Jade Road Investments : 2022 Interim Report (English Version) | MarketScreener







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JADE ROAD INVESTMENTS LIMITED | INTERIM REPORT 2022

HIGHLIGHTS

22 September 2022

JADE ROAD INVESTMENTS LIMITED

(“Jade Road Investments”, “JADE”, the “Company” or the “Group”)

INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2022

Jade Road Investments Limited (AIM: JADE), the London quoted pan-Asian diversified investment vehicle focused on providing shareholders with attractive uncorrelated, risk-adjustedlong-term returns, is pleased to announce its interim results for the six months ended 30 June 2022.

FINANCIAL HIGHLIGHTS:

  • Total income increased to US$1.56 million from interest income and profit on partial disposal of one investment (H1 2021: US$1.24 million).
  • Net profit of US$1.02 million (H1 2021: US$0.27 million loss).
  • Consolidated profit per share (basic) of US$0.88 cents (H1 2021: US$0.24 cents loss).
  • Consolidated NAV at 30 June 2022 increased slightly by 1.5% to US$69.04 million/GBP 56.83 million (31 December 2021: US$68.03 million/GBP50.33 million).
  • NAV per share at 30 June 2022 US$0.59 (GBP0.49) (30 June 2021 US$0.90/GBP0.65).
  • Period end cash position of US$0.44 million (30 June 2021: US$2.56 million).

INVESTMENT AND OPERATIONAL HIGHLIGHTS:

  • Future Metal Holdings Limited (“Future Metal“)
    o The Investment Manager and Board of the Company continue to focus on divestment opportunities for this asset.
    1. The local management team is actively seeking new sales channels to enhance the business and also seeking local divestment opportunities as directed by the Investment Manager.
  • Meize Energy Industries Holdings Limited (“Meize“)
    1. The Company partially divested its interest in the period as it entered into a share sale agreement for 112,500 shares of the Series B Preferred Equity in Meize for consideration of USD1.2 million, which was settled in three equal tranches.
  1. The first tranche was received in June 2022 with the remaining two tranches received by the end of August 2022.
    1. The Company maintains an interest of 6.3 per cent in this business.
  • DocDoc Pte Ltd (“DocDoc“)
    1. The investee company has continued to develop its ‘Neo Insurer’ model by building partnerships with insurance companies in the region. It is also in discussions with various investors regarding capital raisings to position the business for its future growth.

JADE ROAD INVESTMENTS LIMITED | INTERIM REPORT 2022

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HIGHLIGHTS

CHAIRMAN OF JADE ROAD INVESTMENTS, JOHN CROFT, COMMENTED:

“The past six months continued to pose a challenging period for the Chinese economy as it faces the slowest GDP growth forecast in four decades.

Notwithstanding these difficult times, Jade Road successfully completed the partial divestment of Meize, demonstrating that the Company has the in- country resources and expertise to work closely with portfolio companies to achieve investment returns.

The Board of the Company and the Investment Manager’s assessment is that Asian SMEs continue to provide investment opportunities for the Company as strong, income-generating assets, at an attractive entry point for Jade.

The Board is confident that significant opportunities exist for Jade Road going forward, particularly investment candidates in the IT, Fintech, Healthcare, and online commerce sectors in Southeast Asia.”

For further information on JADE, please visit the Company’s website at www.jaderoadinvestments.com and follow the Company on Twitter (@JadeFinance).

FOR FURTHER INFORMATION, PLEASE CONTACT:

Jade Road Investments Limited

+44

(0)

778 531 5588

John Croft

WH Ireland Limited – Nominated Adviser

+44

(0)

20 7220 1666

James Joyce

Andrew de Andrade

Hybridan LLP – Corporate Broker

+44

(0)

203 764 2341

Claire Noyce

Lionsgate Communications – Communications Adviser

+44

(0)

779 189 2509

Jonathan Charles

ABOUT JADE ROAD INVESTMENTS

Jade Road Investments Limited is quoted on the AIM Market of the London Stock Exchange and is committed to providing shareholders with attractive uncorrelated, risk-adjustedlong-term returns from a combination of realising sustainable capital growth and delivering dividend income.

The Company is focused on providing growth capital and financing to emerging and established Small and Medium Enterprises (SME) sector throughout Asia, and is well-diversified by national geographies, instruments and asset classes. This vital segment of the economy is underserved by the traditional banking industry for regulatory and structural reasons.

The Company’s investment manager, Harmony Capital, seeks to capitalise on its team’s established investment expertise and broad networks across Asia. Through rigorous diligence and disciplined risk management, Harmony Capital is dedicated to delivering attractive income and capital growth for shareholders with significant downside protection through selectively investing in assets and proactively managing them.

Harmony Capital is predominately sourcing private opportunities and continues to create a strong pipeline of attractive income-generating assets from potential investments in growth sectors across Asia, including healthcare, fintech, hospitality, IT and property.

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JADE ROAD INVESTMENTS LIMITED | INTERIM REPORT 2022

The successful partial disposal of Meize Energy Industries (“Meize”), a leading privately owned wind turbine blade manufacturing company in China, at a 22% premium to the carrying value as at the 31st of December 2021, helped validate Jade Road’s investment strategy during challenging times for the capital markets.

The past six months continued to pose a challenging period for the Chinese economy as it faces the slowest GDP growth forecast in four decades.

Notwithstanding these difficult times, Jade Road successfully completed the partial divestment of Meize, demonstrating that the Company has the in- country resources and expertise to work closely with portfolio companies to achieve investment returns.

Total income increased to USD1.56 million from interest income and profit, compared to the corresponding period in the previous year (H1 2021: USD1.24 million).

Net profit increased to USD1.02 million (H1 2021: USD0.27 million loss) while consolidated profit per share (basic) increased to USD0.88 compared to a loss of USD0.24 (H1 2021).

INVESTMENT PORTFOLIO

Jade Road’s largest shareholding is an 85% stake in Future Metal Holdings Limited (FMHL), the largest magnesium dolomite quarry in Shanxi Province. The gradual removal of travel restrictions in China is helping FMHL to reach out to new clients with a further geographical radius for its high-end products. The investment team’s focus is on achieving a partial or complete sale of this asset and a formal sales process has been initiated with this objective in mind.

In June 2022, the Company announced the partial divestment via a share purchase agreement (SPA) for 112,500 shares of the Series B Preferred Equity in Meize for a consideration of USD1.2 million. The consideration for the disposal was to be received in three equal tranches of USD400,000. The first of these tranches was received in June, the second and third tranche payments of USD400,000 were received in July and August, thereby completing the transaction.

CHAIRMAN’S STATEMENT

The core investment strategy remains to pivot away from China and focus on the broader Asian SME subsector, which is showing greater resilience than larger companies in terms of recovery and build a base of income generating assets that covers overheads, management fees and finance costs, with a growing surplus to fund dividends.

The Board is confident that significant opportunities exist for Jade Road going forward, particularly investment candidates in the IT, Fintech, Healthcare and online commerce sectors in Southeast Asia.

A good example is Jade Road’s investment in Singapore-based DocDoc, which continues to develop its Neo Insurer model.

ESG

Environmental, Social and good corporate Governance is integral to Jade Road’s responsible investment approach., which is executed through its Investment Manager, Harmony Capital.

POST BALANCE SHEET EVENTS

The partial disposal of the Company’s interest in Meize Energy for $1.2m was announced in June 2022. $800k of the total $1.2m consideration was received in two tranches in July and August. As reported, the partial divestment of Meize implies a valuation of USD10 million and a premium of 22.0% to the carrying value as at the 31st of December 2021 (USD8.2 million). Following this transaction, Jade retains a 6.3% stake in Meize.

The Board remains confident in the longer term prospects of this and its other portfolio investments.

SUMMARY

Whilst China falters, the Asian Development Bank has reported that “developing Asia’s economies are forecast to grow 5.2% this year and 5.3% in 2023, thanks to a robust recovery in domestic demand and continued expansion in exports“. The Board of the Company and the Investment Manager’s assessment is that Asian SMEs continue to provide investment opportunities for the Company as strong, income-generating assets, at an attractive entry point for Jade. Given the stage of growth of many of these SMEs, the Investment Manager continues to pursue a strategy of structuring investments through credit instruments where possible. Coupled with continued divestments from our Chinese legacy assets, the Company believes this investment strategy will create a better constructed portfolio with near-term downside protection.

JADE ROAD INVESTMENTS LIMITED | INTERIM REPORT 2022

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I would like to take this opportunity to thank the investment team for the successful completion of the partial divestment in Meize, proving that with patience and perseverance, deals can still be done.

I would also like to thank our shareholders for your continued support, and I look forward to updating you on progress.

  • Asian Development Bank, ‘Developing Asia Economies Set to Grow 5.2% this Year Amid Global Uncertainty’, 6 April 2022.

The principal assets as of 30 June 2022 are detailed below:

Valuation

Equity

at 31

investment/

Valuation

Effective

December

Credit

Cash

other

Fair value

at 30 June

Principal assets

interest %

Instrument type

2021

income

receipts

movement

adjustment

2022

US$ million

US$ million

US$ million

US$ million

US$ million

US$ million

FLM Holdings

Convertible Bond

0.7

(0.7)

Future Metal Holdings Limited

84.8

Structured Equity

50.4

0.3

50.7

Meize Energy Industrial

Redeemable convertible

Holdings Ltd

6.3

preference shares

8.2

0.3

(1.2)

1.5

8.8

DocDoc Pte Ltd

Convertible Bond

2.6

0.1

2.7

Infinity Capital Group

Secured Loan Notes

1.4

0.2

1.5

Infinity TNP

40

Equity

3.6

3.6

Project Nicklaus

1.8

1.8

Loan to HKMH

3.7

3.7

Other receivables

0.8

0.8

Corporate debt

(3.6)

(0.2)

(3.8)

Other liabilities

(1.0)

(0.3)

(1.3)

Cash

0.8

0.4

(0.8)

0.4

Total Net Asset Value

68.0

1.5

0.4

(1.6)

0.8

69.0

FUTURE METAL HOLDINGS LIMITED (“FMH“)

Our largest asset by value is the dolomite quarry project (“Quarry“) in China, Future Metal Holdings Limited (“FMHL“), which was previously known as Hong Kong Mining Holdings. The Company has an 85% shareholding in FMHL.

JADE has been exploring the option of a partial or full exit of this investment by actively engaging with interested parties on the ground in the Shanxi Province as well as with brokers in Mainland China, Hong Kong and Singapore.

Including loan disbursements provided by the Company to FMHL and its subsidiaries and accrued PIK interest, the estimated fair value of the Company’s investment is US$50.7 million as of 30 June 2022.

MEIZE ENERGY INDUSTRIES HOLDINGS LIMITED (“MEIZE“)

Swift Wealth Investments Limited, a 100% (2019: 100%) owned subsidiary of the Company incorporated in the British Virgin Islands, held a 7.2% stake in Meize through a redeemable preference share structure.

Meize is a privately owned company that designs and manufactures blades for both onshore and offshore wind turbines.

In June 2022, the Company entered into a share purchase agreement for 112,500 shares of the Series B Preferred Equity in Meize for consideration of USD1.2 million. The transaction price implies a valuation of USD10.0 million for the Company’s investment in Meize.

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JADE ROAD INVESTMENTS LIMITED | INTERIM REPORT 2022

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Disclaimer

Jade Road Investments Ltd. published this content on 22 September 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 September 2022 10:49:06 UTC.

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Sales 2021

Net income 2021 -38,4 M

Net cash 2021 63,5 M

P/E ratio 2021 -0,23x
Yield 2021
Capitalization 5,55 M
5,55 M
EV / Sales 2020
EV / Sales 2021
Nbr of Employees
Free-Float 27,9%

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