NAOS CEO Insights

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

March 9, 2018

Man using tablet pc against medical interface on xray.jpeg

“In all regions, health spending is rising as populations grow and age, technologies improve, and patients become better informed. Increasing incidence of chronic disease and mental health are driving demand. The simple fact is, demand for health care is rising faster than the capacity of the sector itself” Craig McNally, MD, Ramsay Health Care

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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Healthcare

“The government reforms which were announced late last year by the Federal Health Minister are welcomed, as I believe they will improve affordability of private health insurance. Overall, we believe that will impact positively on the industry but I think it also indicates the government is committed to a strong private health care sector” Craig McNally, MD, Ramsay Health Care

Infrastructure

“We are positive on the outlook in South Australia and the East Coast where we sell cement, concrete aggregates and concrete products. Overall, we're positive on demand for 2018” Martin Brydon, MD, Adelaide Brighton

Food & Beverage

“Vegemite is now [experiencing] good growth in the marketplace, growing at some 3%” Barry Irvin, Executive Chairman, Bega Cheese

“Peanut production in Australia is less than 40% of the demand… we do see a very strong opportunity to increase peanut production in Australia” Barry Irvin, Executive Chairman, Bega Cheese

“We now see a softening in the dairy ingredients market and a return to a very competitive milk purchasing environment. The Nutritionals business is now recovering” Barry Irvin, Executive Chairman, Bega Cheese

“We absolutely believe that in this state [WA] and in Queensland, and to a lesser degree in New South Wales, where the industry’s profitability is primarily dependent on liquid milk sales, that $1-a-litre milk takes money out of the supply chain” Mike Partridge, President of the Dairy Section, WA Farmers

Agriculture

“Growth in the value of agricultural production and exports will come mainly from increased volume, underpinned by rising demand as incomes and populations in importing countries grow” Dr Steve Hatfield-Dodds, Executive Director, Department of Agriculture and Water Resources

“The Australian citrus industry is in a buoyant phase, thanks to strong export markets and unprecedented demand” Nathan Hancock, CEO, Citrus Australia

“We expect consumers to be paying more for food in the coming years” Mark Bennett, Head of Agribusiness, ANZ

Commodities

“Mineral sands market conditions [improved in 2017 due to] moderate underlying demand growth combined with supply constraints” Tom O'Leary, MD, Iluka Resources

“We've entered 2018 with positive pricing and supply demand dynamics in both zircon and high-grade titanium feedstock markets” Tom O'Leary, MD, Iluka Resources

Gas

“LNG buyers certainly continue to seek diversity of supply” Peter Botten, MD, Oil Search

Cosmetics

“The NIMA (Non-Invasive Medical Aesthetics) category has many of the characteristics that the telecommunications industry had back in 1995. It's somewhat complex in nature and so lends itself to consultative selling. It’s services driven and so by default, it's insulated against online disruption. It's a high growth category, where not only modalities are increasing, but so is the breadth of the customer base” Maxine Horne, CEO, Vita Group

Residential

“While off its highs, the residential sector remains healthy in New South Wales and Victoria and is improving in Southeast Queensland” Martin Brydon, MD, Adelaide Brighton

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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