2016 All-Asia Research Team: Australia/New Zealand, No. 1: Lourens Pirenc & team

Lourens Pirenc & team

Morgan Stanley

First-Place Appearances: 5

Total Appearances: 8

Team Debut: 2009

Morgan Stanley claims first place for a second straight year and for the fifth time since 2010. Sydney-basedLourens Pirenc, 43, oversees the firm’s Australia/New Zealand equity research, leading a 25-strong crew in reporting on some 180 names. Stationed in Melbourne and Sydney, the analysts are “good at identifying market trends early,” says one admirer. Investors cite, in particular, the team’s ongoing skepticism on Woolworths, a consumer staples retailing heavyweight headquartered in New South Wales. In January 2015 the researchers highlighted their underweight rating on the stock, at A$28.57, noting a slowdown in the consumer cycle, increasing competition in New Zealand, currency weakness and rising taxes as among the pressures likely to impact earnings. Sure enough, management subsequently reported that Woolworths’ annual net profit fell 12.5 percent for the fiscal year through June, to A$2.15 billion ($1.64 billion), and collapsed 176 percent year over year for the following two quarters, resulting in an after-tax loss of A$972.7 million. By late April its shares had tumbled 24 percent, to A$21.72, lagging the broad regional market by 17.7 percentage points. Pirenc and his associates forecast a further decline to A$17. “They’re not afraid to have a negative or contrarian view,” another fund manager observes. In general, the Morgan Stanley group foresees a broad movement away from domestic drivers and toward targeted overseas expansion, among other operational shifts. On this theme Domino’s Pizza Enterprises remains a favorite. Since launching coverage on the Queensland-based fast food chain operator and franchisor in April 2010, the analysts have recommended overweighting the stock, then trading at A$4.41. They cited leadership’s success in expanding Domino’s footprint in Europe — where it maintained operations in Belgium, France and the Netherlands — and continue to tout the company’s growth in that region and in Asian markets. It has, for instance, secured its positions in both Japan and Germany and is well positioned to deliver “significant earnings growth over five years,” says Pirenc, with offshore revenue poised to triple in five to ten years. Domino’s shares were trading at A$61.97 late last month, up 75.4 percent over the trailing 12 months and ahead of their regional peers by 91.3 percentage points. Over the life of the call, the stock has far outperformed Asia ex-Japan names overall, which delivered a 7.3 percent gain. They assign it a 12-month price objective of A$70.