Investing in high growth Asian frontier economies., Asia Frontier Capital

Scott Osheroff

Investing in high growth Asian frontier economies.

Asia Frontier Capital

Asia Frontier Capital Ltd. is a pioneering fund management company based in Hong Kong that specializes in investing in high growth Asian frontier economies by managing the AFC Asia Frontier Fund , AFC Iraq Fund and the AFC Vietnam Fund.

The AFC Asia Frontier Fund invests in public equities of Asian frontier countries that are seeing increasing consumption due to favorable demographic trends, rising incomes and high GDP growth. The fund invests in listed equities of companies that have their principal business activities in Bangladesh, Bhutan, Cambodia, Iraq, Laos, Maldives, Mongolia, Myanmar (Burma), Nepal, Pakistan, Papua New Guinea, Sri Lanka and Vietnam. The AFC Asia Frontier Fund is positioned to take advantage of the continuing economic shifts in these countries and offers high returns combined with significant diversification opportunities. This fund is directed by the founder and CEO of Asia Frontier Capital, Thomas Hugger, who has been investing in frontier markets across Asia and Africa for more than 20 years.

The AFC Iraq Fund was launched on the 26th June 2015 and aims to achieve long-term capital appreciation for investors by capturing value and growth potential in the post conflict high-growth & resource rich Iraq market. The fund emphasises long term investment horizon to truly capture the opportunity in Iraq. The fund's investable universe consists of locally listed companies that have their principal business activities in Iraq as well as foreign listed companies that have the majority of the business in Iraq as a whole including the prosperous Kurdish Region of Iraq (KRI). The AFC Iraq Fund offers access to investments in post conflict recovery potential of Iraq, including the KRI, and/or stability in its territory. The AFC Iraq Fund is managed by Asia Frontier Capital (Iraq) Limited, Cayman Islands under the executive leadership team of Thomas Hugger (CEO & Fund Manager) and Ahmed Tabaqchali (CIO) who have more than 47 years of investment experience as well as an extensive background covering global, emerging, frontier and MENA markets.

The AFC Vietnam Fund invests exclusively in listed Vietnamese equities to capture value in growth companies with a focus on the small to medium size companies. This market segment offers a unique investment opportunity as the valuation gap between large- and small-cap stocks in Vietnam is presently much wider than in comparable neighboring markets and the valuations are significantly depressed versus their regional peers. The fund adopts a fundamental-quantitative approach and employs an in-house earnings model to identify attractive companies where we see high growth opportunities. In conjunction with targeting the maximum upside potential the portfolio has been structured to mitigate corporate government and liquidity risks. The fund invests in a diversified portfolio of 70-90 attractively valued companies to carefully control concentration risk.  This approach allows the fund to sell, or buy, positions without having a significant market impact. The fund is directed under the executive leadership of Thomas Hugger and Andreas Vogelsanger who have more than 50 years combined experience managing investments in frontier markets, Asia and around the world.

For more information about the fund, management team and investment strategy please contact us at info@asiafrontiercapital.com.

Thematic (Sector/Industry)

In line with our process of being on the ground in the countries we invest in, Scott Osheroff, Analyst at Asia Frontier Capital, traveled to Laos to visit portfolio companies and other companies on our shortlist. The photos in this article are all by AFC.

In line with our process of being on the ground in the countries we invest in, Scott Osheroff, Analyst at Asia Frontier Capital, traveled to Laos to visit portfolio companies and other companies on our shortlist. The photos in this article are all by AFC.

Asia Frontier Capital Travel Report: Laos

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

Equity Bottom-Up

Lembaga Tabung Haji (the pilgrimage fund) which has around <a href="http://www.asiaasset.com/news/PilgrimsFund_CEO_SG2604_FS_DM.aspx" target="_blank">US$15 billion</a> under management, has bought additional 1.75 million <a href="https://www.smartkarma.com/entities/19627" target="_blank" data-smartkarma-citation="entities:19627:1">DRB-Hicom Bhd (DRB MK)</a> shares last week which made them a substantial shareholder owning around 5%. The move could be seen as a support by the local player to defend DRB share price post the tumble after <a href="https://www.smartkarma.com/entities/127" target="_blank" data-smartkarma-citation="entities:127:1">Geely Automobile Holdings Ltd (175 HK)</a> 's chairman mentioned that he may abandon the plan to buy Proton as DRB's management keep on changing their plan. In reference to…

Lembaga Tabung Haji (the pilgrimage fund) which has around US$15 billion under management, has bought additional 1.75 million DRB-Hicom Bhd (DRB MK) shares last week which made them a substantial shareholder owning around 5%. The move could be seen as a support by the local player to defend DRB share price post the tumble after Geely Automobile Holdings Ltd (175 HK) 's chairman mentioned that he may abandon the plan to buy Proton as DRB's management keep on changing their plan. In reference to…

As mentioned in my previous report, Proton will benefit greatly from the joint effort with the coming FSP hence <a href="https://www.smartkarma.com/entities/19627" target="_blank" data-smartkarma-citation="entities:19627:1">Drb Hicom Bhd (DRB MK)</a> (which 72% revenue are from Proton) share price sprinted a la Usain Bolt recently. The story goes on with a potential increase in sales due to an improved product mix, benefit from a wider distribution network, tighter cost management discipline, and centralized R&amp;D that lower R&amp;D cost and foster cross-learning.  Capital injection by the Malaysian government and potential cash received from the FSP will strengthen their balance sheet (D/E 51% to 38%) that leads to an improvement of credit rating and improvement of production facilities in Malaysia that increases ROA. The company will also benefit from the best practice in running a day to day operations that could lead to better clarity on expense allocation hence there is hope to lower administrative expenses (which are a staggering 13% of revenue and cannot be allocated to any specific business unit).

As mentioned in my previous report, Proton will benefit greatly from the joint effort with the coming FSP hence Drb Hicom Bhd (DRB MK) (which 72% revenue are from Proton) share price sprinted a la Usain Bolt recently. The story goes on with a potential increase in sales due to an improved product mix, benefit from a wider distribution network, tighter cost management discipline, and centralized R&amp;D that lower R&amp;D cost and foster cross-learning.  Capital injection by the Malaysian government and potential cash received from the FSP will strengthen their balance sheet (D/E 51% to 38%) that leads to an improvement of credit rating and improvement of production facilities in Malaysia that increases ROA. The company will also benefit from the best practice in running a day to day operations that could lead to better clarity on expense allocation hence there is hope to lower administrative expenses (which are a staggering 13% of revenue and cannot be allocated to any specific business unit). 

Proton, a struggling Malaysian car maker, received an injection of MYR 1.5 bn from Malaysian government that can be disbursed upon finding a strategic foreign investor by Q1 2017. Geely is reportedly the front runner for this race. Khazanah and Malaysian government are no longer shareholders as they sold their stakes to DRB Hicom, which could speed up negotiation talk. The share price has risen 39% since the end of November 2016 to date but should the strategic deal is finalized and turn-around is successful, Proton could be in the long term work to turn the company around and change the South East Asia auto manufacturing landscape.

Proton, a struggling Malaysian car maker, received an injection of MYR 1.5 bn from Malaysian government that can be disbursed upon finding a strategic foreign investor by Q1 2017. Geely is reportedly the front runner for this race. Khazanah and Malaysian government are no longer shareholders as they sold their stakes to DRB Hicom, which could speed up negotiation talk. The share price has risen 39% since the end of November 2016 to date but should the strategic deal is finalized and turn-around is successful, Proton could be in the long term work to turn the company around and change the South East Asia auto manufacturing landscape.

Geely share price has had a fantastic rally during the past two months, around 25% since 30th November 2016 to date. The rally in mid of December 2016 to January 2017 was jump-started by an insider buying. According to SCMP, Geely’s Chairman Mr. Li Shu Fu bought another 165.5 million shares from December 6 to 9 with price ranges from HK$7.85 to HK$8.48 each, on average HK$ 8.21. The trade was so big that it accounted for 44% of the stock trading volume. Post this buying, the Chairman boosted his…

Geely share price has had a fantastic rally during the past two months, around 25% since 30th November 2016 to date. The rally in mid of December 2016 to January 2017 was jump-started by an insider buying. According to SCMP, Geely’s Chairman Mr. Li Shu Fu bought another 165.5 million shares from December 6 to 9 with price ranges from HK$7.85 to HK$8.48 each, on average HK$ 8.21. The trade was so big that it accounted for 44% of the stock trading volume. Post this buying, the Chairman boosted his…

Hong Kong

Geely Automobile Holdings Limited operates as a passenger vehicles manufacturing company. The Company provides passenger vehicles development, manufacturing, sales, and other services. Geely Automobile Holdings also exports passenger vehicles.

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Geely Auto (175 HK)

Asia Frontier Capital Travel Report: Laos

In line with our process of being on the ground in the countries we invest in, Scott Osheroff, Analyst at Asia Frontier Capital, traveled to Laos...

Asia Frontier Capital

Pilgrimage Support to the Machine

Lembaga Tabung Haji (the pilgrimage fund) which has around US$15 billion under management, has bought additional 1.75 million DRB-Hicom Bhd (DRB...

Henry Soediarko

Proton:The Rise of the Machine-Part Deux

As mentioned in my previous report, Proton will benefit greatly from the joint effort with the coming FSP hence Drb Hicom Bhd (DRB MK) (which 72%...

Henry Soediarko

Proton: The Rise of the Machine?

Proton, a struggling Malaysian car maker, received an injection of MYR 1.5 bn from Malaysian government that can be disbursed upon finding...

Henry Soediarko

New Products and SEA Footprint?

Geely share price has had a fantastic rally during the past two months, around 25% since 30th November 2016 to date. The rally in mid of December...

Henry Soediarko

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