Henderson Far East Income Reports Half-Year Profit Slump Amid Market Volatility
Why we think this is bad
The investment trust's performance has significantly deteriorated, with total return plummeting from £27.8 million to £8.1 million. Earnings per share have more than halved, dropping from 17.09p to 4.87p. While there's a slight increase in revenue, the core investment income is declining. The trust is underperforming its benchmark indices, indicating struggles in its investment strategy. Despite some positive aspects like reduced debt and optimism about dividend growth, the overall picture is concerning. The increased exposure to China and the financial sector, coupled with reduced Indian exposure, suggests a riskier portfolio allocation in the current volatile market conditions.
Key Points
- Total return decreased from £27.8 million to £8.1 million
- Earnings per share dropped from 17.09p to 4.87p
- NAV per share declined from 227.06p to 216.48p
- Increased exposure to China (24.8% vs 17.5%) and financials sector (37.4% vs 28.5%)
- Reduced exposure to India (7.0% vs 13.1%)
- Improved cash position and reduced net debt
- Underperformance against benchmark indices
- Mixed outlook with optimism on dividend growth but concerns over market volatility
Summary
Henderson Far East Income Limited has reported its half-year results, showing a significant decline in profitability. The total return fell from £27.8 million to £8.1 million, with earnings per share dropping from 17.09p to 4.87p. While revenue slightly increased, core investment income decreased. The trust's NAV per share declined from 227.06p to 216.48p, and it's currently trading at a small premium despite underperforming its benchmark indices. The trust has increased its exposure to China and the financial sector, while reducing exposure to India, potentially increasing portfolio risk. On the positive side, the trust has improved its cash position and reduced net debt. The outlook remains mixed, with management expressing optimism about dividend growth potential but acknowledging significant market uncertainties and volatility, particularly due to US trade policies.