Johannes Faul: Key takeaways on the retailing sector coming out of reporting season, there's still a bit of a split we see in terms of the outlook for discretionary versus the essential non-discretionary categories. Food and liquor we're seeing sales momentum is actually improving. It's improved in the second half, and it keeps on improving into the new fiscal year 2024. So, the top line for both liquor and food looks good. For the discretionary retail sector, however, as expected, and we've seen that through trading updates throughout the year, that slowing sales movement, that very challenging environment has continued, has carried over into fiscal '24 and we're seeing that across categories like consumer electronics, department stores, apparel.

There is, however, also a theme that's emerged and will really impact earnings in FY '24 and that's inflating cost base. And the most important item there is wage growth. Wage costs are going to increase quite dramatically in fiscal 2024 for both the food retailers like Coles and Woolies, as well as the discretionary retailers like JB Hi-Fi. On a positive note though, for discretionary retailers, their balance sheets are in very good shape across the board, and we don't really foresee them coming out under financial pressure in that sense in the current financial year. So, earnings, yes, margins will contract, earnings will come back to more normal levels for discretionary retailers, but the balance sheets are in a state that we're not worried about them.

Angus Hewitt: For airlines, profitability has massively turned around from record losses during COVID to record or near record profitability. Demand has come back really strongly, but supply is still constrained due to the availability of aircraft, labor and parts. This is leading to expensive tickets, full planes and exceptional profitability for airlines. But we think this is about as good as it gets for airlines. We expect competition to gradually ramp up as these supply constraints ease. That should have an effect on ticket prices and therefore profitability for the airlines. Airlines globally lack economic moats, and we think these issues that have plagued airlines before the pandemic will return as supply returns.

On the gambling side of the equation, recovery from pandemic lows is contrasting with increased regulatory scrutiny. So, while profitability is roaring back for venue-exposed businesses like Lottery Corp's Keno casinos and Tabcorp's retail venues, how this looks with increasing regulatory scrutiny, things like advertising restrictions, increased levies and operating restrictions remains to be seen. We think a company like Lottery Corp with lotteries that are mostly removed from the conversation around problem gambling and money laundering is much less exposed to the increased regulatory scrutiny. On the opposite side, you've got casinos, which are most exposed to regulatory scrutiny. However, we think pessimism in the share price is actually overblown, and these companies like SkyCity and Star Entertainment are actually trading at a decent discount to our fair values.