NAOS CEO Insights

CEO INSIGHTS – Week Ending 15 March 2019 By NAOS Asset Management

March 15, 2019
"Many of our models are sold out. The Ferrari Pista, sold out. The Pista Spider, sold out. The 812 Superfast, sold out. Even the Ferrari Portofino, you are waiting until mid-2020 if you order a car today."
Herbert Appleroth, CEO, Ferrari Australasia
As part of the NAOS investment process, we pay particular attention to the comments made by company CEOs and business leaders in order to gain a greater understanding of the current investment environment and key trends that may be emerging. Below are quotes from the week which in our view detail some of the most important and prominent industry trends and economic factors impacting their businesses.

Global Economy

"The risks surrounding the euro area growth outlook are still tilted to the downside"
Mario Draghi, President, European Central Bank 
“Vehicle sales in January and February—a period that includes China’s movable Lunar New Year holiday—totalled 3.85 million, down 15% from a year earlier. Commercial vehicles sales increased 2% to 608,000 over the two months, but passenger-car sales were off 18% to 3.24 million. Electric-vehicle sales were the exception: They doubled in the first two months of the year to 148,000”
China Association of Automobile Manufacturers 
“[Vehicle] Sales will likely remain depressed until the second half of 2019…..Last year’s slowdown burdened dealers with too much inventory, and it will take time to reduce stock”
Chen Shihua, Assistant Secretary-General of the Manufacturers’ Association [China]
" A large number of our product developments are now incorporating sustainable materials. We have 1 range, which is made entirely of recycled plastic bottles. And this, I think, is only the start of a very important trend"
Tim Parker, Chairman, Samsonite Inc 

Box Office

"We think that the year we're experiencing now [at the box office] will be at the level, and potentially even better than the current $11.85 billion record for 2018"
Mark Zoradi, CEO, Cinemark [American movie theatre chain]
“Over the last year an extra 280,000 Australians signed up to use an Mobile Virtual Network Operator (MVNO) for their pre-paid mobile phones while around half as many, 140,000, signed on to one of the traditional Mobile Network Operators (MNO) for their pre-paid mobile phones"
Michele Levine, CEO, Roy Morgan Research Institute
"Despite all the right trends towards personalisation and our success within the customisation niche, contrary to our market research, the mass market fashion customer just didn't respond as we expected……We learnt the hard way that mass market customers don't want to create, they want to be inspired and shown what to wear"
Michael Fox, Co-Founder, Shoes of Prey [now in administration]
"We are seeing a slowdown in the European market"
Kasper Rosted,  CEO, Adidas
"Demand for odd-looking vegetables is strong, we have sold around 114 million kilograms in the past five years, and we're seeing a 25 per cent rise each year"
Paul Turner, Head of Produce, Woolworths
"I must say as I look ahead to 2019, I think, we could be facing one of the toughest trading environments that we have faced in a long while until some of the key [global macro] uncertainties are removed"
Tim Parker, Chairman, Samsonite Inc
“China has been slowing coal imports a couple of times since last year…… The latest one started in January, as China is in the process of shifting its energy consumption model…. Both Australia and Mongolia have been affected because of these measures because they are the top coal suppliers to China”
Hongmei Li, Head of Content, Mysteel Global [Global pricing and intelligence service]
"The pleasing thing is, as of now, we've had very strong recovery in all categories. Avocados are still a touch lower than we'd like, but certainly now the tomatoes have really gone very strongly, all the others recovered about three or four weeks ago – berries, and the other crops, bananas, grapes"
Harry Debney, CEO, Costa Group
"Ongoing extreme seasonal conditions in south-western Queensland and the Barkly in the Northern Territory will significantly increase station operating expenses, particularly grain, feeding and transport costs"
ASX Market Announcement 11th March, Australian Agricultural Co Ltd
"We are seeing very difficult trading conditions being experienced by the Australian agriculture sector, including many of Elders’ clients"
Mark Allison, CEO, Elders
“The strong results for the digital advertising market in 2018 are underpinned by the continuing shift in consumer media consumption. Australians now spend nearly 100 hours a month on desktop, smartphone and tablets and nearly five million people access internet content on their TV screens daily”
IAB Australia Online Advertising Expenditure Report (OAER) Quarter Ended Dec. 2018 (CY18)

"As accommodation development increased in recent years, a higher proportion of rooms are now held by developers. Many of these groups are likely to look to exit over the next few years to recycle capital into other projects. This should see deal flow increase"
Gus Moors, Head of Hotels, Colliers International
"Small lenders and mortgage brokers are an absolutely critical part of the competition in that market [mortgage lending]. There are 17,000 mortgage brokers employing 26,000 people, and they write over half of the residential backed mortgages. They are a very critical part of the sector"
Josh Frydenberg, Australian Federal Treasurer
"Many of our models are sold out. The Ferrari Pista, sold out. The Pista Spider, sold out. The 812 Superfast, sold out. Even the Ferrari Portofino, you are waiting until mid-2020 if you order a car today"
Herbert Appleroth, CEO, Ferrari Australasia
"We do know consumers are certainly embracing alternative payments on the retail side"
Peter Gray, Co-Founder, ZIP Money
Artificial Intelligence
"The boom in artificial intelligence is only just starting in our view, and we think the momentum is growing"
Mark Brayan, CEO, Appen Ltd

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Important information: This material has been prepared by NAOS Asset Management Limited (ABN 23 107 624 126, AFSL 273529) (NAOS) for general information purposes only and must not be construed as investment advice. Certain economic, market or company information contained in this material may have been obtained from published sources prepared by third parties. Nothing contained herein should be construed as granting by implication or otherwise, any license or right to use such third party content without the written permission of the owner.

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