1 May 2018 09:00
Terra Capital Plc
Fund Manager's Update Regarding Q1 2018
Legal Entity Identifier: 2138006S6U2X7L4R8V74
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 2018.
The Fund Manager's update covering Q1 2018 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
April 30, 2018
Terra Partners Asset Management Limited ('TPAM' or the 'Fund Manager') presents its First Quarter 2018 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 2018 Return & Portfolio
The Fund's NAV increased to $1.172 at March 31st, 2018 from $1.149 at December 31st, 2017 a net total return of 2.0% for the quarter. This is compared to the MSCI Frontier Markets Index, which was up 5.1% during the quarter. The relative underperformance was driven largely by our underweights to Vietnam and Argentina.
Specific Areas of Investment
Europe: The Fund's exposure to Europe increased to 23.3% of the portfolio. The Fund liquidated its position in Crngorski Telekom (Montenegro) and decreased its position in KCELL (Kazakhstan) There were no other changes made during the quarter.
Americas: The Fund's exposure to the Americas decreased from 20.9% as of December 31st, 2017 to 16.6% as of March 31st, 2018. The Fund decreased its position in Ferreycorp (Peru), NCB Group (Jamaica), JMMB (Jamaica), IRSA (Argentina), Refineria La Pampilla (Peru) and SDI Logistica (Brazil), and liquidated its position in Copa Holdings (Panama).
Asia: The Fund's exposure to Asia decreased slightly from 11.9% to 11.7%. The Fund liquidated its position in Qingling Motors (China).
Middle East: The Fund's exposure to the Middle East decreased from to 14.7% to 13.7%. The Fund decreased its position in Gulf Warehousing Company (Qatar) and liquidated its positions in Oman Refreshment (Oman) and Oman Cement (Oman).
Africa: The Fund's Africa allocation increased slightly from 12.8% to 14.4%. The Fund increased its position in Nigerian Breweries (Nigeria), decreased its position in ARTES (Tunisia) and liquidated its positions in Residences Dar Saada (Morocco) and Tunisie Leasing (Tunisia).
Purchases: The Fund added to one position during the period and did not initiate any new positions.
Sales: The Fund liquidated seven positions and reduced its position in nine current holdings. The liquidated investments are the following: Crnogorski Telekom (Montenegro), Qingling Motors (China), Oman Refreshment (Oman), Oman Cement (Oman), Copa Holdings (Panama), Residences Dar Saada (Morocco), and Tunisie Leasing (Tunisia).
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 nu
Region | Country | Security | Shares | Market Value | % of Fund | Position Change |
EUROPE | Hungary | Any Security Printing | 593,457 | 3,227,534 | 4.98% | No Change |
Serbia | Galenika-Fitofarmacija DP | 79,115 | 2,367,076 | 3.65% | No Change | |
Macedonia | Komercijalna Banka A D Skopje | 28,845 | 2,074,144 | 3.20% | No Change | |
Kazakhstan | KCELL | 377,630 | 1,808,848 | 2.79% | Decrease | |
Bulgaria | Speedy | 47,518 | 1,233,107 | 1.90% | No Change | |
Italy | QF Polis Fund | 1,789 | 1,206,520 | 1.86% | No Change | |
Slovenia | Gorenje Velenje | 175,399 | 1,218,559 | 1.88% | No Change | |
Ukraine | Kernel Holding SA | 61,923 | 1,051,552 | 1.62% | No Change | |
Poland | Fabryki Mebli Forte | 58,000 | 907,350 | 1.40% | No Change | |
Montenegro | Crnogorski Telecom A.D. | - | - | 0.00% | Liquidated | |
15,094,689 | 23.28% | |||||
ASIA | Bangladesh | Square Pharma | 515,910 | 1,921,857 | 2.96% | No Change |
Philippines | Travellers International Hotels | 19,782,000 | 1,574,687 | 2.43% | No Change | |
Bangladesh | Summit Power Ltd. | 2,786,398 | 1,165,219 | 1.80% | No Change | |
Philippines | Belle Corporation | 15,700,000 | 1,114,562 | 1.72% | No Change | |
Philippines | RFM Corporation | 11,003,750 | 989,622 | 1.53% | No Change | |
China | Great Wall Motor Company | 828,600 | 830,843 | 1.28% | No Change | |
China | Qingling Motors | - | - | 0.00% | Liquidated | |
7,596,789 | 11.72% | |||||
MIDDLE EAST | Lebanon | Blom Bank | 137,672 | 1,679,598 | 2.59% | No Change |
Bahrain | Bank of Bahrain and Kuwait | 980,000 | 1,169,668 | 1.80% | No Change | |
Oman | Bank Muscat | 1,159,677 | 1,102,517 | 1.70% | No Change | |
Kuwait | National Bank of Kuwait | 420,000 | 1,051,121 | 1.62% | No Change | |
Qatar | Gulf Warehousing Company | 91,694 | 1,014,993 | 1.57% | Decrease | |
Bahrain | Gulf Hotel Group | 704,700 | 990,613 | 1.53% | No Change | |
Lebanon | Solidere - GDR | 114,499 | 974,386 | 1.50% | No Change | |
Oman | Ooredoo Oman | 699,000 | 911,483 | 1.41% | No Change | |
Oman | Oman Refreshment | - | - | 0.00% | Liquidated | |
Oman | Oman Cement | - | - | 0.00% | Liquidated | |
8,894,381 | 13.72% | |||||
AMERICAS | Jamaica | National Commercial Bank Jamaica | 3,065,835 | 2,412,876 | 3.72% | Decrease |
Peru | Refineria La Pampilla SA | 18,064,485 | 1,595,160 | 2.46% | Decrease | |
Jamaica | Jamaica Money Market Brokers | 5,253,982 | 1,085,958 | 1.67% | Decrease | |
Brazil | BB Votorantim FII | 54,300 | 989,497 | 1.53% | No Change | |
Brazil | FII Vila Olimpia Corporate | 34,000 | 961,806 | 1.48% | No Change | |
Peru | Ferreycorp SAA | 1,182,833 | 930,874 | 1.44% | Decrease | |
Brazil | FII Torre Almirante | 1,020 | 595,100 | 0.92% | No Change | |
Brazil | FII Edificio Galeria | 39,200 | 566,961 | 0.87% | No Change | |
Argentina | IRSA Inversiones y Represent. SA GDR | 22,889 | 541,325 | 0.83% | Decrease | |
Brazil | FDO S F Lima FII | 578,259 | 465,224 | 0.72% | No Change | |
Brazil | SDI Logistica Rio FII | 14,456 | 448,200 | 0.69% | Decrease | |
Brazil | FII Imob Projeto Agua Branca | 1,800 | 197,623 | 0.30% | No Change | |
Panama | Copa Holdings | - | - | 0.00% | Liquidated | |
10,790,604 | 16.64% | |||||
AFRICA | Egypt | Emaar Misr for Development | 7,361,000 | 2,033,126 | 3.14% | No Change |
South Africa | African Oxygen | 707,000 | 1,851,395 | 2.86% | No Change | |
Tunisia | One Tech Holding | 248,305 | 1,481,892 | 2.29% | No Change | |
Kenya | KCB Group | 2,867,000 | 1,476,810 | 2.28% | No Change | |
Burkina Faso | Onatel BF | 60,809 | 969,887 | 1.50% | No Change | |
Nigeria | Nigerian Breweries | 2,144,747 | 774,492 | 1.19% | Increase | |
Tunisia | Automobile Reseau Tunisien et Services | 236,434 | 719,337 | 1.11% | Decrease | |
Morocco | Residences Dar Saada | - | - | 0.00% | Liquidated | |
Tunisia | Tunisie Leasing | - | - | 0.00% | Liquidated | |
9,306,939 | 14.35% | |||||
Total Equity Holdings | 51,683,401 | 79.72% | ||||
Cash | 13,151,734 | 20.28% | ||||
Hedging | - | 0.00% | ||||
Total Fund | 64,835,135 |
\* 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.