Ellerston Asian Investments Limited

Softness in Investment Performance in May Month: Ellerston Asian Investments Limited (ASX: EAI) is an Australian based investment company and focuses on mid & small cap companies based on the highest conviction ideas from a filtered universe of securities. The company has the rich exposure team with a long track record of absolute investing with over 15 years average equity investing background. Recently, the company disclosed weekly Net Tangible Asset backing (NTA) per share before tax that came at $1.2049 as at 22 June 2018. If all the remaining 2019 options had been exercised by 22 June 2018 then the estimated fully diluted NTA before tax would have been $1.1303 per share.

In another release on ASX, the company has provided its investment update for May 2018 which was somewhat below expectation because of volatility in global equity markets including Asian markets. The investment return was down 1.6% during the month, still outperforming the benchmark by 0.30% (gross). The NTA (before tax) as of May 31st was $1.2164. However, we expect that the company will continue to come on track and show better performance.

As of May 31, 2018, the gross Ellerston Asian Investments Limited recorded a 2.9% and 15.1% gain in its past six month and past one year’s performance, respectively, while there was a respective 2.2% and 12.8% increase in the MSCI AC Asia ex Japan Net Index (in AUD). The company wisely allocated its investment into diversified equities such as 32.6% in IT, 32% in the financial sector, 12.2% in the consumer sector, 4.1% in material sector, 6.5% in other, and 12.6% in cash to maintain its portfolio in a very well manner. Meanwhile, the share price climbed 15.14 per cent in the past one year but down by 3.18 per cent in the past one month. As of now, we give an “Expensive” recommendation on the stock at the current price of $1.080, considering short-term macro level headwinds across the globe, for instance, trade war between US and China, and macroeconomic factors such as increased interest rate in the USA.


Investment Performance (Source: Company Reports)

 
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