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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%
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 / 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)
(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
$ b
illio
n
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
0
2
4
6
8
10
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Curr
ent A
ccou
nt as %
of G
DP
China housing starts
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2001 2004 2007 2010 2013 2016
Mill
ion
squ
are
me
tre
s, ro
lling 1
2 m
on
ths
Source: Bloomberg
0
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
Mill
ion
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
0
5
10
Greece Portugal Spain Ireland Italy
Curr
en
t a
cco
un
t (%
of
GD
P)
2007 2016
Source: Credit Suisse, Bloomberg
Corporate earnings: US versus Europe
0
1
2
3
4
5
6
7
8
9
10
Ind
ex, Ja
nu
ary
19
88
= 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
Rea
l W
age
s In
de
xe
d , 2
01
5=
10
0
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
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
0
100
200
300
400
500
600
Korea Japan Germany Italy US Taiwan China
No
. o
f R
ob
ots
pe
r 1
0,0
00
Em
plo
ye
es
2015 World Average
0%
5%
10%
15%
20%
25%
0
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
Yo
Y %
ch
an
ge
RM
B p
er
ye
ar
Urban average wage (RMB pa) Migrant worker average (RMB pa)
YoY % change (Urban) YoY % change (Migrant)
Source : Intel, AliExpress
TechnologyTencent
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
% o
f G
DP
Source: CLSA (B = Budgeted)
Ayala Land
Source: Ayala Land
Developing India’s future
Source: Credit Suisse
Reliance Industries : Jio
Source: Jio
China housing starts
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2001 2004 2007 2010 2013 2016
Mill
ion
squ
are
me
tre
s, ro
lling 1
2 m
on
ths
Source: Bloomberg
Tencent
Source: Wechat
Midea
Source: Kuka
Korean exports – strong
Source: Bloomberg
-40
-30
-20
-10
0
10
20
30
40
50
% C
han
ge Y
oY
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
Source: Platinum Investment Management Limited