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Epicure Qatar Equity (QIF)

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Thursday 17 July, 2008

Epicure Qatar Equity

Quarterly update

RNS Number : 2531Z
Epicure Qatar Equity Opportunities
17 July 2008
 

Epicure Qatar Equity Opportunities plc

Quarterly Update to Quarter End June 2008



Report to Shareholders



A FORMATTED VERSION OF THIS REPORT IS AVAILABLE FROM THE COMPANY ADMINISTRATOR, GALILEO FUND SERVICES LIMITED, ISLE OF MAN UPON REQUEST. PLEASE CONTACT enquiries@galileofs.co.im TO REQUEST A COPY.  

Epicure Qatar Equity Opportunities plc

Investment Advisers Report - Quarterly Update to Quarter End June 2008

Investment Objective

Epicure Qatar Equity Opportunities plc ('the Company' or 'EQEO') was established to capitalise on attractive investment opportunities in Qatar and the Gulf Cooperation Council ('GCC') region, resulting from the economic boom being experienced in the area. The Company seeks to invest in quoted Qatari equities listed on the Doha Securities Market ('DSM') in addition to companies soon to be listed, with a possible allocation of up to 15 per cent in regional GCC listed companies. The Investment Adviser intends to invest using both a top-down screening process, as well as a fundamental industry and company analysis, and does not intend to benchmark itself to any regional index.

Company Activity

Since the last update double digit sell-offs have been witnessed in emerging markets such as ChinaIndia and Vietnam and the story has been similar in the developed markets. During this time the GCC markets benefited from their low correlation to global markets, as well as being the prime beneficiaries of rising oil prices.

The GCC markets managed to finish the second quarter of 2008 in positive territory, with Qatar and Oman showing double digit increases. With a rise of 24.2 per cent, the Qatari market was the best performer in the GCC and the second best performer in the world, while Dubai and Kuwait were up 1.7 per cent and 8.2 per cent respectively. 


Embedded image removed - please refer to the Company's website www.epicure-qatarequity.com for a table depicting regional index March-June performance

Source: Reuters, Qatar Insurance Company S.A.Q.


Based on closing prices of 26 June 2008, the Company's undiluted NAV was 

$1.354, up 40.5 per cent since inception and up 18.9 per cent year to date. The Investment Adviser has remained positive on the growth prospects of the companies that they have invested in on the back of strong first quarter results and a buoyant macroeconomic climate. During this period the Investment Adviser has been a selective seller of stocks to raise cash and enable investment in deeply discounted rights issues as they came to market. The Investment Adviser believes that first half results, to be announced imminently, will confirm that companies have continued to achieve strong growth in profitability.  

events during the quarter 


Corporate profitability 

DSM-listed companies posted 63 per cent year-on-year growth in net profit for the first quarter of 2008. Qatari companies have proven resilient in tackling the ongoing inflation and bottleneck issues present in Qatar.  Qatar's nominal GDP grew by 25.2 per cent in 2007 and is expected to grow by a further 15.5 per cent in 2008. The current economic environment should enable companies to continue to execute their plans for growth. The 22 Qatari companies that EQEO is invested in grew their Q1 2008 profits by an average of 59 per cent year-on-year and the Investment Adviser believes that they will continue to post strong numbers for the rest of the year. 


Rights Issues

During the first half of the year Qatari companies announced QR20.6bn ($5.6bn) worth of rights issue of which QR19.2bn ($5.2bn) has already been called, with the balance expected by Q4 2008.


Embedded image removed - please refer to the Company's website www.epicure-qatarequtiy.com for a pie chart depicting rights issues 2008 as % of total rights called.

Source: Qatar Insurance Company SAQ.


industry allocation


At the end of the second quarter of 2008, EQEO was 95.5 per cent invested compared to 92.6 per cent at the end of the first quarter. During the quarter EQEO deployed its funds mainly in rights issues.


The Company has a substantial weighting in the financial services sector, with 38.1 per cent of its investments in the banking sector. The services sector, which is broadly defined and includes companies in telecommunications and utilities, accounted for 22.6 per cent of all investments. The Company's exposure to the real estate sector stood at 13.5 per cent at the end of the second quarter of 2008. The industries and insurance sectors accounted for a further 15.3 per cent and 6.0 per cent respectively.


Embedded image removed - please refer to the Company's website www.epicure-qatarequtiy.com for a pie chart depicting Industry Allocation (% of Market Value.

Source: Qatar Insurance Company SAQ and data provided as at 30 June 2008.



Portfolio Breakdown


Top Five Holdings


Company                                     Sector      % of Funds      % of NAV                                     
                                                                                                          raised    

Industries Qatar                  Industries                 11.6%              14.1%    

Qatar National Bank                  Banks                 10.4%              10.9%    

Commercial Bank of Qatar        Banks                   7.3%               7.7%    

Masaf Al Ryan                           Banks                   7.2%               6.4%

Qatar Telecom                        Services                    6.9%              5.2%



The top five investments of the Company constitute 44.2 per cent of the gross funds raised. 


Embedded image removed - please refer to the Company's website www.epicure-qatarequtiy.com for a pie chart depicting Country Allocation (% of Market Value).

Source: Qatar Insurance Company SAQ and data provided as at 30 June 2008.


IMPORTANT NEWSFLOW


New Listings on the Doha Securities Market

The second quarter of 2008 witnessed the successful listing of Gulf International Services on the DSM, taking the total number of companies listed to 43. The IPO, which was only open to local citizens, was priced at QR21 and traded as high as QR45 on the first day of trading. Post listing, the Company invested in Gulf International Services.


NYSE to buy stake in Doha Exchange

The State of Qatar and NYSE Euronext entered into a strategic partnership which will transform the Doha Securities Market into a significant international player in the global stock exchange space and provide NYSE Euronext with a valuable presence in the Middle East. The State of Qatar has agreed to sell 25 per cent of the Doha Securities Market to NYSE Euronext for $250m. The closing of the transaction is expected to take place early during the fourth quarter of 2008.


Commercial Bank of Qatar issues Global Depositary Receipts

During the second quarter, Commercial Bank of Qatar concluded its Global Depositary Receipt (GDR) issue for overseas institutional investors. The Commercial Bank of Qatar fixed the pricing for its international offering at $7.50 per GDR, with each GDR representing an interest in 0.2 ordinary shares. The GDR issue was part of a capital raising exercise involving the issue of 24 million new shares to increase the bank's issued and paid-up capital to QR2.06bn ($565m). Total funds raised were QR3.28bn ($900m). The increase in the bank's capital involved three elements: 1) a pre-emptive rights issue to existing shareholders of 4,664,705 shares at a price of QR136.50 per share; 2) an issue of 18,435,295 shares, representing 92,176,475 GDRs, to international institutional investors at a price of US$7.50 per GDR; 3) a private placement of 900,000 shares to Qatari investors at a price of QR136.50 per share. The Company participated in the pre-emptive rights issue. 


Qatar Steel Decides to maintain steel prices

During the quarter Qatar Steel, a company owned by Industries Qatar, announced that it would maintain its steel prices for April, May and June 2008 to safeguard the construction industry in Qatar. Aligned with the government's efforts to curb the current high inflation rate, Qatar Steel decided to freeze steel prices in Qatar in spite of soaring raw material and international steel prices.


Q-TEL acquires Indosat and announces plan for tender offer 

Qatar Telecommunication Company (Q-Tel) and Singapore Technologies Telemdia Pte Ltd, a leading information and communications company with operations in the Asia-Pacific region, the Americas and Europe, announced that their jointly held subsidiary, Asia Mobile Holding Pte. Ltd (AMH), will sell its 40 per cent interest in PT Indosat Tbk (Indosat) to Q-Tel. Under the terms of the agreement Q-tel has agreed to pay S$2.4bn ($1.8bn) in cash to acquire AMH's total interest in Indosat. Later Q-tel announced its plan to conduct a tender offer to acquire all of the outstanding Series B Common Shares (including the Series B Shares represented by American Depositary Shares (ADS) of PT Indosat Tbk.


QNB extends $550m loan to Al Arrab Contracting Company

Qatar National Bank (QNB), along with a consortium of other banks, underwrote a $550m term loan facility for Al Arrab Contracting Company. QNB underwrote $290m of the total term loan. Similarly QNB Al Islami, the Islamic branch of QNB, Qatar International Islamic Bank and Al Salam Bank in Sudan, signed a facility agreement worth $50m with Sudanese Telecommunication Co. (Sudatel).


Qatar Islamic Bank expands to Kazakhstan

Qatar Islamic Bank (QIB) entered into a memorandum of understanding (MOU) for the establishment of a finance house In Kazakhstan. This MOU underlines QIB's intent to build on its expansion plans outside Qatar and comes in addition to the finance houses already established in LebanonMalaysia and the United Kingdom


Qatar Islamic Bank & Gulf Petroleum sign MOU for $5bn project in Malaysia

The Qatar Islamic Bank Group (QIB), which includes Asian Finance Bank based in Malaysia, signed a MOU with Gulf Petroleum Berhard, Malaysia, a subsidiary of Gulf Petroleum Limited WLL, Qatar, for the potential financing of a new oil and gas complex in the State of PerakMalaysia. The project would comprise an oil refinery, a petrochemicals plant and petroleum terminal at a cost of $5bn.  


Nakilat and partners charter five more Q-Flex LNG ships

During the quarter Qatar Gas Transport Company (Nakilat), RasGas and the Japanese owners consortium J5 Nakilat named another five Q-Flex LNG carriers. The addition of these five ships brings the RasGas LNG fleet to a total of 25 ships ranging from 138,000 cubic meters to 216,000 cubic metres. RasGas has chartered each vessel for a period of 20 to 25 years to deliver LNG from existing and future facilities at the Ras Laffan industrial port to a growing global customer base.


Dlala to participate in insurance company 

Dlala Holding Company announced that its board of directors had approved participation in an insurance company to be set up under the Qatar Financial Center umbrella with capital of $10m.


National Leasing Holding Company signs a MOU with Qatari Diar

The National Leasing Holding Company has entered into a contract with Qatari Diar to purchase real estate properties at Lusail. The properties are designated for the construction of villas for Qatari citizens. A total area of one million square metres, divided into 880 lots, has been allocated for this purpose.

Embedded image removed - please refer to the Company's website www.epicure-qatarequity.com for a graph depicting the DSM20 Invex (since January 2005)

Source: Reuters, as at 30 June 2008


EQEO NAV Performance (% net in USD)



Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2008

- 2.26

7.28

-5.35

11.37

7.06

0.49







2007








-3.49

4.22

7.21

3.59

1.94



Source: Galileo Fund Services Ltd  

NAV Performance is unaudited


Performance figures are based on the NAV calculated on the last Thursday of each month and published via the regulatory news service of the London Stock Exchange.


The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares when redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. Additional information regarding policies for calculation and reporting returns is available upon request.




Epicure Qatar Equity Opportunities plc



NAV Update

NAV at launch                      US$ 0.96

NAV as at 26 June 2008        US$ 1.35

Inception Date                  31 July 2007


The NAV is estimated net of fees and expenses every week and announced through the regulatory news service of the London Stock Exchange.




As at 26 June 2008

Market Price -Shares              US$1.16

Market Price -Warrants           US$0.45



Key Features

Domicile                             Isle of Man

Shares Issued                   247,527,523

Warrants Issued                  34,271,000

Maturity                    Continuation vote at 2012 Annual General Meeting

Year End                                30 June

Management Fee           1.25% of NAV




Performance Fee

The performance fee is 20% of the of the increase in Adjusted Net Asset Value per Ordinary Share above the Target Net Asset Value per Ordinary Share, subject to the achievement of two tests (i) the year end Adjusted Net Asset Value per Ordinary Share is greater than the High Watermark and (ii) the year end Adjusted Net Asset Value per Ordinary Share exceeds the Target Net Asset Value per Ordinary Share during the relevant Performance Period. The Target Net Asset Value per Ordinary Share for the first performance period is the US$1 placing price increased by the hurdle rate of 8% per annum. For further details, please refer to the Company's admission document.



Investment Manager                      Epicure Managers Qatar Limited

Investment Adviser                        Qatar Insurance Company S.A.Q

Administrator                                Galileo Fund Services Limited I.O.M.

Custodian                                     Anglo Irish Bank Corporation, I.O.M. PLC

Nominated Adviser and Broker        Panmure Gordon (UK) Limited

Auditor & Tax Adviser                    KPMG I.O.M.

Legal Adviser                                Stephenson Harwood


    


Ordinary Shares


ISIN                                             IM00B1240704

SEDOL                                        B124070

Bloomberg ticker                           EQEO

Valoren                                         3268997


Warrants


ISIN                                              IM00B1240G96

SEDOL                                         B1240G9

Bloomberg ticker                            EQEW

Valoren                                         3271492


Exchange Rate US$1.00=QR3.64


Webpage: www.epicure-qatarequity.com



Contacts


Epicure Qatar Equity Opportunities plc

Leonard O'Brien

T: +41 (22) 908 1190


Nominated Adviser & Broker

Panmure Gordon (UK) Limited

Moorgate Hall
LondonEC2M 6XB

T: +44(0) 207 459 3600


Administrator & Registrar

Galileo Fund Services Limited

Third Floor

Britannia House
St Georges Street
Douglas
Isle of ManIM1 1TE


T: +44(0)1624 692600

F: +44 (0)1624 692 601

E: enquiries@galileofs.co.im


Custodian

Anglo Irish Bank Corporation (I.O.M.) PLC

Jubilee Buildings
Victoria Street
Douglas
Isle of ManIM1 2SH



PR/ Media Contact 


Tim Draper

M Communications 

T+44 20 7153 1267


Marylene Guernier

M Communications

T +44 20 7153 1269


1 Ropemaker Street
Ninth Floor
London
EC2Y 9HT


www.mcomgroup.com




Disclaimer

The contents of this document have been prepared by Qatar Insurance Company S.A.Q as Investment Adviser to the Epicure Qatar Opportunities Fund PLC ('the Company'). This document has been prepared solely for information purposes and for the use of the recipient. It does not constitute an offer or an invitation by or on behalf of the investment Adviser or the Company to any person to buy or sell any security or investment product. Any reference to past performance is not necessarily a guide to the future. The information and analyses contained in this publication have been compiled, or arrived at from sources believed to be reliable, but the Investment Adviser does not make any representation as to their accuracy or completeness, and does not accept liability for any loss arising from their use. The investments discussed in this report may not be suitable for all investors. and are provided for information purposes only. The ordinary shares and warrants in the Compapny have not been, and will not be, registered under the United States Securities Act of 1933 as amended (the 'Securities Act') or qualified for sale under the laws of any state of the United States or under the applicable laws of any of Canada, Australia, Republic of South Africa or Japan and, subject to certain exceptions, may not be offered or sold in the United States or to, or for the account or benefit of, US persons (as such term is defined in Regulation S under the Securities Act) or to any national, resident or citizen of Canada, Australia, Republic of South Africa or Japan. None of the Company, the Manager or any of their respective members, directors, officers or employees nor any other person accepts any liability whatsoever for any loss, however arising, from any use of such information or opinions.

Epicure Qatar Equity Opportunities plc

Registered Office
Third Floor

Britannia House

St Georges Street
Douglas
Isle of ManIM1 1TE



This information is provided by RNS
The company news service from the London Stock Exchange
 
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