HFL - Results for the half-year ended 28 February 2025

LEGAL ENTITY IDENTIFIER: 2138008DIQREOD38O596 HENDERSON FAR EAST INCOME LIMITED Unaudited results for the half-year ended 28 February 2025 This announcement contains regulated information INVESTMENT OBJECTIVE The Company seeks to provide shareholders with a growing total annual dividend per share, as well as capital appreciation, from a diversified portfolio of investments from the Asia Pacific region. HIGHLIGHTS • Net asset value total return 2.4% • Share price total return 3.2% • FTSE World Asia Pacific ex Japan Index 4.6% CHAIRMAN’S STATEMENT Investor attention is understandably rivetted on current market developments in light of dramatic new tariff initiatives from the US. Is it a massive overreaction or a sensible short-term adjustment to a new reality? Will the impact be broadly similar in all economies or will some fare better than others? The future impact of these changes is being modelled by many analysts, but it is fair to say that an emerging trade war is unlikely to be good news in the near term. I will return to this later in my statement, but it is important to remember that Asian economies and markets are not joined in lock-step to the US. Asian markets produced a positive return during our first half despite rising, but unpredictable, challenges from the new US administration. Whilst the outcome is likely to be a protracted period of volatility for some of our exporting markets, we have witnessed a more stable macro environment in China which has in turn supported more positive sentiment towards the entire APAC region. Asia Pacific equities outperformed the US over the quarter ending 28 February 2025 and there are a number of reasons to believe in a more sustainable reversal during the rest of the year after recent sharp setbacks for all equity markets. In general, APAC markets have performed relatively better in the recent market drops. As we consider prospects for our second half, the likelihood of a weaker US dollar has traditionally been a positive for Asian markets. At the same time, recent US trade policy changes are likely to negatively impact US inflation, growth and employment. There are already signs of reduced consumer and business confidence that many analysts believe foreshadows a US recession. Asia meanwhile has benefitted from stabilisation in China with a raft of stimulus measures driving improved domestic consumption. This has long been a key government objective which has reduced the country’s dependence on exports. Chinese government measures have improved confidence amongst consumers and investors alike. The improved outlook in China has not only been about the consumer. Technology breakthroughs in electric cars and the emergence of China’s own version of an AI large language model, DeepSeek, has shocked technology investors with its low cost and high operating standards. China has the ability to surprise markets further given the immense investments it has already made in the industries of the future. The return on this investment in the form of improved operating metrics at the corporate level, is far more sustainable for the China recovery than recent stimulus and short-term boosts to consumption could provide. Alongside signs of a China recovery, we continue to see significant progress in the investment themes we have previously highlighted within Asia such as technology, financial inclusion, infrastructure and corporate reform. The strong performance of the financial sector has been supported by a number of these themes. Most of our best performers in the period were from this sector and many of these companies increased their dividend per share and/or introduced share buyback programmes. Our conversations with management teams of portfolio companies gives us confidence to forecast a strong improvement in dividend growth over the remainder of the current financial year. As you may remember, I have previously noted our conviction that Asian companies have resumed a commitment to higher dividend growth, thus supporting our investment strategy. We should not expect that dividend growth will move in a linear fashion from one year to the next and there will certainly be periods of both slowdown and acceleration. We are currently in a phase where we expect dividends to exceed expectations. That will make Asian markets even more attractive for investors during a period of real uncertainty elsewhere. Performance The NAV total return performance for the first six months of the Company’s financial year was 2.4%, 2.2% behind the FTSE World Asia Pacific ex Japan Index and 3.3% behind the MSCI AC Asia Pacific ex Japan High Dividend Yield Index. This is not unexpected given the Company’s bias toward yield in comparison to the former index which was boosted by the performance of Chinese technology companies, most of which have zero yield. The share price total return for the six months to 28 February 2025 was 3.2%. It is gratifying to note that at 28 February 2025, the Company’s performance both in NAV and share price total return terms, was positive over one, three, five and ten years. It has been some time since this was the case and it demonstrates the Board and Fund Manager’s commitment to addressing the overall performance whilst maintaining the progressive dividend. Dividends The first interim dividend for the year ending 31 August 2025 was declared on 20 January 2025. This was in the amount of 6.20p per ordinary share. We are pleased to declare the second interim dividend for the current financial year, also in the amount of 6.20p per ordinary share. This represents an increase of 1.6% on the two interim dividends declared in first half of last year. The second interim dividend will be paid to shareholders on the register at 2 May 2025. Share issues The Company has issued 5.2m shares in six months to 28 February 2025. This issuance has raised £9.7m for further investment. In the period since the half-year end, a further 1.3m shares have been issued raising £2.8m. Outlook At the start of this statement, I promised to return to the subject of recent government policy initiatives in the US and their implications for other economies, especially in Asia. Unfortunately, I am not a seer, but a few observations are in order. First, it will be some time before the real impact of US tariff initiatives on other economies is clear but there will be considerable sentiment-driven volatility before the facts emerge. And since the US moves are trade related, we should remember that the US constitutes only about 13% of world trade, an important player but by no means the only one. Asian economies have long shown their ability to respond flexibly to a changing environment and today’s challenges are already generating a constructive reaction. Asian market valuations remain attractive and some of our markets, such as India, are relatively insulated from the global altercation now underway. Most importantly, China as a regional driver has finally demonstrated a return to domestic consumption growth that will benefit the entire region. Dividend growth will remain robust with recent dividend announcements being well above expectations. Alongside attractive valuations, there is real confidence in the cash-flow and balance sheet metrics that are enabling corporates to surprise positively on dividends. The combination of above-expectation dividend growth and the defensive nature of our holdings should produce a less volatile outcome for investors in a market that is looking increasingly uncertain. There is no change to our view that the drivers of structural growth in the Asia Pacific region can continue to deliver solid performance even during the current uncertainties. Ronald Gould Chairman 14 April 2025 Please refer to the PDF version for the full announcement For further information please contact: Sat Duhra Fund Manager Henderson Far East Income Limited Telephone: +65 6813 1035 Dan Howe Head of Investment Trusts Janus Henderson Investors Telephone: +44 (0)20 7818 4458 Harriet Hall PR Director Investment Trusts Janus Henderson Investors Telephone: +44 (0)20 7818 2919