Site visit – New Zealand

We spent two days in New Zealand on 28-29 July visiting investments, looking for new ideas and narrowly avoiding the police chasing a stolen car the wrong way down a motorway! Luckily nobody was badly hurt.

On the 28^th in Auckland we visited two radiology sites that belong to Integral Diagnostics (IDX.AU) in which we have an investment. We are big believers in the future of imaging (particularly MRI) which we believe is a key element of preventative medicine. This helps increase efficacy and lower cost.

In Auckland we also visited Mainfreight (MFT.NZ) and Auckland Airport (AIA.AU, AIA.NZ).  Mainfreight is one of those rare companies that succeeds and succeeds in the toughest of industries – transport and logistics. They succeed because they are very good at what they do which is consolidate less than container loads (LCL) of freight and move it efficiently around the world. They have exceptional alignment and retention of team members (never staff!!), almost never issue equity and invest for the long term (they own their long term terminals). They have successfully expanded in this industry beyond New Zealand which is no mean feat. Many would consider the statements that adorn the reception area as hokey. We love them. It’s the key to this company’s success. They really do walk the talk. The depot was spotless!

We love visiting Auckland Airport. It’s a long term holding and one of our most successful investments. It’s a great asset and a key part of New Zealand’s tourism infrastructure. They have some significant expansion plans over the next decade including a second runway and shifting the domestic terminal so that it is adjacent to the international terminal. Shorter term investments include the recently announced on-site hotels (two more) and improved road access.

On the 29^th we spent the day with Synlait Milk (SML.NZ) at their investor day in Dunsandal outside Christchurch. This is also a remarkable company. It takes a decade to get to where they have got to and it shows. The level of automation and health and safety around their dairy processing is essential to this operation. It is worth reflecting that the key product they make (infant formula) is the only source of nutrition for many a small vulnerable human and therefore standards must be peerless. They have recently launched a program called “lead with pride” which pays farmers a higher rate for their milk if they produce in a more sustainable way. They describe it as an investment “For a Healthier World”. Which nicely says it all. It also gave me a great opportunity to wear hi-viz in a milk shed and take a picture that NZ tourism would be proud of.

This is the third time in five years that we have visited this site and it continues to expand. We look forward to visiting the new site in Pokeno (near Hamilton in the North Island) which is about to open. (Pretty please – Synlait).

Author: Stephen Wood, Principal and Portfolio Manager.

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