Scottish Mortgage Investment Trust (SMT) announced its interim results for the six months to 30 September 2024. The company delivered a NAV total return of 1.9%, trailing the benchmark index return of 3.6%. Shares fell by 6% over the period, although are up 15% year to today. The company also announced an interim dividend of 1.60p per share, consistent with last year’s interim payment.
Discussing some of the highlights and challenges for the period, manager Tom Slater commented:
“SpaceX has made remarkable progress with its reusable Starship launch platform. Designed for rapid reusability, Starship dramatically reduces launch costs, making space more accessible for a variety of missions. This capability doesn’t just open new doors for SpaceX, it could redefine what humanity can achieve in space by making projects like lunar exploration, Mars missions, and space tourism more feasible.
“One of Starship’s primary impacts will be its support for Starlink, SpaceX’s satellite communication network. With Starship’s high payload capacity, SpaceX can deploy and maintain a vast constellation of Starlink satellites at an accelerated pace. The company has been steadily increasing the number and capabilities of these satellites, recently adding more powerful models to improve coverage, speed, and reliability.
“In parallel, SpaceX has introduced a more affordable Starlink ground terminal, lowering the barrier for users to access high-speed internet in remote or underserved areas. This combination of enhanced satellite infrastructure and accessible ground equipment is set to accelerate the growth of the space-based communications market, potentially connecting millions of people worldwide who previously had limited or no internet access.
“While many of our portfolio companies performed well in both operational and stock price terms, two larger positions dampened our overall NAV growth. Moderna, the drug developer, has been underperforming. Its COVID vaccine franchise is in decline, and its new vaccine for respiratory syncytial virus has struggled to compete with established providers. This is disappointing, and we’re engaging with management to improve execution. However, we remain optimistic about Moderna’s differentiated pipeline of new therapies, which we expect to drive long-term improvement.
“Northvolt, the European battery manufacturer has struggled with production delays. It has announced it will lay off 1,600 staff and scale back its expansion plans, cancelling a project to increase its factory’s capacity. The company will need to deliver significant improvements if it is to retain the confidence of its stakeholders and capitalise on the vast opportunity that electrification of our transport system will present over the next decade.
“In contrast, Redwood Materials, which focuses on battery recycling, is making encouraging progress. The company is successfully scaling operations in the U.S. and finding enthusiastic buyers for its intermediate products as it builds towards full recycling. We have added to our investments in electrification by acquiring a stake in Chinese electric vehicle (‘EV’) manufacturer BYD. Despite fierce competition in China’s EV market, BYD’s vertical integration and focus on hybrid vehicles have positioned it as a dominant player with significant international potential. We believe its business will continue to internationalise.”
Regarding the outlook, he added:
“Our world is evolving rapidly, and with change comes opportunity. The founders and entrepreneurs leading our portfolio companies are well-positioned to seize these opportunities. Over the long term, earnings growth drives stock prices, and our portfolio consists of holdings growing much faster than the broader market. We believe that potential is not fully reflected in stock prices today, and we are excited about the returns they can deliver for our shareholders.”
