WAM Capital Limited (WAM) Earnings Call Transcript & Summary

Good afternoon, everyone, and thank you for joining us today for the WAM Capital, WAM Microcap and WAM Research FY 2026 Full Year Results and Q&A webinar. This is your company, and we appreciate you taking the time today. We look forward to answering your questions in the latter part of the webinar. I'm April Lowis from the Investor Relations team. And today, I'm joined by Oscar Oberg ,Lead Portfolio Manager; and Tobias Yao, portfolio manager. Oscar and Tobias, along with the rest of the investment team; Global WAM; Capital WAM, Microcap and WAM Research. Today, Oscar and Tobias will talk through the full year results and provide an overview of the investment portfolio. Before we begin, a disclaimer is displayed for you on screen for you to reach and what we discuss today will be general in nature and is not financial advice. I'll now hand over to Oscar.

Thanks, April, and good afternoon, everyone. So unfortunately, the 2026 financial years personally the hardest mark of that I've experienced in my time in Wilson Asset Management around 11 years and probably 20 years in market, and it's certainly the hardest market that met Capital has experienced since the GFC in 2009. As Geof and I spoke about at the call in early September, the tough market has meant that the WAM Capital Board has chosen to reduce the dividend to a more sustainable level from the $0.155 annualized that we have previously over the last 10 years to now a target of $0.08. Now it's important, and I want to reiterate that today that, that is a target, and it's obviously subject to market conditions and, of course, our performance across the funds. If you have a look at Slide 3. Now this is a summary of the dividend changes that were made. Now no doubt we'll get some more questions on this on the call, but please feel free to look at the recording. That's on our website, but also to call them. We've got an extensive corporate affairs team, and we're here to answer your questions, whether it be on e-mail or on the phone. So now turning to Slide 4, and you can see the performance of the 4 funds that we manage across small caps. And I really want to start off with WAM active today. So I think that's a good demonstration of the divergence that we saw across a number of sectors through 2026. Now Shaun and I were on a call in early July talking about WAM Active's performance. There was nothing short of spectacular over that period. Now it's important to note this is a very small fund. It's much smaller than the other 3 cat funds that we manage, being WAM Capital, WAM Microcap and WAM research. And it looks across all spectrums of the market, it looks at small caps, it looks at large caps, and it also looks at industrial companies and it looks at resources companies. Now when we got to October of 2025, that first 4-month period of the 2026 financial year was very good for all our funds, and we are industrial did very, very well over that period in time because interest rates were forecast to go down. Now when this flipped, and we went from cutting rates to increasing interest rates, resources did extremely well in a number of commodities such as gold and color increased quite in an extraordinary way over that period. Now Shaun did exceptionally well to flip effectively the port from 100% industrial to port almost all resources. And he had a number of -- him and the team had a number of concentrated positions that did exceptionally well. And that because of this, you can see the performance being around 76% last year was nothing short of extraordinary. But I thought it was important to note WAM Active, given the strong sources exposed there, you can see how much it outperformed the other 3 funds. And as I've said many times in these calls, industrials is generally where we like to focus in WAM Capital, WAM Microcap and WAM Research. And this is in sectors such as health care, software, retail, automotive. And why is that the case? It's because these are the sectors that best fit our investment process. The resources sector on the other hand, has many different variables such as commodity prices that we need to forecast, and it's generally not something that does fit our investment process. So for those 3 funds, it's generally mostly small cap industrial companies. Now if you look at the 2026 financial year and as you can see in WAM Active's performance, resources materially outperformed industrial companies. If we look at small cut resources sector, which is largely dominated by companies in gold. Small-cap resources outperformed small cap industrials by a massive 30%, and this is one of the best results really over the last 30 years. Now what's more, and we've said this many times on calls, large caps outperformed small caps. It was, I think, the fifth year in a row where this happened. And on average, it's been around 7% per annum over the last 5 years. And the best example of this is BHP. BHP is around 10% of the index. It went up 60% last year. So 10% of 60%, 6% underperformance. And we don't own a share in BHP. So of course, that impacted our performance. So now I'll turn to WAM Microcap and look at this specifically. Now this is the first year, the 26 financial year that we actually underperformed since we launched the fund in 2017. Now as I said before, resources outperformed industrials by 30%. Now approximately 30% of the small ordinaries index is resources. So that was a 9% headwind, and we underperformed the market by 8%. So we actually didn't do too bad the Microcap companies are illiquid and really struggle in these tougher periods. So actually, when we got to the end of the year and we reviewed our performance -- the one would disappoint clearly, look, we don't -- we're actually -- we're okay with it, and it was a very tough year, and that has actually continued into the '27 financial year. But its' WAM Research where I want to spend a bit of time on. WAM Research is really where we apply our investment process, and we invest for the longer term. And we're investing through cycles. We get benefits when interest rates go down, and it means it's more difficult when interest rates go up. And we invest, as I said before, across a number of sectors exposed to interest rates such as software, retail, health care, automotive, et cetera. Now as we said in the call in early September, it wasn't just interest rates that hit these stocks. There was also war, artificial intelligence and, of course, government policy. Now I don't want to hide behind the fact that this was our toughest year that we've experienced in performance in WAM Research, largely due to our stock picking. We've come off very good years, '21, '22, '23, '24, '25, and a number of the stocks that did very well for us fell by the way, side due to unforeseen events. And unfortunately, the best example of this was -- probably not the best, but the most relevant example of this was [ 2S ], which is a telecommunications company based in Singapore. Now we've done exceptionally well of this stock. We bought it $0.50. It went to around $7, I think. And it announced the merger between itself and the #3 player in Singapore, M1. Now everything was all the research and we did the channel checks pointed to this merger happening. There was nothing to suggest it wasn't going to happen. And then about a day before the merger, a random announcement happened 2S saying that incorrectly used spectrum in Singapore. And the shares fell, I think it was 67% on the day. And that was a 6% weight in WAM Research, so call it a 4.5% hit on our performance. So we had a number of little examples like that -- well, sorry, we had a number of examples of tough stocks. It wasn't as bad as that, but we had a number of those examples. And normally, they get offset by positive announcements, whether it be a takeover or also earnings upgrades. And the problem was because it's so tough, these catalysts that happen and they always happen for us, it just became a liquidity event for investors to sell. And so therefore, the investment for has got hit very, very hard through the 26 financial year, unfortunately. Now it's a bit in there, but with WAM Capital, it's generally a 50-50 weighting between Active and Research. Now as I said before, Active actually performed okay through the 2016 financial year. It was WAM Research that really hit us hard in the portfolio. So look, in summary, and I said this before the call in early September. I want to reiterate that myself and the team are working extremely hard at the moment. We understand the payment shareholders are in right now with the dividend change, and we are working as hard as we can to make sure this portfolio is positioned in the best companies, the best industrial companies that will outperform once this macroeconomic climate comes back into our favor. So now I'll just turn to Slide 5, and I've largely mentioned this previously, just around interest rates, geopolitical risk, artificial intelligence and government policy hitting the portfolio. And I'll just move to Slide 6 and Slide 6 and 7 is looking at interest rates and how important they are to our portfolios. Now this slide show you the period from 2010 to 2018 was coming out of the GFC. Now as you can see, interest rates peaked at 4.75% and fell to 1.5%. And the small cap industrial companies did really well over that period of time. And you can see that in the red line. This is largely what we invest in, and they slightly outbred the broader market or call it the all ordinaries index in that sort of 8-year period. And these are some of the best years for the fund that we achieved. Now if we go to the next 8-year period from 2018 in the next slide on Slide 7, looking at 2018 to today in 2026. You can see COVID hitting the market, and then interest rates went to 0. We had a great year in 2021, but then interest rates went up. And we went largely from 0% to where we are today at 4.5% and likely to probably go higher over the next 3 or 4 months. But as you can see in the green line, the all other is indexed dominated by large cap companies has materially outperformed small-cap industrial companies in the red line, and that's largely what we invest in. Now the positive for shareholders is that but the market moves in cycles. We are currently in a very difficult interest rate hiking cycle at the moment. At some point, when interest rates go down, this is there will be very positive for all our portfolios. And we saw this after about a 4-month period from around sort of June to October 2025, but industrials actually outperformed the are lands index. So that's what investors need to look forward to. And as I said previously, we're very confident in our holdings and they're very -- and the actual companies are doing very well. The share prices aren't, but the companies are doing well. So we think once the market comes back to us, we'll do well. So we're seeing positive signs. Now I'm going to go through these 4 dot points here, but we're going through. I don't want investors to conclude that. I think the market -- our performance is going to go really, really well. and maybe be up 20% or something in the near term. I want to reiterate, it's a very difficult market at the moment. There is a war, it hasn't concluded and interest rates are going higher. So obviously, preface what I'm going to say with that comment. But we are seeing positive signs. The first time was the portfolio, as I said previously, is very well over reporting season. We had over 60 companies report and over 70% beat earnings expectation. That's really high for us. that's as high as it's been even in the good times. I'm not saying 70% of those share prices went up. But for the fact that [ Ampol ] is actually from the numbers perspective, doing really well, in a very tough environment, you have to ask a question, what will happen once the environment improves. That's what we've got to look forward to. The second one is around takeovers. So in 2022, the last tough period, takeovers was really the start of a small cap of the market really improving. And we are definitely seeing this right now. We've seen Reliance as Cleanaway, equity trustees, Perpetual, Energy One. So it's been a lot of companies in the last 3 to 4 months. as much as we've seen. And that was nonexistent over the last 12 months. So offshore buyers are seeing Australia is an attractive market, which is positive, which we hope can kick start our valuations in small caps. Now we're looking at sort of decade low valuations. And we have a huge amount -- like a lot of stocks in the portfolio where the share price is of low asset value. Companies such as [ Harvey Norman], Premier Investments, Cedar Woods, there's a lot of them I think the best example is Harvey Norman, where in the last 30 years, having on the share price is only twice being -- sorry, this is the third time in the last 30 years. The Harvey Norman share price is below its net tangible asset value. Now in the previous 2 times, if you invested in Harvey Norman at that point in time when it was below its asset value, if you held in the next 2 years, you doubled your money. So we -- that's why we own Harvey Norman right now. a number of other catalysts and so forth, but we think the business is in a strong state we can weather the storm and will come out stronger. And look, then finally, despite the fact that we do think there'll be another interest rate hike and potentially one, more, the quicker they go up the quicker they go down. And so we think for '27 we might -- we're hoping for stabilization rates definitely that will happen. The question will be whether there will be cuts. And certainly, I would say, Matt and Damian and the large cap team certainly think that how they're thinking for WAM leaders and WMX. So I think we're going to leave you with is JB HiFi is a great example of this. So in the '26 financial results, JB HiFi for the first 8 weeks of the '27 financial year, so from July 1, is called the middle of all this, delivered negative sales growth. The last time that happened was in 2012. And -- if you go back to 2012 and look at the next 12 months, JB Hi-Fi -- sorry, the reserve bank dropped interest rates 7x in that 1-year period. Now I'm not -- I don't want you to come off the call thinking that Oscar and Tobias and the team think interest rates are going to fall 7x. But I'll tell you what, if they're stable and potentially might go down 1 or 2x in 2027. This will be extremely favorable for our portfolio of stocks. So going to the next slide, Slide 9. And this is an example of our travel that we've done. It is the most extensive travel we have ever done as a team. It's a function of it being a very tough market. and just have a lot of uncertainty. And for context, in the February reporting season back in 2026, when artificial intelligent artificial intelligence really hear a number of the companies that we in the portfolio. I literally got on a plane the week after reporting as I've never done that before in a lot at Wilson Asset Management, but it was just to get to United States and just work out what was going on. And it wasn't just a trip that I did. I mean Tobias has been to China, Singapore a couple of times. I went to the United Kingdom. We've been across the country, Australia, numerous times, New Zealand. So we're doing as much as we can do as much work across all the industries, there are private companies or suppliers or whatever competitors trying to really get those extra angles on the stocks that we cover and make sure that we're in the right stocks for when the market comes our way. The last slide I'll leave you with is 10, and sorry, it's been a bit of a marathon, but if you look at [indiscernible], so this is showing our performance from 2020 to 2026. The last 2 times, 2020 and 2022, you can see the portfolio bounce out of what was really hard period. And 2020, of course, was COVID. '22 was the Rusia-Ukraine war inflation. '26 is more inflation and artificial intelligence. Now unlike 22, it's still tough. So I don't want investors to come off the call thinking we're going to do 18% or 26% in FY '27. The portfolio at the moment around sort of negative 2%, I think. It's underperforming the ore loads Index by a couple of percent, but it's outperformed the small industrials index, which is what we can control, which is great. But it's still a very tough environment, still very fluid. So look, it's going to be uncertain than AGM updates in November will likely be weak. But the positive thing and always what I need to remind yourself is the market always looks 12 to 18 months forward. And if the market interest rates are stabilizing or going down, it will come back to small industrial companies, and that is what we're looking forward to. So I'll leave it at that. I'll pass it on to Tobias to talk about some stock topics.

Thank you, Oscar. For many of our investors, our investment process is to look for undervalued growth companies with catalysts that could rerate the share price. And so the 4 companies you see on the slide effect the ore investment process. And these are large positions in the fund. Now the first one is Cedar Woods. Oscar mentioned this earlier, that's trading below asset backing, and Cedar Woods is a property developer, with exposure in Western Australia, South Australia, Victoria and Queensland. Now what's unique about this business is they've been very prudent and conservative in how they allocate capital and when they deploy capital. So as you know, with property, it's all about when you buy these assets, and they sort of add value to these assets. And therefore, when they finish the construction phase, then they sell these assets on market. Now we are seeing that they're reaping the benefit of those great purchases in the last result in August, they saw a share earnings go up over 30%. What's most important is the FY '27 guidance that is underwritten by presales. So the presales number was up over 25% year-on-year. So that's an example of a company that is significantly undervalued. It's trading on price-to-earnings ratio with 15% earnings growth over the next few years per annum. And again, to Oscar's point earlier, trading at below the asset value on this book. So that's one thing -- that's a company we quite like. The other company on the slide is FDC. Now FDC is a diversified fit-out and construction specialist. It's quite a large company with $2 billion of revenue and market cap is over $1.3 billion. Now I'd say recent IPO entrant it listed in July of this year. However, it's been around for over 36 years, having delivered consistent top line and earnings growth. What's unique about FDC is the fact that it's a founder-led company, 40% of the shares are owned by the 2 founders, but also another 20% owned by the employees. So 60% of the shares are owned by insiders, and that is a very large amount of alignment of interest. We called that with some of the stocks that we have. One of the benefits of FDC and water greens so good at delivering strong growth over time is the reputation and the consistency, which they've delivered these projects on time and on budget. We believe that over the next few years as we head into the Brisbane Olympics. There's going to be a lot of projects coming online and these guys will be a key beneficiary of that amount of work that's coming to the market. The other stock on there is called Megaport. Now for many of our investors, you've probably heard us talk about Megaport in the past. For those of you that's new to the story, Megaport is a global technology business that stitches together compute, storage and network to help solve a lot of that digital infrastructure challenges for many globally large enterprises globally. Now about a year ago, they bought a business called Latitude, which allow them to go into the AI compute part of the business. And as you may have read, that part is doing really, really well. We've been doing a lot of industry meetings, both domestically and overseas. One of the key trends that we are seeing in the market, and is happening in the U.S. live, is the move away from cloud back into a hybrid model. So if we take a step back, over the last 2 decades, companies around the world have been moving data from Oneness, which is effectively serviced in the office into cloud such as Amazon Web Services, Google and Microsoft. And we've been doing this for about 2 decades. With AI and the intensity of AI compute, the most optimal way to manage the data and the storage and the intensity of the AI computer is to move part of that data back from the cloud into specific service that deals with AI compute. Megaport is the best beneficiary or the purest beneficiary of this structural trend that's listed on the has a global diversified customer base with over 1,000 interconnected data centers around the world to help companies move their data from the cloud and into AI compute. The EBITDA in 2026 is -- was $77 million. Over the next 3 years, the EBITDA could potentially go up 10x to over $700 million. And that sort of growth we just do not see on the ASX and hence, why we believe that as they continue to bring more contracts and to continue that growth, the share price will be rate over time. Finally, Maas Group, MGH. We've spoken about this in the past. It's one of our large positions, to folate company owned by Wes Maas, which owns over 50% of the business. Now we're nearing the end of the completion of the sale of the Construction Materials business, and we believe Maas now is the purest and the best exposure to the AI capital expenditure boom that's going to happen in Australia. We've done an extensive amount of work here and overseas, visiting industry participants across all spectrum of the value chain. We believe Australia is very -- is uniquely placed to be able to take on the AI computer demand of the world. We have -- we're very lucky we have ample land water and with the right infrastructure build, we'll have electricity and also the rule of law. So when we speak to industry participants from the large language models and global companies, Australia is the ideal destination for them to build these AI factories, particularly in nonmetropolitan areas, that's where they need sort of the space. So how does Maas Group benefits from this? They are the preferred supplier to build the power tubes for firmer as you may have read in the papers, Firmus which is a AI factory, large factories look into list over the next month. It's backed by NVIDIA, Blackstone and a couple of large U.S. funds. Now Maas builds the power cubes for Firmus. They've already won $1 billion worth of work and as Firmus embark on their rollout of AI factories across the country. Maas will get, in our view, a lot of our work. At the same time, they also have a lot of firms shares on the balance sheet. It's around $500 million of former shares at $230, which was the last valuation prior to the IPO. So we believe Maas is the best exposure to the AI factory build-out that we believe would continue for the next 3 or 4 years.

Great. Thank you, Oscar, and Tobias, and thank you again, everyone, for joining and submitting questions. As Oscar mentioned earlier, we recently hosted a WAM Capital 2026 dividend, a results dividend and performance webinar in detail. So the recording is available on our website. to allow plenty of time for the stock specific questions that we've seen lots coming through. We're going to address 4 of the most common questions we've received on the dividend and performance first, and then we'll move on to stocks. If your question isn't covered, I encourage you to watch the recording of the webinar and we'll also be happy to speak to you afterwards individually after today's discussion. So Neil, Richard and Colin have all asked about the share price for WAM Capital. Why has the share price fallen over the past year?

Okay. So is it bidding that. And I think if you go as I said in my intro, the first 4 months of the financial year was actually very positive for all the funds, and we generated profit. The market went up. We made up higher than the market. We generated a profit. We added to the profit reserve. Now when we got to the end of October, then the net tangible assets of WAM, right, was $1.70, and the share price was about $1.90. So it was trading. The share price is trading at, call it, a 15% premium approximately to what the assets were worth. Then -- so the market's going up, we've gone up. I think where an absolute performance was sort of, call it, 10%. And basically, interest rates went up, official intelligence, war, government, and it just hit us really hard. And the of fell. So the portfolio went from, call it, plus 10% absolute to negative 10%. So that's a 20% move from the end of October to the 30th of June, quite extreme. But that means you take 20% now off the value of the portfolio. So the net tangible assets then goes from, call it, $1.70 to say $1.35. Then we've paid you to dividends. So that's $0.0775 a half, that's $0.15. So $1.35 goes to $1.20 net tangible assets approximately, and that's where we are at today. But then the question is, then why has the share price fallen so much? So remember what I said at the start was the share price is trading at a 15% premium. And this is -- as Geof has said many times, he likes by shares when they're trading at a discount to the tangible assets -- the risk is if you buy at a premium to net tangible assets, that, that premium becomes no longer. And that's exactly unfortunately, and we're all hurting here because we're all shareholders, too. That's exactly what's happened. So the $1.90 has now gone to. It's gone from a 15% premium. It's now trading more or less in line with tangible with the net tangible assets of, call it, $1.20. So there's a big movement there, and it's largely absolute performance of around 20%. And dividend. And then that's for the NTA, the net tangible assets, but then for the share price itself, then you've got to take into account the premium no longer becoming a premium. So unfortunately, that's just the way it is and how it's -- and that's why it's fallen over the last year.

Thanks, Oscar. Louise, Thomas and Dave have asked, why was the dividend reduced?

Yes. So obviously, I'm not on the board. It's a board decision, and I reiterate, it's a target. Target that's very important, and it is a very fluid market right now. However, so if you want to take it back a step and say, well, how do dividends get generated. Now if we have a portfolio and say, on the first of July, that portfolio is worth $1. And then over the course of the year, that portfolio goes up 10%, so it's $1.10 Effectively, that $0.10 profit, let's call it, just for simplistic sake, is $0.10 that goes into the profit reserve. Now let's say that portfolio pays a $0.05 dividend, and we paid a $0.05 dividend over that financial year. the $0.10 in the profit reserve and pay you a dividend goes to $0.05. So you've only got $0.05 lift in the profit reserve. Now let's say, the next year, the market falls 20%. You haven't generated a profit. So you haven't added to the profit reserve. However, you still pay your dividend. So that profit reserve, which was $0.10, then went to 5 after you paid the first dividend. You then made a loss in the portfolio because the market is down. that $0.05 that was in the profit reserve. You keep pay a dividend and some then you're at 0. And I'm trying to keep it as simple as possible. That's what's happened. And really, you go back on it. In January 2024, there was a decision to move our franking from 100% to 60%. Now franking is different from dividends. Franking, you generate from realized gains in the portfolio. So that's when we physically sell shares, dividends is from the unrealized gains that we make. Now they should more or less mirror each other, but there can be some time some timing differences. Now the fact that we moved from 100% to 60% shows you that we were very, very close to cutting the dividend in January 2024. And the reason why we didn't simplistically was that January, we had a very, very good month and that just kicked the can down the road. And '24 and '25 are great use for the business. And unfortunately, '26 was very bad, but we've kept paying the dividend, so we ate away at the profit reserve. And then the start to 2027 was a continuation of that bad environment, 26. So putting that all together, the Board is looking forward and looking 12 months forward. As it stands today, there's $0.0775 that will get paid in October, and it's given a target for $0.04 in April, May next year. So I'll leave it at that. But it just shows you that we basically ate away at our profit reserve as we're paying the same rate of dividends in 3 really tough markets, which was, of course, COVID, Russia-Ukraine war and then last year being another war in Iran. So hopeful that, I'll try to make it as simple as possible, hopefully, that makes sense.

That's great. The next question comes from Roger and Phillis. When will the share price recover?

Well, I have no crystal ball there, obviously. We'd all like to recover as soon as it can. And look, there is no doubt that we think about the share price and have done so for a as been at the company. The one I will say now, and we've said it many times on calls is that with the dividend reducing to a level as much as it hurts because there's a reduction in income. What we mean is that we should actually see an improvement in capital growth capital growth being the share price. When you pay a dividend, when the ex dividend date occurs, the share price generally falls by the value of the dividend. We have been paying a super high level of a dividend for a long period of time to the extent where the dividends that we've been paying is actually more than the share price, the growth in the net tangible assets or the share price. So this is now more equal now. So once the markets return to some sort of normality and say, on average, the market goes up, say, 10% a year, you should -- there shouldn't be -- there should be a more favorable outcome, let's say, for the share price. Now the difficulty is the total shareholder return is probably the same. It's just a better distribution between the share price and the dividend. Previously, it was more weighted or heavily weighted to the dividend.

The final question of the first slide we have is on profit reserve. I believe there's a slide that we've got to help answer this, but could you please talk about the profit reserve of some of our LICs?

Yes, that's a good question because I think what came up a bit after the WAM capital announcement was, I think some of our investors were worried about the other funds and what it meant for them. And I think it's important to note that WAM Capital is very much isolated from the other funds. Why a decision was made by the Board 10 years ago, to increase the dividend to a level which in hindsight, hindsight is a wonderful thing, I was probably a bit too high. Now the other funds, on the other hand, probably could argue have probably learned from that experience and have been gradually increasing the dividends in smaller increments over the journey. And because of that, you could see -- if you have a look at the slide and it's in the appendix. The profit -- the dividend coverage, which is effectively the profit reserve divided by effectively the evidence we're paying out. And if we look at sort of WAM Capital -- WAM Research, WAM Microcap and WAM Active, it's between 3 to 4 years. So there's plenty of buffer there. It was really WAM capital, which was the outlier there. And unfortunately, that's -- yes, we've seen the dividend get cut as a result. So what I'm trying to make here is there's much more coverage across all the funds, and you can see that in the appendix in the presentation.

Thanks, Oscar. And if any shareholders still have questions regarding the dividend rebase, or WAM Capital's recent performance. You can find a link on our website to watch the previous webinar or you could submit your question through the Q&A function and our team, including myself, we would really like to follow up with you. We'll now turn to some broader and more stock-specific questions or broader markets as well. George has asked, could you provide more detail on the scope of EVT and the ticker is EVT, their strategic review. Is it focused on the property portfolio? Or does it encompass the broader business as well? And the second part is, if it is a whole of company review are all strategic options being considered to maximize shareholder value?

Well, the answer is yes. And this is a company we've spoken about on numerous conference calls. It's been a company we've owned for a long time. It's been a frustrating one for us because it's you often see with companies where the share price just doesn't reflect the intrinsic value of the company. And there have been various reasons why this has been the case event, but it's basically stayed at the same share price for over a decade. So it's fair to say that the shareholders are probably had enough. But that was a very powerful statement in the August result. And yes, our interpretation of that is it -- originally our thesis was around certain buildings in the CBD getting sold and being realized for more than what their valuation was on the books. But now we think all options are on the table. And for those of you who don't know the stock very well, that's a large hotel business that's doing well over $100 million of earnings. Thredbo, which should do in a normal year between $30 million to $35 million of earnings. Our cinema business that I think was is finally recovering from COVID, which we used to do well over $110 million of earnings, probably doing around $60 million right now and then a suite of property. But yes, we think the business is worth well over $20, and it's currently worth $13.

George has asked a few more stock questions. IDP Education, which is IEL, the share price has fallen an extraordinary 96%. Do you think the fundamentals justify such a drop in the company's valuation and do any of your funds hold a position?

So a great example of how hard small-cap investing has been like we were sitting here in 2021, the share price was $40. And today, it's $1.50. Is that right? And if you take a step back and you go, we look at it, and we've got a small position in it because call think management is doing a very good job, a really good job. The balance sheet is fine. There's just -- everything is against them. And it's just basically coming down to immigration of international students and they're based in Australia, Canada, U.K. and small business in the U.S. And basically, all government policy at the moment is to restrict visa applications for the international students. So you couldn't get a worse environment for the company. But again, you take a step back and you go, well, actually performing quite well. It's trading at a very low valuation. At some point, there will be growth as it just gets too low and change your government policy and get a bit of growth, and that will be off to the races again. And yes, you'll see the share price grows quite a lot. So look, it's so small now to actually made it into our microcap portfolio, believe it or not. ASX-100 stop almost ASX 50, I think. So it's incredible. But a great example of how tough small-cap investing has been over the last few years.

George has also asked recently, Oscar was positive on Aspen Group, APN. Could you please elaborate further as to why you think the company is best suited to weather the current macroeconomic environment, especially in light of rising interest rates? So interest rates in the near term, you can't buy us and if you're worried about interest rates right now. Like if you're investing for the next 6 months, it's not going to do well. That's the first thing I'd say. But if you've got a longer time horizon, we certainly do. This is a high-quality business with an exceptional founder -- a group of founders. They're in a sweet spot, which is in affordable housing. The median rents of their developments around 30% lower than the medium house price, million. And this is a part of the market because -- which is basically going to see a lack of supply because of the negative gearing changes. Investors were a large portion of this market, and they just got -- so these guys are going to be what we think the last people standing. And if you take a step back and you look at the numbers, and it's a very similar story set of words where the business is performing. The share price isn't, but the business is performing. They've got a lot of presales. This year is largely complete FY 2027 financial year. 2028, the outlook looks pretty good, too. And there's -- if you look over the next 3 to 5 years, we think this business can deliver 15% to 20% earnings growth a year. Yet the shares are trading at 14x earnings, I think it is at the moment. So as soon as the market changes, history tells you when a company is organically growing like that, it probably trades well over 3x earnings. And we think it's got its own little story and the settlements are actually going to increase by 50% next year, irrespective of the market. So yes, we're very, very positive with the stock. But will go up in the near term with interest rates, probably not, but we need to be prepared because as soon as that switch clicks over and investors want to get into stocks like this. We need to have a position.

I think they've been very selective with the site acquisitions. So they've built a lot of margin of safety in a lot of these assets there for trying to ask us point a lot of that upside. You're not seeing it now, but once it comes on to the market, we can see that come through in earnings effectively.

And there's blood on the streets right now. I think that's 1 thing we've got to think about is the good companies out there, and we think we own a lot of them. They make their best decisions in tough markets. And I think all investors who read the paper would have heard about buffer in Sydney. It's a horrible situation for a lot of people but -- and private credit has a lot of issues at the moment as well. So you've got the negative gearing changes investors probably out of the market. we could be sitting back here in the next 2 or 3 years, and these guys are just picking and choosing the land acquisitions that they want to buy because there's no competition. So that's what we always -- that's when we're doing our industry work. We're always trying to understand. Tobias and I just went to New Zealand. And there's 2 companies over there, for instance, that look extremely interesting because 2 of their largest competitors could go under. Now it's tough over New Zealand at the moment. But let's say we go back to mid-cycle and all of a sudden, you've got Three businesses, 3 big competitors, and now it's all some 2 competitors. These companies will earn materially more in that period. So we've got to take a long-term view. And those are the opportunities we're seeing right now -- and again, which gives us confidence that when the market comes back to our stocks, the stocks were in our portfolio will earn materially more and will end up getting a higher valuation because of that.

I think one of the common questions we ask all the management teams is how are you playing offense in the current environment. And so it's good to play in defense in the short term, but our view is that if they are setting the business up for the next 3 to 5 years, and we'll -- our shareholders will benefit when these sort of opportunities come to fruition.

Yes, I'm going to say Cedar Woods is a great example. What was the earnings growth? They beat earnings expectations by 15%. If you have a lot at the share price, it's down 15% since this result, but we couldn't agree on in the meeting like we couldn't be happy with how the business is going. And it's trading in the last valuations that were traded off. So it's very frustrating. But again, we just got to take a long-term view, it will change at some point, and we'll do well once that happens.

Jennifer has asked. I saw Geof Wilson has been buying WAM shares, do you both own WAM and have you been increasing your holding?

So we both own WAM. And I'd say I've been quoted saying this in public presentation, so I don't mind saying it like years ago when people would ask me this question, I would say, well, look, we run WAM, well, I run WAM effectively. But at WAM is my lowest holding I still got a lot of shares, but it's 1 of the lowest that I've got in the suite of WAM products, and they go, "Oh, that does make sense. Why is that? And I go WAM is trading at a 30% premium towards their tangible assets. What I can say now is that for the first time in my 11 years at Wilson Asset Management is that WAM Capital is now trading at a discount. So WAM Capital is now my largest holding across the WAM products and is likely that holding is likely to materially increase in the next few months. So hopefully, that was a good answer. I'm not on the board, so you can't see the buying. All I can say is that I bought a lot. I've bought a lot and I will continue to keep buying because we -- this hopefully, it came through in the presentation, but we're -- this is extreme -- like we're seeing extreme stress in this part of the market right now, like -- and there's a lot of factors going against this. I can ask yourself the question what happens if they change and fundamentals come back. So yes, we're just -- we'll wait. And when that happens, it will be very positive.

Yes, a lot of late value in the portfolio, given all the earnings upgrades as well you've had?

Totally. Totally.

Derek's asked, what do you believe sets WAM research apart from other small and mid-cap funds when markets become more challenging? And how is that reflected in portfolio positioning and performance?

Look, the first thing I'd say is WAM Research, we had a bad year last year. No question. There's a lot of lessons that we could have learned from that. I think in hindsight, sometimes you can outperform. I know it sounds crazy, but some -- maybe our performance in '23, '24, '25 is inflate, if that makes sense. So we had a lot of -- WAM Research has been our best bumps for years. If I go back to -- coming out of COVID, we had a lot of the e-commerce players. And we sold those companies really well, which was great. Coming out of '22, we were positioned well in retail, which was on its knees at point in time. And then we've got some really good stock picks that our peers were there like Tobias bought 2 assets at $0.50, it went to $7. GDG, we owned at $0.50, went to $8. John's Lings Group was $1, went to $9. Like there was a lot of examples like that. And the '23, '24, '25 results were excellent. Now there's a lot of lessons we can get from last year was we -- as I said, we take -- we're investing for the longer term, perhaps a number of companies just ran out of gas and the falls that we saw in them were magnified, and I think that's the key by the market. It is very unusual for a company for 67%. And look, in the WAM Research portfolio is a 6% weight at the time, but a month earlier, I think it was like a 10% weight. So we did actually sell some. And look, we had 9 that was going to happen. But that was an extreme example. Webjet got investigated by Spanish Tax Authority, sorry. a company that was definitely like this. But I would say like with Webjet, look, you get those things in a year like we've invested in smaller companies, they're not BHP, not come off back, random things happen. So you get that in the year, but it's offset by something like a takeover -- and we just didn't have -- no 1 was taking over companies last year. Interest rates go up. There's a war, there's artificial intelligence, people like people there for Webjet's example, people are thinking, "Oh, there's no such thing as a travel agent in 20 years' time, why would I buy a travel agent." So that was just wasn't there. And so what I was trying to say before in the earlier part of the presentation was some of the cracks that you get from making mistakes over the course of a year. weren't covered over last year. Basically, the performance that you saw was just basically everything being hit. So look, it's not going to hide behind the fact that we had a tough year, no question. A lot of that, I think, was -- we think was because we had such good years previously, and we should have probably sold a few names, and we didn't. So there's lessons there. But in terms of the way we invest, like it's not going to change. And it's proved to outperform over the longer term. And despite the bad year, even if you have a look at the numbers, we're still outperformed, and I think it was like 4% a year or something like that since inception. So don't get me wrong, it was a bad year. But yes, as I said, the team is excited and working hard as we can rectify it.

And I think to answer, Oscar, it's the cadence of idea generation. We think over the next few years, when our portfolios perform, it's because of a new cohort of companies that we can get in early and then does well as the businesses grow and rather than effectively investing in businesses that have pretty high valuations and sort of reduced the valuation and expecting these valuations to come back. So I think when we look back I think maybe a decade ago when we got on to the software as a service trend pretty early. It takes a bit of time for a lot of these global trends to come into Australia. Our job is to find the right companies. These companies have to be undiscovered and when there are incremental buyers as these businesses deliver. But let's say, Cedar Woods -- when the macro turns, for example, the share price go up. And a lot of our peers wouldn't have it and if they shares, the share price goes up. So we want to be in the right whole cohort of companies that sort of gives us that next leg of growth.

Steve has asked, how have you adjusted your investment strategy to hedge against the persistent momentum trade driven by ETFs and superannuation funds that is working against active managers?

That's a great question. It's getting harder. There's no question. Yes, that -- and we saw it -- and it will keep happening. As I said before, we're long-term investors. And we've got to take -- we've got to roll with the punches. There will be periods where there's lower interest rates and the herd, i.e., ETFs and so forth will come flocking back because they want to buy retailers, they want to buy automotive companies, they want to buy tech companies. But then when interest rates go up, they sell those companies and they buy resources, they buy oil and gas and they buy financials. And unfortunately, that's the market. And it is getting magnified every year now because active fund managers are losing more. There's no question we got impacted by active fund managers particularly on the research side of the portfolio because the research part side of the portfolio is fundamental. It has an investment process. It's very strict, and a lot of other funds have a similar investment process to us. So if there's a $1 billion small cap fund that invests the same as us and somebody loses all their money as it goes into passive, that $1 billion of small caps get sold and create selling pressure on all your stocks. So there's no question that, that impacted our portfolio and continues to do into '26 and '27. Now the positive again is if you get that swing the other way, it can magnify your gains. And I think that's important to understand that. And I think lessons from 2026 for sure is when we get that benefit is to realize you're getting that benefit and potentially take some shares -- to sell some shares and take it off the table if that makes sense. The reverse is happening to you. And maybe in hindsight, we didn't do that enough through '24 and '25. But again, if we didn't hold us at a big weight, then we wouldn't have had the performance that we did. So it's hard. But yes, look, as I said, that is big structural impact on the industry. There's no question, no question, particularly in small caps.

And I think there are a lot of companies that's not in the index that's sort of coming up. So our job is to find the right ones. -- if they execute and the catalysts play out, hopefully, the share price will go up and then the market gets large enough for there to be sort of a risk of getting into the index and then you see the follow-on buying from the ETFs. And in these cases, what we see is it's almost a permanent rerate in the valuation of these businesses. So historically, when a company delivers consistently over time, you see the share price sort of trend up. But now those with passive money sort of takes a bit of time for it to really come up. And then when it does, it's quite exponential in terms of the share price chart.

But as an example, there was a fund manager 2 weeks ago. I think it was around $2 billion and they're closing the doors. And so it's not like click your fingers in that $2 billion gets bought. It creates selling pressure all the stocks, and we've got a number of stocks that and every single one of them is down probably 15% this month. So that's a headwind. Now I don't think I've seen a fund win money for a while. That would be nice. So the point I'm trying to make like it can't happen in reverse. So you're just going to be across the flows and what's happening and making sure that you're taking advantage of it. Now unfortunately, we're just in a tougher period of the market right now.

We also have the benefit of having a closed pool of capital as well so you're not forced sellers.

Exactly, exactly. And that's why we can make long-term bets and ride through a cycle. I'm telling you right now, at Cedar Woods, we keep bring it up, but I think it's a painful one for us because the company has performed really well. It's trading at a price multiple of 6.5x, should be at 12. And if we're confident in the earnings of the company, irrespective of what the interest rates are doing, we think we can grow 10%, 15% a year. So at the time, the earnings go up 20%, let's call it. And then the market wants to put 12x earnings on the stock. That's like 130% upside or something like...

We've seen takeovers in the space.

Exactly. So it's got to be patient. It's hard and you've got to be patient.

Joseph has asked, does WAX, so WAM Research, Mirror and Track a certain portion of WAM Capital's portfolio? Or is it completely independent with its own strategy? Maybe it is worth touching on the 3 strategies today.

Okay. So years ago, will probably from the prior 2023, there was $1 of a company in WAM Capital, there was $2 either on WAM Active or $2 in WAM Research, if that makes sense. So a 1% position in WAM Capital was 2% in WAM Research. And broadly speaking, 50% of WAM Capital was Research, 50% was Active. Then we decided because of the strategy and the mandate of WAM Active from years and years ago, probably wasn't -- we weren't it need life of its own. So we split off WAM Active. That's now headed up by Shaun Weick,still in our team. And that's how little life of its own now. Now for WAM capital, it's still 50-50, WAM Active, WAM Research -- sorry. For WaM Capital, it's still 50-50 Active and Research, and it's still that 1% and 2% dynamic in man. So I'd say generally, how we run the portfolio, is it starts with WAM and then goes to WAM Research. So we're always thinking about WAM, but WAM Research will be more concentrated than WAM Capital, if that makes sense.

Could you maybe say what the 3 like broad investment strategies are for like WAM Research, WAM Capital and Microcap?

Yes, no worries. I'll start with WAM Active. WAM Active is across all sectors, all stocks the whole market is just catalyst investing. So if there's a strong catalyst buy into it, the catalyst isn't there self. Then -- and that would be things like -- and then catalyst like an acquisition, earnings upgrade divestment, initial public offering, something like that. WAM Research is more fundamental. It's our investment process. And so we're looking for undervalued growth companies with a catalyst, and we want a price-to-earnings ratio that's less than the growth of the company. We're seeing some quite large distortions there at the moment. We want a strong management team. We want a strong company in its chosen field of expertise, and then we need a catalyst to rerate the company. And so that's WAM Research. WAM Capital is 50% WAM Active, 50% WAM Research strategies. And when Microcap is the same as WAM Capital, 50% active, 50% research, but just looks at the company's less than $300 million market cap.

Great. Thank you. Tony has asked, why have you been selling Integral Diagnostics, IDX?

Well, sometimes you need to take some profits. It's been a tough stock last last 12 months. We really like the stock. Materially undervalued example what we're seeing in public markets at the moment, transactions in radiology and private markets go for about 12 to 13 earnings. IDX is currently trading at, I think, about 7x earnings. There's a variety of reasons for that. But at some point, we think it will get taken over. But it did it in lease of life. It's got a new and potentially they could be divesting their New Zealand business, which we think will be very positive for the stock. Why we've been selling it? We set it around 4% to 4.5% of the company over the last, call it, 2 or 3 years. The share price fell to about $1.80. At that point, we bought more shares and went to around 6% of the company, and that's why you saw the change in substantial notice come out. We were buying, I think, $1.80, $1.90 or something. And then the shares have actually rallied following a better-than-expected result and we sold some at $2.35, I think it was, which means we're below the substantial change. It doesn't mean we're out of the company. We're still sitting at about 4.5% of the company or something like that. So if the shares fell to be back to $2, $2.10, we'd be buying it back. So that's one thing to be mindful of. Don't necessarily look at our substantial changes and go if it becomes substantial on the stock, that means we're buying it, if we see substantial, it means we're selling it, we're out of the stock. That's not the case. It's because that threshold is 5% of the company. So that's something to be mindful of. And it does -- just because we go substantial company over 5% of the shares don't necessarily mean that it's the biggest position in WAM Capital, we how to buy us and I look at the portfolio, it's about the weighting of the company in the portfolio. We don't care about the percentage of company that we are. We do monitor but it's more important getting the right weighting of that company in your portfolio, which is different.

Michael has asked, WAM Microcap is a substantial shareholder in EDU Holdings, ticker is EDU. Could you please give your views on the company and its future prospects?

Yes. So EDU Holdings, effectively for those that's not familiar, with the name is effectively, I think of it as a -- the company has put icons institutes effectively a university, where they take students, both domestic and international to do courses such as hospitality, nursing courses where you get a bachelor's degree. At every stock that we have in the fund, it probably has the lowest PEG ratio. It's currently trading on around 5x price-to-earnings ratio with 15%, 20% of earnings growth, which they've consistently done with a net cash balance sheet again. So to Oscar's point, it's -- I think in any other markets, the stock would be...

It would have tripled.

I would have probably gone a lot harder. It's a found on our business. The university intake is about 1% of the total university students and taxes every year. Now obviously, there's a lot of noise in terms of as we touched on with IDP, However, they are a very small part of the market. They're very specialized in the courses that they deliver. And the students that undertake these courses, they actually have to pay out of pocket. So they are effectively during these courses over a period of 3 years or 4 years, get the degree to enable them to find a job in Australia. And so from our perspective, the company has done an exceptional job of managing through I guess the macro volatility, continue to grow their earnings per share growth. It's a very high dividend paying company as well and a very conservative balance sheet. So our view is, as they continue to launch new courses and as they continue to grow the pool of students that's coming through their universities, the share price will go up with the earnings growth.

Jenny has asked, I know Trio, AYA, was the top holding in most of the WAM strategies, but it looks like it's now being reduced. Can you please comment on your current thoughts? Was it following EIQ or another decision?

No, not particularly. Look, I mean, the EIQ announcement clearly wasn't good for Trio because it just raises question marks around the FDA approval in the United States. But it looks completely different field of expertise. And look, we're very, very confident on the stock. I think the stock did exceptionally well as to my earlier comments, sometimes stocks can go really well. I think we went up like 4x last year, 400% or something like that. And we thought it was appropriate to sell a few shares into the index change, which was last week, where there's a lot of passive buying because it just entered the ASX 300. So I wouldn't read into it too much. It was more there was a liquidity event, but the shares fall will probably keep buying. And we've done a lot of work on the stock visited them in 1 of their hospitals in Atlanta back in March. And yes, this is an enormous opportunity for this company. So yes, very positive on it. Yes. And the ex Chief Financial Officer of Pro Medicus has recently joined it so it gives it some credibility, which is great. So the management team is doing a good job. Yes, I wouldn't read into it too much very bullish longer term.

Chris has asked you hold Imricor Medical Systems IMR in your Microcap fund, although it is far from a microcap. Why do you continue to hold it in the fund or have you been a recent seller?

I, well can answer that easily. So the order Microcap, it's when we first buy the shares. So in recall, it was on its knees when we first bought it, I think the market cap might have been lot $50 million. It's raised a bit of money since in the share prices go up. So we're not forced sellers of these companies, Zip Money businesses in WAM Microcap, because we bought it really well years and years ago. So yes, as long as it's less than $300 million market cap in terms of free float, we can own it, and we're not for sellers. But do you want to talk about that?

Yes. So Emeco has done exceptionally well, and it actually went into the index is very similar to AYA. So we actually took the opportunity to sell some just with the liquidity. But what they've actually done behind the scenes, especially with the recent Partnership is nothing short of amazing. One of the uniqueness of this business has been around for actually over 2 decades. So the technology has been tested tried for a very long period of time. If we read a lot of the use cases, both in the U.S. and also in Europe for their technology, and this is the fact that as investors is as how we, I guess, gain confidence on the technology and on the stock is the doctors and the specialist doctors are raving about this technology. So we think as they continue to deliver on that, the share price will get re-rated. Again, as with AYA and EIQ. It's a long journey, and it takes time and the share price would go up or down and we sort of take out opportunity to either add to a position or reduce or take profit.

And again, that was a company I spend a whole morning with in San Diego at a Children's Hospital, looking at their technology and talking through ablation and I guess, effectively what they were disrupting in time. And the doctors we spoke to at the time were incredibly supportive. So there's a long journey ahead of it. But again, we really like the story.

We've got a few questions on Firmus. Maybe I'll ask Ben's one first, which is how big the holding is and other ex crow restrictions, and I've got the exact numbers if that's helpful. Firmus was 2.4% of the portfolio at the end of June 2026 and 1.9% at the end of August. But I'll throw over to you for maybe the escrow question.

Just quickly, yes, so we sold a portion of our Firmus holding. Just to take some profits really because it's -- I mean, it must have been it's been Tobias and Shaun first saw them and the valuation was, what, $4 $43. And within a year, it's now the valuation is $230. So we sold around -- it was an initially -- the initial holder was $10 million. and we sold around $30 million. So we've made effectively 3x, but that's only a portion of our investment. So effectively, well, we've got free carry, I guess you can say, on the remaining investment, but it's now in WAM Capital. It's probably at a $230 share price. It's around $35 million, I think, 2% weighting. And clearly, there's a lot of news we're actually seeing them today after this call, but there's a new play that will be coming in on stock in the next week or 2. Escrow, we don't know yet is yes, we don't know. We assume there will be some because it's going to be a decent raise, but we'll wait and see.

And David has also asked, will you be selling post IPO, but I suppose it will be depend on that then?

Well, it's depending on the process and the catalyst ahead of it. I mean do you want to talk about what we think like space, like, I think very interesting.

There's obviously, I think there's an out of confirms every single day. But because it's a private business, I think a lot of the achievements have been overlooked because you don't get the regular updates with listed companies. And effectively, there's a lot of, I guess, conjecture over time. But what they've done, I think over the last couple of years have been nothing short of amazing in terms of when was the last time you've had a partner as large as NVIDIA, Blackstone that's come in and put that amount of equity into an Australian business. And what they've done incredibly well has been able to put together effectively a business that we believe would be, I guess, the go to business in Asia Pac in terms of the AI compute demand. People often ask us in terms of what is their competitive advantage. I think engineering, I think I think it's almost with a lot of the big numbers is the fact that they really come from an engineering background, if you speak to the individuals involved what they've done, and this is having done our due diligence, what they've done on the engineering side or the back end to ensure that their technology is the most efficient in running AI compute, which is the singular focus and scale, I think that's quite unique. If you think about a lot of the new clouds globally, a lot of them start off as Bitcoin miners because with Bitcoin miners, you effectively want to achieve the lowest cost of energy. And for that after that is in the middle of Norway. Now when NVIDIA came along and effectively handed out the blueprint to how to build NVIDIA AI Giga factories. They've effectively partnered with the likes of Firmus to be able to roll out their ambitions in turning these AI factories, the blueprint into actual assets. And Firmus have been from all the feedback we've had, NVIDIA is sort of very happy with initially the engineering capability and the innovation they've created as part of this journey, but also how they've executed along the way to not only get sites, get approvals, build, commission their assets, but also attracting capital and attracting some of the biggest names in the world. to this company. So I think once the prospectus becomes public, and I think the IPO pipeline is sort in the time frame is sometime late October, we'll see a lot more on that and hopefully get the chance in the sun.

Maybe to summarize, Sally has asked for shareholders with a long-term investment horizon, what gives you the greatest confidence in Firmus' ability to deliver attractive returns over the next 3 to 5 years?

So I think in Australia and particularly Firmus is more than just Australia now, given they've won very large contracts in Malaysia and in Indonesia with OpenAI, and they've obviously done Meta. I think that's public now and NVIDIA are big customers. So these are proper, largest companies in the world and backing Firmus. Why is this attractive for us? Because we believe if they can continue to deliver, there's no reason why they can -- the large guys will use them to expand the footprint. Australia is very uniquely placed, but also Indonesia and Malaysia. These are areas that will take on a lot of capacity to be able to service the significant growth in AI demand. If you saw what NVIDIA was trying to do maybe a couple of months ago, with the $500 million of financing agreement. Effectively, they believe the chips are assets, and therefore, they could be lent against by banks and sort of other institutions to demonstrate this to have an ample amount of data. So if you think about the 6-year-old chips, the pricing of those chips are still going up, even with the newer generation of chips. And so the biggest shift, I think, in perception over the next few years will be the fact that due to the significant increase in AI demand. The value, the intrinsic value of these chips, even the older generation chips are actually significantly higher than what the market is attributing value to. And so their ability Firmus, the ability to be able to not only roll off the existing contracts, but actually make a significant amount of sort of returns from that initial CapEx base is going to underearner that sort of return on capital equation.

Andrew is asked, what's your current view on 2S, to UA, and have you heard from the further from the company in relation to the bridges in Singapore?

Yes. Great question. Actually, to us is reporting its results tomorrow. We continue to like the operations of the business. They continue to win share. Now obviously, the regulatory uncertainty is what's holding it back. We continue to have 2S in the fund. But we will find out a little bit more tomorrow in terms of where that is at in terms of the regulatory outcome. I think the -- if you look at the business now, 50% of the market cap is actually in the cash, which they raised as part of the acquisition. So that's still sitting on the book. The other 50% of this market cap is effectively what the market attributes its value. to the rest of the business, which is about effective 11%, 12% of the Singaporean mobile market. We think that is significantly undervalued. However, when would the share price go up? I think we need to see the regulatory effect up and then I think people will be able to value that part of the business more appropriately.