Utilico Emerging Markets Regulatory News (UEM)

7 April 2022

UTILICO EMERGING MARKETS TRUST PLC

(LEI Number: 2138005TJMCWR2394O39)

Publication of monthly factsheet

The latest monthly factsheet for Utilico Emerging Markets Trust plc (the "Company") will shortly be available through the Company's website at:

https://www.uemtrust.co.uk/investor-relations/factsheet-archive 

Monthly commentary

PERFORMANCE

UEM's NAV total return in the month of March increased by 7.9%, again pleasingly ahead of the MSCI Emerging Markets total return Index ("MSCI") which declined by 0.4% in Sterling terms during the month. Over the past twelve months UEM has delivered a NAV total return of 14.9%, strongly ahead of the MSCI which fell 6.9% in Sterling terms.

Volatility in global markets remains elevated, as the stalled Russian invasion of Ukraine drags on with no clear resolution in sight. China continues to enforce its zero-COVID policy, locking down the major urban centres of Shenzhen and then Shanghai. The economic impact of this was seen in the composite PMI collapsing to 43.9 in March from 50.1, the sharpest decline in activity since the start of the pandemic.

Markets were mixed in March, with notable weakness in the Hong Kong Hang Seng Index declining 3.2% and the Shanghai Composite falling 6.1%. Much better performances were evident in Latam, with Brazil's Bovespa Index up 6.1%, Mexico's IPC Index gaining 5.9% and the Chilean IPSA recovering by 8.9%. The Indian SENSEX was also firmer, up 4.1%.

Sterling weakened against almost all currencies in March, down 2.8% against the Chilean Peso, weakening 1.6% versus the Hong Kong Dollar and declining 1.3% against the Indian Rupee. But the most significant move was a 9.5% drop against the Brazilian Real, as interest rates were raised to 11.75%, reigniting the carry trade. Brazil and Chile are also seen as major beneficiary of stronger commodity prices, which have continued to firm, with both Brent Crude Oil and Copper prices up 6.9% over the month.

PORTFOLIO

There were three changes to the constituents of the top thirty holdings in the portfolio in March with Petalite, Santos Brasil and Engie Energia Chile replacing China Gas Holdings, China Everbright Environment and Telecom Egypt due to relative performance.

Petalite is an unlisted EV charging infrastructure company which is based in the UK. Over the past seven years, Petalite has been developing a revolutionary new technology which enables more reliable and cost-effective EV chargers. UEM first made a modest investment in Petalite in early 2020, since which time it has achieved significant milestones including initial certification of the Power Core and delivery of test units to a blue-chip customer. Petalite is in commercial discussions with several large companies and is currently in advanced negotiations for further funding from new and existing investors. Reflecting such progress, the current valuation represents a very material uplift on UEM's initial investment and ICM believes Petalite has exciting prospects.

Strong performances were seen in UEM's Brazilian investments in March, with Rumo recovering off recent lows to close up 19.8%, while Santos Brasil was up 17.6%, Simpar increased by 11.4% and Alupar firmed by 7.8%. FPT's share price hit new all-time highs after increasing by 14.8% over the month, while KT Corp and China Datang Renewables were also up 11.7% and 10.2% respectively.

The most significant decliners within the top thirty were China Everbright Greentech down 12.5%, Kunlun Energy down 10.4% and Gujarat State Petronet down 10.5%. High input gas costs have dented sentiment in the gas distribution sector, though we would note that recent results demonstrate that some of these operators are proving resilient. As an example, in its financial year to 31 December 2021 Kunlun Energy's retail gas volumes grew 18.5% YoY and EBITDA was up 19.9%. Note that this is not just due to a COVID-induced recovery - retail gas volumes were up 42.8% on 2019.

Purchases during the month for the portfolio amounted to £10.8m and realisations totalled £12.6m.

DEBT

UEM's bank debt increased from EUR 24.0m to EUR 28.0m as at the end of March, the corresponding liability in Sterling terms rose from £20.1m to £23.7m.

OTHER

UEM's share price ended March at 224.00p, up 5.9% over the month, with the discount to NAV widening marginally to 11.9%. UEM took advantage of weakness in March and bought back 3.2m shares at an average price of 207.47p. Over the past twelve months UEM has bought back a total of 6.5m shares at an average price of 211.90p and total cost of £13.8m.

UEM's third quarterly interim dividend of 2.00p per ordinary share in respect of the year ending 31 March 2022 was paid on 25 March 2022 to shareholders on the register on 4 March 2022.

Name of contact and telephone number for enquiries:

ICM Investment Management Limited +44(0)1372 271486

Charles Jillings / Alastair Moreton

Montfort Communications

Gay Collins, Pippa Bailey +44(0)20 3770 7913

utilico@montfort.london