In QuotedData’s morning briefing 21 May 2021:
- Ecofin Global Utilities and Infrastructure (EGL) has announced its interim results for the six months ended 32 March 2020. During the period, EGL provided NAV and share price total returns of 13.5% and 16.1% respectively, thereby outperforming the MSCI World Utilities Index and S&P Global Infrastructure Index, which returned 2.7% and 10.6% respectively. While the portfolio was not immune to market swings, it was a successful period in terms of stock selection with some strong performances by large holdings in each region of the portfolio and with no lagging names. Several names – including Covanta, Exelon, and Engie – announced strategic reviews which the manager had hoped would emerge, and others – including EDF, National Grid, Veolia and Drax – announced or continued to pursue what the manager considers to be value-accretive M&A. The largest positive contributors included Chinese wind operators China Longyuan Power and China Suntien Green Energy, US environmental services company Covanta, Drax and SSE in the UK, and North American clean power specialists Brookfield Renewable and TransAlta Renewables. During the pronounced market rotation mid-Q1 2021, which favoured last year’s market laggards, mostly cyclicals and value stocks, the portfolio’s exposure to energy infrastructure (Williams) and transportation services (ENAV, for example) proved their diversification purpose. Pure regulated names were not particularly weak but they did get left behind in the market rallies.
- Schroder Asia Pacific (SDP) has released its interim results for the six months ended 31 March 2021. During the period, SDP provided NAV and share price total returns of 19.7% and 25.1%, respectively, both significantly outperforming its benchmark’s total return of 14.1%. Over the period the biggest positive contribution came from stock selection in the Hong Kong market, where SDP’s exposure to some of the beneficiaries of the recovery in Chinese consumer demand as well as those expected to gain from the easing of pandemic related restrictions, including the Macau gaming names, outperformed. Otherwise, stock selection in Korea and Taiwan was strong, driven by exposure to the technology sector, including semiconductor and EV battery manufacturers. Stock selection in Singapore and India also added value, as did SDP’s exposure to Vietnam and its zero weight in Malaysia, which lagged. Although SDP’s Chinese stock selection lagged, it was more than offset by the underweight to the market.
- JPMorgan China Growth & Income (JCGI) has released its interim results for the six months ended 31 March 2021. During the period, JCGI provided an NAV total return of 13.8% (in sterling terms), compared to the benchmark return of 3.8%. Portfolio gains of 19.4% during the fourth quarter of 2020 were partially offset by losses of 4.5% during the first quarter of 2021. The share price total return during the period was 13.4%. Stock selection was by far the most significant contributor to returns over the review period, although sector selection had a modestly favourable impact. Positive contributions from stock selection in consumer discretionary, industrials and communication services did most to enhance JCGI’s performance, although these gains were partially offset by the adverse impact of the style rotation away from several sectors which had previously outperformed, notably information technology and healthcare. Stock selection within information technology and healthcare also detracted.
- Electra Private Equity (ELTA) has announced its interim results for the six months ended 31 March 2021. ELTA is in the final stages of winding down its portfolio and returning proceeds to shareholders. Reflecting this, NAV and share price total returns were 45.5% and 105.5% respectively. The key takeaways from the report are that a decision has been to list ELTA’s two largest remaining portfolio assets: TGI Fridays and Hotter Shoes , on the FTSE Main Market and AIM, respectively. The results say that it is the company’s intention to demerge TGI Fridays onto the FTSE Main Market late in the third quarter of this year and, subsequently, in the fourth quarter, to bring Hotter on to AIM through reclassification of the Electra entity. Plans are well advanced for both listings.
- SDCL Energy Efficiency Income has announced that it has completed the acquisition of a 100% equity interest in a commercial district energy system, RED-Rochester, LLC, from Stonepeak Infrastructure Partners for approximately $177 million in cash. RED-Rochester is one of North America’s largest district energy systems with 117 MW of steam turbine generators plus boilers, chillers and other equipment that provide exclusive utility services to commercial and industrial customers within the 1,200 acre Eastman Business Park, located in Rochester, New York. The acquisition has been funded from existing cash reserves and RCF facilities. RED’s existing project debt finance facilities, which are equivalent to c.$84 million, remain in place post-acquisition.
- Kistos (KIST) has announced that it has completed the acquisition of the entire issued and outstanding share capital of Tulip Oil Netherlands B.V. on the terms set out in the Company’s admission document dated 21 April 2021. According to Kistos, the producing asset Q10-A has a uniquely low carbon footprint given the platform is powered by wind and solar energy, averaging 0.013kg CO2e/Boe since first gas. This is against a UK North Sea average of 22kg CO2e/Boe. The effective date of the acquisition was 1 January 2021 and production year to date has been in line with expectations, whilst realised gas prices have been higher than those assumed in the admission document.
- Yew Grove REIT, the Irish commercial property investor, has acquired an industrial building in Dundalk and two adjoining office properties in Citywest Dublin. In Dundalk, the company has exchanged contracts to buy a 86,451 sq ft industrial building for €8m, reflecting a yield of 6.9%. It is let to a US multinational with a weighted average unexpired lease term (WAULT) to first break of approximately 8.4 years and a WAULT to expiry of 18.4 years. The company has also exchanged contracts to purchase Blocks E&F, Citywest Dublin, for €11m. The two adjoining office blocks total 45,972 sq ft of space and are let to three multinational tenants paying an annual rent of €984,000. This represents a net initial yield of 8.2%. The property has a WAULT of 4.0 years to first break and 6.4 years to expiry.
- LondonMetric Property has acquired two vacant London warehouse assets in Brent Cross and Streatham for a combined price of £13.5m. The company has agreed a new 20 year lease with Jacuna Kitchens across 75% of the combined space. Jacuna will operate 100 dark kitchens across both locations and LondonMetric will refurbish and upgrade the warehouses to provide enhanced power, ventilation and drainage to the buildings. The group said the letting of the remaining space is under negotiations with a new delivery start up. Following completion of the letting and refurbishment, LondonMetric expects to deliver a blended yield on cost of 5.4% from the acquisitions.
- Hibernia REIT has issued €125m of new unsecured US private placement notes. The issue comprises equal amounts of 10- and 12-year notes with an average fixed coupon of 1.9%. The notes have been placed with five institutional investors, all new lenders to Hibernia. The transaction was priced on 14 April 2021 and funds will be drawn on 23 July 2021.
- JPMorgan Asia Growth & Income (JAGI) has announced its interim results for the six months ended 31 March 2021, during which it provided an NAV total return on 17.8% and a share price total return of 19.9%. In comparison, its benchmark index, the MSCI All Countries Asia ex Japan Index, returned +14.1% (all figures in sterling terms). Outperformance was driven by positive stock selection, with the allocation to technology hardware companies being the top contributor. Industry leaders such as Samsung Electronics and Taiwan Semiconductor Manufacturing, both top 3 holdings for the Company at end March, saw their profits grow by more than 20% in 2020. Within the healthcare sector, Wuxi Biologics significantly enhanced performance. The largest detractor from performance during the review period was Budweiser Brewing. This company runs a large restaurant and bar business in China, which has yet to fully recover from the downturn in trade it suffered during China’s severe lockdown.
We also have Schroder British Opportunities acquisition of a majority stake in Waterlogic, Capital Gearing’s annual results – another year of very acceptable returns, and the manager of AVI Japan’s proposals for SK Kaken.