Episode 211: SkinKandy Deep Dive, Labor Revolting, More Budget Woes, and Is The UK Racist Against White People?
Adam and Adir go deep on SkinKandy, share the latest on the budget, look at the murder of young Brit Henry Nowak and announce which listener won a $500 Luxury Escapes voucher.
The Contrarians catchup
The government spent $20M on a radio ad campaign telling Australians to pump up their tyres and remove heavy items from their boot to reduce fuel consumption. Adir did the maths: “If 2% of cars on the road pumped up their tyres from 28 to 32 psi and removed 50 kilos from their boot, it saves one million litres a week. Australia consumes a billion litres - 15M litres over 15 weeks. In the grand scheme of government wastage, it’s actually not too bad. They’re effectively buying petrol at a dollar a litre.”
Glen Ira City Council wrapped one of its electric vehicles in about $10,000 of vinyl livery announcing it was “reducing emissions.” Adir: “I think that’s just indicative of the wasted money. There would be a million better things to spend that ten thousand dollars on.”
Adam on removing the fuel excise: “Removing the fuel excise has the exact opposite effect. It obviously makes petrol cheaper so more people use it. They should actually be increasing the excise if they really want to reduce fuel use. But this is a government that cares much more about votes than actual economic policies.”
Adir’s take on why centrist politics is impossible right now: “No one feels passionate about calmness and reasonableness. In an era where everything is extremely emotional, centrism and reasonableness and rational argument is super weak compared to one line emotional fighting. I think we’re leaving the age of reason. And if we’re going back to the age of emotion, which by the way caused both world wars, then being a centrist party today is fundamentally the problem.”
SiteMinder is up 30% in a few months after both Adam and Adir flagged it as a buy. Adam: “SiteMinder’s been on a tear since we spoke about it. It was actually on a tear before we spoke about it, but it’s been on a real tear.”
The Victorian government: 35 seats and a crime wave
The latest polling suggests Labor could lose up to 35 seats at the next Victorian election. Victoria has entrenched itself as the crime capital of Australia, with insurance claims for car thefts surging 25% this year while every other state fell: WA down 15%, SA down 14%, Queensland down 12%. Victoria’s car theft bill exceeds every other state combined.
Adir: “People hate this government now. Enough people hate it. The question is who are they going to vote for? That’s the bigger issue. Historically the two most left-wing states in Australia are South Australia and Victoria. South Australia gave One Nation a big hug in their election. And if Victoria does the same, despite One Nation’s inability to have coherent policy amongst their leaders, people are becoming so upset with the far left they’re swinging far right, because they’re skipping over the top of the coalition.”
Adir: “The Victorian election will be a super interesting barometer federally. I think politically, electorally, at the federal level, the more interesting part of it is what becomes the relationship between the coalition and One Nation in Victoria after the election.”
Adam: “Dan Andrews has been the key proponent, but Jim Chalmers and Albo have jumped on it as well. We’re going to just massively increase the size of the public service. Who do public servants vote for? They vote for us. So we’re going to stay in power.”
The budget: hidden powers and a sleeper clause
The AFR revealed hidden provisions in the Federal Budget Tax Bill that give Treasurer Jim Chalmers massive powers to create additional CGT and negative gearing rules outside the legislation, bypassing parliamentary scrutiny. A separate “sleeper clause” could inflate tax bills by stripping the right to cherry-pick how capital losses are offset against gains.
Adir: “Albo just decided he’s not going to be swayed by pressure that he perceives is being pushed by interests aligned with the conservatives and the right. One of the things that’s incredibly similar between Elbow and Trump, other than being populists, is they view concession of any errors as being a weakness. He will only flip if there’s a way that he can say, yeah, I meant to do this all along.”
Adir: “The primary driver of jobs creation in Australia in the last half decade has been public service jobs. Jobs where the money that people are paid depends on taxing wage earners in order to have the money to pay them. That is where jobs growth is coming from in Australia and in Western countries, and that enshrines this culture of entitlement.”
Adam: “We’ve got too much spending, whether it’s the NDIS frauds costing real disabled people the ability to get money, all the public servants, the ridiculous infrastructure like SRL that nobody wants. Then you’ve got a really inefficient tax system that effectively taxes income, not wealth. So that’s inherently unfair. And we’ve got so many younger people carrying the can for older people through the greatest tax rort of them all that nobody ever talks about, which is superannuation. Nobody talks about it because Paul Keating’s done such an incredible branding job on super, and you’ve got all the super funds who have their snouts at the trough and all the fund managers who get paid billions of dollars.”
Adir: “No taxation without justification. Every time the government is going to take your money, they should make an argument for why it’s better for society to take your money and put it elsewhere than to leave you alone with your money. The thing that’s horrified me about this debate is there are so many people whose starting point ignores this idea of taking half of someone’s money that they’ve earned, and they say, why should you get better treatment for your capital than we get for our wages?”
A deep dive into SkinKandy
SkinKandy, a 15-year-old body piercing and jewellery chain, listed on the ASX last month at a market cap of $245M, raising a upsized $160M at $2.20 a share. The company has 100 stores, does 650,000 piercings a year, and will do close to $90M in revenue this year. Gross margins sit at around 90%. CEO Dane Freeze previously ran Lovisa’s global rollout. Board member Trent Peterson was also involved in Lovisa, Adairs, Dusk, Universal Store, and Shaver Shop.
Adir: “I love this business. Like I think there are so many things to love about this business. This business basically says we’ll pierce your ears and make a ton of money. And by the way, we don’t have to employ extra people to pierce your ears, because we have to employ that person anyway. We’ll sell you jewellery and make a ninety percent margin on that. What does it mean? We buy something for two dollars and sell it for twenty on a piece of cardboard.”
Adir: “This is a business that’s basically running on ninety percent gross margins overall as a business. Like I’ve almost never seen that before. From FY24 to FY25, it grew 39% and grew its gross profit 1% more than that. It’s actually still getting margin expansion at the gross profit line. God knows how they’re doing that.”
Adam: “New stores cost an average $278,000 to open and generate $240,000 in EBITDA in the first year, making for a quick 13.9 month payback. I’ve got stores making $800K EBITDA and it costs them $300K, so you’ve got your payback period of four months for the best stores. These guys don’t need franchisees, they can do it themselves. It’s hard to think while these guys aren’t rolling out quicker. All they need to do is just rinse and repeat. Not just in Australia. You’ve got UK, you’ve got US, you’ve got other countries. Nobody’s done this really anywhere well that I know of.”
Adir: “The reason is it is such an impulse purchase that the more foot traffic in their target demographic they have walking past the store, the more sales they make. And so a big mall, you might not walk past one of their stores. It’s okay, we’ll have two of them to make sure you do walk past.”
Adam: “The CEO spent three years as COO during Lovisa global rollout. So he is the perfect guy to be running this business. I think there’s one where you buy and put in the drawer. You trust Trent and the team to execute again, because they have. I actually didn’t expect to like it as much as I did. I don’t think it’s expensive at 30 times PE at all.”
Adir: “This is my favourite kind of business. It is founder involved, it’s got good management, you can see a great long-term path. I believe in the business, I believe in the leadership, and I believe in the TAM. This to me is a business where you can potentially invest and say ring me in five years and then ring me again in 10 and tell me how the investment’s gone.”
Five other stories worth following:
University of North Dakota researchers are testing mobile wastewater treatment for NASA that turns astronaut waste into plant food. With three bioreactors handling toilet, shower, laundry and food waste, it beats Apollo’s moon bags.
Quilty says its AI can predict whether scripts will become hits, charging $50 per analysis. But after backing Sydney Sweeney’s Christy over Sinners, its box office crystal ball still looks pretty cloudy for now.
Apple is expected to show off a smarter, Gemini-powered Siri at WWDC after years of delays and AI stumbles. For Tim Cook, it’s a last chance to close the biggest gap in his legacy.
Pope Leo began a weeklong Spain visit with Mass for 1.2M people in Madrid, the first papal visit there in 15 years, as young Spaniards increasingly return to Catholicism despite Bad Bunny competition.
SpaceX is reportedly preparing a blockbuster Nasdaq debut that could value the rocket company at $1.77T, dwarfing previous IPO records and potentially making Elon Musk the world’s first trillionaire this week.