Antares Equities on investing in discretionary retail and property

Funds Management

by Jessica Amir

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Antares Equities Listed Property Fund Analyst and Deputy Portfolio Manager, Vikrant Gupta talks what discretionary retail and shopping centres stocks to watch and what to expect.

Jessica Amir: Hello I’m Jessica Amir for the Finance News Network. With me today from Antares Listed Property Fund is Analyst and Deputy Portfolio Manager, Vikrant Gupta. Hi Vikrant and welcome to the Network.

Vikrant Gupta: Thank you Jessica.

Jessica Amir: First up, can you tell us about your role in the Antares team?

Vikrant Gupta: I have been working as an equity analyst for the past six years, and I’m the Deputy Portfolio Manager of the Listed Property Fund. In terms of the sector coverage, I look after the retail and property sectors and contractors.

Jessica Amir: How have discretionary players such as JB Hi-Fi Retail (ASX:JBH) and Supercheap Auto performed, during reporting season. And can you tell us, what’s the outlook for other discretionary players?

Vikrant Gupta: Contrary to market expectations, they performed really well. The results were in line or better and hence, they outperformed the market returns over the reporting season. That said the outlook from our perspective is negative, considering the macro headwinds from rising interest rates, falling house prices, rising fuel prices. Which is putting pressure on the consumer to spend, so they don’t have the ability or the willingness to spend, going forward.

From a medium term, Inc. (NASDAQ:AMZN) has come in as a competitor, which is going to put pressure on existing retailers. But from a long-term perspective, retailers with scale such as JB Hi-Fi, which is selling $7 billion of electronics and home appliances, are going to withstand the competition better, as they reinvest into the portfolio, both online and offline.

Jessica Amir: In the retail shopping centre environment, how are landlords thinking about their shopping centre portfolios?

Vikrant Gupta: The environment is tough; a lot of spending is going online. For every $10 that is spent in Australia, $1 is spent online and $9 is getting spent in physical stores, but it is changing dramatically. So landlords are trying to learn from offshore experiences. They are trying to improve the quality of their portfolio, by selling the lower quality assets and reinvesting those proceeds, into higher quality assets. At the same time, they are making it better for the consumer in terms of experience. They are investing in leisure, activities and food and entertainment which should drive foot traffic going forward.

Jessica Amir: Lastly Vikrant, what do you like in the property sector space, given that you have got insights into both retailers and landlords?

Vikrant Gupta: We are in Scentre Group (ASX:SCG), which is a high quality operator and has high quality assets in good locations. They actually own all the Westfield shopping centres in Australia. So think of Bondi Junction, or think Doncaster in Victoria. They have been reinvesting into their assets and they have been working with the retailers, to give a good experience to the shoppers. The management is proactive, they have been ready to take initiators such as Afterpay (ASX:APT). They are one of the major landlords to install Afterpay across their platform.

Jessica Amir: Vikrant Gupta, thank you so much for your time.

Vikrant Gupta: Thank you Jessica.

Jessica Amir: And thank you for watching.


Jessica Amir

Finance News Network
Jessica joined FNN in January 2017 after having worked in financial advising for seven years and in TV journalism for seven years, specialising in finance, equities and analysis. She has interviewed former Prime Ministers of Australia, Tony Abbott, Julia Gillard and Kevin Rudd and ex Treasurer Jo Hockey. Jessica has worked as a journalist with Sky News Business, ABC 1, ABC's The Business, ABC24 and has also been a regional Channel 7 and 9 TV reporter with Prime7 and Win News.