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FACT SHEET FOR APS ASIA-PACIFIC HEDGE FUND AUGUST 2009
RETURNS (FUND AND INDEX)
2009 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD
APS Asia Pac Hedge Fund* 1.4 4.6 16.8 8.7 11.1 3.4 13.3 0.91 76.8
MSCI Asia Pacific Free** (7.2) (9.5) 7.6 12.4 12.2 1.2 8.4 1.36 26.6
S&P 500** (8.6) (11.0) 8.5 9.4 5.3 0.02 7.4 3.36 13.0
Since
Annualized 1 Yr 2 Yrs 3 Yrs 4 Yrs 5 Yrs 6 Yrs 7 Yrs
Inception
APS Asia Pac Hedge Fund* 55.19 15.36 2.36 4.83 2.02 0.19 1.50 2.41
MSCI Asia Pacific Free** (9.50) (13.67) (4.24) 2.02 4.94 6.96 7.37 6.14
S&P 500** (20.44) (16.79) (7.84) (4.37) (1.56) 0.21 1.56 (1.57)
Since
Cumulative 1 Yr 2 Yrs 3 Yrs 4 Yrs 5 Yrs 6 Yrs 7 Yrs
Inception
APS Asia Pac Hedge Fund* 55.19 33.09 7.26 20.74 10.51 1.12 11.01 19.32
MSCI Asia Pacific Free** (9.50) (25.47) (12.20) 8.31 27.26 49.76 64.49 55.62
S&P 500** (20.44) (30.76) (21.72) (16.37) (7.57) 1.25 11.41 (11.05)
Apr - Dec
Cumulative CY 2003 CY 2004 CY 2005 CY 2006 CY 2007 CY 2008
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APS Asia Pac Hedge Fund* 13.88 0.33 (8.18) 1.84 13.76 (37.55) (11.07)
MSCI Asia Pacific Free** (13.35) 38.07 16.30 21.04 14.51 12.28 (43.23)
S&P 500** (23.32) 26.38 8.99 3.00 13.62 3.53 (38.49)
*APS Asia Pacific Hedge Fund - Returns are calculated net of management and performance fees on a bid-to-bid basis in USD terms.
** Market index information is provided for reference purposes only.
Source: APS, Bloomberg
KEY FUND DATA
Net NAV (USD) 119.97
Net Return 0.91%
Fund Size (USD) 52..6mn
Avg. Annual Compounded Return 2.4%
Annualized Standard Deviation 18.7%
Downside Deviation 3.7%
Sharpe Ratio 0.1
Sortino Ratio 0.6
Gross Exposure 136.2%
Net Exposure 95.8%
Minimum Acceptable Return (3 months
US Treasury rate) 0.14%
Source: APS, Bloomberg Source: APS, Bloomberg
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INVESTMENT STYLE FUND DESCRIPTION
The APS Hedge Fund is managed using primarily a Investment Geography Asia including Japan
Launch Date April 2002
bottom-up approach. Company research, which is Domicile Cayman Islands
intensive and rigorous, is undertaken by a 20-member Minimum Investment USD 100,000
Management Fee 1.25%
investment team in Singapore, Tokyo and Shanghai. Performance Fee 20% (with high watermark)
Subscriptions Monthly
Research is directed at searching for some of the Redemption notification 5 pm Singapore time 30 days prior to the
best-managed and profitable companies and last business day of each month
Prime Broker UBS AG
worst-managed and unprofitable companies in Asia. Administrator Bank of Bermuda
Auditor Deloitte & Touche
All ideas are generated internally. Client Relations APS Asset Management Pte Ltd
3 Anson Road, #23-01 Springleaf Tower,
Singapore 079909.
Sim Teow Pin, +1 212-332-7808
Email: tpsim@aps.com.sg
Chee Wei Zhen, +65 6303-4532
Email : cheeweizhen@aps.com.sg
MARKET COMMENTARY
ISM/PMI data from both China and the US are strong and positive. Former Fed Chairman Alan Greenspan expects the
US economic growth to exceed analysts’ forecasts over the coming years. Consumer confidence figures and housing
market data both came in at better-than-expected levels. Fed Chairman Ben Bernanke was appointed to serve a second
term well before the end of his current term. His current term ends in December. Pending home sales exceeded
expectations and recorded its fifth monthly rise.
The global equity markets rebound continued into August. In a reversal of the two previous months, developed markets
outperformed emerging markets. Emerging markets continue to outperform year to date. However, the domestic Chinese
stock market declined substantially on the concern of liquidity tightening and surging IPO supplies. It broke the 20% bull-
bear market inflection point in the month of August. The Democratic Party of Japan’s (DPJ) winning of the general election
on 30th August has already been discounted by the Japanese stock market. However, it is still unclear what the impact
will be on the Japanese economy and stock market with a DPJ administration. Meanwhile, the global credit markets
showed further signs of improvement as credit spreads tightened. On the flip side, equity trading volumes cooled off
slightly around the globe, which is quite normal for the summer.
North American and European stock markets recorded some positive performance while stocks declined across Asia
Pacific with the exception of Thailand, New Zealand and Vietnam. The worst performer is the domestic Chinese market
followed by Hong Kong.
PORTFOLIO PERFORMANCE
The APS Asia-Pacific Hedge Fund returned 0.9% during August 2009.
Outperforming stocks are Daewoo Motor, KH Vatec, OCI Company, Hua Han Bio-Pharmaceutical, United Overseas
Australia, Virgin Blue and Ozeki.
Daewoo Motor’s share price staged a strong comeback after reporting its 2Q09 sales recovered sequentially. KH Vatec
rose to the highest level in more than three and a half years after Samsung Securities raised its target price. The broker
said it will benefit from an expected “growth phase” in the handset market as Nokia and Samsung are its major clients.
OCI Company rallied after local and foreign brokers upgraded the target price because of the improved outlook for
polysilicon market. In addition, the brokers think the valuation is at a discount to its fair value given its good execution and
long-term prospect. Hua Han Bio-Pharmaceutical’s price rose after Atlantis Investment reportedly increased its stake in
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the company. United Overseas Australia’s share price rose amid its continuous share buy-back. It also declared an
increased interim dividend compared to last year. Virgin Blue performed well as oil price declined during the month. The
stock price was helped further by the report of a reduced loss in 2Q09, quarter-on-quarter basis. Ozeki (7617 JP), a
supermarket store chain, announced a MBO on 1st October at a price more than 30% higher than the last traded price for
July. This caused the share price to rally to the MBO price.
Underperforming stocks are China Power International, Huadian Power International, Huang Hsiang Construction
and Powerchip Semiconductor.
China Power International and Huadian Power International retreated after reaching a recent high towards the end of
July. This was caused mainly by investors’ worry about the sharp contraction in new loan growth in China. In addition,
the Chinese premier announced the control of the investments in certain industries including thermal power. Huang
Hsiang Construction and Yuanta Financial fell in the face of massive profit taking after rebounding sevenfold from the
bottom. Powerchip Semiconductor declined after it sold part of its Rexchip shares to Elpida Memory in lieu of
outstanding short-term debt. In addition, the share started to trade on full margin which caused some investors to sell the
shares ahead of the implementation.
PORTFOLIO ACTIVITY
Halla Climate Control Corporation – Opportunistic Alpha (Korea; NEW)
Halla provides automotive air control equipments for Hyundai Motor and Kia Motor. The Korean car manufacturers are
among the few global car manufacturers that did well amid the financial crisis because of their lower price and weaker
Korea Won. We expect the company to grow together with Hyundai strongly. Given the low base effect, we expect its
operating profit to show a strong turnaround in 3Q09, which may trigger a rerating.
United Microelectronics Corporation – Dynamic Alpha (Taiwan; NEW)
UMC is the world’s second largest semiconductor foundry. Share price collapsed as a result of the global economic crisis.
However, the company is seeing early signs of business recovery, such as higher utilization rate and strong order
indication from customers. Inventory in the system is also lean. Trading at 1x book, which is at the lower end of the
historical PB band, we think the stock is an excellent proxy to ride the recovery of the semiconductor industry.
Samson Holding Ltd – Dynamic Alpha (Hong Kong; NEW)
The company is principally engaged in the manufacturing and trading of furniture and over 90% of its sales are in the US.
It enjoys strong brand names in US. Sales have been badly impacted by the in the US housing woe and contraction in
US consumer spending. With the economic stimulus from the governments globally, we expect the recession to be near
the end and the recovery in sight. The company has also taken initiatives to mitigate the severe impact by doing more
OEM contracts and expanding into Europe. Meanwhile, it prepares to take avantage of this crisis to become the largest
furniture company in the US by buying one large furniture company. This will substantially change its profile. The
company has a good management and very cost concious too.
The current P/E ratio of 10x has not priced in these various opportunities. Therefore we feel that the stock is undervalued
and could turn around its performance in the coming years.
Panin Life – Economic Alpha (Indonesia; NEW)
Panin Life’s share price is currently trading at 67% discount to its RNAV. 95% of this is attributable to its 46% stake in
th
Panin Bank, the 7 largest bank listed on Jakarta Stock Exchange. Over the past years, the major shareholder of Panin
Life has been approached repeatedly by interested parties who wanted to acquire its Panin Bank stake. In January this
year, Australia New Zealand Bank (“ANZ”) raised its stake in Bank Panin by 8.3% to 38.2% from 29.8%. A sale of Panin
Life’s stake in Panin Bank will unlock the value of the company.
Sundart International Holdings Ltd – Structural Alpha (Hong Kong; NEW)
The company was the biggest renovation contractor in Hong Kong and Macau. They have a dominant position in the
business. However, they started to expand into mainland China and Middle East because of saturation in their home
market. In mainland China, the primary sales of properties were dominated by the bare-shell projects. After the
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government’s initiative to build more fitted houses as well as people’s growing demand for better living conditions, the
fitting contracts awarded by the developers are expected to grow. Their strategy in China is to penetrate into the Hong
Kong based developers’ projects, most of which are fitted. The IPO provides them with capital and marketing in the new
markets.
Given the stable business in Hong Kong and Macau and their growing profile in Mainland China with their expertise, we
expect a high earning growth in the coming years. Therefore, we think that the current P/E ration of below 10x P/E is
cheap.
Zhengzhou Gas Co., Ltd (China; SELL)
Following the announcement that Zhengzhou Gas’ parent has been acquired by China Resouces Gas, the share price
shot up by over 50% on speculation that there will be general offer by the acquirer. Therefore, we took profit.
Hutchison Telecom (Hong Kong; SELL)
We recognize that the stock was undervalued when we bought it because investors did not fully understand the company
as well as selling pressure by the old shareholders. It was then traded about 17% free cash flow yield. Now we think that
the valuation is no longer attractive after the free cash flow yield shrank to 11%. Therefore, we sold the stock.
PORTFOLIO ANALYTICS – COUNTRY MIX
# # OF SHORT POSITIONS GROSS LONG
MSCI COUNTRY OF LONG POSITIONS GROSS SHORT NET EXPOSURE
AUSTRALIA 4 1 5.0% 3.4% 1.6%
CHINA 9 3 7.7% 1.4% 6.3%
HONG KONG 8 2 18.7% 1.6% 17.1%
INDONESIA 3 0 1.7% 0.0% 1.7%
JAPAN 4 4 4.2% 2.2% 2.0%
KOREA 16 3 29.5% 2.8% 26.7%
MALAYSIA 2 0 12.7% 0.0% 12.7%
PHILIPPINES 1 0 4.7% 0.0% 4.7%
SINGAPORE 7 4 9.1% 8.8% 0.3%
TAIWAN 6 0 22.7% 0.0% 22.7%
60 17 116.0% 20.2% 95.8%
Sources: APS, Wilshire
PORTFOLIO ANALYTICS – TOP 5 LONG POSITIONS
SECURITY NAME MSCI COUNTRY MSCI SECTOR % EQUITY
Excel Step Inv Malaysia Consumer Staples 12.20
Taiwan H Speed Raiwa Taiwan Industrials 8.57
Hynix Semicon Cb Korea Information Technology 6.51
Powerchip Semiconductor Taiwan Information Technology 6.35
Hopson Development H Hong Kong Financials 6.34
TOTAL 39.97
Sources: APS, Wilshire
PORTFOLIO ANALYTICS –TOP 5 SHORT POSITIONS
TOP 5 SHORT POSITIONS % EQUITY
TOTAL -13.5%
Sources: APS, Wilshire
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PORTFOLIO ANALYTICS –TOP AND BOTTOM CONTRIBUTORS
LONG POSITIONS
TOP 5 CONTRIBUTORS % EQUITY % RETURN % CONTRIBUTION
1 Kh Vatec 6.02 29.23 1.56
2 Daewoo Motors Wr 2.19 43.02 0.70
3 Taiwan H Speed Raiwa 8.57 6.10 0.53
4 Samsung Sdi 1.13 39.85 0.35
5 United Overseas Austral 2.11 17.58 0.34
BOTTOM 5 CONTRIBUTORS % EQUITY % RETURN % CONTRIBUTION
1 Powerchip Semiconductor 6.35 (14.72) (1.17)
2 China Power Internation 1.20 (22.67) (0.38)
3 Powerchip Semi 2 5.46 (4.75) (0.29)
4 Wheelock Properties Lim 3.32 (6.98) (0.27)
5 Kingboard Copper 3.24 (4.10) (0.16)
All returns above are quoted in USD terms for the month under review.
Sources: APS, Wilshire, Bloomberg
PORTFOLIO ANALYTICS –TOP AND BOTTOM CONTRIBUTORS (continued)
SHORT POSITIONS
TOP 5 CONTRIBUTORS % EQUITY % RETURN % CONTRIBUTION
1 Financials (1.52) (4.67) 0.08
2 Financials (0.78) (4.37) 0.04
3 Consumer Discretionary (0.22) (12.68) 0.04
4 Industrials (0.96) (2.95) 0.03
5 Telecomm Services (1.02) (2.51) 0.03
BOTTOM 5 CONTRIBUTORS % EQUITY % RETURN % CONTRIBUTION
1 Consumer Staples (5.72) 9.77 (0.55)
2 Financials (3.38) 11.76 (0.39)
3 Information Technology (1.08) 42.69 (0.35)
4 Consumer Discretionary (0.96) 18.32 (0.16)
5 Information Technology (0.97) 3.86 (0.04)
All returns above are quoted in USD terms for the month under review.
Sources: APS, Wilshire, Bloomberg
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Disclaimer: This publication is strictly for information purposes only and should not be construed as an offer or
solicitation to deal in the securities/investments mentioned herein. Unless stated otherwise, any opinions expressed
are based on our internal forecasts and should not be relied upon as indicating any guarantee of return from an
investment in our products. We have made every effort to ensure that the information provided herein is accurate.
Please note, however, that some data has been derived from sources that we believe to be reliable but its
correctness is not guaranteed. Investments in unit trusts are not obligations of, deposits in, guaranteed or insured by
APS Asset Management Pte Ltd (the “Manager”) and are subject to investment risks, including the possible loss of
the principal amount invested. Investors should refer to the prospectus for a full disclosure of all risk factors. All
applications for units in the Fund must be made on the application forms accompanying the prospectus. Investors
may obtain a copy of the prospectus from the Manager or any of its appointed distributors. Investors should read the
prospectus before deciding to purchase units in the Fund. The value of the units and the income derived from them
may fall as well as rise.
Past performance and any forecasts made are not necessarily indicative of future or likely performance of
the Fund. Investors may wish to seek advice from a financial adviser before making a commitment to
purchase the product. In the event that the investor chooses not to seek advice from a financial adviser, he
should consider whether the product in question is suitable for him.
Risks associated with a hedge fund:
1. An investment in the Fund carries substantial/more-than-average risks and is not suitable for persons who
cannot afford to take such risks.
2. The risks inherent in an investment in hedge funds are of a nature and degree not typically encountered in
investments in securities of listed companies.
3. Investors may lose all or a large part of their investment in the Fund; and
4. An investment in the Fund is not intended to be a complete investment programme for any investor and
prospective investors should carefully consider whether an investment in the Fund is suitable for them in the
light of their own circumstances and financial resources.
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