25 May 2017 14:00
Terra Capital Plc
Fund Manager's Update Regarding Q1 2017
Terra Capital Plc. ('TCA' or the 'Fund'), the AIM quoted investment company focused on investing in value opportunities globally, primarily in frontier markets is pleased to report that it has received the latest report from Terra Partners Asset Management Limited ('TPAM' or the 'Fund Manager'), covering its activities in Q1 2017.
The Fund Manager's update covering Q1 2017 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
May 25, 2017
Terra Partners Asset Management Limited ('TPAM' or the 'Fund Manager') presents its First Quarter 2017 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 positions in TCA. 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.
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. All current and prospective investors should be aware that PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
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.
By accepting this document, you agree to be bound by the foregoing limitations.
TCA's 1st Quarter 2017 Return & Portfolio
The Fund's NAV increased to $1.076 at March 31, 2017 from $1.016 as of December 31, 2016, a net total return of 5.9% for the quarter.
The Fund's investment level (equity, fixed income and hedging) increased from 86.3% at December 31 (including commitment to Terra Argentine Fund, L.P.) to 98.5% at March 31. The large increase in invested level is the byproduct of the decrease in cash used to fund the recent tender offer.
Specific Areas of Investment
Americas
The allocation to the Americas increased from 25.5% to 30.9% and is the Fund's largest regional allocation. The Fund increased its position in Ferreycorp (Peru) and decreased its position in Refineria La Pampilla (Peru).
Europe
The Fund's exposure to Europe increased from 18.9% to 21.7% and is the second largest regional allocation. The Fund increased its positions in Forte (Poland) and Speedy (Bulgaria) and decreased its position in Kernel (Ukraine).
Middle East
The Fund's exposure to the Middle East increased on the quarter from 16.2% to 17.4%. The Fund initiated new positions in BBK (Bahrain) and Amanat Holdings (UAE) and increased its position in Bank Muscat (Oman), Ooredoo (Oman), and Oman Cement (Oman). The fund decreased its position in Blom Bank (Lebanon), Abu Dhabi Commercial Bank (UAE), and Air Arabia (UAE). The fund liquidated its position in Doha Bank (Qatar).
Asia
The Fund's exposure to Asia decreased from 16.3% to 14.5%. The Fund liquidated its positions in Emperador (Philippines), Lotte Chilsung (Korea), Kumho Petro (Korea), and Shinyoung Securities (Korea). It decreased its positions in Bank of Georgia (Georgia) and Square Pharma (Bangladesh). The Fund increased its positions in Great Wall Motor Company (China), Qingling Motors (China), Travelers International Hotels (Philippines), and Belle Corp (Philippines).
Africa
The allocation to Africa increased from 9.4% to 14.0%. The fund increased its positions in Coop Bank (Kenya), Residences Dar Saada (Morocco), Onatel (Burkina Faso), Emaar Misr for Development (Egypt), and Nigerian Breweries (Nigeria). It initiated a new position in African Oxygen (South Africa). The fund liquidated its position in UAC (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 | 1Q US$ Total Return | 1Q LC$ Total Return |
AFRICA | Kenya | Co-operative Bank of Kenya | 8,700,000 | 1,177,158.10 | 1.78% | Increase | 5.09% | 5.68% |
Morocco | Residences Dar Saada | 60,083 | 1,046,335.92 | 1.58% | Increase | -4.65% | -5.41% | |
South Africa | Holdsport Ltd. | 230,501 | 1,030,794.00 | 1.56% | No Change | 4.33% | 1.82% | |
Burkina Faso | Onatel BF | 56,809 | 1,008,721.36 | 1.52% | Increase | -6.78% | -8.33% | |
South Africa | African Oxygen Ltd. | 660,000 | 973,995.48 | 1.47% | New | 6.78% | 4.21% | |
Egypt | Emaar Misr for Development | 6,761,000 | 955,131.31 | 1.44% | Increase | -12.46% | -12.07% | |
Tunisia | One Tech Holding | 248,305 | 948,235.95 | 1.43% | No Change | 3.53% | 2.47% | |
Tunisia | Automobile reseau tunisien et services | 246,934 | 919,181.72 | 1.39% | No Change | 9.57% | 8.45% | |
Tunisia | Tunisie Leasing | 87,818 | 616,050.51 | 0.93% | No Change | -11.95% | -12.85% | |
South Africa | Onelogix Group Ltd. | 2,128,792 | 507,727.90 | 0.77% | No Change | 0.39% | -2.09% | |
Nigeria | Nigerian Breweries PLC | 244,747 | 98,678.91 | 0.15% | Increase | -9.93% | -12.44% | |
Nigeria | UAC of Nigeria | 0 | 0 | 0.00% | Liquidated | -20.41% | -22.67% | |
9,282,011 | 14.03% | |||||||
AMERICAS | Brazil | XXXX | 745,146 | 4,498,237.04 | 6.80% | No Change | ||
Argentina | Terra Argentine Fund LP | 1,700,000 | 2,808,654.66 | 4.25% | No Change | |||
Jamaica | National Commercial Bank Jamaica | 5,431,719 | 2,619,743.94 | 3.96% | No Change | 25.41% | 24.80% | |
Argentina | IRSA Inversiones y represent. SA GDR RCTP | 81,433 | 1,995,922.83 | 3.02% | No Change | 32.92% | 32.92% | |
Panama | Copa Holdings SA - Class A | 15,265 | 1,713,496.25 | 2.59% | No Change | 24.14% | 24.14% | |
Argentina | Terra Argentine Fund LP Commitment | 1,700,000 | 1,700,000.00 | 2.57% | No Change | 0.00% | 0.00% | |
Jamaica | Scotia Group Jamaica | 5,429,031 | 1,652,418.33 | 2.50% | No Change | 6.65% | 6.12% | |
Peru | Ferreycorp SAA | 2,107,381 | 1,322,379.96 | 2.00% | Increase | 24.33% | 20.71% | |
Jamaica | Jamaica Money Market Brokers - Jamaica | 8,500,000 | 1,209,976.00 | 1.83% | No Change | 26.42% | 25.79% | |
Peru | Refineria La Pampilla SA | 12,543,116 | 906,684.79 | 1.37% | Decrease | 3.88% | 0.86% | |
20,427,514 | 30.88% | |||||||
ASIA | Bangladesh | Square Pharma | 522,707 | 1,810,098.27 | 2.74% | Decrease | 10.14% | 11.56% |
Bangladesh | Summit Power | 2,596,398 | 1,336,214.80 | 2.02% | No Change | 10.20% | 11.62% | |
Philippines | Belle Corp | 14,984,000 | 1,193,944.22 | 1.80% | Increase | 26.28% | 27.97% | |
Kazakhstan | Kcell JSC - GDRs | 318,630 | 1,147,068.00 | 1.73% | No Change | 12.50% | 12.50% | |
China | Qingling Motors | 3,362,615 | 1,094,687.15 | 1.65% | Increase | 7.42% | 7.66% | |
Philippines | RFM Corporation | 11,003,750 | 1,052,151.39 | 1.59% | No Change | -5.45% | -4.20% | |
Philippines | Travellers International Hot | 16,131,000 | 1,028,270.92 | 1.55% | Increase | -4.01% | -2.74% | |
China | Great Wall Motor Company-H | 609,600 | 694,193.56 | 1.05% | Increase | 21.96% | 22.24% | |
Georgia | Bank of Georgia Holdings Plc | 5,280 | 213,153.86 | 0.32% | Decrease | 9.70% | 7.98% | |
Australia | Ardent Leisure Group | 0 | 0 | 0.00% | Liquidated | -17.15% | -21.79% | |
Philippines | Emperador Inc. | 0 | 0 | 0.00% | Liquidated | -12.21% | -11.05% | |
Korea | Lotte Chilsung beverage Co - Pref | 0 | 0 | 0.00% | Liquidated | -5.57% | -12.54% | |
Korea | Kumho Petro Chemical Co - PFD | 0 | 0 | 0.00% | Liquidated | 2.80% | -4.78% | |
Korea | Shinyoung Securities LTD | 0 | 0 | 0.00% | Liquidated | 7.75% | -0.20% | |
9,569,782 | 14.47% | |||||||
EUROPE | Hungary | Any Security Printing Co.Plc (AlamiNyomda) | 553,679 | 2,554,646.66 | 3.86% | No Change | 19.29% | 17.41% |
Serbia | Galenika-Fitofarmacija DP | 79,115 | 1,866,294.11 | 2.82% | No Change | 1.69% | 0.74% | |
Macedonia | Komercijalna Banka AD Skopje | 28,845 | 1,399,381.45 | 2.12% | No Change | 0.23% | -1.91% | |
Russsia | X5 Retail GDR | 39,416 | 1,326,348.40 | 2.00% | No Change | 3.70% | 3.70% | |
Slovenia | Gorenje Velenje | 175,399 | 1,309,809.57 | 1.98% | No Change | 18.42% | 16.76% | |
Poland | FABRYKI MEBLI FORTE SA | 58,000 | 1,200,105.92 | 1.81% | Increase | 14.02% | 7.96% | |
Ukraine | Kernel Holding SA | 61,923 | 1,116,531.62 | 1.69% | Decrease | 18.27% | 11.98% | |
Italy | QF Polis | 1,789 | 1,072,579.92 | 1.62% | No Change | 7.12% | 5.51% | |
Bulgaria | Speedy AD | 42,318 | 946,401.57 | 1.43% | Increase | 16.54% | 13.10% | |
Montenegro | Crnogorski Telekom a.d. | 222,624 | 641,237.26 | 0.97% | No Change | -2.89% | -4.26% | |
Estonia | Silvano Fashion Group AS | 148,299 | 461,959.69 | 0.70% | No Change | 0.05% | -1.35% | |
Italy | QF BNL Portfolio IMM | 845 | 461,959.69 | 0.70% | No Change | 1.23% | 0.00% | |
14,357,256 | 21.70% | |||||||
MIDDLE EAST | Lebanon | Blom Bank GDS ord B shs | 127,272 | 1,616,354.40 | 2.44% | Decrease | 16.51% | 16.51% |
Lebanon | Solidere- GDRs | 114,499 | 1,052,249.03 | 1.59% | Increase | -8.10% | -8.10% | |
U.A.E. | ABU DHABI COMMERCIAL BANK | 558,000 | 1,033,080.13 | 1.56% | Decrease | 4.35% | 4.35% | |
Oman | Bank Muscat | 1,045,455 | 1,042,739.08 | 1.58% | Increase | -9.28% | -9.28% | |
Oman | Oman Refreshment | 175,000 | 981,818.18 | 1.48% | No Change | 4.87% | 4.87% | |
Qatar | Al Meera Consumer Goods | 21,218 | 981,273.50 | 1.48% | No Change | 1.08% | 1.08% | |
Oman | OOREDOO | 649,000 | 910,285.71 | 1.38% | Increase | -11.82% | -11.82% | |
Bahrain | BBK | 900,000 | 686,965.50 | 1.04% | New | -1.50% | -1.50% | |
Oman | Oman Cement | 566,950 | 739,243.90 | 1.12% | Increase | 12.24% | 12.24% | |
U.A.E. | Amanat Holdings PJSC | 2,400,000 | 725,312.42 | 1.10% | New | 13.15% | 13.15% | |
Bahrain | Gulf Hotel Group b.s.c. | 488,700 | 758,328.05 | 1.15% | Increase | 4.45% | 4.45% | |
Qatar | Gulf Warehousing Company | 40,750 | 586,411.45 | 0.89% | No Change | -3.57% | -3.57% | |
U.A.E. | Air Arabia PJSC | 1,473,500 | 425,252.53 | 0.64% | Decrease | -15.04% | -15.04% | |
Qatar | Doha Bank QSC | 0 | 0 | 0.00% | Liquidated | 1.77% | 1.77% | |
11,539,314 | 17.44% | |||||||
Total Equity Holdings | 65,175,877 | 98.52% | ||||||
Cash | 979,121 | 1.48% | ||||||
Total Fund | 66,154,997 |
* 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
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 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 fair value but 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 on the ground in areas of interest to investigate suitable opportunities rather than rely on third party research.