Global Listed Infrastructure: In a Class of Its Own Edward P. - - PowerPoint PPT Presentation
Global Listed Infrastructure: In a Class of Its Own Edward P. Keating Senior Vice President This presentation and all research and materials enclosed are property of Lazard Asset Management LLC. Information and opinions presented have been
This presentation and all research and materials enclosed are property of Lazard Asset Management LLC. Information and opinions presented have been obtained or derived from sources believed by Lazard to be reliable. Lazard makes no representation as to their accuracy or completeness. All opinions expressed herein are as of the date of this presentation and are subject to change.
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Infrastructure comprises the physical assets that a society requires to facilitate its orderly operation. They include:
Transport
Energy
transmission, distribution & generation Water
treatment plants Communication
Social
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As of 31 December 2010 The information identified above should not be considered a recommendation or solicitation to purchase or sell any security. It should not be assumed that any investment was, or will be profitable. Source: Lazard Asset Management.
Frankfurt , Germany Copenhagen, Denmark Zurich, Switzerland Vienna, Austria Sydney, Australia Monterrey, Mexico Tokyo, Japan Heathrow, UK
Publicly listed infrastructure companies form the largest opportunity set for global infrastructure investors with a total market cap more than US$3.0 Trillion.
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For illustrative purposes only. Expected returns do not represent a promise or guarantee of future results and are subject to change.
Cash Fixed Income Listed Equities Alternatives Preferred Infrastructure Expected Return Expected Volatility Real Assets
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The securities identified are not necessarily held by Lazard Asset Management and should not be considered a recommendation or solicitation to purchase or sell these securities.
Strict adherence a Preferred Infrastructure investment philosophy is critical to delivering
= Stable, consistent pattern of return
= Volatile, uncertain pattern of return
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2.4 2.9 3.4 3.9 4.4 25 35 45 55 65 75 85 95 Jan 08 Jun 08 Nov 08 Apr 09 Sep 09 Feb 10 Jul 10 Dec 10 May 11 Oct 11 Mar 12 Aug 12 Jan 13 Exelon Share Price Exelon EPS 2.2 2.3 2.4 2.5 2.6 2.7 2.8 25 30 35 40 45 50 Jan 08 Jun 08 Nov 08 Apr 09 Sep 09 Feb 10 Jul 10 Dec 10 May 11 Oct 11 Mar 12 Aug 12 Jan 13 Southern Company Share Price Southern Company EPS
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Source: Lazard
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120 100 80 60 1850 Equally-weighted Base Metals Real Price Index (Log) 1870 1890 1910 1930 1950 1970 1990 2010
Adjusted by US GDP deflator Source: The Economist
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20 40 60 80 100 120 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 MSCI World Lazard PIU
As of 30 September 2013 Estimates based on historical financial accounts of companies held in the Lazard Global Listed Infrastructure strategy. Statistics are calculated using an index style construction methodology. Investment characteristics are based upon a portfolio that represents the proposed investment for a fully discretionary account. All estimates are based on current information and are subject to change. Past performance is not a reliable indicator of future results. Source: Lazard, UBS
Earnings $
Not all infrastructure companies will exhibit stable earnings – selectivity is critical
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3.6% Lazard GLI 3.3% UBS 50/50 Index 2.3% MSCI World Index
As of 31 December 2013 Estimates based on historical financial accounts of companies held in the Lazard Global Listed Infrastructure strategy. Statistics are calculated using an index style construction methodology. Investment characteristics are based upon a portfolio that represents the proposed investment for a fully discretionary account. All estimates are based on current information and are subject to change. Past performance is not a reliable indicator of future results. Source: Lazard, UBS*, MSCI
2.0 3.0 4.0 5.0 6.0 7.0 8.0 Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13
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As of 31 December 2013 1 Index data represented by monthly returns derived from the following indexes: CPI-U All Items Less Food And Energy US City Average SA, Barclays Capital US Aggregate, Barclays Capital Global Aggregate Bond, Barclays Capital US Govt Inflation-Linked, UBS Global Infrastructure & Utilities 50-50 Index, S&P GSCII, FTSE NAREIT All Equity REITs, FTSE EPRA/NAREIT Developed Net Return , S&P 500, MSCI The World Index, MSCI EMF Source: Factset
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Asset Type Preferred Infrastructure Real Estate Timber Commodities Key Valuation Drivers Allowed Returns/Tolls Capital Expenditures Long Run Traffic/PAX/Volume Rental Yields Local Supply & Demand Capitalization Rate Timber Growth Rates Harvest Rates Global Supply & Demand Short, Medium & Long Run Supply & Demand Marginal Cost Resource Lives Forecasting Risk Low Moderate Moderate High Valuation Risk Low Moderate Moderate High
We believe valuation is the most important criteria:
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As of 12 July 2013 Past performance is not a reliable indicator of future results. The security identified above is not necessarily held by Lazard for all client portfolios, and should not be considered a recommendation or solicitation to purchase or sell this security. It should not be assumed that any investment in this security was, or will be profitable. Source: Factset, Lazard
Transurban Intrinsic Value to Share Price
0% 20% 40% 60% Jan-00 Oct-00 Jul-01 Apr-02 Jan-03 Oct-03 Jul-04 Apr-05 Jan-06 Oct-06 Jul-07 Apr-08 Jan-09 Oct-09 Jul-10 Apr-11 Jan-12 Oct-12 Jul-13
Intrinsic Value
% Share price above/below Intrinsic value
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Equity securities will fluctuate in price; the value of your investment will thus fluctuate, and this may result in a loss. Securities in certain non-domestic countries may be less liquid, more volatile, and less subject to governmental supervision than in one’s home market. The values of these securities may be affected by changes in currency rates, application of a country’s specific tax laws, changes in government administration, and economic and monetary policy. Emerging market securities carry special risks, such as less developed or less efficient trading markets, a lack of company information, and differing auditing and legal standards. The securities markets of emerging market countries can be extremely volatile; performance can also be influenced by political, social, and economic factors affecting companies in emerging market countries. Securities and instruments of infrastructure companies may be more susceptible to adverse economic or regulatory occurrences affecting their industries. Infrastructure companies may be subject to a variety of factors that may adversely affect their business or operations, including additional costs, competition, regulatory implications and certain other factors. Certain information included herein is derived by Lazard in part from an MSCI index or indices (the “Index Data”). However, MSCI has not reviewed this product
source of any such information or analysis. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any Index Data or data derived there from.