12 Oct 2021
Click here for a PDF of this newsletter The ASX sustained a monthly fall of 1.6% in September 2021 for only the second time in 18 months with the previous fall (of 3.4%), coincidently, occurring 12 month prior in September 2020. Happily the Cyan C3G Fund did not follow the broader market lower finishing September with a monthly rise of 3.4% and taking the return for the quarter to 6.1% (all after all . Our comprehensive returns and downloads of our unit price and distribution history since inception are available on our website at: Performance • (cyanim.com.au)
The market’s confidence was dented on a few fronts including the Chinese property developer Evergrande’s financial woes, increases in interests rates as inflation concerns emerged and a significant retracement in the iron price which weighed heavily on the likes of BHP, Fortescue (FMG) and Rio Tinto (RIO). IRON ORE However as the light at the end of the Covid-19 tunnel brightens as Australia tracks further down the road map to re-opening, investors looked favourable on the outlook for the travel and hospitality sectors. AUST 10yr BOND RATES Click here for a PDF of this newsletter Month in review As anticipated at the end of August, the Cyan C3G Fund benefited in September from a couple of newly listed IPOs along with some positive performances from existing holdings. Zoom2U (Z2U +147%) a technology driven courier platform (analogous to Uber but for deliveries) had a extremely strong IPO debut. Prior to listing, Z2U heralded major corporate clients such as DHL, Nespresso and Pact Group, but shortly after their IPO the company announced new client contracts with Bing Lee, A-Mart Furniture and Telstra. In addition, the market was no doubt beginning to appreciate the material tailwinds the business is enjoying from the extended lockdowns in VIC and NSW, competitor StarTrack’s industrial action and the mounting pressures on the Australia Post system (Australia Post delivery delays revealed) that is likely to result in significant increases in Z2U’s 2021 revenue.
Our investment in Touch Ventures (TVL +21%) ended the month at a 21% premium to its IPO price of 40c and at a 142% premium to our original pre-IPO investment price of 20c 12 months prior. Whilst this was obviously very positive financial outcome for the Fund we were honestly expecting a stronger debut given their strong association with Afterpay and attractive investment portfolio. Graeme Carson wrote a comprehensive article on the company in Livewire Markets Touch gives investors a slice of Afterpay talent which clearly lays out why were retain such optimism for the company. In July we made a small investment in online market research company Pureprofile (PPL +106%) which really kicked ahead this month. The company had been completely out of favour since it listed back in 2016 but a recent change in management, reduction in debt, a partnership with Flybuys and a return to profitability along with some targeted investor marketing has seen the market embrace the company. Raiz (RZI -12%) – whilst the shareholder spat that we discussed last month between the founder and some of the board has been resolved, RZI was no doubt impacted by the retracement in the market and the impact on its level of FUM. As at early October RZI reported a September increase in FUM of 0.3% with customer numbers still growing strongly up 5% over the month and the stock has rebounded accordingly. Media Cyan featured again in Ausbiz during the month – all of our Ausbiz appearances are listed here. As mention above, we wrote about Touch Venture (TVL) in Livewire Touch gives investors a slice of Afterpay talent All details are in the ‘News’ section of our website. Outlook We fully expect further positive newsflow from both Touch Ventures and Zoom2U; gaming developer Playside Studios (PLY) has new titles being released this month, Maggie Beer (MBH) can be expected to trade very strongly this quarter particular due to its recently acquired online hamper business Hamper Emporium; and we believe an opening up of the economy to benefit holdings such as venue owner and micro-brewer Mighty Craft (MCL) We also have two more pre-IPO investments that are well down the path of a listing before the end of calendar 2021. Dean Fergie and Graeme Carson |
