JOM FUNDS Monthly Report September 2014

Transcription

1 At first some thoughts on my latest trip to Indonesia: JOM FUNDS Monthly Report September 2014 Met with Indonesian companies in Jakarta and Java Island in mid-september. The meeting schedule consisted of 20 companies (19 public, one private) including a few site visits in the city of Solo (former Surakarta) in central Java. The company sectors included infra, insurance, banking, construction, real estate, food, e-commerce, oil, textiles and retail. Significantly more construction cranes and ongoing public infrastructure projects were visible on the streets of Jakarta compared to my last visit in March 2014, when uncertainty over the future leadership was still prevailing ahead of the presidential election. Now after the political situation has somewhat clarified, many projects have been reset in motion, for example the MRT construction in Jakarta. The city traffic was actually surprisingly fluid, as a few flyover highways have become operational, and the number of buses has expanded. Or maybe it was just the dry season, as the rains will come only later in the fall. The general feeling over future public infra projects was positive, though with certain reservations. Although the president-elect Jokowi is seen as an efficient pro-infra leader, launching the actual programs may take longer than the markets currently expect. Jokowi will probably stress process transparency more than his predecessors, and bidding etc. stages take longer when they re done by the book. Thus we may see public infra construction truly take off only in late Another slowing factor in the sector is the lack of qualified engineers available. According to the CEO of a major-league partly state-owned construction company, the need for educated engineers is some 150 thousand at the moment, while the Indonesian educational system produces some 40 thousand engineer graduates per year. The shortage is evident especially when seeking managers for very large public projects. The same applies for architects, which are in tight supply. Lately the opposition coalition has caused some political noise in Indonesia, as the Gerinda party led by the runner-up of the presidential race Prabowo Subianto is trying stall politics for example by introducing some rather undemocratic reforms. The opposition would like eradicate direct popular vote in the presidential elections, and move back toward voting for a board of electors instead. In communal elections they have already had their way (if the recently passed decision will hold), and overall the aim seems to be eliminating the risk of the people electing wrong candidates who come from outside the ranks of the old powers presented by the opposition. Polls however indicate that 85% of voters are against such changes and thus this strategy might prove risky in longer term. In Indonesia, the political landscape may change rapidly, and we don t see these political headwinds lasting very long rather the uncertainty and relating market volatility brings about interesting buying opportunities. Moving on to business: In Indonesia e-commerce is still in its infancy, even compared to other Asian countries, but the sector is picking up steam. The graph below depicts the share of internet sales i.e. e-commerce of GDP. In Indonesia the segment is some 0.1% of GDP, while in the US e-commerce represents an over 10-fold share at 1.2% of GDP. Currently e-commerce sales at 8 bn USD (including C2C and B2B sales) are some 0.9% of GDP in Indonesia, but according to estimates the total size will be some 24 bn USD or 2.1% of GDP at the end of The graph below illustrates the growth:

2 JOM FUNDS Monthly Report September 2014 Car penetration levels in ASEAN countries are very low, and the lowest levels are found in Vietnam and Philippines. JOM Silkkitie Fund has invested in leading companies benefiting from rising car sales in both countries. For example in Vietnam vehicle sales are growing 25-30% p.a, while private consumption has stagnated at some 0-5% growth annually. Car sales, as well as other structural growth themes, are the core of the investment strategy of JOM Funds. We have also indirect exposure to Indonesian vehicle sales through a few different companies. Below you can see ASEAN vehicle penetration figures (number of vehicles/ 1000 people), e.g. in Vietnam the ratio is less than 25/1000 or 2.5%. Investment and efforts to improve tourism in the Philippines are gradually starting to pay off, though the country is still way behind Thailand and Singapore when comparing number of tourist arrivals. Philippines is favoured by tourists from the US and North Asia, e.g. Japan and Korea, but the largest obstacle for higher growth numbers is still the lack of sufficient infra in the tourism sector. In 2013 the number of tourists was some 4.7 m visitors: Judging by the cement penetration numbers there is still a lot to build in our focus markets. Also the insurance sector is one of the structural themes we like and are involved in, below penetration rates in different ASEAN countries... and the construction sector will benefit. In Indonesia cement consumption was some 250 kg/capita in 2012, and the level will rise once the fuel subsidies are cut and the funds diverted towards infra improvement.

3 JOM FUNDS Monthly Report September 2014 The level of infrastructure in Indonesia and Philippines is poor when compared to developed economies, as stated in our reports many times. For example in the World Economic Forum ranking in 2012, and the countries were at the bottom positions of 92 and 98, respectively:

4 JOM SILKKITIE INVESTMENT FUND Monthly Report September 2014 JOM Silkkitie Investment Fund s NAV was at the end of September, and thus the performance during the month stood at -1.25%. 12-month performance was at % and 6-month performance at % on YTD 2014 performance was %. Geographical Break-down of Equities Japan 3 % Malaysia 3 % Philippines 21 % Vietnam 16 % China 28 % Indonesia 29 % JOM SILKKITIE, NAV ( ) Fund size meur Number of fund units Inception date Last month s performance -1.25% Performance since inception % Annualiced performance since inception 19.32% Accumulated management fee* 0.89% Accumulated performance fee* 0.59% Accumulated custodian fee* 0.08% Net investment position (prior to subscriptions on ) 97.6% Volatility** 13.5% Portfolio turnover*** 180.3% OVERVIEW OF THE FUND Financial & Property 23 % Global Leaders 10 % Equities by Investment Themes Infra 24 % Consumers 43 % Name: JOM Silkkitie Fund (UCITS) Portfolio Manager: Juuso Mykkänen Custodian: SEB. Helsinki branch Benchmark index: No official index Profit sharing: The Fund has only accumulating units Fund rules last confirmed: Inception date: ISIN-code: FI Bloomberg-ticker: JOMSILK FH Fund target group: Demanding investors who understand the potential of Asian equity markets in the long run. Minimum subscription: Subscription account: SEB Management fee: 1.2% p.a. Subscription fee: 1.5% - 0%* Redemption fee: 1% (min. 20 ) Performance fee: 10% on the return exceeding the hurdle rate of 5%. (pls see Fund prospectus for details) Morningstar rating: Past performance is no guarantee for future returns. The Fund value may increase or decrease, and the investor may incur losses when redeeming his shares. MSCI AC Asia ex-japan (EUR) is a price index, which does not take dividends into account. Further details on JOM Silkkitie (Investment Fund (non- UCITS) may be found in the key investor information document, fund prospectus and fund rules, which are available by request from JOM Fund Management Ltd, or on the website *For the fiscal period since , % of fund average net assets. **Based on daily returns during 12 months. Detailed formulas available from the Fund Management Company.

5 JOM SILKKITIE INVESTMENT FUND Monthly Report September 2014 JOM SILKKITIE, NAV ( ) Fund size meur Last month s performance -1.25% Annualised performance since inception % Volatility 13.5% Jakarta Composite Index JCI FUND CORRELATION (12M, DAILY) WITH SOME EQUITY INDICES (EUR) Philippine composite Index PCOMP HK China H shares HSCEI MSCI Asia ex-japan Topix MSCI World S&P 500 Bloomberg Europe 500 Index Indonesia Philippines China Asia Japan World US Europe JOM SILKKITIE NAV VS. THE REGIONAL EQUITY MARKET INDEX MSCI AC Asia ex-japan (EUR) JOM Silkkitie % FUND PERFORMANCE BI-ANNUALLY (%) FUND PERFORMANCE MONTHLY (%) + 40 % % Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year % % % % % % % % % -20 % % % % Past performance is no guarantee for future returns. The Fund value may increase or decrease, and the investor may incur losses when redeeming his shares. MSCI AC Asia ex-japan (EUR) is a price index, which does not take dividends into account. Further details on JOM Silkkitie (Investment Fund (non- UCITS) may be found in the key investor information document, fund prospectus and fund rules, which are available by request from JOM Fund Management Ltd, or on the website *For the fiscal period since , % of fund average net assets. **Based on daily returns during 12 months. Detailed formulas available from the Fund Management Company.

6 JOM Komodo Fund s NAV was at the end of September, as it decreased by 2.09% during the month. YTD 2014 the Fund has returned 57.04%. 12-month performance stood at %, while in six months the Fund is up by 11.57%. Since inception ( ) the Fund has returned % altogether. 160 JOM KOMODO INVESTMENT FUND Equities by Investment Themes Financial 22% Industrial 34% Consumer, Noncyclical 33% Consumer, Cyclical 6% Basic Materials, 5% JOM KOMODO NAV VS. INDONESIA EQUITY INDICES Monthly Report September 2014 JOM KOMODO, NET ASSET VALUE ( ) Size of the fund 9.33 meur Number of fund units Inception date Last month s performance -2.09% Performance since inception % Accumulated management fee* 1.12% Accumulated performance fee* 0.00% Accumulated custodian fee* 0.23% Net investment position (prior to subscriptions on ) 73.3% Volatility** 22.1% Portfolio turnover 248.9% Fund s correlation to JCI-Index (12m) 0.72 FUND PERFORMANCE MONTHLY (%) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year FUND OVERVIEW JAKARTA COMPOSITE Index MV Indonesia SmallCap TR Index JOM Komodo Name: JOM Komodo Fund (UCITS) Portfolio Manager: Juuso Mykkänen Custodian: SEB. Helsinki branch Benchmark index: No official index Profit sharing: The Fund has only accumulating units Fund rules last confirmed: Inception date: ISIN-code: FI Fund target group: Demanding investors who understand the potential of Asian equity markets in the long run. Minimum subscription: Subscription account: IBAN: FI BIC: ESSEFIHXXX Management fee: 1.5% p.a. Subscription fee: 1.5% - 0%* Redemption fee: 2% (min. 20 ) Performance fee: 10% on the return exceeding the hurdle rate of 5%. (pls see Fund prospectus for details) Past performance is no guarantee for future returns. The Fund value may increase or decrease, and the investor may incur losses when redeeming his shares. Jakarta Composite Index (EUR) and MV Indonesia SmallCap Index (EUR) are price indices, which do not take dividends into account. Further details on JOM Komodo Investment Fund (non-ucits) may be found in the key investor information document, fund prospectus and fund rules, which are available by request from JOM Fund Management Ltd, or on the website *For the fiscal period since , % of fund average net assets. **Will be calculated based on daily returns during 12 months. after the fund has sufficient track history. Detailed formulas available from the Fund Management Company.