Fundies favourite – Platypus Asset Management on Qube Holdings

Print This Post A A A

How long have you held Qube?

Almost three years.

What do you like about it?

Qube Logistics increases returns on assets through integrating and owning more of the logistics value chain. By increasing the number of touch points in an import or export logistics chain, it not only increases revenues, but, more importantly, increases margins through greater efficiency.

Management has built positions in attractive businesses over the last six years, and post corporatisation in 2011, has taken control of the two main business: the old P&O automotive and general stevedoring, and the old P&O Trans Australia.

How is it better than its competitors?

We don’t believe it is clearly better in any particular field than its competitors in an operating sense. We believe that Qube’s smaller scale means it has better opportunities to grow and develop an infrastructure logistics operation, and that the share has more growth and a better risk/return profile than Asciano or Toll Holdings.

What do you like about its management?

Management is very experienced in this area. It built Patrick Corp, which it subsequently sold, and created strong shareholder value. The strategy at Qube is almost exactly the same as at Patrick, and the key operational managers – Maurice James, Donald Smithwick, Paul Digney, Paul Lewis, David Knight and many more – are performing the same roles at Qube that they did at Patrick and were so successful.

Stock Chart for Qube (QUB)

What is key for us here, is that the managers have excellent knowledge of their particular industries, they have experience at running industry leading operations, and they have excellent knowledge of their competitor’s in-house operations.

We also like management’s long-term focus on shareholder value creation.

What is your target price on Qube?

Our target price is above $2.

At what point would you sell it?

If the stock was trading above our target price, or if the story had changed.

How much has it added (subtracted) to your overall portfolio over the last 12 months?

It has had a very small negative contribution.

Is it a liquid stock?

It trades $2 million a day.

Where do you see the value?

The stock is highly rated, owing to its management and return profile. We see value over the next few years, as it continues to integrate assets with new businesses and own more touch points along particular logistics chains.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.

Also in the Switzer Super Report

Also from this edition

View More Articles