Fidelity Asian Values Plc (LON:FAS) has announced its half-yearly results for the six months ended 31 January 2025.
Financial Highlights
- During the six months ended 31 January 2025, Fidelity Asian Values PLC (“the Company”) reported a Net Asset Value (NAV) total return of +3.2% while the Comparative Index, the MSCI All Countries Asia ex Japan Small Cap Index (net) total return (in sterling terms) fell -2.1%.
- Over the same period, the ordinary share price total return of the Company was +4.1%.
- Overweight positioning in China and underweight positioning in India contributed positively to performance.
- The Portfolio Managers continue to believe innovation and technological excellence in China offer opportunities to investors.
PORTFOLIO MANAGERS’ HALF-YEARLY REVIEW
PERFORMANCE REVIEW
Over the six-month period ended 31 January 2025, the net asset value (“NAV”) total return of the Company was +3.2%, outperforming the Comparative Index, the MSCI All Countries Asia ex Japan Small Cap Index (net) total return (in sterling terms), which fell by -2.1%. Over the same period, the Company’s share price total return was +4.1%. The Company’s discount to its NAV was 9.5% as at 31 January 2025, having ranged between 8.2% and 14.5% in the reporting period. However, it was trading in a narrower range than its peer group.
TABLE 1: COMPANY’S NAV, SHARE PRICE AND COMPARATIVE INDEX RETURNS (AS AT 31 JANUARY 2025)
| NAV total return (%) | Share Price total return (%) | Comparative Index total return (%) | |
| Tenure (since 1 April 2015) | +126.3 | +134.2 | +134.7 |
| 10 Years | +140.5 | +149.2 | +144.1 |
| 5 Years | +64.9 | +51.1 | +67.4 |
| 3 Years | +20.5 | +17.1 | +14.0 |
| 1 Year | +9.1 | +4.9 | +7.4 |
| 6 Months | +3.2 | +4.1 | -2.1 |
| 3 Months | -2.1 | +1.6 | -3.9 |
| ========= | ========= | ========= |
Source: Fidelity International, 31 January 2025.
Fidelity Asian Values has outperformed its Comparative Index in the six-month period under review. This was achieved through the consistent application of our investment process, despite the challenging context of the past eighteen months. We have retained our contrarian positions in undervalued Chinese businesses and stayed away from expensive Indian small-caps. Our consistency has driven the recovery in the Company’s relative performance compared to the Comparative Index in the six-month period under review. Our overweight position in China and underweight position in India contributed positively to the Company’s relative performance against the Comparative Index. Small caps in China and Hong Kong rose by 15.1%, while small caps in India fell by 10.4%. The success of DeepSeek’s low-cost but top-end AI model drove a sharp rally in shares of Chinese small cap technology companies perceived as potential beneficiaries. We had minimal exposure to such companies as our investment process filters them out due to their unpredictable long-term earnings trajectory and expensive valuations. As a result, stock selection in China detracted from performance. Outside of our benchmark countries, stock selection in the US and Australia (reported under “Others” in Table 2) also added value during the review period. While Genpact, which is a US-listed business process outsourcing company with the majority of its operations in India, drove returns from the US, gains in gold miners (De Gray Mining and Gold Road Resources), which tracked goldprices, enhanced returns from Australia.
TABLE 2: COUNTRY ATTRIBUTION OVER SIX MONTHS TO 31 JANUARY 2025
Average weight (%) | Contribution to relative returns (%) | ||||||
| Company (%) | Index (%) | Relative (%) | Cumulative returns (%) | Stock selection | Market selection | Total | |
| China & Hong Kong | 39.0 | 13.8 | +25.1 | +15.1 | -1.9 | +4.9 | +3.0 |
| India | 14.2 | 34.0 | -19.8 | -10.4 | -0.6 | +1.8 | +1.2 |
| Indonesia | 17.1 | 2.2 | 14.9 | -1.4 | +0.1 | +0.1 | +0.2 |
| Malaysia | 0.6 | 3.2 | -2.6 | -0.8 | 0.0 | 0.0 | 0.0 |
| Philippines | 1.5 | 0.8 | 0.7 | -5.4 | -0.1 | 0.0 | -0.1 |
| Taiwan | 2.0 | 24.4 | -22.4 | +1.2 | +0.7 | -0.7 | -0.0 |
| Singapore | 2.6 | 5.5 | -2.9 | +4.3 | 0.0 | -0.1 | -0.1 |
| Thailand | 1.5 | 3.4 | -1.9 | +0.9 | -0.1 | -0.1 | -0.2 |
| Korea (South) | 12.7 | 12.6 | 0.1 | -6.2 | -0.7 | +0.2 | -0.5 |
| Others | 11.8 | 0.0 | 11.8 | – | +2.1 | 0.0 | +2.1 |
| ————— | ————— | ————— | ————— | ————— | ————— | ————— | |
| Total Primary Assets | 103.0 | 100.0 | +3.0 | -2.1 | -0.5 | +6.1 | +5.6 |
| Cash & others | -3.0 | 0.0 | -3.0 | – | – | – | -0.3 |
| ————— | ————— | ————— | ————— | ————— | ————— | ————— | |
| Total | 100.0 | 100.0 | 0.0 | – | – | – | +5.3 |
| ========= | ========= | ========= | ========= | ========= | ========= | ========= | |
Source: Fidelity International, 31 January 2025. Company = Fidelity Asian Values PLC. Index = MSCI All countries Asia ex Japan Small Cap Index (net) total return (in sterling terms).
TABLE 3: TOP 5 KEY CONTRIBUTORS OVER SIX MONTHS (AS AT 31 JANUARY 2025)
Order | Security | Average Active Weight (%) | Gain/Loss (%) | Contribution to Relative Returns (%) |
| Top 5 | ||||
| 1 | Genpact | +2.6 | +44.9 | +1.0 |
| 2 | Full Truck Alliance | +1.1 | +53.5 | +0.6 |
| 3 | Japfa Comfeed Indonesia | +2.0 | +29.9 | +0.6 |
| 4 | Taiwan Semiconductor Manufacturing | +2.1 | +26.9 | +0.6 |
| 5 | China Mengniu Dairy | +0.9 | +7.1 | +0.5 |
| ————— | ||||
| Total | +3.3 | |||
| ========= |
Source: Fidelity International, 31 January 2025.
TOP 5 KEY DETRACTORS OVER SIX MONTHS (AS AT 31 JANUARY 2025)
Order | Security | Average Active Weight (%) | Gain/Loss (%) | Contribution to Relative Returns (%) |
| Top 5 | ||||
| 1 | Axis Bank | +3.0 | -15.7 | -0.5 |
| 2 | IndusInd Bank | +1.0 | -27.1 | -0.4 |
| 3 | Valaris | +0.7 | -36.5 | -0.4 |
| 4 | Samsung Electronics | +0.8 | -38.3 | -0.4 |
| 5 | LIC Housing Finance | +1.3 | -21.3 | -0.4 |
| ————— | ||||
| Total | -2.1 | |||
| ========= |
Source: Fidelity International, 31 January 2025.
Genpact was the largest contributor to relativeperformance. Its high-quality management team is driving it to grow at a faster rate than the industry. The company’s investments in AI solutions are also attracting clients. We trimmed our exposure when the stock price rose but continue to retain a position as the company has high-teens return on invested capital (which measures how well a company generates profits from its investment) and is attractively valued at 13 times its 12-month forward earnings. Forward earnings are a measure of the price of the shares against the likely future profits. Full Truck Alliance which is China’s dominant freight transport platform that matches trucker and shippers for commissions was another contributor. Its highly cash generative, low capex business model adds value to its clients by reducing logistics costs and enhancing efficiencies and the stock trades at 15 times 12-month forward earnings. Indonesia’s second largest poultry feed and farming company Japfa Comfeed Indonesia also added value and again we have taken some profits but continue to retain a position in the company given its operating margins and valuations are at historical low levels at 6 times 12-month forward earnings.
Our holdings in Axis Bank and IndusInd Bank, which are India’s third and fifth largestprivate sector lenders, detracted in line with the correction in Indian equities. There were some concerns around asset quality for Axis Bank while IndusInd Bank experienced nearterm weakness in growth in its micro finance segment. Elsewhere, the share price in US listed oil services company Valaris was subdued in an environment of oil price weakness despite continued geopolitical issues and tensions in the Middle East. The company has operations globally including in the Asia Pacific Rim. We maintain our conviction in all of these names from a medium to long-term perspective.
INVESTMENT STRATEGY
Our investment strategy continues to focus on investing in good businesses, run by good management teams that are available at a suitable margin of safety which means that we are not overpaying for the investment.
Our bottom-up approach to investing is completely benchmark agnostic which has succeeded in generating sustainable performance for the Company in the long run, despite style headwinds. We believe these headwinds should become tailwinds. In our opinion, value stocks should generate superior earnings growth over time compared to growth stocks and provide better cash returns, in terms of dividends.
Outlook
We have always maintained that macro-economic trends and market movements are difficult to forecast. We know that equities can move sharply, driven by sentiment. We witnessed this in China in September 2024 when investors reacted strongly to Chinese policy announcements driving a steep rally, which then fizzled out in the following few months as a result of policy disappointments. This rally could repeat itself as there is a huge amount of money sitting on the sidelines in China. The sentiment could turn very quickly if there are signs of a shift in earnings momentum which could lead to stock market strength in China.
Our focus remains on owning businesses which are better quality than the market at cheaper valuations. As you can see from the chart in the Half-Yearly Report, the Return on Equity which measures the prospective return against the value of shares of our portfolio is at a premium to the market, while the Price to Earnings ratio which measures the price of the shares of the portfolio against its earnings, is at a significant discount.
Overall, we are very comfortable with the portfolio as it stands today. We are overweight in China compared with the Index given that we see many opportunities to own well-financed and well-run businesses with a significant margin of safety, meaning that they are available at an attractive valuation. We are convinced that China remains home to innovation and technological excellence with its substantial pool of well-educated workforce. It also maintains its position as a highly competitive manufacturing hub for the world, offering technology and cost leadership. Indonesia is another country where we continue to find investment opportunities at the right price, particularly in well-run financials and we have selected long-term winners in the consumer staples space. Meanwhile, we continue to stay away from sectors and countries that most investors find fashionable, such as AI-driven technology hardware; Taiwan and Korea; as well as expensive small caps in India. This strategy has served us well in the past and we believe it will continue to reward us well in the coming three to five years.
NITIN BAJAJ AJINKYA DHAVALE
Portfolio Manager Co-Portfolio Manager
24 March 2025 24 March 2025
TWENTY LARGEST HOLDINGS AS AT 31 JANUARY 2025
The Asset Exposures shown below measure exposure to market price movements as a result of owning shares, corporate bonds, equity linked notes and derivative instruments. The Fair Value is the realisable value of the portfolio as reported in the Balance Sheet. Where the Company holds shares, corporate bonds and equity linked notes, the Asset Exposure and Fair Value will be the same. For derivative instruments, Asset Exposure is the market value of the underlying asset to which the Company is exposed, while the Fair Value reflects the mark-to-market on the contract since it was opened and is based on how much the share price of the underlying asset has moved.
| Fair Value £’000 | |||
| Asset Exposure | |||
| £’000 | %1 | ||
| Long Exposures – shares unless otherwise stated | |||
| Bank Negara Indonesia (Persero) | |||
| Banks | 12,123 | 3.1 | 12,123 |
| Axis Bank | |||
| Banks | 11,709 | 3.0 | 11,709 |
| Indofood CBP Sukses Makmur | |||
| Food Products | 10,206 | 2.6 | 10,206 |
| Taiwan Semiconductor Manufacturing Company | |||
| Semiconductors & Semiconductor Equipment | 9,502 | 2.5 | 9,502 |
| BOC Aviation (long CFDs) | |||
| Trading Companies & Distributors | 9,105 | 2.4 | (26) |
| KT | |||
| Diversified Telecommunication Services | 8,932 | 2.3 | 8,932 |
| Genpact | |||
| Professional Services | 8,604 | 2.2 | 8,604 |
| Federal Bank | |||
| Banks | 8,333 | 2.2 | 8,333 |
| Japfa Comfeed Indonesia | |||
| Food Products | 7,201 | 1.9 | 7,201 |
| De Grey Mining | |||
| Metals & Mining | 6,526 | 1.7 | 6,526 |
| Crystal International Group (shares and long CFDs) | |||
| Textiles, Apparel & Luxury Goods | 6,287 | 1.6 | 4,129 |
| Full Truck Alliance | |||
| Ground Transportation | 6,229 | 1.6 | 6,229 |
| IndusInd Bank | |||
| Banks | 6,123 | 1.6 | 6,123 |
| Sinotrans | |||
| Air Freight & Logistics | 5,980 | 1.6 | 5,980 |
| LIC Housing Finance | |||
| Financial Services | 5,532 | 1.4 | 5,532 |
| Arwana Citramulia | |||
| Building Products | 5,480 | 1.4 | 5,480 |
| Ciputra Development | |||
| Real Estate Management & Development | 5,339 | 1.4 | 5,339 |
| Chow Sang Sang Holdings International (shares and long CFD) | |||
| Textiles, Apparel & Luxury Goods | 5,099 | 1.3 | 4,986 |
| Asia Commercial Bank (shares and equity linked notes) | |||
| Banks | 5,061 | 1.3 | 5,061 |
| Qingdao Port International | |||
| Transportation Infrastructure | 4,922 | 1.3 | 4,922 |
| ————— | ————— | ————— | |
| Top twenty long exposures | 148,293 | 38.4 | 136,891 |
| Other long exposures | 282,317 | 73.1 | 235,608 |
| ————— | ————— | ————— | |
| Total long exposures (159 holdings) | 430,610 | 111.5 | 372,499 |
| ========= | ========= | ========= | |
| Short exposures | |||
| Short CFDs (8 holdings) | 12,068 | 3.1 | (190) |
| Short futures (4 holdings) | 5,010 | 1.3 | (106) |
| ————— | ————— | ————— | |
| Total short exposures | 17,078 | 4.4 | (296) |
| ————— | ————— | ————— | |
| Gross Asset Exposure2 | 447,688 | 115.9 | |
| ========= | ========= | ||
| Portfolio Fair Value3 | 372,203 | ||
| ========= | |||
| Net current assets (excluding derivative assets and liabilities) | 13,760 | ||
| ————— | |||
| Total Shareholders’ Funds/Net Assets | 385,963 | ||
| ========= | |||
1 Asset Exposure (as defined in the Glossary of Terms in the Half-Yearly Report) is expressed as a percentage of Total Shareholders’ Funds.
2 Gross Asset Exposure comprises market exposure to investments of £371,447,000 plus market exposure to derivative instruments of £76,241,000.
3 Portfolio Fair Value comprises investments of £371,447,000 plus derivative assets of £1,473,000 less derivative liabilities of £717,000.
INTERIM MANAGEMENT REPORT AND DIRECTORS’ RESPONSIBILITY STATEMENT
BOARD CHANGES
Following completion of the Board’s succession planning, Michael Warren retired from the Board at the conclusion of the AGM in November 2024, at which point the Board reverted to five non-executive Directors.
DISCOUNT MANAGEMENT AND SHARE REPURCHASES
With geopolitical tensions remaining high, market conditions have continued to be unsettled, leading to a degree of volatility in the Company’s share price discount to NAV, which ranged during the period between 8.2% at its narrowest and 14.5% at its widest, finishing the end of the reporting period at 9.5%. In the six-month reporting period, the Company repurchased 1,503,615 ordinary shares (2.0% of the issued share capital) for holding in Treasury, at a cost of £7,550,000. Since then and up to the latest practicable date of this report, 1,121,748 shares have been repurchased as part of the Company’s active and ongoing discount management strategy. The primary purpose of share buybacks is to limit discount volatility, and at the AGM on 21 November 2024 the Board received shareholder approval to renew the annual authority to repurchase up to 14.99% or to allot up to 10% of the ordinary shares in issue.
The timing of repurchases of ordinary shares are made at the discretion of the Broker, within guidelines set by the Board and considering market conditions at the time. Shares will only be repurchased in the market at prices below the prevailing NAV per ordinary share, thereby resulting in an accretive enhancement to the NAV per ordinary share. Shares repurchased are currently held in Treasury and would only be reissued at NAV per ordinary share or at a premium to NAV per ordinary share. The Board will consider cancelling shares when the percentage of shares held in Treasury exceeds 10% of the total issued share capital.
ALLOCATION OF INVESTMENT MANAGEMENT FEES AND FINANCE COSTS
The Board has elected under the Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts (“SORP”) issued by the Association of Investment Trust Companies, to charge 75% of the base investment management fees and finance costs to capital and 25% to revenue with effect from 1 August 2024. The Board believes that this allocation better reflects the Company’s focus on capital growth to generate returns. Previously, these costs were charged in their entirety to revenue. The change does not affect the total return although relative rates of taxation of income and capital gains may be a consideration for some investors.
The variable investment management fee continues to be allocated wholly to capital.
PRINCIPAL AND EMERGING RISKS
The Board, with the assistance of the Manager (FIL Investments Services (UK) Limited), has developed a risk matrix which, as part of the risk management and internal controls process, identifies the key existing and emerging risks and uncertainties faced by the Company.
The Board considers that the principal risks and uncertainties faced by the Company continue to fall into the following risk categories: economic, political and market; investment performance (including the use of derivatives and gearing); changes in legislation, taxation or regulation; cybercrime and information security; business continuity and crisis management; competition and marketplace threats impacting business growth; level of discount to net asset value; operational; key person; and environmental, social and governance (ESG). Information on each of these risks is given in the Strategic Report section of the Annual Report on pages 24 to 28 for the year ended 31 July 2024 which can be found on the Company’s pages of the Manager’s website at www.fidelity.co.uk/asianvalues.
There continues to be increased geopolitical risks facing the company, including political and trade tensions globally, trade sanctions and a challenging regulatory environment hindering foreign investment. Global economic uncertainty is raised by the ongoing war in Ukraine, the potential for further Middle East conflict despite the ceasefire, ongoing tensions between South Korea and North Korea, South China Sea dispute and implications of China-Taiwan relations. The Board and the Manager remain vigilant in monitoring such risks.
In recent months, there have been increased concerns around investment cost disclosure and its impact in the industry. There is a risk that the FCA’s proposed Consumer Composite Investment (CCI) regime may make investment companies more complex for consumers and other investors to understand and increase the regulatory burden imposed on the sector if it proceeds with some of the proposals as drafted.
There are increased threats facing the sector within the current market environment of increased mergers and acquisitions activity. The investment company sector has suffered from significant discounts for an extended period and this has allowed for some activist managers to take a more aggressive approach. The Board is aware of these risks and continues to actively monitor the Company’s discount and is taking action within the guidelines set.
Climate change continues to be a key principal risk confronting asset managers and their investors. Globally, climate change effects are already being experienced in the form of a changing pattern of weather events. Climate change can potentially impact the operations of investee companies, their supply chains and their customers. Additional risks may also arise from increased regulations, costs and net-zero programmes which can all impact investment returns. The Board notes that the Manager has integrated ESG considerations into the Company’s investment process. The Board will continue to monitor how this may impact the Company as a risk on investment valuations and potentially affect shareholder returns.
The Board and the Manager are also monitoring the emerging risks and rewards posed by the rapid advancement of artificial intelligence (AI) and technology and how this may threaten the Company’s activities and its potential impact on the portfolio and investee companies. AI can provide asset managers powerful tools, such as enhancing data analysis risk management, trading strategies, operational efficiency and client servicing, all of which can lead to better investment outcomes and more efficient operations. However, with these advances in computer power that will impact society, there are risks from its increasing use and manipulation with the potential to harm, including a heightened threat to cybersecurity.
Other emerging risks may continue to evolve from future geopolitical and economic events.
Investors should be prepared for market fluctuations and remember that holding shares in the Company should be considered to be a long-term investment. Risks are mitigated by the investment trust structure of the Company which means that the Portfolio Managers are not required to trade to meet investor redemptions. Therefore, investments in the Company’s portfolio can be held over a longer-time horizon.
The Manager has appropriate business continuity and operational resilience plans in place to ensure the continued provision of services. This includes investment team key activities, including those of portfolio managers, analysts and trading/support functions. The Manager reviews its operational resilience strategies on an ongoing basis and continues to take all reasonable steps in meeting its regulatory obligations, assess its ability to continue operating and the steps it needs to take to serve and support its clients, including the Board.
The Company’s other third-party service providers also have similar measures in place to ensure that business disruption is kept to a minimum.
TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
The Manager has delegated the Company’s portfolio management of assets and company secretariat services to FIL Investments International. Transactions with the Manager and related party transactions with the Directors are disclosed in Note 13 to the Financial Statements below.
GOING CONCERN STATEMENT
The Directors have considered the Company’s investment objective, risk management policies, liquidity risk, credit risk, capital management policies and procedures, the nature of its portfolio and its expenditure and cash flow projections. The Directors, having considered the liquidity of the Company’s portfolio of investments (being mainly securities which are readily realisable) and the projected income and expenditure, are satisfied that the Company is financially sound and has adequate resources to meet all of its liabilities and ongoing expenses and can continue in operational existence for a period of at least twelve months from the date of this Half-Yearly Report.
This conclusion also takes into account the Board’s assessment of the ongoing risks as outlined above.
Accordingly, the Financial Statements of the Company have been prepared on a going concern basis.
Continuation votes are held every five years and the next continuation vote will be put to shareholders at the AGM in 2026.
BY ORDER OF THE BOARD
FIL INVESTMENTS INTERNATIONAL
24 March 2025
DIRECTORS’ RESPONSIBILITY STATEMENT
The Disclosure and Transparency Rules of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements.
The Directors confirm to the best of their knowledge that:
a) the condensed set of Financial Statements contained within the Half-Yearly Report has been prepared in accordance with the Financial Reporting Council’s Standard FRS 104: Interim Financial Reporting; and
b) the Portfolio Managers’ Half-Yearly Review and the Interim Management Report above include a fair review of the information required by DTR 4.2.7R and 4.2.8R.
The Half-Yearly Report has not been audited or reviewed by Fidelity Asian Values’ Independent Auditor.
The Half-Yearly Report was approved by the Board on 24 March 2025 and the above responsibility statement was signed on its behalf by Clare Brady, Chairman.
