AFC Vietnam Fund AFC Asia Frontier Fund CONFIDENTIAL January 2017 - PowerPoint PPT Presentation

AFC Vietnam Fund AFC Asia Frontier Fund CONFIDENTIAL January 2017 September 2013

Most new funds are launched when markets are “hot” and close to their highs We see opportunities as the market & economy are at the beginning of a new cycle AFC Vietnam Fund Launch Viet Capital - Hanoi Index May 2006 – December 2016 2 AFC Vietnam Fund

TABLE OF CONTENTS Executive Summary 4 Why Vietnam 5 Investment Strategy 17 AFC Vietnam Fund 20 Fund Performance 21 Directors & Shareholders 23 Awards 28 Contact Information 29 Disclaimer 30 Appendix 31 AFC Vietnam Fund 3

EXECUTIVE SUMMARY Fund Objective • Capture the value of growth companies in Vietnam; especially in the small to medium size company segment Opportunity • Vietnams GDP growth is accelerating again since H2 2013 and is expected to grow at over 6% in 2017. • Banking reform is under way, such as e.g. the resolution for NPL’s • Strong FDI inflows are helping to transform Vietnam to a higher value added manufacturing destination • Low oil prices are beneficial for Vietnam and are helping to increase consumer spending • VND - Currency expected to remain stable. Potential • We believe to achieve a significant capital appreciation for at least the next 4 - 6 years. AFC Vietnam Fund 4

WHY VIETNAM A Land of Opportunities Valuations • Vietnam’s overall valuation looks extremely compelling versus its regional peers, but listed “Small/Medium Caps” offer outstanding value • Reaching the old highs in the next economic and stock market cycle would mean a potential of several hundred per cent, supported by fundamentals Growth Prospects • Very competitive labour costs, but rising individual wealth at CAGR 13.50% over the past 10 years • High foreign remittances of around USD 12bn in 2016 • FDI disbursement grew by 9% and reached USD 15.8bn in 2016 AFC Vietnam Fund 5

WHY VIETNAM Strong Fundamentals will Support Growth  Sustainable GDP Growth • GDP is accelerating again at 6.2% 2016, after declining from 8.5% (2007) to 5% (2012)  Competitive Labour Costs • Low wages with increasing productivity and improvements in human capital  Inflation under Control • The government managed to keep inflation below 5% at 4.7% in 2016 (recent highs in 2011 at 18.7% and in 2008 at 23.1%)  Interest Rates Came Down • Average lending rate came down from over 20% (2011) to 7.75% (2016)  Improving Trade Balance • Trade balance improved from USD -18bn (2008) to USD +2.6bn (2016)  Foreign Reserves Increasing • Foreign reserves increased from USD 12.5bn (2010) to approx. USD 41bn 2016  Currency expected to remain stable versus USD AFC Vietnam Fund 6

WHY VIETNAM Competitive Labour Costs 8.48 Minimum Hourly Wage (USD) 4.63 3.87 1.25 1.21 1.19 0.73 0.56 0.30 0.30 Japan South Korea Hong Kong Malaysia Thailand China Philippines Indonesia Vietnam Laos Worldbank AFC Vietnam Fund 7

WHY VIETNAM Increasingly Educated Population 600 Pisa Score / GDP per Capita (current USD) Singapore Hong Kong 550 Korea Germany Vietnam 500 Average PISA Score Switzerland United States 450 PISA 2015 - mean score of Mathematics, Reading & Science 400 552 533 529 524 519 508 506 502 502 500 496 496 492 488 485 483 Thailand Indonesia 415 395 350 Hong Kong Japan Canada Korea Germany Switzerland Australia United Kingdom France Sweden Austria United States Italy Luxembourg Thailand Indonesia 300 Singapore Vietnam 1,000 10,000 100,000 GDP per Capita (current USD) PISA Score Log. (PISA Score ) OECD - PISA 2015 – assessed the competencies of 15 year olds in 72 countries / GDP per Capita 2015 (current USD); source: Worldbank AFC Vietnam Fund 8

WHY VIETNAM Vietnam Consumer Confidence Vietnam 97.0 98.2 Indonesia 91.0 92.0 China 87.0 Hong Kong Singapore 82.0 New Zealand 77.0 Australia 72.0 India 67.0 Thailand 62.0 Taiwan 61.2 57.0 South Korea 58.4 52.0 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Bloomberg / ANZ Roy Morgan / AFC AFC Vietnam Fund 9

WHY VIETNAM Vietnam is implementing several Free Trade Agreements, and is negotiating others, such as the Regional Comprehensive Economic Partnership WTO Center AFC Vietnam Fund 10

WHY VIETNAM Strong FDI Disbursements and Overseas Remittances • The disbursement of foreign direct FDI & Remittances 2005 - 2016 27.8 investment (FDI) last year reached a record USD bn level with USD 15.8 billion. This achievement 25.0 is expected to reiterate in 2017 20.0 15.8 15.0 • Vietnam received about USD 12bn worth of inward remittances in 2016 from 5 million 10.0 Vietnamese residing in 103 countries around 5.0 the world, most of which has been invested in production and business activities 0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 FDI Disbursements Overseas Remittances Total General Statistics Office of Vietnam AFC Vietnam Fund 11

WHY VIETNAM Compelling Valuations (January 2017) Dividend Yield P/E P/B (%) AFC Vietnam Fund 9.44 1.6 6.4 Indonesia 24.0 2.4 1.5 Philippines 19.9 2.4 1.8 Thailand 17.1 1.9 3.1 Malaysia 16.8 2.4 3.1 Singapore 12.8 1.2 3.6 16.5 2.0 3.0 Vietnam - Ho Chi Minh 9.0 0.9 3.5 Vietnam - Hanoi Bloomberg AFC Vietnam Fund 12

WHY VIETNAM GDP Growth - Inflation under control Vietnam Interest Rates and Inflation Yearly GDP Growth 25.00% CPI (y-o-y) Lending rate 6.5% 6.2% 20.00% Deposit rate 6.7% 6.4% 6.2% 6.0% 5.4% 15.00% 5.2% 10.00% 8.50% 7.00% 4.74% 5.00% 0.00% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016 2017F Agriculture, forestry, and fishery Industry & Construction Services Yearly GDP Growth Worldbank / General Statistics Office of Vietnam AFC Vietnam Fund 13

WHY VIETNAM Increasing Foreign Reserves will Support Currency & Balance of Payments Foreign Reserves in % of Foreign Public Debts (Foreign & Domestic) in % Debts of GDP 100% 50 64.4% 63.8% 62.2% 41 140 70.0% 56.8% 36 53.2% 80% 40 120 50.9% 60.0% 34 50.0% 49.0% 32 100 50.0% 60% 24 30 24 31.0% 80 40.0% 28.9% 27.1% 26.4% 25.8% 28.3% 27.8% 17 60 30.0% 40% 13 20 14 40 20.0% 20% 10 20 10.0% 56% 71% 75% 61% 90% 50% 36% 66% 38% 0 0.0% 0% 0 2010 2011 2012 2013 2014 2015e 2016e 2017e 2008 2009 2010 2011 2012 2013 2014 2015 2016 Foreign Debt Domestic Debt Public Debt / GDP Foreign Debt / GDP Foreign Reserves in % of Foreign Debt Foreign Reserves (USD bn) Current Account Balance (USD bn) Trade Balance (USD bn) 8.80 2.6 2.00 7.00 0.80 0.90 6.00 2009 2010 2011 2012 2013 2014 2015 2016 1.00 -3.20 2009 2010 2011 2012 2013 2014 2015 -0.60 -9.80 -10.95 -12.60 -4.30 -6.60 Worldbank AFC Vietnam Fund 14

WHY VIETNAM Improving Business Environment Government to Support Economic Recovery • Relaxation of Foreign Ownership Limits, allowing foreign investors to buy up to 100 percent of stocks from companies in non-strategic sectors • Relaxation of the rules on foreign ownership of property • Tax Cuts for Individuals and Corporates • Stimulus Packages for various Industry Sectors • Restructuring of SOE’s (State Owned Enterprises) • Improving Banking Regulatory Framework • Better Supervision and Severe Punishment of Banking Misconduct • Lower Lending Rates • To keep NPL ratio below 3% and credit growth target at 18% - 20% range • Visa exemption for foreign visitors AFC Vietnam Fund 15

WHY VIETNAM Improving Business Environment  Strong Foreign Investments into Manufacturing (Samsung alone ~USD 15bn)  Key Sectors: Electronics, Textile and Energy  TPP, ASEAN and other Free Trade Agreements will support Economy  Political Stability  Main Risks • External economic or political shocks • Vietnam will need to continue to drive economic reforms and also improvements in labour productivity will need to keep the same pace AFC Vietnam Fund 16

INVESTMENT STRATEGY Value Based Bottom Up Stock Selection • In-house and third party research to identify undervalued companies • Self-developed Fundamental-Quantitative model • Company visits Risk Mitigation • In-depth due diligence of investment opportunities • The fund is well diversified and typically invests in 60 to 90 stocks across various sectors • Investment limit per position max 9% with top-slicing at 19% • Top 5 holdings have a weighting of around 11% Cash • Not fully invested in uncertain times and/or excessive valuations • Holding cash will allow the fund to take advantage of opportunistic investments when they arise (momentum / news driven) AFC Vietnam Fund 17

INVESTMENT STRATEGY Investment Process • Our stock selection process is driven by a fundamental approach, to which the team applies a quantitative overlay in a controlled manner. Our core investment process does not target any particular style bias and aims to outperform in most market environments. Managing Fundamental Dynamic Risks; aligning Portfolio Portfolio Stock with Optimisation them with Monitoring Construction Analysis quantitative Process Investment overlay Conviction AFC Vietnam Fund 18