Henderson EuroTrust — Good stock selection outweighing headwinds

Henderson EuroTrust (LSE: HNE)

Last close As at 20/06/2024

GBP1.58

0.50 (0.32%)

Market capitalisation

GBP335m

More on this equity

Research: Investment Companies

Henderson EuroTrust — Good stock selection outweighing headwinds

Henderson EuroTrust’s (HNE’s) manager, Jamie Ross, is heartened by the trust’s outperformance in FY23 despite investors favouring lower-quality value stocks. This result was achieved through successful stock selection. The manager employs a long-term view, seeking high-quality companies with high or improving returns. He also has a mid- and long-term record of NAV outperformance versus the Europe ex-UK market, although the trust encountered a protracted period of style headwinds between Q121 and Q222. In absolute terms, over the last decade, HNE’s NAV total return of 9.4% per year is comfortably ahead of the market’s 8.0% annual total return. European stocks are trading at a meaningful discount to global peers and with the trust continuing to be valued at a double-digit discount, now could be an opportune time to consider a portfolio of high-quality companies where the manager has a proven strategy of successful fundamental stock selection.

Melanie Jenner

Written by

Mel Jenner

Director, Investment Trusts

henderson

Investment Companies

Henderson EuroTrust

Good stock selection outweighing headwinds

Investment trusts
European ex-UK equities

13 December 2023

Price

137.5p

Market cap

£291m

Total assets

£348m

NAV*

159.7p

Discount to NAV

13.9%

*Including income at 11 December 2023.

Yield

2.8%

Shares in issue

211.9m

Code

HNE

Primary exchange

LSE

AIC sector

Europe

Financial year-end

31 July

52-week high/low

140.5p

121.0p

NAV* high/low

164.5p

141.5p

*Including income

Net gearing*

5%

*At 31 October 2023

Fund objective

Henderson EuroTrust aims to achieve a superior total return from a portfolio of European (excluding the UK) investments where the quality of the business is deemed to be high or significantly improving. HNE has an all-cap mandate but tends to have a bias towards large and medium-sized companies. ESG factors are embedded within the investment process.

Bull points

Long-term record of outperformance.

Experienced manager and well-resourced collegiate team.

Competitive fee structure.

Bear points

HNE’s relative performance is likely to struggle in a market led by value stocks.

The European macroeconomic backdrop remains uncertain.

Moderate fund size may deter some investors.

Analyst

Mel Jenner

+44 (0)20 3077 5700

Henderson EuroTrust is a research client of Edison Investment Research Limited

Henderson EuroTrust’s (HNE’s) manager, Jamie Ross, is heartened by the trust’s outperformance in FY23 despite investors favouring lower-quality value stocks. This result was achieved through successful stock selection. The manager employs a long-term view, seeking high-quality companies with high or improving returns. He also has a mid- and long-term record of NAV outperformance versus the Europe ex-UK market, although the trust encountered a protracted period of style headwinds between Q121 and Q222. In absolute terms, over the last decade, HNE’s NAV total return of 9.4% per year is comfortably ahead of the market’s 8.0% annual total return. European stocks are trading at a meaningful discount to global peers and with the trust continuing to be valued at a double-digit discount, now could be an opportune time to consider a portfolio of high-quality companies where the manager has a proven strategy of successful fundamental stock selection.

NAV versus Europe ex-UK index (last 10 years) – getting back on track following a period where value rather than growth stocks led the market

Source: Refinitiv, Edison Investment Research

Why consider HNE?

Ross has been HNE’s sole manager since February 2019, having progressed from his role as deputy manager in March 2017. He works in a collegiate environment and can draw on the very wide resources of Janus Henderson Investors when required. The trust has a portfolio of around 45 Europe-listed businesses that is diversified by sector and geography. HNE’s well-defined and repeatable investment process incorporates ESG/sustainability analysis as an integral element and the trust is designated as a Light Green fund under Article 8 of the EU Sustainable Finance Disclosure Regulation.

With its focus on generating a superior total return, alongside seeking capital growth, HNE also offers a dividend yield, which ranks highly versus most of its peers in the AIC Europe sector. In FY21, the board announced a change in the company’s dividend policy, whereby distributions would be broadly based on the level of income received. At the time, the trust had significant revenue reserves, which were paid out in FY21 and FY23. The board has recently announced that due to the pattern of income receipts, there will now be a single annual dividend payment rather than a modest interim and a larger final dividend.

HNE: High-quality European growth exposure

HNE offers investors exposure to the European stock market via a fund of high-quality companies with either high or improving returns. Despite style headwinds, Ross has adhered to his successful investment process, selecting stocks on a bottom-up basis, and has generated a commendable performance record; the trust’s NAV is ahead of its benchmark over the last one, five and 10 years.

HNE’s upside/downside capture

Exhibit 1 shows HNE’s upside/downside capture over the last 10 years. Its upside capture of 106% suggests that in months when European stocks rally, the trust is likely to modestly outperform the European market. However, its 100% downside capture implies that the trust is likely to perform in line with the market during months of share price weakness. The downside capture was below 100% for most of the last decade, suggesting until HNE’s performance was negatively affected by style headwinds from Q121 to Q222 the trust would have outperformed during a falling market.

Exhibit 1: HNE’s upside/downside capture

Source: Refinitiv, Edison Investment Research. Note: Cumulative upside/downside capture calculated as the geometric average NAV total return (TR) of the fund during months with positive/negative reference index TRs, divided by the geometric average reference index TR during these months. A 100% upside/downside indicates that the fund's TR was in line with the reference index’s during months with positive/negative returns. Data points for the initial 12 months have been omitted in the exhibit due to the limited number of observations used to calculate the cumulative upside/downside capture ratios.

HNE’s short-term and MSCI European indices’ long-term performance

Exhibit 2: Relative performance of HNE’s NAV and MSCI European indices

HNE NAV performance vs MSCI Europe ex-UK Index over last 12 months

Performance of MSCI Europe growth vs value indices over last 10 years

Source: Refinitiv, Edison Investment Research

Over the last 12 months, HNE’s NAV has been ahead of the Europe ex-UK market despite a style headwind (Exhibit 2, left-hand side). Higher interest rates, rising inflation and concern about quality growth companies have seen investors favour cyclical stocks, which generally do not fit the manager’s investment criteria. However, successful stock selection has outweighed an unfavourable investment backdrop.

Exhibit 2 (right-hand side) illustrates how growth stocks outperformed in a low interest rate environment. The manager comments that when interest rates moved from 0% to 5%, growth stocks underperformed, and it was ‘a terrible place to be’. This is evidenced by HNE’s underperformance between Q121 and Q222, which is highlighted on the front-page chart.

The trust’s portfolio metrics

HNE’s portfolio metrics compared with the benchmark are shown in Exhibit 3. Reflecting the trust’s bias to quality growth stocks, its portfolio has a higher valuation in terms of price-to-book and forward P/E multiples and has a lower historical dividend yield. HNE also has a superior earnings growth outlook and generates a higher return on equity and operating margin, while it has less leverage than the benchmark.

Over the last 18 months, the manager has initiated positions in very high-quality stocks, while selling lower-quality businesses. This has increased the quality of the portfolio and raised its overall margins. New positions include Airbus (aerospace and defence), Sartorius (medical equipment and services) and Universal Music Group (media), while sales include BAWAG Group (bank), Kion (industrial engineering) and UniCredit (bank).

Exhibit 3: HNE’s portfolio metrics versus the benchmark

Weighted averages

Compounders

Improvers

HNE

Benchmark

Market cap (£bn)

112.9

43.2

94.0

81.7

Price-to-book (x)

3.6

1.4

2.6

2.0

Trailing dividend yield (%)

2.2

2.6

2.3

3.0

Forward 2024 P/E (x)

17.5

12.9

16.0

12.9

Next 12 months EPS growth (%)

12.7

8.4

11.5

9.4

Return on equity (%)

27.4

5.7

21.5

19.6

Operating margin (%)

25.1

13.5

22.0

18.3

Long-term debt to capital (%)

31.0

33.9

31.8

33.1

Number of securities

32

15

47

577

Weight (adjusted for gearing, %)

73.0

27.0

Source: HNE. Note: At 31 July 2023.

Current portfolio breakdown

Over the 12 months to the end of October 2023, the largest changes in HNE’s sector positions were an increase in healthcare (+4.1pp) with a decrease in financials (-3.9pp). The largest active weights compared with the benchmark were above-index weightings in consumer staples (+5.3pp) and healthcare (+4.2pp) with underweight positions in industrials (-4.3pp) and consumer discretionary stocks (-4.2pp). However, it should be remembered that the trust’s relative positioning is a result of bottom-up stock selection.

Within consumer staples there is a new holding in Dutch brewer Heineken. The brewing industry has had to deal with cost inflation, including higher prices for barley, which is a major ingredient. In addition, Heineken has struggled in some of its important markets such as Vietnam and Nigeria, which drove a decline in its share price that allowed the manager to pay 14x earnings for a business he expects to grow at 15% per year.

In the healthcare sector, Ross initiated a position in Denmark-listed Zealand Pharma. It is a pharmaceutical business focused on research and development and licensing, with no commercial operations. The company has a series of products in various stages of development, two of which have the highest potential value – an obesity product and a drug for the treatment of the rare condition short bowel syndrome. Given HNE’s long-term holding in Novo Nordisk, the manager has a particular interest Zealand’s obesity product. Although it is only in Phase II trials, Ross believes that it could fill a niche within the market for the treatment of non-alcoholic fatty liver disease (commonly known as NASH), which would set the company apart from Novo Nordisk and Eli Lilly, which are currently the market leaders in drugs to combat obesity. He considers that this product is not fully reflected in Zealand’s share price.

Exhibit 4: Portfolio sector exposure versus benchmark (% unless stated)

Portfolio end-
October 2023

Portfolio end-
October 2022

Change
(pp)

Active weight
vs index (pp)

Healthcare

20.7

16.6

4.1

4.2

Financials

18.4

22.3

(3.9)

0.4

Consumer staples

14.2

11.8

2.4

5.3

Industrials

12.5

12.4

0.1

(4.3)

Consumer discretionary

9.0

8.4

0.6

(4.2)

Technology

9.0

8.6

0.4

0.0

Energy

6.1

5.8

0.3

1.4

Materials

5.1

6.9

(1.8)

0.4

Communication services

3.7

5.1

(1.4)

0.6

Utilities

1.3

2.0

(0.6)

(2.9)

Real estate

0.0

0.0

0.0

(1.0)

Total

100.0

Source: HNE, Edison Investment Research. Note: Numbers subject to rounding.

Exhibit 5: HNE’s sector exposure versus benchmark (at 31 October 2023)

Source: HNE, Edison Investment Research. Note: Numbers subject to rounding.

Within the underweight consumer discretionary sector, HNE has an overweight exposure to luxury goods companies. The Hermès position has been in the portfolio for around seven years, and Moncler and LVMH for around five and two years, respectively. These companies have strong pricing power and high returns, having built their valuable brands over multiple decades, thereby providing high barriers to entry. However, their businesses have a level of cyclicality and Chinese economic weakness is negatively affecting current trading conditions. Despite this, Ross retains a positive outlook on the long-term prospects for the trust’s luxury goods names, so is not inclined to trim these positions.

The manager has reduced HNE’s prior overweight position in semiconductors down to a market weight, locking in significant profits. ASML has been in the portfolio for many years but the holdings in ASM International and BE Semiconductor were initiated within the last year to 18 months and have rallied strongly, making their valuations less attractive. Also, semiconductor stocks can move dramatically in a short space of time due to swings in investor sentiment and these companies’ fundamentals may come under pressure due to the risk of further US sanctions on the sale of specific semiconductor technology to Chinese firms. Ross will look to increase the trust’s semiconductor exposure when he considers it is appropriate.

The manager has been reducing HNE’s bank exposure and the trust now has an underweight position versus the benchmark for the first time since the announcement of Pfizer’s COVID-19 vaccine in November 2020. Ross believes that we are close to the peak in interest rates, so while banks are now benefiting from higher net interest margins, if the economy weakens, they will likely have to increase their loan-loss provisions. The manager is therefore anticipating a move from an interest-rate cycle to a credit cycle.

Exhibit 6: Portfolio geographic exposure versus benchmark (% unless stated)

Portfolio end-
October 2023

Portfolio end-
October 2022

Change
(pp)

Active weight
vs index (pp)

France

33.2

28.8

4.4

10.2

Switzerland

18.6

18.5

0.1

(0.5)

Germany

15.1

16.7

(1.6)

(1.3)

Netherlands

12.7

13.1

(0.4)

4.2

Denmark

8.2

5.2

3.0

1.7

Italy

4.8

5.7

(0.9)

(0.8)

Spain

3.3

3.6

(0.3)

(2.0)

Finland

1.5

2.3

(0.8)

(0.7)

Austria

1.3

4.1

(2.8)

0.9

Portugal

1.3

2.0

(0.7)

0.9

Other

0.0

0.0

0.0

(12.5)

Total

100.0

Source: HNE, Edison Investment Research. Note: Numbers subject to rounding.

Exhibit 7: HNE’s geographic exposure versus benchmark (at 31 October 2023)

Source: HNE, Edison Investment Research. Note: Numbers subject to rounding.

In terms of HNE’s geographic exposure, the largest changes in the 12 months to end-October 2023 were higher weightings to France (+4.4pp) and Denmark (+3.0pp) and a lower weighting to Austria (-2.8pp). Versus the benchmark, the trust’s largest active weights were a 10.2pp higher weighting to France, with zero exposure to ‘other’ European countries, which made up 12.5pp of the index.

Exhibit 8: Top 10 holdings (at 31 October 2023)

Company

Country

Sector

Portfolio weight %

31 Oct 2023

31 Oct 2022*

Novo Nordisk

Denmark

Pharmaceuticals & biotech

7.1

5.2

TotalEnergies

France

Oil, gas & coal

6.1

5.8

Nestlé

Switzerland

Food producer

5.0

5.5

Roche

Switzerland

Pharmaceuticals & biotech

4.7

5.7

Sanofi

France

Pharmaceuticals & biotech

3.9

4.4

ASML

Netherlands

Technology hardware & equipment

3.2

N/A

SAP

Germany

Software & computer services

3.1

N/A

Safran

France

Aerospace & defence

3.0

N/A

LVMH Moët Hennessy Louis Vuitton

France

Personal goods

3.0

N/A

SGS

Switzerland

Industrial support services

2.9

N/A

Top 10 (% of portfolio)

42.0

46.6

Source: HNE, Edison Investment Research. Note: *N/A where not in end-October 2022 top 10.

At end-October 2023, HNE’s top 10 positions made up 42.0% of the fund (Exhibit 8), which was a lower concentration compared with 46.6% a year earlier; five positions were common to both periods. Ross has been taking profits in HNE’s largest position, Novo Nordisk, as the stock has performed so well, the holding had become too large from a risk perspective. The company’s Wegovy weight-loss product is in very high demand for the treatment of obesity. Also, positive trial data show that the use of Wegovy can reduce adverse cardiovascular outcomes by 20%.

Market overview

According to the manager, it appears that the worst of the interest rate concerns have passed, and inflation is moderating; however, a tight labour market is supporting wage inflation. Higher interest rates are having a negative impact on economic activity. There has been increased commentary about weakening demand, especially in more cyclical areas of the market including industrials and consumer discretionary businesses. Several companies are citing China as an area of weakness, including BASF (chemicals), Siemens (broad industrial exposure) and Pernod Ricard (premium spirits), which has also experienced wholesale destocking in North America following strong post-pandemic demand growth.

European growth outlooks are relatively lacklustre – the International Monetary Fund World Outlook that was updated in October 2023 shows Euro area growth projections of 0.7% for 2023 and 1.2% for 2024. These are lower than 1.5% and 1.4% for advanced economies and 3.0% and 2.9% for world output, respectively. However, lower growth may already be reflected in European valuations. As shown in Exhibit 9 (right-hand side), using Datastream indices, on a forward P/E multiple basis, Europe ex-UK is 16.8% less expensive than the world market. In relative terms, Europe ex-UK is trading at a 13% discount to its 10-year average, which is wider than the world’s 1% discount. Europe ex-UK has a more attractive price-to-book valuation and offers a higher dividend yield.

Exhibit 9: Performance of indices and valuations

Performance of indices (last 10 years, £ adjusted)

Valuation metrics of Datastream indices (at 11 December 2023)

 

Last

High

Low

10-year
average

Last as % of
average

Europe ex-UK

P/E 12 months forward (x)

12.8

18.5

11.3

14.7

87

Price to book (x)

1.9

2.1

1.3

1.7

109

Dividend yield (%)

3.2

4.4

2.1

3.0

106

Return on equity (%)

12.6

13.7

5.3

9.7

129

World

P/E 12 months forward (x)

15.4

19.9

12.5

15.6

99

Price to book (x)

2.4

2.5

1.5

2.0

119

Dividend yield (%)

2.3

3.4

1.8

2.4

97

Return on equity (%)

12.6

14.0

7.4

11.2

113

Source: Refinitiv, Edison Investment Research

Performance: Benefiting from stock selection

There are seven funds in the AIC Europe sector following a range of investment mandates. HNE has the smallest market cap and has a total return mandate, focusing on quality growth companies rather those at the high growth or value ends of the style spectrum. Stablemate Henderson European Focus Trust also has a total return mandate but is growth/value style agnostic. Fidelity European Trust seeks to generate long-term growth in capital and income. The four other companies have capital growth mandates: Baillie Gifford European Growth can invest in both private and listed companies; BlackRock Greater Europe has a broad remit and can invest in emerging European markets, although currently all the fund is invested in developed markets; European Opportunities Trust invests taking top-down factors into consideration; and JP Morgan European Growth & Income seeks capital growth and a rising share price, but also pays dividends based on its quarterly NAV.

HNE’s relative NAV total return performance has improved in recent months as it now ranks third over one year compared with fourth when our last review was published in July 2023. The trust ranks sixth over the last three years and has above-average returns over the last five and 10 years, ranking fifth and fourth respectively. Despite its relative performance HNE has one of the widest discounts in a sector where no funds are trading at a premium. Its ongoing charge is in line with the mean, and along with all its peers, no performance fee is payable. The trust has a lower-than-average level of net gearing, and has an above-average dividend yield, which is 80bp above the mean. HNE ranks second, surpassed only by JPMorgan European Growth & Income with its NAV-based distribution policy.

Exhibit 10: AIC Europe peer group at 11 December 2023*

% unless stated

Market cap (£m)

NAV TR
1 year

NAV TR
3 year

NAV TR
5 year

NAV TR
10 year

Discount (cum-fair)

Ongoing charge

Perf.
fee

Net gearing

Dividend yield

Henderson EuroTrust

291.3

14.9

11.3

60.6

152.6

(13.9)

0.8

No

105

2.8

Baillie Gifford European Growth

318.6

5.7

(24.3)

20.9

53.8

(14.5)

0.6

No

113

0.4

BlackRock Greater Europe

540.4

16.3

14.0

81.1

180.3

(7.0)

1.0

No

107

1.3

European Opportunities Trust

817.6

11.7

18.3

28.3

137.0

(8.6)

1.0

No

100

0.4

Fidelity European Trust

1,434.6

14.3

35.2

76.6

185.3

(6.9)

0.8

No

113

2.2

Henderson European Focus Trust

357.5

19.9

30.9

75.3

164.6

(12.3)

0.8

No

104

2.6

JPMorgan European Growth & Inc

409.2

14.0

34.8

63.0

134.1

(11.4)

0.7

No

105

4.4

Simple average

595.6

13.8

17.2

58.0

144.0

(10.7)

0.8

107

2.0

HNE rank in sector (7 funds)

7

3

6

5

4

6

5

5

2

Source: Morningstar, Edison Investment Research. Note: *Performance to 11 December 2023 based on ex-par NAV. TR, total return. Net gearing is total assets less cash and equivalents as a percentage of net assets.

Exhibit 11: HNE performance to 30 November 2023

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

Price, NAV and index total return performance (%)

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

Exhibit 12: Five-year discrete performance data

12 months ending

Share price
(%)

NAV
(%)

MSCI Europe ex-UK
(%)

MSCI World
(%)

CBOE UK All Cos
(%)

30/11/19

16.8

16.8

14.1

13.6

11.3

30/11/20

20.6

19.6

7.1

11.5

(11.2)

30/11/21

7.0

8.9

15.5

23.4

17.1

30/11/22

(10.6)

(8.7)

(2.4)

(0.5)

7.9

30/11/23

11.9

12.2

10.0

6.8

1.5

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

Despite the difficult performance period between Q121 and Q222, when investors favoured value rather than growth stocks, HNE has a respectable relative performance record (Exhibit 13) as its NAV total returns are now ahead of the European ex-UK market over the last one, five and 10 years. The performance of the world market has been boosted by the dominant US market (70% of the MSCI World Index) that has outperformed for much of the last decade (the US S&P 500 Index has outpaced the MSCI World Index, in US dollar terms, for nine out of the last 10 years). HNE is noticeably ahead of the UK market over the last one, five and 10 years.

Exhibit 13: HNE share price and NAV total return performance, relative to regional and global indices (%)

 

One month

Three months

Six months

One year

Three years

Five years

10 years

Price relative to MSCI Europe ex-UK

1.7

(0.4)

0.9

1.8

(13.6)

(0.4)

4.2

NAV relative to MSCI Europe ex-UK

(0.1)

(1.1)

0.0

2.0

(10.0)

2.9

14.2

Price relative to MSCI World

3.1

(0.4)

(2.1)

4.8

(18.4)

(9.3)

(25.9)

NAV relative to MSCI World

1.2

(1.2)

(3.0)

5.0

(15.0)

(6.3)

(18.8)

Price relative to CBOE UK All Companies

5.3

0.9

2.9

10.3

(16.5)

19.0

37.0

NAV relative to CBOE UK All Companies

3.4

0.1

1.9

10.5

(13.0)

23.0

50.2

Source: Refinitiv, Edison Investment Research. Note: Data to end-November 2023. Geometric calculation.

Looking back to the trust’s FY23 results (ending 31 July), its NAV and share price total returns of +16.7% and +19.7%, respectively, were ahead of the benchmark’s +16.1% and the AIC Europe sector’s +14.6% total returns. The largest contributors to the trust’s returns were: UniCredit (+2.8pp), Munich Re (+1.5pp) and Hermès (+0.8pp). On the negative side, the largest detractors were: Koninklijke DSM (prior to the merger with Firmenich, -1.6pp), EDP Renováveis (-1.0pp) and Cellnex (-0.9pp).

General disclaimer and copyright

This report has been commissioned by Henderson EuroTrust and prepared and issued by Edison, in consideration of a fee payable by Henderson EuroTrust. 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 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Henderson EuroTrust and prepared and issued by Edison, in consideration of a fee payable by Henderson EuroTrust. 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 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

More on Henderson EuroTrust

View All

Latest from the Investment Companies sector

View All Investment Companies content

Research: TMT

Nano Dimension — Outlining the path to profitabililty

Nano Dimension reported Q323 year-on-year revenue growth of 21.6%, an adjusted gross margin of 48.0% (+20.4pp y-o-y) and an adjusted EBITDA loss of $30.1m. Despite the Israeli/Palestinian conflict, Nano Dimension maintains its outlook for FY23 and has launched an initiative to improve company profitability. It has also made improvements to corporate governance. With a substantial net cash balance and a material stake in Stratasys, the company is focused on optimising capital allocation, balancing M&A, share buybacks and investment in R&D.

Continue Reading
Nano Dimension1

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free