NAOS CEO Insights

CEO INSIGHTS – Week Ending 11 June 2021 By NAOS Asset Management

June 11, 2021

“We all can see that affordable homes are not coming forward, prices are just continuing to go up...we believe people will continue to want a home but will demand more value out of every dollar spent. That means for the future we will see much more competition into the affordable and smart home solutions” Jan Gardnerg, CEO, IKEA Australia

CEO INSIGHTS – Week Ending 11 June 2021 By NAOS Asset Management

“We all can see that affordable homes are not coming forward, prices are just continuing to go up...we believe people will continue to want a home but will demand more value out of every dollar spent. That means for the future we will see much more competition into the affordable and smart home solutions” Jan Gardnerg, CEO, IKEA Australia


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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Commodities

“Although doubling in production over the past decade [and now the world's second largest steel producer behind China] India is considered at an early stage of development with consumption per capita around a third of the global average” Andrew Harding, CEO, Aurizon Holdings Ltd

Industrial Property

“What we’re seeing on that acquisition side is a continuing tightening of yields and a significant increase in vendor expectations in some of these key markets like Sydney and Melbourne” Andrew Catsoulis, CEO, National Storage REIT

“Since the end of the first half, there has been a number of significant industrial property transactions in western Sydney. The pricing of these transactions has reinforced the strong investor appetite for prime industrial property assets” Lindsay Partridge, Managing Director, Brickworks Ltd

Housing

“In Australia, the significant uptick in housing approvals is now translating to increased building activity, with our sales particularly strong in Queensland and Western Australia over recent months” Lindsay Partridge, Managing Director, Brickworks Ltd

“We all can see that affordable homes are not coming forward, prices are just continuing to go up...we believe people will continue to want a home but will demand more value out of every dollar spent. That means for the future we will see much more competition into the affordable and smart home solutions” Jan Gardnerg, CEO, IKEA Australia

Workplace & Employment

“There isn't a CEO I speak to who isn't seeing their industry transforming at the moment in many different ways, from their customer behaviours to the actual structure of its competitive nature” Jane Fraser, CEO, Citigroup Inc

“Of course, working at home just went crazy, but those that did a temporary solution are now realising this is the way I’m going to run my life for the future, maybe working hybrid 50-50 [home-office], so now I will upgrade my lighting and chair, so we are seeing the second wave of those investments” Jan Gardnerg, CEO, IKEA Australia

“I think most businesses and companies have moved into remote-only work with their organic teams and they've noticed that this is actually a pretty viable way of working and because of that, they've been also more open to figuring out how to integrate freelancers into that mix. So that has been a massive tailwind” Micha Kaufman, CEO, Fiverr International Ltd [top-tier global freelance marketplace]

Banking & Finance

“That business [commercial banking] is really exploding with newborn digital players, as well as more and more companies that are looking at going into different geographies” Jane Fraser, CEO, Citigroup Inc

“There could be some pent-up demand out of COVID, but my belief is there is going to be more steady continuous momentum during the next couple of years as many businesses start shifting their financials to the cloud” Chano Fernandez, CEO, Workday Inc

Inflation

“Current spot prices for materials such as resins, chemicals and other ingredients are up anywhere from 30% to 200% versus April 2020” Jon Moeller, COO, The Procter & Gamble Company

Technology

“The fact that almost one in three households [4 million out of 12 million] is not using the NBN today, illustrates the dynamic nature of the market” Market Statement, NBN Co Ltd

Health & Fitness

“I think [Peloton was] the first to see the massive opportunity in what digital streaming media could do to the fitness category the way it's impacted the way we consume movies and gaming and music. So, why not fitness, right?” Jill Woodworth, CFO, Peloton Interactive Inc [US$30bn home exercise equipment company]

Travel & Leisure

“The consumer acceptance of that technology [mobile check-in/out/room keys], I think, will continue to ramp up even as the pandemic recedes” Anthony Capuano, CEO, Marriott International Inc

Agriculture

“There is increased competitive activity when it comes to milk supply in Australia. So, we are seeing some of our competitors that are offering higher milk prices” Kai Brockmann, COO, Saputo Inc [one of the worlds largest dairy processing companies]

Automotive & Rail

“Right now, we see this [younger RV buyers] as a long-term trend, and if we get people in at an entry-level price and entry-level product, they grow throughout their lifetime” Bob Martin, CEO, Thor Industries [world’s largest RV manufacturer]

“Similar to the motor vehicle and energy industries, the rail freight industry globally is developing low or zero-carbon solutions to power freight trains. This includes battery, hybrid, and hydrogen-powered locomotives” Andrew Harding, CEO, Aurizon Holdings Ltd

Energy

“Analysis by the International Energy Agency shows that half the global reductions required to achieve net zero will come from technologies that are not yet ready for commercial deployment” Angus Taylor, Federal Energy Minister

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.