Mindil Beach Casino and Resort - formerly SKYCITY Darwin ...

Wide Moat, what is that ? Before starting this blog post please read this wide moat businesses explanation here
Okay, now that we are up to speed, before you invest in any wide moat company you need to ensure financials of the business are solid as well, I’ll cover the topic of How to understand the financials of the business in the upcoming blogs so subscribe (here) to know when the blog is out.
Let’s see if we can spot any wide moat business listed on NZX.

Auckland International Airport Limited (NZE: AIA)

Auckland International airport holds a virtual monopoly as the largest airport in NZ and processes the most number of passengers. This is located in the largest city in NZ as well, making it an ideal destination for travelers, With travelers expected to increase in the coming decades, you can clearly see the wide moat around this business.

WILL THE MOAT SHRINK IN THE NEAR FUTURE ?

The likely hood of the moat shrinking is very low since construction of another international airport in Auckland is highly unlikely. Thing to look out for is debt, since airport need vast amounts of money for up keep and improvements( ex: loss of unnecessary capital due to project over runs and delays).
Read a more in depth analysis on Auckland International Airport here

Chorus Limited (NS) - (NZE: CNU)

Chorus manages and builds telecommunications infrastructure in NZ, for ex: when ever you sign up for fiber broadband plan with your ISP, Chorus is contracted to install the connections to your house. As copper cables are replaced by fiber optic cables around NZ, the cost of maintaining these new infrastructure grids are less than before.( Fiber vs Copper wiring: cost of copper and fiber optic cables are stronger requiring less maintenance).

WILL THE MOAT SHRINK IN THE NEAR FUTURE ?

I don’t think the moat will shrink in the near future as setting up a telecom infrastructure company with years of know how is quite difficult, the only way I can see this moat shrinking is if international companies what a piece of NZ infrastructure, but I don’t think the government would allow key infrastructure projects to be outsourced.

NZME Limited (NZE: NZM)

NZME is a New Zealand media company which owns brands such as:

1. NZ herald
2. Newstalk ZB
3. ZM
4. The Hits
5. Grab one etc…..

The moat exists but it is a very small one, this moat would have been huge during the hay day of print newspaper readership.
So what has happened here ? Internet….
Print newspaper is virtually dead, newspapers all around the world are struggling to make money as subscribers dwindle.
Due to the drop in readership, less and less ads are placed in the newspaper hence lower revenue.
All the eye balls have moved to “ Social Media”, that’s where the ads are now a days.
The only saving light I can see is Grab One, the popular coupon site in NZ. I do believe this will provide a strong source of revenue to the company but I am not sure if this can offset the losses in the other divisions.

The New Zealand Refining Company Limited (NZE: NZR)

Refining NZ is New Zealand’s only oil refinery and the leading supplier of refined petroleum products to the New Zealand market, including petrol, diesel, aviation fuel and other products As a critical piece of national energy infrastructure, Refining NZ is responsible for supplying:

• around 85% country’s jet fuel
• around 67% of diesel
• around 58% of all petrol
• between 75 and 85% of bitumen for roading
• all fuel oil for ships
• sulphur for farm fertilizer
• CO2 for the carbonated drinks industry

Moat exists because this is the only oil refinery in New Zealand, It also suppliers around 85% of NZ’s aviation fuel.
I believe the number of travelers to New Zealand will only increase, Provide refining NZ a solid moat, however as electric cars are bound to make in roads in New Zealand, the demand for petrol and diesel will gradually decrease.
So we need to keep an eye out on the financial performance on an annual basis to make sure the business can still maintain the moat.

Port of Tauranga Limited (NS) (NZE: POT)

The Port of Tauranga Located Tauranga (about 200 km away from Auckland) is the largest port in New Zealand in terms of total cargo volume, and the second largest in terms of container throughput.
Total exports:
📷
Total Exports from POT
As you can see the number of tonnes being exported from port of Tauranga is increasing.
Total imports:
📷
Total Imports from POT
As you can see the number of tonnes being imported from port of Tauranga is increasing as well.
I see this trend continuing as the demand for NZ products especially in emerging markets increases and demand for imports increases as NZ population continues to grow.
So the Moat around POT should be in tact for many years to come.

Restaurant Brands New Zealand Limited (NZE: RBD)

Restaurant Brands operates the New Zealand franchises for KFC, Pizza Hut and Carl's Jr. It also operate a KFC franchise in New South Wales, Australia and Taco Bell and Pizza Hut franchise in Hawaii, Guam and Saipan.
As of October 2018, Restaurant Brands has 261 stores: 94 KFC New Zealand, 61 KFC Australia 29 Pizza Hut New Zealand, 18 Carl's Jr., 36 Taco Bell Hawaii and 45 Pizza Hut Hawaii stores. It employs nearly 8,000 staff across New Zealand, Australia and Hawaii and serves 120,000 customers worldwide every day. Since RBD operates the NZ franchises for KFC, Pizza Hut and Carl’s Jr and if you wanted to be a franchisee in NZ then you would have to go through them , this gives RBD an economic moat.
Will the moat shrink in the near future ?
I think the moat will certainly shrink, this is due to the fact that many people are moving away from processed foods to more organic and more healthier options, this will cause sales in fast foods such as KFC, Pizza hut etc to shrink, which in turn means less new franchises opening up. There might even be closures around the corner. So I see the moat being broken pretty soon in the years to come.

SKYCITY Entertainment Group Limited (NS) (NZE: SKC)

SKYCITY Entertainment Group Limited is New Zealand’s largest tourism, leisure and entertainment company. It is one of three major publicly listed casino operators in Australasia.
It has entertainment complexes in:

1. Auckland
2. Hamilton
3. Queenstown
4. Adelaide
5. Darwin

SkyCity also owns one of Auckland’s best know attractions “Sky Tower”. Although the revenue generated from sky tower to the overall business is small, it is still a jewel in the sky city crown.
Will the moat shrink in the near future ?
Considering SKC is New Zealand’s largest tourism, leisure and entertainment company, it has all the basis covered for tourists that enter into NZ. It also has large convention centers where numerous conferences are held, I don’t see the moat shrinking any time soon. As they in casino lingo “ House always wins”.

South Port New Zealand Limited (NS) ( NZE: SPN)

SPN is the southern most commercial port in NZ located at Bluff. It is situated in the highly productive province of Southland which is responsible for producing a sizeable proportion of New Zealand’s total exports by value. The region’s major exporters are all situated within 80km of the port.
All the moat characteristics explained for Port of Tauranga (POT) exist here as well.

Trade Me Group Limited (NZE: TME)

Trade me is the largest internet auction website in NZ. It has Trade me property, motors, jobs etc.
Trade me had held a monopoly on internet auctions for quite some time in NZ, but it’s moat has been slowly eroding away, how ?
Trade me jobs is competing against Seek, LinkedIn
Trade me property is competing against realestate.co.nz, oneroof etc.
Trade me market place is competing against Facebook marketplace.
Looking at all the competitions trade me is facing it seems quite difficult to hold down the moat in the future.

Vector Limited (NZE: VCT)

Vector is New Zealand's largest distributor of electricity and gas, owning and operating networks which span the Auckland region.This distribution system gives Vector an economic moat.
Vector has been involved in electrification projects - charging stations for electric cars, which I think is great for future growth. As number of electric cars increase, there will definitely be a need for more and more charging stations which vector can deliver. The moat seems to be very much intact.

Wide Moat, what is that ? Before starting this blog post please read this wide moat businesses explanation here
Okay, now that we are up to speed, before you invest in any wide moat company you need to ensure financials of the business are solid as well, I’ll cover the topic of How to understand the financials of the business in the upcoming blogs so subscribe (here) to know when the blog is out.
Let’s see if we can spot any wide moat business listed on NZX.

Auckland International Airport Limited (NZE: AIA)

Auckland International airport holds a virtual monopoly as the largest airport in NZ and processes the most number of passengers. This is located in the largest city in NZ as well, making it an ideal destination for travelers, With travelers expected to increase in the coming decades, you can clearly see the wide moat around this business.

WILL THE MOAT SHRINK IN THE NEAR FUTURE ?

The likely hood of the moat shrinking is very low since construction of another international airport in Auckland is highly unlikely. Thing to look out for is debt, since airport need vast amounts of money for up keep and improvements( ex: loss of unnecessary capital due to project over runs and delays).
Read a more in depth analysis on Auckland International Airport here

Chorus Limited (NS) - (NZE: CNU)

Chorus manages and builds telecommunications infrastructure in NZ, for ex: when ever you sign up for fiber broadband plan with your ISP, Chorus is contracted to install the connections to your house. As copper cables are replaced by fiber optic cables around NZ, the cost of maintaining these new infrastructure grids are less than before.( Fiber vs Copper wiring: cost of copper and fiber optic cables are stronger requiring less maintenance).

WILL THE MOAT SHRINK IN THE NEAR FUTURE ?

I don’t think the moat will shrink in the near future as setting up a telecom infrastructure company with years of know how is quite difficult, the only way I can see this moat shrinking is if international companies what a piece of NZ infrastructure, but I don’t think the government would allow key infrastructure projects to be outsourced.

NZME Limited (NZE: NZM)

NZME is a New Zealand media company which owns brands such as:

1. NZ herald
2. Newstalk ZB
3. ZM
4. The Hits
5. Grab one etc…..

The moat exists but it is a very small one, this moat would have been huge during the hay day of print newspaper readership.
So what has happened here ? Internet….
Print newspaper is virtually dead, newspapers all around the world are struggling to make money as subscribers dwindle.
Due to the drop in readership, less and less ads are placed in the newspaper hence lower revenue.
All the eye balls have moved to “ Social Media”, that’s where the ads are now a days.
The only saving light I can see is Grab One, the popular coupon site in NZ. I do believe this will provide a strong source of revenue to the company but I am not sure if this can offset the losses in the other divisions.

The New Zealand Refining Company Limited (NZE: NZR)

Refining NZ is New Zealand’s only oil refinery and the leading supplier of refined petroleum products to the New Zealand market, including petrol, diesel, aviation fuel and other products As a critical piece of national energy infrastructure, Refining NZ is responsible for supplying:

• around 85% country’s jet fuel
• around 67% of diesel
• around 58% of all petrol
• between 75 and 85% of bitumen for roading
• all fuel oil for ships
• sulphur for farm fertilizer
• CO2 for the carbonated drinks industry

Moat exists because this is the only oil refinery in New Zealand, It also suppliers around 85% of NZ’s aviation fuel.
I believe the number of travelers to New Zealand will only increase, Provide refining NZ a solid moat, however as electric cars are bound to make in roads in New Zealand, the demand for petrol and diesel will gradually decrease.
So we need to keep an eye out on the financial performance on an annual basis to make sure the business can still maintain the moat.

Port of Tauranga Limited (NS) (NZE: POT)

The Port of Tauranga Located Tauranga (about 200 km away from Auckland) is the largest port in New Zealand in terms of total cargo volume, and the second largest in terms of container throughput.
Total exports:
📷
Total Exports from POT
As you can see the number of tonnes being exported from port of Tauranga is increasing.
Total imports:
📷
Total Imports from POT
As you can see the number of tonnes being imported from port of Tauranga is increasing as well.
I see this trend continuing as the demand for NZ products especially in emerging markets increases and demand for imports increases as NZ population continues to grow.
So the Moat around POT should be in tact for many years to come.

Restaurant Brands New Zealand Limited (NZE: RBD)

Restaurant Brands operates the New Zealand franchises for KFC, Pizza Hut and Carl's Jr. It also operate a KFC franchise in New South Wales, Australia and Taco Bell and Pizza Hut franchise in Hawaii, Guam and Saipan.
As of October 2018, Restaurant Brands has 261 stores: 94 KFC New Zealand, 61 KFC Australia 29 Pizza Hut New Zealand, 18 Carl's Jr., 36 Taco Bell Hawaii and 45 Pizza Hut Hawaii stores. It employs nearly 8,000 staff across New Zealand, Australia and Hawaii and serves 120,000 customers worldwide every day. Since RBD operates the NZ franchises for KFC, Pizza Hut and Carl’s Jr and if you wanted to be a franchisee in NZ then you would have to go through them , this gives RBD an economic moat.
Will the moat shrink in the near future ?
I think the moat will certainly shrink, this is due to the fact that many people are moving away from processed foods to more organic and more healthier options, this will cause sales in fast foods such as KFC, Pizza hut etc to shrink, which in turn means less new franchises opening up. There might even be closures around the corner. So I see the moat being broken pretty soon in the years to come.

SKYCITY Entertainment Group Limited (NS) (NZE: SKC)

SKYCITY Entertainment Group Limited is New Zealand’s largest tourism, leisure and entertainment company. It is one of three major publicly listed casino operators in Australasia.
It has entertainment complexes in:

1. Auckland
2. Hamilton
3. Queenstown
4. Adelaide
5. Darwin

SkyCity also owns one of Auckland’s best know attractions “Sky Tower”. Although the revenue generated from sky tower to the overall business is small, it is still a jewel in the sky city crown.
Will the moat shrink in the near future ?
Considering SKC is New Zealand’s largest tourism, leisure and entertainment company, it has all the basis covered for tourists that enter into NZ. It also has large convention centers where numerous conferences are held, I don’t see the moat shrinking any time soon. As they in casino lingo “ House always wins”.

South Port New Zealand Limited (NS) ( NZE: SPN)

SPN is the southern most commercial port in NZ located at Bluff. It is situated in the highly productive province of Southland which is responsible for producing a sizeable proportion of New Zealand’s total exports by value. The region’s major exporters are all situated within 80km of the port.
All the moat characteristics explained for Port of Tauranga (POT) exist here as well.

Trade Me Group Limited (NZE: TME)

Trade me is the largest internet auction website in NZ. It has Trade me property, motors, jobs etc.
Trade me had held a monopoly on internet auctions for quite some time in NZ, but it’s moat has been slowly eroding away, how ?
Trade me jobs is competing against Seek, LinkedIn
Trade me property is competing against realestate.co.nz, oneroof etc.
Trade me market place is competing against Facebook marketplace.
Looking at all the competitions trade me is facing it seems quite difficult to hold down the moat in the future.

Vector Limited (NZE: VCT)

Vector is New Zealand's largest distributor of electricity and gas, owning and operating networks which span the Auckland region.This distribution system gives Vector an economic moat.
Vector has been involved in electrification projects - charging stations for electric cars, which I think is great for future growth. As number of electric cars increase, there will definitely be a need for more and more charging stations which vector can deliver. The moat seems to be very much intact.