PACIFIC ALLIANCE CHINA LAND LTD Patrick Boot pboot@pag.com (86) 21 6010 6188
Pacific Alliance China Land
Quarterly Newsletter September 2019
Fund Performance | As at 30 September 2019 |
NAV per Share | US$ 0.6992 |
Total Net Assets | US$ 1.9m |
Issued Shares | 2,653,0781 |
Share Price | US$ 0.72 |
Market Capitalization | US$ 2m |
Portfolio Breakdown | |
Cash | US$ 2,056,855 |
Investments 3 | |
Total Cash and Inv estments | US$ 2,056,855 |
Other Net Assets/(Liabilities) | US$ (201,900)3 |
Fund Details | |
Bloomberg Code | PACL LN |
Reuters Code | PACL.L |
ISIN Code | KYG6846Y1035 |
Listing | AIM London Stock Exchange |
Date of Inception | 22 Nov ember 2007 |
Domicile | Cay man Islands |
Structure | Closed-end f und |
- 2,653,078 ordinary shares issued and outstanding. In December 2018,
20,833,331 shares were repurchased and cancelled. - Following the share capital restructuring in March 2009, 48.69% of the original PACL ordinary shares in issue were repurchased and cancelled. In return, shareholders who tendered theirshares received an equivalent number of new shares in PACL II Limited, a Cayman Islands private realization vehicle that would distribute free cash from exited projects (invested prior to the reconstruction) held by PACL. The inv estments values represent only that amount attributable to the PACL shareholders and exclude any portion that is attributable to PACL II. Those investments marked * were acquired after the restructuring and PACL II does not have a participation.
- Other Assets/(Liabilities) - Includes accrued taxation and other pay ables of US$0.2m
Investment Objective
Pacif ic Alliance China Land Limited (PACL) is a closed-end real estate f und f ocused on inv esting in existing properties, new dev elopments, distressed projects and real estate companies in Greater China. The Fund inv ests opportunistically across all types of property, with a focus on f irst, second and third tier cities. The Fund is adv ised by a dedicated team of experienced prof essionals located across China.
On 25 July 2014, PACL's inv estment policy changed to restrict new inv estment solely to a) supporting existing inv estments, b) utilizing RMB cash assets subject to exchange control restrictions, for low risk short-term inv estments, and c) focusing f uture inv estment management efforts on the realization of the portf olio and the return of net realization proceeds to Shareholders. Since July 2014 PACL has returned a total of US$262million to Shareholders by way of div idends and share repurchases.
Portfolio News
The Fund's net asset value (NAV) as of 30 September 2019 was US$1.9 million or US$0.70 per share, compared to US$2.61 per share as at the prev ious quarter ending 30 June 2019. Following the completion of the capital reduction of the Tianjin WOFE, a div idend of US$5 million was paid to Shareholders on 20 September 2019.
In line with market expectations, China's Gross Domestic Product (GDP) grew 6.0% y ear-on-y ear in the third quarter, a slight decrease compared to 6.2% in the last quarter. Robust growth in consumption and the serv ices sector continued to contribute positiv ely to economic perf ormance as tertiary industries grew by 7% in the quarter. Real estate dev elopment inv estment increased by 10.5% y ear on y ear in the f irst eight months of 2019, slightly lower than 10.6% f or the f irst sev en months of 2019. The Chinese economy still f aces challenges and downward pressure f rom excess industrial capacity, as well as continuing trade tensions with its largest trading partner, the United States. While the macroeconomic situation is decidedly mixed, China's ov erall outlook remains stable despite the ongoing China-U.S. trade disagreement and negotiations. The gov ernment is committed to continuing its monetary policy support and f iscal expansion in order to maintain a moderate and sustainable lev el of growth.
According to data f rom China's National Bureau of Statistics (NBS), prices of new homes increased in 55 of the 70 cities tracked by the NBS in August 2019, compared with 60 in July 2019. Most tier-one and tier-two cities saw limited growth in terms of both price and transaction v olumes as a result of the Chinese gov ernment's stricter property tightening measures. During August, av erage new home prices in f irst-tier,second-tier, and third-tier cities increased 0.3%, 0.5%, and 0.7% month-on- month, respectiv ely .
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Patrick Boot pboot@pag.com (86) 21 6010 6188
US$ NAV | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD |
Return% | |||||||||||||
2007 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | -0.08% | -0.08% |
2008 | -0.27% | -0.33% | +0.04% | +2.61% | +0.78% | +0.55% | +0.40% | -0.16% | +0.76% | +1.21% | -0.15% | +0.59% | +6.20% |
2009 | +0.29% | +0.06% | +2.61% | +0.05% | +0.12% | +1.15% | +0.50% | +1.14% | +0.82% | -0.20% | -0.21% | +20.79% | +28.60% |
2010 | +0.53% | -0.21% | +1.49% | +0.02% | -0.09% | +1.96% | +1.53% | -0.33% | +11.63% | +0.66% | +0.03% | +8.90% | +28.10% |
2011 | -0.51% | -0.04% | +0.35% | +2.61% | -0.09% | +1.00% | +7.73% | 1.34% | -0.19% | +0.86% | -0.28% | +6.12% | +20.55% |
2012 | -0.26% | -0.12% | +0.75% | -0.16% | -0.45% | +2.61% | -0.17% | -0.28% | +1.00% | +0.12% | +0.77% | +3.10% | +6.97% |
2013 | +0.24% | -0.08% | +0.12% | +1.46% | +0.05% | +0.86% | +2.90% | -0.06% | -0.10% | +0.11% | -0.06% | +3.52% | +9.25% |
2014 | -0.75% | -0.94% | -5.35% | -0.27% | -0.63% | -0.24% | -0.19% | +1.38% | +2.94% | +0.52% | +2.94% | +6.55% | +5.64% |
2015 | -1.18% | -0.62% | -0.88% | +4.10% | -0.12% | -0.65% | -2.05% | -6.11% | -1.06% | +3.91% | -3.41% | -5.40% | -13.13% |
2016 | -5.29% | -3.34% | +8.38% | +1.40% | -1.70% | -2.89% | +3.62% | +2.90% | +3.18% | -0.57% | +11.51% | +8.38% | +26.96% |
2017 | -0.03% | -0.70% | -0.37% | -0.32% | +0.21% | -0.06% | +0.25% | +1.90% | -1.21% | -0.11% | -0.50% | +1.42% | +0.43% |
2018 | +3.06% | -0.99% | -0.48% | -0.93% | -1.31% | -2.19% | -2.92% | -0.40% | -0.85% | -1.32% | -0.19% | +2.90% | -5.64% |
2019 | +2.46% | -0.05% | -1.31% | -0.59% | -3.09% | -1.59% | -0.32% | -1.53% | -72.66% | -74.29% |
Portfolio News (continued)
China's home sales v olume, in terms of transacted building f loor area, increased 0.6% y ear-on-y ear in the f irst eight months of 2019. The Manager expects that the central gov ernment will continue to adopt diff erentiated housing policies f or diff erent cities, tightening controls in tier-one and tier-two cities where housing inv entories are low, and loosening controls in lower-tier cities in order to boost demand and help f acilitate a reduction of inv entories in those ov ersupplied markets.
Conclusion
Following the div idend to Shareholders, the Company will put a proposal to Shareholders to commence an orderly wind up of the Company and cancellation of the Company 's shares from trading on AIM.
Any questions regarding the abov e inf ormation can be addressed with the Manager v ia email or telephone.
Fund Highlights
Distributions
Following the completion of the capital reduction of the Tianjin WOFE, a div idend distribution to shareholders of US$5 million was paid on 20 September 2019.
Once the Company is delisted, and liquidation of the Company is completed, which the Manager expects to take place by the end of Q1 2020, all excess cash will be paid to shareholders in a f inal distribution.
Portfolio Manager
Patrick Boot
Investment Manager | |
PAG Real Estate | |
Tel: (86) 21 6010 6188 | pboot@pag.com |
Nominated Adviser | |
Grant Thornton UK LLP | |
Philip Secrett | |
Tel: (44) 207 385 5100 | philip.j.secrett@uk.gt.com |
Important Information
The information contained in this Quarter ly Update has been prepared solely by P acific Allianc e Real Estate Limited ("the Manager"). None of the information contained in this Monthly Update is intended as financial, investment or profess ional advice and should not be taken as such by any party receiv ing it or obtaining it through any means. Nothing in this Monthly Update s hould be construed as an offer to sell or a solicitation of an offer to buy any secur ity or to partic ipate in any trading strategy. Contents ar e bas ed on sourc es which the Manager believ es to be r eliable; however no warr anty or representation, ex press or implied is giv en as to acc uracy and completeness. You should rely on independent confirmation of any inform ation contained her ein before relying on that inform ation for any purpos e whatsoever. Any forward looking statement included in this M onthly Update is based on the opinions or expectations of the Manager, and actual results could differ materially. Historical perform ance is not an indicator of future performance and should not be assumed or construed as suc h. Finally, all the inform ation c ontained herein including market data and prices are subject to change without notice. The information contained her ein is being made available to institutional investors and investment professionals only as defined in the Financial Services and Markets Act 2000.
Pacific Alliance Real Estate Limited is the investment manager of Pacific Alliance China Land Limited. The Manager is not regulated by the Financial Services Authority.
www.pacl-fund.com
Pacific Allianc e China Land Lim ited is part of PAG, one of the r egion's lar gest Asia-foc used alternative investment managers with funds under m anagement across Priv ate Equity, Real Estate and A bsolute Retur n strategies. PAG has a presence across Asia with over 330 staff working in the region.
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Pacific Alliance China Land Ltd. published this content on 31 October 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 October 2019 09:56:04 UTC
