Indonesia Syariah Small-Mid Cap Fund

AIA FINANCIAL

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Indonesia Remains a Defensive Emerging Market Play

Exports to EU only 2.4% to GDP with very little Bank exposure, relatively insensitive to EU crisis.

Debt to GDP at 26%, Fiscal Deficit of 2% (estimate), GDP consistently growing over 6%. Better than Asean peers.

Demography Bonus of Young and Growing Middle Income. Backbone to domestic economy engine.

FDI is catching up and multinational companies are keen to penetrate more in Indonesia.

Higher and more stable ROI with declining Cost of Capital. Business poised to expand

Long Term Story of Indonesian Growth Remain Intact

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Macro Picture ; Resilient and Constructive Economy

Consistent GDP Growth of over 6 % Structural lower Inflation Historical Low BI Rate level Room for Fiscal and Monetary Stimulus on the event of Global Economy Slowdown

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Asset Class Comparison , Equity is now cheaper than treasuries

Tactical Asset Allocation , Favoring Equity when Economic growth is strong , Favoring Treasuries when Economic Growth Weakened and Inflation in Check, currently Equity earning yield gap to treasuries suggest undervalued level

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How was Indonesia Stock Market Performance YtD?

OvershadoWED by eudebt concern, JCI plunged by 8.3% in May 2012 trimmed the early performance and left the YTD performance only at 0.3% OR the worst performance in the Asia region. Providing excellent entry opportunities for Long-Term Believer.

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Valuation is only average, but balance is healthier with less leverage

Comparing the Price Earning Ratio & Return On Equity Metrix, currently JCI is trading in the middle range with PE ratio around 13x or at par with the China market. In Term of Return On Equity, China market was able to give higher ROE at around 54% while Indonesia only give around 30% ROE. However, looking at the Debt to Equity Size (indicated by the large of the bubble), China market was more riskier than Indonesia with the Debt to Equity ratio around 160% vs Indonesia at 60%.

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Immature Capital Market provides an ample room to grow

Looking at the Equity Market Cap vs GDP, currently Indonesia is still very low in term with 50.5% vs Other Emerging Market Countries like Malaysia, Singapore, China, providing opportunities for a re-rating.

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Indonesia is a Safer Harbour for Investment Destination

Constructive Economy Demography Bonus Attractive Valuation Room For Growth, growing demand and expansion, rerating is imminent for Indonesian companies.

Consistently growing Demographic Indonesia Equities is a prospective Investment Destination GDP, Structurally lower CPI, Defensive Attributes from healthy Government Fiscal and Monetary Figure. Bonus of Young and Productive Population, with increasing Income will support LongTerm Domestic Growth Story.

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Why Invest in Small-Mid Cap Companies ?

Smaller companies, positioned at early stage of its business cycle, offer bigger growth prospect that would translate to higher EPS and Asset growth. Historical data shows smaller companies shares price outperform larger companies. Diversification over large names can reduce risk and volatility. Less efficient and mispriced because it is un-covered by analyst and market, Re-rating potential is a bonus when they got covered. Appreciation would come from both company internal growth and expansion on stocks multiple based on market perception. Chances to take advantages of increasing Merger and Acquisitions activity.

Small Companies Big Upside

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Investment Roadmap
Roadmap to Optimal Return
Invest with Beneficial Tailwind of Macro Economy. (Indonesia) Capture the Excess Return By BottomUp Stock Selection

Top Down

Small-Mid Cap

Bottom-Up Selection

Diversification

Optimal and Enhanced Return on the Universe Of Small-Mid Cap in DES

Diversify and Apply Portfolio Management to Minimize Risks

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JCI and Islamic Index Expanding at Similar Rate

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Why Sharia Stock Universe ?

Comply with Sharia Securities List (Daftar Efek Syariah)

JCI Universe : 485 Names

DES is a Natural Screening :

Stocks within the DES have to adhere with strict rule of ; Sharia Complied Business, Decent GCG, and Healthy Balance Sheet with conservative level of Debt.

DES Universe : 285 Names

AIA-F Fund : 20-25 Names

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LQ 45 (Big Caps) Underperform JCI

Small-Mid Cap Historically Outperform JCI

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Philosophy and approach

We seek to add value through our information advantageInhouse based analysts help discover Attractively Valued and innovative growth companies.In relatively inefficient Small-Mid Cap universe.

Our philosophy

We believe that bottom-up research and strategic allocation across the Value and Growth investing principle can lead to attractive risk-adjusted returns.

Our approach

Enhance alpha potential while managing risk: We strategically allocate the portfolios assets across building blocks of Investment: stable or explosive growth Stocks, Value and Distress Stocks, growth at value prices. We identify undervalued, Under-Followed companies with an unrecognized positive dynamic for change. Expand our investment universe: With the flexibility to invest in a wide range of companies, small and mid caps, we have a larger universe of alpha-generating opportunities. Participate in the long-term success of our holdings: Our long-term investment horizon permits us to participate in the success of quality growth stocks as they move from the small-to mid-to large-cap categories.

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Aim for Optimal Return with Moderate Level of Risk

Portfolio Construction from Value and Growth Strategy
Value Investing

Stock Selection on Undervalued Companies with Significant MOS offering. Focus on Balance Sheet

Growth Investing

Stock Selection o nRapidly Growing and Positive Momentum Companies Focus on Operating Profit Growth

En

d ce n ha

u et R

rn

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Discipline Investment Process

DES Universe 0f 285 Stocks

Placeholder Sourcing Opportunities

Fundamental Analysis

Portfolio Construction

This is ofplaceholder text. Ideas Team a Actively Seeking This text can be replacedManagers Analysts and Portfolio with your own text. Qualitative Screens how your own The text demonstrates text will look when you replace the Meeting With Companies placeholder text. Management and Sell Side The text that you insert will retain the same style and format as the Analysts. placeholder text.

Qualitative Scoring Analyze Company Fundamentals

Diversify Strategically according to conviction levels and risk assesments Maintain a balance and diversify within value and growth attributes. Manage for Long-Term Return

Develop Investment Thesis Determine Upside/Downside Potential Classify Company By Idea and Theme

Investment Team of Capable and Competitive Resources

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Qualitative Company Scoring - Example

Management Quality Competitive Positioning Earning Stability Balance Sheet Strength Industry Dynamics Valuation
1
2 3 4 5

Worst

Best

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AIA Sharia Small-Mid Cap Fund

Fund Name
Investment Strategy

AIA Financial IDR Sharia Small-Mid Cap Fund

20%-80% in Equities of listed companies in Indonesia Stock Exchange (IDX) 0 20% in Money Market Instruments Economic & political risk, country risk, market risk, interest rate risk, liquidity risk, exchange rate risk, risk on changes in tax regulation or other government regulations Annual Management Fee up to 2% p.a. (incl. in NAV) IDR IDR 1,000 (one thousand Rupiah) Daily Basis Daily Basis Citibank

Principal Risks

Fees, Charges & Expenses Currency Initial Net Asset Value (NAV) per unit NAV Publication Subscription / Redemption Custodian

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Thank You
AIA-Financial Investment Team
For internal use only and may not be copied, reproduced or transmitted without written permission from AIA Financial

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