NAOS CEO Insights

CEO INSIGHTS – Week Ending 13 November 2020 By NAOS Asset Management

November 13, 2020

“After scientific and personal analysis of the renewable resources of our little planet I can assure you there is more than enough renewable energy to sustainably and economically supply every person on the planet from this time forth” Andrew Forrest, Chairman, Fortescue Metals Group.

CEO INSIGHTS – Week Ending 13 November 2020 By NAOS Asset Management

“After scientific and personal analysis of the renewable resources of our little planet I can assure you there is more than enough renewable energy to sustainably and economically supply every person on the planet from this time forth” Andrew Forrest, Chairman, Fortescue Metals Group.


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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Commercial Property

“Vacancy is beginning to rise and it's beginning to rise fairly quickly now which is again exactly what you would expect in a downturn of this sort. Companies that do not have the ability anymore to kick the can down the road are, based on our numbers renewing and that's at a higher percentage than is typical. They're not going to the market. They're just going to renew and they're renewing at shorter-term leases” Brett White, CEO, Cushman & Wakefield plc

“At the moment, the way I would describe, what we're seeing on the leasing side is rents are holding up. That will change. We know the rents are going to be coming down” Brett White, CEO, Cushman & Wakefield plc

“Rising confidence will combine with very low interest rates to drive investor capital toward property, and particularly commercial property yielding two to three times the yield available from buying residential” David Harrison, CEO, Charter Hall

Aviation

“There’s reasonable optimism now that [northern hemisphere] summer 2021 will get back to some degree of normality” Michael O'Leary, CEO, Ryanair

Automotive

“We are now assuming a global car demand down 17% for the full year, 2 percentage points better than our previous expectations, and a minus 5% in the fourth quarter. High-value [car industry] is confirming its resilience” Andrea Casaluci, CEO, Pirelli Tyre & Co SpA

Tourism & Leisure

“Caravan sales are very strong at the moment – a six month wait for a new caravan is not unusual – and the two most popular regions in Australia for caravanning and camping are the NSW North Coast and NSW South Coast” Simon Owen, CEO, Ingenia Communities Group

Workplace & Employment

“We believe the shift to distributed work will continue long after the pandemic ends” Drew Houston, CEO, Dropbox Inc

“We're expecting, hoping it [unemployment] will get to 6.5 per cent by the end of calendar year 2021, I think that would be a very, very good result” Matt Comyn, CEO, Commonwealth Bank of Australia Ltd

Domestic Economy

“Some of the underlying impact of lockdowns we probably can't quite see until probably April/June quarter next year” Matt Comyn, CEO, Commonwealth Bank of Australia Ltd

Chinese Economy

“This was another extraordinary quarter for Chinese consumer consumption” Fabrizio Freda, CEO, The Estée Lauder Companies Inc

Food & Beverage

“Despite restricted operating conditions due to a virus resurgence in the State of Victoria, strong drive-thru and delivery sales drove roughly 75% of Australia sales, and they grew market share. Australia has also seen an increase in other digital channels, such as our mobile app and self-order kiosks, as customers use contactless ways to order and pay” Kevin Ozan, CEO, McDonald’s Corp

Agriculture

“There were reports just a few weeks ago about rain and hail storms and the damage they had done to crops, put simply we’re not seeing the impact of that coming through our network based on the scale of the crop” Robert Spurway, CEO, GrainCorp Ltd

“Right now, we’re into harvest and we’re seeing what’s happening and we’re very confident about the amount of grain coming into our network, based on what we see as a very significant crop across East Coast Australia. We’ve seen good yields. We’ve seen good quality” Robert Spurway, CEO, GrainCorp Ltd

“Milk supply in Australia continues to improve…Favourable weather conditions have helped increase milk production for our current base of suppliers. We’ve seen increased milk purchases from third-party milk brokers, and we continue to increase our toll manufacturing opportunities. Volumes are performing better than prior year” Kai Bockmann, COO, Saputo Inc [Australia’s largest dairy processor]

Domestic Retail

“As a result of significant pent-up demand, the trading performance across stores in Melbourne has been very strong since they re-opened to retail customers on 28 October 2020” Rob Scott, CEO, Wesfarmers Ltd

“With borders reopening and the return of domestic tourism, along with a steady increase in workers returning to CBD offices, this should support improved retail conditions across Australia” Grant Kelley, CEO, Vicinity Centres

Media & Advertising

“Since the end of September, the FTA [free to air] advertising market and Nine’s share of that market, have both improved significantly” Hugh Marks, CEO, Nine Entertainment Co Holdings Ltd

Construction & Infrastructure

“As we look ahead, our customers are pointing to volumes remaining at current levels through to the start of the new calendar year” Ross Taylor, CEO, Fletcher Building Group Ltd

Energy & Resources

“After scientific and personal analysis of the renewable resources of our little planet I can assure you there is more than enough renewable energy to sustainably and economically supply every person on the planet from this time forth” Andrew Forrest, Chairman, Fortescue Metals Group.

terial 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.