Schroder AsiaPacific (SDP)
09/12/2024
Results analysis from Kepler Trust
Intelligence
· Schroder
AsiaPacific (SDP) has published its
results for the financial year ending 30/09/2024. Over the period,
the trust saw its NAV increase by 16.5% on a total return basis,
versus 17.3% for SDP's benchmark, and 15.9% weighted average for
the peer group.
· Performance has largely been driven by
stock selection. The holdings in Taiwan, primarily tech companies,
were the biggest positive contributors. Philippines was also a
positive, as was Indonesia, benefitting from an improving macro
backdrop.
· Stock selection in India was a drag due
to small and mid-caps driving the market. China and Korea stocks
were also detractors, although underweight allocations were a
positive.
· The managers took profits in strong
performers and rotated elsewhere. Examples include trimming TSMC
are rotating into other technology names, such as E Ink and ASE
Technology.
· The managers slightly narrowed their
underweight to China, by selectively adding to high quality-stocks
at attractive levels. They remain notably underweight, preferring
Hong Kong to balance allocation risk whilst focusing on quality
companies with good governance.
· The annual dividend has been increased
to 12.5p per share and is fully covered by revenue. This equates to
a yield of 2.3% based on the closing share price on
02/12/2024.
· The discount widened in the period, and
the board undertook significant share buy backs.
· Chairman James Williams believes the
trust, "is well positioned to capitalise on the region's growth
opportunities, while managing risks carefully," and that, "Asia
Pacific remains an engine of global growth, with robust domestic
consumption, technological innovation, and an increasingly affluent
population."
Kepler
View
These results saw strong
absolute returns from Richard Sennitt and Abbas Barkhordar,
managers of Schroder AsiaPacific (SDP). Whilst relative performance
was slightly below the index, stock selection still contributed to
returns, and the outlook for the region has improved
materially.
Positive stock selection
primarily came through tech, including key holdings in Taiwan. The
sector has enjoyed positive dynamics and we believe the overweight
could continue to benefit performance. The trimming of profits and
rotating elsewhere, is a good example of portfolio discipline in
our opinion.
We believe this discipline is
also evident in the country exposure. The managers have slightly
reduced their China underweight through highly selective additions
to quality, market leading companies. Instead, they prefer Hong
Kong, offering similar exposure but fewer governance issues.
Conversely, they are underweight India on valuation grounds. This
has been a detractor in the past year.
Despite good absolute
performance and an improving outlook, the discount widened over the
year. Long-term NAV returns are strong, over ten percentage points
ahead of the benchmark over five years to 02/12/2024, largely as a
result of good stock selection. To our mind, the discount doesn't
reflect this long-term success, nor the improving macro backdrop
and therefore could prove an attractive entry point for long-term
investors, in our opinion.
CLICK HERE TO READ THE FULL REPORT
Visit
Kepler Trust Intelligence for more high quality
independent investment trust research.
Important information
This report has been issued by Kepler
Partners LLP. The analyst
who has prepared this report is aware that Kepler Partners LLP has
a relationship with the company covered in this report and/or a
conflict of interest which may impair the objectivity of the
research.
Past
performance is not a reliable indicator of future results. The
value of investments can fall as well as rise and you may get back
less than you invested when you decide to sell your investments. It
is strongly recommended that if you are a private investor
independent financial advice should be taken before making any
investment or financial decision.
Kepler Partners is not authorised to
make recommendations to retail clients. This report has been issued
by Kepler Partners LLP, is based on factual information only, is
solely for information purposes only and any views contained in it
must not be construed as investment or tax advice or a
recommendation to buy, sell or take any action in relation to any
investment.
The information provided on this
website is not intended for distribution to, or use by, any person
or entity in any jurisdiction or country where such distribution or
use would be contrary to law or regulation or which would subject
Kepler Partners LLP to any registration requirement within such
jurisdiction or country. In particular, this website is exclusively
for non-US Persons. Persons who access this information are
required to inform themselves and to comply with any such
restrictions.
The information contained in this
website is not intended to constitute, and should not be construed
as, investment advice. No representation or warranty, express or
implied, is given by any person as to the accuracy or completeness
of the information and no responsibility or liability is accepted
for the accuracy or sufficiency of any of the information, for any
errors, omissions or misstatements, negligent or otherwise. Any
views and opinions, whilst given in good faith, are subject to
change without notice.
This is not an official confirmation
of terms and is not a recommendation, offer or solicitation to buy
or sell or take any action in relation to any investment mentioned
herein. Any prices or quotations contained herein are indicative
only.
Kepler Partners LLP (including its
partners, employees and representatives) or a connected person may
have positions in or options on the securities detailed in this
report, and may buy, sell or offer to purchase or sell such
securities from time to time, but will at all times be subject to
restrictions imposed by the firm's internal rules. A copy of the
firm's Conflict of Interest policy is available on
request.
PLEASE SEE ALSO OUR TERMS AND CONDITIONS
Kepler Partners LLP is authorised and
regulated by the Financial Conduct Authority (FRN 480590),
registered in England and Wales at 70 Conduit Street, London W1S
2GF with registered number OC334771.