Airport Corporation of Vietnam (ACV: UPCOM)

Airport Corporation of Vietnam (ACV: UPCOM) PRELISTING REPORT BUY - 1Y Target Price: VND 37,700 Mai Anh Dinh anhdtm@ssi.com.vn Kim Nguyen kimntt@ssi.com.vn +84 8 3824 2897 ext. 2140 18 November 2016 INDUSTRIALS - VIETNAM Key Figures Charter cap (USD mn) 96.5 Charter cap (VND bn) 21,.711 Outstanding shares (mn) 2,177 Management ownership (%) N.A State ownership (%) 95.4% Foreign ownership (%) 2.93% Company Factsheet 13A 14A 15A Revenue (USD, mn) 452 493 585 Net profit (USD, mn) 109 123 78 Total equity (USD, mn) 808 957 915 Total assets (USD, mn) 1,641 2,045 1,990 Net debt (USD, mn) 302 403 398 ROA (%) 7.1 6.7 4 ROE (%) 14.4 14 8.5 Source: ACV LISTING INFORMATION ACV will list on UPCOM on 21st November, 2016 with the reference price of VND 25,000/share. The parent company IPO-ed in December 2015 with 77.8 mn shares offered to the public, equivalent to 3.5% of total shares. Average winning price was VND14,344/share (see our IPO report). Name of Subsidiaries Southern Airport Services JSC Saigon Ground Service JSC Noi Bai Aviation Fuel Service JSC(NAFCO) List of subsidiaries Investment in subsidiaries(vnd bn) % Stake 671 51.00% 78 55.51% Core business Commercial Service in airport Ground service in airport 66 60.00% Aviation Fuel Source: ACV (as at 30 September 2016) According to the privatization plan of the Government, ACV divested from Cam Ranh Aviation Commercial JSC in 2015 (from 51% ownership to 10%). The company continued to divest from the ownership of 55.5% in Saigon Ground Service JSC (SGN: UPCOM) to 48% between 02-07 th November 2016, making it no longer a subsidiary and may record roughly VND 150bn in income from the divestment in 4Q16. SGN contributed roughly 5% and 5% to ACV s revenue and net profit in 2015, respectively. SSI.COM.VN Visit SSI Research on Bloomberg at SSIV<GO> Page 1

Ownership structure 2.93% 0.34% 0.14% 1.18% Ministry of Transportation (MoT) ACV's Trade Union Foreign Institutions Local Institution Individual Investors 95.40% Source: ACV( as at 31 December 2015) In the privatization plan, ACV plans to sell a 20% stake to a strategic partner. 7% was sold to Aeroport de Paris (AdP) at the beginning of 2016. ACV and AdP is still negotiating on the remaining 13%. According to the updated regulation on SOE privatization, the State ownership in ACV will reduce from 75% to 65% in the coming time, detailed divestment plan is still not disclosed. Estimated free float is 4.6% BUSINESS UPDATE 1. Airport expansion plan ACV owns 22 airports in Vietnam. In 2015, overcapacity was mainly experienced at Tan Son Nhat International Airport (TSN) with 133%, reaching 26.5 mn passengers through terminals with designed capacity of 20 mn passengers per year, followed by Da Nang Airport with 6.7mn passengers, reaching 112% utilization in 2015. Noi Bai International Airport with 17.2 mn passengers achieved 69% of utilization thanks to the new Noi Bai Terminal 2 (commenced operation from the end of 2014). Amid overcapacity at TSN, ACV expanded the international terminal, increasing capacity by 25% and commenced operation from November 2016. This enables the airport to receive 25 mn passengers per year. Nevertheless, ACV expects that TSN may achieve more than 30 mn passengers in 2016, surpassing 20% of designed capacity. As the new Long Thanh Airport may not be ready until 2025, the Ministry of Transportation (MoT) recently guided for a plan of expanding TSN by another 60% in 2018 and 100% in 2020 in order to ease the bottleneck. Further detailed information is still not announced. SSI.COM.VN Visit SSI Research on Bloomberg at SSIV<GO> Page 2

VND bn In 9M16, ACV commenced operation on expansion projects of Tho Xuan Airport by 2x to 1.2mn passengers/year (Thanh Hoa province), Cat Bi International Airport by 4.6x to 4mn passengers/year (Hai Phong City) and Cam Ranh Airport (Nha Trang city) with total CAPEX of VND 4,433bn (including TSN and Phu Quoc International Airport). Long Thanh International Airport project has no new development since our IPO report. 2. Company s business plan 2016 Consolidated business plan 2016P 2015 %YoY Net sales (VND bn) 14,860 13,173 +12.8% PBT (VND bn) 2,388 2,277 +4.8% PBT Margin 17% 17.3% -0.3% PBT/Charter capital 9.44% - - Dividend 5% - - 3. 2015 and 3Q16 business updates ACV, SAS, SGN, NAFCO, SSI Research Historical business performance Net sales EBITDA PBT Sales growth GPM EBITDA margin PBT growth PBT margin 14,000 100.0% 12,000 80.0% 10,000 60.0% 8,000 40.0% 6,000 20.0% 4,000 0.0% 2,000-20.0% 0 2011 2012 2013 2014 2015-40.0% Source: ACV In the past 4 years, EBITDA grew at a 33% CAGR, driven by (1) average passenger growth of 25% per annum (2) establishment of Vietjet Air, a low cost carrier in 2012, and (3) Noi Bai Terminal 2 commenced operation at the end of 2014, increasing both passenger capacity and commercial area in 2015. SSI.COM.VN Visit SSI Research on Bloomberg at SSIV<GO> Page 3

Mn Passengers Thousand tons Historical passenger through terminal Historical Cargo volume Passenger Growth Freight Growth 70 40% 1200 35% 60 50 40 30 20 10 35% 30% 25% 20% 15% 10% 5% 1000 800 600 400 200 30% 25% 20% 15% 10% 5% - 0% 0 0% Source: ACV, Civil Aviation Authority of Vietnam(CAAV) 3Q16 business update In 3Q16, ACV reported VND 4,060bn in net revenue (+5% QoQ) and VND 804bn in net income (vs a loss of VND 16bn in 2Q16). The company recorded VND 267bn in FX loss due to 1.9% appreciation of JPY against VND on JPY dominated ODA loan of JPY72 bn (~USD 713mn as at 30 September 2016) (vs a loss of VND 1,379 bn amid 9.5% appreciation of JPY against VND in 2Q16). If excluding FX effects, 3Q16 PBT would decline by 9.6% QoQ. Accumulatively, for 2 quarters from 04 April 2016 to 30 September 2016, net revenue achieved VND 7,919bn, completing 53.3% of 2016 target and PBT achieved VND 968bn, completing 40.5% of 2016 target. In total, ACV recorded a significant FX loss of VND 1,646bn (vs a loss of VND 705bn for entire 2015). ACV only announced 2016 quarterly business results without 2015 figures; therefore, we are lack of absolute numbers for YoY comparison. We believe that the actual YoY growth of 2016 revenue is encouraging thanks to increasing passengers, cargo and commercial flight growth reported in 9M16. In 9M16, total passengers through ACV s terminals reached 70.5mn, increasing 29.6% YoY and completing 80% of 2016 target. 2 largest airports totaled roughly 55mn passengers, equivalent to 78% of total passenger traffic. International passengers reached 17.5 mn, increasing 25.2% YoY and domestic passengers recorded 43mn, up 31.5% YoY. Cargo and parcels totaled 765.7 mn tons, increasing 6.9% YoY (~ 69.4% 2016 target). Commercial flights were 417.8K flights, up 25.9% YoY (~79% of 2016 target). GPM of international business is higher than domestic one thanks to higher charging fees of roughly 2.5x-6.4x. SSI.COM.VN Visit SSI Research on Bloomberg at SSIV<GO> Page 4

OUTLOOK 22% passenger capacity addition plan by 2020 According to IPO plans, ACV planned to increase total designed capacity by 22%, receiving 90.8 mn passengers by 2020. Especially, because TSN and Noi Bai International Airport contribute roughly 50% to ACV s total revenue, expansion of TSN as above mentioned and the new Terminal 2 in Noi Bai Airport Airport will enable ACV to enjoy clear earnings growth driven not only by passenger growth but also nonaeronautical revenue growth over the next 5 years. Possible increases in domestic aeronautical charge from 01 January 2017 In August 2016, ACV coupled with Civil Aviation Authority of Vietnam CAAV proposed to the MoT to increase domestic passenger charge at 7 airports including TSN, Noi Bai, Da Nang, Cam Ranh, Phu Quoc, Vinh and Phu Bai Airport since 01 January 2017. Specifically, domestic passenger charge may increase by 43% (from VND 70K/pax to VND 100K/pax) and domestic landing charge may increase by 43% and equivalent to 50% of international flights. In 2015, total passengers of those 7 airports accounted for 90% of total passengers, and domestic passenger charges accounted for roughly 40% of net revenue. According to ACV, this may be approved by the MoT as CAPEX for international terminals and airports are similar to domestic ones yet current domestic charging fee is lower by roughly 2.5x-6.4x compared with international ones. This will help improve GPM of domestic segment of ACV, which enjoy higher growth rate than the international segment. Vietnam is ranked as the 5 th fastest growing market in terms of additional passengers per year and the 7th fastest growing industry in percentage terms from 2016-2035 by the International Air Transport Association (IATA). According to the most updated forecast by IATA, forecasted passenger numbers of world aviation is expected to reach 7.2 billion in 2035 with a 3.7% annual CAGR, roughly doubling the 3.8 bn air travelers in 2016. IATA also projects overall Vietnam aviation will continue to grow at an annual rate of 7.3%, being the 7 th fastest growing market in terms of percentage. Also, according to the organization s previous forecast in 2015, Vietnam s international freight will grow at an annual rate of 6.6% from 2015-2017. In terms of regional air traffic growth, IATA forecasts future growth for the period from 2015-2035 specifically as follows: SSI.COM.VN Visit SSI Research on Bloomberg at SSIV<GO> Page 5

Annual CAGR growth by 2034 by region 5 largest countries in terms of additional pax per year by 2035 annual CAGR growth by 2034 Additional x mm pax per year by 2035 Annual % growth Africa The Middle East Latin America Europe Norther America Asia Pacific 5.10% 4.80% 3.80% 2.50% 2.80% 4.70% 900 800 700 600 500 400 300 200 100 5.20% 3.10% 6.70% 4.80% 7.20% 8% 7% 6% 5% 4% 3% 2% 1% Southest Asia 6.60% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% - China United State India Indomesia Vietnam 0% Source: IATA, Boeing The surge in low-cost carriers (LCC) will strongly support efficiency and industry growth. According to a report by the Centre for Asia Pacific Aviation (CAPA) in Jan 2016, Vietnamese privately owned LCC Vietjet Air which was established in 2012 strongly boosted domestic air travels at a CAGR of 23% from 2013-2015. Vietjet Air projects 50% YoY passenger growth in 2016, to 15 mn pax with loading factor of nearly 90% (being the largest domestic carrier with 40% market share, surpassing Vietnam Airlines in 2016). Vietjet Air plans to add 12 aircrafts in 2016, reaching a fleet of 42 and may reach 200 in 2023. As such, with aggressive expansion plan both in domestic and international routes of Vietjet Air, it should boost air traffic growth in the coming time amid a rising middle class in Vietnam. Aviation industry will be strongly supported by free trade agreements between Vietnam and partners. FTAs between Vietnam and partners (For example FTA VN- EU, FTA Vietnam-Korea and etc ) and the adoption of the ASEAN Single Aviation Market will also strongly support industry growth. The ASEAN Single Aviation Market will liberalize the region s air services, specifically among ASEAN countries, benefiting both passengers and airlines Nevertheless, global trade tends to slower in the coming years, ACV s cargo and parcel may grow at a slower pace than recent years. We are opinion of international freight may remain a CARG of 6.6% per year to 2035 in line wih IATA forecasts. EARNINGS ESTIMATES As the increase in charging fee proposal is still not approved by the MoT, we conservatively assume that ACV s fees for aeronautical services will remain stable moving forward. Any increases in passenger volume, air cargo volume and flight SSI.COM.VN Visit SSI Research on Bloomberg at SSIV<GO> Page 6

VND bn movements will boost revenue growth. 3 major airports are Tan Son Nhat, Noi Bai and Danang International Airport, whose revenue accounts roughly 80% to total revenue, will primarily contribute to the company s earnings. The remaining airports will still record losses or breakeven in the coming years due to high depreciation expenses and low capacity utilization. 14,000 12,000 10,000 250% 200% 150% 8,000 6,000 4,000 2,000 100% 50% 0% -50% - 2011 2012 2013 2014 2015 2016F -100% Aeronautical Non-aeronautical Retails Others Aeronautical growth Non-aeronautical growth Retails growth Others growth Source: ACV parent company, consolidated FS, SSI Research In 2016, we forecast that ACV s consolidated revenue may reach VND 17,581 bn (+33.5% YoY). Based on fore-mentioned 9M16growth in air passenger, cargo volume and flight movements, our assumption for 2016 are anchored on the following: Passengers through ACV s terminals will increase by 28% YoY, receiving 80 mil passengers in 2016. Cargo and parcel volume will increase by 7%% YoY, reaching 1.04mn tons. Commercial flights will record 567 movements, up 26.5% YoY We expect that ACV will book VND 4,327bn in depreciation expense in aeronautical COGs, increasing by 20% YoY accounting for 69% of aeronautical COGs and 37% of total COGs due to the expansion of Tan Son Nhat Airport and other above mentioned expansion of the airports which commenced operation in 2016 GPM will stay at 35.3%, improving 8.6% pts YoY thanks to the increasing in sales volume As of 30 September 2016, the JPY appreciated by roughly 16% against the VND. Hence, we think that ACV may incur exchange rate loss of VND 2,500bn in 2016, equivalent to a 16% appreciation of JPY against VND for the entire year. As a result, 2016 PBT may reach VND 3,106bn, increasing 36% YoY. If excluding FX affects in both 2015 and 2016, 2016 PBT would have increase by 87% YoY. 2016 EPS SSI.COM.VN Visit SSI Research on Bloomberg at SSIV<GO> Page 7

will achieve VND 1,059 Core EPS(excluding FX loss) may achieve VND 1,896. We revise up 2016 EPS by ~50% compared with our previous report owing to (1) increasing 2016 GPM to 35.3% (from 32%) as we believe that higher passenger volume will yield higher GPM than we expected; (2) In 2016, ACV will also record VND 150 bn in provision reversion for SAS on bad debt provision in 2015 involving in Viet House Joint Venture (see our report) (3) ACV will record VND 150bn as income from divestment of SGN in November 2016. In 2017, we expect ACV s revenue will reach VND 20,031bn (+13.9% YoY) and PBT to reach VND 4,838 bn (+56% YoY). Our upbeat revenue and PBT projections are derived on the following assumptions: Increases in passenger volume and cargo and parcel volume of 17.2% YoY and 7% YoY, respectively, thanks to the commencement of Tan Son Nhat Airport International Terminal expansion in 4Q16 and expansion of other airports commencing operation in 2016 SGN s business results will not be consolidated into ACV s FS since December 2016. We estimate that ACV may record roughly VND 105bn income from associates from SGN in 2017 GPM will improve to 36.8% in 2017 thanks to: i) increasing capacity at Noi Bai International Airport thanks to the commencement of Terminal 2, ii) an increase at Tan Son Nhat International Airport s capacity after its expansion in 2016. Based on our assumption for conservative reason on JPYUSD that JPY may continue to strengthen against USD in 2017, we assume that JPY will appreciate by 10% against VND in 2017, implying that ACV may continue incur FX loss of VND 1,700bn in 2017. Accordingly, in 2017, ACV s PBT and net income may reach VND 4,838bn (+56% YoY) and VND 3,870bn (+56% YoY) (assuming that ACV is applied CIT of 20% in 2017), translating to an EPS of VND 1,649. Excluding FX effects, 2017 PBT should have increased by 16% YoY. Core EPS (excluding FX loss) may achieve VND 2,318. From 2018-2020: we assume that international passenger will grow at 7.3% per year and international cargo will grow at 6.6% per year in line with IATA s forecasts. As a result, net revenue and net profit will increase at CAGR of 10.8% and 12%, respectively from 2018-2020. SSI.COM.VN Visit SSI Research on Bloomberg at SSIV<GO> Page 8

VALUATION AND INVESTMENT VIEW Comparable companies Companies Market Revenue in 2015(mn USD) P/E P/B EV/EBITDA Belgrade Nikola Tesla Airport (AERO SG) Serbia 84 10.7 1.47 6.67 Vienna International Airport (FLU AV) Austria 802 13.85 1.66 7.1 TAV Airport Holding (TAVHL TI) Turkey 1,116 9.39 1.57 5.7 Beijing Capital International Airport Co Ltd (694 HK) China 1,334 16.27 1.53 12.8 Airport of Thailand Pcl(AOT TB) Thailand 1,385 25 4.5 16 HNA Infrastructure Company Ltd (357 HK) HongKong 166 7.6 0.93 9.27 Average 815 13.8 1.9 9.59 Median 959 12.3 1.6 8.2 Airport Corporation of Vietnam Vietnam 584 23 1.9 7.2 DFC Calculation Source: ACV, Bloomberg Consolidated (VND million) 2015 2016F 2017F 2018F 2019F 2020F Terminal EBIT 2,367,292 3,210,135 4,952,540 5,679,648 6,388,688 7,132,933 11,099,158 Abnormal adjustments 0 0 0 0 0 0 Adjusted EBIT 2,367,292 3,210,135 4,952,540 5,679,648 6,388,688 7,132,933 11,099,158 Effective CIT rate (%) 23.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% EBIT(1-T) 1,822,278 2,568,108 3,962,032 4,543,718 5,110,950 5,706,346 8,879,326 Add: Depreciation 3,611,285 4,492,115 5,095,864 5,699,644 6,303,363 6,907,203 4,862,140 Less: CAPEX 1,686,087 5,800,000 5,800,000 5,800,000 5,800,000 5,800,000 5,800,000 Less: Change in WC (503,151) 763,161 (20,855) (429,559) (741,201) (901,738) (2,002,214) Free cash flow to firm 4,250,626 497,061 3,278,751 4,872,921 6,355,514 7,715,287 9,943,680 Terminal growth 2.0% Terminal value 94,314,395 Discount period 0.14 1.14 2.14 3.14 4.14 Discount factor 0.99 0.90 0.81 0.74 0.67 Present value 490,453 2,939,668 3,969,915 4,704,837 5,189,769 Terminal PV 63,441,568 PV of FCFF - Operating 80,736,210 Cash & cash equivalents 4,466,482 ST Investments 12,864,252 Total Firm Value 98,066,943 Debt 13,426,638 Equity Value 84,640,306 No. of shares 2,177,173,236 Value of a share (VND) 38,876 At the reference price of VND 25,000/share, ACV is being traded at 2016 and 2017 P/E of 23x and 15x; 2016 and 2017 P/B of 2x and 1.9x, 2016 and 2017 EV/EBIDA of 7.1x and 5.4x respectively, which are quite attractive. We believe that ACV desires a P/B of 1.9x and EV/EBITDA of 8.5x at end 2017 (a discount of 10% compared with average international peers of 9.5x due to lower revenue size). Based on combined methods (end 2017 target EV/EBITDA: 8.5x; end 2017 P/B: 1.9x, DCF model: WACC: 10.05%, terminal growth: 2%), end 2017 target price for ACV arrives at VND 37,700/share, or 51% higher than the reference price. We recommend BUY ACV. We like ACV thanks to: (1) a monopoly airport manager and operator in Vietnam and has been guaranteed investment capital by the State budget and low bearing interest loan sources. (2) Increasing air travel and airfreight demand in the next 20 years. (3) Experienced management team SSI.COM.VN Visit SSI Research on Bloomberg at SSIV<GO> Page 9

Risks: (1) Significant depreciation expense for expansion projects and the mega Long Thanh International Airport project will impact ACV s GPM and bottom line. (2) After 2018, Long Thanh International Airport will be mainly funded by ODA. Accordingly, ACV s debt ratio will thus significantly increase ( ACV may own 51% stakes in Long Thanh Airport). However, interest expense will be capitalized until the project commences operation. (3) Substantial foreign exchange loss due to heavy dependent on Japanese ODA loans. Currency risk is difficult to forecast and measure. SSI.COM.VN Visit SSI Research on Bloomberg at SSIV<GO> Page 10

APPENDIX: HISTORICAL FINANCIAL STATEMENTS VND Billion 2014 2015 2016F 2017F VND Billion 2014 2015 2016F 2017F Balance Sheet Income Statement + Cash 3,897 4,466 8,261 8,452 Net Sales 10,555 13,173 17,581 20,031 + Short-term investments 10,669 12,864 14,106 14,106 COGS -7,489-9,656-11,368-12,658 + Account receivables 3,376 3,478 5,364 6,111 Gross Profit 3,066 3,517 6,214 7,373 + Inventories 540 712 796 886 Financial Income 2,504 960 1,222 1,177 + Other current assets 519 295 390 443 Financial Expense -501-811 -2,575-1,818 Total Current Assets 19,002 21,815 28,917 29,999 Income from associates 0 0 0 0 + LT Receivables 442 179 176 200 Selling Expense -416-428 -615-701 + Net Fixed Assets 23,568 20,661 23,027 23,881 Admin Expense -1,296-1,203-1,319-1,502 + Investment properties 38 32 32 32 Income from business operation 3,358 2,055 2,926 4,633 + LT Assets in progress 0 1,054 1,055 1,202 Net Other Income 49 223 179 204 + LT Investments 284 642 720 720 Profit Before Tax 3,408 2,277 3,106 4,838 + Other LT Assets 439 467 319 357 Net Income 2,634 1,753 2,485 3,870 Total Long-Term Assets 24,771 23,036 25,329 26,391 NI attributable to shareholders 2,632 1,712 2,427 3,780 Total Assets 43,772 44,852 54,246 56,390 Minority interest 2 41 58 90 + Current Liabilities 7,540 8,151 9,373 10,310 In which: ST debt 250 308 227 253 Basic EPS (VND) 0 0 1,059 1,649 + Non-current Liabilities 15,742 16,086 18,305 16,919 BVPS (VND) 12,081 11,601 11,816 12,965 In which: LT debt 12,268 13,119 15,347 16,881 Dividend (VND/share) 0 0 500 500 Total Liabilities 23,282 24,237 27,678 27,230 EBIT 3,474 2,367 3,210 4,953 + Contributed capital 16,274 17,093 21,772 21,772 EBITDA 5,602 5,979 7,699 10,046 + Share premium 0 0 0 0 + Retained earnings 2,904 1,807 3,024 5,526 Growth + Other capital/fund 1,312 1,714 1,772 1,862 Sales 10.5% 24.8% 33.5% 13.9% Shareholders' Equity 20,490 20,615 26,568 29,160 EBITDA 5.9% 6.7% 28.8% 30.5% Total Liabilities & Equity 43,772 44,852 54,246 56,390 EBIT 8.4% -31.9% 35.6% 54.3% NI 14.5% -33.4% 41.7% 55.8% Cash Flow Equity 20.0% 0.6% 28.9% 9.8% CF from operating activities 2,691 4,213 5,176 5,519 Chartered Capital 53.4% 5.0% 27.4% 0.0% CF from investing activities -6,656-2,814-7,119-5,800 Total assets 26.3% 2.5% 20.9% 4.0% CF from financing activities 5,336-833 5,737 472 Net increase in cash 1,371 566 3,794 191 Valuation Beginning cash 2,516 3,897 4,466 8,261 P/E N/A N/A 23.6 15.2 Ending cash 3,897 4,466 8,261 8,452 P/B 0.0 0.0 2.1 1.9 P/Sales N/A N/A 3.1 2.7 Liquidity Ratios Dividend yield N/A N/A 2.0% 2.0% Current ratio 2.52 2.68 3.09 2.91 EV/EBITDA -0.4-0.7 6.9 5.3 Acid-test ratio 2.38 2.55 2.96 2.78 EV/Sales -0.2-0.3 3.0 2.7 Cash ratio 1.93 2.13 2.39 2.19 Net debt / EBITDA 1.34 1.47 1.06 0.80 Profitability Ratios Interest coverage 52.31 26.34 30.76 43.14 Gross Margin 29.0% 26.7% 35.3% 36.8% Days of receivables 34.4 36.5 38.0 41.1 Operating Margin 24.0% 10.4% 12.7% 17.9% Days of payables 106.0 56.5 44.0 45.0 Net Margin 25.0% 13.3% 14.1% 19.3% Days of inventory 25.4 23.7 24.2 24.2 Selling exp./net sales 3.9% 3.3% 3.5% 3.5% Admin exp./net sales 12.3% 9.1% 7.5% 7.5% Capital Structure ROE 14.0% 8.5% 10.5% 13.9% Equity/Total asset 0.47 0.46 0.49 0.52 ROA 6.7% 4.0% 5.0% 7.0% Liabilities/Total Assets 0.53 0.54 0.51 0.48 ROIC 9.1% 5.4% 6.7% 9.0% Liabilities/Equity 1.14 1.18 1.04 0.93 Debt/Equity 0.61 0.65 0.59 0.59 ST Debt/Equity 0.01 0.01 0.01 0.01 Source: Company, SSI Research SSI.COM.VN Visit SSI Research on Bloomberg at SSIV<GO> Page 11

1. ANALYST CERTIFICATION The research analyst(s) on this report certifies that (1) the views expressed in this research report accurately reflect his/her/our own personal views about the securities and/or the issuers and (2) no part of the research analyst(s) compensation was, is, or will be directly or indirectly related to the specific recommendation or views contained in this research report. 2. RATING Within 12-month horizon, SSI Research rates stocks as either BUY, HOLD or SELL determined by the stock s expected return relative to the market required rate of return, which is 18% (*). A BUY rating is given when the security is expected to deliver absolute returns of 18% or greater. A SELL rating is given when the security is expected to deliver returns below or equal to -9%, while a HOLD rating implies returns between -9% and 18%. Besides, SSI Research also provides Short-term rating where stock price is expected to rise/reduce within three months because of a stock catalyst or event. Short-term rating may be different from 12-month rating. Industry Rating: We provide the analyst industry rating as follows: Overweight: The analyst expects the performance of the industry over the next 6-12 months to be attractive vs. the relevant broad market Neutral: The analyst expects the performance of the industry over the next 6-12 months to be in line with the relevant broad market Underweight: The analyst expects the performance of the industry over the next 6-12 months with caution vs. the relevant broad market. *The market required rate of return is calculated based on 5-year Vietnam government bond yield and market risk premium derived from using Relative Equity Market Standard Deviations method. Our rating bands are subject to changes at the time of any significant changes in the above two constituents. 3. DISCLAIMER The information, statements, forecasts and projections contained herein, including any expression of opinion, are based upon sources believed to be reliable but their accuracy completeness or correctness are not guaranteed. Expressions of opinion herein were arrived at after due and careful consideration and they were based upon the best information then known to us, and in our opinion are fair and reasonable in the circumstances prevailing at the time and no unpublished price sensitive information would be included in the report. Expressions of opinion contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. SSI and other companies in the SSI and/or their officers, directors and employees may have positions and may affect transactions in securities of companies mentioned herein and may also perform or seek to perform investment banking services for these companies. This document is for private circulation only and is not for publication in the press or elsewhere. SSI accepts no liability whatsoever for any direct or consequential loss arising from any use of this document or its content. The use of any information, statements forecasts and projections contained herein shall be at the sole discretion and risk of the user. WWW.SSI.COM.VN SAIGON SECURITIES INC. Member of the Ho Chi Minh Stock Exchange, Regulated by the State Securities Commission HO CHI MINH CITY 72 Nguyen Hue Street, District 1 Ho Chi Minh City Tel: (848) 3824 2897 Fax: (848) 3824 2997 Email: info@ssi.com.vn HANOI 1C Ngo Quyen Street, Ha Noi City Tel: (844) 3936 6321 Fax: (844) 3936 6311 Email: info@ssi.com.vn Page 12

4. CONTACT INFORMATION Institutional Research & Investment Advisory Kim Nguyen Analyst, Industrials Tel: (848) 3824 2897 ext. 2140 kimntt@ssi.com.vn Phuong Hoang Hung Pham Giang Nguyen, ACCA Deputy Managing Director, Associate Director Associate Director Head of Institutional Research & Investment Advisory hungpl@ssi.com.vn giangntt@ssi.com.vn phuonghv@ssi.com.vn WWW.SSI.COM.VN SAIGON SECURITIES INC. Member of the Ho Chi Minh Stock Exchange, Regulated by the State Securities Commission HO CHI MINH CITY 72 Nguyen Hue Street, District 1 Ho Chi Minh City Tel: (848) 3824 2897 Fax: (848) 3824 2997 Email: info@ssi.com.vn HANOI 1C Ngo Quyen Street, Ha Noi City Tel: (844) 3936 6321 Fax: (844) 3936 6311 Email: info@ssi.com.vn Page 13