Investment Pitches

Pitch Summary:
Ingenia Communities (ASX: INA -5.0%) affirmed solid FY26 momentum at its AGM, reiterating guidance for 10–15% EBIT growth and underlying EPS of 32.5–34.0 cents. The refreshed board and management team continue to deliver, supported by structural tailwinds from ageing demographics, accelerating land lease development activity, and operating leverage from scale. New community commencements planned for FY26 support a targeted 5-year settlements CAGR of 10–15%. Our holdings in Ingenia alongside Lifestyle Communities reflect conviction in the long-term fundamentals of Australia’s land lease community sector.

BSD Analysis:
Ingenia sits at the intersection of seniors housing and lifestyle living, offering flexible accommodation formats. Demand benefits from aging populations and housing affordability pressure. Development returns are attractive when execution is disciplined. Rental income provides stability while new projects add growth. The market often underestimates how sticky these communities become. Rising rates impact sentiment more than fundamentals. Asset quality and location selection matter enormously here. Ingenia has built a repeatable model. This is yield plus growth in an overlooked corner of housing.

Pitch Summary:
Lifestyle Communities (ASX: LIC -12.0%) provided an update at their AGM, building on the steady start to FY26 reported in the Q1 trading update. The business has now completed 93 settlements year-to-date, and the updated contract position implies ~30 additional potential FY26 settlements versus the October update. Inventory continues to trend lower, combined with completion of non-core land divestments resulting in a material improvement in net debt. LIC refinanced its debt facilities, extending tenor and improving covenant flexibility. LIC also announced it will offer all existing homeowners the option to transition to the new DMF model once the VCAT appeal is determined. We remain constructive, supported by structural tailwinds from ageing demographics, balance sheet deleveraging, improved settlement visibility and optionality from the VCAT appeal.

BSD Analysis:
Lifestyle Communities operates affordable land-lease housing for retirees, a niche with powerful demographic tailwinds. Demand is driven by downsizing and housing affordability rather than speculation. Cash flows are long-duration and inflation-linked. Regulatory scrutiny creates headline risk but has not altered core demand. Development pacing affects earnings timing, not asset value. Investors worry about policy changes, yet supply remains constrained. The business model is capital intensive but defensible. Over time, rental communities tend to compound quietly. This is real estate driven by demographics, not cycles.

Pitch Summary:
Baby Bunting (ASX BBN: -17.4%) reaffirmed FY26 NPAT guidance ($17–20m) during the quarter as part of their AGM update. The business continues to execute well against the refreshed strategy announced in June 2024, maintaining positive trading momentum with comparable sales (adjusted for refurbishment closures) up +5.6% YTD and gross margin improving to ~40.6%. The first three refurbished Store of the Future sites are delivering ~30% sales uplifts, well ahead of expectations. We view the AGM update as reinforcing our turnaround thesis, with tangible progress across comparable sales, margins and store productivity. Despite macro volatility, we remain focused on the improving fundamentals and upside from execution of the refreshed strategy, including continued rollout of refurbishments, network expansion, operating leverage, retail media growth and a positive earnings contribution from New Zealand from FY27.

BSD Analysis:
Baby Bunting is a category killer in Australian baby retail, benefiting from scale and specialist positioning. Demand softened as birth rates fell and consumer spending tightened. Even so, parents tend to prioritize spending in this category. Private-label expansion improves margin resilience. Inventory management has become a focus after post-COVID excess. Investors extrapolate short-term demand weakness too far. Store economics remain attractive over a full cycle. As conditions normalize, operating leverage returns quickly. This is cyclical pressure on a structurally sound retailer.

Pitch Summary:
Lendlease traded down over the quarter (ASX: LLC -5.5%), with interest rate dynamics continuing to weigh on rate-sensitive real estate stocks. Towards the end of the quarter, LLC announced progress on the $2bn of planned capital recycling during FY26 with a binding agreement exchanged for the ~$400m sell down of The Exchange TRX retail mall, a full divestment of LLC’s 60% interest in the adjacent office tower in Malaysia and affirmation that the sale of their ~25% remaining stake in the Keyton retirement business is progressing with exclusive negotiations underway. Whilst gearing is expected to be elevated at the 1H FY26 result (a function of transaction timing), the ~$1bn in proceeds from settlement of the TRX and Keyton selldowns, in addition to ~$300m in proceeds from settlement of the Crown Estates transaction, and a further $1bn of capital recycling initiatives underway, provide a clear line of sight to significantly reduced gearing and commencement of the up to ~$500m buyback during 2H FY26. We see this as a key catalyst for a re-rate of LLC. In late December, LLC announced it had secured a $2.2bn prime over station office development in Hunter Street, Sydney, a project that is targeted to commence in FY27 and complete in 2032. In conjunction with the luxury residential development site at 175 Liverpool Street secured in July and large developments at One Circular Quay and Comcentre in Singapore currently underway, the win adds to the medium-term earnings visibility in the development segment.

BSD Analysis:
Lendlease is a global developer navigating one of the hardest real estate environments in decades. Rising rates and construction cost inflation exposed balance sheet and execution risk. Management has shifted decisively toward simplification and capital discipline. The underlying asset quality and urban regeneration expertise remain strong. Long-dated projects create opacity, which markets hate in uncertain times. However, replacement cost economics still favor experienced developers. Asset sales and restructuring are reducing downside risk. Investors price Lendlease like permanent impairment. This is a reset story with real assets underneath.

Pitch Summary:
During the quarter we liquidated two positions in the portfolio, Nexans SA and Deutsche Telekom AG. Deutsche Telekom delivered solid near-term results, including a modest earnings beat and a guidance upgrade, while subsidiary T-Mobile US posted strong subscriber growth and another EPS beat, however, competitive pricing pressures raised concerns about ARPU stability. Management’s 2026 outlook pointed to slower profit and cash flow growth. Rising competitive risks—particularly in the U.S., where leadership changes at Verizon introduced uncertainty around future pricing dynamics—added to our caution. In Germany, mild wireless softness and higher cost pressures further weighed on margin expectations. While we continue to view Deutsche Telekom as a high-quality operator, growing competitive uncertainty and emerging cost headwinds led us to exit the position.

BSD Analysis:
Deutsche Telekom combines European stability with U.S. growth via T-Mobile. Cash flow generation has improved materially. Capital returns are becoming more visible. European operations benefit from rational competition. U.S. exposure provides growth the market underweights. Balance sheet strength supports flexibility. Investors treat it as boring telecom. The asset mix says otherwise. This is a hybrid growth-yield play. Execution remains solid.

Pitch Summary:
During the quarter we liquidated two positions in the portfolio, Nexans SA and Deutsche Telekom AG. We exited our position in Nexans, as we see increasing uncertainty around near-term catalysts and a less favorable risk-reward relative to peers. While Q3 sales were reassuring overall, led by strong growth in Transmission and Grid, the weaker-than-expected performance in the Connect segment raised questions given prior guidance for a second-half acceleration. The ongoing overhang from the Great Sea Interconnector project remains a key concern. Although Nexans has received cash payments in line with prior guidance and continues to produce and invoice as normal, the absence of additional payments and discussions around milestone adjustments increase the risk of delays. Additionally, the abrupt CEO transition introduced incremental uncertainty, and commentary increasingly pointed to a potential pause in 2026 before re-acceleration. Given these factors, we chose to reallocate capital toward industry leader Prysmian.

BSD Analysis:
Nexans is a critical enabler of global electrification through high-voltage and specialty cables. Grid expansion and offshore wind drive multi-year demand. Execution has improved after years of restructuring. Order visibility is strong and margins are expanding. Capacity constraints support pricing. Investors underestimate the difficulty of replicating Nexans’ expertise. Electrification is a bottleneck story. Nexans sits right in the bottleneck. This is industrial leverage to energy transition.

Pitch Summary:
During the quarter we initiated one new position, Weir Group PLC. Weir is a leading global mining equipment company known for its high exposure to aftermarket (75% of sales), driving resilience through the cycle, with recurring demand from upstream ground engaging tools and mid-stream processing solutions such as slurry pumps which have a high replacement rate given its extreme usage. The global mining cycle remains supportive, with capex momentum improving after several years of troughing, underpinned by elevated commodity prices. In particular, the company’s largest exposures are to copper and gold. While there is some debate on the split of capex between greenfield or brownfield, Weir is well positioned in any scenario. Structural margin expansion continues, following the divestment of the more volatile Oil & Gas business. Incremental efficiency gains persist, and the acquisition of MicroMine is margin-accretive and improves revenue quality.

BSD Analysis:
Weir is an unsung beneficiary of mining capex tied to energy transition metals. Its equipment and aftermarket services create recurring revenue. Copper, lithium, and iron ore demand drive order books. Pricing power comes from engineering complexity. Capital discipline has improved materially. Investors treat Weir like a pure cyclical. In reality, replacement demand dominates. Decarbonization increases wear intensity. This is infrastructure for materials scarcity.

Pitch Summary:
The weakness in MercadoLibre Inc. during the fourth quarter reflected increasing competitive pressure from Amazon and the company’s commitment to reinvest and the corresponding impact on margins. During the quarter, Amazon launched two new initiatives to attract new merchants to the platform, including promotions around fulfillment fees for merchants and reduced commissions for new merchants. Competition from Amazon cannot be taken lightly but we do not believe that Amazon’s activity erodes the moat around MercadoLibre’s business in Brazil given the ecosystem strengths around MercadoLibre’s best-in-class logistics network in the region, and the synergistic ecosystem effects of their commerce, fintech, advertising, loyalty, and content distribution offerings. We view the increased competitive pressure as an acknowledgement of both the fertile opportunity in Brazilian ecommerce and MercadoLibre’s leadership position. Separately, MercadoLibre continues to reinvest in its core offerings through lower free shipping thresholds, greater social commerce spend, and expansion of its credit card portfolio. MercadoLibre’s spending intentions weigh on the near-term margin outlook and led to modest negative revisions. Historically, higher investment has strengthened MercadoLibre’s competitive position.

BSD Analysis:
MercadoLibre has evolved from an e-commerce leader into the digital commerce and financial infrastructure of Latin America. The marketplace drives engagement, but MercadoPago is the real profit engine as payments, credit, and wallets embed into daily transactions. Logistics investments have built a moat competitors struggle to match across fragmented geographies. Credit losses create periodic noise, yet data-driven underwriting improves with scale. Inflation and informality in the region push users toward digital rails, not away from them. Currency volatility distorts reported numbers but not underlying growth. Investors debate valuation every year while the company keeps expanding its addressable market. This is platform dominance in an underbanked region. Few businesses are this deeply woven into local economies.

Pitch Summary:
Mitsubishi Heavy Industries Ltd. underperformed during the quarter after the company reported a headline earnings miss. However, this included some one-off provisions and excluding these items, results were in line. More importantly, the company revised up its full year order guidance driven by the energy and A&D businesses. Some of the stock weakness was due to profit-taking given shares had been a very strong outperformer due to trends in the gas turbine and defense segments. Meanwhile, the implications from Investor Days at GE Vernova and Siemens Energy only confirmed the strong medium-term outlook for the company. Lastly, the election of Takaichi as Japan’s next Prime Minister is supportive of continued defense spending, given her historically hawkish stance on national security.

BSD Analysis:
Mitsubishi Heavy sits at the intersection of defense, energy systems, and industrial infrastructure, exactly where long-cycle capital spending is accelerating. Defense exposure benefits from rising global security budgets, while energy systems position the company for hydrogen, nuclear, and decarbonization investment. The portfolio is complex, but that complexity masks valuable optionality rather than inefficiency. Execution has improved steadily as management focuses on higher-return segments. Japan’s corporate governance reforms support better capital discipline and transparency. Investors still view MHI as an old-line conglomerate, missing the shift in earnings quality. Order backlogs provide multi-year visibility that smooths cyclicality. This is patient industrial compounding, not a short-term trade. When capex cycles align, Mitsubishi Heavy has real leverage.

Pitch Summary:
Shares of Rheinmetall underperformed as renewed news flow around a potential Ukraine–Russia peace deal weighed on the broader defense sector, pressuring sentiment despite unchanged long-term fundamentals. At the company’s Investor Day in November, management reinforced confidence in Rheinmetall’s superior earnings growth outlook through 2030 and beyond, with a EUR 50bn 2030 sales target above consensus estimates. While there were some government procurement delays pushing orders into later periods, this appears to be a timing issue, with a strong surge of orders toward year-end.

BSD Analysis:
Rheinmetall has moved from a cyclical defense supplier to a core pillar of Europe’s rearmament, with demand visibility measured in years rather than quarters. Ammunition shortages and platform upgrades have turned capacity, not orders, into the binding constraint. Governments are prioritizing delivery speed over price, which supports margin expansion as volumes ramp. The order book continues to reset higher as geopolitical realities harden into budgets. Civilian auto exposure matters far less to the earnings mix than it once did. Investors still debate “peak defense,” but Europe is rebuilding capability from historic lows. Execution risk exists, but strategic relevance dominates the narrative. Rheinmetall is no longer trading defense cycles — it’s supplying a structural reset. This is rare industrial growth backed by political inevitability.

Pitch Summary:
Standard Chartered PLC was the strongest outperformer. Standard Chartered has continued to deliver strong earnings growth that has beaten consensus expectations over the past year and consistently raised its guidance and share buyback goals over that period. A major business driver has been their Wealth Management platform that has taken share from competitors and is benefiting from expanding AUM. This business is contributing to rising fee income that diversifies the bank away from traditional net interest income as the major profit driver. Given the rising wealth in key markets in Asia, the Middle East, and Africa – regions with rising incomes and strong demographic growth, the trajectory of Standard Chartered is bright. In addition, Standard Chartered is benefiting as a global bank providing services to major global customers for cross-border services to facilitate business in their markets. Strong management and a focus on cost discipline, alongside the integration of cutting-edge technology, are driving profitability. Given the strong cash flow and exceptionally strong balance sheet, the bank should continue to return capital to shareholders in the form of buybacks and increasing dividends while raising their ROE over the coming years.

BSD Analysis:
Standard Chartered is a global bank leveraged to trade flows, emerging markets, and capital mobility. Rising rates have helped earnings reset higher. Credit quality remains better than skeptics expected. The bank’s Asia-Africa footprint provides long-term growth optionality. Complexity and geography scare investors, keeping valuation low. Capital returns are increasing as balance sheet strength improves. Management focus has improved materially. This is a global macro bank priced like a local one. As trade normalizes, upside appears.

Pitch Summary:
AstraZeneca signed a deal with the U.S. administration to offer most-favored-nation (MFN) drug pricing to Medicaid patients and to participate in TrumpRx, a direct-to-consumer platform for purchasing prescription drugs. As part of the agreement, AstraZeneca received a three-year exemption from tariffs while committing to increased investment in its U.S. footprint. In our view, this outcome represents a best-case scenario for AstraZeneca and does not impact either near-term guidance or the company’s 2030 financial targets. The company reiterated guidance, supported by broad-based strength across oncology, cardiology & renal, and rare disease despite macro headwinds throughout 2025. 2025 was a strong year of clinical success with more than 15 positive phase III trial readouts at major medical conferences. This data further underpins AstraZeneca’s $80B revenue target for 2030. AstraZeneca is well positioned heading into 2026, with numerous additional Phase III readouts expected, providing continued momentum and further visibility toward achieving the 2030 $80B revenue goal.

BSD Analysis:
AstraZeneca has quietly assembled one of the strongest oncology and specialty pharma pipelines in the industry. Revenue diversification across geographies reduces policy risk. New indications continue extending product lifecycles. Emerging markets growth adds durability. Heavy R&D spend is translating into approvals, not just hope. Investors underestimate how balanced the portfolio has become. Margins improve as legacy investments mature. AstraZeneca is built for sustained growth, not one-hit wonders. This is scale pharma done right.

Pitch Summary:
Sandoz’s strong biosimilar growth supported a modest increase to 2025 guidance, reflecting continued execution across key launches. The U.S. Department of Health and Human Services released streamlined guidance for biosimilar regulatory requirements, moving the U.S. framework closer to the EU regulatory model and reducing complexity for developers. This regulatory shift is expected to lower development costs, enabling Sandoz to reinvest savings into pipeline expansion and accelerate future biosimilar programs. Biosimilar launches during 2025 performed in line with investor expectations, supporting confidence in the company’s launch cadence and commercial execution. The generics business remains stable with 180 launches expected throughout 2025 – management is successfully managing any price erosion pressures. Sandoz plans to launch generic semaglutide (NovoNordisk’s GLP-1) in Canada in 2026, using the market as a test case ahead of larger global opportunities as semaglutide patents expire in subsequent years.

BSD Analysis:
Sandoz is positioning itself as a global leader in generics and biosimilars at a time when healthcare systems are desperate for cost containment. Scale matters enormously in this business, and Sandoz has it. Pricing pressure is real, but volume and complexity offset erosion. Biosimilars provide higher-margin growth compared to traditional generics. Operational independence has sharpened focus. Investors view generics as low quality, missing policy tailwinds. Cash flows are steadier than perception suggests. This is defensive healthcare with optional growth. Boring works here.

Pitch Summary:
We re-entered Vertiv Holdings Co. during the quarter. Demand for Vertiv’s data center infrastructure products has remained robust, driven by AI-related buildouts and broader cloud capacity expansion. We believe Vertiv is well-positioned to benefit from rising power and cooling requirements as data center density increases, and the company has demonstrated improving execution and profitability.

BSD Analysis:
Vertiv is one of the most levered plays on data center and AI infrastructure growth hiding in plain sight. Power, cooling, and thermal management are the real bottlenecks in AI buildouts, not chips. Vertiv’s installed base creates recurring service and upgrade revenue. Pricing power has improved as demand outpaces supply. Execution improvements have transformed margins. Investors treat Vertiv like a cyclical industrial, missing its infrastructure-like characteristics. Hyperscaler capex cycles matter, but secular demand dominates. This is picks-and-shovels for the AI boom. The cycle still has legs.

Pitch Summary:
We initiated a position in HDFC Bank Ltd. as the recent merger with HDFC Ltd. created short-term earning headwinds that we believe will dissipate over the coming years. Currently, the company is experiencing lower net interest margins as it shifts to a higher cost funding mix. As these headwinds dissipate, and the company continues to grow loans and deposits, earnings growth should accelerate. HDFC Bank has a strong deposit franchise, given their strong customer engagement and broad branch network which drives accessibility. While synergy realization from the HDFC Ltd. merger will be key, we believe this merger will be a catalyst for the company to gain share and deliver strong earnings growth over time.

BSD Analysis:
HDFC Bank is the gold standard of Indian banking, combining conservative risk management with relentless growth. Its deposit franchise is unmatched, giving it structural funding advantages. The post-merger digestion phase has created short-term noise but no franchise damage. Credit quality remains strong even as loan growth accelerates. India’s formalization and digitalization directly benefit HDFC’s scale model. Regulatory scrutiny is a feature, not a bug, for banks of this quality. Investors fixate on near-term margins, missing long-term compounding. This is a multi-decade growth platform. Few emerging-market banks earn this level of trust.

Pitch Summary:
We initiated a position in Elanco Animal Health, Inc. due to its unique potential to deliver double-digit revenue growth and strong earnings growth over the coming years. This is primarily driven by their solid pipeline of innovative products, including products for pain management for companion animals and parasiticides for companion animals and livestock. In addition, given the fragmented industry structure, the company has the potential to consolidate the industry by making acquisitions of other animal health competitors. Even without acquisitions, there is strong potential for gross margin expansion due to the shift from lower-margin products to newer products and improved execution from improved logistics. We see it as a rare opportunity to invest in a high-quality business at a compelling valuation.

BSD Analysis:
Elanco is still digesting past acquisitions, but the underlying animal health demand story remains intact. Pet humanization supports long-term growth, even if discretionary spending fluctuates. Margin pressure has forced operational discipline, which is slowly improving earnings quality. The livestock business adds diversification tied to global protein demand. Debt reduction remains the central task, but cash flow is stabilizing. Investors price Elanco as permanently impaired, ignoring normalization potential. R&D productivity is improving quietly. This is a repair story, not a broken one. If leverage comes down, equity upside follows.

Pitch Summary:
We initiated a position in Cameco Corp. as we believe uranium demand continues to rise due to a structural shift toward nuclear energy. Global nuclear reactor build-out and life extensions are driving sustained demand, while supply remains constrained by years of underinvestment. We view Cameco as a high-quality operator with leverage to improving uranium fundamentals and attractive long-term earnings growth potential.

BSD Analysis:
Cameco sits at the center of a uranium market defined by scarcity, geopolitics, and years of underinvestment. Supply deficits are structural, not cyclical, as utilities scramble to secure long-term contracts. Cameco’s tier-one assets give it optionality competitors simply don’t have. Contract repricing is now flowing through earnings, resetting cash flow expectations higher. Western energy security priorities place Cameco in a strategic sweet spot. Operational discipline matters less when supply is constrained. Investors worry about volatility, but uranium cycles move in multi-year waves. Cameco doesn’t need perfect execution to win. Scarcity does the heavy lifting.

Pitch Summary:
Hitachi’s strong quarter was driven by its solid fundamentals and execution. Hitachi raised full-year guidance after posting strong earnings, supported by resilient demand in its core infrastructure and digital businesses. We continue to view Hitachi as a high-quality industrial compounder, with improving profitability and a clear path toward margin expansion.

BSD Analysis:
Hitachi has quietly reinvented itself from a sprawling conglomerate into a focused industrial-technology platform. Digital infrastructure, energy systems, and rail now drive earnings quality far more than legacy hardware ever did. The Lumada data platform ties software to physical assets, creating stickier customer relationships. Portfolio pruning has improved margins and capital discipline. Japan’s corporate reform tailwinds support better capital returns. Investors still view Hitachi through an old lens, missing how much the business mix has changed. Global electrification and infrastructure spending directly benefit its core segments. This is industrial modernization executed patiently. The rerating case is structural, not cyclical.

Pitch Summary:
Eli Lilly announced a deal with the U.S. administration that includes a three-year exemption from tariffs and the sale of GLP-1 therapies through government channels at discounted prices. Access to these channels significantly expands the addressable patient population and supports meaningful volume growth. Strong operating results and an upgraded 2025 outlook were driven by continued momentum from Mounjaro and Zepbound. Eli Lilly continues to gain share from Novo Nordisk across both diabetes and obesity markets, with prescription trends for both products remaining robust. Orforglipron (oral GLP-1) approval and commercial launch anticipated in 2026. This is likely the most watched commercial launch of all time with extremely high expectations.

BSD Analysis:
Eli Lilly is executing one of the most powerful product cycles in modern pharma history, driven by obesity and diabetes therapies that redefine standard of care. Demand is far outstripping supply, shifting the debate from clinical risk to manufacturing scale. Pricing power is real because outcomes are transformative, not incremental. The pipeline beyond GLP-1s remains deep, reducing single-product dependency. Capital spending is heavy, but returns on that investment look exceptional. Political noise around drug pricing persists, yet outcomes-based therapies tend to win policy battles. Investors fixate on peak sales assumptions, but Lilly keeps expanding the use cases. This is rare pharma momentum backed by real science. Execution, not discovery, is now the key risk.

Pitch Summary:
The weakness in MercadoLibre Inc. during the fourth quarter reflected increasing competitive pressure from Amazon and the company’s commitment to reinvest and the corresponding impact on margins. During the quarter, Amazon launched two new initiatives to attract new merchants to the platform, including promotions around fulfillment fees for merchants and reduced commissions for new merchants. Competition from Amazon cannot be taken lightly but we do not believe that Amazon’s activity erodes the moat around MercadoLibre’s business in Brazil given the ecosystem strengths around MercadoLibre’s best-in-class logistics network in the region, and the synergistic ecosystem effects of their commerce, fintech, advertising, loyalty, and content distribution offerings. We view the increased competitive pressure as an acknowledgement of both the fertile opportunity in Brazilian ecommerce and MercadoLibre’s leadership position. Separately, MercadoLibre continues to reinvest in its core offerings through lower free shipping thresholds, greater social commerce spend, and expansion of its credit card portfolio. MercadoLibre’s spending intentions weigh on the near-term margin outlook and led to modest negative revisions. Historically, higher investment has strengthened MercadoLibre’s competitive position.

BSD Analysis:
MercadoLibre is no longer just Latin America’s Amazon — it’s the region’s financial and logistics backbone. E-commerce remains the visible growth engine, but fintech is where the real operating leverage sits as MercadoPago embeds itself into everyday commerce. Credit penetration is rising, and while losses fluctuate, the data advantage compounds with scale. Logistics investments are paying off through faster delivery and higher conversion, reinforcing a moat competitors struggle to match. Currency volatility creates noise, but local dominance matters more than FX translation. The company benefits when inflation and informality push users toward digital platforms. Investors worry about valuation, yet MercadoLibre keeps expanding its total addressable market. This is platform power in a region with few substitutes. Long-term winners in emerging markets look exactly like this.