CEO INSIGHTS – Week Ending 3 December 2021 By NAOS Asset Management

“No one’s too big to be privatised. You’ve just seen the $32 billion enterprise value Sydney Airport get taken down, so I don’t think anyone’s safe anymore.” David Harrison, CEO, Charter Hall

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.  

Supply Chain & Logistics

“Oh man this year has been such a supply chain nightmare & it’s not over!” Elon Musk, CEO, Tesla Inc

“[We are] seeing progress. The port and transit delays are improving” Doug McMillon, CEO, Walmart Inc

“We anticipate freight costs will continue at elevated levels for the next 18 months to 24 months.” Lyndal York, Chief Financial Officer, Fisher & Paykel Healthcare Corp. Ltd

Packaging & Parcels

“The circular economy transition is accelerating, with growing consumer demand for sustainable packaging, strong government support and legislative changes” Sanjay Dayal, CEO, Pact Group Holdings Ltd

“The business is booming at the moment – we would have done more than 2 million parcel deliveries [on Friday] and this week we expect to reach around 3 million a day due to the Black Friday sales. So the volume is definitely coming through the system, compared to around 1.5 million a day pre-COVID” James Dixon, Head of Networks, Australia Post

Foreign Investment & Capital Markets

“I do think we’re going to see another level of investment next year when foreign capital can actually fly into the country and start kicking the tyres and looking at assets” David Harrison, CEO, Charter Hall

“The next couple of years will be very, very active with overseas investment back into Australia. We did a survey of hundreds of global investments just recently in EMEA, and the US, and the view was that there’ll be a 44 per cent increase in their investment into Asia Pacific” Stephen Conry, CEO, Jones Lang LaSalle ANZ

“No one’s too big to be privatised. You’ve just seen the $32 billion enterprise value Sydney Airport get taken down, so I don’t think anyone’s safe anymore.” David Harrison, CEO, Charter Hall

Domestic Economy

“We need immigration now more than ever before. Don't worry about what the politicians tell you” Harry Triguboff, Managing Director, Meriton

Food & Beverage

“With KFC, the brand has never been stronger than it is right now and we can see that as everyone goes into the chicken category and yet the brand continues to grow and we continue to take market share” Drew O’Malley, CEO, Collins Foods Ltd [operator of KFC in Australia]

COVID & Healthcare

“I think it’s going to be a material drop [in vaccine effectiveness]. I just don’t know how much because we need to wait for the data. But all the scientists I’ve talked to…are like, ‘This is not going to be good’” Stéphane Bancel, CEO Moderna

“Consumers are embracing retail pharmacy to manage their health care more than ever” Rosalind Brewer, CEO, Walgreens Boots Alliance Inc

Interest Rates & Inflation

“We acknowledge that markets are anticipating increases to medium- and long-term interest rates globally and to some extent this is already factored into the rate curve within Australia” John Bain, CEO, Centuria Capital Group

“We're not seeing it [price elasticity] at the same levels that we saw in prior cycles” Jon Moeller, CEO, Procter & Gamble Co.

Resources

“When I was in the US I heard about rumours that China may open the doors for Australian coal on a quota basis, but the market hasn’t seen that yet. I assume China will stay away from Australian coal through 2022” Gerhard Ziems, CFO, Coronado Global Resources Inc [one of the world’s largest produces of metallurgical coal]

“We see the [iron ore] market getting softer until the end of the second quarter [of 2022] for sure” Eduardo Bartolomeo, CEO, Vale S.A.

Consumer Staples

“Success in our highly competitive industry also requires agility that comes with a mindset of constructive disruption... In the current environment, that agility and constructive disruption mindset are even more important” Jon Moeller, CEO, Procter & Gamble Co.

Technology

“We’ve seen almost a 10x increase in ransomware [attacks]” Keith Jensen, CFO, Fortinet Inc [major global antivirus software provider]

Motorcycles

“Through the year we saw market demand stabilise at an elevated level. This provides optimism across the motorcycle retail industry and is a good indication that these improved trading conditions will continue, and are sustainable for the medium-term, rather than being a short-term by-product of the COVID-19 pandemic” David Ahmet, CEO, Motorcycle Holdings Ltd

Travel

‘In the last 48 hours, we've seen a strengthening in bookings, even though there's an emergency [Omicron]” Will Creedon, CEO, Alloggio [short term rental accommodation provider in Australia]

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.