Whitefield Industrials Limited · ASX:WHF
Whitefield Industrials — Shareholder Meeting (July 2009)
26 slides from Whitefield Industrials's shareholder meeting presentation, Jul 30, 2009
Slide 1: Presentation to the 86th Annual General Meeting
For personal use only Listed Investment Company WHITEFIELD LTD PRESENTATION TO: 86th ANNUAL GENERAL MEETING THURSDAY, 30th JULY 2009 WHITEFIELD 1 ▼▼
Slide 2: Our Objectives
For personal use only OUR OBJECTIVES • TWO FUNDAMENTAL OBJECTIVES A. To produce a sound long term rate of return from investment in a broadly diversified exposure of listed Australian (industrial) shares B. To provide investors with a structurally efficient investment vehicle (Long term MER <0.35%)
Slide 3: A Cost Efficient Investment Vehicle
For personal use only A COST EFFICIENT INVESTMENT VEHICLE MANAGEMENT EXPENSE RATIOS Retail Managed Funds (Aust Share) Wholesale Man Funds (Aust Shares) Listed Investment Companies (Aust Shares) 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% WHF MER 0.35% WHITEFIELD 3 ▼▼
Slide 4: Investment Strategy
For personal use only INVESTMENT STRATEGY Strategy: A style neutral strategy based on the fundamental analysis of earnings and valuation • Core of Research & Analysis • Analysis focussed on Valuation & Return from future earnings • Look through the cycle to avoid skewing from cyclical peaks and trou
Slide 5: Investment Strategy
For personal use only INVESTMENT STRATEGY Strategy: A style neutral strategy based on the fundamental analysis of earnings and valuation Core of Research & Analysis We utilise a defined analytical methodology which seeks to obtain a qualitative and quantitative portrait of the short, medium and long
Slide 6: Investment Outcomes: 2009 Earnings
For personal use only INVESTMENT OUTCOMES: 2009 EARNINGS • WHF generated earnings after tax (and before gains or losses on sale of investments) of $11,864,370 • EPS fell by 4.4% primarily from the growing level of cuts in dividends across the market WHITEFIELD: NET PROFIT AFTER TAX (EXCLUDING REALIS
Slide 7: Investment Outcomes: 2009 Earnings
For personal use only INVESTMENT OUTCOMES: 2009 EARNINGS WHITEFIELD NET PROFIT AFTER TAX PER SHARE The cyclical ebb and flow of (EXCLUDING REALISED CAPITAL GAINS) underlying 20.00 earnings can be 18.00 seen in this 16.00 longer term graph. 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 87 89 91 93 95 97
Slide 8: Investment Outcomes: Portfolio Returns
For personal use only INVESTMENT OUTCOMES: PORTFOLIO RETURNS • WHF portfolio returns for the year to March were similar Best performing to the All Industrials Accumulation Index at (31%). holdings in 2009 were: • WHF portfolio returns are 0.45%pa above All Industrials CSL Index over 10 years Cochlea
Slide 9: Dividends 2009
DIVIDENDS 2009 For personal use only • WHF has maintained its year end dividend at 8.5 cps fully franked • Total dividends for the year were 17.0 cps an increase of 5.6% WHITEFIELD: DIVIDENDS CENTS PER ORDINARY SHARE 18.00 17.00 16.00 15.00 14.00 13.00 12.00 2005 2006 2007 2008 2009 WHITEFIELD 9 ▼▼
Slide 10: Recovery Pre-Requisites
For personal use only RECOVERY PRE-REQUISITES Financial Well-Being Dictates Consumer & Corporate Spending • Consumers will spend less while employment conditions are tough, when their financial wealth has been eroded, and when access to finance is more difficult. • Corporations will be cautious on a
Slide 11: Recovery of the Consumer
For personal use only RECOVERY OF THE CONSUMER Two of the major drivers of consumer spending are likely to continue to weaken over 2009 and into 2010 • Unemployment is predicted to rise rapidly above 8% • House prices are likely to remain soft for some time • While official cash rates are low, only
Slide 12: Recovery of the Consumer
For personal use only RECOVERY OF THE CONSUMER HOUSEHOLD SECTOR: MAJOR DRIVERS OF CONSUMER SPENDING UNEMPLOYMENT OUTLOOK: Negative HOUSE PRICE OUTLOOK: Negative AUS UNEMPLOYMENT RATE AUST HOUSE PRICE INDEX 8.50% 140.0 8.00% 130.0 7.50% 120.0 7.00% Actual 110.0 6.50% 100.0 6.00% 90.0 5.50% Est 80.0 5
Slide 13: Recovery of the Business Sector
For personal use only RECOVERY OF THE BUSINESS SECTOR Many drivers of corporate earnings are only at the start of a downwards phase. • Consumer spending is likely to soften further as unemployment rises • Construction activity will continue to be weak (1st home buyers benefit offset by falling comme
Slide 14: Recovery of the Business Sector
For personal use only RECOVERY OF THE BUSINESS SECTOR BUSINESS SECTOR: MAJOR DRIVERS OF ACTIVITY CONSUMER SPENDING: Negative CAPITAL EXPENDITURE: Negative AUS RETAIL SALES AUS REAL MACHINERY & EQUIPMENT EXPENDITURE CHANGE YOY 15% 25% 10% 15% 5% 5% (5%) 0% (15%) 01 04 06 09 00 02 03 05 07 08 (25%) Re
Slide 15: A Possible Economic Timeline
For personal use only A POSSIBLE ECONOMIC TIMELINE • While the systemic risk to the financial system has lessened over recent months, the second half of 2009 is likely to see the slowdown impact heavily on the real economy – employment and company profits Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Fina
Slide 16: The 2009/10 Outlook
For personal use only THE 2009/10 OUTLOOK Economic fundamentals may deteriorate throughout the remainder of 2009. • Unemployment and corporate profit outcomes will be bleak • There is a moderate potential for investors to be disappointed with the slow pace of recovery • In past recessions it has tak
Slide 17: Value in the Market
For personal use only VALUE IN THE MARKET We see moderate upside in value for many stocks in the Australian market. • However this upside comes hand in hand with near term earnings risk VALUATION AND RISK SUMMARY Value upside from long term earnings Near Term Earnings and Other Risks s ls s g s s re
Slide 18: Implications for Stocks and Sectors: Banking, Non-Bank Financials
For personal use only IMPLICATIONS FOR STOCKS AND SECTORS BANKING NON-BANK FINANCIALS Value: Value: Value significantly above current levels at long term Value moderately / significantly above current levels as market margins and volumes, but exposed to near term value activity recovers. destruction
Slide 19: Implications for Stocks and Sectors: Insurers, Media
For personal use only IMPLICATIONS FOR STOCKS AND SECTORS INSURERS MEDIA Value: Value: Some limited upside only. We view this as a particularly undervalued sector. Significant upside based on longer term margins and earnings unless you believe traditional media will be permanently eroded. Earnings:
Slide 20: Implications for Stocks and Sectors: Gaming, Retailing
For personal use only IMPLICATIONS FOR STOCKS AND SECTORS GAMING RETAILING & CONSUMER STAPLES Value: Value: Some upside from earnings. Value opening up in staples, as sectoral rotation occurs. Regulatory change has damaged industry defensiveness Some upside in discretionary retail, but carrying larg
Slide 21: Implications for Stocks and Sectors: Healthcare, Infrastructure
For personal use only IMPLICATIONS FOR STOCKS AND SECTORS HEALTHCARE INFRASTRUCTURE Value: Value: Moderate upside. Underlying net asset value in a normal market significantly Some dependency on currency, and currency volatile at present. higher than current crisis-driven assessments. Refinancing, re
Slide 22: Implications for Stocks and Sectors: Industrials, Telecommunications
For personal use only IMPLICATIONS FOR STOCKS AND SECTORS OTHER INDUSTRIALS TELECOMMUNICATIONS & UTILITIES Value: Value: Moderate - strong upside, but varies between stocks Some upside, but significant structural risk for TLS Limited upside in utilities. Earnings: Earnings: BXB, TOL some adverse imp
Slide 23: Implications for Stocks and Sectors: Materials, Mining & Energy
For personal use only IMPLICATIONS FOR STOCKS AND SECTORS MATERIALS METALS, MINING & ENERGY Value: Value: Modest upside. Limited upside in large miners on value. But moderately sized near term risks. Fear of inflation, and expectations of a return to 2007 have made this a crowded trade. Earnings: Ea
Slide 24: Strategic Positions: Top ~20 Stocks
For personal use only STRATEGIC POSITIONS: TOP ~20 STOCKS VALUE FROM FUTURE EARNINGS RISK STATUS Financial, Cyclical, Structural High Fairfax Media Higher Risks Challenger Valuation News Corporation Macquarie Infrastructure Group Upside Macquarie Infrastructure Group Macquarie Airports Challenger Su
Slide 25: Pricing & NTA
For personal use only PRICING & NTA WHITEFIELD LTD: PRICE AND NTA $5.70 $5.20 $4.70 $4.20 $3.70 $3.20 $2.70 $2.20 $1.70 $1.20 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 NTAAT DT Price Whitefield NTA (June Post Div) NTA Before Tax $2.97 NTA After Tax $3.10 WHITEFIELD 25 ▼▼
Slide 26: Conclusion
For personal use only CONCLUSION INVESTMENT • Economic conditions will deteriorate in 09/10, even as some financial conditions improve • Market to experience bursts of buoyancy as investors chase valuation opportunities • Interspersed with disappointment as investors recognise the timelines for econ
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