Ausbil Active Dividend Income Fund - Active ETF · ASX:DIVI
Ausbil Active Dividend Income Fund - Active ETF — Ausbil Investment Management — Non-Deal Roadshow (March 2014)
52 slides from Ausbil Active Dividend Income Fund - Active ETF's roadshow presentation, March 2014
Slide 1: Ausbil Investment Road Show - March 2014
Ausbil Investment Road Show - March 2014 Australian shares – will the recovery continue? March 2014
Slide 2: New York Life Investment Management
New York Life Investment Management Large, established life insurance group with “boutique affiliate” model New York Life a Fortune 100 company • Founded in 1845 • One of the largest mutual life insurance companies in the US • Operates two primary businesses; Insurance and Investments New York Life
Slide 3: Boutique affiliate model
New York Life Investment Management Boutique affiliate model Affiliate Specialty AUM Office Base $USb Manage the general account fixed income assets 154 New York Fixed income, equities, alternatives, sustainable investments Brussels, Paris, 101 and asset allocation Luxembourg Fixed income oriented b
Slide 4: Investment Returns
Investment Returns Our belief in an improving world has paid dividends Fund Investable 1 year Return* 1 year excess Since Inception Universe Return* Excess Return^ Active Equities ASX 300 16.4% +6.2% +3.6% Active Extension ASX 200 19.9% +9.3% +2.3% Geared Equities ASX 300 27.5% +17.3% -6.4% Emerging
Slide 5: A Large Cap Perspective
A Large Cap Perspective Australian shares – will the recovery continue? Presenter: Paul Xiradis – CEO and Head of Equities
Slide 6: Will the recovery continue? The global economy
Will the recovery continue? The global economy 6
Slide 7: Australian and world share prices
Australian and world share prices The recovery continues Source: Iress, Ausbil 7
Slide 8: Global growth outlook
Global growth outlook GDP growth rate trends turning more positive Real GDP Consensus 2013 (a) Consensus 2014 (f) Consensus 2015 (f) % yoy US 1.9% 2.8% 3.0% Japan 1.7% 1.6% 1.1% Euroland -0.4% 1.1% 1.4% China 7.7% 7.6% 7.4% Australia 2.5% 2.8% 2.8% Advanced Economies 1.3% 2.2% 2.4% Developing Econom
Slide 9: Global interest rates are rising
Global interest rates are rising Reflects improving economic fundamentals 10 Year Government Bond Yields 7 6 5 4 3 2 1 US 10yr AUS 10yr GER 10yr 0 2000 2002 2004 2006 2008 2010 2012 2014 Source: Bloomberg 9
Slide 10: US economic growth
US economic growth Long term suggests 3% GDP more than achievable Average Source: US Department of Commerce; Bureau of Economic Analysis 10
Slide 11: US Fed spending
US Fed spending The drag is abating Percent change, year ago Percent change, year ago 10 10 8 Forecast 8 6 6 4 4 2 2 0 0 -2 -2 -4 Real Federal Spending Growth -4 -6 -6 -8 -8 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Department of Commerce. Goldman Sachs Global Investment Re
Slide 12: US housing starts gather momentum
US housing starts gather momentum With potential to overshoot long term average Source: Deutsche Bank 12
Slide 13: Shale energy revolution in the US
Shale energy revolution in the US Moving towards self sufficiency Source: EIA World Energy Outlook 2013 13
Slide 14: Euro Manufacturing PMI continues to recover
Euro Manufacturing PMI continues to recover The negative austerity drag is abating 14
Slide 15: China should deliver 7%+ growth
China should deliver 7%+ growth Slightly lower; but on a much expanded base Source: Source: CEIC Latest actual data 15
Slide 16: Australian dollar versus US dollar
Australian dollar versus US dollar Offshore earners the key beneficiaries Source: IRESS, Ausbil 16
Slide 17: Commodity prices
Commodity prices Global IP improvement supportive for base metals Global Industrial Production and Metal Prices Global IP growth (lhs) % yoy % yoy Base metal prices USD (rhs) 15 120 IP growth above 12 trend 90 9 60 6 30 3 0 0 -30 -3 Stronger growth -60 should support -6 IP growth below prices more -
Slide 18: Will the recovery continue? The domestic economy
Will the recovery continue? The domestic economy 18
Slide 19: USA & Australian GDP growth correlation
USA & Australian GDP growth correlation US recovery suggests an improvement for Australia Source: Citi Research, Ausbil 19
Slide 20: Domestic GDP contributors shifting
Domestic GDP contributors shifting Non-mining sector & housing taking up the slack Source: Citi Research, Ausbil, *Ausbil estimates for 2014 Mining & Non Mining investments 20
Slide 21: Australian building approvals sharply up
Australian building approvals sharply up Low interest rates are working 000s, annualised 220 205 190 175 160 145 130 115 100 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 Source: UBS 21
Slide 22: Retail spending starting to rebound
Retail spending starting to rebound Whilst offshore online sales down Retail Sales % % yoy%ch The A$ and offshore online sales 10 10 50 40 8 8 30 6 6 20 10 4 4 0 2 2 -10 -20 0 0 -30 -2 -2 -40 2002 2004 2006 2008 2010 2012 2014 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Monthly growth A$ Year ended gr
Slide 23: Will the recovery continue? The Australian equity market
Will the recovery continue? The Australian equity market 23
Slide 24: Australian equity market performance
Australian equity market performance Earnings rebound will provide support/momentum Index x 50,000 17 16 45,000 15 40,000 14 13 35,000 12 30,000 11 10 25,000 9 20,000 8 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Accumulation index (lhs) 12m forward earnings (lhs) PE (rhs) Source:
Slide 25: Cyclical/defensive valuation gap closing
Cyclical/defensive valuation gap closing But stronger cyclical earnings will continue trend Relative P/E = 0 20 year average 25
Slide 26: Reporting season observations
Reporting season observations Continued trend to earnings upgrade Changes to company earnings forecasts • 60% of companies beat expectations Number Net % of stocks upgraded 140 40 • Broadly based (barring transport, 120 20 airlines and beverages which disappointed) 100 0 80 -20 • Housing a standout
Slide 27: Banking sector profits have increased
Banking sector profits have increased Yet valuations remain fair Source: UBS 27
Slide 28: Current market statistics and valuations
Current market statistics and valuations Consensus expectations for EPS growth and P/Es EPS Growth FY EPS Growth FY February 2014 PE FY 2014 (f) PE FY 2015 (f) 2014 (f) 2015 (f) MARKET 15.0x 13.9x 12.0% 7.6% Financials 13.8x 13.1x 11.1% 5.0% - REITS 14.6x 13.9x 5.3% 4.9% Industrials 18.6x 16.4x 3.2%
Slide 29: Opportunities within the market
Opportunities within the market Beneficiaries of an improving economic recovery Global Recovery Domestic Cyclical Yield Curve Normalising High ROE 29
Slide 30: Boral (BLD)
Boral (BLD) Global/domestic housing recovery beneficiary • Huge leverage to Australian and US housing cycle • Strategic opportunities – US Gypsum • New management • Optimising business • Strong balance sheet • Cost cutting Source: IRESS, Ausbil 30
Slide 31: Conclusion
Conclusion The recovery will continue! Source: Citi Research 31
Slide 32: The Mid & Small Cap Perspective
The Mid & Small Cap Perspective Australian shares – will the recovery continue? Presenter: John Grace – Director, Equities
Slide 33: Major current portfolio thematics
Major current portfolio thematics Across the mid and small cap spectrum • Favour domestic cyclicals with improving margins and operating leverage • Retail, media and housing all present opportunities • Earnings are likely to be more abundant; stockpicking still key • The online services sector will
Slide 34: Uncertainty has seen large caps outperform
Uncertainty has seen large caps outperform But small caps better leveraged to earnings recovery 150 130 110 90 70 50 Jan-2011 Jul-2011 Jan-2012 Jul-2012 Jan-2013 Jul-2013 Jan-2014 S&P/ASX 50 Acc S&P/ASX Mid Cap 50 Acc S&P/ASX Small Ords Acc Source: IRESS, Ausbil 34
Slide 35: Market weight disparity and concentration
Market weight disparity and concentration Outside the top 50, the market is skewed to industrials Top 50 Mid Cap 50 Small Ords Financials, Financials, 17% 16% Industrials, 27% Financials, 49% Industrials, Resources, 58% Resources, Industrials, 26% 25% 59% Resources, 24% Concentration by market cap 8
Slide 36: Smaller caps have higher PEs
Smaller caps have higher PEs But with higher growth forecasts PE vs EPS Growth x 18 30% 16x 15x 15 14x 25% 22% 12 20% 9 15% 12% 6 8% 10% 3 5% 0 0% Top 50 Mid Cap 50 Small Ords PE Rolling 12Mths EPS Growth Rolling 12 Mths Source: IRESS, Ausbil 36
Slide 37: CEO earnings comments have been positive
CEO earnings comments have been positive Positioned for better trading conditions …opportunities for growth [including] opening of new stores, market share gains and the expansion of our commercial division. Terry Smart JB HIFI …have seen growth in both foot traffic and basket size this quarter… Pau
Slide 38: Industrial company operating leverage is high
Industrial company operating leverage is high Any improvement in revenue/sales will …. If sales growth increases just 1.00% higher than expected in FY14 which is well below 2007 growth levels… 38
Slide 39: Industrial company operating leverage is high
Industrial company operating leverage is high … increase earnings growth significantly ….earnings growth could double in 2014! 39
Slide 40: Emerging Leaders opportunities
Emerging Leaders opportunities Leverage to domestic/global recovery & lower AUD Global Recovery Domestic Cyclical Housing Recovery High ROE 40
Slide 41: Bluescope Steel (BSL)
Bluescope Steel (BSL) Fallen angel in a tough sector with housing leverage • Management turnaround • Closure of unproductive capacity & export sales Initiated Position • Strong balance sheet, cost out focus at $4 • Highly leveraged to: 1) global economic pickup 2) domestic housing & construction pic
Slide 42: Transpacific Industries (TPI)
Transpacific Industries (TPI) Operational turnaround after restructure • Basic Industrial Services • New Management • Big operational turnaround opportunity • Repaired Balance Sheet Initiated Position • Margin expansion at $1 42
Slide 43: Ozforex (OFX)
Ozforex (OFX) Emerging online financial services disruptor • Attractive business model - foreign exchange transaction engine • Global expansion potential • Good management team • High ROE Participated at IPO 43
Slide 44: A MicroCap Perspective
A MicroCap Perspective Australian shares – will the recovery continue? Presenter: Tony Waters – Portfolio Manager
Slide 45: MicroCap Equities (200-300 bias)
MicroCap Equities (200-300 bias) Under-researched “sweet spot” subject to index buying Traditional AUSBIL Traditional Small Cap MICROCAP Micro Cap 100-200 bias 200-300 PORTFOLIO bias FOCUS 300+ bias 45
Slide 46: Microcaps offer breadth of opportunity
Microcaps offer breadth of opportunity Readily filtered down to a high quality universe Common stock characteristics: Listed companies = 1920 • Speculative • Mining exploration Ex 200 = 1720 • Illiquid • Biotech • Concept technology • Non-earners Liquid = 300 Common stock Profitable = Investment 150
Slide 47: High quality organisations
High quality organisations Low debt, high ROIC, attractive valuation multiples S&P/ASX S&P/ASX Ausbil S&P/ASX S&P/ASX Ausbil S&P/ASX S&P/ASX Ausbil 200 201+ MicroCap 200 201+ MicroCap 200 201+ MicroCap Source: Ausbil, broker consensus, 5th March 2014 Profitable Industrials, ex Banks, ex REITs 47
Slide 48: Micro Cap opportunities
Micro Cap opportunities Increasing dichotomy between winners and losers Wave of quality IPOs Flexibility and innovation Reinvest for growth Global scale
Slide 49: Altium (ALU)
Altium (ALU) Designs electronic tools to solve engineering issues • Annuity style earnings, relatively fixed cost base, provide strong operational leverage potential. • 20% market share of new sales versus 10% market share Initiated position July 2013 • Earnings growth 15-20% p.a. • 1H14 EPS growth
Slide 50: Greencross (GXL)
Greencross (GXL) Vertically integrate the domestic pet market • Growing consumer segment • Ongoing Pet Barn store rollout at time of acquisition. – 124 stores currently, could double. • Strong per store revenue growth Added to position • 21x PE supported by strong EPS Nov 2013 forecast Initiated pos
Slide 51: Ausbil Investment Road Show - March 2014
Ausbil Investment Road Show - March 2014 Australian shares – will the recovery continue? March 2014
Slide 52: Disclaimer
DISCLAIMER Important information for presentation recipients The information contained in this presentation has been prepared for general use only and does not take into account your personal investment objectives, financial situation or particular needs. Before you make any decision about whether t
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