NAOS Ex-50 Opportunities Co. Ltd. · ASX:NAC
NAOS Ex-50 Opportunities — NAOS Asset Management — Non-Deal Roadshow (February 2019)
37 slides from NAOS Ex-50 Opportunities's roadshow presentation, February 2019
Slide 1: National Investor Roadshow
National Investor Roadshow NAOS Asset Management ASX: NCC | ASX: NSC | ASX: NAC February 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 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 3: NAOS Investment Mandate
NAOS Investment Mandate 01 02 NAOS seeks to protect investor capital NAOS provides investors with genuine, whilst providing a sustainable growing concentrated exposure to Australian stream of fully franked dividends and undervalued listed micro, small and long-term capital growth above the mid-cap c
Slide 4: NAOS Investment Beliefs
NAOS Investment Beliefs Value with Long Quality over Invest for the Performance v Term Growth Quantity Long Term Liquidity Focus Ignore the Pure Exposure Environmental, Management Index to Industrials Social and Alignment Governance (ESG) We do not invest in tobacco, gambling, nuclear, uranium, cont
Slide 5: Market Review
Market Review • Q4 CY2018 returns: ASX Small Ordinaries Accumulation Index (XSOAI) -13.70%, ASX Small Industrials Accumulation Index (XSIAI) -13.38% and ASX All Ordinaries Accumulation Index (XAOAI) -8.98% • Value vs. Growth • Growth back in vogue due to dovish comments on future interest rate hikes
Slide 6: 2018 in Review
2018 in Review 80%‘covenant lite’ (fewer restrictions on the borrower) in 2018 vs. Leverage Loan Issues 30% in 2007* US 10yr Treasury Yield At their 2018 peak yields doubled from their 2016 low Herd mentality creating lack of liquidity in micro cap companies. A Exchange Traded Funds number of funds
Slide 7: 2018 Slowdown: NAB Business Conditions
2018 Slowdown Slowdown seen across: • Building Materials (Infrastructure Project Delays, Multi Residential Slowdown) • Consumer Discretionary (Retail, Automotive) • Regulatory Issues (Banks, Financials, Automotive, Aged Care) NAB Business Conditions over the past 6 months suggest a significant slowi
Slide 8: 2018 Slowdown
2018 Slowdown Steady Decline in the Australian Household Savings Ratio Source: Trading Economics 12 10 8 6 4 2 0 -2 -4 Ratio driven by a number of factors including: Does not take into account: • Lack of wage growth • Equity held in assets such as property or shares • Interest rates on mortgages • A
Slide 9: Lessons From the Last 6 Months
Lessons From the Last 6 Months 1. Event driven vs. no catalyst 2. Capital allocation decisions and market communication 3. Proactive approach with management teams is required 4. Market scepticism around short term earnings gyration vs. long term potential CML Group (ASX: CGR) Share Price Source: Bl
Slide 10: Industry Tailwinds Exist Amongst a Gloomy Macro Backdrop
Industry Tailwinds Exist Amongst a Gloomy Macro Backdrop NAOS focuses on investments that we believe represent long term value and have clear and comprehensible industry tailwinds to reduce any prolonged earnings downgrades. CONVICTION. LONG TERM. ALIGNED | Copyright 2019 NAOS Asset Management Limit
Slide 11: Industry Tailwinds: NBN
Industry Tailwinds: NBN NAOS Exposure: Service Stream Limited (ASX: SSM), BSA Limited (ASX: BSA) Source: NBN Corporate Plan 2019 8 7 Cumulative Activations Premises 6 5 (million) 4 3 2 1 0 FY16 FY17 FY18 FY19 (Forecast) FY20 (Forecast) NBN is supported an external workforce of 24,000 CONVICTION. LON
Slide 12: Industry Tailwinds: Infrastructure Projects
Industry Tailwinds: Infrastructure Projects NAOS Exposure: Big River Industries Limited (ASX: BRI), Adelaide Brighton Limited (ASX: ABC), Saunders International Limited (ASX: SND), BSA Limited (ASX: BSA) Potential additional projects 1. Western Sydney Airport ($5.30 Billion) 2. NBN ($51 Billion) 3.
Slide 13: Industry Tailwinds: Demand for Australian Agricultural Products
Industry Tailwinds: Demand for Australian Agricultural Products NAOS Exposure: Wingara AG Limited (ASX: WNR), Costa Group Holdings (ASX: CGC) Citrus Exports to China 90,500 70,000 Tonnes 40,000 29,000 18,000 14,250 1,100 3,850 400 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Citrus Australia
Slide 14: Industry Tailwinds: Growth in Non-Bank Finance Sector
Industry Tailwinds: Growth in Non-Bank Finance Sector NAOS Exposure: Consolidated Operations Group (ASX: COG), CML Group Limited (ASX: CGR), 360 Capital Total Return Fund (ASX: TOT) Source: RBA Payments Data November 2018 17,000 Number of Credit Card Accounts 15,000 13,000 (‘000) 11,000 9,000 7,000
Slide 15: Industry Tailwinds: Cybersecurity
Industry Tailwinds: Cybersecurity NAOS Exposure: Over The Wire Holdings Limited (ASX: OTW) - Cybercrime is rated by SMEs as the third biggest risk to their business - 47% of SMEs don’t believe or don’t know if their business has the expertise and resources to handle a cybercrime - 25 hours is the do
Slide 16: Where are the Opportunities?
Where are the Opportunities? Quality assets at reduced prices provide a better risk/reward outcome in a less crowded market 1. Recheck all assumptions 2. Speak with industry contacts 3. Prioritise opportunities 4. Invest with conviction 5. Commit to fact based decision making 6. Highly aligned manag
Slide 17: Updates on Key Investments
Updates on Key Investments CML Group Ltd (ASX: CGR) Enero Group Ltd (ASX: EGG) • Long term tailwinds driving the growth and • Public relations (PR) business assets are high adoption of invoice financing, a resilient quality brands, high margin and globally business model throughout cycles. scalable.
Slide 18: Updates on Key Investments
Updates on Key Investments MNF Group Ltd (ASX: MNF) Consolidated Operations Group Ltd (ASX: COG) • A new generation voice network, unparalleled • First mover advantage in corporatising the cottage within the APAC region. Backbone industry of equipment finance broking. Difficult for infrastructure to
Slide 19: Updates on Key Investments
Updates on Key Investments BSA Services Group Ltd (ASX: BSA) Wingara Ag Ltd (ASX: WNR) • Eradication of losses in an underperforming • Leveraging the ‘food bowl’ of Asia thematic, a division through a review provides a real significant industry tailwind, achieving this opportunity to create sharehol
Slide 20: LIC Overview and Investment Update
LIC Overview and Investment Update “Assuming you have the requisite capital and nerve, the big and relatively easy money in investing is made when prices are low, pessimism is widespread and investors are fleeing from risk.” HOWARD MARKS CONVICTION. LONG TERM. ALIGNED | Copyright 2019 NAOS Asset Man
Slide 21: NTA & Performance as at December 2018
NTA & Performance as at 31 December 2018 PRE TAX NTA 6 MONTHS 1 YEAR INCEPTION (P.A.) INCEPTION (NOMINAL) NCC* $1.08 -10.70% -14.92% +12.41% +98.10% NSC^ $0.75 -11.50% -15.48% -13.49% -14.54% NAC* $0.97 -8.56% -11.73% +10.82% +52.89% * Investment performance is post all operating expenses, before fe
Slide 22: Long Term Capital Protection
Long Term Capital Protection* 0.00% 15.00% 10.00% -2.00% 5.00% -4.00% Average Performance Average Performance 0.00% (Down Market Months) (Down Market Months) Performance (p.a.) Performance (p.a.) NCC v XSOAI NAC v XKIAI NCC v XSOAI NAC v XKIAI NAOS LIC -0.47% -0.49% NAOS LIC 12.41% 10.82% Benchmark
Slide 23: NCC Overview
NCC Overview PORTFOLIO METRICS 9 3.04% Number of Holdings Dividend Yield 0% $14.6m 35.90%* Cash Weighting EBITDA (Portfolio Weighted) Projected EBITDA Growth (12 month) 4.0m 5.67 NCC Directors Shareholding Enterprise Value to EBITDA $82.7m 0.23 Holdings Weighted av. Mkt Cap Net Debt to EBITDA Figure
Slide 24: NSC Overview
NSC Overview PORTFOLIO METRICS 9 3.21% Number of Holdings Dividend Yield 0% $20.8m 30.98%* Cash Weighting EBITDA (Portfolio Weighted) Projected EBITDA Growth (12 month) 1.93m 9.51 NSC Directors Shareholding Enterprise Value to EBITDA $195.6m 0.40 Holdings Weighted av. Mkt Cap Net Debt to EBITDA Figu
Slide 25: NAC Overview
NAC Overview PORTFOLIO METRICS 10 2.63% Number of Holdings (9 Long, 1 Short) Dividend Yield 38% $110.2m 12.70%* Cash Weighting EBITDA (Portfolio Weighted) Projected EBITDA Growth (12 month) 7.49m 8.44 NAC Directors Shareholding Enterprise Value to EBITDA $1.07b 0.67 Holdings Weighted av. Mkt Cap Net
Slide 26: Appendix
Appendix CONVICTION. LONG TERM. ALIGNED | Copyright 2019 NAOS Asset Management Limited 26
Slide 27: NCC Overview as at December 2018
NCC Overview as at 31 December 2018 DIVIDENDS Dividend Profile $11.9m $0.08 $0.0725 Profits Reserve $0.0700 $0.07 $0.0675 $0.0625 $0.06 $0.0575 6.59% $0.05 Fully Franked Dividend Yield $0.04 100% $0.03 $0.0250 Franking $0.02 $0.01 $0.00 2H FY13 FY14 FY15 FY16 FY17 FY18 CONVICTION. LONG TERM. ALIGNED
Slide 28: NSC Overview as at December 2018
NSC Overview as at 31 December 2018 DIVIDENDS Dividend Profile $11.2m $0.04 Profits Reserve $0.0300 8.30% $0.03 $0.0250 Fully Franked Dividend Yield $0.02 100% $0.0135 Franking $0.01 $0.00 1H FY18 2H FY18 Q1 FY19 CONVICTION. LONG TERM. ALIGNED | Copyright 2019 NAOS Asset Management Limited 28
Slide 29: NAC Overview as at December 2018
NAC Overview as at 31 December 2018 DIVIDENDS Dividend Profile $3.6m $0.06 Profits Reserve $0.0525 $0.0500 $0.05 $0.0475 5.87% $0.04 Fully Franked Dividend Yield $0.03 100% $0.02 $0.0200 Franking $0.0135 $0.01 $0.00 2H FY15 FY16 FY17 FY18 Q1 FY19 CONVICTION. LONG TERM. ALIGNED | Copyright 2019 NAOS
Slide 30: NAOS Listed Investment Companies
NAOS Listed Investment Companies CONVICTION. LONG TERM. ALIGNED | Copyright 2019 NAOS Asset Management Limited 30
Slide 31: NAOS investment process
NAOS investment process CONVICTION. LONG TERM. ALIGNED | Copyright 2019 NAOS Asset Management Limited 31
Slide 32: NAOS ESG framework
NAOS ESG framework CONVICTION. LONG TERM. ALIGNED | Copyright 2019 NAOS Asset Management Limited 32
Slide 33: Number of Shareholders
Number of Shareholders 9,000 7,500 6,000 4,978 4,500 3,000 970 1,500 2,052 0 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 NCC NAC NSC CONVICTION. LONG TERM. ALIGNED | Copyright 2019 NAOS Asset Management Limited 33
Slide 34: Investor awareness and communication
Investor awareness and communication 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 regularly website web
Slide 35: NAOS Directors and Team
NAOS Directors and Team OUR DIRECTORS Sebastian Evans Matthew Hyder David Rickards Sarah Williams Warwick Evans Mark Bennett Trevor Carroll Managing Director, NAOS Asset Director, NAOS Asset Independent Chairman & Director, Independent Director, Chairman, NAOS Asset Director, NAOS Asset Independent
Slide 36: NAOS Asset Management giving back
NAOS Asset Management giving back NAOS, the management company, is proud to be supporting the following charities ‘Golden Shouldered Parrot’ threatened ‘Reef Aid’ campaign, in partnership RFDS, dedicated to providing species project, in partnership with with Greening Australia healthcare to Australi
Slide 37: Q&A Thank you for your continued support
Q&A Thank you for your continued support CONVICTION. LONG TERM. ALIGNED | Copyright 2019 NAOS Asset Management Limited 37
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