PM Capital Global Opportunities Fund Ltd. · ASX:PGF
PM Capital Global Opportunities Fund — Non-Deal Roadshow (April 2016)
69 slides from PM Capital Global Opportunities Fund's roadshow presentation, Apr 5, 2016
Slide 1: PM CAPITAL Global and Asian Opportunities Roadshow
PM CAPITAL Global and Asian Opportunities Roadshow Lunch presentation For personal use only April 2016 “Don’t let the market force you into something you don’t want to do” Paul Moore, CIO of PM CAPITAL
Slide 2: Disclaimer
Disclaimer This presentation is issued by PM CAPITAL Limited (ABN 69 083 644 731 AFSL No. 230222, ‘PM CAPITAL’) as investment manager for the PM For personal use only Capital Asian Opportunities Fund Limited (ACN 168 666 171, the ‘Company’), and as responsible entity for the PM CAPITAL Global Compan
Slide 3: Agenda
Agenda For personal use only Introduction Rob Thompson 4 Global Strategy Paul Moore 11 Asian Strategy Kevin Bertoli 36 Listed Investment Companies Overview Paul Moore 58 Q &A Paul Moore 63 Options conversion Paul Moore 66 3
Slide 4: Why PM CAPITAL?
Why PM CAPITAL? For personal use only Old fashioned stock-pickers Investment • Focused on mispriced and under-researched businesses Philosophy • Good business at a good price • Same philosophy, same process, applied by CIO for 30+ years Research Intensive, global perspective Investment • It’s a glob
Slide 5: PM CAPITAL approach and product offering
PM CAPITAL approach and product offering For personal use only Simple investment philosophy “The best way to preserve and enhance your wealth is to buy a good business at a good price” GLOBAL STRATEGY ASIAN STRATEGY AUSTRALIAN STRATEGY YIELD STRATEGY UNLISTED UNLISTED UNLISTED UNLISTED Global Asian
Slide 6: PM CAPITAL Global Companies Fund awards
PM CAPITAL Global Companies Fund | Short term For personal use only Zenith / Professional Planner International Equities (Alternative Strategies) Fund of the Year 2015 Australian Fund Manager Foundation Best Australian Based Global Equity Manager of the Year 2015 The Professional Planner | Zenith Fu
Slide 7: PM CAPITAL Regional Roadshow 2016
PM CAPITAL Regional Roadshow 2016 For personal use only For attending today’s Roadshow, you are eligible to complete our online test to receive CPD points towards your annual accreditation. Furthermore, you can receive additional CPD points by completing our Quarterly Report online tests, which can
Slide 8: Recent upgrade - Zenith Investment Partners - Recommended
For personal use only Recent upgrade - Zenith Investment Partners - Recommended Our Disclaimer The Zenith Investment Partners (“Zenith”) Australian Financial Services License No. 226872 rating (assigned October 2015) referred to in this document is limited to “General Advice” (as defined by the Corp
Slide 9: Same philosophy, same process, 30+ years
Same philosophy, same process, 30+ years For personal use only
Slide 10: Agenda
Agenda For personal use only Introduction Rob Thompson 4 Global Strategy Paul Moore 11 Asian Strategy Kevin Bertoli 36 Listed Investment Companies Overview Paul Moore 58 Q &A Paul Moore 63 Options conversion Paul Moore 66 10
Slide 11: 30+ years – A history of global stock picking
30+ years – A history of global stock picking 1 1981 BMI – acquired by Boral in 1982 For personal use only 2 1983 CUB – acquired by Elders IXL 3 1985 BHP – it’s a relative (inefficient) world Stock market crash - Portfolio insurance 4 1987 “The day after the market crashed people began to worry that
Slide 12: Guiding principles
Guiding principles For personal use only 1 Investor returns are not a straight line 2 The importance of understanding investor psychology “The day after the market crashed people began to worry that the market was going to crash” Peter Lynch 3 “Never let the market force you into something that you
Slide 13: Investing requires patience and conviction
Investing requires patience and conviction For personal use only A history of fundamental themes 5000 2001 | Overweight resources 2008/09 | Overweight US/UK Banks Iron Ore price increases five fold from ‘99 to ‘08 Dow Jones US Banks Index climbs 50% between 4500 ‘10 to ‘15 4000 3500 3000 2500 2010 |
Slide 14: For personal use only
For personal use only When it comes to investing, there is no safety in numbers; you have to be doing something different from what other investors are doing; you must be able to stand your ground under intense pressure and ridicule PAUL MOORE 14
Slide 15: A Unique Track Record
A Unique Track Record For personal use only Performance (net of fees) Inception Since Total Return 29 February 2016 Date Inception Since Inception p.a. Global Companies Fund 10/1998 8.1% 283.4% MSCI World Net Total Return Index ($A) 3.4% 77.4% Asian Companies Fund 07/2008 16.1% 214.7% MSCI AC Asia e
Slide 16: Resources focus on investment anomalies
Resources focus on investment anomalies For personal use only Risk vs Reward: Identifying opportunities for investors overvalued Risk ONE WFC undervalued Reward The majority of limited Plenty of time to 10 year + the market is well opportunities perform due investment researched and are available di
Slide 17: Wells Fargo (WFC)
Wells Fargo (WFC) For personal use only Wells Fargo & Company (WFC) 1988 – Savings and Loans Crisis Best franchise / Best management A 13%+ compound return over 26 years despite the greatest financial crisis since the Great Depression, not to mention the Gulf War,Twin Towers and other events. Source
Slide 18: Market Insights – Macro fear
Market Insights – Macro fear For personal use only 1 Two steps forward one step back 2 Cyprus, Greece, Spain 3 Oil and China decline 4 Speed and magnitude 5 Negative rates Most macro forecasts are wrong 18
Slide 19: Market Insights – Structural change is now required
Market Insights – Structural change is now required For personal use only 1 Monetary is short term 2 Labour flexibility and taxation 3 Higher rates 19
Slide 20: Market Insights – Mr Market; a manic-depressive
Market Insights – Mr Market; a manic-depressive For personal use only 12 month 12 month % from Sector Stock % of Low High Low high Commodities BHP $31.16 $14.06 222% 55% Capital goods Catepillar $89.62 $56.36 159% 37% Housing KB Home $17.42 $9.04 193% 48% Financials Lloyds £0.89 £0.56 160% 38% Consu
Slide 21: Market Insights – most interesting observation
Market Insights – most interesting observation The number of “quality” buy backs announced For personal use only Owner operators / individuals who have built a business Buy backs experienced by current portfolio holdings 21
Slide 22: What do we typically look for?
What do we typically look for? For personal use only Identify severe cyclical corrections that the market From crisis comes prices as permanent when they are in fact transitory 1 opportunity • The Global Financial Crisis – distressed property • Las Vegas, Ireland Spain In a slow growth High single d
Slide 23: Our best ideas globally…
Our best ideas globally… For personal use only 1 Domestic banking Economic recovery and increased payout ratios; Déjà vu 2 US housing Recovery from a severe cyclical correction European property 3 Recovery from a severe correction in Europe 4 Monopolistic type service providers Earnings growth – a t
Slide 24: From crisis comes opportunity – US housing
From crisis comes opportunity For personal use only New Home Sales and Recessions US housing recovery still early in the cycle Source: http://www.calculatedriskblog.com 24
Slide 25: From crisis comes opportunity – Spanish offices
From crisis comes opportunity For personal use only Office Capital Values (Q1 2000 = 100) Values severely depressed, PM CAPITAL enter Spanish office market in early 2014 Source: CBRE 2014 25
Slide 26: Update 2016 – Real House Prices
Update 2016 For personal use only Real House Prices In 2015, home prices also gained 5 per cent, despite widespread expectations of a Fed interest rate rise, according to the S&P/Case Shiller composite index of prices in 20 metropolitan areas* ¨ Las Vegas recovered to more “normal” transaction activ
Slide 27: Yield | Domestic banking franchises
Yield | Domestic banking franchises For personal use only FY16 consensus Domicile Market share Price to Price to forecasts position Earnings Book (P/B) (P/E) CBA Australia 1 12.6x 2.0x Wells Fargo US 1 11.1x 1.3x Bank of America US 2 8.7x 0.5x Lloyds Bank UK 1 9.5x 1.1x ING Benelux 1 9.8x 0.9x Sourc
Slide 28: Update 2016 – Lloyds Banking Group share price
Update – 2016 For personal use only Share price | Lloyds Banking Group (London Stock Exchange) • Lower risk loan book, improved funding profile, +5x the equity = significantly less business risk? • Macro fear • 2015 earnings announcement, cash dividend now a reality, 7%+ Never let the market make yo
Slide 29: Growth | Monopolistic service providers
Growth | Monopolistic service providers For personal use only 5 Year Earnings per Share (EPS) Market Position Growth Intercontinental +90% interest rate 17.2% Exchange futures #1 global VISA / MasterCard 21.3% payments 90% search in Google 12.2% mobile, 65% in desktop Source: PM CAPITAL Limited inte
Slide 30: Update 2016
Update 2016 For personal use only Card transaction Increased velocity of Industry volumes and internet trading on financial consolidation; search activity futures exchanges, Deutsche Bourse continues to grow at particularly in respect merger with London double digit rates of commodities. Stock Excha
Slide 31: Industry consolidation | Global brewing
Industry consolidation | Global brewing PM CAPITAL Global Companies Fund Historical Positions For personal use only One simple idea, 15 opportunities over 10+ years G. Subject to shareholder and regulatory approval. 31
Slide 32: Alternative Investment Managers
Alternative Investment Managers For personal use only Share price | Alternative Asset Managers (US Stock Exchange) $40.00 $35.00 Peak to trough decline of ~60%* $30.00 $25.00 $20.00 $15.00 $10.00 Apollo (APO) Share Price (Close) KKR (KKR) Share Price (Close) • Severe price adjustment despite signifi
Slide 33: Macau – from crisis comes opportunity
Macau – from crisis comes opportunity For personal use only Simple Business Casino – one of our first investments in 1998 - and many since Simple Idea Severe cyclical recovery within a long term secular evolution of the Chinese Consumer • Corruption crackdown on “high rollers” • Evolution to mass ma
Slide 34: Summary
Summary For personal use only Simple Simple One A Ideas Businesses investment focused proposition, portfolio many iterations 34
Slide 35: Agenda
Agenda For personal use only Introduction Rob Thompson 4 Global Strategy Paul Moore 11 Asian Strategy Kevin Bertoli 36 Listed Investment Companies Overview Paul Moore 58 Q &A Paul Moore 63 Options conversion Paul Moore 66 35
Slide 36: Why the Asian Companies Fund?
Why the Asian Companies Fund? For personal use only Asian Companies Fund Portfolio MSCI Asia ex Japan Index Rigorous bottom Top 10 Holdings Weight Top 10 Holdings Weight A differentiated 51Job Inc. 7.1% Taiwan 4.0% up research = Semiconductor Mfg approach to Donaco International stock pickers Ltd 6.
Slide 37: A changing economic reality in China
A changing economic reality in China China’s GDP growth composition has shifted but investors still focused on ‘old For personal use only world’ economic metrics given index composition Caixin China General Manufacturing PMI China FAI vs China IP - YOY Growth (%) China GDP Growth Share 100% Service
Slide 38: Consumption to drive future growth
Consumption to drive future growth Asia = the fastest growing middle income class globally For personal use only Europe 2009: 664 m 2030: 680m North America 2009: 338 m 2030: 322m Central and Asia Pacific South America 2009: 525 m 2009: 181 m 2030: 3228m 2030: 313m Middle East and Africa 2009: 137 m
Slide 39: Drivers of consumption growth
Drivers of consumption growth For personal use only Pan-Asia opportunity Group of unique and disparate economic jurisdictions 1 2 3 4 5 Population Wage Baby Dominators Urbanisers Large addressable growers growers Boomers Large rural Countries with Markets where markets w/ low Countries populations t
Slide 40: Why now? With crisis comes opportunity!
Why now? With crisis comes opportunity! For personal use only Fund Flows – EM Asia ex China (US$Bn) * Market factoring in Chinese FAI slowdown * Top down market mentality = ‘sell everything Asia trade’ MSCI Asia (ex Japan/China) Trailing P/B * Short term macro fears = long term growth opportunity be
Slide 41: Why now? With crisis comes opportunity!
Why now? With crisis comes opportunity! Taken advantage of market For personal use only Average invested position of 75-80% since weakness to bring both Asian inception for the Asian Companies Fund strategies to fully invested 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2009 2010 2011 2012 2013 2014
Slide 42: Our best Asian ideas…
Our best Asian ideas… For personal use only Evolution in content delivery, 1 Online classifieds & consumer spending habits and e-Commerce advertising models. Market liberalisation, rising affluence & non-discretionary 72% 2 Gaming spending, improved market accessibility. Rising affluence, increased
Slide 43: Our best Asian ideas…
Our best Asian ideas… For personal use only Evolution in content delivery, Online classifieds & 1 consumer spending habits and e-Commerce advertising models. Market liberalisation, rising affluence & non-discretionary 2 Gaming spending, improved market accessibility. Rising affluence, increased dist
Slide 44: Classified & e-Commerce
Classified & e-Commerce For personal use only Attractive business models A repeatable theme across different sectors High barriers to entry Current holdings* Scalability • 51Jobs, Zhaopin & 104 Corp. (jobs) • Autohome Inc. (automotive) • Baidu (search) Low capital intensity High cash Held generative
Slide 45: Classified & e-Commerce
Classified & e-Commerce For personal use only Significant corporate activity allowing for rotation of capital overtime Jobstreet iProperty Zhaopin • Online employment • Acquired by REA • Non-binding classified business Group Feb2016 proposal by Chinese acquired by SEEK • Consideration A$4 P/E firm t
Slide 46: Classified & e-Commerce
Classified & e-Commerce A long term growth opportunity vs. DM peers who are reaching maturity For personal use only LTM Revenues ($AM) 600 500 400 300 200 100 0 iProperty^ Zhaopin Seek* iCar Asia Autotrader** Autohome REA Group 51Job Rightmove 104 Corp Carsales Property Jobs Autos LTM EBIT ($AM) 250
Slide 47: Our best Asian ideas…
Our best Asian ideas… For personal use only Evolution in content delivery, Online classifieds & 1 consumer spending habits and e-Commerce advertising models. Market liberalisation, rising affluence & non-discretionary 2 Gaming spending, improved market accessibility. Rising affluence, increased dist
Slide 48: Gaming
Gaming Pan-regional investment For personal use only • thematic • Rapid industry evolution as markets across the region liberalise • Sentiment towards Macau driving investors attitudes to entire sector • Hit by a perfect storm, gaming Vietnam Macau revenues down 50% from peak Macau Monthly Gaming Re
Slide 49: Gaming – Macau, with crisis comes opportunity
Gaming – Macau, with crisis comes opportunity For personal use only Macau Adj. EBIDTA (US$Bn) • Mass market to drive future 9 growth 8 7 • Significant room to grow 6 5 penetration 4 52% 3 – Individual Visitor Scheme 2 75% – Infrastructure i.e. high speed rail 1 0 – Hotel room capacity 2011 2012 2013
Slide 50: Gaming – Macau, with crisis comes opportunity
Gaming – Macau, with crisis comes opportunity Valuations discounting long term opportunity For personal use only • Limited GGR growth in forecasts • Current valuation implying minimal EBITDA uplift from new capacity • Significant FCF post 2016 Unit: HK$ Bn Wynn Macau MGM China Sands China Enterprise
Slide 51: Our best Asian ideas…
Our best Asian ideas… For personal use only Evolution in content delivery, Online classifieds & 1 consumer spending habits and e-Commerce advertising models. Market liberalisation, rising affluence & non-discretionary 2 Gaming spending, improved market accessibility. Rising affluence, increased dist
Slide 52: Diversified thematic for consumer franchises
Diversified thematic for consumer franchises For personal use only Brewers Restaurants Food Media Health & personal care 52
Slide 53: The Brewing Industry
The Brewing Industry For personal use only 1 Leveraging global expertise and experience in Asia 2 Identification of similar key issues impacting the sector, regardless of the geography 3 Witnessed industry evolve globally over 20 years, with Asian Brewers following a familiar pattern of Consolidatio
Slide 54: Brewers in Malaysia
Brewers in Malaysia Market Background For personal use only Attractive market Created favourable Which has in turn structure market dynamics driven… • Duopoly • Premier Brand Portfolio • High margins and • High barriers to entry for • Rational pricing returns new competitors environment • Consistent
Slide 55: Brewers in Malaysia – Investment thesis today
Brewers in Malaysia Investment thesis today For personal use only Attractive structural Attractive Opportunity that backdrop to drive valuations created initial continued earnings growth entry point? • Ungeared yield • Young population 8% • Excise tax risks • Rising income levels • 100% payout • Sho
Slide 56: China the next consolidation story?
China the next consolidation story? Historically a competitive market structure with four to five major players For personal use only Driven unfavourable market Which has in turn driven Consolidation = dynamics • Low margins and returns future opportunity • Irrational capital allocation versus globa
Slide 57: Agenda
Agenda For personal use only Introduction Rob Thompson 4 Global Strategy Paul Moore 11 Asian Strategy Kevin Bertoli 36 Listed Investment Companies Overview Paul Moore 58 Q &A Paul Moore 63 Options conversion Paul Moore 66 57
Slide 58: LIC Discount
LIC Discount For personal use only Time Increase breadth Buyback of interest A 3-5 year + investment Dividend PMC Investment Premium performance at a discount? What every stock-picker is looking for… 58
Slide 59: Is it rational?
Is it rational? For personal use only 1 Historic Gross Performance differential Performance (net of fees) Inception Since Total Return 29 February 2016 Date Inception Since p.a. Inception Global Companies Fund 10/1998 8.1% 283.4% MSCI World Net Total Return Index ($A) 3.4% 77.4% Asian Companies Fund
Slide 60: Impact of buying at a premium to NTA vs a discount
Impact of buying at a premium to NTA vs a discount For personal use only An illustrative example. Assumptions: 7.5% 15% Discount Normalisation NTA compound vs 15% of share price 5 year horizon growth rate Premium to NTA Starting NTA Starting Share Price Year 5 NTA and Total Return Ending Share Price
Slide 61: Actions speak louder than words
Actions speak louder than words For personal use only PM CAPITAL Global PM CAPITAL Asian Opportunities Opportunities Fund Limited (PGF) Fund Limited (PAF) # of Shares held Date, as at close # of Shares held by PM CAPITAL % of Total Shares % of Total Shares of market by PM CAPITAL June 2015 16,464,32
Slide 62: Agenda
Agenda For personal use only Introduction Rob Thompson 4 Global Strategy Paul Moore 11 Asian Strategy Kevin Bertoli 36 Listed Investment Companies Overview Paul Moore 58 Q &A Paul Moore 63 Options conversion Paul Moore 66 62
Slide 63: Australian banks & resources now attractive, can you invest in Australian businesses?
For personal use only Australian banks & resources now attractive, can you invest in Australian businesses? 63
Slide 64: What's the view on AUD and what's your current positioning?
For personal use only What’s the view on AUD and what’s your current positioning? 64
Slide 65: Agenda
Agenda For personal use only Introduction Rob Thompson 4 Global Strategy Paul Moore 11 Asian Strategy Kevin Bertoli 36 Listed Investment Companies Overview Paul Moore 58 Q &A Paul Moore 63 Options conversion Paul Moore 66 65
Slide 66: PAFO considerations
PAFO considerations For personal use only PAF Options give a right to invest in PAF at $1.00 per share • Cease trading 25 May 2016 • Expire 31 May 2016 If you do nothing your options will expire worthless. While PAF shares are currently trading at $0.865*, based on the underlying NTA, options have a
Slide 67: What can I do with my PAF Options (PAFO)?
What can I do with my PAF Options (PAFO)? For personal use only Carefully consider your alternatives and monitor the PAF share price relative to the option exercise price. Option holders have four choices; 1) Exercise your options This entitles you to subscribe for one PAF share at $1.00 for each op
Slide 68: Option Exercise Objectives of the Company
Option Exercise Objectives of the Company For personal use only The objectives of the Company associated with the additional capital from any exercise of options are to: • Lower PAF’s fixed costs per share • Increase the Company’s relevance in the market & raise its profile • Improve liquidity in th
Slide 69: Thank you for attending!
Thank you for attending! Here’s to another 30 years! For personal use only
PM CAPITAL Global Opportunities Fund — Non-Deal Roadshow (April 2016) on 6ix