Scottish Oriental Smaller Companies

SST has performed well in a tough environment thanks to its quality focus…

Bargain hunt

We survey the discount opportunities in the market and update on the performance of our Discounted Opportunities Portfolio

Scottish Oriental Smaller Companies - Overview

Scottish Oriental Smaller Companies (SST) aims to identify high-quality Asian businesses with market-leading positions and strong balance sheets which can grow faster than the market over the long run. The strategy has a track record of generating good returns after global economic crises. As we discuss in Performance, it has done well in 2021 so far too. SST has been run to the same basic strategy by the same team at FSSA since launch in 1995 but has been revivified in recent years under lead

Grade inflation

Markets had a great first half to 2021 following on from what was a strong 2020, just as we all would have expected during a pandemic, no doubt! Our discounted opportunities portfolio has performed respectably in the six months to the end of June. We had one great success, with a trust leaving the list after a barnstorming rally, but overall results from a NAV and discount perspective were mixed, as we discuss below. Overall share price ratings are now high in the investment trust space, with de

Scottish Oriental Smaller Companies - Overview

Scottish Oriental Smaller Companies (SST) invests in market-leading businesses which have a market cap of below $5bn at the time of investment. These companies are chosen for their low levels of debt, strong management teams, and ability to compound earnings consistently over the long run. SST performed very well after the 2008 financial crisis and the 2000 bursting of the tech bubble, as discussed in the performance section, which has contributed to it being one of the ten best-performing trus

Get 'em while they're hot!

The period since our last review of investment trust discounts on 22 October has been a pretty good one for investors in trusts, and has seen the average discount on the sector narrow from 3.5% to under 1%. In fact, despite the tumultuous events of 2020, it is now almost as if the year had never happened: the universe entered the year on a discount of 1.5% and ended it on a discount of 1.1%, where it remains as of 07/01/2021.

Scottish Oriental Smaller Companies - Overview

Scottish Oriental Smaller Companies Trust (SST) aims to buy marketleading Asian businesses with a market cap below $3bn and hold them for the long term as they grow. Manager Vinay Agarwal aims to find companies which can generate high and sustainable earnings, typically from dominating a niche and having advantages which can’t be easily replicated. He aims to buy these companies on reasonable valuations and invest on a three- to five-year time horizon. A key element of the investment process is

Five ways to play Indian equities

India is one of the countries hit worst by the coronavirus crisis. In Q2 the country’s GDP fell 23.9%, which compares to an average of -6.9% for the OECD average and growth of 11% for China, following a 10% decline in Q1. India’s government has also definitively lost control of the virus itself. While other countries can at least claim to be restraining its spread (although that is contentious), India has been continuing with its national unlocking while cases rise rapidly (even if some states h

Always darkest before the dawn

Since we last reviewed our portfolio of discount opportunities, an awful lot has happened. The period from October to December saw a new Brexit deal, followed by the UK government winning a parliamentary majority to implement it. Both were bullish for UK and European markets, and led to a sharp rally in markets and a rapid narrowing of investment trust discounts. Globally, the mood was pretty optimistic for 2020; with a growing number of managers and commentators forecasting a rally in cyclical

Don't panic: the case for investing in Asia this ISA season

The coronavirus outbreak in China has developed from a humanitarian catastrophe to a stock market panic. While the short-term economic impact of the virus could well be severe, there are still fundamental reasons to be invested in developing Asia for long-term investors. Historically one reason investors have been encouraged to invest in emerging Asian markets is to benefit from the region’s greater GDP growth. The OECD forecasts that UK real GDP, that is adjusted for inflation, will grow by 2.

Scottish Oriental Smaller Companies - Overview

Scottish Oriental Smaller Companies Trust (SST) aims to generate capital growth from a portfolio of Asian ex Japan smaller companies which are selected for their long-term growth potential. Manager Vinay Agarwal looks for high quality companies trading on attractive valuations, and aims to hold them for three years at a minimum, but ideally for much longer. The strategy centres on finding companies with strong positions in growing markets and industries, and with management teams who work in the

Quality street: can the dominant style continue to outperform?

Quality as an investing style has outperformed significantly in recent years, and over the past 12 months especially so. After this kind of outperformance, it is natural to ask whether a trend is over-done and profits should be taken – and that is what we have done. When analysing the typical quality benchmarks, it quickly becomes apparent that these indices have significant industry and sector exposures, which could affect how they perform in the future and put them at risk of a down period. Bu

Push-me pull-you

Since the start of 2018, investors in Asian equities have had a torrid time, with the region underperforming global stock markets. Perhaps reassuringly for investors, the drivers of this underperformance have not been economic fundamentals but more unpredictable factors, which are external to the economies and markets of the region – namely, the ongoing trade dispute between the US and China, and expectations for the US federal funds rate (the global economy’s risk-free rate). However, this does

Scottish Oriental Smaller Companies - Overview

Scottish Oriental Smaller Companies Trust (SST) aims to generate capital growth from a portfolio of Asian ex Japan smaller companies which are selected for their long-term growth potential. Manager Vinay Agarwal looks for high quality companies trading on attractive valuations and aims to hold them for three years at a bare minimum, but ideally for much longer. Vinay took over in 2016 and has revivified the portfolio, accelerating the concentration of holdings initiated by previous manager, Wee

Surf's up

BlackRock World Mining Trust | Invesco Income Growth Trust | Perpetual Income & Growth IT | BlackRock Energy and Resources Income Trust | Scottish Oriental Smaller Companies | JPMorgan Asian

Morning Note – 22 April 2024

Benefits of scale set to materialise

Frenkel Topping - Resilient with strong growth potential

FY 2023 was a challenging year for Frenkel with higher interest rates encouraging clients to place money into lower margin money market funds. Despite this, sales grew +32% (supported by recurring revenue +9% and +51% in non-recurring), EBIT margins remained strong at 22% and adj. EPS grew +17% (taking into account the higher number of shares). FY 2024 has seen a solid start to transactional business and there is a strong pipeline of new FUM opportunities both of which support further growth. Wi

S&U - PBT ahead, encouraging volume trends

S&U reported FY24 PBT of £33.6m, down from £41.4m in FY23 on higher funding and regulatory costs and higher impairments in Advantage in H2. PBT was 2% ahead of our forecast as stronger revenues – up 12% to £115.4m – and better costs offset higher-than-expected impairments. Net receivables grew to a record at both Advantage and Aspen and management noted particular strength in Q4 and a good trading environment in the current year. Having absorbed a significant rise in funding cost as well as addi

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no

Foresight Solar Fund - Termination of coverage

Edison Investment Research is terminating coverage on ABC Arbitrage (ABCA), paragon (PGN), Foresight Solar Fund (FSFL), Kendrion (KENDR), Lithium Power International (LPI), Triple Point Energy Transition (TENT), 4iG (4IG), e-therapeutics (ETX), Pharnext (ALPHA) and Shield Therapeutics (STX). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant. Previously published reports can still be accessed via our web

Regional REIT - Performing as expected ahead of refinancing

In a challenging market, Regional REIT’s (RGL’s) FY23 operational and financial performance was robust, in line with expectations and previous guidance. Investor focus remains on the company’s loan to value (LTV) reduction and bond refinancing plans, explored in detail in our previous note and RGL will provide an update on this in due course.

LIBERUM: PayPoint: On track for £100m of EBITDA in FY 26

LIBERUM: Speedy Hire: Weakness in FY 24 but recovery in FY 25

Hybridan Small Cap Feast - 22 April 2024

22nd April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

The Hardman & Co Monthly: April 2024

Feature article: Steady as she goes, but could be better: A review of investment company liquidity since 2016 Liquidity is the lifeblood of equity markets. The measurement of liquid asset availability to a market or company is a way of gauging a market’s health. This article builds on our previous work, which analysed the liquidity data for non-financial trading companies, by applying the same analytical techniques to the investment companies (IC) space. We analyse liquidity for ICs as a whol

Foxtons Group (FOXT LN) - 1Q24 IMS shows real momentum

Foxtons Group plc first quarter revenue rose 9% to £35.7m (1Q23: £32.9m) with growth delivered across all business segments. Trading is in line with management's expectations.

International Public Partnerships - Consistently and responsibly delivering

International Public Partnerships’ (INPP’s) FY23 results show that it continues to deliver consistent and predictable returns for investors, while delivering environmental and social benefits for the individuals and communities that are served by its assets. Despite this strong performance and a substantial need for private infrastructure funding, the macroeconomic environment has weighed on INPP’s share price, in common with the wider sector. Regardless, attractive returns are available from th

H&T Group (HAT): Core franchise build, short-term retail noise

In our 15 March 2023 initiation, 'Pawnbroking royalty, with strong, profitable growth', and subsequent notes, we have highlighted the strong market for pawnbroking and why H&T, as the market leader, is uniquely placed to take advantage of these opportunities. These results reconfirmed both, with the pledge book up 28% and net pawnbroking revenue up 36%. Like many in the retail space, H&T faced the challenge of customers focusing on lower-value, lower-margin items in the key run-up to Christmas 2

Zeus Top Picks for 2024 - 2023 review and outlook for 2024

On 9 January last year, we set out our ten top stock picks for 2023, for what turned out to be another relatively poor twelve months for UK equities due to two wars, stubbornly high inflation and further tightening of monetary policy. This was even as other major markets, such as the US, largely recovered in the year. In the 2023 calendar year, the AIM All-Share index fell 8.2% and is still 42% off its 2021 high. From the release of our 2023 top picks note, the average total return (assuming div