EQUITY RESEARCH. Nguyen Tra Lan, Analyst

Transcription

1 Nguyen Tra Lan, Analyst Ticker: HPG Exchange: HSX Analyst Opinion: BUY Target Price Range: VND 51,720 STOCK STATISTICS Price as of 7/30/ ,800 Sector: Basic Materials Business Models: Industrials Diversified Listed Since 11/15/2007 Share in issue 294,545,997 Floating Shares 179,643,604 Market Cap (billion VND) 10, Week High (VND) 54, Week Low (VND) 34, Day Average Volume 283,714 % Price Change 1 Month 13.73% % Price Change 3 month 23.01% % Price Change 6 month 14.08% % Price Change 12 month 5.79% % Foreign Ownership 33.29% % Foreign Ownership Limit 49.00% Beta 52 Weeks 1.06 Source: TLS Chart: Accumulated rate of return of HPG and VNINDEX over past 12 months (Vol.: in thousands) 160% 140% 120% 100% 80% 60% 40% 20% 0% HPG Vol. % VNI % HPG 7/29/2009 7/29/2010 4,000 3,500 3,000 2,500 2,000 1,500 1, Source : TLS FINANCIAL HIGHLIGHTS (VND Bn) E Assets 5,639 10,243 12,949 Equity 4,364 5,165 6,782 Gross Revenue 8,365 8,123 12,592 EBIT 1,258 1,976 1,664 EAT 848 1,270 1,355 EPS (VND) 4,328 6,471 5,221 Dividend/share (VND) 3,000 1,000 3,000 PE (x) PB (x) Sales Growth 48.2% 2.9% 55.00% EPS Growth 11.1% 49.5% 19.40% Gross Profit Margin 15.0% 24.3% 16.00% Net Profit Margin 10.2% 15.6% 15.70% ROE 19.4% 24.6% 20.00% ROA 15.0% 12.4% 10.50% Source: HPG, TLS HOA PHAT GROUP JSC July 30, 2010 We keep our BUY recommendation for HPG which was posted in previous version. The BUY recommendation is based on three main points: (1) Sales and profit margins are expected to rise within years ahead as the company aims to form a complete value chain to enjoy efficiency through synergy; (2) steel price is bounced back and sold above 12.3 mn per ton by the end of this year and (3) HPG earns remarkable profit from coking coal business to foreigners. Our model suggests this stock should gain around 44.5% from today price to reach its fair value (based on today market price). Please see last page for our ranking category. COMPANY PROFILE The owners equity is currently VND 5, bn. Capital surplus and retained earnings are VND 1,620.9 bn and VND 1,431.1 bn, respectively, as the end of March, Main business lines include manufacturing construction steel (steel bar/57.1% and steel pipe/11.7%), trade (9.8%), energy (7.6%), furniture (6.3%), construction machinery (2.8%) and refrigeration (5.3%), etc. As the end of June, HPG was ranked in the second place among nation s biggest construction steel producers with 13.4% market share. The revenue and net profit in 2Q10 meet 50% of target plan. HPG gained VND 5,959 bn in revenue and earned VND 631 bn in 2Q10. NEW DEVELOPMENTS Some signs displayed the steel price bounced back: Local sale volume reached 350,000 tons in June, up 25% to May. Selling price (excluded VAT) advanced to VND 12.2 mn mn. Setting up the 2 nd production line for the iron ore processing plant in Au Lau, Yen Bai province: Total capacity of processed iron ore is expected to be around 120 thousand tons per annum. This could meet 17.1% of steel billet volume needed for steel billet production annually. Holding a 60% stake (VND 260 bn) in Golden Gain Real Estate Company: This company handles a 25,866m2 project in Trung Hoa Nhan Chinh site which is for apartment building. Low sale on cement due to a plant is just newly run: Cement sale was VND 2.7 bn, as of May. This low volume could be due to a test run over first months before an official run in May. Successfully issuing VND 800 bn bond on early July, coupon 14.5%, maturity date on 2013: This issuance is aimed to raise capital for the ongoing real estate projects. INVESTMENT HIGHLIGHTS China one of the big steel exporters into Vietnam removed rebate on steel products to promote the domestic consumption: This could be an advantage for the Vietnamese steel producers. Chinese Baosteel Company, the 2 nd biggest producer in terms of production, just ordered to purchase iron ore, 65% iron content, from Australia at price of USD per ton, 23 % higher than the current price. That showed the sign of demand in China was little bit advanced. Acquiring advantages on the corporate tax on big projects in coming years: The Steel Complex and cement company was no corporate tax in 4 and 2 years from 2010, respectively. Iron ore volume exploited is expected to meet 50% of steel billet processing this year: This could help avoid risks from scrap steel import at high price and exchange rate. Impression on the energy sale: 5 month coking coal production was 80,500 tons and sale of energy sector was VND bn, in which coking coal sale was estimated around VND 170 bn. Expectation on coking coal sale to foreigners thanks to an increase on price: Coking coal price reached USD 225 per ton, the peak over the last 14 years, as of May, VALUATION We drive our yearend target price of VND 51,720 using the earnings valuation models on the industrials complex business. The target price is combined from the industry comparable P/E and historical P/E, which gave the P/E of 9.9. INVESTMENT RISKS Competitive force from big rivalries: As the end of the 2nd quarter, a joint venture between Nippon Steel (Japan) and Vietnam Steel Corporation would be set up, with an installed capacity of 600,000 ton per annum (tpa). Guang Lian Steel Vietnam Company was approved to upgrade its installed capacity of 5 mtpa to 7 mtpa in June. Approximately 30% of area in the Pho Noi A Industrial Park (IP) unfulfilled: It is not easy for HPG to call on the investors to come to stay in the newly expanded IP while the current IP just get its area leased by over 70%. 1

2 FINANCIAL SUMMARY In VND billion Earning Model (VNDbn) E Balance Sheet (VNDbn) E Net sales 5, , , , Current Assets Cost of sales 4, , , , Cash and cash equivalents , , Gross profit , , , Financial investment Gross profit margin Accounts receivable , Other operating income Inventory 1, , , , Selling expenses Prepaid expenses, other CA General administration expenses Total current assets 3, , , , Other operating expenses Property and equipment EBIT , , , At cost 1, , , , Investment income Less accumulated depreciation , Net interest Net property and equipment , , , Net financial items Other long term assets , Earnings before tax , , , Total Assets 4, , , , Income tax , Current Liabilities Tax/Profit before amortization 15.20% 15.60% 15.80% 15.00% Financial debts , , Profit after taxes , , Trade payables , Minority Interests Other liabilities Dividend paid (VND per share) 1,000 3,000 1,000 3,000 Total Current Liabilities 1, , , , Retained earnings , Longterm debt Stockholders' equity 3, , , , Weighted average shares (m) 108,270, ,181, ,363, ,421,689 Common stock 1, , , , Year end shares (m) 132,000, ,363, ,363, ,479,380 Investment and development funds 1, Earnings per share (VND) 5,959 4,350 6,477 5,221 Retained earnings , , Common stock dividend (VND) 1,000 3,000 1,000 3,000 Shares bought back Payout ratio (common stock) 16.80% 69.00% 15.40% 57.50% Budget sources and other funds 1, , , Minority interest Cash flow Statements (VNDbn) E Total liabilities and equity 4, , , , Net profit , , Adjustments for: Growth and Margin (%) E Depreciation and amortisation Sales Growth 57.04% 48.24% 2.89% 55.01% Change in inventories EBITDA Growth 61.79% 36.33% 52.51% 17.68% Change in trade receivables EBIT Growth 89.54% 32.50% 62.09% 0.34% Change in trade payables Net Income Growth 76.27% 32.40% 48.90% 6.50% Cash flow from operations , , EPS Growth 6.76% 27.00% 48.90% 19.39% Gross Margin 17.13% 15.04% 24.33% 16.02% Change in tangible fixed assets , , EBITDA Margin 20.88% 19.21% 30.16% 22.90% Change in intangible fixed assets EBIT Margin 13.78% 12.31% 20.55% 13.21% Change in long term investments , Cashflow from investments , , Ratios 2,007 2,008 2, E ROE 19.84% 19.65% 24.60% 19.97% Equity issued 1, , ROA 13.51% 15.21% 12.41% 10.46% Change in other funds Inventory days Change in financial debts , Receivable days Change in long term liabilities Payable days Dividend to shareholders Net debt/equity Cash flow from financing 1, , Interest cover EBIT(x) Net cash flow , Valuation (Multiples) E Opening cash , PE Closing cash , , PB Dividend Yield (%) 1.05% 9.52% 1.79% 5.36% Projected Free Cash Flow 2,007 2,008 2, E Profit after Taxes , , Add back depreciation () increase in CA, except cash 1, , (+) increase in CL , () increase in PEaC , Notes: CA = current assets; CL = current liabilities; PEaC = Property and Equipment at Cost Free Cash Flow , , Source: Thang Long Securities 2

3 Chart 1: Change in price of iron ore, 67,55% iron content. (USD/dry metric ton unit) Source: collection by TLS as of May, 2010 Chart 2: Change in steel scrap price monthly INVESTMENT HIGHLIGHTS Steel processing business line The most significant advantage is efficiency through synergy as HPG has successfully controlled most of its value chain. HPG s own iron ore mines are exploited and then are processed to steel billet. COGS made from its processing cycle would be low in comparison to other competitors COGS, especially based on purchase price of USD 10 15/ton on average from some iron ore mines in Ha Giang province while the current selling price is around USD per ton, the information supplied by the president of HPG in the Annual General Meeting (AGM). With a reserve of 50 mn tons of Crude iron ore, the An Thong mine is assumed to get 20% of this 50 mn tons processed to be iron ore, equivalent to 7.5 mn tons of iron ore. Based on the announced information that HPG purchased An Thong Company s stake, the owner of the An Thong mine, at the cost of VND 200 bn, equivalent to USD 10.5 mn, we saw the cost that HPG paid for the An Thong mine was USD 1.4 per ton. This estimated cost is much lower that the cost of USD 1015 per ton that the HPG s president announced in the AGM session. The steel price and volume are expected to increase by the end of this year. Only in June, sale volume across nation was 350,000 tons, up 25% to May. Vietnam Steel Association (VSA) expected the volume would be consumed around 350,000 to 380,000 tons in July. Total steel billet and steel products volume kept in the storage were 380,000 tons and 520,000 tons, respectively, as the end of June. The steel price would be expected to little bit rise in coming months as iron ore and steel scrap prices show some signs that they were on the resistance. The steel scrap price was recently sold at USD 205 per ton, the lowest price level ever traded in November, 2008 and October, Therefore, it is expected that the steel scrap price would be bounced back as it happened during February to May, 2009 and November to December, 2009 after it downed to this level. The 2 big projects on steel processing could be postponed caused by some difficulties. Those are projects with huge installed capacities the complex by Tata Corporation in Ha Tinh province (500,000 tons per anum (tpa)), the complex by Vinashin and Lion Corporation (Malaysia) in Ca Na Ninh Thuan province (14.42 million tpa). High demand in steel billet and cold rolled steel: the local production just met 54% of steel billet and 40% of cold rolled steel in 2009, meanwhile, the demand and supply in steel bar and wire rod was balanced. Table 1: Steel sector Master Plan for the phase from 2007 to 2015, targeted to 2025 Source: collection by TLS as of April, 2010 Phase Unit Steel billet volume Steel products volume Steel bar & wire rod Steel sheet Max. Min. Max. Min. Max. Min Mtpa (*) Chart 3: Coking coal price, as the end of Q $250 $200 $150 $100 $50 $ Mtpa Mtpa Mtpa (*) Million ton per annum Source: Vietnam Steel Sector Master Plan for the phase from 2007 to 2015 The decision numbered 145/2007/QĐTTg Acquiring benefits from the low income tax policy for the newlyrun integrated steel processing complex and cement factory: The integrated steel processing complex: o Cold rolled steel processing plant: No income tax in 2 years (2010E 2011), 50% of annual income tax in next 4 years ( ). o Steel billet processing plant: No income tax in 4 years from getting started (2010E 2013), 50% of the annual income tax in next 9 years ( ), income tax of 10% in next 15 years ( ). Source: collection by TLS, Mining Journal Datastream 3

4 The cement factory: No income tax in 2 years from getting started ( ), 50% of the annual income tax in next 5 years ( ), income tax of 20% in next 10 years ( ). Coking coal sale to foreigners a new income flow: Thanks to the low local supply and advancing demand along with an increase in price, HPG got ordered from foreigners. That could bring a remarkable profit this year. 5 month sale breakdown pointed out a great performance from this business line, with 7.6% of total sales coming after the steel sale. Besides, one other important thing is that coking coal export could help HPG avoid risk from exchange rate fluctuation. The industrial park and real estate business lines Net profit is expected to rise sharply due to the success from real estate projects: The bottom lines in the first 5 months with VND 4,800 bn in revenue and VND 560 bn in net profit displayed an optimistic view for the whole year of The real estate and industrial park business lines, even though not perform good results as expected in the first 5 months, would be expected to reach good performance in upcoming years, around 30% of total sales annually meanwhile, local demand and supply on cement and steel sectors are considered balanced from 2010 on. Potential growth on the real estate sector in years ahead: Projects on residential apartments are still the market segment that gets investors focus. Expenditures for purchasing pieces of land in Hanoi and Ho Chi Minh City HPG paid seem to be valued lower than their actual value. 3 out of 4 projects in 2 big cities are under progresses of design consultancy and transfer procedures. Cost on these ongoing projects could be raised by the end of this year and revenue recognition on these ones could be raised by the end of The residential apartment located in a site of No. 257 Giai Phong Road performs the most optimistic view among the other 3 residential apartment projects. Revenue could be recognized as the base is soon completed. In comparison to other selling price for residential apartments in locations closed to this site, we saw the price of VND 38.4 mn/m2 would be higher. Some points, however, could be considered added values on this price shown as below: Residential apartments would be provided, not including offices for rent as announced by the representative of HPG. This assumption is based on the document by the Ministry of Construction to not allow transferring residential apartments to become offices. Moreover, the fact that the combination offices below residential apartments find itself difficult to carry out. This site is closed to the bridge on the side of Giai Phong Road and the University of National Economics on the side of Vong Street. Construction density of 45.8% displays a quiet space to live. Table 2: Estimated revenue and net profit from the residential apartment site in 257 Giai Phong Road Scale (m2) Storey Block Selling price (VND mn/ m2) Construction density Revenue (E) (VND bn) Profit (E) (VND bn) 1, % Source: HPG, estimates by TLS Table 3: Records of 4 real estate sites in Hanoi and Ho Chi Minh City Ongoing projects Residential Apartment in 257 Giai Phong Rd. Residential Apartment in 493 Truong Dinh Str. Projects by Golden Gain Company Residential Apartment in Binh Trieu site Cost (VND mn) Scale (m2) Storey Block Selling price (VND mn/ m2) Average Cost (VND mn/m2) 80,000 1, ,340 13, ,000 25, Current performance Base construction still in progress and to be completed in Site transfer procedures and design consultancy still in progress and to be completed in Site transfer procedures and design consultancy still in progress 51,685 8, Site transfer procedures still in progress Source: HPG 4

5 VALUATION The assumptions for the year 2010 are as follows: Revenue: The growth rate for other business lines out of steel trading and production, such as equipments and machinery, furniture and refrigerators engineering are expected to be around 5 6% in comparison to those last year. These assumptions are little bit prudent based on the balance on demand and supply, competitive forces from foreign rivalries, especially on steel business line as HPG sold 260,000 tons since January, which just reached 37 45% production capability this year. As provided by the representative from HPG, the 5 month revenue on cement business line was VND 2.7 bn, implying that the cement production lines could be on test run since it was officially run. Therefore, we expected that maximum cement volume produced by the end of this year could be around 100,000 tons. COGS: HPG is assumed to keep low COGS as closely as that last year (estimated to be 76%). The COGS of steel and steel pipe processing would be adjusted from around 80% 81% annually to hit 88% 89% this year based on the combination between the advantages on the value chain of synergy and adjustment on depreciation cost of new production lines. The COGS of other business lines (machinery, furniture and refrigeration engineering) are assumed to be as same as they took previous years (from 82.5% 85%). Income tax rate: Based on the industrial diversified business model, with preferential income tax on the integrated steel processing complex, cement plant, iron ore mining and coking coal projects, we assume the tax rate this year would be around 16%, same as the average tax rate HPG took last year. The interest rate: Based on the preferred interest rates on long term loans for cement plant, the long term loan of VND 600 bn for Hoa Phat Energy JSC and for integrated steel processing complex (the 2 nd phase), we assume the interest expenses are doubled this year. Table 4: Long term loans and interest expenses assumed this year: Interest rate per Bank Loans value (VND) annum Interest expenses in 2010 (VND) BIDV Ha Thanh branch 686,982,797, % 73,507,159,373 VDB Hung Yen branch 5,720,000, % 257,400,000 VCB 61,542,858,679 Payment on 7,692,857,335 (*) Indovina Bank 9,982,365, % 1,247,795,688 Techcombank 18,591,257, % 1,952,082,071 Habubank 1,592,278, % 167,189,255 Total 784,411,558,493 84,824,483,721 Source: 2009 Annual report, (*) estimates by TLS Revenue and net profit on real estate and industrial park sector: We assume that revenue on this business line would hit the planned figures as announced by the president in the Annual General Meeting. That means the real estate and industrial park sector would be expected to earn VND bn in net profit, accounting for 11% of the group s total net profit this year. The estimates are included the additional costs for residential apartments by the end of this year. Table 5: Estimated revenue and net profit on the steel business line in 2010: Production (ton) Selling price (in 000 VND) Revenue (in 000 VND) Net profit (in 000 VND) Steel bar & wire rod 431,000 13,500 5,118,500, ,997,500 Steel trading 50,000 13, ,000,000 47,250,000 Steel pipe 125,000 13,500 1,687,500, ,187,500 Total 606,000 6,131,000, ,435,000 Source: Estimates by TLS (volume and selling price to subsidiaries included). 5

6 Chart 4: Steel projects approved to run Ba Ria Vung TauHai PhongPhu Tho & Ha Tinh MAJORED RISKS Competitive force from bigscaled producers: As the end of June, Nippon Steel Corporation (Japan) cooperated with Vietnam Steel Corporation to set up a steel pipe processing joint venture with the installed capacity of 600,000 ton per annum. A forceful drive on getting vacancies in the current industrial park leased: It is said that HPG is successful with its industrial park business line as compared to other competitors. HPG reached over 70% of vacancies in the Pho Noi A Industrial Park since it was set up in The fact that the current size of 390 hectares would be expanded to 594 hectares could get HPG taken more difficulties as it is trying call on more investors to come to current industrial park. Table 6: Statistics on a number of industrial parks Source : Ministry of Industry and Trade Chart 5: First 5 month sales breakdown by subsidiaries 0.5% 3.8% 6.3% 2.6% 0.7% 0.0% 9.8% 11.7% 7.6% 57.1% Industrial park Location Scale (hectare) Leasing price (USD/m2/50 năm) % area leased (as of 31/12/2009) Start up since Pho Noi A Hung Yen % 2005 Đai An Hai Duong n/a 95% 2003 Que Vo Bac Ninh % 2002 Que Vo (expanded) Bac Ninh % 2007 Quang Chau Bac Giang % 2006 Source: Collection by TLS BUSINESS MODEL HPG is now winning the 2 nd place among the nation s biggest steel producers in terms of sales volume. From 2010, it is known that HPG takes advantages over competitors on steel billet price as it got rights to exploit iron ore mines. This makes the value chain of synergy completed to reduce the COGS as much as possible. Steel bar & wire rod Equipments & machinery Refrigeration Engineering Trading Minerals Source : HPG Steel pipe Furniture Real Estate & Ips Cement Energy Iron Ore Thermal Plant (Estimated production of 8090 mn KWh) The complex Steel billet processing Steel bar & wire rod Coking coal (Supplying retrieved heat to the thermal plant) Chart 6: Sales and net profit quarterly 4,000 3,500 3,000 2,500 2,000 1,500 1, (500) Revenue Net Profit Source : HPG Cement (HPG ACB Cement plant) Source: Formatted by TLS IPs and Real Estates Steel pipe Processing Furniture and Machinery Engineering The Group has 11 subsidiaries, including Hoa Phat Energy JSC., Golden Gain Real Estate JSC., and 5 joint ventures which cover the main operations of: Construction steel trading and manufacturing: In 2009, sale composition of deformed bar accounted for 62.6% total sale of this line of business while wire rod accounted for 31.2%. The company rank 2 nd position in the steel market with over 13% market share in terms of sale volume. With 30 agencies in the North and 2 branches in the South and the Centre of Vietnam, the company sold 354,500 tons of construction steel during last year and 260,000 tons over first 5 months this year. 6

7 Refrigeration Engineering: The product mainly includes: air conditioner, refrigerator and enameled electric water heater capacity. This business line contributed slightly to the total sale and profit of the company due to hard competition of imported items. Chart 7: Revenue breakdown by subsidiaries in 2009 Chart 8: Net profit breakdown by subsidiaries in % 5.9% 7.7% 12.0% 43.8% 3.5% 7.3% 2.9% 15.1% 45.2% 6.5% 18.8% 7.8% 18.3% Steel bar & wire rod Equipments & machinery Refrigeration Engineering Trading Steel pipe Furniture Real Estate and IPs Steel bar & wire rod Equipments & machinery Refrigeration Engineering Trading Steel pipe Furniture Real Estate and IPs Source: Annual report 2009 Steel pipe manufacturing: With the 1 st ranking in this business line, the company has the market share of around 40% for the galvanized steel pipe and 15% market share for black steel pipe. Recently, the Plane No. 2 in the Song Than Industrial Zone has put into production which helps increase the annual capacity of more than 150,000 ton per annum. Furniture manufacturing: the trademark of HPG s furniture continues to be the 1 st ranking in the market. It also has good exporting markets in Laos and Cambodia. Chairs, table and cabinet account for 86% total furniture sales. Chart 9: 2009 Sales compared to 2008 Chart 10: 2009 Net profit compared to ,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Table 8: Installed capacities and using purposes by business lines Business line Unit Installed capacity Steel bar & wire rod tpa 700,000 Steel pipe tpa 150,000 Cement tpa 1,000,000 Iron ore (exploited) tpa 350,000 Iron ore (purchased) tpa 350,000 Coking coal tpa 350,000 Source: HPG Source: Annual report 2009, 2008, Volume in VND bn Construction machinery manufacturing: This line of business maintains good growth during past period thanks to its good prestige to exporting markets as the Philippines, Laos, Cambodia, and Ukraine. The company is planning to increase its installed capacity by 65% with a new plan in Binh Duong Province of total areas of 17,000 m2. Mineral Exploitation: At the moment, there are 4 mineral exploitation companies in the HPG Group. 2 plants with the total installed capacity of 600,000 tons of crude iron ore are now under operation. Real estate is considered the strength of the company and contributed considerably to the operating income of the company. The company is planning to expand the Pho Noi Industrial zone to 600 ha and is building the infrastructure for the Hoa Mac Industrial zone in Ha Nam province in which the leasing start from

8 Table 7: Properties in hand and under construction as the end of June 2010: Properties Tay Mo Urban Area Northern Pho Noi Urban Area Location Tu Liem Dist. Scale (hectare) Constru ction area Total investment capital (VND bn) HPG's ownership Selling price (E) in VND/m ,000 25% 10,000,000 (*) Hung Yen n/a 100% 5,000,000 (*) Current performance Investment capital being transferred to the People Committee of Hanoi to build civil roads in exchange of acquiring this piece of land. Setting a master plan and design still in progress Pho Noi A IP (expanded site) Hung Yen % 3040$/m2 for 50yr lease Projection and procedures for using this site still in progress Hoa Mac Industrial Park Ha Nam % 35$/m2 for 50yr lease The infrastructure being constructed Source: HPG and (*) estimates by TLS Cement Manufacturing: The total investment value of 3,200 billion VND was made for the cement plant, the new field. The company has contracted with the 3 financially strong and influential distributors in the market that ensure the distribution channel for its products. Coal and thermoelectric production: In late 2009, coking coal was manufactured for the thermoelectricity and exports. Ticker Company Price Outstanding Share Market Cap. (USD mn) APPENDIX Table: Industry comparables Revenue (USD mn) Net Profit (USD mn) Trailing EPS 4Q (vnd) Dividend yield P/E P/B ROE ROA HLA Huu Lien Asia ,800, , % % 5.00% 14,929 Group HPG Hoa Phat ,545, , % % 10.60% 17,083 Group HSG Hoa Sen ,771, , % % 18.40% 16,526 Group VGS VG Pipe ,599, , % % 12.50% 13,733 VIS Vietnam Italy 50 30,000, , % % 13.20% 14,375 Steel TLH Tien Len Steel ,000, , % % 25.70% 13,933 POM Pomina Steel ,450, , % % 8.40% 12,282 Source: Statistics by TLS, the exchange rate by the VCB accessed on July 29, 2010 Book Value 8

9 RESEARCH LOGS Issued date Report Latest recommendation Market price at issued date Target price 7/5/2010 Update HOLD 47,600 49,000 53,000 11/6/2010 Update BUY 40,000 52,014 ANALYST DECLARATION Conflicts of interest might exist as Thang Long Securities and its clients might have stakes in the target firm through investments and/or advisory services in the past, at present or in the future. PRODUCT This product covers the latest developments on the target firm. Details on the firm can be obtained by contacting our analyst(s) or the sales persons named above. We thank clients for comments and feedbacks on our product. Thang Long Securities publishes this product, but all errors if any are the authors. RESEARCH AND INVESTMENT ADVISORY GROUP We offer economic and equity research. The Economic Research Team led by The Anh Pham (PhD, Manchester) has been offering periodic reports on macroeconomics, monetary policies and fixed income markets. The Equity Research Team led by Do Hiep Hoa (MBA, Hawaii; CFA Level III Candidate) has been offering reports on listed firms, private equities and sector reviews. The Research and Investment Advisory Group has been also offering regular market commentaries The Investor Daily and The Investor Weekly. THANG LONG SECURITIES INC. Established in 2000, Thang Long Securities Joint Stock Company (Thang Long) was one of the first securities firms operating in Vietnam. The company is authorized under Vietnam Securities Law to provide a full range of services including brokerage, research and investment advisory, investment banking and capital markets underwriting. With over 400 employees located throughout an expansive network of offices in Hanoi, Ho Chi Minh City, Haiphong and other strategic locations, Thang Long is one of the best known securities firms in Vietnam. Our client base consists of retail and institutional investors, financial institutions and corporations. As a member of the MB Group, including MB Bank, MB Land, MB Asset Management and MB Capital, Thang Long Securities is able to leverage substantial human, financial and technological resources to provide its clients with tailored products and services that few securities firms in Vietnam can match. Since its establishment, Thang Long has become widely regarded throughout Vietnam as: A leading brokerage firm ranked No.1 in terms of brokerage market share in A renowned research firm with a team of experienced analysts that provides marketleading research products and commentaries on equity markets and the economy. A trusted provider of investment banking services for market companies. OFFICES Headquarter: 2 nd Floor, Toserco Building, 273 Kim Ma St., Ba Dinh, Hanoi. Phone: +84(4) Research Office: 4 th Floor, Vinaconex Building, 34 Lang Ha St., Ba Dinh, Hanoi. Phone: +84(4) DISCLAIMER The views expressed in this report are those of the authors and not necessarily related, by any sense, to those of the Thang Long Securities Company. The expressions of opinions in this report are subject to changes without notice. Authors have based this document on information from sources they believe to be reliable but which they have not independently verified. Any recommendations contained in this report are intended for general/public investors to whom it is distributed. This report is not and should not be construed as an offer or the solicitation of an offer to purchase or subscribe for any investment. This report may not be further distributed in whole or in part for any purpose. No consideration has been given to the particular investment objectives, financial situation or particular needs of any recipient. Copyright. Thang Long Securities Company , ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying recording, or otherwise, without the prior written permission of Thang Long Securities Company. 9