NAOS CEO Insights

CEO INSIGHTS – Week Ending 9 November 2018 By NAOS Asset Management

November 9, 2018

"Market conditions are not expected to improve in the short term. Listings may be weaker in the lead up to the NSW election in March, while the impact of the Federal election is harder to predict." 
Market Announcement, REA Group Ltd

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.

Domestic Property

"Our strong results this quarter demonstrate, despite tougher market conditions, our customers and consumers are clearly seeing value in the products and experiences we are creating."
Tracey Fellows, CEO, REA Group

"We expect the focus on additional verification requirements for home lending customers will contribute to an ongoing moderation of growth in home lending over fiscal year 2019."
David Carter, CEO, Suncorp

China

"Coles has been exporting meat to Asia for more than 20 years and China is already our biggest market."
Greg Davis, COO, Coles

"Last time I was in China I had a one-on-one with Xi Jinping in which he came up with the quote, when I was talking to him about protectionism, that 'in the West you have this thing, turn the other cheek - in China, we punch back."
Andrew Mackenzie, CEO, BHP

Australian Economy

“While parts of the agricultural sector continue to face challenges, we are optimistic about the economy, which continues to benefit from a relatively weaker Australian dollar, a strengthening resources sector and historically low interest rates."
David Carter, CEO, Suncorp

"The Australian economy is performing well."
Dr Philip Lowe, Governor, Reserve Bank of Australia

"Business conditions are positive and non-mining business investment is expected to increase. Higher levels of public infrastructure investment are also supporting the economy, as is growth in resource exports."
Dr Philip Lowe, Governor, Reserve Bank of Australia

Hotels

"Global RevPAR [revenue per available room] rose roughly 2% in the third quarter with a modest increase in North America and continued robust trends in most international markets."
Arne Sorenson, CEO, Marriott International Hotels Group

Agriculture

"With the bad weather in Australia and bad weather in Europe, wheat in the U.S. will become competitive."
Juan Luciano, CEO, Archer Daniels Midland

Retail

"Overall, we increased marketing by over 30% to last year in the second quarter and continue to shift our spend to channels that matter most to consumers today, namely digital and social."
Patrice Jean Louis Louvet, CEO, Ralph Lauren Corp

Trade

"Trade restrictions pose a real threat to economic growth by diverting trade flows, affecting prices and discouraging investment."
Ken MacKenzie, Chairman, BHP

"Now importantly, as we think about that [cost] pressure, it incorporates the tariff pressures that we're seeing from the existing legislation and incorporates some of the freight and input cost inflation that we're seeing."
Jane Nielsen, CFO, Ralph Lauren Corp

NBN

"We have always forecast that 25 per cent of homes will be either mobile-broadband only homes or will be vacant and take no fixed-broadband service - and that is exactly what is happening on the ground."
Spokesperson for NBN Co

Cyber Security

"Cyber security is of increasing concern for businesses of every size, right around the world. Many growing small and medium-sized businesses, for whom data is central to their operations, too often lack the resources to effectively manage it."
David McMillan, Group COO, QBE

Industrial Property

"We are seeing consistently high occupancy, increased rental growth, strong demand for new products and higher valuations in our markets."
Greg Goodman, CEO, Goodman Group

Financial Services

“In an industry where scale and cost efficiencies count, this new alliance [with Mercer Super] will enable Kogan to create value at scale through their trusted online brand and huge customer base."
Ben Walsh, CEO, Mercer LLC

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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