Last checked at 15 May 2018 12:53
BlackRock Greater Europe Investment Trust Plc - Portfolio UpdateBlackRock Greater Europe Investment Trust Plc - Portfolio Update
PR Newswire
London, May 15
BLACKROCK GREATER EUROPE INVESTMENT TRUST plc (LEI - 5493003R8FJ6I76ZUW55)All information is at 30 April 2018 and unaudited.Performance at month end with net income reinvested
| One Month | Three Months | One Year | Three Years | Launch (20 Sep 04) | |
| Net asset value (undiluted) | 3.8% | -1.8% | 11.1% | 38.0% | 344.9% |
| Net asset value* (diluted) | 3.8% | -1.8% | 11.1% | 39.4% | 345.3% |
| Share price | 3.5% | -2.4% | 10.8% | 36.4% | 325.1% |
| FTSE World Europe ex UK | 4.1% | -2.0% | 7.4% | 32.9% | 241.7% |
* Diluted for treasury shares and subscription shares.Sources: BlackRock and Datastream
At month end
| Net asset value (capital only): | 344.19p |
| Net asset value (including income): | 347.27p |
| Net asset value (capital only)1: | 344.19p |
| Net asset value (including income)1: | 347.27p |
| Share price: | 329.00p |
| Discount to NAV (including income): | 5.3% |
| Discount to NAV (including income)1: | 5.3% |
| Net gearing: | 8.6% |
| Net yield2: | 1.7% |
| Total assets (including income): | £308.3m |
| Ordinary shares in issue3: | 88,776,863 |
| Ongoing charges4: | 1.10% |
1 Diluted for treasury shares.2 Based on a final dividend of 3.70p per share and an interim dividend of 1.75p per share for the year ended 31 August 2017.3 Excluding 21,552,075 shares held in treasury.4 Calculated as a percentage of average net assets and using expenses, excluding interest costs, after relief for taxation, for the year ended 31 August 2017.
| Sector Analysis | Total Assets (%) | Country Analysis | Total Assets (%) | |
| Industrials | 33.1 | France | 17.0 | |
| Health Care | 17.5 | Switzerland | 16.8 | |
| Financials | 12.5 | Germany | 12.7 | |
| Consumer Goods | 11.7 | Netherlands | 10.9 | |
| Consumer Services | 9.8 | Denmark | 10.9 | |
| Technology | 8.4 | Sweden | 7.4 | |
| Basic Materials | 3.5 | Belgium | 4.5 | |
| Telecommunications | 1.9 | Spain | 4.5 | |
| Oil & Gas | 1.8 | Israel | 3.8 | |
| Net current liabilities | (0.2) | Russia | 3.6 | |
| ----- | Finland | 3.0 | ||
| 100.0 | Ireland | 2.1 | ||
| ===== | Greece | 1.7 | ||
| Poland | 1.3 | |||
| Net current liabilities | (0.2) | |||
| ----- | ||||
| 100.0 | ||||
| ===== |
| Ten Largest Equity Investments | ||
| Company | Country | % of Total Assets |
| Safran | France | 4.6 |
| Lonza Group | Switzerland | 4.4 |
| Unilever | Netherlands | 4.0 |
| Fresenius Medical Care | Germany | 3.7 |
| Compagnie Financière Richemont | Switzerland | 3.5 |
| Danske Bank | Denmark | 3.3 |
| SAP | Germany | 3.2 |
| Novo Nordisk | Denmark | 3.1 |
| Wartsila | Finland | 3.0 |
| Hexagon | Sweden | 2.9 |
Commenting on the markets, Stefan Gries, representing the Investment Manager noted:
During the month, the Company’s NAV rose by 3.8% and the share price increased by 3.5%. For reference, the FTSE World Europe ex UK Index returned 4.1% during the period.
European equity markets rebounded sharply in April following two volatile months. All sectors generated positive returns in absolute terms during the month. The energy sector led the rally as the oil price reached its highest level in three years driven by heightened geopolitical risk, effective action by OPEC, as well as an implosion of Venezuelan production. The telecoms and consumer discretionary sectors also saw particularly strong performance.
The European Central Bank (ECB) left policy unchanged. President Mario Draghi expressed confidence in the Eurozone’s solid economic growth but cited escalating trade tensions and the recent soft patch in economic data as risks. After the recent fall in macro data, the region’s composite Purchasing Managers’ Index held steady in April.
The Company underperformed the market in April. Sector allocation detracted over the period whilst stock selection was neutral. Given the strength in the oil price over the period, the lower allocation to this sector versus the reference index detracted from returns. The higher weighting to the industrial sector also detracted from returns, as cyclical assets, those more sensitive to economic growth, underperformed during the month.
Positively, the larger allocation to consumer services, where we hold a number of luxury stocks, aided returns.
The best performing holding in April was Safran. The group reported Q1 sales 2.5% ahead of consensus expectations, driven by the propulsion division. The full year guidance was upgraded as the group now expect to hit to top end of their revenue guidance and remain confident on their LEAP engine ramp. Zodiac, the aerospace component manufacturer they acquired last year, also showed positive trends in earnings, an important data point given the company’s history of poor execution.
A position in luxury goods company Kering performed strongly during the month. Kering released a large first quarter sales beat, with group organic sales +13% ahead of expectations. Again, this was primarily driven by Gucci which grew +49% organic on a +48% comparative from Q1 2017. All regions for the group saw double digit growth.
A holding in Greek listed Alpha Bank performed well. The share price rallied as news broke that all Greek banks would pass the ECB stress tests, encouraging the sector higher. Elsewhere in the banking sector, a position in Danske Bank detracted from performance over the period as worries around the extent of past wrongdoing in the Estonian subsidiary (
A position in Telenet also fell over the period as results proved disappointing with revenues missing by 2%. Both business-to-business and mobile trends were weaker in the quarter, somewhat impacted by a tough comparative from Q1 2017. We believe that the business will still be able to improve their pricing dynamic whilst also seeing further cost benefits, leading to double digit earnings growth. The stock trades on an attractive 10% Free Cash Flow Yield.
At the end of the period the Company had a higher allocation than the reference index towards industrials, technology, consumer services and health care. A lower allocation was held in financials, consumer goods, utilities, telecommunications, basic materials and oil & gas.
Outlook
We believe there are a number of reasons to remain positive in Europe. Earnings continue to grow, underlying fundamentals are robust across domestic and export-led markets, political reform is creating opportunities and inflation remains largely at bay. Tail risks, which have created volatility for markets year-to-date, may influence confidence in the short run, but we do not yet see a reason to fear a derailment in European growth. The earnings releases from some industrial bell-weather companies give us reason to be confident. Our concern mostly lies in the global arena, where tighter credit conditions could have implications in time. We believe the ECB, however, will remain pragmatic whilst inflation continues to undershoot and do not expect a rate rise until 2019. Valuation has become incrementally more attractive in the region, in both an absolute and relative sense, but is extended in certain areas. At this stage in the cycle, where companies may consider re-leveraging and repositioning, we seek to understand the vision, execution ability and approach to capital discipline for the companies we invest in. We believe careful stock picking in what may continue to be a more volatile environment can benefit our clients.
15 May 2018
ENDS
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