In a busy month for earnings announcements, the fund rose +0.99%, compared with +1.52% for its benchmark index. For several months now we have reminded our investors that the first half of 2023 would be challenging in terms of earnings. This is because rising costs and slower growth have combined to hit companies full on. Added to this is a problematic comparison basis, since economic conditions last year did not begin to deteriorate until the second half. We believe that the market will not rebound significantly until this half-year obstacle has been passed.

At the time of publication of this newsletter, 90% of the fund’s holdings had published results.

Shares of two companies fell sharply after disappointing announcements, but these positions comprise only a small part of the portfolio: TELEPERFORMANCE (0.6% of AUM) and SMCP (0.5% of AUM). News in other positions:
- Turnover of OENEO declined significantly. However, as management was very clear about this in advance, and as the message for the quarters to come is upbeat, the share price has not overreacted.
- LECTRA announced a fall in earnings, but its outlook is unchanged.

- INFOTEL slowed to a crawl in Q2 but seems to be back on track in Q3. Note that digital services were hit hard by fewer working days in May.

There were also some positive surprises from our companies: six raised their targets (ESKER, SOPRA, SEB, SPIE, MERSEN and NEXANS), while eight announced results considerably above expectations (EKINOPS, LUMIBIRD, SIDETRADE, GTT, X-FAB, SWORD, GUERBET and WORLDLINE).

Solid performances also came from ATEME, BILENDI, XILAM, INVIBES, ID LOGISTICS and WALLIX, which will all have a much clearer comparison basis in the second half of the year. FOCUS HOME expects a full pipeline of new releases in the coming months.

Management of SES-IMAGOTAG is confident that margins will improve this year – our major concern for this investment – thanks largely to a very favourable currency effect and a positive product mix.

WAVESTONE is carrying out a major operation by merging its activities with those of Q_PERIOR, a German consultancy. While the two firms have comparable activities, they are highly complementary in geographic terms. The merger will boost WAVESTONE’s business volume by nearly one-third, and improve its success rate for tenders on a European scale. The merger will have a dilutive effect on margins, but management’s track record shows substantial synergies can be achieved within two years.