Investment opportunity inAIRPORTS CORPORATION OF VIETNAM

Investment highlights (cont.)

The Government of Vietnam: 75%

IPO: 3,47%

Strategic investor: 20%

Employees: 1,40%

Union: 0,13%

Issuer Airports Corporation of Vietnam

Trading name ACV

Total amount offered 77.804.122 shares

Percentage 3,47%

Par value 10.000 VND

Offer price 11.800 VND

Vietnam airport operation has showed strong prospect

ACV’s project & investment management capacity

Significant growth in all core operations

Potential growth of Non-aeronautical revenues

Substantial cash-flow

Investment highlights

2 3 4 51

CONTENTS1. The airport service sector

2. Airport investment and management capacity

3. Business operation

4. Financial performance

5. Operating result forecast & Valuation

The airport service sector

Role of airports in aviation valuation

Manufacture

Airlines

Distribution (Freight) Distribution (Passengers)

Service providers

Infrastrucutre

Airport services

Inside manoeuvring areaOutside manoeuvring area

Airport security

Non-aeronautical service and retail

Passenger service

Take-off & Landing

Ground handing service

Airports sector’s characteristics X Airport projects require considerable investment and is usually attached to development policies.

Investment in the industry subject to restriction.

X Direct customers of airports are airlines.

X Service charges at airports are regulated by state agencies.

X The revenue of airport positively correlates with the volume and structure of passenger and cargo traffic.

X Fixed costs constitute the majority of expenses, and thus are forecastable and controllable.

Service charge regulation

X In Vietnam, service charge rates must comply with the regulation of the Government.

X Most service charge categories was increased, effective from 01/10/2014.

X Calculated as “Rate” × “Workload Unit” (Passenger, Flight, Cargo)

1,32 1,44 1,5 1,5

8

0

1

2

3

4

5

6

7

8

9

Mac

tan

Cebu

Kual

a Lu

mpu

r

Tân

Sơn

Nhấ

t

Nội

Bài

Chan

gi

7,8 12

,1 15,6 19

,6

19,9

20

25

0

5

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15

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25

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Mya

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ar

Mac

tan

Cebu

Kual

a Lu

mpu

r

Thái

Lan

Chan

gi

Tân

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t

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Bài

Figure 1: Comparison of international passenger charge, 2015 (USD)

Figure 2: Comparison of international passenger securitiy charge (USD)

-

10

20

30

40

50

60

2012 2013 2.014

Sustainable growth

X Vietnam aviation industry saw significant growth in 2012 – 2014.

X Growth drivers: Economic recovery, population, expanding middle class, expansion strategies of LCC, and global economic integration.

CAGR = 16%

Figure 3: ACV’s terminal passenger traffic, 2012 – 2014

Sustainable growth

X Vietnam aviation industry would have the fastest growth rate compared its regional peers in the next 20 years.

X International passenger growth forecast: 5,3%/year

X Domestic passenger growth forecast: 8,2%/year.

Figure 4: Aviation industry growth forecast, 2014 – 2034

4,6% 5,

7% 6,2%

5,0%

7,3%

0%

4%

8%

Toàn Cầu Châu Á - Thái Bình Dương

Philippines Indonesia Việt Nam

ACV’s airport investment and management capacity

Airports network in Vietnam22 airports in Vietnam aviation infrastructure network:

X Classified by ICAO: according to the ability to serve aircraft (3C to 4F)

X Classified by operation: 07 international and 15 domestic

X Classified by level of service charge: Class-A and Class-B airport.

Capacity

Total capacity of all airports in Vietnam approximates 69,40 million passengers.

Figure 5: Design capacity of airports in Vietnam (million passenger)

- 5 10 15 20 25 30

Noi Bai (4E)

Tan Son Nhat (4E)

Da Nang (4E)

Phu Quoc (4E)

Can Tho (4E)

Phu Bai (4C)

Cam Ranh (4D)

4 Class-A Airport

11 Class-B Airport

Strong investment capacity

During 2012-1H2015, ACV has invested in 05 significant airport projects, increasing capacity by 54%.

Dec, 2013 – Hall E, - Ter-minal 1 Noi Bai at Noi Bai Airport

Feb, 2015 – Vinh Air-port

Dec, 2014 – Termi-nal 2, Noi Bai Inter-national Airport

Aug, 2013 – Civil operational area, Tuy Hoa Airport

Dec, 2012 – Phu Quoc international airport

Figure 6: Notable projects, 2012 – 2016

Strong investment capacity (cont.)

Vietnam airports capacity is expected to increase to 90,8 million passengers by 2020 

Figure 7: ACV’s expected total capacity, 2011-2050

Figure 8: Expected capacity increase at key airports

5

10

15

20

25

30

Tan SonNhat

Noi Bai Da Nang Cam Ranh Phu Quoc

Current Expected

50 100 150 200

2011

2012

2013

2014

2015

2017

2020

2030

2050

Current Expected

Growth in all core operating segments

1.000

2.000

3.000

4.000

5.000

6.000

7.000

2012 2013 2014 6T2014 6T2015

Passenger service charge Landing charge

Grounding handing charge Airport security charge

Other aeronautical service

Core business growth

Aeronautical services is the main operating segment of ACV, contributing 81% of total revenue during 2012-2015H1 on average. The segment consist of 04 core revenues lines:

X Passenger service charge

X Landing charge

X Ground handling charge

X Airport security charge

Figure 9: Aeronautical revenue, 2012-6T2015

CAGR = 13%

CAGR = 35%

X Remarkable traffic growth in terms of passenger, cargo and air traffic movement.

X Increase in service charge since 1/10/2014.

X Incentive policy toward airlines cease to be effective from 31/12/2014.

Growth drivers 16%/yearCAGR of terminal passenger, 2012 – 2014

15%/yearCAGR of cargo movement, 2012 – 2014

10%/yearCAGR of air traffic movement, 2012 – 2014

Passenger charge

Providing terminal, lounge… to passengers

Passenger service revenue contribute the largest proportion of ACV aeronautical revenues.

� Doanh thu

0

10

20

30

40

50

60

2012 2013 2014 6T2014 6T2015

International Domestic

At 1H2015, rev-enue was 2.463

VND vn., up 34%.

CAGR = 21%

Figure 10: Passenger charge 2012 – 2015 (ten VND bn. ) and terminal passenger traffic volume (million passenger)

200

400

600

800

1.000

1.200

2012 2013 2014 6T2014 6T2015

Doanh thu hạ cất cánh (tỷ đồng) Số lượt hạ cất cánh thương mại (nghìn lượt)

Landing chargev

Providing runway, taxiway, lighting system and other support systems to ensure the safety of landing/ take off.

Landing service is the second important segment, contributing on average 17% of ACV aeronautical revenues

At 1H2015, reve-nue was 671 VND

bn. up 28%.

CAGR = 6%

Figure 11: Landing charge 2012 – 6T2015 (VND bn.) and number of air traffic movement

Ground handling service

Services provided acorrding to IATA standard ground handling agreement, such as check-in, loading/unloading and carrying luggage/cargo from aircrafts to the terminals or vice versa with specialized facilities and equipment; aircraft movement control;

Figure 12: Ground handling service, 2012 – 2015 (VND bn.)

(100)

100

300

500

700

900

1.100

1.300

1.500

2012 2013 2014 6T204 6T2015

ACV và HGS thực hiện SAGS

CAGR = 18%

Stable financial structure and robust cashflow

Revenue & Profit

14%/year

Compound annual growth of revenue, 2012 – 2014

5.173 VND bn.

Net revenue 1H2015, up 37,72% compared to the previous period

1.693 VND bn.

Profit before tax in 2014, excluding unrealized gains from foreign exchange, up 15% in 2012 – 2014

Total cost structure

27+33+20+20+M 28%Depreciation: Some equipment, machinery and vehicle are depreciated twice as fast. Depreciation expense over originial cost ratio is approximately 10%.

26%Wage, salaries and benefits: Remained stable, constitute a major expense category due to ACV’s charateristically large labour force.

15%Repair and maintenance: Accrued to stabilize operating result, approximate VND 900 bn/year

31%Other operating cost (equipment, materials, outsourced services...)

7.395 VND bn.

Assets structure

- 10 20 30 40

2013

2014

Tiền, tương đương tiền và tiền gửi ngân hàngTài sản ngắn hạn khácTài sản cố định dài hạnCác khoản đầu tư tài chính dài hạnTài sản dài hạn khác

At the end of 1H2015, long-term assets increased by 49% compared to 2013 due to the investment in T2 Terminal at Noi Bai International Airport .

Cash, cash equivalents and short-term financial in-vestments totalled VND 14 tn. as of 2015H1. This represent 75% of current assets.

Financing

- 10 20 30 40

2013

2014

Vốn chủ sở hữu

Vay dài hạn

Chi phí phải trả ngắn hạn

Nợ phải trả ngắn hạn khác

ACV utilize long-term ODA financing (40 years), with a grace period much longer than the useful life of the terminal, low interest and subject to foreign exhange risk

As of H12015H1, the debt/total assets of ACV was 0,52x

ACV possesses robust financial capacity and operating cash flow, due to:

X Core business growth;

X Long financing term with low interest;

X High depreciation and high accrued repair & mantenance costs.

Robust operating cashflow

Operating result forecast and valuation

Revenue foreastCore assumption

X We use IATA’s forecast of traffic growth

X To be prudent, we assume service charge after 2015 remain stable

Aeronautical revenue

X We forecast (i) Passenger charge (ii) Landing charge, (iii) Ground handling charge, (iv) Security charge and (v) Other aeronautical revenue

Non–Aeronautical revenue

X Based on each airports and the amount of commercial space available

Financial revenue

X Based on interest and dividend revenues

X Labor expense: based on revenue and investment

X Depreciation expense: forecast to increase in 2015 and and subsequently decrease

X Major repair expense: maintained at current level

X Financial expenses: decrease due to repayment of long-term financing

Expense forecast

Operating result forecast

Actual result may differ from our conservative estimation due to strong growth drivers of the aviation industry.

13.993 VND bn.2020 revenue forecast

10.130 VND bn.2015 revenue forecast

3.424 VND bn.2015 net profit forecast

1.719 VND bn.2015 net profit forecast

9% /yearCoumpound annual growth rate forecast of profit from core business lines, 2015 – 2020

1.526 VND/shareEPS 2020

FCFF valuation

X Rf (Risk free rate): as at 30/10/2015

X Risk premium for B1 and US market obtained from 3rd party research

X Beta obtained from 1-year beta of peers

X Equity/Debt structure as estimated in 2016 – 2020

12.068 VND/shareFCFF valuation result

Comparables valuation

X Peer selection: 19 airport managers and operators global and regional

X Multiple used: Median EV/EBITDA and P/B

14.606 VND/shareEV/EBITDA valuation result

14.766 VND/shareP/B valuation result

Summary of valuation result

We price ACV shares from 12.068 VND/share to 14.766 VND/share

Valuation method ResultFCFF 12.068EV/EBITDA 14.606P/B 14.766

Thank you!

ContactHead office 10, 11 fl – BIDV Tower35 Hang Voi – Hoan Kiem – Ha NoiTel: 84 4 39352722Fax: 84 4 22200669Website: www.bsc.com.vn

Ho Chi Minh BRanch9 fl– 146 Nguyen Cong TruDist. 1, Ho Chi Minh CityTel: 84 8 3 8218885Fax: 84 8 3 8218510Facebook: www.facebook.com/BIDVSecurities

Tran Thang Long Head of Research longtt@bsc.com.vn (+84) 43935 2722 ext. 118