Australian Foundation Investment Co. Ltd. · ASX:AFI
Australian Foundation Investment — Corporate Update (March 2020)
26 slides from Australian Foundation Investment's corporate update, Mar 27, 2020
Slide 1: Teleconference/Webcast Presentation ASX cover letter
27 March 2020 The Manager ASX Market Announcements For personal use only Australian Securities Exchange Exchange Centre Level 4 20 Bridge Street Sydney NSW 2000 Electronic Lodgement Australian Foundation Investment Company Limited Teleconference/ Webcast Presentation Please find attached the present
Slide 2: Shareholder Teleconference March 2020
For personal use only Shareholder Teleconference March 2020
Slide 3: Disclaimer
For personal use only Disclaimer Australian Foundation Investment Company Limited and its subsidiary AICS (AFSL 303209), their related entities and each of their respective directors, officers and agents (together the Disclosers) have prepared the information contained in these materials in good fai
Slide 4: The Market
For personal use only The Market Shareholder Teleconference March 2020 3
Slide 5: The Market: COVID-19 Oil Price
For personal use only The Market COVID-19 Oil Price Source FactSet Shareholder Teleconference March 2020 4
Slide 6: Isolation/shut down in China appears to be working
For personal use only Isolation/shut down in China appears to be working • 5 months since first case detected. • China official data suggests downward trend in new COVID-19 cases. • Most businesses have returned to 60%-70% of normal activity. • Coal consumption by power plants is back to 78% of the
Slide 7: Very long term returns of the Australian share market since 1940
For personal use only In perspective… the very long term returns of the Australian share market – All Ordinaries Price Index since 1940 Shareholder Teleconference March 2020 6
Slide 8: Dividends and franking add significantly to long term returns
For personal use only Dividends and the attached franking add significantly to long term returns in the Australian market Shareholder Teleconference March 2020 7
Slide 9: Volatility in equity markets is back at GFC levels
For personal use only Volatility in equity markets is back at GFC levels ASX 50 Implied Volatility Shareholder Teleconference March 2020 8
Slide 10: Long term value in the context of the recent market moves
For personal use only Long term value in the context of the recent market moves Price to Book – Price to Sales – S&P/ASX 200 Index S&P/ASX 200 Index times times Shareholder Teleconference March 2020 9
Slide 11: Our Approach
For personal use only Our Approach Shareholder Teleconference March 2020 10
Slide 12: AFIC is a long standing traditional LIC, different to an Index ETF
For personal use only AFIC is a long standing traditional LIC that is different to an Index ETF i.e. S&P/ASX 200 ETF Shareholders Only 66 own the Companies in Transparent Company the Portfolio Reserves may Investment Distributions are help stability of benefits of a after tax paid dividends close en
Slide 13: AFIC offers a diversified portfolio of quality stocks
For personal use only AFIC offers a diversified portfolio of quality stocks What we look for: • Sustainable competitive advantage – unique assets producing strong returns on capital • Strong management team and board • Recurring, predictable earnings are preferred • Financial strength – strong cash
Slide 14: Relative portfolio performance, including franking
For personal use only Relative portfolio performance, including franking – per annum returns to end February 2020 Note the S&P/ASX 200 Accumulation Index has fallen by approximately 22% over the month of March to date. Shareholder Teleconference March 2020 13
Slide 15: Impact of recent market moves
For personal use only Impact of recent market moves Estimate of NTA before tax at 13 March 2020 was $5.53 cents per share: • A fall of 12.8% from the beginning of March to 13 March • The S&P/ASX 200 Index fell 13.5% over the same period Note the S&P/ASX 200 Accumulation Index has fallen by approxima
Slide 16: Top Overweight Positions in AFIC
For personal use only Top 15 Overweight Positions in AFIC ASX 200 Portfolio Index Very unique toll road assets which benefit from population growth 4.50% 2.34% and have set inflation linked pricing. Further opportunities to add new growth projects which support long term cash flow growth. NZX Emergi
Slide 17: Top Overweight Positions in AFIC continued
For personal use only Top 15 Overweight Positions in AFIC continued ASX 200 Portfolio Index Very strong market position with broadening distribution network 1.64% 0.60% and sustainable competitive advantage. Strong balance sheet. Leading manufacturer of respiratory and humidification medical product
Slide 18: Top Overweight Positions in AFIC continued
For personal use only Top 15 Overweight Positions in AFIC continued ASX 200 Portfolio Index Quality portfolio of difficult to replicate assets seeking to reduce 1.12% 0.24% freight costs and benefit from the modal shift from road to rail. Focused management who take a long term view. High quality po
Slide 19: Top holdings as at March 2020
For personal use only Top 20 holdings as at 24 March 2020 Rank Company % of Portfolio 1 CSL 10.5% 2 Commonwealth Bank of Australia 7.8% 3 BHP Group* 6.8% 4 Transurban Group 4.5% 5 Wesfarmers 4.1% 6 Westpac Banking Corporation 4.0% 7 Woolworths Group 3.6% 8 National Australia Bank 3.0% 9 Macquarie Gr
Slide 20: Top holdings as at March 2020 continued
For personal use only Top 20 holdings as at 24 March 2020 continued Rank Company % of Portfolio 11 Rio Tinto 2.7% 12 Amcor 2.5% 13 Australia and New Zealand Banking Group 2.4% 14 Brambles 2.1% 15 Coles Group 2.0% 16 Fisher and Paykel Healthcare 2.0% 17 Sydney Airport 1.9% 18 Mainfreight 1.7% 19 Jame
Slide 21: AFIC Sector Weights vs the S&P/ASX Index
For personal use only AFIC Sector Weights vs the S&P/ASX 200 Index Shareholder Teleconference March 2020 20
Slide 22: Major additions for the financial year to date
For personal use only Major additions for the financial year to date – Investment Portfolio Shareholder Teleconference March 2020 21
Slide 23: Sydney Airport has seen a significant reduction in its share price
For personal use only Sydney Airport has seen a significant reduction in its share price Millions of passengers The long run passenger trajectory is very positive despite any short term setbacks Shareholder Teleconference March 2020 22
Slide 24: Closing Remarks
For personal use only Closing Remarks Shareholder Teleconference March 2020 23
Slide 25: Going forward
For personal use only Going forward • Duration of this health crisis is the key – severe government action will help. • Strong likelihood of a global recession – u shaped or a v shaped recovery? • In a world of already low interest rates, large fiscal response has been necessary. • Stocks are relati
Slide 26: Australian Foundation Investment Company
AUSTRALIAN FOUNDATION INVESTMENT COMPANY
Australian Foundation Investment Company — Corporate Update (March 2020) on 6ix