Anthony Macdonald

The market's still pretty rich.

16, 17 times, still a premium.

Yeah.

Now CSL, which has also come unstuck recently, mate, it was trading up in the 30 times earnings and it's now back at 13 times.

So you can get the downgrade and the risk here is that they do get further downgrade.

So it's a real ugly one.

So Cochlear, essentially, it's a hearing device, but it's just like any other widget maker.

In its case, it's got very expensive widgets and sells them.

But the more you make, the more you sell, the quicker you sell them for, the higher the price, the more money investors make at the end of the day.

Cochlear carries a lot of inventory, like about 500 million bucks worth at June 30 last year.

Right.

It was a third of that 10 years ago.

So it's built up a lot, and it's particularly built up a lot since COVID, and the sales growth just hasn't matched it.

Now, the reasons it built so much recently, it's had a new product launch, so it's sort of stocking that in its own factories before it goes to market with them.

And then it was also trying to increase its supply chain resilience by storing more of some of the parts that it's a little bit worried that if the world –

goes bad it won't be able to get yeah but the more you store the higher your risk of obsolescence there's the risk you're carrying things that you're not going to be able to sell and there's an actual cost to that as well it sucks up your working capital in the business yes so you're paying for a lot of stuff up front they're not going to be selling for quite a while that's an expensive way to do things for shareholders it's much better if you run gyg and you're making burritos then and then getting the cash in the door then and there you're not having to carry the inventory as much on the way through

In terms of Craig's question on average day's inventory, I mean, that measures how long you're holding stock before you sell it.

And yeah, it's blown out, which is very costly for business.

Average day's inventory at Cochlear was approximately 320 days, FY25.

Yeah, it was 233 days a decade ago, 285 days five years ago.