@SebastianG and @Noddy74 - persoanlly, I don't see an ethical issue with the PBN model.

The world is full of models where if you are late, you pay a late fee. I remember as a child growing up in a small town in NZ, if my library loans were late, there'd be a small fee to pay (OK, it was only $0.10 per week per book, but when I only got paid a few bucks for my paper run, it wasn't nothing!)

Moreover, the world over, local councils use parking fines as a revenue generator as well as incentivising the public not to block spaces all day, which are intended for 1-2 hour shoppers, or visitors to a hospital, as another example. Why should the economics of a public parking space be different to a private parking space? It's a clear and transparent contract. Pay, for example, $3.50 per hour, and if you overstay, you pay $100 to incentivise you to honour your side of the contract.

The risk I do worry about is regulatory intervention. If the business becomes too profitable or loses its social licence to operate through, for example, misuse of data by another market participant. The QLD experience shows that regulatory intervention can quickly turn things on its head. That's why, massive though the UK opportunity is, I do hope they continue to diversify.

Great discussion!

@SebastianG you asked the following:

'And so the question I have about this business, particularly if it's based in UK cities, is whether the use of carparks is going to increase overtime'.

My primary question is, does it matter? I have owned this business for five years and haven't ever really concerned myself with the growth of carparks -- and whether or not they will increase overtime. Sure, a decrease in the long run might be a key indicator of people driving less, but data does not support this. Even with the impact of C-19, when many thought parking would suffer long term due to changes in the way we live (remote living, more things online, less travelling etc) I considered this noise and still do. My investment in Smart Parking has never really been about the industry or the broader thematic. It's about a little business that has attractive economics and a solid management team, with a sound strategy of slowly self-funding the growth and expansion of their business. Maybe that is simplistic but even with a shift in driving/parking habits the runway remains significant and will for a long time in my opinion. I don't think autonomous driving is a key risk. I too remain a sceptic and I think mass adoption is a long, long way away, if it ever happens. Even if it does, does an increase in autonomous driving spell trouble for parking operators? In reality the two could both exist. I don't think that is a sound argument not to invest in this business though. I also completely agree with @mikebrisy that there are no ethical concerns here.

I like your train of thought @SebastianG , particularly your self analysis re why you still haven't jumped on board $SPZ. Very open and host appraisal.

I also like the response by @Noddy74 and your thoughts on autonomous vehicles at some point in the future. By all reports, Alphabet is the leader by some way in this sphere, but for the general public, there is still too many hurdles in legislation and infrastructure (and budgets) to make this happen overnight. Sure, public transport, mining, known route transport, maybe some company (more likely government) fleet vehicles will be or are first adopters, but there is still huge hurdles re the handover between autonomous and manual, etc, etc.

I think companies like $SPZ have plenty of time to "make hay while the sun shines" if run correctly, which it seems to be.

There's that bias creeping in again, as a holder in SM not IRL.

The moral argument is always an interesting conundrum. In the old days I worked for some time in the Tenix Group for their Energy and infrastructure business Tenix Alliance). For those who don't know, Tenix was formed when the original founders of Transfield, 2 Italian engineers that migrated to Australia in the 1950's handed the business over to the next generation and there was a huge fight between the two families with one family keeping the Transfield name and the Salteri family creating an off shoot called Tenix.

Anyway, I digress somewhat!! Tenix Group also had a business called Tenix Solutions that made a motsa (private company so let's stick with a shedload) doing mainly fine enforcement in NSW & Vic. So speeding fines, toll infringements, parking, overdue fines for almost anything that the government didn't want to be seen to be chasing......but did. So other than a 25% stake in the harbour tunnel (how's that for a long term investment) that's how they made virtually all of their groups annual revenue and they were by far the most profitable of the Tenix businesses.

Personally I think along the lines of @mikebrisy & @Rocket6 and don't have a moral or ethical issue with a business that is open about their role and acts inside the law and the conditions of entry for parking (in their case). Of course, the expectation is they do follow due process, etc.

I certainly think it's a pretty straight forward decision for me after seeing the Salteri's and Tenix do it for government for so many years and its not a consideration for me with $SPZ.

Great topic/s about a very interesting business, thanks @SebastianG

Hi @Rocket6

All your comments are fair and reasonable.

I am not sure Covid-19 is a fair comparison because clearly during the pandemic, carparks suffered. The big players in Sydney and Melbourne CBD for example probably got by on long-term carparking holders. For example, if you are a Partner of a law firm and drive to work, you also generally rent a car space and those leases tend to be on 12+ month time horizons and very often they are built into the Partnership Deed where the firm pays. So the ongoing revenue of a carparking centre would still have been pretty consistent from those carparks. The ad-hoc carparks, like Wilson early bird spots, shopping centers and the like would definitely have decreased during the pandemic. Obviously as things got back to 'normal' the revenue of these places has probably got back to levels they were at previously (or likely increased even).

I haven't thoroughly analysed the data, but based on my personal experience, the carpark I occasionally used when driving to work in Melbourne's CBD raised its price by $5 (!) from the start to the end of the Covid period. I can always get a park in it now whereas prior to the pandemic it was often full and I had to drive to an alternate spot. So I would hazard a guess the volume of people parking in carparks has reduced but it is offset by a monumental increase in price.

But there has to be a point at which the increases in price cannot offset the reduction in volume. My base case would be that autonomous vehicles place further downward pressure on car park volumes. And think about it, SPZ is another cost for the parking business operator. If I am trying to keep the cost of my carparks low to promote volume, I will look to cut costs (seen any actual people operating these carparks lately? Labour costs have already been chiselled).

Another threat which isn't related to the autonomous driving aspects but just me spit-ballin', and many people will disagree with me on this, is the cost of public transport. I am going to go against the grain here and say it is likely to reduce over time. I know historically it keeps going up and up and I personally find how it is charged in Melbourne insane, but in Australian cities we've seen the Government trial (with great success) cheap or free public transport. The cities are also being re-designed to reduce car access.

But, the take-home point is, if you've been invested in for 5 years and you're in it for the next 5, it's probably going to be a good little business that gives you a nice return. It's more if you are looking 10+ years on that I would have concerns.

In relation to the ethical issue question, I didn't mean to offend anybody. I do not think what SPZ does is illegal and I perfectly understand the policy reasons behind carparking limits. But I will always have a strange moral compass. As a lawyer, I encounter many 'unjust laws' in my practice. Just because it is the law, this doesn't necessarily make the law a good one. Nor does it make the people or companies that stay within the bounds of it philosophically 'right'. At the risk of continuing to offend people, it's a bit like aged care businesses. Don't get me wrong, they generate cash out the wazooh, but I would never invest in them because they exploit families mostly at their greatest time of need. All my family members who have resided in a home or aged care centre have hated the place and it has broken my heart watching them live out their later years in misery. Meanwhile the aged care centres take their $500,000 to $1 million deposit from you and invest it freely.

And I am not perfect, I have invested in military/tech based businesses which I now consider morally bankrupt. But as you get older and more experienced, you learn... right?

@SebastianG no need to apologise for your point of view. I get a lot of value on here when Members have different perspectives. That’s a big part of the value of the platform. Seeing investments from different perspectives, getting new insights on opportunities and risks,….that’s what it’s all about.

When I've thought about the impact of self-driving cars on SPZ, I've always jumped straight to what happens when we're all driving around in them and they're likely to be pool cars. Obviously bad news. Something you've prompted me consider @SebastianG is the impact is profound well in advance of that. SPZ - like any company - only exists because it's solving a problem. "Got a problem with guests overstaying their welcome? Let me install some cameras for free and I'll fix it for you". It's an easy sell. But the first part of that sales pitch is crucial. It implies that you not only have people breaching your rules, but you've got such a problem with it there are times other customers can't find a park. Essentially, it's a problem at the margin and the only reason I would agree for cameras to be installed is because it costs me nothing.

You don't need 100% of people to be using autonomous vehicles for the answer to that question to be, "Sometimes people are in breach of the rules but we always have enough spare parking". I don't know what the percentage of autonomous vehicle penetration needs to be for the problem to go away, but it's not 90% and it's not 80% either. Is it 5, 10, maybe 20%? If it's that low that could undermine the business model a lot earlier than I had previously assumed - at least as a growth stock. I doubt it will prompt me to sell out in the near future but it's something I need to pay more attention to than I had done.

Agree @Noddy74 and @SebastianG as a long term holder I will keep an eye on this. My previous watch was really just over regulation.

@Noddy74 totally agree. Don’t forget the market is forward looking, so once robocars are allowed, once we get to 0.5% to 1% penetration, pundits will be projecting exponential growth over 5+ years, and it could then be game over pretty quickly in terms of a growth thesis. If the business hasn’t innovated by then, it would need to move to a hard cash harvest mode, potentially.

At US$30k each, and no labour, Uber/taxis are the first to be transformed (subtract labour; entry of new fleet cos.) Building out EV charging infrastructure will be a drag in some markets, like Aus. So I think it’s 5 years + at least.

The other problem could be market volatility,…as legislation and regulations form, lots of opportunity for short theses.

The entry of AV’s is now definitely included in my thesis.

We may not even need cars - just jump on the back (or stand on a footstand, be carried, whatever) of your Tesla Bot (a wheeled model perhaps?) and direct it where to go. No need for parking at either end of the trip, it just follows you inside! How's that for disruption? :)

Something like this @RogueTrader ?

Something like that Strawman! What kind of ride she gets when she climbs on the front is being discussed in a different forum :) :)

Biggest beneficiary has to be all the ride sharing companies like Uber.

I had this as a pick in my assessment but then sold it when I think the Dutch wanted to impose a fine on sharing driver data outside the EU. Shows how much of a good investor I am now that it is up on the Tesla nothingburger :)

Also proof that people will buy the dip when regulators come in to spoil the anti-competitive show only because it takes time for them to act.

Seen it with Qantas, Wesfarmers, Coles, Woolies and Amazon already.

On that subject of driverless cars, Tesla and Elon Musk's many predictions about the future: The link below is to a US podcast episode from 4 months ago (June 2024) which is a real eye-opener for people who believe Elon Musk is an innovator and also believe his many promises (and maybe even some of his predictions). He's a scam artist. Always has been. He gets rich - and richer - on other people ideas and billions of dollars of US Government money and the only reasons that some of his companies do make money is because they were started by people who knew what they were doing - not by Musk - and Musk employs some smart people - but not as many as the number of people who he has sacked - via email - which is in the thousands. He's nasty on multiple levels, but people still believe he's a genius, which is a real worry, because he really isn't.

The best example of what happens when Musk gets rid of people who know what they're doing and runs a company himself is: Twitter, now renamed "X", being Elon's favourite letter of the alphabet - "X" has been part of a few company names that he has started over the years - except Tesla which was started by two other guys with Elon providing some cash backing in the early years before ousting them and taking over the company once they had done all of the hard work, but he made sure they made a model "X".

Warning - do not proceed if swear words offend.

Elon Musk: Everything You Didn't Know About His Sh*tty Past

Plain Text Link - https://www.youtube.com/watch?v=4y40RU5Nx6U

[Language Warning!]

Is it a bird? A Plane? No, it's a Tesla model X.

And for something less cold: https://www.space.com/every-spacex-starship-explosion-lessons-learned [yeah, most of them blew up]

Further Reading: https://www.vox.com/technology/2023/4/25/23697830/elon-musk-twitter-checkmark-removal-blue-kara-swisher-lebron-james-doja-cat

https://www.theverge.com/2023/4/20/23690079/twitter-legacy-verification-ending-on-420

https://www.newsweek.com/elon-musks-cruel-mockery-disabled-worker-exposes-ugly-truth-about-america-opinion-1786373

https://www.outsourceaccelerator.com/articles/ceos-cant-bully-their-employees-anymore/ [how Musk's Twitter employee ultimatum backfired spectacularly]

https://www.bbc.com/news/technology-66365968 [Twitter lost almost half of its advertising revenue since his US$44bn takeover, Mr Musk revealed in July 2023.]

https://www.bbc.com/news/business-66217641

Twitter loses nearly half advertising revenue since Elon Musk takeover

17 July 2023, by Jemma Dempsey, BBC News

Twitter has lost almost half of its advertising revenue since it was bought by Elon Musk for $44bn (£33.6bn) last October, its owner has revealed.

He said the company had not seen the increase in sales that had been expected in June, but added that July was a "bit more promising".

Mr Musk sacked about half of Twitter's 7,500 staff when he took over in 2022 in an effort to cut costs.

Rival app Threads now has 150 million users, according to some estimates.

Its in-built connection to Instagram automatically gives the Meta-designed platform access to a potential two billion users.

Meanwhile, Twitter is struggling under a heavy debt load. Cash flow remains negative, Mr Musk said at the weekend, although the billionaire did not put a time frame on the 50% drop in ad revenue.

In a tweet he said: "Need to reach positive cash flow before we have the luxury of anything else."

--- click here for the rest of that one ---

No, not a genius. Just a rather peculiar man who just wants to be loved. And admired. And followed on "X" more than POTUS. And to be very, very rich.

Quite a rant there @Bear77 and one i completely and utterly agree with. I don’t how anyone can idolise him.

Agree! - He very much reminds me of the Edward Norton character from the recent Glass Onion movie (I'm guessing this was an intentional thing)