Argo Global Listed Infrastructure Ltd. · ASX:ALI
Argo Global Listed Infrastructure — Investor Presentation (May 2023)
47 slides from Argo Global Listed Infrastructure's investor presentation, May 22, 2023
Slide 1: Shareholder Information Meetings announcement
22 May 2023 Company Announcements ASX Limited 20 Bridge Street SYDNEY NSW 2000 For personal use only Shareholder Information Meetings Please find attached the presentation slides for the Shareholder Information Meetings of Argo Global Listed Infrastructure Limited (ASX: ALI) and Argo Investments Lim
Slide 2: Shareholder Information Meeting May 2023
Shareholder Information Meeting For personal use only May May2023 2023
Slide 3: Meeting details
For personal use only Meeting details 2
Slide 4: Disclaimer
Disclaimer For personal use only This presentation has been prepared by Argo Service Company Pty Ltd (ASCO) (ACN 603 367 479) (Australian Financial Services Licence 470477), on behalf of Argo Investments Limited (ACN 007 519 520) and Argo Global Listed Infrastructure Limited (ACN 604 986 914). ASCO’
Slide 5: Your presenters
Your presenters For personal use only Jason Beddow Andy Forster Brydie Lloyd-Roberts Managing Director Senior Investment Officer Investment Analyst BEng, GdipAppFin(SecInst) BComm (Hons), CFA BComm Colin Whitehead Ben Morton Investment Analyst Senior Portfolio Manager at Cohen & Steers 4 BA (Hons) A
Slide 6: Share market performance
Share market performance S&P/ASX 200 & Accumulation Index 140 Before, during and post-pandemic For personal use only 130 120 110 100 90 US Fed First rate rise RBA rate vaccine 80 rise released 70 60 5
Slide 7: Overview
Overview Half year profit Half year earnings Interim dividend, fully For personal use only per share franked per share $137.0 m 18.2c 16.5c Up +6.2% Up +2.2% Up +3.1% Dividend yield LIC capital gain MER 3.8% 15.0c 0.16% 5.4% grossed up For FY2022 per share Management expense ratio 6
Slide 8: Inflation remains persistently high
Inflation remains persistently high Australian Consumer Price Index (quarterly and annual movement) For personal use only Source: Australian Bureau of Statistics 7
Slide 9: Sharp interest rate increases beginning to impact sentiment
Sharp interest rate increases beginning to impact sentiment For personal use only Australia’s official cash rate Source: RBA 8
Slide 10: ...while unemployment is at historic lows
…while unemployment is at historic lows Australia Unemployment Rate vs Pauses in RBA Hiking Cycle For personal use only Source: Macquarie 9
Slide 11: Australian banks in good shape
Australian banks in good shape For personal use only Half year profit Half year profit Half year profit Half year profit Full year profit $4.0 billion $4.0 billion $5.2 billion $3.5 billion $5.2 billion up 22.0% up 11.7% up 10.0% flat 0.0% up 10.1% Interim dividend Interim dividend Interim dividend
Slide 12: Banks reporting season: key themes
Banks reporting season: key themes For personal use only Net interest margin Strong strong, but peaking capital position Bad debts Higher remain low dividends 11
Slide 13: Diversified portfolio
Diversified portfolio Materials 15.7% For personal use only Other Financials 12.8% Banks 12.4% Health Care 10.9% Consumer Staples 8.5% Telcos & I.T. 8.2% Energy 8.0% Industrials 7.5% Consumer Discret. 6.9% Property 2.9% LICs 2.5% Utilities 1.9% Cash 1.8% Figures above are to 30 April 2023. 12
Slide 14: Top holdings
Top 20 holdings For personal use only Figures above are to 30 April 2023. 13
Slide 15: Recent portfolio movements
Recent portfolio movements Purchases Sales For personal use only For the financial year to date. 14
Slide 16: Stock in focus: IDP Education
Stock in focus: IDP Education Growth in international or foreign enrolment in tertiary education worldwide (in millions of students) For personal use only Source: OECD 15
Slide 17: Stock in focus: IDP Education
Stock in focus: IDP Education Indicative graduate average salary per institution / nation (‘000,US$) For personal use only Source: RedSeer, Credit Suisse 16
Slide 18: Structural drivers generating battery demand
Structural drivers generating battery demand For personal use only Decarbonisation & Government incentives & electrification regulations 17
Slide 19: Battery demand forecast to surge
Battery demand forecast to surge Battery demand (Gwh) 5,000 For personal use only 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 - 2020 2022 2024 2026 2028 2040 2016 2018 2030 2032 2034 2036 2038 EV Vehicle Demand Energy Storage Other Batteries (Portable devices, tools etc) Source: Barrenjoey 1
Slide 20: Australia dominates global lithium mine supply
Australia dominates global lithium mine supply Lithium production by country Top 10 countries with largest lithium reserves* For personal use only Other 7% Argentina 6% Australia 40% Chile 22% China 25% Source: Barrenjoey * Million metric tons. 19 Source: United States Geological Survey, Minespans,
Slide 21: Australian lithium projects hit boom time!
For personal use only Australian lithium projects hit boom time! 20 Source: Goldman Sachs
Slide 22: Argo's exposure to lithium
Argo’s exposure to lithium For personal use only 21
Slide 23: Looking ahead
For personal use only Looking ahead 22
Slide 24: Outlook: various possible scenarios
Outlook: various possible scenarios Potential Paths of ASX 300 Total Returns After Pause in RBA Hiking Cycle For personal use only Source: Macquarie. Data is based on past cycles and is not a forecast. 23
Slide 25: Outlook: PE forecasts
Outlook: PE forecasts 12 month Price to Earnings ratio For personal use only 35 12mf Price-to-Earnings (x) 30 25 23.0x 20 15 13.1x 10 10.1x 5 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 ASX 200 Resources Ind x Fin Financials Source: Morgan Stanley 24
Slide 26: Overview
Overview For personal use only ASX code Manager Portfolio Manager Argo Cohen & ALI Investments Steers Dividend yield Consecutive fully Market franked dividends capitalisation 3.8% 10 $400m 5.4% grossed up 25
Slide 27: Key considerations for investors
Key considerations for investors For personal use only 26
Slide 28: Infrastructure is essential for economic growth
Infrastructure is essential for economic growth For personal use only Characteristics of Global Listed Infrastructure • Long-lived real assets • Often regulated or concession-based • High barriers to entry • Inflation-linked pricing Communications Midstream Energy Transportation Utilities Wireless t
Slide 29: Differentiated behavior in growth and inflation regimes
Differentiated behavior in growth and inflation regimes For personal use only Relative real return by category vs. long-term average (1978–2022) 28
Slide 30: Defensive in times of market stress
Defensive in times of market stress Scenario analysis of large drawdowns in global equity markets Global Listed For personal use only Infrastructure(1) Global Equities(2) Rel Return Start Date End Date (%) (%) (%) Note 1 2/23/2007 3/5/2007 -3.46 -5.90 2.44 February Correction. 2 10/11/2007 1/22/2008
Slide 31: Global Listed Infrastructure has historically benefitted from unexpected inflation
Global Listed Infrastructure has historically benefitted from unexpected inflation For personal use only % Outperformance vs long-term average for every 1% Y/Y inflation surprise May 1991 – March 2023 Bonds Stocks Infrastructure 2.0 0 inflation beta indicates expected return for asset class equal to
Slide 32: Why infrastructure now
Why infrastructure now For personal use only 31
Slide 33: Global Listed Infrastructure outlook
Global Listed Infrastructure outlook For personal use only Utilities Midstream Energy Transportation Telecommunications 32
Slide 34: Record dry powder creating a valuation floor
Record dry powder creating a valuation floor 400 Private infrastructure dry powder(1) For personal use only 347 350 318 289 298 300 250 234 ($Billions) 194 200 169 152 150 108 106 108 100 86 77 66 67 68 71 50 37 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Y
Slide 35: Cohen & Steers Global Listed Infrastructure Strategy
Cohen & Steers Global Listed Infrastructure Strategy For personal use only 34
Slide 36: Global Listed Infrastructure top holdings
Global Listed Infrastructure top holdings Portfolio For personal use only Top ten holdings % NextEra Energy Inc. 6.43 CSX Corporation 3.81 Sempra Energy 3.72 Grupo Aeroportuario De Sur-B 3.56 Transurban Group 3.48 Canadian Pacific Kansas City 3.16 National Grid PLC 3.09 Exelon Corporation 2.84 PPL C
Slide 37: Key holding: Towers
Key holding: Towers For personal use only SBA Communications Corporation • SBA is an owner of wireless infrastructure globally. 85% of its cash flows are in the US. The company leases space in its macro cell towers to carriers under L/T contracts. A decade long Overview investment cycle to deploy 5G
Slide 38: Key holding: Railways
Key holding: Railways For personal use only Canadian Pacific Kansas City • Transports primarily agricultural and energy commodities alongside growing automotive volumes. • Operates over 20,000 route miles and serves eleven container ports across the pacific and gulf and Overview provides direct acce
Slide 39: Key holding: Utilities
Key holding: Utilities For personal use only NextEra Energy Inc. • NextEra generates electricity through wind, solar, and natural gas as well as nuclear power units and provides distribution services. Overview • Provides retail and wholesale electric services to more than 5 million customers. • $90
Slide 40: Key holding: Airports
Key holding: Airports For personal use only Asur • ASUR is a Mexico-based company which holds concessions to operate, maintain and develop nine airports, including Cancún. Overview • The company benefits from attractive traffic growth, opportunities to grow commercial revenues and invest in its regu
Slide 41: Infrastructure performance remains strong following significant downside protection
Infrastructure performance remains strong following significant downside protection in 2022 to now For personal use only Infrastructure performance vs. Global Equities At April 30, 2023 in A$. 40 Infrastructure represented by FTSE Global Core Infra 50/50 NR AUD . Global Equities represented by the M
Slide 42: Global Listed Infrastructure performance attribution
Global Listed Infrastructure performance attribution For personal use only Relative to the FTSE Global Core Infrastructure 50/50 Index, 1 Year 41
Slide 43: Global listed infrastructure team
Global listed infrastructure team Portfolio managers Ben Morton For personal use only Head of Global Listed Infrastructure, Senior Portfolio Manager New York 20/25 Thuy Quynh Dang Tyler Rosenlicht Portfolio Manager Portfolio Manager London New York 12/23 11/14 Research analysts & associates Portfoli
Slide 44: Cohen & Steers' competitive advantages
Cohen & Steers’ competitive advantages For personal use only 43
Slide 45: Summary
For personal use only Summary 44
Slide 46: Footnotes
Footnotes Slide titled ‘Differentiated behavior in growth and inflation regimes’ At December 31, 2022. Source: Cohen & Steers proprietary analysis, Survey of Professional Forecasters, University of Michigan Survey of Consumers. For personal use only Returns represent annualized average, categorized
Slide 47: Find out more
For personal use only Find out more argoinvestments.com.au argoinfrastructure.com.au
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