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Showing posts with label sport. Show all posts
Showing posts with label sport. Show all posts

Sunday 16 July 2023

The economics of the sport of golf, a game of patience as well as strategy

 

MST Golf's is a one-of-a-kind listing and therefore would enjoy a scarcity premium.

 


 

THERE is a joke in the golfing community, ask a man to wake up before sunrise, there will be a million excuses.

Ask a man to tee off at dawn, he will be right on time. In the years I have played the game, I have witnessed the laziest people putting the utmost effort into improving their golf swing.

The amount of money spent on equipment, coaching, practice rounds in the driving range, club membership fees, travel and flight expenses to overseas golfing trips is mind-boggling.

This sport is by no means cheap and compared to other equipment sports like ping pong, it is incomparable.

However, once you start the game, you will be hooked for life. Every single round of golf is different.

The experience of playing with different people and courses makes it even more interesting.

So, what has all this got to do with business or the stock market?

Well, we have a highly anticipated

Main Market initial public offering (IPO) coming soon, which is the MST Golf Group Bhd listing.

For those who play the game, MST is a household name for golfers. It has been around for as long as I was born.

Over the years, MST has grown from a single retail store to controlling more than 51% of the local golf equipment retail and distribution market in Malaysia.

It is also the second largest golf retailer in Singapore. Although some older establishments such as RGT Golf, Desa Golf House, Transview Golf and others still exist in the market, none of them have seen the growth rate and expansion the way MST has done through the years.

A game of passion


Golf as a sport has been growing tremendously in the past century since its founding in Scotland in the 1860s. Today, there are over 80 million golfers and 30,000 golf courses globally.

The United States, Japan and South Korea are the top three countries which dominate global golf participation.

Based on the World Golf Report 2023 data, worldwide golf equipment and apparel market hit Us$20bil (Rm93bil) in 2022 of which Us$11.1bil (Rm51bil) was in equipment sales and Us$8.9bil (Rm41bil) in apparel sales.

There was also a major surge in worldwide sales in 2021 with an annual increase of more than Us$5bil (Rm23bil).

The sport is so popular that a seismic change in the golfing landscape occurred in 2022 when a new professional golf tour funded by the Public Investment Fund (sovereign wealth fund of Saudi Arabia) known as LIV Golf started and challenged the historic PGA Tour.

The prize fund up for grabs for a single season tournament reached a staggering Us$400mil (Rm1.8bil). Top-ranked golfers were offered hundreds of millions just to join LIV.

The PGA Tour reacted by banning professional golfers who played on the LIV golf circuit and multiple legal suits were filed between the two organisations.

Ultimately, a resolution appeared to be in sight following the news that a potential merger will go ahead between the two franchises. A Netflix documentary on golf, called Full Swing, depicts the sport’s evolution.

Golf as a sport has a huge market not only in terms of the annual growth rate of the number of players, but it remains the most lucrative sport in terms of the prize money and sponsorship deals.

We can see the continuous sponsorship of Rolex and other premium brands plastered all over golfing events.

Market leadership


MST’S IPO was oversubscribed by 5.28 times. This is a good performance considering it is a Main Market listing looking to raise Rm130mil for expansion.

At the IPO price of 81 sen, the market cap upon listing is expected to be Rm665mil. This is a rather huge IPO and not comparable to smaller ACE Market listings.

The question on some retail investors’ minds is that recent Main Market listings have been disappointing such as DXN Holdings Bhd, Radium Development Bhd and more recently Skyworld Development Bhd.

Some are concerned that the sentiment may impact this IPO as well. I am of lesser concern because the true value of the company lies not only in which market it lists but also its business itself.

Apart from the clear market leadership position of MST, many from the investment fraternity have used MR DIY as a peer comparison. I have also seen some other commentary using other retailers such as Innature, Senheng, Padini and others which are in the consumer retail space.

This led to the misconception that MST is listing at a very steep valuation. MST in fact is a specialty retailer and distributor of equipment for a global sport catering to the segment of consumers with the highest disposable income.

MST is very different from the other above-mentioned consumer retail companies which target the masses.

Furthermore, due to its track record and entrenched market share, we are unlikely to come across another golf equipment retailer and distributor company listing on Bursa Malaysia in the years to come. This is a one-of-a-kind listing and therefore, would enjoy a scarcity premium.

Ideally, I would like to see MST perform as well as MR DIY on listing day and the weeks to come.

However, the distinguishing factor that I believe would see MST sustain and do better for the longer horizon is because the MR DIY listing does not include the businesses in its other foreign markets which it expanded to such as Indonesia and the Philippines, etc.

For MST, the listing of the group includes all markets and MST is only starting to venture into Indonesia and Thailand; both are huge golfing markets by the sheer number of their population, popularity of golf tourism and burgeoning middle class.

A better peer comparison in terms of the valuation for MST would be Us-listed Topgolf Callaway Brand Corp.

It is one of the most popular golf equipment brands with a long history of being golfers’ favourite. Callaway has historically traded at an average forward price earnings (PE) valuation of 31 times. The immediate forward PE valuation is 23 times.

On the premise of the same valuation metrics, the likely intrinsic fair value for MST in 2024 is not too far off from TA Research’s recent report.

I often likened investing in the stock market to playing the game of golf. It is a game of patience, prudence and strategy.

A lot of practice and dedication is required to be good at the game.

Additionally, this is one sport where the biggest competitor is yourself and not your opponents. Consistency is the key, and one swallow does not make a summer. It is a long game.

Investing in the right company within a short span of time is meaningless if you cannot maintain the performance over a long duration of time.

Ultimately, the one who is regarded as a good investor, like a good golfer, is someone who consistently beats the market and surpasses their own performance over a long duration.

Golf is one sport that has a long-life span. It is a game that one can play until a ripe old age. Unlike badminton, football or basketball, the cardio element and companion requirements limit the longevity of the sport.

If your elderly parents are still insisting on playing badminton on a regular basis at the age of 70 and above, I would recommend you asking them to slow down.

Golf, on the other hand, would be one that requires little concern. If anything, the long outdoor session followed by the after-game chit chat session bodes well for the elderly who enjoy companionship.

Now, for those who have subscribed to the MST Golf IPO or are planning to invest on “Gong” day, I hope my article is able to shed some light on the economics of golf both for the uninitiated and for those who enjoy the game as much as I do.

But I must put forth a disclaimer; as an avid golfer myself, my views may be coloured by an inherent bias and lack the objectivity required for a fund manager.

Whether my love for the game would help with my investment or otherwise, we shall find out on July 20.

My best wishes to all fellow golfing aficionados, hopefully we can all reap the rewards of the long game. In the event this IPO goes out of bounds at tee off, we can always try asking Bursa for a Mulligan. 

The Star - StarBiz
Ng zhu hann
 

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https://youtu.be/9cGeDbIHX3E

Monday 8 June 2015

Science on high intensity interval training: HIIT, or SHIIT?


Let me pose you a question: would you rather go down to the video store (if it hasn’t yet gone bankrupt) to hire a DVD, or stream it from the comfort of your own home? You’ve probably answered: the comfort of your own home, unless of course you get all nostalgic about walking down the street to hire discs. I know I do!

Okay, okay, now let me pose you a further question: would you rather spend one hour exercising, or 30 minutes? Stop, don’t answer that just yet. What if I were to say that both workouts would give you equivalent results? Unless you’re a time wasting enthusiast, pain junky, or DOMS devotee you’re probably going to answer 30 minutes. Well a new (old) exercise regiment known as high intensity interval training (HIIT) is offering just that.

Yes, if you believe one of the internet’s many great fitness prophets, then you will be aware that HIIT is the shit! Slow endurance training is the DVD for hire and HIIT is Netflix, which is of course, the shit. So is HIIT truly the shit, or should you beware of false fitness prophets?

HIITWorkout

What is HIIT?

Before I answer your previous question. What is HIIT? Simply put, HIIT involves performing intervals of highly intense exercise followed by either complete rest, or low intensity exercise. The high intensity-low intensity combination seems to be the more popular of the two currently.

How about an example? Sure, here’s one. Let’s say running is your game. Your HIIT may involve a ratio of a one minute sprint, to 45 seconds of slow jogging, repeated for a total of 15 minutes. It certainly doesn’t have to follow this exact ratio, or duration and these variables change greatly from protocol to protocol, that was simply an example. I should note, however, that scientific data to date has found minimal difference between different interval ratios thus far (9).


HIIT (1)

Why HIIT might be the shit?

HIIT is proposed to lead to multiple complex physiological changes to the skeletal muscle system that promote fat burning efficiency and preference, and more efficient oxygen utilisation. In turn, this is proposed to: make you skinnier, fitter and it will likely give you the ability to fly! But probably not the last one.

Science and HIIT (SHIIT):

Of course theory means little unless it translates to real world, real life changes. So, does it? Spoiler, it generally does.

Aerobic health:

A review paper analysing studies on individuals suffering from various different lifestyle diseases found HIIT to be effective. Specifically, cardiovascular fitness, as measured by Vo2 max, was 9% higher when individuals performed HIIT as opposed to moderate intensity continuous exercise (1). Another large scale review paper on scientific studies to date found HIIT to improve: aerobic fitness level more so than normal, moderate intensity exercise in both sedentary and active individuals. But it was only as effective as continuous exercise training in athletic persons (2). If that wasn’t enough science for you, a third study found HIIT to improve aerobic fitness as well as moderate intensity continuous exercise in a relatively fit group of people (3). This basically tells us that the lower your fitness level is, the better you will respond to HIIT and if you only want to do one sort of training, HIIT will be more effective than continuous training for aerobic fitness. Conversely, if you’re really fit and only want to do one form of exercise, then HIIT is as good as continuous moderate intensity exercise for aerobic fitness.

beautiful fitness woman

Muscles, muscles, muscles:

What about those muscles? Can you skip the separate weight sessions and do an all in one HIIT session? Well, the scientific data is very limited on this. But the one study that does exist on this topic, found that when having an active rest period was compared to having complete rest, complete rest won. Yes, complete rest led to greater work output, which in turn would likely mean improved: muscle mass, strength, power, looking shredded bro (4)! This makes sense and says that resistance training HIIT will likely provide you with some nice adaptations, but not as good as traditional weight training where proper rest between sets is taken.

Weight loss:

What about weight loss then? The data ain’t crystal clear on this. One study found HIIT boxing was better than continuous brisk walking at improving body fat percentage (5). Another study found participants had a decreased waist circumference following HIIT, but not following moderate intensity continuous exercise (6). Yet, in complete contrast, continuous moderate intensity exercise was found to decrease trunk fat more so than HIIT in another study (7). All in all, the science isn’t certain on whether HIIT or continuous training is best for weight loss. But if you base your workout on the number of calories you’re burning, based on average heart rate or a similar method, then you should be no worse off than performing continuous exercise, as average heart rate tends to be higher for HIIT and stays elevated for longer following exercise.

Adherence:

If HIIT is quicker to do, then you’d think people would do it more and stick to it. And they do! High intensity interval training led to a greater level of adherence (89% vs 71%) than moderate intensity continuous training (8). Grouse!

HIIT


Is it healthful? 

Ladies and gentlemen, HIIT is the shit! Or at least it is pretty darn good and very relevant to our time-centric society:

  • HIIT is likely as good as endurance exercise for aerobic fitness and if you’re of a low fitness level it’s probably better.

  •  Resistance training HIIT won’t get you as ripped as traditional resistance training with structured rest periods. But it’s probably not a great deal worse.

  • HIIT will lead to at least equivalent weight loss to continuous moderate intensity exercise in a shorter period of time, likely due to an elevated average heart rate.

  • HIIT generally leads to higher adherence, so you’re more likely to stick with it.

Our verdict :Highly healthfull. If you’re time poor and unfit, HIIT’s the most effective way to turn things around. Although if time is less of a factor and you really want to optimise your health you should combine HIIT, anaerobic exercise and aerobic exercise as part of a proper periodised program. Especially, if you have sport related goals.

I hope this has been healthful!

Isithealthful

I hold a Doctor of Physiotherapy, Bachelor of Exercise Science and am a qualified personal trainer. I have extensive clinical and research experience and a strong passion for all things health. This has driven me to write the blog: Is it healthful, in order to analyse sound scientific research to determine if a product, service or intervention is healthful, or simply a waste of money or time.
 
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