NAOS CEO Insights

CEO INSIGHTS – Week Ending 21 September 2018 By NAOS Asset Management

October 2, 2018

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"There are opportunities for Australian universities at the moment from Brexit and Trump. They tend to be in places like India where study in the US or England was much preferred over Australia but people around the world are starting to look at Australia as an important English-language alternative." Dr Michael Spence, Vice Chancellor, Sydney University

CEO Insights - Week Ending 21 September 2018 By NAOS Asset Management

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.

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Digital Economy

[Referring to the expansion of global technology companies] "One of the things that has struck me over the past few years is that people in Australia don’t realise that distance has disappeared." Michael Milken, Chairman, Milken Institute

"But given its [Australia's] geographic shelter from global competition - and, relatedly, the absence, at least until recently, of a behemoth disrupter like Amazon - this market has been content to digitise at its own pace, lacking the urgency seen in Europe and the US. That's starting to change." Research Report, Source Global Research

Construction/Infrastructure

"Practically all the major buildings that are happening in Sydney and Melbourne, commercial buildings, where you're up to about 20 storeys …it's all timber." Robert Moriss-Nunn, Director, Circa Morris-Nunn Architects

“With the announcement of many significant infrastructure projects by both federal and state governments, the anticipation is for civil cranes to maintain current levels [of utilisation] or rise further." Stephen Mee, Chairman, RLB Global

Telecommunications

“Telstra is repositioning itself and that also entails a level of risk as its competitors will look to respond, so these factors do raise the chance for the industry to over-egg [over-promise] what they are selling." Rod Sims, Chairman, ACCC

"When we launched 4G we didn’t make it more expensive than 3G; it's true to say that telco revenue went up when 4G was first rolled out but that was really a consequence of higher usage. I would envisage that would be the same dynamic with 5G - as an industry I dont think we're going to suddenly structurally change the pricing of telecommunications connectivity."Andy Penn, CEO, Telstra Ltd

Domestic Property

"No doubt it's [dropping house prices] having a ripple effect through consumption more broadly, and in confidence." Mark Steinhert, CEO, Stockland Ltd

Domestic Economy

 "Survey-based reports of business conditions in WA, which had previously been well below those reported for the rest of the country, had increased to be above historical averages, although still below the rest of Australia." RBA September Minutes

Global Economy

"This thing [trade wars] will last long. If you want a short-term solution, there is no solution."Jack Ma, Chairman, Alibaba Group

“Global GDP is above trend, led by strength in the U.S., the extension cycle is nine years old, but we don’t see any sort of late stage vulnerabilities emerging, no obvious potholes that we’re going to set into." Marianne Lake, CFO, JP Morgan Chase

“We are seeing solid economic growth, especially in the U.S. Growth in jobs and incomes are keeping confidence high and driving positive trends in consumer spending and retail sales. The industrial sector continues to perform well and outlook for business investment is strong.” Raj Subramaniam, Chief Marketing and Communications Officer, FedEx 

Aged Care

"Over recent years, successive Australian governments have reduced residential aged care funding by an estimated $3 billion." Sean Rooney, CEO, Leading Age Services Australia

Tourism

"We are looking [at investing in Australia] more so than we were five years ago because we are seeing an inbound trend that is favourable for Club Med." Xavier Desaulles, CEO APAC, Club Med Resorts

Resources

"It’s a good time to be a coal miner….despite these really high prices, you’re only seeing Australia export 3 percent more thermal coal — the Australians can’t produce much more than they are producing." Shane Stephan, Managing Director, New Hope Coal

Education

"There are opportunities for Australian universities at the moment from Brexit and Trump. They tend to be in places like India where study in the US or England was much preferred over Australia but people around the world are starting to look at Australia as an important English-language alternative." Dr Michael Spence, Vice Chancellor, Sydney University

Aviation

"We recently updated our current market outlook, our annual assessment of the future. We look out over the next 20 years, we see a world that needs about 43,000 new commercial airplanes, that's up about 1700 airplanes from our last year’s estimate." Dennis Muilenburg, Chairman President and CEO, The Boeing Company

Pharmaceuticals

“We operate in a challenging environment. There is growing pressure by public and private payers to reduce overall healthcare costs. In the U.S., the current administration is focused in particular on reducing drug prices, and we are also facing accelerating competition from biosimilars.” Joaquin Duato, Vice Chairman, Executive Committee, Johnson & Johnson

Thank you for reading.

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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.

NAOS Insights CEO Insights

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