AL Mal UAE Equity Fund — Fund Information / Factsheet 2019

Mar 11, 2019

Al Mal MENA Equity Fact Sheet NAV Per Unit: USD 8.89

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February 2019

Fund Manager Charles-Henry Monchau, CFA Vrajesh Bhandari, CFA Sanat Sachar, CFA Inception Date 15th June 2008 Fund Size USD 27 million Strategy Size USD 85 million Fund Registration Bahrain Currency USD Subscription Weekly Min Subscription USD 250,000 Bloomberg Code MALMENE BI Reuters Code LP65123002 Management Fee 1.75% Subscription Fee Up to 3% Redemption Weekly Benchmark Index S&P Pan Arab Composite Fund Type Open Ended Administrator Apex Custodian Standard Chartered Auditors Deloitte Fund Objective:The objective of the Fund is to achieve significant capital appreciation, primarily through investment in equity and equity related securities in the Middle East and North African markets. Key Terms:

Performance1 Fund Benchmark2 Relative Perf. 1 Month -0.22% -0.74% 0.52% YTD 4.3% 5.7% -1.4% 1 Year -5.2% 8.9% -14.2% 3 Years 26.2% 24.9% 1.3% 5 Year -1.5% -10.7% 9.2% Since Inc. -4.5% -35.5% 31.0% Performance Fund Benchmark Relative Perf. 2019 4.3% 5.7% -1.4% 2018 2.6% 6.8% -4.1% 2017 17.8% 1.3% 16.5% 2016 -3.7% 4.1% -7.8% 2015 -12.5% -17.6% 5.1% 2014 -0.7% -1.5% 0.8% 2013 31.1% 18.9% 12.2% 2012 6.6% 2.6% 4.0% 2011 -8.8% -15.1% 6.3% 2010 15.7% 13.9% 1.8% 2009 17.7% 12.7% 5.0% 2008 -47.5% -49.9% 2.4% Since Inc.* -4.5% -35.5% 31.0%

Performance

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Al Mal MENA Equity Fund S&P Pan Arab Composite Index (Rebased)
12.0
10.0
8.0
6.0
4.0
Jun-08 Aug-08Oct-08 Dec-08 Feb-09 Apr-09Jun-09 Aug-09Oct-09 Dec-09 Feb-10 Apr-10Jun-10 Aug-10Oct-10 Dec-10 Feb-11 Apr-11Jun-11 Aug-11Oct-11 Dec-11 Feb-12 Apr-12Jun-12 Aug-12Oct-12 Dec-12 Feb-13 Apr-13Jun-13 Aug-13Oct-13 Dec-13 Feb-14 Apr-14Jun-14 Aug-14Oct-14 Dec-14 Feb-15 Apr-15Jun-15 Aug-15Oct-15 Dec-15 Feb-16 Apr-16Jun-16 Aug-16Oct-16 Dec-16 Feb-17 Apr-17Jun-17 Aug-17Oct-17 Dec-17 Feb-18 Apr-18Jun-18 Aug-18Oct-18 Dec-18 Feb-19
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• As of 27 of February 2019

Source: Al Mal internal performance measurement based on reports from third-party administrators (Apex)

1 Performance is net of fees; 3-year and 5-year return is cumulative

2S&P Pan Arab Composite Index

Al Mal MENA Equity Fact Sheet

NAV Per Unit: USD 8.89

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February 2019

Fund Manager Commentary:

On the surface, MENA Equities had only a slightly down month. However there were sharp divergences beneath. UAE and Egypt were strong (3-5% gains), whereas Qatar heavily sold off (-5.5%). Saudi Arabia also was weak (-1.3%). This country leadership is very much inline with our 2019 country views. The Al Mal Mena Equity slightly outperformed last month and is up +4.3% since the start of the year.

Egypt cut interest rates by 100 basis points in last month’s MPC, while until recently expectations were that we would see monetary easing not before the last quarter of the year. The central bank realizes that inflation levels are currently tamed and the high cost of capital is hurting investment from the private sector. Carry traders are back thanks to high after-tax yield of 14.5%, while the EGP/USD strengthened 1.5% year to date. We expect a further 200 bps decline this year.

EK Holding, one of our high conviction picks in Egypt, came out with the much-awaited seismic survey analysis that revealed potential natural gas reserves of 2.35 TCF (and 112m bbl of condensate), which is 14x existing P1 reserves and hence a major game changer. Even being conservative and assigning discounts to global valuation multiples would add huge upside to current market price.

	Top Portfolio Holdings	% of Fund
	Al Rajhi Bank	7.6
	National Commercial Bank	5.3
	Humansoft Holding	5.2
	SABIC	4.7
	Qatar National Bank	4.5
	Total # of Holdings	38

Source: Al Mal internal performance measurement based on reports from third-party administrators (Apex)

	Fund Characteristics2 Standard Deviation	Fund 14.5%	Benchmark 14.6%
	Sharpe Ratio	-0.23	-0.36
	Beta	0.88	-
	Tracking Error	6.8%
	Information Ratio	0.26

2 Calculated using 5-year weekly data

Another high conviction, Extra (electronics retailer in Saudi) presented an upbeat picture during their quarterly earnings call. The management believes the market has bottomed and is betting on a recovery this year. It is targeting market share of 25-30% over the next 3 years driven by the consolidation of white goods segment. The company is also launching a new consumer finance subsidiary that will provide product and cash loans. Existing book grew 2.3x last year and loss ratios were fairly contained at 3%. For 2019, we expect double digit net income growth, even as the new business will be loss making.

Geographic Allocation

Sector Allocation

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Qatar Real Estate
Services
Kuwait
Cash
Cash
Others
Material
UAE
Telecoms
Egypt
Industrial
Banks
Saudi Arabia
0% 10% 20% 30% 40% 50% 60%
0% 10% 20% 30% 40% 50% 60%
Benchmark Fund
Benchmark Fund
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Disclaimer

None of the information and opinions contained herein is intendedto form the basis for any investment or trading decision, and no specific recommendations are intended. The products and transactions described herein are not suitable for every investor. Such products and transactions are only suitable for sophisticated and knowledgeable professional users of financial instruments, and are structured and customized to the needs and objectives of each investor. The information and opinions contained herein have been prepared for informational purposes only and do not constitute an offer to sell, or solicitation of an offer to purchase, any security, any commodity futures contractor commodity-related product, any derivative product, or any trading strategy or service described herein.

Neither Al Mal Capital PSC nor any of its affiliates, directors, authorized managers and/or employees accepts liability for any loss arising from the use of or makes any representation as to the accuracy or completeness of the terms and conditions of products and transactions described herein. Finalized terms and conditions are subject to further discussion and negotiation, and will be determined in part on the basis of pricing and valuation models, data, and assumptions that are proprietary to Al Mal Capital and its affiliates. No assurance can be given that a product or transaction can, in fact, be executed on any representative terms indicated herein.

Al Mal UAE Equity Fact Sheet

NAV Per Unit: AED 1.20

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February 2019

	Fund Manager Charles-Henry Monchau, CFA Fund Objective: The Al Mal UAE Equity Fund’s objective is to achieve medium to long-term capital growth by investing primarily in equities listed on the UAE Exchange. Key Terms:	Performance1 Fund Benchmark2 Relative Perf. 1 Month 2.9% 4.1% -1.2% YTD 3.0% 5.6% -2.6% 1 Year -8.1% -4.1% -4.0% 3 Years 14.0% 2.2% 11.8% 5 Year -6.6%% -21.2% 14.7% Since Inc. 34.5% -40.2% 74.7% Performance Yearly Fund Benchmark Relative Perf. 2019 3.0% 5.6% -2.6% 2018 -5.7% -7.7% 2.0% 2017 7.8% -1.6% 9.4% 2016 7.9% 9.0% -1.1% 2015 -15.3% -17.6% 2.3% 2014 11.2% 7.5% 3.7% 2013 81.4% 88.0% -6.6% 2012 28.7% 23.5% 5.2% 2011 -18.4% -17.7% -0.7% 2010 -1.0% -8.8% 7.8% 2009 31.2% 24.6% 6.6% 2008 -56.9% -69.4% 12.5% 2007 50.4% 54.8% -4.4% 2006 -19.1% -35.2% 16.1% Since Inc.* 34.5% -40.2% 74.7%
	Vrajesh Bhandari, CFA
	Sanat Sachar, CFA
	Inception Date 5th April 2006
	Fund Registration UAE
	Currency AED
	Fund Size AED 29mn
	Subscription Weekly
	Dividend Frequency Yearly
	Min Subscription AED 100,000
	Management Fee 1.50%
	Performance Fee 20% over 10% hurdle with high watermark
	Subscription Fee Up to 2%
	Redemption Weekly
	Benchmark Index S&P UAE Composite Index
	Fund Type Open Ended
	Administrator Standard Chartered
	Custodian Standard Chartered
	Financial Year End 31st December
	Auditors Deloitte

Performance

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Al Mal UAE Equity Fund S&P UAE Index (Rebased)
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
* As of 27 [th] of February 2019
Apr-06 Jun-06Aug-06 Oct-06 Dec-06 Feb-07Apr-07 Jun-07Aug-07 Oct-07 Dec-07 Feb-08Apr-08 Jun-08Aug-08 Oct-08 Dec-08 Feb-09Apr-09 Jun-09Aug-09 Oct-09 Dec-09 Feb-10Apr-10 Jun-10Aug-10 Oct-10 Dec-10 Feb-11Apr-11 Jun-11Aug-11 Oct-11 Dec-11 Feb-12Apr-12 Jun-12Aug-12 Oct-12 Dec-12 Feb-13Apr-13 Jun-13Aug-13 Oct-13 Dec-13 Feb-14Apr-14 Jun-14Aug-14 Oct-14 Dec-14 Feb-15Apr-15 Jun-15Aug-15 Oct-15 Dec-15 Feb-16Apr-16 Jun-16Aug-16 Oct-16 Dec-16 Feb-17Apr-17 Jun-17Aug-17 Oct-17 Dec-17 Feb-18Apr-18 Jun-18Aug-18 Oct-18 Dec-18 Feb-19
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Source: Al Mal internal performance measurement based on reports from third-party administrators (Standard Chartered Bank)

1 Performance is net of fees; 3-year and 5-year return is cumulative

• 2S&P Pan Arab Composite Index

Al Mal UAE Equity Fact Sheet

NAV Per Unit: AED 1.20

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February 2019

Fund Manager Commentary:

Abu Dhabi’s outperformance over Dubai seems to be finally reversing as the latter strongly outperformed last month (+5.4% for Dubai vs. 2.9% for Abu Dhabi). The heavily beaten down real estate stocks - Emaar Properties, Emaar Malls and Aldar – jumped by more than 15% each.

Emaar Development’s 4Q numbers was most likely the trigger for the improved sentiment hovering Dubai Financial Market. Prior to the recent rebound, Property developers were valued at more than 50% discount to Net Asset Value. We have added exposure to the sector and intend to further increase, subject to supporting news flow. Our top pick in the space is Emaar Malls. Core asset ‘The Dubai Mall’ continues to operate well with stable rental rates and EBITDA margins. Expansion at the Fashion Avenue will contribute meaningfully to current year numbers. Furthermore, acquisition of completed retail assets from its parent company will add more than 2m sqft of GLA to the current portfolio. We believe market implied cap rate is too harsh and see very good upside even applying cyclical low multiples.

	Top Portfolio Holdings	% of Fund
	Emirates NBD	13.1
	Emaar	12.8
	DP World	9.6
	Total # of Holdings	12

Source: Al Mal internal performance measurement based on reports from third-party administrators (Apex)

	Fund Characteristics2	Fund	Benchmark
	Standard Deviation	19.6%	21.6%
	Sharpe Ratio	-0.23	-0.36
	Beta	0.88
	Tracking Error	5.7%
	Information Ratio	0.54

2 Calculated using 5-year weekly data

Aldar - a recent portfolio addition - acquired the remaining stake in two properties from Etihad Airways in a deal worth AED 1.2bn. These assets are expected to add AED 0.1bn in annual NOI and make it more tangible for investors to value them as core business versus currently being completely discounted under JV investments. Aldar could also be one of the biggest beneficiaries of the recent announcement from the UAE Government to build over 34,000 housing units for nationals by 2025. Funds worth AED 32bn have already been allocated for the project.

Geographic Allocation

Sector Allocation

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Cash
Cash
Others
Other
Healthcare
Nasdaq
Capital Goods
Dubai Transport
Real Estate
Abu Dhabi
Banks
0% 10% 20% 30% 40% 50% 60%
0% 10% 20% 30% 40%
Benchmark Fund
Benchmark Fund
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Disclaimer

None of the information and opinions contained herein is intendedto form the basis for any investment or trading decision, and no specific recommendations are intended. The products and transactions described herein are not suitable for every investor. Such products and transactions are only suitable for sophisticated and knowledgeable professional users of financial instruments, and are structured and customized to the needs and objectives of each investor. The information and opinions contained herein have been prepared for informational purposes only and do not constitute an offer to sell, or solicitation of an offer to purchase, any security, any commodity futures contractor commodity-related product, any derivative product, or any trading strategy or service described herein. Neither Al Mal Capital PSC nor any of its affiliates, directors, authorized managers and/or employees accepts liability for any loss arising from the use of or makes any representation as to the accuracy or completeness of the terms and conditions of products and transactions described herein. Finalized terms and conditions are subject to further discussion and negotiation, and will be determined in part on the basis of pricing and valuation models, data, and assumptions that are proprietary to Al Mal Capital and its affiliates. No assurance can be given that a product or transaction can, in fact, be executed on any representative terms indicated herein.