REG-BlackRock Greater Europe Investment Trust Plc: Portfolio Update

Blackrock Greater Europe Investment TrustAnnouncement

17/03/2025 12:30

The information contained in this release was correct as at 28 February 2025.
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 GREATER EUROPE INVESTMENT TRUST PLC (LEI - 5493003R8FJ6I76ZUW55)

All information is at 28 February 2025 and unaudited.

Performance at month end with net income reinvested
 

                              One Month  Three Months  One Year  Three Years  Launch (20 Sep 04)  
                                                                                                  
 Net asset value (undiluted)  -0.7%      8.1%          -1.7%     23.0%        798.5%              
 Share price                  -0.8%      8.8%          -4.0%     15.2%        748.5%              
 FTSE World Europe ex UK      2.2%       9.7%          10.5%     34.6%        486.9%              

Sources: BlackRock and Datastream
 

 

At month end

 Net asset value (capital only):      639.47p     
 Net asset value (including income):  639.47p     
 Share price:                         596.00p     
 Discount to NAV (including income):  6.8%        
 Net gearing:                         10.1%       
 Net yield 1 :                        1.2%        
 Total assets (including income):     £620.7m     
 Ordinary shares in issue 2 :         97,070,633  
 Ongoing charges 3 :                  0.95%       

 

1  Based on an interim dividend of 1.75p per share and final dividend of
5.25p per share for the year ended 31 August 2024.

2  Excluding 20,858,305 shares held in treasury.
3  The Company’s ongoing charges are calculated as a percentage of average
daily net assets and using the management fee and all other operating expenses
excluding finance costs, direct transaction costs, custody transaction
charges, VAT recovered, taxation, write back of prior year expenses and
certain non-recurring items for the year ended 31 August 2024.

 

                          
 Sector Analysis          Total Assets (%)  
 Industrials              28.0              
 Consumer Discretionary   23.9              
 Technology               14.6              
 Health Care              14.3              
 Financials               10.9              
 Basic Materials          6.7               
 Real Estate              2.1               
 Net Current Liabilities  -0.5              
                          -----             
                          100.0             
                          =====             
                                              
 Country Analysis         Total Assets (%)  
 France                   20.3              
 Netherlands              18.3              
 Switzerland              17.3              
 Denmark                  9.4               
 Ireland                  6.0               
 Sweden                   6.0               
 United Kingdom           5.9               
 Germany                  5.1               
 Italy                    4.3               
 United States            3.8               
 Belgium                  2.2               
 Finland                  1.9               
 Net Current Liabilities  -0.5              
                          -----             
                          100.0             
                          =====             
                                            

 


 

 Top 10 holdings           Country         Fund %  
 Novo Nordisk              Denmark         7.1     
 Safran                    France          6.0     
 RELX                      United Kingdom  5.9     
 ASML                      Netherlands     5.2     
 Hermès                    France          4.9     
 Schneider Electric        France          4.6     
 Allied Irish Banks (AIB)  Ireland         4.3     
 Ferrari                   Italy           4.3     
 Partners Group            Switzerland     4.3     
 Adyen                     Netherlands     4.0     
                                                   

 

Commenting on the markets, Stefan Gries and Alexandra Dangoor, representing
the Investment Manager noted:

 

During the month, the Company’s NAV declined by 0.7% and the share price
fell by 0.8%. For reference, the FTSE World Europe ex UK Index returned 2.2%
during the period.

 

European ex UK markets rose during February, marking one of the strongest
starts to the year in over a decade for European equities and outperforming US
equities. Europe is benefiting from its cyclical nature, with strong
performance in banks and assets tied to the global economy, while the US faces
challenges such as a high budget deficit, lower consumer confidence and heavy
reliance on major tech companies (Mag7).

 

So far this year, markets have traded heavily around various narratives,
including a European domestic recovery, the Deepseek news, or a potential
peace deal in Ukraine.

 

In February, we observed increasingly narrow markets driving strong returns.
This relatively narrow leadership was driven by banks, which have shown
positive trends for some time, and European defence stocks anticipating
increased military spending by EU states. Conversely, companies with
accelerating growth and small upgrades, particularly in the tech and data
centre space, have not performed in line with upgrades due to market concerns
about hyperscale capex spending.

 

The full-year earnings season has been positive for the Company, with most
companies' earnings exceeding expectations, even though markets haven't always
rewarded them. Generally, earnings expectations remain relatively low,
especially compared to US peers, which could support positive earnings
surprises in upcoming quarters.

 

The Company underperformed its reference index during the month, driven by
both stock selection and sector allocation.

 

In sector terms, the Company’s underweight positioning to financials was
negative. A lower allocation to consumer staples and overweight positioning to
technology also dragged on sector attribution. This was partially offset by a
higher exposure to industrials.

 

The largest negative contribution came from the Company’s semiconductor and
data centre exposure, on a continuation of the recent weakness in shares. BE
Semiconductor, ASMi and Schneider Electric were amongst the largest
detractors. BE Semiconductor reported earnings which included a small miss on
Q4 revenues and a Q1 2025 guide below lofty consensus expectations. The lower
guide was driven almost entirely by the core business which awaits a pickup in
demand for PC and smartphone end markets – something management expects to
see in H2 2025. Meanwhile, there was better news in Hybrid Bonding where the
pace of adoption is accelerating, and new client orders have begun to come
through.

 

Similarly, ASMi missed consensus expectations for Q4 order intake driven by
parts of the business which masked strong acceleration in their key Gate All
Around (GAA) transistors used in leading edge applications.

 

Despite detracting over the month, Schneider Electric reported strong
financial results for FY24, achieving record revenues of EUR38bn, up 8%
organically from the previous year. The electrification and automation
segments contributed strongly. Although the data centre segment saw some
weakness, the value chain remains positive despite some uncertainty in the
outer years. Data centres had already become increasingly important before AI,
and modernisation of the existing installed base should continue to drive
growth.

 

The portfolio’s shares in RELX were weak on the market’s momentum
reversal. Meanwhile, the company reported strong full year results including
7% organic growth at group level with an outlook pointing to 2025 as another
year of strong underlying growth, supporting the longer-term thesis that the
business can continue to accelerate growth over time.

 

On the positive side, AIB Group was the single largest contributor to relative
returns. Positive trends in the banking sector, such as deposit growth, solid
balance sheets, and capital returns, have been observed for a while. With no
changes to fundamental news flow, interest rates, FX rates, or swap rates, the
sector rallied on the back of increased investor demand and flows into
European cyclicals trading at low valuations.

 

Kingspan was also amongst the largest contributors to relative returns this
month. Shares were up after the company reported solid Q4 earnings including a
3% beat in EBIT at group level. This was largely driven by the Roofing &
Waterproofing division which beat EBIT expectations by 27% with margins
beating by 130bps. Management indicated they are happy with 2025 consensus
expectations and pointed to a strong order book with the Data Solutions
division seeing a tailwind due to the demand from data centres.

 

Shares in Adyen rose after they reported impressive H2 2024 and FY24 financial
results. For H2, Adyen reported net revenue up 22% year-on-year, with an
EBITDA margin of 53%. Adyen’s superior product offering continues to give
them a competitive advantage versus peers and positions the company well to
sustain a mid-20s CAGR over the medium term.

 

Finally, Ferrari also contributed to relative returns as the company reported
much better than expected earnings and order book numbers in Q4 results. The
order book now covers the whole of 2026, giving the company good earnings
visibility for at least the next two years. 2025 guidance suggested further
upside is still to come as they expect to hit the top end of 2026
profitability targets a year early. 


 

Outlook

 

The underlying economic conditions in Europe remains solid, with both
consumers and corporations in healthy financial positions. The disinflation
process is progressing, with the European Central Bank projecting headline
inflation to average 2.1% in 2025 and 1.9% in 2026. Globally, rate-cutting
cycles have begun, with the Federal Reserve following Europe's lead.

 

After a long hiatus, capital expenditure (capex) has returned, supporting a
lot of cyclical businesses and potentially driving higher earnings over a
multi-year period, which has driven us to maintain our cyclical exposure.
There are significant secular opportunities in areas such as the energy
transition and advancements in AI.

 

The luxury sector, having been through two years of normalisation, could
potentially start to see improvements in 2025, as resolving US election
uncertainty has further improved the economic backdrop in the US. However, it
remains crucial to be selective in Europe – defensive exposures are more
attractive in the industrials sector, while demand for most consumer staples
remains soft.

 

Additionally, the European market composition has structurally improved,
becoming a higher quality market while valuations are at a record-wide
discount relative to the US.

 

Investor sentiment toward Europe has been subdued and is now starting to turn
decisively as Europe continues to offer compelling valuation opportunities.
The potential for structural reforms in Germany and economic stimulus from
China could help to continue to shift sentiment more positively. That said,
our investment approach prioritises company specific opportunities and
management teams over a country view or political developments. Our focus lies
on industries with robust structural drivers, as these have a more profound
impact on long-term outcomes than country-specific factors. A strong U.S.
economy, positive real wage growth in Europe and potential stimulus measures
in China, could create a supportive backdrop for Europe’s globally oriented
companies.

 

17 March 2025

 

ENDS

 

Latest information is available by typing www.blackrock.com/uk/brge 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.

 Release (https://mb.cision.com/Main/22396/4119605/3324410.pdf)  



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