Fund Manager's Update Q1 2017

Released : 25 May 2017 14:00

RNS Number : 2538G
Terra Capital PLC
25 May 2017
 

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. 

 


This information is provided by RNS
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