vietnam construction, infrastructure and building materials

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I. EXECUTIVE SUMMARY VIETNAM is among the fastest growing sizeable economies in the world. The country’s strong economic growth and recent infrastructural developments provide many opportunities to both local and foreign companies in construction and property. Rising affluence has led to an increasing demand for residential and commercial infrastructure which is fuelling a boom in the country’s construction and real estate industry. In 2006 alone, the construction industry grew by a record 21%, driven by increased public spending and private sector investments and bringing the 5-year CAGR to 18%. We believe this growth will continue and will benefit listed contractors, developers, building material manufacturers and slew of companies currently actively investing in real estate. One of the reasons for the increasingly dynamic development of the country’s construction and real estate industries has been the State’s adoption of guiding documents for the new Common Investment Law and the Housing Law, creating a clear legal framework for the sector. Also, Hanoi addressed one of the biggest challenges to real estate with the new Housing Law which has helped fuel real estate transactions. Vietnam has a land-use rights system and freehold is vested in the State, as it is in China. Land-use rights are typically for up to 50 years, but in the past transferring these was complicated and opaque. These leases can now be registered and title documents transferred to the buyer. Banks have even stepped in to provide mortgages and buyers can actually borrow up to 50% of land value for 15 years. There is a greater level of security and Vietnamese see this as a favorable investment option and would have their money invested in property rather than depositing in low-interest bank deposits. Another reason was the country’s accession to the World Trade Organization (WTO), which flung open the door for its financial market - an important gateway for foreign investors to participate in the real estate business. The government is aware of the rapid increase in property prices and the importance the real-estate sector plays in maintaining economic growth, thus, the government is now encouraging foreign interests to join with local companies to bolster the sector. The end result is that greater foreign investor involvement will make the market more transparent, which should benefit consumers. In addition co-operation between domestic and foreign firms in developing real estate, which over the long term will improve the market's depth in terms of quality and price range. Of the 200 listed companies in Vietnam, there are currently 59 companies with their core business in construction and construction-related activities. Together, they add up to more than 15% of the total market capitalization. These numbers increase if we include companies involved in other business lines that are actively investing in real estate. We came across eight non-core construction companies with a minimum market capitalization of US$30 million that have been heavily investing into property in recent years, and we have highlighted them in this report. Horizon Securities believes that construction and construction-related companies will benefit from the buoyant growth in real estate, infrastructure and construction. Horizon Securities has sought out these companies and has highlighted some of them in this report.

Vietnam construction, infrastructure and building materialsVietnam construction, infrastructure and building materialsVietnam construction, infrastructure and building materialsVietnam construction, infrastructure and building materials

HRSHRSHRSHRS Equity

Research

30 June

2007

Horizon Securities

Research teamResearch teamResearch teamResearch team

Marc Djandji, CFAMarc Djandji, CFAMarc Djandji, CFAMarc Djandji, CFA Head of Research [email protected] +84.90.318.9687 Phuong LePhuong LePhuong LePhuong Le Analyst [email protected] Khoi PhamKhoi PhamKhoi PhamKhoi Pham Analyst [email protected]

Please refer to the important disclosures and analyst certifications at the end of this document.

Sector report Sector report Sector report Sector report –––– Construction, infrastructure, building materials Construction, infrastructure, building materials Construction, infrastructure, building materials Construction, infrastructure, building materials

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Horizon Securities has created the HRS CONDEX 500 to benchmark the construction industry and assess its performance in relations to the VNIndex and HaSTC Index. The index includes all listed companies in construction, real estate, infrastructure, and building materials manufacturing with a market capitalization of at least VND500 billion (approx. US$30 million). The CONDEX 500 has gained 51% since the beginning of this year, outperforming both the VNIndex and the HaSTC Index by 15% and 40% respectively. Horizon Securities also built three sub-indices to benchmark separately listed companies in construction & real estate, infrastructure, and construction materials.

Figure 3. Sector Comparison

Avg Avg Avg Avg Price Price Price Price Change Change Change Change Price to salesPrice to salesPrice to salesPrice to sales P/EP/EP/EP/E P/BP/BP/BP/B

3M3M3M3M 2005200520052005 2006200620062006 2007E2007E2007E2007E 2008E2008E2008E2008E 2005200520052005 2006200620062006 2007E2007E2007E2007E 2008E2008E2008E2008E 2005200520052005 2006200620062006 Q1 Q1 Q1 Q1 2007200720072007

Construction Construction Construction Construction & Real e& Real e& Real e& Real estatestatestatestate -5.46% 5.82 x 6.46 x 5.38 x 4.68 x 47.80 x 50.31 x 29.38 x 25.55 x 9.87 x 5.71 x 5.86 x

InfrastructureInfrastructureInfrastructureInfrastructure -13.48% 1.07 x 1.11 x 0.92 x 0.80 x 32.92 x 21.06 x 16.83 x 14.64 x 3.57 x 2.65 x 2.66 x Building Building Building Building materialsmaterialsmaterialsmaterials -9.46% 2.00 x 1.99 x 1.66 x 1.44 x 41.35 x 20.76 x 17.30 x 15.04 x 6.78 x 5.25 x 4.90 x

Source: Company reports, Horizon Securities – forward looking numbers are based on 20% growth in 2007 and 15% growth in 2008

1 Horizon Securities clients can contact their account manager to get more information on how they can invest in the same proportions set out in any of the HRS Indices.

Figure 1. HRS CONDEX 500 INDEX1 Figure 2. HRS MATERIALS INDEX, HRS

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Source: Horizon Securities Source: Horizon Securities


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TABLE OF CONTENTSTABLE OF CONTENTSTABLE OF CONTENTSTABLE OF CONTENTS I. EXECUTIVE SUMMARY .................................................................................................................................................. 1 II. VIETNAM CONSTRUCTION INDUSTRY......................................................................................................................... 4

2.1 Introduction .......................................................................................................................................................... 4 2.2 Housing Construction........................................................................................................................................... 6 2.3 Infrastructure Construction.................................................................................................................................. 7 2.4 Commercial Construction .................................................................................................................................... 9

III. INDUSTRY DYNAMICS...............................................................................................................................................13 IV. KEY INVESTMENT RISKS..........................................................................................................................................14 V. VIETNAM STOCK MARKET AND CONSTRUCTION.....................................................................................................15

5.1 Construction & Real estate companies ............................................................................................................19 5.2 Infrastructure companies ..................................................................................................................................24 5.3 Construction materials companies ...................................................................................................................28 5.4 Non-core real estate companies .......................................................................................................................33

Disclaimer ......................................................................................................................................................................44

TABLE OF FIGURESTABLE OF FIGURESTABLE OF FIGURESTABLE OF FIGURES

Figure 1. HRS CONDEX 500 INDEX ................................................................................................................................ 2 Figure 2. HRS MATERIALS INDEX, HRS CONSREAL INDEX, HRS INFRA. INDEX........................................................... 2 Figure 3. Sector Comparison .......................................................................................................................................... 2 Figure 4. Vietnam’s construction GDP is growing rapidly.............................................................................................. 4 Figure 5. Company Comparison...................................................................................................................................... 5 Figure 6. Rising urbanization level ................................................................................................................................. 6 Figure 7. Soaring housing market in Vietnam................................................................................................................ 6 Figure 8. Top 10 major apartment building projects in HCMC between 2007 – 2010 .............................................. 7 Figure 9. Top 10 priority projects between 2005 – 2010 ............................................................................................ 8 Figure 10. Infrastructure financing................................................................................................................................. 9 Figure 11. Grade A Office in HCMC...............................................................................................................................10 Figure 12. Grade B Office in HCMC ..............................................................................................................................10 Figure 13. Grade A Office Rents in Prime Asian Cities ................................................................................................10 Figure 14. Total Office Supply in HCMC .......................................................................................................................11 Figure 15. Total Office Supply in Hanoi ........................................................................................................................11 Figure 16. Major upcoming office developments ........................................................................................................11 Figure 17. Major industrial developments between 2007 – 2010............................................................................12 Figure 18. Selling price per sqm of apartments downtown HCMC.............................................................................12 Figure 19. Selling price per sqm of apartments downtown Hanoi .............................................................................12 Figure 20. Building materials inflation close to peak..................................................................................................13 Figure 21. Construction costs in Vietnam are still lower than other Asian countries................................................13 Figure 22. Company comparison..................................................................................................................................15 Figure 23. Company comparisons................................................................................................................................16 Figure 24. HRS CONSREAL 500 INDEX ........................................................................................................................19 Figure 25. HRS INFRA. INDEX 500 ...............................................................................................................................24 Figure 26. HRS MATERIALS INDEX 500 .......................................................................................................................28 Figure 27. EBITDA margin (%) .......................................................................................................................................30 Figure 28. EBIT margin (%)............................................................................................................................................30 Figure 29. EV/Ton (US$) ...............................................................................................................................................30 Figure 30. EV/EBITDA (x)...............................................................................................................................................30


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II. VIETNAM CONSTRUCTION INDUSTRY

2.1 Introduction After being hard hit by the financial crisis in 1997, Vietnam’s construction sector has experienced a strong recovery. In 2006, the construction industry recorded a record growth rate of 21%, taking the 5-year average growth rate to 18%. The construction industry has become one of the driving forces of the economy. Nationwide, it currently employs over two million people, and accounts for 6.6% of the country’s GDP.

The vibrant economic growth, influx of foreign companies and increasing national wealth triggered high demand for housing, commercial, office building and public infrastructures. Vietnam has also experienced a robust inflow of foreign direct investment into property sector vis-à-vis increasing government spending on public works. Given the increasing supply of housing and infrastructure projects, we believe the construction industry will expand

vigorously in the coming years. The construction boom has created investment opportunity for both local and foreign investors involved directly in construction or in construction-related sectors. There are currently 59 companies involved directly in construction and construction-related activities with a market capitalization greater than US$30mln. We have found eight companies that have made substantial non-core investments into real estate. Horizon Securities has been monitoring 17 of these companies based on market share and capitalization. Although the sector seems highly priced, we believe a deeper analysis of specific companies would enable investors to find companies with aggressive expansion programs and strong pipelines that can provide good upside to market. Horizon Securities intends to follow up this preliminary report with such detailed equity reports of individual companies.

Figure 4. Vietnam’s construction GDP is growing

rapidly

0

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60,000

70,000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

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Source: GSO

In 2006, VietnamIn 2006, VietnamIn 2006, VietnamIn 2006, Vietnam’s construction ’s construction ’s construction ’s construction

sector reached record 21% YOsector reached record 21% YOsector reached record 21% YOsector reached record 21% YOYYYY

There are 67 companies involved There are 67 companies involved There are 67 companies involved There are 67 companies involved directly and indirectly in directly and indirectly in directly and indirectly in directly and indirectly in construction, property, and construction, property, and construction, property, and construction, property, and

constructionconstructionconstructionconstruction----related sectorsrelated sectorsrelated sectorsrelated sectors


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Figure 5. Company Comparison

NameNameNameName TTTTickerickerickericker PricePricePricePrice Market CapMarket CapMarket CapMarket Cap Foreign Foreign Foreign Foreign ownership ownership ownership ownership P/EP/EP/EP/E

Price Price Price Price change change change change

CONSTRUCTION & REAL ESTATECONSTRUCTION & REAL ESTATECONSTRUCTION & REAL ESTATECONSTRUCTION & REAL ESTATE (VND)(VND)(VND)(VND) (Million (Million (Million (Million VND)VND)VND)VND) (%)(%)(%)(%) 2007E2007E2007E2007E 2008E2008E2008E2008E 3Mths3Mths3Mths3Mths

Tan Tao Industrial Park Corporation ITA 120,000 7,200,000 20.4% 38.72 x 33.67 x -20.1% Song Da Urban & Industrial Zone Investment and Development JSC SJS 315,000 6,300,000 16.7% 42.05 x 36.57 x 198.6%

Thu Duc House TDH 197,000 3,349,000 48.3% 32.97 x 28.67 x 269.6%

Sector AverageSector AverageSector AverageSector Average

1,442,214 1,442,214 1,442,214 1,442,214 29.38 x29.38 x29.38 x29.38 x 25.55 x25.55 x25.55 x25.55 x ----5.5%5.5%5.5%5.5%

INFRASTRUCTUREINFRASTRUCTUREINFRASTRUCTUREINFRASTRUCTURE HO CHI MINH CITY INFRASTRUCTURE INVESTMENT JOINT STOCK COMPANY CII 67,000 2,010,000 49.0% 33.72 x 29.32 x -6.9% Song Da No 10 Joint Stock Company SDT 139,000 834,000 7.4% 15.96 x 13.88 x 1.1%

Song Da No 9 Joint Stock Company SD9 63,500 444,500 1.7% 11.95 x 10.39 x -43.7%

Sector Sector Sector Sector AverageAverageAverageAverage

416,262 416,262 416,262 416,262 16.83 x16.83 x16.83 x16.83 x 14.64 x14.64 x14.64 x14.64 x ----13.5%13.5%13.5%13.5%

BUILDING MATERIALSBUILDING MATERIALSBUILDING MATERIALSBUILDING MATERIALS

But Son Cement JSC BTS 45,500 4,095,000 6.9% 44.67 x 38.84 x 82.7%

Bim Son Cement JSC BCC 37,500 3,375,000 11.8% 37.05 x 32.21 x 55.6%

TAICERA Enterprise LTD Co. TCR 30,000 899,208 3.9% 12.38 x 10.77 x -43.7%

Sector AverageSector AverageSector AverageSector Average

335,381 335,381 335,381 335,381 17.30 x17.30 x17.30 x17.30 x 15.04 x15.04 x15.04 x15.04 x ----9.46%9.46%9.46%9.46%

NONNONNONNON----CORE CONSTRUCTIONCORE CONSTRUCTIONCORE CONSTRUCTIONCORE CONSTRUCTION

FPT FPT 307,000 28,003,111 18.6% 41.83 x 36.37 x 123.4% Refrigeration Electrical Engineering Corporation REE 150,000 8,589,058 49.0% 30.89 x 26.86 x 169.8%

Kinh Do Corporation KDC 236,000 8,495,581 38.3% 39.82 x 34.63 x 57.1%

General Forwarding & Agency Corporation GMD 147,000 6,386,783 51.3% 31.85 x 27.70 x 202.5%

Sacom Cables & Telecom Materials JSC SAM 165,000 6,177,506 49.0% 24.25 x 21.09 x -9.5%

Saigon General Service Joint stock company SVC 85,000 1,094,240 0.2% 19.09 x 16.60 x -33.8%

Full Power Joint Stock Company FPC 58,500 877,500 4.3% 20.84 x 18.12 x -57.4% Song Da International Manpower Supply & Trading Joint stock corp. SDA 316,000 632,000 0.7% 31.62 x 27.50 x 22.5%

Source: Reuters, Horizon Securities, As at 29-Jun-2007


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2.2 Housing Construction Rising urbanization drives housing demandRising urbanization drives housing demandRising urbanization drives housing demandRising urbanization drives housing demand Urbanization in Vietnam, like other developing nations, has contributed significantly to housing demand. Vietnam’s urban population as a percentage of total population has grown from 20.7% in 1995 to 27.1% in 2006. This represents an increase of over 5 million people currently living in urban areas compared to 1995. According to the Ministry of Planning and Investment, the urban population is likely to reach 33.4 million by 2010, and 46 million by 2020. Furthermore, Hanoi recently adopted a policy to make it easier for migrant workers, coming into the cities, to change their residency papers. The end result is that rapid urbanization levels will drive demand for housing, and infrastructure development, especially in HCMC, Hanoi, Hai Phong and Da Nang.

Soaring housing marketSoaring housing marketSoaring housing marketSoaring housing market spurred construction spurred construction spurred construction spurred construction growthgrowthgrowthgrowth From 2000 to 2005, total housing area in Vietnam increased dramatically, from 700sqm million to 990sqm million. The average annual increase in supply was 58sqm million which represents a CAGR of 7.18%. During that period, new housing construction was four times the total new supply of the previous

decade. We expect housing construction will accelerate in the coming years, driven by stable economic growth, increasing urbanization, and growth in disposable income.

Housing area per person is 11sqm, still lower than the average of 14sqm in Asia Pacific and 30sqm in developed nations. Hanoi has set a target to reach 15sqm per person for urban areas and 14sqm per person for rural areas by 2010. Taking into account the population growth and current housing disparity, we forecast that there will be at least of 60sqm million

of housing area built yearly for the next four years. The net result is that growth in the housing sector will continue to be robust over the coming years. Major upcoming residential developmentsMajor upcoming residential developmentsMajor upcoming residential developmentsMajor upcoming residential developments Substantial investments have been announced in the housing development. The major upcoming residential developments include the construction of Tay Ho Tay (Western West Lake) New Urban Town in Hanoi. This project will cover 847 hectares and have

Figure 6. Rising urbanization level

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Figure 7. Soaring housing market in Vietnam

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… still it’s not enoug… still it’s not enoug… still it’s not enoug… still it’s not enoughhhh

Urban populUrban populUrban populUrban population will reach 33.4 ation will reach 33.4 ation will reach 33.4 ation will reach 33.4 million and 46 million in 2010 million and 46 million in 2010 million and 46 million in 2010 million and 46 million in 2010 and 2020 respectivelyand 2020 respectivelyand 2020 respectivelyand 2020 respectively

Selling prices per sqm for Selling prices per sqm for Selling prices per sqm for Selling prices per sqm for apartments downtown HCMC and apartments downtown HCMC and apartments downtown HCMC and apartments downtown HCMC and Hanoi range between US$1,000 Hanoi range between US$1,000 Hanoi range between US$1,000 Hanoi range between US$1,000

to US$ 3,000 to US$ 3,000 to US$ 3,000 to US$ 3,000


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5,000 high-end condominiums at a total investment of over US$314 million. Once completed the new town will be the financial and commercial center of Hanoi. Another major project is the Hanoi City Complex worth US$115 million, comprising of residential apartments, offices and trade centers. Coralis SA, of Luxemburg is the developer. In May 2007, the HCMC People’s Committee issued to the Korean GS E&C Corporation, a license to build one of the largest residential developments in HCMC, larger even than the Phu My Hung development. The Nha Be Metrocity GS will cover a total land area of 349,365 ha at a cost of US$1.6 billion. Other large-scale residential developments include the Thanh My Loi B project worth US400 million and the Sai Gon Sport City project worth US$130 million. In June 2006, the Indochina Riverside Tower Company started the construction of an office, commercial center and apartment complex in the heart of Da Nang. The project worth US$27 million will span over a land area of 3,652sqm and will offer more than 32,082sqm floor area.

Figure 8. Top 10 major apartment building projects in HCMC between 2007 – 2010

No.No.No.No. ProjectProjectProjectProject DevelopersDevelopersDevelopersDevelopers No. of No. of No. of No. of UnitUnitUnitUnit

Total Area Total Area Total Area Total Area (sqm)(sqm)(sqm)(sqm)

1 Saigon Castle n/a 2,500 240,000

2 Gia Hoa Gia Hoa Co., Ltd 1,800 172,800

3 Sky Garden Phu My Hung Corp. 1,500 144,000

4 Vinaconex - Thao Dien Vinaconex 1,305 125,280

5 Hoa Binh Dai Do Thanh Co., 1,020 97,920

6 New Saigon Hoang Anh Gia Lai Group 1,000 96,000

7 Tan Kien 584 high-rise building Investment- Construction Co. 584 978 93,888

8 Estella Tien Phuoc Co. 900 86,400

9 Tahami Tan Hai Minh Ltd. 800 76,800

10 Phu Thanh – CIENCO 5 Investment- Construction Co. 585 784 75,264

TotalTotalTotalTotal 12,58712,58712,58712,587 1,208,3521,208,3521,208,3521,208,352 Source: CBRE, Horizon Securities

2.3 Infrastructure Construction Infrastructure spending will doubInfrastructure spending will doubInfrastructure spending will doubInfrastructure spending will doublelelele Decades of war and economic recession left Vietnam’s infrastructure system antiquated. The country is in dire need for infrastructure investment, and Hanoi understands that fact. The latest statistics show that only 36% of the road network is paved. In addition, the current power supply cannot bear the growth of the industrial sector, and experts have warned that Vietnam may experience severe shortage of energy in the next few years, if nothing is done immediately. Hanoi has put infrastructure development on its priority list. The Government stated that during the period of 2006 to 2010, Vietnam’s road system will be increased by 105,000km, up 52% as compared to the 69,000km of new supply which was built during the previous five-year period. In total, the government plans to commit more than US$34 billion in infrastructure investments from 2006 to 2010, which is the double what was invested during the 2001 to 2005 period. The net result is that civil engineering construction activity will benefit from the government’s efforts to accelerate spending. Moreover, supported by the low base effect, we expect continued strength in civil engineering orders throughout in the coming years.

InfrastruInfrastruInfrastruInfrastructure in Vietnam is poor cture in Vietnam is poor cture in Vietnam is poor cture in Vietnam is poor

and underinvestedand underinvestedand underinvestedand underinvested

The Government will invest more The Government will invest more The Government will invest more The Government will invest more than VND539 trn (US$34bn) than VND539 trn (US$34bn) than VND539 trn (US$34bn) than VND539 trn (US$34bn) between 2006 and 2010between 2006 and 2010between 2006 and 2010between 2006 and 2010


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Major infrastructure projects in the futureMajor infrastructure projects in the futureMajor infrastructure projects in the futureMajor infrastructure projects in the future We observe a pick up of infrastructure spending in the economy, driven by strong political will and ease of project financing. An urgency to ensure commercial viability is now apparent throughout State policies, and is being reflected across sectors.

Figure 9. Top 10 priority projects between 2005 – 2010

ProjectProjectProjectProject LocationLocationLocationLocation Capacity Capacity Capacity Capacity TimeframeTimeframeTimeframeTimeframe Total investment Total investment Total investment Total investment (mln US$)(mln US$)(mln US$)(mln US$)

Thank Khe Mining & Metallurgy Project Ha Tinh

4.5mln tons/year 2007 - 2012 3,437.50

Dung Quat No.1 Oil Refinery Plant Quang Ngai

6.5mln tons/year 2001 - 2008 2,484.38

Son La Hydroelectric Plant Son La 2400 MW 2005 - 2015 2,308.31

1-5 Aluminium Plant Dac Nong 1.9mln tons/year 2006 - 2009 1,410.81

Mong Duong Thermoelectric Plant Quang Ninh 1000 MW 2007 - 2010 1,200.00 Tycoon Group steel ingots plant Quang Nghai

5mln tons/year 2007 - 2017 1,032.50

Lai Chau Hydroelectric Plant Lai Chau 1200 MW 2007 - 2014 865.38 Dawoo-Hoa Lac Railways

Ha Noi - Ha Tay 32km 2008 - 2012 750.00

Phu My No. 2 Fertilizer Plant

Ba Ria - Vung Tau

800mln tons/year 2006 - 2008 637.50

Nghi Son No. 1 Thermoelectric Plant Thanh Hoa 600 MW 2007 - 2011 627.38

Source: 5 years social economic plan 2005 – 2010, Horizon Securities

In addition to these projects there are three important projects that should be noted; the North-South Highway Project, the Hanoi-Ho Chi Minh Express Railway and the Long Thanh International Airport in Dong Nai Province. According to the Japan International Cooperation Agency (JICA), the Vietnam North-South Express Railways will stretch over 1,600 km, connecting Vietnam to the Trans-Asian Railways Network that runs from Russia through China to South East Asia. Upon completion, rail travel between Hanoi and HCMC will take 10 hours instead of 29 hours presently. Estimated cost total capital requirement is US$33 billion, of which 70% will be for infrastructure and the rest for equipment and vehicles. The North-South Highway worth US$12 billion is

another major transportation project. The full project is divided into smaller portions, some of which have already begun construction. A number of domestic investment groups offered to build BOT road projects or to purchase the toll-collection rights on certain sections of the highway. In April 2006, the Bank of Investment and Development of Vietnam (BIDV) announced it will cooperate with a joint venture comprised of 11 local enterprises to bid for the first phase of the HCMC-Long Thanh-Dau Giay Highway Project worth US$612 million. The master plan for Long Thanh International Airport was officially approved in 2006. Expected to be completed in 2010, the airport will span on an area of 5,000ha, with 4


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runways, five terminals and concourses handling up to 80 to 100 million passengers annually. The cargo terminal will be able to handle up to 5 million metric tones of goods per year. The total estimated cost is US$7 billion, financed from the State and private funds. Other major aviation projects are the Duong To-Phu Quoc International Airport, the No. 2 Terminal of the Noi Bai Airport in Hanoi and the new Da Nang Terminal. Financing initiativesFinancing initiativesFinancing initiativesFinancing initiatives In the past the Government relied mostly on the State budget and overseas development assistance (ODA) to finance infrastructure projects. However, recently Hanoi has outlined initiatives towards improving project financing for infrastructure, and is taking steps to allow more private domestic and foreign participants via BOT or BOO investments. A number of foreign-invested projects in ports, energy, water treatment, and telecoms are waiting for government approval. Also, a number of mutual funds have set up dedicated schemes for infrastructure projects in view of these changes. We find that funds availability for the infrastructure segment, both domestic and overseas

have improved significantly and believe that financing will become more institutionalized.

The Prime Minister recently approved the bond issue of US$1 billion in 2007 to finance the Dung Quat Refinery Plant, two hydroelectricity plants and some other major infrastructure projects. Hanoi and HCMC authorities have so far this year raised about VND2.5 trillion (US$156 million), bringing the municipals’

outstanding bond debt to VND10 trillion (US$625 million). The Ministry of Finance forecasts that in the near future Government-backed bonds will attract about VND60-70 trillion (US$3.7-4.3 billion) annually. Debt instruments have become popular to compensate shortages in the State budget and to mobilize capital for national infrastructure projects.

2.4 Commercial Construction Office market Office market Office market Office market in HCMC and Hanoi is in HCMC and Hanoi is in HCMC and Hanoi is in HCMC and Hanoi is on the spoton the spoton the spoton the spot The commercial property market has also seen a significant expansion in Vietnam since the Asian financial crisis. From 2000 to 2005 more than 160,000 new enterprises were established in Vietnam, triple the amount of companies established during the preceding decade. However, very little supply of office space had been constructed during that period, due to land use restrictions and the effect from the Asian crisis. The net result is there is currently a serious demand-supply imbalance in high-end A and B grade, office space.

Figure 10. Infrastructure financing

Government bonds,

14%

State-owned banks,

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ODA, 37%

State Budget, 11%Private sector, 16%

Infrastructure users,

21%

Source: Mekong Research

More than 160,000 new More than 160,000 new More than 160,000 new More than 160,000 new companies were estabcompanies were estabcompanies were estabcompanies were established lished lished lished during 2000 during 2000 during 2000 during 2000 –––– 2005 2005 2005 2005

Vietnam is seeking more foreign Vietnam is seeking more foreign Vietnam is seeking more foreign Vietnam is seeking more foreign loans to finance for its loans to finance for its loans to finance for its loans to finance for its infrastructure developments infrastructure developments infrastructure developments infrastructure developments


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Demand supply disparity createDemand supply disparity createDemand supply disparity createDemand supply disparity createssss investment opportunities investment opportunities investment opportunities investment opportunities for for for for investorsinvestorsinvestorsinvestors According to CBRE, in 2006 prime office rates in the CBD of HCMC and Hanoi, have increase by more than 20% YOY. In 2005, HCMC ranked 51st most expensive city for office rents in the world and 5th in Asia, after Hong Kong, Singapore, Mumbai and Seoul. Rental rates per square meter of prime office space in HCMC and Hanoi range between US$30-35 while the occupancy rate is almost 95%. It is forecasted that rents can possibility reach US$50 per square meter within the next four years.

High rental yields will attract more

investments into office buildings. Many

international property

developers have already invested in Vietnam, these include Bonday

Investment (Hong Kong), Chap Hua (Hong Kong),

CapitaLand (Singapore), Kepple Land (Sinagpore), and Kumho E&C (Korea). Local companies such as Vietcombank, Bitexco, Khai Silk, REE, Hoa Binh, Kinh Do Corp., and Gemadept are also getting on the bandwagon.

Figure 11. Grade A Office in HCMC Figure 12. Grade B Office in HCMC

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15.00

20.0025.00

30.00

35.00

40.00

45.00

50.00

US$

Vacancy Rate Rental Rate

0%

10%

20%

30%

40%

50%

60%

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

US$

Vacancy Rate Rental Rate

Source: CBRE Source CBRE

Figure 13. Grade A Office Rents in Prime Asian Cities

52.94

35.50

30.00

17.0415.15 14.62 14.91

0.00

10.00

20.00

30.00

40.00

50.00

60.00

Singapore Ho Chi

Minh City

Ha Noi Bangkok Jarkarta Kuala

Lumpur

Manila

US$/sqm/month

Source: Jones Lang LaSalle

Office rental rates in HCMC and Office rental rates in HCMC and Office rental rates in HCMC and Office rental rates in HCMC and Hanoi are among the highest in Hanoi are among the highest in Hanoi are among the highest in Hanoi are among the highest in

Asia Asia Asia Asia


11

Figure 14. Total Office Supply in HCMC Figure 15. Total Office Supply in Hanoi

Source: CBRE Source: CBRE

Current office supply in HCMC and Hanoi stands at 439,000sqm and 118,000sqm. Considering what is already in the pipeline CBRE estimates that by 2010 total office supply will have tripled in HCMC to 1,249,000sqm and will have doubled in Hanoi to almost 447,000sqm. Office space growth will be mainly in grade B and C type buildings. By 2020, , with the completion of the Thu Thiem New Urban Area in HCMC, and the Tay Ho Tay New Urban Area in Hanoi, total supply is expected to reach as much as five times the current supply.

Figure 16. Major upcoming office developments

No.No.No.No. ProjectProjectProjectProject DeveloperDeveloperDeveloperDeveloper Total Total Total Total aaaarea (sqm)rea (sqm)rea (sqm)rea (sqm)

1 Financial Tower Bitexco 110,000

2 Finance-Banking Tower BIDV 100,000

3 Vietcombank Tower Vietcombank - Bonday - Ben Thanh

77,000

4 Saigon M&C Tower Saigon M&C 36,000

5 Saigon Paragon Khaisilk - Thuy Loc 34,000

6 Intresco Building Intresco 34,000

7 Kumho Asiana Plaza Kumho E&C 32,000

8 Times Square Larkhall – Savico 31,000

9 Saigon Pearl SSG 30,000

10 Centec Tower SPN 25,000

TotalTotalTotalTotal 509,000509,000509,000509,000 Source: CBRE, Horizon Securities

Retail and industrial construction also see significant expansionRetail and industrial construction also see significant expansionRetail and industrial construction also see significant expansionRetail and industrial construction also see significant expansion We see the demand for construction of retail and industrial property also significantly expanding in the coming years, driven by high occupancy and rental rates. In the next four years, there will be more than 200,000sqm of retail space constructed, mostly in HCMC and Hanoi. A list of 33 industrial projects for 2006-2010, totaling US$440 million, was approved by the Prime Minster. Most of these major industrial developments will happen in the South of Vietnam, due to land availability and infrastructure quality.

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2003 2004 2005 2006 2007E 2008E 2009E 2010E

sqm

Existing supply New supply

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

2003 2004 2005 2006 2007E 2008E 2009E 2010E

sqm

Existing supply New supply

By 2010, office space in HCMC is By 2010, office space in HCMC is By 2010, office space in HCMC is By 2010, office space in HCMC is expected to triple, and in Hanoi to expected to triple, and in Hanoi to expected to triple, and in Hanoi to expected to triple, and in Hanoi to

double the cudouble the cudouble the cudouble the current amountrrent amountrrent amountrrent amount

Retail and industrial construction Retail and industrial construction Retail and industrial construction Retail and industrial construction will also see significant will also see significant will also see significant will also see significant expansion, mainly in the South of expansion, mainly in the South of expansion, mainly in the South of expansion, mainly in the South of VietnamVietnamVietnamVietnam


12

Figure 17. Major industrial developments between 2007 – 2010

ProjectProjectProjectProject LocationLocationLocationLocation

Total Total Total Total areaareaareaarea (ha)(ha)(ha)(ha)

Total Total Total Total investmentinvestmentinvestmentinvestment (bln VND)(bln VND)(bln VND)(bln VND)

Total Total Total Total investment investment investment investment ((((mln mln mln mln US$US$US$US$))))

Duc Hoa III Industrial zone Long An 987 1,974 123.38 My Yen-Tan Buu-Long Hiep Industrial zone (Ben Luc) Long An 411 822 51.38 Thanh Duc Industrial zone Long An 330 660 41.25 Thuan Dao Industrial zone (expansion) Long An 300 600 37.50 Tan Kim Industrial zone (expansion) Long An 300

600

37.50

Tan Duc Industrial zone (expansion) Long An 296

592

37.00

Soai Rap Industrial zone Tien Giang 289 578 36.13

Binh Minh Industrial zone Vinh Long 162 324 20.25

Tran De Industrial zone Soc Trang 138 276 17.25

Nhat Chanh Industrial zone Long An 122 244 15.25 Cau Tram Industrial zone (Cầu Đước) Long An 78

156

9.75

Tra Kha Industrial zone Bac Lieu 66 132 8.25 Tan Huong Industrial zone (expansion) Tien Giang 59

118

7.38

Source: Horizon Securities

HoHoHoHouse prices increaseuse prices increaseuse prices increaseuse prices increase Selling price per square meter for downtown condominiums in HCMC and Hanoi have reached US$1,000 to US$3,000. Some residential projects have experienced capital appreciation of more than 60% since launching.

Figure 18. Selling price per sqm of

apartments downtown HCMC

Figure 19. Selling price per sqm of

apartments downtown Hanoi

3,500

2,800

2,300

1,800

1,5001,300 1,250

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

The

Lancaster

The Avalon The Manor Indochina

Park Tower

Saigon

Pearl

Horizon

Tower

River

Garden

US$/sqm

1,800

1,6001,500

1,200

800 800

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Pacific Place Golden West

Lake

The Manor Hoa Binh Int'l

Towers

Chelsea Park Ciputra

US$/sqm

Source: CBRE Source: CBRE

GGGGovernment overnment overnment overnment loosensloosensloosensloosens price control on building materials price control on building materials price control on building materials price control on building materials In response to record inflation of building material prices, the Ministry of Construction issued a circular in 2005 to implement government controls over prices. As a result, in 2006 inflation of building material was reduced to 5.9% from 9.8% in 2005, lower than the average country inflation. This helped construction and property companies increase their profit margins during 2006. Although building material prices were stabilized in past, the input cost environment is currently clearly bearish. The trend in rising input costs has been accentuated by the removal of preferential coal and electricity pricing for the cement and steel industries. Since the beginning of the year steel prices have gained more than 20%, while cement increased by at least 5%. Cement prices are bound to increase even more as cement players have been suffering from the rise in manufacturing costs. Based on our

The Government loosens price The Government loosens price The Government loosens price The Government loosens price control over buildicontrol over buildicontrol over buildicontrol over building materials ng materials ng materials ng materials

House price has increased House price has increased House price has increased House price has increased significantly due to disparity significantly due to disparity significantly due to disparity significantly due to disparity

between demand and supply between demand and supply between demand and supply between demand and supply


13

meetings with industry experts, we believe that the Vietnam Cement Corporation will continue to push for price rises to avoid domestic entities risking failure. The net result is that higher production costs for cement and steel will continue to affect building material prices. As a result, we expect construction companies to experience higher input costs for building materials.

Figure 20. Building materials inflation close to peak

Figure 21. Construction costs in Vietnam are still lower than other Asian countries

-

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

10 /0202 /03

06 /0310 /03

02 /0406 /04

10 /0402 /05

06 /0510 /05

02 /0606 /06

10 /0602 /07

06 /07

1,419

664 669

549634 674

565627 614

0

200

400

600

800

1,000

1,200

1,400

1,600

Hong Ko ng

S hanghai

B eijing

Guangzhou/Shenzen

Kualalumpur

B angkok

Manila

Jakarta

HC MC

US$

Source: GSO Source: Jones Lang LaSalle

III. INDUSTRY DYNAMICS With over 3,500 construction and property companies in Vietnam – including 270 foreign-invested enterprises (FIE) – worth more than US$3.5 billion, competition in the industry is fierce. The largest construction companies are still state-owned and benefit from their relationships when it comes to winning bids. However, many of these companies are running huge losses and the government is taking steps to privatizing them. Although there is no shortage of land, high capital requirements and the complexity involved in getting a business license act as a barrier to entry. In addition, the process of land transfers and ownership is quite opaque. Land owners in Vietnam generally have stronger bargaining power over developers. The net result is that land acquisition is complex, and speculation could drive up land prices significantly. We see the core construction segment as having exciting growth opportunities. We believe that this calls for increased management bandwidth in terms of managing new growth verticals (hydropower, urban infrastructure, railways, etc), new geographies, increased project size and threat on margins. With many companies also diversifying into real estate development and infrastructure developers, one of the key challenges in our opinion is to manage the transition, given the already stretched management bandwidth. This is because, each of these new verticals has its own specific risks: infrastructure development – interest rates, execution, project financing, etc and real estate – land purchase, project development, financing, marketing, etc. The recent boom in real estate has attracted many companies, and currently many listed companies have made substantial non-core investments in real estate. We have highlighted these companies and want to bring investors attention on their activities.


14

IV. KEY INVESTMENT RISKS Anyone investing in construction & real estate, infrastructure, and building materials must be aware of some key inherent risks in the market:

� Low transparency in the real estate markeLow transparency in the real estate markeLow transparency in the real estate markeLow transparency in the real estate marketttt. Jones Lang LaSalles ranks Vietnam at an “opaque” transparency level. Although there have been considerable improvement in the law, Vietnam current land and property laws still do not provide clear guidance on issues related to the legal nature and rights of land ownership and usage, and lack implementation mechanisms and procedures for land distribution and transfers. Furthermore, lack of transparency in the real estate market and procedures to license projects in Vietnam remain very complicated and time consuming.

� Land acquisition issueLand acquisition issueLand acquisition issueLand acquisition issue. All Vietnamese property companies have land acquisition concerns, as land owners have greater bargaining power. Speculation on land prices only adds to the concern of the acquisition cost potentially being driven upward. Moreover, although a property company might possess a large land bank, the locations may be scattered and do not form one parcel of land.

� Intense competitionIntense competitionIntense competitionIntense competition. Vietnam’s property sector is highly fragmented, with around 3,500 construction and property companies. Although, there is still currently a lack of supply, intense competition among developers could affect their ability to raise selling prices in the future.

� Lack of experience and scale of new entrantsLack of experience and scale of new entrantsLack of experience and scale of new entrantsLack of experience and scale of new entrants. There seems to be too much capital going after a limited base of good quality real estate prospects. It is expected that the bigger players, who bid more aggressively for the accretive projects, will win the deals. The downside is that the smaller players will end up with lower quality investments, increasing their risks even further. Also, although the more experienced property developers may be aware and knowledgeable in dealing with land use rights issues, the lack of transparency and the involvement of government officials make the process complex and time consuming.

� Project riskProject riskProject riskProject risk. Larger projects which rely on pre-sale launches are exposed to rising construction costs and overhead expenses over the construction period. As building material prices have increased considerably since the beginning of this year, we could see pressure on margins while developers may not be able to raise their prices. In addition, projects delays could be costly as well, as they increase overall construction costs.


15

V. VIETNAM STOCK MARKET AND CONSTRUCTION Of the 200 listed companies in Vietnam, there are currently 59 companies with their core business in construction and construction related activities. Together, they add up to more than 15% of the total market capitalization. As could be expected, the larger companies are involved in real estate and industrial park development, while the pure play construction services companies are relatively small. In recent years, real estate has attracted many investors and we have seen many non-real estate companies making sizeable investments in real estate development. Of the listed companies with a market capitalization of at least VND500 billion (US$30 million), we came across eight companies that have been actively investing in property in recent years, and have highlighted them in this report. Although the sector seems highly priced, we believe a deeper analysis of specific companies would enable investors to find companies with aggressive expansion programs and strong pipelines that can provide good upside to market. This type of analysis will require a comprehensive study of the firm’s activities, land bank, and pipeline of projects and is not the objective of this report. Horizon Securities intends to follow up this preliminary report with such detailed equity research of individual companies.

Figure 22. Company comparison

NameNameNameName TickerTickerTickerTicker PricePricePricePrice Market CapMarket CapMarket CapMarket Cap Foreign Foreign Foreign Foreign ownership ownership ownership ownership P/EP/EP/EP/E

Price Price Price Price change change change change

CONSTRUCTION & REAL ESTATECONSTRUCTION & REAL ESTATECONSTRUCTION & REAL ESTATECONSTRUCTION & REAL ESTATE (VND)(VND)(VND)(VND) (Million (Million (Million (Million VND)VND)VND)VND) (%)(%)(%)(%) 2007E2007E2007E2007E 2008E2008E2008E2008E 3Mths3Mths3Mths3Mths

Tan Tao Industrial Park Corporation ITA 120,000 7,200,000 20.4% 38.72 x 33.67 x -20.1% Song Da Urban & Industrial Zone Investment and Development JSC SJS 315,000 6,300,000 16.7% 42.05 x 36.57 x 198.6%

Thu Duc House TDH 197,000 3,349,000 48.3% 32.97 x 28.67 x 269.6%

INFRASTINFRASTINFRASTINFRASTRUCTURERUCTURERUCTURERUCTURE HO CHI MINH CITY INFRASTRUCTURE INVESTMENT JOINT STOCK COMPANY CII 67,000 2,010,000 49.0% 33.72 x 29.32 x -6.9% Song Da No 10 Joint Stock Company SDT 139,000 834,000 7.4% 15.96 x 13.88 x 1.1%

Song Da No 9 Joint Stock Company SD9 63,500 444,500 1.7% 11.95 x 10.39 x -43.7%

BUILDING MATERIALSBUILDING MATERIALSBUILDING MATERIALSBUILDING MATERIALS

But Son Cement JSC BTS 45,500 4,095,000 6.9% 44.67 x 38.84 x 82.7%

Bim Son Cement JSC BCC 37,500 3,375,000 11.8% 37.05 x 32.21 x 55.6%

TAICERA Enterprise LTD Co. TCR 30,000 899,208 3.9% 12.38 x 10.77 x -43.7%

NONNONNONNON----CORE CONSTRUCTIONCORE CONSTRUCTIONCORE CONSTRUCTIONCORE CONSTRUCTION Refrigeration Electrical Engineering Corporation REE 150,000 8,589,058 49.0% 30.89 x 26.86 x 169.8%

FPT FPT 307,000 28,003,111 18.6% 41.83 x 36.37 x 123.4%

Kinh Do Corporation KDC 236,000 8,495,581 38.3% 39.82 x 34.63 x 57.1%

Sacom Cables & Telecom Materials JSC SAM 165,000 6,177,506 49.0% 24.25 x 21.09 x -9.5%

General Forwarding & Agency Corporation GMD 147,000 6,386,783 51.3% 31.85 x 27.70 x 202.5%

Saigon General Service Joint stock company SVC 85,000 1,094,240 0.2% 19.09 x 16.60 x -33.8%

Full Power Joint Stock Company FPC 58,500 877,500 4.3% 20.84 x 18.12 x -57.4% Song Da International Manpower Supply & Trading Joint stock corp. SDA 316,000 632,000 0.7% 31.62 x 27.50 x 22.5%

Source: Reuters, Horizon Securities, Dated 29-Jun-2007, forward looking numbers are based on 20% growth in 2007 and 15% growth in 2008


16

Figure 23. Company comparisons

TickerTickerTickerTicker PricePricePricePrice Market CapMarket CapMarket CapMarket Cap Foreign Foreign Foreign Foreign ownership ownership ownership ownership

Price to Price to Price to Price to sasasasalesleslesles P/E P/E P/E P/E P/BVP/BVP/BVP/BV

CONSTRUCTION & REAL ESTATECONSTRUCTION & REAL ESTATECONSTRUCTION & REAL ESTATECONSTRUCTION & REAL ESTATE (VND)(VND)(VND)(VND) (Million VND)(Million VND)(Million VND)(Million VND) (%)(%)(%)(%) 2006200620062006 2007E2007E2007E2007E 2008E2008E2008E2008E 2006200620062006 2007E2007E2007E2007E 2008E2008E2008E2008E 2006200620062006 Q1 2007Q1 2007Q1 2007Q1 2007

Tan Tao Industrial Park Corporation ITA 120,000 7,200,000 20.4% 20.41 x 17.01 x 14.79 x 48.40 x 40.33 x 35.07 x 12.61 x 6.48 x

Song Da Urban & Industrial Zone Investment and Development JSC SJS 315,000 6,300,000 16.7% 18.74 x 15.62 x 13.58 x 52.57 x 43.81 x 38.09 x 11.61 x 11.06 x

Thu Duc House TDH 197,000 3,349,000 48.3% 23.10 x 19.25 x 16.74 x 41.21 x 34.34 x 29.86 x 6.07 x 6.00 x

Hoa Binh Construction& Real Easte Corp. HBC 121,000 682,439 4.5% 3.32 x 2.77 x 2.41 x 75.46 x 62.88 x 54.68 x 9.84 x 9.26 x

Cho Lon Real Estate JSC RCL 252,700 379,050 0.4% 5.12 x 4.27 x 3.71 x 40.11 x 33.43 x 29.07 x N/A 10.79 x

Viet Nam Construction Joint Stock Company No.2 VC2 153,900 307,800 0.4% 0.78 x 0.65 x 0.57 x 14.59 x 12.16 x 10.57 x 6.11 x 5.62 x

Underground Works Construction JS Company - VINAVICO CTN 58,500 175,500 0.6% 0.64 x 0.53 x 0.46 x 22.91 x 19.09 x 16.60 x 3.26 x 3.63 x

Song Da Investment - Development Joint-Stock Corp. SIC 41,000 90,200 0.6% 2.73 x 2.27 x 1.98 x N/A N/A N/A 2.35 x 2.32 x

Investment and construction joint stock company no1 MCO 70,000 77,000 0.6% 0.77 x 0.64 x 0.56 x 33.96 x 28.30 x 24.61 x 5.49 x 3.76 x

Construction and mechanical joint stock company No 1 CMC 53,100 80,712 0.3% 4.67 x 3.89 x 3.39 x 28.10 x 23.42 x 20.36 x 4.57 x 3.94 x

COTEC Investment and Construction Joint Stock Company CIC 45,900 50,995 1.4% 0.65 x 0.54 x 0.47 x 18.20 x 15.16 x 13.19 x 4.30 x 5.10 x

Binh Trieu Construction & Engineering JSC BTC 32,300 43,647 2.3% 2.42 x 2.02 x 1.76 x N/A N/A N/A 6.09 x 6.04 x

Construction and infrastructure development joint stock corporation CID 23,000 12,443 4.0% 0.61 x 0.51 x 0.44 x 12.28 x 10.24 x 8.90 x 1.89 x 2.20 x

Sector averageSector averageSector averageSector average 1,442,214 1,442,214 1,442,214 1,442,214 7.17 x7.17 x7.17 x7.17 x 5.97 x5.97 x5.97 x5.97 x 5.19 x5.19 x5.19 x5.19 x 35.25 x35.25 x35.25 x35.25 x 29.38 x29.38 x29.38 x29.38 x 25.55 x25.55 x25.55 x25.55 x 6.18 x6.18 x6.18 x6.18 x 5.86 x5.86 x5.86 x5.86 x

Source: Reuters, Horizon Securities, Dated 29-Jun-2007, forward looking numbers are based on 20% growth in 2007 and 15% growth in 2008


17

Figure 23. Company comparisons (cont’d)

TickerTickerTickerTicker PricePricePricePrice Market CapMarket CapMarket CapMarket Cap Foreign Foreign Foreign Foreign ownership ownership ownership ownership

Price to Price to Price to Price to salessalessalessales P/E P/E P/E P/E P/BVP/BVP/BVP/BV

INFRASTRUCTUREINFRASTRUCTUREINFRASTRUCTUREINFRASTRUCTURE (VND)(VND)(VND)(VND) (Million VND)(Million VND)(Million VND)(Million VND) (%)(%)(%)(%) 2006200620062006 2007E2007E2007E2007E 2008E2008E2008E2008E 2006200620062006 2007E2007E2007E2007E 2008E2008E2008E2008E 2006200620062006 Q1 2007Q1 2007Q1 2007Q1 2007

But Son Cement JSC BTS 45,500 4,095,000 6.9% 6.79 x 5.66 x 4.92 x 55.84 x 46.53 x 40.46 x 4.19 x 4.11 x

Bim Son Cement JSC BCC 37,500 3,375,000 11.8% 3.41 x 2.84 x 2.47 x 46.31 x 38.59 x 33.56 x 3.49 x 3.40 x

Taicera Enterprise LTD Co. TCR 30,000 899,208 3.9% 1.33 x 1.11 x 0.96 x 15.48 x 12.90 x 11.21 x 1.74 x 1.70 x

Ho Chi Minh City Metal Corporation HMC 47,000 742,600 0.8% 0.42 x 0.35 x 0.31 x 33.75 x 28.12 x 24.45 x 4.09 x 4.28 x

Chau Thoi Concrete Corporation No.620 BT6 56,000 560,000 49.0% 1.20 x 1.00 x 0.87 x 17.84 x 14.87 x 12.93 x 1.20 x 1.95 x

Tung Kuang Corporation TKU 34,800 114,209 49.0% 0.18 x 0.15 x 0.13 x 32.07 x 5.17 x 4.50 x 0.50 x 0.48 x

Viet Nam - Italy Steel Joint Stock Company VIS 46,000 460,000 0.2% 0.36 x 0.30 x 0.26 x 30.23 x 25.19 x 21.91 x 3.96 x 4.25 x

Dongnai Roofsheet & Construction Material Joint stock Company DCT 32,700 395,583 0.9% 2.34 x 1.95 x 1.70 x 13.75 x 11.46 x 9.96 x 2.47 x 2.50 x

SMC Investment - Trading Joint Stock Company SMC 51,000 382,497 4.4% 0.20 x 0.17 x 0.15 x 16.92 x 14.10 x 12.26 x 3.75 x 3.66 x

Nam Viet Joint Stock Company NAV 117,000 292,500 4.4% 1.66 x 1.39 x 1.21 x 15.75 x 13.12 x 11.41 x 7.19 x 5.94 x

Chang Yih Ceramic Joint Stock Company CYC 17,000 153,789 4.7% 1.02 x 0.85 x 0.74 x N/A N/A N/A 1.44 x 1.44 x

Viglacera thanglong ceramic tiles joint – stock company TLT 72,100 129,780 0.1% 0.37 x 0.30 x 0.26 x 10.67 x 8.89 x 7.73 x 3.92 x 3.96 x

Bim Son Packaging Joint-Stock Company BPC 36,000 136,800 1.0% 1.02 x 0.85 x 0.74 x 17.30 x 14.42 x 12.54 x 2.23 x 2.12 x

DIC Investment and Trading Joint Stock Company DIC 38,000 121,600 1.0% 0.28 x 0.23 x 0.20 x 14.10 x 11.75 x 10.22 x 2.30 x 2.43 x

Gypsum and cement Joint Stock Com. TXM 30,000 105,000 0.0% 0.37 x 0.31 x 0.27 x 10.94 x 9.12 x 7.93 x 2.34 x 2.24 x

Lam Dong Building Materials Joint Stock Company LBM 65,000 106,545 1.4% 1.19 x 1.00 x 0.87 x 19.41 x 16.18 x 14.07 x 4.06 x 5.46 x

Phu Phong Corporation PPG 27,000 108,000 3.9% 0.44 x 0.37 x 0.32 x 20.75 x 17.29 x 15.04 x 2.06 x 2.03 x

Material, Transportation & Cement Joint Stock Company VTV 40,000 100,000 0.6% 0.27 x 0.23 x 0.20 x 51.92 x 43.26 x 37.62 x 3.96 x 3.76 x

Thanh Thanh Ceramic Tile Joint Stock Company TTC 26,400 105,389 3.3% 0.38 x 0.32 x 0.28 x 13.87 x 11.56 x 10.05 x 2.25 x 2.26 x

Vitaly Joint Stock Company VTA 28,500 114,000 0.7% 0.36 x 0.30 x 0.26 x 48.11 x 40.09 x 34.86 x 2.58 x 2.56 x

Nhi Hiep Brick-tile JSC NHC 50,000 66,281 2.8% 1.74 x 1.45 x 1.26 x 10.58 x 8.82 x 7.67 x 3.54 x 3.55 x

ButSon Cement Packing JSC BBS 21,500 64,500 0.5% 0.75 x 0.63 x 0.54 x 12.22 x 10.18 x 8.85 x 1.71 x 1.71 x

Songda Cement Joint-Stock Company SCC 30,000 59,400 0.8% 1.05 x 0.87 x 0.76 x 10.44 x 8.70 x 7.56 x 1.55 x 1.52 x

Dongnai Paint Corporation SDN 45,000 51,300 3.9% 1.14 x 0.95 x 0.82 x 20.92 x 17.43 x 15.16 x N/A N/A

Song Da Yaly Cement Joint Stock Company SDY 29,900 44,850 0.4% 0.24 x 0.20 x 0.17 x 18.51 x 15.42 x 13.41 x 1.55 x 1.65 x

Hoa Phat Construction Stone Joint stock Company HPS 20,500 32,088 0.4% 3.02 x 2.51 x 2.19 x 21.40 x 17.83 x 15.51 x 1.63 x 1.72 x

Viglacera Tu Son ceramic joint stock company VTS 26,200 26,200 0.8% 0.79 x 0.66 x 0.57 x 5.95 x 4.96 x 4.31 x 1.74 x 1.94 x

Viglacera Ba Hien JSC BHV 20,000 18,000 0.0% 0.54 x 0.45 x 0.39 x 11.13 x 9.28 x 8.07 x 1.60 x 1.56 x

Ðong Anh Ceramic Joint - Stock Company DAC 20,000 15,000 0.6% 0.66 x 0.55 x 0.48 x 13.93 x 11.61 x 10.10 x 1.35 x 1.48 x

HA LONG I - VIGLACERA HLY 32,000 16,000 0.3% 0.50 x 0.42 x 0.36 x 12.85 x 10.71 x 9.31 x 2.18 x 2.37 x

Đông Triều - Viglacera JSC DTC 26,000 13,000 0.1% 0.27 x 0.23 x 0.20 x 8.86 x 7.38 x 6.42 x 1.78 x 1.72 x

Sector averageSector averageSector averageSector average 416,262 416,262 416,262 416,262 1.11 x1.11 x1.11 x1.11 x 0.92 x0.92 x0.92 x0.92 x 0.80 x0.80 x0.80 x0.80 x 21.06 x21.06 x21.06 x21.06 x 16.83 x16.83 x16.83 x16.83 x 14.64 x14.64 x14.64 x14.64 x 2.61 x2.61 x2.61 x2.61 x 2.66 x2.66 x2.66 x2.66 x Source: Reuters, Horizon Securities, Dated 29-Jun-2007, forward looking numbers are based on 20% growth in 2007 and 15% growth in 2008


18

Figure 23. Company comparisons (cont’d)

TickerTickerTickerTicker PricePricePricePrice Market CapMarket CapMarket CapMarket Cap Foreign Foreign Foreign Foreign ownership ownership ownership ownership Price to salesPrice to salesPrice to salesPrice to sales P/E P/E P/E P/E P/BVP/BVP/BVP/BV

BUILDING MATERIALSBUILDING MATERIALSBUILDING MATERIALSBUILDING MATERIALS (VND)(VND)(VND)(VND) (Million VND)(Million VND)(Million VND)(Million VND) (%)(%)(%)(%) 2006200620062006 2007E2007E2007E2007E 2008E2008E2008E2008E 2006200620062006 2007E2007E2007E2007E 2008E2008E2008E2008E 2006200620062006 Q1 2007Q1 2007Q1 2007Q1 2007

Ho Chi Minh City Infrastructure Investment Joint Stock Company CII 67,000 2,010,000 49.0% 12.06 x 10.05 x 8.74 x 42.15 x 35.12 x 30.54 x 5.40 x 5.36 x

Song Da No 10 Joint Stock Company SDT 139,000 834,000 7.4% 1.87 x 1.56 x 1.35 x 19.95 x 16.63 x 14.46 x 7.36 x 6.86 x

Song Da No 9 Joint Stock Company SD9 63,500 444,500 1.7% 1.31 x 1.09 x 0.95 x 14.94 x 12.45 x 10.83 x 3.10 x 3.00 x

Machinery erection and construction JSC (Vimeco) VMC 70,900 248,150 0.2% 0.51 x 0.43 x 0.37 x 23.25 x 19.38 x 16.85 x 4.56 x 4.28 x

Songda 7 Joint Stock Company SD7 151,000 226,500 0.8% 0.84 x 0.70 x 0.61 x 20.42 x 17.02 x 14.80 x 7.73 x 7.63 x

Song Da No5 Joint – Stocks Company SD5 92,000 202,400 0.2% 0.56 x 0.46 x 0.40 x 15.34 x 12.78 x 11.11 x 4.67 x 5.80 x

Song da No 10.1 Joint stock company SNG 84,000 159,600 0.1% 1.76 x 1.47 x 1.28 x 10.98 x 9.15 x 7.95 x 4.02 x 3.91 x

DOAN XA PORT JOINT STOCK COMPANY DXP 46,000 161,000 3.1% 3.07 x 2.56 x 2.23 x 14.04 x 11.70 x 10.18 x 2.94 x 2.90 x

Song Da 909 Joint Stock Company S99 385,000 192,500 4.3% 3.30 x 2.75 x 2.39 x 59.47 x 49.56 x 43.09 x 17.83 x 11.79 x

Song Da No6 Joint – Stocks Company SD6 69,500 159,850 0.5% 0.55 x 0.45 x 0.40 x 11.09 x 9.25 x 8.04 x 3.36 x 3.87 x

Song Da No 11 Joint Stock Company SJE 67,000 134,000 0.2% 0.53 x 0.44 x 0.38 x 15.45 x 12.88 x 11.20 x 3.61 x 3.81 x

Song Da 3 joint stock company SD3 56,100 112,200 0.3% 0.58 x 0.48 x 0.42 x 27.95 x 23.29 x 20.25 x 4.53 x 4.47 x

Song Da No 91 Joint Stock Company S91 37,000 55,500 0.7% 0.90 x 0.75 x 0.65 x 11.43 x 9.53 x 8.29 x 2.63 x 2.59 x

Song Da 505 joint stock company S55 76,300 53,410 0.5% 0.52 x 0.44 x 0.38 x 11.72 x 9.76 x 8.49 x 3.81 x 3.61 x

Song Da 6.04 joint stock company S64 53,000 37,100 2.4% 1.49 x 1.24 x 1.08 x 13.24 x 11.04 x 9.60 x 3.19 x 3.59 x

Sector averaSector averaSector averaSector averagegegege 335,381 335,381 335,381 335,381 1.99 x1.99 x1.99 x1.99 x 1.66 x1.66 x1.66 x1.66 x 1.44 x1.44 x1.44 x1.44 x 20.76 x20.76 x20.76 x20.76 x 17.30 x17.30 x17.30 x17.30 x 15.04 x15.04 x15.04 x15.04 x 5.25 x5.25 x5.25 x5.25 x 4.90 x4.90 x4.90 x4.90 x

TickerTickerTickerTicker PricePricePricePrice Market CapMarket CapMarket CapMarket Cap Foreign Foreign Foreign Foreign ownership ownership ownership ownership Price to salesPrice to salesPrice to salesPrice to sales P/EP/EP/EP/E P/BVP/BVP/BVP/BV

NONNONNONNON----CORE CONSTRUCTIONCORE CONSTRUCTIONCORE CONSTRUCTIONCORE CONSTRUCTION (VND)(VND)(VND)(VND) (Million VND)(Million VND)(Million VND)(Million VND) (%)(%)(%)(%) 2006200620062006 2007E2007E2007E2007E 2008E2008E2008E2008E 2006200620062006 2007E2007E2007E2007E 2008E2008E2008E2008E 2006200620062006 Q1 200Q1 200Q1 200Q1 2007777

FPT FPT 307,000 28,003,111 18.6% 1.31 x 1.09 x 0.95 x 52.28 x 43.57 x 37.89 x 17.88 x 16.60 x

Refrigeration Electrical Engineering Corporation REE 150,000 8,589,058 49.0% 10.42 x 8.68 x 7.55 x 38.61 x 32.18 x 27.98 x 7.91 x 4.23 x

Kinh Do Corporation KDC 236,000 8,495,581 38.3% 8.51 x 7.09 x 6.17 x 49.78 x 41.48 x 36.07 x 14.51 x 13.60 x

General Forwarding & Agency Corporation GMD 147,000 6,386,783 51.3% 5.97 x 4.98 x 4.33 x 39.82 x 33.18 x 28.85 x 10.27 x 3.02 x

Sacom Cables & Telecom Materials JSC SAM 165,000 6,177,506 49.0% 3.73 x 3.11 x 2.71 x 30.31 x 25.26 x 21.97 x 8.37 x 8.31 x

Saigon General Service Joint stock company SVC 85,000 1,094,240 0.2% 0.94 x 0.79 x 0.68 x 23.87 x 19.89 x 17.29 x 5.53 x 5.39 x

Full Power Joint Stock Company FPC 58,500 877,500 4.3% 1.77 x 1.47 x 1.28 x 26.05 x 21.71 x 18.88 x 3.07 x 3.02 x

Song Da International Manpower Supply & Trading Joint stock corp. SDA 316,000 632,000 0.7% 15.09 x 12.57 x 10.93 x 39.53 x 32.94 x 28.64 x 16.33 x 16.40 x Source: Reuters, Horizon Securities, Dated 29-Jun-2007, forward looking numbers are based on 20% growth in 2007 and 15% growth in 2008


19

5.1 Construction & Real estate companies

The CONSREAL 500 INDEX, which includes all construction & real estate companies with a market cap of at least VND500 billion, was the best performing sub-index of the construction industry. Since the beginning of 2007, it has gained 82%, beating both the VNIndex and the HaSTC Index by 46% and 72% respectively. The rally in construction and real estate stocks has been fueled by the thriving real estate and property development market.

2 Horizon Securities clients can contact their account manager to get more information on how they can invest in the same proportions set out in any of the HRS Indices.

Figure 24. HRS CONSREAL 500 INDEX2

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20

ITA ITA ITA ITA –––– TAN TAO INDUSTRIAL CORPORATIO TAN TAO INDUSTRIAL CORPORATIO TAN TAO INDUSTRIAL CORPORATIO TAN TAO INDUSTRIAL CORPORATIONNNN

The Tan Tao Industrial Park was established in 1996 and owns a total area of 442ha making it one of the 10 largest industrial parks in Ho Chi Minh City. In January, it became the first industrial park in the country to receive the ISO 9001: 2000 certification. Besides its industrial park the company also specializes in construction services in industrial, civil and transportation works. Revenues and ProfitsRevenues and ProfitsRevenues and ProfitsRevenues and Profits In 2006, revenue reached VND367.538bil (US$23mln), up 15.38% compared to 2005. Net profit was VND148.773bil (US$9.3mln), up 33.57%. In 2007, management expects revenues and profits to reach VND572bil (US$35.75mln.) and VND300bil (US$18.75mln) respectively. In addition to high revenue and earnings’ growth, the company has maintained sound EBITDA margins of approximately 50% over the past two years. Raising charter capital Raising charter capital Raising charter capital Raising charter capital In April 2007, ITA did a secondary public offering and raised VND950bil (US$59.4mln) which the company will use to invest in five new projects:

1. Tan Duc Industrial AreaTan Duc Industrial AreaTan Duc Industrial AreaTan Duc Industrial Area worth VND280bil (US$17.5mln) 2. Tan Tao Residential AreaTan Tao Residential AreaTan Tao Residential AreaTan Tao Residential Area 100ha in Tan Binh Province worth VND150bil

(US$9.375mln) 3. Tan Duc Residential AreaTan Duc Residential AreaTan Duc Residential AreaTan Duc Residential Area 346ha at Duc Hoa District – Long An Province worth

VND200bil (US$12.5mln) 4. Asia CollegeAsia CollegeAsia CollegeAsia College – UOSA worth VND200bil (US$12.5mln) 5. Sai GonSai GonSai GonSai Gon----MeMeMeMekkkkong E.Cityong E.Cityong E.Cityong E.City which includes residential, commercial, and office

space on more than 1000 ha worth VND120bil (US$7.5mln) Other projectsOther projectsOther projectsOther projects::::

1. Contributed 51% on charter capital, of VND510bil (US$31.875mln) to establish ITAITAITAITA----POWER JSC POWER JSC POWER JSC POWER JSC in Long An Province.

3 HRS Calculations, floating shares was calculated by subtracting shares held by Government, founding members and board

of directors from outstanding shares.

Table 1. Basic InformationTable 1. Basic InformationTable 1. Basic InformationTable 1. Basic Information

Charter Capital (mln VND) 600,000 Market Capital (mln VND) 8,460,000 Outstanding shares

60,000,000

Float3

20,590,830

Total room for foreign investor

29,400,000

Current room for foreign investor

17,621,560

Average volume (30 days) 87,588

Table 2. Table 2. Table 2. Table 2. MultiplesMultiplesMultiplesMultiples

PE 23.44 x BV (VND) 18,507

P/BV

6.61 x EV/EBITDA 42.29 x DPS (VND) 1,000 DY (%) 0.82%

Price (19 June 2007)Price (19 June 2007)Price (19 June 2007)Price (19 June 2007) 122,286122,286122,286122,286

Last (VND) 122,286 52 Wk high (VND) (1 Mar 2007)

146,569

52 Wk low (VND) (15 Nov 2006)

46,833

PerformancePerformancePerformancePerformance 1M1M1M1M 3M3M3M3M 6M 6M 6M 6M

Absolute (%) 2.92% -6.00% 50.00%

Relative (%) 4.55% 1.43% 1.90%


21

2. Contributed 80% of the chartered capital to establish the Tan Duc Tan Duc Tan Duc Tan Duc CorporationCorporationCorporationCorporation which has invested in a water treatment plant with capacity of 300,000 m3/day under a BOO contract.

3. Established TASERCO TASERCO TASERCO TASERCO CorporationCorporationCorporationCorporation, a 100% owned subsidiary with charter capital of VND120 billion engaged in providing infrastructure services for industrial zones.

4. Invested VND250bil (US$15.625mln) in a hydropowerhydropowerhydropowerhydropower plant plant plant plant with capacity of 70MW in the Lai Chau Province. The plant is expected to be operational in 2009.


22

SJS SJS SJS SJS –––– SONG DA URBAN & INDUSTRIAL ZONE INVESTMENT AND DEVELOPMENT JOINT SONG DA URBAN & INDUSTRIAL ZONE INVESTMENT AND DEVELOPMENT JOINT SONG DA URBAN & INDUSTRIAL ZONE INVESTMENT AND DEVELOPMENT JOINT SONG DA URBAN & INDUSTRIAL ZONE INVESTMENT AND DEVELOPMENT JOINT STOCK COMPANY (Sudico)STOCK COMPANY (Sudico)STOCK COMPANY (Sudico)STOCK COMPANY (Sudico)

Sudico was equitized in 2003, and is a member of the State-owned Song Da Corporation. As such, Song Da Corp. still owns 51% of company. The company specializes in the construction and sale of residential buildings. Its main products are high-end apartments and villas. The company estimates it holds approximately 3% of the retail construction & real estate market. Management has been able to maintain net profit margins of about 35% despite the intense competition in the industry and increasing input prices. The company’s main investment projects include:

1.1.1.1. Tran Hung Dao Residence in Hoa Binh ProvinceTran Hung Dao Residence in Hoa Binh ProvinceTran Hung Dao Residence in Hoa Binh ProvinceTran Hung Dao Residence in Hoa Binh Province –––– Total land area is 240,000m2 with the investment of VND 148bil (US$ 9.25mln). The project is expected to generate VND 207bil (US$ 12.94mln) in total revenue.

2.2.2.2. Song DaSong DaSong DaSong Da----Ngoc Vung Ecological Area in Quang Ngoc Vung Ecological Area in Quang Ngoc Vung Ecological Area in Quang Ngoc Vung Ecological Area in Quang Ninh ProvinceNinh ProvinceNinh ProvinceNinh Province –––– This 39ha area will include mini-hotels, entertainment facilities and tourism services on Ngoc Vung Island which. The project is now at the last stage of completion and total invested will be VND248bil (US$15.5mln). Management expects the project will generate revenues of VND 37.75bil (US$ 2.36mln) to VND 93.73bil (US$ 5.86mln) per year from 2008 to 2018.

3. My DinhMy DinhMy DinhMy Dinh----Me Tri Urban Area in Ha NoiMe Tri Urban Area in Ha NoiMe Tri Urban Area in Ha NoiMe Tri Urban Area in Ha Noi –––– The company has spent about VND 287bil (US$ 18mln) on this project.

4. Nam An Khanh Urban Arre in Ha TayNam An Khanh Urban Arre in Ha TayNam An Khanh Urban Arre in Ha TayNam An Khanh Urban Arre in Ha Tay –––– Total land area of this project is 312ha and invested capital will be VND 1,374bil (US$ 85.88mln). The project will be completed in the fourth quarter of 2008.

5.5.5.5. Song DaSong DaSong DaSong Da----Ha Long Hotel in Quang NinhHa Long Hotel in Quang NinhHa Long Hotel in Quang NinhHa Long Hotel in Quang Ninh –––– The project covers an area of 18,730m2 and will include a four star hotel and 26 villas for rent.

6.6.6.6. Tien XuanTien XuanTien XuanTien Xuan----HHHHoa Binh Ecologoa Binh Ecologoa Binh Ecologoa Binh Ecological Urbanical Urbanical Urbanical Urban –––– The total land area of 1,400ha was handed over by the Song Da Corporation.


Charter Capital (mln VND)

200,000

Market Capital (mln VND)

6,040,000

Outstanding shares

20,000,000

Float

17,450,000


9,800,000


6,619,120

Average volume (30 days)

181,547

Table 2. MultiplesTable 2. MultiplesTable 2. MultiplesTable 2. Multiples

PE 52.57 x

BV (VND)

27,135 P/BV 11.61 x EV/EBITDA 47.46 x

DPS (VND)

2,000 DY (%) 0.66%

Price (03 July 2007)Price (03 July 2007)Price (03 July 2007)Price (03 July 2007) 302,000 302,000 302,000 302,000

Last (VND)

302,000

52 Wk high (VND) (26 Jun 07)

338,000 52 Wk low (VND) (1 Aug 06) 14,420 PerformancePerformancePerformancePerformance 1M1M1M1M 3M3M3M3M 6M 6M 6M 6M

Absolute (%) 35.43% 52.86% 268.63%

Relative (%) 43.40% 57.80% 239.70%


23



170,000


3,270,932

Outstanding shares

16,354,660

Float

14,655,800


8,330,000


0 Average volume (30 days) 66,359

Table 2. MultipleTable 2. MultipleTable 2. MultipleTable 2. Multiplessss

PE 40.56 x

BV (VND)

33,194 P/BV 6.03 x EV/EBITDA 92.50 x

DPS (VND)

1,200 DY (%) 0.6%

PricPricPricPrice (28 June 2007)e (28 June 2007)e (28 June 2007)e (28 June 2007) 200,000 200,000 200,000 200,000

Last (VND)

200,000

52 Wk high (VND) (15 Dec 06)

315,000

52 Wk low (VND) (03 Jan 07)

174,000 PerformancePerformancePerformancePerformance 1M1M1M1M 3M3M3M3M 6M 6M 6M 6M

Absolute (%) -11.11% 3.63% 14.94%

Relative (%) -6.14% 2.43% -22.89%

TDH TDH TDH TDH –––– THU DUC HOUSE THU DUC HOUSE THU DUC HOUSE THU DUC HOUSE

The company’s main line of business is real estate,

but it is also involved in a wide range of other

activities. In order to increase its market share and

diversify its products and services, TDH cooperated

with several partners to form various joint-venture

companies.

Subsidiaries and jointSubsidiaries and jointSubsidiaries and jointSubsidiaries and joint----venture companies:venture companies:venture companies:venture companies:

Affiliated companiesAffiliated companiesAffiliated companiesAffiliated companies Committed holdingCommitted holdingCommitted holdingCommitted holding

1 Agro-market Management Ltd. Co

100%

2 Daewon –Thu Duc Housing Development JV

40%

3 Dong An Binh Pure Ice Ltd. Co.

50%

4 Tam Binh – Thu Duc Services Co. Ltd.,

40%

5 Phong Phu - Da Lat Investment & Commercial Corporation

44%

6 Tang Nho Phu Petro Station

20%

7 Phong Duc Construction Ltd Co.

65%

8 Phong Phu Investment Joint Stock Company

26%

9 Thu Duc BOO Water Pump Joint Stock Company 10%


24

5.2 Infrastructure companies

The INFRA 500 INDEX, includes all infrastructure construction companies with a market cap of at least VND500 billion. The INFRA 500 was the second best performing sub-index in construction industry. However, since the beginning of 2007, it only beat the VNIndex by 1.5% and beat the HaSTC Index by 27.5%.

Figure 25. HRS INFRA. INDEX 500

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25

CII CII CII CII –––– HO CHI MINH INFRASTRUCTURE INVESTMENT JOINT STOCK COMPANY HO CHI MINH INFRASTRUCTURE INVESTMENT JOINT STOCK COMPANY HO CHI MINH INFRASTRUCTURE INVESTMENT JOINT STOCK COMPANY HO CHI MINH INFRASTRUCTURE INVESTMENT JOINT STOCK COMPANY

The company focuses on construction services for civil, industrial, and transportation works as well as for urban infrastructure projects under BOT and BOO contracts. CII’s founders are the Ho Chi Minh City Investment Fund (HIFU), the Vietnam Youth Corporation (VYC), and the Investment and Services Company (INVESCO). As at the beginning of 2007, the company had 287 employees. In 2006, the company’s revenue increased by 4.3% from VND 175.64bil (US$ 10.98mln) to VND 193.29bil (US$ 12.08mln). Revenue from toll roads represented 86.2% of total revenue. In 2006, net income increased by 67.6% compared to 2005. The main reasons behind the strong increase in net income were an adjustment in the amortization calculation and financial income.

Ongoing pOngoing pOngoing pOngoing projectrojectrojectrojectssss

1. Thu Duc Water Treatment PlantThu Duc Water Treatment PlantThu Duc Water Treatment PlantThu Duc Water Treatment Plant –––– Is expected to be online in August 2007. The company will invest about VND 77.012bil (US$ 4.81mln) in Thu Duc BOO Water Company.

2. Kenh Dong Water Treatment PlantKenh Dong Water Treatment PlantKenh Dong Water Treatment PlantKenh Dong Water Treatment Plant –––– The investment capital will be VND 47.4bil (US$ 2.96mln) in this year and it is projected to be in operations by 2008.

3. Phu My Bridge Phu My Bridge Phu My Bridge Phu My Bridge –––– Once completed the company will have invested VND 10bil (US$ 0.63mln).

4. Hoa Phu InduHoa Phu InduHoa Phu InduHoa Phu Industry Areastry Areastry Areastry Area – TDH will invest VND 10.5bil (US$ 0.66mln) in the Hoa Phu JSC.

5. Binh Trieu 2 Bridge Binh Trieu 2 Bridge Binh Trieu 2 Bridge Binh Trieu 2 Bridge – The project total investment capital of VND 1,000bil (US$ 62.5mln). Stage 2 of the project will be completed by 2008.

6. HighHighHighHigh----Tech ParkTech ParkTech ParkTech Park – CII is a founder of the High-Tech Park Development and Investment JSC and holds 5% of its shares.

7. Truong Dinh Hoi 2 Block and 155 Nguyen Chi Thanh BlockTruong Dinh Hoi 2 Block and 155 Nguyen Chi Thanh BlockTruong Dinh Hoi 2 Block and 155 Nguyen Chi Thanh BlockTruong Dinh Hoi 2 Block and 155 Nguyen Chi Thanh Block – The project has a total investment capital of over VND 75bil (US$ 4.69mln).

Future pFuture pFuture pFuture projectrojectrojectrojectssss

1. Dong Tam Water Treatment PlantDong Tam Water Treatment PlantDong Tam Water Treatment PlantDong Tam Water Treatment Plant (Tien Giang Province) – A BOO contract with an investment capital of VND 560bil (US$ 35mln). CII, Tien Giang Capital, Lottery Company and Water Supply Company are together the founders of this project. CII holds 39% of VND 200bil (US$ 12.5mln) of the charter capital.

2. 152 Dien Bien Phu Building152 Dien Bien Phu Building152 Dien Bien Phu Building152 Dien Bien Phu Building – Started in 2007 with a VND 416bil (US$ 26mln) of investment capital.

3. Tan An Hoi Resident AreaTan An Hoi Resident AreaTan An Hoi Resident AreaTan An Hoi Resident Area – covers an area of 102ha.



300,000


2,040,000

Outstanding shares

30,000,000

Float

22,750,000


14,700,000


79,130 Average volume (30 days) 54,909


PE 42.15 x

BV (VND)

12,406 P/BV 5.4 x EV/EBITDA 18.14 x

DPS (VND)

1,200 DY (%) 1.76%

PPPPrice (25 June 2007)rice (25 June 2007)rice (25 June 2007)rice (25 June 2007) 68,000 68,000 68,000 68,000

Last (VND)

68,000

52 Wk high (VND) (9 Mar 07)

92,000

52 Wk low (VND) (2 Aug 06)

26,200


Absolute (%) -10.53% -15.00% 94.29%

Relative (%) -6.78% -9.94% -10.10%


26

SDT SDT SDT SDT –––– SONG DA 10 JOINT STOCK COMPANY SONG DA 10 JOINT STOCK COMPANY SONG DA 10 JOINT STOCK COMPANY SONG DA 10 JOINT STOCK COMPANY

Song Da 10 specializes in the construction of hydropower plants and transportation works. The company owns 70% of the total drilling construction market in Vietnam. It is also engaged in industrial and civil construction, as well as trading construction materials and equipment. Besides holding minority interests in investment, construction, and steel companies in Vietnam, SDT owns 63.7% of Song Da 10.1 Corporation (HaSTC: SNG). The company was listed on the Hanoi Stock Trading Center in December 2006. In 2006, the company made VND446.1 billion (US$27.9 million) in revenue up 11.08% compared to 2005. Net profit reached VND36.519 billion (US$2.3 million), up 186.27% from 2005. Management forecasts net income to reach VND551.326 bil (US$34.458mln) this year. Projects and InvestmentsProjects and InvestmentsProjects and InvestmentsProjects and Investments

1. Investment in machinery repair and assembly in the Northern and Central provinces.

2. Investment in construction materials for producing cement and concrete. 3. Investment for hydropower plants e.g Nam Cum, Nam Chien 2, Dai Nga, etc. 4. Financial investment in associates.

NewsNewsNewsNews In the third quarter of 2007, SDT intends to offer 8 million shares in a secondary public offering and hopes to raise up to VND140 bil (US$8.75mln).



60,000


768,000

Outstanding shares 6,000,000

Float 2,330,400

Total room for foreign investor 2,940,000

Current room for foreign investor 2,486,200



PE 21.03 x

BV (VND)

18,883

P/BV 6.78 x

EV/EBITDA 12.5 x

DPS (VND)

1,800

DY (%) 1.41%

Price (02 Jul 2007)Price (02 Jul 2007)Price (02 Jul 2007)Price (02 Jul 2007) 128,000 128,000 128,000 128,000

Last (VND)

128,000


210,000

52 Wk low (VND) (27 Dec 2006)

61,000


Absolute (%) -14.67% -26.90% 95.12%

Relative (%) -2.17% -2.02% 73.46%


27

SD9 SD9 SD9 SD9 –––– SONG DA NO 9 JOINT STOCK COMPANY SONG DA NO 9 JOINT STOCK COMPANY SONG DA NO 9 JOINT STOCK COMPANY SONG DA NO 9 JOINT STOCK COMPANY

In operations for over 40 years, Song Da No 9 is a member of the State-owned Song Da Corporation. The company focuses on mechanical engineering for power plants, and on irrigation and transportation works. The company has been contracted for local & overseas projects, and has invested in small- & medium-size power plants, housing projects, and office buildings. In 2007, management intends to increase the company’s chartered capital to VND150 billion (US$9.4 million) by issuing VND10.5 billion in dividend shares, VND29.5 billion to existing shareholders and VND40 billion as a secondary public offering.

Projects and InvestmentProjects and InvestmentProjects and InvestmentProjects and Investmentssss::::

1. Nam Ngan Hydroelectricity Nam Ngan Hydroelectricity Nam Ngan Hydroelectricity Nam Ngan Hydroelectricity – Located in Tan Thanh Commune, Bac Quang Dist, Ha Giang Province with a total investment of VND251 billion (US$15.7 million) and a capacity of 13.5 MW. Construction began in 2005 and is expected to be completed by the second quarter of 2008.

2. Song Giang HydroelectricitySong Giang HydroelectricitySong Giang HydroelectricitySong Giang Hydroelectricity – To commence working in 1st 2011, Song Giang 2 with capacity of 18MW estimated to consume VND330bn has been built sine 1st 2008 at Quang Nam Province.

3. Phinh Ho HydroelectricityPhinh Ho HydroelectricityPhinh Ho HydroelectricityPhinh Ho Hydroelectricity – Total investment of VND115bn, Phinh Ho Hydropower plant construction will last until the first quarter of 2009 with capacity of 6MW in Yen Bai Province.

4. Song DaSong DaSong DaSong Da Mechanical Mechanical Mechanical Mechanical Manufacturing PlantManufacturing PlantManufacturing PlantManufacturing Plant – Beginning in 2008 with capacity of VND25bn, Song Da No 9 is going to invest into a machinery components production line.



70,000


529,200

Outstanding shares

7,000,000

Float

5,464,647


3,430,000


3,304,500 Average volume (30 days) 24,492

Table 2. RatioTable 2. RatioTable 2. RatioTable 2. Ratio

PE 21.25 x

BV (VND)

13,926 P/BV 5.26 x EV/EBITDA 8.19 x DPS (VND) 0 DY (%) 0.00%

Price (28 June 2007)Price (28 June 2007)Price (28 June 2007)Price (28 June 2007)

75,600 75,600 75,600 75,600

Last (VND)

75,600


144,000

52 Wk low (VND) (29 Dec 2006)

27,000


Absolute (%) 1.48% 2.86% 44.00%

Relative (%) 1.37% 13.96% 6.08%


28

5.3 Construction materials companies

The MATERIALS 500 INDEX, which includes all building materials companies with a market cap of at least VND500 billion, was the worst performing sub-index of the construction industry. Since the beginning of 2007, although it beat the HaSTC index by 23.2%, it actually lost ground against the VNIndex. Construction material companies have had to deal with rising input prices on the one hand and government-imposed

price ceilings on the other. Although Hanoi is now giving them more leeway to increase their sales price, stiff competition is impeding their ability to pass on these increases to consumers. As a result, we expect building materials producers to experience tighter margins. Two of the three largest building materials companies are involved in the cement industry which faces a potential oversupply in the next few years.

Figure 26. HRS MATERIALS INDEX 500

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4/4/

2007

4/12

/200

7

4/20

/200

7

5/4/

2007

5/14

/200

7

5/22

/200

7

5/30

/200

7

6/7/

2007

6/15

/200

7

6/25

/200

7

7/3/

2007

HRS MATERIALS INDEX VN-INDEX HaSTC INDEX



29



900,000


3,915,000

Outstanding shares:

90,000,000 Float: 4,985,800

Total room for foreign investor :

44,100,000

Current room for foreign investor:

37,820,500 Average volume (30 days): 42,390

Table 2. RatioTable 2. RatioTable 2. RatioTable 2. Ratio

PE 53.38 x

BV (VND)

10,861 P/BV 4.01 x EV/EBITDA 5.26 x

DPS (VND)

700 DY (%) 1.61%


43,500 43,500 43,500 43,500

Last (VND):

43,500

52 Wk high (VND):(20 Mar 2007)

55,800

52 Wk low (VND): (13 Dec 2006)

20,400


Absolute (%) -3.33% 17.57% 97.73%

Relative (%) 12.47% 46.27% 79.03%

BTS BTS BTS BTS –––– BUT SON CEMENT JOINT STOCK COMPANY BUT SON CEMENT JOINT STOCK COMPANY BUT SON CEMENT JOINT STOCK COMPANY BUT SON CEMENT JOINT STOCK COMPANY

But Son Cement’s principal activities include the manufacture and sale of cement and clinker. Approximately 95% of But Son products are consumed mainly in Northern Provinces, as competition in the cement industry typically occurs at the local level due to high transportation costs and because cement is a perishable commodity. Only a few larger companies, such as But Son, have distribution networks that span from the Northern to the Central regions. Currently But Son Cement is one of the three largest cement companies in Vietnam. But Son Cement was equitized in early 2005 and was listed on the Hanoi Stock Exchange in May 2006. But Son’s current production capacity is 1.6 million tons per year. However, the company has invested US$185 million in a new dry rotary kiln production line that will add another 1.4 million tons per year of capacity by the end of 2008.


30

In 2006, net profit increased by 12%. The company has the highest EBITDA margin among the listed Vietnamese cement producers. However, the company is also trading at high premium compared to regional peers, which typically trade at an average of US$127/per ton of capacity and 11.6x EBITDA.

Figure 27. EBITDA margin (%)EBITDA margin (%)EBITDA margin (%)EBITDA margin (%) Figure 28. EBIT margin (%)EBIT margin (%)EBIT margin (%)EBIT margin (%)

27.9% 27.4% 27.1% 26.9%25.5%

19.5% 19.1% 18.5% 17.8%16.4%

13.9%

9.5%

37.5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Gujarra

t A.C

ement

Indocem

en t

Sement G

resik

Asian Cem

ent

But Son C

ement

Siam

City

Cem

ent

Taiwan C

ement

Siam

Cem

ent

Bim S

on Cem

ent

TPI Polene

Song Da C

ement

Holcim

Indonesia

Son g Da Y

aly Cem

ent

Average 24%

22.5%22.3%

20.0%

16.2%15.4%

11.0%10.4% 9.7%

4.3%

0.5%

14.5%14.0%

31.7%

0%

5%

10%

15%

20%

25%

30%

35%

Gujarr

at A.C

ement

Siam

City

Cem

ent

Sement G

resik

Indocem

ent

But Son C

ement

Taiwan C

ement

TPI Polene

Siam

Cem

ent

Asian Cem

ent

Bim S

on Cem

ent

Songda Cem

en t

Song Da Y

aly Cem

ent

Holcim

Indonesia

Average 16.9%

Source: Company data, Reuters, Horizon Securities; Average calculated ex-Vietnamese companies

Source: Company data, Reuters, Horizon Securities; EBIT before amortization of goodwill; Average calculated ex-Vietnamese companies

Figure 29. EV/Ton (US$) Figure 30. EV/EBITDA (x)

263

198

159

141 137 135

92

7161

37

106109111

-

50

100

150

200

250

300

Gujar

rat A

.Cem

ent

ButSon

Cem

ent

Indo

cem

ent

Siam

City

Cem

ent

Bimso

n Cem

ent

Semen

t Gre

sik

TPI Polen

e

Song

Da

Yaly Cem

ent

Siam

Cem

ent

Hol

cim In

done

sia

Asian

Cem

ent

Taiwan

Cem

ent

Song

Da

Cem

ent

Average US$127/ton

21.8

19.4

16.5

15.4 15.3

9.8

6.5 6.2 6.25.7

10.7

11.2 11.2

-

5.0

10.0

15.0

20.0

25.0

Hol

cim In

dones

ia

ButSon

Cem

ent

Bimso

n Cem

ent

Taiwan

Cem

ent

Asian

Cem

ent

Indo

cem

ent

TPI Pole

ne

Siam

City

Cem

ent

Song

Da

Yaly

Cemen

t

Siam

Cem

ent

Gujar

rat A

.Cem

ent

Semen

t Gre

sik

Song

Da

Cem

ent

Average 11.6x




31



900,000


3,465,000

Outstanding shares

90,000,000

Float

23,355,950


44,100,000



Table 2. RatTable 2. RatTable 2. RatTable 2. Ratioioioio

PE 47.54 x

BV (VND)

10,751 P/BV 3.58 x EV/ EBITDA 20.51 x

DPS (VND)

467 DY (%) 1.21%


38,500 38,500 38,500 38,500

Last (VND)

38,500


59,400

52 Wk low (VND) (13 Dec 2006)

18,200


Absolute (%) -2.04% -1.28% 78.24%

Relative (%) 13.77% 27.42% 59.55%

BCCBCCBCCBCC –––– BIM SON CEMENT JOINT STOCK COMPANY BIM SON CEMENT JOINT STOCK COMPANY BIM SON CEMENT JOINT STOCK COMPANY BIM SON CEMENT JOINT STOCK COMPANY

Bim Son’s principal activities include the manufacture and sale of clinker and cement. Like But Son, Bim Son cements are distributed in Northern and Central provinces of Vietnam. Bim Son cement is one of the top 10 cement production company in Vietnam and accounts for 14% in its Northern market. In May 2006 Bim Son was equitized and listed on the HaSTC in November 2006. Bim Son’s factory was built in the early of 1980s with blast-furnace technology from the Soviet Union and a design capacity of 1.2 million tons per year. In 2001, they increased their capacity to its current levels of 1.8 million tons. Having spoken to management, we learned they can run the plant to produce up to 1.9 million tons per year. Bim Son's management forecasts sales for the year 2007 and 2008 to increase by 10.3% and 6.1% respectively mainly due to current strong demand for construction and cement. Bim Son expects to put into operation a new production line that will increase its total capacity to 3.8 million ton per year by the middle of 2009. The total project will cost the company close to US$255.3 million, roughly US$128 per ton of new capacity. Bim Son’s has an EBITDA margin of 18.5% below regional average of 24%. At current production levels, the company has an enterprise value of US$137 per ton which is slightly higher than its regional peers and trading at premium to replacement costs.


32



299,736


890,216

Outstanding shares

29,973,594 Float

4,969,000


2,434,810


1,264,019


36,809

Table 2. MultiTable 2. MultiTable 2. MultiTable 2. Multipleplepleple

PE 15.48 x

BV (VND)

17,195 P/BV 1.74 x EV/ EBITDA 10.74 x DPS (VND) 0 DY (%) 0.00%


Last (VND)

29,700


49,000

52 Wk low (VND) (18 Jan 07)


Absolute (%) -12.65% -17.50% -17.50%

Relative (%) -8.08% -13.95% -45.99%

TCR TCR TCR TCR ---- TAICERA ENTERPRISE COMPANY TAICERA ENTERPRISE COMPANY TAICERA ENTERPRISE COMPANY TAICERA ENTERPRISE COMPANY

Taicera listed on the HOSE since 29 December 2006. The company was founded in 1994 by a cooperation of the three leading Taiwanese ceramic manufactures; Zun Lity Tile Manufacture, Engar enterprise and Chang-Feng Ceramic industrial. These three manufactures have been in the ceramic industry for over 30 years. Taicera is one of the first six foreign-invested companies to become a joint stock company in Vietnam. They focus on producing ceramics tiles, granite tiles and polished granite tiles and on building civil projects. Over 70% of its revenue is generated from the sale of granite tiles. Export production has been about 61% in total consumption over the last three years. Taicera owns six branches in Ho Chi Minh City, Hai Phong, Can Tho, Da Nang, Ha Noi, Nha Trang and employees about 1,075 employees.


33



608,102


28,094,326

Outstanding shares

91,215,344

Float

73,321,254


44,695,519




PE 52.45 x

BV (VND)

18,535 P/BV 16.63 x EV/EBITDA 50.36 x DPS (VND)

600

DY (%) 0.2%


Last (VND)

308,000

52 Wk high (VND) (27 Feb 07)

443,330

52 Wk low (VND) (13 Dec 06)


Absolute (%) -6.67% -10.29% -5.72%

Relative (%) -2.21% -7.30% -25.29%

5.4 Non-core real estate companies In an effort to capitalize on the real estate boom, many listed companies have been actively investing in property development and real estate. We have highlighted eight listed companies with a market capitalization of at least VND500 billion that have been investing in real estate as a non-core activity. FPT FPT FPT FPT ---- THE CORPORATIO THE CORPORATIO THE CORPORATIO THE CORPORATION FOR FINANCING & PROMOTING TECHNOLOGYN FOR FINANCING & PROMOTING TECHNOLOGYN FOR FINANCING & PROMOTING TECHNOLOGYN FOR FINANCING & PROMOTING TECHNOLOGY

The Corporation for Financing & Promoting Technology (FPT) was founded in 1988 and equitized in 2002. Its main businesses include:

� Networking

� Software & outsourcing

� Internet & communications solution

� Game & media online

� Mobile phone & IT products distribution

FPT intends to expand its business into financial services and real estate, and has set up a fund management and securities company.

FY06 net profit up 77.7% FY06 net profit up 77.7% FY06 net profit up 77.7% FY06 net profit up 77.7% YOYYOYYOYYOY

In 2006, PFT recoded VND21.4trn (US$1.34bn) in revenue, up 51.8% YOY. Net profit was VND536bn (US$33.5 million), increased by 77.7% compared to 2005.

Major investments in 2007Major investments in 2007Major investments in 2007Major investments in 2007

1. Develop the FPT Software ParkFPT Software ParkFPT Software ParkFPT Software Park in Hoa Lac near Hanoi which spans over 12.4ha with 120,000m2 construction area and a total investment of US$58mln. Construction for first phase will last from 2007 to 2009, and second phase will be complete in 2011.

2. Construction of the 27272727----stories FPT Office Bstories FPT Office Bstories FPT Office Bstories FPT Office Buildinguildinguildinguilding in Lang Ha, Hanoi. Total construction area is 37,125m2.

3. Establish FPT Media & EntFPT Media & EntFPT Media & EntFPT Media & Entertainmentertainmentertainmentertainment JSC JSC JSC JSC with a total capital of VND50bn. 4. Jointly establish FPT Online Services JSCFPT Online Services JSCFPT Online Services JSCFPT Online Services JSC, with a total investment of VND9.6bn.


34



572,604


8,703,579

Outstanding shares

57,260,388

Float

54,145,550


28,057,590 Current room for foreign investor - Average volume (30 days): 177,006


PE: 19.94 x

BV: (VND)

18,955 P/BV: 8.02 x EV/ EBITDA 50.90 x

DPS: (dong)

1,600 DY (%): 1.05%


152,000 152,000 152,000 152,000

Last (VND):

152,000

52 Wk high (VND):(29 Mar 2007)

190,000

52 Wk low (VND): (1 Aug 2006)


Absolute (%) -11.21% -16.52% 74.55%

Relative (%) -4.42% -15.77% 38.70%

REE REE REE REE –––– REFRIGERATION ELECTRICAL ENGINEERING CORPORATION REFRIGERATION ELECTRICAL ENGINEERING CORPORATION REFRIGERATION ELECTRICAL ENGINEERING CORPORATION REFRIGERATION ELECTRICAL ENGINEERING CORPORATION

The Refrigeration Electrical Engineering Corporation (REE) was established in 1977 & equitized in 1993. Company’s principal activities include:

� Refrigeration and electrical engineering for industrial projects.

� Manufacturing white goods for households. � Invest, develop and operate real estate and

property. � Invest in infrastructure such as water

treatment and power generation. � Financial investments.

In the past, REE used to specialize in the refrigeration and electrical engineering and the manufacturing of air-conditioners, home appliances, electric panels, industrial mechanic products. However, REE has gradually shifted its core business into real estate development and financial investment field.

1. 1. 1. 1. Refrigeration electrical engineering for industrial Refrigeration electrical engineering for industrial Refrigeration electrical engineering for industrial Refrigeration electrical engineering for industrial worksworksworksworks Current market share is around 30%. In 2006, REE signed four big contracts with:

� Vietnam Television with the total contract value was USD 13 million � Hanoi Petroleum Trade Center with total contract value was VND141.4 billion � Hung Vuong Plaze with total contract value was VND 97.65 billion � Sacombank building with total contract value was VND 47.35 billion

2.2.2.2. Civil Refrigeration Electronic Civil Refrigeration Electronic Civil Refrigeration Electronic Civil Refrigeration Electronic In 2005, the market share of high capacity air conditioner was around 40%. However, the company has had to compete head on with large international brands such as LG, Samsung and Toshiba once the import duties were reduced to 5% because of AFTA. Increased competition has hurt REE’s market share. 3.3.3.3. Real estate business Real estate business Real estate business Real estate business Currently REE owns a 42,000m2 land area on which it can build six office building with a total area of 72,000m2. Management estimates these building would generate VND100 billion (US$6.3mln) in net income by the end of 2007. Current projectsCurrent projectsCurrent projectsCurrent projects

1. Reecorp BReecorp BReecorp BReecorp Buildinguildinguildinguilding in 336 Nguyen Trai St, Dist. 2 with total area of 4,233m2 2. Etown 3Etown 3Etown 3Etown 3 (with total area of 15,000m2) and Etown 4 (with total area of

4,000m2) expected to be operational in 2007.


35



29,999


7,439,995

Outstanding shares

29,999,980

Float

19,298,540


14,699,990 Current room for foreign investor 2,706,489


43,892


PE 45.60 x

BV (VND)

19,858 P/BV 11.88 x EV/EBITDA 45.58 x

DPS (VND)

1,800 DY (%) 0.73%


248,000 248,000 248,000 248,000

Last (VND)

248,000

52 Wk high (VND) (26 Jun 2007)

250,000

52 Wk low (VND) (02 Aug 2006)


Absolute (%) 10.22% 51.06% 98.40%

Relative (%) 15.34% 36.76% 57.19%

3. Office and ROffice and ROffice and ROffice and Residentialesidentialesidentialesidential Building Building Building Building at 9 Doan Van Bo St, with the total construction area of 39,572m2.

4. Industrial DevelopmentIndustrial DevelopmentIndustrial DevelopmentIndustrial Developmentssss in Ho Chi Minh City and Long An with and initial investment capital of VND 680 billion (US$42.5mln).

At the beginning of 2007, REE has established several companies involved in real estate and infrastructure: REE Chuong Duong Land JSDREE Chuong Duong Land JSDREE Chuong Duong Land JSDREE Chuong Duong Land JSD (REE contributed 30%), REE REE REE REE LLLLandandandand (member of REE contributed 10%), REE Hydro Power JSCREE Hydro Power JSCREE Hydro Power JSCREE Hydro Power JSC (REE contributed 20%), Saigon Infrastructure Investment in HiSaigon Infrastructure Investment in HiSaigon Infrastructure Investment in HiSaigon Infrastructure Investment in Hi----Tech Zone JSCTech Zone JSCTech Zone JSCTech Zone JSC (REE contributed 10%).

KDKDKDKDC C C C –––– KINH DO CORPORATION KINH DO CORPORATION KINH DO CORPORATION KINH DO CORPORATION

In 2007, the company intends to diversify activities. The company will maintain 70% of its activities in food processing and the rest will be in property:

� The Le Loi 49-storey building will have a construction space of 171,080m2 and cost the company VND2,656bn (US$166mln). The project’s IRR is estimated at 18%.

� Built on Kinh Do’s old factory lot, the Hiep Binh Phuoc Sky Building will consist of 14 to 20 floors with 1,811 flats and will cost VND1,071bn (US$67mln). The IRR of the project was estimated as high as 142% in addition to profits of VND250bn gained from land revaluation.

� The Cong Hoa Complex Plaza with construction space of 143,138m2 will have a 50 month payback period and an IRR of 41%.


36



604,073


6,647,468

Outstanding shares

43,447,505

Float

37,439,548


22,295,000 Current room for foreign investor 0


39,437


PE 37.59 x

BV (VND)

19,150 P/BV 7.68 x EV/EBITDA 26.92x

DPS ((VND)

1,200 DY (%) 0.78%


153,000 153,000 153,000 153,000

Last (VND)

153,000


208,000

52 Wk low (VND) (2 Aug 2006)


Absolute (%) -8.38% -8.38% 17.69%

Relative (%) -3.26% -22.68% -23.52%

GMD GMD GMD GMD –––– GENERAL FORWARDING & AGENCY CORPORATION GENERAL FORWARDING & AGENCY CORPORATION GENERAL FORWARDING & AGENCY CORPORATION GENERAL FORWARDING & AGENCY CORPORATION

Gemadept was the first State-owned company chosen to be equitized. Its services include port operations, container liner services, shipping agency, container liner agency, container leasing, sea and air freight forwarding, project cargo handling, warehousing, depot service, real estate. To further expand the company’s core business and enhance its competitiveness the company expanded across the country with four branches in Hai Phong, Hanoi, Da Nang and Qui Nhon with six agency offices, three port representatives, two enterprises, one joint venture company and six departments. Gemadept has become one of the biggest players in the sector covering most of the shipping services: from port exploitation and investment to marine transportation, marine services and ship management. Dominant position in Dominant position in Dominant position in Dominant position in heavy cargoheavy cargoheavy cargoheavy cargo transportation transportation transportation transportation servicesservicesservicesservices Ranked second in heavy cargo transportation services, Gemadept is capable of carrying oil stations, turbines and machines as heavy as hundreds of tons. Though currently, most of the company’s revenue is generated from port operation services, the company has been active in real estate development and financial investments to diversify its revenue stream. GMD has made serious commitments to massive property projects which include:

1. Construction of a 22222222----sssstortortortoreeeey y y y OOOOffice ffice ffice ffice BBBBuildinguildinguildinguilding at No. 6 Le Thanh Ton St., downtown Ho Chi Minh City. At a total estimated cost of US$15 million and the building is expected to be completed by the end of 2007.

2. Dung Quat International PortDung Quat International PortDung Quat International PortDung Quat International Port stretching on an area of 30ha to serve the Dung Quat Industrial Zone. At a total cost of US$36mln, it is scheduled be completed by the beginning of 2008.

3. At US$300mln, Cai MepCai MepCai MepCai Mep----Thi Vai Deep Water PortThi Vai Deep Water PortThi Vai Deep Water PortThi Vai Deep Water Port is GMD’s biggest investment project. It will be able to dock 80,000DWT vessels, which is 30,000DWT more than the existing capability.

4. The LelLelLelLeloi oi oi oi Office and Apartment BOffice and Apartment BOffice and Apartment BOffice and Apartment Buildinguildinguildinguilding will have a total built up area of 50,000m2 and will cost US$50mln. It will have 35 floors and will be in operations in 2008.


37

5. The 114 V114 V114 V114 Villas illas illas illas DevelopmentDevelopmentDevelopmentDevelopment along the Rach Chiec River, and covering an area of 5ha, is expected to be ready by the end of 2007 at a cost of US$50mln.

6. GMD will also invest US$125mln in the construction of the 90ha Nhon Hoi Nhon Hoi Nhon Hoi Nhon Hoi International PortInternational PortInternational PortInternational Port in Quy Nhon.

Sustainable market gain of 15% over the years Sustainable market gain of 15% over the years Sustainable market gain of 15% over the years Sustainable market gain of 15% over the years Target to 30% profit increase in 2007, the company worked out its business plans on the basic of historical average growth rate of 15% in sales over the years including the above interesting list of current and future commitment projects. The actual figure of net sales in 2006 was up 23% to VND1,069bn from VND871bn in the previous year, resulting in a surge by 27% to VND209bn for net profit before tax. Raising charter capital Raising charter capital Raising charter capital Raising charter capital Gemadept’s growth is accelerated by raising its charter capital from VND475bn to VND720bn through the issuance of 24,5mln common shares by end of 2007.


38



374,394

Market capital (mln VND)

6,177,506

Outstanding shares

37,439,428

Float

23,312,990


18,345,320 Current room for foreign investor - Average volume (30 days) 60,787


PE 30.31 x

BV (VND)

19,710 P/BV 8.37 x EV/EBITDA 24.39 x

DPS (VND)

1,600 DY (%) 0.97%


165,000 165,000 165,000 165,000

Last (VND)

165,000


212,209

52 Wk low (VND) (2 Aug 2007)


Absolute (%) -8.33% -2.32% 14.58%

Relative (%) -1.54% -1.57% -21.27%

SAM SAM SAM SAM –––– CABLE & TELECOMUNICATIONS MATERIAL JOINT STOCK COMPANY CABLE & TELECOMUNICATIONS MATERIAL JOINT STOCK COMPANY CABLE & TELECOMUNICATIONS MATERIAL JOINT STOCK COMPANY CABLE & TELECOMUNICATIONS MATERIAL JOINT STOCK COMPANY

Established in 1998, its main activities are manufacturing and trading telecom cables and electronic cables for manufacturing household appliances. The company’s main competitors in the sector include TAYA, Vina Daesung JV, Postal Material Company. In 2006, revenue and net profit reached VND1,654 billion (US$103.4mln) and 203.8 billion (US$12.7mln), up by 98% and 12% respectively. Revenue in the first quarter of 2007 was VND713 billion and net profit was VND 48.6 billion. Management intends to raise capital to invest in new projects:

1. Cable MCable MCable MCable Manufacturinganufacturinganufacturinganufacturing P P P Plantlantlantlant in Long Thanh, Dong Nai worth VND131bn (joint venture with Saigon Cable JSC).

2. Investment in Pacific CommunicatioPacific CommunicatioPacific CommunicatioPacific Communication n n n CompanyCompanyCompanyCompany (PCP) in Cambodia worth VND80bn.

3. Increasing its share to 40% in the TaihanTaihanTaihanTaihan----SacomSacomSacomSacom (TSC) for a total investment of US$2.8mln.

4. SAM has started to diversify its activities into the property sector by making investments in the Sacom ResortSacom ResortSacom ResortSacom Resort in Da Lat worth VND160bn (US$10mln) and in an Office Office Office Office BBBBuildinguildinguildinguilding in HCMC worth VND25bn (US$1.6mln).


39



128,734


1,114,837

Outstanding shares

12,873,410 Float 7,201,730


6,307,971




PE 23.49 x

BV (VND)

15,375 P/BV 5.63 x EV/ EBITDA N/A

DPS (VND)

1,000 DY (%) 1.15%


86,600 86,600 86,600 86,600

Last (VND)

86,600


177,000

52 Wk low (VND) (28 Jun 2007)


Absolute (%) -24.63% -25.86% -31.27%

Relative (%) -8.82% 2.84% -49.96%

SVCSVCSVCSVC –––– SAIGON GENERAL SERVICE JOINT STOCK COMPANY SAIGON GENERAL SERVICE JOINT STOCK COMPANY SAIGON GENERAL SERVICE JOINT STOCK COMPANY SAIGON GENERAL SERVICE JOINT STOCK COMPANY

SVC’s scope of business includes a wide range of services from real estate, service-trade, financial investments. The company was equitized in July 2004 and in December 2006, SVC listed on the HaSTC. Business performance in 2006Business performance in 2006Business performance in 2006Business performance in 2006 1. Real estate service:1. Real estate service:1. Real estate service:1. Real estate service: Total investment in real estate in 2006 reached VND92.6 billion (US$5.8mln):

� Savico Danang Service & Trade Center which opened in January 2007.

� Construction of the Savico Can Tho Trade Center began in 2006 and is expected to be completed by the second half of 2007.

� SVC completed the procedures to attain the construction licenses, cost projections, contractors and supervisors for three projects; 277-279 Ly Tu Trong St, 555 Tran Hung Dao St, and 35 Dong Khoi St.

� In process of completing the regulatory issues for a residential project in Hiep Binh Phuoc-Tam Binh.

� SVC is also involved in the Bai Trem resort project, which is awaiting approval.

2. Service2. Service2. Service2. Service----Trade systemTrade systemTrade systemTrade system Total investment in services & trade in 2006 reached VND198 billion (US$12.4mln), and included investments in:

� Car dealership: the company sold a total of 4,192 units, accounting for 13% of the total market.

� Motorbike dealership: the company sold 4,911 units. SVC established two new companies: Ben Thanh-Savico General Trading & Service Co. specializing in distributing SYM motorbikes and Saigon Trading & Services Co. focusing on distributing Yamaha motorbikes.

3. Financial investment3. Financial investment3. Financial investment3. Financial investment The company continued to build its investment portfolio and invested in the Vietnam Asia Joint Stock bank and in the Orient Securities Joint Stock Company. At current market valuation we estimate that the company’s equity portfolio alone is equals close to 60% of SVC’s market capitalization. Current Current Current Current real estate real estate real estate real estate projects: projects: projects: projects:

1. The 555 Tran Hung Dao St, 277-279 Ly Tu Trong St, 35 Dong Khoi St office and commercial buildings expected to be completed in 2007.


40

2. The commercial-office-residential complex at 115-117 Ho Tung Mau St, district 1, HCM with estimated investment capital of VND514 billion (US$32.1mln).

3. The commercial-office-residential complex at 104 Pho Quang St, Tan Binh district, HCM with estimated investment capital of VND423 billion (US$26.4mln)

4. The residential project at Hiep Binh Phuoc-Tam Binh, in Thu Duc district with estimated investment capital of VND333 billion (US$20.8mln).

5. The Gia Thuy-Ha Noi Long Bien Trade Center project, with an estimated investment capital of VND231 billion (US$14.4mln).


41


Charter Capital (mln VND) 150,000

Market Capital (mln VND) 900,000

Outstanding shares 15,000,000

Float 10,471,917

Total room for foreign investor 1,799,239

Current room for foreign investor 1,155,217



PE 26.72 x

BV (VND) 19,391

P/BV 3.09 x

EV/EBITDA 20.07 x

DPS (VND) 1,000

DY (%) 1.67%

Price (5 Jul 2007)Price (5 Jul 2007)Price (5 Jul 2007)Price (5 Jul 2007) 60,000 60,000 60,000 60,000

Last (VND) 60,000

52 Wk high (VND) (15 Jun 2007) 67,626

52 Wk low (VND) (3 Jan 2007) 19,960


Absolute (%) 12.82% 27.81% 185.58%

Relative (%) 15.40% 31.26% 161.54%

FPC FPC FPC FPC –––– FULL POWER JOINT STOCK COMPANY FULL POWER JOINT STOCK COMPANY FULL POWER JOINT STOCK COMPANY FULL POWER JOINT STOCK COMPANY

Full Power JSC is a 100% foreign-invested company from Taiwan. Its main businesses are in designing and installing electrical & industrial systems, sanitation and water supply, refrigeration systems, medium-low tension line up to 35KV, transformers, and trading building materials. The company is expanding into concrete products, door-frames, fences made by metal, fabric structures for construction, as well as in real estate. The company was listed on the HOSE in July 2006. In 2006, revenue reached VND496bil (US$31mln), up 36.83% and net profit was VND33bil (US$2.1mln), up 36.7% YOY. In 2007, management expects revenue and profit to reach VND1000bil (US$62mln) and VND70bil (US$4.4mln) respectively.


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Projects and InvestmentsProjects and InvestmentsProjects and InvestmentsProjects and Investments The company recently raised VND600bil (US$37.5mln) from the sale of 15 million new shares. It intends to use that capital for the following projects:

No Items Amount (US$)

1 Underground enforcement structure 4,000,000 2 Construction vehicles 1,000,000 3 Purchasing machinery & equipments 312,500 4 Fabric structure construction 6,687,500 5 Stone factory 4,906,250 6 Administration center, dormitory at Nhon Trach 2,187,500 7 Door frame, metal processing factory 2,500,000 8 Steel processing factory 387,500 9 Concrete factory 2,656,250 10 Shuttering factory 3,000,000 11 Construction engineering college 2,500,000 12 Song May branch office & warehouse 300,000 13 Da Nang branch office & warehouse 700,000 14 Bac Ninh branch office & warehouse 700,000 15 Phu Yen branch office & warehouse 300,000 16 ABU DHABI branch office & warehouse 200,000 17 Taipei branch office & warehouse 200,000 18 Kun Shan (China) branch office & warehouse 200,000

19

1,000sqm office longterm leasehold 48-year at Scepta building, 19A-C, Cong Hoa, Tan Binh Dist. HCMC

1,562,500

20 Change in working capital, restructuring and other liabilities

3,200,000

Total 37,500,000


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20,000


630,000

Outstanding shares

2,000,000 Float 825,675


980,000


966,000 Average volume (30 days) 5,377


PE 39.47 x

BV (VND)

19,431 P/BV 16.21 x EV/EBITDA 70.36 x

DPS (VND)

2,500 DY (%) 0.79%


315,000 315,000 315,000 315,000

Last (VND)

315,000

52 Wk high (VND) (23 May 2007)

387,000

52 Wk low (VND) (27 Dec 2006)


Absolute (%) -6.80% 39.69% 502.29%

Relative (%) 9.00% 68.39% 483.60%

SDA SDA SDA SDA –––– SIMCO SONG DA JOINT STOCK COMPANY SIMCO SONG DA JOINT STOCK COMPANY SIMCO SONG DA JOINT STOCK COMPANY SIMCO SONG DA JOINT STOCK COMPANY

Company’s principal activities include human resources training & employment services. It focuses mainly on exporting laborers to many Asian countries such as Taiwan, Malaysia, Korea, Japan, and Qatar. In recent year, SDA has diversified its business to the construction & real estate sectors.

SDA was founded in 1997 as a member of the State-owned Song Da Corporation. In May 2003 SDA was officially established as a joint stock company and in December 2006, the company was listed on the HaSTC. Business performance Business performance Business performance Business performance for for for for 2006200620062006 Revenue in 2006 increased by 32% compared to 2005. In 2006 SDA sent 2,115 workers overseas. Revenue and profit for the first quarter of 2007 was VND10.3 billion (US$0.64mln) and VND5.5 billion (US$0.34mln) respectively. Current construction and real estCurrent construction and real estCurrent construction and real estCurrent construction and real estate projectsate projectsate projectsate projects

1. Residential project in Van Phuc with an estimated investment capital of VND53 billion (US$3.3mln).

2. Residential project in Ha Tinh province with an estimated investment capital of VND77 billion (US$4.8mln).

3. The company intends to invest VND220 billion (US$13.7mln) in power plants, industrial zones, infrastructure projects.


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Disclaimer This report has been issued by the Horizon Securities Corporation (“HRS”) with the instructional contributions of Horizon Capital whose employees are specified in the publication. This report is for information of its institutional and professional customers; and it is not intended to for and should not be distributed for retail customers in Vietnam. This report is and should not be construed as an offer to sell or a solicitation of an offer to purchase or subscribe for any investment. No consideration has been given to the particular investment objectives, financial situation or particular needs of any recipient. Investors are advised make their own financial decisions based on their independent financial advisors as they believe necessary and based on their particular circumstances such as their financial situation, investment objectives and other considerations. In preparing this report, we have relied upon and assumed the accuracy and completeness of all information available from public and other sources which we believe to be reliable, but which we have not independently verified. HRS makes no express or implied guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of such information. Opinions, estimates, and projections expressed are current opinions of the authors as of the original publication date appearing on this report only and the information, including the opinions contained herein, are subject to change without notice. HRS and its affiliates may from time to time perform investment banking or other services for, or solicit investment banking or other business from, companies mentioned herein. Further, HRS and its affiliates, and/or their officers, directors and employees involved in the preparation or issuance of this report may, from time to time, have long or short positions in, and buy or sell, the securities, or derivatives (including options) thereof, of companies mentioned herein, or related securities or derivatives in a manner that may be consistent or inconsistent with this report and opinions expressed therein. As a result, investors should be aware that HRS and its affiliates and/or their officers, directors and employees may have a conflict of interest that could affect this report. This report shall not be copied, reproduced, distributed (in whole or in part) or disclosed by recipients to any other person without the express permission of HRS in writing.


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