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transcript

National Adviser Roadshow

April – June 2017

Platinum Asset Management AFSL 221935

Disclaimer

Platinum Asset Management has prepared this presentation material. Platinum Investment Management Limited ABN 25 063 565 006AFSL 221935 trading as Platinum Asset Management (Platinum) is the responsible entity and issuer of units in the Platinum Trust Funds.Platinum is a member of the Platinum Group of companies.

Performance results shown have been calculated using the relevant Fund’s unit price and represent the combined income and capitalreturn for the specified period. They are net of fees and costs (excluding the buy-sell spread and any investment performance feepayable), pre-tax, and assume the reinvestment of distributions.

The investment returns are historical and no warranty can be given for future performance. Past performance is not a reliable indicatorof future performance. Due to the volatility of underlying assets of the Funds and other risk factors associated with investing, returnscan be negative (particularly in the short-term).

Disclaimer: The information provided in these presentation slides is not intended to provide advice. It does not take into account theinvestment objectives, financial situation and particular needs of any person, and should not be used as the basis for makinginvestment, financial or other decisions. To the extent permitted by law, no liability is accepted for any loss or damage as a result ofany reliance on this information. Platinum does not guarantee the repayment of capital, payment of income or the performance of theFunds.

Hobart, Perth, Adelaide,

Brisbane, Melbourne, Sydney

Kerr Neilson, CEO, Co-Founder, Portfolio Manager, Platinum International Fund

Andrew Clifford, CIO, Portfolio Manager, Platinum International Fund

Nik Dvornak, Portfolio Manager, Platinum Europe Fund

Kerr Neilson – CEO and Founder

Strength and breadth across Platinum Trust Funds

Source: Platinum Investment Management Limited to 31 May 2017, https://www.finder.com.au/historical-term-deposit-rates

Cumulative Returns

Term Deposit 19%

10 15 20 25 30

International Technology Fund

International Health Care Fund

International Brands Fund

Japan Fund

European Fund

Unhedged Fund

Asia Fund

International Fund

Annualised Returns over 5 years (% compound pa)

Strong, experienced Investment Team

10 Fund Managers Average time at Platinum: 14 years

20 Analysts/ Dealers / QuantAverage time at Platinum: 6 years

30 Investment ProfessionalsAverage time at Platinum: 9 Years

Source: Platinum Investment Management Limited

Andrew Clifford – CIO and Founder

The great imbalance

Source: World Bank: http://data.worldbank.org/indicator/BN.CAB.XOKA.CD

(1,000)

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Major surplus nations Major deficit nations

Europe’s current account transformation

Source: Bloomberg

Current Account to GDP 2008

Current Account to GDP 2016

Portugal -10 1

Ireland -6 12

Italy -3 3

Greece -11 0

Spain -4 2

Germany +4 +8

China – the pervasive mental image

Source: Bookblock, http://www.bookblock.com/wp-content/uploads/2016/07/Manufacturing-In-China.jpg

China’s shrinking current account surplus

Source: Bloomberg

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

nt as %

China housing starts

2001 2004 2007 2010 2013 2016

lling 1

Source: Bloomberg

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

China’s outbound tourists

Source: Factset, http://images.says.com/uploads/story_source/source_image/467964/3f80.jpg

120 million outbound

tourists in 2016

China’s debt issue simplified

State Owned Banks

State Owned Enterprises

Strong Government

Balance Sheet

Nik Dvornak – Portfolio Manager

Never waste a good crisis

Source: Financial Times

Europe… Balance restored

Greece Portugal Spain Ireland Italy

2007 2016

Source: Credit Suisse, Bloomberg

Corporate earnings: US versus Europe

ex, Ja

US Europe

Source: Bank of America Merrill Lynch

Household debt to net disposable income

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Australia Germany

Source: OECD, https://data.oecd.org/hha/household-debt.htm

German real wages

Source: Factset, Deutsche Bundesbank

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Real Wages

German versus Australian property prices

Source: The Economist: http://www.economist.com/blogs/graphicdetail/2017/03/daily-chart-6

Australia

Germany

Scout24

Source: Scout24

German property prices remain low

Source: Global Property Guide; Numbeo

0 1000 2000 3000 4000 5000 6000 7000 8000 9000

Sydney

Melbourne

Munich

Hamburg

Berlin

Frankfurt

Hanover

US$/m2

Andrew Clifford – CIO and Founder

Platinum International Fund – geographical disposition (30 April 2017)

Source: Platinum Investment Management Limited, Wikimedia Commons.

*The regional net exposure is accurate as at 30/4/2017 and represents the exposure of the physical holdings and both long and short derivatives.

Regional Exposure (Net)*

Asia Pacific: 50% Europe: 21% USA: 12%

Curtis Cifuentes, Investment Analyst,Technology Team

The Car of the Future

SE Melbourne, Ballarat, Geelong,

Bendigo, Cairns, Canberra, Gold Coast

Autonomous driving: opportunity and impacts

Source: waymo.com

Why now?

Source: Wikipedia

The total cost of ownership of EVs is compelling

Source: Velodyne

Will autonomous vehicles need LIDAR?

Source: http://imgur.com/gallery/kacupqk

Accurate image recognition is hard…despite progress

Automation hasn’t ravaged the driving occupation …yet

Source: AFP

Like manufacturing jobs… it’s hard to bring them back

2nd and 3rd order impacts: Venice to Hubble

Source: Kevin Chan

Investing at the intersection

Cameron Robertson, Portfolio Manager,Platinum International Technology Fund

Technology : A Balanced View

Port Macquarie, Coffs Harbour, Bundaberg

Sunshine Coast, Albury, Goulburn Valley

Corporate Behaviour

• Prevalence of “Non-GAAP” metrics

• Stock compensation on the rise

• Compensation is stepping up

• Capital allocation is variable

Source: The Economist

Moore’s Law: what is it?

Source: Intel Analyst Day 2017 Presentation Materials

Cost and efficiency have been synonymous with Moore’s Law

Moore’s Law: what’s happening?

Source: http://www.economist.com/technology-quarterly/2016-03-12/after-moores-law

Moore’s Law: investment implications

• Shrinking impact of process improvements

• Increasing importance of design

• Opportunity for new materials and approaches

• Implications for supply chain, foundries, and alternate chip types

Artificial Intelligence: what is it?

Source: https://devblogs.nvidia.com/parallelforall/deep-learning-nutshell-core-concepts/

Artificial Intelligence: why is it happening?

• Available processing power and data sets

• Leads to improved performance

• Image recognition

• Voice interfaces

• Translation

Source: Bernstein

Artificial Intelligence: investment implications

• New areas open for automation

• Increased value of data

• Increased demand for compute

Source: www.babylonhealth.com

Evolution of Advertising

Source: Luma Partners - http://www.lumapartners.com/wordpress/wp-content/uploads/2012/04/Display-LUMAscape_2012-04-05.jpg

Evolution of Advertising

Source: https://iabuk.net/sites/default/files/IABGuidetoDisplayAdvertising.pdf

Cloud Computing: what is it?

Source: Google Images

From this To this

Cloud Computing: why is it happening?

• Flexibility

• Cost

• Accessibility

Source: http://www.joeweinman.com/resources/joe_weinman_smooth_operator_demand_aggregation.pdf

Cloud Computing: investment implications

• Creates new business models

• Expands addressable markets

• Challenging for some incumbents

Jack Cao, Investment Analyst, Asia team

Technology and China

Tamworth, Dubbo, Orange, Townsville,

Mackay, Rockhampton, Wagga Wagga

Source : Intel, AliExpress

Technology

Opportunity

Source : Foodlogistics.com, Wall Street Journal

Takeaway and e-commerce delivery

Source : China Daily

Cities with population >1m:

• China 270

• US 10

Population density drives unit economics

Source : WeChat

Mobile payments

Source : Tech In Asia, FT.com

Proliferation of mobile payments

Source : Sampi.co

Live streaming

Source : Kuka

Robots

China is the world’s largest industrial robot market and 2x Korea/Japan’s size

Source : Bernstein, IFR, Haver

Robots

Korea Japan Germany Italy US Taiwan China

2015 World Average

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Urban average wage (RMB pa) Migrant worker average (RMB pa)

YoY % change (Urban) YoY % change (Migrant)

Source : Intel, AliExpress

TechnologyTencent

Alibaba

Jamie Halse, Portfolio Manager,Platinum International Brands Fund

The Retail Revolution

Lismore, Toowoomba, Mildura,

Gippsland, Newcastle, Wollongong

Source : Rogers Historical Museum

The end of retail as we know it

Source: Stuff.co.nz, New York Times

Fragmentation of cereal etc.

Source: Business Insider

The infinite shelf

Source: Say Daily

Instagram influencers

• Platforms

• Social Media

• Online Payments

• Early Movers

Source: We Chat

Digital winners

Source: Bernstein and Bank of America Merrill Lynch

E-commerce more advanced in China

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Beauty and Personal Care Consumer Health Home Care Pet Care Retail Tissue and Hygiene

US e-commerce % of sales by category

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E

Beauty and Personal Care Apparel and Footwear

Consumer Electronics Consumer Healthcare

Consumer Appliance Housewares and Home Furnishings

Media Products Food and Drink

Traditional Toys and Games

China e-commerce as % of sales by category

Source: Company websites

Brands that can still prosper

• Jewellery / Luxury

• Convenience

• Alcohol

• Complex Sales e.g. Toilets!

• Underwear!

Source: Coca-Cola

One step ahead: fragmentation

Dr Joseph Lai

Portfolio Manager, Platinum Asia Fund

PICKing up alpha in Asia

• P Philippines Ayala Land

• I India Jio (Reliance Industries)

• C China Tencent & Midea

• K Korea Samsung Electronics

PICKing up alpha in Asia

Asia = Unloved, Misunderstood Opportunity

Source: Timeout

Philippines infrastructure expenditure to GDP

1.8% 1.8%2.0%

2.7%2.7%

5.2%5.3%

2010 2011 2012 2013 2014 2015 2016B 2017B

Source: CLSA (B = Budgeted)

Ayala Land

Source: Ayala Land

Developing India’s future

Source: Credit Suisse

Reliance Industries : Jio

Source: Jio

China housing starts

2001 2004 2007 2010 2013 2016

lling 1

Source: Bloomberg

Tencent

Source: Wechat

Source: Kuka

Korean exports – strong

Source: Bloomberg

Last data point May

2017: +13.4% YoY

Samsung Electronics

Source: Samsung

Platinum Asia FundKey themes and exposures, as at 31 May 2017

Greater China: 47%

The Emerging ConsumerKorea: 11%

Rejuvenation

ASEAN: 17%

GDP Growth

India: 15%

PM Modi’s Reform

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