10 April
2024
UTILICO EMERGING MARKETS
TRUST PLC
(LEI Number:
2138005TJMCWR2394O39)
Publication of monthly
factsheet
The latest monthly factsheet for
Utilico Emerging Markets Trust plc ("UEM" or the "Company") will
shortly be available through the Company's website at:
https://www.uemtrust.co.uk/investor-relations/factsheet-archive
Monthly commentary
PERFORMANCE
UEM's NAV total return increased by
2.8% in March, outperforming the MSCI Emerging Markets total return
Index ("MSCI") which was up 2.5% in Sterling terms in the month.
This takes UEM's twelve-month NAV total return performance in its
financial year ended 31 March 2024 to 12.8%, significantly ahead of
the MSCI which was up 5.8% in Sterling terms over the same
period.
Global stock markets were mostly
positive in March, as core measures of inflation continue to ease
and economic growth and job data in several countries proved
remarkably resilient. In the US the S&P 500 Index strengthened
by 3.1% with the US workforce expanding by the largest amount in
almost a year. European markets were also buoyant, with the
Eurostoxx and FTSE 100 both up 4.2% in the month.
Emerging markets posted some
impressive figures which demonstrates the strength of some of these
economies. India reported that GDP growth accelerated to 8.4% in
the quarter to December 2023, well ahead of expectations. Strong
retail and mutual funds flows into the market helped the Sensex
Index hit another all-time high, which over the month was up by
1.6%.
The exports boom helped bolster
Vietnam GDP growth to 5.7% in the quarter to March 2024, and its
upgrade to emerging markets status by FTSE took a step closer
following the issuance of a consultation on the removal of
pre-funding requirements. This helped propel the Ho Chi Minh Index
up by 2.5% in March. In China, the real estate market remains in
the doldrums, but some economic data indicates a tentative recovery
with service and manufacturing PMIs edging up, and exports growth
accelerating to 7.1% in February. The Shanghai Composite Index
consolidated gains of 0.9% over March.
In Brazil, the Bovespa Index eased
by 0.7% after the Central Bank cut interest rates by 50bps to
10.75% but indicated that future cuts might be at a slower pace due
to uncertainty over the inflation outlook. With inflation at 4.1%,
real rates remain elevated, though it is encouraging to see the
economy holding up well and posting a record trade surplus for Q1.
In Mexico, interest rates were cut for the first time since the
Bank of Mexico started its tightening cycle in 2021. Mexico's Bolsa
Index appreciated by 3.5% over the month.
In March, Sterling strengthened
against most currencies, up 0.6% versus the Brazilian Real, 0.5%
against the Indian Rupee and the Vietnamese Dong, and 0.3% versus
the Chinese Renminbi. Sterling was broadly flat against the US
Dollar and the Philippine Peso.
PORTFOLIO
There were three changes to the top
holdings, with Manila Water, JSL and Sonatel entering the top
thirty, replacing GSPL, ECL and China Datang on investment and
relative performance. UEM took advantage of the recent price
strength and liquidity in GSPL's shares to exit the majority of its
position in GSPL during the first three months of the
year.
Manila Water is a Philippine water
utility whose main operations service 7.6m people the East Zone of
Manila. A change in the ownership structure and improvement in
regulatory regime provided UEM with an attractive opportunity to
start accumulating a position since late-2023, and progress is
reflected in their recent FY23 results which saw EBITDA increase by
over 60% and EPS by over 130%. Manila Water's share price was up by
15.7% in March.
JSL is Brazil's largest listed road
logistics company, operating an integrated logistics services
portfolio offering customized services with long-term contracts.
JSL's share price was up by 4.9% over the month. Sonatel's share
price was broadly flat on end-February.
Many of UEM's investee companies
reported excellent financial results during March, highlighting the
growth and resilience of their operations. ICT's share price rose
by 10.1% following solid FY23 results with yields continuing to
improve, driving revenues up 6.5% and EBITDA up 6.8%. Dividends of
PHP 11.00 per share including a special dividend which increased
the total dividend by 10.0%.
Santos achieved superb Q4 financials
with EBITDA up an astonishing 85% on improved operational
efficiencies, and also released strong February volume data, up
39.5%, reflecting new services won and boosted by volumes from a
competing terminal that had an accident restricting its handling
capacity. Santos' share price soared by 26.2% in March. Orizon
delivered FY23 EBITDA growth of 48% driven predominantly by
operational efficiencies. Pleasingly, it has finally received Gold
Standard accreditation for its carbon credits at the Joao Pessoa
landfill site, unlocking further value and helping shares firm by
13.7%. There were also strong share price performances from Nuam up
16.4%, Umeme up 8.7%, and FPT up 7.4%.
Weaker price performance was seen at
Citic Telecom, with its share price down by 15.4% in the month as
it reported poor H2 results for 2023, with a collapse in SMS
revenues resulting in EBITDA falling 12.3%. Transport Trade
Services' share price also declined by 4.4%, as it consolidated
recent record highs.
Portfolio purchases amounted to
£10.1m and realisations totalled £43.1m as UEM raised cash to repay
its loan facility.
DEBT
UEM's debt decreased from £26.0m to
nil in the month as UEM repaid all amounts outstanding under the
£50m committed multicurrency revolving facility from The Bank of
Nova Scotia which matured on 15 March 2024. The Company is
currently in discussions regarding a replacement revolving facility
and a further announcement will be made in due course.
OTHER
UEM's share price ended March at
221.00p, decreasing by 0.9% over the month. Disappointingly, the
discount to NAV widened to 19.3% from 17.0%. UEM bought back 0.7m
shares at an average price of 220.44p in the month, taking the
total shares bought back in the twelve months to 31 March 2024 to
11.4m, equivalent to 5.6% of the share capital as at 31 March
2023.
The third quarterly interim dividend
of 2.15p per ordinary share in respect of the year ending 31 March
2024, was paid on 28 March 2024 to shareholders on the register on
8 March 2024.
Name of contact and telephone number for
enquiries:
ICM Investment Management Limited
+44(0)1372
271486
Charles Jillings / Alastair
Moreton
Montfort Communications
Gay Collins, Pippa
Bailey
+44(0)20 3770 7913
utilico@montfort.london