AL Mal UAE Equity Fund — Fund Information / Factsheet 2021

Sep 1, 2021

AZ Al Mal MENA Equity Fact Sheet

August 2021

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NAV Per Unit: USD 6.31

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Fund Manager Commentary

In August, we saw Federal Reserve Officials confirming that they could be announcing a plan for the rollback of its exhaustive asset purchase program next month. In the commodities market, Oil prices see sawed towards the end of the month as it dropped to 5 month lows on concerns the delta variant’s spread could curtail economic recovery. It then proceeded to rebound quickly erasing all losses as COVID-19 related sentiment improved, and on an evident disconnect between the physical and derivatives market. As stated consistently over past comments, we continue to see strength in Brent Crude in the remainder of 2021 on the back of the supply-demand gap being maintained by OPEC+.

Saudi’s National Banking Champion, Saudi National Bank, released Q2 earnings with a miss to our, and the street’s estimates, primarily due to aggressive postmerger clean-up of its loan book and higher than expected OpEx. We continue to like the long-term story of the bank combined with synergies from the consolidation of SAMBA, a strong capital base, and scope for participation in the corporate lending boom underpinned by initiatives such as the Shareek Program.

In Egypt, MM Group for Industry and International Trade (MTI) reported its Q2 21 results, with earnings up 11% y/y, mostly on higher revenues driven by strong performance from its consumer electronics segment and automotive sales. We continue to like the name as a play on higher consumer electronic penetration, resilient European automotive business which is faring better than Asian vehicles amid trade tariffs, and near-term value unlock via the imminent IPO of MTI’s e- payment business.

National Bank of Kuwait (NBK) posted its Q2 2021 earnings of KWD 76.5mn, up 129% y/y from a low Q2 2020 base. NIMs expanded by c.3bps y/y in H1 2021, which was largely due to c.82bps in savings in deposit costs. Loan growth was driven by both local and international operations across the retail and corporate segment, bringing net loan growth to 5.7%. However, the current political landscape which contributed to a negative outlook from S&P continues to act as an overhang for Kuwait.

Objective

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

			Fund Performance
	Performance1	Fund	Benchmark2	Alpha
	1 Month	3.4%	3.3%	0.1%
	YTD3 1 Year 3 Year	21.8% 30.7% 31.2%	24.6% 34.3% 30.5%	-2.8% -3.6% 0.7%
	5 Year	61.8%	52.5%	9.3%
	Since Inc.	26.3%	20.4%	5.9%

1 Performance is net of fees; return is cumulative

2 S&P Pan Arab Composite Index

3 As of 25th Aug 2021

Top 5 Holdings

		ldi
	Holding	Top 5 Hongs	% of Fund
	Al Rajhi Bank Mouwasat Medical Services United Electronics		9.9 6.3 4.7
	The Saudi National Bank		4.5
	Saudi Basic Industries		3.6
		Fund Analysis
	Matrix4	Fund	Benchmark
	Standard Deviation	13.1%	15.0%
	Tracking Error Beta No. of Holdings	5.4% 0.8 47

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

Sector Allocation

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42% - Financials 11% - Consumer Discretionary 10% - Materials

7% - Health Care

7% - Consumer Staples

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7% - Communication Services
6% - Industrials
3% - Real Estate
2% - Energy
2% - Information Technology
2% - Cash
1% - Utilities
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	Investment Manager Investment Advisers	Azimut (DIFC) Limited Al Mal Capital PJSC
	Fund Manager	Sherif El Haddad
	Inception Date	June 26, 2019
	Fund Size	USD 76 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

Geographic Allocation

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Disclaimer

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20
10Y Fund Strategy Performance
Al Mal MENA Equity Fund
18 S&P Pan Arab Composite Index (Rebased)
AZ Al Mal Equity Fund
16
51% - Saudi Arabia
16% - UAE 14
12% - Egypt
12
10% - Qatar
10
5% - Kuwait
4% - Others 8
2% - Cash
6
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.

August 2021 NAV Per Unit: USD 10.78

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Al Mal MENA Equity Fact Sheet

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Fund Manager Commentary

In August, we saw Federal Reserve Officials confirming that they could be announcing a plan for the rollback of its exhaustive asset purchase program next month. In the commodities market, Oil prices see sawed towards the end of the month as it dropped to 5 month lows on concerns the delta variant’s spread could curtail economic recovery. It then proceeded to rebound quickly erasing all losses as COVID-19 related sentiment improved, and on an evident disconnect between the physical and derivatives market. As stated consistently over past comments, we continue to see strength in Brent Crude in the remainder of 2021 on the back of the supply-demand gap being maintained by OPEC+.

Saudi’s National Banking Champion, Saudi National Bank, released Q2 earnings with a miss to our, and the street’s estimates, primarily due to aggressive postmerger clean-up of its loan book and higher than expected OpEx. We continue to like the long-term story of the bank combined with synergies from the consolidation of SAMBA, a strong capital base, and scope for participation in the corporate lending boom underpinned by initiatives such as the Shareek Program.

In Egypt, MM Group for Industry and International Trade (MTI) reported its Q2 21 results, with earnings up 11% y/y, mostly on higher revenues driven by strong performance from its consumer electronics segment and automotive sales. We continue to like the name as a play on higher consumer electronic penetration, resilient European automotive business which is faring better than Asian vehicles amid trade tariffs, and near-term value unlock via the imminent IPO of MTI’s e- payment business.

National Bank of Kuwait (NBK) posted its Q2 2021 earnings of KWD 76.5mn, up 129% y/y from a low Q2 2020 base. NIMs expanded by c.3bps y/y in H1 2021, which was largely due to c.82bps in savings in deposit costs. Loan growth was driven by both local and international operations across the retail and corporate segment, bringing net loan growth to 5.7%. However, the current political landscape which contributed to a negative outlook from S&P continues to act as an overhang for Kuwait.

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Sector Allocation
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42% - Financials
11% - Consumer Discretionary
10% - Materials
7% - Health Care
7% - Consumer Staples
7% - Communication Services
6% - Industrials
4% - Real Estate
2% - Energy
2% - Information Technology
1% - Utilities
1% - Cash
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Objective

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

			Fund Performance
	Performance1	Fund	Benchmark2	Alpha
	1 Month	3.5%	3.3%	0.2%
	YTD3	21.2%	24.6%	-3.4%
	1 Year	30.6%	34.3%	-3.7%
	3 Year	29.8%	30.5%	-0.7%
	5 Year	57.6%	52.5%	5.1%
	Since Inc.	25.5%	-19.7%	45.2%

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

2 S&P Pan Arab Composite Index

3 As of 25th Aug 2021

	Holding	Top 5 Holdings	% of Fund
	Al Rajhi Bank Mouwasat Medical Services Co United Electronics Co		10.2 6.4 4.8
	Saudi National Bank		4.6
	Saudi Basic Industries		3.6
		Fund Analysis
	Matrix4	Fund	Benchmark
	Standard Deviation	13.3%	15.0%
	Tracking Error Beta Dividend Yield 2020	5.2% 0.8 4.0%
	No. of Holdings	47

	4The fund characteristics are based on the historical data of the Al Mal MENA Equity Fund as the AZ Al Mal Equity Fund continues to	4The 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
	Fund Manager Fu	Sherif El Haddad Sherif El Haddad
	InceptionDate Inceptio Date	15th June 2008 15th June 2008
	FundSize StrategySize Fu Size Strateg Size	USD 28 million USD 250 million USD 32 million USD 250 million
	Domicile Do	Bahrain Bahrain
	Currency Cu	USD USD
	Subscription & Redemption Su	Weekly Weekly
	Min Subscription Min S	USD 250,000 USD 250,000
	BloombergCode Blo Code	MALMENE BI MALMENE BI
	ManagementFee Manag Fee	1.75% 1.75%
	BenchmarkIndex Ben Index	S&P Pan Arab Composite S&P Pan Arab Composite
	FundType Fu Type	Open Ended Open Ended
	Administrator Ad	Apex Apex
	Custodian Cu	Standard Chartered Standard Chartered

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Geographic Allocation
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Disclaimer

10Y Fund Strategy Performance

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20
18 Al Mal MENA Equity Fund Benchmark
51% - Saudi Arabia 16
16% - UAE
14
13% - Egypt
12
9% - Qatar
5% - Kuwait 10
5% - Others 8
1% - Cash
6
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 August 2021 NAV Per Unit: AED 1.48

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Fund Manager Commentary

UAE continued to show its resilience and recovery as UAE’s PMI rose from 52.20 in June to 54.00 in July. We see strength in economic activity in H2, on the back of increased tourism and mobility in the country. We are actively watching Average Daily Rates and occupancy rates, which have fared well through the year thanks to domestic demand. According to JLL MENA, Dubai’s hotel occupancy levels were recorded at 58% for YT May 2021, compared to 46% for YT May 2020. Whilst in Abu Dhabi, occupancy improved to 61% from 60% in YT May 2021. ADRs in Abu Dhabi have faced pressure, dropping 7% y/y to USD 89, while Dubai has had a 1% y/y increase to reach USD 147.

First Abu Dhabi Bank (FAB) reported 2Q21 net profit of AED 2.9bn beating most estimates largely on a mix of higher non-interest income, up 19% y/y, and lower provisioning, down 36% y/y. We saw decent loan growth of 4%, after excluding Bank Audi, which should allow FAB to hit its mid-single digit target of loan growth as the business remains bullish on opportunities in the corporate space.

ENBD saw its loan book contract mainly as a result of corporate repayment. Retail lending was strong in the quarter and growth persisted across Egypt, Turkey and the UAE. On the corporate side, the company sees opportunities in KSA corporate lending and potential acquisitions in Egypt to increase its footprint. Broadly, they guide for net loan growth to remain in low single-digits, NPL ratio within mid-digit range, provisioning in H2 2021 to be similar to that of H1 2021, and an upward revision to NIMs by 5bps to c.2.40-2.50%. Lastly, ENBD expects the impact of Dubai Bank’s sale to be reflected in Q3 2021.

Tabreed, a portfolio holding, reported earnings of AED 148mn (+4.1% y/y) with revenues at AED 511mn up 23% y/y. This quarter saw capacity additions of 13.4k RT, which helped boost EBITDA to AED 291mn (+22.6% y/y). Later in the month, Tabreed announced its divestiture from its Qatar operations, and later acquired a 50% stake in Al Maryah Island’s DC plants. The acquisition is value accretive in our view, as the acquisition multiple is at a c.30% discount to that of Tabreed implied in the market, and almost 20% below replacement cost.

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	3.2%	4.8%	-1.6%
	YTD3	21.5%	30.2%	-8.7%
	1 Year	37.4%	43.4%	-6.0%
	3 Year	20.1%	10.8%	9.3%
	5 Year	42.1%	7.4%	34.7%
	Since Inc.	79.3%	-32.9%	112.2%

1 Performance is net of fees; return is cumulative

• 2 S&P UAE Composite Index

3 As of 25th Aug 2021

Top 3 Holdings

		Top 3 Holdings
	Holding		% of Fund
	Abu Dhabi Commercial Bank Emirates NBD		9.3 9.2
	First Abu Dhabi Bank		9.2
		Fund Analysis
	Matrix4	Fund	Benchmark
	Standard Deviation Tracking Error Beta Dividend Yield 2020	17.0% 11.1% 0.65 4.5%	23.1%
	No. of Holdings	19

4 Calculated using 3-year weekly data

Fund Information

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Sector Allocation
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39% - Financials
14% - Real Estate
13% - Communication Services
11% - Consumer Staples
10% - Industrials
4% - Health Care
4% - Consumer Discretionary
3% - Cash
2% - Utilities
1% - Information Technology
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	Fund Manager	Sherif El Haddad
	Fund Size	AED 54 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

Geographic Allocation

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Disclaimer

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10Y Fund Strategy Performance
Al Mal UAE Equity Fund Benchmark
24
22
20
18
16
49% - Abu Dhabi
14
38% - Dubai
12
8% - KSA
3% - Cash 10
2% - Qatar 8
6
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.