Territory Stories

Sunday Territorian 7 Nov 2021

Details:

Title

Sunday Territorian 7 Nov 2021

Collection

Sunday Territorian; NewspaperNT

Date

2021-11-07

Language

English

Subject

Community newspapers -- Northern Territory -- Darwin.; Australian newspapers -- Northern Territory -- Darwin.

Publisher name

News Corp Australia

Place of publication

Darwin

File type

application/pdf

Use

Copyright. Made available by the publisher under licence.

Copyright owner

News Corp Australia

License

https://www.legislation.gov.au/Details/C2019C00042

Parent handle

https://hdl.handle.net/10070/854955

Citation address

https://hdl.handle.net/10070/855006

Page content

SUNDAY NOVEMBER 7 2021 BUSINESS 31 V1 - NTNE01Z01MA BUY RPMGlobal Holdings (RUL) Though the share price of the mining software company recently eclipsed $2, it could still be a takeover target as its revenues recover post-Covid. Medical Developments (MVP) Supplies the famous green whistle seen on sporting fields for short-term pain relief. With ex-CSL executives in charge, success overseas could produce a big increase in profits. HOLD Lovisa Holdings (LOV) Its share price has increased nearly nine-fold since last year, but theres still scope for capital gains if its successful overseas. Auckland International Airport (AIA) International travel is beginning its recovery as borders open to vaccinated travellers, which is good news for this company, which relies heavily on international passenger traffic. SELL ALE Property Group (LEP) The pub group is under a takeover offer. Were not expecting a higher bid so consider selling for new ideas. Sydney Airport (SYD) The consortium bidding for Sydney Airport looks like it will succeed, so well be forced to sell whether we like it or not. Chris Conway Marcus Today BUY Macquarie Group (MQG) Recently reported a fourth consecutive quarter averaging $1bn net profit after tax. It beat expectations and indications are for a strong second half. Life360 (360) Delivered a strong quarter and is much closer to break even than previously anticipated. Doing very well at attracting eyeballs and converting from freemium to paid subscriptions. HOLD Reliance Worldwide (RWC) Benefiting from renovation activity in the US. Its acquisition of EZ-FLO in the US will allow it to expand into new segments. Resmed (RMD) Reported better-than-expected results, with revenue up 20 per cent and ahead of expectations amid an environment of constrained component supply. SELL Marley Spoon (MMM) Was smashed more than 30 per cent after downgrading revenue guidance. A huge pandemic beneficiary thats on the wrong end of the reopening trade. Westpac (WBC) While its almost sacrilegious to sell an Aussie bank, Westpacs results were not good. Revenue down and costs up a sure-fire share price killer. Nathan Bell InvestSMART Solomon Lew has Myer within his reach, but does he really want the prize exactly be petty cash for a billionaire like Lew another 10 per cent might cost him $50-60 million, 15 per cent closer to $100m if he really, sincerely, wanted Myer AND really, sincerely, believed he could make it more successful and boost its share price, betting maybe 10 per cent of his net worth would seem a good punt. He could go straight to 20 per cent by paying anything he liked to anyone. After that he would have to make a formal takeover offer or be limited to buying 3 per cent every six months. So you can see he could get to 26 per cent in a single year and to 32 per cent in two years. IF he sincerely wanted Myer and was prepared to spend the money. Indeed, if hed started back in the mid-2010s, he would have been inside the Myer boardroom and sitting at the head of the table long since. He would also have had an even more stressed 2020, given all his other retail businesses. Although, as it turned out, they all sailed through Covid brilliantly with a little help from Josh Frydenbergs JobKeeper and, somewhat more involuntarily, also his landlords. As indeed, did Myer. JobKeeper was critical to maintaining cash flows through all the closures, especially in hometown Melbourne; and even more importantly keeping staff connected to the business: the absolute core point of it all. While I doubt that Myer chairman JoAnne Stephenson and CEO John King would quite see it this way, the brutal lockdowns might actually have been the making of Myers future, by doubling its online business. In 2019 Myers online sales totalled $262m and comprised just 10 per cent of total sales. Both those numbers doubled. This year online sales were $540m and 20 per cent of the total. Provided these numbers can be broadly sustained after Covid, the growth is very significant. First, online sales would now be big enough to matter in the overall group scheme of things. Online sales growth could actually deliver overall sales growth. Secondly, a $500m business would have critical scale, on both the costs side and the revenue side. It also plays out into operational efficiencies and dynamics across the group. Now equally, ironically, the Myer of 2022 might actually give Lew more confidence that the risk-reward ratio of spending $100m to seize control has actually swung in his favour compared to back in 2018. And, as I say, he could still do it quickly, within a year. But, if he did, would he also be like the dog which caught the car? Thats catching it the second time, after seizing control of the giant Coles Myer group back in the 1990s, from first entering the Myer register in the 1970s. But now not really knowing, having caught it, what to do with it. Its a tax haven in our backyard retiring at age 65, it would be $242,000 versus $354,000. BIGGER BAKERS? With the above, weve used someone on the middle marginal tax rate of 34.5 per cent. The strategy will work even better for those earning in the next tax bracket of 39 per cent. And thats because they would lose more of the initial $10,000 in tax before they start baking. So, what about those on the highest marginal tax rate of 47 per cent? Well, yes, it would be even better, but The problem for those on the top marginal tax rate is that they have a few extra restrictions put on them. Firstly, if their salary package is more than $250,000, they pay extra tax on some or all of their super contributions. Instead of being taxed at 15 per cent on the way in, it gets taxed at 30 per cent. (This is known as a Division 293 tax bill.) A second obstacle is that they will struggle to put more tax-effective money into super if they are employees. Take an employee earning $200,000 a year. Their employer already puts $20,000 into super for them. With a total limit of $27,500, they can only contribute an extra $7500. Its still generally going to be worth it for them, because the ongoing tax on earnings in super is still a maximum of 15 per cent. They might as well have that money sitting in super paying less tax. SMALLER BAKERS? The strategy doesnt work as well for those on lower incomes. But dont misread that! That is NOT to say that super is no good for lower-income earners. If your income is below $45,000, your maximum tax rate is 21 per cent, so its not much more than the 15 per cent inside super. Incomes below $18,200 dont pay tax. Governments give other super incentives to help here, such as refunding the 15 per cent super tax for those earning less than $37,000 and offering a co-contribution of up to 50 per cent for contributions of up to $1000 for those earning less than $56,112. BAKE OR BUY? Learning how to get the biggest or best super cake can be great fun. Reading, then baking, those rules to your situation can be rewarding. But if youre not prepared to do the baking, then you should still buy the cake. And by that I mean get advice. Financial advisers bake these cakes for breakfast. Bruce Brammall is both a financial adviser and mortgage broker and author of books including Mortgages Made Easy. Email: bruce@brucebrammallfinancial.com.au. Learning how to get the biggest or best super cake can be great fun. Reading, then baking, those rules to your situation can be rewarding.


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