Pacific Horizon Investment Trust : Interim Financial Report

lnterim	31 January 2025
Financial Report

Pacific Horizon Investment Trust

PLC

Pacific Horizon's objective is to invest in the Asia-Pacific region (excluding Japan) and in the Indian Sub-continent in order to achieve capital growth. The Company is prepared to move freely between the markets of the region as opportunities for growth vary. The portfolio will normally consist principally of quoted securities.

Comparative index

The principal index against which performance is measured is the MSCI All Country Asia ex Japan Index (in sterling terms).

Principal risks and uncertainties

The principal risks facing the Company are financial risk, investment strategy risk, political and associated economic risk, discount risk, regulatory risk, custody and depositary risk, operational risk, leverage risk, climate and governance risk, cyber security risk and emerging risks. An explanation of these risks and how they are managed is set out on pages 42 to 45 of the Company's Annual Report and Financial Statements for the year to 31 July 2024 which

is available on the Company's website: pacifichorizon.co.uk.

The principal risks and uncertainties have not changed since the date of that report.

Responsibility statement

We confirm that to the best of our knowledge:

a. the condensed set of Financial Statements has been prepared in accordance with FRS 104 'Interim Financial Reporting';

b. the Interim Management Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.7R (being an indication of important events that have occurred during the first six months of the financial year, their impact on the Financial Statements and a description of the principal risks and uncertainties for the remaining six months of the financial year); and

c. the Interim Financial Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

On behalf of the Board Roger Yates Chairman

11 March 2025

Pacific Horizon Investment Trust PLC

Summary of unaudited results

		31 July 2024
	31 January 2025	(audited)	% change
Shareholders' funds*	£613.7m	£602.0m
Gearing†	1.9%	(1%)
Net asset value per ordinary share*	681.44p	664.01p	2.6
Share price	585.00p	612.00p	(4.4)
MSCI All Country Asia ex Japan Index (in sterling terms)#			5.8
Discount†‡	(14.2%)	(7.8%)
Active share†	73%	75%

	Six months to		Six months to
	31 January 2025	31 January 2024
Revenue earnings per ordinary share		0.52p		0.59p
	Six months to		Year to
	31 January 2025		31 July 2024
Total return†
Net asset value per ordinary share‡		3.0%		4.8%
Share price‡		(4.0%)		5.1%
MSCI All Country Asia ex Japan Index (in sterling terms)#		6.7%		6.8%
	Six months to 31 January 2025	Year to 31 July 2024
Period's high and low	High		Low	High	Low
Net asset value per ordinary share*	705.93p	619.53p	712.09p	579.28p
Share price	617.00p	556.00p	657.00p	512.00p
Discount†‡	(8.7%)	(15.9%)	(5.0%)	(14.5%)

• For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 23 to 24.

• Alternative Performance Measure - see Glossary of terms and Alternative Performance Measures on pages 23 to 24.

• The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured.
  ‡ Key Performance Indicator.

Source: Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer on page 22.

Past performance is not a guide to future performance.

01

Chairman's statement

Performance

During the first half of the financial year, the Company produced a net asset value ('NAV') total return of 3.0% compared to 6.7% for the comparative index*. Commentary on performance and portfolio positioning is contained in the Managers' Report.

The share price total return over the period was negative 4.0%, as the discount widened from 7.8% to 14.2%.

Share Buybacks

In response to the discount widening, the Company increased its share buybacks. Over the six months to 31 January 2025 the Company bought back 590,771 of its own shares at a total cost of approximately £3.5 million and an average discount of approximately 13%. In the corresponding period to 31 January 2024, the Company bought back 335,775 shares at a cost of approximately £1.8 million and at an average discount of 11%.

Thus far the increased buybacks had only a limited impact on the discount to NAV of the share price and the Board will consider what actions might be taken to reduce the discount further.

Gearing

The Company has a £100 million multi-currency revolving credit facility with the Royal Bank of Scotland International Limited. This facility expires in March 2025 and is being replaced with a £60 million facility with the same lender. At the period end, gearing was 1.9%.

Outlook

As referred to above, investment performance relative to the comparative index was disappointing over the half year. The numbers over one and three years are also below benchmark. Nevertheless, over the longer term 5 and 10 year periods the performance numbers remain very strong.

As a Board we encourage our managers to take a long term perspective both in individual stock selection and in country allocation and this has served shareholders well over those longer periods.

The Board and managers are very positive about macro economic conditions in the region and about the growth companies located there. Accordingly, we remain optimistic about the returns which will accrue to shareholders in the medium to long term.

Roger Yates

Chairman

11 March 2025

• The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured.

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Interim Financial Report 2025

Managers' review

Overview

Over the six-month reporting period, the Company's net asset value ('NAV') per share total return and the share price total return were positive 3.0% and negative 4.0% respectively. This compares to a total return of positive 6.7% of the MSCI All Country Asia ex Japan Index in sterling terms.

Geographic returns across the region exhibited significant divergence. Most notably, after a significant period of weakness, China rebounded strongly, rising 20.6%, as the government moved to support the economy. Elsewhere, Taiwan continued to perform strongly, rising 16.1%, primarily driven by its semiconductor sector, which experienced strong demand from global investments in artificial intelligence ('AI').

Conversely, South Korea was the worst performing market, falling 15.7%, largely driven by weakness in its technology sector, particularly Samsung Electronics. India, which was one of the best performing Asian markets over the past couple of years, experienced a significant correction, down 8.0%, after valuations became extended and a significant number of company results disappointed market expectations.

Despite having significantly reduced our Indian exposure over the past 18 months, and re-invested much of it into China, our performance disappointed. China was the main detractor, where the Company was hurt by not owning some of the top performing technology companies, including Xiaomi, Meituan and Alibaba. Stock selection in Korea was detrimental, with our large holding in Samsung Electronics being the single largest negative contributor as the company fell behind in high bandwidth memory required in hyperscale datacentres, an issue we believe to be temporary.

Pacific Horizon Investment Trust PLC

Taiwan was our largest positive contributor led by our semiconductor related holdings. This was followed by Singapore, where our significant holding in SEA generated substantial returns as the company's operational performance significantly improved and the share price rose more than 90%. Vietnam, our largest country overweight position (+10.3%), continued to contribute positively.

Some modest changes were made to the portfolio, including continued significant additions to TSMC in Taiwan, increasing our positions in China, in particular internet companies including Pinduoduo and Tencent, and additions to Vietnam. Funding came from a variety of sources, including continued reductions in India. In the six months to 31 January 2025, we increased the gearing of the Company from 0% to 1.9% and bought back 590,771 shares, representing 0.7% of the issued share capital as at 31 July 2024.

Review

Many of the headwinds which hampered Asia for the past several years persist, including the strongest US dollar in decades and geopolitical tensions. Yet Asian economies have not only avoided crisis in this challenging environment, but many have prospered, outpacing growth in many Western nations.

This success underscores the much-improved macroeconomic position of Asia today, particularly compared to Western economies.

Combining Asia's favourable macroeconomic position with its structurally faster growth rates and valuations at multi-year lows relative to developed markets, Asia ex Japan appears to be in a sweet spot. Nevertheless, performance thus far failed to fully reflect this positive position.

03

Two major catalysts could change this. Firstly, a weakening US Dollar would be a substantial tailwind. While predicting short-term currency movements is difficult, longer-term structural factors may

put significant downward pressure on the Dollar, including record high valuations, potential US interest rate cuts, continued fiscal expansion, mounting debt, and the drive to re-industrialise the country.

Secondly, an improvement in sentiment for China could be transformative. The country remains a key concern among investors, with the MSCI China Index still more than 40% below its early 2021 peak. While challenges persist, especially in the real estate sector, China appears to have hit an important inflection point in September. The government moved decisively to support the economy, with stimulus plans that are significantly more meaningful than anything seen since the Covid-19 pandemic, including explicit support for the property and equity markets. Notably, these plans have been personally overseen and approved by President Xi Jinping.

Support for China's private sector has continued to strengthen in 2025, with Premier Xi personally endorsing its importance at a public meeting with major technology companies in February. This shift in policy contributed to the strong performance of MSCI China over the past six months.

The potential for further market gains is significant, given the low valuations of many high-quality Chinese companies and the substantial household savings accumulated over recent years (more than $10tr since the Covid-19 pandemic).

Operationally many Chinese companies continue to perform well, especially in the internet sector. Tencent Holdings and Pinduoduo Inc. have grown earnings an impressive 40% (to c. $30bn) and 100% (to c.$17bn) year-over-year, respectively, based on our expected full year earnings for 2024.

These businesses are highly cash-generative and committed to significant shareholder returns through buybacks and/or dividends.

We continued to make modest additions to China, adding to the technology platforms Tencent and Pinduoduo, the fintech firm Lufax, and to the Chinese semiconductor company SG Micro. After the reporting period, we also took new holdings in Haidilao, a leading Chinese restaurant chain and Goneo, a leading manufacturer of electric hardware and sockets. These purchases were funded by the use of gearing, and the sale of Baidu (after the reporting period) due to concerns about the lack of growth in the core search business and increasing competition from newer forms of search.

Meanwhile, India, which had been one of the best performing markets over the past few years, experienced a correction. While the macro-outlook for the country remains good, valuations had become overextended. This led us to reduce our exposure to the country over the past year (a year ago India was 34% of the portfolio and 13% overweight the comparative index, today it is 18.9% and -2.4% underweight). With many companies trading at decade high valuation multiples, and more than half of the companies we monitor missing earnings estimates in their recently quarterly results, there was a sharp correction in the market, especially in the mid and small cap sectors.

We continued to trim our exposure in India. We significantly reduced our holding in Jio Financials, Reliance's fintech business, as we reassessed the company's growth potential. We also trimmed our large position in Equinox (a developer) and sold our remaining small holding in Tata Motors.

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Interim Financial Report 2025

Pacific Horizon Investment Trust PLC

In our assessment, Vietnam remains the best structural growth story in Asia, driven by its successful export manufacturing base. The country faced challenges over the past few years due to a corruption clampdown and issues in the property sector. However, with the appointment of Tô Lâm as the General Secretary (effectively the head of the government), Vietnam is likely entering a period of greater political stability, and we are hopeful of a more business-friendly environment.

Geopolitics remains the most significant short-term risk, with Vietnam having a substantial $100bn trade deficit with the US, and the country will need to manage relations carefully over the coming year.

We made small additions to our holdings in Military Bank (financial) and Mobile World (retailer), and initiated a new holding in Khang Dien Housing, one of the country's leading property developers. These purchases increased Vietnam to a 10.4% absolute position and made it our largest country overweight.

Taiwan's technology industry continued to be the major beneficiary of global investment into artificial intelligence. We added to our holding in TSMC, the world's leading semiconductor manufacturer, which ended the period as our largest holding at 10.8%.

Performance

Underperformance during the period was primarily driven by stock selection in China and South Korea, detracting 200 basis points (bp) and 180bp respectively.

Despite China's strong performance in the comparative index (+20.6%), it was our main detractor despite significant additions over the past year. Our challenges were concentrated in two sectors.

In financials, our longstanding underweight position in Chinese banks, due to concerns over margin pressures, regulatory issues, and state control, cost us over 100bp. While this strategy has been correct long-term, Chinese financials rose nearly 30% in this period as the government bolstered the economy and the property sector.

In Information Technology, despite our overweight position, the sector detracted more than 100bp. We missed out on Xiaomi's 135% rise, driven by strong results and market excitement relating to its AI capabilities, while our main holdings, Silergy and SG Micro, faced weak semiconductor demand.

In South Korea, Samsung Electronics (5.6% of our portfolio) was the largest detractor (-200bp), falling 38% due to setbacks in high bandwidth memory for AI applications. Despite this, Samsung remains the global leader in memory chips, has new semiconductor management, and aims to launch next-generation high bandwidth memory this year. Trading below book value, we see it as an attractive long-term investment.

Kazakhstan's Kaspi, our large holding in the country's leading super app, detracted 80bp following a short seller report questioning its Russian links. We view these concerns as unfounded, given Kaspi's domestic focus (99.7% of gross marketing value is from Kazakh residents). The company continues to perform strongly, with expected revenue and earnings growth of 70% and 25% respectively.

05

Taiwan emerged as the Trust's best-performing market, contributing 120bp to performance, driven by strong demand for AI infrastructure. Accton, a manufacturer of data centre switches, was our top Taiwanese company, rising 56% on accelerated demand from its key customer, Amazon. Semiconductor-related businesses MediaTek (semiconductor designer) and Chroma (testing equipment) also delivered robust performances.

Singapore followed closely, with SEA, ASEAN's leading ecommerce and gaming company, rising 96% and adding 120bp to performance. The company reached a crucial milestone as its ecommerce business turned profitable in both ASEAN and Brazil, the latter surpassing our expectations. SEA's gaming division saw its flagship title, Free Fire, become the year's most downloaded game globally, while its fintech arm experienced rapid growth, with loan customers expanding 60% year-on-year.

Vietnam showed solid performance, led by Binh Minh Plastics, the country's largest pipes manufacturer, and FPT, Vietnam's premier IT company, which recently unveiled plans for AI factory development and a strategic partnership with NVIDIA.

Notably, several Chinese companies ranked among our top 5 positive contributors, including privately- held ByteDance (owner of Douyin and TikTok), which continued to see revenue growth of approximately 40% year-on-year, and Luckin Coffee, China's largest coffee chain.

Outlook

We maintain our positive outlook for the region, supported by strong growth, record low valuations compared to developed markets, and China moving to support its economy and the private sector.

Baillie Gifford & Co

11 March 2025

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Interim Financial Report 2025

Pacific Horizon Investment Trust PLC

Baillie Gifford - valuing private companies

We aim to hold our private company investments at 'fair value', i.e. the price that would be paid in an open-market transaction. Valuations are adjusted both during regular valuation cycles and on an ad hoc basis in response to 'trigger events'. Our valuation process ensures that private companies are valued in both a fair and timely manner.

The valuation process is overseen by a valuations group at Baillie Gifford, which takes advice from an independent third party (S&P Global). The valuations group is independent from the investment team, with all voting members being from different operational areas of the firm, and the investment managers only receive final valuation notifications once they have been applied.

We revalue the private holdings on a three-month rolling cycle, with one-third of the holdings reassessed each month. During stable market conditions, and assuming all else is equal, each investment would be valued four times in a twelve-month period. Regarding the Trust's private portfolio, the prices are also reviewed twice per year by the respective investment trust boards.

Beyond the regular cycle, the valuations group also monitors the portfolio for certain 'trigger events'. These may include changes in fundamentals,

a takeover approach, an intention to carry out an initial public offering ('IPO'), company news which is identified by the valuation team or by the portfolio managers or meaningful changes to the valuation of comparable public companies. Any ad hoc change to the fair valuation of any holding is implemented swiftly and reflected in the next published net asset value. There is no delay.

The valuations group also monitors relevant market benchmarks on a weekly basis and updates valuations in a manner consistent with our external valuer's (S&P Global) most recent valuation report where appropriate.

In the period we have seen an improvement in investor sentiment in certain geographies, coupled with the continued dominant performance at the private portfolio company level, all reflected in the valuation movements. That being said, market conditions remain challenging for some private investments in the portfolio tempering valuation increases seen below.

Pacific Horizon Investment Trust PLC*

Average movement per instrument	1.8%
Average movement at private company level	7.3%

• Data reflecting period 1 August 2024 to 31 January 2025 to align with the Company's reporting period end.

07

List of investments

as at 31 January 2025 (unaudited)

			Value	% of total
Name	Geography	Business	£'000	assets *
TSMC	Taiwan	Semiconductor manufacturer	68,212	10.8
Samsung Electronics	South Korea	Memory, phones and electronic	35,447	5.6
		components manufacturer
Tencent Holdings	China	Internet services	30,686	4.9
SEA ADR	Singapore	Internet gaming and ecommerce	21,504	3.4
Equinox India Developments	India	Real estate	21,129	3.4
Dailyhunt (VerSe Innovation)	India	News aggregator application	15,343	2.4
Series I Preferred
Dailyhunt (VerSe Innovation)	India	News aggregator application	3,064	0.5
Series Equity
Dailyhunt (VerSe Innovation)	India	News aggregator application	2,193	0.4
Series J Preferred
			20,600	3.3
ByteDance Series E-1 Preferred	China	Social media	19,574	3.1
Zijin Mining Group	China	Gold and copper miner	17,262	2.7
Accton Technology Corporation	Taiwan	Server network equipment manufacturer	16,789	2.7
Pinduoduo Inc	China	Ecommerce platform	15,449	2.5
Delhivery	India	Logistics and courier services provider	14,432	2.3
SK hynix	South Korea	Semiconductor manufacturer	14,304	2.3
MMG	China	Copper miner	14,013	2.2
Kaspi.kz	Kazakhstan	Banking, ecommerce and payments	12,887	2.0
		platform
MediaTek	Taiwan	Electronic component manufacturer	12,789	2.0
JD.com	China	Online mobile commerce	12,551	2.0
EO Technics	South Korea	Manufacturer and distributor of	12,545	2.0
		semiconductor laser markers
Reliance Industries	India	Petrochemical company	12,000	1.9
Luckin Coffee Inc ADR	China	Coffeehouse chain	11,755	1.9
PolicyBazaar	India	Online financial services platform	11,445	1.8
Phoenix Mills	India	Commercial property manager	11,186	1.8
Mobile World Investment Corporation	Vietnam	Electronic and grocery retailer	10,833	1.7
HDBank	Vietnam	Consumer bank	10,507	1.7

• For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 23 to 24. Denotes private company investment.
  Denotes listed security previously held in the portfolio as a private company investment.

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Interim Financial Report 2025