City Natural Resources Growth and Income PLC GBP · LSE:CYN
City Natural Resources Growth and Income PLC GBP — CQS Natural Resources Growth and Income — Shareholder Meeting (December 2023)
23 slides from City Natural Resources Growth and Income PLC GBP's shareholder meeting presentation, December 2023
Slide 1: CQS Natural Resources Growth and Income PLC December 2023 AGM
December 2023 AGM CQS Natural Resources Growth and Income PLC Robert Crayfourd, Keith Watson, Portfolio Managers LONDON NEW YORK HONG KONG All Investors should ensure that they have received and read the latest Offering Documentation and Pre-Investment Disclosure which is available from CQS at www.c
Slide 2: Introduction
CQS Natural Resources Growth and Income Introduction Fundamentals in the commodities sector are beginning to catch up, providing protection against inflation. After years of underinvestment, supply is now lagging demand in most commodities, leading to higher prices and potentially higher profits for
Slide 3: The Investment Proposition
The Investment Proposition Diversified natural resources exposure through smaller companies The Fund The Strategy Current Portfolio Listed Equities mainly, Smaller 111 44% 6.6% LSE Main Market natural but fixed interest companies Holdings Top 10 Largest holding Investment Trust resources also focus
Slide 4: About the Fund Manager
About the Fund Manager Portfolio Managers Other Funds Managed About CQS 20+ years delivering fundamental, research-driven Ian Francis £500m+ investments across the capital structure, from our offices in London, New York & Hong Kong. Ian ‘Franco’ Francis is CIO New City, and a Senior Managed by the t
Slide 5: CQS Natural Resources versus Peers and Indices
CQS Natural Resources versus Peers and Indices 150 100 GBP (Rebased to 100) 50 0 -50 -100 Sep 18 Mar 19 Sep 19 Mar 20 Sep 20 Mar 21 Sep 21 Mar 22 Sep 22 Mar 23 Sep 23 Nov 23 CQS Natural Resources Growth and Income (NAV) MSCI World Mining (GBP) MSCI World Energy (GBP) Source: Bloomberg as at 22 Novem
Slide 6: Key Themes
Key Themes Maximise returns from market disconnects driven by government and investor policy Inflation Underinvestment ESG Constraining Energy Transition Supply Commodities are Capex by producers has ESG constraints have Near term need in any generally one of the best been weak since 2015 blocked th
Slide 7: Current Portfolio
Current Portfolio Breakdown by Asset Class Breakdown by Holdings Top 10 Holdings1 Gross Assets (%) 1 Nexgen Energy NPV 6.6 Other Asia Europe 13.8% 7.0% 2.1% Copper Oil & Gas Latam 2 BW LPG USD0.01 6.5 2.9% 28.6% 6.3% Lithium 3 Transocean USD0.01 4.8 North 5.0% America Africa 48.8% 4 Precision Drilli
Slide 8: Top 10 Holdings
Top 10 Weight Sector Region Notes Nexgen Energy NPV 6.6 Uranium North America Highest grade undeveloped mine globally BW LPG USD0.01 6.5 Shipping Global Propane shipper, benefiting from US exports to Asia Transocean USD0.01 4.8 Oil & Gas Global Leading offshore rig company with high spec rigs Precis
Slide 9: Commodities Perform During Inflation, Gold Especially During Stagflation
Commodities Perform During Inflation, Gold Especially During Stagflation Goldman Sachs Commodity Index Source: Goldhub, as at 11 March 2022. 9
Slide 10: Key Theme - Energy Crisis of Our Own Making
Key Theme - Energy Crisis of Our Own Making – Renewables Still Only 7% of Power Supply Energy: 56% of the Fund (including Uranium & Shipping) World Consumption (Exajoules)1 ▪ Renewables growing but from a low base – will need grid storage ▪ 100’s of years of energy policy cannot be reversed overnigh
Slide 11: Oil and Gas: 29% of Fund
Oil and Gas: 29% of Fund Observable crude oil inventories Demand On land, at sea and in-transit (min Mbbls)1 ▪ Oil demand is set to hit a record 103M bopd Global oil inventories already declining at ~3M bopd ▪ EV penetration small but growing ▪ Renewables to push out coal not oil ▪ Emerging market g
Slide 12: Energy Is Still Seeing a Muted Supply Response
Energy is Still Seeing a Muted Supply Response Slow producer response to higher prices Summary ▪ Demand recovering to pre-Covid levels 1800 140 ▪ OPEC remaining disciplined 1600 120 ▪ Shareholder pressure limiting any supply response (ESG/ Dividends 1400 & buybacks) Dollars per barrel ($/bbl) 100 Nu
Slide 13: Uranium – 10% of Fund – Zero Carbon Base Load Power
Uranium – 10% of Fund – Zero Carbon Base Load Power ▪ Nuclear renaissance due to zero carbon base load ▪ Government support to meet emission targets ▪ Structural supply shortfall for the next decade ▪ Reactor life extensions in West ▪ Reactor build out in Asia ▪ Russia/ Ukraine adding supply chain u
Slide 14: Key Theme - Energy Transition Needs Certain Commodities
Key Theme - Energy Transition is happening but needs a lot more of Certain Commodities – 11.4% of Fund ▪ Copper, Lithium, Nickel, Rare Earth ▪ Batteries are key to stabilise grids 12 60 ▪ Lithium is not rare and Lithium stocks aren’t cheap – bottom up 10 50 analysis is key ▪ Input prices will remain
Slide 15: Key Theme - Precious Metals – 21%
Key Theme - Precious Metals – 21% Increasing Reasons to Own Gold Summary 40000 1400 35000 1200 ▪ Global debt going parabolic 30000 1000 ▪ China dumping US treasuries 25000 800 20000 ▪ Central Bank demand strong 15000 600 10000 400 ▪ Gold elevated despite physical 200 5000 ETF selling 0 0 Jul 05 Jul
Slide 16: Precious Metals – Miners at Record Low Multiples
Key Theme - Precious Metals – 21% Miners at Record Low Multiples Valuations Valuations have lagged the current Gold Price1 ▪ Close to Lowest P/NAV’s ever ▪ Cost Inflation pressures easing ▪ M&A – Larger producers have under spent on exploration and now need to acquire, in order to avoid depleting re
Slide 17: Base Metals 9% of Fund
Base Metals 9% of Fund Long term fundamentals are positive but near term risks Examples ▪ Some near term demand concerns due to global slow down and Chinese property ▪ Talon Metals: C$180m Nickel developer in US, slowdown JV with Tesla ▪ Environmental themes accelerated through Government spending –
Slide 18: Shipping – 10.5%
Shipping – 10.5% Tanker and dry bulk orderbooks at lowest levels in decades Summary ▪ Order book for new vessels at lowest on record ▪ Uncertainty on environmental requirements are constraining new orders ▪ Demand growth for Bulks, Oil and Gas to raise demand ▪ Strong FCF to lead to support high div
Slide 19: Conclusion
Conclusion The CQS Natural Resources fund aims to provide Discount to NAV investors with capital growth and income ▪ Exposure for inflation protection 300 0 ▪ Closed end structure enables a focus on 250 -5 valuation rather than liquidity – SMID cap at a discount/ higher beta 200 -10 NAV (pence) Disc
Slide 20: At a Glance: Multi-Sector Alternative Credit Platform
At a Glance: Multi-Sector Alternative Credit Platform Years AUM Employees Investment Professionals 20+ $15.6bn ~150 55+ Managing research-driven Alternative credit strategies in Headquartered in London Including a research team credit strategies across public and semi-liquid markets, with investment
Slide 21: Global Offices
Global Offices London New York Hong Kong CQS (UK) LLP CQS (US), LLC CQS (Hong Kong) Limited 4th Floor, One Strand, London 152 West 57th Street, 40th Floor, New York. 3305 AIA Tower, 183 Electric Road, WC2N 5HR, United Kingdom NY 10019, USA North Point, Hong Kong, China T: +44 (0) 20 7201 6900 T: +1
Slide 22: Important Information
Important Information This document has been issued by CQS (UK) LLP which is authorised and regulated by the made may be adversely affected. CQS is not liable for any decisions made or action taken by you UK Financial Conduct Authority, CQS (US), LLC which is a registered investment adviser with or
Slide 23: Important Information
Important Information Distribution in the European Economic Area and the UK: In relation to each member state of the EEA and the UK (each a “Relevant State”) which has implemented the Alternative Investment Fund Managers Directive (Directive (2011/61/EU) (the “AIFMD”)/as AIFMD forms part of local la
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