SSI – RESEARCH INSTITUTIONAL RESEARCH & INVESTMENT ADVISORY

Airport Corporation of Vietnam (ACV: UPCOM)

BUY - 1Y Target Price: VND 58,500
Current price: VND 46,900

Kim Nguyen The first stage of growth

kimntt@ssi.com.vn
+84 8 3824 2897 ext. 2140
28 December 2016
INDUSTRIALS - VIETNAM
Key figures
Market cap (USD mn)
Market cap (VND bn)
Outstanding shares (mn)
52W high/low (VND 1,000)
Average 3M volume (share)
Average 3Mvalue (USD mn)
Average 3M value (VND bn)
Foreign ownership (%)
State ownership (%)
Management ownership (%)
Stock performance
2016 business preview: 2016 GPM supported by encouraging
sales volume and no maintenance expense
th
ACV held an investor meeting on 15 December 2016. The followings are key
takeaways from the meeting:
The company announced estimated business results for 2016, which are quite
4,747
positive. ACV estimated 2016 net revenue of the parent company to achieve VND
107,988
13,393bn (+23% YoY) and PBT to achieve VND 4,079bn (+97% YoY). GPM is
2,177
estimated to achieve 38%, a significant improvement from 23.6% in 2015. The
56/35.2
upbeat performance in earnings can be attributed to:
N.a
N.a  Sales volume growth. In 2016, ACV estimates total passenger volume through
N.a its terminals to record 81.1mn passengers (+28% YoY and vs. 24% YoY in
3.19 2015), in which international passengers will total 23.9mn (+25% YoY) and
95.4 domestic passengers are expected to reach 57.2mn passengers (+30% YoY).
N.a The number of flights will reach 562K (+26% YoY). Cargo and parcel volume
may record 1.035 mn tons (+6% YoY). As aeronautical revenue contributes more
than 80% to total revenue, the positive growth in sales volume fueled revenue
growth in light of unchanged charging fees and high growth of international
passengers with higher charging fees.

 Significant reduction of repair and maintenance expenses as accrued

expenses. In 2016, ACV estimates maintenance and repair expense will be
roughly VND 350bn, while it recorded VND 1,260bn in 2015(including VND
995bn in advance booking for maintenance as trade payables and roughly VND
260bn of other actual repair). As a result, 2016 GPM significantly expanded to
38% from 23.6% in 2015. Nevertheless, according to ACV, the company is
Source: Bloomberg
waiting for Ministry of Finance’s decision on whether ACV will continue to book
Company Snapshot
expenses for repair and maintenance in advance in 2017 (maximum amount will
The parent company of Airports Corporation
of Vietnam’s (ACV) predecessor was initially be VND 400bn) or it will record expenses on actual basis.
founded in 1976 under the direct
management and operation of the Civil
Aviation Administration of Vietnam (CAAV) as
Northern, Central and Southern Regional
Airport Authority. ACV was incorporated
following a merger of the Northern, Central
and Southern Airport Corporation in 2012 by
the Minister of Transport. It IPO-ed in
November 2015 and was listed on UPCOM
on 21st November 2016. Currently, ACV
operates under a parent-subsidiary model
and involves in managing and operating 22
civil airports in Vietnam. The company
significantly expanded its operating capacity
from 45 mil passengers per year in 2011 to
more than 81 mil passengers per year in
2015.

SSI.COM.VN Visit SSI Research on Bloomberg at SSIV <GO> Page 1

SSI – RESEARCH INSTITUTIONAL RESEARCH & INVESTMENT ADVISORY

ACV’s annual maintenance and repair expenses

2012 2013 2014 2015 2016E 2017E

Advance booking for maintenance(VND bn) 995 995 995 995 200
400
Other repair(actual repair)(VND bn) 347 568 50 258 150

Source: ACV, SSI Research

Note: ACV plans to record advance booking for maintenance and expenses of roughly VND
400bn in 2017, equal to average actual repair and maintenance expenses from 2012-2015

 Impact from FX loss was similar to 2015. In the above estimated business results, ACV
estimates FX loss on JPY dominated ODA loans of JPY 72bn will be VND 824bn (vs that of
VND 641bn in 2015), implying a 6% appreciation of JPY against VND. If we were to exclude
FX effects in 2015 and 2016, 2016 PBT of the parent company would increase by 81% YoY,
reaching VND 4,903bn.

ACV’s passenger volume from 2012-2016 ACV’s cargo volume from 2012-2016
90 40% 1,200 25%
Passenger(million) Growth Cargos and Parcels(thousand tons) Growth

80 35%
34% 1,000 21%
20%
70 29%
30%
60 800 16%
25% 15%
24% 14%
50
20% 600
17% 12%
40
10%
15% 15%
30 400
10% 6%
20 5%
200
10 5%

0 0% 0 0%
2012 2013 2014 2015 2016E 2012 2013 2014 2015 2016E

Source: ACV
ACV’s Revenue breakdown by in 3Q16 ACV’s revenue Breakdown in 10M16

Non-
aeronautical Retails LPC
9% 9% 13%
Others
25%

Non
aeronautical
9%
Aeronautical
82% PSC
48%
ASC
5%

Source: ACV
Source: ACV Note: LPC-aircraft landing and parking charges, PSC-
Passenger charges, ASC-Airport security charges

SSI.COM.VN Visit SSI Research on Bloomberg at SSIV <GO> Page 2

SSI – RESEARCH INSTITUTIONAL RESEARCH & INVESTMENT ADVISORY

Expansion plan: 45% passenger designed capacity addition plan in 3

years from 2016-2019

Unlike Airports of Thailand PLC. (AOT TB) and Malaysia Airport Holdings Berhad (MAHB MK)
which are currently in the second phase of growth (strong focus on enhancing non-aeronautical
st
business), ACV is currently in the 1 phase of growth focusing more on aeronautical business
(accounting for roughly 80% to revenue). ACV plans to strongly invest in infrastructure such as
maintenance and upgrade maneuvering areas at the major airports such as TIA, NIA, DIA and
Phu Quoc International Airport (PQIA) as well as expanding terminals in its airports to capture
the incremental air travel demand in Vietnam. Overall, ACV’s total area of terminals is much
smaller than its regional peers. For example, total terminal area in Tan Son Nhat is about
133,000sqm for serving actual capacity of 31mn pax in 2016 while that of Suvarnabhumi Airport
is around 563,000sqm for serving actual capacity of 62mn pax in 2015 or that of roughly
700,000sqm in Kuala Lumpur International Airport for serving total 70mn passengers per year.
As such, in the next 3 years, ACV will focus on expanding the airport terminals and apron in
order to meet anticipated demand. At the meeting, ACV announced detailed capacity plans for
the airports from 2016-2019 as follows:

Firstly, from 2016 -2018, ACV will upgrade the maneuvering areas with total VND 6,247bn in
CAPEX at NIA, TIA and PQIA. The CAPEX will be funded by the State Budget because ACV
returned the maneuvering assets to the Government and lease back for operating post-
st
privatization from 1 April, 2016. Therefore, in 2017, ACV will not record roughly VND 200bn in
depreciation of the maneuvering assets. Nevertheless, ACV plans to pay leasing fees for these
assets to the government of roughly VND 50bn per year as well as there will be new expansion
projects which will commence operation in 2016-2017, ACV’s GPM will not be significantly
impacted.

Secondly, other expansion of the aprons and terminals will be funded by ACV’s own capital,
targeting a total budget of VND 11,095bn from 2015-2018. Actual CAPEX for the period from
2016-2018 will be VND 8,698bn.

In overall, ACV plans to invest approximately VND 8,698bn to increase its airports capacity from
total designed capacity of 71.1 mn passengers in 2015 to 115 mn passengers in 2019, implying
a CARG of 13%.

Designed capacity of ACV’s airports from 2015-2019E

Passenger(Million/year)
Airport ACV’s CAPEX plans(VND bn)
Capacity Utilization
FY15 FY16 FY19 FY16 FY15-18
NIA 21 21 25 20.5 244
TIA 20 25 38 32.4 3,666
DIA 6 6 13 8.8 1,598
CRIA 1.6 2.5 10 4.2 1,150
Other airports 22.5 24.6 29 15.2 4,437
Total 71.1 79.1 115 81.1 11,095

Source: ACV, SSI Research

Note: NIA- Noi Bai International Airport, TIA-Tan Son Nhat International Airport, DIA-Danang
International Airport, CRIA- Cam Ranh International Airport

Regarding TIA, The Ministry of Defense will transfer 21ha next to TIA to the MOT for expanding
the airport’s apron. The Ministry of Transportation (MOT) and Vietnam Airlines are building the
master plan but ACV will hold a majority stake in the project. Currently, the existing apron at TIA
has 47 aircraft parking stands with 36,64ha; the additional 21ha is estimated to accommodate
more than 16 parking stands.

SSI.COM.VN Visit SSI Research on Bloomberg at SSIV <GO> Page 3

SSI – RESEARCH INSTITUTIONAL RESEARCH & INVESTMENT ADVISORY

Our thoughts: Although the CAPEX for expansion plan is significant, we think that the plan is a
good catalyst for ACV because of following reasons: (1) Firstly, as of 3Q16, ACV had already
accumulated significant cash on hand of VND 3,673bn and short-term investment of VND
12,333bn (short-term deposit). With EBITDA of more than VND 8,000bn a year (according to
our estimates from 2017 onwards), ACV can fund the expansion plan without borrowing new
debts. (2) Secondly, the expansion plan would not only upgrade total passenger capacity but
also expand the commercial space which will boost ACV’s non-aeronautical revenue. ACV’s
non-aeronautical revenue’s contribution to total revenue of 10% remains low compared with
regional peers (vs that of 43% of AOT and 27% of MAHB). Therefore, non-aeronautical
business still has room for growth.

Possible increase in aeronautical charging fee in 2017

In August 2016, together with Civil Aviation Authority of Vietnam (CAAV), ACV proposed to the
MOT to increase domestic passenger charge at 7 of the largest airports including TIA, NIA, DIA,
CRIA, PQIA, Vinh International Airport and Phu Bai Airport. At the meeting, ACV disclosed the
proposal, specifically: (1) ACV proposes to re-classify airports as follows: Class A airports
include TIA, DIA, NIA, Cat Bi International Airport, Vinh International Airport, and Can Tho
International Airport. Class C airports include Con Dao Airport, Dien Bien Airport, Ca Mau
Airport, Rach Gia Airport. Class B airports will include the remaining. (2) Landing charge: For
Class A airports, charging fee will increase by 31%, and Class B will increase by 14%. (3)
Domestic passenger charge: Class A: increase by 43%, and Class B: increase by 14%. (4)
International passenger charges at Cat Bi International Airport, Vinh International Airport and
Lien Khuong International Airport will increase to USD 14 per pax from the current USD 8 per
th
pax. (5) Aircraft parking fee: 50% will be applied hourly charging scheme (from the 4 hour of
parking) for domestic airlines because currently all domestic airlines are applying a monthly
payment package (Currently, 100% of international airlines are applied hourly charging scheme
th
from the 4 hour of parking).

According to ACV, the adjustment in charging fees will be soon approved by the MOT and
gradually applied step by step in 1Q17 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 the segment of ACV, which
enjoys higher growth rate than the international segment.

More clarity on privatized some airport projects according to MOT’s strategies with
impact on 2017 business plan

Post- equitization of ACV, MOT will privatize several airport projects in order to avoid monopoly
in the airport industry. In particular:

(1) According to the IPO plan, the new international terminal in DIA will be operated by a private
entity. The International Airport Investment and Exploitation JSC (AHT) will operate the new
terminal (AHT is a joint stock company comprising ACV, Thang Long Air Services
Corporation, AOV Investment Corporation and Ha Noi Construction Corporation). ACV owns
10% in AHT. The project is currently under construction and plans to inaugurate from 3Q17.
Therefore, all international passengers from the current terminal will move to the
international terminal in 2017. According to ACV, this will cause ACV’s revenue from DIA to
reduce roughly VND 350bn in 2017.

Additionally, similar to DIA, for the new international terminal in PQIA, the international
terminal JSC will operate the project from 2018, in which ACV will also own 10% ownership

(2) At the meeting, ACV also disclosed that it proposed to the MOT to establish an airport
security company as an independent entity. ACV may not own and operate airport security
services in the future but the exact timeline has not been defined. In 2016, airport security
revenue is expected to record VND 750bn. However, the security force current includes

SSI.COM.VN Visit SSI Research on Bloomberg at SSIV <GO> Page 4

SSI – RESEARCH INSTITUTIONAL RESEARCH & INVESTMENT ADVISORY

2,600 employees which incur abundant expenses and profit is insignificant. As a result, if we
were to exclude this business from ACV, its revenue will be reduced by VND 750bn in 2017;
labor cost will also reduce accordingly. As such, the reduction of airport security business
will not significantly impact ACV’s earnings performance in the coming years.

(3) The vehicle parking lot will be operated by the Investment and Construction JSC, in which
ACV owns 18% ownership. Nevertheless, revenue contribution of the parking lot is
insignificant in 2016

(4) According to the government’s regulation on ACV, the company divested 6.6% stake in
Saigon Ground Services JSC (SGN: UPCOM) (from 54.6% to 48%) on November 2016 and
will continue to divest 3% stake in Southern Airports Services JSC (SAS: UPCOM) (from
51% to 48%). As such, SGN and SAS’s FS will not be consolidated into ACV’s from 2017.

Earnings estimates

Because the proposal to increase charging fees is still not approved by the MOT, we still
assume that ACV’s fees for aeronautical services will remain stable moving forward due to the
regulatory risk. Any increases in passenger volume, air cargo volume and flight movements will
boost revenue growth.

In 2017, we revise down revenue estimate for ACV compared with our previous report because
the company will divest 3% ownership in SAS to 48%. As the international terminal at DIA will
commence operation from 3Q17, international passengers will move to the new terminal.
Accordingly, we assume that ACV’s international passenger charge revenue will reduce roughly
VND 350bn in 2017 and 2018. As the timeline of privatizing airport security business has not
been decided, we have not factored its impact in 2017 estimates. Overall, we expect that ACV’s
revenue will reach VND 15,838bn (-2.7% YoY) and PBT to reach VND 5,593 bn (+25% YoY).
Our upbeat PBT projection is anchored on the following assumptions:

 Increases in passenger volume and cargo and parcel volume of 23% YoY and 5.7% 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 and
2017. International passengers may increase by 18% YoY and domestic passenger volume
will increase by 25% YoY thanks to the government’s emphasis on boosting the domestic
air travel market.

 GPM will remain at 35% in 2017 (a slight decline compared with 36.5% in 2016) because: i)
we assume that ACV will book VND 400bn in repair and maintenance expense in 2017 and
ii) increase capacity at Noi Bai International Airport thanks to the commencement of
Terminal 2 and an increase at Tan Son Nhat International Airport capacity after its
expansion in 2016 will enhance GPM. Amid the weakened JPY recently, we assume that
ACV will not incur FX loss in 2017

 We adjust CAPEX expenses to roughly VND 2,500bn per year (vs our previous estimate of
VND 5,800bn per year) from 2016-2020 corresponding with ACV’s updated CAPEX plan
because the CAPEX for the maneuvering area will be funded by the State Budget.

As a result, ACV’s 2017 PBT and net income may reach VND 5,593bn (+25% YoY) and VND
4,474bn (+25% YoY) (assuming that ACV is applied CIT of 20% in 2017), translating to (core)
EPS of VND 1,907. Excluding FX effects in 2016, 2017 PBT should increase by 12% YoY
(assuming that JPY may appreciate by 3.8% against VND, implying an FX loss of VND 545bn in
2016, lower than ACV’s guidance of VND 824bn).

SSI.COM.VN Visit SSI Research on Bloomberg at SSIV <GO> Page 5

SSI – RESEARCH INSTITUTIONAL RESEARCH & INVESTMENT ADVISORY

From 2018-2020: we assume that international passengers will grow at 10% per year and
international cargo will grow at 3% per year.

Valuation: 1Y TP: VND 58,500/share, BUY

In our view, ACV holds significant potentials, including:

 In aeronautical business, ACV is the largest beneficiary from Vietnam’s robust tourism
growth in the coming years. We estimate that in the next five years, the annual growth rate
of international tourist volume to Vietnam should increase to about 12%, from the average
9.48% in the last five years, thanks to the recent government’s initiative to boost the tourism
sector.

 Higher passenger volumes will help improve GPM.

 Possible increase in domestic charging fees from 2017 will help expand GPM. The latest
adjustment in charging fees in in late 2014. In our estimate, we still keep the charging fees
flat.

 Regarding non-aeronautical business. Non-aeronautical revenue growth through

concession revenues (revenue sharing with retail operators in the airports) will be supported
by the expansion of airports which will enlarge commercial area.

Please note that ACV’s current GPM is roughly 38%, significantly lower than that of the Airport
of Thailand Plc. at more than 60%.

Given the leading position of ACV, we have raised target EV/EBITDA for ACV to 11x (from
8.5x), 10% discount to regional peers of roughly 12x. At the current price of VND 46,900/share,
ACV is being traded at 2016 and 2017 P/E of 30x and 24x; 2016 and 2017 P/B of 3.8x and 3.4x,
respectively and 2017 EV/EBIDA of 10x. Based on combined methods (end 2017 target
EV/EBITDA: 11x; DCF model: WACC: 9.15%, terminal growth: 2%), end 2017 target price
for ACV arrives at VND 58,500/share, or 25% higher than the current price. We
recommend BUY ACV.

Risks

(1) Policy risk regarding privatizing airports which will reduce ACV monopolistic stature in
Vietnam and as a result can reduce earnings upside. Additionally, the government’s strict
regulations on airlines will also constraint potential growth of the aviation industry.

(2) Substantial foreign exchange loss due to heavy dependent on Japanese ODA loans.

(3) Territorial disputes and viral diseases (such as South China Sea dispute, SARS and bird flu)
may hinder international passengers through international airports.

(4) Significant depreciation expense for expansion projects and the mega Long Thanh
International Airport project will impact ACV’s GPM and bottom line from 2025. Long Thanh
International Airport will be mainly funded by the ODA loans after 2018. Accordingly, ACV’s
debt ratio will thus significantly increase (ACV may own 51% stakes in Long Thanh Airport).
We have not yet factored this mega project in our model.

SSI.COM.VN Visit SSI Research on Bloomberg at SSIV <GO> Page 6

SSI – RESEARCH INSTITUTIONAL RESEARCH & INVESTMENT ADVISORY

Sensitivity analysis in 2017

JPYVND 10% 5% 0% -5% -10%

Exchange loss/gain (VNDbn) -1,536 -733 0 733 1,536
PBT (VNDbn) 4,000 4,834 5,593 6,326 7,129
EPS (VND) 1,365 1,648 1,907 2,157 2,431
Target price (VND/share) 53,900 56,300 58,500 60,600 63,000

DCF calculation

Consolidated (VND
2016F 2017F 2018F 2019F 2020F Terminal
million)
EBIT 4,564,364 5,690,242 7,145,804 8,580,297 9,739,001 14,271,488
Abnormal adjustments 0 0 0 0 0 0
Adjusted EBIT 4,564,364 5,690,242 7,145,804 8,580,297 9,739,001 14,271,488
Effective CIT rate (%) 20.0% 20.0% 20.0% 20.0% 20.0% 20.0%
EBIT(1-T) 3,651,491 4,552,194 5,716,643 6,864,238 7,791,201 11,417,191
Add: Depreciation 4,148,431 4,408,498 4,668,594 4,928,630 5,188,786 2,800,040
Less: CAPEX 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000
Less: Change in WC 1,570,615 826,098 1,774,979 151,678 (19,039) 1,045,036

Free cash flow to firm 3,729,308 5,634,593 6,110,258 9,141,189 10,499,026 10,672,194
Terminal growth 2% Terminal value 143,660,204
Discount period 0.03 1.03 2.03 3.03 4.03
Discount factor 1.00 0.91 0.84 0.77 0.70
Present value 3,719,476 5,148,431 5,114,823 7,010,234 7,376,283
Terminal PV 100,931,108
PV of FCFF - Operating 129,300,355
Cash & cash equivalents 4,466,482
ST Investments 12,864,252
Total Firm Value 146,631,089
Debt 13,426,638
Equity Value 133,204,451
No. of shares 2,177,173,236
Value of a share (VND) 61,182

SSI.COM.VN Visit SSI Research on Bloomberg at SSIV <GO> Page 7

SSI – RESEARCH INSTITUTIONAL RESEARCH & INVESTMENT ADVISORY

APPENDIX: ANNUAL FINANCIAL STATEMENTS

VND Billion 2014 2015 2016F 2017F VND Billion 2014 2015 2016F 2017F
Balance Sheet Income Statement
+ Cash 3,897 4,466 10,621 11,988 Net Sales 10,555 13,173 16,281 16,037
+ Short-term investments 10,669 12,864 14,106 14,106 COGS -7,489 -9,656 -10,631 -10,273
+ Account receivables 3,376 3,478 4,967 4,893 Gross Profit 3,066 3,517 5,651 5,763
+ Inventories 540 712 744 719 Financial Income 2,504 960 1,100 1,078
+ Other current assets 519 295 362 355 Financial Expense -501 -811 -658 -112
Total Current Assets 19,002 21,815 30,800 32,061 Income from associates 0 0 0 0
+ LT Receivables 442 179 163 160 Selling Expense -416 -428 -570 -240
+ Net Fixed Assets 23,568 20,661 19,993 18,073 Admin Expense -1,296 -1,203 -1,221 -1,100
+ Investment properties 38 32 32 32 Income from business operation 3,358 2,055 4,302 5,593
+ LT Assets in progress 0 1,054 977 962 Net Other Income 49 223 164 0
+ LT Investments 284 642 720 720 Profit Before Tax 3,408 2,277 4,467 5,593
+ Other LT Assets 439 467 298 289 Net Income 2,634 1,753 3,573 4,474
Total Long-Term Assets 24,771 23,036 22,182 20,235 NI attributable to shareholders 2,632 1,712 3,538 4,370
Total Assets 43,772 44,852 52,983 52,285 Minority interest 2 41 36 104
+ Current Liabilities 7,540 8,151 8,074 7,135
In which: ST debt 250 308 213 205 Basic EPS (VND) 0 0 1,544 1,907
+ Non-current Liabilities 15,742 16,086 17,308 14,382 BVPS (VND) 12,081 11,601 12,300 13,707
In which: LT debt 12,268 13,119 14,351 14,351 Dividend (VND/share) 0 0 500 500
Total Liabilities 23,282 24,237 25,382 21,517 EBIT 3,474 2,367 4,564 5,690
+ Contributed capital 16,274 17,093 21,772 21,772 EBITDA 5,602 5,979 8,710 10,096
+ Share premium 0 0 0 0
+ Retained earnings 2,904 1,807 4,079 7,142 Growth
+ Other capital/fund 1,312 1,714 1,750 1,854 Sales 10.5% 24.8% 23.6% -1.5%
Shareholders' Equity 20,490 20,615 27,601 30,768 EBITDA 5.9% 6.7% 45.7% 15.9%
Total Liabilities & Equity 43,772 44,852 52,983 52,285 EBIT 8.4% -31.9% 92.8% 24.7%
NI 14.5% -33.4% 103.8% 25.2%
Cash Flow Equity 20.0% 0.6% 33.9% 11.5%
CF from operating activities 2,691 4,213 5,246 4,963 Chartered Capital 53.4% 5.0% 27.4% 0.0%
CF from investing activities -6,656 -2,814 -3,819 -2,500 Total assets 26.3% 2.5% 18.1% -1.3%
CF from financing activities 5,336 -833 4,727 -1,096
Net increase in cash 1,371 566 6,154 1,367 Valuation
Beginning cash 2,516 3,897 4,466 10,621 P/E N/A N/A 32.1 26.0
Ending cash 3,897 4,466 10,621 11,988 P/B 0.0 0.0 4.0 3.6
P/Sales N/A N/A 6.6 6.7
Liquidity Ratios Dividend yield N/A N/A 1.0% 1.0%
Current ratio 2.52 2.68 3.81 4.49 EV/EBITDA -0.4 -0.7 11.6 10
Acid-test ratio 2.38 2.55 3.68 4.34 EV/Sales -0.2 -0.3 6.6 6.7
Cash ratio 1.93 2.13 3.06 3.66
Net debt / EBITDA 1.34 1.47 0.74 0.32 Profitability Ratios
Interest coverage 52.31 26.34 46.78 58.34 Gross Margin 29.0% 26.7% 34.7% 35.9%
Days of receivables 34.4 36.5 39.3 44.1 Operating Margin 24.0% 10.4% 22.1% 28.9%
Days of payables 106.0 56.5 45.4 48.3 Net Margin 25.0% 13.3% 21.9% 27.9%
Days of inventory 25.4 23.7 25.0 26.0 Selling exp./Net sales 3.9% 3.3% 3.5% 1.5%
Admin exp./Net sales 12.3% 9.1% 7.5% 6.9%
Capital Structure ROE 14.0% 8.5% 14.8% 15.3%
Equity/Total asset 0.47 0.46 0.52 0.59 ROA 6.7% 4.0% 7.3% 8.5%
Liabilities/Total Assets 0.53 0.54 0.48 0.41 ROIC 9.1% 5.4% 9.6% 10.4%
Liabilities/Equity 1.14 1.18 0.92 0.70
Debt/Equity 0.61 0.65 0.53 0.47
ST Debt/Equity 0.01 0.01 0.01 0.01

Source: ACV, SSI Research

SSI.COM.VN Visit SSI Research on Bloomberg at SSIV <GO> Page 8

SSI – RESEARCH INSTITUTIONAL RESEARCH & INVESTMENT ADVISORY

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, SSIResearch 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, SSIResearch 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.

SSI.COM.VN Visit SSI Research on Bloomberg at SSIV <GO> Page 9

SSI – RESEARCH INSTITUTIONAL RESEARCH & INVESTMENT ADVISORY

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. HO CHI MINH CITY HANOI

Member of the Ho Chi Minh
Stock Exchange, Regulated
by the State Securities
Commission
72 Nguyen Hue Street, 1C Ngo Quyen Street, Ha Noi City
District 1 Tel: (844) 3936 6321
Ho Chi Minh City Fax: (844) 3936 6311
Tel: (848) 3824 2897 Email: info@ssi.com.vn
Fax: (848) 3824 2997
Email: info@ssi.com.vn

Page 10