JPMorgan Asia Growth and Income says that over the 12 months ended 30 September 2023, it genetrated an NAV return of 6.4% and a return to shareholders of 7.3% (as the discount narrowed slightly during the review period, to 9.2% at end September 2023, from 9.6%), both better than the 1.4% return on the benchmark MSCI Asia ex-Japan Index.
The company’s dividend policy aims to pay regular, quarterly dividends, each equivalent to 1% of NAV on the last business day of each financial quarter, being the end of December, March, June and September. Dividends are funded from a combination of revenue and capital reserves. For the year ended 30th September 2023, dividends paid totalled 15.7p (2022: 16.5p).
The company no longer has a borrowing facility. The managers were not using the last one. The statement says when the timing is conducive the board will look to establish a new loan facility.
Extracts from the manager’s report
The report notes that stock selection added 5.2% to the company’s returns and was the main reasn that the trust outperformed.
The main contributors to relative performance at the stock level over the past year – both from stocks we held and those we avoided – were predominantly IT and consumer discretionary names, from a mix of countries. Our overweight to SK Hynix, a Korean semiconductor manufacturer, was rewarded as the stock outperformed on the back of their leadership in high bandwidth memory chips used in AI servers. Sales of these chips accounted for roughly 15% of total dynamic random-access memory (‘DRAM’) chip sales in the first half of the calendar year. Demand for AI-powered processes also supported Wiwynn, a Taiwanese tech hardware company specialising in computer storage solutions and cloud infrastructure. It outperformed on the back of growth in original design manufacturer (‘ODM’) server orders. Overweights to India’s Axis Bank and auto producer Maruti Suzuki also enhanced returns, as did our underweights to Chinese e-commerce names such as Meituan and JD.com. These names underperformed because of heightened competition and weak consumer demand.
The largest detractors from returns included our overweight to Foshan Haitian, a Chinese supplier of packaged foods. This stock underperformed due to the sluggish post-pandemic recovery in demand, as restaurant customers have been downtrading since the reopening. This position has now been sold. China’s Xinyi Solar, which produces solar glass, hurt returns as excess supply has led to pricing pressure across the supply chain. Our underweight to Quanta Computer, a Taiwanese manufacturer of notebook computers and communications products, detracted as this company was an early mover into AI server ODM, focusing on large cloud service providers, and the stock rose sharply in the rush for AI exposure. Quanta’s strong earnings were also supportive.
JAGI : Good stockpicking boosts JPMorgan Asia Growth and Income