WAM Research Ltd. · ASX:WAX
WAM Research — Investor Presentation (May 2017)
39 slides from WAM Research's investor presentation, May 15, 2017
Slide 1: For personal use only
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Slide 2: May 2017 Shareholder Presentation
For personal use only May 2017 Shareholder Presentation
Slide 3: Disclaimer
For personal use only Disclaimer This presentation has been prepared by MAM Pty Ltd and Wilson Asset Management (International) Pty Ltd (Wilson Asset Management) for use in conjunction with a verbal presentation and should be read in that context. This presentation Information for the graphs, charts
Slide 4: Agenda
For personal use only Agenda 1. Wilson Asset Management 3. Investment portfolio and our listed investment companies – What worked – What didn’t work 2. Market and investment insights – What we like – Market overview and outlook – Investment themes and trends 4. Questions Page 4
Slide 5: About us
For personal use only About us Investing in opportunities. For you. For good. 1 Page 5
Slide 6: About us: Independent boutique fund manager
For personal use only About us Independent boutique fund manager – Five LICs and over $2 billion in shareholder capital for 48,000 retail shareholders – Eight investment professionals with combined investment experience of more than 100 years – Proven investment approach – Committed to philanthropic
Slide 7: Investment and management team
For personal use only Investment and management team Geoff Wilson Kate Thorley Chris Stott Matthew Haupt Martin Hickson Chairman Chief Executive Officer Chief Investment Officer Portfolio Manager Head of Trading & Portfolio Manager & Portfolio Manager Oscar Oberg John Ayoub Tobias Yao Martyn McCathi
Slide 8: Wilson Asset Management investment universe
Wilson Asset Management investment universe For personal use only Focus on ASX listed small-to-mid-cap industrial Focus on ASX listed small-to-mid-cap industrial companies companies Research-driven process Research and market-driven processes Focus on ASX top 200 listed companies Focus on ASX listed
Slide 9: For personal use only
For personal use only Gross assets One-year total shareholder return $1,184.3m 17.9% Fully franked annualised Portfolio performance (p.a. since August 1999) dividend yield* 6.4% 17.7% As at 30 April 2017 Page 9 *As at 12 May 2017
Slide 10: For personal use only
For personal use only Gross assets Options exercised* $480.4m 14.3% Fully franked interim Portfolio performance (p.a. since May 2016) dividend 1.0 cent 11.5% As at 30 April 2017 Page 10 *As at 09 May 2017
Slide 11: For personal use only
For personal use only Gross assets One-year total shareholder return $225.2m 21.8% Fully franked annualised Portfolio performance (p.a. since July 2010) dividend yield* 6.3% 18.8% As at 30 April 2017 Page 11 *As at 12 May 2017
Slide 12: For personal use only
For personal use only Gross assets One-year total shareholder return $40.4m 16.6% Fully franked annualised Portfolio performance (p.a. since January 2008) dividend yield* 4.8% 12.7% As at 30 April 2017 Page 12 *As at 12 May 2017
Slide 13: Century Australia Investments Limited
For personal use only Century Australia Investments Limited Raising up to $75 million at NTA – Open to new investors and two $20 million priority allocations to existing CYA shareholders and WAM Capital, WAM Leaders, WAM Research and WAM Active shareholders – Diversified exposure to a portfolio of l
Slide 14: WAM Microcap Limited: Strong track record
For personal use only WAM Microcap Limited Strong track record – Strong track record of performance in micro-cap companies delivered over almost 20 years – We have created WAM Microcap to provide direct exposure to these types of opportunities – Companies we have invested in as micro-caps over the l
Slide 15: WAM Microcap Limited
For personal use only WAM Microcap Limited $121m priority – Exposure to undervalued micro-cap growth companies listed on the ASX with a market cap of less than $300m – $1.10 issue price to raise up to $154m through the issue of up to 140 million shares with no options – Priority closes 5 June 2017 a
Slide 16: Market and investment insights
For personal use only Market and investment insights 2 Page 16
Slide 17: Market outlook
For personal use only Market outlook Page 17
Slide 18: Market outlook
For personal use only Market outlook On the ground feedback – Messages from Canberra – Recent out of cycle interest rate increases by the major banks have slowed the economy – “Economy remains patchy, much the same as the last three to five years” – “The consumer remains fragile” – Some companies co
Slide 19: The Australian economy: Housing market has peaked
For personal use only The Australian economy Housing market has peaked Page 19
Slide 20: The Australian economy: Housing market has peaked
For personal use only The Australian economy Housing market has peaked Australian housing market has peaked and growth is slowing Official cash rate remains low, banks continue to raise interest rates independently Regulators acting to address banks’ capital requirements and create more resilience i
Slide 21: Private residential building approvals (monthly)
Private residential building approvals (monthly) For personal use only Page 21 Source: Australian Bureau of Statistics
Slide 22: Household debt-income up to record high
Household debt-income up to record high, but interest paid dropped to a 13-year low 18 225 For personal use only % of household disposable income % of household disposable income 16 200 Downturns record high! 14 Household interest payments (LHS) 175 Household debt (RHS) 12 150 f* 10 125 8 100 6 75 4
Slide 23: The Australian economy: Mining recovery
For personal use only The Australian economy Mining recovery Page 23
Slide 24: The Australian economy: Mining recovery
For personal use only The Australian economy Mining recovery Mining stocks have bottomed over the last 12-18 months Global growth improving Chinese stimulus Investment exposure: selectively investing in mining and mining services companies Investment exposure: Page 24
Slide 25: The global economy: Macroeconomic environment
For personal use only The global economy Macroeconomic environment Page 25
Slide 26: The global economy: Macroeconomic environment
For personal use only The global economy Macroeconomic environment Global macroeconomic environment is the strongest it has been since the GFC Global leading indicators at an all time high Inflection point: sentiment is high, earnings growth returning What does it mean for Australia? Page 26
Slide 27: Investment themes and trends
For personal use only Investment themes and trends Page 27
Slide 28: Australian consumers
For personal use only 01 Australian consumers Page 28
Slide 29: Australian consumers
For personal use only 01 Australian consumers Amazon market entry by end of 2017 Potential to put downward pressure on retailers profitability We estimate $5bn in additional costs to consumers over the next 12 months from interest rates, utility bills, healthcare and petrol costs Disposable income i
Slide 30: Private health insurance affordability
For personal use only 02 Private health insurance affordability Page 30
Slide 31: Private health insurance affordability
For personal use only 02 Private health insurance affordability Low cost brands NIB (ASX: NHF) and ahm (ASX: MPL) growing market shares at a rapid rate Premiums are up 4-5% p.a. Consumers downgrading their level of cover Investment exposure: Page 31
Slide 32: Telco sector under transition
For personal use only 03 Telco sector under transition Page 32
Slide 33: Telco sector under transition
For personal use only 03 Telco sector under transition Lower margins for internet service providers (ISPs) under NBN From 1.2 million premises ready for services in 2017 to 9.1 million in Dec 2018 Increased competition in the mobile segment imminent Investment exposure: Page 33
Slide 34: Top holdings
Top holdings For personal use only Company ASX Code Owned by Challenger Limited* CGF WAM, WLE, WAX Woolworths Limited^ WOW WAM, WLE, WAA Hunter Hall Global Value Limited^ HHV WAM, WAA AUB Group Limited* AUB WAM, WLE, WAX Automotive Holdings Group Limited* AHG WAM, WLE, WAX Eclipx Group Limited* ECX
Slide 35: What worked: Research-driven
For personal use only What worked: Research-driven Sold majority at Bought again at $19.65 Credit Corp Group Limited (ASX: CCP) $21 $17.20 $20 Why it rated $19 – Strong growth in consumer loan book $18 $17 – Continued growth in debt ledgers $16 – Productivity improvements $15 Started buying at – Str
Slide 36: What didn't work: Research-driven
For personal use only What didn’t work: Research-driven Ardent Leisure Group (ASX: AAD) $3.00 Why it rated $2.80 – Growth underpinned by US Main Event division $2.60 Started buying at – Catalyst: Asset sales $2.40 $1.84 Sold at $1.67 $2.20 Why it didn’t work $2.00 – US Main Event division underperfo
Slide 37: What we like: Research-driven
For personal use only What we like: Research-driven iSelect Limited (ASX: ISU) $2.10 Started buying at Background $2.05 $1.90 – Largest comparison website in Australia $2.00 – New CEO reinvigorating the business $1.95 – Improved cash flow conversion $1.90 $1.85 Catalysts $1.80 – Non-health insurance
Slide 38: What we like: Market-driven
For personal use only What we like: Market-driven Woolworths Limited (ASX: WOW) $28 $27 Background Started buying at – Largest supermarket chain in AUS and NZ $26 $23.41 – Underperformance to Coles $25 – New management team $24 Catalysts – Divestments of Masters and petrol business $23 – Earnings mo
Slide 39: Subscribe to our investment insights
For personal use only Join more than 26,000 weekly readers Subscribe to our investment insights and market updates at: wilsonassetmanagement.com.au