In its first full year since it became a dedicated Japanese investment trust, Aberdeen Japan has posted a 46.6% increase in its net asset value as compared to a 26% return for its benchmark index (Topix). The share price return was even better at 58.2% as the discount narrowed from 13.4% to 6.7% (all these numbers are for the year ended 31 March 2015). The dividend has been reduced from 4.5p to 2.6p – this is a reflection of the change to the investment approach.
In January they locked in 1.3bn yen of debt at an interest rate of 0.8975% fixed for three years to January 2018. The Sterling / Yen hedge has been reduced to 45% of the fund as of March 2015.
The manager says consumer-related holdings were among the top contributors. Pigeon Corp, a maker of baby bottles, benefited from robust demand in China. It is also making inroads into other Asian markets, while maintaining steady growth in Europe and the US. Similarly, for diaper-maker Unicharm, signs of a turnaround in its Chinese business increased optimism over its prospects. Snacks manufacturer Calbee’s share price rose on expectations of continued solid sales in the US and gains from other overseas markets. Membership-based resorts operator Resorttrust was buoyed by healthy sales from the launch of premium condominiums and medical resorts.
In the health care sector, Asahi Intecc’s positive results underlined good sales for its mainstay guidewires and market-share gains for other peripheral devices. Sysmex also did well, supported by its core hematology business. Its launch of a cell-analysis product in the US also fuelled expectations of further gains in its market share. Elsewhere, Nippon Paint Holdings’ shares outperformed the benchmark after the company consolidated its Asian joint ventures. It was also expected to benefit from lower input costs, thanks to cheaper oil prices. Machine-tool maker Amada Holdings was boosted by a share buyback, higher year-end dividends, as well as a near-tripling of profits owing to higher capital spending both domestically and in the US. Another good performer was sensor maker Keyence, which gained from steady auto-related demand in the US and its announcement to improve shareholder returns by raising year-end dividends for the first time in seven years.
Conversely, Yahoo Japan was the biggest detractor at the stock level, owing to worries that its PC-based advertising business would deteriorate faster than gains in its mobile division. Some other holdings had positive absolute returns but underperformed in relative terms. While auto-parts maker FCC’s earnings met their expectations, its share price was dampened by its lower profit forecast due to weaker four-wheel clutch sales to Honda Motor. Personal goods company Mandom lagged, although its results met our expectations, while the sluggish housing market in Osaka hurt the share price of property developer Daibiru. Both Japan Tobacco and power-tool maker Makita Corp were weighed down by concerns over their exposure to the Russian market.
AJIT : Aberdeen Japan makes 46% in first year