NAOS Ex-50 Opportunities Co. Ltd. · ASX:NAC
NAOS Ex-50 Opportunities — Q4 FY24 Earnings Presentation
46 slides from NAOS Ex-50 Opportunities's earnings presentation, Aug 1, 2024
Slide 1: Q4 FY24 Investor Update and Q&A - Presentation Materials
NAOS Ex-50 OPPORTUNITIES COMPANY LIMITED (ASX: NAC) ABN 49 169 448 837 1 August 2024 ASX Market Announcements ASX Limited 20 Bridge Street Sydney NSW 2000 Q4 FY24 Investor Update and Q&A - Presentation Materials For personal use only Please find attached the presentation materials for the Q4 FY24 Inv
Slide 2: Q4 FY24 Investor Update and Q&A
For personal use only Thursday 1 August 2024 | 10:30am (AEST) Q4 FY24 Investor Update and Q&A Click Here to Register
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. CON
Slide 5: We are NAOS
We are NAOS We are active, long-term investors in emerging companies. Our aim is to compound For personal use only shareholders’ capital and deliver dividend growth over the long-term and we have a resolute commitment to investing our capital alongside our shareholders. With a focus on quality over
Slide 6: Portfolio Composition – Emerging Companies
Portfolio Composition – Emerging Companies The NAOS LICs have exposure to emerging companies with unique moats, often benefiting from structural industry changes. For personal use only Industry Exposure Market Capitalisation Buckets Investment type Financial Services Building Materials Listed Unlist
Slide 7: Get to Know NAOS
Get to Know NAOS For personal use only CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 6
Slide 8: 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 June 2024 CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 7
Slide 9: Investment Portfolio Performance Summary
Investment Portfolio Performance Summary For personal use only 1 Year 3 Year 5 Year Inception Q4 FY24 Performance Performance Performance (p.a.) Performance (p.a.) Performance (p.a.) NAOS LIC Benchmark^ NAOS LIC Benchmark^ NAOS LIC Benchmark^ NAOS LIC Benchmark^ NAOS LIC Benchmark^ NCC Investment Po
Slide 10: Q4 FY24 – Overview & Summary
Q4 FY24 –Overview & Summary Q4 FY24 was the most disappointing quarter from an investment performance perspective for each of the NAOS LICs since their respective inceptions. For personal use only Q4 Performance FY24 Performance NCC -14.18% -26.49% NAC -19.01% -27.98% NSC -15.89% -22.93% The rec
Slide 11: Q4 FY24 – Overview & Summary
Q4 FY24 –Overview & Summary Recent share price movements compounded by: Low levels of share liquidity within emerging companies, especially those not technology or resource related. For personal use only Fund manager closures and subsequent redemption selling. Very low valuations applied to
Slide 12: CY24 YTD Share Price Performance
CY24 YTD Share Price Performance Share Price Performance 10% For personal use only 0% -10% Performance (%) -20% -30% -40% -50% -60% December 2023 January 2024 February 2024 March 2024 April 2024 May 2024 June 2024 MaxiPARTS Limited Big River Industries Ltd. COG Financial Services Limited Move Logist
Slide 13: Why Are These Companies Not Growing EPS As Expected?
Why Are These Companies Not Growing EPS As Expected? For personal use only Economic slowdown and decreasing consumer confidence due to cost-of-living increases. Supply-side inflationary pressures are less affected by higher interest rates i.e., rents, electricity, insurance costs etc. Harder t
Slide 14: Australian Quarterly GDP Growth
Australian Quarterly GDP Growth Australian GDP continues to decline following a solid period of growth during COVID-19. As consumers tighten their belt, many emerging companies face numerous headwinds. For personal use only Australian Quarterly GDP Growth 5.0 3.7 3.9 3.5 3.0 2.2 0.9 0.8 0.9 0.8 1.
Slide 15: Q4 Notable Downgrades
Q4 Notable Downgrades Code Company Sector May % Share Price Downgrade commentary Movement Cost of living pressures, consumer spending, inflation driving cost of APE Eagers Automotive Auto Dealerships -20% goods sold increases For personal use only Group like for like sales -1% in 2H (Rebel Sport -2%
Slide 16: Q4 Notable Downgrades (continued)
Q4 Notable Downgrades (continued) Code Company Sector May % Decline Downgrade commentary All three operating divisions, Rip Curl, Kathmandu & Oboz, declined as a For personal use only KMD KMD Brands Limited Discretionary Retail -13% group 14% in 1H24 and 8% in 2H24. Broad weakness across discretiona
Slide 17: S&P FY24 Return Vs Magnificent Seven
S&P 500 FY24 Return Vs Magnificent Seven S&P 500 Vs Magnificent Seven For personal use only Tesla Nvidia Microsoft Meta Apple Amazon Alphabet S&P 500 Equal Weight Index S&P 500 -50% 0% 50% 100% 150% 200% Source - FactSet Share Price Return CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset M
Slide 18: Is CBA Overvalued?
Is CBA Overvalued? Commonwealth Bank of Australia (ASX: CBA) - Share Price Vs EPS 130.0 5.75 For personal use only 125.0 5.70 120.0 5.65 Share Price ($) 115.0 EPS ($) 110.0 5.60 105.0 5.55 100.0 5.50 95.0 90.0 5.45 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 C
Slide 19: For personal use only
For personal use only CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 18
Slide 20: Industry Trends
For personal use only Industry Trends
Slide 21: Disclaimer
Disclaimer MitchCap Pty Ltd ABN 15 630 819 760 makes no representation and gives no warranty as to the accuracy of the preceding information and does not accept any responsibility for any errors or inaccuracies in, or omissions from, the For personal use only information contained herein (whether ne
Slide 22: The Ecosystem Connecting Fragmented Distribution Channels
For personal use only The Ecosystem Connecting Fragmented Distribution Channels Concentrated Distribution Fragmented Distribution 1 0 314 3,000 2,000 12,000 OEMS Distributer Dealers Floorplan is inventory OEMS Distributer Dealers s ownership at consumer decision s point CDP Data Points: Distribution
Slide 23: Dealers Stocking is cautious, planned and still below normal
Dealers Stocking is cautious, planned and still below “normal” Portfolio Utilisation 100% For personal use only 90% 80% Pre-Covid Normal 70% 65% 60% Today? 50% 40% 30% Post-Covid Recovery 20% Peak Covid < 30%, factory closures, supply disruption 10% And record demand 0% Discussion: Are dealers stock
Slide 24: Qualitative Industry Trends in Industry Portfolio
Qualitative Industry Trends in Industry Portfolio 1. Vertical Integration Slowed – less activity of OEMs acquiring and establishing dealerships as working capital cycle extension costs > than margin gain in some instances For personal use only 2. Dealer Incentives – Through Covid OEMs discontinued e
Slide 25: NAOS Investee Companies - Key Events Q4 FY24
NAOS Investee Companies - Key Events Q4 FY24 HOLDING INDUSTRY Q4 UPDATE H2 FY24 trading update with expected revenue of $239m - $244m and expected NPBT For personal use only of $9.6m - $10.1m. Softer results than anticipated. East Coast core business experiencing inconsistent pricing from market
Slide 26: NAOS Investee Companies - Key Events Q4 FY24
NAOS Investee Companies - Key Events Q4 FY24 HOLDING INDUSTRY Q4 UPDATE For personal use only A disappointing 9-month FY24 trading update was issued. Revenue of $308m and EBITDA of $25m. For context in FY23 BRI revenue and EBITDA was $449m and $51.5m respectively. Challenging trading conditions ex
Slide 27: NAOS Investee Companies - Key Events Q4 FY24
NAOS Investee Companies - Key Events Q4 FY24 HOLDING INDUSTRY Q4 UPDATE Q3 FY24 trading results, lower than expected NPATA of $5.4m. For personal use only Finance Broking & Aggregation (FB&A) division volumes increased but margins impacted from lower pass-through rates from lenders. Asset fina
Slide 28: Current Challenges for Active Managers
Current Challenges for Active Managers Index returns have been extremely strong especially those correlated to highly liquid businesses i.e., CBA. For personal use only For active managers, these businesses are often perceived to be the most expensive and therefore not held. This has led to si
Slide 29: We Remain Highly Optimistic On The Long-Term Outlook
We Remain Highly Optimistic On The Long-Term Outlook Long-term equity returns are generated from: Earnings For personal use only Valuation multiples Dividends Earnings growth over the long-term is driven by: Australian economic outlook. Industry specific tailwinds. Some businesses ma
Slide 30: Long-Term Tailwinds Despite Short-Term Headwinds
Long-Term Tailwinds Despite Short-Term Headwinds We believe headwinds faced in FY24 across many sectors are an aberration, not a long-term trend For personal use only New Dwelling Starts, by type 300,000 250,000 New dwelling starts, by type 200,000 150,000 100,000 50,000 0 2021-22 2022-23 2023-24 20
Slide 31: Cash Earnings Remain Strong
Cash Earnings Remain Strong The cash earnings of the majority of our largest investments remains strong even at depressed earnings levels, and are a good indicator of a company’s value. For personal use only Market Capitalisation Estimated FY25 FCF Yield* (30 June 2024) BRI $115 Million 8.1% FCF Yie
Slide 32: Other Key Points
Other Key Points The Directors and the Investment Manager are committed to not only restoring short-term value for shareholders but also achieving long-term outperformance once again. For personal use only All Directors have recently acquired more shares in the LICs. Investment Manager reinves
Slide 33: Dividends
Dividends NCC Dividend History NAC Dividend History 8.0 7.50 8.0 7.50 For personal use only 7.00 7.25 7.25 7.25 7.0 6.75 6.25 5.75 5.90 6.00 5.75 Cents per Share 6.0 6.0 5.25 5.25 5.25 3.75 5.00 4.75 Cents per Share 5.0 4.50 4.0 3.75 4.0 3.0 2.50 2.0 3.75 2.00 2.0 1.0 0.0 2H FY13 FY14 FY15 FY16 FY17
Slide 34: Q&A
Q&A Thank you for your continued support. For personal use only “Selling out at the bottom – and thus failing to participate in the subsequent recovery – is the cardinal sin of investing. The ability to persevere requires consistent adherence to a well- thought-out approach; control over emotion; an
Slide 35: NAOS Asset Management 1% Pledge
NAOS Asset Management 1% Pledge For personal use only CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 34
Slide 36: Appendix
For personal use only Appendix
Slide 37: 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. For personal use only A Listed Investment Company structure: Allows the
Slide 38: NAOS Directors and Team
NAOS Directors and Team OUR DIRECTORS For personal use only OUR TEAM CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 37
Slide 39: NAOS LICs Director Alignment
NAOS LICs Director Alignment “Show me the incentive and I’ll show you the outcome” - Charlie Munger For personal use only Inception Directors Shareholding 30 June 2024 Directors Shareholding 10,000,000 9,000,000 8,721,598 8,000,000 7,000,000 6,000,000 5,576,720 NUMBER OF SHARES 5,000,000 4,000,000 3
Slide 40: Capital Management Initiatives
Capital Management Initiatives Performance • Maintain a focus on long term performance without deviating from the NAOS investment philosophy. For personal use only • Continue to focus on a growing stream of dividends, franked to the maximum extent possible, whilst maintaining Dividends an adequate r
Slide 41: NAOS ESG Framework
NAOS ESG Framework For personal use only CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 40
Slide 42: Proactive Portfolio Management
Proactive Portfolio Management The NAOS Investment Team conducted 835 meetings during FY24, highlighting our commitment to thorough research and informed decision-making. For personal use only Source – NAOS CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 41
Slide 43: 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: For personal use only CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 42
Slide 44: Reasons Why We Seek Board Representation
Reasons Why We Seek Board Representation From time to time, we will seek Board representation where we believe some skillsets could be enhanced. For personal use only These individuals will generally have: - Significant experience outside funds management including operational and M&A roles. - A sou
Slide 45: 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: For personal use only Concentrated portfolios (0-15 investments & shareholdings often >20%) Long-term investment philosophy (5+ years) Focus on emerging companies ($2
Slide 46: Investor Awareness and Communication
Investor Awareness and Communication For personal use only FOLLOW NAOS Subscribe Now: www.naos.com.au/subscribe CONVICTION. LONG TERM. ALIGNED | Copyright 2024 NAOS Asset Management Limited 45
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