Last checked at 21 Aug 2019 12:09
BlackRock Greater Europe Investment Trust Plc - Portfolio UpdateBlackRock Greater Europe Investment Trust Plc - Portfolio Update
PR Newswire
London, August 13
BLACKROCK GREATER EUROPE INVESTMENT TRUST plc (LEI - 5493003R8FJ6I76ZUW55)All information is at 31 July 2019 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) | 1.3% | 9.0% | 9.7% | 49.9% | 430.2% |
| Net asset value* (diluted) | 1.3% | 9.0% | 9.7% | 49.9% | 430.7% |
| Share price | 2.1% | 8.9% | 11.5% | 53.2% | 414.0% |
| FTSE World Europe ex UK | 1.9% | 6.6% | 4.7% | 38.1% | 273.6% |
* Diluted for treasury shares and subscription shares.Sources: BlackRock and Datastream.
At month end
| Net asset value (capital only): | 402.14p |
| Net asset value (including income): | 405.14p |
| Net asset value (capital only)1: | 402.14p |
| Net asset value (including income)1: | 405.14p |
| Share price: | 389.00p |
| Discount to NAV (including income): | 4.0% |
| Discount to NAV (including income)1: | 4.0% |
| Net gearing: | 2.3% |
| Net yield2: | 1.5% |
| Total assets (including income): | £343.7m |
| Ordinary shares in issue3: | 84,833,101 |
| Ongoing charges4: | 1.09% |
Diluted for treasury shares.
Based on a final dividend of 4.00p per share for the year ended 31 August 2018 and an interim dividend of 1.75p for the year ending 31 August 2019.
Excluding 25,495,837 shares held in treasury.
Calculated as a percentage of average net assets and using expenses, excluding interest costs, after relief for taxation, for the year ended 31 August 2018.
| Sector Analysis | Total Assets (%) | Country Analysis | Total Assets (%) | |
| Industrials | 28.0 | Switzerland | 17.0 | |
| Health Care | 19.8 | France | 15.8 | |
| Technology | 17.3 | Denmark | 15.7 | |
| Consumer Goods | 15.7 | Germany | 13.9 | |
| Financials | 7.9 | Italy | 7.8 | |
| Consumer Services | 6.0 | Netherlands | 6.6 | |
| Basic Materials | 4.2 | Spain | 5.5 | |
| Telecommunications | 1.8 | Sweden | 4.8 | |
| Net current liabilities | -0.7 | United Kingdom | 4.5 | |
| ----- | Israel | 3.4 | ||
| 100.0 | Ireland | 1.7 | ||
| ===== | Belgium | 1.6 | ||
| Poland | 1.3 | |||
| Greece | 1.1 | |||
| Net current liabilities | -0.7 | |||
| ----- | ||||
| 100.0 | ||||
| ===== |
| Ten Largest Equity Investments | ||
| Company | Country | % of Total Assets |
| Safran | France | 6.3 |
| Novo Nordisk | Denmark | 6.0 |
| SAP | Germany | 5.9 |
| Adidas | Germany | 5.4 |
| Sika | Switzerland | 5.0 |
| Lonza Group | Switzerland | 4.5 |
| DSV | Denmark | 4.4 |
| RELX | United Kingdom | 4.4 |
| Royal Unibrew A/S | Denmark | 4.1 |
| ASML | Netherlands | 4.1 |
Commenting on the markets Stefan Gries, representing the Investment Manager noted:
During the month, the Company’s NAV rose by 1.3% and the share price by 2.1%. For reference, the FTSE World Europe ex UK Index returned 1.9% during the period.
Data released in July showed evidence of a significant slowdown in certain sectors of the economy in June. This was seen through poor earnings releases for short-cycle companies such as chemicals, as well as autos manufacturers. More defensive areas (those less exposed to the economic cycle) therefore led the market over the month.
Following a dovish speech given at Sintra in June, the European Central Bank (ECB) indicated they would provide a policy response in September to the economic outlook which is “getting worse and worse”.
The Company underperformed the index over the month. This was driven by stock selection, whilst sector allocation had a muted effect on performance.
The Company’s overweight towards real world economic cyclicals, particularly industrials, had aided the performance in June but experienced a reversal in July in response to the weaker economic environment. The lower weighting to financials, however, aided returns as the banking sector fell lower on the prospect of further rate cuts by the ECB.
After a strong run of performance, Sika was the single largest detractor from returns in July. As mentioned in last month’s commentary, we anticipated second quarter organic revenue growth could be tough given the group’s exposure to the auto sector. This has come through and the shares have fallen relative to the market as a result. We continue to anticipate organic growth to re-accelerate through the second half of the year.
Our holding in SAP also detracted in July. Following extremely strong Q1 results, the company posted weaker Q2 numbers, which were slightly below expectations for both revenue and profit. The investment case of defensive revenue growth with margin expansion remains intact though and the stock remains one of the largest holdings in the Company’s portfolio.
Shares in Hexagon fell as the Swedish industrial technology group announced weaker-than-expected results in June, with revenues in China falling by 25% organically, with electronics particularly impacted. There is growing evidence of large electronics manufacturers shifting their supply chains away from China as a result of tariff negotiations and threats, which is impacting the group’s short-term performance.
Danish brewer Royal Unibrew and French Cognac producer Rémy Cointreau were both additive to returns within consumer goods, with the latter reporting solid Q1 revenue numbers during the month. Elsewhere in the consumer space, Adidas was a positive contributor to performance having experienced improving sales momentum and margin visibility over the course of the year thus far.
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
The global economic environment is clearly deteriorating in response to the uncertainty caused by US-Chinese relations. We believe this has created disruption within supply chains and potential delays to capital expenditure, but do not see structural imbalances in the economy at this point in time. Policy remains supportive in Europe and the consumer resilient, with Eurozone retail sales growing 2.6% year-on-year in June. Q2 earnings releases have unveiled a slow-down in short-cycle companies; however, our portfolios are generally not exposed to these types of businesses. At present, we do not see contagion beyond this. Valuation dispersion within the market remains a topic of conversation, but we believe the prevailing environment and structural headwinds warrant ‘cheap valuations’ for some sectors. Our portfolio capital is positioned to where we see the best upside driven by fundamentals. Whilst markets can respond to statistical indicators in the near-term, at times causing rotations, we believe company fundamentals drive long-term performance. We continue to have a small pro-cyclical tilt in portfolios, primarily expressed through late cycle industrials, such as aerospace stocks and consumer exposed names, such as luxuries.
21 August 2019
ENDS
Latest information is available by typing www.brgeplc.co.uk on the internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV terminal). Neither the contents of the Manager’s website nor the contents of any website accessible from hyperlinks on the Manager’s website (or any other website) is incorporated into, or forms part of, this announcement.