April June 2017 Disclaimer Platinum Asset Management has prepared - - PowerPoint PPT Presentation

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 25 063 565 006 AFSL 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 capital return for the specified period. They are net of fees and costs (excluding the buy-sell spread and any investment performance fee payable), 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 indicator

• f future performance. Due to the volatility of underlying assets of the Funds and other risk factors associated with investing, returns

can 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 the investment objectives, financial situation and particular needs of any person, and should not be used as the basis for making investment, financial or other decisions. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. Platinum does not guarantee the repayment of capital, payment of income or the performance of the Funds.

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%

17.0 20.9 15.8 25.9 17.3 18.8 15.7 17.3 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)

125% 158% 114% 214% 125% 140% 113% 124%

Strong, experienced Investment Team

10 Fund Managers Average time at Platinum: 14 years 20 Analysts/ Dealers / Quant Average time at Platinum: 6 years 30 Investment Professionals Average 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) (500)

• 500

1,000

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

US$ billion 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

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

2 4 6 8 10 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Current Account as % of GDP

China housing starts

200 400 600 800 1,000 1,200 1,400 1,600 1,800 2001 2004 2007 2010 2013 2016 Million square metres, rolling 12 months

Source: Bloomberg

20 40 60 80 100 120 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Million

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

• 15
• 10
• 5

5 10 Greece Portugal Spain Ireland Italy Current account (% of GDP) 2007 2016

Source: Credit Suisse, Bloomberg

Corporate earnings: US versus Europe

1 2 3 4 5 6 7 8 9 10 Index, January 1988 = 1 US Europe

Source: Bank of America Merrill Lynch

Household debt to net disposable income

70 90 110 130 150 170 190 210 230 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

88 90 92 94 96 98 100 102 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Real Wages Indexed , 2015=100 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

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

Source: Platinum Investment Management Limited

Autonomous driving: opportunity and impacts

Source: waymo.com

Why now?

Source: Wikipedia

Source: Platinum Investment Management Limited

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

Source: Platinum Investment Management Limited

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

Source: Platinum Investment Management Limited

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 China

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

100 200 300 400 500 600

Korea Japan Germany Italy US Taiwan China

• No. of Robots per 10,000 Employees

2015 World Average

0% 5% 10% 15% 20% 25% 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

YoY % change RMB per year Urban average wage (RMB pa) Migrant worker average (RMB pa) YoY % change (Urban) YoY % change (Migrant)

Source : Intel, AliExpress

Technology Tencent Baidu Alibaba Midea China

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

0% 5% 10% 15% 20% 25% 30% 35% 40% 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

0% 5% 10% 15% 20% 25% 30% 35% 40% 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% 4.3% 5.2% 5.3% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 2010 2011 2012 2013 2014 2015 2016B 2017B % of GDP

Source: CLSA (B = Budgeted)

Ayala Land

Source: Ayala Land

Developing India’s future

Source: Credit Suisse

Reliance Industries : Jio

Source: Jio

China housing starts

200 400 600 800 1,000 1,200 1,400 1,600 1,800 2001 2004 2007 2010 2013 2016 Million square metres, rolling 12 months

Source: Bloomberg

Tencent

Source: Wechat

Midea

Source: Kuka

Korean exports – strong

Source: Bloomberg

• 40
• 30
• 20
• 10

10 20 30 40 50

% Change YoY

Last data point May 2017: +13.4% YoY

Samsung Electronics

Source: Samsung

Platinum Asia Fund

Key themes and exposures, as at 31 May 2017

Greater China: 47% The Emerging Consumer Korea: 11% Rejuvenation ASEAN: 17% GDP Growth India: 15% PM Modi’s Reform

Source: Platinum Investment Management Limited