Kempen Oranje Participaties NV

Profile

Kempen Oranje Participaties N.V. (KOP) offers the opportunity to invest in small-sized European companies. KOP invests in shares of undervalued companies and aims to hold 5% or more of the paid up nominal capital of each company. The environmental, social and governance (ESG) criteria are incorporated in the investment process.

KOP positions itself as an engaged shareholder and aims to generate a long term total return of 10% on an annual basis (on the basis of capital gains and dividends).

Management team

Michiel van Dijk, Erwin Dut, Sander van Oort, Ingmar Schaefer

Performance per 2022-05-31 (rebased)

No chart data available

Performance per 2022-05-31

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  Fund
1 month -0.6 %
3 months -6.0 %
This year -14.1 %
2019 27.6 %
2020 19.0 %
2021 28.0 %
1 year (on annual basis) -7.2 %
3 years (on annual basis) i 15.4 %
5 years (on annual basis) i 7.5 %
Since inception (on annual basis) i 13.0 %
As of 1 July 2015 the investment policy of Kempen Oranje Participaties N.V. has changed. In addition to Dutch and Belgian companies it is now also allowed to invest in other European companies. Performance is shown after deduction of ongoing charges and including the reinvestment of dividend that has been paid out. The value of your investments may fluctuate. Past performance provides no guarantee for the future.
More information can be found on the documents page of this fund

Key figures

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Total fund size
EUR 1,168.43 M 2022-03-31
Share class size
EUR 1,126.85 M 2022-05-31
Number of shares
4,319,619 2022-05-31
Net Asset Value i
EUR 231.68 2022-07-06
Transaction price i
EUR 239.39 2022-07-01
Morningstar rating â„¢

Fund characteristics per 2022-03-31

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  Fund
Number of holdings 25
Dividend yield i 1.66 %
Weighted average market capitalization i EUR 1,271 M
P/E ratio i 16.45
Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch and English) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Developments per 2022-03-31

The following texts refer to the first quarter of 2022

Performance
In the first quarter of 2022, KOP’s Net Asset Value (NAV) declined from €308.35 to €284.48 per participation, bringing the return over the quarter to -7.7%. KOP has averaged a return of 17.5% per year over the past three years and 12.7% per year over the past five years, resulting in a performance above our target of an average of 10% per year in the long term.

Trading
As of 1 April 2022, the trading price was €285.90, based on the NAV of that date plus a premium of 0.5% caused by net inflow into the fund. As of the start of the second quarter, the fund’s size is €1.2 billion. For the next trading date of 1 July 2022, an instruction deadline of 4pm on 31 May 2022 applies for orders in KOP (via Euronext) and a few days before that for the holding companies (via the Van Lanschot Kempen transfer agent).

Market review
The MSCI Europe Index fell by 6.0% in the first quarter of 2022 and in doing so did much better than the MSCI Europe small cap index, which was down by 9.8%. Three obvious themes dominated the markets: soaring inflation, new lockdowns in China and Russia’s invasion of Ukraine. The latter is pushing up energy prices, which in turn is affecting the first theme, while the lockdowns in China may well create additional logistic challenges for a variety of industries, which could in turn lead to shortages and price increases. Ultimately the high inflation and clear signals from the US central bank that it intends to get tough on inflation by implementing several interest rate hikes are the main reasons for the weak market price trends of the past few months. A combination of high inflation and higher interest rates could potentially trigger a recession in the US and Europe as these reduce purchasing power and push down house prices. It’s therefore not surprising that prices of relatively economically-sensitive European small caps in particular have dropped in the last few months.

Portfolio
Nor will it come as a surprise that the best-performing equities in the KOP portfolio have a relatively defensive profile, such as Avon Protection (+17%), Coats (+10%), AlliancePharma (+5%), Premier Foods (+1%) and Acomo (0%). The companies with the weakest price growth were industrial names, such as SAF Holland (-38%), XP Power (-31%) and DiscoverIE (-26%).

An important theme at industrial companies is the difficulties they are experiencing in converting their growing order books into revenue growth due to a global shortage of essential components. Companies such as XP Power, Kardex, DiscoverIE, Kendrion and Suss Microtec are working hard to procure sufficient quantities of computer chips, electronics, cables and other essential semi-manufactured goods (in time), with enormous price increases being the rule rather than the exception. Demand from customers is so strong, however, that passing on the higher procurement costs is not generally much of a problem. The creation of buffer stocks is temporarily increasing the amount of working capital and leading to weak free cashflows at some industrial companies.

Noteworthy news came from XP Power, which received a US$40 million fine for corporate espionage in the US. Two employees who joined the company from competitor Comet had, without the knowledge of XP Power, brought with them trade secrets from their former employer. The employees were immediately dismissed, yet Comet still brought charges against XP Power and a jury found in the former’s favour. The case has now gone to appeal and we expect a final verdict in the next few weeks. As XP Power does not use any Comet technology in existing or new products, we envisage no negative impact on the company’s future revenue growth.

Two names were removed from the portfolio in the first quarter and two new ones added. We have sold Italian company La Doria after a private equity company launched a takeover bid for it in the second half of 2021. It is a fair offer price and at an average annual return of 9% since we bought the stocks in 2015, we are satisfied with the return yielded by this defensive participation.

We also sold our last few shares in Interroll last quarter. As we had only held a fraction of the company’s nominal value for some time now, this former participation had become a taxed position for KOP. Interroll has been a successful investment for us but the market capitalisation of this growth company simply became too big to be able to retain a participation in it in the long term. The industry for automated warehouse solutions remains a highly interesting one, however, and we were therefore pleased to be able to announce a new participation in Kardex in the first quarter.

Swiss company Kardex is a leading manufacturer of automated warehouse solutions for efficient storage and order picking of goods by customers in a range of end markets, such as e-commerce, industry, healthcare, public authorities and logistics. Kardex manufactures individual systems under the brand Remstar and also supplies project solutions via its Mlog division. The company is highly profitable, with an operating margin of 14% and a return on invested capital of 33%. In addition to its own systems, Kardex supplies the solutions of its partner Autostore, a high-end warehouse solution for mainly wholesale and retail markets (e-commerce).

Intralogistics is a structural growth market that enjoys annual growth of 5-7%. Kardex operates primarily in Europe but its recently-opened US factory could enable it to conquer the underdeveloped North American market as well. Markets in the Far East are also reaching the stage of being ready for automated warehouse solutions. In the course of 2021 we accrued a participation in Kardex that currently represents about 7% of the KOP portfolio.

The second new participation we announced is in Finland’s Harvia. This company is global market leader in the manufacture of saunas and sauna equipment, such as stoves, control units, steam generators, thermometers, lighting solutions, cleaning products etc. Harvia sells its products worldwide in over 80 countries and has a market share of 17% in stoves and 4% in complete saunas.

Driven by lifestyle trends, the global market for saunas and spas is averaging structural growth of about 5% a year. An increase in the value per order (premiumisation), geographical expansion and improvements to productivity will in our view lead to average autonomous earnings growth of approximately 8% in the coming years. A robust balance sheet that contains a small amount of debt also gives the company the capacity to make attractive acquisitions in a fragmented industry. The participation in Harvia currently represents about 3% of the KOP portfolio.

The KOP portfolio also witnessed the long-awaited split of Momentum Group AB from its parent company Alligo AB. We have written in previous reports about how the growth formula of Swedish conglomerate Bergman & Beving has led in the past few years to the hiving-off of a number of successful listed Swedish small caps, such as Addtech, Addlife, Lagercranz, Alligo and now also Momentum Group. The successful formula is based on growth in fragmented markets by means of acquisitions and the subsequent splitting-off (and separate market listing) of a business unit once it has acquired sufficient scale. The company then continues to grow as an independent business by means of further acquisitions and hives off another business unit, and so on. Momentum Group was given a separate listing at the end of the first quarter and Alligo paid us a dividend in the form of Momentum stocks. Alligo can now continue as a distributor of tools, protective clothing etc. and concentrate on autonomous revenue growth and cutting costs in the wake of its acquisition of Swedol. Momentum will focus on further consolidating the fragmented Scandinavian market for components and maintenance services for industrial customers. Alligo represents 4% of the KOP portfolio and the smaller Momentum 2%.

The KOP portfolio contains 21 tax-exempt participations, with our position in BESI having stood at well below 5% of the nominal capital for some time now, as a result of which it will no longer come under the participation exemption for holdings that drop below 5% from January 2023. As always, we have a number of positions under accrual; however, it is still unclear whether they will continue to grow into fully tax-exempt participations.

Valuations
The value of the KOP portfolio increased across the quarter. The portfolio’s cash-adjusted price/earnings ratio (EV/EBIT 2023E) stands at 15. This is high from a historic perspective but given the low interest rates we continue to believe that our portfolio enjoys long-term price potential.

Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch and English) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Performance per 2022-05-31 (rebased)

No chart data available

Performance per 2022-05-31

Slide to see more
  Fund
1 month -0.6 %
3 months -6.0 %
This year -14.1 %
2019 27.6 %
2020 19.0 %
2021 28.0 %
1 year (on annual basis) -7.2 %
3 years (on annual basis) i 15.4 %
5 years (on annual basis) i 7.5 %
Since inception (on annual basis) i 13.0 %
As of 1 July 2015 the investment policy of Kempen Oranje Participaties N.V. has changed. In addition to Dutch and Belgian companies it is now also allowed to invest in other European companies. Performance is shown after deduction of ongoing charges and including the reinvestment of dividend that has been paid out. The value of your investments may fluctuate. Past performance provides no guarantee for the future.

Dividends

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Distributing
Yes
Last dividend
EUR 3.80
Ex-date last dividend
2021-05-27
Number of distributions per year
1
Dividend calendar

Risk analysis (ex post) per 2022-05-31

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  3 years Since inception
Maximum drawdown i -23.08 % -41.66 %
Tracking error i 10.95 % 9.55 %
Information ratio i -0.36 0.19
Beta i 0.74 0.84
Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch and English) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Geographic allocation (2022-03-31)

29.2 %
United Kingdom
16.4 %
Netherlands
10.0 %
Sweden
9.4 %
Germany
7.4 %
France
7.1 %
Switzerland
6.9 %
Italy
5.4 %
Ireland
3.7 %
Singapore
3.0 %
Finland
1.4 %
Cash
Total
100 %

Sector allocation (2022-03-31)

30.5 %
Industrials
19.7 %
Technology
19.5 %
Consumer Discretionary
12.0 %
Health Care
11.7 %
Consumer Staples
4.6 %
Other
Total
98 %
Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch and English) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Environmental and/or social characteristics promoted

Kempen Oranje Participaties (the “Fund”) falls under the scope of article 8 of the SFDR which means that the fund promotes environmental and/or social characteristics. This fund will invest in a broad range of companies, of which some will have sustainability objectives.

We commit to the goals of the Paris Agreement. This encompasses short-term objectives (2025), a mid-term ambition (2030) and a long-term commitment to be a net zero investor by 2050. By 2025, we aim to be aligned with a path to achieving the Paris Agreement and Dutch Klimaatakkoord. We follow the market reduction, which assumes a pathway in line with the EU Benchmarks.

Fund carbon emission targets

ESG Investment process

The promotion of environmental and/or social characteristics is achieved through the consistent implementation of the funds ESG policy. The ESG policy is fully implemented in our strategy’s investment process across the three relevant pillars of: Exclusion, ESG integration and Active ownership.

In the investment process we assess the ESG profile of a company. We look at each company on a case-by-case basis, taking into account material risks in a given industry in combination with the company’s respective risk exposure, practices and disclosure. This includes an assessment of good governance practices. The investee companies are rated for governance aspects using external research as well as making internal assessments. Furthermore, we look into the company’s exposure to past controversies and future ESG opportunities. Based on the fundamental ESG analysis we form an opinion on the quality of a company’s ESG profile.

Exclusion

The Fund excludes companies through the application of strict exclusion criteria. These take into account international standards, such as UN Global Compact Framework, the OECD Guidelines for Multinational Enterprises, UN Guiding Principles for Business and Human Rights, and our Principles for Responsible Investment commitments. We have summarized how we integrated the principle adverse indicators in our ESG policy and process in the ESG Policy & Process document that can be found on our website.

Key figures

  Kempen criteria Additional criteria
Business conduct
Human Rights
Labour
Environment
Anti Corruption
Product involvement
Controversial Weapons
Tobacco
Thermal Coal
Tar Sands
Adult Entertainment
Alcohol
Animal Welfare & GMO
Gambling
Power Generation Nuclear
Power Generation Carbon Intensive
(Un)conventional Oil & Gas Extraction
Weaponry
Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch and English) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

 

SWING FACTORS

An overview of the current swing factors are available here.

Ongoing charges

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Management fee i
0.750 %
Service fee i
0.20 %
Expected ongoing charges i
0.95%
Ongoing charges last financial year i
0.95 %
The 0ngoing charges figure of the last financial year relates to 2021.

Other costs

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Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch and English) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Share class details

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Investor type
Institutional & Private
Distributing
Yes
Objective
To generate a long term return of 10% a year (on the basis of capital gains and dividends)
Investment category
Small-caps
Universum
European small-caps
Inception date
1985-08-29
Domicile
The Netherlands
May be offered to all investors in
The Netherlands
May be offered to professional investors only in
United Kingdom
UCITS status i
No
Status
Open-end i
Base currency
EUR
Share class currency
EUR
Administrator
BNP Paribas Securities Services S.C.A., Amsterdam branch
Management company
Kempen Capital Management N.V.
Depositary and custodian
BNP Paribas Securities Services S.C.A., Amsterdam branch
Morningstar rating â„¢

Tradability

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Listed
yes, listed on the NAV Trading Facility of Euronext
Subscription/Redemption Frequency
Quarterly, on the first business day of January, April, July en October
ISIN i
NL0000440675
Entry period purchase order
Approximately 32 calendar days before the start of each quarter
Entry period sell order
Approximately 32 calendar days before the start of each quarter
Details
Orders must be sent by the bank or broker to the NYSE Euronext Trading Facility on the last business day of November, February, May and August, no later than 04.00 PM Amsterdam time in order to be executed on the next dealing day.
Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch and English) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.
Kempen Capital Management N.V. (KCM) is the management company of Kempen Oranje Participaties N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch and English) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.