Hilan Ltd.
Hilan Ltd. engages in the provision of Software as a Service (SaaS) for the purpose of managing the enterprise human capital. Its solutions include payroll, human resources, time and attendance, pension, analytics, and business process outsourcing (BPO). The firm offers its services to the industry, high-tech, finance, academic, communications, healthcare, municipal, transportation, retail, education, government, social care, associations, and hotels sectors. It operates through the following segments: Payroll Services, Human Resources, and Organizational Systems, Business Solutions, Computing Infrastructures, and Marketing of Software Products. The Payroll Services, Human Resources, and Organizational Systems segment provides payroll management services, pension operations, enterprise resource planning, other value-added services, and attendance, human resources, business, financial, and relationship management. The Business Solutions segment is involved in the sale of outsourcing and technological value-added solutions, as well as solutions and projects in the field of computing, digital, and innovation. The Computing Infrastructures segment sells solutions in the field of computing infrastructures, managed public and private clouds, advanced information security, and cyber. The Marketing of Software Products segment is composed of the distribution and assimilation of software products and solutions in the field of control, data, analytics and business intelligence, infrastructures and applications in the information technology world, document and content management, information and cyber security, and content delivery network. The company was founded on December 16, 1992 and is headquartered in Tel Aviv, Israel.
COMMENTARY
Market Commentary
Global equities rebounded in January as inflation continued to ease, signalling the path to further reductions in global interest rates. However, share market returns varied significantly between regions.
US equities made gains upon the strength of the US economy and a positive start to its December quarter earnings season. However, the US lagged behind most other regions after the semiconductor sub-sector underperformed. This followed China’s DeepSeek announcing it had developed an AI model with capabilities comparable to those of western models, but much more quickly and cheaply. This raised doubts about the demand growth for computing power and advanced chips. The Federal Reserve kept rates unchanged as the US labour market, retail sales and industrial production were strong, but core inflation moved lower.
European stocks outperformed those in other developed markets in January as investors rotated out of some US technology stocks. The region’s economy remains weak, as GDP growth stagnated in the December quarter, leading to the European Central Bank and Sweden’s Riksbank both cutting interest rates by 0.25% in January.
Japanese equities edged up after a weak start to the year. The Bank of Japan raised interest rates by 0.25% to 0.50%, the highest rate for 17 years, in line with market expectations. Technology stocks were initially lifted by new investment announcements but later fell back upon concerns that improved AI efficiency could impact chip stocks.
Emerging markets delivered modest returns overall in US dollar terms but varied by country, with Latin America and Poland performing strongly. Asia saw a divergence in fortunes, with the more developed markets of Korea, Singapore, and Taiwan leading the gains. China made modest advances despite the growing risk of US trade tariffs. Indian equities moved lower upon valuation and economic growth concerns as some investors rotated back into Chinese stocks.
Global smaller companies performed broadly in line with larger cap stocks, benefitting from the prospect of interest rate cuts and their perception of lower sensitivity to trade tariffs.
Portfolio Highlights
The Fund returned 1.4% in Australian dollar terms during January, while the MSCI World SMID Cap Index returned 2.5%. Strong stock performance in consumer discretionary and healthcare contributed to relative returns. However, this was offset by weaker stock performance in industrials, financials and communications services. Relative performance was strong across each market cap segment, but returns were strongest in the larger cap segments (>US$5 billion), where the Fund has historically been underweight.
The Fund’s most significant contributor to relative performance during January was its holding in US-based global data analytics and digital solutions company EXLService Holdings. It has continued to outperform since its strong third-quarter earnings results, with the share price rising 12% in January and almost 50% over the last six months. This reflects its strong financial performance and the successful execution of its data and AI-driven business strategy.
Another strong performer in January was Truecaller, a Sweden-based global communications platform that created a unique database that blocks spam calls. Its largest market is India, which is the company’s primary revenue driver. The stock outperformed in January after announcing a 21.3% year-on-year increase in revenue. This reflects its expanding premium user base, strategic partnerships with banks and the strong performance of its ‘Truecaller for Business’ division.
The largest detractor from the Fund’s relative returns in January was its holding in India-based Computer Age Management Services. It provides financial infrastructure and services for mutual funds and other financial institutions. It underperformed upon the broader sell-off in Indian small-cap stocks, despite announcing better than expected quarterly earnings results, with revenue growing 33% year-on-year to ₹3.85 billion.
Over the last quarter, the Fund has established a new position in ChemoMetec, the Danish medical device company that specialises in the development, manufacture and marketing of automated cell counters. Its products are primarily used in life science research, cell and gene therapy development, and bioprocessing applications. The market is growing rapidly due to increasing demand for biologics and cell-based therapies, advances in cell-based research and diagnostics, and the growth of biopharmaceutical manufacturing.
More than half of its ‘Nespresso-like’ business model revenue derives from recurring sales of consumables and services, providing a stable cash flow and a solid foundation for future expansion. It delivered strong quarterly earnings results, with 27% year-on-year revenue growth and improved EBITDA margins. This indicates that the company is well-positioned to capitalise on the growing demand for advanced cell counting solutions in the life sciences industry.