NAOS Ex-50 Opportunities Co. Ltd. · ASX:NAC
NAOS Ex-50 Opportunities — Non-Deal Roadshow (October 2022)
51 slides from NAOS Ex-50 Opportunities's roadshow presentation, October 2022
Slide 1: Investor Roadshow 2022
Investor Roadshow 2022 Today’s trends which are driving the emerging companies of tomorrow
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: Acknowledgement of Country
Acknowledgement of Country We would like to acknowledge the Gadigal People of the Eora Nation, the Traditional Custodians of the land now called Sydney, and pay our respect to the Elders past, present and emerging. 2
Slide 4: NAOS Asset Management
NAOS Asset Management NAOS Asset Management is a specialist fund manager providing concentrated exposure to quality private and public emerging companies. NAOS established its first Listed Investment NAOS was originally founded in 2004 and Company (LIC) in 2013 with 400 shareholders, today has 10 st
Slide 5: Focus on Capital Management for All Shareholders
Focus on Capital Management for All Shareholders Since their inception, the NAOS LICs have returned $157m to shareholders through a combination of dividends, franking credits and buybacks. NCC NAC NSC Inception date Feb 2013 Nov 2014 Dec 2017 Outperformance since inception* 5.69% 4.55% 1.28% (p.a.)
Slide 6: NAOS Directors and Team
NAOS Directors and Team OUR ahhh! ‘Sobastian Evans NO>Z Warwick Evans Sarah Williams David Rickards OAM “Fiovor, Carell Matthew Hyder Rk Bonckl Managing Director, NAOS Chairman, NAOS Asset ‘Independent Director, Independent Chair & Indopendent Chair NSC _Ditector, NAOS Asset Drocior NaDSRssot Asset
Slide 7: Our Investment Beliefs and Differentiation
Our Investment Beliefs and Differentiation 6
Slide 8: NAOS LICs Director Alignment
NAOS LICs Director Alignment Directors' shareholdings have significantly increased since the inception of each LIC Inception Directors Shareholding 30 September 2022 Directors Shareholding 9,000,000 8,412,696 8,000,000 7,000,000 6,000,000 5,332,207 NUMBER OF SHARES 5,000,000 4,000,000 3,000,000 2,46
Slide 9: What Qualitative Information Sources Does NAOS Use?
What Qualitative Information Sources Does NAOS Use? The NAOS Investment Team undertakes fundamental analysis on potential and current investments. Some examples of our key focus areas include: 8
Slide 10: Reasons Not to Invest with NAOS
Reasons Not to Invest with NAOS Our LICs are not for everyone. Some reasons why you may not choose to invest with NAOS include: Concentrated portfolios (0-15 investments & shareholdings often >20%) Long-term investment philosophy (5+ years) Focus on emerging companies ($20 million - $500 milli
Slide 11: How Have the LICs Performed Since our Last Roadshow?
How Have the LICs Performed Since our Last Roadshow? 3 Year and inception performance for NCC, NAC, NSC relative to each benchmark BENCHMARK 3 YEAR INCEPTION Investment Portfolio PERFORMANCE 3 YEAR BENCHMARK PERFORMANCE (p.a.) INCEPTION PERFORMANCE PERFORMANCE (p.a.) NCC Investment Portfolio Perform
Slide 12: Reflecting on FY22
Reflecting on FY22 Let’s Reflect on FY22 11
Slide 13: What Has Changed in the Macro-Economic Backdrop?
What Has Changed in the Macro-Economic Backdrop? Reserve banks globally have been rising interest rates to offset inflation caused by supply side disruptions and strong demand, driven in part by Government stimulus related to the COVID-19 pandemic. Capital is no longer “free”, and the risk-free
Slide 14: Comparing Investment Alternatives: Will Macroeconomic Conditions Change Investor Preferences?
Comparing Investment Alternatives: Will Macroeconomic Conditions Change Investor Preferences? US 10-yr T-Note ~53x Fwd P/E Yield of 0% Div. Yield ~3.7% Source: CapIQ, NAOS Data as at 5/10/2022 13
Slide 15: What Has Changed in the Macro-Economic Backdrop?
Yield (%) 0 1 2 3 4 5 Sep-02 Sep-03 Source: Factset Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 US 10 Year Bond Yield (20 Year History) Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 What Has Changed in the Macro-Economic Backdrop? Sep-20 Sep-21 Sep-22 14
Slide 16: How is This Affecting Investors?
How is This Affecting Investors? Do many of the “new age” valuation methods (such as EV/revenue) still apply in today's market? What certainty do I have over the short-term E (earnings) in the P/E of a business? Does my investment have the financial flexibility to withstand a demand slowdown w
Slide 17: How is This Affecting Investors?
Price 1,000 1,500 2,000 2,500 3,000 3,500 Sep-17 Dec-17 Source: Bloomberg Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 S&P/ASX All Technology Index (Previous 5 Years) Mar-20 How is This Affecting Investors? Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 16
Slide 18: How is This Affecting Investors?
How is This Affecting Investors? Share price performance of high ROIC & ROCE businesses High ROIC & ROCE Businesses (Price) 120 110 100 90 Price Return % 80 70 60 50 40 January 2022 February 2022 March 2022 April 2022 May 2022 June 2022 July 2022 August 2022 September 2022 Dicker Data Limited Object
Slide 19: What We Believe Has Worked
What We Believe Has Worked Continued focus on industry dynamics. Fruitful exits of successful investments. Holding for the long-term and allowing capital to compound. 18
Slide 20: Key Learnings
Key Learnings Reduce exposure to low margin businesses. Avoiding management teams who are non-transparent or poor capital allocators. Waiting too long to exit poor performing investments or seeking to effect change. 19
Slide 21: How We Have Evolved Our Investment Process
How We Have Evolved Our Investment Process Trusted long-term partnerships. Board representation and/or recommendations. Private/unlisted investment opportunities. 20
Slide 22: Where We are Investing & How We Are Positioned
Where We are Investing & How We Are Positioned
Slide 23: Where We Are Investing & How We Are Positioned
Where We Are Investing & How We Are Positioned Industry/Structural Tailwinds: Residential Property Shortage (Big River Industries) Renewable Energy Transition (Gentrack Group) Ageing & Complex Transport Vehicle Fleet (Maxiparts) De-risking of Supply Chains (Move Logistics) 22
Slide 24: NAOS Core Investee Company Updates: Big River Industries
NAOS Core Investee Company Updates Big River Industries (ASX: BRI) Why should Big River Industries remain a core investment? Moat Business founded in 1910’s and has the size and scale to service all types & sizes of trade customers (>10,000 accounts) around Australia and New Zealand. People & Alignm
Slide 25: NAOS Core Investee Company Updates
NAOS Core Investee Company Updates Big River Industries (ASX: BRI) Significant growth over last 5 years, with expectation of further growth given acquisition strategy. 2017 2022 Source: Big River, NAOS 24
Slide 26: NAOS Core Investee Company Updates: MOVe Logistics
NAOS Core Investee Company Updates MOVe Logistics (NZX: MOV) Why have we made MOV a new core investment? Moat Strong NZ regional presence with the scale, offering and network to meet the customer requirements of the largest NZ businesses. People & Alignment A majority new executive team, many who ha
Slide 27: NAOS Core Investee Company Updates
NAOS Core Investee Company Updates “The final deal saw Mainfreight financed into the purchase with vendor money – the perfect arrangement. This was vintage Dunphy: first agree a favorable price, then casually mention, ‘We’re not going to pay you upfront, we’re going to pay you off over two or three
Slide 28: Recent MOVe Executives Appointments
NAOS Core Investee Company Updates Recent MOVe Executives Appointments MOVe Hire MOVe Role Experience Executive Director Mainfreight and General Manager Mainfreight Chris Dunphy Executive Director International CEO Mainfreight Europe 2011-16, General Manager Mainfreight New Mark Newman Independent D
Slide 29: NAOS Core Investee Company Updates: Maxiparts
NAOS Core Investee Company Updates Maxiparts Ltd (ASX: MXI) Why have we made MXI a new core investment? Moat A national distribution network with significant product breadth and depth including Japanese after-market parts. People & Alignment CEO tenure of >16 years with an effective incentive scheme
Slide 30: EBIT Margin Comparison
NAOS Core Investee Company Updates EBIT Margin Comparison – ASX: MXI, ASX: SNL and ASX: BAP 16% 14% 12% EBIT % 10% 8% 6% 4% 2017 2018 2019 2020 2021 2022 Maxiparts Supply Network Bapcor Source: Factset 29
Slide 31: NAOS Core Investee Company Updates: Gentrack Group
NAOS Core Investee Company Updates Gentrack Group Ltd (ASX: GTK) Why have we maintained GTK as a core investment? Moat A strong product offering which has been in market since the 1980’s and a track record of implementing large and sophisticated system offerings. People & Alignment Over the past 24
Slide 32: NAOS Core Investee Company Updates
NAOS Core Investee Company Updates Source: Gentrack communications 31
Slide 33: Outlook
NO>Z Outlook
Slide 34: Outlook for NAOS core investments
Outlook for NAOS core investments The chart below represents a selection of core investments across the NAOS LICs, comparing the FY22 P/E multiple (blue dot) to our internal expectations of the P/E multiple (orange dot) in 24 months’ time, factoring in what we believe is a reasonable EPS growth over
Slide 35: Remain Focused on Long-Term Opportunity
Remain Focused on Long-Term Opportunity • We have no competitive advantage in picking market tops and bottoms. • We believe a significant majority of our investments will be significantly more profitable in 5–10 years' time compared to where they are today. • The capital required to achieve such gro
Slide 36: Expect the Best but Prepare for the Worst
Expect the Best but Prepare for the Worst • In our view the primary short-term risks for listed businesses include: • Funding • Counterparty • Refinancing • Margins • We will remain focused on mitigating these risks through investing in businesses with proven business models, that are cash flow posi
Slide 37: NAOS Asset Management 1% Pledge
NAOS Asset Management 1% Pledge 36
Slide 38: NAOS Asset Management 1% Pledge
NAOS Asset Management 1% Pledge 37
Slide 39: The NAOS Guide to Investing in LICs
The NAOS Guide to Investing in LICs Scan the QR code to learn more about NAOS and our Listed Investment Companies. 38
Slide 40: Q&A
Q&A Thank you for your continued support. “Games are won by players who focus on the playing field - not by those whose eyes are glued to the scoreboard.” Warren Buffett 39
Slide 41: Appendix
Appendix
Slide 42: NCC Overview: Cumulative Dividends
NCC Overview as at 30 September 2022 $0.91 $0.94 $0.81 9.26% 13 $131.7m Pre-Tax NTA Post-Tax NTA Share Price Dividend Yield Number of Weighted Average Holdings Market Capitalisation of the Investments FRANKED DIVIDEND HISTORY Dividends Paid Cumulative Dividends Paid 65.00 8.0 7.50 7.50 7.25 7.25 7.2
Slide 43: NAC Overview: Cumulative Dividends
NAC Overview as at 30 September 2022 $0.91 $0.96 $0.85 6.94% 10 $139m Pre-Tax NTA Post-Tax NTA Share Price Fully Franked Number of Weighted Average Dividend Yield Holdings Market Capitalisation of the Investments FULLY FRANKED DIVIDEND HISTORY Fully Franked Dividends Paid Cumulative Dividends Paid 5
Slide 44: NSC Overview: Cumulative Dividends
NSC Overview as at 30 September 2022 $0.84 $0.84 $0.67 7.46% 8 $194.2m Pre-Tax NTA Post-Tax NTA Share Price Fully Franked Number of Weighted Average Dividend Yield Holdings Market Capitalisation of the Investments FULLY FRANKED DIVIDEND HISTORY Fully Franked Dividends Paid Cumulative Dividends Paid
Slide 45: NAOS Strong Long-term Risk-adjusted Returns
NAOS Strong Long-term Risk-adjusted Returns * NCC Investment Portfolio Risk and Performance Metrics NAC Investment Portfolio Risk and Performance Metrics 15% 15% 10.27% 9.81% 10% 10% 5.72% 5% 5% 4.12% 2.99% 3.51% 2.67% 2.41% 0% 0% -1.32% -1.47% -3.15% -3.65% -5% -5% Performance Since Monthly Average
Slide 46: NAOS Strong Long-term Risk-adjusted Returns
NAOS Strong Long-term Risk-adjusted Returns * NSC Investment Portfolio Risk and Performance Metrics 10% 5% 3.43% 3.81% 2.15% 2.35% 0% -2.04% -4.03% -5% Performance Since Monthly Average Monthly Average Inception p.a. Performance when the Performance when the Market is up Market is Down NSC Investmen
Slide 47: Historical Shareholder Numbers
Historical Shareholder Numbers 8000 6000 4000 2000 0 NCC Shareholders NAC Shareholders NSC Shareholders 46
Slide 48: NAOS ESG Framework
NAOS ESG Framework Asan investment manager, NAOS ‘excludes investing in epecific controversa soon Ol 02 caveune eee ay OUR COMMITMENT TO N RESPONSIBLE INVESTMENT A NEGATIVE SCREENS: ° NAOS systematically. Ss ‘recognises and acoepts its duty to act responsibly and in the best interests of shareholder
Slide 49: Key Business & Industry Traits for Maximising Long-term Performance
Key Business & Industry Traits for Maximising Long-term Performance and Reducing the Risk of Permanent Capital Loss Events Industry Tailwinds Supporting A growing revenue base provides companies with a number of competitive advantages such as the ability to scale Long-Term Revenue Growth their fixed
Slide 50: Why Invest via a Listed Investment Company?
Why Invest via a Listed Investment Company? We strongly believe LICs are a highly effective structure to give investors the highest quality exposure to specific asset classes, which in the case of NAOS is emerging businesses. A Listed Investment Company structure: Allows the investment manager to
Slide 51: Investor Awareness and Communication
Investor Awareness and Communication FOLLOW NAOS 50
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