MUNROGLOBALGROWTHFUNDMARCHQUARTER2017
2
DisclaimerNeither Munro Asset Management Limited, Munro Investment Holdings Pty Ltd, Munro Partners (together “Munro”) nor Grant Samuel Funds Management Pty Ltd (GSFM) AFSL 321517 are providing any generaladvice or personal advice regarding any potential investment in any financial products within the meaning of section 766B of the Corporations Act.
• Munro Asset Management Limited is the holder of an Australian Financial Services Licence (AFSL) number 480509. Our Financial Services Guide can be located on our website: www.munropartners.com.au. Thispresentation is not an advertisement and is not intended for public use or distribution. As such, it is not to be released or made available to any other party, excepting Grant Samuel Funds Management Pty Ltd(GSFM) AFSL 321517 or used for any other purpose.
• Munro has issued a product disclosure statement (PDS) on 1 March 2017 offering investors an opportunity to subscribe for units in the Munro Global Growth Fund (Fund). If you would like to receive a copy ofthe PDS, then please contact Munro on (03) 9290 0900 or [email protected] and Munro will arrange for a copy of the PDS to be forwarded to you. Alternatively, a copy of the PDS for the Fund isavailable on our website www.munropartners.com.au/access. All prospective investors should consider the contents of the PDS in full prior to making a decision regarding an investment in the Fund.
• No consideration has been made of any specific person’s investment objectives, financial situation or needs. The provision of this presentation is not and should not be considered as a recommendation inrelation to an investment in any entity or that an investment in any entity is a suitable investment for any specific person. Recipients should make their own enquiries and evaluations they consider appropriateto determine the suitability of any investment (including regarding their investment objectives, financial situation, and particular needs) and should seek all necessary financial, legal, tax and investment advice.
• Munro, GSFM, its directors, related parties, representatives and employees do not accept any liability for results of any actions taken or not taken on the basis of information in this presentation, or for anynegligent misstatements, errors or omissions of any of its contents and no legal or other commitments or obligations shall arise by reason of the provision of this Presentation or its contents, except as requiredby law.
• It contains selected information and does not purport to be all-inclusive or to contain all of the information that may be relevant. The information contained in the Presentation has not been independentlyverified, nor have they conducted any due diligence in respect of the information provided. It should be noted that any projections or past performance are provided for general reference purposes and arebased on assumptions relating to the general economy and other factors beyond the control of Munro. Returns of the Munro Global Growth Fund are net of applicable fees, costs and taxes. Returns have notbeen annualised. Past performance is not a reliable indicator of future performance. The MSCI AC World TR Index (AUD) refers to the MSCI All Country World Net Index in Australian dollars. The Top 5 Holdingsdepict end of month figures and may have changed materially from holdings during the month or not disclosed due to confidentiality reasons. Numbers may not sum due to rounding. Please also see ourFinancial Services Guide, Privacy Policy and Terms of Use via www.munropartners.com.au/legals/.
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• This Presentation may contain forward-looking statements, forecasts, historical performance, estimates, projections and opinions ("Forward Statements"). No representation is made or will be made that anyForward Statements will be achieved or is correct. Actual future results and operations could vary materially from the Forward Statements. Similarly no representation is given that the assumptions disclosed inthis Presentation upon which Forward Statements may be based are reasonable. The recipient acknowledges that circumstances may change and the contents of this Presentation may become outdated as aresult.
CONTENTSGLOBALMARKETOUTLOOK 4
MGGFPERFORMANCEANALYSIS 11
KEYINVESTMENTTHEME:BIGDATA(LONG) 15
3
4
GLOBALMARKETOUTLOOK
5
GLOBALMARKETOUTLOOKGrowthisimprovinginmostglobaleconomies...withstimulusstilltocome.
Source:BloombergConsensusData
51.5
52.6
50.4 50.4
46.0
51.9
53.5
51.4 51.2
46.3
53.253.7
51.351.7
46.2
54.7 54.9
52.4
51.4
45.2
56.055.2
52.7
51.3
44.0
57.7
55.4
53.3
51.6
46.9
42.0
44.0
46.0
48.0
50.0
52.0
54.0
56.0
58.0
60.0
US Eurozone Japan China Brazil
GlobalPurchasingManagersIndices(PMI's)
Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17
0
0.5
1
1.5
2
2.5
3
3.5
4
Mar-09 Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16
(%)
USRealGDPConsensusForecasts
6
GLOBALMARKETOUTLOOKUSGDPconsensusforecastshaveconsistentlyreviseddown...canTrumpchangetheplaybook?
Source:BloombergConsensusData
2011
2012
2013
2014
2015
2016
2017
7
GLOBALMARKETOUTLOOKThetransitionfrommonetaryaccommodationtopotentialfiscalaccommodationhasledtosomelargetrendreversals.
Source:BloombergConsensusData
-20
0
20
40
60
80
100
120
KeySovereignBondYields(10yr%)
US Italy Germany France
405060708090
100110120130
Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17
GlobalCommodities(%)
Gold Copper BrentCrudeOil CRBCommodityIndex
70
80
90
100
110
120
130
140
GlobalCurrencies(%)
DXY JapaneseYen Euro AustralianDollar
10
15
20
25
30
35
40
45CBOEVolatilityIndex
8
GLOBALMARKETOUTLOOKS&P500Indexvaluationishigh,howeverearningsgrowthhasnowinflectedpositivelyandlookslikelytocontinue.
Source:BloombergConsensusData
0
5
10
15
20
25
30
0
20
40
60
80
100
120
140
160
Mar-90 Mar-92 Mar-94 Mar-96 Mar-98 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 Mar-16 Mar-18
S&P500IndexForwardValuation(RHS)andEPS(LHS)
S&P500FwdEPS(LHS) S&P500FwdP/E(RHS)
9
GLOBALMARKETOUTLOOKYieldcarryforequitieshasshrunk,butimportantlyremainspositive.
Source:BloombergConsensusData
-8
-6
-4
-2
0
2
4
6
8
Jan-62 Jan-66 Jan-70 Jan-74 Jan-78 Jan-82 Jan-86 Jan-90 Jan-94 Jan-98 Jan-02 Jan-06 Jan-10 Jan-14
S&P500EarningsYield- US10yrBondYield(%)
10
GLOBALMARKETOUTLOOKSelectedmarketvaluations….Stilllookokprovidedearningsgrowthcomesthrough.
Source:BloombergConsensusData
P/ERatio DividendYield(%)
2016 2017 2018 2016 2017 2018
S&P500Index 21.1 18.4 16.4 2.1% 2.1% 2.2%
EuropeanStoxx 600Index 25.8 15.6 14.3 3.5% 3.5% 3.7%
UKFTSE100Index 62.4 14.9 13.8 4.0% 4.2% 4.4%
HangSengIndex 11.9 12.1 11.1 3.7% 3.4% 3.6%
HangSengChinaEnterprisesIndex 7.7 8.3 7.6 3.9% 3.6% 3.9%
BrazilIbovespa Index 20.2 12.3 11.0 2.7% 3.5% 4.3%
Nikkei225Index 24.6 18.0 16.4 1.7% 1.8% 1.9%
S&P/ASX200Index 25.3 16.3 15.8 4.1% 4.3% 4.4%
11
FUNDPERFORMANCE
12
MUNROGLOBALGROWTHFUNDMonthlyreturnsoftheMunroGlobalGrowthFundcomparedtotheACWITRNetAUDsinceinception(1August2016).
1MTH 2MTHS 3MTHS 6MTHS 9MTHS 12MTHS SinceInception
LocalCurrencyReturn 2.0% 2.4% 6.2% 5.0% 8.4%
+/- CurrencyImpact 0.1% -0.4% -2.2% -1.2% -2.0%
MUNROGLOBALGROWTHFUND(AUD) 2.1% 2.0% 4.0% 3.7% 6.3%
MSCIACWorldTRIndex(LocalCurrency) 1.1% 4.0% 5.7% 10.0% 11.0%
+/- CurrencyImpact 1.0% -0.5% -4.1% -1.3% -2.0%
MSCIACWorldTRIndex(NetAUD) 2.0% 3.6% 1.5% 8.5% 8.8%
PPaasstt ppeerrffoorrmmaannccee iiss pprroovviiddeedd ffoorr iilllluussttrraattiivvee ppuurrppoosseess oonnllyy aanndd iiss nnoott aa gguuiiddee ttoo ffuuttuurree ppeerrffoorrmmaanncceeInception date is 1 August 2016. Returns of the Munro Global Growth Fund are net of management costs and assumes distributions have been reinvestedThe MSCI AC World TR Index (AUD) refers to the MSCI All Country World Net Index in Australian dollars
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
HANGSENGINDEX HANGSENGCHINAENTINDX
S&P500INDEX STXE600€Pr DOWJONESINDUS.AVG
SHANGHAISECOMPOSITE
FTSE100INDEX NIKKEI225 MSCIAWCINetAUD MGGF
1Januaryto31March2017(%)
13
MUNROGLOBALGROWTHFUNDLocalcurrencyreturnsofvariousglobalmarketsandthereturnoftheMSCIWorldACIndexinAUDnexttothereturnoftheMGGF inAUD.
=FXContribution
IndexReturn+1.5%
FundReturn+4.0%
PPaasstt ppeerrffoorrmmaannccee iiss pprroovviiddeedd ffoorr iilllluussttrraattiivvee ppuurrppoosseess oonnllyy aanndd iiss nnoott aa gguuiiddee ttoo ffuuttuurree ppeerrffoorrmmaannccee
14
MUNROGLOBALGROWTHFUNDJanuary1toMarch31basispointsattributionoftheMGGFbyinvestmentcategory.
-300 -200 -100 0 100 200 300 400 500 600 700
FX
Long
Short
Hedging
MGGFAttribution(bps)
PPaasstt ppeerrffoorrmmaannccee iiss pprroovviiddeedd ffoorr iilllluussttrraattiivvee ppuurrppoosseess oonnllyy aanndd iiss nnoott aa gguuiiddee ttoo ffuuttuurree ppeerrffoorrmmaannccee
15
MUNROGLOBALGROWTHFUNDJanuary1toMarch31basispointattributionoftheMGGFbystockandbyregion.
Top5Performers Region Bps
MicronTechnologies US 87
Siltronic GY 86
Facebook US 84
ActivisionBlizzard US 76
ASML NA 57
Bottom5Performers Region Bps
AnadarkoPetroleum US -30
AngloAmerican UK -29
RPCGroup UK -19
CirrusLogic US -19
ThorIndustries US -16
-50
0
50
100
150
200
250
300
350
400
UnitedStates EuroRegion Japan HongKong Korea Sweden UnitedKingdom
Australia
RegionalPerformance(bps)
PPaasstt ppeerrffoorrmmaannccee iiss pprroovviiddeedd ffoorr iilllluussttrraattiivvee ppuurrppoosseess oonnllyy aanndd iiss nnoott aa gguuiiddee ttoo ffuuttuurree ppeerrffoorrmmaanncceeThe Regional Performance and Top 5 Performers / Bottom 5 Performers depict end of quarter figures and may have changed materially from holdings during the quarter or not disclosed due to confidentiality reasons.
16
CASESTUDY:BIGDATA
BIGDATA
CREDITAGENCIES
INFORMATIONSERVICES
ADVERTISERS
MEASUREMENT&ANALYTICS
17
CASESTUDY:BIGDATA
AoI WinnersSub- Trends
InaArtificialIntelligenceworldtheabilitytocapturerelevantandaccurateinformationandthencorrectlyanalyseandinterpretthisdataiscriticalforcompanies,socialagenciesandgovernments.BigDataanddataprovidersassistsorganisationstomakebetterdecisionsandultimatelyhelpsthemtodriveproductivity.
EXCHANGES
18
Creditagencieshavebeencollectingdataonindividualsfrombeforetheinternetevenexisted.Themajorcreditagencies(Equifax,ExperianandTransunion)havebeenpivotaltoenablingmortgage,creditcardandautofinancingforyears.Todaytheirdatasetsextenttootherverticalsincludingemployment,healthcare,insurance,utilitiesandultimatelyhavebecomerelevanttosiliconvalleyandtheAIrevolution.
CREDITREPORTINGAGENCIES:UNIQUEDATASETSANDPRODUCTS
Example:EmployeeDataExchangeandnetworkeffects
Source:MunroPartnersestimates&EquifaxcompanydataSource:MunroPartners(asimplificationofEquifaxTALXpresentation,Feb2007)
Buildthedataset,technologyandplatformonceand“sellitmanytimesover”
0
500
1000
1500
2000
2500
3000
3500
4000
31/12/2010 31/12/2011 31/12/2012 31/12/2013 31/12/2014 31/12/2015 31/12/2016 31/12/2017e 31/12/2018e
EquifaxRevenueGrowth(US$millions)
MortgageSolutions EmployerServices FinancialMarketingServices
OnlineInformationSolutions International GlobalConsumer
VerificationServices
9.6%CAGR
19
KEYSTOCKIDEA:EQUIFAX(LONG)Equifaxisaglobalinformationsolutionscompanythatusesuniquedata,analytics,technologyandindustryexpertisetoprovide insightstoorganisationsandindividualstohelpthemmakemoreinformeddecisions.Thecompanyorganises,assimilatesandanalysesdataonmorethan820millionconsumersandmorethan91millionbusinessesworldwide.
KeyStock EquifaxKeyDetails Market Cap:USD16.4billion
Listed:UnitedStatesRevenue2016:USD3.1billion
Qualitative Tests Growth:Forecastingtop-linegrowthof9.6%CAGRfrom2010-2018,ascompanycontinuestodevelop newproductsanddatasets,andexpandsacrossverticalsandgeographies.Alsomovedintohigher-value,complimentaryanalyticssolutions.EconomicLeverage: ExpectEBITDAmarginstoexpandto38%by2018(from31.8%in2010).Leveragingdatasets,platformsandtechnologyspendacrossnewverticalsandgeographicregionsdrivesmarginupside.Sustainability:Thecombinationofproprietarydatafrommultiplesourcesononeplatformallowsforsustainablesalesacrossmanyverticals.Networkeffectsgetstrongerwithscale.Control:CEOowns~US$35mnofstock,CFO~US$12mn.Divisionalchiefshavebetween$1mnand$10mnworthofstock.CustomerPerception:Missioncriticalinformation,deeplyembeddedinclientprocesses.Newproductinnovationhistoricallygetsgoodtakeupbytheclientbase.
Quantitative Tests Earnings upside:Sell-sideearningsestimateslikelyconservative.StreetunderestimatesEFX’sstructuralorganicgrowthprofile.Highincrementalmarginsnotproperlyreflectedinconsensusmarginassumptions.Multipleupside:NTMP/Eof21.9xisattractiveforacompanyofEFX'squalityandgrowthcharacteristics.Catalysts/Sizing:1Q17earnings26Apr,AGM4May
Outcome Investmentmade:Feb2017
0
5
10
15
20
25
30
0
20
40
60
80
100
120
140
160
Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16
Forw
ardPE
Multip
le
SharePrice
StockPrice ForwardP/EMultiple
0
1
2
3
4
5
6
7
0
20
40
60
80
100
120
140
160
Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16
Forw
ardEP
S
SharePrice
StockPrice ForwardEPS
20
MUNROGLOBALGROWTHFUNDConclusion
• Positivereturnsforthequarter,withtheMunroGlobalGrowthFundreturning4.0%comparedtotheMSCIACWorldTRIndex(AUD)returning1.5%.
• Sentimentindicatorscontinuetoimprovepointingtobettereconomicgrowthahead,whileinterestratesremainsupportiveoffurthereconomicgrowth.
• Assuminggrowthimproves,earningshaveroomtoinflecthigher.Higherearningscontrastedagainstfull,butnotexpensive,valuationsshouldbemildlysupportiveofequitymarketsoverthemediumterm.
• OurinvestmentprocessatMunrocontinuestoidentifybeneficiariesfromevolvingstructuralforcesintheeconomy.Ourworkoninvestmentwinnersofthe‘ArtificialIntelligence’revolutionhasyieldedsomegoodwinnersaround‘compute’yeartodateandwehaverecentlyexpandedourworkinthisareatofocusonthe‘data’sideoftheequation.
PPaasstt ppeerrffoorrmmaannccee iiss pprroovviiddeedd ffoorr iilllluussttrraattiivvee ppuurrppoosseess oonnllyy aanndd iiss nnoott aa gguuiiddee ttoo ffuuttuurree ppeerrffoorrmmaanncceeThe Regional Performance and Top 5 Performers / Bottom 5 Performers depict end of month figures and may have changed materially from holdings during the quarter or not disclosed due to confidentiality reasons.
THANKYOU
MunroPartners(Australia)Level19
80CollinsStreetMelbourneVIC3000
+61392900900www.munropartners.com.au