Our Global Long-Term Unconstrained strategy stock focused approach is driven by in-depth fundamental research. Each month we highlight key company news flow, and where appropriate, insights from any engagement activity the team have undertaken with our investee companies. This is considered in the context of our long-term investment horizon.
Benefitting from positive green tailwinds
We met Kingspan’s management in February, the company offers us exposure to energy efficient infrastructure. We discussed how Kingspan’s 2021 acquisition of Danish company Logstor has led to its supply of pre-insulated pipes to district heating networks, notably the FWS-West Hamburg district heating project, Europe’s largest urban redevelopment project in a city centre. We also discussed, more generally, how on-going regulatory tailwinds globally should boost insulation panel sales.
Source: Martin Currie and Kingspan as at 17 February 2023.
CEO updates on acquisitions and disruption
In February Atlas Copco, hosted an update meeting with CEO Nico Delvaux, the company is a global leader in access solutions, or more prosaically, locks and keys. He discussed the latest on the acquisition of HHI, potential market disruptors and the legacy of COVID. Assa Abloy is exposed to infrastructure development. Digitization of access solutions is gaining traction via the adoption of smart locks. In 4Q 2022 Assa Abloy reported organic growth of +9%, partly supported by smart lock adoption. The firm also reported doubling operational cashflow.
Source: Martin Currie and ASSA Abloy as at 3 February 2023.
Purosangue is exceeding order expectations
With revenue and EBITDA growth of +12% and +8% respectively, Ferrari’s 4Q 2022 results exceeded expectations. This was the first quarter with meaningful contributions from deliveries of the Purosangue SUV and the SP3 Daytona (Icona model). Both models are priced above the Group average selling price and therefore accretive to margin. Ferrari also issued 2022 revenue and EBITDA above consensus.
Source: Martin Currie and Ferrari as at 24 February 2023.
Management deliver an upbeat outlook after a difficult quarter
Kering Q4 results were challenged by a confluence of factors including volatile trading circumstances due to COVID in China, a negative media event in the US in December for Balenciaga and continued underperformance from Gucci, where they have recently announced a new creative director. Overall group sales missed consensus expectations by 3% with largest brand Gucci’s sales -14% in Q4. The division in which Balenciaga resides had sales 11% below consensus, and this impacted the US results. Whilst Q4 of 2022 was difficult, management highlighted a stronger start to 2023 and an upbeat outlook.
Source: Martin Currie and Kering as at 15 February 2023.
Sales across geographies outperform
L’Oreal’s brand portfolio and digital execution helped it outperform in terms of sales in 2022. Whilst the beauty market grew at 6% in 2022, the company delivered double digit revenue growth (1.8x the market) with outperformance in all regions, divisions, and categories. The CEO highlighted that (global) market growth of 4-5% is expected to continue in 2023 and beyond with L’Oreal set to gain further share.
Source: L’Oreal as 9 February 2023.
Disruption to travel retail impacts Q2 results
Second quarter (December 2022) results reported net sales down 17% year on year. While this was 1% ahead of consensus, the firm cut guidance for the financial year. The weaker guide reflects a slower recovery in China with weakness in travel retail, driven by destocking. We see these issues as transitory.
Source: Martin Currie and Estée Lauder as at 2 February 2023.
NovaSeq X launch ahead of expectations
The genetic sequencing firm’s Q4 results were in line with preannounced expectations, revenue of $1.075 billion, was +1.1% vs consensus. The company have guided revenue growth of 7-10% in 2023, management have taken a deliberately conservative tone, reflecting the challenging macro operating environment and a demand air pocket caused by new product launches.
Source: Martin Currie and Illumina as at 7 February 2023.
Over the course of the year 2022, the proportion of hybrid powertrains increased from 20% to 35%. Ferrari intends to reach a mix of 60% hybrid and full electric (and therefore only 40% internal combustion engine) by 2026.
Regulatory information and risk warnings
This information is issued and approved by Martin Currie Investment Management Limited (‘MCIM’), authorised and regulated by the Financial Conduct Authority. It does not constitute investment advice. Market and currency movements may cause the capital value of shares, and the income from them, to fall as well as rise and you may get back less than you invested.
The information contained in this document has been compiled with considerable care to ensure its accuracy. However, no representation or warranty, express or implied, is made to its accuracy or completeness. Martin Currie has procured any research or analysis contained in this document for its own use. It is provided to you only incidentally and any opinions expressed are subject to change without notice.
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Past performance is not a guide to future returns.
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The views expressed are opinions of the portfolio managers as of the date of this document and are subject to change based on market and other conditions and may differ from other portfolio managers or of the firm as a whole. These opinions are not intended to be a forecast of future events, research, a guarantee of future results or investment advice.
The information provided should not be considered a recommendation to purchase or sell any particular strategy / fund / security. It should not be assumed that any of the security transactions discussed here were or will prove to be profitable.
It is not known whether the stocks mentioned will feature in any future portfolios managed by Martin Currie. Any stock examples will represent a small part of a portfolio and are used purely to demonstrate our investment style.
The analysis of Environmental, Social and Governance (ESG) factors forms an important part of the investment process and helps inform investment decisions. The strategy/ies do not necessarily target particular sustainability outcomes.
Risk warnings – Investors should also be aware of the following risk factors which may be applicable to the strategy shown in this document.
- Investing in foreign markets introduces a risk where adverse movements in currency exchange rates could result in a decrease in the value of your investment.
- This strategy may hold a limited number of investments. If one of these investments falls in value this can have a greater impact on the strategy’s value than if it held a larger number of investments.
- Smaller companies may be riskier and their shares may be less liquid than larger companies, meaning that their share price may be more volatile.
- Emerging markets or less developed countries may face more political, economic or structural challenges than developed countries. Accordingly, investment in emerging markets is generally characterised by higher levels of risk than investment in fully developed markets.
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