October 23, 2017

Mobile World Investment (MWG VN)

BUY
Welcome to the jungle! Share Price
12m Price Target
VND 132,000
VND 157,000 (+19%)
Previous Price Target VND 120,000

Promising BHX: TP raised 31% Company Description

Consumer Discretionary

We have raised our DCF-based TP 31% mainly as a result of revising our Vietnam's largest retailer, currently offering
portable electronics ("TGDD"), white/brown goods
store count assumption for the grocery retailing format Bach Hoa Xanh
("DMX"), FMCG ("BHX"), & B2C e-commerce
(BHX) from 3,000 to 5,000 at the DCF terminal-year (FY21). Our TP
("vuivui.com")
revision was also a result of a lower WACC (from 11.4% to 10.2%; LTG
unchanged at 2%) as management showed more confidence in using debt Statistics
to finance expansions. Our TP equates to a fair 18x FY18E PER, supported 52w high/low (VND) 132,000/72,000
by 17% FY18E EPS growth as MWG transitions from the maturing 3m avg turnover (USDm) 2.2
incumbent business lines to the high-growth BHX. Free float (%) 62.0
Issued shares (m) 308
BHX: what do we see that the market does not? Market capitalisation VND40.6T
The share price has increased faster than monthly earnings in the past USD1.8B
few weeks, and we attribute much of this to the markets positive Major shareholders:
response to MWGs new growth initiatives (i.e. drugstores). While we Founders & related parties 35.6%
also share the markets positive view on MWGs growth plan, we believe PYN Elite Fund 5.3%
Other foreign investors 43.7%
the small initial investments in drugstores will be overshadowed by
BHXs. As we write, BHX has been opening stores at the rate of 4 /day. Price Performance
Vietnam

This is twice the rate at which it opened stores at the peak of the 140,000 300
expansion of its portable electronics chain (TGDD), and is mainly 130,000 280

targeted at rural districts largely ignored by local peers. It appears 120,000 260
110,000 240
promising progress has been made as BHX navigates the FMCG retail 100,000 220
jungle with fragmented suppliers to cater to the untapped demand. 90,000 200

Coupled with the strong existing online platform, MWG could be 80,000 180
70,000 160
somewhat similar to Amazon in the future, in our view. 60,000 140

Risks to our call: BHX needs to be perfected 50,000

40,000
120
100
Besides notable progress, our channel checks indicate BHXs opex will 30,000 80
Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17
remain high. FY18E is expected to be a transitional year when store
growth in the white/brown goods chain (DMX) tapers off and BHX is only Mobile World - (LHS, VND) Mobile World / Vietnam Composite Index - (RHS, %)

just about to conquer the critical-mass point. As such, BHXs expansion, -1M -3M -12M
if not properly planned, could further slow earnings growth. Absolute (%) 16 31 76
Catalysts: further accretive M&A could be possible Relative to index (%) 13 22 46
That said, we expect TGDD/DMXs FCFF to be high in FY18-19E and more Source: FactSet

than enough to cover BHXs capex. We do not rule out further accretive
M&A, given MWGs highly scalable business model.

FYE Dec (VND b) FY15A FY16A FY17E FY18E FY19E Monthly profit vs share price
Revenue 25,253 44,613 69,010 92,032 112,534
EBITDA 1,519 2,361 3,513 4,436 5,592 300 120,000
Core net profit 1,072 1,577 2,293 2,814 3,516 250 100,000
Core EPS (VND) 3,825 5,375 7,424 8,680 10,535
200 80,000
Core EPS growth (%) 52.8 40.5 38.1 16.9 21.4
VNDb

VND

150 60,000
Net DPS (VND) 750 750 1,500 1,500 1,500
100 40,000
Core P/E (x) 34.5 24.6 17.8 15.2 12.5
P/BV (x) 15.6 10.6 7.2 5.3 4.0 50 20,000
Net dividend yield (%) 0.6 0.6 1.1 1.1 1.1 - -
Jul-14

Jul-15

Jul-16

Jul-17
Oct-14

Oct-15

Oct-16
Jan-15

Jan-16

Jan-17
Apr-15

Apr-16

Apr-17

ROAE (%) 54.2 49.9 47.1 39.8 36.1

ROAA (%) 20.1 14.3 13.2 12.4 12.3
EV/EBITDA (x) 8.4 11.3 12.7 10.2 7.9
Net gearing (%) (incl perps) 68.8 98.7 67.6 29.9 net cash PAT (LHS) Share price (RHS)
Consensus net profit - - 2,244 2,855 3,459 Source: Company, Bloomberg
MKE vs. Consensus (%) - - 2.2 (1.5) 1.7

THAI Quang Trung, CFA

trung.thai@maybank-kimeng.com.vn
(84) 844 55 58 88 x 8180

THIS REPORT HAS BEEN PREPARED BY MAYBANK KIM ENG SECURITIES LIMITED
SEE PAGE 16 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS
Mobile World Investment Corp

1. Forecast revisions

Figure 1. Forecast revision details

Previous assumption in parens FY14A FY15A FY16A FY17E FY18E FY19E Notes
Mobile World (TGDD) store # 344 564 951 1,100 1,100 1,100
No change.
(951) (1,100) (1,100) (1,100)

Dien May Xanh (DMX) store # 20 69 256 756 856 856 Strong upward revisions. Inclusive of equivalent store
(256) (556) (656) (656) additions from Tran Anh.

Bach Hoa Xanh (BHX) store # - - 50 250 1,050 2,050 Strong upward revisions. Good progress. 90% of retained
(50) (202) (702) (1,202) earnings expected to be spent on store openings.

Total revenue (VNDb) 15,757 25,251 46,177 69,010 92,032 112,534 Higher top-line due to Tran Anh acquisition, as well as
(46,177) (66,888) (84,800) (99,918) Dien May Xanh and Bach Hoa Xanhs acceleration.

PATMI (VNDb) 668 1,072 1,577 2,293 2,814 3,516 Slightly higher bottom-line due to the above.
(1,577) (2,243) (2,788) (3,516)

FCFF (VNDb) (146) (1,191) (1,752) 2,000 2,239 3,345 Sooner-than-expected mean-reversion of inventory days
(1,752) 1,448 3,720 3,551 in FY17E but higher capex on BHX expected in FY18-19E.
Source: Company historical data, MKE estimates

2. Key assumptions
2.1 Impact of the Tran Anh acquisition
In late Aug it was made public that MWG will purchase a major stake in
Tran Anh (TAG VN, NR), a competitor in Northern Vietnam. Given MWGs
newly approved M&A funding plan to set aside up to VND2.5T in cash (up
from VND0.5T originally approved by the AGM in Mar17) and 6.7m new
shares to be issued, we expect MWG will acquire TAG in full in a part-
cash, part-stock deal. Details of the purchase agreement are expected to
be released in November. In our financial forecasts, we assume the full
VND2.5T will eventually be spent at least on TAG and another drugstore
chain, for which MWG has already started hiring pharmacists, and the
6.7m new shares will be issued to former TAG shareholders in 4Q17.

While awaiting TAG pricing details, we expect the impact on our FCF- TAG acquisition will be equivalent to
based valuation to be moderately positive. In asset-turnover terms, TAG growing DMX store-count by about 20%. In
has been a fairly efficient retailer (Figure 2), and its store locations asset-turnover terms, TAG has been a
appear difficult to replicate. With a trailing 12M revenue of about VND4T fairly efficient retailer.
(c.20% that of DMX), the TAG acquisition will be equivalent to growing
store count by c.120 new mini-DMX stores in one fell swoop. MWGs MWGs existing bargaining power with
existing bargaining power with manufacturers will likely improve TAGs manufacturers will likely improve TAGs
operating margins shortly. (This also appears to be a fairly friendly operating margins shortly.
takeover, as the TAG brand name will be retained for the foreseeable
future. As such, we do not foresee significant operating hurdles in bringing
the two companies together.)

Figure 2. Asset turnover: TAG vs MWG

15.0

10.0
(x)

5.0

0.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 TTM
TAG MWG
Source: Company historical data

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Mobile World Investment Corp

2.2 General capital allocation and financing

Beyond the TAG acquisition, we expect MWGs capital allocation to be
done in the following manner:

- Dividend policy: In the absence of unexpected spending needs or

earnings disruptions, we expect the company to adopt a fixed
dividend policy of VND1,500/share (which was the FY15 and FY16
rate), as this appears to be the preference of many shareholders.

- Distribution of retained earnings: Our discussion with the company We assume 90% of annual retained earnings
and our channel checks led us to believe MWG will allocate the vast to be ploughed back to BHX in the forecast
majority of its annual retained earnings to opening BHX stores in the horizon.
next few years. In our model, we assume 90% of annual retained
earnings will be ploughed back into BHX in the forecast horizon. For Despite the aggressive BHX store opening,
FY18E, this would translate into about 800 new BHX stores, vis--vis we still expect FCFF to be largely positive
the companys latest guidance of 500-1,000 stores. in FY17-19E.
Despite the aggressive BHX store opening, we still expect FCFF from
the current core businesses to be largely positive in FY17-19E (Figure
1 above), as inventory needs in the maturing TGDD/DMX businesses
slow and BHXs increased economies of scale improve both
profitability and cash conversion cycles. In fact, we expect FY18-19E
FCFF from TGDD/DMX alone to be between VND2T to VND3T, as these
business lines mature. We will explain our BHX channel checks and
expectations of store economics later in the report.
Figure 3. FCFF turning positive as working capital needs slow

3,000 70.0
60.0
2,000
50.0
1,000
VNDb

40.0
days

0 30.0
20.0
-1,000
10.0
-2,000 -
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17

FCFF (LHS) Inventory days (RHS) CCC (RHS)

Source: Company historical data

- Investment in new ventures/M&A: Aside from reinvesting in the

current core businesses (TGDD, DMX and BHX), possible ventures that
MWG is currently considering include its maiden B2C e-commerce
(akin to Amazon) and drugstore chain (akin to Guardian/Watsons).
Based on our above assumption, it appears MWG would have 10% of
annual retained earnings, plus any extra working capital surpluses, for
spending on new investments. Nevertheless, we expect the company
to be prudent and only significantly increase its investment in these
new ventures once EBITDA is near break-even levels. Managements
actual capex timeline for BHX in the past and their current cautious
view on e-commerce in Vietnam support our view. In our base-case
scenario, we expect these new ventures will neither consume
significant capital (aside from the abovementioned VND2.5T) nor
contribute significant earnings in the forecast horizon.

- Debt financing: We expect MWG to be more liberal in using debts to

fund expansions. Historically, the company has been rather cautious.
Gearing has been strongly correlated with inventory days (r = 0.9);
net cash was even observed during 2Q14-3Q14 when inventory days
dropped to below 40. Nevertheless, our discussion with management
leads us to believe MWG will increasingly leverage its high-turnover
October 23, 2017 3
Mobile World Investment Corp

business lines (which have enabled it to have very favourable lending
rates thus far) to use bank loans to minimise equity raising. Given
that debt/equity has averaged about 1x in the past one year, we
expect MWG to use bank loans to finance roughly half of its annual
working capital, capex and acquisition needs combined. (Note that,
since our base case scenario involves largely positive FCFF in FY17-
19E, we expect a net cash position again by FY19E.) While these
loans will likely be predominantly short-term, we may expect long-
term capital (bonds, bank loans or equity) to be raised, should the
company find worthwhile sizeable investments.
We assume the company will be more
liberal in using debts to fund expansions.
This also prompts us to slightly lower our
WACC assumption.
While these debts are likely to be
predominantly short term, we may expect
long-term capital (bonds, bank loans or
equity) to be raised should the company
find sizeable investments.

This higher long-term debt/equity ratio also prompts us to lower our

WACC assumption to 10.2% from 11.4%.

2.3 BHX: store economics and working capital needs

We use the following assumptions for BHXs store-level economics and
working capital needs.

Metric Medium term Long term

(2-3 years) (3-5 years)
Capex/store (VNDb) 2.0 2.0
Rev/store/mth (VNDb) 1.2 1.2
Gross margin 23% 25%
Net margin 1.9% 2.3%
ROIC 13.5% 16.2%
Receivables days 0 0
Inventory days 15 15
Payables days 30 30
Store count >2,000 >5,000
Total BHX revenue ~USD1b ~USD3b
Source: MKE estimates

We believe our long-term assumption for the total scale of the BHX
business is conservative, equal to about half of the companys ambitious
target of a 10% market share in a USD60b market. At this stage, we
believe the company target can be achieved only if further long-term
capital is raised.
In any case, we believe this high-turnover model will enable BHX to run We believe this high-turnover business will
negative working capital, backed by MWGs meticulous merchandise enable BHX to run negative working
management (i.e. constantly reviewing SKUs to remove low-moving items) capital, backed by MWGs meticulous
and proactive vendor selection. The fact that MWG secured sizeable merchandise management (i.e. constantly
supply contracts for key fresh fruit products from Hoang Anh Gia Lai reviewing SKUs to remove low-moving
Agrico (HNG VN, NR) is a good start, in our view. items) and proactive vendor selection.

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Mobile World Investment Corp

3. Good progress on BHX, overall

3.1 Retail concept revisited
We revisit BHXs retail concept and are comfortable with its current We see that similar peers in the local
positioning. To a certain extent, we see that similar peers in the local market are not exactly doing the same
market are not exactly doing the same thing BHX is doing. thing as BHX.
These peers include Coop Food under Saigon Coop Group (unlisted),
Satrafoods under Saigon Trading Group (unlisted) and Vinmart+ under They seem to appeal to consumers in
Vingroup (VIC VN, HOLD, TP45,000). While all three of these chains do sell income quintiles 4 or 5, as opposed to
selected fresh food products (i.e. produce, meat and fish), they quintiles 1 to 3 by BHX.
apparently do not aim to compete with wet markets. In short, we believe
they would appeal to consumers in income quintiles 4 or 5, as depicted in
Figure 4 below. (Income quintile 5 refers to the top 20% income-earners in
the population, and quintile 1 refers to the bottom 20%).

In contrast, BHX aims to compete directly with wet markets and would
mainly target consumers in quintiles 1 to 3, in our view. Hence, the
economics of BHX would eventually depend on: (1) staying on top of what
consumers, especially those in quintiles 1 to 3 demand on a daily basis; (2)
navigating the fragmented supply chain to offer product availability,
affordability and quality to consumers. As explained by Chairman Nguyen
Duc Tai, the success of the model depends on finding a winning formula
to ensure the above two operational goals are systematically met. Once
they are met, BHXs scaled-up bargaining power should eventually help to
cut out the middlemen and improve profitability.
Figure 4: HCMC average expenditure per capita per month by quintile

6,000
5,000
4,000
3,000
'000 VND

2,000
1,000
-
2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Quintile 1 Quintile 2 Quintile 3

Quintile 4 Quintile 5

Source: HCMC Statistics Department, World Bank, MKE estimates

3.2 Store opening: aggressively targeting untapped demand

Figure 5 and Figure 6 below demonstrate that MWG is committed to We believe MWG has been more aggressive
targeting the mass market, which is what the companys operating than local peers in targeting untapped
platform is built for, after all. Recall, the companys overall strategy is to mass-market demand.
grab retailing market share from mom-and-pop stores (or wet markets, in
the case of grocery retailing). We believe MWG has been more
aggressive than local peers in targeting untapped mass-market demand.

In particular, Figure 5 shows that MWG, driven by its overall strategy,

naturally wants to focus on districts that have a combination of the
following characteristics: (1) high population base; (2) low penetration of
modern retail trade; and (3) traffic difficulties, which leads to a need for
brick-and-mortar convenience. Figure 6 further confirms this. Currently,
districts with a BHX footprint account for over 60% of HCMCs population;
our survey of residential/commercial real estate indicates these districts
are mostly home to residents belonging to income quintiles 1 to 3.

October 23, 2017 5

Mobile World Investment Corp

Figure 5. HCMC population vs retail store availability by region

Region [1]
Area [2] Population [2] Density [2] # of minimart stores [3] # of
Bach Hoa supermarkets /
(km2) (persons/km2)
Xanh Satrafoods Vinmart+ hypermarkets [3]
Downtown & satellites 128 1,704,500 13,327 - 34 111 26
Chinatown neighbourhood 42 1,338,683 32,257 - 23 60 12
North/Northeast 215 1,329,359 6,196 21 24 38 9
Tan Son Nhat neighbourhood 58 1,557,668 26,773 37 25 91 22
South/Southwest 405 1,417,150 3,499 112 11 25 7
Rural 1,248 900,469 722 26 13 6 4
Total 2,095 8,247,829 3,937 196 130 331 80
[1] HCMC regions are defined by MKE Research as follows:
Downtown & satellites: D1, D2, D3, D4, D7, Binh Thanh, Phu Nhuan. These districts tend to be commercially oriented, with high housing prices.
Chinatown neighbourhood: D5, D6, D8, D10, D11. These districts, which comprise the Chinatown area, are densely populated and also tend to have high housing prices.
North/Northeast: D9, D12, Thu Duc. The economic development of these districts tends to be driven by industrial/high-tech manufacturing activity in HCMC and surrounding provinces.
Tan Son Nhat neighbourhood: Tan Binh, Go Vap, Tan Phu. These districts, which surround the airport, can be characterised by a high population base against traffic difficulties.
South/Southwest: Binh Tan, Binh Chanh, Nha Be. These districts have a high population base and fairly low consumer purchasing power. There is a lack of supermarkets despite a low population density.
Rural: Can Gio, Cu Chi, Hoc Mon. These districts have a high population base and arguably the lowest consumer purchasing power. There is a lack of supermarkets despite a low population density.
[2] In 2015, per official statistics.
[3] As at 17 Oct 2017, per MKE survey. Note that Coop Food does not list their store locations on their website. However, its Facebook page reported 156 stores nationwide as at end-Aug17.

Source: HCMC Statistics Department, company data, MKE estimates

Figure 6. BHX stores are predominantly on the outskirts of HCMC

CBD

Note: some new stores may not be shown on the map yet; conversely, some stores recently shut down may still
be shown.
Source: Google Maps, company data, MKE estimates, as at 17 Oct 2017

3.3 Merchandise management: high-turnover SKUs only

Our channel checks indicate a large number of residents in the areas Most target customers probably would
targeted by BHX (i.e. income quintiles 1 to 3) have latent needs that are purchase small-value items, on average.
neither met by other minimart chains/supermarkets nor wet markets.
This is where MWG has excelled in the past
Based on Figure 4 above, we estimate that these consumers can probably
in the original portable electronics format.
only afford to buy about USD2-3 worth of daily necessities per store visit,
on average. Most of the items they purchase would probably be small in
value. This is actually where MWG has excelled in its original portable
electronics format (TGDD). The sales of small accessories, like earphones
or power banks have been highly profitable for MWG as the company
meticulously ensures friendly product classifications, ease of browsing and
reliable quality control.

We believe that in order for BHX to compensate for the low margins when
competing with mom-and-pops and wet markets, proactive merchandise
management is needed to ensure high turnovers and low working capital
requirements. This apparently involves matching customers needs with a
very fragmented supply chain, even when the items in demand are small
in value and require meticulous merchandise management. This is
probably a hurdle that has prevented many previous minimarts from
reaching this type of untapped demand.

October 23, 2017 6

Mobile World Investment Corp

In this regard, we believe BHX has made promising progress, after having
arrived at an optimal level of 2,000 high-turnover SKUs. In Figure 7, we
compare the prices of selected high-turnover low-priced items in BHX and
Satrafoods. We believe these items will have fairly stable prices, and we
deem Satrafoods one of BHXs prominent competitors in terms of target
customers. We believe many working-class consumers now physically
frequent a nearby BHX store for these daily necessities.

Figure 7. Pricing comparison of low-priced items

Category Brand item Manufacturer Bach Hoa Xanh (VND) Satrafoods (VND)
Toothbrush P/S Soft Protection 123 Unilever 9,000 9,000
Toothpaste Colgate MaxFresh 140g Colgate-Palmolive 20,000 19,500
Shampoo sachet X Men For Boss Perfumed 6g x 10 ICP 10,000 N.A.
Sugar Bien Hoa Pure 500g Bien Hoa 11,000 11,000
Fish sauce Nam Ngu 3-in-1 750ml Masan 30,000 30,800
Bottled drink Lipton Honey Green Tea 350ml PepsiCo 6,000 6,200
Instant noodles Hao Hao Hot Sour Shrimp Acecook 3,600 3,600
Condensed milk Ong Tho 380g Vinamilk 21,000 21,500
Canned meat Two Bits of Pork 150g Vissan 22,000 21,000
Powder detergent OMO 400g Unilever 17,500 17,500
Source: company data, as at 17 Oct 2017

Figure 8. Friendly classification by brand and functionality, even for small items

Source: bachhoaxanh.com

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Mobile World Investment Corp

Figure 9. Detailed product descriptions, linked to related cooking tips & manufacturers profile, even for small items

Source: bachhoaxanh.com

October 23, 2017 8

Mobile World Investment Corp

4. Risks to our call

4.1 Risks to BHX
OPEX: In the near term, we expect BHXs opex to remain high. As FY18E is
likely to be a transitional year in which TGDD/DMX slows and BHX is just
about to conquer managements 1,000-store critical-mass target, higher-
than-expected opex in the BHX business line during FY18E would directly
dampen EPS growth. We estimate TGDD/DMX combined would see
FY18/19E earnings growth of only 16%/4%, as there are currently no
store opening plans for these maturing business lines in FY19E.

Although we expect BHX to improve at a rapid rate, we have yet to see

convincing progress on fresh food items in terms of controlling wastage,
product availability and pricing. At present, if time allows, most
consumers would still choose wet markets or other minimart chains over
BHX for most of these items.

Also, certain higher-priced items, such as powder detergent of certain

brands (in large packages) and milk are admittedly more expensive than
those offered in other chains, according to BHX staff. To ensure buyers of
these high-frequency items are not turned away, higher-than-expected
promotions/discounts might be incurred.

Last but not least, inventory losses could also be a risk. The company is
yet to come up with a way to systematically prevent stolen goods, which
we think is an inevitable problem for the type of business BHX is pursuing.

Sales: Although average sales per store are already hovering around
USD50,000 per month, we are not certain whether BHX can ensure the
right products will be made available to its target customers at the right
prices at all times. Logistical difficulties and an extremely complicated
supply chain (with hundreds of vendors for each category) may hamper
product availability and lead to sales declines, at least in some locations.

Capex: In order for the high expected earnings growth to materialise and
justify the current +2SD PER, MWG would critically need to scale up BHX.
This is because only at a high scale (which management expects to be
>1,000 stores) does bargaining power with suppliers start to kick in,
ensuring profitability. However, an overly aggressive BHX store opening
schedule could coincide with opex hikes and result in higher-than-
expected debt financing and lower earnings. That said, we note that it is
much easier for MWG to open and close BHX stores than they do
TGDD/DMX-mini stores, and we still expect BHXs capex to be below
TGDD/DMXs FCFF in FY18-19E.

4.2 Risks to TGDD/DMX

SSSG: TGDD is seeing flattish SSSG. As this is still the largest chain (>50%
revenue in FY17E), MWGs enterprise value remains fairly sensitive to
TGDD SSSG, at least until FY19E when we expect its revenue share to drop
below 40%. That said, we still expect a long-term SSSG of 2% for this chain
as optimisation starts to kick in and more value-added in-store services
are offered over time. Also, a slowing SSSG would automatically trigger an
inventory slowdown to protect FCFF.

Online competition: We find that TGDDs portable electronics and non-

bulky accessories are especially susceptible to online competition. This is
because these products seem to have increasingly stable sources of
supply, and their non-bulky and pricing characteristics are increasingly
making them economical items for online retailers to deliver. MWG has
historically competed successfully with online retailers in Vietnam
(without using a full-force e-commerce platform, yet) by relying on its
extensive capital-light rental store network (vs expensive distribution
centres) to provide 30-minute deliveries. However, if further investments
October 23, 2017 9
Mobile World Investment Corp

are made to logistics and staff training, players, such as lazada.vn could
challenge MWGs #1 online retailing position.

5. Valuations
5.1 DCF
We normally use FCFF to value Vietnamese corporates, as there are
usually uncertainties in their future utilisation of debt to allocate capital
to benefit shareholders. However, as MWG has been fairly proactive in
leveraging its high-turnover business to use debt for expansion, we keep
an eye on both FCFF and FCFE. We find that in the near term (FY17-18E),
they yield fairly close results. We adopt a 12M target price of VND157,000
based on these results.

FCFF (VNDb) 2014 2015 2016 2017 2018 2019 2020 2021
Free cash flow to firm (FCFF) (146) (1,191) (1,752) 2,000 2,239 3,345 3,496 4,880
5-yr Total PV of FCFF 10,699 9,555 7,188 4,427 4,880
Terminal value 60,483 60,483 60,483 60,483 60,483
PV of terminal value 40,967 45,158 49,777 54,870 60,483
Total PV of FCFF 51,666 54,713 56,965 59,297 65,363
Less: debt 6,983 8,661 10,331 12,367 14,707
Add: cash 2,993 6,200 10,420 15,112 21,397
Less: MI 3 5 7 9 11
Equity value 47,672 52,248 57,047 62,033 72,041
Fair value/share (VND) 147,500 156,500 167,500 177,500 203,000

FCFE (VNDb) 2014 2015 2016 2017 2018 2019 2020 2021
Free cash flow to firm (FCFF) (146) (1,191) (1,752) 2,000 2,239 3,345 3,496 4,880
Less interest expenses after tax (16) (29) (90) (192) (279) (346) (413) (495)
Net borrowings 106 1,434 2,736 2,194 1,677 1,671 2,035 2,341
Free cash flow to equity (FCFE) (56) 215 894 4,003 3,637 4,669 5,118 6,726
5-yr Total PV of FCFE 13,904 12,352 9,536 5,849 5,849
Terminal value 52,776 52,776 52,776 52,776 52,776
PV of terminal value 30,175 34,701 39,906 45,892 52,776
Total PV of FCFE 44,078 47,053 49,443 51,741 58,625
Add: cumulative cash 2,993 6,200 10,420 15,112 21,397
Less: MI 3 5 7 9 11
Equity value 47,068 53,249 59,856 66,844 80,010
Fair value/share (VND) 145,500 159,500 175,500 191,000 225,500

Risk Free Rate 7.0%

Equity Risk Premium 8.0%

Beta 1.0
Cost of Equity 15.0%
Cost of Debt (%) - before tax 7.0%
Cost of Debt (%) - after tax 5.5%
Debt/Equity 1.0x
WACC 10.2%
Terminal Growth 2.0%

Source: MKE estimates

October 23, 2017 10

Mobile World Investment Corp

5.2 Multiples
We are not overly concerned with MWGs PER at/above 2SD to the mean
at this point. Historically, we believe the market was largely unaware of
the companys ambition to move far beyond electronics retailing. For
instance, much of the weakness in the share price during 9M15 was due to
uncertainties regarding its arguably generous ESOP, which we think
eventually proved worthwhile.

We see MWG as a highly adaptive growth company supported by a unique

culture that will eventually lead to an upward rerating by the market, in
our view.
Figure 10: 12M Trailing PER

25
20
15
10
5
-
May-15

May-16

May-17
Mar-15

Jul-15
Sep-15

Mar-16
Nov-15

Jul-16
Sep-16

Mar-17
Nov-16

Jul-17
Sep-17
Jan-15

Jan-16

Jan-17

Trailing PER Mean-2SD Mean-1SD

Mean Mean+1SD Mean+2SD

Source: Bloomberg

Figure 11: 12M Forward PER

20

15

10

-
Jul-15

May-17
Nov-14

May-15

May-16
Jul-14
Sep-14

Mar-15

Sep-15
Nov-15

Mar-16

Jul-16
Sep-16
Nov-16

Mar-17

Jul-17
Sep-17
Jan-15

Jan-16

Jan-17

Forward PER Mean-2SD Mean-1SD

Mean Mean+1SD Mean+2SD

Source: Bloomberg

October 23, 2017 11

Mobile World Investment Corp

Value Proposition Price Drivers

Vietnams largest retailer by revenue, MWG differentiates Corporate actions and business operations key drivers
by pioneering a customer-centric culture and operating 140,000 750
4
efficiently via an evolving, highly-customised ERP system. 120,000 650
Focused products are portable electronics (TGDD) and
100,000 550
white goods/brown goods (DMX). Gearing up FMCG 1
80,000 3 450
minimarts (BHX). Exploring e-commerce and drugstores. 2
60,000 350
Competitive strengths are an entrepreneurial, yet prudent
40,000 250
management, looking for high-growth areas, on-the-
ground local expertise, and an efficient workforce. 20,000 150

Having seen PATMI leap 10x during 2011-16, MWG is still 0 50

Jul-14 Dec-14 May-15 Oct-15 Mar-16 Aug-16 Jan-17 Jun-17
looking to reach untapped demand in remote areas across Mobile World - (LHS, VND)
Vietnam with an on-going store expansion plan. Mobile World / MSCI AC Asia ex JP - (RHS, %)
Secular growth story. Mom-and-pops still dominate
Vietnams retailing, and MWGs scalable platform is well Source: Company, Maybank Kim Eng
positioned to capture mass-market modern trade growth.

Efficient ERP and competitive pay lift productivity 1. Shares well received by the market due to increasing
sell-side coverage.
10.0
2. Announced generous employee stock ownership
8.0 programme (ESOP) at 5% of outstanding shares with no
upfront cost.
6.0
3. FY16 AGM saw an aggressive store-opening plan put
4.0 forward.
2.0 4. Noted progress in BHX and intention to acquire drugstore
chains well received by the market.
0.0
FY12 FY13 FY14 FY15 FY16
Sales per employee per day (VNDm)

Source: Company

Financial Metrics Swing Factors

SSSG key to monitor in FY18E as store growth in incumbent Upside
chains slows; currently flattish for portable electronics
and double-digit for white/brown goods. Accretive M&A opportunities may arise as MWG looks to
Expect SG&A/revenue to increase as MWG seeks to: (1) marry its scalable business operations and industry
maintain competitive cash incentives for managers; (2) expertise in other retailing formats.
expand BHX; and (3) ramp up TGDD/DMX market positions. Margin expansion from value-added services, such as
Cash conversion cycle (>30 days) and current liabilities to providing instalment loans to customers, as well as early
inventory (~1x) are now stable. Expect gearing to remain payment discounts.
at ~1x as MWG makes use of favourable lending rates. Industry consolidation or an exit by trailing competitors
(FPTShop, Viettel Store, Vien Thong A, aside from Tran
Increase in SG&A necessary to maintain revenue growth Anh) may open up further room for growth.
%

14.0 100.0
12.0 Downside
10.0 75.0
8.0
6.0
50.0 Higher-than-expected opex in BHX could slow growth.
4.0 25.0 Aggressive BHX expansion, if not timed properly, could
2.0 coincide with its opex hikes and lead to higher-than-
0.0 0.0
expected debt needs and lower earnings.
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17

Selling pressure from insiders, employees and long-

standing strategic investors is occasionally a concern.
SG&A/revenue (LHS) Revenue growth (YoY) (RHS)
These shareholders have acquired shares at low costs.
Source: Company

trung.thai@maybank-kimeng.com.vn

October 23, 2017 12

Mobile World Investment Corp

FYE 31 Dec FY15A FY16A FY17E FY18E FY19E

Key Metrics
P/E (reported) (x) 10.3 10.6 17.8 15.2 12.5
Core P/E (x) 34.5 24.6 17.8 15.2 12.5
P/BV (x) 15.6 10.6 7.2 5.3 4.0
P/NTA (x) 15.8 10.7 7.3 5.4 4.0
Net dividend yield (%) 0.6 0.6 1.1 1.1 1.1
FCF yield (%) nm nm 4.9 5.2 7.6
EV/EBITDA (x) 8.4 11.3 12.7 10.2 7.9
EV/EBIT (x) 9.6 13.4 15.7 12.9 10.1

INCOME STATEMENT (VND b)

Revenue 25,252.7 44,613.3 69,010.1 92,031.6 112,534.3
Gross profit 3,922.4 7,214.1 11,565.8 15,391.7 19,365.3
EBITDA 1,519.1 2,361.2 3,512.6 4,435.6 5,592.1
Depreciation (196.2) (369.0) (664.2) (929.6) (1,227.1)
Amortisation (0.9) (0.5) (0.5) (0.5) (0.5)
EBIT 1,322.0 1,991.6 2,847.9 3,505.5 4,364.5
Net interest income /(exp) (38.0) (117.8) (229.5) (319.2) (371.0)
Associates & JV 0.0 0.0 0.0 0.0 0.0
Exceptionals 0.0 0.0 0.0 0.0 0.0
Other pretax income 101.7 132.1 249.2 332.5 404.3
Pretax profit 1,385.8 2,005.9 2,867.6 3,518.8 4,397.7
Income tax (310.0) (427.7) (573.5) (703.8) (879.5)
Minorities (3.9) (0.9) (1.1) (1.4) (1.8)
Discontinued operations 0.0 0.0 0.0 0.0 0.0
Reported net profit 1,071.9 1,577.4 2,293.0 2,813.6 3,516.4
Core net profit 1,071.9 1,577.4 2,293.0 2,813.6 3,516.4
Preferred Dividends 0.0 0.0 0.0 0.0 0.0

BALANCE SHEET (VND b)

Cash & Short Term Investments 343.9 997.0 2,992.6 6,200.5 10,419.8
Accounts receivable 76.9 243.5 226.6 245.2 261.0
Inventory 4,932.7 9,370.7 9,768.6 11,007.5 12,266.0
Property, Plant & Equip (net) 826.9 2,069.5 2,896.2 3,823.3 4,596.2
Intangible assets 34.7 26.6 26.1 25.6 25.1
Investment in Associates & JVs 0.0 0.0 0.0 0.0 0.0
Other assets 1,050.6 2,147.0 4,017.2 4,172.9 4,344.2
Total assets 7,265.8 14,854.3 19,927.3 25,475.0 31,912.3
ST interest bearing debt 2,052.9 4,789.0 6,983.4 8,660.8 10,331.4
Accounts payable 1,971.3 4,680.0 5,353.6 6,632.2 8,124.4
LT interest bearing debt 0.0 0.0 0.0 0.0 0.0
Other liabilities 758.0 1,544.0 1,687.0 1,949.0 2,206.0
Total Liabilities 4,782.2 11,012.9 14,023.5 17,242.3 20,662.1
Shareholders Equity 2,481.9 3,839.0 5,900.4 8,227.8 11,243.5
Minority Interest 1.6 2.3 3.5 4.9 6.6
Total shareholder equity 2,483.6 3,841.4 5,903.8 8,232.6 11,250.1
Perpetual securities 0.0 0.0 0.0 0.0 0.0
Total liabilities and equity 7,265.8 14,854.3 19,927.3 25,475.0 31,912.3

CASH FLOW (VND b)

Pretax profit 1,385.8 2,005.9 2,867.6 3,518.8 4,397.7
Depreciation & amortisation 197.1 369.5 664.8 930.1 1,227.7
Adj net interest (income)/exp 38.9 119.6 229.5 319.2 371.0
Change in working capital (2,060.9) (2,534.5) 292.6 21.1 217.9
Cash taxes paid (196.0) (530.9) (573.5) (703.8) (879.5)
Other operating cash flow 31.2 78.3 10.0 10.0 10.0
Cash flow from operations (604.0) (491.9) 3,490.9 4,095.5 5,344.7
Capex (586.5) (1,260.4) (1,491.0) (1,856.7) (2,000.0)
Free cash flow (1,190.5) (1,752.3) 2,000.0 2,238.8 3,344.7
Dividends paid (1.8) (220.1) (231.6) (486.2) (500.6)
Equity raised / (purchased) (2.2) 0.0 762.3 97.1 75.7
Change in Debt 1,434.3 2,736.0 2,194.4 1,677.4 1,670.6
Other invest/financing cash flow (108.8) (110.5) (2,729.5) (319.2) (371.0)
Effect of exch rate changes 0.0 0.0 0.0 0.0 0.0
Net cash flow 131.0 653.1 1,995.6 3,207.9 4,219.3

October 23, 2017 13

Mobile World Investment Corp

FYE 31 Dec FY15A FY16A FY17E FY18E FY19E

Key Ratios
Growth ratios (%)
Revenue growth 60.3 76.7 54.7 33.4 22.3
EBITDA growth 64.6 55.4 48.8 26.3 26.1
EBIT growth 64.0 50.7 43.0 23.1 24.5
Pretax growth 59.6 44.7 43.0 22.7 25.0
Reported net profit growth 60.4 47.2 45.4 22.7 25.0
Core net profit growth 60.4 47.2 45.4 22.7 25.0

Profitability ratios (%)

EBITDA margin 6.0 5.3 5.1 4.8 5.0
EBIT margin 5.2 4.5 4.1 3.8 3.9
Pretax profit margin 5.5 4.5 4.2 3.8 3.9
Payout ratio 19.6 14.0 20.2 17.3 14.2

DuPont analysis
Net profit margin (%) 4.2 3.5 3.3 3.1 3.1
Revenue/Assets (x) 3.5 3.0 3.5 3.6 3.5
Assets/Equity (x) 2.9 3.9 3.4 3.1 2.8
ROAE (%) 54.2 49.9 47.1 39.8 36.1
ROAA (%) 20.1 14.3 13.2 12.4 12.3

Liquidity & Efficiency

Cash conversion cycle 36.1 38.1 29.8 21.6 17.3
Days receivable outstanding 0.9 1.3 1.2 0.9 0.8
Days inventory outstanding 60.2 68.8 60.0 48.8 45.0
Days payables outstanding 24.9 32.0 31.4 28.2 28.5
Dividend cover (x) 5.1 7.2 4.9 5.8 7.0
Current ratio (x) 1.3 1.1 1.1 1.1 1.2

Leverage & Expense Analysis

Asset/Liability (x) 1.5 1.3 1.4 1.5 1.5
Net gearing (%) (incl perps) 68.8 98.7 67.6 29.9 net cash
Net gearing (%) (excl. perps) 68.8 98.7 67.6 29.9 net cash
Net interest cover (x) 34.8 16.9 12.4 11.0 11.8
Debt/EBITDA (x) 1.4 2.0 2.0 2.0 1.8
Capex/revenue (%) 2.3 2.8 2.2 2.0 1.8
Net debt/ (net cash) 1,709.1 3,792.0 3,990.8 2,460.4 (88.3)
Source: Company; Maybank

October 23, 2017 14

Mobile World Investment Corp

Research Offices
REGIONAL HONG KONG / CHINA INDONESIA VIETNAM
Christopher WONG
Sadiq CURRIMBHOY Isnaputra ISKANDAR Head of Research LE Hong Lien, ACCA
(852)2268 0652 christopherwong@kimeng.com.hk
Regional Head, Research & Economics (62) 21 8066 8680 Head of Institutional Research
HK & China Properties
(65) 6231 5836 sadiq@maybank-ke.com.sg isnaputra.iskandar@maybank-ke.co.id (84) 8 44 555 888 x 8181
Jacqueline KO, CFA Strategy Metals & Mining Cement lien.le@maybank-kimeng.com.vn
WONG Chew Hann, CA Strategy Consumer Diversified
(852) 2268 0633 jacquelineko@kimeng.com.hk Rahmi MARINA
Regional Head of Institutional Research Consumer Staples & Durables (62) 21 8066 8689
(603) 2297 8686 wchewh@maybank-ib.com THAI Quang Trung, CFA,
rahmi.marina@maybank-ke.co.id
Ka Leong LO, CFA Deputy Head, Institutional Research
ONG Seng Yeow Banking & Finance
(852) 2268 0630 kllo@kimeng.com.hk (84) 8 44 555 888 x 8180
Regional Head of Retail Research Consumer Discretionary & Auto Aurellia SETIABUDI trung.thai@maybank-kimeng.com.vn
(65) 6231 5839 (62) 21 8066 8691 Real Estate Construction Materials
ongsengyeow@maybank-ke.com.sg Mitchell KIM aurellia.setiabudi@maybank-ke.co.id
(852) 2268 0634 mitchellkim@kimeng.com.hk Property LE Nguyen Nhat Chuyen
TAN Sin Mui
Internet & Telcos (84) 8 44 555 888 x 8082
Director of Research Janni ASMAN
chuyen.le@maybank-kimeng.com.vn
(65) 6231 5849 sinmui@kimeng.com.hk Ning MA, CFA (62) 21 8066 8687
Oil & Gas
(852) 2268 0672 ningma@kimeng.com.hk janni.asman@maybank-ke.co.id
ECONOMICS Insurance Cigarette Healthcare Retail NGUYEN Thi Ngan Tuyen,
Adhi TASMIN Head of Retail Research
Suhaimi ILIAS Ricky NG, CFA (62) 21 8066 8694 (84) 8 44 555 888 x 8081
Chief Economist (852) 2268 0689 rickyng@kimeng.com.hk adhi.tasmin@maybank-ke.co.id tuyen.nguyen@maybank-kimeng.com.vn
Malaysia | Philippines Regional Renewables Food & Beverage Oil&Gas Banking
Plantations
(603) 2297 8682 suhaimi_ilias@maybank-ib.com HK & China Properties
CHUA Hak Bin Sonija LI, CFA, FRM
PHILIPPINES TRUONG Quang Binh,
Regional Thematic Macroeconomist Deputy Head, Retail Research
(852) 2268 0641 sonijali@kimeng.com.hk Minda OLONAN Head of Research
(65) 6231 5830 chuahb@maybank-ke.com.sg (84) 4 44 555 888 x 8087
Gaming (63) 2 849 8840 binh.truong@maybank-kimeng.com.vn
LEE Ju Ye minda_olonan@maybank-atrke.com
Stefan CHANG, CFA Rubber Plantation Tyres and Tubes Oil&Gas
Singapore Strategy
(65) 6231 5844 leejuye@maybank-ke.com.sg (852) 2268 0675 stefanchang@kimeng.com.hk
Technology Regional Lovell SARREAL TRINH Thi Ngoc Diep
Saktiandi SUPAAT (63) 2 849 8841 (84) 4 44 555 888 x 8208
Head, FX Research Tony Ren, CFA lovell_sarreal@maybank-atrke.com diep.trinh@maybank-kimeng.com.vn
(65) 6320 1379 saktiandi@maybank.com.sg (852) 2268 0640 tonyren@kimeng.com.hk Consumer Media Cement Technology Utilities Construction
Healthcare & Pharmaceutical
STRATEGY Rommel RODRIGO NGUYEN Thi Sony Tra Mi
INDIA (63) 2 849 8839 (84) 8 44 555 888 x 8084
Sadiq CURRIMBHOY rommel_rodrigo@maybank-atrke.com mi.nguyen@maybank-kimeng.com.vn
Global Strategist Jigar SHAH Head of Research Conglomerates Property Gaming Port Operation Pharmaceutical
(65) 6231 5836 sadiq@maybank-ke.com.sg (91) 22 6623 2632 jigar@maybank-ke.co.in Ports/ Logistics Food & Beverage
Strategy Oil & Gas Automobile Cement Katherine TAN
Willie CHAN NGUYEN Thanh Lam
(63) 2 849 8843
Hong Kong / Regional Vishal MODI kat_tan@maybank-atrke.com (84) 4 44 555 888 x 8086
(852) 2268 0631 williechan@kimeng.com.hk (91) 22 6623 2607 vishal@maybank-ke.co.in Banks Construction thanhlam.nguyen@maybank-kimeng.com.vn
Technical Analysis
Banking & Financials
MALAYSIA THAILAND
Neerav DALAL
WONG Chew Hann, CA Head of Research Maria LAPIZ Head of Institutional Research
(91) 22 6623 2606 neerav@maybank-ke.co.in
(603) 2297 8686 wchewh@maybank-ib.com Dir (66) 2257 0250 | (66) 2658 6300 ext 1399
Strategy Software Technology Telcos Maria.L@maybank-ke.co.th
Strategy Consumer Materials Ind. Estates
Desmond CHNG, ACA Vishal PERIWAL Oil & Gas Telcos
(603) 2297 8680 (91) 22 6623 2605 vishalperiwa@maybank-ke.co.in
desmond.chng@maybank-ib.com Sittichai DUANGRATTANACHAYA
Infrastructure (66) 2658 6300 ext 1393
Banking & Finance
Sittichai.D@maybank-ke.co.th
LIAW Thong Jung SINGAPORE Services Sector Transport Property Telcos
(603) 2297 8688 tjliaw@maybank-ib.com
Oil & Gas Services- Regional Neel SINHA Head of Research Tanawat RUENBANTERNG
(65) 6231 5838 neelsinha@maybank-ke.com.sg (66) 2658 6300 ext 1394
ONG Chee Ting, CA Strategy Tanawat.R@maybank-ke.co.th
(603) 2297 8678 ct.ong@maybank-ib.com SMID Caps Regional Banks & Diversified Financials
Plantations - Regional
Ornmongkol TANTITANATORN
Mohshin AZIZ CHUA Su Tye (66) 2658 6300 ext 1395
(603) 2297 8692 mohshin.aziz@maybank-ib.com (65) 6231 5842 chuasutye@maybank-ke.com.sg ornmongkol.t@maybank-ke.co.th
Aviation - Regional Petrochem REITs Oil & Gas
YIN Shao Yang, CPA Derrick HENG, CFA Sukit UDOMSIRIKUL Head of Retail Research
(603) 2297 8916 samuel.y@maybank-ib.com (65) 6231 5843 derrickheng@maybank-ke.com.sg (66) 2658 5000 ext 5090
Gaming Regional Media Transport Property REITs (Office) Sukit.u@maybank-ke.co.th
TAN Chi Wei, CFA Ekachai TARAPORNTIP Deputy Head
Luis HILADO
(603) 2297 8690 chiwei.t@maybank-ib.com 66) 2658 5000 ext 1530
(65) 6231 5848 luishilado@maybank-ke.com.sg
Power Telcos Ekachai.t@maybank-ke.co.th
Telcos
WONG Wei Sum, CFA Surachai PRAMUALCHAROENKIT
John CHEONG, CFA (66) 2658 5000 ext 1470
(603) 2297 8679 weisum@maybank-ib.com
(65) 6231 5845 johncheong@maybank-ke.com.sg Surachai.p@maybank-ke.co.th
Property
Small & Mid Caps Healthcare Auto Conmat Contractor Steel
LEE Yen Ling Suttatip PEERASUB
(603) 2297 8691 lee.yl@maybank-ib.com NG Li Hiang
(66) 2658 5000 ext 1430
Building Materials Glove Ports Shipping (65) 6231 5840 nglihiang@maybank-ke.com.sg
suttatip.p@maybank-ke.co.th
Banks
Ivan YAP Media Commerce
(603) 2297 8612 ivan.yap@maybank-ib.com Sutthichai KUMWORACHAI
Automotive Semiconductor Technology (66) 2658 5000 ext 1400
Kevin WONG sutthichai.k@maybank-ke.co.th
(603) 2082 6824 kevin.wong@maybank-ib.com Energy Petrochem
REITs Consumer Discretionary Termporn TANTIVIVAT
LIEW Wei Han (66) 2658 5000 ext 1520
termporn.t@maybank-ke.co.th
(603) 2297 8676 weihan.l@maybank-ib.com Property
Consumer Staples
Jaroonpan WATTANAWONG
Adrian WONG (66) 2658 5000 ext 1404
(603) 2297 8675 adrian.wkj@maybank-ib.com jaroonpan.w@maybank-ke.co.th
Constructions Healthcare Transportation Small cap
Jade TAM Poonpat CHAIKUMHAN, CFA
(603) 2297 8687 jade.tam@maybank-ib.com (66) 2658 5000 ext 1511
Media Building Materials poonpat.c@maybank-ke.co.th
Electronics ICT
Mohd Hafiz Hassan Sorrabhol VIRAMETEEKUL
(603) 2082 6819 mohdhafiz.ha@maybank-ib.com Head of Digital Research
Small & Mid Caps (66) 2658 5000 ext 1550
sorrabhol.V@maybank-ke.co.th
TEE Sze Chiah Head of Retail Research
Food, Transportation
(603) 2082 6858 szechiah.t@maybank-ib.com
Wijit ARAYAPISIT
Nik Ihsan Raja Abdullah, MSTA, CFTe (66) 2658 5000 ext 1450
(603) 2297 8694 wijit.a@maybank-ke.co.th
nikmohdihsan.ra@maybank-ib.com Strategist

October 23, 2017 15

Mobile World Investment Corp

APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES

DISCLAIMERS
This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as
an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate
and that each securitys price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental
ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and
volume-related information extracted from the relevant jurisdictions stock exchange in the equity analysis. Accordingly, investors returns may be less than
the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment
advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read
this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment
strategies discussed or recommended in this report.
The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank
Investment Bank Berhad, its subsidiary and affiliates (collectively, MKE) and consequently no representation is made as to the accuracy or completeness of
this report by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates, connected parties and/or employees
(collectively, Representatives) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this
report. Any information, opinions or recommendations contained herein are subject to change at any time, without prior notice.
This report may contain forward looking statements which are often but not always identified by the use of words such as anticipate, believe, estimate,
intend, plan, expect, forecast, predict and project and statements that an event or result may, will, can, should, could or might
occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us
and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking
statements. Readers are cautioned not to place undue relevance on these forward-looking statements. MKE expressly disclaims any obligation to update or
revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence
of unanticipated events.
MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law,
from time to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solicit
business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other
investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. One or more directors,
officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report to the extent permitted by law.
This report is prepared for the use of MKEs clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in
whole or in part in any form or manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for
the actions of third parties in this respect.
This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state,
country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. This report is for distribution only
under such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certain
categories of investors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on
geographical location of the person or entity receiving this report.
Malaysia
Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental
ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia
Securities Berhad in the equity analysis.
Singapore
This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (Maybank
KERPL) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact
Maybank KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited
investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally
liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law.
Thailand
Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of Maybank
Kim Eng Securities (Thailand) Public Company Limited. Maybank Kim Eng Securities (Thailand) Public Company Limited (MBKET) accepts no liability
whatsoever for the actions of third parties in this respect.
Due to different characteristics, objectives and strategies of institutional and retail investors, the research reports of MBKET Institutional and Retail Research
Department may differ in either recommendation or target price, or both. MBKET Retail Research is intended for retail investors (http://kelive.maybank-
ke.co.th) while Maybank Kim Eng Institutional Research is intended only for institutional investors based outside Thailand only.
The disclosure of the survey result of the Thai Institute of Directors Association (IOD) regarding corporate governance is made pursuant to the policy of the
Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand
and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the
perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the
Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. MBKET does not confirm nor certify the
accuracy of such survey result.
The disclosure of the Anti-Corruption Progress Indicators of a listed company on the Stock Exchange of Thailand, which is assessed by Thaipat Institute, is made
in order to comply with the policy and sustainable development plan for the listed companies of the Office of the Securities and Exchange Commission.
Thaipat Institute made this assessment based on the information received from the listed company, as stipulated in the form for the assessment of Anti-
corruption which refers to the Annual Registration Statement (Form 56-1), Annual Report (Form 56-2), or other relevant documents or reports of such listed
company. The assessment result is therefore made from the perspective of Thaipat Institute that is a third party. It is not an assessment of operation and is not
based on any inside information. Since this assessment is only the assessment result as of the date appearing in the assessment result, it may be changed after
that date or when there is any change to the relevant information. Nevertheless, MBKET does not confirm, verify, or certify the accuracy and completeness of
the assessment result.
US
This third-party research report is distributed in the United States (US) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities
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this report.
October 23, 2017 16
Mobile World Investment Corp

UK
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DISCLOSURES

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Disclosure of Interest
Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further
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Singapore: As of 23 October 2017, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report.
Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the
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Hong Kong: As of 23 October 2017, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report.
India: As of 23 October 2017, and at the end of the month immediately preceding the date of publication of the research report, KESI, authoring analyst or
their associate / relative does not hold any financial interest or any actual or beneficial ownership in any shares or having any conflict of interest in the
subject companies except as otherwise disclosed in the research report.

In the past twelve months KESI and authoring analyst or their associate did not receive any compensation or other benefits from the subject companies or
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OTHERS
Analyst Certification of Independence
The views expressed in this research report accurately reflect the analysts personal views about any and all of the subject securities or issuers; and no part of
the research analysts compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.

Reminder
Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable
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No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.

October 23, 2017 17

Mobile World Investment Corp

Historical recommendations and target price: Mobile World Investment Corp (MWG VN)

21 Apr 12 Jul 31 Aug 11 Nov 22 Mar 23 May 4 Aug

Buy : 48,000 Buy : 82,500 Buy : 92,000 Buy : 96,000 Buy : 113,500 Buy : 114,000 Buy : 120,000
140,000.0

120,000.0

100,000.0

80,000.0

60,000.0

40,000.0

20,000.0
Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17

Mobile World Investment Corp

Definition of Ratings
Maybank Kim Eng Research uses the following rating system
BUY Return is expected to be above 10% in the next 12 months (excluding dividends)
HOLD Return is expected to be between - 10% to +10% in the next 12 months (excluding dividends)
SELL Return is expected to be below -10% in the next 12 months (excluding dividends)

Applicability of Ratings
The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only
applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment
ratings as we do not actively follow developments in these companies.

October 23, 2017 18

Mobile World Investment Corp

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Malaysia Thailand
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Vietnam Philippines
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Tel: (84)-8-44-555-888 x8080 Tel: (63) 2 848-5288
www.maybank-ke.com | www.maybank-keresearch.com

October 23, 2017 19