Fund performance in September came to –7.46% (vs. –8.75% for the benchmark index). It was a very difficult month for markets, and once again small caps were especially hard hit.

Companies are experiencing a broad range of challenges. Business is slowing, while the global cost of inputs (e.g. raw materials, energy and payrolls) peaked in H1. We believe that conditions will improve in Q3 because:
• the comparison base will be simpler (P&L began to deteriorate as from Q3 last year)
• inflation appears to have peaked

We are convinced that in today’s environment which discourages bank financing, AMPLEGEST PME will outperform in the coming months. Remember that since the beginning the fund has never invested in companies with excessive debt. We have observed in recent weeks the significant damage caused by weak balance sheets. For example, higher financial costs can wipe out net earnings; covenant overruns can block debt financing and lead to bankruptcy; and the overuse of debt financing has been called into question. Consequently, we have decided to further strengthen our scrutiny on this particular point.

At the end of September, the fund’s average gearing (debt-to-equity, or D/E) stood at –3%, and –36% for the TOP 10 (vs. more than 70% for the benchmark index). Rate hikes have a dual effect of boosting the competitive edge of our companies and generating additional revenues through remunerated cash investments.

The fund’s valuation is very attractive at 10.5x 2023 EBITDA 2023, with forecast growth of +24.5% in 2023/24.