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 2017-10-31 (rebased)

No chart data available

Performance per 2017-10-31

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  Fund
1 month 2.5 %
3 months 8.5 %
This year 40.3 %
2014 5.9 %
2015 25.7 %
2016 32.8 %
3 years (on annual basis) i 35.5 %
5 years (on annual basis) i 27.7 %
Since inception (on annual basis) i 14.3 %
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 664.67 M 2017-10-31
Number of shares
3,123,694 2017-10-31
Net Asset Value i
EUR 207.59 2017-11-17
Transaction price i
EUR 208.65 2017-09-30

Fund characteristics per 2017-09-30

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  Fund
Number of holdings 24
Dividend yield i 1.99 %
Weighted average market capitalization i EUR 974 M
P/E ratio i 21.81
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 2017-09-30

The following texts refer to the third quarter of 2017.

KOP’s Net Asset Value (NAV) increased from €193.78 to €207.61 per participation in the third quarter of 2017. This translates into a return over the third quarter of 7.1%, bringing the total return over the first three quarters, including a dividend payment of €3.00, to 36.9%.

As of 2 October 2017, its trading price was €208.65 based on the NAV including a premium of 0.5% caused by net inflow into KOP. The number of issued KOP shares consequently rose by 3.0% and this quarter we were once again able to welcome new participants. We continue to see interest from prospective and existing clients. With a view to accommodating this interest, during the next quarter the number of holding companies will be expanded to include Participatiefonds Linge. For the next trading date of 2 January 2018, an instruction deadline of 4pm on 30 November 2017 applies for orders in KOP (via Euronext) and a few days before that for the holding companies (via the Kempen transfer agent).

Following a successful meeting earlier this year at which our guest speaker was the CEO of Kendrion, our next client event will be held at our office in Amsterdam on 2 November 2017. We are pleased to announce that the managing director of Washtec will update us on this excellent KOP holding.

The performance of European and Dutch small-cap indices over the third quarter of 2017 stood at 5-6% and at about 25% over the three quarters so far this year. Equity markets enjoyed another good third quarter, partly driven by excellent economic trends and generally sound corporate results. We saw the euro strengthen against the US dollar and a capricious but on balance stable rate for the British pound. Oil prices increased by about 10% across the quarter. US yields are slowly rising as a result of decreasing monetary stimulation. In Europe, scaling back monetary stimulation will be a delicate and lengthy process, in spite of sound European economic growth and persisting low inflation. The flipside is that exchange rates are responding sharply to monetary policy, leading to central bank policies having an effect on the competitive positions of countries. We are also seeing tax incentives to retain companies, such as the recent tax proposals in the US and discussions on cutting corporation tax in Europe. The low volatility on the equity markets combined with low interest rates and sound economic trends are pushing equity valuations up further. This is also generating a busy pipeline of companies being floated on the stock market. The solid cash positions at many listed companies mean that relatively little new loan capital is required for acquisitions or large-scale investment.

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-structured companies with the correct focus will be able to profit now that the global economy is picking up. 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 a potential (further) increase in the value of 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.

KOP again experienced positive growth in the third 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 2017-09-30

At the end of the third quarter, we completed the accrual of a new participation in Germany’s SAF Holland. This is the fourth new participation for KOP this year after Coats, ForFarmers and Oeneo. These new participations have clearly added to KOP’s return, the balance within the portfolio and the price potential. We are also in the process of accruing several interests, but do not expect to complete any new participations in the short term.

SAF Holland is a leading manufacturer of chassis-related systems and components for trailers, lorries and vans. Its range of products comprises axle and suspension systems, fifth wheels, kingpins and landing gear and is sold under the SAF, Holland and Neway brands. The name Holland refers to the place in the US where its US activities were once started. With 18 manufacturing sites and 3,300 employees, SAF Holland operates worldwide and earned revenue of €1 billion and operating profits of €90 million in 2016. About 25% of the revenue and nearly 50% of the profits derive from the market for spare parts, which is stable and growing steadily and conducted via over 9,000 service outlets worldwide. The launch of new products in existing regions and expansion of its international market position are expected to yield attractive organic growth over the next few years. Moreover, SAF Holland is seeking acquisitions that will allow it to position itself even better as a one-stop shop for its end customers. Following several meetings with management and a visit to its head office near Frankfurt, we have accrued a 5% position this year. The participation in SAF Holland represents 6% of KOP. Its solid operating model and long-term growth profile make SAF Holland an attractive addition to the portfolio.

All the companies held in the KOP portfolio have now published their interim figures and we have spoken to most of them during our regular meetings. Besi (third-quarter price +26%) and Washtec (+10%) once again added significantly to KOP’s return in the third quarter. Other large contributions came from ForFarmers (+12%), Lectra (+11%) and La Doria (+36%), while minor negative contributions came from Sweco (-5%) and El.En (-15%).

We continue to be impressed by the ongoing positive performances achieved by BESI. With the aid of the correct technological machines, the company is succeeding in retaining a growing number of clients, assisted by cost-effective local manufacturing in China. At the same time, BESI continues to be alert to further operational improvements, such as the improved coordination of components with additional procurement benefits. BESI is also succeeding in increasing its gross margins further via sound pricing, and its operating result is expected to more than double in 2017. In the long term, BESI occupies a sound market position in which the semiconductor cycle looks to become less heated as the end markets enjoy greater diversification, e.g. in cars or data centres. Our aim is for BESI to occupy a balanced position in the KOP portfolio.

We have been in touch with Washtec several times in the past quarter. During a visit to head office in Augsburg we were updated by the Board of Management on the company’s operational and strategic plans for the next few years. After a number of years in which the new management developed its new management model (70% of senior managers were replaced or reassigned) and the company’s structure was consolidated, Washtec is now actively consolidating its market positions based on product innovation, a more active drive to retain customers and taking advantage of the company’s scalability, resulting in revenue growth translating into above-average earnings growth. Washtec is making a successful re-entry in the US market with its new, modular tunnel concept, which when combined with its already robust position in roll-over systems should increase its market share in North America. New products are also being introduced in Europe and the company is seeing attractive revenue and earnings growth. At the end of September we visited the European Car Wash Show at Amsterdam RAI, where we met Washtec’s Dutch management team and were able to see a number of new products for ourselves. Alongside a number of global key accounts, Washtec is now setting its sights on the Asian market for car washes, which is currently undergoing tentative growth, not so much due to a lack of cheap, local labour as a lack of space in urban areas. We continue to have every faith that Washtec will experience both strategic and financial positive growth over the next few years. We are very pleased that Washtec’s managing director, Arthur Wessels, will be a guest speaker at our client event on 2 November 2017.

Italy’s La Doria (market leader in Italian private label tomato products and legumes) reported sound figures over the first half of 2017. Revenue and results were boosted by stronger than expected volume growth. Volume growth for legumes and sauces was in excess of 10%, whereby the private label segment noted a clear increase in market share. Yet the tomato activities also displayed volume growth of nearly 4% and better than expected growth. The robust volumes have enabled La Doria to compensate for the price pressure and it has adjusted its revenue and earnings forecasts upwards for the current year. The forecasts for next year are also positive. Production in the sector declined in 2016 and as a result stocks of end products will decrease over the course of this year. The lower stocks and stable production volumes in 2017 are allowing prices to recover, which will have a clear positive impact in 2018.

Our other Italian holding, EL.En (manufacturer of specialist laser equipment for industrial and medical applications), failed to live up to expectations. An acquisition of its distributor in the US led to worse than expected sales of medical applications. We anticipate a recovery in sales in the US in 2018. Furthermore, El.En is busy developing new products for medical applications that could be launched on the market in the course of 2018. Sales of industrial lasers are displaying a sharp upturn, especially in China. The long-term positive trends at this innovative company remain strong.

The Lectra equity price was able to continue its upward trend following the ‘processing’ of a secondary offering of a large package of shares. The company recently appointed a new CFO (Oliver du Chesnay), who has been attached to Lectra since 2013. We spoke to him at the start of this year at Lectra in Bordeaux and are impressed by his qualities.

Dutch companies Sligro, ForFarmers and Kendrion all reported good interim figures. Kendrion is repositioning itself for the long term via new innovation and a wider range of products for the auto sector. This market is undergoing a rapid transition to electric and eventually driverless cars. Sligro is profiting from the upturn in the economy and expansion in Belgium. The strategic alliance with Heineken in the Netherlands and reorientation of its Foodretail segment could potentially create significant shareholder value in the next few years. ForFarmers published excellent interim figures, especially in the Netherlands where, thanks to higher milk prices and measures to reduce phosphate, ForFarmers can sell higher-value products.

We have expanded our position in Nedap to over 8% of the company and a 3.5% weight in the KOP portfolio. We believe that over the next few years Nedap will reap the rewards of all the operational changes it has made over the past few years. Moreover, Nedap gained its first proper CFO on the appointment of Eric Urff in 2015. Our talks with management demonstrate that the Board of Management now enjoys a more balanced composition, as well as there being a greater focus on financial return. A candidate with a distinct financial background is also being sought for the Supervisory Board. Nedap is taking great strides forward in operational terms. The greater part of its manufacturing has been outsourced, which enhances focus and reduces complexity. The number of products is being cut sharply and global sales are receiving greater attention. Many products are linked to RFID and nearly all the products contain a software component or consist almost entirely of software. This enables the company to supply software products to e.g. the temporary employment agency and health sectors based on an annual fee. We have every confidence that Nedap will enjoy above-average revenue growth and achieve sharply higher EBIT margins over the next few years.

New purchases for the portfolio are financed by adjustments to the portfolio and the entry of new participants to KOP. Last quarter we adjusted the weights in e.g. BESI and Interroll downwards, taking advantage of the sharp price increases, while retaining the holding exemption. In addition to our active policy on existing participations, we will also continue to accrue a few new positions. All the portfolio adjustments listed serve to improve the equilibrium in the portfolio, create a better average valuation and consequently boost future price potential.

Valuations

Based on our earnings forecasts for the next 12 months, the KOP portfolio is trading at a price/earnings (P/E) ratio of about 20. 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 over 13 for the next 12 months. The average valuation again increased in the third 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 2017-10-31 (rebased)

No chart data available

Performance per 2017-10-31

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  Fund
1 month 2.5 %
3 months 8.5 %
This year 40.3 %
2014 5.9 %
2015 25.7 %
2016 32.8 %
3 years (on annual basis) i 35.5 %
5 years (on annual basis) i 27.7 %
Since inception (on annual basis) i 14.3 %
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 2017-10-31

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  3 years Since inception
Maximum drawdown i -11.00 % -63.64 %
Tracking error i 7.27 % 9.39 %
Information ratio i 1.72 0.33
Beta i 0.89 0.85
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 (2017-09-30)

33.0 %
The Netherlands
14.3 %
Germany
12.1 %
France
10.2 %
United Kingdom
8.9 %
Italy
7.3 %
Switzerland
6.2 %
Luxembourg
2.8 %
Sweden
2.4 %
Belgium
2.7 %
Cash
Totaal
100 %

Top 5 holdings (2017-10-31)

10.6 %
Coats Group
9.9 %
BE Semiconductor Industries
9.6 %
Washtec
8.5 %
Forfarmers
6.9 %
Interroll
Totaal
45.5 %

Sector allocation (2017-09-30)

45.2 %
Industrial Goods & Services
19.6 %
Food & Beverage
16.2 %
Technology
8.2 %
Retail
6.2 %
Automobiles & Parts
1.8 %
Telecommunications
2.7 %
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
Pricing 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.
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.

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.