NAOS CEO Insights

CEO INSIGHTS – Week Ending 17 August 2018 By NAOS Asset Management

August 17, 2018

growth in utilities

“Growth in Utilities in the short term will be dominated by wind and solar projects. They do dominate the pipeline. The immature solar supply chain presents the biggest challenge. Water, gas and power distribution will continue to grow, and we expect major investment in upgrading and extending the nation's transmission grid to cope with the requirements of renewable and energy storage capacity.” Grant Fenn, MD and CEO, Downer

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.

Australian Economy

"We're seeing reasonably strong economic growth and retail spending is fairly solid." Rob Scott, Managing Director, Wesfarmers

Residential Property

“While residential construction activity is expected to slow, the pipeline of building work yet to be completed remains at reasonably high levels.” GWA ASX Announcement

Commercial (Office) Property

"In the second half of the year, rather than the majority of the valuation uplift being driven by cap rate tightening, it was driven by effective rental increases" Darren Steinberg, CEO, Dexus

Chinese Consumer

"We're seeing a market that is continuing without any obvious signs of political influence." Jane Hrdlicka, CEO, A2 Milk

"We've got a consumer that is very focused on the underlying health and nutrition of their children, and that's a big priority, as it is in every country around the world.” Jane Hrdlicka, CEO, A2 Milk

"There is a lot of discussion about the increasing power of the Chinese consumer market and increasing consumerism in China, and I think that we're in a category that is very obvious and evident." Jane Hrdlicka, CEO, A2 Milk

Consumer Behaviour

"To me Gatorade is Blockbuster Video, and BodyArmor is Netflix... If you don’t evolve, you’re not going to be around much longer." Mike Repole, Co-Founder BodyArmor [sports drink company]

Energy

“What you have seen is that I think the prices are turning that corner [referring to flat or falling prices].” Frank Calabria, MD and CEO, Origin Energy

Insurance

"In Australia we are showing insurance rate increases of nearly 7%. Increases were particularly strong in commercial property up 18%, commercial motor plus 8%, workers' comp plus 9%." Patrick Regan, CEO, QBE

Telecommunications

“Yesterday we announced we had switched on 5G technology across selected areas of the Gold Coast, making us the first in the country to be 5G ready." Andy Penn, CEO, Telstra

"The challenging market dynamics created by the nbn rollout and increasing mobile competition continue to have an impact." Telstra Market Announcement

Education

"In EMEA [Europe, Middle East & Africa], with education spending stabilising, we expect improvements in that market." Jonathan Kenny, CFO, 3P Learning Ltd

Television

"There's no doubt that what the Australian audience is prepared to pay for TV programming is far greater than we previously presumed." Robert Thompson, CEO, Newscorp

Childcare

“Mayfield has seen occupancy soften in the month of July 2018 reflecting the uncertainty and confusion around the new Child Care Subsidy, but as we work our way out of the transition period, and the flexible session strategy gains traction, we are seeing a noticeable recovery." Dean Clarke, CEO, Mayfield Childcare

Equity Capital Markets

"Business conditions remain encouraging with a significant number of Equity Capital Market transactions completing this month." Bell Financial Group market statement

Thank you for reading.

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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