Murray International has published results for the 12 month period ended 31 December 2024. Highlights are:

• A NAV total return of +8.1% and a share price total return of +4.5%, this compares to a +3.5% rise in the Retail Price Index and a +19.8% increase in the FTSE All World Index.
• The discount moved out from 4.0% to 7.5% (currently 7.8%).
• The full year dividend rose to 11.8p, up 2.6% on the prior year. This was not quite covered by earnings, which fell from 12.1p to 11.6p. The company still has revenue reserves totalling £74.2m if needed.
• North America delivered the strongest regional returns with a 28% overall contribution while Latin America delivered the poorest absolute returns during the year.
• The strongest contributor to performance by far was Broadcom Inc., rising 114% and contributing 2.75% to NAV performance.
• Other major contributors to performance included TSMC, Hon Hai Precision Industry Inc. and Philip Morris International Inc.
• The most significant detractors during the period were Globalwafers Co., Wal-Mart de Mexico, Samsung Electronics, Grupo Aeroportuario Del Sureste and Vale.

Assuming the final dividend is approved, this will represent the 20th consecutive year in which the company has grown its dividend and as a result, the board expects that the company will be included in the AIC’s list of ‘Dividend Heroes’.

17.74m (2023: 5.25m) shares were repurchased during the year at a total cost of £54.1m (2023: £12.4m). These shares were acquired at a weighted average discount of 9.6% and represented 2.8% of the issued share capital at the start of the year (2023: 0.8%). The buybacks increased the NAV per share by 0.26%. Since the year end, a further 8.0m shares have been acquired.

Extracts from the manager’s report

In 2024, global equity index performance was significantly driven by the US and technology stocks, and this was also reflected in the portfolio’s positive absolute performance in total return terms. North America delivered the strongest regional index returns, mirrored in the portfolio returns with a 28% contribution to overall total return. Broadcom was the portfolio’s best performing investment over the year, rising by 114%, on top of the 93% return the stock generated in the previous year. Broadcom’s growth this year was driven by its products focused on AI infrastructure and connectivity, which are designed to support scalable AI infrastructure and the growing demands of AI applications. Cisco Systems also enjoyed a strong year within the technology sector. It wasn’t simply technology that performed well in North America; Philip Morris International and Canadian based Enbridge, the midstream pipeline business, also had a strong year. The UK was the next best-performing country in terms of absolute portfolio performance, delivering a 17% total return thanks to strong share price performance from consumer staples exposures in British American Tobacco and Unilever.

Asia was another region that witnessed strong equity market returns, driven by solid returns from Taiwan, Singapore, Thailand and Hong Kong. The area achieved a 14% total return for the portfolio during the year. Ping An Insurance, the Hong Kong listed financial services group, performed well, with the Chinese market more positive after a challenging couple of years on expectations that recent stimulus measures would continue and revive the country’s economy. Thai-based bank SCB X generated strong total returns over the period. In Singapore, the banking group Oversea-Chinese Banking Corporation and Singtel, one of Asia’s leading communication providers, appeared among the portfolio’s best performing investments. The fortunes of Taiwan Semiconductor largely dictate the fortunes of Taiwan’s equity market. Fortunately, the world’s leading semiconductor foundry operator had a very strong year driven by strong demand for high-end chips. This also benefitted the portfolio, as did the position in the contract manufacturing specialist, Hon Hai Precision Industries. The portfolio’s Asian exposure was not all positive. Global Wafers, again in Taiwan, had a challenging 2024 due to the sluggish demand in the silicon wafer market. South Korean technology giant Samsung Electronics was disappointing as it struggled to keep pace with competitors supplying semiconductor chips for AI applications.

European equity market returns were also more subdued, which was reflected in frustrating stock performance in the portfolio. Weak refining margins and lower oil prices dented the earnings of French energy company TotalEnergies, which weighed on performance. BE Semiconductor in the Netherlands had a more challenging year after being the portfolio’s strongest performer in 2023.

Latin America delivered the poorest absolute returns during the year. Mining exposures to iron ore and lithium, with Vale in Brazil and SQM in Chile, were disappointing as those commodity prices fell. In Mexico, Walmart de Mexico, Grupo ASUR and the currency came under pressure as the outcome of the general election in June raised uncertainty over future economic policies and changes to the fiscal and regulatory environment.

Finally, the residual Emerging Market Bond exposures witnessed the full brunt of Sterling’s strength but still managed a positive +6% return for the year. With a current running yield of 8.6% and many holdings still priced below par, current exposures are expected to be maintained and it is unlikely that they will be added to.

MYI : Murray International now a Dividend Hero