CEO INSIGHTS – Week Ending 16 November 2018 By NAOS Asset Management

"We now have the world's only fully automated, end-to-end bricklaying solution, with a massive market waiting for it. We now begin the next exciting phase for the company as we execute our global commercialisation strategy to capitalise on the significant demand for our technology."
Mike Pivac, CEO, Fastbrick Robotics

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.

Construction

“The underperformance predominately relates to further deterioration in the small number of projects previously identified. This is attributed to a number of issues including lower productivity in the post tunnelling phases of NorthConnex; and excessive wet weather, access issues and remedial work arising from defective design and other projects.”
Steve McCann, CEO, Lend Lease

Retail and Supermarkets

"The convenience [supermarket] opportunity is a big one."
Stephen Cain, Managing Director, Coles

"Consumers who have discovered meal kits don’t stop going to the supermarkets, but they are shifting a big chunk of sales away from the supermarkets to services like ours."
Fabian Siegel, Founder, Marley Spoon

"I am always somewhat bemused when I read newspaper reports suggesting that the Wesfarmers board and/or CEO are under some sort of pressure to make an acquisition, given the company's substantial financial capacity or in order to 'fill the earnings hole left after the Coles demerger’.”
Michael Chaney, CEO, Wesfarmers

“The following factors in the Company’s year to date results are particularly relevant to the guidance - sluggish consumer demand having an adverse impact on sales volume for other products in all other markets. While the first quarter of FY19 was broadly in line with last year, October was well below the Company’s expectations, prompting the update.”
Peter Ludman CEO, National Tyre & Wheel Co.

Airlines

"Our forward bookings are up 8% in value, we're seeing real strong growth across the Australian economy ... and then the inbound tourism and the outbound tourism are still extremely strong."
Alan Joyce, CEO, Qantas Airways

Childcare

[On childcare oversupply] "I think a lot of the cowboys are starting to leave the industry."
Mathew Edwards, CEO, Think Childcare

“Tightening of bank funding to developers continues to moderate future supply pipeline [of new childcare centres].”
G8 childcare market update

Data Centres

"Why would we be already looking to the next [developing new data centre] parcel?  It reflects the fact that we are very fortunate to be in this great demand cycle that our clients are coming to us."
Krupal Raval, CFO, Digital Realty [global data centre company]

Oil Supply

"Global oil supplies are growing rapidly, as record output from Saudi Arabia, Russia and the US more than offsets declines from Iran and Venezuela."
Statement, International Energy Agency

“Key producers have behaved responsibly in boosting production, and that trying to raise prices now would be ‘not the right thing to do’."
Fatih Birol, Director, International Energy Agency

Solar

“Personally, I have some investments in solar plants, solar farms. I’m very bullish on that as a sector and you can see from the investment going in, that’s not a unique view.”
Mike Cannon-Brookes, Co-founder, Atlassian

Media

"The current regulatory regime in the television industry is unsustainable in an environment where we are competing for advertising dollars with foreign digital platforms that are almost entirely unregulated."
Kerry Stokes, Chairman, Seven West Group

Chinese Economy

"So, what we've seen post-Golden Week has been a slowdown in Macau. And we've seen it in the premium end of the business and in VIP."
Matthew Maddox, CEO, Wynn Resorts

"There are 300 million people in China's middle class. In the next 10-15 years, that number will double to 600 million. That number is not going to stop, trade war or no trade war."
Joe Tsai, Executive Vice Chairman, Alibaba

USA/China Trade

"It's an ironic development, but after Trump has turned up the volume, the US has only increased their imports from China even more."
Soren Skou, CEO, AP Moller-Maersk

"When we talk to our customers, we hear from many of them that they want to bring in a lot of goods before the end of the year. Donald Trump can't tell Nike, Walmart and The Home Depot that they can't import from China. So, they will continue to import and will work on solutions and they may be hit a bit on their margins."
Soren Skou, CEO, AP Moller-Maersk

Small Business Financing

"To overcome this [high funding costs] and ensure that small businesses are able to fulfil their potential and continue to underpin economic growth and employment, the Australian Business Securitisation Fund will invest up to $2 billion in the securitisation market, providing significant additional funding to smaller banks and non-bank lenders to on-lend to small businesses on more competitive terms."
Joint statement from Federal Treasurer Josh Frydenberg and Small Business Minister Michaelia Cash

"The fact is some small business owners are going overseas to get loans and that just shows something is incredibly wrong here at the moment and we've got to fix it."
Peter Strong, Chief Executive, Council of Small Business of Australia

Thank you for reading.

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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.