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VietJet Aviation Joint Stock Company (VJC: HOSE)

BUY - 1Y Target Price: VND 168,100
Current price: VND 143,000

Kim Nguyen EARNINGS UPDATE

kimntt@ssi.com.vn
+84-28 3824 2897 ext. 2140
Uptrend in passenger yields
27 December 2017  Core 9M2017 NPAT growth recorded 75% YoY, backed by 23% YoY growth in passenger
INDUSTRIALS – VIETNAM volume and yield expansion in both international and domestic routes

 Our estimates reveal 67% YoY and 31% YoY growth for 2017F and 2018F core EPS,
Key figures backed by robust passenger growth, expanding passenger yields, and increaing ancillary
Market cap (USD mn) 2,842 revenue per pax
Market cap (VND bn) 64,542
Outstanding shares (mn) 451  Given a strong earnings outlook, we revise up the 2018 target price to VND
52W high/low (VND 1,000) 143.8/77.1 168,100/share, offering a 18% upside
Average 2M volume (share) 1,037,248
Average 2M value (USD mn) 5.54 9M 2017 review: impressive growth amidst a recovery in passenger yield
Average 2M value (VND bn) 125.89
Foreign ownership (%) 26.28
We use the parent company’s 2017 results as of September for comparison, which purely
State ownership (%) 0
reflects the performance of the core aviation business.
Management ownership (%) N.A.
% annual Margin
(bn VND) 9M2017 9M2016 YoY target
VJC Price & Trading Volume 9M2017 9M2016 2016
completed
Net sales 16,939.2 11,985.8 41.3% 53.8%
Gross profit 3,113.6 1,888.0 64.9% 18.4% 15.8% 14.9%
Operating profit 2,340.0 1,373.5 70.4% 13.8% 11.5% 10.9%
EBIT 2,368.2 1,380.4 71.6% 14.0% 11.5% 11.3%
EBITDA 2,368.2 1,380.4 71.6% 14.0% 11.5% 11.6%
Pretax profit 2,193.2 1,254.2 74.9% 12.9% 10.5% 10.2%
Net income 1,973.6 1,128.6 74.9% 81.4% 11.7% 9.4% 8.9%
NI attributable
Source: Bloomberg 1,973.6 1,128.6 74.9% 11.7% 9.4% 8.9%
to shareholders
Company Snapshot
VJC is a privately-owned Low Cost Carrier (LCC) airline in Source: VJC parent company results
Vietnam. It was established on 23rd July 2007, and
commenced the first commercial flight on 24th December
2011 with the Ho Chi Minh City - Hanoi route. Total The VJC parent reported an impressive top line and bottom line growth during the first 9
passengers served by VJC reached 14.05 mn pax in 2016 months of the year. During this time, VJC reported core revenue amounting to VND 16.939
after 4 years of operation. As of 31 Dec 2016, VJC
operates a fleet of 41 aircraft, in which 19 aircraft are tn, up 41.3% YoY. Encouraging top line growth was attributable to a 41% YoY growth in
funded by SLB and 1 aircraft is owned by the company passenger transportation revenue (~76% of total revenue), 53% YoY growth in ancillary
via financial lease. Other aircraft include 15 dry leases and
6 wet leases. revenue (with ~23% of total revenue). The drivers behind such strong growth were:
VJC achieved a domestic market share of 40.8% as of 31
Dec 2016, an increase from 37.1% as of 31 Dec 2015,
according to a report by the Civil Aviation Authority of
Vietnam (CAAV)

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 Firstly, the VJC network expanded to 73 routes as of 3Q 2017 from 55 routes as of 3Q 2016. Secondly,
the number of aircraft increased to 40 aircraft as of 3Q 2017 from 36 aircraft as of 3Q 2016. Thirdly, the
aircraft utilization ratio also increased to 14.04 hours/day in 3Q 2017 and 13.6 hours/day in 1H 2017 (vs
13.3 hours/day for all of 2016).

Given the above capacity expansion and a 23% YoY increase in total passenger volume, totaling 12.6 mn
pax, VJC’s metrics for available seat kilometers (ASK) and revenue passenger kilometers (RPK) added up
22% YoY and 32% YoY in growth respectively as of Sept for the year so far.

 International passenger and domestic passenger yield increase by 44% YoY and 21% YoY, respectively in
9M 2017. Besides the surge of 25.7% YoY in average jet fuel price in 9M 2017, constrained flight slot
increases at Tan Son Nhat International Airport amid enhanced travelling demand in Vietnam in holidays
have prompted VJC’s fares to increase. Additionally, in 3Q 2017, Jetstar Pacific reduced its fleet size from
17-18 aircraft to 13-14 aircraft, which affect domestic capacity supply, resulting in increased domestic fare
prices in the quarter. According to CAPA Centre for Aviation, Jestar Pacific’s fleet size may reach 17 A320s
in its network by end of this year which will increase the capacity supply again.

 Ancillary income per pax grew by 22% YoY, recording $14.00 USD per pax thanks to more international
flights in which customers tend to spend more for longer flight hours,.

For the first 3 quarters of 2017, VJC overall load factor improved to 88.4% compared with 84.4% during the first
three quarters of ‘16. Domestic passenger loads for the year substantially improved by 2.4 ppts to 89% as of
September 2017, fueled by enhanced travel demand in Vietnam amid the transition of travel preferences from
bus and train to by air. VJC loads for international routes also slightly improved to 86.66% during the first 9
months of this year, from 84.8% over the same period last year.

Accordingly, cumulative annual net earnings up to the 3rd quarter recorded upbeat earnings of VND 1.974 tn,
increasing 75% YoY on the back of 41% YoY growth in total revenue and 2.6 pts expansion in the GPM. The
2017 GPM up to Q3 reached 18.4%, quite high compared with that of 15.8% in the first 9 months of 2016.
RASK increased 2% YoY, reaching $0.045 USD while CASK ex-fuel fell by 7% YoY, reaching $0.0241 USD. The
RASK&CASK spread enlarged by 15% YoY from strong growth of passenger transportation and ancillary
revenue, and as a result made GPM expand significantly.

In the first 9 months of 2017, VJC received 5 new aircraft from SLB, resulting in a recognition of around $250
mn USD in revenue and around $37 mn USD in PBT (~ $7 mn USD in PBT per aircraft). As a result,
consolidated net profit for the year up to the 3rd quarter increased by 40% YoY, reaching VND 2.762 tn (SLB
aircraft for 9M 2017: 5 aircraft vs 7 aircraft during the same period last year).

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Estimates and Valuation

Estimates

2017

We forecast that VJC 2017 core net revenue will achieve VND 22.5 tn (+42% YoY). Net income may reach VND
2,359 tn (+67% YoY), leading to a core EPS of VND 5,230 (+67%YoY). Robust earnings growth in both top
line and bottom line will be mainly driven by (1) a 23% YoY growth in total passenger volume; (2) a 20% YoY
growth in both domestic and international passenger yields and (3) ancillary revenue per pax could grow by
15% YoY, achieving $13 USD/pax. We assume jet fuel price may reach $66 USD/barrel on average, applying the
guidance forecast from the International Air Transport Association (IATA) for 2017.

We expect revenue from SLB activities will record VND 19.985 tn (+73% YoY), attributable to gains recognized
from 17 new aircraft being delivered during the year for SLB (vs a recognized of 10 aircraft in 2016). PBT is
assumed to total roughly VND1.741tn(+14% YoY) . This surpassed VJC’s initial plan of recognized 15 aircraft
from SLB in the beginning of this year.

As a result, VJC 2017 consolidated revenue may reach VND 42.189 tn (+53% YoY) and net profit may achieve
VND 3.887 tn (+56% YoY). EPS accordingly may reach VND 8,615 (+56% YoY)

2018

Based on VJC fleet expansions and new route openings in 2017, we forecast that VJC 2018 core net revenue
will achieve VND 29.774 tn (+32% YoY). Net income might reach VND 3.094 tn (+31% YoY). Our forecast
based on the following summary of our analysis is as follows:

 Passenger volumes will achieve roughly 22.2 mn passengers in 2018, increasing by 30% YoY thanks to (1)
1 new domestic route featuring 6 flights per week (Dong Hoi-Hanoi) and 9 international routes with 8-14
flights per week added in 2H 2017, originating from 2 main hubs Hanoi and Ho Chi Minh to destinations in
ASEAN and Northwest Asia. These flights will be growth vectors for both passenger transportation and
ancillary revenue.

 We expect VJC to maintain its passenger load ratios, at 89% for domestic routes and 86% in international
routes, similar to 2017.

 We assume average jet fuel price to increase by 11% YoY next year, based on consensus forecast for 2018
average Brent oil price of $60 USD per barrel.

 Following the 2017 trend, we expect VJC may continue to increase domestic passenger yield by 6%YoY in
2018 due to the constrained airport situation apparent in both the Tan Son Nhat International Airport leading
to constrained flight slot expansion for domestic airlines. As such, these will prompt VJC to increase its
domestic fare prices further from previous low fare pressure for gain more domestic market share.
International passenger yield may modestly increase by 2% YoY as VJC continues to launch new
international routes within a 5 hour flight radius, which will create higher yields. Nevertheless, due to
intense competition of regional LCCs, VJC may see mild yield growth in international markets due to fare
promotion pressure. Additionally, uptrend in jet fuel price will be another driver for fare price upturn.

 Ancillary revenue per pax is projected to reach $14.4 USD/pax (+10% YoY) from an aggressive
international expansion effort fueled by higher passenger purchasing power. Thus volume growth from
flights will support its ancillary revenue growth going forward.

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We expect that revenue from SLB activities will record VND 16.458 tn (-16% YoY), attributable to gains
recognized from 14 new aircraft being delivered during the year for SLB. We assume that PBT of SLB may total
VND1.969tn(+13% YoY) thanks to more A320 and A321 neo SLB which are more favored by lessors. As
such, 2018 consolidated revenue and net profit will achieve VND 46.232 tn (+10% YoY) and VND 4,807tn
(+24% YoY). EPS will be VND 10,650 (+24%YoY).

VJC operating data assumptions

VJC: Group operating data FY15 FY16 FY17E FY18E

RPKs(m) 9,690 14,451 19,648 24,259
ASKs (m) 11,055 16,498 22,374 31,489
Passenger load factor
Domestic 88.1% 88.2% 89% 89%
International 83.8% 83.4% 86% 86%
Yield per RPK (U.S. cents) 4.03 3.80 3.9 3.99
Average jet fuel price (USD/bbl) 66.70 52.10 66 73.3

Source: VJC, IATA, World Bank, SSI Research forecast

VJC consolidated earnings forecast

(VND bn) 2015 2016 2017F 2018F

Net revenue 19,845 27,499 41,189 46,232
EBITDA 1,308 2,930 4,710 5.803
Pretax income 1,168 1,177 4,318 5,338
Net income 1,171 2,496 3,887 4,807
EPS (VND) 2,593 5,529 8,615 10,650
DPS (VND) N/A N/A 4,000 4,000
Core EPS (VND) 1,443 3,137 5,230 6,858
Core EPS growth (%) 117% 67% 31%
Dividend yield (%) N/A N/A 3% 3%
PER(x) N/A N/A 13.4 12.6
EV/EBITDAR(x) N/A N/A 6.8 5.8

Source: VJC, SSI Research

Valuation: BUY, 2018 target price of VND 168,100/share, 18% upside

We decide to apply a 2018 target EV/EBITDAR of 7.4x for VJC, as we assume investors appreciate the expected
skyrocketing 2017&2018 core EPS growth of 67% YoY and 31% YoY respectively. Our target EV/EBITDAR
implies a 25% premium compared with international peers’ 2018 average PER of 5.9x, majority of which expect
single digit growth or incurred losses in 2017 and 2018 EPS. Additionally, we arrive at the value per share from
SLB income for the period from 2017-2023 amounting to VND 35,832 per share (Discount rate: WACC:
13.26%)

Overall, we arrive at a 2018 target price of VND 168,100/share for VJC, with an upside of 18%. We recommend
to BUY the stock.

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Peers valuation comparison

Name Country Market Cap EPS growth PER PBR EV/EBITDAR ROE
USDm 2017F 2018F 2017F 2018F 2017F 2018F 2017F 2018F 2016
Ryanair Holdings PLC Ireland 21,262 26% 7% 13.0 12.0 3.6 2.9 11.30 10.70 33%
EasyJet PLC UK 7,598 20% 25% 15.0 12.0 1.9 1.7 6.50 5.70 11%
WestJet Airlines Ltd Canada 2,442 3% 14% 11.0 9.7 1.4 1.3 4.40 3.90 15%
JetBlue Airways Corp US 6,923 -20% 5% 12.0 11.5 1.6 1.4 4.00 4.10 21%
Spirit Airlines Inc US 3,068 -26% 4% 14.0 13.8 1.9 1.8 4.30 4.00 20%
Southwest Airlines Co US 39,116 -5% 27% 18.5 14.6 4.3 3.7 6.90 6.00 28%
AirAsia Bhd Malaysia 2,730 -42% -9% 7.6 8.4 1.3 1.2 7.90 7.50 37%
Cebu Air Inc Philipines 1,169 -18% 1% 6.4 6.3 1.4 1.2 4.90 5.50 33%
Average 10,539 -8% 9% 12 11 2 2 6.3 6.0 25%
Vietjet Aviation JSC Vietnam 2,837 63% 32% 13.8 12.8 4.6 3.2 6.8 6.8 72%

Source: Bloomberg, SSI Research

Investment rationales

(1) Impressive core EPS earnings in 2017F and 2018F of 67% YoY and 31% YoY respectively

(2) Significant advance in passenger yields thanks to (i) constrained domestic airport infrastructure and (ii)
international expansion will create higher yield compared with domestic flights, despite intense
competition. As such, VJC margins may continue to expand in the coming time

(3) Higher ancillary revenue per passenger from increased frequency of international flights. We see huge
potential upside in VJC ancillary income per passenger, as its current level of $14 USD per passenger is
still low compared with that of more than $40 USD per passenger seen among the average of regional
LCCs.

(4) We believe that VJC bottom line results will not be significantly impacted by oil increases in 2018 thanks to
its faster RASK growth compared with CASK growth, which will help enlarge the RASK and CASK spread.

Risks and issues

(1) Higher than expected increase in fuel price will be a negative event for all airlines

(2) The continued bottleneck at the Tan Son Nhat international Airport may constrain airlines’ domestic
expansion plans due to limited aircraft parking slots

(3) As the domestic market share of VJC is already high, it might be difficult for the company to soak up more
market share given the large number of aircraft being delivered over the next 5-10 years(216 aircraft in
order as of 3Q 2017).

(4) A large portion of VJC profits comes from sales of new aircraft that the company buys in bulk at deep
discounts. On the one hand, this strategy has helped Vietjet Air increase competitiveness by lowering
ownership cost and operating costs. On the flip side, this makes earnings more volatile. Furthermore, lease
payment terms could be fixed and non-cancellable, regardless of whether or not passenger traffic delivers.

(5) Financial risk and FX risk persists on required significant USD amount for aircraft deposits for its SLB
activities, with its payback lease terms with the lessors leaving the company potentially vulnerable.

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APPENDIX 1: ANNUAL FINANCIAL STATEMENTS

VND Billion 2015 2016 2017F 2018F VND Billion 2015 2016 2017F 2018F
Balance Sheet Income Statement
+ Cash 924 2,741 7,358 9,469 Net Sales 19,845 27,499 42,189 46,232
+ Short-term investments 270 1 0 0 COGS -17,736 -23,597 -36,709 -39,655
+ Account receivables 5,516 8,391 7,984 12,171 Gross Profit 2,110 3,902 5,481 6,576
+ Inventories 164 138 147 159 Financial Income 154 145 117 212
+ Other current assets 209 304 217 234 Financial Expense -562 -654 -514 -468
Total Current Assets 7,083 11,575 15,705 22,033 Income from associates -10 -21 -15 -40
+ LT Receivables 2,060 3,843 4,289 5,047 Selling Expense -318 -518 -616 -851
+ Net Fixed Assets 29 1,047 2,882 3,667 Admin Expense -203 -189 -169 -157
+ Investment properties 0 0 0 0 Income from business operation 1,160 2,671 4,259 5,274
+ LT Assets in progress 137 181 181 181 Net Other Income 8 32 59 65
+ LT Investments 8 68 68 68 Profit Before Tax 1,168 1,177 4,318 5,338
+ Other LT Assets 2,727 3,348 5,139 5,552 Net Income 1,171 2,496 3,887 4,805
Total Long-Term Assets 4,962 8,487 12,560 14,515 NI attributable to shareholders 1,170 2,496 3,888 4,807
Total Assets 12,045 20,063 28,265 36,548 Minority interest 0 0 -2 -2
+ Current Liabilities 5,883 9,326 11,637 14,752
In which: ST debt 3,543 6,102 7,342 8,724 Basic EPS (VND) 2,593 5,529 12,061 14,910
+ Non-current Liabilities 4,015 6,002 7,405 8,735 BVPS (VND) 14,802 15,775 28,616 40,526
In which: LT debt 0 695 1,164 1,257 Dividend (VND/share) 0 0 4,000 3,000
Total Liabilities 9,897 15,329 19,042 23,487 EBIT 1,298 2,884 4,545 5,588
+ Contributed capital 1,450 3,000 3,224 3,224 EBITDA 1,308 2,930 4,710 5,803
+ Share premium 0 0 1,670 1,670
+ Retained earnings 686 1,703 4,302 8,142 Growth
+ Other capital/fund 12 31 29 -98 Sales 127.9% 38.6% 53.4% 9.6%
Shareholders' Equity 2,147 4,734 9,225 12,937 EBITDA 151.6% 123.9% 60.8% 23.2%
Total Liabilities & Equity 12,045 20,063 28,267 36,548 EBIT 155.2% 122.1% 57.6% 23.0%
NI 225.0% 113.2% 55.7% 23.6%
Cash Flow Equity 122.2% 120.4% 94.9% 40.2%
CF from operating activities 852 1,636 4,304 2,603 Chartered Capital 81.3% 106.9% 7.5% 0.0%
CF from investing activities -1,201 -2,830 -2,000 -1,000 Total assets 56.9% 66.6% 40.9% 29.3%
CF from financing activities 740 2,986 2,313 509
Net increase in cash 391 1,792 4,617 2,111 Valuation
Beginning cash 527 924 2,741 7,358 P/E 0.0 0.0 10.6 8.6
Ending cash 924 2,741 7,358 9,469 P/B 0.0 0.0 4.5 3.2
P/Sales N.a N.a 1.0 0.9
Liquidity Ratios Dividend yield N.a N.a 3.1% 2.3%
Current ratio 0.98 0.98 1.35 1.49 EV/EBITDA 1.8 1.4 13.1 10.7
Acid-test ratio 0.92 0.93 1.32 1.47 EV/Sales 0.1 0.1 1.5 1.3
Cash ratio 0.19 0.26 0.63 0.64
Net debt / EBITDA 1.79 1.14 0.55 0.14 Profitability Ratios
Interest coverage 10.01 15.96 20.09 22.39 Gross Margin 10.6% 14.2% 13.0% 14.2%
Days of receivables 6.3 15.9 8.5 0.9 Operating Margin 6.4% 10.2% 10.6% 11.8%
Days of payables 7.8 6.3 3.8 7.2 Net Margin 5.9% 9.1% 9.2% 10.4%
Days of inventory 2.7 2.3 1.4 1.4 Selling exp./Net sales 1.6% 1.9% 1.5% 1.8%
Admin exp./Net sales 1.0% 0.7% 0.4% 0.3%
Capital Structure ROE 75.2% 72.5% 55.7% 43.4%
Equity/Total asset 0.18 0.24 0.33 0.36 ROA 11.9% 15.5% 16.1% 14.8%
Liabilities/Total Assets 0.82 0.76 0.67 0.64 ROIC 28.1% 30.9% 28.0% 24.7%
Liabilities/Equity 4.61 3.24 2.06 1.82
Debt/Equity 1.65 1.44 0.92 0.77
ST Debt/Equity 1.65 1.29 0.80 0.67

Source: VJC, SSI Research

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APPENDIX 2: QUARTERLY FINANCIAL STATEMENTS

VND Billion 4Q16 1Q17 2Q17 3Q17 VND Billion 4Q16 1Q17 2Q17 3Q17
Balance Sheet Income Statement
+ Cash 2,741 2,794 2,650 1,864 Net Sales 8,047 5,107 11,317 6,187
+ Short-term investments 1 1 1 1 COGS -6,891 -4,336 -9,568 -4,751
+ Account receivables 7,129 9,276 7,936 8,785 Gross Profit 1,156 771 1,749 1,435
+ Inventories 138 151 181 162 Financial Income 5 23 5 80
+ Other current assets 304 208 248 238 Financial Expense -326 -178 -81 -186
Total Current Assets 10,313 12,430 11,016 11,051 Income from associates 0 0 0 0
+ LT Receivables 5,105 6,474 8,335 10,030 Selling Expense -187 -142 -127 -188
+ Net Fixed Assets 1,047 1,034 1,293 1,280 Admin Expense -49 -52 -50 -56
+ Investment properties 0 0 0 0 Income from business operation 589 418 1,480 1,075
+ LT Assets in progress 181 209 187 261 Net Other Income 15 0 9 0
+ LT Investments 68 68 68 68 Profit Before Tax 604 418 1,489 1,075
+ Other LT Assets 3,348 3,143 3,848 3,523 Net Income 523 376 1,420 966
Total Long-Term Assets 9,749 10,928 13,731 15,163 NI attributable to shareholders 519 376 1,420 967
Total Assets 20,063 23,358 24,747 26,214 Minority interest 4 0 0 -1

+ Current Liabilities 10,570 11,918 11,919 12,639 Basic EPS (VND) N.a 1,240 4,497 2,142
In which: ST debt 6,102 6,829 5,500 6,796 BVPS (VND) 15,775 21,320 22,704 18,372
+ Non-current Liabilies 4,759 4,566 5,507 5,282 EBIT 659 479 1,547 1,132
In which: LT debt 695 695 660 661 EBITDA 705 495 1,568 1,094
Total Liabilities 15,329 16,484 17,426 17,920
+ Contributed capital 0 0 0 0 Growth (YoY)
+ Share premium 0 1,536 1,536 246 Sales -59.5% -22.5% 89.7% -10.3%
+ Retained earnings 0 0 0 0 EBITDA -47.0% -20.0% 104.0% 30.7%
+ Other capital/fund 4,734 5,339 5,786 8,047 EBIT -50.0% -22.6% 101.2% 35.2%
Owners' Equity 4,734 6,875 7,321 8,293 NI -56.1% -30.8% 104.5% 31.5%
Total Liabilities & Equity 20,063 23,358 24,747 26,214

Cash Flow
CF from operating activities 0 305 1,821 572
CF from investing activities 0 -2,879 -261 -1,993 Profitability Ratios
CF from financing activities 0 2,631 -1,687 618 Gross Margin 14.4% 15.1% 15.5% 23.2%
Net increase in cash 0 57 -126 -803 Operating Margin 7.7% 9.4% 13.6% 18.0%
Beginning cash 0 2,741 2,794 2,650 Net Margin 6.5% 7.4% 12.5% 15.6%
Ending cash 0 2,794 2,650 1,864 Selling exp./Net sales 2.3% 2.8% 1.1% 3.0%
Admin exp./Net sales 0.6% 1.0% 0.4% 0.9%
Liquidity Ratios
Current ratio 0.98 1.04 0.92 0.87 Capital Structure
Acid-test ratio 0.93 1.01 0.89 0.84 Equity/Total asset 0.24 0.29 0.30 0.32
Cash ratio 0.26 0.23 0.22 0.15 Liabilities/Total Assets 0.76 0.71 0.70 0.68
Net debt / EBITDA 5.76 9.55 2.24 5.11 Liabilities/Equity 3.24 2.40 2.38 2.16
Interest coverage 12.08 7.93 26.89 19.83 Debt/Equity 1.44 1.09 0.84 0.90
ST Debt/Equity 1.29 0.99 0.75 0.82

Source: VJC, SSI Research

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1. ANALYST CERTIFICATION

The research analyst(s) on this report certifies that (1) the views expressed in this research report accurately reflect his/her/our own personal
views about the securities and/or the issuers and (2) no part of the research analyst(s)’ compensation was, is, or will be directly or indirectly
related to the specific recommendation or views contained in this research report.

2. RATING

Within 12-month horizon, SSIResearch rates stocks as either BUY, HOLD or SELL determined by the stock’s expected return relative to the
market required rate of return, which is 18% (*). A BUY rating is given when the security is expected to deliver absolute returns of 18% or greater.
A SELL rating is given when the security is expected to deliver returns below or equal to -9%, while a HOLD rating implies returns between -9%
and 18%.

Besides, SSIResearch also provides Short-term rating where stock price is expected to rise/reduce within three months because of a stock
catalyst or event. Short-term rating may be different from 12-month rating.

Industry Rating: We provide the analyst’ industry rating as follows:

 Overweight: The analyst expects the performance of the industry over the next 6-12 months to be attractive vs. the relevant broad market

 Neutral: The analyst expects the performance of the industry over the next 6-12 months to be in line with the relevant broad market

 Underweight: The analyst expects the performance of the industry over the next 6-12 months with caution vs. the relevant broad market.

*The market required rate of return is calculated based on 5-year Vietnam government bond yield and market risk premium derived from using Relative Equity Market
Standard Deviations method. Our rating bands are subject to changes at the time of any significant changes in the above two constituents.

3. DISCLAIMER

The information, statements, forecasts and projections contained herein, including any expression of opinion, are based upon sources believed to
be reliable but their accuracy completeness or correctness are not guaranteed. Expressions of opinion herein were arrived at after due and
careful consideration and they were based upon the best information then known to us, and in our opinion are fair and reasonable in the
circumstances prevailing at the time, and no unpublished price sensitive information would be included in the report. Expressions of opinion
contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an
offer to buy or sell any securities. This report also does not recommend to U.S. recipients the use of SSI to effect trades in any security and is not
supplied with any understanding that U.S. recipients will direct commission business to SSI. SSI and other companies in the SSI and/or their
officers, directors and employees may have positions and may affect transactions in securities of companies mentioned herein and may also
perform or seek to perform investment banking services for these companies.

This document is for private circulation only and is not for publication in the press or elsewhere. SSI accepts no liability whatsoever for any direct
or consequential loss arising from any use of this document or its content. The use of any information, statements forecasts and projections
contained herein shall be at the sole discretion and risk of the user.

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4. CONTACT INFORMATION

Institutional Research & Investment Advisory

Kim Nguyen
Analyst, Industrials
 Tel: (84-28) 3824 2897 ext. 2140
kimntt@ssi.com.vn

Phuong Hoang Hung Pham Giang Nguyen, ACCA

Deputy Managing Director, Associate Director Associate Director
Head of Institutional Research & Investment Advisory hungpl@ssi.com.vn giangntt@ssi.com.vn
phuonghv@ssi.com.vn

WWW.SSI.COM.VN SAIGON SECURITIES INC. HO CHI MINH CITY HANOI

Member of the Ho Chi Minh
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