16th Jun 2020 12:15
(Alliance News) - CC Japan Income & Growth Trust PLC on Tuesday reported a sharp drop in interim assets but has committed to paying a full year dividend level with the year before.
At April 30, the trust's NAV per share stood at 129.53 pence, down from 158.93p at October 31.
CC Japan's net assets dropped over the six months to GBP174.5 million from GBP214.1 million.
The trust declared an unchanged interim dividend of 1.40 pence. CC Japan committed to distributing a full year dividend at least the same level as the year before at 4.50p.
CC Japan's NAV total return was negative 16.7% underperforming the Topix Index, which lost 7.5%.
Chair Harry Wells said: "The company's performance has been affected by the maelstrom of the Covid-19 pandemic which engulfed the global economy and financial markets.
"The sell-off in value and yield stocks, combined with our structural gearing of 20%, hit us badly. Hopefully, the extent of dislocation in global stock markets reached a nadir in March 2020, although economic recovery may be protracted given the extent of disruption."
Looking ahead, Wells believes the outlook for Japanese corporate earnings is now "poor".
He continued: "Operating profits for non-financial companies dropped 42% year-on-year in March 2020. Economic momentum had been stalling before the Covid-19 crisis and GDP is expected to decline significantly in the second calendar quarter of 2020.
"However, there are reasons to be positive. Although earnings will be under pressure and guidance is distinctly lacking, the feedback from Japanese companies is that most are committed to sustaining their levels of dividend, reflecting excess capital on balance sheets, albeit with higher operational spend expected to cover any revenue shortfalls."
Shares in CC Japan Income & Growth were 4.4% higher in London on Tuesday at 125.83 pence each.
By Paul McGowan; [email protected]
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