3 Aug 2016 09:41
Terra Capital Plc
Fund Manager's Update Regarding Q2 2016
Terra Capital Plc ('TCA' or the 'Fund'), the AIM quoted investment trust focused on investing in value opportunities globally, primarily in frontier markets is pleased to report that it has received the latest update from Terra Partners Asset Management Limited ('TPAM' or the 'Fund Manager'), covering its activities for Q2 2016.
TCA's non-executive Chairman, Dirk Van den Broeck said "Thanks to another positive quarterly performance, the six month period to 30 June 2016 has seen Terra Capital's NAV grow a further 5.03%, (including the dividend payment in February), which compares favourably to the 0.13% fall in the MSCI Frontier market during the equivalent period. 2016 is so far shaping up to be another year of strong relative outperformance, building on the success we had in 2015 and 2014 in terms of NAV growth, compared to both our peers and the wider index.
"Importantly, the returns we are generating are less volatile than, and less correlated with, those of the wider market and our peers. We view this as a product of both the importance we place on risk management as well as our fund manager's tried and tested investment process. This is based on applying forensic financial evaluation techniques and close interaction with management teams to identify and invest in under-researched and under-valued companies across the world."
The Fund Manager's update covering Q2 2016 is reproduced below:
Terra Partners Asset Management Limited
Portomaso Tower, 8/5A
Portomaso Avenue
St. Julian's STJ 4011 MALTA
Telephone +356 2371 7000
Regulated by the Malta Financial Services Authority, Reg. No. C 56353
Registered Investment Adviser with the US Securities & Exchange Commission
August 3, 2016
Terra Partners Asset Management Limited ('TPAM' or the 'Fund Manager') presents its Second Quarter 2016 Update to shareholders regarding the activities of Terra Capital Plc. ('TCA' or the 'Fund'), an AIM quoted investment trust investing globally in value opportunities, primarily in frontier markets.
The opinions expressed in this document represent the views of TPAM, the Fund Manager of TCA, at the time of its preparation. This document has been prepared from publicly available information, internally developed data and other sources believed to be reliable, and all reasonable precautions have been taken to ensure its accuracy; however, no representation or warranty about the accuracy of the information contained in, or of any omissions from, this document or any supplementary information made available to any interested party or its advisers is implied, and any liability in respect of such information or omissions is hereby expressly disclaimed. Note that the information herein is not all of the information TPAM had available, or which it relied upon, when making its initial and continuing investment decisions. TPAM reserves the right to amend the information provided herein, and its opinions, at any time, and undertakes no obligation (express or implied) to provide any recipient with any further information or to correct any inaccuracies or omissions which may subsequently become apparent. Readers are advised that a fund managed by TPAM, and some officers and employees of TPAM currently own stock in TCA.
Investments in Emerging and Frontier markets usually suffer from liquidity problems, and are often affected by governmental interference in the free market, local politics and vagaries in commodity and currency prices; therefore, their prices can be very volatile. This means that it can be difficult to acquire and subsequently sell the shares noted in TCA's portfolio. This document is for information purposes only and it is not intended as an offer or solicitation regarding the purchase or sale of any security or investment vehicle.
All solicitations or offers regarding TCA are made and transacted on the public market of the AIM Section of the London Stock Exchange and occur by reference to TCA's Offering Memorandum and the document titled "Tender Offer to Purchase Ordinary Shares at the Tender Price and Restructuring and Amendment to the Directors' Incentive Plan and Change of name to Terra Capital PLC and Notice of Extraordinary General Meeting" of the April 30, 2012 (the "Circular") as amended by subsequent resolutions, primarily the one passed at the January 26, 2015 EGM. Documents are accessible on TCA's website www.terracapitalplc.com in the "Investor Centre" tab under the Documents and Announcements section of the file "AIM Rule 26". This website contains important information which may supplement, modify or differ from the information contained herein and no prospective investment decision should be considered before careful reading of documentation found on TCA's website. All current and prospective investors should be aware that PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
By accepting this document, you agree to be bound by the foregoing limitations.
TCA's 2nd Quarter 2016 Return & Portfolio
The Fund's NAV increased to $0.939 at June 30th, 2016 from $0.938 as of March 31, 2016, a net total return of 0.11% for the quarter.
The Fund's investment level (equity, fixed income and hedging) increased from 89.31% at March 31 (including commitment to Terra Argentine Fund) to 92.0% at June 30.
Specific Areas of Investment:
Asia
The Fund's exposure to Asia increased from 18.55% to 22.80%, and is now the fund's largest regional exposure. The fund increased its position in five holdings, which include Kcell (Kazakhstan), Century Pacific Foods (Philippines), Belle Corp (Philippines), Travelers Int'l Hotels (Philippines), and Emperador (Philippines). The fund liquidated its position in Hyundai (Korea).
Europe
The Fund's exposure to Europe decreased slightly from 24.19% to 22.09%, and is now the second largest regional allocation. The Fund liquidated three positions: JSC Acron (Russia), PKP Cargo (Poland), and VIB Vermoegen (Germany). There were no other changes during the period.
Americas
The allocation to this region increased from 18.90% to 20.13%. The fund contributed to the fourth capital call in the Terra Argentine Fund and initiated a new investment strategy in Brazil. In addition, it increased its position in Copa Holdings. The Fund decreased its holdings in Refineria La Pampilla (Peru) and Ferreycorp (Peru).
Middle East
Exposure to the Middle East decreased during the last quarter from 17.14% to 16.40%. The Fund increased its holdings in Blom Bank (Lebanon), Solidere (Lebanon), and Abu Dhabi Commercial Bank (UAE). The Fund decreased its holdings in Oman Cement (Oman) and Bank Sohar (Oman).
Africa
The Fund's allocation to Africa remained stable at 10.54%. The Fund increased its position in Holdsport (South Africa) and Umeme (Uganda) and initiated a new position in Nigerian Breweries (Nigeria). The fund decreased its position in Onatel (Burkina Faso) and UAC of Nigeria (Nigeria).
Fund Details
The following page details the Fund's holdings, changes from the prior quarter, and the total return of each company's shares over the quarter in both U.S. dollars and local currency. The numbers provided are based on TPAM's internal calculations.
Region | Country | Security | Shares | Market value | % of Fund | Change in Share Holdings | 2Q US$ Total Return | 2Q LC$ Total Return |
AFRICA | Morocco | Residences Dar Saada | 69,843 | 1,247,100.99 | 1.94% | No Change | 10.51% | 12.69% |
South Africa | Holdsport Ltd. | 230,501 | 924,705.10 | 1.44% | Increase | 0.01% | 0.05% | |
Tunisia | Automobile reseau tunisien et services | 246,934 | 888,531.46 | 1.38% | No Change | -12.72% | -3.61% | |
Uganda | Umeme Ltd. | 5,870,000 | 862,474.29 | 1.34% | Increase | -5.51% | -4.65% | |
Tunisia | One Tech Holding | 248,305 | 804,118.20 | 1.25% | No Change | -1.60% | 8.55% | |
Tunisia | Tunisie Leasing | 87,818 | 749,689.94 | 1.17% | No Change | 1.85% | 12.31% | |
Burkina Faso | Onatel BF | 30,477 | 696,107.17 | 1.08% | Decrease | -11.25% | -6.90% | |
South Africa | Onelogix Group Ltd. | 2,281,292 | 449,686.77 | 0.70% | No Change | -12.11% | -12.12% | |
Nigeria | UAC of Nigeria | 1,541,658 | 109,089.36 | 0.17% | Decrease | -26.34% | 2.49% | |
Nigeria | Nigerian Breweries PLC | 70,000 | 34,194.69 | 0.05% | New | -9.13% | 28.97% | |
6,765,697.97 | 10.54% | |||||||
AMERICAS | Argentina | Terra Argentine Fund LP | 1,700,000 | 2,386,428.72 | 3.72% | Increase | 8.79% | 8.79% |
Jamaica | National Commercial Bank Jamaica | 5,431,719 | 1,845,625.58 | 2.88% | No Change | 1.29% | 5.45% | |
Argentina | Terra Argentine Fund LP Commitment | 1,700,000.00 | 2.65% | Decrease | ||||
Argentina | IRSA Inversiones y represent. SA GDR RCTP | 81,433 | 1,368,888.73 | 2.13% | No Change | 12.37% | 12.37% | |
Jamaica | Scotia Group Jamaica | 5,429,031 | 1,320,470.76 | 2.06% | No Change | -2.16% | 1.89% | |
Brazil | New | new | 1,022,559.12 | 1.59% | New | |||
Peru | Refineria La Pampilla SA | 13,300,102 | 954,601.16 | 1.49% | Decrease | -7.46% | -8.53% | |
Peru | Ferreycorp SAA | 1,827,387 | 866,982.06 | 1.35% | Decrease | 13.55% | 12.16% | |
Panama | Copa Holdings SA - Class A | 15,265 | 797,748.90 | 1.24% | Increase | -22.11% | -22.11% | |
Jamaica | Jamaica Money Market Brokers - Jamaica | 8,500,000 | 652,864.48 | 1.02% | No Change | -4.92% | -1.00% | |
12,916,169.51 | 20.13% | |||||||
ASIA | Bangladesh | Square Pharma | 629,734 | 2,136,231.39 | 3.33% | No Change | 6.05% | 5.98% |
Bangladesh | Brac Bank Ltd | 2,710,489 | 1,834,100.44 | 2.86% | No Change | 24.24% | 24.16% | |
Vietnam | Imexpharm Pharmaceutical JSC. | 802,158 | 1,611,221.23 | 2.51% | No Change | -1.12% | -1.06% | |
Georgia | Bank of Georgia Holdings Plc | 31,280 | 1,092,332.23 | 1.70% | No Change | 19.18% | 29.29% | |
Kazakhstan | Kcell JSC - GDRs | 296,000 | 1,006,400.00 | 1.57% | Increase | 3.81% | 3.81% | |
Philippines | RFM Corporation | 11,003,750 | 975,259.48 | 1.52% | No Change | -1.79% | 0.72% | |
Philippines | Century Pacific Food Inc. | 2,102,999 | 974,302.21 | 1.52% | Increase | 12.13% | 15.00% | |
China | Qingling Motors | 3,042,615 | 941,209.01 | 1.47% | No Change | 6.05% | 6.10% | |
Philippines | Belle Corp | 12,000,000 | 860,005.30 | 1.34% | Increase | 10.23% | 13.04% | |
Philippines | Travellers International Hot | 9,300,000 | 668,476.01 | 1.04% | Increase | -10.54% | -8.27% | |
Philippines | Emperador Inc. | 4,279,000 | 657,784.26 | 1.03% | Increase | -6.74% | -4.35% | |
Korea | Lotte Chilsung beverage Co - Pref | 749 | 551,442.96 | 0.86% | No Change | -2.81% | -1.97% | |
Australia | Ardent Leisure Group | 372,606 | 522,397.34 | 0.81% | No Change | -17.98% | -15.50% | |
Korea | Kumho Petro Chemical Co - PFD | 17,850 | 435,479.25 | 0.68% | No Change | -4.60% | -3.77% | |
Korea | Shinyoung Securities LTD | 8,370 | 362,617.64 | 0.57% | No Change | -17.27% | -16.56% | |
Korea | Hyundai Motor Co. Ltd. - PFD | 0.00 | 0.00% | Liquidated | -9.92% | -9.13% | ||
14,629,258.75 | 22.80% | |||||||
EUROPE | Italy | QF Polis | 1,789 | 2,160,150.23 | 3.37% | No Change | 9.13% | 12.16% |
Hungary | Any Security Printing Co.Plc (AlamiNyomda) | 553,679 | 1,967,451.52 | 3.07% | No Change | -4.58% | -1.47% | |
Serbia | Galenika-Fitofarmacija DP | 82,744 | 1,949,522.85 | 3.04% | No Change | 5.57% | 9.12% | |
Slovenia | Gorenje Velenje | 175,399 | 1,216,805.97 | 1.90% | No Change | 37.29% | 41.11% | |
Ukraine | Kernel Holding SA | 86,323 | 1,159,872.99 | 1.81% | No Change | -4.27% | 1.21% | |
Russsia | X5 Retail GDR | 57,416 | 1,142,578.40 | 1.78% | No Change | -6.13% | -6.13% | |
Macedonia | Komercijalna Banka AD Skopje | 28,845 | 1,119,179.76 | 1.74% | No Change | -2.62% | -0.09% | |
Croatia | Hrvatski Telekom DD | 36,228 | 756,042.63 | 1.18% | No Change | -0.61% | 2.07% | |
Montenegro | Crnogorski Telekom a.d. | 222,624 | 691,790.72 | 1.08% | No Change | -28.69% | -26.70% | |
Estonia | Silvano Fashion Group AS | 267,000 | 592,633.20 | 0.92% | No Change | 28.02% | 31.58% | |
Italy | QF BNL Portfolio IMM | 845 | 499,837.27 | 0.78% | No Change | -4.50% | -1.84% | |
Bulgaria | Monbat AD | 115,000 | 481,597.49 | 0.75% | No Change | 0.02% | 2.77% | |
Bulgaria | Speedy AD | 16,818 | 343,563.38 | 0.54% | No Change | -1.54% | 0.35% | |
Serbia | Komercialna Banka Serbia | 7,231 | 92,662.44 | 0.14% | No Change | 1.37% | 4.78% | |
Russsia | JSC ACRON S GDR | 0.00 | 0.00% | Liquidated | 14.38% | 14.38% | ||
Poland | PKP Cargo S.A. | 0.00 | 0.00% | Liquidated | -27.28% | -23.08% | ||
Germany | Vib Vermoegen O.N | 0.00 | 0.00% | Liquidated | 9.11% | 12.15% | ||
14,173,688.85 | 22.09% | |||||||
MIDDLE EAST | Lebanon | Blom Bank GDS ord B shs | 156,272 | 1,570,533.60 | 2.45% | Increase | -0.22% | -0.22% |
Qatar | Al Meera Consumer Goods | 21,218 | 1,230,637.01 | 1.92% | No Change | 2.04% | 2.03% | |
U.A.E. | Air Arabia PJSC | 2,947,000 | 1,051,067.25 | 1.64% | No Change | 6.51% | 6.50% | |
Oman | Oman Refreshment | 175,000 | 999,870.15 | 1.56% | No Change | -2.23% | -2.22% | |
Lebanon | Solidere- GDRs | 95,308 | 905,426.00 | 1.41% | Increase | -11.63% | -11.63% | |
Qatar | Doha Bank QSC | 83,692 | 812,465.59 | 1.27% | No Change | -4.84% | -4.85% | |
Bahrain | Gulf Hotel Group b.s.c. | 444,273 | 753,623.79 | 1.17% | No Change | -18.00% | -17.95% | |
Bahrain | SEEF Properties b.s.c. | 1,414,577 | 716,118.12 | 1.12% | No Change | 7.23% | 7.30% | |
Qatar | Gulf Warehousing Company | 40,750 | 645,706.32 | 1.01% | No Change | -1.70% | -1.70% | |
Oman | Oman Cement | 464,950 | 569,942.60 | 0.89% | Decrease | 2.60% | 2.61% | |
Oman | Bank Sohar | 1,116,811 | 498,874.15 | 0.78% | Decrease | 21.11% | 21.13% | |
U.A.E. | ABU DHABI COMMERCIAL BANK | 248,000 | 408,494.42 | 0.64% | Increase | -9.70% | -9.70% | |
Bahrain | Bahrain Commercial Facilities Company | 200,000 | 357,814.94 | 0.56% | No Change | -10.07% | -10.00% | |
10,520,573.94 | 16.40% | |||||||
Total Equity Holdings | 59,005,389.02 | 91.96% | ||||||
Cash | 5,160,446 | 8.04% | ||||||
Total Fund | 64,165,834.59 |
* These figures were prepared by the Fund Manager based on its internal records and calculations.
RESPECTFULLY SUBMITTED BY:
Terra Partners Asset Management Limited
Portomaso Tower, 8/5A, Portomaso Avenue,
St. Julian's ž STJ 4011 ž MALTA
Regulated by the Malta Financial Services Authority, Reg. No. C 56353
Registered Investment Adviser with the US Securities & Exchange Commission
Contact: Galileo Fund Services Limited (Administrator)
Ian Dungate or Suzanne Jones
+44 1624 692600
Panmure Gordon (Nominated adviser and corporate broker)
Paul Fincham or Jonathan Becher
+44 20 7886 2500
St Brides Partners Ltd
Elisabeth Cowell / Frank Buhagiar
+44 (0) 20 7236 1177
NOTES:
Terra Capital Plc is an AIM quoted investment trust focussed on generating high absolute returns while ensuring volatility is kept to a minimum. The Fund predominantly invests in under-researched and under-valued companies. The Fund Manager targets companies that it believes are trading at less than their intrinsic worth and so, aside from any potential growth prospects, provide scope for capital appreciation as a result of a reversion towards underlying value. Investments are also made in companies which are viewed as trading at fair value but still offer opportunities for growth at a reasonable price. Due to inherent market inefficiencies, the Fund Manager believes many such 'value' opportunities can be found in Frontier Markets and utilises in-house teams of analysts both at its office and in locations "on the ground" in areas of interest to investigate suitable opportunities rather than rely on third party research.