Footonomics by Jakobsen & Garnry #3

Equities 5 minutes to read
Peter Garnry

Head of Equity Strategy

Summary:  Today's Footonomics is about England vs Croatia that is tough match in football, but an easy win for England in the world of equities with Unilever winning 3-0 over INI Industrija Nafte on superior fundamentals. On the macro and football quotes it is a draw with surprisingly Croatia beating England on the Misery Index - well done Croatia! Steen's and Peter's prediction is that the match will be an entertaining one finishing 3-3.


Match: England vs Croatia

Macro: Le Roast Beef vs. Our Beautiful (Liepa nasa)

  • Croatia takes the win on the Misery Index (CPI + Unemployment + Budget deficit) with a 13.9 score vs. 16.9 for England. (Higher number is worse)

  • England is ranked 10th in GDP globally vs. Croatias 80th place. England win.

  • Croatia has most appearances in the finals without ever finishing in the top four: 5 times, but even worse England: Most appearances in the finals without ever finishing in the top 2: 9 times! Major win for Croatia.

  • Best football quotes: England: Gary Linker: Football is a simple game. 22 men chasing a ball for 90 minutes and at the end, the German always win.Croatia represented by Luka Modric: “Fight for your dreams and success. This is what has always guided me. Linkers is iconic, sorry Modric (you got some amazing good advice though!). England Win.

Equities: Unilever vs INA Industrija Nafte

  • Unilever, one of the world’s largest consumer goods companies, wins 3-0 over INA Industrija Nafte, Croatia’s largest oil company, as Unilever is cheaper on valuation (18.5 vs 35.6 on 24-month forward P/E ratio), has a better return on equity (45.8% vs 1.8%), and has a higher expected growth rate (6.5% vs 1.1%). Unilever is an extremely well-run company and difficult for Balkan oil company to beat.

  • Unilever has since 2017 been diversifying away from non-core businesses to enhance operating margins and cash flow generation. The world’s largest soap maker is a well-diversified company that has the pricing power to pass on any inflationary pressures to consumers.

  • INA Industrija Nafte had some great growth years before the pandemic but lost 35% of its revenue in 2020 and plunged into losses. With Balkan economies opening up again the business outlook has improved; however, the oil company looks quite entrenched in the old integrated oil and gas business.
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