JPMorgan Japan Smaller just fails to match benchmark – JPMorgan Japan Smaller Companies has released results for the year ended 31 March 2019. The total return on net assets was -7.9%, compared with -7.3% returned by the benchmark. The total return to ordinary shareholders was -8.9%, reflecting a slight widening of the share price discount to net asset value from 11.6% at the beginning of the financial year to 12.8% at 31st March 2019.
The company implemented a new dividend policy with effect from 1st April 2018, in the absence of unforeseen circumstances, it will pay a regular quarterly dividend equal to 1% of the NAV on the last business day of the preceding financial quarter [sound familiar? it’s the same approach that Montanaro UK Smaller Companies uses]. This totalled 18.0p per share for the year.
Extract from the manager’s report
“the company’s gearing modestly detracted from performance. A positive level of gearing was maintained throughout the year, leading to a negative performance impact in a declining market. Stock selection and sector allocation in aggregate had a small positive impact.
Bengo4.com operates an online legal consulting service. As the most popular website in the legal sector, with nearly 11 million users, Bengo4.com is an attractive marketing tool for lawyers. The company also runs a website called Zeiri4.com, which offers similar services for tax accountants, and has a business called CloudSign, a cloud-based service that shifts contract paperwork to digital format, reducing time, paper and postal charges.
Benefit One manages fringe benefit programs on behalf of employers. With a shrinking and ageing population, the incentive for companies to improve benefits for their employees will increase as competition for labour rises. Work style reform, which pursues equal pay for equal work amongst other things, will also drive fringe benefit growth.
RAKSUL operates two resource sharing platform services called ‘Raksul’, a print sharing platform, and ‘Hacobell’, a logistics sharing platform. Online representation by both the printing and trucking industries is still low. We believe the company has huge growth potential as it offers companies the opportunity to cut costs by utilising and matching excess capacity through internet-based platforms.
SUMCO, RS Technologies and Taiyo Yuden were among stocks that contributed negatively to relative performance. Semiconductor and technology hardware companies such as these underperformed due to concerns over the US-China trade war and over current levels of stock held by manufacturers. We believe demands for semiconductor and electronics parts will grow in response to innovation entailing increased use of technology in the automotive industry and the emerging ‘internet-of-things’. We have, therefore, kept these holdings in the face of short-term headwinds.
With respect to sector allocation, top contributors include software & services (overweight), and top detractors include semiconductors & semiconductor equipment (overweight).”
JPS :