European Opportunities Trust — ‘Special’ stocks beginning to shine

European Opportunities Trust (LSE: EOT)

Last close As at 20/04/2024

GBP8.09

11.00 (1.38%)

Market capitalisation

774m

More on this equity

Research: Investment Companies

European Opportunities Trust — ‘Special’ stocks beginning to shine

European Opportunities Trust’s (EOT’s) manager, Alexander Darwall, invests in ‘special’ companies – globally focused businesses with unique technologies, comparative advantages and multiple growth channels. His aim is to construct a resilient portfolio capable of generating capital growth in all economic climates. The trust’s long-term track record of outperformance attests to the manager’s stock selection skills. EOT has returned 8.7% in NAV terms on an average annualised basis over the past 10 years to end July 2023, compared to a benchmark return of 7.6%. The performance was challenged in 2020 and 2021, but recent returns suggest the manager’s stock-picking skills – and patience – are paying off. In the six months to end July 2023, the trust returned 6.3% on an NAV basis, compared to a benchmark return of 3.6%. With a share price discount to NAV still well above its historical average, now may be an especially good time for investors to acquire or increase their exposure to Darwall’s favourite high-quality, growth-oriented stocks.

Joanne Collins

Written by

Joanne Collins

Analyst, Investment Trusts

Investment Companies

European Opportunities Trust

‘Special’ stocks beginning to shine

Investment trusts
European equities

16 August 2023

Price

808p

Market cap

£784.8m

AUM

£948.4m

NAV*

900.6p

Discount to NAV

10.3%

*Including income. At 14 August 2023.

Yield

0.3%

Ordinary shares in issue

97.3m

Code/ISIN

EOT/GB0000197722

Primary exchange

LSE

AIC sector

Europe

52-week high/low

816.0p

629.0p

NAV* high/low

921.0p

742.7p

*Including income.

Net gearing (at 31 July 2023)

4.6%

Fund objective

The objective of European Opportunities Trust (EOT) is to invest in securities of European and UK companies, in sectors or geographical areas that are considered by the investment manager to offer good prospects for capital growth, taking into account economic trends and business developments.

Bull points

An experienced, patient, high-conviction manager focused on ‘special’, high-quality growth companies capable of succeeding despite short-term economic vicissitudes.

Recent improvement in performance reaffirms the manager’s stock picking skills.

A historically wide discount offers investors a potentially attractive entry point.

Bear points

EOT’s low-dividend policy may deter investors in need of income.

Conservative use of gearing limits potential upside.

The trust will lag the benchmark at times, especially when cyclical and value stocks are in favour with investors.

Analyst

Joanne Collins

+44 (0)20 3077 5700

European Opportunities Trust is a research client of Edison Investment Research Limited

European Opportunities Trust’s (EOT’s) manager, Alexander Darwall, invests in ‘special’ companies – globally focused businesses with unique technologies, comparative advantages and multiple growth channels. His aim is to construct a resilient portfolio capable of generating capital growth in all economic climates. The trust’s long-term track record of outperformance attests to the manager’s stock selection skills. EOT has returned 8.7% in NAV terms on an average annualised basis over the past 10 years to end July 2023, compared to a benchmark return of 7.6%. The performance was challenged in 2020 and 2021, but recent returns suggest the manager’s stock-picking skills – and patience – are paying off. In the six months to end July 2023, the trust returned 6.3% on an NAV basis, compared to a benchmark return of 3.6%. With a share price discount to NAV still well above its historical average, now may be an especially good time for investors to acquire or increase their exposure to Darwall’s favourite high-quality, growth-oriented stocks.

Long-term NAV outperformance versus the benchmark, MSCI Europe

Source: Refinitiv, Edison Investment Research. Note: Total returns in sterling.

The analyst’s view

The manager’s focus on innovative, world-leading, growth-oriented companies may appeal to those keen to invest in ‘tomorrow’s winners’ developing game changing drugs, agricultural products and consumer services, and benefiting from rising demand for sustainable fuels and semiconductors.

Investors may be attracted by the manager’s stock selection skills, as manifested in the trust’s record of long-term capital growth and outperformance. The trust’s recent return to form may provide an added incentive for such investors.

EOT’s outperformance of the UK market over both the short and longer term (see Exhibit 4) serves as a reminder to UK investors of the benefits of diversifying away from their home market.

EOT’s share price discount has begun to narrow, but it is still wide compared to its long-term average of <5%, so if the recent improvement in performance can be sustained, there is, arguably, scope for the discount to narrow further.

EOT’s focus on capital growth means that it does not receive, or pay, significant dividends, a policy that may detract from the trust’s appeal for those requiring regular and attractive income.

EOT: Improving performance, still at a wide discount

Conviction in ‘special’ stocks is starting to pay-off

EOT’s manager, Alexander Darwall, is a high-conviction investment manager targeting ‘special’ stocks – innovative global leaders, with large and rapidly growing markets, capable of riding the wave of structural change and exploiting the opportunities it creates. Darwall’s long-term approach has delivered outperformance over time; the trust has outpaced its benchmark, the MSCI Europe Index, over the past 10 years to end July 2023, delivering an average annualised return of 8.7% in net asset value (NAV) terms over this period, compared to a benchmark return of 7.6%. This track record attests to Darwall’s stock selection skills, although investors have required patience in more recent years. Returns over the past three- and five-year periods have been disappointing relative to benchmark, due to poor performances in 2020 and 2021 (discussed in previous notes Positioned for positive news and growth and Consistent, resilient trust returning to form).

However, Darwall has remained patient and true to his investment strategy, and this appears to be paying off, as performance seems to be returning to its long-term course. Performance began to show signs of improving in mid-2022, as discussed in our last couple of update notes (links above), as many of EOT’s holdings began to deliver the positive performance Darwall and his team foresaw. And this improvement has gathered momentum in recent months, to the extent that the trust has delivered outright gains, and decisively outpaced its benchmark, over the past six months ended 31 July 2023, returning 6.3% in NAV terms and 9.0% on a share price basis, compared to a benchmark return of 3.6%. It is particularly encouraging that these returns have been derived from many of EOT’s holdings, including some of its largest positions, which is further evidence of the manager’s ability to pick long-term winners. Contributors to returns since the beginning of 2023 have included Novo Nordisk, a Danish pharmaceutical company that has developed groundbreaking treatments for diabetes and obesity, Infineon, a German semiconductor manufacturer, French software company Dassault Systèmes, and Edenred, a French credit services company (see Performance section for details).

Discount narrowing, but still well above long-term average

Investors are beginning to notice and respond to this improvement in performance. As can be seen from Exhibit 1, EOT’s share price discount to its NAV has begun narrowing over the past year, to around 10% at present, from 10-year highs of more than 15%.

Exhibit 1: Premium/discount over 10 years (NAV including income)

Source: Refinitiv, Edison Investment Research

This narrowing trend has been encouraged by the board’s consistent efforts to support the share price via buybacks. In the financial half year ended 30 November 2022, the company repurchased c 1.145m shares and it has since repurchased a further c 4.350m (as at 14 August 2023). The marketing efforts of EOT’s new broker, Singer Capital Markets, and a series of investor roadshows early in 2023 may also be contributing to the recent discount narrowing.

However, EOT’s shares are still trading a long way from their long-term average discount of less than 5%, so if the recent improvement in performance can be sustained, there is, arguably, scope for the discount to narrow further. This suggests that now may be an opportune time for investors to acquire or top up exposure to this trust.

Performance: Patience is paying off

Exhibit 2: Five-year discrete performance data

12 months ending

Share price
(%)

NAV
(%)

MSCI Europe
(%)

MSCI Europe
ex-UK (%)

CBOE UK All Cos (%)

31/07/19

3.8

8.6

4.3

5.0

1.1

31/07/20

(20.2)

(15.2)

(7.4)

(2.8)

(18.5)

31/07/21

19.7

22.2

25.7

26.4

26.4

31/07/22

(7.1)

(5.1)

(2.3)

(6.5)

6.1

31/07/23

8.3

5.4

13.9

16.1

6.4

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

Recent performance has improved markedly

The improvement in EOT’s recent performance has been quite marked. Returns for the year to end July 2023 trailed the benchmark by 8.5 percentage points on an NAV basis. While the trust returned 5.4% on an NAV basis and 8.3% in share price terms over the past year, the benchmark gained 13.9%. However, the trust has made up all this ground in the past six months and is now outperforming the benchmark by 2.7 percentage points, returning 6.3% in NAV terms and 9.0% in share price terms, compared to a benchmark return of 3.6%. EOT has also outpaced the UK market over this period, as well as over the long-term (Exhibit 4).

Exhibit 3: Investment fund performance to 31 July 2023

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

Price, NAV and benchmark total return performance (%)*

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

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

 

One month

Three months

Six months

One year

Three years

Five years

10 years

Price relative to MSCI Europe

2.6

4.7

5.2

(4.9)

(13.9)

(26.1)

(2.0)

NAV relative to MSCI Europe

0.1

1.9

2.6

(7.5)

(12.6)

(16.6)

10.2

Price relative to MSCI Europe ex-UK

2.7

4.2

4.3

(6.8)

(12.2)

(28.8)

(9.7)

NAV relative to MSCI Europe ex-UK

0.2

1.4

1.8

(9.3)

(10.9)

(19.7)

1.6

Price relative to CBOE UK All Cos

1.9

5.7

8.2

1.7

(15.6)

(15.2)

19.0

NAV relative to CBOE UK All Cos

(0.6)

2.8

5.6

(1.0)

(14.4)

(4.4)

33.9

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

Return contributions from many sources

According to Darwall’s colleague Luca Emo, most of the trust’s holdings have posted ‘very good numbers’ in recent times, with several making upward revisions to earnings projections. But the best performers year-to-date have been EOT’s largest holdings, most notably Novo Nordisk, as the strength of its earnings have continued to take investors by surprise. Sales rose 25% in the first three months of 2023 and the company has revised up its forecasts for the full year. Sales are now expected to rise by 27–33% during 2023, while profits are forecast to increase by 31–37% for the year, thanks especially to strong demand for its GLP-1 class of drugs for diabetes, and for its weight loss drug, Wegovy. Competition is intensifying and health authorities are investigating the safety of this drug for users with mental health issues, following recent concerns. However, the company’s shares jumped in August on news that Wegovy has positive health benefits: a trial showed the drug significantly reduces the risk of heart attack and stroke. This latest news will no doubt reinforce Darwall’s confidence in Novo Nordisk’s ability to realise further significant growth over time.

Other large holdings such as Dassault Systèmes, Infineon and Experian that have been out of favour with investors are beginning to recover, and boost performance accordingly (Exhibit 6). Dassault has benefited from an 8–9% increase in revenues and strong operating margins, while the unexpected rise in sales of electric vehicles (EVs) and the recent focus on artificial intelligence are providing tailwinds for Infineon. Experian offers a variety of data-driven credit services to businesses and individuals in the UK, Europe, the US and Latin America. The US regulatory threat appears to have receded, as the Biden administration seems less likely to set up a new public credit bureau. Additionally, there are early signs that investors are finally beginning to appreciate the growth potential of Experian’s businesses, with some viewing recent guidance as unduly conservative.

The list of contributors to recent returns also includes another credit services company and top 10 holding Edenred. It announced the acquisition of an employee engagement platform in May and Darwall believes this transaction provides the company with a major new growth opportunity. Second quarter results showed a 20% rise in revenues and a larger increase in profits. The company also confirmed its ambitious full year targets. Recent acquisitions budget airline Ryanair and Prysmian, an Italian cable manufacturer, both discussed below, have performed well since purchase.

Patience still needed in some cases

The year-to-date has not been without its disappointments from a few portfolio holdings, but, as ever, the managers are prepared to remain patient and give these companies the time they require to fully realise their potential. The largest detractor from returns so far this year has been Genus, a UK animal genetics company focused on the production of disease-resistant pigs. It came under pressure following precipitous falls in Chinese pork prices due to a new outbreak of African swine flu. However, Darwall remains confident in the longer-term prospects of this company. Initial feedback from farmers on gene-edited pigs has been positive and Chinese farmers will eventually begin to restock, creating an opportunity for Genus. In addition to the massive Chinese market, there is scope for strong growth from the US, where current sales of pork are low, but rising. Genus is due to file an application for US regulatory approval of its gene-editing animals before year-end and, if this application is successful, it will, according to Darwall, ‘transform the company’s medium-and long-term prospects’.

German pharmaceuticals and life sciences company Bayer has also disappointed recently, due to poor performance from both its pharma and crop sciences businesses. The company benefited from the price rise in glyphosate fertilisers following Russia’s invasion of Ukraine, but prices have since declined. However, Darwall sees Bayer as ‘a world leader’ whose extensive investment in R&D will ultimately be rewarded by the success of new products such as short stature corn, despite current market scepticism.

Current portfolio positioning

A constant search for ‘special’ companies

Darwall believes EOT’s ‘special’ companies sidestep many of the challenges faced by the European economy – inflation, persistently high interest rates and medium-term rises in energy costs – and are well-placed to grow on the back of structural growth trends. This confidence in the portfolio, combined with his long-term investment focus, means turnover tends to be low, at less than 20%.

Exhibit 5: Top 10 holdings (at 31 July 2023)

Company

Country

Industry

Portfolio weighting (%)

31 July 2023 (%)

31 July 2022 (%)*

Change (pp)

Novo Nordisk

Denmark

Pharmaceuticals

11.2

12.6

-1.4

Experian

UK

Credit data provider

9.3

10.4

-1.2

RELX

Netherlands

Publishing

8.4

9.9

-1.5

Dassault Systèmes

France

Software

8.2

9.1

-0.9

Deutsche Boerse

Germany

Stock exchanges

7.0

6.4

0.6

Edenred

France

Credit services

6.7

4.8

1.9

BioMérieux

France

Pharmaceuticals

6.1

6.7

-0.5

Bayer AG

Germany

Pharmaceuticals

5.1

4.9

0.2

Genus

UK

Animal genetics

4.9

5.1

-0.3

Soitec

France

Information Technology

4.9

N/A

N/A

Top 10 (% of holdings)

71.7

74.1

Source: European Opportunities Trust, Edison Investment Research. Note: *N/A signifies that the company was not among EOT’s top 10 holdings at end July 2022.

However, the manager and his growing team are always on the look-out for interesting investment opportunities. In May they opened a new position in Irish budget airline Ryanair. This stock has performed well since and the managers expect the numbers to get ‘even better’, for several reasons. Ryanair purchased new planes cheaply during the pandemic when demand was low. These aircraft are 20% more fuel efficient than existing planes, which will limit fuel bills over the medium term and provide the company with a competitive edge accordingly. In addition, unlike some competitors, Ryanair kept its pilots on the payroll during the pandemic, so it has the resources to meet the post-pandemic surge in air travel. Demand for holiday travel is expected to remain strong, but customers are likely to ‘trade down’ to cheaper travel options in response to current cost-of living constraints. As a budget airline, Ryanair is likely to benefit from this shift. The company has also profited from shrewd hedging of fuel costs, and it appears to be willing to pay more to use sustainable aviation fuel (SAF), as it sees this a marketing tool that appeals to environmentally conscious customers.

The managers purchased Prysmian in June. This company is a world leader in the supply of energy and telecoms cable systems, including for power transmission and distribution, and as such it is set to benefit from long-overdue US investment in grid upgrades, and from global demand for renewable energy infrastructure. Within the US, the company is likely to benefit from the reluctance of American utility companies to source cable infrastructure from Prysmian’s Chinese competitors, for security reasons. EOT’s managers have indicated that the trust’s small position in this name is likely to grow over time.

Market fluctuations provide scope to top-up existing holdings…

Market fluctuations have provided the managers with the opportunity to add to some favoured holdings at attractive prices. They have recently topped up positions in Genus, Edenred, Oxford Instruments, a UK producer of semiconductor equipment and materials, and Intermediate Capital Group (ICG), an alternative asset manager, following a run of good results and a meeting with management. EOT’s holding of Worldline, a French software company providing payments and transactions services to financial institutions, corporations and governments, was increased in July after the company reported excellent results. Worldline continues to benefit from the trend to digital money, which Darwall expects to underpin profit growth for the foreseeable future. As discussed in our last note, the managers began to wind down their position in Mowi, a Norwegian salmon farmer, in late 2022, following the introduction of a hefty and controversial tax increase intended to capture externalities related to companies’ use of natural resources. They closed the position in Q123. However, since then, the resource tax has been reduced from 45% to 25%, and the managers have signalled that they may re-purchase the stock at the right price, as they believe alternative forms of salmon farming are expensive, due to high electricity costs.

… and take profits on strong performers

Recent disposals have included the outright sale of Network International, a software infrastructure provider focused on digital commerce, following an agreed takeover. A position in Hikma, a UK pharmaceuticals manufacturer, was also closed, locking in profits after the stock performed well and reached what the managers believed to be a realistic valuation. They also trimmed the position in Novo Nordisk, to maintain its 11.5% portfolio weighting, although they stress that their confidence in the company is undiminished. The exposure to Experian was also reduced to limit its substantial portfolio weighting. Exposure to Infineon was also trimmed after a recent share price bounce.

Exhibit 6: Portfolio sector exposure at 31 July 2023 (% unless stated)

Sector

Portfolio weight
31 July 2023

Portfolio weight
31 July 2022

Change
(pp)

MSCI Europe

31 July 2023

Active weight vs benchmark (pp)

Healthcare

33.4

33.6

(0.2)

15.6

17.8

Industrials

22.0

20.1

1.9

15.1

6.9

Information Technology

20.4

24.2

(3.8)

6.8

13.6

Financials

17.7

10.6

7.1

17.6

0.1

Energy

4.5

5.5

(1.0)

5.6

(1.1)

Materials

2.1

1.1

1.0

7.1

(5.0)

Consumer Staples

0.0

4.2

(4.2)

12.3

(12.3)

Consumer Discretionary

0.0

0.7

(0.7)

11.8

(11.8)

Consumer Services

0.0

0.0

0.0

3.1

(3.1)

Utilities

0.0

0.0

0.0

4.2

(4.2)

Real Estate

0.0

0.0

0.0

0.8

(0.8)

Total

100.0

100.0

100.0

Source: European Opportunities Trust, Edison Investment Research

Dividend policy

EOT’s objective is to achieve capital growth, rather than income, and the trust invests in companies focused on structural growth, which tend to reinvest their earnings in further growth, rather than pay dividends to their shareholders, so the dividends EOT receives from its investments tend to be low. EOT’s policy is to pay out income equal to 85% of this investment income, the minimum required by legislation to maintain its investment trust status. This means that the trust’s dividend is quite low in absolute terms, and relative to its peers, and does not usually make a significant contribution to total returns. As can be seen from Exhibit 7, the dividend may fluctuate in line with EOT’s investment income.

Exhibit 7: Dividend, pence per share

Source: European Opportunities Trust

In the financial year to end-May 2022, the company paid a final dividend of 2.5p per share, up from 2.0p per share in the previous financial year. The dividend for the year to end-May 2022 represents a yield of 0.3%, based on the current share price. EOT makes one final dividend payment per year. It is expected to announce its final dividend for the current financial year ended May 2023 at the time of publication of its annual results, in September 2023. Subject to the agreement of shareholders at the annual general meeting, the dividend will be paid in November 2023.

For further information about EOT’s fund profile, capital structure, investment process and fees and charges, please see our initiation report.

General disclaimer and copyright

This report has been commissioned by European Opportunities Trust and prepared and issued by Edison, in consideration of a fee payable by European Opportunities Trust. 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 European Opportunities Trust and prepared and issued by Edison, in consideration of a fee payable by European Opportunities Trust. 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 European Opportunities Trust

View All

Latest from the Investment Companies sector

View All Investment Companies content

Research: Metals & Mining

Pan American Silver — Refining estimates post Q2 results

Pan American Silver (PAAS) reported its first quarterly results that include the assets acquired as part of the Yamana transaction, with Q2 revenues and adjusted EBITDA of US$640m and US$218m, an improved margin of 34%. Despite somewhat weaker than expected numbers, PAAS maintained its operational and cost guidance for FY23, which points to a visible improvement in performance in H2. Escobal continues to advance through the ILO 169 consultation process, with completion of Phase 2 expected by the authorities in October. We have updated our financial estimates and revised our valuation, which now stands at US$22.2 per share.

Continue Reading
Macro Pyrite mineral_pan american

Subscribe to Edison

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

Sign up for free