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A winning dual investment strategy

Aberdeen Asian Income Fund 10 November 2021 Update
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Aberdeen Asian Income Fund

A winning dual investment strategy

Investment trusts
Asia Pacific income

10 November 2021

Price

226.5p

Market cap

£396.1m

AUM

£491.7m

NAV*

259.0p

Discount to NAV

12.6%

NAV**

260.2p

Discount to NAV

12.9%

*Excluding income. **Including income. As at 8 November 2021.

Yield

4.1%

Ordinary shares in issue

174.9m

Code

AAIF

Primary exchange

LSE

AIC sector

Asia Pacific Income

52-week high/low

237.0p

201.0p

263.4p

225.9p

Gearing

Net gearing at 5 November 2021

7.4%

Fund objective

Aberdeen Asian Income Fund (AAIF) aims to provide investors with a total return primarily through investing in Asia-Pacific securities, including those with an above-average yield, as well as to grow its dividends. Performance is measured against the MSCI AC Asia Pacific ex-Japan Index and the MSCI AC Asia Pacific ex-Japan High Dividend Yield Index (both in sterling terms), but no formal benchmark is used.

Bull points

Diversified by sector and geography, the income strategy is managed by one of the most experienced Asia-based investment teams.

Outperformed the MSCI AC Asia Pacific ex-Japan High Dividend Yield Index over both the short and long term.

Strong revenue (over 50% of full-year dividend) and capital reserves support continued dividend growth.

Bear points

The conservative quality approach resulted in a bottom-half ranking in the Asia income peers over the medium term.

Wider than peers’ discount.

The income-focused strategy might lag non-yielding growth funds in bull markets.

Analysts

Victoria Chernykh

+44 (0)20 30775700

Sarah Godfrey

+44 (0)20 3681 2519

Aberdeen Asian Income Fund is a research client of Edison Investment Research Limited.

With a focus on income and growth, Aberdeen Asian Income Fund’s (AAIF) dual investment strategy has proved successful. The team targets the income and growth potential of Asia's most compelling and sustainable companies. AAIF’s 4.1% yield is competitive with its four Asian income peers. The focus on high-quality businesses creates a relatively defensive tilt in regional equities. Over the past 12 months (to end-October), AAIF posted a 24.3% NAV total return, outperforming peers and both the broad and high dividend yield indices, by 13.5pp and 7.7pp, respectively. AAIF’s team believes the fund’s focus on quality has helped deliver a consistently robust performance during the pandemic (see chart below).

AAIF’s performance relative to the MSCI AC Asia Pacific ex-Japan Index

Source: Refinitiv, Edison Investment Research

Why invest for income in Asia and choose AAIF?

Income seekers can gain core exposure to the Asian consumption-driven growth story complemented by structural dividend growth. Following the 12th consecutive year of dividend growth in FY20 and an improving trend for income in its portfolio companies, the board aims to at least maintain the dividend in FY21. The FY20 dividend of 9.3p per share (up 0.5% year-on-year) was c 80% covered by portfolio income. At end June 2021, the company’s revenue reserve was c 70% of the annual dividend payment. The board is committed to a progressive dividend policy.

The analyst’s view

The abrdn team is known for its quality stock-picking approach and value tilt. Followed by the team since the company’s launch in December 2005, this quality approach served investors well during a challenging 2020, protecting on the downside. The outperformance has continued into 2021, against a backdrop of increasingly negative sentiment towards Asian markets on the back of regulatory measures across a number of corporate sectors in China, particularly technology, property and education. This has contributed to AAIF’s cum-fair discount widening to 12.9% compared to its three-year average of 9.6%. We believe there is scope for this to narrow, if investors rotate into quality and value. In addition, the commercial robustness and financial strength of portfolio investees should support AAIF’s future dividend payout.

The manager’s view

The abrdn Asian team is currently finding plenty of yield-generating opportunities from quality names in the region. Although the investment director Yoojeong Oh highlights a number of key risks such as renewed COVID-19 outbreaks, regulatory pressures – particularly from China – and inflation fears, she considers them manageable. The team expects dividend payouts to increase, with corporate earnings growth rebounding this year, led by the technology hardware sector. AAIF holds a number of market-leading companies in the sector, including TSMC and Samsung Electronics, and the team is optimistic about the dividend outlook for the portfolio in FY21.

She highlights that Asia has not seen inflation to the same extent as many developed markets are starting to experience. Asian countries did not loosen their monetary policy to the extent that developed markets did. Oh believes that the easing of the pandemic and full reopening of Asian economies will be a trigger for increased inflation. She believes that if inflation does pick up in Asia, AAIF’s investment policy of holding companies with strong balance sheets, low debt and pricing power should leave the portfolio well placed for continuing outperformance. Oh explains that on the contrary, higher rates would benefit stronger financial stocks, including banks and insurers, where AAIF also has exposure (see portfolio section below).

The manager seeks high-quality companies with strong balance sheets, sustainable cash flow generation and the ability to support consistent growth in both profits and dividends, and these may be found across a range of markets. These businesses capture structural shifts in technology, healthcare, urbanisation and infrastructure investment trends, as well as demand from Asia’s burgeoning middle class for wealth management and investment services.

Portfolio

At end-September 2021, the portfolio had 61 holdings, the majority of which are steady income generators.

Exhibit 1 illustrates the active stock-picking strategy, as the portfolio remains differentiated relative to the MSCI AC Asia Pacific ex-Japan Index. China combined with Hong Kong has been underweight throughout the life of the fund and remains the largest underweight by 24.8pp relative to the MSCI AC Asia Pacific ex-Japan Index.

Exhibit 1:Portfolio geographic exposure versus the index* (% unless stated)

Portfolio weight

MSCI AC Asia Pacific ex-Japan

Country/region

30 September 2021

30 September 2020

Change (pp)

30 September 2021

Versus index (pp)

Taiwan

20.3

16.5

3.8

14.5

5.8

Australia

18.2

17.2

1.0

14.5

3.7

Singapore

15.9

16.2

(0.3)

2.0

13.9

China

10.1

11.8

(1.7)

33.1

(23.0)

Korea

9.5

11.1

(1.6)

12.8

(3.3)

Thailand

6.1

6.9

(0.8)

1.7

4.4

India

6.5

5.4

1.1

11.4

(4.9)

Hong Kong

4.5

4.2

0.3

0.5

(1.8)

New Zealand

4.4

4.3

0.1

6.3

3.9

Japan

1.9

2.6

(0.7)

0.0

1.9

Indonesia

1.0

0.7

0.3

1.2

(0.2)

Malaysia

0.1

1.8

(1.7)

1.3

(1.2)

Philippines

0.0

0.0

0.0

0.6

(0.6)

Other

0.0

0.3

(0.3)

0.0

0.0

Cash

1.5

1.0

0.5

0.0

Total incl. cash

100.0

100.0

 

100.0

 

Source: AAIF, MSCI, Edison Investment Research. Note: *MSCI AC Asia Pacific ex-Japan Index.

The absence of zero-yielding Chinese internet stocks from the portfolio has protected it from recent market downturns. In particular, it did not and does not invest in Alibaba and Tencent. In combination, these two companies accounted for more than 7% of the MSCI AC Asia Pacific ex-Japan Index at end-September 2021 (see Exhibit 2) and have fallen by 43% and 17%, respectively, over the past year.

The Chinese names that AAIF invests in, albeit outside its top 10 holdings, include those perceived by the team to be quality property companies: China Resources Land (2.0% weighting at 30 September 2021), China Vanke (0.8%) and Ping An Insurance (0.5%). Oh explains that China Resources Land and China Vanke are blue-chip names in AAIF’s portfolio, with strong balance sheets and relatively low debt. Both these companies fund their developments from profits on the existing real estate portfolio, and hence the team considers them to be prudent investments. The manager highlights the focus by China Resources Land on environmental, social and governance (ESG) practices, including respecting minority shareholders. Oh noted that the investee managers were forward thinking and early adopters of ESG best practice in consultation with abrdn. China Resources Land is trying to get an MSCI ESG rating that would, in its view, add to its credibility and improve its investment profile in the eyes of both Chinese and foreign investors.

Exhibit 2: Top 10 holdings versus the MSCI Asia Pacific ex-Japan Index

Company

Country

Industry (GICS)

Portfolio weight %

Top 10 index*

Country

Industry (GICS)

Index weight

30-Sept-21

30-Sep-21

TSMC

Taiwan

Information technology

8.3

TSMC

Taiwan

Information technology

6.3

Samsung Electronics (pref)

South Korea

Information technology

7.2

Tencent

China

Communication services

4.2

AusNet Services

Australia

Utilities

3.6

Samsung Electronics

South Korea

Information technology

3.7

Momo.com

Taiwan

Consumer discretionary

3.5

Alibaba

China

Consumer discretionary

3.4

Oversea-Chinese Banking Corporation

Singapore

Financials

3.4

AIA Group

Hong Kong

Financials

1.7

Venture Corporation

Singapore

Information technology

3.1

Commonwealth Bank of Australia

Australia

Financials

1.7

DBS Group

Singapore

Financials

3.0

Meituan Dianping

China

Consumer discretionary

1.6

BHP Group

Australia

Materials

2.5

Reliance Industries

India

Energy

1.2

LG Chemicals

South Korea

Materials

2.4

CSL

Australia

Healthcare

1.8

Infosys

India

Information technology

2.3

BHP Group

Australia

Materials

1.0

Top 10 (% of holdings)

39.3

26.6

Source: AAIF, MSCI. Note: *MSCI Asia Pacific ex-Japan Index.

Singapore is AAIF’s largest country weighting compared to the MSCI AC Asia Pacific ex-Japan Index (13.9pp, see Exhibit 1). The team continues to own three Singaporean banks (Oversea-Chinese Banking Corporation, DBS Group, within the top 10 holdings, 3.4% and 3.0% respectively, and United Overseas Bank (1.6%) – outside the top 10). Historically, the team has highlighted the quality of the Singaporean businesses it picked for AAIF, and the business cases for the investees stand. The team correctly anticipated that the banks’ dividends would be restored in 2021, as all three banks did. Another notable Singaporean holding is Venture (top 10, 3.1%), a leading contract manufacturer in the electronics space. It supplies machine components to Illumina, a leading Singaporean research and genome sequencing company. Venture was one of the companies that raised dividends in 2020, being a beneficiary of supply chain outsourcing; it continues to pay a dividend in 2021, and the abrdn team expects it to be at a similar level to the 2020 dividend payment.

Taiwan (20.3% of the portfolio) and Australia (18.2%) remain two countries with the largest weightings in the portfolio, as their listed companies continue to offer a good selection of high dividend paying stocks. BHP (top 10, 2.5%) and Rio Tinto (1.9%), both diversified miners benefiting from their exposure to China, AusNet Services (top 10, 3.6%), an energy delivery service provider, and Commonwealth Bank of Australia, a diversified bank, are among selected Australian businesses. Momo.com (top 10, 3.5%), a Taiwanese consumer-focused e-commerce services company, has been a strong performer for AAIF (see the performance section on page 4). India (6.5%) is the second largest underweight (4.9pp) to the MSCI AC Asia Pacific ex-Japan Index, as the team finds more dividend growth stocks elsewhere in Asia.

Performance

AAIF outperformed the MSCI AC Asia Pacific ex-Japan HDY Index (arguably a better comparator for AAIF than the broad market index due to the company’s high-income focus) over all the periods shown, on a net asset value (NAV) total return (TR) basis, as Exhibit 4 shows. The company recovered better than the MSCI AC Asia Pacific ex-Japan Index from the March 2020 lows and outperformed both indices in the 12 months to end-October 2021, posting 24.3% NAV TR. Solid performances from differentiated high-conviction stocks across the technology field, including Samsung (7.2% of the portfolio at end-September 2021 vs 3.7% in the index), Momo.com (3.5%), Venture Corporation (3.1%) and Infosys (2.3%), contributed materially to outperformance.

Exhibit 3: Five-year discrete performance data

12 months ending

Share price
(%)

NAV
(%)

MSCI AC Asia Pacific ex-Japan (%)

MSCI AC Asia Pacific ex-Japan HDY (%)

31/10/17

10.7

11.8

17.7

12.5

31/10/18

(8.5)

(5.3)

(8.4)

(2.5)

31/10/19

14.4

10.1

12.8

7.9

31/10/20

(3.7)

(1.5)

12.2

(8.4)

31/10/21

22.5

24.3

9.5

15.4

Source: Refinitiv. Note: All % on a total return basis in pounds sterling.

The company’s NAV consistently outperformed the MSCI AC Asia Pacific ex-Japan HDY Index over one, three and six months as well as one-year and three-year periods, on a TR basis, as Exhibit 4 illustrates.

Exhibit 4: Share price and NAV TR performance, relative to indices (%)

 

One month

Three months

Six months

One year

Three years

Five years

10 years

Price relative to MSCI AC Asia Pac ex-Jpn

0.3

(0.0)

4.0

11.9

(2.6)

(8.6)

(15.3)

NAV relative to MSCI AC Asia Pac ex-Jpn

(0.6)

1.7

6.3

13.5

(2.7)

(4.5)

(1.5)

Price rel to MSCI AC Asia Pac ex-Jpn HDY

1.9

(0.6)

2.4

6.2

18.3

9.2

(1.2)

NAV rel to MSCI AC Asia Pac ex-Jpn HDY

1.0

1.2

4.7

7.7

18.2

14.0

14.8

Source: Refinitiv, Edison Investment Research. Note: Data to end-October 2021. Geometric calculation.

Relative to the other four Asia-Pacific income peers, shown in Exhibit 5, AAIF has seen the highest NAV TR over the year to end-October 2021. Its defensive and dual income and growth strategy has protected investors’ returns during the volatile markets in Asia over the past 12 months. AAIF’s NAV TR also exceeds the sector average and both MSCI AC Asia Pacific ex-Japan and MSCI AC Asia Pacific ex-Japan HDY indices over one year. A lower China weighting as well as ownership and overweight positions in more balanced technology companies were beneficial to its performance relative to peers, who were more exposed to aggressive technology stocks and China. Two high beta top 10 JPMorgan Asia Growth & Income (JAGI) and Invesco Asia Trust (IAT) holdings, Alibaba and Tencent, have corrected in the past 12 months amid a significant sell-off of Chinese stocks. This followed previous strong outperformance of China tech. AAIF ranks third by NAV TR over three and five years, behind these two trusts.

Exhibit 5: Country specialist – Asia Pacific equity income peer group

% unless stated

Market
cap (£m)

NAV TR
1 year

NAV TR
3 years

NAV TR
5 years

NAV TR
10 years

Ongoing charge

Perf.
fee

Discount (cum-fair)

Net gearing

Dividend yield (%)

Aberdeen Asian Income

396.1

24.3

35.7

43.6

138.2

1.0

No

(13.1)

107

4.0

Henderson Far East Income

449.5

9.4

12.5

17.5

101.0

1.1

No

(0.9)

105

7.9

Invesco Asia Ord

241.3

19.3

49.1

61.9

198.4

1.0

No

(9.1)

100

4.2

JPMorgan Asia Growth & Income

440.6

9.7

43.6

68.8

176.7

0.7

No

(1.7)

102

4.2

Schroder Oriental Income

698.7

18.8

32.7

37.6

176.6

0.9

Yes

(5.6)

103

4.0

Sector average (5 funds)

445.2

16.3

34.7

45.9

158.2

0.9

(6.1)

103

4.8

Rank in sector

4

1

3

3

4

2

5

1

5

Source: Morningstar, Edison Investment Research, Bloomberg. Note: Performance data to 31 October 2021 based on cum-fair NAV. TR=total return. Net gearing is total assets less cash and equivalents as a percentage of net assets.

Dividend policy and record

The investment philosophy of AAIF’s management team is to find good quality companies that offer both capital growth and an attractive dividend yield over the long term.

On 12 October 2021 the company announced a third interim dividend for the financial year ending 31 December 2021 of 2.25p per share. The total dividend for H121 (ending 30 June 2021) amounts to 4.5p (H120: 4.5p). In the absence of unforeseen circumstances, the board intends to at least maintain the dividend of 9.3p per share paid in FY20, in respect of FY21 (to 31 December 2021). A decision on the level of the fourth interim dividend will be made post the period end, in January 2022.

The board remains keen to continue AAIF’s long-term record of dividend growth and aims to use reserves, accumulated since the launch of the company, where necessary (£244.8m of capital reserves and £11.4m of revenue reserves, equal to approximately 0.7x annual dividend payment, at end-June 2021).

Valuation: Affected by sentiment

Exhibit 6: Share price discount to NAV (including income) over three years (%)

Source: Refinitiv, Edison Investment Research

Having recovered from a decade-high discount to cum-income NAV of 16.9% in March 2020, AAIF has traded at an average discount of c 10.4% over the past 12 months. This is 0.8pp wider than the three-year discount average of 9.6%. We believe the recent widening of the discount was caused by the deteriorating sentiment towards Asian stocks, in the light of the latest regulatory events in China. Nevertheless, the relatively low exposure of AAIF to China, coupled with its strong performance over the past 12 months, could see the discount narrowing. The board regularly buys back shares to help manage the discount and has repurchased c 0.9m shares so far in FY21, at a cost of c £2.1m.

General disclaimer and copyright

This report has been commissioned by Aberdeen Asian Income Fund and prepared and issued by Edison, in consideration of a fee payable by Aberdeen Asian Income Fund. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

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General disclaimer and copyright

This report has been commissioned by Aberdeen Asian Income Fund and prepared and issued by Edison, in consideration of a fee payable by Aberdeen Asian Income Fund. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

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Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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