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Adamas Fin Asia Ltd (ADAM)

Adamas Fin Asia Ltd

Unaudited Net Asset Value and Portfolio Update
RNS Number : 7359O
Adamas Finance Asia Limited
03 June 2020
 

ADAMAS FINANCE ASIA LIMITED

(" ADAM " or the " Company ")

Unaudited Net Asset Value and Portfolio Update for the Quarter ended 31 March 2020

Adamas Finance Asia Limited (AIM: ADAM), the London quoted company focused on providing shareholders with attractive uncorrelated, risk adjusted returns from a diversified portfolio of pan-Asian investments, is pleased to provide the following update for the quarter ended 31 March 2020.

NET ASSET VALUE

The Company delivered consolidated unaudited estimated Net Asset Value ("NAV") per share at 31 March 2020 of GBP 0.77/USD 0.96 (31 December 2019: GBP 0.72/USD 0.95). The consolidated unaudited estimated NAV at 31 March 2020 was USD 100.7 million (31 December 2019: USD 100.9 million). The NAV was impacted by a marginal decrease in the Company's net cash balance mainly due to an increase in operating expenses incurred. The Company has used a USD:GBP exchange rate of USD 1.00:GBP 0.80 as at 2 June 2020 to determine GBP values.

John Croft, Chairman of Adamas Finance Asia Limited, commented:

"Despite the ongoing global impact of the COVID-19 pandemic, the Company remains relatively well positioned due to our resilient and diversified portfolio of pan-Asian investments and strong liquidity position. The Company is benefiting from the long established investment expertise, disciplined risk management processes and relationships across Asia of Harmony Capital, the Company's Investment Manager, who has an established track record of generating attractive returns throughout market cycles across the globe for over 20 years and with a focus on Asia for over 17 years.

The Board continues to expect the Company's investment portfolio from a valuation perspective to remain not materially impacted in 2020, helped by the fact that many of the countries in which our portfolio companies are based, including China and Hong Kong, are exhibiting early signs of recovery with the gradual lifting of lock-down measures and new cases of COVID-19 have been largely eliminated. Most Asian countries and businesses are benefiting from the experience gained from previous regional pandemics, such as Bird Flu and SARS.

We continue to see a strong and growing number of attractive investment opportunities partly driven by the global impact of COVID-19, which is increasingly leaving the Asian SME sector even more starved of capital. The Board remains confident in the outlook for the Company and of delivering value to our shareholders over the short and longer term."

UPDATE ON KEY PORTFOLIO INVESTMENTS

Future Metal Holdings Limited ("FMHL") - 44.5% of NAV

The quarry successfully recommenced operation in late 2019. During the Chinese New Year period (starting on 25 January 2020 and ending on 8 February 2020), production was suspended as staff returned home for the holiday season. In January 2020, the quarry's wall rock products were sold at an average price of RMB45.0 per tonne (USD6.3 per tonne). Estimated total production during that period amounted to 15,000 tonnes.  

As a result of the inter-regional travel bans and quarantine rules imposed by the Chinese government due to the 2019 Novel Coronavirus ("COVID-19") epidemic, in February and early March 2020, all operations at the quarry were temporarily halted. In mid-March 2020, as quarantine restrictions eased, onsite activities resumed gradually and processes such as land hardening and steel structure construction continued, as required by the local Ministry of Environmental Protection.

The existing Mining Licence was originally scheduled to be renewed during Q1 2020. However, due to COVID-19, the Linfen City Ministry of Natural Resources granted a 3-month extension for the renewal of the licence, which is now expected to be renewed in Q2 2020. The local management team prepared and submitted all the required documents to apply for such extension. These documents are currently under review by the local Ministry of Natural Resources.

As announced on 18 May 2020, the local management team is actively pursuing sales orders from domestic construction companies who have all commenced operations and the Company expects the quarry to build up to full production levels in 2020, generating free cash flows from the business.

Fook Lam Moon Holdings ("FLMH") - 27.3% of NAV

After receiving its One Michelin Star in late 2019, Fook Lam Moon was subsequently named in the Top 10 Chinese Restaurants of the World in a dining guide published by author and wine critic, Ch'ng Poh Tiong, in late March 2020.

Although Fook Lam Moon and its branch restaurants have been affected by the COVID-19 pandemic and the resulting social distancing measures in most public places across Hong Kong, management has taken active steps to safeguard the health of guests and staff, including regular disinfection of all dining rooms and dining utensils as well as the installation of additional private dining areas for guests' usage. The restaurants have also since engaged online food distribution channels in an effort to increase guests' accessibility to its food and beverage offerings during the lockdown period.

Infinity TNP - 7.3% of NAV

In late 2019, construction was completed of the Tellus Niseko residential apartments, which were subsequently leased out to guests in January 2020. During January, average occupancy at the property was between 80% and 90%, which was in line with management's expectations.

However, occupancy levels at Tellus Niseko after January 2020 were negatively impacted by the spread of COVID-19 in Japan and as tourism from Greater China and other parts of the world dropped sharply due to international travel bans. According to data published by the Japan National Tourism Organisation, in February 2020, foreign arrivals in Japan were down by 58.3%, with arrivals from China down 87.9% compared to the same period last year. The local management team has been monitoring the situation in Japan closely and has implemented a series of cost-saving measures at the property, including shutting down parts of the property when bookings are minimal.  Onsite, essential controls and processes have been put in place to ensure guests' safety and hygiene.  Occupancy levels are expected to return to normal as Japan gradually lifts lock-down restrictions across the country and management expects the revival of local tourism once travellers are able to return to the region. 

DocDoc Pte Ltd ("DocDoc") - 2.2% of NAV

As a result of the COVID-19 pandemic, an increasing number of global insurance companies and multi-national corporates have been contacting DocDoc, aiming to understand how its platform can enhance their core offerings to policyholders and employees. As a consequence of the uncertainties created by the pandemic, organisations have been driven to react by being much more innovative and tech-enabled. Specific examples observed by DocDoc include insurance companies seeking to enhance their market share by providing innovative offerings to policyholders and increasing interest from banks which want to provide innovative healthcare options to their employees. In response to this reactionary demand landscape, DocDoc is expediting its sales cycle to address the needs of its current and potential customers during this pandemic.

Infinity Capital Group Limited ("ICG") - 2.0% of NAV

ADAM has received the second cash interest payment from ICG as part of the Senior Secured Loan Agreement. As the COVID-19 pandemic continues to impact Japan and the Hokkaido region, ICG is working closely with local management to monitor the domestic property market and the local market's response to the pandemic, including construction project planning as well as potential movements in property prices. In December 2019, construction was completed of ICG's Tellus Niseko residential apartments, which were leased to guests in January 2020 in line with management expectations. Management has subsequently put in place a series of inspection and monitoring measures similar to most other hotel properties in the region due to the impact of the global pandemic.  

For further information, please visit the Company's website at http://adamasfinance.com and follow the Company on Twitter (@ AdamasFinance ).

FOR FURTHER INFORMATION, PLEASE CONTACT:

 

Adamas Finance Asia Limited

+44 (0) 778 531 5588

John Croft

 

 

 

WH Ireland Limited - Nominated Adviser

+44 (0) 20 7220 1666

James Joyce

 

James Sinclair-Ford

 

 

 

Pello Capital Limited - Joint Corporate Broker

+44 (0) 20 3700 2500

Mark Treharne

 

 

 

Maitland/AMO - Communications Advisor

+44 (0) 20 7379 5151

James Benjamin

 

Peter Hamid

 

 

About Adamas Finance Asia

Adamas Finance Asia Limited (ADAM) is quoted on the AIM Market of the London Stock Exchange and is committed to providing shareholders with attractive uncorrelated, risk adjusted long-term returns from a combination of realising sustainable capital growth and delivering dividend income.

 

The Company is focused on providing growth capital and financing to emerging and established Small and Medium Enterprises (SME) sector throughout Asia, well diversified by national geographies, instruments and asset classes. This vital segment of the economy is underserved by the traditional banking industry for regulatory and structural reasons.

 

The Company's investment manager, Harmony Capital, seeks to capitalise on its team's established investment expertise and broad networks across Asia. Through rigorous diligence and disciplined risk management, Harmony Capital is dedicated to delivering attractive income and capital growth for shareholders with significant downside protection through selectively investing in assets and proactively managing them.

 

Harmony Capital is predominately sourcing private opportunities and continues to create a strong pipeline of attractive income generating assets from potential investments in growth sectors across Asia, including healthcare, fintech, hospitality, IT and property. 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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