74 00:03:50.500 --> 00:03:53.400 fossil buys Nova is taking an 75 00:03:53.400 --> 00:03:56.800 equity stake of 65.6% first in 76 00:03:56.800 --> 00:03:59.400 2018. And then it's 77 00:03:59.400 --> 00:04:03.100 going to increase its Equity stake in the company on 78 00:04:02.100 --> 00:04:06.100 an auto price value base, which is 100 and 79 00:04:05.100 --> 00:04:08.100 10 million. Euros. Keep this figure in mind. 80 00:04:08.100 --> 00:04:11.700 We'll use it a little bit later. What is that steak in 81 00:04:11.700 --> 00:04:14.400 terms of equity story for fossil. It's a 82 00:04:14.400 --> 00:04:17.500 legacy. It's a fantastic name. It's a 83 00:04:17.500 --> 00:04:19.600 rooted in history of fashion. 84 00:04:20.500 --> 00:04:24.200 And its potential development in China. So what 85 00:04:23.200 --> 00:04:26.700 will the company do first change the CEO 86 00:04:26.700 --> 00:04:29.600 change the designer change a creative director 87 00:04:29.600 --> 00:04:32.200 and start putting the capital back on the 88 00:04:32.200 --> 00:04:36.300 track in terms of growth and obviously performance a 89 00:04:35.300 --> 00:04:38.600 few words about for soon for sunnism 90 00:04:38.600 --> 00:04:42.400 Diversified conglomerate the motto 91 00:04:41.400 --> 00:04:45.100 of the companies happiness Welles and 92 00:04:45.100 --> 00:04:48.500 health. Is it the pun or is it a strategy 93 00:04:48.500 --> 00:04:51.800 difficult to say but within for 94 00:04:51.800 --> 00:04:54.400 so soon you have Pharmacy you have tourism you 95 00:04:54.400 --> 00:04:57.100 have Financial Services insurance and you 96 00:04:57.100 --> 00:05:01.000 have luxury with Nova go the cabin 97 00:05:00.200 --> 00:05:03.500 has been created by War One Chance 98 00:05:03.500 --> 00:05:06.900 who was born in 1967 and 99 00:05:06.900 --> 00:05:10.300 some people say how he is a Chinese warrant 100 00:05:09.300 --> 00:05:13.100 perfect, which is probably slightly an 101 00:05:12.100 --> 00:05:15.200 exaggeration. We all know plenty of 102 00:05:15.200 --> 00:05:18.500 very strong Chinese companies go away 103 00:05:18.500 --> 00:05:20.200 telecommunication equipment. 104 00:05:20.400 --> 00:05:23.600 Remember there was a film in the Academy of Huawei 105 00:05:23.600 --> 00:05:26.400 compared with rexon and Nokia 106 00:05:26.400 --> 00:05:30.200 higher in the housing business Alibaba. I 107 00:05:29.200 --> 00:05:32.500 use Alibaba as a competitor of 108 00:05:32.500 --> 00:05:35.600 Amazon web services when we discussed the 109 00:05:35.600 --> 00:05:39.000 cloud business Gillies a very well-known common 110 00:05:38.200 --> 00:05:41.600 factor. Julie is a controlling interest of 111 00:05:41.600 --> 00:05:44.300 Volvo. There is a film on the IPO of 112 00:05:44.300 --> 00:05:47.400 Volvo last but not least long full spring 113 00:05:47.400 --> 00:05:50.400 an extremely interesting company in the 114 00:05:50.400 --> 00:05:53.700 mineral water business, but these companies are 115 00:05:53.700 --> 00:05:57.000 very much focusing on there Core Business, 116 00:05:56.500 --> 00:05:59.900 even though they are multiple activities in 117 00:05:59.900 --> 00:06:02.600 an industry, but in one industry for soon 118 00:06:02.600 --> 00:06:06.100 is a conglomerate you remember conglomerate this 119 00:06:05.100 --> 00:06:08.600 started growing rapidly in 120 00:06:08.600 --> 00:06:11.600 the 70s in the United States. We remember 121 00:06:11.600 --> 00:06:14.300 Taiko. We remember ITT and 122 00:06:14.300 --> 00:06:17.400 so on and so forth. What is a rational behind that? 123 00:06:17.400 --> 00:06:20.100 It's a financial rationality. 124 00:06:20.400 --> 00:06:23.600 Social logic, we hold a diversified portfolio of 125 00:06:23.600 --> 00:06:26.500 companies or these companies are all together 126 00:06:26.500 --> 00:06:29.800 generating continuous growth so that 127 00:06:29.800 --> 00:06:32.300 the earnings per share are up so that 128 00:06:32.300 --> 00:06:35.100 you can increase the dividend. What is a dream of 129 00:06:35.100 --> 00:06:38.900 the CEOs of this companies is to create an investment tool 130 00:06:38.900 --> 00:06:41.700 an asset on the stock market which 131 00:06:41.700 --> 00:06:44.600 looks like a Government Bond. It's like 132 00:06:44.600 --> 00:06:47.800 a garden balloons coupon is growing little 133 00:06:47.800 --> 00:06:50.700 by little in a very predictable voice throughout 134 00:06:50.700 --> 00:06:53.600 the years probably the most well known of all 135 00:06:53.600 --> 00:06:56.700 these congrats is a CEO of ITC Harold 136 00:06:56.700 --> 00:07:00.100 jennine a kind of dictatorship of quarterly 137 00:06:59.100 --> 00:07:01.100 earnings per share. 138 00:07:02.500 --> 00:07:05.400 Our original was very well known because he was considering that 139 00:07:05.400 --> 00:07:08.400 he was a most important person at ITT. So 140 00:07:08.400 --> 00:07:12.000 when he was visiting they subsidized here 141 00:07:11.400 --> 00:07:14.700 and there everybody was adjusted to 142 00:07:14.700 --> 00:07:17.500 New York time so that he does 143 00:07:17.500 --> 00:07:19.400 not suffer from jet lag. 144 00:07:20.200 --> 00:07:23.400 A very interesting personality now there were plenty of 145 00:07:23.400 --> 00:07:27.000 criticisms against these congrats. 146 00:07:27.600 --> 00:07:30.300 First the acquisition policy was 147 00:07:30.300 --> 00:07:33.600 a little bit driven by the ego of 148 00:07:33.600 --> 00:07:36.500 this series and Igor was definitely not 149 00:07:36.500 --> 00:07:39.400 what was missing for these guys hubris, right 150 00:07:39.400 --> 00:07:42.900 disregarding any consideration about 151 00:07:42.900 --> 00:07:45.900 value and shareholder value. 152 00:07:45.900 --> 00:07:48.400 This is why by the way a little 153 00:07:48.400 --> 00:07:51.900 bit later on was developed the agencies Theory because 154 00:07:51.900 --> 00:07:54.400 now that shareholders are supposed to regain the 155 00:07:54.400 --> 00:07:57.200 control of what belongs to them. Jerry speaking 156 00:07:57.200 --> 00:08:00.900 to board of directors is supposed to a little bit control 157 00:08:00.900 --> 00:08:03.300 the CEO unlimited the power of the 158 00:08:03.300 --> 00:08:06.300 sea is a board of directors was 159 00:08:06.300 --> 00:08:09.400 very much control by the CEO and not 160 00:08:09.400 --> 00:08:12.700 the other way around management autocratic management 161 00:08:12.700 --> 00:08:15.300 job down management normally meets to 162 00:08:15.300 --> 00:08:18.200 power and then the consequence of 163 00:08:18.200 --> 00:08:21.600 that is kind of disappearance of entrepreneurial Spirit, 164 00:08:21.600 --> 00:08:24.200 which was supposed to be in the 165 00:08:24.200 --> 00:08:26.600 DNA of the American Auto partner. 166 00:08:27.600 --> 00:08:30.500 Kind of financialization because at 167 00:08:30.500 --> 00:08:34.100 the end of the day the rational is absolutely financial and 168 00:08:33.100 --> 00:08:36.300 not Industrial in the set 169 00:08:36.300 --> 00:08:39.300 of criticisms. There was also one which is very important 170 00:08:39.300 --> 00:08:43.100 when you hold a diversified portfolio 171 00:08:42.100 --> 00:08:45.300 of companies how much time can you 172 00:08:45.300 --> 00:08:48.200 allocate to each and every company or even 173 00:08:48.200 --> 00:08:51.700 to each and every industry business segment not 174 00:08:51.700 --> 00:08:55.200 much and you did some competences you 175 00:08:54.200 --> 00:08:57.800 need to understand everything about Pharma and about 176 00:08:57.800 --> 00:09:01.500 tourism about telecommunication about advertising 177 00:09:00.500 --> 00:09:04.300 the day you want to take decisions, but 178 00:09:03.300 --> 00:09:06.500 you contact decisions understanding all 179 00:09:06.500 --> 00:09:10.200 this businesses the management of these congrats require 180 00:09:09.200 --> 00:09:12.600 plenty of Diversified skills and 181 00:09:12.600 --> 00:09:15.900 competences. It's absolutely a realistic. 182 00:09:16.600 --> 00:09:20.000 At the end of the day, what's going to be the consequence? I'll 183 00:09:19.300 --> 00:09:22.500 sometimes you miss allocate resources you 184 00:09:22.500 --> 00:09:26.300 over invest in bad projects sometimes 185 00:09:25.300 --> 00:09:28.400 to risk you some companies which 186 00:09:28.400 --> 00:09:31.300 unfortunately should not be rescued. And 187 00:09:31.300 --> 00:09:34.400 how do you finance this project diverting free 188 00:09:34.400 --> 00:09:38.400 cash flows generated by good companies. There are 189 00:09:38.400 --> 00:09:41.200 some promising businesses. You should take these three 190 00:09:41.200 --> 00:09:44.200 Cash tools and investing in promising businesses, and he said 191 00:09:44.200 --> 00:09:47.900 of that you're rescue companies which are supposedly time 192 00:09:47.900 --> 00:09:50.200 last but not least this kind of 193 00:09:50.200 --> 00:09:54.300 Investment Portfolio is absolutely unsuitable for investors. 194 00:09:53.300 --> 00:09:56.700 If you're an asset management you want 195 00:09:56.700 --> 00:10:00.300 to invest a percentage of the fans 196 00:09:59.300 --> 00:10:02.400 in cosmetics other percentage in 197 00:10:02.400 --> 00:10:05.500 luxury also percentage in photos in cars. 198 00:10:05.500 --> 00:10:08.700 So you want to decide your location across the 199 00:10:08.700 --> 00:10:12.000 industries and then you don't take that decision is taken 200 00:10:11.100 --> 00:10:14.300 by the government, right? You will prefer 201 00:10:14.300 --> 00:10:16.200 to have few players. 202 00:10:16.600 --> 00:10:19.400 You can invest and take the decision of see allocation 203 00:10:19.400 --> 00:10:22.500 by yourself the consequence of all these 204 00:10:22.500 --> 00:10:25.700 criticism is that all these conglomerates and 205 00:10:25.700 --> 00:10:29.700 holding firms. They are going to show discount. Well, 206 00:10:28.700 --> 00:10:31.700 the value of this conglomerate is 207 00:10:31.700 --> 00:10:34.500 less than just some of the parts. This 208 00:10:34.500 --> 00:10:37.700 is a discount which was observed and documented by 209 00:10:37.700 --> 00:10:40.700 academics and by professionals no doubt 210 00:10:40.700 --> 00:10:43.300 about that. What would be the consequences of 211 00:10:43.300 --> 00:10:44.700 all these criticism? 212 00:10:45.500 --> 00:10:48.900 they are going to be a kind of economic rationale for 213 00:10:48.900 --> 00:10:51.400 deregulation which took place 214 00:10:51.400 --> 00:10:55.000 in the 80s starting in the United States and in 215 00:10:54.100 --> 00:10:56.100 Great Britain as you know, 216 00:10:57.100 --> 00:11:00.600 At that time we observed the emergence of the market for 217 00:11:00.600 --> 00:11:03.300 corporate control. So there will be a fantastic 218 00:11:03.300 --> 00:11:06.600 development of structuring tools on the 219 00:11:06.600 --> 00:11:09.700 financial point of view. You remember that Joe bonson. 220 00:11:09.700 --> 00:11:12.900 What is your objective of these financing 221 00:11:12.900 --> 00:11:16.000 tools to take the control of these conglomerates and 222 00:11:15.900 --> 00:11:18.700 dismantle that cut down 223 00:11:18.700 --> 00:11:21.500 into pieces so that you can show the real 224 00:11:21.500 --> 00:11:24.700 value of each and every asset taken separately. This 225 00:11:24.700 --> 00:11:27.900 is why they will be wave in the 80s of whole Style 226 00:11:27.900 --> 00:11:28.600 takeovers. 227 00:11:29.200 --> 00:11:32.200 Together with a little bit of insider trading as you 228 00:11:32.200 --> 00:11:35.100 probably remember the concept ones would be 229 00:11:35.100 --> 00:11:39.300 to break up these conglomerates because of their poor 230 00:11:38.300 --> 00:11:41.300 economic efficiency now for soon 231 00:11:41.300 --> 00:11:43.500 as the congrat rate today in China. 232 00:11:44.400 --> 00:11:47.400 Part of the activity is in the pharmaceutical industry 233 00:11:47.400 --> 00:11:50.000 Shanghai for soon Farmers to 234 00:11:50.300 --> 00:11:54.100 go group. The company was created in 1994 and was 235 00:11:53.100 --> 00:11:56.600 listed in 1998. 236 00:11:57.500 --> 00:12:00.500 If you look at the funds or metrics of the companies 237 00:12:00.500 --> 00:12:03.500 the last 12 months a bit more than 40 billion 238 00:12:03.500 --> 00:12:06.500 Rand members, which is a bit more than six billion 239 00:12:06.500 --> 00:12:09.300 dollars. It's far from being a big player like the 240 00:12:09.300 --> 00:12:12.200 Novartis or horse or the center of fear 241 00:12:12.200 --> 00:12:15.500 whatsoever. It's not a marginal player, but it is just 242 00:12:15.500 --> 00:12:18.700 in between. Of course the company showed some successes 243 00:12:18.700 --> 00:12:22.200 for example you announcement in December and 2022. 244 00:12:23.400 --> 00:12:27.400 That they got the authorizations your approval for bio-intech partnership 245 00:12:26.400 --> 00:12:29.900 vaccine covid. That's 246 00:12:29.900 --> 00:12:32.200 great. But at the end of the day, if 247 00:12:32.200 --> 00:12:35.300 you look at the metrics the return Capital it's about eight 248 00:12:35.300 --> 00:12:38.100 percent. And again, it's very far from the 249 00:12:38.100 --> 00:12:40.900 first League of the Russian Novartis. I mentioned earlier 250 00:12:41.800 --> 00:12:45.100 This is not an outstanding performance. But the 251 00:12:44.100 --> 00:12:47.300 Enterprise Value is twice as 252 00:12:47.300 --> 00:12:50.500 much as a capital and prod which shows some relativen creation. 253 00:12:50.500 --> 00:12:53.600 You remember Market to book Enterprise Value 254 00:12:53.600 --> 00:12:56.600 divided by Capital employee. So there is 255 00:12:56.600 --> 00:13:00.600 some kind of market value creation but 256 00:12:59.600 --> 00:13:02.300 not that much under the performance 257 00:13:02.300 --> 00:13:05.200 is not outstanding. If you observes the last five years 258 00:13:05.200 --> 00:13:08.600 of listing of Shanghai for soon pharmaceutical on 259 00:13:08.600 --> 00:13:11.600 the Shanghai stock exchange some guys Stock Exchange 260 00:13:11.600 --> 00:13:14.600 plus two percent and five years some guy 261 00:13:14.600 --> 00:13:18.200 pharmacist to call minus 16% with 262 00:13:17.200 --> 00:13:20.900 plenty of variability Juris speaking 263 00:13:20.900 --> 00:13:23.700 the pharmaceutical companies. They are 264 00:13:23.700 --> 00:13:27.500 a little bit more stable in terms of stock price 265 00:13:27.500 --> 00:13:30.700 Evolution. The beta is reasonably low 266 00:13:30.700 --> 00:13:33.200 because of the resilience because of 267 00:13:33.200 --> 00:13:36.400 the size because of the patterns because of Etc. 268 00:13:36.400 --> 00:13:39.600 So you understand that this set is 269 00:13:39.600 --> 00:13:41.500 an extremely volatile set in the port. 270 00:13:41.800 --> 00:13:44.200 Of assets of fossoon. It's not 271 00:13:44.200 --> 00:13:47.200 a fantastic contributor Pharma tourism. 272 00:13:47.800 --> 00:13:50.800 For soon is very well known because it acquired in 273 00:13:50.800 --> 00:13:53.400 2015 very well known 274 00:13:53.400 --> 00:13:56.300 company French companies name is Club Med Club 275 00:13:56.300 --> 00:13:57.100 mediter, honey. 276 00:13:57.700 --> 00:14:00.800 But the company also took some Equity stakes in Thomas 277 00:14:00.800 --> 00:14:01.100 Cook. 278 00:14:01.700 --> 00:14:02.600 bankrupt 279 00:14:03.200 --> 00:14:06.800 Circus Soleil 20% of Syracuse today very prestigious 280 00:14:06.800 --> 00:14:09.400 company in Canada bankrupt 281 00:14:10.100 --> 00:14:13.400 deferred so not big successes. What about 282 00:14:13.400 --> 00:14:16.500 Club men when for soon buys Club 283 00:14:16.500 --> 00:14:19.300 men, it's for 900 and 284 00:14:19.300 --> 00:14:22.600 something million euros and at that time the company saves our 1.4 285 00:14:22.600 --> 00:14:26.000 billion euros keep this figure in mind. They 286 00:14:25.200 --> 00:14:28.700 bit dies about 9% And in 287 00:14:28.700 --> 00:14:31.600 terms of free cash to you. Remember that free cash flow is cashing from 288 00:14:31.600 --> 00:14:34.300 operations minus Capital expenditures cash out 289 00:14:34.300 --> 00:14:37.500 the free cash flow is will most that break even so the 290 00:14:37.500 --> 00:14:40.100 company does not generate cash access but does not 291 00:14:40.100 --> 00:14:40.900 consume cash. 292 00:14:41.500 --> 00:14:45.200 And the adaptedness is close to Breakeven. No 293 00:14:44.200 --> 00:14:47.300 net financial debt close 294 00:14:47.300 --> 00:14:48.100 to zero. 295 00:14:48.800 --> 00:14:51.900 Well some agility some flexibility and the 296 00:14:51.900 --> 00:14:54.600 capital is doing reasonably well now clubbed does 297 00:14:54.600 --> 00:14:58.100 not stand alone Club Med stands within a 298 00:14:57.100 --> 00:15:00.600 collection a portfolio of assets all 299 00:15:00.600 --> 00:15:03.600 devoted to tourism inside for some 300 00:15:03.600 --> 00:15:06.800 group and his name for Zoom tourism group 301 00:15:06.800 --> 00:15:09.700 ftg. Whose nickname 302 00:15:09.700 --> 00:15:12.300 is 40 day. So 40 days 303 00:15:12.300 --> 00:15:15.900 about Club men obviously strong asset plus 304 00:15:15.900 --> 00:15:18.200 kazaku plus Folly the 305 00:15:18.200 --> 00:15:22.800 town and so on and so forth. What about the sales in 2021 1.3 306 00:15:21.800 --> 00:15:23.100 billion? 307 00:15:24.400 --> 00:15:27.700 You remember that climate in 2015 was generating 308 00:15:27.700 --> 00:15:31.300 revenues of 1.4 billion. Of course 2021 309 00:15:30.300 --> 00:15:33.700 is a very difficult and 310 00:15:33.700 --> 00:15:37.100 specific year because of the pandemic but at 311 00:15:36.100 --> 00:15:39.100 that time Club Med is generating revenues of 312 00:15:39.100 --> 00:15:41.200 only 840 million. 313 00:15:42.300 --> 00:15:45.500 They be nice three percent. So it be dies at 314 00:15:45.500 --> 00:15:48.300 Breakeven it be that that's not fine on the capital 315 00:15:48.300 --> 00:15:51.100 expenditures. Of course, there is a recovery first half of 316 00:15:51.100 --> 00:15:54.500 2022 the revenues generated by the business 317 00:15:54.500 --> 00:15:58.100 group for the first half of the year is 0.9 billion, 318 00:15:57.100 --> 00:16:00.200 you multiply by two and you 319 00:16:00.200 --> 00:16:03.200 get one point eight. It's more than one point three. 320 00:16:03.200 --> 00:16:06.300 Obviously there is a recovery and a bit dies 321 00:16:06.300 --> 00:16:09.500 very much up. Now, it represents 19% of 322 00:16:09.500 --> 00:16:12.300 Revenue. So obviously there is a recovery, but 323 00:16:12.300 --> 00:16:15.200 when you look at the market capitalization today, it's just 324 00:16:15.200 --> 00:16:18.200 one point five billion euros, and you remember that 325 00:16:18.200 --> 00:16:21.100 club met part of it was the quiet for 326 00:16:21.100 --> 00:16:25.200 900 million value creation. Not 327 00:16:24.200 --> 00:16:27.400 that much interestingly afterg was 328 00:16:27.400 --> 00:16:30.400 listed five years ago. If You observe the 329 00:16:30.400 --> 00:16:33.700 track record on the stock market of ftg as 330 00:16:33.700 --> 00:16:36.500 opposed to the Hang saying index because the company is 331 00:16:36.500 --> 00:16:40.000 listed on the Hong Kong Stock Exchange went down 332 00:16:39.200 --> 00:16:41.800 by 20 and after, 333 00:16:42.300 --> 00:16:45.300 Down by 30 something. Of course, 334 00:16:45.300 --> 00:16:48.400 there was a big crash because of covid and there's 335 00:16:48.400 --> 00:16:51.400 a kind of recovery, but at the end of the day you 336 00:16:51.400 --> 00:16:54.800 understand that neither the farmer business nor 337 00:16:54.800 --> 00:16:58.200 the tourism business are definitely beating 338 00:16:57.200 --> 00:16:59.000 the market. 339 00:16:59.900 --> 00:17:02.400 They are not an outstanding success is 340 00:17:02.400 --> 00:17:06.200 just following the stock market index more or 341 00:17:05.200 --> 00:17:08.800 less now last but not least long fun 342 00:17:08.800 --> 00:17:11.500 lava group. Now that 343 00:17:11.500 --> 00:17:14.800 group is going to be listed via business combination 344 00:17:14.800 --> 00:17:18.300 with a spec special purples acquisition 345 00:17:17.300 --> 00:17:21.000 companies p k which 346 00:17:20.200 --> 00:17:24.100 stands for Primavera Capital acquisition 347 00:17:23.100 --> 00:17:24.800 Corporation. 348 00:17:25.900 --> 00:17:28.500 You remember in the Academy? I already discussed 349 00:17:28.500 --> 00:17:31.700 plenty of times about specs. The first time. It 350 00:17:31.700 --> 00:17:34.500 was in October 2020 and the vietcast was 351 00:17:34.500 --> 00:17:38.400 devoted with a title the year of spacked 352 00:17:37.400 --> 00:17:40.000 why for a very 353 00:17:40.500 --> 00:17:43.100 simple reason which is at that time. The market was 354 00:17:43.100 --> 00:17:46.500 very much growing for specs. Then there 355 00:17:46.500 --> 00:17:49.800 was the use of the tool for Virgin Galactic 356 00:17:49.800 --> 00:17:52.700 2021 Virgin Galactic Truth 357 00:17:52.700 --> 00:17:56.100 or Consequences in 2022, 358 00:17:55.100 --> 00:17:58.600 and the market is down. So 359 00:17:58.600 --> 00:18:02.500 there's another one which is spec is alive, but 360 00:18:03.400 --> 00:18:06.900 And I was describing the evolution if you take statistical 361 00:18:06.900 --> 00:18:11.000 data from spark research about IPOs. 362 00:18:11.700 --> 00:18:14.600 2020 was great 2021 East 363 00:18:14.600 --> 00:18:17.300 Stratus fake with ipo's representing moles and 364 00:18:17.300 --> 00:18:20.900 160 billion dollars crash in 365 00:18:20.900 --> 00:18:24.600 2022 with 13 billion almost disappearance 366 00:18:23.600 --> 00:18:26.400 of the market kind of 367 00:18:26.400 --> 00:18:30.400 recovery on Renaissance beginning of 2023. So 368 00:18:29.400 --> 00:18:32.900 far end of February 7 billion 369 00:18:32.900 --> 00:18:35.400 plus an additional billion, which is announced. 370 00:18:35.400 --> 00:18:39.200 So it seems that it goes up a little bit very far 371 00:18:38.200 --> 00:18:42.300 from where it was standing in 2021. 372 00:18:41.300 --> 00:18:44.400 And even in 2020 now, 373 00:18:44.400 --> 00:18:47.900 what about lovang who today? It's no 374 00:18:47.900 --> 00:18:50.700 more. It's Nova plus and now 375 00:18:50.700 --> 00:18:52.500 there are five brands. 376 00:18:53.200 --> 00:18:56.500 So sense of all, these combined Brands is 377 00:18:56.500 --> 00:18:59.600 about 330 million euros, 378 00:18:59.600 --> 00:19:03.700 the company's announcing 1,200 points 379 00:19:03.700 --> 00:19:06.800 of sales. So fantastic Network for the development. 380 00:19:07.900 --> 00:19:10.300 The company does not talk much about 381 00:19:10.300 --> 00:19:10.400 the 382 00:19:12.300 --> 00:19:14.400 past but on the equity stories about fantastic. 383 00:19:15.100 --> 00:19:19.700 Expected anticipated growth kangaroo average 384 00:19:19.700 --> 00:19:22.300 growth per year more than 30% for 385 00:19:22.300 --> 00:19:25.500 the period 2021 to 2025. So 386 00:19:25.500 --> 00:19:29.400 the future is going to be great. Okay specifically in 387 00:19:29.400 --> 00:19:33.500 China growth in China should be about 56% per 388 00:19:32.500 --> 00:19:35.400 year on the average. So the company 389 00:19:35.400 --> 00:19:38.600 is very much selling the future and not 390 00:19:38.600 --> 00:19:41.700 capitalizing on an outstanding track record for 391 00:19:41.700 --> 00:19:44.600 the past. But when you look at these five Brands, 392 00:19:44.600 --> 00:19:47.400 is it luxury or is 393 00:19:47.400 --> 00:19:48.000 it fashion? 394 00:19:49.100 --> 00:19:53.500 Is it high fashion? Is it old Couture or simply premium 395 00:19:52.500 --> 00:19:55.800 brands in fashion business? 396 00:19:55.800 --> 00:19:58.300 Of course, you have long van, 397 00:19:58.300 --> 00:20:01.400 but you also have companies in your shoes business 398 00:20:01.400 --> 00:20:04.500 in ETC. Basically the question 399 00:20:04.500 --> 00:20:07.100 is is it about luxury or is it about 400 00:20:07.100 --> 00:20:07.600 fashion? 401 00:20:08.300 --> 00:20:11.300 The company wants to tell a story about luxury or 402 00:20:11.300 --> 00:20:14.500 let's have a look at our peer group the peer group consists in 403 00:20:14.500 --> 00:20:18.900 lvmh market capitalization 360 404 00:20:17.900 --> 00:20:20.100 billion as it is 405 00:20:20.100 --> 00:20:24.100 announced by fasoot today. It's more than 400 billion 406 00:20:23.100 --> 00:20:27.000 by the way, and also the competitors 407 00:20:26.500 --> 00:20:30.400 our peers are going to be a mess carrying 408 00:20:29.400 --> 00:20:32.800 Gucci, etc, etc. But 409 00:20:32.800 --> 00:20:35.900 at the end of the day the value of non-fine 410 00:20:35.900 --> 00:20:38.700 group is 750 million 411 00:20:38.700 --> 00:20:41.400 dollars. It's quite far from these very 412 00:20:41.400 --> 00:20:45.000 very big players. And to be honest. Do 413 00:20:44.400 --> 00:20:47.700 you dream of the low vibrom name? 414 00:20:47.700 --> 00:20:51.300 Maybe you can dream of Gucci Bulgari. 415 00:20:50.300 --> 00:20:53.200 We don't have a mess. 416 00:20:53.200 --> 00:20:56.600 No fun. You dream a little bit less. So they 417 00:20:56.600 --> 00:20:59.200 try to convince investors at their part of this 418 00:20:59.200 --> 00:21:02.300 premier league, but it's very likely not the 419 00:21:02.300 --> 00:21:05.200 case. Then you get to the harsh reality of 420 00:21:05.200 --> 00:21:07.900 numbers. Of course. We got some 421 00:21:08.300 --> 00:21:11.400 years when the business combination was announced a 422 00:21:11.400 --> 00:21:13.000 prospectus on the stock market. 423 00:21:13.800 --> 00:21:16.800 And what do we read in the Prospectors? 2021 424 00:21:16.800 --> 00:21:19.200 sales? 309 million 425 00:21:19.200 --> 00:21:22.400 not 333 Provident Falls 426 00:21:22.400 --> 00:21:25.900 sales tax Reasons by way. What about the profit? You 427 00:21:25.900 --> 00:21:28.900 know lvmh is immensely profitable 428 00:21:28.900 --> 00:21:31.300 what about nonfan law fines 429 00:21:31.300 --> 00:21:34.500 generating losses of more than 100 million 430 00:21:34.500 --> 00:21:37.600 euros operating loss which represents 431 00:21:37.600 --> 00:21:41.500 about 35% of revenues at 432 00:21:40.500 --> 00:21:43.300 the end of 2021. There's some 433 00:21:43.300 --> 00:21:46.600 good news about the financial structure. The company has more cares than 434 00:21:46.600 --> 00:21:49.600 death cash is exceeding that by 23 million 435 00:21:49.600 --> 00:21:52.500 which gives you some room to maneuverability to 436 00:21:52.500 --> 00:21:56.000 grow up opportunities and so on so forth and finance growth, 437 00:21:56.600 --> 00:22:00.400 But what are the news H1 2022 how 438 00:21:59.400 --> 00:22:02.900 the revenues are up 200 439 00:22:02.900 --> 00:22:05.300 million for the first half if you multiply by 440 00:22:05.300 --> 00:22:09.000 2 is 400 million. It is one third 441 00:22:08.700 --> 00:22:12.800 35% more than 2021. Okay, 442 00:22:11.800 --> 00:22:14.100 that's gross. But 443 00:22:14.100 --> 00:22:16.800 what about the profit the operating Revenue? 444 00:22:18.500 --> 00:22:22.500 Jeopardy in call me still negative by 30% 445 00:22:21.500 --> 00:22:24.500 So you generate some economies 446 00:22:24.500 --> 00:22:27.900 of scale. But when you generate losses you consume cash 447 00:22:27.900 --> 00:22:30.900 and when you are growing you consume 448 00:22:30.900 --> 00:22:33.600 cash because of working capital requirements 449 00:22:33.600 --> 00:22:36.700 is to grow at the same rate at the 450 00:22:36.700 --> 00:22:39.500 revenues more inventories more receivables on 451 00:22:39.500 --> 00:22:42.200 so on so you have to find out the 452 00:22:42.200 --> 00:22:45.900 increase in your working capital requirement. You have to finance your Capital expenditures 453 00:22:45.900 --> 00:22:48.800 and says no cash coming from business operations because 454 00:22:48.800 --> 00:22:52.400 the company is generating operating also Consequence the 455 00:22:51.400 --> 00:22:54.600 net cash position is transforming to 456 00:22:54.600 --> 00:22:55.400 net that position. 457 00:22:56.300 --> 00:22:59.600 And at the end of the first half of 2022 that is 458 00:22:59.600 --> 00:23:02.200 exceeding cash by 59 million. 459 00:23:03.100 --> 00:23:06.600 So now flexibility is out of the picture and you 460 00:23:06.600 --> 00:23:10.100 need cash to get back to Breakeven. Go 461 00:23:09.100 --> 00:23:13.100 back to profitability positive Ebates. 462 00:23:12.100 --> 00:23:15.500 Are they better and to finance geograph? 463 00:23:16.200 --> 00:23:19.100 Where does cash come from from the 464 00:23:19.100 --> 00:23:23.400 mother company? This is the advantage of your congrate. Unfortunately, 465 00:23:22.400 --> 00:23:25.400 the congrat is out 466 00:23:25.400 --> 00:23:28.400 of the picture because for soon is suffering from 467 00:23:28.400 --> 00:23:32.200 very serious liquidity risk. All 468 00:23:31.200 --> 00:23:34.500 these Acquisitions made by the company. 469 00:23:34.500 --> 00:23:37.000 We're Finance by dead. Why do you 470 00:23:37.100 --> 00:23:40.100 use that once an equity to avoid Evolution and keep the 471 00:23:40.100 --> 00:23:40.300 control? 472 00:23:41.300 --> 00:23:44.300 You remember it was a case of a company which I described 473 00:23:44.300 --> 00:23:47.600 in the academy left out lefash finances 474 00:23:47.600 --> 00:23:51.200 grows at 600 rows and its Acquisitions with that at 475 00:23:50.200 --> 00:23:53.400 the end of the third company was extremely fragile to 476 00:23:53.400 --> 00:23:56.600 Asian very vulnerable. There's a surprise crisis and 477 00:23:56.600 --> 00:23:59.700 the company is collapsing and now is 478 00:23:59.700 --> 00:24:02.000 in the hands of holsim. 479 00:24:02.700 --> 00:24:05.500 Lafast does not exist as a company anymore. It only 480 00:24:05.500 --> 00:24:08.600 exists as a brand now the dead in the balance sheet 481 00:24:08.600 --> 00:24:11.500 of forsoon represents 36 billion dollars. 482 00:24:12.700 --> 00:24:16.500 During the year 2022 Moody 483 00:24:15.500 --> 00:24:18.100 is downgrade the rating of 484 00:24:18.100 --> 00:24:21.900 the company twice S&P also downgraded the 485 00:24:21.900 --> 00:24:23.800 rating to be be minus. 486 00:24:24.600 --> 00:24:28.000 You remember you are investment grade down to 487 00:24:27.100 --> 00:24:31.100 BBB minus and you 488 00:24:30.100 --> 00:24:33.400 turn to speculative red with BB Plus, 489 00:24:33.400 --> 00:24:36.400 but now the company stands three notches far 490 00:24:36.400 --> 00:24:40.300 from investment grade with BB minus. 491 00:24:39.300 --> 00:24:42.100 So for soon has no 492 00:24:42.100 --> 00:24:45.700 money to provide to Nova and for soon 493 00:24:45.700 --> 00:24:48.100 needs cash when you need cash whether you 494 00:24:48.100 --> 00:24:49.600 do or you can sell assets. 495 00:24:50.500 --> 00:24:52.900 But when you sell assets you reduce your debt. 496 00:24:53.400 --> 00:24:55.400 You reduce the value of the company as well. 497 00:24:56.200 --> 00:24:59.500 You can also list assets. Then you 498 00:24:59.500 --> 00:25:02.200 are going to show the real value of the asset 499 00:25:02.200 --> 00:25:05.500 because there is a transactional value on the stock 500 00:25:05.500 --> 00:25:08.400 market and then you can use this transactional value 501 00:25:08.400 --> 00:25:11.700 as a guarantee for the debt, which is probably one 502 00:25:11.700 --> 00:25:14.800 of the reasons why Nova was listed by 503 00:25:14.800 --> 00:25:17.500 fursuit in the end of I was acquired 504 00:25:17.500 --> 00:25:20.400 for an Enterprise value of 100 and 10 million. 505 00:25:20.400 --> 00:25:24.000 And today the value of Nova glue 506 00:25:23.600 --> 00:25:26.700 is 750 million dollars, 507 00:25:26.700 --> 00:25:29.700 but it's not only long fans. 508 00:25:29.700 --> 00:25:32.900 They also four additional Brands though difficult 509 00:25:32.900 --> 00:25:35.700 to try to figure out the real rate of 510 00:25:35.700 --> 00:25:36.000 return. 511 00:25:37.300 --> 00:25:40.400 The company wants to belong to a group of 512 00:25:40.400 --> 00:25:43.800 companies, which is luxury. I hand luxury luxury 513 00:25:43.800 --> 00:25:47.100 requires conservable investment for 514 00:25:46.100 --> 00:25:49.800 promotion for advertising brand management. 515 00:25:49.800 --> 00:25:52.300 And these companies are fast growing when 516 00:25:52.300 --> 00:25:55.000 you grow you need to invest in capital expenditures. You need 517 00:25:55.100 --> 00:25:58.600 to finance for working capital requirement. So basically if 518 00:25:58.600 --> 00:26:01.300 Nova wants to be in the eye and of 519 00:26:01.300 --> 00:26:04.500 luxury Road, there must be plenty of 520 00:26:04.500 --> 00:26:08.400 Financial Resources devoted to this strategy and 521 00:26:07.400 --> 00:26:11.400 fortunately fursuit as plenty 522 00:26:10.400 --> 00:26:13.500 of that is very highly in 523 00:26:13.500 --> 00:26:16.600 debted as a group and is suffering liquidity risk, 524 00:26:16.600 --> 00:26:19.800 then if the mother company cannot provide the resources, 525 00:26:19.800 --> 00:26:23.100 you have to take the resources inside from internal 526 00:26:22.100 --> 00:26:25.700 generated fast and fortunately love 527 00:26:25.700 --> 00:26:28.500 our generates losses and no profit. 528 00:26:28.500 --> 00:26:31.300 So you understand that the situation is very very 529 00:26:31.300 --> 00:26:34.600 complex for long run as it is complex for 530 00:26:34.600 --> 00:26:36.700 soon and unfortunately, 531 00:26:37.300 --> 00:26:41.000 story rain forces a bad reputation and 532 00:26:40.700 --> 00:26:44.300 poor economic efficiency of conglomerates 533 00:26:43.300 --> 00:26:46.100 once observed in 534 00:26:46.100 --> 00:26:49.800 the United States and unfortunately to their confirmed 535 00:26:49.800 --> 00:26:50.700 with fursuit 536 00:26:51.600 --> 00:26:52.400 Thank you very much.