TIDMSIHL
RNS Number : 6115X
Symphony International Holdings Ltd
30 April 2019
Not for distribution, directly or indirectly, in or into the
United States or any jurisdiction in which such distribution would
be unlawful.
Symphony International Holdings Limited
30 April 2019
Symphony International Holdings Limited ("Symphony", "SIHL" or
the "Company") (LSE: SIHL.L), a leading investor in
consumer-related businesses, primarily in the healthcare,
hospitality and lifestyle sectors (including education and branded
real estate developments) in the Asia-Pacific region, today issues
the following Shareholder Update.
Highlights
-- Symphony's unaudited Net Asset Value ("NAV") at 31 March 2019
was US$541,785,257 and NAV per share was US$1.0554. This compares
to NAV and NAV per share at 31 December 2018 of US$492,705,463 and
US$0.9598, respectively
-- The change in NAV was predominantly due to a change in the
share price of Minor International Pcl ("MINT")
-- Symphony's share price continued to trade at a discount to
NAV in Q1 2019. At 31 March 2019, Symphony's share price was
US$0.67, representing a discount to NAV per share of 36.5% which
compares to 40.6% at 31 December 2018
-- During the first quarter, Symphony announced an investment
related to Vietnam's leading private logistics company, Indo Trans
Logistics Corporation ("ITL")
Anil Thadani, Chairman of Symphony Asia Holdings Private Limited
and a Director of Symphony, said:
"Market sentiment rebounded in Q1 2019, which had a positive
impact on our net asset value. As mentioned in our 2018 annual
report, we have been seeing more interesting opportunities coming
to market. As a result, we announced in March a new investment
related to Indo Trans Logistics Corporation, Vietnam's largest
independent integrated logistics company. We hope to announce
additional new investments in the coming months that will provide
additional exposure to attractive new sectors in key emerging
markets."
For further information:
For further information:
Symphony Asia Holdings Pte. Ltd.:
Anil Thadani +65 6536 6177
Numis Securities Limited:
Hugh Jonathan +44(0)20 7260 1000
Nathan Brown
Dealing codes
The ISIN number of the Ordinary Shares is VGG548121059, the
SEDOL code is B231M63 and the TIDM is SIHL.
The LEI number of the Company is 254900MQE84GV5DS6F03.
About Symphony
Symphony is a London listed strategic investment company that
invests in consumer businesses in the healthcare, hospitality and
lifestyle ("HH&L") sectors (including education and branded
real estate developments), which are principally in Asia. It offers
a way for investors to gain exposure to the rising disposable
incomes and wealth in fast growing economies. Symphony's objective
is to provide superior capital growth by investing in high quality
companies and forming long-term business partnerships with talented
entrepreneurs. Symphony is managed by Symphony Asia Holdings
Private Limited, which has a team of investment professionals with
a broad range of expertise - many of them have been working in Asia
for more than 30 years. For more information, please visit our
website at www.symphonyasia.com
MARKET OVERVIEW
Following a sharp decline in global equity markets during the
fourth quarter of 2018 due to concerns over slowing economic growth
and geopolitical tensions, financial markets rebounded in Q1 2019.
The change in investor sentiment was driven by ongoing progress in
US-China trade talks and a more dovish stance taken by central
banks. Asian financial markets performed particularly well, but
weak economic data from China cooled sentiment towards the end of
the quarter.
Although we expect volatility to persist with geopolitical and
trade tensions, these tend to be short-lived. As mentioned in
earlier updates, governments tend to lean towards pro-market
policies. More relevant to Symphony's portfolio, relative growth in
Asia will continue to remain strong. Emerging and developing Asia
is forecast by the IMF to grow by 6.3% in 2019 and 2020, which
compares to 1.8% and 1.7% for the same years, respectively, in
advanced economies that include the US, the euro area and Japan
amongst other countries. Intra-regional trade and growth in incomes
in Asia are making economies in the region less dependent on
exports as they transition towards more consumption driven
growth.
As part of Symphony's ongoing strategy to gain exposure to the
growth of industry and commerce in key emerging market countries
across Asia, we announced at the end of March 2019 an investment
related to Vietnam's leading private logistics company, Indo Trans
Logistics Corporation ("ITL"). We continue to explore several
additional opportunities to further broaden our portfolio in this
respect. Our ongoing focus is to provide Symphony's shareholders
with participation in Asia's long-term economic growth.
COMPANY UPDATE
Symphony's listed investments accounted for 57.5% of NAV at 31
March 2019 (or US$0.606 per share), which is up from 54.6% of NAV
at 31 December 2018. The change is predominantly due to an increase
in the value of MINT. The value of Symphony's unlisted investments
(including property) comprised a further 40.0% of Symphony's NAV
(or US$0.423 per share), and 2.5% of NAV (or US$0.027 per share)
was temporary investments.
Symphony's share price continued to trade at a discount to NAV
in 1Q19. At 31 March 2019, Symphony's share price was US$0.67,
representing a discount to NAV per share of 36.5% which compares to
40.6% at 31 December 2018.
As of 31 March 2019, the sum of Symphony's temporary investments
and listed investments amounted to US$324.9 million, or US$0.633
per share. Symphony's share price on the same date represented a
premium of 5.9% to temporary and listed investments.
PORTFOLIO DEVDELOPMENTS
Minor International Pcl ("MINT") is one of the largest
hospitality and restaurant companies in the Asia Pacific region.
MINT owns 369 hotels and manages 144 other hotels and serviced
suites with 75,241 rooms. MINT owns and manages hotels in 51
countries predominantly under its own brand names that include
Anantara, Oaks, NH Collection, NH Hotels, nhow, Elewana, AVANI, Per
AQUUM and Tivoli. MINT also owns and operates 2,270 restaurants
(comprising 1,159 equity-owned outlets and 1,111 franchised
outlets) under brands that include The Pizza Company, Benihana,
Swensen's, Sizzler, Dairy Queen, Burger King, Beijing Riverside,
Thai Express, The Coffee Club, Veneziano Coffee Roasters, and
Breadtalk.
MINT's operations also include contract manufacturing and an
international lifestyle consumer brand distribution business with
490 retail outlets focusing on fashion, cosmetics, wholesale and
direct marketing channels under brands that include Anello,
Bossini, Brooks Brothers, Esprit, Charles & Keith, Zwilling
J.A. Henckels and Bodum amongst others.
Update: MINT's core revenue, EBITDA, and net profit grew by
102%, 95% and 32%, respectively, in Q4 2018 year-over-year. The
growth was driven by the Hotel and Mixed-Use business following the
consolidation of the NH Hotel Group SA ("NH Group") in October
2018. The relatively slower EBITDA and net profit growth compared
to revenue was due to lower profitability of the restaurant
business, which had same-store-sales decline, a mismatch in sales
recognition from residential developments and higher
personnel-related expenses from properties under management letting
rights.
In 4Q18, core revenue from hotel and related services operations
increased by 194% from THB8.4 billion to THB24.5 billion due to the
inclusion of the NH Group and robust growth from non-NH Group
related hotels overseas. Although MINT's hotels in Bangkok
continued to perform well, operations in the provinces of Thailand
were impacted from the slowdown in inbound tourism from China and
some European countries.
MINT continued to expand its restaurant business with the total
number of outlets increasing by 96 to 2,270 quarter-over-quarter.
The majority of the new outlets were The Pizza Company, Dairy Queen
and The Coffee Club. MINT entered into a joint venture agreement
with the Vietnam Investments Group to be the master franchisee for
The Coffee Club brand in Vietnam.
Total core revenue for the restaurant group declined by 5% in
4Q18 year-over-year to THB5.8 billion due to a slowdown in
Australia and strategic outlet closures in Singapore, which was
partially offset by sales growth in Thailand. Core EBITDA from this
business segment declined by 37% during the same period due to
heightened margin pressure from same-store-sales contraction, new
openings and higher marketing expenses.
The Retail Trading operations benefited from an increase in the
number of retail outlets by 38 during 4Q18.
During the quarter, the value of Symphony's investment in MINT
increased by US$43.5 million to $301.3 million at 31 March 2019
from US$257.8 million at 31 December 2018. The change in valuation
is due to an increase in MINT's share price by 14.0% to THB38.75
from THB34.0 and an appreciation in the onshore Thai baht rate by
2.5% during the same period.
Minuet Limited ("Minuet") is a joint venture between Symphony
and an established Thai partner. Symphony has a direct 49% interest
in the venture and is considering several development and/or sale
options for the land owned by Minuet, which is located in close
proximity to central Bangkok, Thailand.
Update: The Company's investment cost (net of shareholder loan
repayments) was approximately US$32.1 million at 31 March 2019. The
fair value of Symphony's interest at 31 March 2019 was US$75.0
million based on an independent third party valuation at 31
December 2018. The change in value from US$73.6 million at 31
December 2018 is predominantly due to an appreciation of the
offshore Thai baht by 1.8%.
Structured Transaction in Vietnam: Indo Trans Logistics
Corporation ("ITL") was founded in 2000 as a freight-forwarding
company and has since grown to become Vietnam's largest independent
integrated logistics company with a network that is spread across
Vietnam, Cambodia, Laos, Myanmar, and Thailand. ITL has grown to
national champion status in Vietnam with over 2,000 employees
across its business units and joint ventures.
During the first quarter, Symphony entered into a structured
transaction to provide funds to Su Misura Pte Ltd, a company owned
by the Management of ITL. The transaction will provide Symphony
with an opportunity to acquire a minority stake in the company at a
later date. The transaction represents more than 5% of SIHL's NAV.
However, due to competitive reasons, exact pricing information is
not being disclosed at this time.
IHH Healthcare Berhad ("IHH") is one of the largest healthcare
providers in the world by market capitalisation. Its portfolio of
healthcare assets includes Parkway Holdings Limited, Pantai
Holdings Berhad, International Medical University ("IMU"), Acibadem
Saglik Yatirimlari Holding A.S. ("Acibadem") and Fortis Healthcare
Limited ("Fortis"). IHH has a broad footprint of assets in Asia as
well as Turkey, Abu Dhabi, Central and Eastern Europe that employs
55,000 people and operates over 15,000 licensed beds in 82
hospitals worldwide.
Update: IHH reported 4Q18 revenue and EBITDA growth of 10% and
18%, respectively. The growth was due to organic growth from
existing operations with the ramp-up of Gleneagles Hong Kong
Hospital and Acibadem Altunizade Hospital (both opened in March
2017), and inorganic growth related to the acquisition of Amanjaya
(acquired in October 2018) and Fortis (acquired in November 2018).
Excluding the effects of the foreign exchange, IHH's revenue and
EBITDA increased 28% and 33%, respectively, in 4Q18 over the same
period last year.
Operations at Parkway Pantai and Acibadem continued to see
growth in admissions and revenue intensity.
At 31 March 2019, the fair value of Symphony's investment in IHH
was US$10.0 million down from US$11.0 million at 31 December 2018.
The change is primarily due to a sale of 1.4 million shares that
generated net proceeds of US$2.0 million, which was partially
offset by an increase in the share price by 7.3% to MYR5.76 from
MYR5.37 and 1.2% strengthening of the Malaysian ringgit during the
quarter.
Desaru Property Joint Venture in Malaysia: Symphony has a 49%
interest in a property joint venture in Malaysia with an affiliate
of Themed Attractions Resorts & Hotels Sdn Bhd, a hotel and
destination resort investment subsidiary of Khazanah Nasional
Berhad, the investment arm of the Government of Malaysia. The joint
venture has developed a beachfront resort and private villas on the
south-eastern coast of Malaysia that will be branded and managed by
One & Only Resorts ("O&O").
Update: Symphony invested a total of US$36.7 million as at 31
March 2019 in the Desaru joint venture. Symphony's interest in the
joint venture at 31 March 2019 was valued at US$35.2 million based
on an independent third party valuation conducted on 31 December
2018, which compares to US$33.6 million at 31 December 2018. The
change in value is predominantly due to an increase in investment
related to ongoing development costs and a 1.2% increase in the
Malaysian ringgit.
The project has been delayed due to rectification works and
modifications related to design requirements by the new operator,
O&O.
SG Land Co. Ltd ("SG Land") is a joint venture company that owns
the leasehold rights for two office buildings in downtown Bangkok -
SG Tower and Millenia Tower. The two buildings in SG Land's
portfolio have high occupancy rates and offer attractive rental
yields. Symphony holds 49.9% of the venture.
Update: SG Land continues to generate stable rental income on
its two office towers. The fair value of SG Land at 31 March 2019
was US$9.9 million based on an independent third party valuation at
31 December 2018. The change in value from US$9.5 million at 31
December 2018 is due to an appreciation of the Thai baht by 1.8%
and an increase in cash that has not yet been offset by a reduced
lease term, which is used to derive fair value.
Liaigre Group ("Liaigre"): Symphony announced in May 2016 that
it acquired, as part of a consortium, Financier CL SAS, the holding
company of the Liaigre Group ("Liaigre"). The Liaigre brand is
synonymous with discreet luxury, and has become one of the most
sought-after luxury furniture brands. Liaigre has a strong
intellectual property portfolio and offers a range of bespoke
furniture, lighting, fabric & leather, and accessories through
a network of 25 showrooms in 11 countries across Europe, the US and
Asia. In addition, Liaigre also undertakes exclusive interior
architecture projects for select yachts, hotels, restaurants and
private residences.
Update: New orders received by Liaigre in Q1 2019 were 41%
higher than the same period a year earlier. However, new orders are
lower than expected due to the delay to several large orders and
weaker showroom sales in Paris due to the "Gilets Jaunes" protests.
The Asian business continues to grow, particularly from large
orders, and the current project pipeline is encouraging. As
mentioned in the prior update, the Pierre Chen family from Taiwan
became a partner and co-owner in Liaigre, following an investment
in February 2019, to facilitate expanding Liaigre into
complimentary businesses.
Property Joint Venture in Japan: Symphony invested in a property
development venture that acquired two hotels in Niseko, Hokkaido,
Japan. Symphony has a 37.5% interest in this venture.
Update: The property is located in the Hirafu area of Niseko,
which is a premier ski destination in Asia that also attracts
visitors all-year-round. Niseko is being likened to Asia's Aspen
and St. Moritz. The joint venture is actively exploring potential
options for this asset that include a development and a partial or
full sale.
Chanintr Living Limited ("Chanintr") is a luxury lifestyle
company which primarily sells several high-end U.S. and European
furniture brands and is based in Thailand. The current portfolio of
furniture brands includes Christian Liaigre, Barbara Barry, Baker,
Thomasville, Herman Miller, Minotti, Bulthaup kitchens, Puiforcat,
and St. Louis. It also provides Furniture, Fixtures & Equipment
solutions for various real estate and hotel projects. Chanintr also
has the franchise to operate the Clinton Street Baking Company
("CSB") F&B outlets in selected Asian markets.
Update: Chanintr posted strong revenues and profitability for
the March 2019 quarter due to a strong delivery cycle on large
projects, office systems, and co-working spaces. Management expects
the outperformance of its office segment to continue. The company
has also embarked on a plan to update core business processes to
position itself for future growth. For the remainder of 2019, the
company expects earnings to be stable. In the second half of the
year, the company expects to open two new showrooms close to its
Thong Lor site. These will be for Waterworks, a high-end bathroom
and kitchen fittings brand, and an in-house Chanintr Home brand.
Office systems will get a new dedicated space within the Sukhumvit
area.
Symphony continues to support management's efforts to expand
into related market segments and further develop and enhance its
business.
WCIB International Co. Ltd. ("WCIB"): In January 2017, Symphony
entered into a joint venture, WCIB International Co. Ltd. ("WCIB"),
that developed and operates Wellington College International
Bangkok, the fifth international addition to the Wellington College
family of schools. WCIB operates a co-educational school that will
ultimately cater to over 1,500 students aged 2-18 years of age when
all phases are fully complete. WCIB commenced classes on August 23,
2018 with 150 inaugural students attending Nursery to Year 6.
Update: During the first quarter of 2019, the school continued
to operate smoothly with student enrollment at 151 to start Term 3.
School management is implementing changes in marketing to support
growth including hiring for a marketing position in content
creation and a new web master for digital content management.
Plans for student growth and the related staffing needs were
reviewed and approved by the Board early in Term 2. The net result
for academic staffing is an increase of 10 teachers and 5
additional teaching-related positions for the next academic year,
of which 7 teaching positions have been contracted.
Completion of interior works for the second floor of the Junior
School is underway and represents a transition stage from Junior
School to the middle years. It includes learning spaces for Year 6
through Year 8 for next year, and Year 9 the following year.
Review of the expenditure through the first half-year shows that
school is on track with less than 10% variance from the approved
final operating budget for the year. WCIB's website can be found at
www.wellingtoncollege.in.th.
Wine Connection Group ("WCG"): At the end of April 2014,
Symphony invested in the Wine Connection Group ("WCG"), Southeast
Asia's leading wine themed Food and Beverage chain with
approximately 80 outlets in Singapore, Thailand, Malaysia and South
Korea.
Update: The management team of WCG continue to focus on growing
revenues while maintaining the current cost structure. However, the
operating environments in Singapore and Thailand, WCG's core
markets, continue to be difficult for the sector overall. Aside for
seeking growth from new markets, management are looking to
reinvigorate the operations in its core markets.
Structured Transaction: In February 2014, Symphony completed a
structured transaction, which provides a minimum return of 15% per
annum. The amount outstanding is approximately 1% of NAV.
Global Listed Portfolio: The portfolio was fully invested in the first quarter.
SUBSEQUENT EVENTS
Subsequent to quarter end, Symphony made a small follow-on
investment in the Desaru Property Joint Venture in Malaysia of less
than 1% of NAV.
OUTLOOK
Symphony's portfolio is well positioned to benefit from
long-term Asian growth. We continue to explore several additional
opportunities to further broaden our portfolio in this respect. Our
ongoing focus is to provide Symphony's shareholders with
participation in Asia's long-term economic growth.
IMPORTANT INFORMATION
A more detailed Shareholder Update is available on request from
the Company and can be accessed via www.symphonyasia.com.
This document is not for release, publication or distribution,
in whole or in part, directly or indirectly, in or into the United
States or any other jurisdiction into which the publication or
distribution would be unlawful. These materials do not constitute
an offer to sell or issue or the solicitation of an offer to buy or
acquire securities in the United States or any other jurisdiction
in which such offer or solicitation would be unlawful. THE
securities referred to in this document have not been and will not
be registered under the securities laws of such jurisdictions and
may not be sold, resold, taken up, transferred, delivered or
distributed, directly or indirectly, within such jurisdictions.
No representation or warranty is made by the Company or its
Investment Manager as to the accuracy or completeness of the
information contained in this document and no liability will be
accepted for any loss whatsoever arising in connection with such
information.
This Document contains (or may contain) certain forward-looking
statements with respect to certain of the Company's current
expectations and projections about future events. These statements,
which sometimes use words such as "anticipate", "believe", "could",
"estimate", "expect", "intend", "may", "plan", "potential",
"should", "will" and "would" or the negative of those terms or
other comparable terminology, are based on the Company's beliefs,
assumptions and expectations of its future performance, taking into
account all information currently available to it at the date of
this document. These beliefs, assumptions and expectations can
change as a result of many possible events or factors, not all of
which are known to the Company at the date of this announcement or
are within its control. If a change occurs, the Company's business,
financial condition and results of operations may vary materially
from those expressed in its forward-looking statements. Neither the
Company nor its Investment Manager undertake to update any such
forward looking statements
Statements contained in this DOCUMENT regarding past trends or
activities should not be taken as a representation that such trends
or activities will continue in the future. The information
contained in this document is subject to change without notice and,
except as required by applicable law, neither the Company nor THE
INVESTMENT MANAGER assumes any responsibility or obligation to
update publicly or review any of the forward-looking statements
contained herein. You should not place undue reliance on
forward-looking statements, which speak only as of the date of this
announcement.
This document is for information purposes only and does not
constitute an invitation or offer to underwrite, subscribe for or
otherwise acquire or dispose of any securities of the Company in
any jurisdiction. All investments are subject to risk. Past
performance is no guarantee of future returns. Shareholders and
prospective investors are advised to seek expert legal, financial,
tax and other professional advice before making any investment
decisions.
This DOCUMENT is not an offer of securities for sale into the
United States. The Company's securities have not been, and will not
be, registered under the United States Securities Act of 1933 and
may not be offered or sold in the United States absent registration
or an exemption from registration. There will be no public offer of
securities in the United States.
Neither the content of the Company's website (or any other
website) nor the content of any website accessible from hyperlinks
on the Company's website (or any other website) is incorporated
into, or forms part of, this DOCUMENT.
The Company and the Investment Manager are not associated or
affiliated with any other fund managers whose names include
"Symphony", including, without limitation, Symphony Financial
Partners Co., Ltd.
End of Announcement
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END
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