Portfolio Update - 18 February 2022


📢 Weekly Update 📢 Performance YTD -12.84% Return after 3 years (Cumulative): +98.96% Hi Everyone, I know that the market is not in our favour at the moment. We have 13.5% in cash ready to be deployed, but before doing it, I am waiting to see how the crisis Russia-Ukraine-NATO evolves over the next few weeks. The rate hike announcement few weeks ago has also been a strong headwind. I know that with the actual conditions it is not easy to sit tight and remain patient. At the moment the stock market is breathing and another bull run will come back soon, but this correction is necessary for another bull run. We have experienced other negative months in the past, and we will experience some others in the future, it is the nature of the stock market. 🔷09 Feb | Walt Disney🔷 Earnings per share: $1.06 adj. vs 63 cents expected Revenue: $21.82 billion vs $20.91 billion expected Disney+ total subscriptions: 129.8 million vs 125.75 million expected Disney+ subscriptions beat expectations, even as executives previously said they expect subscriber growth for Disney+ to be stronger in the second half of the year compared to the first, with original content being released on the platform in Q4 2022. The subscriber number includes nearly 12 million Disney+ subscriptions added in the first quarter. The service also saw average revenue per user (ARPU) in the U.S. and Canada grow to $6.68 per month from $5.80 a year ago. CFO Christine McCarthy said on the company’s earnings call that Disney expects to spend significantly on streaming in the second quarter. She said the company expects programming and production expenses for the direct to consumer business to increase by about $800 million to $1 billion, including programming fees for Hulu live. They expect those expenses for linear to increase by about $500 million, in part due to pandemic-related timing shifts. Though Netflix shares fell during its most recent report when it showed slowing subscriber growth, Chapek reiterated guidance of 230 million to 260 million Disney+ subscribers by 2024. Additionally, although Disney’s television and film productions have resumed, it is still experiencing disruptions in its pipeline. While the studio’s theatrical releases were among the top performing films of the year, the domestic box office still has not fully recovered from the pandemic. Income from Disney’s co-production of the Marvel Cinematic Universe film “Spider-Man: No Way Home” with Sony offset losses on other titles released during the quarter, which were unable to overcome significant marketing and production costs. Disney’s parks, experiences and consumer products division saw revenues reach $7.2 billion during the quarter, double the $3.6 billion it generated in the prior-year quarter. The segment saw operating results jump to $2.5 billion compared to a loss of $100 million in the same period last year. Disney said the growth in revenue came as more guests attended its theme parks, stayed in its branded hotels and booked cruises. While we are coming out of the pandemic, Disney+ is still performing very well and the theme parks are reopening. Walt Disney is one of the company in our portfolio that has been impacted during the pandemic, and it seems that the company is set to outperform some of its competitors such as Netflix or Apple TV+.

🔷16 Feb | Nvidia🔷 EPS: $1.32, adjusted, versus $1.22 expected Revenue: $7.64 billion, versus $7.42 billion expected Nvidia has gotten a boost as cloud providers and enterprises turn to its graphics processors that are used for artificial intelligence applications like speech recognition and recommendations. Nvidia reported $3.26 billion in sales from its data center business, up 71% annually. Gaming is still Nvidia’s largest market, as its latest GeForce graphics processors are ideal for playing advanced computer games. The gaming business rose 37% year-over-year to $3.42 billion driven by GeForce sales, the company said. Nvidia’s chips are also used by businesses for applications like computer-assisted design and rendering. It reports those sales in its Professional Visualization business, which rose 109% annually to $643 million. The company said the growth was driven by workstation chip sales and hybrid working. However, Nvidia’s automotive business was down 14% to $125 million. It’s not a primary focus for the company but represents a growth market for its chips. Nvidia said that car makers’ supply constraints were one reason that its automotive sales fell. From this quarter, every segment of the company except the automotive segment have grown and it is very satisfying. On top of this, the supply chain is getting more resilient and it will allow Nvidia to deliver more chips and match the demand. The only drawback was the ARM deal that has not gone forward due to compliance. Even though the share price is quite volatile, I strongly believe in the company's future.

🔷17 Feb | Airbus🔷 Europe’s Airbus predicted 720 plane deliveries and higher profits in 2022 after core operating profit almost trebled last year on a partial recovery in jet deliveries and higher defense and helicopter earnings during the pandemic. Europe’s largest aerospace group also restarted its dividend for the first time in two years after swinging to a record net profit of 4.213 billion euros ($4.8 billion), boosted by the halting of its A380 superjumbo and a reversal of some Covid-19 charges. Airbus said it would propose a dividend of 1.5 euros a share The group’s widely watched adjusted operating profit soared to 4.865 billion euros from 1.706 billion a year earlier as revenues rose 4% to 52.149 billion. For 2022, Airbus predicted a core profit of 5.5 billion euros For the fourth quarter, Airbus posted 1.496 billion euros of adjusted operating income on revenues of 16.994 billion. Analysts were on average expecting comparable income of 1.364 billion euros on revenues of 16.878 billion, according to a company-compiled consensus. Net cash rose more than 75% to 7.6 billion euros, compared with a pre-crisis level of 12.5 billion. Even though they did not reach their pre-crisis level, Airbus is coming out of the very difficult 2-year-period where production has been extremely difficult to provide, but the roll out of the vaccines/boosters allows the company to produce again with the increasing demand of new planes from airlines with the reopening of tourism. Last but not least, the announcement of dividends to shareholders is a very promising sign for the future of the company.

🔷17 Feb | Kering🔷 Francois-Henri Pinault said the fourth quarter for Gucci had been “brilliant.” Parent company Kering reported that the iconic fashion label had delivered revenues of 9.7 billion euros ($11.02 billion), up 31% on 2020. Kering released its 2021 full-year results on Thursday morning, reporting that revenues had jumped to 17.7 billion euros, up by more than a third on the previous year. The luxury goods group’s recurring operating income jumped 60% versus 2020, topping 5 billion euros. The luxury goods group said revenue growth was driven by “outstanding” performance from all its fashion houses. Focusing specifically on Gucci, Pinault said that while the brand marked its 100th birthday last year, the label was “still being built.” The launch of a new Gucci collection last year brought in “significant growth” in the final three months of the year, Kering’s CEO said. Pinault said he believed Gucci’s growth momentum would continue through 2022 and in the coming years. Kering CEO says there is a new appetite for luxury in the U.S. “We have a very long-term vision for Gucci and it’s delivering as expected and it will continue for sure,” he said. Pinault was also confident about the growth of the luxury market more broadly. He said that growth hadn’t just been driven by people spending more money on products than experiences amid the coronavirus pandemic. The number of customers coming into the luxury industry was growing in the likes of Asia and America, he added. Kering keeps on performing very well, especially with Gucci. I keep on being really impressed by how the brand keeps on attracting new customers, such as in Asia and America.

🔷 18 Feb | Hermes International 🔷 Hermes said Friday that earnings and revenue surged in 2021, with Asia driving growth and Europe recovering from the pandemic. The French luxury-fashion company made a net profit of 2.45 billion euros ($2.78 billion), rising 77% on year, on revenue that surged to EUR8.98 billion from EUR6.88 billion in 2019, before the pandemic. Analysts had seen net profit at EUR2.34 billion and revenue at EUR9 billion. Revenue growth versus 2019 maintained a pace of 33% in the second half as in the first, Hermes said. Asia sales for the year were up by more than half compared with 2019, making it the biggest engine of top-line growth for the company. Total Europe sales returned to growth of 4.3% over the same period, though Hermes's home market in France booked a slight decrease. Recurring operating profit surged to EUR3.53 billion, representing a major expansion in the operating margin to 39.3% from 34% in 2019. The company will propose a dividend of EUR8.00 a share for the year at a shareholders' meeting in April. Hermes didn't offer any numerical guidance for 2022, but said it continues to aim for ambitious organic revenue growth for the medium term. Hermes is also in a very good position such as Kering due to the increase of new customers and a new appetite for luxury goods in America and Asia. Have a nice weekend. GSerdan 📅 Earnings Reports during the 2 weeks ahead 📅 24 Feb | Block (Square) 01 Mar | Salesforce