Kempen Oranje Participaties N.V.

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.

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).

On 28 September 2015 Kempen European Participations N.V. (KEP) was merged with KOP, whereby the KEP shares were converted into KOP shares. More information about this merger can be found under the Documents tab on this webpage.

Management team

Joop Witteveen, Michiel van Dijk, Erwin Dut

Performance per 2017-12-31 (rebased)

No chart data available

Performance per 2017-12-31

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  Fund
1 month 2.9 %
3 months 3.9 %
This year 42.3 %
2014 5.9 %
2015 25.7 %
2016 32.8 %
3 years (on annual basis) i 33.4 %
5 years (on annual basis) i 26.8 %
Since inception (on annual basis) i 14.2 %
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 674.04 M 2017-12-31
Number of shares
3,123,694 2017-12-31
Net Asset Value i
EUR 220.13 2018-01-18
Transaction price i
EUR 216.86 2017-12-31

Fund characteristics per 2017-12-31

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  Fund
Number of holdings 23
Dividend yield i 1.88 %
Weighted average market capitalization i EUR 1,077 M
P/E ratio i 22.04
Kempen Capital Management NV (KCM) is the management company of Kempen Oranje Participaties N.V. (the Fund). KCM is authorised as a management company and regulated by The Netherlands Authority for the Financial Markets. The Fund is registered under the license of KCM at the The Netherlands Authority for the Financial Markets.

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

Market developments per 2017-12-31

The following texts refer to the fourth quarter of 2017.

Performance
KOP’s Net Asset Value (NAV) increased from €207.61 to €215.78 per participation in the fourth quarter of 2017. This brings the fund’s return over the fourth quarter to 3.9%, yielding a total return over 2017 – including a dividend payment of €3.00 – of 42.3%.
Trading

As of 2 January 2018, its trading price was €216.86, based on the current NAV including a premium of 0.5% caused by net inflow into the fund. The number of issued KOP shares consequently rose by 5.1% and we were once again able to welcome new participants as of the start of 2018. We continue to see interest from prospective and existing clients. With a view to accommodating this interest, a new holding company may be set up during the next quarter. As a result of the inflow on 2 January, KOP has increased in size to about €710 million. For the next trading date of 2 April 2018, an instruction deadline of 4pm on 28 February 2018 applies for orders in KOP (via Euronext) and a few days before that for the holding companies (via the Kempen transfer agent).

Market review
The performance of European and Dutch small-cap indices stood at 3% over the fourth quarter of 2017 and at 20% and 28% respectively for 2017 as a whole, demonstrating that Dutch small caps clearly outperformed the European average this year. The positive fourth quarter was driven by excellent economic trends and generally sound corporate results. We saw a further strengthening of the euro against the US dollar and a minor further drop in the GB pound. This could have a negative impact on the competitive position of international European businesses in 2018. Oil prices were up this quarter, bringing the increase this year overall to about 35%. This means that oil prices are now at a level at which oil companies can gradually start to consider investing and a number of oil-producing countries could put their financial difficulties behind them. This reinforces the already positive picture of global economic growth without major shocks. Forecasts for economic growth have been adjusted upwards in the Netherlands and Europe, with the Netherlands scoring better than the European average and leading to low unemployment. Inflation remains low partly due to persistently low wage increases, although a general increase in wages could now also boost economic growth. US interest rates are being raised slowly as a result of diminishing monetary stimulation and this could well be a lengthy process in Europe as well, whereby interest rates would normally increase in line with inflation. However, the higher confidence in Europe is pushing up the euro, in spite of the higher interest rates in the US. This will prompt the US Fed and European Central Bank to implement monetary tightening with caution. Encouraged by the overhaul of the US tax system, we are seeing proposals to cut corporation tax in several European countries. The Netherlands is also considering abolishing dividend tax, which would have no direct implications for KOP. Many companies are succeeding in improving their profit margins thanks to the robust economic growth and small wage increases. Listed company valuations have risen over the past few years and the climate is now favourable for stock market flotations and acquisitions. The latter is being boosted by very large cash positions and borrowing capacity at many listed companies.

Within the KOP portfolio we depend on specific trends at the companies in which we participate. Almost all the companies in the portfolio are displaying sound corporate growth, partly aided by a sound financial structure. Well-organised companies with the correct focus are in a position to profit considerably from the robust economic growth in Europe, the US and Asia. The additional revenue growth that can be achieved will ideally trigger an acceleration in earnings growth and provide capacity for investment for the longer term. In a few cases, we have been positively surprised by the revenue and earnings growth at ‘our’ companies. We are also alert to the stronger euro, which could adversely affect the competitive positions of several participations. For the time being, the major currencies continue to move within a restricted bandwidth. We also expect ‘our’ companies to consolidate via further acquisitions and in doing so create additional shareholder value.

KOP again experienced positive growth in the fourth quarter, whereby we implemented portfolio adjustments and bought participations in new companies. These adjustments are expected to contribute positively to a balanced KOP portfolio composition and price potential.

Portfolio developments per 2017-12-31

At the end of the third quarter, we completed the accrual of a new participation in Germany’s SAF Holland, after which we announced no further new participations in the fourth quarter. In 2017 we accrued four new participations for KOP: Coats, ForFarmers, Oeneo and SAF Holland. These new participations have contributed well to the fund’s return, the equilibrium within the portfolio and the average valuation and price potential of KOP. Moreover, we have started to accrue a few new interests and expect to be able to complete accrual of a number of new participations in 2018. We spoke to nearly all the companies in the fourth quarter, discussing specific topics with them.

On 2 November 2017, we held another highly successful client event at our office in Amsterdam, at which we updated KOP participants on the portfolio, performance and more. Managing director Arthur Wessels of Germany’s Washtec talked us through the strategic, operational and financial developments at this market leader in automatic car washes. The operational management of Washtec has been improved substantially by the new management since 2015, leading to almost all parts of the company being restructured and subsequently to an acceleration in revenue growth and excellent cost control. In the wake of consolidating its position in Europe, Washtec has now set its sights on the attractive North American market. The combination of market-specific product innovation and new client orders means that Washtec is currently experiencing a sharp increase in revenue and profitability in North America. This makes us optimistic in relation to opportunities in the Asian market for automatic car wash systems in the long term (currently small due to low wages). In September, we were able to see a number of new products for ourselves and talk to a number of Washtec managers at the Car Wash Europe trade fair at the Amsterdam RAI.

BESI again displayed a robust price performance of 13.6% in the fourth quarter, resulting in an impressive overall return for the year including dividends of 130%. BESI can look back on a highly successful 2017. Its specialist advanced packaging machines are being sold to ever larger numbers of customers, partly due to the very sharp growth of its factory in China. Local sales have received a huge boost from this and substantial revenue growth has been achieved to the sub-contractors of Apple products. The company’s market has broadened in terms of applications (cars, data centres) and client composition, which could temper the cyclicality of its earnings. BESI’s very strong product structure means that when the opportunity arises it is in a position to acquire smaller companies in its sector and implement substantial operational improvements. The company has issued a new (cheap) convertible bond with a view to increasing its financial power and making it more flexible. We have discussed these opportunities and risks in detail with the CEO. We believe that a ‘balanced’ investment in this market leader in the cyclical semiconductor equipment market is both attractive and justified.

Among the other strong performers in the fourth quarter were Italian companies La Doria (+18%) and El.En (+10%), the UK’s Coats (+13%) and Dutch company Kendrion (+9%). Negative contributions came from the positions in QSC (-19%), Beter Bed (-16%) and 2G (-16%).

La Doria profited from ongoing improvements with higher volumes and better prices for its products, giving rise to the prospect of a prosperous 2018.
El.En published an excellent third-quarter update, citing higher sales in China of its laser-driven machines for industrial applications. Partly thanks to new product innovation, the medical division is again likely to undergo robust growth in 2018.
We again talked to the Coats management in London and were updated on initiatives involving simplification, efficiency and innovation. Coats is gaining market share in clothing and footwear and creating new opportunities in both existing and new markets by using weaving technology to combine threads and yarns with composites. Following two successful acquisitions in 2016, at the end of the year Coats announced the acquisition of Patrick Yarns, a specialist in heat-resistant and cut-resistant threads and yarns. Patrick Yarns describes its products as EarthSpun®, as all the energy it uses during manufacturing is generated sustainably. Coats also continues to invest substantial amounts in the sustainability of its manufacturing processes and that of its clients (use of raw materials, water and energy, as well as the safety and working conditions of employees). Coats was recently awarded an impressive A rating by MSCI for this.
Kendrion again published solid third-quarter figures in line with its long-term ambitions. In addition to its success in largely having restored its earnings, its revenue growth is also important for the long term, including via new products. We believe that the company is capable of creating enough new applications and selling these products worldwide. In this respect, its progress in China is highly successful and the company is expanding its local capacity. Kendrion’s strong management is also in a position to conduct larger acquisitions in future, which could generate additional shareholder value.
Beter Bed published worse-than-expected sales results for Germany in the fourth quarter. The German company has had to contend with media reports about potentially hazardous substances in mattresses (sector and delivery problems) and is focusing more on the sale of box springs. In contrast to the cash & carry sale of mattresses, box springs are linked to an order book, delivery at a later date and therefore a different logistics network, combined with a lower gross margin but higher purchase price. These factors mean that we do not yet see a (potential) recovery in this important market for Beter Bed. Although a recovery in Germany remains a possibility, we have adopted a cautious attitude to Beter Bed, partly because its management is (temporarily) in poor shape due to the departure of the CEO. We have partially reduced our position and will continue to monitor events closely.
The prices of QSC and 2G Energy also fell during the quarter. QSC is making progress on its repositioning as a leading IT service provider for small and medium-sized businesses in Germany. Its financial results remain at a sound level and creating a separate business unit for its telecom and IoT (internet of things) activities will give it greater strategic power. 2G Energy continues to experience difficulties with converting its excellent technology and market opportunities into profitable revenue growth. We are in dialogue with its management on strategy and governance, whereby the company is expected to improve its financial performance in 2018.

We again welcomed excellent results from France’s Oeneo in the past quarter, a recent participation for KOP. This global leader in the manufacture of corks and wine barrels displayed attractive revenue growth of over 6% over the first half of its tax year, combined with rising profit margins and generating earnings growth of 10%. Thanks to its strong DIAM brand, Oeneo continues to innovate in its cork division in particular and gain market share in this oligopolistic and highly-profitable industry. Our other French participation, Lectra, could well be affected by a strong euro. As an exporter of products from France to global clients, Lectra is affected by weak foreign currencies, especially the US dollar. This could squeeze profitability reported in euros in the short term, but Lectra is in excellent strategic and operational shape, as illustrated by an impressive growth plan for the medium term.

New purchases for the portfolio, whether in existing or new companies, are financed by adjustments to the portfolio (sales) and the entry of new participants to KOP. Last quarter we reduced the positions in Beter Bed and QSC, among others, and increased a few existing positions such as SAF Holland, El.En and Sligro. In addition to our active policy on existing participations, we will also continue to accrue a few new positions. We anticipate being able to announce a number of new participations this year. All the portfolio adjustments listed serve to improve the equilibrium in the portfolio, create a better average valuation and consequently boost future price potential.

Valuation
Based on our earnings forecasts for the next 12 months, the KOP portfolio is trading at a price/earnings (P/E) ratio of about 19. As a large number of companies in our portfolio have a net cash position, something not properly reflected in a P/E ratio, we believe the EV/EBITA ratio to be more relevant. Based on our forecasts, this ratio will be nearly 13 for the next 12 months. The average valuation again increased in the fourth quarter, although this was partly compensated for by portfolio adjustments, sound growth at companies and new participations. The price potential based on our DCF valuation (cashflows) remains attractive and we see sound opportunities for return in the long term.
Kempen Capital Management NV (KCM) is the management company of Kempen Oranje Participaties N.V. (the Fund). KCM is authorised as a management company and regulated by The Netherlands Authority for the Financial Markets. The Fund is registered under the license of KCM at the The Netherlands Authority for the Financial Markets.

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

Performance per 2017-12-31 (rebased)

No chart data available

Performance per 2017-12-31

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  Fund
1 month 2.9 %
3 months 3.9 %
This year 42.3 %
2014 5.9 %
2015 25.7 %
2016 32.8 %
3 years (on annual basis) i 33.4 %
5 years (on annual basis) i 26.8 %
Since inception (on annual basis) i 14.2 %
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 3.00
Ex-date last dividend
2017-05-15
Number of distributions per year
1
Dividend calendar

Risk analysis (ex post) per 2017-12-31

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  3 years
Maximum drawdown i -11.00 %
Tracking error i 7.34 %
Information ratio i 1.69
Beta i 0.90
Kempen Capital Management NV (KCM) is the management company of Kempen Oranje Participaties N.V. (the Fund). KCM is authorised as a management company and regulated by The Netherlands Authority for the Financial Markets. The Fund is registered under the license of KCM at the The Netherlands Authority for the Financial Markets.

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

Geographic allocation (2017-12-31)

31.9 %
The Netherlands
13.7 %
Germany
12.2 %
United Kingdom
11.3 %
France
9.5 %
Italy
7.6 %
Luxembourg
6.9 %
Switzerland
2.0 %
Sweden
1.3 %
Belgium
0.0 %
Others
3.6 %
Cash
Totaal
100 %

Top 5 holdings (2017-12-31)

11.0 %
Coats Group
9.9 %
Washtec
9.8 %
BE Semiconductor Industries
8.4 %
Forfarmers
6.9 %
Interroll
Totaal
45.9 %

Sector allocation (2017-12-31)

46.9 %
Industrial Goods & Services
18.7 %
Food & Beverage
16.1 %
Technology
6.5 %
Automobiles & Parts
6.1 %
Retail
1.1 %
Telecommunications
1.1 %
Money Market Funds
3.6 %
Cash
Totaal
100 %
Kempen Capital Management NV (KCM) is the management company of Kempen Oranje Participaties N.V. (the Fund). KCM is authorised as a management company and regulated by The Netherlands Authority for the Financial Markets. The Fund is registered under the license of KCM at the The Netherlands Authority for the Financial Markets.

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

Ongoing charges

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Management fee i
0.75 %
Service fee i
0.20 %
Expected ongoing charges i
0.95%
Ongoing charges last financial year i
0.94 %
The Ongoing Charges Figure of the last financial year relates to 2016.

Other costs

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Upward swing factor i
0.50 %
Downward swing factor i
1.50 %
Kempen Capital Management NV (KCM) is the management company of Kempen Oranje Participaties N.V. (the Fund). KCM is authorised as a management company and regulated by The Netherlands Authority for the Financial Markets. The Fund is registered under the license of KCM at the The Netherlands Authority for the Financial Markets.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. These documents are available on the website of KCM (www.kempen.com/investmentfunds). 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
UCITS status i
No
Status
Open-end i
Base currency
EUR
Share class currency
EUR
Management company
Kempen Capital Management N.V.
Custodian
BNP Paribas Securities Services S.C.A.

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 NV (KCM) is the management company of Kempen Oranje Participaties N.V. (the Fund). KCM is authorised as a management company and regulated by The Netherlands Authority for the Financial Markets. The Fund is registered under the license of KCM at the The Netherlands Authority for the Financial Markets.

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

Due to the nature of this fund, this information is only available on the Dutch part of this website in the Dutch language.


Read more information about Kempen Capital Management N.V. on this site and find also more information on BNP Paribas Securities Services S.C.A.

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

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

KCM Vision

Kempen Capital Management is an asset manager with a long-term investment approach. We strongly believe in engaged shareholdership that benefits all stakeholders. As a long-term responsible investor, we firmly believe that active ownership and shareholder engagement contribute to positive change across the board.

Our KCM wide approach to responsible investment

To put our vision into action we engage with our investment targets on a wide array of strategic, financial, environmental, social and governance (ESG) topics. Our long-term investment worldview paired with thorough analysis and an experienced and diverse ESG team allow us to use both voting and engagement as means to consistently encourage positive change. Through this process of constructive engagement, we are able to contribute to the development of principles and standards of corporate responsibility within companies that we invest in.

Our fund approach to Responsible Investment

  • Continuous dialogue with company management through one-on-one meetings. Meetings with division directors, peers and join analyst and client events. If necessary seek dialogue with the supervisory board
  • Actively involved during the AGMs through the use of our voting rights. We make remarks on the agenda if necessary and we stress our discussion points with the company at the AGM
  • Companies themselves also have the ability to seek the dialogue with us. We provide feedback on corporate strategy, governance and communication at AGM's and in one-on-one's
  • We are focused on the creation of shareholder value, where the company of course has to take into account all stakeholders
  • All holdings are screened by MSCI on sustainability items, if necessary we engage with management on sustainability issues with help from our experts in Edinburgh

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

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