NAOS CEO Insights

CEO INSIGHTS – Week Ending 21 August 2020 By NAOS Asset Management

August 21, 2020

“We see an even more pronounced fashion shift towards leisure. The increase in workplace flexibility is here to stay. And the majority of companies plan more and more permanent remote working and of course, when you sit at home, you don’t wear your suit, you don’t wear your tie, but you tend to wear sneakers from Adidas or hoodies” Kasper Rorsted, CEO, Adidas AG

CEO INSIGHTS – Week Ending 21 August 2020 By NAOS Asset Management

“The gaming industry, with all that’s happening around the world [COVID-19] and it’s really unfortunate but it’s made gaming the largest entertainment medium in the world. More than ever, people are spending time digitally, spending their time in videogames” Jensen Huang, CEO, NVIDIA Corporation [global manufacturer of computer graphics cards]


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.  
 
If you do not already subscribe and wish to receive this weekly publication of “CEO Insights” via email please click here. 
 

Entertainment

“The gaming industry, with all that’s happening around the world [COVID-19] and it’s really unfortunate but it’s made gaming the largest entertainment medium in the world. More than ever, people are spending time digitally, spending their time in video games” Jensen Huang, CEO, NVIDIA Corporation [global manufacturer of computer graphics cards]

“The consumer market is now growing at a much faster pace than pre COVID-19 times. If we look at June and July sales, the market would have been 40-50% higher than last year's June and July. We clearly see the market growing double digit in gaming. That will continue” Rahul Agarwal, CEO, Lenovo [global computer manufacturer]

Technology

“We believe that the future computer company is a data center-scale company. The computing unit is no longer a microprocessor or even a server or even a cluster. The computing unit is an entire data center now” Jensen Huang, CEO, NVIDIA Corporation [global manufacturer of computer graphics cards]

“There is never going to be a time – I hope – in our lifetimes where change [for companies] is as cheap as it is now” Stewart Butterfield, CEO, Slack Inc

Payments & Lending

“I think what’s happened is the world has accelerated from physical to digital across almost every industry. Across every industry, we’re seeing this surge towards a digital-first strategy” Dan Schulman, CEO, PayPal Inc

“The blurring of lines between online and in-store sales channels, and the digitalisation of commerce [has] continued” Pieter der Does, CEO, Adyen NV [global payments processor]

Retail

“Consumers have discovered new shopping habits online that are enduring, and this is true of all ages” Fabrizio Freda, CEO, The Estée Lauder Companies Inc

Commercial Property

“We don't see any significant changes to lease structures immediately” Peter Huddle, COO, Vicinity Centres

“The Great Recession [GFC] frankly doesn’t – it pales in comparison to what we’re dealing with. Obviously, the amount of bankruptcies in our sector is tremendous and it’s more reminiscent to me of what we’re dealing with, of what we dealt with in the early 1990s than the Great Recession” David Simon, CEO, Simon Property Group [global retail/shopping centre REIT operator]

Residential Property & Construction

“Lead indicators point to a reduction in GWA’s addressable market for FY21, driven predominantly by the residential new build segment; with the decline in residential renovation and replacement segment expected to be less pronounced” Tim Salt, CEO, GWA Group Ltd

“Domestic volumes remained robust” Market Announcement, BlueScope Steel Ltd

“In the developer [property] market, lower investor demand and COVID-19 impacts on immigration, resulted in the deferral of high-rise apartment projects” Jason Pellegrino, CEO, Domain Holdings Australia Ltd

Global Economy

“While the outlook for 2021 remains uncertain, within the scenarios that we consider, our base case has the world economy rebounding solidly during the year” Market Announcement, BHP Group Ltd

Energy & Resources

“Oil markets and refining margins have been impacted by several global events including the transition to low sulphur marine fuels, OPEC+ supply disagreements and reduced global demand for oil products as a result of COVID-19. These have all weighed on global refining margins with sector returns heavily impacted as a result and refineries around the world recording significant losses” Scott Wyatt, CEO, Viva Energy Group Ltd

Domestic Economy

“Very clearly, the economy needs to create jobs at a faster rate than has happened … we have got to have conditions that support business investment” Dig Howitt, CEO, Cochlear Ltd

Transport & Logistics

“You can’t go to concerts or clubs or pubs, or sporting events but you can stay at home and buy stuff for your house. People are spending on themselves directly, instead of spending on entertainment, so we actually have a very strong underpinning and it will probably be a goods led [economic] recovery for some time” Richard White, CEO, WiseTech Global Ltd

Travel & Leisure

“Our business for last month has been at or above last year’s levels from a gross booking value. It’s totally crazy...So it dropped by about 80% and I mean, you know, nobody knows that this is pent up demand or not, but no, we're around last year's levels all around the world” Brian Chesky, CEO, Airbnb Inc

“When travel gets to the point that it turns back on, all past experiences are it turns back on in a big way. I think there will be a huge pent-up demand” Kyle Gendreau, CEO, Samsonite International SA

Automotive

“We have observed a strong rebound in demand for vehicles across multiple international markets as countries have emerged from lockdown. People's aversion to taking public transport [deemed unsafe due to COVID-19] have increased the propensity for car ownership” Cameron McIntyre, CEO, Carsales.com Ltd

Food & Beverage

“As the market leader in at-home offerings, we are ideally placed to capitalise on consumer preferences for strong brands during uncertain times and to benefit from the shift in consumer shopping behavior towards no sugar offerings and [no] energy drinks” Alison Watkins, MD, Coca-Cola Amatil Ltd

Education

“Gaining an international education is a lifelong aspiration. Our research shows 74% of IDP students with current university offers are holding on to their study goals” Andrew Barkla, CEO, IDP Education 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. 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.