NAOS Ex-50 Opportunities Co. Ltd. · ASX:NAC
NAOS Ex-50 Opportunities — Q4 FY23 Earnings Presentation
47 slides from NAOS Ex-50 Opportunities's earnings presentation, Aug 3, 2023
Slide 1: Q4 FY23 Investor Update and Q&A – Presentation Materials
NAOS EX-50 Level 34 OPPORTUNITIES 25 Martin Place COMPANY LIMITED Sydney NSW 2000 (ASX: NAC) T (02) 9002 1576 ABN 49 169 448 837 F (02) 8215 0037 E enquiries@naos.com.au www.naos.com.au 3 August 2023 ASX Market Announcements ASX Limited 20 Bridge Street Sydney NSW 2000 Q4 FY23 Investor Update and Q&
Slide 2: Q4 FY23 Investor Update and Q&A
For personal use only Thursday 3 August 2023 | 10:30 am (AEST) Audio Dial In: +61 3 8488 8990 Q4 FY23 Investor Update and Q&A Audio Access Code: 422-489-216
Slide 3: Important Information
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. It does not constitute an offer to purchase any security or financial product or servi
Slide 4: Acknowledgement of Country
Acknowledgement of Country For personal use only NAOS Asset Management acknowledges Traditional Owners of Country throughout Australia and recognises the continuing connection to lands, waters and communities. We pay our respect to Aboriginal and Torres Strait Islander cultures; and to Elders past a
Slide 5: Get to Know NAOS
For personal use only Get to Know NAOS 3
Slide 6: NAOS Directors and Team
NAOS Directors and Team OUR DIRECTORS For personal use only OUR TEAM 4
Slide 7: Our Investment Beliefs and Differentiation
Our Investment Beliefs and Differentiation For personal use only 5
Slide 8: What Qualitative Information Sources Does NAOS Use?
What Qualitative Information Sources Does NAOS Use? The NAOS Investment Team undertakes fundamental analysis on potential and current investments. Some examples of our key focus areas include: For personal use only 6
Slide 9: Reasons Not to Invest with NAOS
Reasons Not to Invest with NAOS Our LICs are not for everyone. Some reasons why you may not choose to invest with NAOS include: For personal use only Concentrated portfolios (0-15 investments & shareholdings often >20%) Long-term investment philosophy (5+ years) Focus on emerging companies ($2
Slide 10: Investment Portfolio Performance Summary
Investment Portfolio Performance Summary For personal use only 1 Year 3 Year 5 Year Inception Q4 Performance FY23 Performance Performance (p.a.) Performance (p.a.) Performance (p.a.) NAOS LIC Benchmark^ NAOS LIC Benchmark^ NAOS LIC Benchmark^ NAOS LIC Benchmark^ NAOS LIC Benchmark^ NCC Investment Po
Slide 11: NAOS LIC Franked Dividend History and Profit Reserves
NAOS LIC Franked Dividend History and Profit Reserves Each LIC has consistently paid dividends and holds healthy profit reserves For personal use only 94.43 90 80 68.75 70 62.14 CENTS PER SHARE 60 50 46.4 43.50 37.8 38.93 40 30 27.25 20 17.1 10 0 NCC (Feb 2013) NAC (Nov 2014) NSC (Dec 2017) Total Di
Slide 12: Q4 FY23 Summary
Q4 FY23 Summary The S&P/ASX 200 Accumulation Index (XJOAI) returned +1.01% for Q4 FY23, and the S&P/ASX Small Ordinaries Accumulation Index (XSOAI) returned -0.54%, bringing FY23 returns to +14.78% and +8.45% For personal use only respectively. Technology stocks roared their way back into bull m
Slide 13: Impact of rising rates – Consumer Discretionary Stocks
Impact of rising rates – Consumer Discretionary Stocks The consumer discretionary sector benefited strongly during the pandemic as consumers were flush with stimulus, however with rising rates, several consumer discretionary stocks downgraded earnings expectations as consumers start to reduce spendi
Slide 14: Unexpected Sources of Returns
Unexpected Sources of Returns FY23 Price Returns (%) ASX Index Breakdown - Total Returns for 2H FY23 For personal use only S&P Bitcoin Index (USD) 60.7% S&P/ASX 200 Information Technology Sector… 30.9% 10 Year US Treasury Index 28.5% S&P/ASX 200 Telecommunications Services… 10.9% Nikkei 225 Index 25
Slide 15: The Year of Artificial Intelligence…
The Year of Artificial Intelligence… Google Search Trends Data (Worldwide) 250 For personal use only Numbers represent search interest relative to the highest point on the chart for the given region and time. For each individual 200 search term, a value of 100 is the peak popularity. A value of 50 m
Slide 16: Q4 FY23 Summary Cont.
Q4 FY23 Summary Cont. The tone of interest rate expectations has changed from “how high will they go?” to “how long will they remain at this level and how aggressive will the future cuts be?”. In the US where effective rates are currently 5.08%, ~67% of economists expect US rates to be between 3
Slide 17: Australia's Rental Crisis Isn't Helping Consumer Sentiment
Australia’s Rental Crisis Isn’t Helping Consumer Sentiment Annual Rent Increases Vs Consumer Sentiment For personal use only 8 120 6 100 Westpac Consumer Sentiment Index 4 80 Rental Annual % Change 2 60 0 40 -2 20 -4 0 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Mar-13 Mar-
Slide 18: Inflationary Trends – The Trend is Our Friend
Inflationary Trends – The Trend is Our Friend Annual Movments in Inflation Rates (CPI) For personal use only 10.0% 9.0% 8.0% 7.0% Annual Movement (%) 6.0% 5.0% 4.0% 3.0% RBA Inflation Range Target (2-3%) 2.0% US Federal Reserve Inflation 1.0% Target (2%) 0.0% Nov-19 Jan-20 Nov-20 Feb-20 Jan-21 Nov-2
Slide 19: John Lorente, Managing Director and Chief Executive Officer
For personal use only John Lorente Managing Director and Chief Executive Officer 17
Slide 20: Industry Trends
NAOS Investor Update For personal use only Industry Trends 2/08/2023 19
Slide 21: Market performance diversity
01 Market performance diversity • BRI diversified by geography, industry segment, construction type For personal use only and customer Big River manufacturing facilities • Performance of market has differed significantly by Big River sales / distribution sites segment and geography • Supply chains i
Slide 22: Market performance - forecasts
02 Market performance - forecasts • Approvals record high in Dec 2020 – significant delays 3 For personal use only years (labour, materials & land) • Housing completions remain strong but starts falling away • Commencements versus completions • Multi residential on historical lows • Commercial stron
Slide 23: Drivers of the market
03 Drivers of the market Housing demand will be strong • Low vacancy rates For personal use only • 650k immigrants next two years Builders/developers struggling • Trade availability historical lows • Delays in housing • Lending tight • Delays in securing title of land • Fixed price contracts • Cashf
Slide 24: Outlook
04 Outlook • Regionally – performance will differ across geographies For personal use only • Short, medium and longer-term outlooks differ • Segments: • Housing delivery will continue – set a new base before growth • Multi res will grow – driven by medium density • Infrastructure strong – hit a peak
Slide 25: Thank you
For personal use only 2/08/2023 Thank you 24
Slide 26: NAOS Investee Companies - Key Events Q4 FY23
NAOS Investee Companies - Key Events Q4 FY23 HOLDING INDUSTRY Q4 UPDATE Majority (80%) acquisition of automotive supplies & workshop consumables For personal use only distributor Förch Australia for ~$10m. Substantial future revenue opportunity in this adjacent vertical. Board renewal continued
Slide 27: NAOS Investee Companies - Key Events Q4 FY23
NAOS Investee Companies - Key Events Q4 FY23 HOLDING INDUSTRY Q4 UPDATE 1H FY23 (Mar-23) financials released. Strong earnings margin & cash flow For personal use only generation. Singapore office opened. FY23 and FY24 financial outlook again upgraded. FY23 benefitting from non- recurring legacy
Slide 28: NCC Overview as at June 2023
NCC Overview as at 30 June 2023 $0.81 $0.85 $0.68 11.03% 11 $151.1m Pre-Tax NTA Post-Tax NTA Share Price Franked Number of Weighted Average For personal use only Dividend Yield Holdings Market Capitalisation of the Investments FRANKED DIVIDEND HISTORY 8.0 7.50 7.50 80 7.00 7.25 7.25 7.25 6.75 68.75
Slide 29: NAC Overview as at June 2023
NAC Overview as at 30 June 2023 $1.03 $1.04 $0.88 6.19% 12 $205.2m Pre-Tax NTA Post-Tax NTA Share Price Fully Franked Number of Weighted Average For personal use only Dividend Yield Holdings Market Capitalisation of the FULLY FRANKED DIVIDEND HISTORY Investments Fully Franked Dividends Cumulative Di
Slide 30: NSC Overview as at June 2023
NSC Overview as at 30 June 2023 $0.80 $0.81 $0.68 7.06% 10 $195.6m Pre-Tax NTA Post-Tax NTA Share Price Fully Franked Number of Weighted Average For personal use only Dividend Yield Holdings Market Capitalisation of the Investments FULLY FRANKED DIVIDEND HISTORY Fully Franked Dividends Cumulative Di
Slide 31: Overview & Outlook Q1 FY24
Overview & Outlook Q1 FY24 Q1 FY24 will see the release of FY23 financial reports for most of our investee businesses. Investor focus will be less on the FY23 results and more on Q4 FY23 trading updates (and any For personal use only July/August detail) to gauge the impact of interest rate rises
Slide 32: Overview & Outlook Q1 FY24
Overview & Outlook Q1 FY24 We believe many of our investee companies have exposure to long-term structural tailwinds such as: Renewable Energy Transition For personal use only GTK provides the billing platforms to utilities that are well suited for renewable energy. COG will benefit from the shi
Slide 33: Structural Tailwinds: Renewable Energy Transition
Structural Tailwinds: Renewable Energy Transition Funding requirement for the transition to renewable energy is a For personal use only once-in a generation event. AEMO estimate that total renewable investment required for the energy transition by 2050 with be ~$181bn. 7% of the total investment
Slide 34: Structural Tailwinds: Renewable Energy Transition
Structural Tailwinds: Renewable Energy Transition Renewable Energy Transition - Consumption Snapshot For personal use only European Union 85.2% 14.8% Non-OECD Countries 94.1% 5.9% OECD Countries 90.0% 10.0% A long way to go before the renewables transition Global 92.5% 7.5% is implemented. The under
Slide 35: Q&A
Q&A Thank you for your continued support. For personal use only “Games are won by players who focus on the playing field - not by those whose eyes are glued to the scoreboard.” Warren Buffett 33
Slide 36: Appendix
For personal use only Appendix
Slide 37: NAOS Asset Management 1% Pledge
NAOS Asset Management 1% Pledge For personal use only 34
Slide 38: NAOS LICs Director Alignment
NAOS LICs Director Alignment Directors' shareholdings have significantly increased since the inception of each LIC For personal use only Inception Directors Shareholding 30 June 2023 Directors Shareholding 9,500,000 8,595,413 8,500,000 7,500,000 6,500,000 5,434,788 NUMBER OF SHARES 5,500,000 4,500,0
Slide 39: The Case for Concentrated Investing
The Case for Concentrated Investing Holding too many stocks in a portfolio can lead to poor risk adjusted performance For personal use only Source: NAOS Asset Management 36
Slide 40: NAOS Strong Long-term Risk-adjusted Returns
NAOS Strong Long-term Risk-adjusted Returns * NCC Investment Portfolio Risk and Performance Metrics NAC Investment Portfolio Risk and Performance Metrics 15% 15% For personal use only 11.19% 10% 10% 9.00% 6.62% 4.68% 5% 5% 3.09% 3.55% 2.53% 2.36% 0% 0% -1.01% -1.44% -3.07% -3.59% -5% -5% Performance
Slide 41: NAOS Strong Long-term Risk-adjusted Returns
NAOS Strong Long-term Risk-adjusted Returns * NSC Investment Portfolio Risk and Performance Metrics For personal use only 10% 5% 3.85% 3.18% 3.44% 2.05% 0% -1.73% -3.87% -5% Performance Since Monthly Average Monthly Average Inception p.a. Performance when the Performance when the Market is up Market
Slide 42: Capital Management Initiatives
Capital Management Initiatives Performance • Maintain a focus on long term performance without deviating from the NAOS investment philosophy. For personal use only • Continue to focus on a growing stream of dividends, franked to the maximum extent possible, whilst maintaining an Dividends adequate r
Slide 43: Historical Shareholder Numbers
Historical Shareholder Numbers For personal use only 8000 6000 4000 2000 0 NCC Shareholders NAC Shareholders NSC Shareholders 40
Slide 44: NAOS ESG Framework
For personal use only NAOS ESG Framework 41
Slide 45: Key Business & Industry Traits for Maximising Long-term Performance
Key Business & Industry Traits for Maximising Long-term Performance and Reducing the Risk of Permanent Capital Loss Events A growing revenue base provides companies with a number of competitive advantages such as the ability to scale Industry Tailwinds Supporting their fixed cost base and increase m
Slide 46: Why Invest via a Listed Investment Company?
Why Invest via a Listed Investment Company? We strongly believe LICs are a highly effective structure to give investors the highest quality exposure to specific asset classes, which in the case of NAOS is emerging businesses. For personal use only A Listed Investment Company structure: Allows the
Slide 47: Investor Awareness and Communication
Investor Awareness and Communication For personal use only FOLLOW NAOS 44
NAOS Ex-50 Opportunities Company — Q4 FY23 Earnings Presentation on 6ix