NAOS Ex-50 Opportunities Co. Ltd. · ASX:NAC
NAOS Ex-50 Opportunities — Non-Deal Roadshow (October 2023)
43 slides from NAOS Ex-50 Opportunities's roadshow presentation, Oct 12, 2023
Slide 1: NAOS Investor Roadshow – Presentation Materials
NAOS Ex-50 Level 34 OPPORTUNITIES 25 Martin Place COMPANY LIMITED Sydney NSW 2000 (ASX: NAC) T (02) 9002 1576 ABN 49 169 448 837 F (02) 8215 0037 E enquiries@naos.com.au www.naos.com.au 12 October 2023 ASX Market Announcements ASX Limited 20 Bridge Street Sydney NSW 2000 NAOS Investor Roadshow – Pre
Slide 2: Investor Roadshow 2023
For personal use only Investor Roadshow 2023 Seizing Opportunities Early | The Potential of Investing in Emerging Companies
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. 3
Slide 5: Get to Know NAOS
For personal use only Get to Know NAOS 4
Slide 6: How We Invest & Why We Are Different
How We Invest & Why We Are Different For personal use only *Portfolio Weighted Average Calculations as at 30 September 2023 5
Slide 7: Focus on Capital Management for All Shareholders
Focus on Capital Management for All Shareholders Since their inception, the NAOS LICs have returned $183m to shareholders through a combination of dividends, franking credits and buybacks. For personal use only NCC NAC NSC Inception date Feb 2013 Nov 2014 Dec 2017 Outperformance since inception* (p.
Slide 8: NAOS LICs Performance History
NAOS LICs Performance History Performance of NAOS LICs relative to each benchmark For personal use only 1 Year 3 Year Inception Performance Performance (p.a.) Performance (p.a.) NAOS LIC Benchmark^ NAOS LIC Benchmark^ NAOS LIC Benchmark^ NCC Investment Portfolio Performance* -5.15% +6.85% +2.79% +2.
Slide 9: Is Now The Time to Consider Investing in Emerging Companies?
For personal use only Is Now The Time to Consider Investing Let’s inReflect Emergingon Companies? FY22 8
Slide 10: Why Have Emerging Companies Underperformed?
Why Have Emerging Companies Underperformed? Emerging Companies can experience periods of significant underperformance due to: For personal use only Lower liquidity Key person risk Less balance sheet flexibility Less diversification of operations Current underperformance driven by macroec
Slide 11: 5-Year Price & Total Return – S&P/ASX Small Ordinaries Index
5-Year Price & Total Return – S&P/ASX Small Ordinaries Index 160 For personal use only 150 140 130 Return % (Rebased) 120 110 100 90 80 70 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 S&P ASX Small
Slide 12: Historically Large Discount of Smaller Companies
Historically Large Discount of Smaller Companies Premium/Discount of S&P/ASX Small Ordinaries Index vs. S&P/ASX 100 Index 3 Yr Consensus Forecasted EPS For personal use only 50% CAGR COVID stimulus era 14% 12.9% 40% 12% 30% 10% 20% Premium/Discount (%) EPS CAGR Post reporting season 8% rebound 10% 6
Slide 13: Why Invest in Emerging Companies?
For personal use only Why Invest in Emerging Companies? Let’s Reflect on FY22 12
Slide 14: Our Case for Investing in Emerging Companies
Our Case for Investing in Emerging Companies For personal use only Companies in the early stages of their journey have a long-term growth runway. Smaller size allows operational focus on doing one thing and doing it very well. Often a solely domestic focus and benefit from being exposed only t
Slide 15: A Business at the Beginning of its Journey…
A Business at the Beginning of its Journey… Emerging companies are often at the beginning of a long-term journey. For personal use only Case Study: Reece Ltd (ASX: REH) Started in 1920 in Caulfield, Victoria under the name HJ Reece. and listed in 1954. Focused on providing the best products and
Slide 16: The Short Term Can be Bumpy
The Short Term Can be Bumpy This chart outlines the share price trading range of Reece Ltd compared to its share price as at 1 July each year. 175% For personal use only 150% Premium/Discount Relative to opening share price 125% 100% 75% 50% 25% 0% -25% -50% High vs 1 July Starting Price Low vs 1 Ju
Slide 17: Doing One Thing Very Well Can Lead to Market Leadership
Doing One Thing Very Well Can Lead to Market Leadership For personal use only Their smaller size allows emerging companies to do one thing and do it very well. Case Study: JB Hi-Fi Limited (ASX: JBH) Started in 1974 with a single store in East Keilor, VIC by John Barbuto (‘JB’) Initial customer
Slide 18: JBH's Store Network - Then & Now
JBH’s Store Network - Then & Now For personal use only First Store established in East Keilor, VIC Store Network Today Source – JB HiFi, Google Images 17
Slide 19: Focus Solely on the Domestic Market
Focus Solely on the Domestic Market Generally, emerging companies have a domestic focus and gain the advantages of being 100% exposed to For personal use only the Australian economy. Case Study: Monadelphous (ASX: MND) Founded in 1989 as a contracting business out of Applecross, Perth. Initially
Slide 20: MND – Then & Now
MND – Then & Now $4.3m contract in 1994 with McKay Sugar $200m contract in July 2023 with Albermarle’s Kemerton lithium hydroxide plant For personal use only Source – Company Annual Reports, Mining Australia 19
Slide 21: Potential Pricing Inefficiencies in Less Covered Stocks
Potential Pricing Inefficiencies in Less Covered Stocks For personal use only Market Capitalisation Range Number of stocks in the Average number of analysts Total coverage by ($m) S&P/ASX All Ordinaries per stock sell side analysts $0-100m 6 1 3 $100-250m 70 2 149 $250-500m 102 3 328 $500-1,000m 80
Slide 22: Valuation Multiple Expansion Over Time
Valuation Multiple Expansion Over Time As businesses successfully scale, more investor/analyst interest can result in increased demand for a company’s shares, and a subsequent valuation re-rate may occur. For personal use only Supply Network (ASX: SNL) – P/E multiple expansion 35 30 25 P/E Multiple
Slide 23: Is the Proof in the Pudding?
Is the Proof in the Pudding? The below table outlines the returns from investing in the right emerging companies over the long-term. For personal use only Outsized positive returns have been generated by these companies that are specialised, domestic focused and initially not well covered nor widely
Slide 24: Significant Long-Term Tailwinds for Emerging Companies
For personal use only Significant Long-Term Tailwinds for Emerging Let’s Companies Reflect on FY22 23
Slide 25: Long-Term Population Growth
Long-Term Population Growth Australian population is expected to grow Australia Estimated Population Growth - 2022 to 2063 For personal use only to ~40.5m people by 2060. 45 1.8% 40 1.6% This rise will in part drive growth in Gross Domestic Product (GDP). 35 1.4% 30 1.2% This growth will drive c
Slide 26: Trade Buyers Taking Advantage of Current Equity Valuations
Trade Buyers Taking Advantage of Current Equity Valuations Over the last 12-18 months corporate and private equity investors have been actively acquiring both For personal use only emerging and larger companies. Long-term strategic value seen in certain companies that equity market investors are
Slide 27: An Increasing Savings Pool
An Increasing Savings Pool Australia already has one of the largest savings pools globally. This is expected to increase sharply over the next 30 years, which should underpin the demand for equities over the longer-term. For personal use only Projected Proportion of ASX market capitalisation Project
Slide 28: How are our Emerging Companies Scaling?
For personal use only How are our Emerging Companies Scaling? Let’s Reflect on FY22 27
Slide 29: Big River Industries
Big River Industries (ASX: BRI) Core strategy: For personal use only Building Products: Comprehensive range of building products complemented with industry experience and technical advice, nationwide network. Panels: Widest range of premium grade timber veneers, boards, plywood, etc. 5-year grow
Slide 30: MaxiPARTS
MaxiPARTS (ASX: MXI) Core strategy: For personal use only Providing quality products (related to truck parts) and exceptional service. Partnering with customers to meet individual supply chain needs. Leveraging scale to provide the most cost-efficient solution. 5-year growth in: Footprint: 2
Slide 31: Saunders International
Saunders International (ASX: SND) Core strategy: Offer an integrated solution from design & planning through to construction and certification. For personal use only 5-year growth in: Client Base: Government, Defence, local councils, large property/infrastructure companies. Revenue: Increased
Slide 32: Outlook
For personal use only Outlook 31
Slide 33: Current Core Investments Have Executed Over the Long-Term
Current Core Investments Have Executed Over the Long-Term We remain very confident that our current holdings can deliver significant outperformance over the long- For personal use only term due to the following reasons: Track record of strong execution from core investments over the past 3-5 years
Slide 34: The Long-Term Outlook is Positive
The Long-Term Outlook is Positive For personal use only Core investments such as GTK, SND, MXI and BRI have achieved necessary internal scale for profitable growth. Industry tailwinds conducive to long-term revenue growth. Growth opportunities due to strong balance sheets and free cash flow ge
Slide 35: Current Valuations Present Long-Term Opportunity
Current Valuations Present Long-Term Opportunity The below table details the historical and forecasted valuations across some of the core NAOS investments. For personal use only Valuation Metric 2020 2021 2022 2023 2024E* 2025E* Big River Industries P/E 20.94 18.16 9.15 8.35 10.65 8.55 (ASX: BRI) CO
Slide 36: Questions & Answers
Questions & Answers For personal use only Thank you for your ongoing support 35
Slide 37: Appendix
For personal use only Appendix
Slide 38: NAOS Directors and Team
NAOS Directors and Team OUR DIRECTORS For personal use only OUR TEAM 37
Slide 39: NCC Overview as at September 2023
NCC Overview as at 30 September 2023 $0.75 $0.81 $0.75 10.00% 10 $136.9m Pre-Tax NTA* Post-Tax NTA* Share Price Dividend Yield Number of Weighted Average For personal use only Holdings Market Capitalisation of the Investments FRANKED DIVIDEND HISTORY 10.0 80 72.50 9.0 70 8.0 7.50 7.50 7.50 7.25 7.25
Slide 40: NAC Overview as at September 2023
NAC Overview as at 30 September 2023 $0.97 $0.99 $0.955 6.28% 9 $183.6m 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 Cumulati
Slide 41: NSC Overview as at September 2023
NSC Overview as at 30 September 2023 $0.74 $0.77 $0.685 7.30% 10 $182.3m 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 42: NAOS Asset Management 1% Pledge
NAOS Asset Management 1% Pledge For personal use only 41
Slide 43: Investor Awareness and Communication
Investor Awareness and Communication For personal use only FOLLOW NAOS Subscribe Now: www.naos.com.au/subscribe 42
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