MSN - OUTPERFORM COMPANY UPDATE. MSN consolidated earnings forecast

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1 MSN - OUTPERFORM Price chart MSN consolidated earnings forecast Stock Data as of April 15 th 2013 Price (VND) 114,000 Current listed shares 687,280,123 Outstanding shares 687,280, Week high 130, week low 86,000 Price change (3 months) -1.7% Price change (6 months) 18.8% Price change (12 months) -1.7% Free float (share) 165,787,635 Trading value (VNDmil) (average last five trading days) 8,656 Market Cap (VNDmil) 78,349,934 Market Cap (US$mil) 3,758 Total room (no. of share) 336,767,260 Current room (no. of share) 187,056,653 Foreign owned ratio (%) 21.8% Foreign ownership limit (%) 49.0% Source: HSC Key numbers (VNDmn) FY2011 FY2012 Total Assets 33,572,619 38,699,256 Owners' Equity 15,875,652 13,883,838 Revenue 7,056,849 10,389,414 Pre-tax profit 2,868,572 2,488,522 Net profit 1,973,149 1,260,518 (VNDmillion) FY2012 FY2013F FY2014F % y/y FY2012 FY2013F FY2014F Net sales 10,389,414 15,571,584 22,938, % 49.9% 47.3% Gross profit 4,210,488 6,316,483 9,674, % 50.0% 53.2% Net financial income 500, , , % -60.4% 20.3% SG&A expense 2,052,650 2,812,310 3,732, % 37.0% 32.7% Net operating profit 2,658,277 3,702,256 6,180, % 39.3% 66.9% Profit & loss in associates (337,798) (150,622) (101,744) % 55.4% -32.5% Pre-tax profit 2,488,522 3,551,634 6,078, % 42.7% 71.2% Net profit after tax & minority interest (VAS) 1,260,518 2,060,128 3,840, % 63.4% 86.4% Basic EPS 2,183 2,914 5, % 33.5% 81.4% Diluted EPS 1,613 2,681 4, % 63.4% 86.4% P/E BVPS 21,424 28,893 33,893 P/B Source: MSN, (F): HSC forecasts Masan Group (MSN - HSX) - Good FY2012 and strong prospects going forward as mine comes on stream while M&A remains active. Reiterate Outperform MSN FY2012 result was mixed with a strong top line and some pressure on the bottom line. Consumer business maintained rapid growth while operating margins were improved. However TCB profit dropped sharply on heavy provisioning explaining the decrease in group profit last year. We are very positive about the outlook for the consumer side over the next two years assuming market share gains and expansion into several new categories. Main Ratios FY2011 FY2012 Liquidity - Current Ratio Quick Ratio Profitability - Gross margin 43.3% 40.5% - Net margin 35.4% 18.9% - ROE 14.9% 8.5% - ROA 7.4% 5.1% Operating Efficiency - Receivable Turnover Inventory Turnover Asset Turnover Equity Turnover Source: MSN Analyst - Tran Huong My; Nguyen Thi Tam Hanh - Hoang Thi Hai my.th@hsc.com.vn; hanh.ntt@hsc.com.vn Nui Phao will start to generate earnings in the last four months of this year and will be a big contributor to net profit from late-2013 onwards. Therefore we forecast FY2013 group net profit will grow by 63.4% y/y. We also expect continued active M&A especially in the consumer side. Valuations may appear high but our valuation model justifies the premium. Reiterate OUTPERFORM. 1

2 Investment conclusion MSN consolidated earnings snapshot (VAS) Unit: VNDmillion FY2011 FY2012 FY2013F FY2014F % y/y FY2011 FY2012 FY2013F FY2014F Net sales 7,056,849 10,389,414 15,571,584 22,938, % 47.2% 49.9% 47.3% Gross profit 3,059,015 4,210,488 6,316,483 9,674, % 37.6% 50.0% 53.2% Net financial income 837, , , , % -40.2% -60.4% 20.3% SG&A expense 1,416,523 2,052,650 2,812,310 3,732, % 44.9% 37.0% 32.7% Net operating profit 2,479,973 2,658,277 3,702,256 6,180, % 7.2% 39.3% 66.9% Profit and loss in associates 392,733 (337,798) (150,622) (101,744) % % 55.4% -32.5% Pre-tax profit 2,868,572 2,488,522 3,551,634 6,078, % -13.2% 42.7% 71.2% Net profit after tax & minority interest (VAS) 1,973,149 1,260,518 2,060,128 3,840, % -36.1% 63.4% 86.4% Basic EPS 3,829 2,183 2,914 5, % -43.0% 33.5% 81.4% Diluted EPS 2,525 1,613 2,681 4, % -36.1% 63.4% 86.4% P/E BVPS 23,973 21,424 28,893 33,893 P/B Source: MSN, (F): HSC forecasts MSN reported mixed FY2012 results combined a strong top line with some pressure on the bottom line. Net sales grew impressively, led by Masan Consumer with rapid growth from the noodles and coffee segments. In general the consumer business maintained its profitability with improved operating margins across all product categories. However group net profit was down 36.1% y/y with Techcombank acting as a drag. Techcombank s results were disappointing with a decline of 76% y/y in pretax profit due to heavy provisioning. And due to lower interest income, group s net financial income, an important profit contributor last year, also declined. For the next two years we are very positive about Masan Consumer s outlook with increasing market share in existing categories as well as penetration into several new categories. This includes mineral water and possible processed meats and beer at a later stage. The Nui Phao mine is about to be commissioned, therefore its risks are now reduced significantly. And this will be a big contributor to net profits from late-2013 onwards. The outlook for Techcombank is still a bit unclear with work to do to clean up the balance sheet. For FY2013 including just over a quarter of full operations form Nui Phao we forecast strong top line growth, up 49.9% y/y, of which Masan Consumer sales is expected grow 31.5% y/y and account for 88% of group sales and Nui Phao accounts for the balance. We expect group net profit to jump 63.4% y/y with the domination of Masan Consumer. MSN combines organic growth in existing segments with excellent M&A to access new businesses. At the group level; their superior management helps to manage risk, allocate capital efficiently, raise longterm funding, build robust business platforms and exploit M&A opportunities. Above all so far they have been peerless in execution. Valuations as ever appear high but our valuation model justifies the premium. Hence we reiterate our Outperform rating. 2 Page 2

3 There have been some significant milestones over the last 12 months pointing to MSN's continuing execution capability, ability to raise and deploy capital and superior risk management (1) Nui Phao mine about to start operating in April as planned - They have brought the complex Nui Phao mine project to the brink of operations by deploying both equity and debt to prepare the mine; build a processing plant and all supporting facilities and put in place a highly trained workforce led by an experienced management team. The large open strip mine will produce 3.5 million tons of ore every year and has a life of 16.5 years. When we visited the mine in January they told us that they had already signed long term off-take agreements for fluorspar & bismuth with international players. We understand that they are looking to have long term agreements for tungsten output signed and in place over the next few weeks. In the initial ramp-up phase MSN will focus on gradually raising the throughput and recovery rate for tungsten. They will initially produce and ship concentrate before switching to the final tungsten value-added product; APT once that the plant is ready. Other elements will also be processed until the ramp-up is completed by the end of Q3. From Q4 then the mine should be fully operational and contributed over one full quarter to the FY2013 result (about four full months). (2) VinaCafe Bien Hoa (VCF) has been transformed - Following the purchase of a 50.25% stake in October 2011 which was then increased to 53.2% in December 2012; VCF sales surged by 33.4% y/y last year as MSN integrated the company into Masan Consumer s own distribution and POS platform. Then launched four highly successful products namely new Vinacafe, Wake café Saigon, Wake up cafe weasel flavor &Kachi cereals. The integration of VCF into the existing platform has taken place at great speed and with very few hitches. This has enabled Masan to deploy its formidable new product & marketing capability thus enabling the company to ramp up production very aggressively. Looking forward coffee capacity will increase by 267% in 2QFY2013 when the new factory in Long Thanh came on stream and VCF plan to create new export markets for their product. In FY2012 export sales accounted for 7% of total sales and the company hopes to double export sales in FY2013. The current export market is the US and new markets might include Taiwan, China and Korea. (3) M&A has continued apace with the purchase of stakes in Proconco and VinhHao - Masan Consumer has continued its strategy of purchasing strategic stakes in value-creating consumer oriented businesses. To this end they acquired a 40% stake in Proconco; a leading animal feed play and more recently a 24.9% stake in VinhHao Mineral Water JSC; the prominent mineral water company. This points to an innate ability to buy into attractive inorganic opportunities. MSN s plans vis a vis Proconco are still taking shape although we know it will fit nicely into a longer term feed to fork strategy which would place the company at all points along the food processing business line (apart from actual farming). They have made a tender offer for the balance of the shares of VinhHao and have plans to launch new bottled drink products in the future. (4) Masan Consumer top line grew by 47.2% y/y in FY The core consumer business has shown great progress with sales increase of 47.2% y/y fuelled by new product launches in the noodles, fish sauce, coffee and cereals categories and a restructuring of the sauce space which has involved some brand integration. Noodles sales rose 70% y/y in value terms driven by new mass market product launches while we estimate that the more mature sauce segment saw growth of 3.4% y/y. The company now dominates every major segment in both the fish sauce and noodle market with a market share of 78% and 25% respectively driven by seven major brands. (5) Capital raising continues with a US$200 million injection from KKR - They raised a further tranche from leading private equity player KKR (on top of US$159 million already raised from KKR in 2011 for a 9.31% stake in Masan Consumer). In January 2013, KKR bought an additional 8.66% stake in Masan Consumer at US$200 million making this the largest private equity investment in Vietnam. MSN also arranged debt finance of US$250 million from banks such as Standard Chartered Bank and Vietnam Development Bank. (6) MSN streamlined share count by buying back equity from holders at an attractive price - In June 2012, the company redeemed some of its equity-linked instruments and issued shares to settle a majority of its share-based obligations and liabilities. As per discussion with management, Masan Group saw an opportunity to simplify its balance sheet and take advantage of challenging equity markets to reduce its share count at a discount. As a result, a significant amount of convertible instruments (VND781.4 billion) and prior obligations (stock options) were converted into 172,007,854 shares bringing Masan Group s basic share count to 687,280,123 shares. For a consideration of VND4,635 billion, the company bought back shares at an approximately 30% discount to the prevailing market price at that time. Nicely done. (7) Techcombank is starting to work through its NPL issues - Techcombank has not been spared the troubles of the banking sector and last year saw credit growth of 7.3% while provision expenses jumped 3 Page 3

4 324.3% and accounted for 59% of pre-provision profits. The bank announced an NPL ratio of 2.7% after they wrote off VND1,157 billion. This amounts to 1.7% of their loan book as at end FY2012. In HSC's view it will take the bank about another three years to work through this issue; meantime we forecast FY2013 credit growth for TCB of 9.0%. However only part of this can be described as real credit growth. (8) FY2013 prospects to be driven by the fast emerging beverage division - With fish sauce now entering a more mature phase and noodles unlikely to repeat last year s stunning sales surge hopes for this year rests with VCF and later on, new product launches under the VinhHao umbrella. Last year s successful coffee product launches will enjoy a full year s sales this year while we expect MSN will launch new bottled beverage products using the Vinh Hao platform. (9) Masan's stock price is very event driven - Masan stock prices seems to go through periods of relative quiet before springing to life usually based on a news event. Liquidity can often be an issue and hence we see sharp rallies preceded usually by some event or announcement. With the mine about to be commissioned the stock has moved up in recent trading sessions and this is likely to continue for some time in our opinion. (10) Valuation premium an issue for some but the consistent delivery of superior growth justifies it in our opinion - Based on diluted EPS of VND2,628 in FY2013, MSN is currently trading at forward P/E of 46.8x given a mini run on stock price recently. While the FY2013 P/B is 4.3x. This is quite a hefty premium but clearly investors are starting to look ahead into FY2014 when we will get a full year contribution from the mine. Plus the usual raft of new product launches this year mainly focused on the beverage market which offers a lot of potential. Not to mention their M&A potential where they have consistently pulled rabbits out of the hat. 4 Page 4

5 How do you value Masan Group? MSN sum of the part valuation (1) - using comparative regional peer PE for consumer (VNDmillion) Approach Fair value MSN economic interest MSN Fair value Masan Consumer P/E 54,592, % 42,200,716 Techcombank P/B 13,708, % 4,173,471 Nui Phao EV/EBITDA 14,169, % 11,335,825 MSN enterprise value 57,710,012 Debt 1,698,338 Cash 7,470,647 MSN equity value 63,482,322 Fully diluted number of shares 768,276,256 MSN fair price 82,630 Premium for potential earnings growth from M&A 20.0% MSN fair price 99,155 Source: HSC Masan Group presents some unique challenges in terms of valuations. Since listing at a price of VND43,200 back in November 2009 the stock price (adjusted performance) has increased 184.7% against the VN index which went down -8.1% over the same time period. At the time many analysts including ourselves felt the stock was rather expensive and yet it has dramatically outperformed the overall market since. And whether you do a sum of parts (using PE; PB and then EV/EBITDA) as we have done (using PE for the consumer side) or alternatively using PEG versus regional peers, the shares still end up looking rather expensive. But then they have always looked expensive. And the stock has still always outperformed. So somehow the market has developed its own special way of looking at Masan. Our first attempt to capture that was by repeating the sum of parts exercise using first PE and then PEG for the consumer side. To show the growth potential. And yet this is also intrinsically unsatisfying. It does well to capture organic growth from the consumer business by projecting forward growth from the existing businesses. However this almost certainly and perhaps seriously underestimates growth potential from future M&A. However we cannot very well forecast M&A into our model as it would make the assumptions underpinning the model very precarious. MSN sum-of-the-part valuation (2) - using comparative regional peer PEG for Consumer (VNDmillion) Approach Fair value MSN economic interest MSN Fair value Masan Consumer PEG 90,904, % 70,270,624 Techcombank P/B 13,708, % 4,173,471 Nui Phao EV/EBITDA 14,169, % 11,335,825 MSN enterprise value 85,779,921 Debt 8,098,338 Cash 7,470,647 MSN equity value 85,152,230 Fully diluted number of shares 768,276,256 MSN fair price 110,835 Premium for potential earnings growth from M&A 20.0% MSN fair price 133,003 Source: HSC 5 Page 5

6 Clearly though the market includes something for M&A. With good cause. Masan has managed a steady stream of acquisitions in the past three years and they show no sign of slowing this down. And Masan s M&A has been a clever mix of opportunity-driven deals combined with some very targeted purchases. Arguably Nui Phao and Proconco fall into the somewhat opportunity-driven deal category while in our view Vina- Cafe Bien Hoa and VinhHao fall into the targeted purchase camp. An opportunistic purchase does not mean they had no plan to enter that particular segment. It's clear for example that Masan very much wanted to enter the animal feed business even before the Proconco deal came along. So opportunistic deals do not necessarily require a departure in strategy; simply that the right deal came along earlier than expected and that Masan has the resources to take advantage of this. We call it fortuitous. With that in mind let us enter the world of our sum of parts valuation model. 6 Page 6

7 Masan Consumer - regional peer PE vs. regional peer PEG? Masan Consumer valuation - P/E and PEG approaches Company name Listing venue FY2012 PE FY2013F PE EPS CAGR (%) Thai Union Frozen Thailand % 0.52 Tingyi Hong Kong % 1.48 Want want Hong Kong % 1.39 Hengan Hong Kong % 1.33 China Foods Hong Kong % 0.61 Uni-President China Hong Kong % 1.28 Unilever Indonesia Jakarta % 3.52 Indofood Jakarta % 1.11 URC Philippines % 2.31 Nestle India Mumbai % 2.01 Fraser & Neave Singapore % 0.39 Petra Foods Singapore % 4.57 Ajinomoto Tokyo % 1.55 Meiji Holdings Tokyo % 0.55 Kikkoman Tokyo % 1.47 Median % 1.39 Discount for country risk 20% 20% Masan Consumer fair multiples Masan Consumer FY2013 net profit (VNDmillion) 2,869,644 Masan Consumer earnings growth % Masan Consumer fair price using PE 54,592,105 Masan Consumer fair value (VNDmillion) using PEG 90,904,176 Source: Thomson Reuters; We used Thomson Reuters consensus numbers for peer EPS PEG Using Thomson Reuters consensus numbers we have estimated the PE & PEG of comparable consumer businesses throughout the region. We notice that in fact even forward valuations look fairly high with the range extending from 12.7 for Fraser & Neave to the rather pricey looking Nestle India at HSC would strongly argue as we have above, that the PEG approach better differentiates between the mature growth stocks such as Petra Foods and the zippy pace expected from China Foods and a Masan for example. We took the median; gave it a 20% discount for country risk and then applied this to Masan Consumer. 7 Page 7

8 For Techcombank we have used HSC book value forecasts TCB valuation - P/B multiples approach Bank Market Cap (VNDmn) Market price FY2012 FY2013F BVPS P/B BVPS P/B ACB 15,003,144 16,000 13, , STB 20,745,665 21,300 12, , VCB 72,036,112 31,200 17, , CTG 51,648,907 19,700 11, , EIB 18,285,739 14,800 12, , MBB 14,237,500 13,400 12, , Median Discount (listed vs. unlisted) 30% TCB fair PB 0.85 TCB 10,493,439 10,000 14, , TCB fair price per share (VND) 13,064 TBB fair value (VNDmillion) 13,708,309 Source: HSC; We use HSC forecasts for forward PB for peer comparison We have used the PB approach to compare Techcombank to other local banks. Of course some may argue that with NPLs not yet fully disclosed all book values are suspect. However we have tried to make allowances for this to the extent that we can. We argue that this is a system rather than just an individual bank issue so in comparative terms it s a case of swings and roundabouts. We gave TCB a 30% haircut as an unlisted bank which we think also removes some of the latent NPL risk also. 8 Page 8

9 For the mine we use comparative EV/EBITDA with a double haircut Nui Phao s peers price multiples Company FY2012 P/E FY2012 EV/EBIDA FY2013 P/E FY2013 EV/EBITDA Xiamen Tungsten Co Ltd Chongyi Zhangyaun Chenzhou Mining Group Median Source: Thomson Reuters; We used Thomson Reuters consensus numbers for peer EPS Nui Phao Valuation (VNDmillion) FY2013 FY2014 EBITDA 821,309 3,883, EBITDA, discount to 2013 year end (20%) 2,673,448 EV/EBIDA peer multiple for Discount (Vietnam market vs China market) 30.0% EV/EBIDA peer multiple for 2013 after discount 9.0 Enterprise value of Nui Phao 24,122,723 Discount (as Nui Phao is under construction) 20% Enterprise value of Nui Phao 20,102,269 Minus debt 6,400,000 Plus cash 467,513 Equity value of Nui Phao 14,169,782 Source: HSC Once again we took regional comparatives kindly supplied by Thomson Reuters and in this case applied a double haircut; one for Vietnam and then one for the fact that the mine is in the commissioning stage. We think this is very prudent and also gives us scope to revise up this part of the valuation later if the mine meets our forward expectations (which we think it will). 9 Page 9

10 Masan M&A record FY2009 FY2010 FY2011 FY2012 FY2013F FY2014F Acquisition name Nui Phao mine Year 2010 Date acquired 23-Sep-10 Type of company Resources Sales ,899,137 7,028,390 Net profit ,839 2,417,546 EV/EBITDA at acquired price 2.3 PB as % of that year's MSN sales 0% 0% 0% 0% 12.2% 29.7% Sales growth y/y NA NA NA NA NA 270% Acquisition name Vinacafe Bien Hoa Year 2011 Date acquired 17-Oct-11 Type of company Consumer Sales 1,020,694 1,301,664 1,585,572 2,114,659 2,854,206 3,523,273 Net profit 136, , , , , ,945 PE at acquired price PB at acquired price as % of that year's MSN sales 4.7% 20.4% 18.3% 14.9% Sales growth y/y 27.5% 21.8% 33.4% 35.0% 23.4% Acquisition name Proconco Animal Feed Year 2012 Date acquired Oct-12 Type of company Consumer Sales 12,400,000 12,648,000 13,280,400 13,944,420 Net profit 681, , , ,725 PE at acquired price PB at acquired price as % of that year's MSN sales Sales growth y/y 2.0% 5.0% 5.0% Acquisition name Vinh Hao Mineral Water Year 2013 Date acquired Feb-13 Type of company Consumer Sales 184, , , , , ,834 Net profit 14,713 16,564 8,541 15,648 28,347 85,256 PE at acquired price PB at acquired price as % of that year's MSN sales 3.9% 4.1% Sales growth y/y 73.4% 20.3% 27.9% 24.4% 60.3% Source: HSC; Note that 2012 numbers for Proconco and Vinh Hao in the above table are HSC estimates 10 Page 10

11 Then the M&A premium finishes our valuation story Finally we have added a 20% M&A premium to our valuation model. We justify this by the following statements (1) that so far Masan s M&A process has been on the whole tremendously value generating (2) acquisition valuations with the exception of Vinh Hoa have been reasonable. Of course of the five M&A we have observed so far (included in the group that is) only Vinacafe Bien Hoa (VCF) has revealed anything close to its full potential. While Nui Phao is not yet operational. However in this case by selling a 20% stake to Mount Kellett at a large premium they have already demonstrated their ability to create value with this acquisition. Of the others Vinh Hao is still in the acquisition process while Proconco is a medium to long term story. Overall then we have one clear star (VCF); one likely star (Nui Phao); one possible star in the making (Vinh Hao) and a still unknown (Proconco). Not bad. Not bad at all. Therefore we are comfortable with the premium and we reiterate Masan Group (MSN) as an Outperform). 11 Page 11

12 FY2012 result show growth momentum on consumer side still very strong Masan Consumer strong top line growth, margins improved Masan Consumer FY2012 result (VNDmillion) FY2011 actual (*) FY2012 actual (**) y/y% FY2011 proforma (***) FY2012 actual (**) y/y% Net sales 7,056,849 10,389, % 8,309,799 10,389, % COGS 3,997,834 6,177, % 4,936,821 6,177, % Gross profit 3,059,015 4,212, % 3,372,978 4,212, % Financial income 1,006,185 1,313, % 1,034,358 1,313, % Financial expense 281, , % 285, , % Net financial income 725, , % 748, , % Selling expense 1,010,149 1,316, % 1,232,848 1,316, % General administration expense 186, , % 226, , % SG&A 1,196,422 1,711, % 1,458,951 1,711, % Net operating profit (VAS) 2,587,741 3,282, % 2,778,651 3,282, % Other profit (3,797) 21, % (7,701) 21, % Profit and loss in associates - 53,365-53,365 Profit before tax 2,583,944 3,357, % 2,787,831 3,357, % Net profit after tax 2,254,212 2,888, % 2,438,100 2,888, % Net profit after tax & minority interests 2,253,420 2,802, % 2,226,196 2,802, % Gross margin 43.3% 40.5% -6.5% 40.6% 40.5% -0.1% Operating margin 36.7% 31.6% -13.8% 33.4% 31.6% -5.5% Pretax margin 36.6% 32.3% -11.7% 33.5% 32.3% -3.7% Net margin 31.9% 27.0% -15.5% 26.8% 27.0% 0.7% SG&A/sales 17.0% 16.5% -2.8% 17.6% 16.5% -6.1% Source: MSN (*) Including 2 months result of VCF (**) Including full year result of VCF (**) Assuming that VCF full year result of FY2011 was consolidated into Masan Consumer 12 Page 12

13 Instant noodles continued to be driver for strong sales. Gross margin improved on better product strategy Masan Consumer product mix Unit: VNDmillion FY2011 actual FY2012 actual Sales % sales contribution Gross margin Sales % sales contribution sales y/y% Gross margin Sauce products 4,709, % 50.1% 4,870, % 3.4% 50.4% Instant noodles 2,002, % 32.0% 3,404, % 70.0% 34.5% Coffee (*) 1,254, % 21.8% 1,649, % 31.5% 24.4% Cereals (*) 330, % 36.4% 465, % 40.6% 39.2% Others 2, % 21.9% - 0.0% % Total 7,056, % 43.3% 10,389, % 47.2% 40.5% Source: HSC estimates; (*) These are sales of coffee and cereals under VCF entity. VCF has been consolidated to Masan Consumer since October Therefore in FY2011 sales of coffee and cereals incorporated into Masan Consumer were only VND332.6 billion In FY2012, Masan Consumer s net sales grew 47.2% y/y mainly due to the integration of Vinacafe Bien Hoa (VCF). Sales ex VCF grew 17% y/y. Masan Consumer acquired VCF in October 2011, therefore naturally its results were not fully incorporated in FY2011. Then if we add VCF's full year result in FY2011 to Masan Consumer's result in FY2011 to allow for direct comparison to FY2012 Masan Consumer sales, then y/y growth would be 25.0% y/y mostly thanks to the sharp increase in instant noodles sales and the improvement in coffee business. Last year Masan s noodles segment saw spectacular growth of 70% y/y as they took a firmer hold of the low end segment of the market with their top selling Kokomi brand. Kokomi - their low end product launched in December 2011 has enjoyed spectacular success with an attractive price point and backed by MSN's wide distribution network. By recruiting a significant number of wholesalers last year the company has been able to expand its reach deep into the rural market which holds the key to the low-end segment. Masan offers distributors attractive margins (and usually place their own sales staff at the larger distributors to control POS. They increased their sales staff from 1465 to 2090 in FY2012 to cope with this growth. Sales staff work mostly work on a commission basis. Masan issues recommended prices for POS however give that up to 90% of sales are sold through informal channels it s sometimes challenging to control the final retail price. Masan has generally matched the average prices charged by their competitors in each segment, competing instead through a more intensive marketing effort and utilizing their nationwide distribution network which now covers 176,000 POS. Given that much of the competition is fragmented with far smaller marketing budgets this has proven to be more than enough to make deep inroads into the market in FY2012. Meanwhile Omachi the current premium product also performed well. Masan Consumer then launched a new mainstream product called Yoshi in Q3. To boost capacity Masan has installed 6 new noodle line last year adding production of 900 million units a year. Price were kept fairly flat hence sales growth was almost entirely due to higher volumes. We estimate that Masan reached a 27% market share for noodles by the end of FY2012 compared to 16% at the end of last year. This puts it within striking distance of market leader Acecook with about 29%. We estimate the overall noodle market is worth about US$850 million and is growing at over 10% a year. 13 Page 13

14 Fish sauce segment looks rather mature although 1-H sale decline fully explained by product repositioning However given Masan s dominant market share, sauce products have reached a maturity point with single digit sales growth only in Even so it was a story of two halves; a 2-H recovery with sales growth of 14.4 y/y% following a 1-H sales decline of 12% y/y. This led to growth of just 3.4% y/y for the whole year. The 1-H decline was mainly the result of a decrease in the weighted average selling price of 25.5% y/y because of a lot of changes in the product mix which are explained further below. For the whole year we estimate that average selling price fell by 7.7% y/y while volume rose by 12% y/y. To explain further, following changes in consumption patterns, MSN has switched its focus to the premium and low end segments of the fish sauce market and away from the mainstream segment. According to management, the main sales drivers in FY2012 were Chinsu the premium fish sauce, Chinsu-Nam Ngu the crossover fish sauce and Nam Ngu Supersaver the low end fish sauce. This way they were able to boost sauce sales even in a mature market. We estimate that Masan s market share in fish sauce as at FY2012-end was 78%, up 2% y/y. Even with a shelf life of up to one year for this product Masan sometimes has to contend with fairly high levels of returns something which they are trying to address. Gross margins fall mainly due to consolidation of lower margin coffee & cereal products Consumer FY2012 gross margin fell y/y following the consolidation of VCF s coffee and cereals products which carry lower margins. Excluding VCF, gross margins actually rose to 43.8% as at 3Q FY2012, up 50bps from 43.3% in FY2011. Indeed both sauces and noodles saw improved gross margin. One of the secrets of Masan s success has been its ability to maintain similar gross margins throughout all product segment ranging from the low-end up the premium product. For instance, the mass market products such as Kokomi still enjoy the same margins as mainstream and premium noodles. Over the medium term, Masan targets at least a GPM of 40% on all its products. And while this may not be the case at launch time they always require a clear path to 40% GPM before launch. And if a product does not achieve that goal after a stated period they tend to pull it. This can be especially challenging for low-end products with lower price points; however by working carefully with the ingredient mix; sizes; formulations and most importantly by controlling packaging costs they appear to have mastered the art. One consequence of this is frequent launches of new products in different market segments with differing sizes and weights as an effective way of increasing selling prices and thus pushing gross margins higher. SG&A increased sharply due to frequent product launches. In FY2012 the number of distributors rose to 180 from 162 while point of sales increased to 176,000 from 164,000 in FY2011. Masan Consumer now has one of the largest distribution networks in the country (Vinamilk for example has 178,000 POS). However SG&A growth was still a bit lower than sales growth. As such SG&A as % sales remained at reasonable levels of 16.5% compared to FY2011 level of 17%. 14 Page 14

15 VCF see a sales surge following integration with Masan Consumer VCF FY2012 result Unit: VNDmillion FY2011 FY2012 % y/y Company target for FY2012 % Fulfilled Net sales 1,585,572 2,114, % 2,300, % Cost of goods sold 1,193,485 1,530, % Gross profit 392, , % Financial income 35,467 17, % Financial expenses 10,403 2, % Net financial income 25,064 14, % Selling expense 170, , % General administration expense 32,185 41, % SGA expense 202, , % Operating profit 214, , % Net other Income 1,877 20, % Profit from associates/joint ventures % Pretax profit 233, , % Net profit after tax 211, , % 300, % Gross margin 24.7% 27.6% 11.7% Pre-tax margin 14.7% 15.7% 6.4% Net margin 13.3% 14.4% 7.9% SG&A/sales 12.8% 13.6% 7.9% Source: VCF From Q2 we saw a dramatic turnaround in VCF s revenues after a decline of 7.1% y/y in Q1 which was due to their distribution changeover.. And the VND728 billion in sales posted in Q4 was a record. The integration into Masan s market-leading platform & distribution network has thus created enormous value for VCF. VCF management tells us the biggest driver was the dramatic increase in their distribution capability followed by new product launches. Prior to Q1 FY2012 VCF had 125 wholesalers who sold not only VCF s products but also products for other FMCG companies. VCF then had to offer a generous credit sales policy for wholesalers. As a result during FY , the average number of receivables days was quite high at 35 days. However the discount paid to wholesalers was low at only 1.5-3% of sales and wholesalers were allowed to fix selling prices themselves. These wholesalers have now been largely replaced by Masan Consumer s own exclusive distributors. Distributors are required to pay cash on goods delivery. Only supermarkets are offered 45 days of deferred payment. Therefore, the average number of receivables days in FY2012 dropped to 16 days which is obviously better for the company s cash flow. The sales price is fixed by VCF, while the discount paid to distributors is higher than before. This has encouraged distributors to push sales more aggressively. As of now VCF has 185 distributors (up from 125 wholesalers), over 100,000 point of sales (up from 40,000) and 1,000 sales persons (up from 500). All sales and logistic activities are coordinated by Masan Consumer. Last year VCF launched four new products; (1) The new 3 in 1 instant coffee Wake up café Saigon targeted at the South market and competing directly with Tran Quang coffee (in late June). (2) The new 3 in 1 instant coffee Vinacafe 3 in 1 competing directly with Nescafe (in Q1 and then December). This was actually the re-launch of old Vinacafe 3 in 1 with new image and marketing message. (3) The new 3 in 1 instant coffee Wake up weasel flavor targeted at the Northern market and competing directly with Trung Nguyen (since December). (4) The new cereals Kachi which is mostly a repackaging and re-branding of the existing cereal product (in Q2). 15 Page 15

16 By product categories, cereal outperformed coffee a bit because of a lower sales base although both categories saw decent growth. Gross profit margin increased from 24.7% in FY2011 to 27.6% in FY2012 mostly thanks to lower raw material costs growth which accounted for 90% of COGS. Raw material costs grew 24% y/y while output volume grew 29.3% y/y according to our estimates. Which means per unit raw material prices declined by 4.1% y/y while average selling price was 3.2% higher y/y. And while SG&A rose sharply albeit a bit lower than expected given the frequent new product launches. SG&A as a % of sales is still reasonably low at 13.6%. Then with strong top line, improved gross margins and reasonable growth in SG&A, this naturally led to a jump in net profit. VCF quarterly sales Net sales q/q growth Q Q Q Q Source: VCF 40% 30% 20% 10% 0% -10% -20% VCF product mix VNDmillion FY2011 FY2012 Sales % sales contribution sales y/y% Gross margin Sales % sales contribution sales y/y% Gross margin Coffee 1,254, % 20.1% 21.8% 1,649, % 31.5% 24.4% Cereals 330, % 29.2% 36.4% 465, % 40.6% 39.2% Others 2, % 142.5% 21.9% Total 1,585, % 21.8% 24.7% 2,114, % 33.4% 27.6% Source: VCF, HSC estimates 16 Page 16

17 Nui Phao is ready for production in April 2013 Nui Phao earnings forecast (VNDmillion) FY2013F FY2014F FY2015F y/y % change FY2014F FY2015F Net sales 1,909,126 6,268,133 6,581, % 5.0% COGS 1,035,838 3,265,310 3,350, % 2.6% Gross profit 873,287 3,002,823 3,230, % 7.6% Net financial income (120,225) (540,557) (523,933) % 3.1% SG&A expense 321, , , % 5.0% Other profit Profit and loss in associates Pre-tax profit 431,579 1,742,025 1,950, % 12.0% Net profit 431,579 1,742,025 1,755, % 0.8% Net profit after tax & minority interest 431,579 1,742,025 1,755, % 0.8% Source: HSC forecasts We visited Nui Phao in January and were very impressed with the overall facilities and the energy of the workforce. Located 80km outside Hanoi it takes 2 hours or so to get there. The mine is 100% owned by Masan Resources. Then Masan holds an economic interest of 65% of Masan Resources; DC holds 15% while Mount Kellett owns the balance of 20%. The mine is open pit with a low strip ratio (1.5:1); about a 1.6 kilometer wide and eventually will be 220 meters deep. The mine has a life of 16.5 years. 17 Page 17

18 Dragon Capital s residual ownership in Nui Phao likely to be unwound this year Nui Phao Reserves Estimate Ore Resources1 Category Tones ('000) Tungsten(%) Fluorspar (%) Copper(%) Bismuth(%) Gold(g/t) Measured+ Indicated 65, Inferred 32, Measured+Indicated+Inferred 97, Ore Reserves Category Tones ('000) Tungsten(%) Fluorspar (%) Copper(%) Bismuth(%) Gold(g/t) Proven 25, Probable 27, Proven+Probable 52, Source: MSN However Dragon Capital s interest is held in the form of a call & put option structure. More specifically MSN has a call option to buy DC s ownership in Masan Resources at US$90 million within 3 years from the original transaction date (that means until the end of Q3 2013). We estimate that Masan will choose to exercise its call option before then. If so this would mean that Masan in total has paid US$240 million for the mine. Then within one month after the end of third year following the transaction if MSN has not already exercised the call option, DC in turn has a put option to sell its ownership in Masan Resources to MSN in exchange for 25,942,505 MSN shares. The deal was signed on September 23 rd 2010 meaning that this put option could be exercised from the end of September until the end of October this year. 18 Page 18

19 Masan has invested some US$320 to date since the purchase Much progress has been made under the project s new owner, since their acquisition in Up to 31 Dec 2012,MSN has invested an additional $330 million on the mine after the purchase. Thus we estimate all the total investment cost (including purchase cost and investment since then until it is fully operational) should be around US$650 million. We estimate that in Q4 FY2012 alone, Masan spent VND2,407 billion or US$116 million on construction and mine related activities. To fund this, Masan has raised US$400 million between loans and equity. For example they sold the 20% stake in Masan Resources to Mount Kellett for a consideration of US$100 million. The construction and mining work are on track for the commencement of production in April The ramp up stage will last until Q3 and the mine is expected to be in full production by Q Most of the senior mine management have years experience in the mining industry with much of that in the developing world. Some came from the Oxiana mine in Laos. From talking to them is appears that they have found conditions in Vietnam to be quite conducive to success compared to other locations. And have taken some hard learnt lessons with them. These include hiring and training operational staff years before the mine is operational. Workers have been hired early on; sent to study in a formal training course and then sent for training on other projects in Vietnam (run by Vinacomin for example) to gain specialist experience in their chosen skill. This should shorten the ramp up period and lessen the possibility of mistakes as the mine should have a fairly experienced and knowledgeable workforce from the outset. 19 Page 19

20 Site and processing plant on track to be commissioned exactly on time Masan has had about 2,000 workers on site during the construction and preparation stage employed by 13 different subcontractors; 12 Vietnamese and one Thai. The local contractors are mostly well known specialist names such as Lilama and Song Da subsidiaries. While Jacob s Engineering has been heavily involved in the plant commissioning process. The facilities were almost fully completed when we visited and the finishing was good. An eye for detail is an important gauge of professionalism and the mine looked all of that. The site includes a worker s camp with catering hall; medical facilities and even has a gym. Then next to the mine is the processing plant which includes several sub-processes. The project is now under a few weeks away from ore commissioning. All earthworks for the tailings dam have been completed and handed over to the operations team, paving the way for start of production. Commissioning of thickener circuits is done; this is a first step towards commissioning of the full plant. The final leg of work on piping, cabling and electrical instrumentation is almost complete. Regarding operations, two million cubic meters of material have been removed from the Nui Phao open pit mine, and the first ore has been mined. SAP has been implemented at Nui Phao, providing international quality information systems and reporting for the project. Plans are on schedule for the placement of previously recruited operations personnel to run the plant. Off-take agreements are in place for the fluorspar and bismuth, while the long term tungsten off take agreements are now in the final stage of negotiation. Fluorspar, Bismuth and Tungsten (also in its value added product form APT) will all be exported. Regarding copper, it is likely that Nui Phao s copper concentrate will be sold as a mix of domestic and exports. Copper output is small in the scheme of things and does not require any special agreements. 20 Page 20

21 Rock will be blasted; blended and then processed into four elements; tungsten; fluorspar; bismuth and copper. Using explosives to blow a designated portion of the rock, the loose rock will be in a high 1.5:1 dirt to ore ratio. In the beginning the mining process will focus on the central area in the site. The miners use drill holes at narrowing intervals to gather information about the quality and composition of the rock before choosing sites for blasting. One key challenge is to produce a consistent blend of ore before it can be processed into concentrate. This is where the drill holes are important as they allow the miners to build up enough mine intelligence to blast precisely the right sites. Like a careful brew master; choosing the right combination of sites to blast every time gets you the correct blend of rock saving you a lot of trouble later on. A consistent output blend is a must in such a complex process. After ramp-up every year this will produce 3.5 million TPA tons of ore and 5 million tons of waste material. The ore will first be separated from the dirt using crushing pads. It will then be grinded into a fine sand. Processing is complex but uses standard techniques This ore will then enter into the process flow which will use flotation tanks and reagents to separate out the fluorspar; bismuth and copper. While gravity building techniques will be used to separate out the tungsten. This processing plant will have about 125 full time employers and use a continuous flow system using industry standard processes. What is complex however is the fact that unusually four elements are being extracted one after the other. The process will use about 47KwH to process one ton of ore. Hence electricity cost is a big consideration. In terms of supporting infrastructure; there is a 110kV high voltage line running in from the national grid; a narrow gauge railway that links to the national system plus nearby ports and the project will take its water needs from a combination of the nearby Cong river and a series of bore holes. They will use the narrow gauge railway and decent roads to carry the processed materials (concentrate to begin with and then APT bricks later on to ports in Haiphong which is several hours away. 21 Page 21

22 Initial focus will be on refining the tungsten recovery process to produce first concentrate and then APT Nui Phao proposed annual production snapshot Element tonnes per annum at full production % of current global supply Long term offtake agreements Current price per tonnes Estimated proceeds at current price % of revenues Tungsten 4, % Imminent 35,100 3,965, % Flourspar 210, % In place 450 1,820, % Copper 6, % Sold into domestic market & export 8, , % Bismuth 2, % In place 20, , % Source: MSN, HSC, asianmetal.com, Indmin.com, Bloomberg Initially Masan will focus on producing tungsten concentrate and getting the recovery rate up to about 60-70% which is standard. In other words concentrate thus contains about 65% tungsten. One ton of ore produces up to 21 kilos of tungsten concentrate. They will also produce fluorspar and copper from March/ April, while bismuth will be produced later on in the ramp-up stage. Regarding tungsten the final goal is to make ammonium paratungstate bricks (APT) which is a standard valueadded tungsten output containing 88.5% tungsten. For this they need a specialist plant. And the APT processing plant should be completed by September which allows for switch from concentrate to APT as a final output by 4QFY2013 if all goes well. 22 Page 22

23 Process Flow Diagram Crushing Grinding CopperFlotation Bulk Sulphide Flotation Bismuth Flotation Tungsten Gravity Recovery Fluorspar Flotation Bismuth Leach & Refining Tungsten Concentrate APT Plant Copper Concentrate APT Fluorspar Bismuth 1 Expected process flow, subject to further studies and modifications; Source: MSN 23 Page 23

24 Managing the waste disposal process to prevent environmental damage is a key part of the process The process will produce two main waste by products; oxide & sulphide which will taken away in two separate waste streams to two tailings dams. The system is sophisticated with a runoff pond and the discharge is controlled with a complex drainage system. The dams will be built up over the lifetime of the mine. The sulphur waste cannot be exposed to both water & oxygen simultaneously hence it will stored under water to keep it inert forever. Masan plans to adhere to international best practices, and there is a strong focus on environment and safety standards. This is reflected in the design and implementation of the plant processes and the waste disposal systems. Project execution in the last 2.5 years has been excellent At the time of acquisition, the Nui Phao project had been ongoing for almost a decade without much discernible progress. For example the compensation and resettlement process was only 2% complete, and management team stability was an issue. Since acquisition, Masan group has made remarkable progress with resettlement, which is now 98% done; has built Nui Phao s relationship with suppliers and contractors, made full disbursements for compensation and resettlement, hired a world class management team, raised equity and debt financing, and gained credibility with the local community in Thai Nguyen. Masan s progress has not come without challenges. Since acquiring the project, commodity prices have come down from their previous peaks, project costs and export royalties have increased, and the financing environment have become more difficult. Even so the Masan Group has been able to proactively arranged equity and debt financing for the project by offering recourse to Masan group, including collateral. Financing for Nui Phao Item Details Nui Phao has raised sufficient capital for project capex demand for this year and next. As at end FY2012 Nui Phao has VND4,006 billion worth of committed long term loans from Standard Chartered bank, local banks and Vietnam Development Bank (VDB). We will discuss the earnings model and working assumptions for the mine in detail in our FY2013 & FY2014 section further down. Equity In December 2010, Mount Kellett Capital Management invested US$100mm in Masan Resources for a 20% stake, towards development of Nui Phao Masan Group has committed US$25mm towards the development of the project VDB Debt Facility Commercial Bank Debt Facility SCB Debt Facility Offtake Contracts For Fluorspar and Bismuth Commodity Tungsten Fluorspar Bismuth Copper Source: MSN Details In January 2011, Vietnam Development Bank provided a VND2,377bn (~US$115mm1) 8-year debt facility In March 2011, a syndicate of local commercial banks led by Vietcombank provided a US$90mm 8-year debt facility In March 2012, Standard Chartered Bank provided a US$80mm 2-year debt facility Finalizing negotiations with potential customers. Multiple agreements to diversify their sources of supply. Masan looks for one year price reset and fixed output Offtake agreement with CMC Cometals (USA) Take or pay agreement for 200,000mt of fluorspar per year, with floor-price Widespread industry interest in securing non-contracted supply Offtake agreement with Sidech (Belgium), part of 5N/MCP Group, the largest processor of bismuth globally Commitment to offtake 2,000mt of bismuth product per year Evaluating opportunities to sell into domestic wholesale market, small production easily saleable 24 Page 24

25 Associate TCB disappointed in FY2012 with a big loss in Q4 TCB Snapshot (Unit: VNDmillion) 3Q FY2011 FY2011 3Q FY2012 % y/y 3Q FY2012 Q3 FY2012 Q4 FY2012 FY2012 % y/y FY2012 Company target Net interest income 3,584,876 5,298,375 4,164, % 1,413, ,241 5,115, % 4,623, % Net fee and commission income 862,896 1,150, , % 151,149 39, , % 622, % % Fulfilled FY2013F % y/y FY2013 Foreign exchange gains - net (740,495) (698,913) (57,575) -92.2% (46,349) (81,288) (138,863) 170,182 Securities investment/trading securities (19,842) 360,924 (167,999) (154,619) (4,343) (172,342) 60,000 Other income 685, ,374 80, % 8, , , % 166, % Equity income 6,085 8,061 24, % 156 5,090 29, % 30, % Total operating income 4,379,117 6,662,175 4,571, % 1,372,801 1,175,715 5,746, % 5,672, % Operating expenses (1,528,178) (2,099,198) (2,014,898) 31.8% (614,786) (1,263,207) (3,278,105) 56.2% (2,786,389) -15.0% Pre-provision profits 2,850,939 4,562,977 2,556, % 758,015 (87,492) 2,468, % 2,886, % Provision loss (592,660) (341,864) (322,338) -45.6% (154,586) (1,128,030) (1,450,368) 324.3% (1,821,211) 25.6% Pretax profit 2,258,279 4,221,113 2,233, % 603,429 (1,215,522) 1,018, % 5,300, % 1,065, % Net profit 3,153, , % 798, % Average Outstanding Shares 1,053,344,389 1,053,344,389 1,055,415,622 1,059,344,389 Year-end outstanding Shares 878,807, ,807, ,807, ,807,871 Market price (end of period) 11,000 10,000 Page 25 Market Capitalization 9,732,887 8,848,079 EPS (VND) 2, PE (time) BVPS (VND) 14,008 14,651 15,457 PB (time) Source: TCB, HSC forecasts; We factor potential dilution from convertible bonds issued. 25

26 First ever quarterly loss in Q4 mars TCB's year TCB which is an associate in which MSN holds a noncontrolling stake, earned just VND1,018 billion in pretax profits last year down 75.9% y/y. This was driven by a substantial VND1,215 loss reported in Q4. This is the first reported quarterly loss and came about due to a increase in operating costs and a surge in provision costs even as net interest incomes were reduced. Net interest income declined on NIM contraction and only modest growth in interest earning assets. We estimate that NIM fell sharply to 2.68% in Q4 from 3.99% in Q3. As explained below, as loans are moved from Group 1 or Group 2 to Group 3-5 the treatment of interest income changes dramatically from being recorded on an accrual basis to being reported only as banks receive them. To explain; we estimate the before-written-off NPLs (group 3-5) rose to 4.5%. Then, accrued interests on these loans from previous quarters were excluded in Q4. This pulled down NIM. Leading to a sharp decline in total operating income. In addition, provision costs surged 630% q/q as they wrote off bad debts, This reduced the post write-off bad debt ratio to 2.7% at end Short note on how NPL group changes can damage NIMs for Vietnamese banks Typically there are two ways to record interest earnings; 1. For loan group 1- banks report interest incomes on an accrual basis (and not when they actually receive the payment). This is basically a form of anticipation based on the belief that the customer will pay the due amount within the expected timeframe. As good customers do. 2. Loan group banks report interest incomes only when they receive payment. Interest incomes not yet received on such loans are not reported in the P&L but rather reported as receivables off-balance sheet. Only if subsequently received, can they be reported as interest incomes on the P&L. For example, a borrower pay interests every three months on April 15, July 15, October 15 and January 15. If the loan is group 1 loan; on the closing day of the first quarter, expected interest on the loan is automatically reported on the P/L even if the actual payment has not yet been received. However if the loan is viewed as group 2-5 (effectively an overdue loan) on the closing day of the first quarter, interest on the loan is only reported as a receivable off-balance sheet. Only when received can the money be reported as interest income. Given that borrowers of groups 2 are still servicing their loans albeit rather late we imagine that much of the off balance sheet receivables are as reported from Groups 3-5. These off balance sheet numbers, while reported to the SBV are not published in the FS. Hence a sharp drops in quarterly NIM can often occur when some loans previously reported under group 1-2 are suddenly transferred into group 3-5. And as the bank likely hadn t received interest earnings for those loans for some time then (1) interest income for such loans previously recorded as interest received (if they were still logged in Group 1) have to be un-booked (2) While interest due in Q4 for any loan previously logged in group 2 is also lost. And of course given that Q4 is when the once a year loan appraisal exercise is carried out it's not surprising. Operating expenses also jumped in Q4 In addition, operating costs also increased by 105% q/q in Q4. The growth of operating costs was mainly driven by purchases of new equipment and other expenses. As the bank relocated HQ to a new location, the associated costs were allocated in Q4. It also appears that some other one-off costs were included in Q4 also. 26 Page 26

27 Interest earning assets HSC adjusted interest earning assets Amount As % of total assets y/y change (VNDmn) FY2010 FY2011 FY2012 FY2013f FY2010 FY2011 FY2012e FY2013f FY2011 FY2012 FY2013f Loan book 52,927,857 63,451,465 68,261,442 74,541, % 35.1% 38.0% 40.1% 19.9% 7.6% 9.2% Interbank loans/deposits 46,275,434 43,194,102 31,309,867 31,309, % 23.9% 17.4% 16.9% -6.7% -27.5% 0.0% Debt investments (bond holdings) 31,028,412 47,713,953 46,666,041 47,252, % 26.4% 26.0% 25.5% 53.8% -2.2% 1.3% Government bonds 7,633,944 13,721,147 7,608,928 8,750, % 7.6% 4.2% 4.7% 79.7% -44.5% 15.0% FI bonds 14,830,016 13,598,234 12,110,475 10,969, % 7.5% 6.7% 5.9% -8.3% -10.9% -9.4% Corporate bonds 8,564,452 20,394,572 26,946,638 27,532, % 11.3% 15.0% 14.8% 138.1% 32.1% 2.2% Total interest earning assets 130,231, ,359, ,237, ,103, % 85.5% 81.4% 82.5% 18.5% -5.3% 4.7% Interest earning assets as on TCB's FS Amount As % of total assets y/y change (VNDmn) FY2010 FY2011 FY2012 FY2013f FY2010 FY2011 FY2012e FY2013f FY2011 FY2012 FY2013f Loan to customer /other credit institutions 52,929,857 63,451,465 78,457,775 84,737, % 35.1% 43.7% 45.6% 19.9% 23.7% 8.0% Deposit in other banks 46,261,196 43,190,766 21,113,534 21,113, % 23.9% 11.7% 11.4% -6.6% -51.1% 0.0% Debt investments (bonds) 31,028,412 47,713,953 46,666,041 47,252, % 26.4% 26.0% 25.5% 53.8% -2.2% 1.3% Total interest earning assets 130,219, ,356, ,237, ,103, % 85.5% 81.4% 82.5% 18.5% -5.3% 4.7% Total assets 150,291, ,531, ,732, ,664, % -0.4% 3.3% Interest incomes Interest income y/y change FY2010 FY2011 FY2012 FY2013f FY2011 FY2012 FY2013f Interest income from loans 5,594,413 9,569,685 8,525,584 8,943, % -10.9% 4.9% Page 27 Interest income from deposits 3,375,282 6,400,067 3,235,371 1,051, % -49.4% -67.5% Interest income from debt securities 1,964,688 3,978,821 5,861,909 5,613, % 47.3% -4.2% Total interest incomes 10,934,383 19,948,573 17,622,864 15,608, % -11.7% -11.4% Gross yields 27 Gross yield FY2010 FY2011 FY2012 FY2013f Loan to customer /other credit institutions 16.4% 12.6% 11.0% Deposit in other banks 14.3% 10.5% 5.0% Debt investments (bonds) 10.1% 12.3% 12.0% Total interest earning assets 14.0% 12.03% 10.4% FY2010 FY2011 FY2012 FY2013f Total interest bearing liabilities 138,090, ,444, ,211, ,874,642 Total interest expenses 7,750,034 14,650,198 12,507,291 10,985,310 Cost of funds 9.7% 7.8% 6.7% Net interest income 3,184,349 5,298,375 5,115,573 4,623,380 NIM 3.7% 3.5% 3.1% Net spread 4.3% 4.3% 3.7% Note: Net spread = average gross yield - average cost of funds NIM = Net interest income / Average interest earning assets Source: TCB, HSC estimates & forecasts

28 Net interest incomes declined in FY2012 due to lower NIM Corporate & FI bond exposure (Unit: VNDmillion) FY2012 overall was similar to Q4 although less extreme. Net interest income declined due to a lower NIM and a drop in average interest earning assets. The loan book expanded by 8.0% y/y while other interest earnings assets fell 14.2% as TCB slightly decreased its bond holdings whilst sharply reducing interbank exposure. Total loan growth was negative YTD as late as Q3. At yearend however, by tenor, medium-long term loans rose 14% y/y while short term loans expanded just 2.4% y/y. This could imply that some short term loans were turned into medium & long term loans during Q4. Hence we would venture that most FY2012 credit growth in fact took the form of loan restructuring (with due interest payment simply being capitalised) and that real underlying credit growth was possibly as low as 2-3%. The balance of bond investments fell a little. However there were significant changes in bond portfolio composition as TCB reduced the weight of VGBs whilst increasing the weight of corporate bonds. This could imply possible restructuring activity as a short term loan might be transformed into a corporate bond. This however buys time but does not reduce credit risk given the lack of a secondary market for corporate bonds. Total amount y/y change as % of total loan book FY2010 FY2011 FY2012 FY2013F FY2011 FY2012 FY2013F FY2010 FY2011 FY2012 FY2013F Government bond 7,633,944 13,721,147 7,608,928 8,750,267 80% -45% 15% 14% 22% 11% 12% Financial institution bond 14,830,016 13,598,234 12,110,475 10,969,136-8% -11% -9% 28% 21% 18% 15% Corporate bonds 8,564,452 20,394,572 26,946,638 27,532, % 32% 2% 16% 32% 39% 37% Bonds/Debt investment 31,028,412 47,713,953 46,666,041 47,252,075 54% -2% 1% 59% 75% 68% 63% Loan books 52,927,857 63,451,465 68,261,442 74,541,495 20% 8% 9% Total Assets 150,291, ,531, ,732, ,664,506 20% 0% 3% Bond holdings as % assets 21% 26% 26% 25% Source: TCB reports, (F): HSC forecasts TCB - Interbank positions & total exposure to banking system Interbank exposure (VNDmn) FY2009 FY2010 FY2011 FY2012 FY2013F Furthermore corporate bonds pay coupons only twice or once a year & principal only at maturity while loans have monthly or quarterly schedules of payments of principals and interests. These characteristics increase credit risks. Interbank exposure dropped sharply during FY2012. Three reasons. Larger banks themselves are far more concerned about credit risk and prefer the repos market (as it offers collateral) to interbank loans (which frequently does not). While the list of acceptable counterparties has shrunk dramatically. Then the SBV has imposed stricter regulations on the interbank market and discouraged cross lending. This means that weaker banks are effectively shut out. So no growth in interest earning assets while NIM fell. On lower net yields exacerbated by the surge in NPL groups 2-5 for the reasons explained above. And HSC estimates that NPLs group 3-5 surged 59% y/y to around VND3,000 billion last year. Looking at NIM more closely we see average yields on loans and deposits (another term for an interbank loan) fell by 380bps while the average bond yield was unchanged. While the average cost of funding dropped just 195bps. A classic NIM squeeze. In contrast the higher weight of corporate bonds did push up average bond yield to 12.2% or 280bps higher than during the previous year. y/y change FY2010 FY2011 FY2012 FY2013F Deposit at banks 25,899,195 46,261,196 43,190,766 21,113,534 21,113, % -6.6% -51.1% 0.0% Loan to banks 369,759 14,238 3,336 10,196,333 10,196, % -76.6% 0.0% 1 Total interbank lending 26,268,954 46,275,434 43,194,102 31,309,867 31,309, % -6.7% -27.5% 0.0% Deposit from banks 8,253,439 22,199,978 38,188,455 14,920,718 15,560, % 72.0% -60.9% 4.3% Loan from banks 2,092,647 5,583,136 9,944,288 24,249,687 16,974, % 78.1% 143.9% -30.0% 2 Total interbank borrowing 10,346,086 27,783,114 48,132,743 39,170,405 32,535, % 73.2% -18.6% -16.9% 3 Net interbank exposure (3=1-2) 15,922,868 18,492,320 (4,938,641) (7,860,538) (1,225,590) 16.1% % 59.2% -84.4% 4 FI bond holdings 2,427,149 14,830,016 13,598,234 12,110,475 10,969, % -8.3% -10.9% -9.4% 5 Adjusted exposure to banking system (5=3+4) 18,350,017 33,322,336 8,659,593 4,249,937 9,743, % -74.0% -50.9% 129.3% 6 Interbank loan/deposit (6=1/2) 254% 167% 90% 80% 96% Source: TCB reports, (F): HSC forecasts 28 Page 28

29 Fee income streams weak Gross fee & commission income y/y change FY2010 FY2011 FY2012 FY2013F FY2011 FY2012 FY2013F Guarantees 159, , , , % -25.8% 9.0% Settlement & cash services 690, , , , % -23.3% 10.0% Trustee and agency services 2,506 1,883 1,370 1, % -27.2% 10.0% Consulting services 130, ,841 93, , % -11.7% 10.0% Other services 202, , , , % -51.8% 10.5% Total fee income 1,186,620 1,520,157 1,051,286 1,156, % -30.8% 10.0% Fee & commission expenses 256, , , , % 31.3% 10.0% Net fee & commission incomes 929,800 1,150, , , % -50.8% 10.0% Source: TCB, (F): HSC forecasts Fee incomes streams are closely tied to loan growth which itself was down until Q4. Hence net fee earnings decreased across most service categories. Then outsourced service expenses accelerated. These reasons caused the sharp reduction in net fees. The bank still lost money in FX lines; although we saw a big improvement from the same period last year. The FX market was stable but they still used FX lines to subsidise the trade finance business. As for gold lines, the bank had a balanced gold position during the year so the volatility of gold prices had no effect. The bank then realized losses in securities investment. This is unusual as the market rose 17% y/y in FY2012 and TCB has never been active in the equity market anyway. We speculate that losses may have come from provisioning against some corporate bonds. Non-recurring incomes fell 36.2% y/y. Last year, TCB sold their old office building at 72 Ba Trieu to Vietbank. We estimate the asset transfer generated a reported gain of VND214 billion. The balance of other incomes was generated from trust investment vehicles. Earnings from these investment vehicles are similar to gross interest incomes and generated from other assets. 29 Page 29

30 Operating expenses jump Operating costs & CIR Operating expenses % y/y change as % of total FY2010 FY2011 FY2012 FY2013F (VNDmn) FY2011 FY2012 FY2013F FY2010 FY2011 FY2012 FY2013F Compensation budget 754,516 1,156,609 1,372,695 1,139, % 18.7% -17.0% 47.5% 55.1% 41.9% 40.9% Assets related costs 634, , , , % 89.9% -20.0% 40.0% 18.8% 22.8% 21.5% Tax, duties and fee 72,069 72, , , % 70.6% -15.0% 4.5% 3.5% 3.8% 3.8% Others 126, ,484 1,034, , % 117.1% -8.7% 8.0% 22.7% 31.6% 33.9% Total operating expenses 1,587,749 2,099,198 3,278,105 2,786, % 56.2% -15.0% 100.0% 100.0% 100.0% 100.0% Total operating incomes 4,719,021 6,662,175 5,746,809 5,672, % -13.7% -1.3% CIR 33.6% 31.5% 57.0% 49.1% Source: TCB, (F): HSC forecasts Operating expenses rose sharply driven by an almost doubling in asset related costs and a more than doubling in other costs. While total compensation grew almost 19% on higher cost personnel. The growth of asset related costs was due to the purchases of new equipment related to the move into new premises in Vincom Tower in Hanoi. In addition, TCB has been developing their franchise in the South which pushed up the marketing costs and raised other costs. We estimate average salaries rose by 24% y/y. This is due to (1) the hiring of the new top management team while they have also brought in some other specialists to help manage specific functions (2) the average salary for existing staff grew around 10-15% per year after the performance review held mid-year. Although total staff numbers actually decreased 4% y/y as network expansion stalled. Assets related costs surged, mostly in Q4 as mentioned. In addition, other costs accelerated on higher marketing expenses to help develop retail lines. Then of course with limited top line growth; the acceleration of the cost base showed up very clearly in the numbers. As a result CIR broke out sharply to levels far above their peers. Driven by the combination of a faltering top line and a one-off and dramatic increase in costs. One of the biggest challenges for TCB in FY2013 will be reducing this cost base. Not easy when top line growth is expected to be limited once again. TCB - Cost to income ratio (CIR) and key components (VNDmillion) FY2009 FY2010 FY2011 FY2012 FY2013F FY CAGR FY CAGR Operating expenses 1,183,772 1,587,749 2,099,198 3,278,105 2,786, % 18.7% y/y change 34.1% 32.2% 56.2% -15.0% Tax, duties and fee 35,345 72,069 72, , , % 24.3% y/y change 104% 1% 71% -15% as % of total operating exp. 3% 5% 3% 4% 4% Assets related costs 193, , , , , % 25.4% y/y change 229% -38% 90% -20% as % of total operating exp. 16% 40% 19% 23% 21% Other expenses 361, , ,484 1,034, , % 21.2% y/y change -65% 277% 117% -9% as % of total operating exp. 30% 8% 23% 32% 34% Total employee compensation costs 594, ,516 1,156,609 1,372,695 1,139, % 13.9% y/y change 27.0% 53.3% 18.7% -17.0% as % of total operating expenses 50.2% 47.5% 55.1% 41.9% 40.9% Employees 5,043 6,960 7,481 7,159 7, % 8.3% y/y change 38.00% 7.49% -4.30% 5.00% Average compensation per employee % 5.2% y/y change -8.0% 42.6% 24.0% -21.0% CIR 30% 34% 32% 57% 49% Source: TCB, (F): HSC forecasts 30 Page 30

31 While provisions rose sharply as new management tackles legacy loans TCB - NPL summary and breakdown NPL summary Total amount % y/y change (VNDmillion) FY2010 FY2011 FY2012 FY2013F (*) FY2011 FY2012 FY2013F (*) Group 1 50,096,997 57,104,413 64,415,288 67,202, % 12.8% 4.3% Group 2 1,619,793 4,553,396 2,005,682 4,587, % -56.0% 128.7% Group 3 718, , ,330 1,376, % -88.3% % Group 4 320, , ,623 1,376, % 36.1% 62.2% Group 5 171, , ,519 1,911, % 264.4% 116.3% Total 52,927,857 63,451,465 68,261,442 76,452, % 7.6% 12.0% NPLs ( Group 3-5) 1,211,067 1,793,656 1,840,472 4,663, % 2.6% 153.4% NPLs ( Group 2-5) 2,830,860 6,347,052 3,846,154 9,250, % -39.4% 140.5% NPL ratio (Group 3-5) 2.3% 2.8% 2.7% 6.1% NPL ratio (Group 2-5) 5.3% 10.0% 5.6% 12.1% Operating income 4,719,021 6,662,175 5,746,809 5,672, % -13.7% -1.3% Total provision cost 387, ,864 1,449,486 1,821, % 324.0% 25.6% * Provision for loan book 392, ,832 1,392,583 1,598,849 * Provision for other assets 326,711 36,370 56, ,361 Loan book 52,927,857 63,451,465 68,261,442 74,541,495 Provisions as % of loan book 0.7% 0.5% 2.1% 2.4% Provision as % of operating income 8.21% 5.13% 25.22% 32.10% Cumulative provision balance 610, ,059 1,127,435 1,369,247 Cumulative provisions as % of NPLs group % 14.0% 29.3% 14.8% Actual write offs 293,978 27,430 1,154,207 1,357,037 Provision reversal for loan book 331, ,338 Pre write off NPL 2.83% 2.87% 4.31% 6.10% Post write off NPL 2.29% 2.83% 2.70% 3.69% Source: TCB, (F): HSC forecasts; Note: (*) The figures in loan group classification are before write-off figures. We assume that the bank would write off the entire the NPL group 5 (equal VND1,911 billion) with recovery ratio of 71%. After writing off, TCB loan book would be VND74,541 billion at end Then the bank would have a post write-off NPL (group 3-5) ratio of 3.69% The new management s change of style has been most apparent in provisioning. TCB was always historically light on provisioning which enabled them to book fairly high levels of profits previously. This was associated with a rather decentralized credit policy which allowed branch managers scope in lending decisions and then also deciding what appropriate provisioning levels should be. Naturally with annual bonuses at stake no branch manager wants to recommend a higher provision. Those practices have now ended and FY2012 provisioning was the result of a thorough examination of the loan book by the new team. And the result is clear. And was overdue. While loans grew at a CAGR of 34% in FY , corresponding provision costs declined at a CAGR of 18% over the same period. Hence provision costs jumped more than threefold last year while the bank wrote off bad debts totaling VND1,157 billion. After the write off, the bank reported a residual bad debt ratio of 2.7%. Normally the cumulative provision consists of any provision leftover from the previous year plus the current year provision allocation less write-offs and also includes some reversals. FY2012 unaudited FSs do not breakout write-offs/provision reversals. Hence the FY2012 write-off number may also include some reversals (in other words it s the net write-off). 31 Page 31

32 HSC s FY2013 forecast calls for modest growth as the bank continues to book higher provision costs Income Breakdown Income Breakdown Amount (VNDmillion) FY2009 FY2010 FY2011 FY2012 FY2013F Net interest and similar income 2,499,821 3,184,349 5,298,375 5,115,573 4,623,380 Net fee and commission income 641, ,800 1,150, , ,471 Net gain from dealing in foreign currencies 48,089 (91,383) (698,913) (138,863) 170,182 Net gain from trading in securities 150,453 (71,418) (55,333) 2,701 50,000 Net gain from investment 372, , ,257 (175,043) 10,000 Other operating income 178, , , , ,181 Equity income 28,441 80,747 8,061 29,992 30,689 Total 3,918,154 4,719,021 6,662,175 5,746,809 5,672,903 y/y change FY2010 FY2011 FY2012 FY2013F Net interest and similar income 27.4% 66.4% -3.5% -9.6% Net fee and commission income 45.0% 23.7% -50.8% 10.0% Net gain from dealing in foreign currencies % % 80.1% 222.6% Net gain from trading in securities % 22.5% 104.9% % Net gain from investment -56.9% 159.6% % 105.7% Other operating income 195.6% 3.2% -36.2% -52.0% Equity income 183.9% -90.0% 272.1% 2.3% Total 20.4% 41.2% -13.7% -1.3% as % of total FY2010 FY2011 FY2012 FY2013F Net interest and similar income 67.5% 79.5% 89.0% 81.5% Net fee and commission income 19.7% 17.3% 9.8% 11.0% Net gain from dealing in foreign currencies -1.9% -10.5% -2.4% 3.0% Net gain from trading in securities -1.5% -0.8% 0.0% 0.9% Net gain from investment 3.4% 6.2% -3.0% 0.2% Other operating income 11.2% 8.2% 6.0% 2.9% Equity income 1.7% 0.1% 0.5% 0.5% Total 100.0% 100.0% 100.0% 100.0% Source: TCB reports; (F): HSC forecasts We project that the banking sector will see credit growth of 10-12% in FY2013. Most of this however will be related to so-called bullet lending which is effectively restructured or rescheduled existing loans. Underlying new credit growth to healthy customers is expected to be much lower at perhaps 3-4% y/y. We project that TCB itself will see loan growth of 9-9.5%. This will also include a substantial portion of loan rescheduling as the bank cleans up its book. We also assume that debt investments will be unchanged. Within that we expect TCB will reduce the balance of CDs held at other banks and increase VGB holdings. Traditionally banks have bought CDs from each other to improve LDR. However last year, SBV asked banks to reduce the balance of CDS especially if they were being used to boost the LDR. Since then many banks have reduced this balance. We view CDs as being a separate category to interbank loans & deposits. Then we assume interbank exposure will be unchanged. Interbank lending is less profitable than before given the small list of potential clients. Even so given the lower credit risk with the current outstanding interbank loans the balances are unlikely to be reduced further. 32 Page 32

33 TCB - Loan breakdown Loan By Type Loan by type y/y change as % of total loans (VNDmn) FY2009 FY2010 FY2011 FY2012 FY2013F FY2010 FY2011 FY2012 FY2013F FY2009 FY2010 FY2011 FY2012 FY2013F Commercial loans 41,619,593 52,471,320 63,179,306 67,901,136 74,148,041 26% 20% 7% 9% 99% 99% 99.6% 99.5% 99.5% Discounted loans 370, , , , , % 9% 1% 0% 0.2% 0.4% 0.4% Loans financed by trusted funds 102, , ,059 56,650 61,862-44% -57% 9% 0% 0% 0.2% 0.1% 0.1% Loans to foreign individuals & entities 1,702 1,859 9% 0% 0% 0.0% 0.0% 0.0% Others 4,627 5,053 9% 0% 0% 0.0% 0.0% 0.0% Total 42,092,767 52,927,857 63,451,465 68,261,442 74,541,495 26% 20% 8% 9% 100% 100% 100% 100% 100% Loan by quality Loan by quality y/y change as % of total loans (VNDmn) FY2009 FY2010 FY2011 FY2012 FY2013F(*) FY2010 FY2011 FY2012 FY2013F FY2009 FY2010 FY2011 FY2012F FY2013F Group 1 39,344,756 50,096,997 57,104,413 64,415,288 67,202,024 27% 14% 13% 4% 93% 94.7% 90.0% 94.37% 87.90% Group 2 1,700,007 1,619,793 4,553,396 2,005,682 4,587,169-5% 181% -56% 129% 4% 3.1% 7.2% 2.94% 6.00% Group 3 474, , , ,330 1,376,151 52% 29% -88% 1170% 1% 1.4% 1.5% 0.16% 1.80% Group 4 431, , , ,623 1,376,151-26% 95% 36% 62% 1% 0.6% 1.0% 1.24% 1.80% Group 5 (*) 142, , , ,519 1,911,320 20% 41% 264% 116% 0% 0.3% 0.4% 1.29% 2.50% Total 42,092,767 52,927,857 63,451,465 68,261,442 76,452,815 26% 20% 8% 12% 100% 100% 100% 100% 100% Note: (*) This is before write-off number. We assume that the bank would have a before written off - NPL ratio of 6.1% and the NPL ratio group 5 would be 3.69% at end 2013 We also assume that the bank would write off the entire NPL group 5 (equal VND1,911 billion). After writing off, STB loan book would be VND74,541 billion at end Page 33 Loan by term Loan by term y/y change as % of total loans (VNDmn) FY2009 FY2010 FY2011 FY2012 FY2013F FY2010 FY2011 FY2012 FY2013F FY2009 FY2010 FY2011 FY2012F FY2013F Short term 29,310,069 30,076,441 35,586,745 36,446,276 40,090, % 18.3% 2.4% 10.0% 68.0% 56.8% 56.1% 53.4% 53.8% Mid term 8,320,863 10,468,073 10,619,444 16,583,109 18,304, % 1.4% 56.2% 10.4% 19.3% 19.8% 16.7% 24.3% 24.6% Long term 5,461,835 12,383,343 17,245,276 15,232,057 16,145, % 39.3% -11.7% 6.0% 12.7% 23.4% 27.2% 22.3% 21.7% Total 43,092,767 52,927,857 63,451,465 68,261,442 74,541, % 19.9% 7.6% 9.2% 100% 100% 100% 100% 100% Loan by company structure Loan by company structure y/y change as % of total loans (VNDmn) FY2009 FY2010 FY2011 FY2012e FY2013F FY2010 FY2011 FY2012 FY2013F FY2009 FY2010 FY2011 FY2012F FY2013F SOEs 2,300, ,117 2,939,365 3,162,185 3,415, % 282.2% 7.6% 8.0% 5.3% 1.5% 4.6% 4.6% 4.6% Private Sector Company 27,939,042 33,184,640 37,847,720 40,716,789 44,061, % 14.1% 7.6% 8.2% 64.8% 62.7% 59.6% 59.6% 59.1% Personal loans/family loans 12,853,188 18,974,100 22,664,380 24,382,467 27,064, % 19.4% 7.6% 11.0% 29.8% 35.8% 35.7% 35.7% 36.3% Total 43,092,767 52,927,857 63,451,465 68,261,442 74,541, % 19.9% 7.6% 9.2% 100% 100% 100% 100% 100% Source: TCB reports; (F): HSC forecasts 33

34 TCB - Loan breakdown Loan by sector Loan by sector y/y change as % of total loans (VNDmn) FY2009 FY2010 FY2011 FY2012 FY2013F FY2010 FY2011 FY2012 FY2013F Agriculture, forestry and aquaculture 6,348,894 19,706,317 8,783,216 6,390,450 6,997, % -55.4% -27.2% 9.5% 15.1% 37.2% 13.8% 9.4% 9.4% Manufacturing and processing 16,169,326 8,726,192 22,992,710 24,140,768 26,554, % 163.5% 5.0% 10.0% 38.4% 16.5% 36.2% 35.4% 35.6% Constructions 2,752,698 4,445,127 5,096,607 5,173,547 5,432, % 14.7% 1.5% 5.0% 6.5% 8.4% 8.0% 7.6% 7.3% FY2009 FY2010 FY2011 FY2012F FY2013F Transportation, warehousing & telecommunication 1,499, ,669 2,114, , , % 376.6% -58.7% 9.0% 3.6% 0.8% 3.3% 1.3% 1.3% Other sectors 15,322,249 19,606,552 24,464,598 31,682,577 34,604, % 24.8% 29.5% 9.2% 36.4% 37.0% 38.6% 46.4% 46.4% Total 42,092,767 52,927,857 63,451,465 68,261,442 74,541, % 19.9% 7.6% 9.2% 100% 100% 100% 100% 100% Loan by currency Loan by currency y/y change as % of total loans (VNDmn) FY2009 FY2010 FY2011 FY2012 FY2013F FY2010 FY2011 FY2012 FY2013F FY2009 FY2010 FY2011 FY2012F FY2013F VND loans 25,700,954 38,972,870 45,269,739 54,705,310 60,011, % 16.2% 20.8% 9.7% 61.1% 73.6% 71.3% 80.1% 80.5% USD loans 3,623,726 11,350,600 15,753,721 13,229,885 14,155, % 38.8% -16.0% 7.0% 8.6% 21.4% 24.8% 19.4% 19.0% Other currencies 12,768,087 2,604,387 2,428, , , % -6.8% -86.6% 14.6% 30.3% 4.9% 3.8% 0.5% 0.5% Total 42,092,767 52,927,857 63,451,465 68,261,442 74,541, % 19.9% 7.6% 9.2% 100% 100% 100% 100% 100% Source: TCB reports; (F): HSC forecasts 34 Page 34

35 Impact on NIM - loss of gold deposits The effect of gold mobilization shutdown on NIM 12/31/ /30/ /30/ /31/ /30/2013F FY2012 FY2013F Gold deposits (1) 5,328,177 5,728,847 4,188,613 2,471,584-4,429,305 1,235,792 Gold deposit rates (2) 2.0% 2.0% Savings deposits rates (3) 11.3% 8.5% Difference (4) = (3-2) 9.3% 6.5% Interest expenses increasing due to low gold deposit rates (5) = (1)*(4) 411,925 80,326 Average interest bearing liabilities (6) 162,328, ,543,066 Number of basic points (7) = (5)/(6) 25 5 The contraction in NIM (basic points) 20 Source: TCB, (F): HSC forecasts With this in mind, we forecast total interest earning assets will grow at a moderate rate of 4.7% y/y in FY2013 driven by loan growth. We further forecast that average earning assets will increase by 2.2% only in FY2013 because their average interest earning assets were high at beginning of FY2012 and slightly reduced during FY2012. When forecasting NIM for FY2013, we note two factors; (1) the shutdown of gold lending/mobilization before June 30, FY2013 under current regulation (2) the effect of reduced interest income as a % of existing outstanding loans as rising NPLs lead to a different accounting treatment of interest owed. Firstly, as banks are not allowed to raise gold deposits, FY2013 cost of funds will be relatively more expensive than last year. In FY2012 TCB gold deposits accounted for roughly 6.7% of the total. We assume the bank will stop mobilizing gold on June 30, FY2013 and the differential between gold deposit and saving deposits will be 6.5% in FY2013. Then if other factors are unchanged, the cost of funds would be driven higher by 20bps by this alone. Secondly, we assume that NPL group 3-5 will rise by 55% y/y (pre write-off). This will have the effect of reducing interest incomes from existing loans as accrued interest revenues from those loans will be removed from the interest income stream. We forecast rising NPLs will thus cause a further reduction of 20bps in NIM (by reducing interest yields). Given our assumptions, we estimate the NIM will fall a total of 40bps in FY2013. Because of the lower NIM; and fairly negligible growth in interest earning assets, we forecast that net interest incomes will then contract by 9.6%. We estimate that service fees will grow again as service earnings follow new loan growth. And remember even rescheduled loans attract fees. Contrary to FY2012, we separate FX gains and net interest incomes in FY2013 forecasts. The bank accounts for 3% of total trade flows and we assume they will now charge a decent spread on FX transactions for trade finance. Thus we expect FX gains and service earnings will grow in line with Vietnam s trade. Impact on NIM - loss of interest income as NPLs rise further The effect of the increase of NPLs on NIM FY2011 FY2012 FY2013F Loans 63,451,465 68,261,442 74,541,495 NPL ratio (group 3-5) 2.8% 2.7% 6.10% Absolute amount of NPLs (group 3-5) 1,793,656 1,840,472 4,663,622 Increase of NPLs in FY2013 (1) 2,823,150 Gross loan yield (2) 11% Interest will be removed from interest incomes (3)=(2)*(1) 309,425 Average interest earning assets (4) 150,970,393 The contraction in NIM (basic points) (5) = (3)/(4) 20 Source: TCB, (F): HSC forecasts 35 Page 35

36 TCB - Deposits breakdown Breakdown deposits Breakdown deposits y/y change as % of total deposits FY2009 FY2010 FY2011 FY2012 FY2013F FY2010 FY2011 FY2012 FY2013F FY2009 FY2010 FY2011 FY2012 FY2013F Customer Deposits 62,347,400 80,550,753 88,647, ,462, ,837, % 10.1% 25.7% 12.0% 78.6% 62.0% 55.4% 69.1% 75.3% Valuable papers 5,036,565 15,024,217 23,094,145 10,450,843 8,360, % 53.7% -54.7% -20.0% 6.3% 11.6% 14.4% 6.5% 5.0% Trusted funds 1,632,826 6,641, , , , % -96.2% -49.3% 10.0% 2.1% 5.1% 0.2% 0.1% 0.1% Interbank deposits 10,346,086 27,783,114 48,132,743 39,170,405 32,535, % 73.2% -18.6% -16.9% 13.0% 21.4% 30.1% 24.3% 19.6% Total 79,362, ,999, ,127, ,211, ,874, % 23.2% 0.7% 2.9% 100.0% 100.0% 100.0% 100.0% 100.0% Customer deposits by term Customer deposits by term y/y change as % of total deposits FY2009 FY2010 FY2011 FY2012 FY2013F FY2010 FY2011 FY2012 FY2013F FY2009 FY2010 FY2011 FY2012 FY2013F Demand and margin deposits 12,890,280 11,444,058 13,372,651 14,257,523 15,540, % 16.9% 6.6% 9.0% 18.7% 11.2% 11.9% 11.7% 11.7% Term & saving deposits 49,457,120 69,106,695 75,275,128 97,204, ,297, % 8.9% 29.1% 12.4% 71.7% 67.6% 67.2% 79.6% 82.0% Valuable papers 5,036,565 15,024,217 23,094,145 10,450,843 8,360, % -54.7% -20.0% 7.3% 14.7% 20.6% 8.6% 6.3% Trusted funds 1,632,826 6,641, , , , % -49.3% 10.0% 2.4% 6.5% 0.2% 0.1% 0.1% Total 69,016, ,216, ,994, ,041, ,339, % 9.6% 9.0% 9.3% 100.0% 100.0% 100.0% 100.0% 100.0% Customer deposits by currency Customer deposits by currency y/y change as % of total deposits FY2009 FY2010 FY2011 FY2012 FY2013F FY2010 FY2011 FY2012 FY2013F FY2009 FY2010 FY2011 FY2012 FY2013F VND deposits 34,097,054 81,972,958 86,917, ,169, ,936, % 6.0% 22.1% 9.2% 49.4% 80.2% 77.6% 87.0% 86.9% USD deposits 8,189,573 17,081,777 18,278,777 12,760,000 13,972, % 7.0% -30.2% 9.5% 11.9% 16.7% 16.3% 10.5% 10.5% Other currencies 26,730,164 3,161,325 6,798,277 3,111,940 3,430, % 115.0% -54.2% 10.2% 38.7% 3.1% 6.1% 2.5% 2.6% Page 36 Total 69,016, ,216, ,994, ,041, ,339, % 9.6% 9.0% 9.3% 100.0% 100.0% 100.0% 100.0% 100.0% Customer deposits by client Customer deposits by client y/y change as % of total deposits FY2009 FY2010 FY2011 FY2012 FY2013F FY2010 FY2011 FY2012 FY2013F FY2009 FY2010 FY2011 FY2012 FY2013F Private clients 19,543,720 61,806,010 57,635,912 77,056,498 83,221, % -6.7% 33.7% 8.0% 28.3% 60.5% 51.5% 63.1% 62.4% Corporate clients 42,803,680 18,744,743 31,011,867 34,405,790 41,616, % 65.4% 10.9% 21.0% 62.0% 18.3% 27.7% 28.2% 31.2% Buyer of Bond & CD 5,036,565 15,024,217 23,094,145 10,450,843 8,360, % 53.7% -54.7% -20.0% 7.3% 14.7% 20.6% 8.6% 6.3% Trusters 1,632,826 6,641, , , , % -96.2% -49.3% 10.0% 2.4% 6.5% 0.2% 0.1% 0.1% Total 69,016, ,216, ,994, ,041, ,339, % 9.6% 9.0% 9.3% 100.0% 100.0% 100.0% 100.0% 100.0% Interbank deposits Interbank deposits y/y change as % of total deposits FY2009 FY2010 FY2011 FY2012 FY2013F FY2010 FY2011 FY2012 FY2013F FY2009 FY2010 FY2011 FY2012 FY2013F Demand deposits 546,473 6,899,553 11,438,238 7,138,638 5,710, % 65.8% -37.6% -20.0% 5.3% 24.8% 23.8% 18.2% 17.6% Term deposits 7,706,966 15,300,425 26,750,217 7,782,080 9,849, % 74.8% -70.9% 26.6% 74.5% 55.1% 55.6% 19.9% 30.3% Borrowing 2,092,647 5,583,136 9,944,288 24,249,687 16,974, % 78.1% 143.9% -30.0% 20.2% 20.1% 20.7% 61.9% 52.2% Total 10,346,086 27,783,114 48,132,743 39,170,405 32,535, % 73.2% -18.6% -16.9% 100.0% 100.0% 100.0% 100.0% 100.0% Source: TCB reports; (F): HSC forecasts 36

37 CAR and capital structure table FY2008 FY2009 FY2010 FY2011 FY2012 FY2013F Share capital 3,642,015 5,400,417 6,932,184 8,788,079 8,848,079 8,848,079 Treasury share Share premium 1,063, Capital-enhanced fund 59,513 86, , , , ,783 Development fund Exclusions Good will 39,588 64,579 75,687 43,022 23,713 37,899 Investment in other financial institutions 255, ,488 58,248 82, , ,547 Tier 1 capital 4,470,305 5,186,268 6,906,104 8,854,009 8,892,699 8,845,416 Subordinated debts - - 3,000,000 3,000,000 3,000,000 3,000,000 Financial reserves 220, , , , ,961 1,027,854 Tier 2 capital 220, ,003 3,579,917 3,863,767 3,943,961 4,027,854 CAR 12.6% 9.6% 13.1% 11.4% 11.4% 10.7% Source: HSC's estimate; (F) HSC forecasts Other incomes come from other assets which are in fact similar to loans. If the bank reclassifies these as loans, these assets would generate interest income and be included within that income stream. However for the time being we assume that the classification is unchanged and that the bank will earn other incomes as much as they did in FY2012. While gains from the sale of the office building will drop out. In total we forecast, total operating incomes will decline slightly with rises in other streams unable to completely offset the drop in net interest income. However given this we assume the bank will try to reduce their cost base. And that asset related costs will drop 30% while other costs will fall 28% after the unusual surge in Q4. We don t expect that compensation costs will fall much however. As a result, total operating costs will decrease by 15% y/y. We then project provision rise again assuming (1) the bank will write off bad debts equal to 2.5% of loan book with a recovery rate of 30%. (2) the bank will have a post write-off NPL ratio of 3.7%. Besides, we assume TCB will book general provision against corporate bonds and other assets similar to loans. We estimate they will book another general provision of VND278 billion against these. And book a small amount of general provision against interbank exposure. Given these assumptions, provision costs accelerate. Based on HSC s forecasts, we estimate the bank will make a FY2013 pretax profit rises slightly by 4.6%. Given these forecasts, it would generate a EPS of VND732 and a BVPS of VND15,457, respectively for FY2013. In the OTC market TCB shares are trading at a forward P/E of 14xs and a current P/B of 0.64xs. TCB s CAR ratio still looks fairly comfortable to us and with limited growth in credit the bank appears to have sufficient capital for the foreseeable future. And like many larger private sector banks it will attempt to clear its NPLs by increasing provisions over a number of years and use that to write off positions. So effectively the bank hopes to generate enough operating profit from its existing income streams to fund higher provisions. And while this means that pretax profits will remain at low levels and that hence retained earnings won t increase by much it should also mean that shareholders equity will not be impaired. Given enough time (3 years or so) and the fact that TCB s funding base is entirely domestic this should be possible in our opinion. And the need for a recapitalization of the bank can be postponed for several years or until normal credit growth is resumed (by which we mean real new credit growth). The main risk to this scenario are that net interest income falls sharply as a higher than expected number of loans stop contributing interest income. This depends partly on the rate of transfer of loans from Group 1 to Groups 2-5 which of course changes the accounting treatment of interest income as mentioned above. From what we understand however TCB does not expect a large migration of loans into groups 2-5 from now assuming the economy stabilizes and begins to pick up slightly even. Hence for the time being we accept this argument and assume that (1) NPL can be funded over time by operating profits (2) there will be no need to raise new capital until 2015 or so. 37 Page 37

38 MSN FY2012 consolidated result (VAS) (VNDmillion) Q4 FY2011 Q3 FY2012 Q4 FY2012 y/y% q/q% FY2011 FY2012 y.y% Company target % fulfilled Net sales 2,810,859 2,673,129 3,654, % 36.7% 7,056,849 10,389, % 12,000, % COGS 1,557,412 1,588,558 2,124, % 33.7% 3,997,834 6,177, % Gross profit 1,253,447 1,084,571 1,530, % 41.1% 3,059,015 4,212, % Net financial income (82,430) 48,079 67, % 39.6% 837, , % Selling expense 391, , , % 9.8% 1,010,149 1,316, % GA expense 165, , , % -8.9% 406, , % SG&A 557, , , % 3.4% 1,416,523 2,044, % Net operating profit (VAS) 972, ,682 1,003, % 79.9% 2,479,973 2,667, % Net operating profit (excluding net financial income) 1,055, , , % 83.7% 1,642,492 2,167, % Other profit 1,205 67,748 8, % -88.2% (4,134) 163,886 3,864.3% Profit and loss in associates 299,064 (5,539) (196,437) % 3,446.4% 392,733 (287,921) % Profit before tax 1,273, , , % 31.4% 2,868,572 2,543, % Net profit after tax 1,133, , , % 30.2% 2,496,008 2,017, % 3,100, % Net profit after tax & minority interests 894, , , % 4.2% 1,973,149 1,302, % Gross margin 44.6% 40.6% 41.9% -6.1% 3.2% 43.3% 40.5% -6.5% Operating margin 37.5% 19.1% 25.6% -31.8% 34.3% 23.3% 20.9% -10.4% Pretax margin 45.3% 23.2% 22.3% -50.8% -3.9% 40.6% 24.5% -39.8% Net margin 31.8% 11.9% 9.0% -71.6% -23.8% 28.0% 12.5% -55.2% SG&A/sales 19.8% 21.5% 16.3% -18.0% -24.4% 20.1% 19.7% -1.9% Page 38 Source: MSN MSN consolidated financial income and expense (VNDmillion) Group Parent company excluding internal items Masan Consumer excluding internal items 38 Masan Resources, Nui Phao & other subsidiariesexcluding internal items FY2011 FY2012 % y/y FY2011 FY2012 % y/y FY2011 FY2012 % y/y FY2011 FY2012 % y/y Financial income 1,185, , % 388, , % 467, , % 328, , % Interest income 1,124, , % 345, , % 451, , % 328, , % Facility income - - Foreign exchange gains 54,598 16, % 43, % 10,879 13, % 244 2, % Others 5,650 2, % 5,269 13, % 381 (10,870) % Financial expense 347, , % 179, , % 281, , % (112,327) (572,959) % Interest expense 316, , % 162, , % 153, , % (1) (248,630) % Facility expense Foreign exchange losses 19,273 9, % 8,646 3, % 9,982 5, % % Others 12,201 20, % 7,965 20, % 117, , % (112,971) (324,329) % Net financial income 837, , % 209,877 (178,109) % 186,506 (70,986) % 441, , % Source: MSN

39 Group consolidated financials Group sales were 100% driven from Masan Consumer for the last year. Techcombank related earnings come in below the line while there are no Nui Phao revenues to speak of yet. However group net profit decreased by 34% y/y mainly on reported basis and 21% y/y on pro-forma basis because of a disappointing earnings contribution from Techcombank and lower net financial income due to a lower available cash balance and declining interest rates. Pre-minority interest, group net profit decreased 21% y/y on reported basis and 10% y/y on pro-forma basis. Masan Group level net financial income decreased on lower interest income Average term deposit rates came to 10% during the year, down from 14% in FY2011 while the average amount held in bank deposits dropped by 30% y/y. Masan has tended to keep a large cash reserve and actively looked for ways of increasing it over the last few years. Hence FY2012 marked a change in strategy as the heavy calls on cash from the mine plus ongoing M&A opportunities caused a net drain. The loss of income was caused of course by lower interest rates while the drop in cash reserves was due to outlays related to (1) a peak in capex related to Nui Phao and the (2) purchase of the stake in Proconco. Between them they were responsible for a remarkable decline in interest income. On the other side of the equation although total debt rose by 52.9% y/y, interest expense was down by almost a third. This was because all interest expense related to Nui Phao project is still being capitalized. Consolidated SG&A rose aggressively as consumer goods related marketing expands and impacted operating margin Group selling expense are effectively Masan Consumer s SG&A. This grew rapidly during the period but still at a lower growth rate lower than sales. If we include costs related to VCF, selling expense growth rates were high at 30.3% y/y. This was due to the aggressive spend on advertising and promotion of VCF s new products. VCF alone saw selling expenses jumped by 44.5% y/y accounting for 19% of Masan Consumer s total selling expenses. However we expect it will drop off again as the underlying sales base increases over the next few years. Excluding VCF however, selling expense rose just 6.8% y/y reflecting the more mature status of the fish sauce business and the fact that the noodle segment marketing push occurred in the previous year. 39 Page 39

40 MSN balance sheet Unit: VNDmillion 31-Dec Sep Dec-12 y/y% q/q% Current assets 12,541,434 13,638,811 9,221, % -58.1% Cash & cash equivalents 9,573,593 7,459,429 5,718, % -23.3% Short term financial investments 1,222,500 1,612,500 1,840, % 14.1% Short term receivables 903,317 3,361, , % -72.0% Inventories 612, , , % -43.4% Other current assets 229, , , % -25.6% Long term assets 21,031,185 25,310,747 29,478, % 16.5% Long term receivables - 12,883 23, % Fixed assets 11,287,505 15,055,418 17,728, % 17.8% Long term investments 9,321,085 9,769,086 11,313, % 15.8% Other long term assets 422, , , % -12.9% Total assets 33,572,619 38,949,558 38,699, % -0.6% Liabilities 12,017,587 17,529,045 18,994, % 8.4% Current liabilities 3,625,783 3,341,255 4,748, % 42.1% Short term loans 2,032,397 1,005,321 1,793, % 78.4% Current payables 1,593,386 2,335,934 2,954, % 26.5% Long term liabilities 8,391,804 14,187,790 14,246, % 0.4% Long term loans 7,409,781 12,769,168 12,647, % -1.0% Others 982,023 1,418,622 1,599, % 12.7% Owners equity 15,875,652 15,292,716 13,883, % -9.2% Minority interest 5,679,380 6,127,797 5,820, % -5.0% Total resources 33,572,619 38,949,558 38,699, % -0.6% Source: MSN MSN debt Unit: VNDmillion Group Parent company Nui Phao Mining & other subsidiaries Masan Consumer Intergroup loans 31-Dec Dec-12 YTD% 31-Dec Dec Dec Dec Dec Dec Dec Dec-12 Short term borrowings 2,032,397 1,793, % 2,630, ,937 1,402,397 1,683,447 2,000,000 Short term borrowings 1,298,728 1,540, % 2,000, ,298,728 1,540,393 2,000,000 Current portion of LT borrowings 733, , % 630, , , ,054 - Long term borrowings 7,409,781 12,647, % 3,327,960 7,376,522 3,505,764 6,748,712 2,576,057 2,521,943 2,000,000 4,000,000 Long term borrowings 3,329,726 6,667, % 2,000,000 4,000, ,000 4,002,885 2,679,726 2,664,997 2,000,000 4,000,000 Promissory notes 2,855,764 2,855, % - 2,855,764 2,855, Convertible bonds and loans 1,957,960 1,176, % 1,957,960 1,176, Secured convertible bonds - 2,200,000-2,200, Repayable within 12 months (733,669) (252,991) -65.5% (630,000) 0 (109,937) (103,669) (143,054) - Total borrowings 9,442,178 14,440, % 5,957,960 7,376,522 3,505,764 4,112,822 3,978,454 4,205,390 4,000,000 Source: MSN 40 Page 40

41 Group balance sheet shows a sharp increase in fixed assets due to aggressive capital expenditure for Nui Phao Capital expenditure Unit: VNDmillion FY2011 FY2012 y/y% Value Weight Value Weight Masan Consumer 1,582, % 861, % -54.4% Nui Phao 1,514, % 4,854, % 320.5% Parent company 19, % 69, % 256.3% Group 3,116, % 5,785, % 116.4% Source: MSN, HSC Compared to the previous year-end, FY2012 year-end short term receivables were unchanged, which we take as evidence of better working capital & inventory management especially in the context of fast growing sales. Inventory turnover advanced from 8.7 in FY2011 to 10.3 in FY2012. Fixed assets increased significantly during the year mainly due to the disbursement for Nui Phao. In FY2012 spending for Nui Phao accounted for the vast bulk of the total group s capex spending. And Masan Consumer absorbed the balance which was spent on the new coffee factory (VCF) which gives them an additional 3,200 tons of pure instant coffee per annum plus upgrades to existing factories. The new coffee factory comes on stream in this month. Long term borrowings moved strongly YTD as Nui Phao has drawn down most of committed loans from lenders. Lenders include Standard Chartered Bank (VND1,666 billion), VDB, Vietcombank and some local banks (VND2,339 billion). Long term borrowing in Masan Consumer was nearly unchanged as operating cash flow is more than sufficient for capacity expansion projects. As mentioned due to heavy investments (in both existing businesses such as Nui Phao; coffee and new business such as Proconco), MSN s cash position and short term investments have decreased steadily since the beginning of the year. We didn t see any noticeable changes in equity in Q4. Long term investments rose significantly due to the investment of VND2,016 billion for a 40% stake in Proconco the second largest animal feed company. This deal was signed in October Page 41

42 Cash flow analysis MSN cash flow statement Unit: VNDmillion FY2011 FY2012 y.y% Profit before tax 2,868,572 2,543, % Depreciation and amortization 142, , % Allowances and provisions 86,870 40, % Unrealized foreign exchange losses/(gains) (16,689) 3, % Other financial loss/gain - - Loss on disposal of fixed assets and long term assets 5,210 14, % Interest and dividend income (1,124,958) (789,202) 29.8% Interest expense 316, , % Share of profit in an associate (392,733) 287, % Operating profit/(loss) before changes in working capital 1,884,643 2,726, % (Increase)/decrease in receivables and other current assets (35,172) (133,060) % (Increase)/decrease in inventories (173,878) 8, % (Increase)/decrease in payables and other liabilities 74, ,587 1,024.1% Operating profit/(loss) after changes in working capital 1,750,016 3,438, % Interest paid (149,650) (525,144) % Corporate income tax paid (148,616) (319,116) % Other proceeds from operating activities - - Other payments for operating activities (11,304) (16,574) -46.6% Net cash (used in)/generated from operating activities 1,440,446 2,577, % Payments for additions to fixed assets and other long-term assets (2,208,260) (6,292,026) % Proceeds from disposals of fixed assets and other long-term assets 2,406 2, % Loans provided to related parties (715,000) % Collections on loans to related parties 715, % Placements of term deposit to banks (46,504,552) (15,021,416) 67.7% Withdrawal of term deposit received 46,145,052 13,664, % Proceeds from bond investments 421,000 - Payments for bond investments (48,000) % Payments from acquisition of subsidiaries (808,828) - Payments for investment in subsidiaries - (2,054,681) Payment for investments in associate (1,000,000) (2,015,847) % Receipts of interest and dividends 994, ,756 Proceeds from sales of other long term investments (373,000) % Share of profit in an associate - - Net cash (used in)/generated from investing activities (3,379,842) (10,626,275) % Proceeds from equity issued - 411,000 Proceeds from minority interest capital contribution 5,329,180 12, % Payments for redemption of equity instruments - (4,634,395) Proceeds from issuance of equity and debt instruments - 2,707,640 Proceeds from short-term and long-term borrowings 5,215,862 8,776, % Principal payments for short term and long term borrowings (2,092,857) (3,032,725) -44.9% Payments for transaction fees - (20,625) Dividend payments of subsidiaries to minority shareholders - (25,987) Net cash generated from financing activities 8,452,185 4,193, % Net cash flow during the year 6,512,789 (3,854,876) % Cash and cash equivalents at the beginning of the year 3,394,575 9,573, % Effect of exchange rate fluctuation on cash and cash equivalents 39, % Cash and cash equivalents at the end of the year 9,573,593 5,718, % Source: MSN 42 Page 42

43 FY2012 net cash inflow from operating activities increased y/y thanks to higher operating profit and better working capital. However net cash out-flow from investing activities almost tripled because of the spend for Nui Phao and the acquisition of Proconco. Net cash inflow from financing declined sharply y/y as there was no sale/issuance of new shares in the company s subsidiaries. If you recall back in FY2011 the company received proceeds totaling VND5,412 billion including US$159 million from a share sale in Masan Consumer to KKR and US$100 million from the issuance of 20% of Masan Resources shares to Mount Kellett. The latest sale of Masan Consumer shares to KKR occurred only in January 2013 so is not included here. Meanwhile the payment of VND4,634 billion to retire equity-linked instruments in FY2012 also dragged down financing cash flow. Apart from these activities, there was some cash inflow. In FY2012 the company received the proceeds from the issuance of convertible debt of VND2,708 billion to various investors. And we saw a jump in short term and long term borrowings from banks mainly from the drawdown of the facilities for the development of Nui Phao. As a result of more payment for the mine and M&A and lower financing cash flow, net cash flow turned negative. Therefore year-end cash balance declined by 40.3% y/y to VND5,719 billion. 43 Page 43

44 FY outlook Masan Consumer is expected to gain further market share in existing products and enter into new segments Masan Consumer -Sales forecast by product categories Product category FY2010 FY2011 FY2012 FY2013F FY2014F Soya sauce 666, , , ,322 1,087,154 y/y% 12.8% 32.0% 5.0% 7.0% 10.0% Market share 59.1% 69.0% 69.0% 69.0% 69.0% Fish sauce 3,227,505 3,638,961 3,723,828 4,186,107 4,931,067 y/y% 41.5% 12.7% 2.3% 12.4% 17.8% Market share 73.8% 76.0% 78.0% 79.0% 80.0% Chili sauce 119, , , , ,200 y/y% 17.2% 60.0% 15.4% 10.0% 10.0% Market share 32.1% 46.2% 48.5% 48.5% 48.5% Instant noodles 1,468,592 2,002,377 3,402,938 4,780,094 5,881,792 y/y% 49.0% 36.3% 69.9% 40.5% 23.0% Market share 14.1% 16.7% 25.3% 31.5% 34.0% Cooking oil 34, y/y% Market share 0.2% Coffee (*) - 1,254,788 1,650,549 2,227,305 2,739,647 y/y% 31.5% 34.9% 23.0% Market share (instant coffee) NA % 42.8% 46.5% Market share (R&G coffee) NA 0 0.2% 0.2% 0.4% Cereals (*) - 330, , , ,626 y/y% 40.4% 35.0% 25.0% Market share NA NA NA NA NA Bottle water 221, , ,460 y/y% 23.1% 43.8% Market share 3.0% 3.2% 4.0% Soft drinks 270, , ,374 y/y% 25.5% 73.6% Market share 0.8% 0.85% 1.2% Total sales 5,516,090 7,056,849 10,877,137 13,662,458 16,670,320 y/y% 39.4% 27.9% 54.1% 25.6% 22.0% Source: MSN, (F): HSC forecasts; (*) These are sales of coffee and cereals under VCF entity. VCF has been consolidated to Masan Consumer since October Therefore in FY2011 sales of coffee and cereals incorporated into Masan Consumer were only VND332.6 billion Regarding sauce products, we believe Masan Consumer will enjoy a slight increase in its already dominant market share with some successful new products launches later this year. For fish sauce, we forecast the company will win another 1.2% market share in FY2013 thanks to the strategy of moving customers from the mainstream product Nam Ngu to the crossover product Chinsu-Nam Ngu and then finally to the premium Chinsu brand. We believe the key products in FY2013 will be Chinsu- Nam Ngu and Nam Ngu Super Saver. Regarding instant noodles, we expect to see a jump in market share in FY2013 and FY2014 with key drivers Kokomi, Yoshi and Omachi brands in all three segments - low end, middle end and high end. Regarding coffee, we believe that the four new products: Wake up Saigon, Wake up weasel flavor, new Vinacafe 3 in 1 launched last year and the new 2 in 1 instant coffee expected to be launched this year will help VCF to gain significant market share. We also expect that VCF will introduce a new roasted & ground (R&G) coffee within this year. 44 Page 44

45 Masan Consumer earnings forecast y/y % change (VNDmillion) FY2011 FY2012 FY2013F FY2014F FY2012 FY2013F FY2014F Net sales 7,056,849 10,389,415 13,662,458 16,670, % 31.5% 22.0% Gross profit 3,059,015 4,212,045 5,443,196 6,672, % 29.2% 22.6% Net financial income (*) 186,506 (70,986) 206, , % 391.2% 223.7% SG&A expense 1,196,422 1,711,979 2,214,122 2,716, % 29.3% 22.7% Other profit (3,797) 21, % % Profit and loss in associates - 53, , , % 27.2% Pre-tax profit 2,045,302 2,503,860 3,623,425 4,863, % 44.7% 34.2% Net profit 1,883,605 2,061,295 3,052,120 4,097, % 48.1% 34.2% Net profit after tax & minority interest 1,882,813 1,975,493 2,869,644 3,846, % 45.3% 34.1% Source: MSN, (F): HSC forecasts; (*) Intergroup financial income and expenses are net off The Vietnam coffee market saw sales of VND11,000 billion last year. Of which consumption of instant coffee and R&G coffee was about VND4,000 billion and VND7,000 billion respectively. VCF is one of three leaders in instant coffee but still a small R&G player with modest market share. Out of VND,4000 billion of instant coffee, nearly VND2,800 billion is flavored coffee and more than VND1,200 is unflavored coffee. VCF is total dominating unflavored segment while it has not entered flavored segment until the launch of Wake up café Saigon in June. In the flavored segment, current major brands include Nestlé's two brands; Nescafe (VND800 billion) and Café Viet (VND600 billion), a Trung Nguyen brand G7 (VND800 billion) and others (VND600 billion). With two new products in the South and the North market, we expect VCF will take a lot of share in flavored instant coffee. The R&G coffee market is far more fragmented with more than 1,000 players and is 75% unbranded. Trung Nguyen has a market share of 14% and has been the leading R&G coffee market for many years. Masan Consumer is working closely with VCF to introduce a roasted& ground (R&G) coffee product, in an effort to transition unbranded R&G customers towards branded products. Management believes that it can replicate its past success when they transitioned unbranded fish sauce customers over to branded fish sauce. We think this is a good bet. Masan does have serious form in taking market share using new or rebranded products aimed at specific market segments and backed by powerful advertising campaigns. We also forecast growth for cereals products also thanks to re-branding efforts. Masan Consumer is also preparing to enter into new product categories with intensive R&D and marketing work. According to management, in FY2013 they will launch some beverage and snacks products. Given limited information, we do not incorporate these products in our forecasts. 45 Page 45

46 Vinh Hao purchase opens up a whole new segment which Masan will enter in Q3 with new product launches Vinh Hao earnings forecast y/y % (VNDmillion) FY2011 FY2012 FY2013F FY2014F FY2012 FY2013F FY2014F Net sales 384, , , , % 24.4% 60.3% Gross profit 139,519 NA 238, ,334 NA NA 64.4% SG&A expense 132,096 NA 200, ,078 NA NA 52.9% Pre-tax profit 11,449 20,864 37,796 85, % 81.2% 125.6% Net profit 8,541 15,648 28,347 63, % 81.2% 125.6% Source: (F): HSC forecasts The purchase of a 24.9% stake in Vinh Hao Mineral; the bottled and mineral water company from Gemadept at a selling price of VND85,000/share was announced in February. This was followed up by the purchase of an additional 4.1% stake from Gemadept in March. This values Vinh Hao at a FY2012 PE of 44x, PB of 6.2x and P/Sales of 1.4x representing a fairly sizeable premium for the company. Masan Consumer has also made a tender offer to other shareholders of Vinh Hao at the same VND85,000 price and seem confident of having a controlling stake in the near future. As at 1 April 2013, Masan Consumer effective interest in Vinh Hao was 63.51% as a result of the acquisition of an additional 34.5% from other shareholders. So what have they bought? Vinh Hao has a factory with 20,000 bottles per hour capacity and currently makes & sells non-gas mineral water, gas mineral water, bottled water and mineral water based soft drinks. The company is long established and has a 3% market share in the bottled & mineral water market and a small 0.8% market share in the soft drink market. La Vie, owned by Nestle is the leader in bottle water market with 11% market share. Masan Consumers rationale here is more about buying capacity and a brand name to give them market access. And then they plan to use Vinh Hao's brand image to launch a range new drinks products by Q3. Here the strategy looks very similar to that executed after the VCF deal. As follows; Masan identifies a sizeable growth consumer goods segment where gross profit margins are 40% or so and then buys a brand name & manufacturing capacity in that segment. They then quickly launch new products; often in the premium end of the segment using the new capacity or in some cases using outsourced capacity. These products are developed in the concept phase even before the acquisition is complete. And by utilizing their excellent distribution network they can ensure the new product gets distributed to more than 100,000 POS immediately. Backed by Masan Consumer's extraordinary marketing muscle. The bottled water market is worth about VND7,400 billion and is growing at about 15% per year. While the soft drinks market is much biggerand is growing rapidly at 25% y/y. While gross margins are viewed as attractive at 40-50%. Then having bought into VinhHao, Masan is likelyto launch new bottled beverage products this year. As the acquisition has not been completed yet and the new products will not be launched before Q3, the FY2013 impact from Vinh Hao s earnings will not be significant. We forecast sales growth of 24.4% y/y in FY2013 due to some slight market share gains in bottled water (from 3% in FY2012 to 3.2% in FY2013) and in soft drinks (from 0.8% in FY2012 to 0.85% in FY2013). However we expect to see a significant jump in sales in FY2014 with 60.3% y/y as a result of new product launches and the synergies of integrating distribution, marketing and production within Masan Consumer. We forecast their market share in bottled water & soft drinks will rise to 4% and 1.2% respectively. Improvements in cost control and working capital management should also lead to higher profit margins. We expect net margins will increase from 3.2% in FY2012; to 4.6% in FY2013 and then 8.7% by FY2014. Even so to begin with given its small size, Vinh Hao will not contribute significantly to Masan Consumer s earnings We assume that Masan Consumer will hold 100% of Vinh Hao by the end of this year. Accordingly Vinh Hao financial statements will be consolidated to Masan Consumers. 46 Page 46

47 Proconco post acquisition strategy will take time to develop Masan Consumer s 40% stake in Proconco points to its imminent entry into the huge protein-food market (meat, fish, & seafood) thereby developing itself into a fully integrated food business in future. This is part of an emerging feed to fork strategy involving every stage in food processing apart from actual farming itself (which would be sub-contracted). However the current stake, while large does not confer control and the path to control may take some time to reveal itself. The rest of the shares are currently largely held in state hands. Dofico (Dong Nai Food Industry Corporation) holds 18% while three other SOEs; Seaprodex, Huu Nghia and Tin Nghia hold nearly 42%. No timetable on this yet. So the decision to buy into Proconco is closely tied to Masan s Consumers medium to long term strategy of developing a meat based protein product. And while there is no immediate payoff (unlike the VCF and Vinh Hoan acquisitions) a presence in the animal feed business is essential if Masan Consumer is to develop a processed meats capability later on. We view Proconco then as part of the next stage of growth once the noodle; coffee and mineral water/herbal drinks segments have been tapped. Masan Consumer has now taken 2 seats on the BOD of 5 giving them a substantial voice. Looking forward Masan Consumer will start rolling out its strategy with the production of animal feed and could later on progress onto contract farming, meat processing, marketing and distribution. They plan to build a fully integrated value chain of clean breed-clean feed-clean farming-clean processing-clean warehousing- clean distribution. Which would enable them to launch & distribute a range of meat based products to compete against VISSAN, San Miguel and CP currently the largest players in the meat market here. The prize is worth the effort. HSC estimates that the meat market is worth about US$6 billion in annual sales and is growing at over 10% a year. This makes is substantially larger than the other segments where Masan Consumer has a presence. Recently there has been a consumer shift away from pork towards chicken based products. Good preparation is everything. And we estimate it will take them a year or two to develop long term meat supply via contract farming based on existing relationships between Proconco as a feed supplier with farmers. This is the toughest stage in our view given the lack of large scale farms in Vietnam. Then building up a distribution network should be easier for Masan as they can take advantage of their wide coverage at wet markets nationwide. We believe that the first meat products will not be launched until FY Proconco s existing products include cattle feed (80% of sales) and aqua feed (20% of sales). In the animal feed market, CP Vietnam is the largest player with a 13% market share while Proconco comes second with an 11% market share. We estimate in FY2012, Proconco s net profit was VND610 billion and forecast in FY2013 they will make a net profit of VND701 billion, up 15% y/y. Under the equity method, Masan Consumer will book a profit from associate equals to 40% of Proconco s net profit for the fiscal year. We assume that Masan Consumer will also allocate on its balance sheet goodwill of VND1,000 billion which is the premium of the purchase price over 40% of Proconco book value after deducting amortization. This goodwill will be amortized in 10 years and annual goodwill amortization will be recognized as an expense in Masan Consumer s income statement. 47 Page 47

48 Nui Phao will contribute just over 1Q of revenues this year and a full year from FY2014 HSC's model for Nui Phao production & sales forecast Amounts y/y % change Unit FY2013F FY2014F FY2015F FY2014F FY2015F Production volume APT dmt 1,000 6,100 6, % 0.0% Tungsten concentrate dmt 1, Fluorspar Concentrate dmt 70, , , % 0.0% Copper Concentrate dmt 2,167 6,500 6, % 0.0% Bismuth Cement dmt 767 2,300 2, % 0.0% Prices APT US$/mtu % 5.0% Tungsten concentrate US$/dmt 28,000.0 Fluorspar Concentrate US$/dmt % 5.0% Copper Concentrate US$/dmt 8, , , % 5.0% Bismuth Cement US$/lb % 5.0% Total sales 2,159,669 6,685,984 7,020, % 0.0% APT VNDmillion 650,080 3,965,485 4,163, % 5.0% Tungsten concentrate VNDmillion 602, Fluorspar Concentrate VNDmillion 606,670 1,820,009 1,911, % 5.0% Copper Concentrate VNDmillion 92, , , % 5.0% Bismuth Cement VNDmillion 207, , , % 5.0% Export tax 250, , , % 5.0% Net sales 1,909,126 6,268,133 6,581, % 5.0% Source: MSN, (F): HSC forecasts The commissioning stage of Nui Phao will start from April and extend till September. The rough working assumption is the mine will contribute four months worth of revenue & earnings contribution in FY2013. Which means Q4 plus one month. However this needs to be treated very carefully in practice. Firstly the mine will be ramped up from April. And of course expenses both fixed and variable are ongoing. These expenses can be capitalized until (1) the mine begins to book revenues and (2) is fully operational. The detailed schedule are still a little unclear however HSC s working assumption is four months worth of revenue and expenses for FY2013. Hence we treat this year as being worth a third of a full year. With a full allocation of expenses & revenues from FY2014. Production volume is a function of volume of ore mined during the period, average ore feed grade (the metal content of ore in percent) and average mill recovery (portion of metal contained in ore that can be extracted by processing). The working assumptions for our Nui Phao model are as follows; 1. Total ore reserves is 52,550,000 tons and the company assumes annual ore mined of 3,500,000 tonnes. We assume the working life of the mine is just 16.5 years for now. 2. Given the fixed volume of ore mined, production volume of each product namely APT, fluorspar concentrate, copper concentrate and bismuth cement, will be in proportion to the average mill recovery ratio. In our model then we assume that the actual mill recovery for all products is close to company s expectation as shown in the above table. A higher than expected recovery rate would of course lead to higher revenue and margins as operating cost is largely fixed. 3. We assume prices are fixed at current levels for each of the four elements are fixed across FY at current levels. Then a very mild increase in FY2015. The prices we took come from the Asian Metal and Indmin websites. This is a conservative set of assumptions given the likelihood for demand 48 Page 48

49 Nui Phao operating cost estimate annualized (US$million) Year 1 Year 2 Year 3 Breakdown Year 2 Year 3 % y/y % change y/y % change By function Mining cost % 208.8% 1.9% Processing cost % 203.3% 1.9% Total % 205.3% 1.9% By nature Salaries and wages % 215.0% 5.0% Materials and supplies % 200.0% 0.0% Plant costs, maintenance, % 200.0% 0.0% insurance and services Electricity % 230.0% 10.0% Other cost % 200.0% 0.0% Total US$ % 205.3% 1.9% Total VND 766,333 2,339,755 2,383, % 205.3% 1.9% Source: HSC estimates, (F): HSC forecasts recovery and potentially significant upside in metal prices on a three year view. This could provide significant upside from FY2015 but is also the only real medium term upside as volumes remain fixed through the mine s life). 4. We then assume that export tax will be deducted directly from sales. We estimate the annual operating cost will be US$112 million in Year One, of which mining cost come to US$41.2 million while processing cost is US$70.8 million. This includes labour cost while G&A is separate. We then assume that electricity prices will increase by 10% per annum and that labour cost will increase 5% per annum. All other major costs to be unchanged until Two export products; fluorspar and bismuth will carry an export tariff. And all four outputs also be subject to the natural resources tax. According to VAS, export taxes will be deducted directly from sales. Meanwhile natural resources tax is treated as a G&A expense. At full production we assume the natural resources tax expense ranges between US$31.7 and US$38 million per annum. 6. It is not meaningful to break out the profitability of the mine by element given the complexity of the processing flow. The question here is cost allocation by element for the various reagents. No doubt once the mine has been operational for some time they will have a better idea of what the gross profit per element is. Hence we view the operational costs as being in common and do not at this point calculate gross profit per element. We could in theory take a stab at it but it would not be meaningful to do so. Once the mine is operating this will become a much easier exercise no doubt. 7. As an export oriented entity and is expected to bring substantial socioeconomic benefits to the area in which it is located, Nui Phao will enjoy favorable CIT rates. Effective corporate income tax rates will be 0% till 2015, 10% till 2021, 20% till 2025 and then 25% thereafter. Nui Phao depreciation and G&A expense (US$million) Year 1 Year 2 Year 3 Year 2 Year 3 y/y % y/y % Depreciation (US$mn) % 0.0% Depreciation (VNDmn) 269, , , % 0.0% G&A (US$mn) % 0.9% G&A % 5.0% Natural resources tax % 0.0% G&A (VNDmn) 320, , , % 0.9% Source: HSC estimates, (F): HSC forecasts Production Statistics Item Average Ore Feed grade Recovery1 Grade1 Production (tpa)2 Ore Throughput NA NA NA 3,500,000 Tungsten (W)3 0.21% 67% 88.50% 4,100 Fluorspar 8.00% 76.50% 97.00% 210,000 Copper 0.21% 88.40% 27% 6,500 Bismuth 0.10% 65.70% 90% 2,300 1 Based on metallurgical test work conducted by sgs Lakefield that forms part of the Feasibility Study and internal estimates for APT recovery 2 Average LOM production, rounded 3 to convert to WO3 divide by 0.793, to convert to APT divide by Source: MSN 49 Page 49

50 Techcombank FY2013 forecast calls for modest growth as the bank continues to book higher provision costs We discussed FY2013 prospects in the Techcombank section above. Masan Group consolidated forecast We forecast that Masan Consumer will account for 88% of group net sales and 93% of group net profit in FY2013. In FY2014 when Nui Phao runs at full capacity, Masan Consumer contribution drops to 68% of group sales and 70% of group net profit. We further forecast that Nui Phao will be responsible for 12 % of group sales and 19% of group profit in FY2013. The mine will become a key earnings driver in FY2014 providing 30% of group sales and 39% of group net profit. With a sharp drop in net profit y/y, the investment in Techcombank is expected to continue to drag down group profit in the next two years with -12% contribution in FY2013 and -7% contribution in FY2014. If goodwill amortization is added back, however it would actually make some small profit from MSN. 50 Page 50

51 MSN earnings forecast by business Unit: VNDmillion Group Masan Consumer (*) Nui Phao(*) Parent company (*) FY2012A FY2013F FY2014F FY2012A FY2013F FY2014F FY2013F FY2014F FY2012A FY2013F FY2014F Net sales 10,389,414 15,571,584 22,938,453 10,389,415 13,662,458 16,670,320 1,909,126 6,268, y/y % 47.2% 49.9% 47.3% 47.2% 31.5% 22.0% 228.3% Gross profit 4,210,488 6,316,483 9,674,883 4,212,045 5,443,196 6,672, ,287 3,002, y/y % 37.6% 50.0% 53.2% 37.7% 29.2% 22.6% 243.9% Net financial income 500, , ,252 (70,986) 206, ,005 (120,225) (540,557) (178,109) 111, ,804 y/y % -40.2% -60.4% 20.3% % 391.2% 223.7% % 184.9% 162.7% -1.6% SG&A 2,052,650 2,812,310 3,732,575 1,711,979 2,214,122 2,716, , , , , ,073 y/y % 44.9% 37.0% 32.7% 43.1% 29.3% 22.7% 124.0% 71.8% 7.0% 7.0% Other profit 168, , , y/y % % % 663.9% % 0.0% % % Profit and loss in associates (337,798) (150,622) (101,744) 53, , , y/y % % 55.4% -32.5% 0.0% 251.7% 27.2% Profit before tax 2,488,522 3,551,634 6,078,816 2,503,860 3,623,425 4,863, ,579 1,742,025 (294,258) (165,090) (186,270) y/y % -13.2% 42.7% 22.4% 44.7% 34.2% 303.6% % 43.9% 12.8% Net profit after tax 1,962,592 2,980,329 5,312,752 2,061,295 3,052,120 4,097, ,579 1,742,025 (294,258) (165,090) (186,270) y/y % -21.4% 51.9% 78.3% 9.4% 48.1% 34.2% 303.6% % 43.9% 12.8% Page 51 Net profit after tax & minority interests 1,260,518 2,060,128 3,840,724 1,975,493 2,869,644 3,846, ,579 1,742,025 (294,258) (165,090) (186,270) y/y % -36.1% 63.4% 86.4% 4.9% 45.3% 34.1% 303.6% % 43.9% 12.8% Source: MSN, (F): HSC forecasts; (*) Intergroup financial income and expenses are net off 51

52 Masan Group still a compelling growth story We like the company given the growth story of Masan Consumer with new F&B product categories and likely M&A in new consumer segments as well as the expected contribution from Nui Phao next year. Combine this with a strong risk management platform, platform-building capabilities, capital-raising track record and effective capital allocation by the management at the group level and you start to justify the premium. Techcombank is of course an ongoing concern given the general problems in the banking sector and the bank s asset quality. Our view is that net operating income growth here will remain fairly flat for a couple of years as they work to clean up the balance sheet. However we view the issues as moderate and therefore solvable within the bank s own capability. Masan s stock is currently valued at a FY2013 P/E of 42.5x and P/B of 3.9x based on our numbers while for FY2014 it is valued at P/E of 22.8x and P/B of 3.4x. Some might wish to remove the valuation of the mine from the PE calculation given that the mine will achieve a full year of production only in the FY2014 results. However for our part we are confident the mine will achieve its targets. And that the NPL issues over at Techcombank can be dealt with over the next few years without affecting the current level of shareholder s equity. Hence we reiterate our OUTPERFORM rating for MSN. 52 Page 52

53 July 14h 2008 Global Disclaimer Copyright 2008 Ho Chi Minh Securities Corporation (HSC). All rights reserved. This report has been prepared and issued by HSC or one of its affiliates for distribution in Vietnam and overseas. The information herein is believed by HSC to be reliable and is based on public sources believed to be reliable. With the exception of information about HSC, HSC makes no representation about the accuracy of such information. Opinions, estimates and projection expressed in this report represent the current views of the author at the date of publication only. They do not necessarily reflect the opinions of HSC and are subject to change without notice. HSC has no obligation to update, amend or in any way modify this report or otherwise notify a reader thereof in the event that any of the subject matter or opinion, projection or estimate contained within it changes or becomes inaccurate. The information herein was obtained from various sources and we do not guarantee its accuracy or completeness. Prices and availability of financial instruments are also subject to change without notice. This published research may be considered by HSC when buying or selling proprietary positions or positions held by funds under its management. HSC may trade for its own account as a result of short term trading suggestions from analysts and may also engage in securities transactions in a manner inconsistent with this report and opinions expressed there in. Neither the information nor any opinion expressed in this report constitutes an offer, nor an invitation to make an offer, to buy or to sell any securities or any option, futures or other derivative instruments in any jurisdiction. Nor should it be construed as an advertisement for any financial instruments. Officers of HSC may have a financial interest in securities mentioned in this report or in related instruments. This research report is prepared for general circulation for general information only. It does not have regard to the specific investment objectives, financial situation or particular needs of any person who may receive or read this report. Investor should note that the prices of securities fluctuate and may rise and fall. Past performance, if any, is no guide to the future. The financial instruments discussed in this report may not be suitable for all investors. Investors must make their own financial decisions based on their independent financial advisors as they believe necessary and based on their particular financial situation and investment objectives. This report and any part of this report may not be copied, reproduced, published or redistributed by any person for any purpose without the express permission of HSC in writing. Please cite sources when quoting. HEAD OFFICE Level 5 & 6, AB Tower 76 Le Lai, District 1, HCMC T : (+84 8) F : (+84 8) E: infor@hsc.com.vn W: HANOI OFFICE Level 4 & 5, 66A Tran Hung Dao Hoan Kiem District T : (+84 4) F : (+84 4) Page 53