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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).

List of subsidiaries

Name of Subsidiaries Investment in

subsidiaries(VND bn)

%

Stake Core business

Southern Airport

Services JSC 671 51.00%

Commercial

Service in airport

Saigon Ground Service

JSC 78 55.51%

Ground service in

airport

Noi Bai Aviation Fuel

Service JSC(NAFCO) 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 02-07th

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.

Mai Anh Dinh anhdtm@ssi.com.vn

Airport Corporation of Vietnam (ACV: UPCOM)

PRELISTING REPORT BUY - 1Y Target Price: VND 37,700

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Ownership structure

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.

95.40%

0.14%

2.93% 0.34%

1.18%

Ministry of Transportation(MoT)

ACV's Trade Union

Foreign Institutions

Local Institution

Individual Investors

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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% - -

ACV, SAS, SGN, NAFCO, SSI Research

3. 2015 and 3Q16 business updates

Historical business performance

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.

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

0

2,000

4,000

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12,000

14,000

2011 2012 2013 2014 2015

VN

D b

n

Net sales EBITDA PBT Sales growth

GPM EBITDA margin PBT growth PBT margin

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Historical passenger through terminal Historical Cargo volume

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.

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Th

ou

san

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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 non-

aeronautical 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 5th

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 7th 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:

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Annual CAGR growth by 2034 by region 5 largest countries in terms of additional pax per year by

2035

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

6.60%

4.70%

2.80%

2.50%

3.80%

4.80%

5.10%

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00%

Southest Asia

Asia Pacific

Norther America

Europe

Latin America

The Middle East

Africa

annual CAGR growth by 2034

5.20%

3.10%

6.70%

4.80%

7.20%

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China UnitedState

India Indomesia Vietnam

Additional x mm pax per year by 2035 Annual % growth

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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.

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

-100%

-50%

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2011 2012 2013 2014 2015 2016F

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Aeronautical Non-aeronautical Retails

Others Aeronautical growth Non-aeronautical growth

Retails growth Others growth

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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.

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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

Source: ACV, Bloomberg

DFC Calculation

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

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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.

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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

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Page 12

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.

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Page 13

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