NAOS CEO Insights

CEO INSIGHTS – Week Ending 15 October 2021 By NAOS Asset Management

October 15, 2021

“There’s a lot of catching up to do. There’s $100 billion extra sitting in people’s bank accounts. We expect a fair share of that to be spent on food and drink” Steven Cain, CEO, Coles Group Ltd

CEO INSIGHTS – Week Ending 15 October 2021 By NAOS Asset Management

“There’s a lot of catching up to do. There’s $100 billion extra sitting in people’s bank accounts. We expect a fair share of that to be spent on food and drink” Steven Cain, CEO, Coles Group Ltd

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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Automotive & Vehicles

“The modern automotive industry has heard this message loud and clear. If you don’t give your customers an electric option, they won’t stay your customer for long” Behyad Jafari, CEO, Electric Vehicle Council

“Elon Musk would have you believe everyone will be owning an electric vehicle very soon…There is certainly no technology that is going to replace the tractors and trucks out there” Simon Henry, CEO, DGL Group Ltd [ASX listed diversified industrials group]

Environmental

“By our analysis if governments and private sector continue to develop energy infrastructure the way we always have, we won’t get to net zero by 2050. We might not get even half-way” Chris Ashton, CEO, Worley Ltd

Mining & Resources

“We continue to see strong market demand from our customers across Australia for DDH1’s industry leading drilling services, particularly across gold, iron ore and – increasingly – battery minerals” Sy van Dyk, CEO, DDH1 Ltd [major Australian drilling company]

“Copper is critical to the global shift to decarbonisation and this is a shift we are participating in as a company” Sandeep Biswas, CEO, Newcrest Mining Ltd

Consumer Demand

“There’s a lot of catching up to do. There’s $100 billion extra sitting in people’s bank accounts. We expect a fair share of that to be spent on food and drink” Steven Cain, CEO, Coles Group Ltd

Retail

“In Australia, I think retail is going to be fine. We’ve got the advantage of knowing what happens when other countries opened. Australia is sort of lagging from that point of view” Brett Blundy, Chairman, Lovisa Holdings Ltd

“Savings rates are up, people have a lot of money to spend and there’s a built-up expectation that there’s going to be a big retail boom for the next six months” Guy Fowler, Executive Chairman, Barrenjoey Capital

Supply Chain

"Typically, there's a peak on global supply chain capacity that occurs in the run up to Christmas and into the early part of January and up to Chinese New Year. So we naturally expect with a cycle for that to get better in the second half [1HCY22]” Mathew Dunn, CFO, ASOS Plc [global fast fashion retailer]

Inflation

“I do think it’s something that’s really important for retirees and trustees and advisers to be thinking about. While we haven’t seen inflation, real inflation, for so long, it can be really detrimental for retirees in terms of eroding their purchasing power” Richard Howes, CEO, Challenger Ltd

“Inflationary trends are appearing more than transitory, reflecting structural changes, including a shift from consumerism to job creation, rising wage growth, and the energy transition” Lawrence Fink, CEO, BlackRock Inc

“It’s certainly fair to say that some categories are continuing to see inflation. Probably the one that is right up there is red meat” Steven Cain, CEO, Coles Group Ltd

Agriculture

“It’s definitely on some people’s [avocado growers] minds as to whether it’s going to be viable for them going forward. They can weather one year like this, but if this [low prices] is ongoing, I mean the pricing purely, it’s just not sustainable the way it is at the moment” John Tyas, CEO, Avocados Australia

Travel & Aviation

“People are optimistic but cautious; they’re keen to go overseas again, but they’re mindful of the risks” Simon McGrath, CEO, Accor Hotels APAC

“A lot of today’s issues should be in the rear-view mirror by then. It is a great time to start an airline; there is pent-up demand, and we can also leverage good opportunities in the aviation market like cheap jets” Tim Jordan, CEO, Bonza [new Australian low-cost airline]

Labour & Skills

“The labour market and labour shortages have replaced returning to work as the conversation starter for everyone” Jane Fraser, CEO, Citigroup Inc

“There is already a lot of demand for engineers, supervisors and health and safety professionals, and this will just increase in coming years” Joe Barr, CEO, John Holland Group

Infrastructure & Construction

“Demand appears to be strong across all regions” Market Statement, Adbri Ltd [formerly Adelaide Brighton Ltd]

Residential

“As the urban dwellings get smaller in space, there's a real move to the desire of a smaller type of pool” Spiros Dassakis, COO, Swimming Pool and Spa Association of Australia

Cryptocurrency

“No matter what anyone in the room thinks, nor what any libertarian thinks, nor what anyone thinks about it, government’s going to regulate it” Jamie Dimon, CEO, JPMorgan Chase & Co

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.