LondonMetric Property
Equity Market Cap (M) £4,326
Real Estate
Andrew Jones – CEO
We recently met with Andrew Jones, CEO of LondonMetric Property, to discuss how the business has evolved following a period of significant growth and consolidation. A key theme was the company’s willingness to move capital between sectors as long-term consumer behaviour changes. Logistics and convenience retail remain the areas of highest conviction, while offices are largely avoided due to the capital expenditure requirements and the risks around changing working patterns.
One of the strongest views expressed during the meeting was around vacancy. Jones described it as the dementor of real estate, highlighting how quickly returns can deteriorate when rental income disappears but operating costs remain. This is an important part of LondonMetric’s preference for long leases and 'triple-net' structures, where tenants take on much of the responsibility for property costs and maintenance. It also allows the company to operate with a relatively lean management structure.
Mergers & acquisitions has been another important part of the strategy. LondonMetric has completed five public company acquisitions over the past six years, helping the portfolio grow to around £7.6bn. When considering acquisitions, management focuses on whether the majority of the assets are suitable for long-term ownership, while non-core properties can be disposed of over time. Jones also expects further consolidation across listed real estate, particularly among smaller real estate investment trusts.
Despite the increase in scale, management was clear that preserving the company’s culture remains a priority. LondonMetric continues to operate with a flat structure, limited bureaucracy and senior management closely involved in investment decisions. The overall impression was of a business focused on disciplined capital allocation, operational efficiency and avoiding unnecessary complexity.
Schneider Electric
Equity Market Cap (M) €163,638
Industrials
Graham Phillips – Investor Relations Director
Schneider Electric provides energy management and industrial automation products to end markets including buildings, data centres, industrial facilities and infrastructure. The business therefore has exposure to several structural growth themes, including electrification, automation and digitalisation. Schneider operates across the electrical value chain, from grid connectivity through to equipment used within buildings, factories and data centres, while software is becoming an increasingly important part of the offering.
Data centres were a key focus of the meeting. Demand remains strong and is supported by a broad customer base that includes neocloud providers, sovereign customers and co-location operators as well as the obvious hyperscaler customers. Customer requirements are becoming increasingly complex as data centre architectures evolve, requiring expertise across electrical distribution, power management and facility operations which should strengthen Schneider’s positioning. Given exposure to customer capital expenditure, the durability of growth at current levels remains difficult to assess. However, Graham flagged that near term visibility remains strong.
Away from data centres, management highlighted improving trends across other end markets, although conditions remain mixed. Buildings delivered better order growth in the first half, supported primarily by non-residential activity. Residential markets remain softer, particularly in parts of the US, although trends have improved modestly of late. Within Industrial Automation, discrete automation has been gathering momentum for some time now, following an extended downturn, but conditions remain uneven across end markets. Semiconductor-related activity in Asia continues to be supportive, while several hybrid and process industries have remained comparatively subdued. Process automation markets, including oil & gas, cement and materials, have experienced softer demand, although recent order trends have been better.
Texas Instruments
Equity Market Cap (M) $236,019
Information Technology
Mike Pienovi – Director of Investor Relations
Texas Instruments (TI) is a leading analogue semiconductor manufacturer. Analogue chips are the bridge between the physical world and digital computing, converting and managing real-world signals. TI operates a catalogue model with more than 80,000 largely off-the-shelf products, focused on long-life-cycle applications where reliability, durability and product availability are critical.
The growth opportunity in TI's core Automotive and Industrial markets is the increasing amount of analogue content required in each customer end unit. It believes this trend can support analogue semiconductor growth above underlying end-market growth for many years. In Automotive, semiconductor content is being driven higher by three trends: vehicle electrification, advanced driver assistance systems and software-defined vehicles.
Mike flagged the role of analogue content in data centres, with the rapid build-out of AI infrastructure driving strong demand for analogue chips used in power delivery and signal-chain applications. While data centres remain smaller than TI's Industrial and Automotive markets, the addressable market is expanding, with both evolving and emerging use cases for TI products.
Finally we discussed TI's manufacturing strategy. The company has invested heavily in internal production capacity and transitioned much of its manufacturing to 300mm semiconductor wafers, which provide around a 40% cost advantage versus traditional 200mm analogue wafers. Internal manufacturing reduces reliance on third-party foundries, helping mitigate supply chain risk, though the larger cost base will likely result in higher margin variability.
CONSUMER DISCRETIONARYInterContinental Hotels
TechnoGym
CONSUMER STAPLESCoca-Cola
HEALTH CAREEdwards Lifesciences
INFORMATION TECHNOLOGYHalma
Microsoft
Texas Instruments
INDUSTRIALSExperian
RELX
Schneider Electric
Spirax Group
MATERIALSCroda International
REAL ESTATESLondonMetric Property
