NAOS CEO Insights

CEO INSIGHTS – Week Ending 15 September 2017 BY NAOS Asset Management

September 15, 2017

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“Crypto-currency won't end well. It's a fraud. It’s worse than tulip bulbs. [If a JPMorgan trader began trading in bitcoin], I'd fire them in a second. For two reasons: It's against our rules, and they're stupid. And both are dangerous" Jamie Dimon, CEO, JP Morgan

As part of the NAOS investment process, we pay particular attention to the comments made by company CEO’s 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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Consumer

"Australia has become the most promotional market in the world but when you check with the Australian consumer they are not very promotion sensitive, price sensitive. Price matters but what they are looking for is the right assortment, product availability, trust in prices, trust in value – this comes before the absolute level of price or discounts” Antoine Brun, MD, Proctor & Gamble Australia

 

Television

“People say broadcast is dead. It’s not. It’s still the only place you can go and get such high audiences watching CSI or Big Bang Theory” Leslie Moonves, CEO, CBS

“We do see significant growth opportunities within that [paid sports on T.V.] segment in the Australian market… We've had Netflix and other competitors come to the market and we have seen that customers are genuinely willing and able to pay for new appropriate content” Susan Panuccio, CFO, News Corp

 

Crypto-currency

“Crypto-currency won't end well. It's a fraud. It’s worse than tulip bulbs. [If a JPMorgan trader began trading in bitcoin], I'd fire them in a second. For two reasons: It's against our rules, and they're stupid. And both are dangerous" Jamie Dimon, CEO, JP Morgan

 

Domestic Economy

“I don’t see [low wage growth] as a permanent state of affairs. As our economy strengthens and the demand for our labour picks up, growth in wages will pick up too” Philip Lowe, Governor, Reserve Bank

“While the biggest foreign investor in Australia is the United States, the greatest number of ­foreign investment approval ­[applications] is from China, mainly in real estate. There was an explosion of ­interest last year in residential real estate — 75 per cent from Chinese investors and 40,000 [FIRB] ­approvals — but we think [that ­interest] has peaked and is coming off the boil now” Adam McKissack, Principal Adviser, Foreign Investment and Trade Policy, Commonwealth Treasury

 

Global Economy

“I’m optimistic about the [global] economy, but having said that there has been a crisis every seven, eight, 10, 12 years, or some kind of downturn. The last one was 2008 so going into the 9th year we are keeping an eye on that” Nicolas Aguzin, Asia Pacific chief executive, JPMorgan

 

M&A & Private Equity

"Last year there were a number of situations where ASX-listed companies received approaches from less familiar bidders from China. We're seeing much less of that and the types of buyers approaching companies are generally credible and supported by China” Paul Uren, CEO, JPMorgan ANZ

"There is a lot of positive momentum in the [private equity] industry. It's in as good a place as it has been in the past decade and [asset] prices are high but not crazy-high” Cameron Blanks, MD, Pacific Equity Partners

"For 2017 and 2018, EY expects [private equity] houses to look to drive growth via further M&A [mergers and acquisitions] through a buy and build strategy, as well as a top line strategy" Bryan Zekulich, Private Equity Area Leader, EY 

"China outbound announcements are dropping for two reasons; because Chinese buyers are being more constrained in where they can invest and in those situations where they can participate they are competing with more buyers from other regions. Fortunately, the outbound buyer list for US assets from Europe, Japan and Australia is getting bigger so the competition against the Chinese buyer is greater” Chris Ventresca, Global Co-head of M&A, JPMorgan


Agriculture

“We are currently looking at processor case studies in Victoria and NSW where power prices have increased between 75 and 110pc this year. It is far more important for the whole beef supply chain that there is a viable processing sector operating five days a week - which is not happening at the moment” Patrick Hutchinson, CEO, Australian Meat Industry Council

 

Book Publishing

“[Book publishing] is a very steady business [and] we do see top line revenue growth coming out of that business” Susan Panuccio, CFO, News Corp

 

Jewellery

“For decades, diamonds have been marketed almost exclusively as gifts of love and symbols of marriage. While this universal and powerful motivation will remain the bedrock of the industry, new opportunities are clearly emerging as the position of women in society and economy evolves” Statement by De Beers

 

Housing

“The falling prices will have a big impact on the economy” Harry Triguboff, Founder, Meriton


"There is a bigger credit risk when it comes to high-density apartment living"  Steve Laidlaw, CEO, People’s Choice Credit Union

 

Digital Real Estate

“The Digital Real Estate segment is a real growth area. We see significant growth coming out of that particular segment” Susan Panuccio, CFO, News Corp

 

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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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