CEO INSIGHTS – Week Ending 8 September 2017 BY NAOS Asset Management

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“Acting against global warming has passed a point of no return” Maarten Wetselaar, Director, Shell 

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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Domestic Economy

“I anticipate that based on these [second quarter GDP figure] figures today and other data that has come that we will achieve better than the budgeted outcome for the fiscal year of 2016/17” Scott Morrison, Treasurer, Australia

 

Print Advertising

“Customers love the [print] catalogue, they sit down and flick through it; it’s still something they get inspiration from” Jill Easterbrook, CEO, Boden (UK Retailer)

 

Housing

“The most interesting thing to address is the capital gap in developer financing, what I call the last mile financing for residential developments. You can still find some good projects in both Australia and New Zealand where there are capital gaps, and you can do things that are quite de-risked” Ilfryn Carstairs, Co-CIO, Varde Partners

"It [Sydney & Melbourne] is clearly expensive and has been for a while...you need a harder catalyst than just overvaluation for these things to really correct…A sharp change in the buyer base, I think that's the biggest risk to the Australian market. Then you can just reach a certain point of consumer indebtedness where small changes become more magnified and well you look at some of the housing markets like Australia and Canada and just look at the raw level of consumer indebtedness, I think you are getting closer to that point” Ilfryn Carstairs, Co-CIO, Varde Partners

“The [residential] build-to-rent model could be a real game changer in our space and we see globally examples overseas in the US and Europe where build to rent is a whole new asset class” Andrew Whitson, CEO, Stockland Residential

 

Oil & Gas

“In terms of the east coast market, the evidence clearly shows the industry is responding to the need for more supply. The fundamental problem remains restrictions on access to resources and the continuing high cost of exploration and development” Spokesman for the Australian Petroleum Production and Exploration Association 

“The industry continues to be challenged. When you look at the [Oil-field Services] OFS activity, it is recovering, but it is subdued with pricing pressure. As we look at the fundamentals though from a longer-term perspective, we remain confident in the long-term fundamentals of this industry, in particular the shift that you're seeing on a gas perspective and the opportunity for gas to grow” Lorenzo Simonelli, CEO, Baker Hughes

 

Renewables

“We think the future of the energy market in the electricity space, will be for those who can really integrate the cheap energy from renewables with the capacity of existing conventional power and energy storage” Andrés Gluski, CEO, AES

 

Agriculture

“We farm in 26 countries but see Australian agriculture as the most innovative in the world” Sunny Verghese, Co-founder, Olam International

 

Global Economy

“From a macro perspective, we're seeing some overall improvement in the market… However, we continue to be negatively impacted by a challenging pricing environment and commodities cost” Timothy Stonesifer, CFO, HP

 

Construction

"The near-term outlook for the overall construction sector remains healthy with new orders stronger other than for the apartment building sub-sector which saw a very steep fall. The very solid pipeline of infrastructure work is providing a major boost to the overall economy” Peter Burn, Head of Policy, Ai Group

 

Retail

“If you look at our categories, [small start-up] players are the ones that are gaining [market] share. The majority of large companies are losing market share” Jorge Mesquita, Executive VP, Johnson & Johnson

“With recent acquisitions of pure play online retailers by traditional brick-and-mortar companies and vice versa, channel lines are becoming increasingly blurred. In addition, new entrants into the U.S. market have increased the focus on hard discounters and the role of private label versus household brand names” Mark Smucker, CEO, J.M. Smucker

 

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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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