Results analysis from Kepler Trust Intelligence

Schroder AsiaPacific Fund PLC

09 December 2024

 

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.

 

END