Weekly Barometer 25 janvier 2012 2 Innovation Certificate - - PowerPoint PPT Presentation

Weekly Barometer

25 janvier 2012

Innovation Certificate

➢ Innovation is becoming core in many industries, allowing companies not only to reduce costs thanks to automation (artificial intelligence, robotics),

✓ but also to come up with new products, enjoy higher pricing power (smart products) and to develop new business models (sharing economy…)

➢ This digital evolution has the potential to reshape markets faster than perhaps any force in history, with the spotlight being currently on the Internet of Things, virtual / augmented reality, artificial intelligence, robotics, medical devices… ➢ The Innovation certificate gathers our top ideas among innovative technologies that are impacting current businesses and transforming the economy ➢ The investment universe is naturally composed of Tech, Biotech and MedTech players, it can also include more traditional companies whose business model shifts thanks to innovation

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Investment Case Innovation Certificate details

✓ Issuing bank: Natixis, Calculation agent: Natixis SA ✓ ISIN: XS0884325415 ✓ Currency: USD ✓ Fees: 1.65% management fee + 15% performance fee, high water mark ✓ Bloomberg ticker: NXSRATRA

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New mobile apps Robotics AR & VR Smart consumer goods Artificial Intelligence 3D printing Medtech Fintech Smart cars Innovation Certificate

➢ We have reached the 3rd step of technological evolution:

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The Final Stage Of Technology Evolution

TOOL MACHINE AUTOMATION

Machines taking over machines Removal of human contral Motion tools Industrial revolution

Prehistoric man

1st Stage 2nd Stage 3rd Stage

Innovation Certificate

➢ The rate of technology adoption has materially accelerated over the years ✓ as costs have been going down ✓ and as technology has become more user (and developer) friendly ➢ Consumers now have an open mind when it comes to technology, with many of them being even eager to try new technologies

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Technology Adoption Has Accelerated Over The Years

Source: Michael Felton, The New York Times

CONSUMPTION SPREADS FASTER TODAY

Innovation Certificate

➢ Innovation is not exclusive to consumer electronics and healthcare industries anymore ➢ In traditional industries, innovation emerges as a way to confront rising competition from low-cost countries and products and to drive growth ➢ The cloud and IoT are major breakthroughs

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Processing power & IoT Cloud Globalization Data storage and data processing power accessible to all Governments throughout the world have identified innovation as a major source

• f economic growth

Pressure to innovate due to competition

Innovation Is Becoming Core In ALL Industries And For Governments

Innovation Certificate

➢ The self-lacing technology from the 1989 “Back To The Future 2” movie is now real ➢ Smart apparel is on its way ➢ As are smart home appliances

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Technology Is becoming Ubiquitous

Consumer products companies will get a massive revenue boost thanks to the higher selling prices of smart products

Innovation Certificate

Innovation Drives Long-Term Economic Growth

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➢ There are 3 main types of innovations: ✓ Process (cost saving opportunity, e.g. robots) ✓ Product (revenue opportunity, e.g. iPhone) ✓ Business model (e.g. sharing economy)

Innovation

Productivity growth Transformation of economic structures

Long-run economic growth

Health improvement New communication technologies

Innovation Certificate

➢ As the cost and complexity of technology keep going down, new players are coming from out of nowhere in many industries ✓ contributing to the global innovation effort as they come up with original ideas, products and business models ✓ … and putting continued pressure on the cost and complexity of technology ➢ After the GAFA (Google, Apple, Facebook and Amazon), the newcomers to the Tech world are the

NATU (Netflix, Airbnb, Tesla and Uber)

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Who’s Next?

New Players Keep Popping Up 2008

Founded in…

2009 2003 1997 1998 2004

1997 1998 2003 2004 2008 2009 Innovation Certificate

➢ In recent years, R&D spending has been growing at a 5% pace, well above global GDP growth around 3% ✓ suggesting that many innovative products are about to hit the market soon ➢ Unsurprisingly, artificial intelligence, robotics, data analysis and new medical technologies rank high in terms of R&D priorities

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R&D Investments Are Stronger Than Ever

Rank R&D Spending 2018 Company 2018 US$ bn Change from 2017 % of Revenue Headquarters Industry

1 Amazon.com, Inc. 22.62 40.6% 11.8% United States Internet and Direct Marketing Retail 2 Alphabet Inc. 16.23 16.3% 15.5% United States Internet Software and Services 3 Volkswagen 15.77 14.1% 21.5% Germany Automobiles 4 Samsung Electronics Co., Ltd. 15.31 6.8% 7.6% South Korea Technology Hardware, Storage and Peripherals 5 Intel Corporation 13.10 2.8% 5.3% United States Semiconductors and Semiconductor Equipment 6 Microsoft Corporation 12.29

• 5.7%

14.1% United States Software 7 Apple Inc. 11.58 15.3% 21.9% United States Technology Hardware, Storage and Peripherals 8 Roche Holding AG 10.80

• 8.7%

25.4% Switzerland Pharmaceuticals 9 Johnson & Johnson 10.55 16.0% 4.7% United States Pharmaceuticals 10 Merck & Co., Inc. 10.21 0.8% 19.4% United States Pharmaceuticals 11 Toyota Motor Corporation 10.02 2.6% 3.8% Japan Automobiles 12 Novartis AG 8.51

• 11.1%

12.7% Switzerland Pharmaceuticals 13 Ford Motor Company 8.00 9.6% 4.9% United States Automobiles 14 Facebook, Inc. 7.75 31.0% 14.9% United States Internet Software and Services 15 Pfizer Inc. 7.66

• 2.7%

4.8% United States Pharmaceuticals 16 General Motors Company 7.30

• 9.9%

4.2% United States Automobiles 17 Daimler AG 7.08

• 9.2%

18.1% Germany Automobiles 18 Honda Motor Co., Ltd. 7.08 8.7% 12.8% Japan Automobiles 19 Sanofi 6.57 5.8% 4.9% France Pharmaceuticals 20 Siemens Aktiengesellschaft 6.10 4.9% 21.4% Germany Industrial Conglomerates

TOP 20 Total $214.54 6.4% 12.5%

Source: www.strategyand.pwc.com/innovation100, AtonRâ Partners

Innovation Certificate

➢ McKinsey Global Institute estimates the positive economic impact of technologies on global GDP ($80 trillion) in a range of 17%- 41% by 2025

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Reducing by 50%

the number of years for major economies to double in size by 2035 could double economic growth

• ver the next 20 years in 12

developed economies (Accenture)

Artificial Intelligence

A Huge Potential Ahead Of Us

Size in 2025, $tn

Innovation Certificate

➢ The IoT will soon be at the crossroads of basically everything and will spark the advent of a smart, connected world ✓ allowing the remote monitoring of devices ✓ feeding Big Data and AI systems ✓ In return, AI systems will make objects smarter

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What’s Hot Right Now? The Internet of Things (I)

Innovation Certificate

➢ Starting as a simple tracking solution, the IoT now allows to extract and record a variety of data (speed, temperature, pressure, humidity…) from an unlimited number of items ✓ from consumer and industrial products ✓ to basic materials, food and drugs ➢ The IoT will soon power smart homes, with digital assistants (Alexa) making the link between humans and machines ➢ Smart factories will be another major field of application

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What’s Hot Right Now? The Internet of Things (II)

Innovation Certificate

➢ Connecting every single object to the Internet

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80bn

Objects will be connected to the internet in 2020 vs 15bn today

Source: Idate Consulting

EDUCATION HEALTHCARE PROTECTION MOBILE DEVICES PUBLIC TRANSPORT

What’s Hot Right Now? The Internet of Things (III)

Innovation Certificate

➢ Both Facebook and Apple are reportedly working on AR glasses and cameras ➢ The upcoming iPhone 8 is believed to be Apple’s first foray in AR, with a camera expected to allow depth sensing, picture manipulation and virtual effects on images ➢ Wide number of AR applications ranging from gaming to driving or shopping: ➢ AR needs tech content, i.e. semiconductors for improved processing power, connectivity, power management and higher resolution displays ✓ and media content (video games, rich maps…)

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What’s Hot Right Now? Augmented Reality

Innovation Certificate

➢ The auto industry is becoming the next battleground of tech giants, as illustrated by the recent acquisition of Mobileye by Intel ➢ The autonomous driving market is expected to reach $50- 100bn in the medium term ✓ assuming tens of millions of cars come out of the factories each year equipped with such technologies ✓ and an ASP around $1,000

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What’s Hot Right Now? Smart Cars

Many technologies are vying for the car of the future: ✓ from the Intel Xeon CPU - Mobileye vision sensors combo ✓ to Google’s LIDAR sensors and NXP’s BlueBox ✓ and to graphics cards for the computing power

Innovation Certificate

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Artificial Intelligence VR / AR FinTech 3D / 4D Printing Internet of Things Robots How To Play Innovation? (I)

Innovation Certificate

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New internet models Health devices New materials Cyber security Smart cars Quantum computing How To Play Innovation? (II)

Innovation Certificate

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How To Play Innovation? (III) Smart Consumer Goods

Innovation Certificate

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• n the Independence of Financial Research issued by the Swiss Bankers Association.

Although AtonRâ Partners SA believes that the information provided in this document is based on reliable sources, it cannot assume responsibility for the quality, correctness, timeliness or completeness

• f the information contained in this report.

The information contained in these publications is exclusively intended for a client base consisting of professionals or qualified investors. It is sent to you by way of information and cannot be divulged to a third party without the prior consent of AtonRâ Partners. While all reasonable effort has been made to ensure that the information contained is not untrue or misleading at the time of publication, no representation is made as to its accuracy or completeness and it should not be relied upon as such. Past performance is not indicative or a guarantee of future results. Investment losses may occur, and investors could lose some or all of their investment. Any indices cited herein are provided only as examples of general market performance and no index is directly comparable to the past or future performance of the Certificate. It should not be assumed that the Certificate will invest in any specific securities that comprise any index, nor should it be understood to mean that there is a correlation between the Certificate’s returns and any index returns. Any material provided to you is intended only for discussion purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any security and should not be relied upon by you in evaluating the merits of investing in any securities.

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