Mirae Asset Securities Investor Presentation Q4 FY2007 1 1
DISCLAIMER This presentation may contain forward-looking statements about Mirae Asset Securities and unaudited preliminary figures internally collected as of March 2008. These figures are subject to change without prior notice, and Mirae Asset Securities is neither obligated to provide revisions, nor responsible for any loss or inconvenience caused by changes regarding the projection and forecast presented in this document. 2
Table of Contents I. Corporate Overview 4 II. Financial Highlights 9 III. Operational Performance 14 IV. Growth Strategy 19 Appendix 26 3
I. Corporate Overview I. Innovator in Korea Capital Market II. Mirae Asset Group Structure III. Mirae Asset AUM IV. Mirae Asset Fund Map 4
I. Innovator in Korea Capital Market Innovator in Korean Capital Market as MAS led the capital market in Korea through "First-See" & "First-In strategy Korea s first mutual fund First wrap account & installment-type investment First real estate fund & PEF First int'l asset management company First int'l investment fund First Biz Unit System First Simultaneous company First Retirement Annuity Institute Nationwide Branch Investment Seminar First among global securities firms to establish a subsidiary in Vietnam 1998 2001 2004 2005 2006 2007 Leading the market with Alternative Investments Variable Insurance Create the market for Installment Fund WRAP Account REITs PEF Corporate Pension Opened the era of Indirect Investment Mutual Fund Installment Fund Overseas Fund 5
II. Mirae Asset Group Structure Korea s Premier Wealth Management & Consulting Group HK Singapore London Vietnam India Brazil USA Australia & etc. Mirae Asset Overseas Inv. Mgmt Mirae Asset Investment Mgmt. Korea s First Mutual Fund Premier Wealth Mgmt Consulting Co No 1 Market Capitalization HK, Vietnam, China, London, India, USA, Brazil Mirae Asset Securities Focus on Alternative Investments (ETF, SOC, PEF, REITs) Mirae Asset Maps Inv. Mgmt. Mirae Asset Life Insurance Creator of New Paradigm in Life Insurance Market with Variable Insurance Park Hyeon Joo Mirae Asset Foundation Venture, Capital Scholarship, Youth Support program, poga,children de Economy o School & etc. Invest in Venture Companies with High Tech. & Product Innovation 6
III. Mirae Asset AUM Mirae Asset investment arm continues to lead the indirect investment market with superior fund performance and 19.3% M/S within industry (36.3% M/S for equity fund) Asset Management Industry Equity Fund Market Equity Fund Return 350 300 250 200 150 (KrW Trillion) (KrW Trillion) Mirae Asset Independence Fund 150 Total Market 49 50 626% Total Market KOSPI Index 65 MAG MAG +467% 60 40 125 40 55 159% M/S 19.3% 24 22 19 20 17 235 9 9 10 12 222 225 204 223 193 199197 29 34 259 242 298 271 336 2005.03 2005.12 2006.09 2007.06 2008.03 Source: AMAK 100 45 30 75 15 25-50 - M/S 36.3% 20 25 16 84 15 14 13 63 12 52 7 47 44 40 4 35 2 3 26 17 13 11 Source: AMAK 116 135 2005.03 2005.12 2006.09 2007.06 2008.03 30 20 10-2001. 02 2003. 02 2005. 02 Source : Zeroin (As of Feb. 2008) 2008. 02 AUM (KrW Trillion) Total M/S Mirae Asset 64.8 19.3% Samsung ITC 22.2 7.5% Hana UBS 19.6 6.6% KITC 17.3 5.8% Shin Han BNP 15.1 5.1% Source : AMAK (As of March 2008) 7
IV. Mirae Asset Fund Map Mirae Asset investment is the largest overseas investment management company in Korea offering our clients investment opportunities throughout the globe Europe Euro Blue Chip Index Euro Dividend Index Emerging Europe Index Discovery Europe Value Eastern Sector Leader EURICs Sector Leader` Eurasia REIT FOF Global Eurasia Sector Leader Global Consumer Equity Global Top Brands Equity China & India & Korea Global Healthcare Equity USA Blue Chip Index Global REITs FOF China/HK Equity Global Alternative Energy Index China Infra BRICs Index China Sector Leader India Equity India Infra AP Region Chindia Sector Leader Chindia Consumer AP Equity KorChindia Focus 7 AP Consumer Select Q AP Financial Chindia Infra AP Infra AP Sector leader Latin Index Australia Equity Asia REITs FOF AP Select Q Vietnam & Malaysia Pan Asia Consumer Pan Asia IT Malaysia Equity Pan Asia Communication Vietnam Equity Asia Index Vietnam/China Equity AP Natural Resource Equity 8
II. Financial Highlights I. Diversified Revenue & Superior Return II. Differentiated Business Focus III. Managing Growth and Cost 9
I. Diversified Revenue & Superior Return MAS continuously maintains advanced and balanced revenue structure with comparatively high revenue proportion from wealth management business Brokerage - Institutional - On-line - Overseas Equity Wealth Management - Beneficiary certificates - Wrap account - Bancassurance Investment Banking - Underwriting & IPO - Prop. trading - Fixed income securities - Principal Investment Interest ees Profit &O Other Net Revenue Comparison 47 16 10 27 Korea Brokerage 27 21 39 20 20 MAS (In %) 12 21 27 13 12 46 23 38 15 18 Nomura Merrill Lynch 62 13 Goldman Sachs 20 0 (20) OP Margin & ROE 32% 26% 22% 19% MAS 15% 13% 9% S W H FY00 FY03 FY06 MAS Industry 9.5 21.2 8.7 13.3 0.3 23.6 20.320.1 13.1 21.1 FY02 FY03 FY04 FY05 FY06 FY07(E) -4.4 * Nov 2006 for Foreign firms and FY06 for Korea Brokerage and FY07 for MAS 10
II. Differentiated Business Focus MAS core strength lies in the wealth management consulting business accompanied by high growth in other asset management related businesses Wealth Management Brokerage (Equity) (KrW Billion) 120 90 60 30 (KrW Billion) 60 45 30 15 2004 2005 2006 2007 2004 2005 2006 2007 Investment Banking Interest Profit (KrW Billion) 20 15 10 5 (KrW Billion) 40 30 20 10 2004 2005 2006 2007 Excl. PI profits 2004 2005 2006 2007 11
III. Managing Growth and Cost On the back of strong growth in the wealth management business, MAS has been able to grow the size of the revenue and efficiently manage costs Revenue Growth vs. Cost EBT Growth (KrW Billion) 250 (KrW Billion) 150 Growth Strategy 200 120 Expand Branch Network Strengthen Fee Base & On-Line 150 90 Accelerate New Business 100 60 CMA & OTC Products Overseas Brokerage 50 30 Globalization & IB Q2Q Q4 Q2 Q4 Q2 Q4 Q2 Q4 FY04 FY05 FY06 FY07 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 FY04 FY05 FY06 FY07 HK/Vietnam/UK/India/Brazil Principal Investments Note: Excl. OTC trading gain/loss 12
III. Managing Growth and Cost MAS has been strategically expanding its local branch network in the recent quarters already seeing economies of scale taking effect and will further promote CMA to accelerate this phenomenal growth Growth Strategy Expand Branch Network Strengthen th Fee Base & On-Line 2003. 06 2004. 06 2005. 06 2006. 06 2008. 03 # of Branch 0% 3% 69% 97% 326% AUM Growth 0% 23% 64% 151% 625% New Business CMA & OTC Products Overseas Brokerage MAS CMA M/S # of CMA Accounts (Industry in Mn) Globalization & IB HK/Vietnam/UK/India/Brazil Pi Principal i linvestments t 200 25 24.0 25,000 6 MAS Fund AUM (KrW Trillion) 6,000 Principal 27% Investment # of Branches 20.6 11% Wealth 39% 20 20,000 5 Mgmt 5,000 150 9% Underwriting 15 100 10 50 5-3.3 4.1 35 36 5.4 59 83 8.3 69 13.0 81 14.7 110 142 149 2003. 2004. 2005. 2006. 2007. 2007. 2007. 2008. 06 06 06 06 06 09 12 03 4,000 4 15,000 8% 10% 15% 3,000 3 5.7 10,000000 4% 2,000 2 3.9 2.9 5,000 1,000 2.1 1 1.4 - - 2006. 12 2007. 03 2007. 06 13 2007. 09 2008. 03 10% 0% Brokerage Investment Banking Interest & Other 21% 20% 20% Net Revenue (FY07) 54% 10% IB Structured Finance Dealing
III. Operational Performance I. Wealth Management II. Brokerage III. Investment Banking IV. Corporate Pension 14
I. Wealth Management WUM grew 16% QoQ led by strong growth in both overseas and domestic funds growing 29% and 16% respectively WUM & M/S Other Wealth Management Biz 15 (KrW Billion) 36 Trillion 24,047 M/S Trust 8.0% Wrap Account 3,610 CMA 238 7.0% Advisory 2,950 Fund Sales 14,656 1,256 6.0% 0% 13,037 Others 10,876 2,950 MMF 7,088 # of Installment-type type Account 3,150 968 196 5.0% 27% Balanced Fund 8,312 8,669 2,804 1,316 971 192 Industry (mn) 1,238 Fixed-Income Fund 1,138 1,320 220 4.0% 20 5.6% 6.0% 814 669 1,098 MAS M/S 4,494 1,016 956 916 5.5% Domestic Stock Fund 3,882 955 1,038 15 3,114 8,905 5.0% 3.0% Overseas Stock Fund 2,984 3,119 34% 33% 4.5% 1,406 1,558 2,724 3,604 4,733 10 3.9% 4.0% Other : PEF, REIT etc. 2.0% 3.1% 15.5 3.5% 2006. 2006. 2007. 2007. 2007. 2008. 5 2.6% 9.8 06 09 03 06 09 03 6.4 3.0% 2.3 0 25% 2.5% Equity-type Proportion 53% 54% 54% 57% 63% 67% 2005. 2006. 2007. 2008. 03 03 06 03 100%
II. Brokerage In addition to maintaining a dominant position in sales of wealth management products and services, equity brokerage M/S increased to record high of 8.5% Brokerage M/S (CY2007) Brokerage Breakdown MAS M/S & Ave.fee 5.7% 6.4% Q4 FY07 6.9% 7.2% 8.5% 7.9% Trading Value Commissions 20% Institution 23% 2% 1% 46% 41% Off-Line (Retail) 10% 11% 5.68 5.84 8.41 7.17 8.12 6.59 6.9 Q4 FY04 Q4 FY05 72 7.2 7.4 Q4 FY06 (M/S %) 8.5 8.3 Q4 FY07 78% 75% On-Line (Retail) 43% 48% Channel (bps) FY06 FY07 Off-Line Wholesale 14.7 11.8 On-Line Retail 3.1 3.1 H W S D1 MAS Source : MAS, data from each company Q4 FY06 Q4 FY07 Q4 FY06 Q4 FY07 16
III. Investment Banking MAS leads Korea s Financial market thru development of alternative investment products and has extensive knowledge and expertise in IPO and selling structured finance related products IB Revenue breakdown (FY07) Project Finance (FY07) Alternative Investments (CY07) (KrW Billion) (KrW Billion) Category Details Amt Project Finance & others 54% Dealing Underwriting 10% 9% Prop Trading Gain Principal Investments 27% 60.0 50.0 40.0 30.0 20.0 10.0 0.0 0.7 6.5 19.4 53.6 FY04 FY05 FY06 FY07 KOSDAQ IPO M/S Vessel Fund Bulk Carrier 105.0 Nickel Fund Nickel Mine 130.0 Real Asset F Agricultural, Wine 8.0 Underwriting Daewoo Construct 120.0 Real Estate Fund Bali Resort 40.0 OTC Products # of offering Amt ELS 161 886.7 DLS 36 133.8 ELW 197 702.2 Total 394 1,722.7 (KrW Billion) 30 20 10 FY01 FY03 FY05 FY07(E) (USD Million) Category 2004 2005 2006 Amt. 40 137 82 No.of IPO 4 11 3 M/S (%) 9 16 13 Rank 3 3 3 Fee 5 4 4 Source: Bloomberg (Calendar Year Base) 17 DLS Public Offering M/S 76% Carbon fund, Korea Beef Cattle Fund 2, Art Fund are under consideration
IV. Corporate Pension MAS s corporate pension M/S in the securities industry is already 20% and the performance for the plan is 3 times more than the lowest among the peer group Corporate Pension M/S Plan Performance Corporate Pension Outlook 3.0 (KrW Trillion) Pension Market (LHS) MAS M/S (RHS) < DC > < DB > 12% MAS 3% 7% SS 7% WB 7% 7% 6% 160 120 (KrW Trillion) 5% growth 7% growth 144 133 20 2.0 2% +7.4%p 7% MAL 6% 6% NH 5% +2.5%p 80 1.0 1% 6% KB 6% 40 42 44 6% DWS 5% - 2006. 03 2006. 09 2007. 03 2007. 09 2008. 03 0% 5% 8% KBL 5% 2008 2009 2010 2015 Source: MAS Source: FSS (Apr 07~Mar 08) Source: KSDA 18
IV. Growth Strategy I. Changing Market Environment II. Market Outlook III. Long-term Growth Drivers IV. Investment Summary 19
I. Changing Market Environment Investors preference is shifting from bank deposit s to equity and from direct equity market to indirect investments. With upcoming regulatory changes, this trend is expected to accelerate Shift in Asset Class Growth Prospects Household Asset Financial Asset Source: Korea Bank 2005 2006 2004 2006 Regulatory Changes 1. Shift in Asset Class 2. Regulatory Changes Bank Securities Futures Derivatives, FX Etc. Asset Mgmt & Other Insurance Bank Integration Under CMISA Insurance 2010 20
I. Changing Market Environment Increasing interest in asset management and aging population leads current cash outflow form bank deposit to equity funds / CMA AM Industry AUM vs. Bank Time Deposits Expected return from equity 350,000000 (A) Balance of time deposit (B) AUM by asset managers (KrW Billion) 300,000 250,000 200,000 150,000 100,000 (A)/[(A) + (B)] 70% 60% 50% 40% 20 Bank deposit interest rate Expected return from equity 15 10 5 0 2002 2003 2004 2005 2006 2007 Source: Bank of Korea, AMAK, Company report Source: Bank of Korea, AMAK, Company report Net investment in Korean market (LHS) (KrW Billion) 60,000000 20% 50,000 15.9% 40,000 12.1% 15% 30,000 9.2% 8.4% 8.9% 20,000 11.0% 10% 10,000 5% 0-10,000 0% 1996 1997 1999 2000 2002 2003 2005 2006 2008 Source: IBES, Bloomberg Source: Note: IBES, Expected Bloomberg return on equity = 1 / MSCI Korea forward P/E *100 Note: Expected return on equity = 1 / MSCI Korea forward P/E *100 Equity funds are leading Korea stock market Total funds / GDP (as of Dec 06) 2002 2003 2004 2005 2006 2007 2008 Source: National Pension Service, Company report Portion of aggregate market capitalization (RHS) 52.9% 68.6% 47.4% 21 Source: ICI, Bloomberg 78.9% 79.3% 31.5% 28.7% 6.4% 17.0% World total Americas Europe Asia US France Korea India Taiwan
II. Market Outlook Since the implementation of Financial Service Reform Act in Australia in 2002, the Capital market grew at a rapid pace with trading volume and number of IPO offerings rising and we expect similar phenomenon to occur in the local market as well Market Capitalization Korea Market Outlook Trading Volume Financial Service Reform Act (2002. 03 ) (AUD Billion) 900 700 500 1600 1200 IPO Sec. Off. F-I (KrW 10 Billion) Financial Service Reform Act (2002. 03) (AUD Billion) 900 700 500 300 300 100 800 100 2001 2003 2005 2001 2003 2005 IPO Offerings 400 GDP Increase + CMIA Secondary Offerings Financial Service Reform Act (2002. 03) 2001 2003 2005 (AUD Million) 21,000 15,000 9,000 3,000 2001 2003 2005 2010 Equity & F-I : 2~3 X M&A :4~5 X PEF: 4~5 X ELS: 3 X OTC : 7~8 X Source: KSRI Financial Service Reform Act (2002. 03) 2003 2005 (AUD Million) 21,000 15,000 9,000 3,000 22
III. Growth Drivers Vision i Asia s s Leading Financial Services Company Strengthen Principal Capabilities through Enlargement of Capital Efficient use of Capital Strengthen Principal IB Strategy Globalization Innovative Product Development Expand Overseas AM & Sec. Arm - HK, Vietnam, China, India, USA 50% of Client Asset to Overseas New Fund (Vessel, Beef) Korea #1 Corporate Pension Provider 30% of Asset in VL & etc. CMA & OTC Products 23
IV. Investment Summary Our strategy t & track record - Chairman Park & CEO Choi (1 st gen. founder, knowledge/experience, dynamic mgmt. style, and youth) Positioning within the group Our key differentiation - Diversified revenue structure & focus on AM Biz = High Growth & Predictability & Profitability Growth Prospects - Asset Management (CMA, overseas equity fund & network) - Brokerage (Group Synergy & Hong Kong/Vietnam Operation) - Investment Banking g( (PI thru Hong Kong/Vietnam, China & India) - Corporate Pension (Differentiation) 24
Q & A Thank You For more information, please contact MIRAE_IR@miraeasset.com or visit www.miraeasset.com. 25
Appendix I. Income Statement II. Balance Sheet 26
I. Income Statement [KrW Billion] FY2007 YoY Q4 FY07 Q3 FY07 Q2 FY07 Q1 FY07 FY 2006 FY 2005 FY 2004 Operating Income 2,531.8 319% 549.4 574.1 769.3 639.0 604.5 432.1 272.8 Net Revenue (Operating Profit + G&A Expenses) 686.8 108% 146.6 207.1 179.1 153.9 330.7 285.9 151.7 1) Wealth Management 266.8 157% 60.4 106.3 56.5 43.6 103.9 62.0 14.0 2) Brokerage 195.3 71% 41.7 54.7 53.0 46.0 114.6 141.7 73.8 3) Investment Banking 77.3 107% 32.2 15.0 16.5 13.6 37.3 9.7 17.3 4) Net Interest Profit & Other 137.3 203% 44.4 33.6 29.0 30.3 45.3 53.7 23.6 5) Trading Income & Principal Investments 64.2 92% (21.1) 14.6 36.8 33.8 33.4 36.6 41.8 Operating Expense 2,166.9 385% 513.9 446.2 661.4 545.6 446.5 294.6 220.4 General and Administrative Expenses 322.0 86% 111.2 79.1 71.11 60.5 172.77 148.44 99.2 1) Salary Expenses 198.9 94% 72.0 44.2 43.0 39.8 102.5 92.7 59.2 2) Marketing Expenses 37.4 39% 14.5 13.0 5.1 4.9 26.9 18.0 9.8 3) Fixed Expenses 34.6 76% 11.0 10.3 7.5 5.8 19.7 17.2 15.0 4) Other Expenses 51.0 117% 13.7 11.6 15.5 10.1 23.5 20.5 15.2 Salary as % of G&A Expenses 62% 65% 56% 60% 66% 59% 62% 60% Marketing Expense as % of G&A Expenses 12% 13% 16% 7% 8% 16% 12% 10% Fixed Expenses as % of G&A Expenses 11% 10% 13% 11% 10% 11% 12% 15% Operating Profit 364.8 131% 35.5 128.0 108.0 93.4 158.1 137.5 52.5 Non-Operating Income 10.9 157% 0.1 2.5 8.1 0.2 4.3 4.6 2.2 Non-Operating Expenses 8.5 317% 3.9 3.4 1.0 0.1 2.0 13.8 8.1 Net Income Before Tax 367.3 129% 31.7 127.0 115.1 93.5 160.3 128.3 46.6 Net Income 267.2 131% 29.3 87.1 83.0 67.7 115.7 91.5 31.3 Note: Current and historical i numbers are based on pr-audit results provided d for investors convenience. 27
II. Balance Sheet [KrW Billion] Items FY2007 YoY Q3 FY2007 Q2 FY 2007 Q1 FY 2007 FY 2006 FY 2005 FY 2004 FY 2003 Total Assets 7,003.1 78% 7,782.1 7,528.3 6,450.0 3,927.1 1,509.7 824.3 705.0 Ⅰ. Current Assets 6,561.1 76% 7,335.9 7,150.1 6,125.0 3,735.9 1,373.5 677.9 602.1 Ⅱ. Fixed Assets 442.2 131% 446.2 378.3 325.0 191.2 136.1 146.4 102.9 Total Liabilities 5,421.8 82% 6,269.7 6,440.0 5,443.5 2,972.0 979.4 578.7 481.3 Ⅰ. Current Liabilities 5,331.2 79% 6,134.6 6,440.0 5,442.7 2,970.4 978.1 577.8 480.6 Ⅱ. Long-term Liabilities 90.7 NA 135.1-0.8 1.6 1.4 0.9 0.7 Total Shareholder's Equity 1,581.3 66% 1,512.4 1,088.3 1,006.6 955.0 530.2 245.5 223.7 I. Stockholder's Equity 199.6 8% 197.5 185.5 185.5 185.5 134.8 112.8 112.8 II. Capital Surplus 858.2 72% 814.7 499.7 499.7 499.7 213.0 35.7 35.7 III. Retained Earnings 519.9 93% 490.5 403.4 321.5 269.9 182.5 98.9 76.7 IⅤ. Capital Adjustment 36 3.6 NA 00 0.0 (0.3) (0.1) (0.1) (0.1) (1.9) 15) 1.5) Total Liabilities & Stockholder's Equity 7,003.1 78% 7,782.1 7,528.3 6,450.1 3,927.1 1,509.7 824.3 705.0 Note: Current and historical numbers are based on pr-audit results provided for investors convenience. 28
III. Investor Feedback Investors liked the: 1. Opportunity to understand the industry overview from such a good quality company in the growing industry 2. Fact that the Company has a strong leadership in the market and its strategic direction. 3. Fact that the Company is one of the most beneficial of the growing environment as Korean individuals are shifting from saving to investment, and wealth management business is growing in Korea 4. Impressive growth rate of the Company 5. Asset management business as it is clear it is a long term structural trend. A investor client who is a shareholder expressed MAS is their only exposure in the brokerage sector in Korea 6. The fact that it has a huge reinforcement e as the Company main ammunition (Mirae Asset Management). It is diversified into many financial products as well as financial industries (i.e. Investment Banking) 7. Unique fund diversity (carbon fund, cattle fund etc.), the Company willingness to venture into regions outside of Korea which will greatly expand their empire 8. The fact that the Company is part of Mirae Asset Group, hence portion of earnings are locked in/secured Investors were concerned about: 1. The fact that, the Company is ultimately a brokerage company - so performance is very much a high beta play on the Korean market. 2. Proprietary desk exposure - performance is linked to market performance and can be very volatile 3. The Company sells their investment funds through other channels except their own cyclical industry 4. The high valuation - risks of foreign branches not being able to bring enough money back to Hong Kong. Client thinks security houses should trade around 13-14x to be fair. 5. If the Company can get up to the top limit of revenue going to MAS (50% of MAM orders), then client would feel more comfortable because 30-40% is not enough flow to MAS 6. Also, another concern ce with P/B being over 3x since they're e not really sitting on MAM's balance sheet 7. The Company high exposure in emerging markets in the current market environment and high valuation. 8. The fact that despite huge business relationship between the two (MAS & Mirae Asset investment trust), there is no equity relationship between them 29