In this episode, Cameron Reilly from QAV walks us through two companies that have both landed on the QAV investing runway.

We start with IVE Group (IGL), a business that has been printing and delivering catalogues for more than 100 years. The transcript shows how IVE evolved from a small community newspaper into Australia’s largest commercial printer, supported by major acquisitions like Franklin Web and Ovato. Cameron explains how IV’s logistics network of 14,000 walkers, its data‑driven delivery platform, and its “Phygital” approach allow retailers to track catalogue performance with surprising accuracy. Even as digital marketing grows, retailers like Coles have returned to letterbox drops after a four‑year experiment proved paper still drives sales.

We then head to Argentina for Telecom Argentina (TEO). The company recently merged the country’s north–south telecom networks, creating a near‑national monopoly. Cameron highlights the dramatic macro backdrop: inflation falling from over 200%, currency movements driving large accounting gains, and regulatory conditions requiring TEO to divest millions of customers. The transcript also captures the colourful political environment under President Javier Milei, whose policies have reshaped the economy in unpredictable ways.

Both companies score strongly under QAV metrics, but Cameron reminds listeners that sentiment and trend lines matter. IV is currently a “Josephine,” sitting just below its buy line, while TEO has already rerated but still offers attractive cash‑flow‑based value.

TRANSCRIPT FOLLOWS AFTER THIS BRIEF MESSAGE

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EPISODE TRANSCRIPT

Phil: G' day and welcome back to Shares for Beginners. I'm Phil Muscatello and today I am pleased to be welcoming back to the microphone Cameron Reilly from QAV to see what's been rearing its ugly head on the company checklist for qava. Claire, Cameron.

Cameron Reilly: Hey, Phil. It's ugly head. Well, we don't have ugly heads, we just have the good heads, the pretty head cheques.

Phil: Yeah. What have you got for this week? Um, I believe we've got marketing and telecommunications. So, uh, let's kick off, so to speak with, uh, the asx. And what's this company that you've found?

Cameron Reilly: Well, Tony found it this week. He talked about it on our Australian show. It's a stock that's been kicking around our buy list for years. As long as I've been doing it, they come on, they go off. I already hold a couple of parcels of them in our portfolio. Companies called the I've Group I V E. The ticker code is igl and they're, uh, kind of a weird business. Gotta be honest, Phil. So think about this. It's 2026. This is a business that makes its money by paying 14,000 people to walk the streets putting paper in your mailbox, which is.

Phil: I know, uh, I do have a marketing background and I've got friends in the industry. And it's amazing, they still tell me that, uh, direct marketing and catalogues especially still work.

Cameron Reilly: I was saying this to Tony on our show, like, my wife Chrissy loves catalogues. Every time we go to, uh, Aldi, um, she'll grab a catalogue and I'm like, why? She goes, I like looking through it. I'm like, ah, kill me now. It's. That's the looking through catalogue. I mean, actually, I remember back in the day, you know. Do you remember, like 30 years ago, these American aeroplanes had catalogues? I remember flying to the US and enjoying flipping through the Sky Mall catalogue because they had a lot of weird and wacky stuff. But now we just go to Aliexpress. That is. That's my catalogue. Anyway, let's talk about igl because it's, it's not a dying business, surprisingly. You might think that dropping catalogues in mailboxes is going the way of the dinosaurs, but Coles has been trying to get rid of them, uh, uh, for years and always Keeps coming back, which is part of the storey. So I'll take a quick look at the history of the business, then we'll get into the business model and then I'll do the QAV scores so you can see why they're on our buy list again. So origin storey goes back further than I would have thought. Actually goes back to World War I. Just after World War I, Guy by the name of Oscar Selig comes back from the war and starts a community newspaper in Balmain called the Link. And this is the bit I love to keep the Link going to keep printing editions of it. He decides he needs to vertically integrate. He needs to own the print press himself. So he does that, starts a little commercial print shop called Link Printing. And it was really there to push out the paper. But of course in the end the printing business outlived the little community paper. But for several decades that's what it was. He printed his own, uh, newspaper and then he started to do commercial printing in and around Sydney. Small operation, early 1960s. His son, Gordon Selig takes over. Gordon works out that Community print is sort of capping the company's growth. There's a ceiling on how big you can get printing local newspapers. So he pushes into high volume commercial contract printing. Through the 70s and 80s. They move out of this small local premises that they've got scale it up, build heavy industrial printing hubs across western Sydney. Late 90s, third generation of the family, Gordon's sons, Jeff and Paul Selig, uh, running the business and they see something coming out. A lot of the print businesses that no one else saw or did see and ignored, which was being a standalone printing company was under threat because of digital marketing. So instead of printing harder, they diversified. They went into digital data driven communications, point of sale, retail displays, digital telemarking, E commerce platforms. And probably the most important aspect of it was looking at different ways to improve the logistics of delivering the actual catalogues. That's still part of the paper printing business, not just making them, but how do we get them into houses and how do we do that in a, uh, cost effective and reliable way? At that

00:05:00

Cameron Reilly: that stage, the brand sat under a group called Bluestar. One of the businesses in there was called I've EDI. They listed in 2015 under the ticker IGL rebranded everything into the I've group and started buying competitors. There was a company called Franklin Webb that they bought first and then just a few years ago, 2022. The big one was Ovato 2024, the executive chairman Jeff Selig passed away and they appointed a CEO from outside, Matt Aitken. Paul Selig is still on the board. So there's family in the room, but it's not family run anymore. So what do they actually do today? Well obviously they're a print business. But not only are uh, they a print business, they are what uh, they claim to be. Australia's largest print company. They also claim to be the largest commercial printer in the southern hemisphere. Over 2000 staff across Australia and the core is commercial printing. That's the heart of the retail catalogues, corporate mailers, packaging, magazines. About half of the operation. A lot of carton based packaged printing now. But there's a second business which is the distribution part of it that I mentioned. Third party logistics, inventory management and this enormous household letterbox network. Then the third piece is the creative side, digital marketing, branding, social media, performance tracking. So they'll design your campaign, print it, deliver it and then tell you whether or not it worked. And they've got a strategy. They call now to 2030. The whole point of it is operational synergies, cutting operations, costs, lifting margins, partly through acquisitions, partly by consolidating all the printing works into two very large facilities. One in Sydney, one in Melbourne. The Sydney one is called Kemp's Creek, just opened this year, it's 44,000 square metres, focuses on packaged printing, uh, which they got into by buying a business called Jack Pack. They've been picking up smaller businesses along the way. Last 12 months or so. Daily Press, Sydney social media and performance marketing shop Impresso Print, which was actually owned by Domino's Pizza. That gave them a uh, point of sale business and a print hub here in Brisbane. And Budget Mail Services, a direct mail business. So they sort of buy the thing, plug it in and cut the overlap. The big thing though is uh, Ovato. Uh, I hadn't really heard of Vivato, but they used to be known as pmp. Pacific Magazines and Printing. I think it was. I think they were a client of mine when I was at Microsoft 25 years ago. They were a huge printer in Australia. And Tony reckons that PMP was probably the larger of the two before they got acquired by these guys. Um, they lost a couple of big catalogue accounts, so did a couple of mergers of their own. Didn't go well. July of 2022 they PMP, this is or Varto, went into voluntary administration. So I've stepped in, buys the key printing business and the finishing operations out of administration. $60 million paid out of cash reserves. And here's the thing that Tony said that I thought was interesting. 60 million was less than the price of a new commercial printing press. So not bad when you can do a deal like that. So they bought one of the biggest competitors in the industry for less than the cost of one machine. You gotta hand it to them in terms of timing and execution. So that made them the largest and only web offset printer in the country. Which as you'd expect, drew the attention of the accc, but they ended up clearing it. Now, um, if they hadn't bought those, Avado would have shut down. I think this is the ACCC's reasoning. Um, Tony talked a bit about this on our show. Some of their customers, like Coles for example, apparently said to the accc, look, having a monopoly is not great but uh, we need our stuff to get printed and if this business just disappears, the Avado side of it, this isn't good either. So, so it was kind of, you know, the less worse outcome I guess for the customers in Australia at least they still have uh, someone to do their printing. So uh, this goes through and I've doesn't just absorb the assets, they absorb a lot of Ovado's clients too. Major retailers, publishers. Then they rationalise. They shut Ovado's flagship plant at Warwick Farm in 2023, shift the volumes to automated hubs at Silverwater and Huntingwood and Sunshine and Victoria and eventually roll those into their own purpose built facilities. Tony made the point when he was talking about it. It's kind of a Warren

00:10:00

Cameron Reilly: Buffett sort of setup. Buffett's always talked about wanting to own monopoly businesses. They have the widest moats, the highest margins, hardest to compete against. And so that's kind of where IGL fits in. And as value investors, we like that. Right. It's a good storey from a um, from an investing perspective.

Phil: And it's got really strong revenue as well, doesn't it? Um, it's one of those rare companies you find that actually has a cash generating machine as well as a growth in that cash generation built in as well.

Cameron Reilly: Yeah, well, I mean, I wouldn't say that finding cash generating is that rare. We come across them all the time. That's what our checklist is designed to do. Cash plus growth, you're right, is, uh, is a harder combination because the businesses that we tend to get attracted to, the ones that turn up on our buy list, tend to be relatively mature businesses and relatively mature markets. Uh, and as a result of that they're boring and the market's not really paying much attention to them. So we get to pick them up at a discount usually because they don't have a lot of growth, a lot of upside. This is in uh, that weird spot where digital seems to be the growth side of it. But uh, as it turns out, putting paper in letterboxes is still a really good business. And I think this is actually kind of fascinating because Coles has actually done sort of a control experiment on the viability of stopping catalogues. And uh, as it turned out didn't really work out for them. So they actually pulled out before I've bought uh, Ovato. Tony used to run big marketing um, at Colesmire decades ago. So he had some real exposure to this. He said supermarkets are always trying to reduce the cost of catalogues, trying to trim how many they deliver or trying to get the cost down. You know, I think in his day he said it was costing 30 to $40 million a year. Um, but they would keep stumbling because if they cut costs too much, sales would go down. But in 2020, sort of COVID times, Coles decided to cut catalogue delivery. They, they stopped their whole national letterbox thing, you know, for a bunch of reasons. Covid, obviously it was hard to physically get people walking around doing letterbox drops. There was big shift to online retail during COVID as well. And they didn't like having a uh, single supplier for a major cost line in their business. So they launched a digital content hub called Coles Co. To replace the paper catalogues. They kept a small number printed to hand out in stores, but the letterbox drop was gone. Cost. I've ah, $40 million printing contract which was a major blow to them. But then four years go by and in late 2024, Coles went back to printing catalogues and doing letterbox drops. February 2025, Matt Aiken, the new CEO, uh, of I've Group, confirmed to shareholders that Coles had fully returned to the letterbox channel as well as Bunnings and Harvey Norman. So one of the biggest retailers in the country with plenty of cash and every digital tool available to it, ran an experiment for four years and went back to paper. Now the counterpoint to this, and this is Tony's read, is that Coles is likely to keep retreating back to digital over time, even if it costs them some sales just to keep pressure on I've's pricing. I don't know if I should call them I've or I've. I'm gonna call them I've. It's A negotiating position as much as a marketing position. Um, you know, you've got a monopoly supply, you wanna keep them on their toes. But still they tried this experiment and after four years they came back to printing. So there you go.

Phil: But the most fascinating part about tail between their legs.

Cameron Reilly: Yes. So they print coles and woollies between them. Print somewhere between 5 and 7 million catalogues a week. And as Tony pointed out on her show, like from an environmental perspective, I know a lot of the papers probably recycle, but you'd have to think there's going to be some backlash at some point for putting that much paper in letterboxes every week. But there you go. Um, it's a bit like the old Yellow Pages. Remember when you used to get those dropped on your doorstep every day? That went the way of dinosaurs.

Phil: Yeah. That made for very good, um, sound baffling and sound. Um, if you put your soundproof booth together and stuck it full of white pages and yellow Pages, it's very good for keeping noise out.

Cameron Reilly: I used to just rip them in half all the time, just, you know, to prove how strong I was to impress press the ladies. I, uh, just take them out on the street, in the nightclubs and rip them in half. So let's talk about the 14,000 walkers. Um, and I'm just re watching Game of Thrones so, you know, I imagine

00:15:00

Cameron Reilly: these people as White Walkers. The way that they deliver these things is fascinating. So they, uh, they picked up, um, a company called Salmat that had this distribution business. When they picked up the Avado assets, Salmat was the biggest player in delivering catalogues. Didn't do really much on the printing side. They went into liquidation around 2022, after being around a long time, sold the distribution to I've, who sold off the other assets, including a big outsourcing centre in the Philippines. Did a big capital return to shareholders as a dividend. Wound itself up something like 12,000 walkers. I've picked up between the two deals, they're now at 14,000 people hired every week to hand walk leaflets into letterboxes. But, you know, we've all heard storeys. Uh, I remember when my boys were teenagers and I got them a job delivering leaflets for a friend of mine that was a real estate agent. And, uh, you know, he was always wondering how many they just dumped in bins and how much actually got delivered. And it was hard to track and get metrics on that. Well, of course, that's something that all retailers worry about. When you pay people to deliver stuff, how much of it is actually getting delivered. So they actually have a data platform for this, what they call a geodemographic, uh, platform. Um, it's using something called, well, they use the CCD, the census collection districts, which is about 200 households. They can then filter on income, household size and lifestyle profile. So a retailer might send a 32 page premium catalogue to a high disposable income suburb and then an 8 page best value leaflet to a budget conscious postcode and track the difference, uh, in terms of return. And they call this physical and digital. Let's get phygital. Phygital. I should have called my episode that. I don't know why I only thought about that now. Oh, uh, no, it's too late

Phil: on that point. I've always wondered why any of these companies would deliver, uh, on recycling day. I mean surely they'd have that in the database. And I've just noticed sometimes it's like it's just too convenient. You just see this stuff in your letterbox and there's your recycling bin straight outside.

Cameron Reilly: Yeah, except my wife, if she sees me do she goes, hey, I wanted to read that. Get that back.

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Cameron Reilly: What this means in practise is they have QR codes on the fly, so when a household scans one, the retailer can track which demographics are converting and walking into the store. And they cross, cross reference this against loyalty programmes, flybys, everyday rewards, that kind of thing. So they can match the letterbox drop against actual card transactions and see what the drop did. But then there's the verification problem. This is my favourite part. Historically, the retailers, as I said, were sceptical about how many catalogues actually got delivered. So Tony said at Coles they had photographic proof of catalogues being dumped in creeks around Melbourne. Back then it was handled manually, sort of complaint by complaint. They complained to the distributors that these things weren't actually getting out. At one point they were dropping GPS trackers into the catalogue bundles just to see where they ended up. Now there's an app called I've Hub the walker opens, it starts, uh, taps start walk on their phone and the phone's GPS plots the route and flags them if they stray outside of the district, you know, obviously can tell, you know, how fast they're walking. You know, is it a reasonable amount of time to cover the area at the end, they have to submit a digital declaration. Supervisor does a sampling audit against the GPS trail and approves the payment. So that's the modern way of managing 14,000 White Walkers to make sure they're actually dropping paper and letterboxes around an entire country. Pretty smart, huh? Huh?

Phil: It's pretty good, isn't it? That's, uh. Well, I suppose that's. That's a kind of oversight that we're all going to be living under very soon. You know, we can't be trusted to do anything, can we?

Cameron Reilly: I think we already are. Ah.

Chloe: Yeah.

Cameron Reilly: So let's get into the numbers. Uh, does it make money? Well, the Ovado deal, uh, was an overwhelming success. First year post acquisition, FY23, uh, $136 million in revenue directly, and revenue was up 27.5%. Margins went from just under 13% up to 18. Group revenue across the period was up 27.

00:20:00

Cameron Reilly: And in the FY24 and FY25 reports, they confirmed that they had achieved all of the cost synergies they said they would, which, as Tony pointed out, is rare. Like large acquisitions or mergers usually are way more complicated than they sound on paper, and they rarely go well. But this one seems to have gone quite well indeed. Cash flow went from 96 million in 2022 to 128 million in 2025. Net profit after tax was went from 33 million in 22 to 52 million in 25. Just under a 60% lift in profit over three years. The recent half was softer. Revenue was down 6%, margin up 2, profit down 10. Retail softness is being seen in retail generally. It's not specific to these guys. Interest rates, oil prices, pressure on consumer spending dollars, the toughness in the economy, that kind of stuff. So the profit drop, though, is also largely the cost of integrating the printing plants into that new Kemp's Creek facility I mentioned earlier. So it's a spend now problem rather than a broken, uh, business problem, at least in theory. One thing I will point out before I finish through the numbers is at the moment, even though I said we hold it in a couple of our portfolios, I've held it for, uh, about 18 months. I think it's up about 14% since then. So not shooting out the lights, but not a failure either. And, you know, as we always find with the stocks in our portfolio, you normally get a handful that shoot out the lights, you get a handful that go backwards, and you get the rest just sort of sit in the middle and do average performance. That's what you expect so far. This is one of those for us, but we'll see how it goes. Still has a lot going for it,

Phil: but currently it does have a dividend yield as well and a very good fully uh, franked dividend.

Cameron Reilly: I do want to point out too though that we did tell our members, uh, not to buy it this week, despite the fact that it's on our buy list because it's currently what we call a Josephine and so it's not tonight Josephine. Uh, it's slightly below the byline that we're looking for. Only a little bit, but we would wait for it to get over that byline. You know, we use three point trend lines to time our entries and exits and it's slightly below it this week. Um, just run through the numbers quickly. Phil was uh, trading at 2.78 at the time of the analysis. Market capitalization, capitalization of about $427 million had a QAV score of 0.121 which is uh, above our 0.10 cutoff. So it's again not shooting out the lights with the score, but it's uh, got a decent score. The QAV quality score was 70. No, 56.7%. Sorry, 56.7%. We normally like to see them over 75%. So it's not clearing. That means that it's not the healthiest business in terms of the valuation. But it's okay. We make exceptions if everything else stacks up. When we looked at it versus our intrinsic value estimates, the price was below both. So that's a good sign. We could score it for both of those. Book value. Book, uh, value is what the company's accumulated in terms of net assets. The share price was above the book value, so again we couldn't score for that. We also have a score for whether or not the share price is below book plus 30. It didn't pass that test either. So it's a little bit more expensive on that metric. The big one for us as you know, is price to operating cash flow. It's probably one of the, if not the most important scoring metric that we look at. Instead of price to earnings, we like operating cash flow because it's a cleaner metric, harder to game, harder to fudge. The price to operating cash flow for I've group is 4.69. We won't buy anything that's over 7. And basically what that means is 4, uh, point 69 is if you were buying it as a real business. You always use the cough shop analogy. If you're buying into a coffee shop. At least on an operating cash flow perspective. In this case it would take 4.69 years to earn enough money m to pay you back your buy price, which is, you know, reasonable amount of time. Anything over seven, we're like, we don't know what the world's going to look like seven years from now. So. But four years is under five years is kind of a reasonable time frame. Uh, the way things are going, it looks like they'll still be putting paper catalogues and letterboxes in the next five years. Average daily trade is relatively small. It's about $292,000. So it's a thinly traded stock. It's not really going to suit larger

00:25:00

Cameron Reilly: investors. We like to recommend that members don't buy parcels that are more than about 20% of an average daily trade. So if you were, if your parcels are any bigger than say 58,000, this would probably be too small for you. So people should be aware of that. Company generated 32.72 cents, uh, earnings per share, uh, before abnormal items in the last period. So it's making money. And the earnings forecast for the next year is 33.5 cents. So uh, slightly above this year's EPS, which is good. Means that it should be earning a little bit more money next year than it did this year. We like that PE ratio of about 8.5. It's uh, not, I think the lowest PE. Let me just cheque that. Um, yeah, it's not the lowest PE in the last six periods so we couldn't score it for that. Financial health is rated by stock doctor as strong and stable, which is good. So we can score it for that. It does have consistent equity growth so we scored it for that. The management, uh, and the directors of the company don't own 10% of the stock so we couldn't score for that. We like to see skin in the game. They do have about 3% so it's not nothing but it's not high enough to get a score from us. Dividend yield as you said, is quite healthy and uh, is above the mortgage rate so we scored it for that. Don't have a recent buyback that I could track. Don't have a recent three point upturn that I could score for. The price was less than the consensus valuation so I could score it for that. Uh, I think that's about it. All up. As I said, it's got uh, a positive QAV score but again it's sort of a josephine at the Moment. So we would wait until it gets above its byline. And that's uh, igl, family printing business that, uh, took over Australian catalogue distribution.

Phil: So just to clarify, Cameron, you're using the three point trend line as the overarching reason to buy this. Like once it goes below the three point trend line, presumably, um, it'll be ready to buy. Um, but all of the other metrics are looking reasonable enough. But not tonight.

Cameron Reilly: Above. When it goes above the byline. Yeah, we.

Phil: Oh, uh, that's right. Above. Yeah, I'm looking at the wrong way. Yep.

Cameron Reilly: Yeah. Tony, unlike a lot of value investors, uh, also likes to rely on sentiment tracking. You know, his theory is that as good as a business can look on paper, if the market is dumping it for some reason, and sometimes, you know, there is, There are hidden reasons that we can't see that aren't obvious when you looking at the financials that industry insiders know or market analysts or experts know, if the market's dumping it, there's no point buying it because you might be able to get it cheaper tomorrow or a week from now or a month from now. So Tony will wait until the sentiment for it seems to be positive, the share price is going in the right direction. And we might lose out a little bit by not getting in earlier, but at the same time we might not lose money. So rule number one for us is never lose money. So, yeah, we'll wait until it's above our byline before we jump in, assuming everything else still looks good.

Phil: Okay, well, let's move to the United States. Today we're looking at Teo. Teo. Teo. It's a, Ah, Telecom Argentina sa New York stock exchange code Teo. It's a major telecommunications provider primarily housed in Argentina with operations in Paraguay, Uruguay and elsewhere. It offers mobile, fixed line telephony, Internet, broadband, cable TV, data services, related products. And it's founded in 1979 and headquartered in the home of Tango, Buenos Aires. Cameron, what have you got to tell us about Tao?

Cameron Reilly: The home of Tango. Wow, I didn't know that. Yeah. Thanks, Phil. Yeah, Telecom Argentina under the. They. They operate under the brand name Personal and as you said, um, major telecom. The major telecom now in Argentina, in fact, they're mostly just known as Telecom, as we used to refer to Telstra here in Australia many years ago before they changed their branding. Uh, let me give you a background on this and I also want to talk briefly about Argentina because it got some great storeys about the current, uh, president of Argentina. That's right.

Phil: We Got Javier, the uh, free market believer in charge there, don't we, with his chainsaw.

Cameron Reilly: Yeah, and that's only the beginning of what a bonkers storey is. But just quickly I want to point out this, uh, is listed uh, in New York is an adr. So uh,

00:30:00

Cameron Reilly: you have to do some conversions if you're looking at investing this. And they, and you have to change your numbers as well when you're doing your analysis, uh, if you're one of a QIV members. Uh, so the uh, peso in Argentina is known as the Ars1 Ars is currently equal to 0.00067230 USD. I don't know what that is. It's like six, six hundredths of a cent or something like that.

Phil: Anyway, uh, it just means they've had a lot of inflation in Argentina.

Cameron Reilly: Oh, that's not even the half of it. So Market cap's about US$5.8 billion. Share price when I did my analysis was about 13 and a half US dollars. Stocks up about 48% over the past year, 12% year to date. So this has already been rerated pretty hard. And um, that's okay, that doesn't scare us off. But um, you know there's a, there's a lot of stuff going on in Argentina which, which could make or break this storey. Anyway, let's do a little bit of the background first. So this goes back to 1990 when Argentina privatised its state telephone monopoly intel and they literally divided the country in half. North went to what became Telecom Argentina. The south went to Telefonica of Spain. And for 30 odd years those were the phone duopoly in Argentina. Argentina. By the way, the name comes from the Latin Argentum Silva, named after the silver river, the Rio della Plata, named by explorers who thought they'd found mountains of silver up the river. They didn't. And um, you know, that's probably a decent metaphor for investing in Argentina. What you see is not necessarily what you get all of the time. The modern company was born in 2018 when they merged with Cablevision, the biggest cable and broadband operator in the country. Uh, which had been owned by one of the billionaires in Argentina. More on him, who actually the current president used to work for Great Storey. Anyway, um, so, but now it's like this boring old phone company which does all your basic stuff you mentioned before. Mobile home, Internet, pay tv, landline, all in one bill personal. And they also have another brand called Flow. But you can't talk about Argentina without talking about Javier Mountain Mila, the chainsaw wielding libertarian who became president around the end of 2023 and was, uh, Elon Musk's, uh, inspiration for taking a chainsaw on stage. And dude, uh, this guy, Bonkers Storey. I mean, without sidetracking too much, this is his official bio. Like, none of this is secret or was abused by his parents as a young man. Doesn't speak with his parents, but has a crazy close relationship with his sister who was the head of his presidential campaign. She's either the second most powerful person in Argentina, or as one person says, in Argentina, we say that Yavi A. Miliei is the most important person in the government of his sister Karina Melie, um, I read that she cooks his meals, takes care of him, looks after him, cleans up after him. She's also, I think that his chief of staff as president. They're very, very close. Again, as I mentioned in our last episode, I've been watching Game of Thrones and it looks like a Targaryen deal, but I don't want to read too much into it. Anyway. For 15 years, Javier worked at this private, uh, company called Corporation America as the chief economist and financial advisor to Eduardo Ernekian, uh, media billionaire who had owned Cablevision, then sold it off. And he had a bunch of other businesses. Uh, he's the fourth richest person in Argentina at the moment. Yavi, uh, then wrote some books on libertarian economics. Came to prominence in Argentina on TV chat shows, that kind of thing, by. That kind of thing, by just saying outrageous things like, the state is the paedophile in the kindergarten with the children chained up and slathered in Vaseline. Said that in 2018 on a TV show, um, he's an open sexual libertine. Has spoken about being a proponent of free love, tantric sex and enjoying the odd menage.

Phil: Um,

Cameron Reilly: my best bit though, uh, I'll get to skip a lot of his, uh, stuff. But when his dog, he's got. He had, uh, English, um, what do they call them? Not a terrier, um, mastiff. Bull mastiff. He had a dog called Conan the Barbarian that died

00:35:00

Cameron Reilly: in 2017. He couldn't accept its death, so he visited a medium to communicate with his dead dog telepathically. In their conversations. Conan revealed that they had been friends in a past life when they were fighters in Roman, uh, gladiator arena and told Milei to run for president. So Miliee then went to the US and paid $50,000 to have Conan cloned. And he since had him cloned five times. And uh, he's named all of the clones after economists that he admires, people like Milton Friedman. But the, the last one, the most recent one, is also named Conan. And the president reportedly believes that this one is the reincarnation of the original. So that's who's running Argentina right now. Uh, does this have any particular bearing

Phil: on the economy of, uh, that this company Tao is operating in?

Cameron Reilly: Probably, uh, yes. I mean, I guess the, the. As we've seen in the United States, the psychological and emotional profile of your president probably has something to do with how the economy runs. So when he got in, he took a chainsaw to the budget, closed 10 out of 19 government ministries by executive decree almost day one. Between late 2023 and 2025, social spending was slashed by 17%. Environmental programmes were gutted. Um, he's a climate crisis denialist, um, and he has managed to slow inflation. Though it was running at like 211% in 2023, it's down to 31 and a half percent at least was by late 2025, which is still bonkers from any other country's perspective, but it's a long way down from 211. But it's come at a huge social cost. Workers rights have been eliminated. More than 110,000 Argentinians with disabilities have lost their benefits. The official poverty rate has nearly halved since 2024. But critics say that's because they're skewing the data, because they shut down the organisations that collect that data so they don't have any real data to go on. And this is relevant because, you know, his political, um, fortunes, you know, this could all come back to bite him on the backside pretty quickly and everything could go in the opposite direction. It's, it's kind of a mess, I guess, is my point. Argentina, guys, um, being guided by his sister, uh, and his dead dog, reincarnated dead dog, making all of his decisions. Ah. So take from that what you will.

Phil: I wonder if one of those dogs is actually a reincarnation of Milton's M. Friedman as well. That'd be interesting.

Cameron Reilly: Yeah, I'm not exactly sure that that would necessarily be a good thing, but anyway, um, the peso now floats in a managed band. It's roughly 1480 odd pesos to the US dollar. And for comparison, a few years ago it was a few hundred. So the peso has lost a lot of value and every peso earning business in Argentina has been bid up on the back of this. Now that inflation's falling and the economy's Growing money's come flooding back and investors have been buying shares in Argentinian companies across the board. Tao TO is riding that wave. But um, again it could go either direction, you know, but um, we'll get into the core business just quickly. Um, as I said, this sort of the major telecom now of Argentina, they own the towers, they own the pipes, they sell you the plan, your broadband, your cable TV, one company, one bill, national footprint, basically a monopoly. 40 million plus service relationships across mobile and fixed mobile is the engine room. It's about 54% of service revenue. And you know, every month you pay your bill and TO takes the margin. So they became the monopoly because in February last year, 2025, they bought, bought Telefonica. Remember it was split. Well, they re merged. It uh, cost about US$1.245 billion. Their version of the FTC or the ACCC in Australia, um, had an issue with that, um, you know, the, the becoming a monopoly and what they meant for competition. And we'll, we'll get into that, um, in a little bit because there is an impact on their business that's just been ruled on. But um, before that, their last quarter, Q1,

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Cameron Reilly: 2026 was the first quarter with the full three months of that business baked in. And the numbers look enormous. One of the reasons it's on our buy list is because the reintegration of those two halves made the numbers look really good. Quarterly revenue of about 2.36 trillion pesos, about US$1.7 billion for the quarter, which was up 34% in real terms, which is enormous. Right? Mobile revenue was up 50%. A, uh, lot of that is the Telefonica business. If you strip that out, it was still up 9% in real terms from the old to business. So it's still good. But here's the number that I liked the most when I was going through their financials. Their revenue per Customer was up 18.7% in real terms. So that's ahead of inflation. So that's genuine pricing power. And that's the good news. Net income of 643 billion pesos versus 124 billion a year earlier. So that's a five fold jump in a year. But uh, almost all of that profit, about 631 billion of the 643 was not from running phone networks. It was because of the currency movements. So, and management says this in black and white in their most recent report, net income is mainly explained by foreign exchange gains from the real appreciation of the peso. So the headline profit with this is, is sort of a mirage of the currency. It's one way of looking at it. You know what I argue though is uh, this is the real cost of doing business for companies like this. Basically they have a lot of debt in US dollars, they've had to borrow a lot of money. When the, when the peso strengthens against the US dollar, the, the amount of money that they have to pay back drops from a pure cash flow perspective and they look good on paper. And that's, that's real, that's genuine. You can't, I don't think, ignore that trick is it could go the opposite way tomorrow, um, depending on what happens with the Argentinian economy and what Conan the Barbarian, uh, tells the President he should do on any given Sunday. So, you know, it's real, it's real cash, it's a real profit. Um, but it's also a little bit flaky. But as you know, our job is not to predict the future. Our uh, job is to look at the numbers as they are today and invest based on reality. But if the peso falls instead of rises, that giant gain could be wiped out or could become a giant loss as quickly as that. But the propcafe, the price to operating cash flow is real. It sits on a real business that's really making money, that's really selling all of these services and basically has for the moment a monopoly. But that won't always be the case, as we'll see in a minute. So the regulator, the antitrust regulator over there just last month, June 18, let the acquisition go ahead, but with some strings attached. The strings were that they have to sell off at least 6m million mobile customers and the spectrum that goes with them, about 4 million in Buenos Aires and 2 million in the rest of the country. Plus they have to divest about 211,000 home Internet customers across 28 towns. Plus there are ah, behavioural conditions on their corporate and wholesale business. So they bought growth, but the regulators making them hand a chunk of it back, probably to be spun off and sold off to new competitors. So you know, it's, it's, it's a bit of a, bit of a win lose situation for them. It's not as clean as it looked, but again, not our job to predict what this means for the future. Um, we just have to play it as it is today. So Argentina, is it in a crisis right now? You know, there's been a lot of positive storeys about it over the last couple of years and obviously trump And Elon and uh, you know, sort of right wing politicians around the world love talking about Milei and what he's doing with Argentine. Historically speaking, these sorts of experiments, austerity experiments, uh, and you know, ripping the guts out of governments don't end well. Uh, so maybe this time it's different, but we'll see. For the moment though, growth is back. It's about 4%. Inflation's down, as I said, from over 200% down to the low 30s. He's just won the midterms. He's got IMF money, he's got US money, a currency line behind him. So I would say it's not fixed, it's still fragile. It seems to be running okay, but dollar reserves are basically

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Cameron Reilly: zero. It owes around 19 to 20 billion dollars this year. There's no cushion if something goes wrong. The bond market's still nervous, Argentinian debt is priced like a risky country. And bonds maturing after Milie's term yield way more because investors are betting the next government might just tear this all up. So again, take this into account if anyone's thinking about investing in it. Uh, but our ah, perspective, my perspective anyway, I haven't run this past Tony yet, but my perspective with these things is, you know, you play it as you see it.

Phil: The scoring cam, what's that showing us this week?

Cameron Reilly: Yeah, so the QAV scoring shows, look, it looks pretty good. As I said at the time of the analysis, the shares were trading about $13.54, um, giving it a capitalization of about US$5.84 billion. The numbers that I'm running through are adjusted to USD from the Ars. Our proprietary QAV. Our Ah, proprietary QAV score, which is the final score, uh, at the end of all of our numbers came in at 0.258. We look at anything over 0.1. 0.258 is pretty high for us. I think it was number two. Now when I run a US buy list, there's usually a hundred companies that, that, that are available for us to buy. We're not short of opportunity in the US right now. And these are businesses that are generating cash and we can get them cheap, you know, based on evaluation metrics. And these guys were nearly at the top of that list this week. So, uh, pretty good. The quality score. The QAV quality score was at 75% which is sort of the benchmark that we like to see. Not often that businesses are able to hit that, quite honestly. They're usually a little bit below that. But if you get A company that comes in at 75% with a QAV score of 0.258. That's a really, really solid result. Um, and to show you why I got that. So we have two intrinsic value assessments that we look at. One that's based on their numbers today and one that's based on the consensus of their growth for next year. The current, uh, intrinsic value was below the current share price by quite a lot. The IV one was $3.70, the share price was $13.55, so it's quite a lot below that. But our second intrinsic value was $15.87 so the price was below that. So we could score it for that book value analysis. The book value, current book value was uh, um, the price to book ratio is 1.07, so it didn't score for that. The current share price is above, just above the book value. But we also apply a book value plus 30 test and we could score it for that. The share price was below book plus 30. Operating cash flow price to operating cash flow, which as you know is probably the most important, important metric that we look at. Instead of a pe, we look at the price to operating cash flow, prop Caf, as we call it, we look for anything below 7. This was 2.91. So basically a three year, less than three year payback for this business which is really, really solid. And that uh, plays uh, a big role in our final QAV scores. Average daily trade volume sits at around about $6 million. So from our perspective it's a large cap stock. Anyone buying parcels of up to about a million or 1.25 million would probably be comfortable buying something like this. The company, uh, generated earnings of $0.72 per share in the last trailing twelve months. And analyst forecasts for the next fiscal year are $1.53 per share. So doubling more than doubling its EPS over the next year. So that's really good. In Stockopedia, it's got a stock rank of 80 and a quality rank of 60. The Petrovsky F Score measures financial health stands at a 7, which is quite healthy. Surprisingly, Shareholders Equity has shown positive growth over the last few years. There's no recent three point upturn in the trend line, but it's been above its byline for quite a while. As I said, the share price has gone up like 40% uh, in the last 12 months. So uh, investors have seen this as a buy for quite a long time. It's not a new thing. Dividend yield is 0.34% which is lower than debt rates by quite a bit, so we couldn't score for that. Bottom line is weighing it all up. Um, very, very healthy, uh, investment profile from a QAV perspective with the risk flag that Argentina is still a complete basket case and the President takes his financial advice and career advice from the spirit of his dead dog. So, with all of that in mind, I, uh, did add it to our portfolio this week. It's up a couple of percent since

00:50:00

Cameron Reilly: I did that, but, um, we'll see.

Phil: It's a wait and see approach. So, Cameron, I have to let you go because you've got your own Conan mastiff to talk to next. Tony Kynaston, the star of the, of, uh, everything qav.

Cameron Reilly: Yeah, thanks, Phil. Have a good week.

Phil: Thanks very much, Cameron. Yeah, you too. Thanks very much, mate.

Chloe: Thanks for listening to Shares for Beginners. You can find more@sharesforbeginners.com if you enjoy listening, please take a moment to rate or review in your podcast player or tell a friend who might want to learn more about investing for their future.

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