16 Nov 2016 14:30
Terra Capital Plc
Fund Manager's Update Regarding Q3 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 report from Terra Partners Asset Management Limited ('TPAM' or the 'Fund Manager'), covering its activities in Q3 2016.
The Fund Manager's update covering Q3 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
November 16, 2016
Terra Partners Asset Management Limited ('TPAM' or the 'Fund Manager') presents its Third 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 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 2016 Return & Portfolio
The Fund's NAV increased to $0.997 at September 30th, 2016 from $0.939 as of June 30, 2016, a net total return of 6.1% for the quarter.
The Fund's investment level (equity, fixed income and hedging) decreased from 92.0% at June 30 (including commitment to Terra Argentine Fund) to 85.8% at September 30.
Specific Areas of Investment
Americas
The allocation to the Americas increased from 20.13% to 23.48% and is now the Fund's largest regional allocation. The Fund continued to allocate to its investment strategy in Brazil. The only other portfolio change was a decrease in its position Refineria La Pampilla (Peru).
Europe
The Fund's exposure to Europe decreased slightly from 22.09% to 20.24% and is the second largest regional allocation. The Fund liquidated two positions: Monbat (Bulgaria) and Komercialna Banka Serbia (Serbia). The Fund decreased its position in Galenika-Fitofarmacija (Serbia), X5 Retail (Russia), Silvano Fashion Group (Estonia), and Hrvatski Telekom (Croatia).
Asia
The Fund's exposure to Asia decreased from 22.80% to 16.41%. The Fund increased its position in two holdings, which include Kcell (Kazakhstan) and Century Pacific Foods (Philippines. The Fund liquidated its positions in Brac Bank (Bangladesh) and Imexpharm Pharma (Vietnam).
Middle East
The Fund's exposure to the Middle East decreased on the quarter from 16.40% to 15.66%. The Fund added a new position in Bank Muscat (Oman) and increased its position in Solidere (Lebanon). It decreased its position in Seef Properties (Bahrain) and liquidated positions in Bank Sohar (Oman) and Bahrain Commercial Facilities Company (Bahrain).
Africa
The allocation to Africa decreased slightly from 10.54 to 9.97%. The Fund decreased its positions in Onatel (Burkina Faso) and Onelogix (South Africa). There were no other portfolio changes during the period.
Fund Details
The following pages 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 | 3Q US$ Total Return | 3Q LC$ Total Return |
AFRICA | Morocco | Residences Dar Saada | 69,843 | 1,225,000.21 | 1.80% | New | 1.97% | 1.36% |
South Africa | Holdsport Ltd. | 230,501 | 965,665.52 | 1.42% | New | 4.54% | -2.58% | |
Uganda | Umeme Ltd. | 5,870,000 | 909,339.04 | 1.33% | New | 5.62% | 5.00% | |
Tunisia | Automobile reseau tunisien et services | 246,934 | 880,165.23 | 1.29% | New | 5.59% | 5.68% | |
Tunisia | One Tech Holding | 248,305 | 845,591.07 | 1.24% | New | 4.07% | 4.17% | |
Tunisia | Tunisie Leasing | 87,818 | 734,890.34 | 1.08% | New | -2.99% | -2.90% | |
Burkina Faso | Onatel BF | 29,509 | 637,171.39 | 0.93% | New | -4.19% | -5.19% | |
South Africa | Onelogix Group Ltd. | 2,128,792 | 463,757.00 | 0.68% | New | 10.63% | 3.10% | |
Nigeria | UAC of Nigeria | 1,541,658 | 99,508.10 | 0.15% | New | -7.34% | 4.05% | |
Nigeria | Nigerian Breweries PLC | 70,000 | 32,583.40 | 0.05% | New | -3.21% | 8.70% | |
6,793,671.30 | 9.97% | |||||||
AMERICAS | Argentina | Terra Argentine Fund LP | 1,700,000 | 2,860,240.82 | 4.20% | New | 19.85% | |
Brazil | XXXX | 2,665,296.56 | 3.91% | Increase | 10.16% | 11.67% | ||
Jamaica | National Commercial Bank Jamaica | 5,431,719 | 1,766,931.91 | 2.59% | New | -3.10% | -2.34% | |
Argentina | Terra Argentine Fund LP Commitment | 1,700,000 | 1,700,000.00 | 2.49% | New | |||
Argentina | IRSA Inversiones y represent. SA GDR RCTP | 81,433 | 1,546,412.67 | 2.27% | New | 12.97% | 12.97% | |
Panama | Copa Holdings SA - Class A | 15,265 | 1,342,251.45 | 1.97% | New | 69.34% | 69.34% | |
Jamaica | Scotia Group Jamaica | 5,429,031 | 1,340,501.48 | 1.97% | New | 1.54% | 2.34% | |
Peru | Refineria La Pampilla SA | 13,137,309 | 1,021,210.42 | 1.50% | New | 8.21% | 11.44% | |
Peru | Ferreycorp SAA | 1,827,387 | 891,184.34 | 1.31% | New | 2.70% | 5.77% | |
Jamaica | Jamaica Money Market Brokers - Jamaica | 8,500,000 | 866,157.16 | 1.27% | New | 32.70% | 33.74% | |
16,000,186.81 | 23.48% | |||||||
ASIA | Bangladesh | Square Pharma | 629,734 | 2,158,169.73 | 3.17% | New | 1.03% | 1.09% |
Kazakhstan | Kcell JSC - GDRs | 318,630 | 1,070,596.80 | 1.57% | New | -1.18% | -1.18% | |
Philippines | RFM Corporation | 11,003,750 | 953,531.20 | 1.40% | New | -1.09% | 1.68% | |
Georgia | Bank of Georgia Holdings Plc | 25,080 | 943,797.62 | 1.38% | New | 11.40% | 14.26% | |
China | Qingling Motors | 3,042,615 | 925,760.84 | 1.36% | New | -1.63% | -1.67% | |
Australia | Ardent Leisure Group | 372,606 | 789,828.77 | 1.16% | New | 51.45% | 47.34% | |
Philippines | Century Pacific Food Inc. | 2,208,499 | 738,171.08 | 1.08% | New | 9.08% | 12.13% | |
Philippines | Belle Corp | 12,000,000 | 737,806.39 | 1.08% | New | -14.24% | -11.83% | |
Philippines | Emperador Inc. | 4,279,000 | 640,066.64 | 0.94% | New | -0.53% | 2.25% | |
Philippines | Travellers International Hot | 9,300,000 | 631,282.50 | 0.93% | New | -5.59% | -2.95% | |
Korea | Lotte Chilsung beverage Co - Pref | 749 | 502,677.72 | 0.74% | New | -8.79% | -12.85% | |
Korea | Kumho Petro Chemical Co - PFD | 17,850 | 449,036.21 | 0.66% | New | 3.17% | -1.42% | |
Korea | Shinyoung Securities LTD | 8,370 | 375,885.12 | 0.55% | New | 3.72% | -0.90% | |
Bangladesh | Summit Power | 644,000 | 263,762.68 | 0.39% | New | -1.26% | -1.23% | |
Bangladesh | Brac Bank Ltd | 0 | 0.00 | 0.00% | Liquidated | 14.64% | 14.72% | |
Vietnam | Imexpharm Pharmaceutical JSC. | 0 | 0.00 | 0.00% | Liquidated | 26.16% | 26.12% | |
11,180,373.30 | 16.41% | |||||||
EUROPE | Hungary | Any Security Printing Co.Plc (AlamiNyomda) | 553,679 | 2,134,700.09 | 3.13% | New | 8.46% | 4.55% |
Serbia | Galenika-Fitofarmacija DP | 79,115 | 2,016,869.86 | 2.96% | New | 8.46% | 6.79% | |
Italy | QF Polis | 1,789 | 1,844,121.33 | 2.71% | New | 10.42% | 9.08% | |
Slovenia | Gorenje Velenje | 175,399 | 1,556,780.13 | 2.28% | New | 27.94% | 26.38% | |
Ukraine | Kernel Holding SA | 86,323 | 1,334,679.96 | 1.96% | New | 15.13% | 11.55% | |
Russsia | X5 Retail GDR | 45,416 | 1,315,701.52 | 1.93% | New | 45.58% | 45.58% | |
Macedonia | Komercijalna Banka AD Skopje | 28,845 | 1,289,626.64 | 1.89% | New | 15.51% | 13.79% | |
Montenegro | Crnogorski Telekom a.d. | 222,624 | 712,936.53 | 1.05% | New | 3.05% | 1.80% | |
Italy | QF BNL Portfolio IMM | 845 | 486,071.04 | 0.71% | New | -2.75% | -3.94% | |
Estonia | Silvano Fashion Group AS | 161,799 | 394,465.15 | 0.58% | New | 18.46% | 17.02% | |
Croatia | Hrvatski Telekom DD | 14,651 | 358,142.37 | 0.53% | New | 16.96% | 15.64% | |
Bulgaria | Speedy AD | 16,818 | 347,838.68 | 0.51% | New | 1.25% | 0.00% | |
Bulgaria | Monbat AD | 0 | 0.00 | 0.00% | Liquidated | -0.84% | -1.63% | |
Serbia | Komercialna Banka Serbia | 0 | 0.00 | 0.00% | Liquidated | 0.12% | -1.68% | |
13,791,933.30 | 20.24% | |||||||
MIDDLE EAST | Lebanon | Blom Bank GDS ord B shs | 156,272 | 1,593,974.40 | 2.34% | New | 1.49% | 1.49% |
Qatar | Al Meera Consumer Goods | 21,218 | 1,194,280.77 | 1.75% | New | -2.94% | -2.94% | |
U.A.E. | Air Arabia PJSC | 2,947,000 | 1,091,184.32 | 1.60% | New | 3.81% | 3.82% | |
Oman | Bank Muscat | 995,671 | 1,044,821.58 | 1.53% | New | 4.10% | 4.12% | |
Oman | Oman Refreshment | 175,000 | 977,285.42 | 1.43% | New | -2.28% | -2.27% | |
Lebanon | Solidere- GDRs | 96,499 | 919,638.81 | 1.35% | New | 2.60% | 2.60% | |
Qatar | Doha Bank QSC | 83,692 | 854,820.68 | 1.25% | New | 5.22% | 5.23% | |
Bahrain | Gulf Hotel Group b.s.c. | 444,273 | 754,243.51 | 1.11% | New | 0.09% | 0.00% | |
Bahrain | SEEF Properties b.s.c. | 1,214,577 | 644,372.12 | 0.95% | New | 4.80% | 4.71% | |
Qatar | Gulf Warehousing Company | 40,750 | 615,373.00 | 0.90% | New | -4.69% | -4.68% | |
Oman | Oman Cement | 464,950 | 543,455.11 | 0.80% | New | -4.67% | -4.66% | |
U.A.E. | ABU DHABI COMMERCIAL BANK | 248,000 | 435,502.31 | 0.64% | New | 6.61% | 6.61% | |
Oman | Bank Sohar | 0 | 0.00 | 0.00% | Liquidated | -3.49% | -3.49% | |
Bahrain | Bahrain Commercial Facilities Company | 0 | 0.00 | 0.00% | Liquidated | -1.40% | -1.48% | |
10,668,952.03 | 15.66% | |||||||
Total Equity Holdings | 58,435,116.74 | 85.75% | ||||||
Cash | 9,712,894 | 14.25% | ||||||
Total Fund | 68,148,010.24 |
* 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 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.