Adamas Finance Asia
Adamas Finance Asia aims to be the leading London-quoted pan-Asian focused diversified SME investment opportunity. It targets above average income and capital growth, with a stated objective to provide shareholders with unique access to a diversified portfolio with access to high-growth Asian economies.
Interview with the Investment Manager on progress and outlook
Suresh Withana, MD of Harmony Capital who manage Adamas' portfolio discusses:
- the progress evident in the FY 2019 results
- limited impact on activities from Covid-19, but a resulting surge in opportunities
- the recovery from pandemic lockdown in Asia is building
- strategic ambitions still on track, and portfolio news can help shrink large discount to NAV
Strong revenue growth emerging
The highlight of FY19 results was an over six-fold increase in gross portfolio income to USD2.24m, as ongoing repositioning of the investment portfolio moved it closer to the point where it will support sustainable dividends. The period was, of course, pre COVID-19, but ADAM does not expect any material impact on portfolio valuations for FY20. Each investment has a strategy in place to actively manage operational exposure and mitigate the pandemic’s impact.
Asia’s SMEs, already lacking access to traditional financing pre-COVID-19, have an even more urgent need for new sources of cash. So one potentially positive consequence is apparent in ADAM’s pipeline of prospective new investments.
ADAM remains relatively well positioned. It has an existing portfolio of diversified pan-Asian investments, access to liquidity to continue to both provide support where required and finance new investment. Since the year end, it has raised another USD1.7m via further subscriptions to its corporate bond issue.
Although economic disruption has yet to play out, China, Hong Kong and other territories relevant to ADAM’s portfolio have reported initial recovery and are gradually lifting lock-down measures. ADAM sees Asian markets benefiting from their experience of previous pandemics (Bird Flu/SARS).
A key short-term catalyst to a higher equity rating is newsflow on progress to bring legacy holdings, such as Chinese dolomite quarry operation Future Metal Holdings (FMHL), back up to full speed.
In the interim, variables and risks appear offset by a sizeable (c.66% discount to underlying NAV/share of 99c), itself based upon a conservative assessment of fair value.
ADAM reports highly significant Portfolio news
Good progress at ADAM's largest investment
Just what the doctor ordered
Capital raise & new income producing deal
Portfolio additions build income stream
Adamas Finance Asia aims to be the leading London-quoted pan-Asian focused diversified SME investment holding vehicle. It targets above average income and capital growth, with a stated objective to provide shareholders with unique access to a diversified portfolio with access to high-growth Asian economies.
The key message from the recent interim result was the material increase in total portfolio income, from US$0.05m (H1 2018) to US$1.25m in the first six months this year. We see that as the key metric to track continuing progress made by ADAMâ€™s investment manager, Harmony Capital.
First half income was a combination of interest and fair value adjustments. The second half result will be driven by full contributions from transactions concluded in H1 and follow-on investment tranches. That should justify some reappraisal of ADAMâ€™s prospects and valuation, but the other major component will be confirmation that China based Future Metal Holdings (FMH) has resumed operations this year.
As FMH contributed 46% of mid-year NAV, its prospects are closely aligned with ADAMâ€™s. The latter has de facto control of FMH via an 84.8% stake and taken a hands-on role to steer it into a position where it can restart mining this year. Success in that respect should help validate the portfolioâ€™s intrinsic value (NAV/share 88p at end June 2019 vs a 30p share price) and demonstrate the investment managerâ€™s ability to work ADAMâ€™s assets for shareholdersâ€™ benefit.
ADAM has built an investment pipeline which it will capitalise upon where it has rebuilt its valuation and gained access to new capital. It is rolling out initiatives to address the illiquidity of its equity and positively raise its profile.
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Transition to new strategy on track
Adamas Finance Asia at the Equity Development Investor Forum, January 2019
New investment in the medical device sector
announces two investment deals in quick succession
Suresh Withana explains why investment manager Harmony Capital has selected PharmaJet and Infinity Capital Group to enter the portfolio of Adamas (LON:ADAMA) in recent weeks.
NBSuresh will also be presenting at our Private Investor Forum at Buchanan Communications on the evening of Wednesday the 30th of January 2019
Register for the Event here - CLICK HERE