NAOS Ex-50 Opportunities Co. Ltd. · ASX:NAC
NAOS Ex-50 Opportunities — Non-Deal Roadshow (September 2019)
37 slides from NAOS Ex-50 Opportunities's roadshow presentation, Sep 10, 2019
Slide 1: National Investor Roadshow
NAOS Asset Management National Investor Roadshow For personal use only September 2019 CONVICTION. LONG TERM. ALIGNED | Copyright 2019 NAOS Asset Management Limited 1
Slide 2: 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 For personal use only only and must not be construed as investment advice. It does not constitute an offer to purchase any security or fina
Slide 3: Our Mission
NAOS Asset Management Our Mission For personal use only To provide investors with genuine long-term, concentrated exposure to Australian undervalued listed micro, small and mid-cap companies with an industrial focus. NAOS established its first Listed Investment Company (LIC) in 2013 with 400 shareho
Slide 4: NAOS investment beliefs provide a competitive advantage
NAOS investment beliefs provide a competitive advantage For personal use only Value with Long Quality over Invest for the Performance v Term Growth Quantity Long Term Liquidity Focus 5+ years The closed end LIC structure removes application and redemption risk. Ignore the Pure Exposure Environmental
Slide 5: Reasons NOT to invest with NAOS
Reasons NOT to invest with NAOS For personal use only 1. Your investment timeframe is less than 5 years. 2. You have an expectation that investment returns must be similar to index returns and are uncomfortable when returns significantly differ. 3. You prefer to invest in larger or more liquid compa
Slide 6: Why NAOS strategies generated poor returns during FY19
Why we believe the NAOS strategies generated poor returns during FY19 For personal use only 1. Many company strategies took longer than we expected to successfully execute. 2. Significant P/E compression prior to FY19 results despite the lack of company specific news flow. 3. A lack of stock specifi
Slide 7: NAOS investment portfolio financial year returns
NAOS investment portfolio financial year returns * For personal use only 35% 25% 15% 5% -5% -15% FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 NAOS Emerging Opportunities Company Limited (ASX: NCC) NAOS Ex-50 Opportunities Company Limited (ASX: NAC) NAOS Small Cap Opportunities Company Limited (ASX: NSC)
Slide 8: FY19 market backdrop
FY19 market backdrop For personal use only 1. Growth expectations for S&P/ASX 200 Industrials continued to be revised down. 2. Earnings per share (EPS) for FY20 revised down. 3. Dividend payouts rose sharply even with relatively flat FY19 earnings. 4. Initial fatigue in some high growth industrial c
Slide 9: S&P/ASX Industrials revised growth expectations
S&P/ASX 200 Industrials revised growth expectations For personal use only 12% 11.5% 10.8% 10% 8% 7.8% 6% 4.6% 4% 2% 0% Jul-18 Sept-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sept-19 May-19 Jul-19 Sept-19 S&P/ASX 200 Industrials FY19F/A EPS Growth Estimates Over Time S&P/ASX 200 Industrials FY20/F EPS Gro
Slide 10: The macroeconomic environment dictated industry returns
The macroeconomic environment dictated industry returns For personal use only 20% 10% 0% Share Price Return -10% -20% -30% -40% -50% -60% -70% Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 S&P/ASX 300 A-REIT Index (XPK) FY19 Performance +14% Boral Limited
Slide 11: Market backdrop and portfolio considerations
Market backdrop and portfolio considerations We continue to minimise risk by investing in businesses that have exposure to industries with For personal use only tailwinds or opportunities for structural change 1. Ageing population and healthcare 2. Cyclical businesses 3. Maintenance spend on infrast
Slide 12: Ageing population and healthcare
Ageing population and healthcare For personal use only 1. End of aged care royal commission and potential funding changes. 2. NDIS ramp up gaining significant momentum. 3. Technological change in devices and drugs. 4. Many large unlisted businesses operate in related industries and may raise capital
Slide 13: Cyclical businesses
Cyclical businesses 1. Signs of green shoots relating to the consumer with rising auction clearance rates now >80%. For personal use only 2. Tax cuts and lower interest rates to provide potential benefits. 3. Feedback from listed and unlisted cyclical businesses suggested July and August trading has
Slide 14: Maintenance spend on infrastructure assets
Maintenance spend on infrastructure assets 1. New infrastructure assets need to be maintained, examples include new hospitals, new For personal use only airports and new toll roads. 2. Another adjacent opportunity is the spend on government and defence assets as the percentage of GDP that is spent o
Slide 15: NCC Overview as at August 2019
NCC Overview as at 31 August 2019 For personal use only $1.10 $1.02 7.11% $86.7m 9 1.51% 2.5 Years Pre Tax NTA Share Price Dividend Average Holdings Cash Dividend Yield Market Cap. Weighting Reserves of Portfolio Fully Franked Dividend (cents per share) 15 60.70 60 50 42.75 10 40 6.75 7.00 7.25 7.25
Slide 16: NCC Results Overview
NCC Results Overview For personal use only FY20 SHARE PRICE FY19 SHARE PRICE NET DEBT EBITDA LONG-TERM HOLDING NAME RETURN TO INDUSTRY RETURN 30 JUNE 2019 $M FY19 $M OUTLOOK? 31 AUG 2019 Commercial BSA Limited +8.2% +16.9% Services $12.2 $24.6 (ASX: BSA) (Contracting) BTC Health Healthcare/ -57.5% +
Slide 17: NSC Overview as at August 2019
NSC Overview as at 31 August 2019 For personal use only $0.81 $0.61 6.56% $192.8m 12 5.18% 2.75 Pre Tax NTA Share Price Dividend Average Holdings Cash Years Yield Market Cap. Weighting Dividend of Portfolio Reserves Fully Franked Dividend (cents per share) Buy-Back Program 15 13.57 1,200,000 946,892
Slide 18: NSC Results Overview
NSC Results Overview For personal use only FY20 SHARE PRICE FY19 SHARE PRICE NET DEBT EBITDA LONG-TERM HOLDING NAME RETURN TO INDUSTRY RETURN 30 JUNE 2019 $M FY19 $M OUTLOOK? 31 AUG 2019 MNF Group Software and -25.5% +27.3% $40.1 $27.2 (ASX: MNF) Services Motorcycle Motorcycle Holdings Retailer and
Slide 19: NAC Overview as at August 2019
NAC Overview as at 31 August 2019 For personal use only $1.08 $0.85 6.18% $379.6m 9 16.29% 2 Years Pre Tax NTA Share Price Dividend Average Holdings Cash Dividend Yield Market Cap. (0 Short Weighting Reserves of Portfolio Positions) Fully Franked Dividend (Cents Per Share) Buy-Back Program 31.79 600
Slide 20: NAC Results Overview
NAC Results Overview For personal use only FY20 SHARE PRICE FY19 SHARE PRICE NET DEBT EBITDA LONG-TERM HOLDING NAME RETURN TO INDUSTRY RETURN JUNE 30 2019 $M FY19 $M OUTLOOK? 31 AUG 2019 MNF Group Software and -25.5% +27.3% $40.1 $27.2 (ASX: MNF) Services Smartgroup Salary Corporation -23.3% +33.8%
Slide 21: Outlook: New Opportunities
Outlook For personal use only 1. New Opportunities • Several long-term opportunities that have been analysed by the NAOS team over a number of months and in some cases more than a year. • These include Experience Co Limited (ASX: EXP), Class Limited (ASX: CL1), Eureka Group (ASX: EGH) and Vitalharve
Slide 22: Outlook: Existing Opportunities
Outlook For personal use only 2. Existing Opportunities • We believe a number of existing NAOS portfolio holdings that have been built up over the past 12-36 months are on the verge of significant growth and maturity as listed entities, which may lead to significant share price re-ratings. • Example
Slide 23: Outlook: Continue to Address the Discount to NTA
Outlook For personal use only 3. Continue to Address the Discount to NTA • Maintain a focus on performance. • We will not deviate from the NAOS investment strategy and philosophy. • Continued focus on maintaining and growing a stream of fully franked dividends. • Continue to acquire shares via buy-b
Slide 24: Focus on the controllable
Focus on the controllable NAOS will continue to focus on the controllable to maximise risk adjusted returns. For personal use only • Can Control 1. Investing with proven management teams based on value/price and stock specific fundamentals on a 3-5 year view. 2. Assisting our investee companies with
Slide 25: Appendix
Appendix For personal use only CONVICTION. LONG TERM. ALIGNED | Copyright 2019 NAOS Asset Management Limited 25
Slide 26: NAOS Listed Investment Companies
NAOS Listed Investment Companies Each of our LIC’s target a concentrated portfolio of 10-20 companies For personal use only CONVICTION. LONG TERM. ALIGNED | Copyright 2019 NAOS Asset Management Limited 26
Slide 27: NTA & Performance as at August 2019
NTA & Performance as at 31 August 2019 For personal use only INCEPTION PRE TAX NTA 1 MONTH 1 YEAR INCEPTION (P.A.) (Total Return) NCC* $1.10 +2.86% -5.20% +12.34% +113.30% (6 years 7 months) NSC^ $0.81 +12.91% -5.53% -3.26% -5.63% (21 months) NAC* $1.08 +8.14% -0.85% +12.57% +76.53% (4 years 10 mont
Slide 28: Strong long term risk adjusted returns
Strong long term risk adjusted returns * For personal use only NCC Investment Portfolio Risk and Performance Metrics NAC Investment Portfolio Risk and Performance Metrics 14% 14% 12.34% 12.57% 12% 12% 10% 10% 8.72% 8% 7.29% 8% 6.11% 5.81% 5.95% 6% 5.41% 6% 4% 4% 2% 2% 0% 0% Performance Since Incepti
Slide 29: NAOS investment process
NAOS investment process For personal use only CONVICTION. LONG TERM. ALIGNED | Copyright 2019 NAOS Asset Management Limited 29
Slide 30: NAOS ESG framework
NAOS ESG framework For personal use only CONVICTION. LONG TERM. ALIGNED | Copyright 2019 NAOS Asset Management Limited 30
Slide 31: The case for concentrated investing
The case for concentrated investing Holding too many stocks in a portfolio can lead to poor performance For personal use only Source: Dresdner Kleinwort Macro Research CONVICTION. LONG TERM. ALIGNED | Copyright 2019 NAOS Asset Management Limited 31 31
Slide 32: NAOS management alignment
NAOS management alignment For personal use only 8,000,000 7,526,514 Inception Directors Shareholding (Ordinary Shares) 7,000,000 31 August 2019 Directors Shareholding (Ordinary Shares) 6,000,000 5,000,000 4,140,992 4,000,000 3,000,000 2,026,836 1,960,054 2,000,000 1,007,288 1,000,000 837,958 0 NAC N
Slide 33: NAOS Shareholder Numbers
NAOS Shareholder Numbers For personal use only 10,000 8,000 6,000 4,000 7,811 2,000 0 430 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Total Shareholders (June 30) CONVICTION. LONG TERM. ALIGNED | Copyright 2019 NAOS Asset Management Limited 33
Slide 34: NAOS Asset Management giving back
NAOS Asset Management giving back NAOS, the management company, is proud to be supporting the following charities For personal use only ‘Golden Shouldered Parrot’ threatened ‘Reef Aid’ campaign, in partnership RFDS, dedicated to providing species project, in partnership with with Greening Australia
Slide 35: NAOS Directors and Team
NAOS Directors and Team For personal use only OUR DIRECTORS Sebastian Evans Warwick Evans Matthew Hyder David Rickards Sarah Williams Mark Bennett Trevor Carroll Managing Director, NAOS Chairman, NAOS Asset Director, NAOS Asset Independent Chairman & Independent Director, Director, NAOS Asset Indepe
Slide 36: Investor awareness and communication
Investor awareness and communication For personal use only CEO Insights, NAOS Shareholder Monthly Investment The news and media Twice yearly National Newsletter, Conference Calls, Report & NTA email section of our website Roadshow subscribe via our subscribe via our updates, subscribe via is updated
Slide 37: Thank you for your continued support
Thank you for your continued support For personal use only Q&A CONVICTION. LONG TERM. ALIGNED | Copyright 2019 NAOS Asset Management Limited 37
NAOS Ex-50 Opportunities Company — Non-Deal Roadshow (September 2019) on 6ix