NAOS CEO Insights

CEO INSIGHTS – Week Ending 22 April 2022 By NAOS Asset Management

April 22, 2022

“Books and reading books has actually become ‘cool’ again” Mark Newman, CEO, Dymocks Books

CEO INSIGHTS – Week Ending 22 April 2022 By NAOS Asset Management

“Books and reading books has actually become ‘cool’ again” Mark Newman, CEO, Dymocks Books

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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Housing & Residential Property

“The risks from high indebtedness had been underscored by the substantial increase in stress among Chinese property developers. The majority of large, listed property developers had either defaulted on debt or had seen their debt trade at interest rates exceeding 50 per cent. These conditions would make it difficult for property developers to refinance their debt” Market Statement, Reserve Bank of Australia

“Housing affordability is a much bigger political issue than it has been in the past and that’s because it’s a real issue which is set to get worse, not better” Ken Morrison, CEO, Property Council of Australia

Online

“85% of retail still lives offline. So we’re so early in all these areas....and still 95% of the world’s IT spend is on-premises & not in the cloud” Andy Jassy, CEO, Amazon.com Inc

“And we’re certainly seeing a significant impact [from Chinese lockdowns] in terms of consumer demand…Even online shopping is significantly constrained due to the inability to deliver” Andre Schulten, CFO, Procter & Gamble Co.

Technology

“The resource of the metaverse is data. Data is the most valuable resource on Earth. It is more valuable from our perspective than oil or energy or resource” Yat Siu, Executive Chairman, Animoca Brands Ltd [digital media & gaming company]

“We are seeing very strong demand…I think, technology has shifted from being just one aspect of a business to being the source of competitive advantage” Arvind Krishna, CEO, International Business Machines [IBM] Corporation

Freight & Logistics

“We continue to face pallet availability challenges with ongoing constraints on new pallet supply and lower than normal pallet returns in all regions” Graham Chipchase, CEO, Brambles Ltd

Media & Entertainment

“We’ve got great competition. They've got some very good shows and films out and what we've got to do is take it up a notch” Reed Hastings, Co-CEO, Netflix Inc

“Books and reading books has actually become ‘cool’ again” Mark Newman, CEO, Dymocks Books

Financial Markets

“So the number of companies that are looking to go out into the public markets remains really strong. We have great engagement with some really interesting and large-cap IPO opportunities. But they need to feel that the environment is the right environment to go public and that investors are ready to take new risks on new issuers” Adena Friedman, CEO, Nasdaq Inc

Retail & Consumer Sentiment

“I think we are not even close to experiencing a luxury downturn…the overall demand for luxury products and premiumised products is very high. The market is premiumising overall” Nicolas Hieronimus, CEO, L'Oréal S.A.

Commodities Prices

“We expect commodity demand to be underpinned by the global energy transition which is creating new demand for our products and near-term Chinese policies that are becoming more growth focused. Recent input cost increases are the largest raw material cost hike since the Oil Crisis in 1973” Market Statement, Rio Tinto Ltd

“International dairy prices continued to strengthen in 2H FY2022. The improvement in international commodity markets and decreases in 2H FY2022 national milk production have further increased competition for milk” Market Statement, Bega Cheese Ltd

“The lithium margins right now are practically software margins...Do you like minting money? Well, the lithium business is for you” Elon Musk, CEO, Tesla Inc

Airports & Travel

“None of us could have predicted how the last two years would go, including the last two weeks [of congestion], so I think what we will see is the industry continue to get more sophisticated and get back to very high levels of efficiency” Jane Hrdlicka, CEO, Virgin Australia

Semiconductors & Batteries

“Semiconductors are a small appetiser to what we are about to feel on battery cells over the next two decades. Put very simply, all the world's cell production combined represents well under 10% of what we will need in 10 years” RJ Scaringe, CEO, Rivian Automotive Inc [specialised electric vehicle automaker]

Macroeconomic

“It is appropriate in my view to be moving a little more quickly [on hiking rates]” Jerome Powell, Chairman, US Federal Reserve

“The single most important challenge of our time right now is inflation” Tobias Adrian, Director, International Monetary Fund

Healthcare & Hospitals

“We've seen good recovery [post-COVID] in our device portfolio, especially in cardiovascular, seen routine diagnostic testing improving, albeit a little bit slower than what we've seen in devices, but definitely the trend of recovery is there” Robert Ford, CEO, Abbott Laboratories Inc [multinational medical device & healthcare company]

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.