NAOS Ex-50 Opportunities Co. Ltd. · ASX:NAC
NAOS Ex-50 Opportunities — Non-Deal Roadshow (October 2024)
50 slides from NAOS Ex-50 Opportunities's roadshow presentation, Oct 1, 2024
Slide 1: NAOS Investor Roadshow - Presentation Materials
NAOS Ex-50 OPPORTUNITIES COMPANY LIMITED (ASX: NAC) ABN 49 169 448 837 1 October 2024 ASX Market Announcements ASX Limited 20 Bridge Street Sydney NSW 2000 NAOS Investor Roadshow - Presentation Materials For personal use only Please find attached the presentation materials for the NAOS Investor Roads
Slide 2: Investor Roadshow 2024: Emerging Equities: Time for a Golden Era?
For personal use only Investor Roadshow 2024 Emerging Equities: Time for a Golden Era?
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 We acknowledge the Traditional Owners of Country throughout Australia and recognise their continuing connection to lands, waters and communities. We pay our respect to Aboriginal and Torres Strait Islander cultures; and to Elders past and present. CON
Slide 5: We are NAOS
We are NAOS We are active, long-term investors in emerging companies. Our aim is to compound For personal use only shareholders’ capital and deliver dividend growth over the long-term, and we have a resolute commitment to investing our capital alongside our shareholders. With a focus on quality over
Slide 6: FY24 in Review
For personal use only FY24 in Review Let’s Reflect on FY22 CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 5 5
Slide 7: Factors That Contributed to Poor FY24 Performance
Factors That Contributed to Poor FY24 Performance • Many of our investments failed to grow earnings at the rate we expected in FY24. For personal use only • Subdued economic activity led to several core investments downgrading 2H FY24 earnings. • Significantly reduced valuation multiples for emergin
Slide 8: Select Core Holdings Performance – FY24 vs FY23
Select Core Holdings Performance – FY24 vs FY23 FY23 FY24 For personal use only EPS NPAT Share Price Market Cap EPS NPAT Share Price Market Cap $0.124 $23.7m $1.38 $140.0m $0.123 $24.2m $1.13 $117.1m % Change -1% +2% -18% -16% $0.08 $9.5m $1.12 $106.6m $0.0996 $11.3m $0.81 $86.6m % Change +5.4% +12%
Slide 9: Emerging Equities: Time for a Golden Era?
For personal use only Emerging Equities: Time for a Golden Era? CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 8 8
Slide 10: Unique Times For Company Valuations
Unique Times For Company Valuations • In FY18, CBA reported net profit of $9.3Bn and traded at ~$80/share, with a market cap of $120Bn. • In FY24, CBA reported net profit of $9.4Bn and traded at $128/share, with a market cap of $240Bn. For personal use only 140 24 CBA - Price & Valuation - FY18 vs F
Slide 11: FY24 - A Dynamic Period
FY24 - A Dynamic Period For personal use only CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 10 10
Slide 12: Investors Demand Liquidity Regardless of EPS Growth
Investors Demand Liquidity Regardless of EPS Growth For personal use only 1 yr TSR* P/E Multiple^ FY24 EPS Growth Wesfarmers Limited (ASX: WES) +31.08% 31.6 +3.71% Commonwealth Bank of Australia (ASX: CBA) +34.41% 23.6 -3.65% Reece Limited (ASX: REH) +30.19% 41.3 +8.19% JB Hi-Fi (ASX: JBH) +59.27% 1
Slide 13: Valuation Dispersion At Record Levels Between Large and Small Companies
Valuation Dispersion At Record Levels Between Large and Small Companies Record valuation dispersion. Relative Performance of the S&P/ASX Small Ordinaries Industrials Accumulation Index Vs For personal use only S&P/ASX200 Industrials Accumulation Index Small Ordinaries Industrials 800 Accumulation In
Slide 14: What Drives Emerging Company Outperformance?
For personal use only What Drives Emerging Company Outperformance? Let’s Reflect on FY22 CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 13 13
Slide 15: Performance Following Recessionary Environments
Performance Following Recessionary Environments For personal use only Recessionary Recovery XSOAI Index XSOAI XSOAI Trough to Years Event Years Trough Index Peak Peak Return ‘The Recession We Had 1990-1991 1992-1999 Q4 1990 Q4 1999 +214.1% to Have’ Dot Com Crash 2000-2002 2003-2006 Q3 2001 Q4 2007 +
Slide 16: What Drives Emerging Company Outperformance?
What Drives Emerging Company Outperformance? For personal use only 1. Ability to grow profitability in earnings per share (at a reasonable rate). 2. A more accommodating and certain economic environment. 3. Increased investor risk appetite. CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset
Slide 17: Ability to Grow Earnings Per Share
Ability to Grow Earnings Per Share For personal use only Demand for goods and services: • Is the demand profile for goods and services stable and predictable? • Are customers happy to enter into long-term contracts? • How easy is it for businesses to pass on genuine cost increases? • Is competitor a
Slide 18: Ability to Grow Earnings Per Share
Ability to Grow Earnings Per Share Flexibility to manage cost base in a reasonable manner: For personal use only • Staff costs often represent >50% of a company’s cost base. • Occupancy costs are becoming increasingly significant, especially for distribution businesses. • Freight, electricity, and i
Slide 19: A More Accommodating Economic Environment
A More Accommodating Economic Environment A more suitable inflationary environment. For personal use only • Inflation is often directly correlated to many of the cost variables mentioned previously. Interest rates that make it attractive for companies to borrow and invest. • Can a company generate a
Slide 20: Increased Investor Risk Appetite
Increased Investor Risk Appetite For personal use only • What risk adjusted returns are investors able to easily access? • Are higher risk asset classes seeing increased demand globally? • Is there more certainty on the outlook for riskier asset classes? i.e. equity earnings, high yield debt service
Slide 21: The Challenging Macro Backdrop Remains
For personal use only The Challenging Macro Backdrop Remains CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 20 20
Slide 22: Operating Margins Under Pressure
Operating Margins Under Pressure S&P/ASX 100 - Operating Margins 18% For personal use only 16% 14% 12% Operating Margins (%) 10% 8% 6% 4% 2% 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Operating Margins Long Term Average Source - B
Slide 23: The Economy is Growing….. Just
The Economy is Growing….. Just Australian Quarterly GDP Growth For personal use only 4.0 2.0 0.0 GDP Growth (%) -2.0 -4.0 -6.0 -8.0 Source - ABS CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 22 22
Slide 24: Is Opportunity on the Horizon?
For personal use only Is Opportunity on the Horizon? Let’s Reflect on FY22 CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 23 23
Slide 25: The Outlook is Improving
The Outlook is Improving Corporate Earnings For personal use only • Overall economic activity has stabilised, albeit at a low base. • Cost inflation remains elevated despite slowing from the increases seen in FY23 and FY24. A More Accommodating and Certain Economic Environment • Interest rates have
Slide 26: Recent Russell 2000 Index Outperformance
Recent Russell 2000 Index Outperformance Russell 2000 Index vs S&P 500 Index – Total Return 14.0% For personal use only 12.0% 10.0% 8.0% 6.0% Performance (%) 4.0% 2.0% 0.0% 01 Jul 2024 08 Jul 2024 15 Jul 2024 22 Jul 2024 29 Jul 2024 05 Aug 2024 12 Aug 2024 19 Aug 2024 26 Aug 2024 02 Sep 2024 09 Sep
Slide 27: US 10-Year Yields Have Fallen Significantly
US 10-Year Yields Have Fallen Significantly US 10 Year Yield For personal use only 5.1 4.9 4.7 4.5 Yield (%) 4.3 4.1 3.9 3.7 3.5 Sep 2023 Oct 2023 Nov 2023 Dec 2023 Jan 2024 Feb 2024 Mar 2024 Apr 2024 May 2024 Jun 2024 Jul 2024 Aug 2024 Sep 2024 Source: Koyfin CONVICTION. LONG TERM. ALIGNED | Copyri
Slide 28: Summary
Summary For personal use only • Previous bull markets have provided stellar returns over a multi-year period for emerging equities . • We are seeing early signs of earnings stabilisation which we believe will lead to increased investor confidence. • As interest rates fall, investors will seek invest
Slide 29: How Are We Positioned & Outlook
For personal use only How Are We Positioned & Outlook CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 28 28
Slide 30: We Are Laser Focused on Maximising Shareholder Value
We Are Laser Focused on Maximising Shareholder Value For personal use only • Six new core investments. • Board representation strategy yielding results. • Increased board representation. • Continued focus on quality not quantity of investments. • Directors and NAOS (the investment manager) continue
Slide 31: New Core Investments
New Core Investments Six New Core Investments: For personal use only Australia's largest smash repair network now ~net debt free with a AMA Group Ltd ASX: AMA proven board in place. Dropsuite Ltd ASX: DSE A global provider of data backup recovery software. Well-known brands with a highly credible ma
Slide 32: What we look for
For personal use only What we look for CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 31 31
Slide 33: Board Appointee Strategy
Board Appointee Strategy Strategy paying dividends with BSA, BTC health and Saunders International: For personal use only BSA Ltd (ASX: BSA) • Produced its strongest financial performance in FY24 and soon to be net debt free. BTC health Ltd (ASX: BTC) • A rejuvenated management team and strategy. •
Slide 34: 1-Year Total Shareholder Return of BSA, BTC & SND
1-Year Total Shareholder Return of BSA, BTC & SND SND, BSA, BTC – Total Return For personal use only 170% 120% 70% 20% -30% September October 2023 November December January 2024 February March 2024 April 2024 May 2024 June 2024 July 2024 August 2024 September 2023 2023 2023 2024 2024 BSA Total Retur
Slide 35: Board Appointee Strategy
Board Appointee Strategy Extended in FY24 through Maxiparts and Urbanise.com For personal use only Urbanise.com Ltd (ASX: UBN) • Darc Rasmussen appointed as Independent Chairman. • Also has board position on highly successful software businesses Objective Corp (ASX: OCL) and Gentrack Group (ASX: GTK
Slide 36: Portfolio Composition – Emerging Companies
Portfolio Composition – Emerging Companies The NAOS LICs have exposure to emerging companies with unique moats, often benefiting from structural industry changes. For personal use only Industry Exposure Market Capitalisation Buckets Investment type Financial Services Building Materials Construction/
Slide 37: Shareholder Alignment: LIC Directors & Investment Manager
Shareholder Alignment: LIC Directors & Investment Manager Inception Directors Shareholding 31 August 2024 Directors Shareholding 10,000,000 For personal use only 8,783,851 9,000,000 8,000,000 7,000,000 6,000,000 5,616,697 NUMBER OF SHARES 5,000,000 4,000,000 2,800,396 3,000,000 2,026,836 2,000,000 8
Slide 38: Potential to Grow NTA Significantly Over Long Term
Potential to Grow NTA Significantly Over Long Term NAOS Core Investment Analysis for FY25 For personal use only 14.5% % Est. NAOS Total Portfolio FY25 EBIT growth (Weighted Average) 50.0% % of Core Investments Net Cash (by end FY25) % of Core Investments Generating Free Cash 90.0% 0% 10% 20% 30% 40%
Slide 39: Potential FY25 Valuation Upside May Be Significant
Potential FY25 Valuation Upside May Be Significant Company ASX Code Share Price Implied P/E Multiple Small Ordinaries For personal use only Saunders International Ltd ASX: SND $0.89 9.5 Industrials P/E for FY25 is 21.16 BSA Ltd ASX: BSA $0.95 3.4 MaxiPARTS Ltd ASX: MXI $1.845 12.1 COG Financial Serv
Slide 40: Implied Valuations for Investments With Increased Execution Risk
Implied Valuations for Investments With Increased Execution Risk Although the execution risk is significant in these investments, if they can deliver on their respective strategies, For personal use only we believe their valuation multiples will expand materially. Company Our Target Timeframe Implie
Slide 41: Summary
Summary • We are acutely aware that the performance over the past 24 months has been poor, and we are For personal use only committed to restoring value and growing shareholder returns significantly. • History has shown us many times that being true to a sound investment philosophy yields outsized r
Slide 42: Questions & Answers
Questions & Answers For personal use only Thank you for your ongoing support 41
Slide 43: Appendix
For personal use only 42 Appendix
Slide 44: NCC Overview as at August 2024
NCC Overview as at 31 August 2024 $0.43 $0.53 $0.42 13.69% 10 $105.7m Pre-Tax NTA* Post-Tax NTA* Share Price Dividend Yield^ Number of Weighted Average For personal use only Holdings Market Capitalisation of the Investments *The above NTA figures are inclusive of the 2.00 cents per share fully frank
Slide 45: NAC Overview as at August 2024
NAC Overview as at 31 August 2024 $0.48 $0.63 $0.55 10.91% 6 $95.4m 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 Cumulativ
Slide 46: NSC Overview as at August 2024
NSC Overview as at 31 August 2024 $0.53 $0.61 $0.48 10.42% 10 $127.4m 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 Cumulat
Slide 47: 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 48: NAOS ESG Framework
NAOS ESG Framework For personal use only CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 47 47
Slide 49: NAOS Asset Management 1% Pledge
NAOS Asset Management 1% Pledge For personal use only CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 48 48
Slide 50: Investor Awareness and Communication
Investor Awareness and Communication For personal use only FOLLOW NAOS Subscribe Now: www.naos.com.au/subscribe CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 49 49
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