CEO INSIGHTS – Week Ending 16th September 2022 By NAOS Asset Management

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.  

Information Technology

“Demand on commercial continues to remain strong, though we also had some signals of slowdown, mostly because we think companies, as we are, are becoming more conservative in terms of how we manage our budget. That's the market” Enrique Lores, CEO, HP Inc

“I think many of the changes that the pandemic has brought, from hybrid work to telemedicine, the growth of gaming, remote schooling or combination of remote schooling has clearly shown that PCs are much more important for our lives than before” Enrique Lores, CEO, HP Inc

Cybersecurity

“Over the next four years, the shortfall in qualified cybersecurity professionals is forecast to hit 30,000 unfilled positions across Australia. This is four times the number [that] has been quoted by industry and industry groups previously” John Paitaridis, CEO, CyberCX [leading Australian cybersecurity company]

Streaming & Media

“We saw that all of these general entertainment SVOD [streaming platforms] businesses were going to go to headlong against each other, spending a tremendous amount of money to gain subscribers and compete with each other… and we decided to go a different way” Anthony Vinciquerra, CEO, Sony Pictures Entertainment Inc

“I don't think the spending on content has changed dramatically. The way that companies are being managed just changed dramatically.” Anthony Vinciquerra, CEO, Sony Pictures Entertainment Inc

Internet & E-Commerce

“The other thing I think that is just important to just say out loud is 75% of retail is still being done in the physical world and that is obviously shifting. Now, you have countries like China, which is the first country on the planet that actually eclipsed the 50% mark in terms of commerce happening more digitally than in person” Harley Finkelstein, President, Shopify Inc

“So, as people move more and more to buy online, people become less sensitive to where the product is coming from. So, if you're on Google search and you find a product and they give you a list of all the people who are selling it, you may pick the best price. You're not that sensitive to ‘is that coming from my home country?’” Vasant Prabhu, CFO, Visa Inc

“[We're] selling a product for a low price that generates a ton of value for the customer and is often the last thing the customer wants to give up” Amanpal Bhutani, CEO, GoDaddy Inc [world’s largest internet domain registry]

European Energy Crisis

“That this is going to be somehow easy, or over, I think is a fantasy that we should put aside” Ben van Beurden, Shell plc

Financial Markets

“The interesting thing [due to macro factors] has been some of the rotations we've seen across geographic dimensions, sector dimensions, asset class dimensions factors, all those have changed the nature of investing” Andrew Wiechmann, CFO, MSCI Inc

Global Economy

“Deglobalisation is an absolute truth today. It's increasing. It impacts supply chains, it impacts standardisation and that's something we keep a very close eye on” Nishant Batra, CTO, Nokia Corporation

Domestic Economy

“So far, even as rates are rising, more than 50 per cent of our principal-and-interest customers with direct debits are continuing to pay more than their minimum repayment amounts” Maile Carnegie, CEO Retail, ANZ Banking Group Ltd

“Australia didn’t [introduce new vehicle standards]. As a result, our petrol bills are 30 per cent higher and amongst the most polluting in the world. For the first time ever, the average family is spending over $5,000 a year on petrol” Robyn Denholm, Chair, Tesla Inc

Consumer Behaviour

“What we have seen so far in the third quarter is that market demand for core appliances in Europe and the U.S. have decreased at a significantly accelerated pace compared with the second quarter” Jonas Samuelson, CEO, Electrolux Group

“Consumers are thinking second-hand first. [According to our 2022 Resale Report] 41% of consumers say when they shop for apparel, second-hand is the first place they look. 62% of Gen Z and Millennials say they look for an item second-hand before purchasing a new item” Market Statement, thredUP Inc [world's largest online thrift store]

Health & Wellness

“Our data suggests there's nearly 1 billion people with sleep apnea. There's only a few tens of millions being treated” Robert Douglas, COO, ResMed Inc

Commodities

“Everybody likes to think of commodities as being cyclical. Our view is a little bit different in terms of where we think the commodity demand is going to be. I mean we're seeing a massive shift towards energy metals and decarbonisation and electrification” Raj Naran, CEO, ALS Ltd

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. It does not constitute an offer to purchase any security or financial product or service referred to herein. It does not take into account the investment objectives, financial situation or needs of any particular investor. Before making an investment decision, investors should consider obtaining professional investment advice that is tailored to their specific circumstances. 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.