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Adamas completed its transformation in 2018

Adamas completed its transformation in 2018 – Adamas Finance Asia, which adopted a new investment strategy in 2017 of investing in income-generating pan-Asian small and medium-sized enterprises, has published results covering the year ended 31 December 2018.

Initial progress on transitioning to the new portfolio was slow as it took time to sell-off legacy investments. Over 2018:

  • The overall NAV remained stable at US$93.0m (2017: US$93.6m); but the NAV per share fell to US$1.13 (2017: US$1.22)
  • the company reported a net loss of US$3.5m (2017: US$11.7m);
    • reflecting a US$0.22m movement in fair value,
    • realised losses on disposal of US$4,000, and total operating expenses of US$3.9m
  • year-end cash of US$8.8m (2017: US$13.2m);
  • US$3.0m received from the disposal of Global Pharm to Fortune Insight Limited;
  • Disposal of interest in CPE Portfolio in exchange for a convertible bond in Fook Lam Moon Holdings, the operator of high-end Chinese restaurants in Hong Kong;
  • US$2.0m investment in DocDoc, a leading patient empowerment company in Asia;
  • US$4.0m loan, paying 17.5% coupon per annum, to support Infinity Capital Group’s development of a premium ski accommodation project in Niseko, Japan;
  • Further progress towards restarting mining operations at Hong Kong Mining Holdings Ltd, with production targeted to recommence in H2 2019;
  • US$5.0m proposed investment in innovative needle-free injectors developer, PharmaJet

[When there is a big gap between the end of an accounting period and the publication of results, the figures become less relevant and this is perhaps something Adamas should address if it wants to narrow its discount. The completion of the disposal of the old China Private Equity portfolio is good news. This draws a line under that chapter in Adamas’s life and allows investors to focus on the future.]

Extract from the statement

Fook Lam Moon Holdings (“FLMH”) owns a number of high end restaurants in Hong Kong. Its flagship restaurant has been established for more than 70 years and is a well-known landmark in the vibrant Hong Kong hospitality scene. FLMH has plans to expand its business both organically and geographically and ultimately aspires to achieve an IPO on the Hong Kong stock exchange.

Towards the end of the year we announced a new investment in a premium property development in Niseko, Japan which is one of the world’s top ski holiday destinations, attracting increasing numbers of wealthy Asian tourists, particularly from mainland China. The investment is fully secured and delivers a very attractive coupon, and your Board is delighted to have been able to announce this addition to the portfolio.

Post year end we also announced a proposed new investment in PharmaJet Inc (“PharmaJet”) through a convertible bond investment. PharmaJet is a leading producer of needle-free injectors which have received United States FDA clearance and EU CE certification. PharmaJet’s products are World Health Organization prequalified and is cited by UNICEF as revolutionising how vaccines are delivered, facilitating ADAM’s participation in the important healthcare sector through products that have global reach and a high relevance to Asian markets. We expect this transaction to complete in 2019.”

HKMH is a natural resources company whose primary asset is a large dolomite magnesium limestone mine in the province of Shanxi, China. HKMH is in the process of restarting operations.

The local teams are active on the mining site and are preparing to re-start operations. The management team expect production to restart in late 2019. It remains the Company’s intention to consider all viable monetisation options for this investment once operations have recommenced.

Meize Energy Industries Holdings Limited (“Meize”) Meize is a privately-owned company that designs and manufactures blades for wind turbines. Meize secured several new customers to its order book during the year against a challenging backdrop. Our intention remains to monetise this asset.
DocDoc Pte Ltd. (“DocDoc”)

DocDoc is a Singapore-headquartered online network of over 23,000 doctors, 600 clinics and 100 hospitals serving a wide array of specialties. It uses artificial intelligence, cutting-edge clinical informatics and proprietary data to connect patients to doctors which fit their needs at an affordable price. DocDoc has secured partnership agreements with some of Asia’s largest insurers such as the Ping An Group and Prudential Singapore.”

ADAM : Adamas completed its transformation in 2018

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