abrdn Asian Income Fund — A reappraisal of the opportunities for AAIF

abrdn Asian Income Fund (LSE: AAIF)

Currency in GBP

Last close As at 04/02/2023

GBP2.29

1.00 (0.44%)

Market capitalisation

GBP389m

Research: Investment Companies

abrdn Asian Income Fund — A reappraisal of the opportunities for AAIF

While western economies have been struggling with soaring inflation, rising interest rates and slowing economic growth, the managers of abrdn Asian Income Fund (AAIF) note that Asian markets, while not immune to these pressures, have generally not faced headwinds of the same magnitude. Asian markets have outperformed global equities in 2022, with the Indian, Australian and Hong Kong markets being especially buoyant. The economic issues facing Asia differ from those seen in the west. Arguably, the structural fundamentals for the region as a whole are more supportive in that the demographics underpin better long-term demand, with higher growth and lower levels of personnel, corporate and government debt. In addition, Asian equity markets are trading on lower forward valuations compared with other geographic regions. China, which accounted for c 30% of equity markets and 46% of the region’s GDP in 2021, remains a source of both optimism and concern. On the one hand, it is in a position to loosen monetary policy (as inflation is not yet a concern) but on the other hand there is political uncertainty due to the presidential elections in Q322, coupled with ongoing zero-COVID-19 lockdowns and continued geopolitical tensions around Taiwan.

David Holder

Written by

David Holder

Associate Director, Investment Trusts

Investment Companies

abrdn Asian Income Fund

A reappraisal of the opportunities for AAIF

Investment trusts
Asia-Pacific equity income

29 September 2022

Price

213.5p

Market cap

£363m

Total assets

£467m

NAV*

244.4p

Discount to NAV

12.6%

*Including income. At 21 September 2022.

Yield

4.6%

Shares in issue

170.1m

Code Ord

AAIF/GB00B0P6J834

Primary exchange

LSE

AIC sector

Asia Pacific Equity Income

Financial year end

31 December

52-week high/low*

236.0p

205.0p

267.9p

236.9p

*Including income.

Gearing

Net gearing at
27 September 2022

12%

Fund objective

The investment objective of abrdn Asian Income Fund is to provide investors with a total return primarily through investing in Asia-Pacific securities, including those with an above-average yield. Within its overall investment objective, the company aims to grow its dividends over time.

Bull points

Extensive regionally based investment resource

Strong ESG factors in play via the process.

Above inflation growth in the dividend.

Bear points

Widening discount vs AIC category peers.

Focus on quality holds back performance at times.

Underweight China a factor.

Analyst

David Holder

+44 (0)7796268072

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

While western economies have been struggling with soaring inflation, rising interest rates and slowing economic growth, the managers of abrdn Asian Income Fund (AAIF) note that Asian markets, while not immune to these pressures, have generally not faced headwinds of the same magnitude. Asian markets have outperformed global equities in 2022, with the Indian, Australian and Hong Kong markets being especially buoyant. The economic issues facing Asia differ from those seen in the west. Arguably, the structural fundamentals for the region as a whole are more supportive in that the demographics underpin better long-term demand, with higher growth and lower levels of personnel, corporate and government debt. In addition, Asian equity markets are trading on lower forward valuations compared with other geographic regions. China, which accounted for c 30% of equity markets and 46% of the region’s GDP in 2021, remains a source of both optimism and concern. On the one hand, it is in a position to loosen monetary policy (as inflation is not yet a concern) but on the other hand there is political uncertainty due to the presidential elections in Q322, coupled with ongoing zero-COVID-19 lockdowns and continued geopolitical tensions around Taiwan.

Asia equity performance versus global equities ytd

Source: Morningstar. Note: Total returns in sterling. Data to 30 August 2022.

Why consider AAIF now?

abrdn uses its long-established investment process to manage AAIF. The team is one of the largest in the region, with more than 40 analysts and portfolio managers, and has an in-depth knowledge of and strong presence in the region. AAIF’s NAV performance has been solid since its launch in December 2005 as a result of abrdn’s pragmatic investment approach that offers a premium and growing income versus the wider Asian market while delivering capital growth for investors. AAIF trades on one of the widest discounts in the sector, which we feel is unwarranted given the fund’s strong fundamentals of process and team track record.

China remains key to the region’s outlook

While AAIF is not currently (and as we show in Exhibit 1, has not historically been) heavily invested in China (7.7% of the portfolio at July 2022), the country is a significant constituent of the benchmark making up 29.9% for the MSCI AC Asia Pacific ex Japan Index and 23.6% for the MSCI AC Asia Pacific ex Japan High Dividend Yield Index (end of July 2022). This makes the outlook and sentiment towards Chinese equities important for the region’s equity markets as a whole and for AAIF’s relative performance. The largest Chinese benchmark positions are the internet stocks such as Tencent and Alibaba, which are not dividend payers and so do not form part of AAIF’s opportunity set. Chinese banks such as China Construction Bank are high dividend payers, although the managers favour more transparent Singapore-based banks such as DBS Group Holdings and Overseas Chinese Banking Corporation, which have extensive operations in China.

Exhibit 1: AAIF’s persistently underweight China weighting

Source: Morningstar. AP ex JPN Equity Income = Morningstar Asia-Pacific ex Japan Equity Income category. MSCI AP ex JPN = MSCI AC Asia Pacific ex Japan index. MSCI AP ex JPN HDY = MSCI AC Asia Pacific ex Japan High Dividend Yield index.

This means that AAIF has a low historical correlation to Chinese equities relative to peers (Morningstar Asia Pacific ex Japan Equity Income category), and the two reference indices (Exhibit 3). There are also less domestically derived Chinese earnings compared with comparators according to Morningstar (Exhibit 2).

Exhibit 2: Less domestically derived Chinese earnings within the portfolio

Exhibit 3: AAIF returns have a low and diminishing correlation with Chinese equities

Source: Morningstar. Note: AP EI peer group = Morningstar Asia Pacific ex Japan equity income category.

Source: Morningstar. Note: Chinese equities as defined by the MSCI China Index. Three year rolling (monthly) figures.

Exhibit 2: Less domestically derived Chinese earnings within the portfolio

Source: Morningstar. Note: AP EI peer group = Morningstar Asia Pacific ex Japan equity income category.

Exhibit 3: AAIF returns have a low and diminishing correlation with Chinese equities

Source: Morningstar. Note: Chinese equities as defined by the MSCI China Index. Three year rolling (monthly) figures.

China’s zero-COVID policy has been a source of concern for global economists as it has contributed to a slump in consumption and exacerbated supply chain problems (such as delays in shipping), while increasing costs and fuelling inflation. The government’s policy has not changed – lockdowns are still occurring but are becoming more targeted in conjunction with mass testing on a localised basis rather than being applied wholesale. This development could help to mitigate the effects of lockdowns on both the Chinese and global economy. However, if restrictions are lifted and there is a rapid reopening of parts of the Chinese economy currently in lockdown then pent-up consumer demand could have a significant impact on regional inflation.

Exhibit 4: Regional performance in 2022 and 12-month forward price to earnings multiples

Regional equity market performance YTD (%, in sterling term)

Regional equity market 12-month forward P/Es (x)

Last

High

Low

5-year average

10-year average

% of 5-year average

% of 10-year average

UK

13.0

15.7

9.4

13.5

13.3

96.4

97.9

US

20.6

23.7

11.9

19.2

17.3

106.9

119.1

Europe

14.2

17.0

8.6

14.3

13.3

99.5

106.6

Japan

13.7

18.6

10.5

14.8

14.2

93.0

96.7

Asia ex Japan

13.5

17.8

10.5

13.9

13.0

97.3

104.5

World

16.6

19.8

10.4

16.2

14.9

102.3

111.6

Source: Refinitiv, DataStream, Morningstar, Edison Investment Research. Total returns in sterling. Data to 30 August 2022.

While Asian companies have not been immune to the challenges presented by supply constrictions and rising input costs, they are (in general) in relatively robust condition with less debt at both the corporate and government level. As a result, Asian companies are better equipped to deal with a slowing economic environment, while the region as a whole is not facing the headwinds of rising interest rates. Given the economic slowdown and rise in input costs, it is more important than ever to focus on the corporate balance sheet to ensure that lower sales or squeezed margins can be absorbed without hindering the operational viability of a company or reinvesting for future growth.

AAIF’s investment strategy is active, with sector and country positioning historically changing incrementally over time. Over the last 12 months the team has been rotating at the margin out of technology holdings such as Infosys and Hana Microelectronics and increasing its holdings in financials via names such as DBS Group Holdings and United Overseas Bank (see Exhibits 5 and 6).

Exhibit 5: Financials increasing

Exhibit 6: Technology declining

Source: Morningstar

Source: Morningstar

Exhibit 5: Financials increasing

Source: Morningstar

Exhibit 6: Technology declining

Source: Morningstar

AAIF: Income premium to the market

AAIF’s earnings per share increased by 21% from 4.32p in H121 to 5.23p for H122, with the fund’s last reported yield equating to 4.6% versus the MSCI AC Asia Pacific ex Japan Index’s yield of 3.1% and the MSCI AC Asia Pacific ex Japan High Dividend Yield Index’s 6.6% (July 2022). Over the past year (to Q122) Asian companies as a group have increased dividends by 21% year-on-year, which is above the level of growth seen in Europe for example. In addition, the low level of relative net debt to equity in the region gives companies more flexibility to utilise their balance sheets.

Exhibit 7: AAIF’s yield relative to the AIC category peer group

Exhibit 8: Competitive total returns versus the AIC category peer group

Source: Morningstar

Source: Morningstar

Exhibit 7: AAIF’s yield relative to the AIC category peer group

Source: Morningstar

Exhibit 8: Competitive total returns versus the AIC category peer group

Source: Morningstar

The Association of Investment Companies (AIC) Asia Pacific Equity Income peer group comprises five funds, with Henderson Far East Income (HFEL), which currently offers an 8.5% yield, being by far the highest yielding fund. If this fund is excluded, then AAIF is yielding a similar amount to the other three funds in the category. AAIF has grown its dividend by an annualised compound rate of 3.4% over the last 10 years. It has 13 years of consecutive increasing dividends and is in the AIC’s ‘next generation of dividend heroes cohort. The board has guided for a dividend of at least 9.75p for FY22 (FY21:9.5p), although this is not guaranteed.

Countering market uncertainty via stock focus

It is in the nature of financial markets that there is uncertainty but at the moment, with the various geopolitical events and global economic slowdown, AAIF’s portfolio managers are focusing on the stock specific merits of portfolio as the best way to counter macroeconomic-generated turbulence. The investment process focuses on finding the best quality companies (most capable management, best business models, highest barriers to entry, most robust end markets and most appropriately structured debt profile) that they can at the most attractive valuation available. The relative valuation discipline is evident via various metrics such as price to earnings and price to book, but the portfolio also has quality, as is evidenced by the better return on capital invested and net margin trends over the past three years (Exhibits 9 and10). The portfolio managers’ objective is to have a diversified portfolio, which is not over-exposed to any one sector or country, and to hold the best quality growth and value stocks, which gives the strategy a core buy and hold approach able to perform in varying market conditions.

Exhibit 9: Higher return on invested capital versus peers and the two reference indices

Exhibit 10: Higher net margins versus peers and the two reference indices

Source: Morningstar

Source: Morningstar

Exhibit 9: Higher return on invested capital versus peers and the two reference indices

Source: Morningstar

Exhibit 10: Higher net margins versus peers and the two reference indices

Source: Morningstar

Embedded ESG factors

abrdn’s investment process puts ESG at the very heart of the stock analysis. Aside from the wider societal benefits of using its ownership to address areas of concern, this focus adds additional layers to the identification of ‘quality’ within the portfolio. Arguably, businesses that take action to mitigate ESG risks and that have a culture that puts these factors at the front and centre of their activities should be afforded a premium valuation over time versus those companies that pay little or no heed to such considerations. According to work done by Morningstar, the AAIF portfolio historically scores appreciably better than its AIC category peers on these considerations overall (Exhibit 11).

Exhibit 11: Improving and stronger ESG credentials within AAIF’s portfolio

Source: Morningstar. % = percentage of the portfolio exposed to negative ESG characteristics.

With five Morningstar sustainability globes, AAIF also has the highest sustainability rating given by Morningstar, with a better profile in terms of a carbon risk and fossil fuel involvement than its Morningstar category peers. This is despite the fund having above-average exposure to basic materials via positions in five companies including BHP and Rio Tinto. It is an important facet of fund management (either active or passive) that managers leverage their shareholdings on behalf of their investors to engage in an informed and constructive manner with company management to extract the maximum value out of the position, and this includes on ESG matters. As an example, AIA is a top 20 position in the portfolio with an excellent market share and established footprint in the Asia region. The team at abrdn engaged with the company in a number of areas such as its views around net zero emissions and the impact of climate change on its liabilities. After this engagement, AIA announced that it had divested its coal mining and coal-fired power business and was committed to achieving net zero greenhouse gas emissions by 2050. Subsequently AIA’s MSCI ESG rating was upgraded from A to AA in October 2021, its second upgrade in two years.

Regional sector and country positioning

The portfolio is built from the bottom up, but there are a number of themes such as aspiration, building Asia, digital future, going green and tech enablers. We covered some of these themes in our last note in May 2022, A core option for Asian income and capital growth.

The portfolio is more heavily invested in the higher-yielding markets such as Singapore, Taiwan and Australia (Exhibit 12), while being underweight the more expensive Indian and the volatile Chinese markets.

Exhibit 12: Portfolio country exposure versus MSCI Asia Pacific ex Japan Index

(% unless stated)

Portfolio end-July 2022 (pp)

Portfolio end-July 2021 (pp)

Change
(pp)

Index weight (pp)

Active weight vs index (pp)

Singapore

21.0

16.4

4.6

3.0

18.0

Australia

15.8

17.7

(1.9)

16.5

(0.7)

Taiwan

18.0

20.9

(2.9)

13.9

4.1

Korea

8.4

10.1

(1.7)

11.2

(2.8)

China

7.7

10.2

(2.5)

30.0

(22.3)

Thailand

6.2

6.4

(0.2)

1.8

4.4

India

6.9

6.0

0.9

13.1

(6.2)

Hong Kong

6.3

4.1

2.2

6.3

0.0

New Zealand

4.5

4.4

0.1

0.4

4.1

Japan

1.7

1.8

(0.1)

0.0

1.7

Others and cash

3.4

2.0

1.4

3.8

3.4

Total

99.9

100

100

Source: AAIF, Edison Investment Research. Figures may not add up due to rounding

At a market level, there have been substantial regional disparities in performance in CY22 to date, with Korea and Taiwan returning negative double-digit returns, while India and Australia were the strongest regional performers (Exhibit 13). The five largest country positions within the MSCI AC Asia Pacific ex Japan Index are China (29.9%), Australia (16.4%), Taiwan (13.8%), India (13%) and South Korea (11.2%). This compares with the high-dividend index country weightings of China (23.6%), Taiwan (23%), Australia (17.4%), Hong Kong (9%) and Singapore (6.7%).

Exhibit 13: Country performance in CY22

Source: Morningstar. Note: Total returns in sterling. Data to 30 August 2022.

From a sector perspective, energy, utilities and financials were the strongest returning, while technology, telecoms and healthcare saw the largest sell-offs in the region (Exhibit 14). The largest sector weightings in the MSCI AC Asia Pacific ex Japan Index are financials (22.4%) and information technology (19.1%), while in the high-dividend index financials account for 28.6% and information technology 15.8%. The managers seek to have a variety of sources of income within the portfolio rather than being reliant on what may be considered the traditional sources of dividends, such as utilities or banks. Thus, there are decent-sized weightings to technology, industrials and materials in the portfolio, as illustrated by Exhibit 15.

Exhibit 14: Sector performance CY22

Source: Morningstar. Note: Total returns in sterling. Data to 30 August 2022.

The portfolio has exposure to a broad variety of sectors. Key overweights include technology via holdings such as Taiwan Semiconductor Manufacturing, real estate with China Resources Land and basic materials with BHP Group. Sector underweights include financial services, telecoms and industrials.

From a country perspective, the fund is overweight Singapore (DBS Group) and Thailand (TISCO Financial), and underweight China and India. Compared with some regional equity income strategies, the managers believe that there is less quality available to them in general in some equity income stalwarts such as healthcare, but this is more than compensated for by global leaders in the technology space, such as Taiwan Semiconductor Manufacturing Company (TSMC).

Exhibit 15: Portfolio sector exposure versus MSCI Asia Pacific ex Japan Index

(% unless stated)

Portfolio end- July 2022

Index weight

Active weight vs index (pp)

Financials

30.5

22.4

8.1

Information technology

28.5

19.1

9.4

Real estate

16.2

4.2

12.0

Materials

10.4

8.0

2.4

Communication services

7.4

8.7

(1.3)

Consumer discretionary

5.7

13.2

(7.5)

Industrials

5.1

6.5

(1.5)

Utilities

5.2

3.0

2.2

Consumer staples

0.9

5.4

(4.5)

Energy

0.0

4.0

(4.0)

Healthcare

0.0

5.4

(5.4)

Cash and other

0.0

0.0

0.0

Total

109.9

100.0

9.9

Source: AAIF, Edison Investment Research. Portfolio end July 2022 includes gearing, whereas the index is ungeared.

The top 10 positions at July 2022 share a fair amount of commonality with a year ago (Exhibit 16). The headline level reduction in technology is evident by the lower weightings in TSMC and Samsung, while the increase in financials is illustrated by the higher weighting in DBS Group and a new top 10 position in United Overseas Bank.

Exhibit 16: Top 10 holdings (as at 31 July 2022)

Company

Country

Sector

Portfolio weight %

Index weight

Active weight vs benchmark

31 July 2022

31 July 2021*

TSMC

Taiwan

Information technology

6.6

8.6

6.1

0.5

Samsung Electronics

South Korea

Information technology

5.9

7.6

3.8

2.1

DBS Group

Singapore

Financials

3.8

3.0

0.6

3.2

BHP Group

Australia

Mining

3.6

3.1

2.0

1.6

Venture Corporation

Singapore

Information technology

3.3

3.3

0.1

3.2

Oversea-Chinese BC

Singapore

Financials

3.3

3.6

0.4

2.9

LG Chem

South Korea

Basic materials

2.5

2.4

0.4

2.1

United Overseas Bank

Singapore

Financials

2.4

N/A

0.3

2.1

Taiwan Mobile

Taiwan

Communication services

2.3

N/A

0.1

2.2

Power Grid Corporation

India

Utilities

2.3

N/A

0.1

2.2

Top 10 (% of holdings)

36.0

40.6

13.9

Source: AAIF, Edison Investment Research. Note: *N/A where not in end-July 2021 top 10.

Performance

For CY22 to end July, the fund returned -4.3% in NAV (cum income with debt at fair value) versus -6.1% for the MSCI AC Asia Pacific ex Japan Index, 1.3% for the high-dividend Asia index and -2.9% for the Morningstar Asian equity income peer group (all total returns in sterling).The fund’s performance over one, three and five years is ahead of the MSCI AC Asia Pacific ex Japan Index and peers.

Exhibit 17: Investment company performance to 30 July 2022

Price, NAV and index total return performance, three-year rebased

Price, NAV and index total return performance (%)

Source: Refinitiv, Edison Investment Research. Note: Three-, five- and 10-year performance figures annualised.

So far in 2022 AAIF’s performance has benefited from its geographic allocation, with overweight positions to Singapore in particular being accretive, while the overweight Taiwan position has detracted. The sector positioning overall hurt the performance during the period, with the overweight technology position a negative, while the overweight financial weighting proved helpful. The strongest performers in absolute terms include top 10 positions in BHP Group, Overseas Chinese Banking Corp and United Overseas Bank. Some of the large technology positions, such as TSMC and Samsung, have been weak in CY22 and held back the fund’s overall performance over this relatively short period of time.

While the fund’s performance has historically been competitive over the last 10 years, its standard deviation of returns has been modestly higher than its Morningstar peer group or either of the two reference benchmarks. This additional ‘risk’ has, however, been generally used to good effect, with varying but in general higher-risk adjusted returns than comparators, as evidenced by its historical Sharpe ratio (Exhibit 18).

Exhibit 18: Risk-adjusted returns have varied

Source: Morningstar. Note: Five-year (monthly) rolling Sharpe ratios.

The fund’s sensitivity to market movements (beta) has tended to be marginally above one over the past 10 years, with a good record in capturing movements in markets while offering some protection on the downside. This can be largely attributed to the balanced and diversified nature of the portfolio and the managers’ focus on investing in quality at the right price.

Exhibit 19: Five-year discrete performance data

12 months ending

Share price
(%)

NAV
(%)

MSCI AC Asia ex-Japan (%)

MSCI AC Asia ex-Japan HDY (%)

CBOE UK All Companies (%)

31/07/18

0.8

3.1

6.1

5.9

9.1

31/07/19

12.2

10.1

5.7

6.7

1.1

31/07/20

(13.6)

(10.4)

1.9

(12.2)

(18.5)

31/07/21

28.3

25.7

14.1

12.6

26.4

31/07/22

(0.8)

1.7

(5.9)

4.7

6.1

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

AIC peer review

Exhibit 20: Asia Pacific ex Japan Equity Income AIC peer group as at 27 September 2022*

% unless stated

Market
cap £m

NAV TR
1 year

NAV TR
3 year

NAV TR
5 year

NAV TR
10 year

Ongoing
charge

Perf.
fee

Discount
(cum-fair)

Net
gearing

Dividend
yield

abrdn Asian Income Fund

363

-2.2

17.5

30.4

88.7

0.97

No

-12.4

112

4.6

Henderson Far East Income

433

0.7

-5.1

7.6

73.5

1.09

No

2.3

101

8.5

Invesco Asia Trust

227

4.5

34.3

44.3

199.4

0.97

No

-12.7

102

4.5

JPMorgan Asia Growth & Income

344

-9.5

10.5

29.0

145.1

0.77

No

-10.2

101

5.4

Schroder Oriental Income

656

4.0

20.4

34.4

143.5

0.85

Yes

-7.5

104

4.2

Simple average (5 funds)

405

-0.5

15.5

29.1

130.0

0.93

-8.1

104

5.4

AAIF rank in peer group

3

3

3

3

4

=4

4

1

3

Source: Morningstar, Edison Investment Research. Note: *Performance to 27 September 2022 based on ex-par NAV. TR = total return. Net gearing is total assets less cash and equivalents as a percentage of net assets (100 = ungeared).

AAIF trades on a historical price to earnings multiple of 12.6x, which is in line with the index but slightly more expensive than peers. Historically the portfolio has delivered superior earnings and book value growth. Its process seeks to identify quality at the right price and historically the fund has had a better return on invested capital than the benchmark and peers, while debt to capital is in aggregate lower than comparators. From a positioning perspective, the fund is higher weighted in basic materials and real estate versus peers by around 3.5pp and 4.6pp, respectively, with prominent relative positions in the likes of BHP and China Resources Land. Singapore is the largest country overweight relative to the peer average of 9.2pp, with notable weightings in DBS Group and Overseas Chinese Banking Corporation, while as discussed above, China is a notable (8.4pp) underweight relative to peers.

Discount: Gradual re-rating offers opportunities

Despite its solid performance, growing dividend and share buy-backs, AAIF’s rating has moved from a premium to one of the wider discounts in the sector over the past 10 years. There was a period of underperformance in 2020 when the focus on quality growth companies was out of favour and the fund lagged the recovery late in the year. abrdn as a house has seen outflows, which could account for the share price derating seen versus NAV. abrdn has an established and successful franchise in Asian equities with a well-resourced investment capability and a pragmatic and efficacious process. Arguably the current discount of 12.6% presents a good opportunity to buy a quality and diversified basket of Asian equites on an attractive discount to cum income NAV.

Exhibit 21: Long-term derating

Exhibit 22: Pace of buy-backs increasing

Source: Morningstar (data to 30 August 2022)

Source: Morningstar (data to 30 August 2022)

Exhibit 21: Long-term derating

Source: Morningstar (data to 30 August 2022)

Exhibit 22: Pace of buy-backs increasing

Source: Morningstar (data to 30 August 2022)

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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.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

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.

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

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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Copyright: Copyright 2022 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.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

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.

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

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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