2011.01.27 investing in vietnam private clients

Investing in Vietnam

Indochina Capital Corporation | page 1INDOCHINA CAPITAL ADVISORS | page 1 of 22Indochina Capital Corporation | page 1

CONFIDENTIAL: The information contained herein is being furnished on a confidential basis solely for your information and should not be provided to another party without our prior consent

January 2011

Table of Contents

Macroeconomic Primer: Current Headwinds 3

CInvesting in Vietnam: Current Attractions 9

Indochina Capital Corporation: Firm Overview 14

Indochina Capital Advisors: Equities Division 18

Indochina Land: Real Estate Division 22

Indochina Infrastructure: Infrastructure Divisions 26

APPENDIX I | Th G th St St E i F d t l 29APPENDIX I | The Growth Story: Strong Economic Fundamentals 29

APPENDIX II | Investment Themes: Equities Division 36


Contact Us 40

Investment Strategy

Macroeconomic Primer

Indochina Plaza HanoiMixed-Use Development2011 Scheduled Opening

Current Headwinds &

Condominiums: 390Retail (NFA): 18,000 m2

Office (NFA): 14,400 m2


2011 Forecast/Medium-term Outlook

Balancing Growth & InflationThe ebb and flow of monetary policy between 2008-2010

Macro Primer

Policies that Drive GDP Growth in the Face of Inflation

7.40%

6 50% 6 50% 6 50%6.80%

25 00%

30.00%

7%

8% Real GDP (YoY) (LHS) CPI (YoY) (RHS)

6.50% 6.50%6.20%

3.90%

4.60%

5.30%

5.80%6.20%

6.50%

15 00%

20.00%

25.00%

4%

5%

6%

3.10%

5.00%

10.00%

15.00%

2%

3%

4%

Liquidity Driven Inflation Bubble

Monetary Tightening

Global Financial Crisis

Post-GFC Stimulus Recovery Pre-Party

Paralysis

0.00%0%

1%

Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010

Inflation Bubble Tightening Crisis Stimulus y Paralysis

Credit growth in Q1 2008 escalated to 63% YoY, fueling import growth which surged 75% YoY in the same period.

To combat inflation, the government:

Successively raised the prime lending from 8.25% p.a. to 14% p.a.;

With inflation abating, the government unwound its monetary and credit tightening measures.

By yearend 2008 it

The knock-on effect of the GFC caused Vietnam’s quarterly GDP growth rate to dip to a decade low in Q1 2009.

On the back of the stimulus package, GDP growth in 2009 rebounded, as a result of resilient domestic consumption and further aided by a

In the run up to the National Party Congress in January 2011, there was a paralysis in the State Bank of Vietnam and governmental

Indochina Capital Corporation | page 4

As a result of loose monetary policies and rising global food prices, Vietnam’s headline inflation rose to 28.3% .

Compulsory bond issuance to domestic banks; and

Raised reserve requirements.

By yearend 2008, it had reduced reserve requirements to 6% and the lowered the prime lending rate to 8.5% p.a.

In turn, the government initiated a stimulus package amounting to US$8-9 billion

further aided by a recovery offshore.

Along with accelerating growth, the inflation rate began to pick up steam.

governmental authorities—and inflation pressures returned.

Source: Bloomberg

Sovereign Credit Ratings Vietnam downgraded in 2010

Macro Primer

EM Asia: Sovereign Credit Ratings

Moody's S&P Fitch Moody's S&P Fitch Definitions

Aaa AAA AAA SG SG SG Prime investment grade

Aa1 AA+ AA+ HK HKHigh grade and high Aa2 AA AA HK

Fitch, Moody’s and Standard & Poor’s downgraded Vietnam’s sovereign debt rating in 2010

The downgrades were driven by the following factors:

Ratings DowngradedEM Asia: Sovereign Credit RatingsRecent monetary tightening to ease inflation and currency pressures

qualityAa2 AA AA HKAa3 AA- AA- CN,TW TWA1 A+ A+ KR CN KR,TW,CN

Upper medium gradeA2 A A KRA3 A- A- MY MY MY

Baa1 BBB+ BBB+ TH THLower medium gradeBaa2 BBB BBB TH

Baa3 BBB- BBB- IN IN IN

g y g

Inconsistent economic policies that heighten the risk of a balance of payments crisis.

Instability in the VND’s foreign exchange rate and black market premium.

Ba1 BB+ BB+ ID Non investment gradeBa2 BB BB ID ID,PH,VN PH

SpeculativeBa3 BB- BB- PHB1 B+ B+ VN,SL,FJ SL VN,SL

Highly speculativeB2 B BB3 B- B- PK FJ,PK

SG=Singapore; HK=Hong Kong; KR=Korea; CN=China; TW=Taiwan; MY=Malaysia; TH=Thailand; IN=India; ID=Indonesia; PH=Philippines; VN=Vietnam

Accelerating inflation that surged to nearly 12% YoY in 2010, driven by increases in food prices due to local weather disruptions and hikes in global commodity prices.

Rising inflation led to official and informal depreciations of the local currency, where the black-market rate still persists around 8% above the outer band of the official exchange-rate IN=India; ID=Indonesia; PH=Philippines; VN=Vietnamthe outer band of the official exchange rate.

Limited foreign exchange reserves and bank asset quality/liquidity: with foreign exchange reserves running low at an estimated US$15 billion, down from the 2008 peak of US$23 billion, the government is in a weak position to shore up balance of payment concerns.

The primary impact of the rating downgrades is an increased cost of887

Price of 5-Year CDS (US$)Insuring Vietnam credit risk is lower than PIG nations

The primary impact of the rating downgrades is an increased cost of borrowing for the country and in-turn an increase in the cost of capital for Vietnamese corporations. This is evident from the following market indicators:

5-year credit default swaps, the cost of insuring against a credit default on Vietnam government bonds, have increased from their mid-September levels of 220 basis points to 330 basis points as of

616

462

330282


mid September levels of 220 basis points to 330 basis points as of the start of 2011.

Yields on 10-year government bonds have increased 80 basis points since September 2010 to 11.8% while overnight interbank rates spiked from 7% in October to 11% at the end of the 2010.

Greece Ireland Portugal Vietnam Spain

Source: Bloomberg, 17 January 2011

State-Owned Enterprise Balance Sheet & ProfitabilityTroubled Vinashin is an outlier compared to other SOEs

Macro Primer

Vietnam: State-Owned Enterprises - Balance Sheet: Size and Composition(% of GDP) 1/

Assets Equity Debt Equity/Assets 2/

2006 2007 2008 2006 2007 2008 2006 2007 2008 2006 2007 2008

Vinashin appears to be the exception, not the norm, from a balance sheet quality perspective.

Major economic groups (EGs) 48.0 48.7 52.3 23.8 22.8 22.7 23.4 24.5 26.7 49.6 49.5 43.4

> EVN (electricity) 14.1 16.2 13.8 5.5 6.5 4.5 8.6 9.4 8.0 38.8 40.2 32.8

> PETROVN (petroleum and gas) 15.1 12.5 19.1 10.2 8.4 10.6 4.8 4.1 7.9 67.4 66.9 55.6

> VNPT (post and telecommunications) 8.1 7.7 6.9 5.7 5.3 4.7 1.8 1.6 2.1 70.4 68.5 67.2

> VINASHIN (shipping/ship-building) 5.7 6.8 6.2 0.3 0.5 0.5 5.4 6.2 5.7 5.8 6.8 8.4

> VINACOMIN (coal and minerals) 2.2 2.8 3.3 0.9 1.0 1.0 1.3 1.7 2.1 39.2 35.1 30.4

> VINARUBBER (rubber) 2.0 1.8 2.2 1.0 1.0 1.1 0.9 0.8 0.6 52.1 54.4 49.8

> VINATEX (textiles) 0.9 1.0 0.8 0.3 0.3 0.2 0.6 0.7 0.5 29.1 26.3 29.6

Other EGs / special general corporations 11.1 12.4 … 4.4 4.4 … 6.5 7.7 … 39.8 35.4 …

Other general corporations 18.1 19.3 … 5.4 6.5 … 12.5 12.4 … 30.0 33.7 …

All EGs and general corporations 1/ 77.2 80.4 … 33.7 33.7 … 42.5 44.7 … 43.6 41.9 …

Vietnam: State-Owned Enterprises - Profitability IndicatorsVietnam: State Owned Enterprises Profitability Indicators(%; asset-weighted averages) 1/

Pre-tax Profit Rate Return on Assets Return on Equity

2006 2007 2008 2006 2007 2008 2006 2007 2008

Major economic groups (EGs) 20.2 21.0 14.9 9.5 9.6 7.4 17.2 17.8 15.1

> EVN (electricity) 5.8 7.4 2.8 1.9 2.3 0.9 4.9 5.8 2.8

> PETROVN (petroleum and gas) 36.0 32.2 24.7 15.5 16.5 11.4 23.0 24.7 20.5

> VNPT (post and telecommunications) 27.9 38.5 24.7 14.1 13.2 12.6 20.0 19.3 18.8

> VINASHIN (shipping/ship-building) 4.1 3.9 2.7 0.9 1.1 0.9 15.0 16.4 10.6

> VINACOMIN (coal and minerals) 8.9 7.9 11.2 12.4 9.6 13.3 31.6 27.5 43.7

> VINARUBBER (rubber) 39.2 32.2 29.8 23.6 22.2 15.1 45.2 40.7 30.2

> VINATEX (textiles) 1.6 2.2 3.3 2.3 2.7 3.1 7.8 10.4 10.4

Other EGs / special general corporations 3 0 3 3 2 9 3 2 7 3 9 1


Other EGs / special general corporations 3.0 3.3 … 2.9 3.2 … 7.3 9.1 …

Other general corporations 4.6 6.0 … 4.5 6.0 … 15.0 17.9 …

All EGs and general corporations 11.3 10.9 … 7.4 7.2 … 16.9 17.2 …

Sources: Ministry of Finance; National Steering Committee for Enterprise Reform and Development; and IMF staff calculations.1/ Combined, the EGs and general corporations account for about 80%of total state capital invested in SOEs (estimated at 43.7% of GDP at end-2007)2/ In percent.

Monetary PolicyBalancing Pro-Growth Policies to Contain Inflation and Stabilize the VND

Macro Primer

Credit Growth and Inflation (% growth year-over-year)

Following a few mid-year months of moderation, inflation picked up towards the end of Q3, largely attributed to the pass-through of the 2.0% devaluation of the Vietnamese Dong (VND) in August .

Inflationary Pressures have Returned

20%

25%60%Credit Growth

Annual Inflation

Credit Growth and Inflation (% growth year-over-year)Corollary between credit and inflationary cycles

Inflation escalated to 11.8% year-over-year by the end of 2010, primarily as a result of rising food costs (Duly noted, foodstuff represents 40.0% of Vietnam’s CPI basket, which is typical of an emerging market).

However, the reacceleration of Vietnam’s inflation rate is no surprise against the backdrop of strong demand-led pressures and the recent

10%

15%

20%

20%

40%

M S l

g p g pround of currency devaluation. For 2011, the government’s aims is to target an annual inflation rate of 7-8%, which may be achievable barring a commodity price spike.

Balanced Monetary Policy required for Stability

0%

5%

0%2006 2007 2008 2009 2010

Source: General Statistics Office

20 000

22,000$2,500,000M2 growthVND / US$ Unofficial Rate

Money Supply Liquidity in the market plays a critical role in the VND/US$ x-rate

Pressure on the VND is clearly rising, both from a fundamental level and from market forces.

Despite pro-growth talk from policymakers, the State Bank of Vietnam has prioritized macroeconomic stability and will likely continue the recently started monetary tightening cycle—the SBV hiked the base rate 100bps in mid Q4.

16,000

18,000

20,000

$1,500,000

$2,000,000

p

Credit growth will also play into reining in inflation and easing pressure on the VND. By the end of 2010, credit expansion stood at 29% across the banking industry. Compared to 2009 when lending ballooned 38.0% year-over-year due to stimulus measures, credit growth has significantly moderated but has still contributed to the rise in inflation.


14,000$1,000,000

Jan-

07

Apr

-07

Jul-0

7

Oct

-07

Jan-

08

Apr

-08

Jul-0

8

Oct

-08

Jan-

09

Apr

-09

Jul-0

9

Oct

-09

Jan-

10

Apr

-10

Jul-1

0

Oct

-10

Source: State Bank of Vietnam, Currency Traders

The SBV will also have to prioritize its currency regime in 2011, aligning its credit growth targets, interest rate policies, and OMO to bring stability to the VND.

Containing InflationThe #1 policy priority for the government

Macro Primer

30

Composition of Vietnam’s Consumer Price Index Increase

CPI Basket WeightingFood & Foodstuff represent 40% of the CPI basket

20

25

Food and Foodstuff

40%Healthcare

5%

Bev.and Cig.4%

Culture, Sport & Ent.4%

Other 3%

Post and Telecom

3%

15

Cha

nge

YoY

Household goods

Garment & Footwear

7%

Education6%

10

% C Building

materials10%

Transportation9%

goods9%

0

5


-5Food & Foodstuff Housing & Construction Materials Transportation Education Others CPI (Annual Avg)


Investment Themes


Hyatt Regency Danang Resort and SpaLuxury Resort Complex2011 Scheduled Opening

Attractive Elements for Investing in Vietnam

Hotel Rooms: 200Condominiums:182Villas: 27


g

Vietnam’s Trailing P/E Ratio

Attraction 1: Low Valuation LevelsLow valuations despite strong EPS Growth


40

50

Vietnam s Trailing P/E RatioVN-Index P/E is at a 43% discount to its 5-year Average

Valuation multiples have compressed considerably from a heady 43x P/E in 2007 to highly attractive levels of around 11x trailing P/E ratios as of the end of 2010.

Valuations have trended down to a 4-year low

10

20

30 Period average P/E 19.77x

The relative valuation compared to other Asia Pacific emerging markets is particularly remarkable as Vietnam trades at a fraction of regional equity markets despite having similar or higher EPS growth.

Equity valuations have trended down to a 4-year low.

Our forward P/E projections for 2011 is approximately 9.5x for the

Regional Relative Valuations: P/E & EPSL l ti d it t EPS th

0Jan-06 Sep-06 May-07 Jan-08 Sep-08 May-09 Jan-10 Sep-10

31-Dec-2010 P/E11.28x

Our forward P/E projections for 2011 is approximately 9.5x for the VN-Index, in line with our 15% EPS growth forecast.

Valuations are appealing compared to historical multiples and other Asian markets.

Developments in the real economy are showing signs of improvement with GDP growth rebounding

India

IndonesiaMalaysia

Philippines

14

16

Low valuations despite strong EPS growthimprovement with GDP growth rebounding.

Against the backdrop of consistent economic expansion, the combination of low valuations and strong EPS growth has created a unique window of opportunity to gain exposure to Vietnam’s equities market.

It won’t be long before word gets out and the swell of liquidity

China

Thailand

Vi t10

12

2011

P/E

It won t be long before word gets out and the swell of liquidity reaches the shores of Vietnam.

In fact, we are already witnessing the initial indications of this with foreign trading volume as a percent of total volume creeping up from 5% in early 2010 to 15% by yearend.

In mid January 2011 net buying among foreigners further


Vietnam

810% 15% 20% 25% 30% 35%

2011 EPS growthSource: Bloomberg, January 2011

In mid-January 2011, net buying among foreigners further accelerated to approximately 20% of total trading.

Attraction #2: Final Privatization DriveWell-managed SOEs and the Crown Jewels to be “Equitized”


SOEs with an approved privatization plan

Agricultural Supplies Corporation Sai Gon Transport Mechanical Corporation

Agriculture and Rural Development Construction Corporation Song Da (Da River) Construction Corporation

Agriculture, Irrigation Mechanization, Electrification -Construction Corporation Southern Riverway Corporation

Animal Husbandry Corporation State Corporations Under Ministries

Prior to the last National Congress in 2006, there was a swell of SOEs that underwent privatization. However, most of the important privatizations occurred after the party summit—a cycle that is expected to occur again following the January 2011 congress.

Privatization process will resume in 2011

Bach Dang Construction Corporation Sugarcane Corporation No. I

Bank for Investment and Development of Vietnam (BIDV) Sugarcane Corporation No. II

Ben Thanh Corporation Thang Long Construction Corporation

Central Vietnam Corporation Traffic Works Construction Corporation

Construction Glass and Porcelain Corporation Urban and Industrial Zones Development Investment Corporation (IDICO)

Construction Materials Corporation No 1 Urban Infrastructure Development Investment Corporation

p g g y g

In recent years, the process has slowed, mainly due to overly inflated valuations and no real funding needs, as the state provides financial support to SOEs.

Vietnam’s fiscal deficit will remove SOE’s safety net; and the government’s valuation expectations are now more in line with those Construction Materials Corporation No. 1 Urban Infrastructure Development Investment Corporation

Construction Mechanical Corporation Vegetable, Fruit and Farm Produce Corporation

East Sea Fisheries Corporation Vietnam Airlines Corporation

Electrical Technical Equipment Corporation Vietnam Automobile Industrial Corporation

Ha Long Fisheries Corporation Vietnam Bank for Agriculture and Rural Development (Agribank)

Hanoi Construction Corporation Vietnam Cement Corporation

Vietnam Construction Investment Corporation for Water Supply

g pof the market, as the GFC has been a sobering experience.

There are at least 60 SOEs with approved privatization plans. These include some of Vietnam’s “Crown Jewels”: BIDV, Vietnam Airlines, Saigontourist and Hanoitourist.

N b f P i ti ti Hanoi Housing Investment and Development Corporation Vietnam Construction Investment Corporation for Water Supply and Drainage

Hanoi Tourism Corporation (Hanoitourist) Vietnam Engine and Agricultural Machines Corporation (VEAM)

Hanoi Trade Corporation (HAPRO) Vietnam Fisheries Corporation

Hanoi Transportation Corporation (Hanoi Transerco) Vietnam Forestry Corporation

Industrial Machinery and Equipment Corporation Vietnam Industrial Construction Corporation (VINAINCON)

Infrastructure Construction and Development Corporation Vietnam Insurance Corporation540

710 725

Number of PrivatizationsTrickled off in recent years but expected to pick-up

Irrigation Construction Corporation No. 4 Vietnam Machinery Installation Corporation (LILAMA Corporation)

Mekong River Delta Housing Development Bank Vietnam Medical Equipment Corporation

Northern Food Corporation Vietnam Mulberry, Silkworm and Silk Corporation

Northern Riverway Corporation Vietnam National Chemical Corporation

Sai Gon Agricultural Corporation Vietnam National Salt Corporation

Sai Gon Construction Corporation Vietnam National Tea Corporation125

250210 200 190

540

260

12575

240

80


p p

Sai Gon Real Estate Corporation Vietnam Paper Corporation

Sai Gon Tourism Corporation (Saigontourist) Vietnam Steel Corporation

Sai Gon Trade Corporation Waterway Construction Corporation

Source: Steering Committee for Enterprise Renewal and Development

75 80

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: European Chamber of Commerce, Inst. of SE Asian Studies

Attraction #3: Foreign Ownership LimitationsForeign limits are filling up with few quality names remaining


By yearend 2010, foreigners contributed approximately 15% of the total turnover of the VN-Index. As global markets have started to stabilize and valuations of Vietnamese equities have become attractive, foreign participation is poised to escalate in 2011.

Some of the key holdings of a Vietnam listed portfolio have already been fully subscribed by foreign investors. This includes: VinaMilk, Exim Bank, Sacombank and Asia Commercial Bank.

Foreign Ownership Limitations

p p p

However, there are limitations to foreign ownership of Vietnamese listed securities, with regulations varying among sectors.

In addition to those that have reached their foreign limit, there are a number of attractive selections in the healthcare, consumer staples and information technology sectors that have less than 10% remaining in their unused foreign quota.

Foreign ownership of Vietnam's equity market

SectorHo Chi Minh Hanoi Total

% allowed % owned % allowed % owned % allowed % owned

Financials 33.9 16.8 38.9 17.9 34.7 17.0

Consumer Staples 47.8 29.0 49.0 16.2 47.9 28.4

Industrials 49.0 16.8 49.0 5.6 49.0 11.8

Health Care 49.0 31.8 49.0 4.0 49.0 29.2

Materials 49.0 18.5 49.0 3.1 49.0 17.2

Energy 49.0 21.7 49.0 10.3 49.0 17.1

Consumer Discretionary 49.0 15.5 49.0 3.9 49.0 12.5

Information Technology 49.0 35.9 49.0 1.8 49.0 28.9

Utilities 49 0 10 2 49 0 6 6 49 0 10 1Utilities 49.0 10.2 49.0 6.6 49.0 10.1

Total 41.2 19.7 45.1 10.8 42.0 18.0

Select Stocks that have Reached the Quota

Ticker Short Name GICS Sector Name Cur Mkt Cap(US$ mm) Exchange Unused Foreign

Quota (%)Foreign Quota

(%)


VNM VINAMILK Con Staples 1,603 HCM 0 46EIB VIETNAM EXPORT BANK Financials 758 HCM 0 30STB SACOMBANK Financials 724 HCM 0 30ACB ASIA COMMERCIAL BANK Financials 1,082 Hanoi 0 30

Attraction #4: Value Creation despite Economic HeadwindsStrong value creation is being created amid a weak environment


The VN-Index moved relatively sideways during the first half of 2010 and was repeatedly challenged by Vietnam’s macroeconomic woes.

The downward pressure was most discernibly in H2 2010 as a result

Despite macro difficulties, several stocks have exploded

120%

150% BVHMSNVICVNIndex

Stock performance vs. VN-Index (2009 – 2010)Select stocks that have outperformed the VN-Index

BVH

p yof Vietnam’s accelerating inflation rate, vulnerable balance of payments position and devaluing currency. By yearend, the VN-Index dropped by 2% to 489 for the year, making it the 2nd worst performing market in the world behind Shanghai.

This is in stark comparison to other emerging markets, which re-inflated from the lows of 2009 on the back of a tidal wave of foreign

30%

60%

90%

de

MSN

VIC

ginflows: the MSCI Emerging Markets Index rose 102% over the course of 2010.

Despite the market downturn, several stocks listed on HOSE have significantly outperformed the market. There are stocks whose prices increased by more than 100% from 2009 to 2010: MSN (108%), BVH (113%), TBX (196%), VTL (170%) and HCC (108%).

-30%

0%

Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11

Source: Bloomberg

VN-Index

( ), ( ), ( ), ( ) ( )

Companies are still growing fast with profitable operations despite the aftermath of the global economic crisis and its effect on the local

Intrinsic values enhanced given excellent performanceCompany performance Several companies are performing well in a weak environment

TickerROE 2009

ROE 2010E

NPAT % growth

VIC 50% 34% 18%market.

They can sustain their earnings, growing by double digit rates (e.g. VNM, HAG and CII, etc.). The table on the right presents some of the companies who have the highest Return on Equity in the market.

These companies with very strong fundamentals may offer attractive

VIC 50% 34% 18%

VNM 42% 46% 39%

FPT 37% 27% 13%

HAG 28% 31% 78%


p y g yinvestment opportunities to long-term investors.

SJS 48% 37% 19%

CII 32% 31% 171%

Source: Bloomberg

EconomicsAbout Us

Indochina Capital Corporation

The Nam HaiLuxury Beach ResortO d 2006

Firm Overview

Opened 2006

Hotel Villas: 60Residential Villas: 40


About Indochina CapitalOne of Vietnam’s Most Established Financial Services FirmsAbout Us

Founded in 1999, the Indochina Capital Group is one of Vietnam’s leading financial services firms with diversified fund management and financial advisory businesses In 2010 Indochina Capital formed a strategic

Indochina Capital and its affiliates have a countrywide footprint with offices in Hanoi, Danang and Ho Chi Minh City. We are represented by over 200 professionals both expatriates and local Vietnamese to realize our

Fund Management & Advisory Services

advisory businesses. In 2010, Indochina Capital formed a strategic partnership with ORIX Corporation, one of Japan’s leading financial services firms.

Indochina Capital manages several funds, including three private, close-ended real estate funds with a total committed capital of approximately

professionals both expatriates and local Vietnamese to realize our investment activities.

Business Categories:

Real Estate Fund Management

E iti F d M t

Indochina Land

ended real estate funds with a total committed capital of approximately US$500 million from large global financial institutions, as well as a series of equities focused funds and managed accounts totaling US$58 million in funds under management.

Equities Fund Management

Advisory and Finance Services

Infrastructure Advisory and Investment

EquitiesIndochina Land

IndochinaLandHoldings

IndochinaLandHoldings 2

IndochinaLandHoldings 3

Equities

IndochinaCapitalInvestmentsSPC

IndochinaCapitalVietnam Holdings

Mekong Portfolio Investments Ltd

UW Indochina Vietnam V Ltd

US$42 mmClosedApr-05

PrivateLLC

US$265 mmClosedNov-06

PrivateGP / LP

US$180 mm ClosedOct-10

PrivateGP / LP

US$19.1 mmNAVDec-10

Private Segregated

US$23.5 mmNAV Dec-10

Public Listed LSE Main

US$6.1 mmNAVDec-10

Private Segregated

US$5.7 mmNAVDec-10

Private Segregated


Assets Under Management as of December 2010

Accounts Market Accounts Accounts

About Indochina CapitalFund Management & Advisory ServicesAbout Us

Indochina Land

Indochina Land, the group's real estate division, is Vietnam's premier real estate development and fund management firm, developing and financing real estate projects covering the full range of property types from multi-family residential and mixed-use commercial (retail and office) developments to hotels, resorts and leisure facilities. Indochina Land, the sponsor of Vietnam's first

Largest real estate fund manager in Vietnam primarily focused on residential, retail, hospitality and office sectors

Business Divisions

real estate fund, currently manages three private, closed-ended funds with approximately US$500 million of committed institutional capital, facilitating over US$2 billion in property development completed, under construction or in the development pipeline throughout Vietnam.

Recognized by Euromoney as “Best Developer in Vietnam” and Top 10 in Asia

Indochina CapitalIndochina Capital Advisors, Indochina Capital's equities division, manages a diversified portfolio of public and private securities in Vietnamese companies. These emerging corporates include listed

Personalized investment management services for individuals

d i tit tiIndochina Capital Advisors

public and private securities in Vietnamese companies. These emerging corporates include listed and prelisted companies, privatizing state-owned entities, and private companies and ventures. Indochina Capital Advisors offers personalized investment management services to individuals and institutions, which are provided with preferred access to the equities markets of Vietnam.

and institutions

Private Equity investments for institutional clients

Indochina Capital formed Indochina Infrastructure Management in 2008 to invest in and advise on Infrastructure advisory services

Indochina Infrastructure

infrastructure related projects in Vietnam. Indochina Infrastructure's core platforms include projects in environmental, transportation and social infrastructure sectors such as water treatment plants, seaports, and healthcare facilities. The division's key role is to bridge the gap between foreign technical expertise and investment capital and the broad network of local enterprises with attractive infrastructure investment opportunities. Indochina Infrastructure also provides advisory services to nongovernmental donor agencies working with Vietnamese authorities, helping to pioneer the framework for Public-Private Partnerships in infrastructure related investments.

Infrastructure advisory services focusing on environmental, transportation and social sectors

Private Equity facilities for institutional clients

Indochina Finance & Investment

Indochina Finance & Investment Limited (IFI) is the investment banking division of Indochina Capital, providing affiliated companies and third party clients with project financing, financial advisory, and market entry services. Typical clients are large- and medium-sized multinational corporations looking to execute cross-border transactions such as setting up a branch, distribution, or manufacturing base, or acquiring an existing business in Vietnam. The firm was contracted by Morgan Stanley, K ji Shi i d th i t lti ti l k t t lt t d d i

Finance arrangement services for affiliates and third party clients

Financial advisory services and market entry solutions for


Investment Kajima, Shimizu and other prominent multi-nationals as market entry consultants and advisors on investments in the Indochina region. In addition, IFI has arranged more than US$160 million of non-recourse project financing for Indochina Land developments and acquisitions.

market entry solutions for multinational corporations and domestic enterprises

Indochina CapitalBoard of DirectorsAbout Us

Dr. Marc Faber, ChairmanA well-known economist, author, and investment advisor, Dr. Faber is often noted for his “contrarian” investment approach. Dr. Faber is associated with a large number of funds and institutions around the world including the Iconoclastic International Fund, Baring Chrysalis Fund, Overlook Partner’s F d d th I P t ’ Gl b l St t

Peter R. Ryder, Chief Executive OfficerPrior to forming Indochina Capital from 1992–1998, Peter was a partner in two New York-based investment companies active in investing in Vietnam across various sectors, including real-estate, construction, IT, consumer services and products, banking and education. From 1983–1992 P t ith S l B th ’ l t tFund, and the Income Partners’ Global Strategy

Fund. Dr. Faber publishes a widely read monthly newsletter “The Gloom Boom & Doom Report” and he is the author of several books, including “Tomorrow’s Gold” which was a 2002 bestseller.

1992, Peter was with Salomon Brothers’ real estate finance group. As Director of the Asia-Pacific region in Tokyo (1987–1990), he was responsible for US$3 billion of investment in office, retail, residential and hotel projects. He was formerly the Chairman of the American Chamber of Commerce, helping to conclude the1991 US-Vietnam Trade Agreement.

Richmond (Rick) Mayo-Smith III, Managing DirectorPrior to launching Indochina Capital from 1991-1999, Rick operated an investment firm in HCMC and Hong Kong which advised clients, invested-in, and developed projects valued at over US$100 million in real estate, tourism, building materials, and food/beverages. During this time Rick also acted as an advisor to

Raymond Burghardt, Independent DirectorAmbassador Burghardt is a non-executive member of Indochina Capital’s board of directors. From 2001 –2004, he served as U.S. Ambassador to Vietnam. Ambassador Burghardt is also the Director of East-West Seminars at the East-West Center. He was formerly the Director of the American Institute in

During this time, Rick also acted as an advisor to Citicorp Capital and Morgan Stanley, with responsibility for sourcing deal flow in the Indochina region with an emphasis on Vietnam. Rick was the first Chairman of the HCMC American Chamber of Commerce in Vietnam.

Taiwan. In addition, he previously served in diplomatic posts in China, Philippines, and South Korea. Ambassador Burghardt’s earlier diplomatic assignments included the role of Special Assistant to President Reagan and Senior Director of Latin American Affairs on the National Security Council staff.

Ninh Quang Nguyen, Director of Government RelationsNinh has 15 years of experience with foreign investment, government relations, licensing and project management in Vietnam. Ninh currently is the General Director of Indochina Resorts Limited, the Vietnamese entity which owns our flagship resort, The Nam Hai, and has overall responsibility for local relations in the Central

Hiroyuki Sakai, Independent DirectorHiroyuki is Executive Vice President of ORIX Corporation, a Japanese integrated financial services group headquartered in Tokyo, and is overseeing its South East Asian private equity investments. Hiroyuki is also President and Director of ORIX (China) Investment based in Dalian, responsible for a range of


p yCoast and the South. Prior to joining Indochina Resort (Hoi An) Ltd, Mr. Ninh worked for My Duc Ceramics Joint Venture Company, a US$37 million foreign invested project funded by Morgan Stanley, which Mr. Ninh played an important role in establishing.

p ginvestment banking activities including real estate development. Hiroyuki has been with ORIX all his career having worked in China for 5 years in the 1980's as Director of a JV with CITIC, and in the USA for 13 years. Prior to returning to Tokyo in 2006, he was Deputy President of ORIX USA Corporation.

Indochina Capital Advisors

Montgomerie Links VietnamGolf Course & EstatesO d 2009

Equities Division

Opened 2009

Golf Course: 18-HolesVillas: 66


q

Equities Division

Indochina Capital AdvisorsListed Securities and Private Equity

Indochina Capital Advisors (“ICA”) offers investment management services to individuals and institutions via three distinct products:

ICA manages funds and client accounts and provides exposure to a diversified portfolio of attractive equity and equity-linked securities of Vietnamese companies

Executive Summary

Listed Equities Funds (Institutions)Private Equity Investments (Institutions)Managed Accounts (Individuals)

Our board members include Dr Marc Faber and Francois Bohn both

Vietnamese companies.

ICA has been engaged in providing investment management and advisory services since 2004. Our mission is to be the preeminent Vietnam-focused equities fund management company by generating strong investment performance across the equities asset class whileOur board members include Dr. Marc Faber and Francois Bohn, both

experienced emerging market investors. The two other board members who review our portfolio investments include Peter Ryder (CEO) and Richmond Mayo-Smith (Managing Director), both of whom have been investing in the Vietnamese market for nearly twenty years.

strong investment performance across the equities asset class, while providing exceptional customer service and delivering excellence in all that we do. Our vision is to grow our funds under management, including individual managed accounts, listed equities funds and a private equity program, establishing a sizeable and best-in-class operation managed

Our investors are provided with preferred access to the equities markets of Vietnam, which has recently emerged as one of Asia’s great success stories, as evidenced by consistent economic growth driven by both exports and domestic consumption. Vietnam, the world’s 13th most

by high-quality professionals with uncompromising integrity. Our investment spectrum covers listed equities, pre-IPO and OTC equities, as well as private equity. Preferred sectors are industries that target domestic consumption or are export-oriented, allowing us to capture Vietnam’s dynamic growth as an emerging market.

populous nation, has highly compelling investment fundamentals based on sustained economic growth, demographic dividends, socio-political stability and dynamic consumer growth. What attracts us, and our investors, to Vietnam are these underlying building blocks that create unique investment opportunities for investors that can effectively

Philosophically, we believe our Vietnam focus and world-class investment capabilities enable us to provide superior asset management and client services. Our guiding investment principles include active portfolio management, proprietary research, long-


q pp yintegrate local networks and knowledge with international investment best practices.

p g , p p y , gterm strategies and team oriented decision-making.

Indochina Capital AdvisorsManaged Accounts

Equities Division

Through our Managed Accounts services, we construct and manage a portfolio of equity investments, provide access to investment opportunities and monitor market developments Investors are offered

The Managed Accounts division is led by Mr. Nikhil Singh who has over 15 years of emerging markets equities investment experience and a strong track record He is supported by our long-serving portfolio

Managed Accounts

opportunities and monitor market developments. Investors are offered discretionary portfolio management services or exposure to our actively managed model portfolio.

ICA’s over-arching investment strategy for Managed Accounts is to focus on well managed companies with strong growth prospects that are

strong track record. He is supported by our long serving portfolio managers with extensive local and international fund management experience. Our Managed Accounts investment performance has outperformed the broader index over the past five years:

on well-managed companies with strong growth prospects that are priced at reasonable valuation levels and maintain significant trading liquidity. More specifically, we seek companies with the following characteristics:

D i t k t iti th i t i

Indochina Capital’s Track Record with Managed Accounts

ICA Managed Accounts VN-Index

2005 68.8% 28.5%

2006 173 0% 144 5%Dominant market position: the company maintains a commanding share of a particular sector or nicheHigh returns on capital: an economic returns model is built to ascertain the Return on Invested Capital of the firmAttractive sector fundamentals: the growth and profitability potential of the sector are thoroughly analyzed

2006 173.0% 144.5%

2007 45.5% 23.3%

2008 -53.0% -66%

2009 31.0% 56.8%

Average 54.3% 37.4%Appropriate levels of debt: methodical balance sheet analysis is performed to evaluate the risks associated with leverageEntry point at discount to intrinsic value: a variety of methodologies are deployed to determine the intrinsic value of the company

Average 54.3% 37.4%


Indochina Capital AdvisorsPrivate Equity

Equities Division

Private Equity

ICA is currently performing due diligence on various private equity investment opportunities in the Indochina region, with an aim to launch a private equity fund in 2011 meanwhile providing investment

ICA is pursuing investments that fall into the following three categories:

private equity fund in 2011, meanwhile providing investment management services on a non-fund basis for institutional investors deploying capital into Vietnam. The preferred focus is privately negotiated direct investments and direct secondaries in equity or equity linked instruments in innovated high growth companies operating in the middle market sector of Vietnam The basic outline of our investment

Pre IPO & PrivatizationsIPO financing and privatization sponsorshipThe State Capital Investment Corp. manages the privatization process in Vietnam and has over 900 companies currently in its portfolio of which it plans to divest

middle market sector of Vietnam. The basic outline of our investment criteria follows simple bottom-up investment principles:

Business Characteristics Aligned and talented management team with proven expertiseM k t l d d i ifi t th t ti l

The IPO market has been extraordinarily active in Vietnam with 89 offerings in 2008 and 122 in 2009

Direct SecondariesICA maintains close relationships with private equity firms operating in the region and is well positioned to be a keyMarket leaders and significant growth potential

Fully developed products or service offeringsFinancial Characteristics

Meaningful revenues (US$10-25 million)High ROE and Strong EBIDTA performance (US$1-5 million)

operating in the region and is well positioned to be a key provider of liquidity for funds seeking an exit due to the end of a funds life or for other reasonsThere are certain benefits from this approach such as (i) management familiarity in working with financial investors and (ii) being the beneficiary of companies having been upgraded in the areas of governance and operationsUse of Funds

Working capital purposes, including expansion/developmentRecapitalization and/or balance sheet improvementStrategic acquisitions or production capacity investments

Transaction Structure

the areas of governance and operations

Growth & Expansion Capital FinancingFinancial and strategic support to established businesses with the potential for outstanding value growthTypically this is accomplished through a significant minority


Initial investment size in the range of US$5-10 million Meaningful minority ownership (10-49%)Senior equity/equity linked with protective governance provisions

Typically this is accomplished through a significant minority share to help a business to achieve growth ambitions, restructure shareholdings, release equity or change the balance of equity to debt

Investment Themes

Indochina Land

Real Estate Division


Indochina LandVietnam’s leading real estate fund manager and developer


Indochina Land is the real estate division of Indochina Capital, developing and financing real estate projects including residential retail office hotels resorts and leisure Today Indochina

Executive Summary

Indochina Land Holdings (ILH)

Capital Raised US$42 mm

Closed April 2005residential, retail, office, hotels, resorts and leisure. Today, Indochina Land manages three private, closed-ended funds with nearly US$500 million of committed equity, facilitating more than US$2 billion of projects in operations or under development in Vietnam.

Our core strategy is “residential plus” where we develop stand alone for

9 InvestmentsHotel/Resort: 32%, Residential: 39%,

Retail: 6%, Office: 6%, Land Bank: 17%

Geographic Diversification North: 4%, Central: 34%South 62%

Realized IRR on Investments Exited to Date 59%Our core strategy is residential plus” where we develop stand-alone for-sale residential projects or combine for-sale residential with other property types such as retail, office, hotels and resorts. This strategy allows us to capitalize on the significant imbalance between supply and demand in the residential sector. It also enables us to limit fund equity

Indochina Land Holdings 2 (ILH2)


Closed November 2006

Hotel/Resort: 28%, Residential & Serviced injections and enhance our returns through the optimal use of pre-sale equity financing. Specifically for Indochina Land Holdings 3, our focus will be the residential markets in Hanoi and Ho Chi Minh City, which are projected to be the world’s top two fastest growing urban economies from 2008 to 2025 by PricewaterhouseCoopers.

11 Investments Apartments: 28%, Retail: 5%, Office: 3%, Land Bank: 30%, Other: 6%

Geographic Diversification North: 18%, Central: 43%,South: 39%

Commencing disposition cycle One partial exit to date

To realize our projects and promote our brand, we partner with some of the most prominent names in architecture and design, ensuring that we deliver quality projects and add value to Vietnam’s built environment. We have a team of approximately 30 investment professionals and 200

Indochina Land Holdings 3 (ILH3)


Closed October 2010

Target SectorUrban Residential, Urban Mixed-Use with

significant Residential components combined with Commercial Retail and Office space


pp y pproject-specific expatriates and local Vietnamese to implement our projects, making us one of the leading property developers in Vietnam and the region. We maintain an administrative office in Singapore in addition to project offices throughout Vietnam.

with Commercial Retail and Office space

Geographic Focus Hanoi and Ho Chi Minh City

# of Committed Investments 2

Indochina LandCountry-Wide Portfolio


Indochina Plaza HanoiMixed-Use Development

2011 Scheduled Opening


Office (NFA): 14,400 m2

Indochina Riverside TowersMixed-Use Development

Hyatt Regency Resort and SpaLuxury Resort Complex

2011 Scheduled Opening

Hotel Rooms: 200Condominiums:182

Mixed Use DevelopmentOpened 2008

Condominiums: 95Office (NFA): 6,200 m2

Retail (NFA): 4,600 m2

Condominiums:182Villas: 27

M t i Li k Vi tRi G d Th N H i


Montgomerie Links VietnamGolf Course & Estates

Opened 2009

Golf Course: 18-HolesVillas: 66

River GardenUrban ResidentialOpened 2009


The Nam HaiLuxury Beach ResortOpened 2006


Indochina Land Holdings 3Urban residential currently in investing period


In the past decade, Vietnam has emerged as one of Southeast Asia’s greatest success stories for economic progress, posting consistently positive GDP growth Vietnam’s political and social stability make it one

Global Institutional Investor Base

Despite the challenging investment climate, our core base of

ILH3

positive GDP growth. Vietnam s political and social stability make it one of the world’s safest countries and the global investment community has responded by pouring record levels of Foreign Direct Investment into Vietnam, particularly the manufacturing and services sectors.

What attracts us and our investors to Vietnam’s property market are the

p g g ,global institutional investors continues to recognize the potential of Vietnam’s real estate market.80% of the ILH3 Limited Partners have participated in our previous fund vehicles. The closing is a testament to our investors’ enduring confidence in the Vietnam real estate market and Indochina Land as a fundWhat attracts us, and our investors, to Vietnam’s property market are the

underlying fundamentals of rapid urbanization, consistently positive economic growth, compelling demographics and political stability. Because of these strong fundamentals, Vietnam’s property market offers high-yielding investment opportunities to investors who can effectively

in the Vietnam real estate market and Indochina Land as a fund manager and premiere property developer.Our investment strategy targets large scale residential projects in Hanoi and Ho Chi Minh City, whereby we will reduce the fund’s required equity commitment by introducing foreign and/or Vietnam-based co-investors.

integrate local contacts and knowledge with international development, finance, and management experience.

Our investment strategy for ILH3 focuses on the primary urban markets of Hanoi and HCM City, with a particular emphasis on urban residential

Investment Funds14%

Other2%

ILH3 Investor Composition

and urban mixed-use projects with residential. The pipeline deals that we have cultivated for ILH3 feature sites that have already been cleared or involve minimal relocation. Additionally, our projects are located in strategically attractive locations in both downtown districts as well as new urban areas.

Pension Funds50%

Family Offices19%


University Endowments

15%

Indochina Infrastructure

Infrastructure Division



Indochina InfrastructureInfrastructure Advisory and Fund Management

Indochina Infrastructure Management was established in 2008 to advise and invest in infrastructure companies and projects in Vietnam. In line with the country’s economic growth the demand and need for

Fund ManagementThe Indochina Infrastructure team has concentrated on providing advisory services to international investors developers

Executive Summary

with the country s economic growth, the demand and need for infrastructure related investments in Vietnam has grown significantly.

An increase in population and general under-investment in infrastructure in recent years, combined with strong and sustained economic growth improved international integration and rapid urbanization has

advisory services to international investors, developers, multilateral institutions and government agencies in Vietnam. We currently offer a broad range of advisory services to companies looking to make investments in or do business related to infrastructure in Vietnam, including: deal sourcing, Public Private Partnership consultation financial arrangements (debt and equity) feasibility studiesgrowth, improved international integration, and rapid urbanization, has

resulted in increased pressure on existing infrastructure assets, strengthening the demand for infrastructure development in all sectors of the economy. Our infrastructure division focuses on investments in environmental, transportation and social infrastructure

consultation, financial arrangements (debt and equity), feasibility studies and market entry.

With the assistance of our new corporate partner, ORIX Corporation, we intend to resume our efforts to raise an infrastructure focused fund in

sectors such as water treatment plants, seaports, and healthcare facilities.

Indochina Infrastructure provides advisory services to foreign and local enterprises active in Vietnam’s broad network of infrastructure related

2011. The focus for the fund will be to invest in core platforms within the environmental, social and transport sectors, with a particular emphasis on sustainability and renewable resources.

Target Sectors

investment activities. The group advises governmental agencies on policy matters as well as local and foreign companies on their merger and acquisition strategies.

Environmental ServicesIndustrial Waste (solid and hazardous)Water supply and wastewater

Social InfrastructureEducation Healthcare


TransportPorts and logistics zonesBridgesHighways


Indochina InfrastructureAdvisory Projects

Current Advisory Projects and Bids

World Bank / Ministry of Planning and Investment

Lead local advisor on a hallmark project to revise Decree78/108 governing Public-Private Partnerships in Vietnam’s infrastructure sector. In Q1 2010, along with our partners at the World Bank, we submitted a revised regulatory framework that is currently being applied to two pilot projects in the transport

Lead Policy Advisor framework that is currently being applied to two pilot projects in the transport sector and later to three other projects in the environmental sector.

US Trade Development Agency

Bidding to be a sub-contractor, responsible for the financial analysis and development of technical specification for a feasibility study on Danang Software Park. USTDA is considering the project proposal for funding.

Financial Advisor

FMO / WACO

We are acting as financial advisor on arranging a US$7 million loan for a water project in Long An Province. WACO (the developer) has agreed on FMO’s indicative terms for the loan. The Feasibility Study and Environmental and Social Assessment are currently being revised to meet IFC standards. The project is expected to reach financial close by Q1 2010.

Financial Advisor

p y

BIDV / Credit AgricoleHighway Project

In this assignment, we will be serving as joint financial advisors with Credit Agricole in arranging US$700 million loan for the Trung Luong – My Thuanexpressway (the middle portion of the new HCMC-Can Tho expressway). Two of Credit Agricole’s clients (construction companies) confirmed their interests in the project. Both have received ECA approval from their respective countries. Credit

Financial Advisor

Agricole is currently drafting indicative terms for the loans. Expectation is for the first US$300 million loan to be proposed for 2010 with the remaining US$400 million for second half of 2011.

World Bank / Ministry of

In the process of forming a JV with Mazars to bid for the project, which will provide support to the Ministry of Finance’s Project Management Unit in monitoring and qualifying a number of Local Development Investment Funds to


World Bank / Ministry of Finance

monitoring and qualifying a number of Local Development Investment Funds to receive ODA funding from the World Bank for their infrastructure projects. Our proposal was submitted in Q3 2010, and the contract award is expected to be announced in Q1 2011.

Financial Advisor

Investment Strategy

APPENDIX IAPPENDIX IThe Growth Story

Six Senses Con DaoLuxury Beach ResortO d 2010

St E i F d t l

Opened 2010



Strong Economic Fundamentals

Regional PerspectiveVietnam Leads Southeast Asia’s Economic Rebound

Growth Story

In the face of a global economic slowdown, Southeast Asia is demonstrating impressive strength and resilience compared to other parts of the world.

Vietnam’s Regional Comparison Vietnam achieved GDP growth of 5.32% in 2009, significantly stronger than many of its Southeast Asian neighbors. Along with China, India and Indonesia, Vietnam is leading Asia’s economic recovery and is one of the few countries in the world that has not experienced a year on year contraction in GDP

Southeast Asian Rebound

While there is indeed slower economic growth in Southeast Asia than in recent years, the global crisis has had less of a relative impact on the region, especially when compared to economies in the West.

Southeast Asia’s dependency on exports has negatively impacted GDP growth. However, the region’s banks are relatively healthy, and

experienced a year-on-year contraction in GDP.

While all ASEAN economies were effected by the global downturn, Vietnam produced steady GDP growth in 2009 and 2010, nearly rebounding to pre-crises levels. Growth in 2011 is expected to expand to 7.0%.

g , g y y,the allure of cheap labor, natural resources and low trade barriers, coupled with strong domestic demand, are attracting investors.

Southeast Asia’s resilience to the downturn was evidenced by a sharp rebound in GDP growth in 2010, a trend which is forecasted to continue with aggregate growth for the region estimated at 5.3% in 2011, according to the Asian Development Bank. Thailand

8.5%5.3%

Vietnam

6.7%

Low wages and high literacy rates are W ll d t d d

Country

GDP Percent Change Per

Year

‘091 ‘102

Asian Attraction: Economic growth in

Southeast Asia is has successfully rebounded

with from the global financial crisis

, g p

As the fastest growing economy in Southeast Asia in 2009, Vietnam’s economic growth has rebounded further in 2010 and will continue to

-2.2%

Southeast Asia’s auto manufacturing hub

15%

literacy rates are attracting electronics companies, with the domestic economy buoyed by an emerging middle class

.9%

6.2%

Well-educated and English-speaking

workforce make it a hotspot for

outsourcing centers

Strong manufacturing base moving up the

Vietnam: Consistently Strong Growth

economic growth has rebounded further in 2010 and will continue to lead the ASEAN pack in the years ahead.

Vietnam’s GDP growth rate reached 5.32% in 2009, outperforming projections from the Asia Development Bank and the International Monetary Fund.

For 2010 Vietnam’s GDP growth rate accelerated from 5 83% in 6 0%

Philippines

-1.2%

Malaysia

5.0%value chain


For 2010, Vietnam’s GDP growth rate accelerated from 5.83% in Q1 to 6.4% in Q2 and then further to 7.2% in Q3 and 7.3% in Q4, boosting yearend growth to 6.7%.

GDP Growth for 2011 is expected to exceed 7.0%.

4.5%

Indonesia

6.0%

-2.1%

SingaporeAs a major financial services center and export-led economy, the impacts of the global recession were acute but the rebound has been even sharper

Vast natural resources of copper, gold, coal and nickel fuel the economy

Source: DBS, November 2010

GDP GrowthManufacturing bounced back in 2010

Growth Story

Manufacturing Wholesale and retail trade Agriculture, forestry & fishery

Construction Transport, storage and communications Mining and quarrying

Hotels and restaurants Education and training Electricity, gas and water supply

Composition of Vietnam’s GDP

9.3%

8.2%

7.3%7.8%

8.4%8.2%

8.5%

8.0%

10.0% Real estate, renting and business activities Others GDP

5.8%

4.8%

6.8% 6.9%7.1%

6.3%

5.3%

6.8%

6.0%

4.0%

0.0%

2.0%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


-2.0%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Bloomberg

G G (% )

Comparative AnalysisVietnam is an Attractive Emerging Market Investment Destination

Growth Story

9%

12%

GDP Growth (% change year-over-year)Consistently one of the fastest growing economies in Asia

5-Year Avg (2006–2010)

10%

12%

Consumer Expenditure (% change year-over-year) Vietnam’s consumer society has emerged and is driving growth

5-Year Avg (2006–2010)

7.0%

3%

6%

8.4%

2%

4%

6%

8%

10%

0%

Source: HSBC, October 2010

T I t t D ti ti S R ki

0%

Source: HSBC, October 2010

A St t f M j A i C t iTop Investment Destination Survey RankingVietnam is the No. 1 investment target following the BRICs

Country 2010 2009 2008

Vietnam 1 1 1Indonesia 2 6 5 H K

Japan

< 14 15-24 25-39 40-59 > 60

Age Structure of Major Asian CountriesVietnam’s ‘demographic dividend’ will drive economic growth

do es a 6 5Mexico 3 3 2Argentina 4 12 8Saudi Arabia 4 10 10South Africa 6 4 8Nigeria 7 2 12 India

Indonesia

China

Singapore

Hong Kong


Malaysia 8 5 12United Arab Emirates 8 2 3Turkey 8 8 9

Source: Economist Intelligence Unit, September 2010 Survey

0% 20% 40% 60% 80% 100%

Vietnam

Source: U.N. Population Fund

Foreign Direct Investment in Vietnam (US$ Billions)

Foreign Direct InvestmentDisbursed FDI has Remained Steady

Growth Story

1500

2000

$60

$80 Registered FDIDisbursed FDI# of Projects

Foreign Direct Investment in Vietnam (US$ Billions)Disbursed FDI has held steady

Predictably, foreign direct investment (FDI) in Vietnam suffered a sharp decline during the global downturn, as multinationals were forced to turn their attentions inward, abandoning or postponing investment projects overseas to deal with problems at home.

Committed FDI has Declined…

500

1000

$20

$40

$p j p

In 2010, foreign investors registered US$19 billion in new FDI in Vietnam— a 14% reduction compared to 2009, and a steep drop from the real-estate driven boom of 2008, which ended with a record-setting US$71.2 billion of registered FDI.

However, the pie-in-the-sky FDI projects witnessed in 2008 (i.e.

0$-2006 2007 2008 2009 2010


, p y p j (billion dollar real estate projects, etc.) have faded away.

Despite the decline in pledged FDI over the past two years the

…but Disbursed FDI has Increased

% of Foreign Direct Investment per SectorDespite the decline in pledged FDI over the past two years, the amount of FDI actually disbursed — not just committed —in Vietnam has remained remarkably steady through boom, bust and recovery.

Disbursed FDI in 2010 reached an estimated US$11.5 billion, a 10% increase compared to 2009 and, surprisingly, a near-identical number to the amount disbursed during the irrational exuberance witnessed in 2008 60%

80% Manufacturing Real EstateAll other Areas

% o o e g ect est e t pe SectoFDI into Tech Manufacturing

witnessed in 2008.

The composition of FDI projects is returning toward the previous standard, with the manufacturing sector attracting 46% of registered FDI and real estate receding to 34%.

A return to the status quo of the previous decade may seem the antithesis of progress but it is important to note that Vietnam’s

20%

40%

%


antithesis of progress, but it is important to note that Vietnam s manufacturing sector is not what it used to be: high value-added products like microprocessors and laptop components are supplanting low value-added T-shirts, handbags and plastic dishes.

0%2005 2006 2007 2008 2009 2010


The Current AccountStructural trade deficit due to importation of intermediate products for export items

Growth Story

$90

Export / Import Turnover (US$ Billions)Quick rebound in exports following the Global Financial Crisis

$02000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Trade Deficit (US$ Billions)Structural deficit in current account

$30

$60

ExportImport -$12

-$6

Raw material imports for inputs into export products

$02000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


-$18

exacerbates the trade deficit


Export Value of Non-Oil Export Items (US$ Billions)Vietnam has a diversified basket of export items and is moving up the Value Chain

$12 2006 2007 2008 2009 2010

Vietnam has a diversified basket of export items and is moving up the Value Chain

The contribution of computers and electronics to Vietnam's export

t i t dil i i i

$4

$8 turnover is steadily increasing, moving Vietnam up the value chain. This is

also reflected in the changing landscape of FDI, with new

investments targeting high-tech manufacturing sector


$0Textiles Seafood Footwear Computers/Electronics Electrical Wires/Cables Plastic Products Handbags/Luggage


Emerging Middle ClassVietnam is also attractive as a consumer market

Growth Story

60 64

70-74

80+

FemaleMale

Demographic DividendPopulation of nearly 90 million

$1,024 $1,074$1,200

$1,200

$1,400

GDP Per Capita (US$)Rising incomes on par with economic expansion

Official incomes are hard to pin down in an opaque market like Vietnam, and GDP per capita in the urban areas is more than

20-24

30-34

40-44

50-54

60-64

Age

clas

s

$402 $440$552

$725$835

$400

$600

$800

$1,000 the urban areas is more than double the national average

5 4 3 2 1 0 1 2 3 4 5

0-4

10-14

millions populationSource: General Statistics Office

$0

$200

2000 2002 2004 2006 2007 2008 2009 2010f


Modern Retail Space (sq m)Total Retail Turnover (US$ Billions)

500,000

600,000

HCM City Modern Retail Space

Hanoi Modern Retail Space

ode eta Space (sq )Growth in modern retail illustrates Vietnam’s ballooning consumer society

26%

28%$90 2008 2009 2010 Year-over-Year Growth

ota eta u o e (US$ o s)Vietnam’s emerging middle-class is driving retail sales

200,000

300,000

400,000

22%

24%

26%

$30

$60


-

100,000

2006 2007 2008 2009 2010 2011fSource: CB Richard Ellis Vietnam, November 2010

20%$-Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec


Investment Themes

APPENDIX IIAPPENDIX IIInvestment Themes

Indochina Riverside TowersMixed-Use DevelopmentOpened 2008

Condominiums: 95Office (NFA): 6,200 m2

Retail (NFA): 4,600 m2

E iti Di i i


Equities Division

Food & Beverage and RetailSalient component of Domestic Consumption

Investment Themes

Very important sector accounting for 47% of Consumptionand 67% of total retail sales

Excellent fundamentals across sector given (i) rising incomes

Ranked as the most attractive retail market in the world in AT Kearney’s 2008 GRDI study

13th most populous country, experiencing rising disposable

Food & Beverage Retail

g ( ) gallowing the Vietnamese to upgrade the quantity and quality offood and beverages they consume and (ii) the significantexport potential given produce cost differentials

Branded fruit and vegetable juice: Vietnam per capitaconsumption of 1 liter vs 2 liters in Thailand, 20 liters in the

0 S

p p y, p g g pincome

Retail sales to double from US$39 billion in 2008 to US$85 billion in 2012 according to RNCOS

Modern retail chains account for only 20% of distribution, as compared to 90% in Singapore, 60% in Malaysia, 51% in ChinaU.K. and 40 liters in the U.S.

Low per capita consumption of soft drinks at 9 liters per annumvs 15 in China and 70 in the Philippines

Region’s highest mass grocery retail sales forecast at 123% by2012 (BMI, 2010)

compared to 90% in Singapore, 60% in Malaysia, 51% in China and 34% in Thailand.

Highly fragmented market with maximum 3% market-share; conventional outdoor markets make up 90% of sales

Distribution opportunities given lack of nationwide supply chains and policy directive to formal retail channelsand policy directive to formal retail channels

$123$124

Per Capita Food ConsumptionFood consumption steadily rising on par with disposable incomes

60%60%

Share of Modern Retail in terms of Retail SalesHigh growth potential for modern retailers

$119

$120

$121

$122

$119

$120

$121

$122

$123

20%

40%


$117

$118

$119

2008 2009 2010 2011 2012


10%

0%2007 2017

Source: A.T. Kearney

Infrastructure and Healthcare Building blocks for successful development

Investment Themes

Significant growth potential, given a population of approximately 86 million in 2009, expected to be 99 million in 2018

One of the least urbanized countries in Asia with 1 million migrants to major cities a year for next 20 years

Given the long gestation period for project investments, this

Infrastructure Enablers Healthcare

Strong traditional medicines segment with potential to improve the non-prescription drugs market in the longer term.

Improvements in pricing and regulatory environment to boost foreign companies interest and investment in the country.

Health and welfare a priority among emerging middle-class.

g g p p j ,theme focuses on the eco-system of companies benefitting from the long-term building boom in Vietnam, and includes construction companies, building materials, equipment, design and other service providers

Given Indochina Group’s decade long experience in real estate ea t a d e a e a p o ty a o g e e g g dd e c ass

Vietnam has only one full service, international standard hospital (FV Hospital in HCM City).

development, opportunities in this sector are clear and strong relationships are already in place with target companies

Low housing space per capita: urban living space of 11 sqm per capita vs. 17 sqm in Thailand; pipeline of infrastructure megaprojects

$1112

Health Expenditure Forecast (in US$ billions)Increased spending on healthcare a byproduct of rising wealth

9293

Forecast for Population Growth (in Millions)Young and Growing

$6$8

$9

4

6

8

10

8788

8990

87

90


0

2

2009e 2010f 2011f 2012f

Source: BMI 2010

842008 2009 2010 2011 2012


Financial ServicesUnder-penetrated and deepening financial services sector

Investment Themes

Only 15% of Vietnamese have bank accounts and total deposits to GDP is half the Asian average

Rapid growth in system loans with CAGR of 21.9% between 2001 and 2009

The mortgage market is set to benefit from stabili ed real estate prices and lo er long term interest rates as the Vietnamese choose

Financial Services Penetration and Density increasing from very low base

The mortgage market is set to benefit from stabilized real estate prices and lower long-term interest rates as the Vietnamese choose to expand the diminutive living spaces they occupy (19% of Vietnamese live in ‘temporary’ structures, 40% of population occupiesunder 36 sqm while urban per capita living space stands at 11 sqm)

Life insurance as a percent of GDP stands at a meager 1% vs. China 2%, Singapore 6% and Hong Kong 8%; 95% of Vietnamese do not have insurance though 35% can afford the premiums

98%

% of Adults with Access to Financial ServicesLow penetration leaves room for growth

160%

Loans as a % of GDPIncreased leverage will spur further economic expansion

48%

59%63%

98%

77%

95%

131%

160%

29%

42%48%

57%70%

77%


Vietnam China India Thailand Korea Singapore

Source: World Bank

India Vietnam Thailand Korea Singapore KoreaSource: General Statistics Office

Contact Us

P t R R dPeter R. RyderChief Executive OfficerT: (84) 43 930 6399E: [email protected]

Hawkins PhamInvestor Relations / CommunicationsInvestor Relations / CommunicationsT: (84) 83 910 4855E: [email protected]

Ho Chi Minh CityCapital PlaceFloor 106 Thai Van Lung StreetDistrict 1HCMC, Vietnam

HanoiOpera Business Center

Indochina Riverside Towers Danang, Vietnam

An Indochina Capital development

Opera Business CenterFloor 960 Ly Thai To StreetHoan Kiem DistrictHanoi, Vietnam

This presentation does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized orto any person to whom it would be unlawful to make such offer or solicitation. It is the responsibility of any person or persons in possession of thismaterial to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction. Prospective investors should informthemselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations inthe countries of their citizenship, residence or domicile which might be relevant to the subscription, purchase, holding, exchange, redemption ordisposal of any investments. Information contained herein is believed to be reliable but no warranty is given as to its completeness or accuracyand views and opinions, whilst given in good faith, are subject to change without notice. Members of Indochina Capital and its affiliates, connectedpersons and employees may from time to time deal, hold or act as market-makers, advisers or brokers in relation to any investments orderivatives thereof or be otherwise interested therein


derivatives thereof, or be otherwise interested therein.

Past performance is not a guide to future performance and the value of investments and the income derived from them can go down as well asup. Future returns are not guaranteed and a loss of principal may occur. Change in exchange rates may cause the value of the investment toincrease or decrease. Some investments may be restricted to illiquid, there may be no readily available market and there may be difficulty inexiting or liquidating these investments for an unforeseen amount of time.

2011.01.27 investing in vietnam private clients

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