Temple Bar Investment Trust PLC on Wednesday said the UK offered a rare attraction of political stability, noting a boost from NatWest Group PLC, Barclays PLC, and ITV PLC among others.
The London-based company, which primarily invests in UK equities, said net asset value per share at fair value rose 18% to 280.1 pence as at June 30 from 236.8p a year prior.
NAV total return was 13.1% for the first half of 2024, outperforming the FTSE All-Share index’s return of 7.4%, and higher than the company’s total return of 3.4% a year prior.
‘NatWest and Barclays continue to benefit from the recent pick up in net interest margins (itself a function of rising interest rates) and a benign loan loss cycle and both reported a strong set of results in February,’ the company’s Portfolio Managers Ian Lance and Nick Purves said.
‘ITV rose by around 30% in the six months. Although the advertising cycle continues to be weak, it appears to have stabilised, and this at a time when the shares look to be significantly undervalued. This was illustrated by the announcement that the company had agreed to sell its share of the Britbox International joint venture for £255 million, which at the time constituted around 10% of the company’s market valuation; this even though the joint venture contributed little in the way of profit to the group,’ they added.
Temple Bar said the interim dividend for the first half is 5.00p per share, up 8.7% from 4.60p a year ago.
‘The UK stock market enjoyed a positive first half of the year, supported by an increase in M&A activity and in companies buying back their own shares; both a reflection of the perceived value offered by current valuation levels,’ said Chair Richard Wyatt.
He added: ‘With the election of a new government in a landslide result, the UK offers the increasingly rare attraction of political stability. Combined with the continued appealing valuations offered by UK equities, particularly when compared with the valuations seen in certain overseas markets and sectors, the outlook for UK equities is positive.’
Looking ahead, Portfolio Managers Lance and Purves said: ‘Despite the strong returns that the trust has enjoyed over the last eighteen months, we believe that its portfolio of stocks continues to look very undervalued. We are fond of saying that stock market history has shown, quite conclusively, that the best predictor of future investment returns is starting valuation. Stocks that are lowly valued are priced to deliver attractive returns, while those that are richly priced are priced to deliver disappointing returns. In our opinion, today‘s most attractive valuations continue to be found in sectors such as banks, insurance, energy, media and consumer cyclicals.’
Temple Bar shares were 0.2% higher at 274.03 pence each on Wednesday morning in London.
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