The strategy was launched in December 2005 and invests in companies in the Asia Pacific region (excluding Japan, including Australia and New Zealand), which are positioned to benefit from and contribute to sustainable development.
1 April - 30 June 2021
Our investment philosophy marries sustainability with quality.
We are most attracted to companies which occupy the intersection of both of these elements. We will not invest in a company for reasons of sustainability only. Nor will we invest in high-quality companies that are positioned poorly from a sustainability perspective. We evaluate quality across three broad measures: stewardship, franchise and financials.
During the period we sold the very marginal investment in Indigo Paints due to valuations reaching extreme levels post a much anticipated initial public offering (IPO). For reasons of valuation we also trimmed holdings in Dr. Lal PathLabs (India), Cyient (India) and Xero (Australia). We reduced Tokyo Electron Limited for reasons of cyclicality, sustainability and valuation. Fortunately, we had an opportunity to top up a number of existing holdings listed in New Zealand, Australia, Japan, India and Hong Kong for company specific attractions.
The Australian market is often dubbed ‘a commodity market’ because of the high number of successful resource companies listed on the Australian Stock Exchange. These companies, combined with a very dominant banking sector, frequently crowd out investor attention from some of the high- quality innovative business models that are also listed in Australia. During the period we concluded our evaluation of a founder-managed technology business that boasts 20% market share in the software design of printed circuit boards. We believe that this asset, and people-light business offers attractive financial characteristics, excellent stewardship and a powerful franchise that is capable of continuing to win market share from less focused peers. We added the company to the portfolio.
We increased the direct exposure to companies listed in China as we bought two new mainland A-Share companies, taking the number of Chinese listed businesses in the strategy to seven.
During the period we bought a founder-managed diagnostics business which stands distinct from government interference and assists patients with the early diagnosis of cancer. We also invested in an innovative, founder-managed, vertically-integrated, industrial automation business that improves manufacturing productivity, therefore benefiting from strong sustainability tailwinds and aligned with government ambition for national development.
1 April - 30 June 2021
Asia Pacific Sustainability
During the quarter there were 274 resolutions from 26 companies to vote on. On behalf of clients, we voted against 11 resolutions.
We voted against Pentamaster International, Vinda International and AK Medical Holdings’ request to repurchase issued shares, and issue shares without pre-emptive rights, as the share discount rate had not been disclosed and the share issuance was excessive. (six resolutions)
We voted against Shenzhen Inovance Tech’s request to adopt a long-term stock ownership incentive plan as there was a lack of disclosure and transparency on the plan. We also voted against their request to elect an individual to their Supervisory Council as we do not believe they are truly independent. (four resolutions)
We voted against Selamat Sempurna’s request to appoint an independent auditor and their authority to set the auditor fees. At the time of voting the company had not disclosed its proposed auditor. (one resolution)
View our list of investment terms to help you understand the terminology within this document.
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