29 September 2023

Ashoka WhiteOak Emerging Markets Trust plc

(the "Company")

Monthly Update - August 2023

The Company's monthly factsheet as at 31 August 2023 is now available: https://awemtrust.com/factsheet/

The Company produced a NAV total return increase of 0.2% over the period 30 June 2023 to 31 August 2023, against a return of 0.01% for the benchmark index². Among other factors, relative outperformance was led by positive stock selection attribution in small-caps.

Key Contributors

Key Detractors

Source: Factset. Past performance does not predict future returns. The performance calculation is based on GBP. Currency fluctuations will also affect the value of an investment.

¹ The proceeds raised from IPO were substantially invested as at 30 June 2023.

² Benchmark index - MSCI Emerging Markets Net Return Sterling (Bloomberg MGEF)

 Past performance cannot be relied on as a guide to future performance.

Key contributors

Gokaldas Exports is one of the leading garment manufacturers in India and one of the top garment exporters in the region. The positive investment thesis is based on India emerging as an alternative destination for global brands looking to de-risk their supply chain from China, as well as Gokaldas being considered as a partner of choice from India given the company's long-standing relationship with top global brands and improved execution capabilities led by the new CEO. The company underwent an ownership and management change in 2018, after which it turned around from a low-growth, loss-making enterprise to a profitable one, charting a multi-year growth path. The company is expanding within India to take advantage of the incentives offered by the government while exploring options outside India to create manufacturing capacities (both organically and through acquisitions) in low-cost regions and/or nations which have favourable trade terms with large importing countries like the US, UK, European Union, etc. The new management has created a robust system to ensure operational excellence and high-quality customer service, which will likely lead to industry-leading growth and financial performance in the near future.

Disco manufactures capital equipment for the semiconductor industry, the main products being grinders (to thin semiconductor wafers), dicers (to cut completed wafers into individual chips) and related consumables. Owing to its technical prowess, Disco commands a market share of more than 80%. Recent developments within the semiconductor industry, such as quicker than expected adoption of silicon carbide in electric vehicles and the adoption of chiplets/advanced packaging, have led to Disco's strong operating performance compared to its peers. Silicon carbide is amongst the hardest materials, and as such, dicing and grinding such materials takes longer, requiring more equipment and consumables. These factors have led to a resilient demand environment for Disco's products despite the weakness in the semiconductor sector. These reasons could have contributed to the recent stock performance.

ASM International manufactures semiconductor capital equipment, the main products being Single Wafer Atomic Layer Deposition (ALD) and epitaxy tools. Through superior technology, ASM has established a leading position in the single-wafer ALD market and is increasing its presence in epitaxy tools. Single-wafer ALD and epitaxy tools will be required in greater intensity as semiconductor technology advances. In particular, single-wafer ALD use is likely to increase as manufacturing advanced semiconductors transitions to the Gate All Around (GAA) process. These factors have led to ASM growing faster than the overall semiconductor capital equipment market, allowing the company to expand margins through operating leverage. As a result, operating margins have increased significantly from mid-teens pre-2019 to just below 30% in 2022. The stock outperformed recently in anticipation of a rebound in the semiconductor cycle and ASM receiving new orders as customers such as TSMC transition to the GAA process.

Key detractors

AIA is a Hong Kong listed insurer with a presence in multiple emerging markets, including Hong Kong (35% of Embedded Value or EV), Mainland China (18% of EV), and Thailand (12% of EV), along with a growing presence in other ASEAN countries and India as well. AIA is primarily an agency-driven business with a focus on selling protection products. In partnership with South Africa based Discovery, AIA launched 'AIA Vitality', bringing the successful health insurance and loyalty program to its Asian markets. AIA maintains a prudent investment portfolio with 72% of the book in fixed-income securities (37% of which is in government bonds), while BB and below rated securities make up just 3% of the portfolio. The company's focus to return excess capital to shareholders is noteworthy, with USD 5.8bn returned in 2022. However, operational performance was likely affected by slower than expected economic rebound in China, which may have led to weak stock price performance.

LVMH is the world leader in luxury goods. Fashion & Leather Goods (Louis Vuitton in particular, but also Dior, Fendi, and Loro Piana) and Wines & Spirits (Hennessy cognac, Moet & Chandon, Veuve Clicquot) are the group's most important divisions and account for about 80% of the group's EBIT. LVMH is also present in Perfumes & Cosmetics (Dior, Guerlain, Givenchy), Watches & Jewellery (Tag Heuer, Zenith, Hublot, Chaumet), and Selective Retailing (Sephora and DFS). China accounts for almost a third of its total sales. LVMH's competitive advantage is its portfolio of iconic brands, which would be impossible to recreate in a few years as heritage is only built over time. The market share of the top five global luxury brands has been fairly consistent over time, and these companies offer exposure to the most attractive luxury segments, which have long product cycles and a strong investment value attached to them. Long-term growth of the global luxury goods industry will likely be in the high single digits, led by wealthy US and Asian consumers. LVMH, along with the rest of the luxury stocks, has pulled back recently as luxury spending in Europe and the US normalizes from the highly elevated levels seen over the last two years. Recovery in China since Covid restrictions were removed has also been slower than expected.

Dino Polska is the fastest-growing supermarket chain in Poland. Most of its stores are located in small and mid-sized towns and suburbs of large cities due to their lower cost of ownership and maintenance. Core to their value proposition is convenience - A typical client visits the store daily, spending around 40-50 PLN (10-12 EUR) on average. Its standardised store format allows for efficiencies in-store layouts, allowing higher profitability vs. competitors. Between 2014-2022, the number of stores grew by 24% p.a while revenues increased by 32% p.a. The operating model presents compelling and predictable unit economics with 16% returns on capital employed. At ~5% market share, there is still a long runway for growth. Over time, we believe Dino could also expand to neighbouring countries. The recent correction possibly reflects the higher than expected margin compression mainly because of market leader Biedronka's aggressive price move.

About Ashoka WhiteOak Emerging Markets Trust plc

Ashoka WhiteOak Emerging Markets Trust plc (AWEMT) is a UK investment trust seeking to achieve long-term capital appreciation primarily through investing in a multi-cap portfolio of equities that provide exposure to global emerging markets. Advised by White Oak Capital Partners Pte. Ltd, founded by Prashant Khemka with leading Emerging Markets investment experience. White Oak Capital Group has delivered an exceptional track record for its other strategies, and has £4.9 billion in assets under management or advisory⁴. Analytical approach integral to disciplined research process underpinned by proprietary frameworks OpcoFinco™ for valuation and ABLEx^TM for ESG research. The team at WhiteOak believes that emerging markets present potential for higher alpha. EM markets remain under-researched and inefficient. AWEM leverages WhiteOak's investment approach to capture the higher alpha potential in these markets. No fixed management fee. Manager remuneration is aligned with alpha generation and hence shareholders' interest. The Investment Manager is remunerated solely as a function of outperformance over the benchmark.

⁴  Data as at 31^st Aug 2023. AUM data refers to aggregate assets under management or investment advisory for White Oak Group.

Further Information

For further information on the Company's investment strategy and portfolio construction approach as well as details of the portfolio market cap, regional and sector composition please refer to the latest factsheet.

Investment Objective

To achieve long-term capital appreciation, primarily investing in equity and equity-related securities that provide exposure to global emerging markets.

Summary of Investment Policy

The Company shall invest primarily in securities admitted to trading on any stock exchange (which may include stock exchanges in Developed Markets) that provide exposure to companies that are domiciled in Global Emerging Markets (EMs), or that are domiciled in Developed Markets but at the time of investment, derive a majority of their economic value, revenues or profits from, or whose assets or cost base are mainly located in EMs.

The Company's LEI is 254900Z4X5Y7NTODRI75

For further information:

Company Secretary

WhiteOak Capital Partners Pte Ltd.

Ellora Partners

Buchanan