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Angus Shillington

lines on the record: 89
first: 2024-08-29
most recent: 2024-08-29
sittings or episodes: 1
sources: podcast

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“Are not going in reverse, and I think that's the right way to put it. There is genuine improvement everywhere we look in EM. It's been up and down in Turkey. There's Russia was obviously”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“People don't want that, so it's a difficult asset class. I mean, it's a real grind because in order for multiples to be fair across the board, right, we need a weaker dollar and we need the US not to be sucking in quite so much capital, right? So US equity is 75% of ACWI equity, so very heavily weighted. That probably comes down over time. So it's difficult to answer the question directly because when things look more positive for the less good emerging markets, they will do better than the likes of India, which is a plotter, right? So super difficult. And that's sort of where the sort of portfolio construction piece is super important to balance out risk adjusted returns, to balance out sort of symmetric and it's asymmetric risk. But most of the countries”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Not been what they've got, they've gotten China and some bits of Brazil that haven't worked out the way they'd expected, right? So now that the perfect opportunity is there and actually has been there for a while, which is India, and it's being offered at a slightly higher price back to the automobile analogy.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Where can you take less risk, right? Because this is really where it comes down to as a sort of active investor is you're buying companies, right? And those companies have a big or a small risk key off of whatever the economy is doing, right? So, you know, in India, that risk is relatively low, I think. In China, that risk is relatively high. Now, when I bounce around the other markets, Korea, Taiwan look great. So they're in the sort of green light, you can sort of take more risk there. The less predictable are kind of all of the rest where you've got to be very careful companies you pick, you've got to be very selective about balance sheets. And I think this sort of takes us back to where we started this conversation, which is India's kind of the opportunity that everybody thought they were getting when they started to invest in emerging markets 20, 30 years ago, right? But India”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Oh my god, that's a beast. I gotta be really honest with you, right? I gotta say that there are two categories of country. Maybe I'll sort of re-ask ask your question, which is, where can you take more risk?”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“That 14% of ASML's customers. So you got to know what's going on under the hood because for every sort of great customer from ASML, like a TSMC, there's also an Intel hiding under there. And what Intel are doing now is horrifying because they're taking all this government money from for subsidies of building out. And plant equipment, and they're firing people at the same time. That's a terrible look politically, and something is obviously wrong. But my point being that unless you understand the sort of the shifting tiles of most companies, you're not able to make the sort of predictions that people want to make and it sort of loops you back to Nvidia, which is that Japanese people say trees do not grow to the sky, right? You've got to have a point where you say, hang on, enough's enough. I'll take the money and run.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“On AS Yeah, I mean, ASML are incredible, right? Their innovation Shops and what they've delivered in terms of sort of EU view and machinery that can do more better, faster, more efficient is a linchpin to this whole story. However, it has a lot of customers, right? So the corollary of the NVIDIA story and to some extent the ASML story is Intel, right? Intel didn't see fabulous coming. Intel believed they could keep sort of designing the chips that they've always designed, throw them over the wall and somebody would buy them, right? That market disappeared, right? Or it started to dry up. And unless they were able to build and design competitively like a fabulous plus TSMC, then they would end up in the problem they're in right now. And the problem they're in right now is that they're committed to building out plant machinery.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Asking the question Is that inevitable imminent? You've got to be thinking about reducing exposure or diversifying exposure.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Just a simple law of economic supply and demand mean you can't request and have met a price demand that gives you those kind of margins. Super normal. And I think the, you know, and this conversation is very interesting. And I tend to think about it through the lens of I am paid to look after other people's money in the same respect that to some extent I'm paid to look after my family's money, right? And I don't want to take a risk that seems too high to me and be at the point where I have to explain to my wife that could have gone either way, but I didn't take any profit off the table. So as I said, I think it is somewhat inevitable that margins come down. Difficult to say when, right? And if it's further out, then maybe the share price has a lot further to run. But I think, as I say, when you're...”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Simple sort of compounding math around some of that stuff just becomes much more difficult than a business that's returning you hard cash, clean cash, 14, 15% as a minority shareholder has pricing power, has sustainable margins, and is facing a very predictably structural growth consumer buyer client, they're very different propositions. So there's naturally going to be a lot higher cyclicality in a sort of situation like Nvidia, and that cyclicality presents itself in multiples, right?”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Yes, it's a very different sort of investment proposition. So if you dig into the income statement of NVIDIA and you find out where the cash flows are going, they're not going to shareholders. They're just not right now. There's a very large amount of share-based compensation. So there's a bit of a sort of conversion shuffle going on in terms of gap earnings versus adjusted earnings, right? I can't remember the exact number, but it's billions of dollars of stock that's not being expensed. Then 40 or so percent of cash flow is being invested in share buybacks. Now, you may say that's a good reason, but there's merit in that or there's not merit in that. But at the end of the day, yes, that is being returned to shareholders, but it's being returned to shareholders at a valuation that a lot of people are questioning. So the ability to do.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Great company, bad valuation. So you don't have the view on Nvidia that you have on India where it's a great country. The earnings growth is and the valuation is more expensive, but it's justified and might even be cheap. You don't necessarily think that about NVIDIA at this time.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Of the envelope, I took, we were talking about it internally, the lowest sensible tech analyst two years out, EPS take their EPS, put the same ratio on the PE. The price would be nearer 50 than 100. So you can still have great growth and great earnings, but there is potentially risk to the share price. So it gets you to that point that I've heard Jan Vanek talk about a lot recently. Great company, bad valuation. And I think that's sort of where I would end up on that one.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“So, if you look at how earnings progression have been for NVIDIA or any innovative company over decades, they report a beat. Then the analysts upgrade their earnings. Then they report a beat at the next one, the upgrade. But everything is driven by what has happened rather than what is happening and what analysts tend to do because they don't really know, understand, or have the transparency, they tend to extrapolate the growth that's happened over the last several quarters way out. And I think the point that you made just now at the end is you can still get great returns from NVIDIA in terms of growth of EPS. It could be even 50% a year. But that still comes in a lot lower than what's forecast by many analysts. And if it comes in at below what's forecast, then the multiple that is ascribed is going to be lower too.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“NVIDIA is asking it to do so, there's going to be stress around this, there's going to be fragmentation of customers, there's going to be a move away from being locked into possibly the software protocol, but also maybe the supply chain's not capable. At the same time, there are going to be other solutions. There's going to be ASICs or it'll be Crok or Tensor that mean prices, relative prices come down. Because if you look at the TSMC numbers, the actual number of GPUs that's being rolled out, the increase is not that impressive because it's all being taken in the margin. So at some point, that margin is going to come under pressure. And as I say, I think when you're asking yourself the question of when is this inevitable, right, going to be imminent, I think that we're getting to that point right now because the upgrade cycle of an innovative company is usually backward looking, right?”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Platform Google's developing Tensor, Apple's creating its solutions, that you still have to see some fragmentation around what the end users are using because they don't want to get locked into one single provider. And then I think the last point, which is really starting to emerge, which potentially messes this up is NVIDIA promised, and I remember the call that Jensen got on. It was last quarter, maybe the quarter before, who he committed to this cadence of shipping new product, right? Not only have they got the best, they're going to replace it and improve it and innovate it so that every six months a new GPU is going to turn up. Now we just getting news that the supply chain that's building this stuff, including TSMC, just can't keep up with the innovation that...”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Next cohort of customers may not be as technologically demanding as the Amazons, the cloud service providers, to chance their countries with sovereign AI. Now, they're not going to need the most expensive leading edge hopper GPU, right? So that may segment, but also vertically the GPU functionality is likely to segment. Now, this is a very expensive piece of equipment. Right now, people are being forced to run relatively easy. I'd say with respect, processes through those semiconductors, you could run most of your inference through very cheap ASIC chips rather than running them through an NVIDIA GPU. So that will segment out. And I think you're starting to see that these customers are saying, I don't want to get locked into this software.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Look, I mean, this is really a fascinating point. So in technology, right, Morris turns up and he's, and the reason why Equipment off of your balance sheet, right? And that's all on him. Now, TSNC has a right to a gross margin that is relatively high because underneath the gross margin comes all the cost of CapEx and depreciation. That's about call that mid-50s percent. Nvidia, on the other hand, is taking a very high gross margin because, and it turns into quite a high operating margin because they are relatively low cost at the bottom. hand the plans to TSMC they tape it out make it they sell it charge a very high margin this gets you into these sort of perfect storm situation it just happened to be at that moment nobody had a solution like NVIDIA had that solution so over time you know my feeling is is like again the very you know if you think about it through sort of academic principles markets tend to segment right so the”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“So let's say we have this sort of crazy set of we've got right now, and then you start to think, how does that stuff get competed away? And my feeling is that the minute you ask the question, when is inevitable being that these margins begin to get competed away, when is inevitable likely to become imminent? When you start asking yourself that question, you've got to step back. And I think we're sort of there right now. If you want to drill down into any of that, I'm very happy to.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“NVIDIA have this software called an operating system for the sake of argument called CUDA. So if you already have some NVIDIA stuff going on, you can just keep plugging NVIDIA stuff going. The interoperability is incredible. So that was super helpful. So far and away the best. There's a platform approach where you can sort of build and scale quite quickly. But also what was there, right? And people sort of don't stop to think about this is this cohort of heavily cashed up tech businesses, right? Being Amazon, Microsoft, these guys who are effectively the customers. So what you have is this sort of feeding frenzy where there's a sort of nuclear arms rate going out and you've got to stop, I think, and we've seen this in all parts of tech, especially in Asia, which has been very boom-bust over the years, where sooner or later the rules of economics kind of kick in and margins begin to get competing.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“First of all, congratulations. I absolutely walked into that one, didn't I? So look, I mean, this is sort of a bit off scope of an EM conversation, but we've covered, I've covered TSMC as an analyst for many years. So I think my perspective is probably somewhat unique from that point of view. Nvidia is a hands-down, one of the greatest companies ever. And I'm going to start at that point. But as you say, right, there is we're at a point of time where what's happened in the past year and it really only has been a year call it 18 months of this sort of binge AI mania that it was just in the right place at the right time. So the solution through the A100 or the GPUs that they were rolling out, no one could even come close. That's the first thing. The second point is that they”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“And the rest is kind of history. So Taiwan's become this sort of vibrant hotbed of manufacture for the rest of the world, some design, but mostly manufacture. And it has become truly dominant in that space. Now, if it hadn't been for TSMC, there would be no NVIDIA. If there hadn't been TSMC, AMD would not have spun out its foundries and become fabulous. Really, TSMC set the stage for a complete step change in how semiconductors are designed, manufactured. And I'd say released this cohort of designers outside of Texas instruments and Hewlett Packett and Intel that have changed the world. So yes, it's still an emergency. Market, it's a bit of a mystery to some people, it is. But yes, I'm always fascinated by what's going on in Taiwan.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Taiwan has always been incredibly interesting, right? I don't think many people understand the story of Morris Cheng, who is one of my heroes of all times. Morris was MIT Stanford. He worked for the longest time, I think, with Texas instruments, engineer, and he left because he was passed over for promotion. Then he went back to Taiwan, a little bit upset. And she was originally from China, went back to Taiwan, and he was asked by the government to start a company. And that company really was the sweet spot of what he believed in, that semiconductor design should be done by one person and semiconductor fabrication should be done by somebody else. Now he set up a semiconductor fabrication company called TSMC.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“I am finding, we are finding extraordinary opportunities to invest in India. And to a large extent, this narrative of expensive is helpful. I think at some point it will become expensive, right? And I'm talking about sort of tulip mania type expensive. I'd rather be in than out when that happens. But 20, 22 times forward PE multiple on gap earnings for a sort of compounding return of 2018 to 20% seems like absolutely the right price for me.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Go into this in too much detail. We've tried to create product that is more active in order to try and navigate around some of these sort of disruption issues and valuation issues.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Very specific sectors of financial services. So I talked about truck financing as an interesting one. Digital consumer lending is a really interesting place to be. We have a couple of investments around there, but we've gone very, very niche. And I think when you sort of think about the path and match of what's happening in India, right, versus what happened in the US during digitization, it's not dissimilar, right? These patterns roll out in roughly the same way that internet 1.0 in the US just crush distribution cost, right? That was really what it was. It's exactly the same thing is happening in India. So the ability to connect one-on-one with a financial transaction, make transfers is creating this extraordinary opportunity. So we're very, very specific in how we commit capital in our active funds, in our ETFs, and I don't want to really...”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Everybody was asked to open a bank account. And then all cash was sucked out of underbeds through demonetization and put in bank accounts. Now, this created a point in time where banks basically brought in very tons and tons of cheap deposits, right? They turned around, they lent those cheap deposits out really quickly, which arrived maybe two or three years ago. And suddenly there's like, there are no deposits to raise because it's already in the bank, so it's organic only. We have all these high margin products already late. So suddenly loan growth had to come down because there were no deposits to fund loan growth. So as this sort of economy, banks have been a relatively a loser in this sort of growth phenomena because they grew very quickly. There was a sort of pig in the python type situation. So we've tended to pull back from that opportunity and we're much more focused on”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“For quite a long period of time. Now, this is where the whole India story is so interesting as things change, right? So when you assume, like I've laid out, that the economic story is just improving. It's getting more predictable. Well, things turn a little south for these banks because we did the KYC Digital ID program.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“That's a great question, Jack. So first of all, I think I mentioned earlier on that banking was a nightmare, right? And that changed somewhat 10, 15 years ago where some licenses were issued to private banks. Now, private banks in India were smart enough to say, I am not lending into this corporate sector that is, there's no bankruptcy law, they're already encumbered with these other bank loans. It's a disaster. I'm going to be consumer only, right? So the banks set up there, which were like HDFC Bank was a good example. Yes, Bank Access Bank. They set out to be consumer only. So think about them more like JP Morgan. So mortgages, credit cards, that kind of stuff, high margin relatively low risk. These businesses grew up very fast, very successful because the rest of the banking sector was busted. It was an incredible investment destination opportunity, return structure for investors.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“So, you get much more sort of opportunity for big deltas in the sort of smaller caps. So the way I sort of think about investing is, one, I want to be large cap compounding liquid reliable returns relatively low beta, relatively low risk, balance that out with a slightly higher beta, slightly higher alpha. And you need to pay a little bit more attention to what's happening under the hood in terms of return. But again, if you have the right people running these businesses and the right people who have the experience of reinvesting their own capital, the risk is relatively low.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Map that over the future in terms of this business, got a defensible note, addressable market that's growing, you as a shareholder can compound those returns inside the capital structure or with dividends, whatever. That's, I think, level one. And that's sort of a large cap approach. In the sort of mid and small cap space, we're much more about just global domination kind of thing, right? Global in the context of continental-wide, right? Because you're finding businesses in the sort of mid-cap space that were constrained by tax, that were constrained by regulation that have now had those shackles taken off. And we have a truck finance business, right? That is materially better than every other truck finance business in India. And it didn't have a chance to compete because one dominated over here and one dominator over here. And now it's a level playing field. And these guys are just cleaning up, right?”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“I know you raised a really interesting point, which is look when you have the kind of disruption that I am laying out, right? So, you know, a great business in coal or a great business in that's made automobiles but had a license given them to buy a cousin who happened to be a member of a government. These businesses have done, right? So there's going to be a lot of churn around at an index level. Some of it has happened already. So if you buy an ETF, you have the problem you have with ETFs generally, which is you're underwriting a slice of failure alongside a slice of success. So I think your question is a good one, which is how do you invest in India, right? And I think there are the broad framework is the same, right? Which is, and I always think it's about study past data, find businesses that can predictably generate returns over time.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Wow, that's a crazy multiple for a one year growth number. So you say Costco, I'm paying 20 times earnings and I'm only getting 13% growth. But if you get 13% growth every year for 10 years, that's 350% over 10 years. Divide that by 10. That's 35% a year. And a 20 times multiple 35% sounds awesome. So this is really the sort of the grind between China and India is”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Value. So naturally, you're going to have to pay a higher price for the predictability and the consistency of return. China's growth is relatively lower. The multiple is relatively lower. The risk is relatively higher. And the sum of that statement is it's very difficult to say what your return is going to be. Now, if I go into the sort of India situation and say, I should get paid 14% on average and I should be able to compound that over time, you're able to say at an index level, I should return in local currency 2x in five years' time. Now, I'm not making that as a prediction. I'm just simply saying that's kind of how I am thinking about it. So if you can invest in businesses that are predictably compounding a certain number, you can be much more certain about what your outcomes will be over longer periods of time. And, you know, the benefit of cost-bo-like companies is you think.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“No, I'm not saying that at all. I'm saying half of that. I'm saying that India's returns are very predictable in a way that you said Costco's are very predictable. And the price of a steady return on capital, i.e. the ability to be able to compound returns, naturally that price is going to be higher. So think of anything that goes into the Berkshire Hathaway portfolio. China, I don't think you need a crisis situation. You just need a continuation of where you are now. Difficult to predict, right? And if you run the same kind of analysis as I talked about with excess returns of India over China at an index level, Indian companies have returned a negative value over the last 25 years medium, where Indian companies, sorry, Chinese companies have returned a negative value, just making sure I say this right, Indian companies have returned a positive.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“In terms of long-term investment results, return on equity and ability to grow earnings is the most important. So if you take a company like Costco, if you bought a 1995 versus a company, one of the worst performing stocks, Air France, if you bought it, let's say you bought Costco in 2000, you bought Air France in 2000, Costco would have performed way better. But if Costco was three times as expensive, so you're cutting your investment returns in one-third, you still would have crushed France. And you need to say if China and Depression and their earnings contract and maybe even companies are nationalized and India grows, continues to like the US grow its profits very highly, then yes, the valuation differential will be more accounted for.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“14% compound is roughly 100%. Divide that by 5%. So actually you've got a CAGGR of 20%. So 20% a year as a shareholder and you're being asked to pay 20 times earnings for that. That doesn't seem wrong to me at all.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Markets, whether it's Taiwan, US, France, Germany, UK, Switzerland, all around that level, right? So let's put that to one side. India will grow corporate earnings at sort of mid-teens, right? So call that 14, 15% earnings growth over the next seven years. You can also stress test that by saying what is GDP? GDP is going to be around 6 to 7 percent. And then what have Indian companies paid you in excess return over the last 20 years? And the answer to that question is around 7% as well, which also gets you to a 14 number. So let's say you're growing at 14%. Now, that's high quality. It's compounding. So compound 14 over five years, that gives you 90 to 100%, right? So that's just compound return of, call it 14% each year for the next five years.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Put numbers around that in a second. But to me, this analogy is like lining up five automobiles. Four of those automobiles are terrible. One of those automobiles is great. Instead of having a winner, you have a loser and the loser is the one that is highest price. Now, of course, that's going to be the automobile that's the highest quality. And it's a very similar situation in India. Now, the way that I kind of think about it is I think you're quoting a sort of off cycle, right? So calendar year end rather than a March year end. So let's say we normalize that. So I sort of think about 24 months out is roughly the best time. So on a rolling 24 month out basis, I kind of have India between 20, 21 times earnings. I think that's sort of about right. The United States is on about 20. And to be honest, all of the sort of relatively high quality.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“India grows one at higher quality and two more predictably and three quicker than China at an EPS level. So that makes up for another sort of three to five. So if you normalize for one the unusual year end and two, the quality and growth differential, the multiples aren't really that out of whack. It sort of gets you to ask the question of why has this sort of become so embedded over time. And you can think it's a sinister thing or you can think it's an ignorance thing. I'm not sure. I don't know where to go, but I think you've got to argue either one, China's going to go back to its glory days, right? So the relative valuation of China is lower, but it's going to go up, or the relative valuation of India is higher and that it's going to go down, right? And maybe I can just sort of.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Expensive is a subjective construct, right? Let's just think about it that way. So in order to be expensive, you've got to be expensive versus something else, right? And I think you sort of hit the nail on the head is that the people will always point to the fact that India is expensive versus China. And to sort of deconstruct that, the first point is sort of complicated and annoying, but India has March year end, right? So when you compare, you know, I'm not sure what you looked up just now, you compare 2026 earnings or PE of India with 2026 earnings or PE of China, it's not an apples for apples comparison because India's 2026 ends in March. So actually it's mostly 2025. When you do the math around that, that gives you about a three or four hundred basis point of differential, right? Then the other big differential between the two is that.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Here we go. We're doing this. I got to tell you, let me sort of back this up a little because this is super interesting. So we started to sort of ramp up communication with our sort of investing partners maybe 12 months ago. This narrative of India being more expensive is a big deal. People think it, people believe it. I think it's absolute craziness. I think it's nonsense and I think it'll be logic at a, you can logic it away in five minutes. But the reality was that I thought I could sort of step in or we could step in and explain away. Are a couple of things that differentiate India from China, right? Because I think the reality of this sort of”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“I just looked up the price to earnings ratio, the valuation of the Indian stock market. I got 27 or 26.99. I'm sure it depends on what index you use, how you measure it. Next 12 months, previous 12 months. But that's interesting because the Chinese basket that I referenced earlier has a PE ratio of 13.54. So almost exactly India superficially has a price-to-earnings ratio double that of China. So that might lead one to say China is cheap and India is expensive. Do you agree with that and why?”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“It's relatively self-sufficient. I mean, India has always been a net importer of energy, so oil and coal. Coal will roll off over time. Oil India is quite far down the road in terms of developing green hydrogen. And so I'd argue that sort of moves on. But they're sort of accidentally exporting. And I say that because some companies have found that they just produce globally competitive products at very, very, very competitive prices. So quality and price. India will always be, has been always be a net exporter of, I think, human capital. So those emphasis TCS is really just about exporting services. Now, you've got $175 million that speak English and are ready to be exported digitally to the global economy. So I guess that will be an export. But on the whole, you should sort of think of India as having relatively low sort of global”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“It's a function like a lot of the other stuff we talked about of an economy going from super inefficient cash to very inefficient sort of digitized mechanical well-invested well-funded.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“The baseline is about trying to reduce costs across the board. So when you sort of think about, okay, we digitize, right? So let's say we bring the cost of logistics down by hundreds of basis points. Now, that's going to feed into inflation. At the same time, you make distribution more efficient of state payments or naturally you bring down inflation and clips all across the economy. So a more efficient economy is less prone to inflation. So less prone to inflation means you tend to get a normalized level. I think the central bank is looking for sort of three or four percent, but three or four percent, they'll be able to reduce rates structurally and bring not just a structurally lower term structure to rates, but also relatively lower volatility to inflation, which means the cost of capital will also come down over time.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“A little inflation is always good, right? So it helps a lot of sort of lines and an income statement, but too much of it problematic, as we sort of discovered in the US recently. So most Indian inflation was around inefficiency, the inability to get onions to market or the inability to drive better returns from agriculture. So if you had a bad harvest of whatever, then you have an inflation event.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“One thing I noticed is India has had a higher inflation rate than the US over the past 10 years, let's say. It may be different in 2022. India had less inflation, I believe, than the US. But the Chinese economy has not had that much inflation. Is there something about the Indian economy that is structurally inflationary about maybe inflation is not 2%, but it's 4% or something higher, if not out of control. But when you have inflation, nominal growth tends to be high too. So what is your perspective just on Indian inflation as well as an Indian economy with an inflation of 4% is better than a Chinese economy, perhaps with a deflation or inflation of zero or 1%?”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“Incomes are going up enough. Household incomes are going up, and inflation is coming down, you probably have long-term rates coming down. So real estate becomes an interesting option as a household investment theme. So there's no one particular. created this sort of digitally enabled country-wide very young population. You've crushed inefficiency with policy, and they now let rip to take advantage of this in really very many areas. So it's difficult to nail it down specifically. We tend to think it's company by company by company, but they have to have the return structures. They have to have the transparency structure is at least benign going forward.”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT
“And then you call the enabled layer, right? Is where I think we're looking for some really interesting forward-looking returns. Now, a lot of that is sort of industrial infrastructure driven. So let's say that's a given. People understand that. You want to be, I think, looking into digitally enabled logistics platforms, right? where before it took you three times longer to get a tomato to market. Therefore, it was a 60% chance it would perish. You now have fully scaled, digitally enabled logistics businesses that can efficiently crush the cost of logistics and also reduce dramatically the wastage. So it's business like that. And then that moves upstream to you think, hold on a second, if the cost of food or the inflation of food is coming down or staying static, then how”
2024-08-29 · Forward Guidance · India Is The Most Promising Emerging Market | Angus Shillington · IDENTIFIED FROM THE TRANSCRIPT