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Prudent Corporate Advisory Services — DSP BlackRock World Agriculture Fund — Investor Presentation (September 2011)
24 slides from Prudent Corporate Advisory Services's investor presentation, Sep 30, 2011
Slide 1: DSP BlackRock World Agriculture Fund
NFO Period: Sep 30, 2011 to Oct 14, 2011 DSP BLACKROCK = _ WORLD sme ® +s AGRICULTURE FUND INVESTING IN AGRICULTURAL COMPANIES THROUGH INTERNATIONAL FUNDS AN OPEN ENDED FUND OF FUNDS SCHEME DSP BLACKROCK MUTUAL FUND
Slide 2: DSP BlackRock World Agriculture Fund
DSP BlackRock World Agriculture Fund Indian Investors BGF World Agriculture Fund (BGF-WAF) AUM: USD 586 mm (approx INR 2,697 cr) Access to leading global and emerging agricultural companies through international funds Source: DataStream, as at Aug 31, 2011. Exchange Rate: 1 USD= INR 46.019 2
Slide 3: Why invest?
Why invest? • Why Agriculture? - Agriculture sector is among the top 10 global industries in terms of projected growth from 2008 – 2020* • Why invest in the DSP BlackRock World Agriculture Fund? - Low correlation of agriculture sector of 0.6 with Indian equities** - Access to leading global and emer
Slide 4: Agriculture Sector: Value Chain
Agriculture Sector: Value Chain • BGF-WAF mostly invests in the upstream and midstream portion of the agriculture value chain • Upstream resource owners tend to make the highest margins Agricultural value chain Supermarkets/ Farm Inputs Land & Farming Agribusiness Food Processing Food Companies Cons
Slide 5: Demand Drivers
Demand Drivers
Slide 6: Drivers leading to acceleration of agricultural demand
Drivers leading to acceleration of agricultural demand Growth of demand for agricultural commodities by sectors (1960-2015E) Billion mt 2.6 2006 - 2015: 2.6% 2.4 2.2 Fuel demand 2.0 1997-2006: 1.9% 1.8 1988-1997:1.6% 1.6 1979-1988: 1.5% Feed 1.4 demand 1.2 1.0 0.8 0.6 Food demand 0.4 0.2 0.0 60 62 6
Slide 7: Demand driver (I): Global population growth
Demand driver (I): Global population growth • Global population is projected to reach 9 billion by 2050 • Global food production needs to rise by 40%+ by 2030 and 70%+ by 2050 above 2005-07 levels in order to cope with rising food demand from growing world population* Projected global population gro
Slide 8: Demand driver (II): Rising incomes
Demand driver (II): Rising incomes • Rising affluence of urban population leads to demand for improvement in diet • Growing protein demand from the developing countries requires exponential growth of grains output for livestock production Rising protein consumption when income increases* Feeds requi
Slide 9: Demand driver (III): Biofuels
Demand driver (III): Biofuels • “Food for fuels” is still growing from a low base and has room for growth • Globally, a variety of grains and oilseeds are converted into ethanol and biodiesel • Government mandates and financial support are the main drivers behind the biofuel industry • Implication:
Slide 10: Supply Drivers
Supply Drivers
Slide 11: Supply driver (I): Land availability
Supply driver (I): Land availability • According to the United Nations, the world currently has cropland of 1.5 billion hectares (11% of global land) • Despite the potential to expand global cultivated area by 445 million hectares, 41% of the area lacks proper logistics and is far from market (i.e.
Slide 12: Supply driver (II): Slowdown in yield improvement
Supply driver (II): Slowdown in yield improvement • Grain production has been rising over the past two decades, but outpaced by rising consumption • The gradual decline in inventory has left the market more prone to supply shocks arising from adverse climatic conditions or government intervention in
Slide 13: Key Investment Themes in the Agricultural Sector
Key Investment Themes in the Agricultural Sector
Slide 14: Key Investment Themes in the Agricultural Sector
Key Investment Themes in the Agricultural Sector • Agricultural Science Companies US Average Corn Yield Improvement* - Advanced seed and chemical technologies are Bushels/acre increasingly applied by farmers 200 Revolution #2 - Increased crop value justifies the economic Biotech-Ied step change use
Slide 15: Key Investment Themes in the Agricultural Sector
Key Investment Themes in the Agricultural Sector • Agricultural Equipment Rising fixed asset investment on farms with decline in leverage* - Increased intensity of cultivation requires the use of state-of-the-art farming equipment, such as GPS 85 14% technology 80 13% - The higher value of crops at
Slide 16: Key Investment Themes in the Agricultural Sector
Key Investment Themes in the Agricultural Sector • Land & Farming Land Price in Brazil has been resilient over the financial crisis* - Farm operating companies offer exposure to 9% the underlying commodity prices 4400 8% - Farm developers focus on uplift in farm 4200 7% property prices by converting
Slide 17: Agricultural Equities vs. Agricultural Commodities
Agricultural Equities vs. Agricultural Commodities • Equities and commodities offer different exposure to investors · Commodities are more sensitive to factors affecting near-term supply and demand · Equities are more exposed to earnings growth and value creation by companies • Short-term correlatio
Slide 18: Summary: Demand > Supply
Summary Demand > Supply Population | Income | Arable land | Crop Yield Growth Upward pressure on commodity prices Improvement in farm economics Rise in farm production & reinvestment Long term investment opportunity into Agriculture sector 18
Slide 19: BGF World Agriculture Fund
BGF World Agriculture Fund
Slide 20: BGF World Agriculture Fund: Asset allocation
BGF World Agriculture Fund: Asset allocation Sector Allocation Geographic Allocation Source: Internal. Data as at Aug 31, 2011. Geographic exposure shown by listing. 20
Slide 21: BGF World Agriculture Fund: Top holdings
BGF World Agriculture Fund: Top 10 holdings Company Sector Geography % of Fund Potash Corp Fertilizer Canada 9.2% Monsanto Co. Agricultural Science USA 7.9% Deere & Co Agricultural Equipment USA 7.6% Syngenta Agricultural Science Switzerland 6.6% Wilmar International Edible Oil Asia 5.2% Archer-Dani
Slide 22: BGF World Agriculture: Performance
BGF World Agriculture: Performance • Launched on 9th February 2010 • Fund Managers: Desmond Cheung & Richard Davis • AUM of US$586m* (INR 2,697 cr) • 40 - 70 holdings • Benchmark - DAX Global Agribusiness Index BGF World Agriculture Fund vs DAX Global Agribusiness Index** Compounded Annualised 1yr S
Slide 23: DSP BlackRock World Agriculture Fund: Scheme Features
DSP BlackRock World Agriculture Fund: Scheme Features Type of Scheme: An Open Ended Fund of Funds Scheme Minimum Investment: Rs. 5,000/- and multiples of Re 1/- thereafter Terms of Issue : Rs 10/- per Unit (during NFO) Options Available : Growth Dividend - Payout - Reinvest Load Structure Entry Load
Slide 24: Disclaimer
Disclaimer Investment Objective: An open ended Fund of Funds Scheme investing in international funds and the primary investment objective of the Scheme is to seek capital appreciation by investing predominantly in the units of BlackRock Global Funds – World Agriculture Fund (BGF – WAF). The Scheme m
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