RNS Number : 7211Q
Naya Bharat Property Company PLC
17 April 2009
17 April 2009
Naya Bharat Property Company plc
First Quarter 2009 Summary
The unaudited Net Asset Value ('NAV') of the Naya Bharat Property Company plc (the 'Company') stood at USD 0.23 per share on 31 March 2009. This represents a fall of 17.9% over the first quarter, substantially outperforming the Indian property sector as a whole, with the BSE Realty Index down 34.0% in US dollar terms. The Company's share price increased by 8.9% over the same period as its discount to net asset value narrowed.
Even though the value of Indian property assets continues to fall, recent indicators suggest that the property cycle may be close to bottoming out. Last year's upward trend in both inflation and interest rates has now been decisively reversed with inflation falling close to zero from an August 2008 peak of nearly 13% and the Reserve Bank of India cutting its benchmark repurchase rate by 400 basis points over the same period to an all-time low of 5%, and with real interest rates remaining high, there may be scope for further cuts in interest rates. At the same time, the Reserve Bank has directed banks to increase their lending while the government has introduced a variety of fiscal measures to stimulate the economy.
The impact of these measures may be evident in such indicators as car and motorcycle sales, where sales figures from manufactures have been growing strongly since December 2008 with, for example, the leading car producer Maruti Suzuki reporting sales up 15% over the year to March 2009. Fears of large scale layoffs in the IT and Finance industries have also proven to be misplaced, with many banks hiring staff and adding branches.
With credit conditions easing and the employment scenario not as bad as feared, property developers in the residential segment have responded with price cuts. All the large players, including DLF, Unitech and HDIL have announced projects priced as much as 30% below peak levels and have in return received reasonably enthusiastic responses. Demand may be being held back by some concern that prices will continue to fall but once prices stabilise and potential buyers realise that they are unlikely to fall any further, demand is likely to strengthen. These signs of recovery are, however, limited to the residential market. The commercial and retail segments of the property market remain depressed with companies attempting to reschedule their debt obligations, divest non-core assets and raise cash from private equity firms in order to improve their financial positions.
During the quarter, holdings in BSEL and ERA Infra Engineering were divested. The former, as a shopping mall player in Nagpur, was vulnerable to continuing weakness in the retail segment whilst the latter had outperformed the sector considerably. These sales were balanced by new positions in Unitech and Ascendas India. Unitech was only divested in July last year but has since raised cash from a partial sale of its telecom subsidiary and restructured a substantial part of its debt, thus alleviating the concerns which prompted the earlier disposal. Its share price fell by 76% over the intervening period. Ascendas India is a REIT with well-located commercial properties in Bangalore, Chennai and Hyderabad. It is expected to provide stable income, is relatively inexpensive and pays a 13% yield.
The Company's ten largest investments as at 31 March 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 18.0%
HDIL 15.4%
DLF 15.4%
Indiabulls Real Estate 14.9%
IFCI 9.1%
BSE Realty Index PN 8.2%
Ascendas India Trust 4.3%
DSK Developers 2.3%
Ansal Housing 1.8%
Orbit Corporation 1.8%
Enquiries
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Charlemagne Capital
Varda Lotan / Christopher Fitzwilliam Lay
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020 7518 2100
marketing@charlemagnecapital.com
www.charlemagnecapital.com
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Panmure Gordon
Hugh Morgan / Stuart Gledhill
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020 7459 3600
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Smithfield Consultants
John Kiely / Gemma Froggatt
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020 7360 4900
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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
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