In QuotedData’s morning briefing 22 April 2022:
- Asia Dragon (DGN) has published its interim results for the six months ended 28 February 2022. During the period, DGN delivered an NAV total return of -7.7% in sterling terms, outperforming the -8.1% fall in the benchmark, the MSCI AC Asia Pacific (ex Japan) Index (also in sterling adjusted total return terms). The trust’s positioning in China was the main source of outperformance against the Benchmark during the period. The Chinese companies to which the Company has exposure have in general shown resilience despite the challenging operating environment. Among the top contributors was Kweichow Moutai, which benefited from easing concerns over price regulation for producers and distillers of the Chinese spirit Baijiu, and the implementation of well-received market-driven initiatives. Chacha Food, a leading nut-based snack company, performed well on the back of price rises and strong shipments. DGN’s chairman, James Will, says that the portfolio’s bias towards high-quality companies was rewarded by the strong performance of DGN’s largest holding, China Resources Land, during the period. Despite substantial challenges in the real estate sector, China Resources Land posted gains as investors gravitated towards higher-quality property companies.
- SLF Realisation Fund (SLFR – formerly KKV Secured Loan Fund and before that SQN Asset Finance Income) has announced that it is making a capital return of 1p per share to Ordinary Shareholders (this being a total of £3.6m based on the current number of shares in issue), and 4p per share to C Shareholders (this being a total of £5.6m). The Distributions will be implemented by way of an issue of redeemable B shares and D shares to existing Shareholders, pro-rata to their shareholding on the record date (10 May 2022) and the subsequent redemption of those shares. The payment date for the capital return is 19 May 2022.
- BioPharma Credit (BPCR) has announced the results of the secondary placing of the company’s shares that was previously announced on 20 April 2022. Pablo Legorreta, the founder and CEO of Royalty Pharma and a Principal and co-founder of Pharmakon Advisors, BPCR’s investment manager, has announced that he has sold 55,000,000 BPCR ordinary shares at a price of US$0.97 per share. The placing shares represent approximately 4.0% of BPCR’s issued share capital. Because it is a secondary transaction, BPCR will not receive any proceeds from the placing.
- Fidelity Asian Values (FAS) has announced its interim results for the six months ended 31 January 2022. During the period, FAS’s NAV increased by 2.2%, while its share price fell by 1.1%. In comparison, FAS’s comparative index (the MSCI All Countries Asia ex Japan Small Cap Index) fell by 1.0% (all figures in sterling terms). FAS is utilising gearing on a net basis for the first time in seven years (to reflect the business opportunities available to the Company) and, as at 31 January 2022, FAS had net gearing of -2.2%, which has risen to 3.6% as at 18 April 2022. The manager, Nitin Bajaj, says that, during the period, most of the detractors are from China, while most of the contributors are from India. He says that this is more of a reflection of the state of the stock markets in these two countries rather than due to business performance. However, he says that he is finding more opportunities in China where the market has declined due to structural reasons (policy changes) and cyclical reasons (slowing economic cycle). The notable exception to the above trend was China Overseas Land & Investment which is a government-owned housebuilder in China. Nitin says that this will be a big beneficiary of the turmoil in the private sector from housebuilders such as Evergrande, etc.
- LXI REIT (LXI) has sold a Premier Inn-anchored asset in Saffron Walden, which also includes retail units let to B&M, Pure Gym, Pets at Home and Costa, for £19.33m (a 4.45% yield) and used the proceeds to acquire an M&S Simply Food store and a MKM trade unit, for a combined £9.44m (at a 5.25% blended net initial yield), from separate developers. The company is acquiring the foodstore in Largs, North Ayrshire, by means of a pre-let forward funding transaction. Marks & Spencer plc has signed a new, unbroken 15-year lease, with five yearly rental uplifts at a fixed growth rate of 2.5% per annum compounded. The trade unit is a builders’ merchant facility constructed this year and fully let to MKM Building Supplies on a long lease, with 20 years unexpired to first break. The rent increases on a five-yearly basis in line with RPI inflation (capped at 3.5% per annum and collared at 1.5% per annum). Both acquisitions benefit from strong ESG credentials, including an EPC “A” rating and rooftop solar panelling at the MKM unit, and a target EPC rating of “A” at the M&S Simply Food development. The balance of the sales proceeds will be invested in the company’s investment pipeline.
- Life Settlement Assets (LSAA) has announced its annual results for the year ended 31 December 2021. During the period, LSAA’s NAV increased by US$9.1m to US$109.3m. After taking into account distributions made to shareholders that totalled US$5.1m, LSAA’s NAV increased by 14.2% over the year. The NAV per share increased from US$2.01 at the 31 December 2020 to US$2.19 at the 31 December 2021 (an increase of 9.0%). The discount to NAV widened significantly during the period from 5.5% at the end of the prior year to 34.7% as at 31 December 2021. Maturities totalling US$38.5m were declared during the year, continuing the strong start reported at the beginning of the year. Of these, US$30.1m were non-HIV policies, and US$8.4m were HIV policies. LSAA’s manager, Acheron Capital, says that, in the next few years, the non-HIV portfolio will mature much faster than the HIV portfolio, which will leave LSAA predominately invested in HIV policies. The HIV mortality in the portfolio will be the most significant factor that will affect the financial outcome of the LSAA in the future. This will directly affect cashflow, not only in terms of the maturities level, but also in terms of premiums paid. Other factors, such as unexpected premium change or discount rate, would also have effect on cashflow, and, within a reasonable range, some effect on valuation.The total ongoing charges ratio increased slightly from 7.1% to 7.6% of NAV in 2021, reflecting some inflation of third-party fees and an increase in the number of policies being serviced. The ongoing charges ratio excluding policy servicing fees and legal costs increased from 3.1% to 3.6% of NAV. LSAA’s chairman, Michael Baines, says that work continues to reduce the LSAA’s future cost base including the revision to the Investment Manager’s fees (discussions with the manager are ongoing).During the year the Company made distributions to Shareholders by way of special dividends as follows:
- In June 2021, a special B dividend of USD 2.6 million (17.813 US cents per B Share) as part of the share class merger arrangements noted below.
- In November 2021, a special dividend of USD 2.5 million (5.017 US cents per A Share).
We also have annual results from abrdn European Logistics Income.