BlackRock Latin American Investment Trust Plc - Portfolio Update
PR Newswire
London, July 22
The information contained in this release was correct as at 30 June 2020. Information on the Company's up to date net asset values can be found on the London Stock Exchange Website at
https://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html.
BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI: UK9OG5Q0CYUDFGRX4151)
All information is at 30 June 2020 and unaudited.
Performance at month end with net income reinvested
| One month % | Three months % | One year % | Three years % | Five years % | |
| Sterling: | |||||
| Net asset value^ | 7.1 | 23.4 | -34.1 | -15.0 | 8.7 |
| Share price | 10.2 | 20.5 | -30.9 | -5.2 | 20.7 |
| MSCI EM Latin America (Net Return)^^ | 5.3 | 19.5 | -30.4 | -16.0 | 8.1 |
| US Dollars: | |||||
| Net asset value^ | 7.1 | 22.9 | -36.1 | -19.2 | -14.6 |
| Share price | 10.2 | 20.0 | -32.9 | -9.9 | -5.2 |
| MSCI EM Latin America (Net Return)^^ | 5.3 | 19.1 | -32.5 | -20.1 | -15.1 |
^cum income.
^^The Company's performance benchmark (the MSCI EM Latin America Index) may be calculated on either a Gross or a Net return basis. Net return (NR) indices calculate the reinvestment of dividends net of withholding taxes using the tax rates applicable to non-resident institutional investors, and hence give a lower total return than indices where calculations are on a Gross basis (which assumes that no withholding tax is suffered). As the Company is subject to withholding tax rates for the majority of countries in which it invests, the NR basis is felt to be the most accurate, appropriate, consistent and fair comparison for the Company.
Sources: BlackRock, Standard & Poor's Micropal.
| At month end | |
| Net asset value - capital only: | 360.17p |
| Net asset value - cum income: | 360.87p |
| Share price: | 339.00p |
| Total Assets#: | £153.1m |
| Discount (share price to cum income NAV): | 6.1% |
| Average discount* over the month - cum income: | 10.5% |
| Net gearing at month end**: | 8.3% |
| Gearing range (as a % of net assets): | 0-25% |
| Net yield##: | 6.3% |
| Ordinary shares in issue (excluding 2,181,662 shares held in treasury): | 39,259,620 |
| Ongoing charges***: | 1.1% |
Total assets include current year revenue.
#The yield of 6.5% is calculated based on total dividends declared in the last 12 months as at the date of this announcement as set out below (totalling 27.34 cents per share) and using a share price of 418.88 US cents per share (equivalent to the sterling price of 339.00 pence per share translated in to US cents at the rate prevailing at 30 June 2020 of $1.2356 dollars to £1.00).
2019 Q3 interim dividend of 8.03 cents per share (paid on 8 November 2019).
2019 Q4 Final dividend of 9.15 cents per share (paid on 06 February 2020).
2020 Q1 interim dividend of 4.59 cents per share (paid on 20 May 2020).
2020 Q2 interim dividend of 5.57 cents per share (payable on 11 August 2020).
*The discount is calculated using the cum income NAV (expressed in sterling terms).
**Net cash/net gearing is calculated using debt at par, less cash and cash equivalents and fixed interest investments as a percentage of net assets.
*** Calculated as a percentage of average net assets and using expenses, excluding interest costs for the year ended 31 December 2019.
| Geographic Exposure | % of Total Assets^ | % of Equity Portfolio * | MSCI EM Latin America Index | |
| Brazil | 68.6 | 68.5 | 64.1 | |
| Mexico | 18.5 | 18.4 | 21.6 | |
| Argentina | 5.4 | 5.4 | 1.6 | |
| Chile | 5.2 | 5.2 | 7.3 | |
| Peru | 1.5 | 1.5 | 3.1 | |
| Panama | 1.0 | 1.0 | ||
| Colombia | 2.3 | |||
| Net current liabilities (inc. fixed interest) | -0.2 | 0.0 | 0.0 | |
| ----- | ----- | ----- | ||
| Total | 100.0 | 100.0 | 100.0 | |
| ----- | ----- | ----- |
^Total assets for the purposes of these calculations exclude bank overdrafts, and the net current assets figure shown in the table above therefore excludes bank overdrafts equivalent to 8.1% of the Company's net asset value.
| Sector | % of Equity Portfolio * | % of Benchmark |
| Financials | 21.7 | 26.8 |
| Materials | 19.2 | 16.0 |
| Consumer Discretionary | 17.8 | 6.8 |
| Energy | 10.7 | 9.6 |
| Consumer Staples | 9.4 | 15.7 |
| Utilities | 7.1 | 6.8 |
| Communication Services | 5.8 | 7.1 |
| Industrials | 4.5 | 6.3 |
| Real Estate | 3.6 | 1.3 |
| Information Technology | 0.2 | 1.4 |
| Health Care | 2.2 | |
| ----- | ----- | |
| Total | 100.0 | 100.0 |
| ----- | ----- |
*excluding net current assets & fixed interest
Ten Largest Equity Investments (in percentage order)
Company | Country of Risk | % of Equity Portfolio | % of Benchmark |
| Vale | Brazil | 9.4 | 8.1 |
| Petrobras - ADR | Brazil | 8.8 | 7.3 |
| America Movil | Mexico | 5.8 | 4.6 |
| B3 | Brazil | 4.7 | 4.4 |
| Banco Bradesco | Brazil | 4.0 | 4.6 |
| Itau Unibanco | Brazil | 3.9 | 4.8 |
| Ternium | Argentina | 3.6 | |
| AmBev | Brazil | 3.6 | 2.6 |
| Ayfa | Brazil | 3.2 | |
| B2W CIA Digital | Brazil | 3.1 | 0.9 |
Commenting on the markets, Ed Kuczma and Sam Vecht, representing the Investment Manager noted;
For the month of June 2020, the Company's NAV returned +7.1%1 with the share price moving +10.2%1. The Company's benchmark, the MSCI EM Latin America Index, returned +5.3%1 on a net basis (all performance figures are in sterling terms with dividends reinvested).
The positive performance of Latin American equities was led by Argentina, Brazil and Chile and was driven by a global rebound and slight increase in mobility trends after distancing measures continued to be lifted.
Stock selection in Brazil contributed most, while stock selection in Argentina detracted most on relative returns over the period. An off-benchmark holding of GOL Linhas Aéreas Inteligentes, a Brazilian low-cost airline, was the top contributor on a relative basis as the stock was up +53% over the month. We've noted some rotation into lagging sectors, while the company has also benefitted from industry consolidation and a more insulated, domestically focused route list. An off-benchmark holding of Brazilian medical education group, Afya, also benefited relative performance as the company reported that it has enough candidates to ensure 100% occupancy for the second half of 2020 of in-take of medical students and already improved collections in 2020. On the other hand, an off-benchmark holding of Ternium, a steel company in Latin America, detracted most on a relative basis as a slower recovery for flat steel demand weighed on shares recently, given the risk that auto production will take longer to rebound to normalized levels. Not holding BTG Pactual, the largest investment bank in Latin America, within the portfolio weighed on relative performance during the month, as the company is looking to focus on fintech business and start a digital bank, which offers an upside to earnings growth.
Over the month we added to JBS, a Brazilian company that is the largest meat processing company in the world, as we see company's fundamentals improving given high US beef margins and increased protein exports to China. We initiated a position in the retailer, Via Varejo, on attractive valuations and company's ability to become a competitive player in e-commerce in Brazil. We cut our holding in America Movil, a Mexican telecommunication company, as we see signs of increasing competition, which create near-term headwinds. We sold holding of Brazilian healthcare operator, Notre Dame Intermedica, locking in profits after its strong performance. The portfolio ended the month being overweight to Brazil and Argentina, while being underweight to Chile, Mexico, Colombia and Peru. At the sector level, we are overweight to consumer discretionary and real estate, and underweight to consumer staples and financials.
The coronavirus and associated COVID-19 disease has spread throughout the world, prompting "social distancing" and often strict government control measures throughout developed and emerging markets, Latin America included. While China has been gradually easing restrictions since late February, most other emerging economies are still passing through the "peak lockdown" phase. Policy responses have been considerable, but many markets in Latin America, notably those reliant on foreign capital flows, face constraints in the scale of their response, in addition to questions about the robustness of their health systems. We have seen lockdowns easing modestly by June and expect more significant easing in the second half of the year. Most governments plan to do so on this timeframe, though it should be noted that almost everywhere, government control measures have been kept in place longer than originally envisaged. Activity in the industrial sector and in parts of services where "social distancing" is less of a concern should rebound relatively quickly. Still, we do not expect most economies to return to their pre-crisis level of GDP (Gross Domestic Product) until 2021. The extent to which policy action now limits business bankruptcies and a breakdown in the labour market will be an important differentiator of the speed of recovery.
Sources:
1BlackRock as at 30 June 2020
22 July 2020
ENDS
Latest information is available by typing www.blackrock.co.uk/brla on the internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV terminal). Neither the contents of the Manager's website nor the contents of any website accessible from hyperlinks on the Manager's website (or any other website) is incorporated into, or forms part of, this announcement.
