NAOS CEO Insights

CEO INSIGHTS – Week Ending 22 October 2021 By NAOS Asset Management

October 22, 2021

“There will be 8 Teslas, 10 Teslas…and only one of them, is well known today. For the winners, anybody who invested in Tesla is feeling very smart. There will be, you know, Microsoft, Google, Amazon-type companies that come out of this space [climate change solutions]” Bill Gates, Co-Founder, Microsoft Corp/Gates Foundation

CEO INSIGHTS – Week Ending 22 October 2021 By NAOS Asset Management

“There will be 8 Teslas, 10 Teslas…and only one of them, is well known today. For the winners, anybody who invested in Tesla is feeling very smart. There will be, you know, Microsoft, Google, Amazon-type companies that come out of this space [climate change solutions]” Bill Gates, Co-Founder, Microsoft Corp/Gates Foundation

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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Agriculture

“High security [water] values have been supported as permanent irrigators look for long term water security ahead of the next dry period” Market Statement, Duxton Water Ltd

Building & Construction

“A bow wave of demand is coming forward” Rhys Jones, CEO, Vulcan Steel Ltd

“Commercial and key civil sectors seem to be stabilising at current levels” Ross Taylor, CEO, Fletcher Building Ltd

“And in the supply of goods, mainly timber is where we’ve seen a bit of tightness, but it’s easing over the quarter” Tarun Gupta, CEO, Stockland

Industrials

“But now we’re seeing a fourth phase [of customer behaviour since COVID], exhilaration of certainty that we’re moving sharply to higher levels, ignited by the conviction that we have met and managed the virus and that we won’t get shocked again. It’s a bright outlook” Nick Pinchuk, CEO, Snap-on Inc [multinational professional tools manufacturer]

Housing

“A buoyant housing market and a reduction in travel spend are also supporting the growth of our sector” Mark Coulter, CEO, Temple & Webster Ltd

“In 2020, we saw a change in consumer behaviour that created a significant increase in demand for our products as people with pools use them more and those without a pool or outdoor living area began looking for someone to build them their own backyard retreat. We believe that this trend will endure” Peter Arvan, CEO, Pool Corporation [world's largest distributor of swimming pool supplies & equipment]

Consumer Spending & Behaviours

“The end of lockdowns will no doubt have the world return to a more “normal” distribution of discretionary spend” Mark Coulter, CEO, Temple & Webster Ltd

“We are seeing the world shift; it has been going on for some time… The greater financial literacy [of younger generations] means people shop around more and Australian consumers are extremely sophisticated in how they think about which products they consume” Chris de Bruin, CEO Consumer & Business Banking, Westpac Banking Corporation

Environmental & Resources

“I’d compare green hydrogen to the beginning of the Industrial Revolution where everything changed. And I see this legitimately as the next great industrial revolution, but this one is entirely pollution free” Andrew Forrest, Executive Chairman, Fortescue Ltd

“There will be 8 Teslas, 10 Teslas…and only one of them, is well known today. For the winners, anybody who invested in Tesla is feeling very smart. There will be, you know, Microsoft, Google, Amazon-type companies that come out of this space [climate change solutions]” Bill Gates, Co-Founder, Microsoft Corp/Gates Foundation

Technology

“I think the internet works well because it's interoperable, it's open, it works across borders, promotes trade across borders… and so, as we evolve and regulate the internet, I think it's important to preserve those attributes” Sundar Pichai, CEO, Alphabet Inc [Google parent company]

“We’re in the worst of it now [semiconductor shortage], every quarter next year we’ll get incrementally better, but they’re not going to have supply-demand balance until 2023” Pat Gelsinger, CEO, Intel Corporation

Domestic Economy

“Assets in post-retirement are already large at around half a trillion dollars and this is set to expand to around $2 trillion over the next 20 years. Some $60+ billion moves from accumulation to decumulation each year, and the demographics are such that this must increase. Staggering amounts of money” Brett Cairns, CEO, Magellan Financial Group Ltd

Corporate Australia

“It is the hottest M&A environment we have seen in decades. Effectively every single ASX listed company is a target” Alex Cartel, Head Corporate Finance and Advisory, Citigroup Australia

Travel & Leisure

“International leisure bookings have now surpassed domestic bookings in Australia for the first time since the start of the pandemic and almost tripled between July and September” Graham Turner, CEO, Flight Centre Travel Group Ltd

“We have seen immediate green shoots in NSW since we reopened from 11 October” Jane Hastings, CEO, Event Hospitality & Entertainment Ltd

Freight & Logistics

“Pallet availability remained challenging in the first quarter with industry-wide shortages of new pallet supply across the globe as well as lower levels of pallet returns and longer cycle times” Graham Chipchase, CEO, Brambles Ltd

“We continue to see pressure on transportation and warehousing. We continue to see driver shortages, diesel [price] increases” Andre Schulten CFO, Procter & Gamble Co

Labour Markets & Employment

“From a wage inflation point of view in the market, what we're seeing is that there's more pressure at the lower end of the wage spectrum where there is a lot of movement there to attract people to jobs that have been really hard hit during the pandemic” Martine Ferland, CEO, Mercer Inc

“One size fits all is dead. The corporate headquarters as we knew it, 9-5, five days a week, corporate HQ, I don’t think we’re ever going back to that” Marcelo Claure, Exec. Chairman, WeWork Inc

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.