2 Nov 2017 07:00
Terra Capital Plc
Fund Manager's Update Regarding Q3 2017
Legal Entity Identifier: 2138006S6U2X7L4R8V74
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 report from Terra Partners Asset Management Limited ('TPAM' or the 'Fund Manager'), covering its activities in Q3 2017.
The Fund Manager's update covering Q3 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
November 2, 2017
Terra Partners Asset Management Limited ('TPAM' or the 'Fund Manager') presents its Third 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 3rd Quarter 2017 Return & Portfolio
The Fund's NAV increased to $1.12 at September 30, 2017 from $1.085 at June 30, 2017, a net total return of 3.6% for the quarter.
The Fund's investment level (equity, fixed income, and hedging) increased from 85.9% as of June 30th, 2017 to 88.8% as of September 30th, 2017. These figures no longer include the uncalled capital commitment to Terra Argentine Fund, L.P. ("TAF"). In addition, TAF has been completely liquidated and the proceeds distributed back to investors apart from a small residual value still held in the fund. This increase in the level of investment is largely the result of the addition of three new positions which overshadowed the liquidation of TAF.
Specific Areas of Investment
Europe: The Fund's exposure to Europe decreased marginally from 22.8% to 22.7% of the portfolio. The Fund liquidated its position in X5 Retail. There were no other changes made during the quarter.
Americas: The Fund's exposure to the Americas increased from 20.8% to 21.5% and is the Fund's second largest regional exposure. The Fund increased its position in Refineria La Pampilla (Peru) and decreased its positions in NCB Group (Jamaica) and Terra Argentine Fund (Argentina).
Asia: The Fund's exposure to Asia decreased slightly from 12.8% to 12.7%. The Fund increased its positions in Summit Power (Bangladesh) and Qingling Motors (China).
Middle East: The Fund's exposure to the Middle East increased from 16.6% to 18.2%. The Fund added two new positions, National Bank of Kuwait (Kuwait) and Mezzan Holding Co. (Kuwait). It liquidated its position in Al Meera Consumer Goods (Qatar).
Africa: TCA's Africa allocation increased from 12.9% to 13.8%. The Fund increased its position in Emaar Misr (Egypt), African Oxygen (South Africa), and Nigerian Breweries (Nigeria). It added a new position in KCB Group (Kenya) and liquidated its position in Cooperative Bank (Kenya).
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 | Position Change | 2Q US$ Total Return | 2Q LC$ Total Return |
EUROPE | Hungary | Any Security Printing | 593,457 | 3,031,146 | 4.39% | No Change | 3.42% | 0.45% |
Kazakhstan | KCELL | 397,630 | 2,226,728 | 3.22% | No Change | 51.35% | 51.35% | |
Serbia | Galenika-Fitofarmacija DP | 79,115 | 2,093,740 | 3.03% | No Change | 6.79% | 1.86% | |
Macedonia | Komercijalna Banka A D Skopje | 28,845 | 1,585,494 | 2.30% | No Change | 11.82% | 7.74% | |
Bulgaria | Speedy | 47,518 | 1,257,120 | 1.82% | No Change | 8.13% | 4.39% | |
Italy | QF Polis Fund | 1,789 | 1,232,185 | 1.78% | No Change | 3.76% | 0.17% | |
Slovenia | Gorenje Velenje | 175,399 | 1,201,855 | 1.74% | No Change | -3.15% | -6.50% | |
Poland | Fabryki Mebli Forte | 58,000 | 1,155,869 | 1.67% | No Change | -10.29% | -11.66% | |
Ukraine | Kernel Holding SA | 61,923 | 943,814 | 1.37% | No Change | -12.88% | -14.20% | |
Montenegro | Crnogorski Telecom A.D. | 217,624 | 501,347 | 0.73% | No Change | -6.05% | -9.30% | |
Estonia | Silvano Fashion Group AS | 148,299 | 457,273 | 0.66% | No Change | 4.10% | 0.50% | |
Russia | X5 Retail GDR | - | - | 0.00% | Liquidated | |||
15,686,571 | 22.71% | |||||||
ASIA | Bangladesh | Square Pharma | 522,707 | 1,946,558 | 2.82% | No Change | 3.30% | 5.48% |
Philippines | Travellers International Hotels | 19,782,000 | 1,496,575 | 2.17% | No Change | 10.48% | 11.27% | |
Bangladesh | Summit Power Ltd. | 2,778,534 | 1,332,291 | 1.93% | Increase | 1.77% | 3.92% | |
China | Qingling Motors | 3,612,615 | 1,179,293 | 1.71% | Increase | 1.95% | 2.00% | |
Philippines | Belle Corporation | 15,700,000 | 1,159,992 | 1.68% | No Change | -2.53% | -1.83% | |
Philippines | RFM Corporation | 11,003,750 | 973,018 | 1.41% | No Change | 0.40% | 1.12% | |
China | Great Wall Motor Company | 548,600 | 674,197 | 0.98% | No Change | -0.47% | -0.41% | |
8,761,924 | 12.68%
| |||||||
MIDDLE EAST | Lebanon | Blom Bank | 137,672 | 1,748,434 | 2.53% | No Change | 4.96% | 4.96% |
Qatar | Gulf Warehousing Company | 99,107 | 1,139,090 | 1.65% | Increase | -10.51% | -11.02% | |
Oman | Bank Muscat | 1,104,455 | 1,130,302 | 1.64% | No Change | 5.39% | 5.35% | |
UAE | Abu Dhabi Commercial Bank | 558,000 | 1,078,687 | 1.56% | No Change | 1.28% | 1.28% | |
Bahrain | Bank of Bahrain and Kuwait | 980,000 | 1,039,236 | 1.50% | No change | 2.05% | 2.04% | |
Kuwait | National Bank of Kuwait | 400,000 | 1,007,880 | 1.46% | New Position | 8.62% | 8.71% | |
Bahrain | Gulf Hotel Group | 704,700 | 962,144 | 1.39% | No Change | -0.95% | -0.96% | |
Lebanon | Solidere - GDR | 114,499 | 889,660 | 1.29% | No Change | 2.43% | 2.43% | |
Oman | Oman Refreshment | 175,000 | 865,932 | 1.25% | No Change | -4.71% | -4.75% | |
Oman | Ooredoo Oman | 699,000 | 864,241 | 1.25% | No Change | 5.82% | 5.78% | |
UAE | Amanat Holdings | 2,430,000 | 754,247 | 1.09% | No Change | 0.00% | 0.00% | |
Oman | Oman Cement | 601,950 | 628,546 | 0.91% | No Change | -9.83% | -9.87% | |
Kuwait | Mezzan Holding Co. | 160,000 | 442,355 | 0.64% | New Position | -1.92% | -1.76% | |
Qatar | Al Meera Consumer Goods | - | - | 0.00% | Liquidated | |||
12,550,753 | 18.17%
| |||||||
AMERICAS | Jamaica | National Commercial Bank Jamaica | 4,331,719 | 2,942,332 | 4.26% | Decrease | 25.36% | 26.54% |
Panama | Copa Holdings | 12,965 | 1,614,531 | 2.34% | No Change | 7.09% | 7.09% | |
Peru | Refineria La Pampilla SA | 20,834,070 | 1,595,014 | 2.31% | Increase | 10.51% | 11.11% | |
Jamaica | Jamaica Money Market Brokers | 8,500,000 | 1,459,815 | 2.11% | No Change | 10.38% | 11.42% | |
Peru | Ferreycorp SAA | 2,107,381 | 1,374,589 | 1.99% | No Change | 17.05% | 17.68% | |
Argentina | IRSA Inversiones y Represent. SA GDR | 49,498 | 1,215,176 | 1.76% | No Change | 1.78% | 1.78% | |
Brazil | BB Votorantim FII | 54,300 | 1,081,502 | 1.57% | No Change | 8.69% | 4.83% | |
Brazil | FII Vila Olimpia Corporate | 34,000 | 943,650 | 1.37% | No Change | 13.32% | 9.29% | |
Brazil | SDI Logistica Rio FII | 25,244 | 724,016 | 1.05% | No Change | 7.14% | 3.33% | |
Brazil | FII Torre Almirante | 1,020 | 644,937 | 0.93% | No Change | 19.25% | 15.01% | |
Brazil | FII Edificio Galeria | 39,200 | 606,013 | 0.88% | No Change | 6.54% | 2.75% | |
Argentina | Terra Argentine Fund All Series | 16,241 | 0.76% | Decrease | ||||
Brazil | FDO S F Lima FII | 589,582 | 449,209 | 0.65% | No Change | 15.84% | 11.73% | |
Brazil | FII Imob Projeto Agua Branca | 1,800 | 201,425 | 0.29% | No Change | 18.59% | 14.38% | |
14,868,450 | 21.52%
| |||||||
AFRICA | Egypt | Emaar Misr for Development | 7,361,000 | 1,372,885 | 1.99% | Increase | 24.23% | 20.96% |
South Africa | African Oxygen | 707,000 | 1,202,993 | 1.74% | Increase | 14.35% | 18.21% | |
Tunisia | One Tech Holding | 248,305 | 1,197,625 | 1.73% | No Change | 18.83% | 20.50% | |
South Africa | Holdsport | 234,426 | 1,155,993 | 1.67% | No Change | 12.13% | 15.91% | |
Kenya | KCB Group | 2,867,000 | 1,139,021 | 1.65% | New Position | 6.24% | 5.62% | |
Morocco | Residences Dar Saada | 60,083 | 1,063,404 | 1.54% | No Change | -1.14% | -3.62% | |
Burkina Faso | Onatel BF | 60,809 | 812,822 | 1.18% | No Change | -17.24% | -18.04% | |
Tunisia | Automobile Reseau Tunisien et Services | 246,934 | 663,550 | 0.96% | No Change | -14.62% | -13.42% | |
Tunisia | Tunisie Leasing | 87,818 | 524,244 | 0.76% | No Change | -6.13% | -4.81% | |
Nigeria | Nigerian Breweries | 833,247 | 382,969 | 0.55% | Increase | -7.36% | 2.48% | |
Kenya | Cooperative Bank | - | - | 0.00% | Liquidated | 5.29% | 5.49% | |
9,515,506 | 13.77% | |||||||
Total Equity Holdings | 61,383,205 | 88.86% | Total Equity Holdings | |||||
Cash | 7,666,148 | 11.10% | Cash | |||||
Hedging | 31,700 | 0.05% | Hedging | |||||
Total Fund | 69,081,053 | Total Fund | ||||||
* 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.