CEO INSIGHTS – Week Ending 1 June 2018 By NAOS Asset Management

“The price [of beeswax] was around about $4.50 to $5/kg and now you're looking at $20/kg, but it's very difficult to get hold of it… Every time you ring up and say 'look, I need some more beeswax' they'll say 'look, have you got any we can process and send back to you?' Because everything that's spare is being sold at these incredibly good prices” Mauri Damon, Beekeeper

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.

Agriculture

“Our preliminary crop estimate of 4.77 million tonnes of [sugar] cane is around 5% lower than our earlier expectation” Paul Giordani, Wilmar Cane Supply Manager

Food Retailing

“Trading conditions in food retailing continue to be tough” Richard Hinson, Incoming CEO, Retail Food Group

Automotive sector

“Electric and hybrid vehicle numbers are increasing, but only represent <1% of the population” GUD Holdings ASX Announcement

Household products

“New entrants in Pental’s market segments have caused significant disruption in the Australian retail landscape, and this is expected to continue into Financial Year 2019” Pental ASX Announcement

Global Economy

“Our view of global economic conditions remains mostly unchanged from the last few quarters, with mature markets performing relatively well and emerging markets showing improvement, although we're watching the emerging markets closely” R.Scott Herren, CFO, Autodesk

Retail

“We expect the retail landscape, both brick-and-mortar and online, to remain very competitive throughout 2018” Barbara Rentler, CEO, Ross Stores

“We do see a bit of a backlash in disposable fashion… Purpose-driven brands, it's been a buzzword. We see it becoming more and more of a reality” Art Peck, CEO, Gap

“Taking a look at our first quarter comparable performance [versus last year] through the product lens, men's footwear was down low-single digits. This result was the combination of a growing running category, a somewhat improving but still down basketball category, and a slight decrease in casual styles” Richard Johnson, CEO, Foot Locker

Desktop & Notebook Computers

“Not only are we seeing strong growth in Notebooks, this is also the third consecutive quarter of double-digit Desktop growth” Dion Weisler, CEO, HP

Software

“CRM is the fastest-growing enterprise software category. It's a massive $120 billion market opportunity” Marc Benioff, Chairman and CEO, Salesforce

Print & 3D Print

“Total Print revenue was up 11%, with growth across Commercial Hardware, Consumer Hardware, and Supplies. We're seeing growth across all regions and broadly across the business” Dion Weisler, CEO, HP

“The 3D Printing business is a huge opportunity for us and one where we aim to disrupt the $12 trillion global manufacturing market. We're seeing an increase in customers placing repeat orders, upgrading their systems for higher volume manufacturing, and scaling with double-digit unit installations” Dion Weisler, CEO, HP

Advertising

“With the rapid adoption of programmatic buying in the USA, Europe, Australia and increasingly in Asia; brands, agencies and digital media buyers have moved their budgets to programmatic auction-based buying, rather than buying from traditional sales people” Ted Dhanik, Executive Chairman, engage:BDR

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.