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Overwatch League announces multi-year deal with Kellogg Company

September 17, 2019 (updated September 17, 2019) Published by

Overwatch League announces multi-year deal with Kellogg Company (Esports Insider)

  • Activision Blizzard has announced Kellogg Company as a new multi-year partner of its esports Overwatch League (OWL).
  • The deal will last through 2021 and includes co-marketing initiatives with the company’s Pringles and Cheez-It brands, which will be the presenting sponsors of the halftime show and the highlights segments during this year’s OWL finals.

Analysis and Comments

  • The deal is a further sign of the growth on eSports monetisation, showcasing the rapidly increasing number of non-endemic brands that are willing to put marketing dollars into eSports.
  • eSports, while still under-monetised, continues to be one the most high profile platforms for games companies to advertise and broaden their audiences, enabling key beneficiaries such as Activision Blizzard, Ubisoft, EA etc. to increase engagement and publicity for their games.
  • Given recent structural changes within high-profile eSports such as League of Legends and Overwatch (franchising, home and away games, regular season play etc.), we think we could see eSports becoming a profit generator for the games developers (rather than just a marketing tool) sooner than expected.
  • Notably, MTG Esports, one of the largest US based businesses, recently reported huge growth in its eSports league (ESL). Over the course of the first seven months of 2019, ESL’s data shows that unique users (+90%), hours watched (+190%) and video views (+55%) all significantly increased as a result of fans tuning into properties such as ESL One, Intel Extreme Masters and ESL Pro League tournaments, shattering the numbers recorded in 2018.
  • It is possible that we could see an professional (multi-game) eSports teams/organisations become sufficiently profitable that they could look to go public, which could materially change industry dynamics.

Activision’s Share Price

Patients seem willing, but few taking part in telehealth, poll finds

September 10, 2019 (updated September 10, 2019) Published by

Patients seem willing, but few taking part in telehealth, poll finds (HealthcareDive)

  • According to a survey from Telehealth vendor American Well, 66% of consumers are willing to try telehealth, but only 8% have actually done it and 17% of those interested in virtual care were unsure whether the service was covered by their insurance.
  • Another study (from health system Intermountain Healthcare) found that only 20% of people had heard of telehealth, which American Well called “a tremendous opportunity”.
  • Additionally, two thirds of Americans are using devices that help them monitor their personal health and 50% use health apps.

Berenberg view

  • Telehealth is clearly increasing in popularity – the number of physicians reporting telemedicine as a skill rose 20% per year over the past three years according to a study from professional medical network Doximity – with younger generations the most likely to make use of the new virtual care services (surprise).
  • According to a 2018 study published in the Journal of the American Medical Association (JAMA), virtually conducted doctor-patient visits increased by 261% yearly between 2015 and 2017.  
  • However, the article also highlights the well-known gap between people saying they are willing to try something new and people actually then trying it – as well as the continued efforts required in consumer education.
  • The two key groups telemedicine providers have to convince are mothers (since they still handle the majority of their childrens’ doctor visits) and seniors (a tricky one, given the inherent reluctance to use the tech, but a lucrative and growing market which could probably be accessed by targeting the younger relatives who look after their care rather than the seniors themselves).

Teladoc: a specialized telemedicine company

Teladoc Share price

U.N. flags need to cut meat to curb land use impact on global warming

September 7, 2019 (updated September 7, 2019) Published by

U.N. flags need to cut meat to curb land use impact on global warming (Reuters)

  • According to a recent report by the UN’s Intergovernmental Panel on Climate Change (IPCC), global meat consumption must be reduced to curb global warming and alleviate strains on stretched land and water resources.
  • As human use directly affects more than 70% of the global ice-free land surface, plant-based foods and sustainable animal-sourced foods could free up several million square kilometres of land by 2050 and cut harmful emissions.
  • Last year’s report called for rapid changes across society to keep the temperature rise to 1.5 degrees Celsius, while this year’s report states that “[t]he window for making these changes is closing fast. If there is further delay in reducing emissions, we will miss the opportunity to successfully manage the climate change transition in the land sector.”

Analysis and Comments

  • According to the report, agriculture, forestry and other land use activities accounted for 23% of total net man-made GHG emissions during 2007-2016 (excluding pre- and post-production activity in the food system).
  • While the IPCC stops short from actually telling people to go meat-free, it does advocate the benefits of a more plant-based alternative diet, which may be seen as a positive for players in this space (although this is not exactly news).
  • The Guardian published a highly critical response to the IPCC’s land and climate report (saying that it “irresponsibly understates the true carbon cost of our meat and dairy habits”), which includes a number of very interesting figures – well worth a read!  

Beyond Meat’s Share Price

U.N. flags need to cut meat to curb land use impact on global warming

August 30, 2019 (updated August 26, 2019) Published by

U.N. flags need to cut meat to curb land use impact on global warming (Reuters)

  • According to a recent report by the UN’s Intergovernmental Panel on Climate Change (IPCC), global meat consumption must be reduced to curb global warming and alleviate strains on stretched land and water resources.
  • As human use directly affects more than 70% of the global ice-free land surface, plant-based foods and sustainable animal-sourced foods could free up several million square kilometres of land by 2050 and cut harmful emissions.
  • Last year’s report called for rapid changes across society to keep the temperature rise to 1.5 degrees Celsius, while this year’s report states that “[t]he window for making these changes is closing fast. If there is further delay in reducing emissions, we will miss the opportunity to successfully manage the climate change transition in the land sector.”

Analysis and Comments

  • According to the report, agriculture, forestry and other land use activities accounted for 23% of total net man-made GHG emissions during 2007-2016 (excluding pre- and post-production activity in the food system).
  • While the IPCC stops short from actually telling people to go meat-free, it does advocate the benefits of a more plant-based alternative diet, which may be seen as a positive for players in this space (although this is not exactly news).
  • The Guardian published a highly critical response to the IPCC’s land and climate report (saying that it “irresponsibly understates the true carbon cost of our meat and dairy habits”), which includes a number of very interesting figures – well worth a read!  

Beyond Meat’s Share Price

Survey says consumers avoid electric cars due to three myths: range, price, charging (electrek)

August 26, 2019 (updated August 26, 2019) Published by

Survey says consumers avoid electric cars due to three myths: range, price, charging (electrek)

  • According to a new survey by Autolist, the top reasons for not buying an EV were range, price, and charging, with c. 40% of respondents concerned about these issues.
  • The author makes the argument that these concerns are outdated, as EV prices are already below US$30k (after fuel cost advantage), provide a range of ~250miles, and the are thousands of charging points every where in the US.
  • One of the positive insights from the survey is that the majority of consumers (55%) now said they would use an EV as their primary vehicle rather than as a secondary vehicle (which was previously the top answer).

Analysis and Comments

  • This article fits in well with the investor’s view as to the process by which EV uptake will occur
  • The short version is that, as the article highlights, the key issue around EV adoption will be familiarity. For most consumers, current EVs are perfectly suitable for day to day use. Most of us just don’t drive far enough to need to recharge more than once a day (as with the person in this story). So the key is getting people to try one.
  • This does not understate the charging infrastructure challenge; yes, there is a lot more that needs to be done to roll out charging stations, especially fast chargers. But this is a solvable problem.
  • As with similar innovations, the adoption curve starts slowly and then rapidly accelerates – we expect to hit this inflection sometime in the mid 2020s. Tailwinds to this include tougher emission standards & city centre driving restrictions & potential headwinds include cutting of subsidies and a lack of affordable model choice.

The article also makes an important point:

  • Auto makers don’t need to keep making the range further & further, if the cost is more expensive batteries & hence a very expensive EV. The alternative is cheaper shorter range EVs, possibly with a lease package that includes the occasional use of a petrol car for longer trips

Electric Unicorn: Bus Maker Proterra May Hit $1 Billion Valuation With New Funding Round

August 19, 2019 Published by

Electric
Unicorn: Bus Maker Proterra May Hit $1 Billion Valuation With New Funding Round
(Forbes)

  • US-based electric bus maker Proterra, which may be looking to go public, is planning another fundraising round that is likely to push the company to a unicorn-class valuation of US$1bn.
  • The company supplies transit buses to cities across the US and employs a number of former Tesla engineers and executives.
  • The private equity sale (which the company registered on August 2nd) could raise up to US$75m in support of the company’s planned expansion beyond transit buses and into a new business unit aimed at selling EV components such as its batteries and motors.

Analysis and Comments

  • The bus sector is the easiest to electrify because of the predetermined nature of the driving routes which makes it easier and less costly to set up charging points. This explains why 60% of the bus fleet in Chinese cities is already electric.  
  • The bus sector contributes 10% to road related emissions despite being less than 1% in terms of the vehicle fleet. Electrification of bus fleets in Europe and the US will likely speed up over the next 5 years.
  • Chinese companies such as BYD will likely capture the bulk of the international electric bus market, especially short range city buses (also called transit buses). This will be because of their clear cost advantage versus western OEMs. Companies like Proterra are hence focussing on higher value longer range electric buses.      

♻️ 3 Recent Examples of Corporates Which are Working to Counter Climate Risks ♻️

August 13, 2019 Published by

Big Money Starts to Dump Stocks That Pose Climate Risks (Bloomberg)

Image associée
  • As climate change related risks are becoming more pronounced, major investment firms have been increasingly pushing companies to address these risks and their role in exacerbating them.
  • This year, almost every major public oil company faced at least one shareholder resolution involving climate change, with proposals winning record support.
  • While most asset managers prefer engagement to divestment, frustration over fruitless discussion and resolutions has also led to a growing divestment campaign.
  • Earlier this year, Legal & General Investment Management (LGIM) reduced its stake in oil giant Exxon by US$300m, using its remaining stake to vote against the reappointment Chairman and Chief Executive Officer Darren Woods.

Analysis and Comments

  • The whole debate around divestment vs engagement is a potentially divisive one – not so much among asset managers but in discussions with asset owners and particularly retail investors.
  • Over the last few years, it has been interesting to watch the shift in focus, as the engagers have increasingly honed in on the stranded asset risk across a whole range of industries, which has real and tangible implications for value.

Google pledges carbon-neutral shipping, recycled plastic for all devices (Reuters)

Résultat de recherche d'images pour "google devices"
  • Google announced beginning of the week that it would neutralize carbon emissions from delivering consumer hardware by 2020, and include recycled plastics in each of its products by 2022.
  • According to Anna Meegan, the company’s head of sustainability for its devices and services unit, the company’s transport-related carbon emissions per unit fell 40% in 2018 as it increased the use of ships rather than planes in transport.
  • Currently three out of nine products for which the company discloses details online contain recycled plastic (ranging from 20-42%) – which trails behind hardware rival Apple’s sustainability efforts.  

Analysis and Comments

  • The trend may be slow, but for those companies that sell high profile products such as Apple & Google, the pressure to show their green credentials appears to be growing.
  • It is not clear how Google will fully “neutralise carbon emissions from delivery” – initially it looks as if at least part of the solution will be via carbon credits (which will gradually become more & more expensive to buy).
  • Hence longer term, this increase in carbon crédits price could be providing an incentive for the transport sector to accelerate its own shift to low carbon.

Diageo spends £180m on greener African operations (FT)

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  • British spirits maker Diageo is investing £180m into green energy and water recovery solutions such as biomass boilers, solar installations and water recycling systems at 11 of its breweries across Africa.
  • The investment is the company’s largest environmental investment in a decade, and will include £50m in upfront capital for solar, water treatment and biomass equipment, as well as £130m in long-term supply and maintenance contracts.
  • The company’s ultimate goal is to become 100% green and it plans to half its water usage and GHG emissions by 2020 as part of a group-wide commitment. It is also increasing its focus on sourcing locally in, with 78% of agricultural materials used in its 12 breweries across Africa currently sourced from local farmers.

Analysis and Comments

  • Africa contributes c. 13% of Diageo’s global turnover and about half of the company’s beer sales, and a minimum of 20 of the company’s African production facilities are in so-called “water-stressed locations”.
  • Unsurprisingly, water is an essential ingredient in all of Diageo’s brands (90%+ of beer and 60% of spirits) and the company has thus far been able to achieve a c.44% improvement in water efficiency between 2009 and 2018.
  • According to new data from WRI’s Aqueduct tools, 17 countries (including Africa) – home to one quarter of the world’s population – face extremely high levels of baseline water stress, as water withdrawals globally have more than doubled since the 1960s.
  • Of the 17 most water-stressed countries,12 are in the Middle East and North Africa (MENA), where growing demand and climate change are pushing already constrained countries even further into extreme stress.
  • According to the World Bank, this region has the greatest expected economic losses from climate-related water scarcity (c. 6-14% of GDP by 2050), stressing the importance of pursuing SDG 6 – ensuring the availability and sustainable management of water and sanitation for all.
Résultat de recherche d'images pour "diageo solar panel"

Capital One reports data breach affecting 100m customers

August 6, 2019 Published by

Capital
One reports data breach affecting 100m customers (The WSJ)

  • Capital One, the 5th largest US credit card issuer, confirmed on Monday that a hacker accessed the personal information of around 106m card customers & applicants, in one of the largest data breaches of a big “bank”.
  • The bulk of the exposed data related to information submitted by customers and small businesses that applied for Capital One credit cards between 2005 & early 2019. It appears that the breach occurred as long ago as late March 2019, and that it was found by a so called white hat hacker, who emailed Capital One about the leak.
  • Capital One was an enthusiastic adaptor of the cloud for data storage, with the process of shifting all data to AWS due to be completed by 2020.
  • The data hacked apparently included social security numbers, bank account numbers, credit scores & payment histories but not credit card numbers.

Analysis and Comments

  • There was some early speculation that as the hacker had previously worked at AWS, that the hack might have come from there, but more recent filings by the FBI suggest that the Capital One data breach was the result of a configuration vulnerability in the Capital One system.
  • The Capital One breach came just days after credit reporting agency Equifax announced a c. $700m settlement with a number of US government agencies regarding their data breach  FTC blog on Equifax settlement. The settlement includes a sum of up to $425m for the c. 147m customers that were potentially impacted by the breach announced in Sept 2017.
  • Capital One was quoted as saying that they would make provision for costs of c. $100-$150m in 2019 to cover the notification of customers, credit monitoring & technology & legal costs. Although if the Equifax settlement is anything to go by this might not be all they end up spending.
  • According to the FT, news of the breach sent the shares of Capital One down 5.9% – a big move but not massive. This suggests to us that some investors are starting to view these breaches and the subsequent costs and fines, as just being a “cost of doing business”.
  • This approach may end up being risky. In the US, there have been increasing calls for more regulation of the way financial institutions protect their customers data Credit agencies must change how they manage data. Some commentators have drawn parallels with the European GDPR structure, where penalties of up to 4% of global turnover (up to E20m) can be imposed for breaches in processes around how client data is handled EU GDPR rules. In addition, much larger fines, such as the notice of intent to fine BA for a large data breach in 2018 ICO to fine BA £183m.
  • Consumers are increasingly looking to transact online – as more industries go digital, especially via the cloud, this is an issue that is going to take up more investor attention.

Capital One Stock Price

Germany expanding digitisation with the new Digital Care Act

August 4, 2019 Published by

Germany
expanding digitisation with the new Digital Care Act (Health Europa)

  • Germany has introduced the new Digital Care Act, which builds upon the 2016 ‘E Health Act’ that focused on developing information and communication technology in healthcare, particularly in the form of ‘electronic health cards’ and ‘electronic patient files’.
  • The new Digital Care Act will enable doctors to prescribe health apps, the cost of which, under certain conditions, will be reimbursed by German statutory health insurances.
  • Additionally, the German Act that currently prohibits the advertising for remote consultations will be amended, and any planned regulations of the introduction of the ‘electronic patient file’ have been removed, in order to facilitate its launch at the turn of the year 2020/2021.

Analysis and Comments

  • The electronic health card serves as an insurance card for people with statutory health insurance, while the electronic patient file (which hasn’t been built yet) is a further development of the card.
  • The file will enable statutory health-insured people to access a broad range of medical information such as, for example, findings, diagnoses, therapy measures, treatment reports, and vaccine history.
  • A separate privacy law governing the sensitive health data that is to be recorded in the electronic patient file is due to come into effect in January 2021.
  • Ultimately, the new law simply recognises the fact that patients have already been using health apps of various kinds, and stresses Germany’s intent to introduce digital services such as the electronic patient records as soon as possible.
  • Australia recently introduced a similar patient file called ‘My Health Record’, which apparently not only many Australians have opted out of, but is currently often empty (i.e. not being used as information is not being shared in a meaningful way between all parts of the system).

We need to shift the healthcare focus to preventative

August 2, 2019 Published by

We need
to shift the healthcare focus to preventative (The Conversation)

  • On the 22nd July, in the last days of the May government in theUK, a green discussion paper was released on preventative healthcare. The report highlights the long term risk to health budgets if the emerging (& in some cases already emerged) life style risk factors (smoking, obesity, diabetes etc.) are not addressed
  • The report flags some of the recent successes, including the reduction in smoking (its now down to fewer than 1 in 6 of the adult population)
  • But, it also highlights some of the risk factors we are yet to find solutions to – of which the biggest is obesity (especially in children)
  • The report goes on to discuss the increasingly important role that technology will play in helping to solve these problems, obviously not on their own but as part of a wider shift in healthcare priorities
  • The article also highlights that only 5% of UK NHS spending (which is the bulk of the governments healthcare budget) goes on preventative medicine.

Analysis and Comments

  • This report and the related article picks up two very important issues in healthcare – that we think will have material impacts for investors.
  • Much of what we see in the industry around innovation is about better ways of doing the same thing (better heart valves, improved drugs etc). This is in of itself a good thing, but its not enough if innovation is really to make a difference to long term health outcomes
  • This article also picks up on the second important issue, institutional change. Across Europe much of our healthcare industry is driven by government spending & priorities. In such an environment, switching to preventative healthcare is tough as it does not really contribute to achieving short (or in some cases even medium) term goals.
  • The article picks out a number of areas where current technology, properly applied, could make a difference to longer term health outcomes. Inaddition, just yesterday, there were reports out can Google predict kidney disease, that suggest AI could be used to help identify those hospital patients that are at a high risk of developing kidney related complications. The current trial at the Royal London Free Hospital, seems to have gone well kidney app a life saver.
  • These technological advancements to really gain traction need a shift in emphasis among politicians, who set government healthcare priorities. When that happens we could see an explosion in opportunity for European healthcare companies.
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