NAOS CEO Insights

CEO INSIGHTS – Week Ending 4 June 2021 By NAOS Asset Management

June 3, 2021

“It’s been very tough times, but I don’t think prices [of hospitality venues] reflect that. There’s no bargains” Justin Hemmes, CEO, Merivale

CEO INSIGHTS – Week Ending 4 June 2021 By NAOS Asset Management

“It’s been very tough times, but I don’t think prices [of hospitality venues] reflect that. There’s no bargains” Justin Hemmes, CEO, Merivale


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

“Food production is Australia’s biggest manufacturing sector, with a third of all manufacturing jobs and over 14,000 food businesses. With our total food exports going up by 60 per cent since our first Global Food Forum in 2013, I’m confident more and more countries will be looking for safe Australian food as global markets realign” Anthony Pratt, CEO, Visy Industries

Hospitality, Food & Beverage

“It’s been very tough times, but I don’t think prices [of hospitality venues] reflect that. There’s no bargains” Justin Hemmes, CEO, Merivale

Residential Property

“Coming through the other side of the pandemic...my view is that as first home buyers — particularly who look at apartments and smaller places and so forth — come out of the market, that volume will probably be replaced by investors” David Bailey, CEO, AFG Ltd

Electronics & Chip Shortage

“If you want electronics, buy them now. Otherwise, next year I think it will be very difficult to find anything” Serena Ross, CEO Circuitwise [Australian electronics manufacturer for medical device industry]

Media & Entertainment

“The importance of the PC extends far beyond work and school. In many cases, this has become the entertainment center of the home from streaming and content creation to the rise of gaming and eSports” Enrique Lores, CEO, HP Inc

Technology

“We just have never seen customer demand like this” Marc Benioff, CEO, Salesforce.com Inc

“We see three important industry trends now...The first trend is consumption upgrades as people spend the most time on their devices, leaving them to buy more devices and upgrade more often…The second trend is the infrastructure upgrade. The ever-growing use of online applications has not only increased the demand, but also raised the bar for ICT [information & communications technology] infrastructure…The third trend is application upgrade” Yang Yuanqing, CEO, Lenovo Group [worlds biggest PC company]

“We have found that clients on average have typically only moved about 20 per cent of their operations to the cloud. And the big thing that clients are now trying to solve is how you go from 20 per cent on the cloud to 80 per cent on the cloud” Matt Coates, Managing Director, Accenture ANZ

Mining & Resources

“Miners continue to benefit from global commodity consumption growth. Decarbonisation [is] expected to generate a structural change in metal demand including lithium, copper, and aluminium. Miners [are] continuing to increase their efforts to decarbonise their supply chain” Market Statement, Worley Ltd

Environmental & Renewables

“If our solution is entirely just to get a green world, we’re going to have much higher inflation, because we do not have the technology to do all this, yet. That’s going to be a big policy issue going forward too: Are we going to be willing to accept more inflation if inflation is to accelerate our green footprint?” Larry Fink, CEO Blackrock Inc

“Australia has the minerals to power the renewable energy age throughout the world in the coming years” Robyn Denholm, Chairwoman, Tesla Inc

Automotive

“To put it a simpler way: electric vehicles account for less than 1 per cent of vehicles globally at the moment. To reach net zero emissions that needs to be much closer to 100 per cent within 30 years. So that’s at least a 100-fold increase ahead, just for vehicles” Robyn Denholm, Tesla chairwoman

Retail

“Online growth has moderated as customer traffic to stores has increased, and online penetration has reduced but remains above pre COVID levels” Market Statement, Wesfarmers Ltd

Transport & Logistics

“The turnaround of a container hitting the U.S., delivering its contents and being back at the U.S. port to head back overseas has gone from approximately 25 days to 50 days” Richard Galanti, CFO, Costco Corporation

Payments & Lending

“So, what you’re seeing is that even as people are up and about and going into stores and card-present [payments] is recovering, card-not-present [payments] is still almost 60% above 2019 levels. So, you’re starting to see that that card-not-present is not slowing down, even as card-present recovers to, let’s say, almost pre-pandemic levels” Vasant Prabhu, CFO, Visa Inc

“Open banking [sharing banking data with verified third parties] is a trend” Michael Miebach, CEO, Mastercard Inc

Insurance

“We've been in this market of [general insurance] rate improvement above loss cost for, I guess, we're entering year three…I think the market that we're in now is the market we're going to be in for a while” Peter Zaffino, CEO, AIG Inc

Aviation

“Space [exploration] has always been a competitive environment…These new players [SpaceX, Blue Origin, Virgin Galactic, etc] are here to stay, I think, and we're working with them” James Taiclet, CEO, Lockheed Martin Corporation

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.