TIDMNBPC
RNS Number : 1853W
Naya Bharat Property Company PLC
24 July 2009
?
24 July2009
Naya Bharat Property Company plc
Second Quarter 2009 Summary
The unaudited Net Asset Value ("NAV") of the Naya Bharat Property Company plc
(the "Company") stood at USD 0.46 per share on 30 June 2009. This represents a
rise of 100.0% over the second quarter of the year. The Company's share price
increased by 175.5% over the same period as its discount to asset value narrowed
further.
The strong gains of the second quarter reflect a variety of factors. The Indian
economy is again showing some signs of strength with, for example, industrial
production growing by 1.4% over the year to April, having previously fallen by
0.8% over the year to March. At the same time, a continual decline in the rate
of inflation, which has now turned negative, has allowed the central bank to cut
interest rates to historic lows. This provides a particular benefit to the real
estate sector. Lower mortgage rates and property price cuts have improved
affordability. Both these factors and continued wage growth have resulted in
encouraging sales volumes from recent residential launches. Companies are also
benefiting from an improved balance sheet following debt restructuring, equity
issues and asset sales.
These economic factors have been very supportive of share prices generally
whilst political developments have also improved the outlook for the domestic
economy. In a result not generally anticipated, the Indian general election saw
the ruling Congress party returned to power with a far stronger mandate than
before. Although still falling short of an absolute majority, the result is
important for the markets as it means that Congress need no longer rely upon the
support of some of the more left-leaning smaller parties for its majority.
Reforms in such areas as insurance, pensions and state-ownership, which had
previously been blocked by these smaller parties, are therefore very much back
on the agenda. If implemented, we expect that such reforms should ultimately
boost economic activity.
On the back of these developments, share prices rose dramatically with real
estate companies leading the way. Orbit Corporation, the Mumbai-based company
that specialises in the redevelopment of existing properties to a very high
standard, more than doubled in value in the two weeks following the declaration
of the election result. Over the quarter as a whole, the Orbit share price more
than tripled in value. HDIL, the largest Mumbai-based real estate player, also
saw its share price more than triple over the same period.
A number of changes were made to the composition of the portfolio over the
second quarter. Some profits were taken and a holding in IFCI, India's oldest
financial institution, with a significant exposure to real estate, was divested
making way for more attractive opportunities elsewhere. These included Sobha
Developers, Phoenix Mills and Unitech Corporate Parks.
Sobha Developers is a Bangalore-based residential real estate company with an
excellent reputation for high-quality construction and a strong brand in its own
market. The company had previously overextended itself through the acquisition
of a large land bank, and had become excessively leveraged. However, the company
has recently issued new capital and is now on a firmer financial footing,
something that we believe is as yet not fully reflected in its share price.
Phoenix Mills is the most prominent player in the retail real estate sector. The
company has well-established properties in Mumbai that provide steady yields.
The company has plans for several new projects in Mumbai and other cities that
it will roll-out as and when market conditions permit. The stock was bought at a
significant discount to the value of its existing properties and the cash on the
balance sheet, providing a substantial margin of safety. The new projects could
add further value.
Unitech Corporate Parks is a leading commercial market developer with a focus on
the high growth IT (Information Technology) and ITES (Information Technology
Enabled Services) sectors. Its current portfolio comprises an IT Park in Noida
as well as projects in IT Special Economic Zones in Noida, Gurgaon and Kolkata.
These are expected have a total leasable area of 21.5 million square feet upon
completion and have been valued at GBP 469 million, a substantial premium to the
current share price. The company has a very strong cash position, which accounts
for almost all its market capitalization, ascribing little value to its current
operations.
The Company's ten largest investments as at 30 June 2009 are given in the table
below, together with their weight within the overall portfolio at that time. The
Company currently holds no unlisted or pre-IPO investments.
TOP HOLDINGS WEIGHT
Unitech 17.7%
Indiabulls Real Estate 15.8%
HDIL 14.5%
DLF 14.4%
Peninsula Land 3.3%
Ascendas India Trust 3.0%
Phoenix Mills 2.8%
Ansal Housing 2.2%
Sobha 2.1%
Orbit Corporation 2.1%
Enquiries:
+-----------------------------------------+------------------------------------+
| Charlemagne Capital | 020 7518 2100 |
| Varda Lotan / Christopher Fitzwilliam | marketing@charlemagnecapital.com |
| Lay | www.charlemagnecapital.com |
| | |
+-----------------------------------------+------------------------------------+
| Panmure Gordon | 020 7459 3600 |
| Hugh Morgan / Stuart Gledhill | |
| | |
+-----------------------------------------+------------------------------------+
| Smithfield Consultants | 020 7360 4900 |
| John Kiely / Gemma Froggatt | |
+-----------------------------------------+------------------------------------+
Notes to editors:
Naya Bharat Property Company is a property company focused on investing in real
estate companies in India. The Company seeks to take advantage of perceived
capital market pricing anomalies by investing in established listed property
investors/developers at substantial discounts to their net asset values. In this
way, investors in the Company will potentially benefit from both the reduction
in the discount to NAV and the anticipated robust performance of the physical
property market. In addition, special situations in unlisted/pre-IPO and
property-rich small capitalisation stocks can be sought.
In February 2007 the Company raised c. USD 60 million.
The Company's investment manager is Charlemagne Capital (IOM) Limited which is
regulated by the Isle of Man Financial Supervision Commission for investment and
corporate service provider business. The Charlemagne Group specialises in
managing funds in public and private equity in global emerging markets.
Disclaimer
This document does not constitute an offer to sell or solicitation of an offer
to buy shares in the Company and subscriptions for shares in the Company may
only be made on the terms and subject to the conditions (and risk factors)
contained in the prospectus of the Company. Potential investors should carefully
read the prospectus to be issued by the Company which contains significant
additional information needed to evaluate an investment in the Company. This
document has not been approved by a competent supervisory authority and no
supervisory authority has consented to the issue of this document. The
information in this document is confidential and it should not be distributed or
passed on, directly or indirectly, by the recipient to any other person without
the prior written consent of Charlemagne Capital (UK) Limited. This document and
shares in the Company shall not be distributed, offered or sold in any
jurisdiction in which such distribution, offer or sale would be unlawful and
until the requirements of such jurisdiction have been satisfied. This document
is not intended for public use or distribution. The purchase of shares in the
Company constitutes a high risk investment and investors may lose a substantial
portion or even all of the money they invest in the Company. An investment in
the Company is, therefore, suitable only for financially sophisticated investors
who are capable of evaluating the risks and merits of such investment and who
have sufficient resources to bear any loss that might result from such
investment. If you are in any doubt about the contents of this document you
should consult an independent financial adviser. Investors in the Company should
note that: past performance should not be seen as an indication of future
performance; investments denominated in foreign currencies result in the risk of
loss from currency movements as well as movements in the value, price or income
derived from the investments themselves; and there are additional risks
associated with investments (made directly or through investment vehicles which
invest) in emerging or developing markets. Charlemagne Capital (UK) Limited does
not guarantee the accuracy, adequacy or completeness of any information
contained herein and is not responsible for any omissions or for the results
obtained from such information. The information is indicative only and is for
background purposes and is subject to material updating, revision, amendment and
verification. All quoted returns are illustrative. No representation or
warranty, express or implied, is made as to the matters stated in this document
and no liability whatsoever is accepted by Charlemagne Capital (UK) Limited or
any other person in relation thereto.
This information is provided by RNS
The company news service from the London Stock Exchange
END
STRRJMJTMMTTBFL
|