AL Mal UAE Equity Fund — Fund Information / Factsheet 2021

Mar 4, 2021

AZ Al Mal MENA Equity Fact Sheet February 2021 NAV Per Unit: USD 5.57

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Fund Manager Commentary

Objective

Global markets had a strong February with the S&P 500 up 2.8%, the DOW up 3.4% as risk on sentiment continued despite yield curve hiccups. Europe’s STOXX 50 also joined the party rallying 4.6% over the week, Germany’s DAX meanwhile rose 2.6% over the same period. Crude outperformed within the commodities space rising 17%, after cold weather hit Texas, affecting supply. The MSCI Emerging Markets Index lagged global peers but still remained in the green, up 0.8%. The S&P Pan Arab outperformed, up 2.3% with financials, leading the way.

Achieve capital appreciation, primarily through investment in equity and equity related securities in the Middle East and North African markets.

Fund Performance

			Fund Performance
	Performance1	Fund	Benchmark2	Alpha
	1 Month	2.6%	1.3%	1.3%
	YTD3 1 Year 3 Year	6.6% 14.4% 11.5%	3.5% 6.1% 13.4%	3.1% 8.3% -1.9%
	5 Year	44.1%	26.2%	17.9%
	Since Inc.	11.2%	0.8%	10.4%

Saudi’s Crown Prince announced a potential for more Aramco share sales over the near-term, to boost PIF’s assets to USD 1.1tn by 2025. This comes after the fund plans to raise USD 10bn through a revolving loan to spur liquidity to fund its plans. February also saw our portfolio holding NCB’s planned merger with SAMBA be approved by the Saudi General Authority for Competition, with the transaction slated for Q2 21e completion, and we continue to view NCB as a proxy play on PIF’s large scale investment plans. The bank reported a net profit of SAR 3.4bn, down 1% y-o-y bringing its FY 2020 profit to SAR 11.4bn.

1 Performance is net of fees; return is cumulative

2 S&P Pan Arab Composite Index

3 As of 24th February, 2021

	1Performance is net of fees; return is cumulative 2S&P Pan Arab Composite Index 3As of 24thFebruary, 2021 5 Year 44.1% Since Inc. 11.2%	26.2% 0.8%	17.9% 10.4%
	Holding	Top 5 Holdings	% of Fund
	MM Group for Industry and Trade Al Rajhi Bank		5.4 4.9
	Mouwasat Medical Services		4.7
	National Commercial Bank		4.2
	Humansoft Holding		3.8
		Fund Analysis
	Matrix4	Fund	Benchmark
	Standard Deviation	13.2%	15.0%
	Sharpe Ratio	0.21	0.0
	Beta Tracking Error	0.8 5.6%
	No. of Holdings	50

Egypt’s Central Bank remained cautious in their meeting early February, keeping interest rates on hold, as inflation levels were below their target, with economic indicators pointing towards a recovery during Q4 2020. Our portfolio holding MTIE has announced that it is planning to list Ebtikar on the EGX in H2 2021, after the company spins off non-e-payment related business arms. This comes in line with our thesis on the name, as the business crystalizes value from its high-growth e- payment business in an underpenetrated population from a banking perspective. Another holding, Speed Medical, is planning to acquire 100% of Al-Safwa Hospital for EGP 185m, in partnership with Prime Speed, and other investors. We continue to like the name, underpinned by a management team with a strong track record delivering on its growth targets.

Elsewhere in MENA, one of our top holdings, Humansoft, reported stellar FY 20 results, with KWD 37.5m net income up c.5% y/y despite disruptions to the academic year, combined with an attractive c.KWD 0.4/share dividend, implying 11% yield on announcement-date CMP. We remain positive on the name, which continues to generate high-quality cash flows via fully utilized capacity, and we see upside risks from potential capacity additions in the longer-term, which its campus and balance sheet positioning, can adequately accommodate. QEWS, another holding, reported a disappointing set of results though largely on one-off charges, with FY 20 net income down 18% y/y on higher provision charges during Q4, combined with 36% y/y decline in JV income on a one-off power outage at the company’s Ras Laffan subsidiary. Nonetheless, DPS remains attractive, albeit lower y/y, at 3.5% yield.

4 The fund characteristics are based on the historical data of the Al Mal MENA Equity Fund as the AZ Al Mal Equity Fund continues to follow the same strategy; calculated using 3-year weekly data

Fund Information

	Investment Manager Investment Advisers Fund Manager	Azimut (DIFC) Limited Al Mal Capital PJSC Sherif El Haddad
	Inception Date	June 26, 2019
	Fund Size	USD 62 million
	Strategy Size	USD 250 million
	Domicile	Luxembourg
	Currency	USD
	Subscription & Redemption	Weekly
	Min Subscription	USD 1 (Retail) -250,000 (Institutional)
	Bloomberg Code	AZ3AZUA LX
	Management Fee	Up to 2.0%
	Benchmark Index	S&P Pan Arab Composite
	Fund Type	Open Ended
	Administrator & Custodian	BNP Paribas

Sector Allocation

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39% - Financials
5% - Real Estate Subscription & Redemption Weekly
Min Subscription USD 1 (Retail) -250,000 (Institutional)
12% - Health Care
Bloomberg Code AZ3AZUA LX
6% - Materials
Management Fee Up to 2.0%
16% - Consumer Discretionary
Benchmark Index S&P Pan Arab Composite
5% - Consumer Staples Fund Type Open Ended
5% - Communication Services Administrator & Custodian BNP Paribas
2% - Utilities
2% - Cash
8% - Others 10Y Fund Strategy Performance
20 Al Mal MENA Equity Fund Benchmark AZ Al Mal Equity Fund
18
16
45% - Saudi Arabia
14
11% - United Arab Emirates
12
8% - Kuwait
23% - Egypt 10
10% - Qatar 8
1% - Others
6
2% - Cash Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20
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Geographic Allocation

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Disclaimer

None ofthe information andopinions containedherein is intendedto form the basis for any investment or trading decision, andno specific recommendations are intended. The products andtransactions describedherein are not suitable for every investor. Such products and transactions are only suitable for sophisticated and knowledgeableprofessionalusers of financialinstruments, and are structured and customized to the needs and objectives of each investor. The information and opinions contained herein have beenprepared 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 AlMalCapitalPSC 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 MENA Equity Fact Sheet February 2021 NAV Per Unit: USD 9.50

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Fund Manager Commentary

Global markets had a strong February with the S&P 500 up 2.8%, the DOW up 3.4% as risk on sentiment continued despite yield curve hiccups. Europe’s STOXX 50 also joined the party rallying 4.6% over the week, Germany’s DAX meanwhile rose 2.6% over the same period. Crude outperformed within the commodities space rising 17%, after cold weather hit Texas, affecting supply. The MSCI Emerging Markets Index lagged global peers but still remained in the green, up 0.8%. The S&P Pan Arab outperformed, up 2.3% with financials, leading the way.

Saudi’s Crown Prince announced a potential for more Aramco share sales over the near-term, to boost PIF’s assets to USD 1.1tn by 2025. This comes after the fund plans to raise USD 10bn through a revolving loan to spur liquidity to fund its plans. February also saw our portfolio holding NCB’s planned merger with SAMBA be approved by the Saudi General Authority for Competition, with the transaction slated for Q2 21e completion, and we continue to view NCB as a proxy play on PIF’s large scale investment plans. The bank reported a net profit of SAR 3.4bn, down 1% y-o-y bringing its FY 2020 profit to SAR 11.4bn.

Egypt’s Central Bank remained cautious in their meeting early February, keeping interest rates on hold, as inflation levels were below their target, with economic indicators pointing towards a recovery during Q4 2020. Our portfolio holding MTIE has announced that it is planning to list Ebtikar on the EGX in H2 2021, after the company spins off non-e-payment related business arms. This comes in line with our thesis on the name, as the business crystalizes value from its high-growth e- payment business in an underpenetrated population from a banking perspective. Another holding, Speed Medical, is planning to acquire 100% of Al-Safwa Hospital for EGP 185m, in partnership with Prime Speed, and other investors. We continue to like the name, underpinned by a management team with a strong track record delivering on its growth targets.

Elsewhere in MENA, one of our top holdings, Humansoft, reported stellar FY 20 results, with KWD 37.5m net income up c.5% y/y despite disruptions to the academic year, combined with an attractive c.KWD 0.4/share dividend, implying 11% yield on announcement-date CMP. We remain positive on the name, which continues to generate high-quality cash flows via fully utilized capacity, and we see upside risks from potential capacity additions in the longer-term, which its campus and balance sheet positioning, can adequately accommodate. QEWS, another holding, reported a disappointing set of results though largely on one-off charges, with FY 20 net income down 18% y/y on higher provision charges during Q4, combined with 36% y/y decline in JV income on a one-off power outage at the company’s Ras Laffan subsidiary. Nonetheless, DPS remains attractive, albeit lower y/y, at 3.5% yield.

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Sector Allocation
38% - Financials
6% - Real Estate
12% - Health Care
6% - Materials
15% - Consumer Discretionary
7% - Consumer Staples
5% - Communication Services
2% - Utilities
1% - Cash
8% - Others
Geographic Allocation
40% - Saudi Arabia
24% - Egypt
11% - Qatar
8% - Kuwait
11% - United Arab Emirates
5% - Others
1% - Cash
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Disclaimer

Objective

Achieve capital appreciation, primarily through investment in equity and equity related securities in the Middle East and North African markets.

	Performance1	Fund	Fund Performance Benchmark2	Alpha
	1 Month	2.6%	1.3%	1.3%
	YTD3 1 Year 3 Year	6.1% 13.1% 10.3%	3.5% 6.1% 13.4%	2.6% 6.9% -3.1%
	5 Year	42.6%	26.2%	16.4%
	Since Inc.	10.5%	-32.8%	43.3%

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

2 S&P Pan Arab Composite Index

3 As of 24th February 2021

Top 5 Holdings

	As of 24February 2021	Top 5 Holdings
	Holding		% of Fund
	Al Rajhi Bank Mouwasat Medical Services MM Group for Industry and Trade		4.9 4.8 4.8
	Humansoft Holdings		3.9
	Extra		3.2
		Fund Analysis
	Matrix4	Fund	Benchmark
	Standard Deviation	13.4%	15.0%
	Sharpe Ratio	0.2	0.2
	Beta Tracking Error Dividend Yield 2020	0.8 5.4% 4.0%
	No. of Holdings	50
Fund Manager 4Calculated using 3-year weekly data		Sherif El Haddad
	Inception Date Fund Size Strategy Size	15th June 2008 USD 28 million USD 250 million
	Domicile	Bahrain
	Currency	USD
	Subscription & Redemption	Weekly
	Min Subscription	USD 250,000
	Bloomberg Code	MALMENE BI
	Management Fee	1.75%
	Benchmark Index	S&P Pan Arab	Composite
	Fund Type	Open Ended
	Administrator	Apex
	Custodian	Standard Chartered

10Y Fund Strategy Performance

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Al Mal MENA Equity Fund Benchmark
20
18
16
14
12
10
8
6
Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20
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None ofthe information andopinions containedherein is intendedto form the basis for any investment or trading decision, andno specific recommendations are intended. The products andtransactions describedherein are not suitable for every investor. Such products and transactions are only suitable for sophisticated and knowledgeableprofessionalusers of financialinstruments, and are structured and customized to the needs and objectives of each investor. The information and opinions contained herein have beenprepared 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 AlMalCapitalPSC 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 February 2021 NAV Per Unit: AED 1.33

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Fund Manager Commentary

UAE equities had a muted February with Dubai’s DFM severely lagging Abu Dhabi’s down 6.3% vs Abu Dhabi’s -0.1%. Dubai’s underperformance was a result of reintroduced nationwide restrictions on mobility in a bid to reduce infections with measures including closing pubs and bars, as well as limiting capacity at entertainment venues and public areas. Nevertheless, the UAE has focused on its inoculation program, with more than 50% of the population now receiving at least the first dose of the vaccine. This should help spur a recovery in tourism and mobility in the later half of the year, combined with the UAE’s citizenship offering to a select group of foreigners that can help accelerate economic development across the country while staying committed to hosting Expo 2020 this year.

Two of our bank holdings reported FY 20 results, with Emirates NBD’s net profits down 52% y/y on a 65% y/y increase in provisions, while FAB outperformed with net profits down 15% y/y. We continue to like to EMIRATES prudent provisioning approach and think the bank is adequately provisioned thus far. On the Telecom front, portfolio holding, Du, reported a 17% y/y drop in FY 20 EPS, as revenues fell 12% on reduced mobility. Nevertheless, the company increased its dividend payout for the year to AED 0.41/share, implying an attractive 6.1% yield at the time of announcement.

The Emaar trio also reported results in February. Emaar Malls reported a 69% y/y drop in EPS, even though revenues were only down 25% y/y as SG&A increased 2x y/y. Although revenues began to recover 11% sequentially as mobility rebounded, we remain cautious on future rental rates, with their ability to revert to pre Covid-10 levels increasingly unlikely. Emaar also reported a c.60% y/y drop in net income, on a 20% y/y drop in revenues (mainly weighed by EMAARDEV and EMAARMLS weakness) combined with higher expenses at EMAARDEV and EMAARMLS, in addition to higher income tax at the parent, and losses from associates..

Lastly, Agthia announced the completion of its 100% stake acquisition of Al Faysal Bakery in Kuwait, marking the business’ venture into the snacks subset of the food market. We think the acquisition gives Agthia access to Al Faysal’s network in Kuwait, allowing the business to grow its core business there and continues management’s strategy to create value accretive synergies by means of M&A

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Sector Allocation
46% - Financials
18% - Industrials
17% - Real Estate
7% - Communication Services
7% - Consumer Staples
4% - Cash
1% - Others
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Objective

Achieve medium to long-term capital growth by investing primarily in equities listed on the UAE Exchange.

			Fund Performance	Fund Performance
	Performance1	Fund		Benchmark2	Alpha
	1 Month YTD3	-1.8% 7.7%		-2.9% 7.6%	1.1% 0.1%
	1 Year	16.7%		0.5%	16.2%
	3 Year	9.8%		-10.1%	19.9%
	5 Year Since Inc.	36.5% 61.0%		-4.2% -43.9%	40.7% 104.9%

1 Performance is net of fees; return is cumulative

2 S&P UAE Composite Index

3 As of 24th February 2021

Top 3 Holdings

	y	Top 3 Holdings
	Holding		% of Fund
	First Abu Dhabi Bank		20.9
	Tabreed		14.1
	Emirates NBD		12.6
	Matrix4	Fund Fund Analysis	Benchmark
	Standard Deviation Sharpe Ratio Beta	17.5% 0.1 0.7	23.4% -0.3
	Dividend Yield 2020	4.5%
	No. of Holdings	13

4 Calculated using 3-year weekly data

Fund Information

	Fund Manager	Sherif El Haddad
	Fund Size	AED 50 million
	Domicile	UAE
	Currency	AED
	Subscription & Redemption	Weekly
	Min Subscription	AED 100,000
	Management Fee	1.50%
	Performance Fee	20% over 10% hurdle with high
		watermark
	Financial Year End	31st December
	Benchmark Index	S&P UAE Composite Index
	Fund Type	Open Ended
	Administrator & Custodian	Standard Chartered

10Y Fund Strategy Performance

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Al Mal UAE Equity Fund Benchmark
24
Geographic Allocation
22
20
18
16
14
55% - Dubai
12
37% - Abu Dhabi
10
4% - Others
8
4% - Cash
6
Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20
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Disclaimer

None ofthe information andopinions containedherein is intendedto form the basis for any investment or trading decision, andno specific recommendations are intended. The products andtransactions describedherein are not suitable for every investor. Such products and transactions are only suitable for sophisticated and knowledgeableprofessionalusers of financialinstruments, and are structured and customized to the needs and objectives of each investor. The information and opinions contained herein have beenprepared 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 AlMalCapitalPSC 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.