AL Mal UAE Equity Fund — Fund Information / Factsheet 2019

Apr 16, 2019

Al Mal MENA Equity Fact Sheet NAV Per Unit: USD 9.20

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March 2019

March 2019
Fund Manager Charles-Henry Monchau, CFA Vrajesh Bhandari, CFA Sanat Sachar, CFA Inception Date 15th June 2008 Fund Size USD 30 million Strategy Size USD 88 million Fund Registration Bahrain Currency USD Subscription Weekly Min Subscription USD 250,000 Bloomberg Code MALMENE BI Reuters Code LP65123002 Management Fee 1.75% 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 3.5% 1.9% 1.6% YTD 8.0% 7.7% 0.3% 1 Year -1.4% 7.3% -8.7% 3 Years 26.9% 25.7% 1.2% 5 Year -2.9% -12.7% 9.8% Since Inc. -1.2% -34.3% 33.1% Performance Fund Benchmark Relative Perf. 2019 8.0% 7.7% 0.3% 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.* -1.2% -34.3% 33.1%
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

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 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19
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• As of 27 of March 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 9.20

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March 2019

Fund Manager Commentary:

Middle East and North Africa equities outperformed global emerging markets last month. The S&P Pan Arab Index added +1.9% compared to a -1.6% fall in MSCI Emerging Markets and a +0.5% gain for the U.S S&P 500. Top performing markets over the month were Kuwait and Saudi Arabia. The Fund had a very good month with a return of 3.5%. Top contributors were EK Holding and Gulf Bank ok Kuwait, a new addition to the fund which rose 15% during the month.

Orascom Construction - one of our core holdings - reported their 4Q 2018 results. Their core earnings (excluding provisions) skyrocketed 652% y-o-y to USD33.1mn (+14% q-o-q), mainly on the back of the strong performance from OC’s subsidiary BESIX (unconsolidated), which contributed 73% of earnings during the quarter (+76% y-o-y). The stock is trading at P/E of 4.5x with dividend yield of 5%.

We had a call with the Investor Relations of NMC Health and our understanding is that the recent sharp selloff in the stock has nothing to do with fundamentals. The decline is due to technical factors, triggered by short positions that are betting on margin calls from some pledged shares. We are comfortable with the market risks and believe the company will deliver on expectations. NMC is one our long-time conviction and was recently re-introduced in the portfolio. The company reported a good set of results for the second half of the year. EBITDA grew +43% y/y fuelled by organic expansions and M&A however earnings missed estimates on higher finance costs. The company is forming a JV with Saudi’s Hassana that will include its five assets in the Kingdom, and GOSI’s 39 % stake in National Medical Care.

	Top Portfolio Holdings	% of Fund
	Egypt Kuwait Holding	5.6
	Humansoft Holding Al Rajhi Bank	5.3 4.7
	Orascom Development	4.7
	SABIC	4.6
	Total # of Holdings	38

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

	Fund Characteristics2	Fund	Benchmark
	Standard Deviation	14.5%	14.6%
	Sharpe Ratio	-0.25	-0.39
	Beta	0.88	-
	Tracking Error	6.8%
	Information Ratio	0.32

2 Calculated using 5-year weekly data

Last month, we saw the first phase of Saudi’s inclusion in the FTSE EM Index, which drove in USD 600m of flows. In the short term, we think upside is limited, as it has been a well flagged event and the news seems to be already discounted. In the long run, there are some positive implications not just for the Saudi market but for the region as a whole. The foreign flows will bring more institutional investors who are research driven and who will thereby bring more discipline to the market

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Geographic Allocation Sector Allocation
Cash
Cash
Other Others
Qatar Industrial
Telecom
Kuwait
Materials
Egypt
Real Estate
UAE Consumer Discretionary
Financial
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 sophisticatedand knowledgeable professional users of financial instruments, and are structured and customizedto 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, authorizedmanagers 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. Finalizedterms and conditions are subject to further discussion and negotiation, andwill be determinedin part on the basis of pricing andvaluation 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.

NAV Per Unit: AED 1.20

Al Mal UAE Equity Fact Sheet

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March 2019

	Fund Manager Charles-Henry Monchau, CFA Vrajesh Bhandari, CFA Sanat Sachar, CFA Inception Date 5th April 2006 Fund Registration UAE Currency AED Fund Size AED 31mn 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 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 -0.6% -2.1% 1.5% YTD 2.3% 3.4% -1.1% 1 Year -8.9% -2.5% -6.4% 3 Years 9.4% -2.3% 11.7% 5 Year -12.6% -27.2% 14.6% Since Inc. 33.6% -41.4% 75.0% Performance Yearly Fund Benchmark Relative Perf. 2019 2.3% 3.4% -1.1% 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.* 33.6% -41.4% 75.0%

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
Apr-06Jun-06Aug-06Oct-06Dec-06Feb-07Apr-07Jun-07Aug-07Oct-07Dec-07Feb-08Apr-08Jun-08Aug-08Oct-08Dec-08Feb-09Apr-09Jun-09Aug-09Oct-09Dec-09Feb-10Apr-10Jun-10Aug-10Oct-10Dec-10Feb-11Apr-11Jun-11Aug-11Oct-11Dec-11Feb-12Apr-12Jun-12Aug-12Oct-12Dec-12Feb-13Apr-13Jun-13Aug-13Oct-13Dec-13Feb-14Apr-14Jun-14Aug-14Oct-14Dec-14Feb-15Apr-15Jun-15Aug-15Oct-15Dec-15Feb-16Apr-16Jun-16Aug-16Oct-16Dec-16Feb-17Apr-17Jun-17Aug-17Oct-17Dec-17Feb-18Apr-18Jun-18Aug-18Oct-18Dec-18Feb-19
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• As of 27[th] of March 2019

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 UAE Composite Index

Al Mal UAE Equity Fact Sheet

NAV Per Unit: AED 1.20

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March 2019

Fund Manager Commentary:

The S&P UAE Index fell 2.1% last month with Dubai (-2.3%) underperforming Abu Dhabi (-0.8%).

The market weakness was largely attributed to the sharp decline in the employment tracker compiled by IHS Markit. This indicator fell to 47.5 last month, its lowest level since August 2009 – which in simple words means companies in the non-oil private sector cut jobs at the fastest pace in a decade. ‘Some firms reported operating with the minimum level of staffing in a bid to keep costs down’.

However, the Emirate’s PMI reading was still healthy at 55.8. Companies in the wholesale and retail sector reported strong volume growth, although driven by price discounting. The Travel and tourism sector came in at 56.8, a nine-month high. Construction registered a good performance as well. In the financial sector, the CEO of Mashreq bank suggested the lender will close 50% of its branches this year as part of a digital transformation.

The Top performer in the fund last month was Aramex. Some room has been unlocked in the company’s FOL, as Australia Post sold its c10% stake. 2018 ended on a strong note for Aramex with 24% earnings growth. The new CEO Bashar Obeid (erstwhile CFO) has emphasized heavily on expense control and defending margins. The asset-light strategy is likely to translate into further acquisitions across the logistics supply chain, supported by low leverage.

	Top Portfolio Holdings	% of Fund
	Emirates NBD	13.5
	Emaar	12.1
	DP World	9.3
	Total # of Holdings	12

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

	Fund Characteristics2	Fund	Benchmark
	Standard Deviation	19.4%	21.4%
	Sharpe Ratio	-0.29	-0.43
	Beta	0.88
	Tracking Error	5.8%
	Information Ratio	0.54

2 Calculated using 5-year weekly data

The Central Bank in the UAE launched a program called the ‘National Loans Scheme’, which aims to ease the burden of debt accumulation for UAE nationals. This will consolidate all loans and introduces a monthly instalment limit of 50% of income, or 30% over a duration no longer than four years. Though in the short term this could have some pressure on banks profitability, in the long run this creates a healthy credit environment and more banking opportunities.

Geographic Allocation

Sector Allocation

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Cash Cash
Others
Other
Healthcare
Nasdaq
Capital Goods
Transport
Dubai
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 sophisticatedand knowledgeable professional users of financial instruments, and are structured and customizedto 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, authorizedmanagers 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. Finalizedterms and conditions are subject to further discussion and negotiation, andwill be determinedin part on the basis of pricing andvaluation 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.