JPMorgan Brazil Investment Trust plc Annual General Meeting - - PowerPoint PPT Presentation
JPMorgan Brazil Investment Trust plc Annual General Meeting September 2015 Sophie Bosch de Hood , Executive Director Portfolio Manager sophie.bosch@jpmorgan.com FOR PROFESSIONAL CLIENTS/QUALIFIED INVESTORS ONLY - NOT FOR RETAIL USE OR
FOR PROFESSIONAL CLIENTS/QUALIFIED INVESTORS ONLY - NOT FOR RETAIL USE OR DISTRIBUTION
Sophie Bosch de Hood, Executive Director Portfolio Manager sophie.bosch@jpmorgan.com
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(%) 30/4/14 – 30/4/15 30/4/13 – 30/4/14 30/4/12 – 30/4/13 30/4/11 – 30/4/12 30/4/10 – 30/4/11 Portfolio return
4.4
14.7 Index
0.2
5.3 Ordinary share price return
9.3
Source: J.P. Morgan Asset Management. Inception Date: 26 April 2010 Benchmark History - 26 April 2010 To Current - MSCI Brazil 10/40 Total Return Net GBP. Portfolio return: NAV to NAV, net of fees with income reinvested in GBP. Past Performance is not an indication of future performance.
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12 Months to 30th April 2015 % Portfolio return
Index
Ordinary share price return
12 Months to 31st July 2015 % Portfolio return
Index
Annualised Performance since inception – 31st July 2015 % Portfolio return
Index
Source: J.P. Morgan Asset Management. Inception Date: 26 April 2010 Benchmark History - 26 April 2010 To Current - MSCI Brazil 10/40 Total Return Net GBP. Portfolio return: NAV to NAV, net of fees with income reinvested in GBP. Past Performance is not an indication of future performance.
The 12 months to end April were a challenging
The dominant event of the period was October’s
The steep decline in natural resource prices in the
Against this turbulent backdrop, the trust’s net
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2%
3%
21%
5% 25% 45% EM Brazil Mexico Chile Colombia China Korea Taiwan India Malaysia Indonesia Poland Russia South Africa Turkey Dividend Valuation Chg EPS Growth (Lcl) Currency effect Total Return
Sources of total returns for YTD 2015
Source: JPMorgan Asset Management, Factset, as of 31st July 2015 Past performance is not necessarily a reliable indicator for future performance. EPS = earnings per share
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Source: Factset, MSCI Brazil 10/40, July 31, 2015. Past performance is not an indication of future performance. Indices do not include fees or operating expenses and are not available for actual investment. Past performance is not an indication of future performance.
MSCI Brazil 10/40 (Rebased Dec 2000 = 100)
100 200 300 400 500 600 700 800 900
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10 20 30 40 50 60 Aug 94 Aug 97 Aug 00 Aug 03 Aug 06 Aug 09 Aug 12 Jul 15 MSCI EM MSCI Brazil EM Average Brazil Average
Source: Factset as of 31st July 2015 BR = Brazil, CL = Chile, CN = China, CO = Colombia, CZ = Czech Republic, EG = Egypt, HU = Hungary, IN = India, ID = Indonesia, SK = South Korea, MX = Mexico, PE = Peru, PL = Poland, RU = Russia, ZA = South Africa, TR = Turkey.
Price to book 8 16 24 32 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 SK CN PE PL HU RU BR CO EG CZ TR ID MX IN CL ZA PH TH MY
Monthly price to earnings Price to earnings and price to book
Price to earnings TW
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Source: Consensus Economics, J.P. Morgan Asset Management. Domestic demand is defined as public and private consumption plus investment. External demand is defined as exports. Guide to the Markets – Brazil. Data as of 31st July 2015
GDP estimates, calendar year (%)
GTM – Brazil | Page 6
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Source: MacData, JPMorgan Database, data from 1968 to end 2014. Past performance is not necessarily a reliable indicator for future performance..
GDP growth per annum
2% 6% 10% 14% 18% 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
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Source: Publications listed. The companies above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. The use of the above company logos is in no way an endorsement for JPMAM investment management services. Past performance is not necessarily a reliable indicator for future performance
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Currency valuation and support
REER vs CARRY
Source: J.P. Morgan Asset Management estimates. Data as of 24th August 2015
REER (real effective exchange rate) relative to fair value (export-adjusted 10 year average REER) on the x axis and policy rate on the y axis. CARRY (a currency with a high Information Ratio) Countries over the line of best fit provide good carry for their currency valuation
MY CN TW RU ID TH KR MX BR IN CO TR PL HU ZA EG CL PH 2 4 6 8 10 12 14 16
10 20 30 Policy Rate less US REER Relative to Fair Value CHEAP EXPENSIVE LOW CARRY HIGH CARRY JP SG AU US
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Brazil 2014: £1.21 UK 2014: £0.30
Source: Company websites. Brazilian prices shown as GBP as at 28th August 2014. UK prices taken from Tesco.com and Amazon.co.uk. Apple Ipad is previous version of mini Ipad 32gb, wi-fi with retina display. Companies and products shown for illustrative purposes only not to be taken as advice or a recommendation. The use of the above company logos is in no way an
endorsement for JPMAM investment management services
Brazil 2014: £485 UK 2014: £260
Brazil 2014: £1.30 UK 2014: £1.50
Brazil 2014: £0.73 UK 2014: £0.60
Brazil 2014: £8.26 UK 2014: £6.00
Brazil 2014: £4.30 UK 2014: £4.00
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A leading provider of identification systems, payment
methods, SIM cards and digital certification.
Economics – Strong cash flow generation and balance sheet – Average Return on Equity of 20% over the last five years Duration – Historically good at identifying and adapting technology to
meet client needs
– Business and geographic diversification Governance – Listed on the Novo Mercado – Knowledgeable and experienced management team – Minimum payout of 50% since 2012
Source: Company presentation. BTG Pactual XVI Brasil CEO Conference. As of 13th February 2015. The companies/securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. J.P. Morgan Asset Management may or may not hold positions on behalf of its clients in any or all of the aforementioned securities.
Adapting technology to meet client demands
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Economics: – One of the main beneficiaries of a weak Brazilian Real – Conclusion of a major pulp capacity increase has substantially reduced
cash needs
– Ramp up of new plant will boost Suzano’s cash generation Duration: – Brazil enjoys an structural competitive advantage in pulp production due to:
(i) excellent climate conditions, (ii) vast and productive land, and (iii) abundant water availability.
– Consequently, harvesting cycle is relatively short – Low cost producer in a global context and vertical integration indicate
strong business resilience
Corporate Governance: – Family controlled with dual share listing – No tag-along rights for minority shareholders
Source: Company reports, Bloomberg J.P. Morgan Asset Management, data as of end June 2015. The companies/securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. J.P. Morgan Asset Management may or may not hold positions on behalf of its clients in any or all of the aforementioned securities.
Vertically integrated pulp and paper company
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The global solution in electric machines and automation
– Outstanding returns through the cycle, about 20% – Strong balance sheet (net cash position)
– Dominant player in Brazil (>70% market share) – Early automation process kept competitiveness on
Brazilian operation
– Diversified product lines
– Strong management focus on returns on invested capital
Source: Weg. As of July 2015. The companies/securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. J.P. Morgan Asset Management may or may not hold positions on behalf of its clients in any or all of the aforementioned securities.
Strong earnings growth and international diversification
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Active and absolute sector positions
Source: J.P. Morgan Asset Management. The Fund is an actively managed portfolio; holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the Investment Manager without notice.
14.7 5.1 3.2 2.2
0.0 5.0 10.0 15.0 20.0 Industrials Consumer Discretionary Financials Health Care Information Technology Utilities Telecoms Consumer Staples Materials Energy Portfolio weight (%) 21.0 11.5 32.2 3.1 4.1 3.6 0.0 16.2 3.5 3.7
Benchmark MSCI Brazil 10/40 Total Return (Net) Index
Relative to benchmark (%)
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Brazil continues to provide a challenging investment landscape. The country is going through a prolonged
Politics remains centre-stage and has impacted sentiment The Brazilian Real has weakened materially Brazil’s GDP continues to be revised downward. The second half of the year is shaping up to be more
Our continued focus on economics, duration and governance, lead us towards high quality companies that we
The opinions and views expressed here are those held by the author as at August 2015, which are subject to change and are not to be taken as or construed as investment advice
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Fund objective
Aims to generate total returns, primarily in the form of capital, from a portfolio primarily invested in Brazilian focused companies. The Company may also invest up to 10% in companies in other Latin American countries. Equity holdings may be reduced to a minimum of 60% of gross assets if it is considered beneficial to performance.
Risk profile
that there may be difficulty in both buying and selling shares and individual share prices may be subject to short-term price fluctuations.
relatively small movement, down or up, in the value of the Company’s assets will result in a magnified movement, in the same direction, of that NAV.
Please refer to the Fund’s prospectus or Key Investor Information Document (KIID)for more information relating to the Fund.
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GEM Global Emerging Markets EM Emerging Markets DM Developed Markets PE Price/Earnings ratio PB Price/Book PM Portfolio Manager ROE Return on Equity
Overweight u/w Underweight ROA Return on assets BV Book Value ADV Average Daily Volume YoY Year on Year EBITDA Earnings before interest, taxes, depreciation and amortization EPS Earnings per share DPS Dividends per share REER Real effective exchange rate Carry The difference between the interest rate in the country in question and the interest rate in the United States of America IR Information Ratio AR Argentina BR Brazil CL Chile CN China CO Colombia CZ Czech Republic EG Egypt HU Hungary ID Indonesia IN India KR South Korea MX Mexico MY Malaysia PH Philippines PL Poland RU Russia TH Thailand TR Turkey TW Taiwan ZA South Africa
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This is a promotional document and as such the views contained herein are not to be taken as an advice or recommendation to buy or sell any investment or interest thereto. Reliance upon information in this material is at the sole discretion of the reader. Any research in this document has been obtained and may have been acted upon by J.P. Morgan Asset Management for its own purpose. The results of such research are being made available as additional information and do not necessarily reflect the views of J.P. Morgan Asset Management. Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are unless otherwise stated, J.P. Morgan Asset Management’s own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all-inclusive and are not guaranteed as to accuracy. They may be subject to change without reference or notification to you. It should be noted that the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount
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