20170821 STOXPLUSs MA REPORT 2017 final tplxxxxx 20170828101507

Thuan Nguyen, FCCA Lan Nguyen Hai Khieu Anh Nguyen Chief Executive Officer Managing Director, Biinform Senior Associate Senior Associate StoxPlus Corporation StoxPlus Corporation StoxPlus Corporation StoxPlus Corporation thuan.nguyen@stoxplus.com lan.nguyen@stoxplus.com hai.khieu@stoxplus.com anh.phuong@stoxplus.com +84(4) 35626962 (ext 111) +84(4) 35626962 (ext 109) +84(4) 35626962 (ext 108) +84(4) 35626962 (ext 108) Preface We are pleased to bring to you the Vietnam M&A Research Report 2017 (Issue 7) In addition to the M&A data mining, we also focus on M&A opportunities by featuring some industries where we think investment opportunities will be arising given its new dynamics and regulatory developments We also reviewed latest status of SOE IPOs and divestments of State capitals in equitized SOEs Our M&A report utilized extracted database with over years of historical data in Vietnam In addition to data analysis, the report also relies on the authors extensive knowledge and experience in advising deals in Vietnam We have surveyed relevant foreign and local institutional investors as well as conducting a number of in-depth interviews in with experienced M&A advisers and Government officials in during our preparation We strongly believe that this report will be valuable to institutional investors, investment companies and foreign players who are considering M&A as a strategy to set a foothold or to expand your businesses in Vietnam Vietnam M&A Research Report 2017 | Issue | August 2017 About StoxPlus This report is prepared by a team of experienced analysts, researchers and data clerks at StoxPlus StoxPlus is a leading financial and business information provider in Vietnam Our services include provision of high quality data feeds, analytic tools and market research StoxPlus is now serving a client portfolio of over 100 corporate data clients including securities companies, research houses, asset managers, investment companies, and thousands of sophisticated individual investors Our Biinform division has been established as an independent research house in Vietnam to provide local insights to our clients at quality standards of the World’s prestige advisory firms More details can be found at www.biinform.com If you have any questions about this report or our services, please don not hesitate to contact Thuan Nguyen, CEO of StoxPlus at thuan.nguyen@stoxplus.com or +84- 4-3562 6962, ext 111 Table of contents PREFACE VIETNAM M&A ACTIVITIES REVIEW 04 - 28 KEY THEMES 2017 29 - 42 2.1 SOE IPOs & Divestment Update 29 – 38 2.2 Valuation Review 39 - 42 FORWARD LOOKING 43 – 54 3.1 State Capital in Public Companies 43 – 47 3.2 Inbound M&A by Country 48 – 50 3.3 Featured Industries 51 – 54 APPENDICES AND DISCLOSURES Appendix Abbreviation Our Methodology 55 – 74 75 76 – 77 Important Disclosures 78 About StoxPlus Corporation 79 @ 2017 StoxPlus Corporation All rights reserved All information contained in this publication is copyrighted in the name of StoxPlus, and as such no part of this publication may be reproduced, repackaged, redistributed, resold in whole or in any part, or used in any form or by any means graphic, electronic or mechanical, including photocopying, recording, taping, or by information storage or retrieval, or by any other means, without the express written consent of the publisher Vietnam M&A Research Report 2017 | Issue | August 2017 Section 1: M&A Activities Review 1.1 Total Market 1.2 Inbound M&A 1.3 Domestic M&A 1.4 Outbound M&A Vietnam M&A Research Report 2017 | Issue | August 2017 Section 1: M&A Activity Review | Total Market Remarkable record year 2016 of Vietnam M&A but less busier for 1H2017 Figure 1: Vietnam M&A Total Deal Value (US$mn) & Number of Deals, 2003 – 1H2017 345 255 245 172 41 118 23 34 22 61 171 4,7885,235 6,314 5,143 38 1,7191,1171,1401,750 3,504 299 108 1H2017 vs 1H2016 332 10,162 295 166 308 160 102 1,654 102 5,202 1,654 6M2016 6M2017 TOTAL DEAL VALUE NO OF DEALS Source: StoxPlus NEW RECORD HIGH was set in Vietnam M&A 2016 with total deals value of US$10,162mn thanks to a number of “mega” deals However, the momentum slows down in 1H2017 in terms of deal value and number of deals Particularly, total M&A deal value stayed at US$1,654mn which is far lower than US$5,202mn in 1H2016 Despite lower deal number (308 deals in 2016 compared to 332 deals in 2015), M&A activities in Vietnam set new record high with a big jump in total deal value to US$10.16bn in 2016, increasing by almost 95% compared to the previous year Data takes into account acquisitions of Vietnam domiciled enterprises made by foreign investors (Inbound M&A), acquisitions of foreign domiciled enterprises (Outbound M&A) and M&A deals among domestic corporations (Domestic M&A) M&A activities did show a boom in 2016 as well as saw many big ticket transactions 23 out of 308 M&A deals over the year 2016 have the deal value over US$100mn Bidders in these deals are Thai players (Central Group - Big C, Singha Masan Consumer), South Korean peers (AON BGN - Landmark 72, Mirae Asset & AON BGN Group Keangnam Landmark 72); Singaporean investors (Mappletree – Kumho Asiana, F&N Dairy Investments – VINAMILK) and Japanese investors (ANA - Vietnam Airlines, JX Holdings Inc Vietnam National Petroleum Corp, Nippon Airways - Vietnam Airlines) Vietnam M&A Research Report 2017 | Issue | August 2017 There are a number of M&A deals in Real Estate (56 deals) , Industrial Goods & Service (62 deals), Food & Beverage (34 deals) and Construction & Materials (32 deals) The momentum cools in 1H2017 in terms of volume and value Particularly, there are 102 deals in 1H2017 with total deal value of US$1.628bn Significant M&A deals in 1H2017 include Shinhan Bank acquiring ANZ Vietnam’s Retail Division at US$240mn, SCG acquiring 100% stake in VCM at US$156mn, Kohlberg Kravis Roberts acquiring 7.5% stake in Masan Nutri-Science and 4.2% stake in Masan Group with total investment of US$250mn, Earth Chemical acquiring 100% stake in A My Gia at US$89mn and China Fortune Land Development acquiring Dai Phuoc Lotus at US$64mn F&B, Bank and Construction & Materials are the three most buoyant industries in terms of deal value in 1H2017 Section 1: M&A Activity Review | Total Market Real Estate and Consumer-based sectors still witnessed high value of transactions Figure 2: Total M&A Deal Value (US$mn) & Deal Number of Top Sector, 2016 62 3,965 56 34 32 1,063 10 198 136 16 133 66 170 Others TOTAL DEAL VALUE 209 11 Technology 303 Insurance Industrial Goods & Services Travel & Leisure Media Construction & Materials Retail Food & Beverage Real Estate 315 Health Care 331 13 Oil & Gas 367 Personal & Household Goods 423 14 Basic Resources 736 Utilities 1,738 21 18 NO OF DEALS Source: StoxPlus In terms of TOTAL DEAL VALUE: • Real Estate appeared to be the most attractive sector in 2016 with investment value of US$3.97bn, equivalent to 32% of the year’s M&A activities Remarkable deals include Vietnam Investment Development Group’s acquiring 22% stake in Vingroup at US$1.08bn, Mirae Asset & AON BGN Group’s acquiring 100% Landmark 72 for US$396mn, Vingroup’s acquiring 81.8% in Sinh Thai Company for US$380mn and Mapletree’s acquiring 100% Kumho Asian Plaza for US$215mn • Food & Beverage, Retail, Construction & Materials and Media were in the Top five attractive sectors for M&A, accounting for 17%, 14%, 9% and 6%, respectively Media made a spectacular rises in Vietnam M&A ranking by sector, from 14th place in 2015 to 5th rank in 2016 with total deal value of US$423mn Meanwhile, the remaining have been magnetic to M&A bidder since 2015 Notable M&A deals include VID Group – 21.7% Vingroup, Central Group – 100% Big C Vietnam, Singha – 14% Masan Consumer and Siam City – 65% Holcim Vietnam Vietnam M&A Research Report 2017 | Issue | August 2017 In terms of DEAL NUMBER: • Industrial Goods & Services captured the highest number of M&A deals in 2016 – 66 deals or approximately 20% in total M&A deal number in 2016 Significant deals include Aeroport de Paris acquiring 7.4% stake in Airports Corporation Of Vietnam at US$97mn, SOTRANS acquiring 67.1% stake in Southern Waterborne Transport Corporation at US$35mn and GEX acquiring 18.9% in Vietnam Electrical Equipment at US$29mn • Real Estate, Food & Beverage, Constructions & Materials and Utilities are other attracting industries in 2016 as high potential demand, good performance of domestic players, Section 1: M&A Activity Review | Total Market M&A takes a knock in 1H2017 in terms of total deal value Figure 3: M&A Total Deal Value (US$mn) & Deal Number, 1H2011 – 1H2017 188 160 123 112 96 3,067 102 85 3,430 2,463 1H2012 1H2013 1,654 2,078 1,747 1H2011 5,202 1H2014 TOTAL DEAL VALUE 1H2015 1H2016 1H2017 NO OF DEALS Source: StoxPlus M&A activities in Vietnam are losing upward momentum in 1H2017 in terms of deal value and number of deal Particularly, in 1H2017, 102 M&A transaction are recorded with total deal value of US$1,654mn, posting a 219% decrease and a 110% decrease compared to the figure in 1H2016 and 1H2015, respectively By sector, in addition to “old name” such as F&B, Construction & Materials, Real Estates and Industrial Goods & Services, Vietnam witness big deals in Banks and Personal Goods & Services in 1H2017 Particularly, Shinhan Bank successfully acquired ANZ Vietnam Retail Division at US$240mn in April 2017 In addition, Japanese firms in chemical sector, Earth Chemical, fully acquired A My Gia – a local player specializing in the manufacture of home care products under the brands Gift, Ami, Redfoxx The deal value is US$89mn Figure 4: M&A Activities by Sector, 1H2017 21 14 497 10 240 11 32 30 29 27 Travel & Leisure Chemicals Others Utilities TOTAL DEAL VALUE 47 Oil & Gas 50 36 Financial Services 75 Insurance Personal & Household Goods 91 Basic Resources 104 Industrial Goods & Services 159 Real Estate Banks Food & Beverage 210 Construction & Materials NO OF DEALS Source: StoxPlus Vietnam M&A Research Report 2017 | Issue | August 2017 Section 1: M&A Activity Review | Total Market Deal size analysis: Big and mega deals drive M&A 2016 Figure 5: Vietnam M&A Total Deal Value (US$mn) and Deal Number BY DEAL VALUE US$10.16bn US$5.26bn 9.7% 10.5% 69.7% 2016 Less than US$1mn US$1-5mn 2015 US$5-25mn 27.5% 25.0% 13.1% 12.1% 9.7% 10.5% 3.5% 5.3% 6.8% 10.1% 51.0% 69.7% 2016 BY NUMBER OF DEAL 23.1% 28.9% 31.2% 27.5% 2016 US$25-50mn US$50-100mn 51.0% 13.1% 12.1% 2015 2015 More than US$100mn Source: StoxPlus In terms of TOTAL DEAL VALUE: • Big and mega deals dominated the market in 2016 The year witnessed the large portion of M&A deal value from more than US$100mn, which its high record of US$7.07bn among total deal value (US$10.16bn), 2.6 times larger than this figure in 2015 • While the year 2015 showed US$0.97bn for deals from US$5-25mn and US$0.63bn with deals ranged from US$25-50mn, there was a switch between these deal value range in year 2016 Particularly, deals from US$25-50mn reached nearly US$1.00bn while it took approximately US$0.7bn The rest of deals with value less than US$5mn or lower accounted for only approximately 2% among total deal value that captured of US$0.17bn in 2016 Vietnam M&A Research Report 2017 | Issue | August 2017 In terms of DEAL NUMBER • Among our identified 269 deals in 2016, deals with value from US$1-5mn performed the highest with 69 deals, equal to 26% of total deals, decreased 37% in comparison to 2015 (193 deals) There were 53 deals for both value ranged from less than US$1.0mn and US$25-50mn for year 2016, also lower than 2015 for these deal value limit, which took 93 deals for each range • Following were 29 deals, 15 deals, and deals for deal value of US$25-50mn, over US$100mn, and US$50-100mn respectively in the year 2016 Overall, these deals increased up to 30% vs 2015, which numbered with 1bsidiary Saigon Securities is one of the largest securities firms in Vietnam, and in 2015, marked the highest market share among brokers listed on the Ho Chi Minh Stock Exchange As planned, SSI expected to generate revenues of about US$92mn and net profit of US$46mn for the year 2017 Appendix 5: M&A Transaction Factsheet VIETNAM M&A TRANSACTION 2016 Sector: TECHNOLOGY Acquiror 18 # SOUTH KOREA 20 16 17 Type AnDate Size (US$m) Stake Majority 18/11/2016 34.08 0.00% → 62.50% UTC INVESTMENT Taget Name VNPT EPAY Seller #N/A Sector: INSURANCE Acquiror UTC Investment Co., Ltd (UTC) is a private equity and venture capital firm Its major business are specializing in buying out and investing in start-ups The fund also engages in corporate # restructuring In addition, the firm seeks to invest in the information services, petrochemistry, and energy sectors In South Korea, UTC focus on Seoul and Gyeonggi-do for their investment Moreover, the firm implements cross-border M&A as well, primarily in China and Japan To look for new investment opportunities, especially nations with high growth rate such as Vietnam, UTC has completed the purchase of 7.47 million shares, equaling a 62.25% stake in VNPT Electronic Payment JSC (VNPT EPAY) from VMG Media Group (VMG) The transaction was # settled in middle of November 2016 Formerly, VNPT EPAY was founded by Vietnam Posts and Telecommunications Group (VNPT), holding of 35% stake, and VMG, with 62.25% Established in 2008, VNPT EPAY is one of largest enterprises that provide electronic payment services in Vietnam The company also provide various means of payment services such as, through a prepaid card code, payment via SMS or bank for online games, online services on the internet or mobile platforms 18 # HONG KONG 20 16 17 Type AnDate Size (US$m) Stake Minority 07/01/2016 33,21 0.00% → 35.00% FAIRFAX ASIA LIMITED Taget Name BIDV INSURANCE Seller #N/A Sector: Acquiror Fairfax Financial Holdings Limited is a holding company which, through its subsidiaries, is # engaged in property and casualty insurance and reinsurance and investment management Through its subsidiary Fairfax Asia Limited, Canada-headquarter FairFax Financial Holdings has completed the purchase of 35% stake of BIDV Insurance Corporation (BIC) equivalent to 41 mn shares After this transaction, Fairfax has become BIC’ strategic partner and had right to appoint # members of BIC’s broad directors and nominee members Seeing the advantage of strong presence of BIC in Viet Nam as well as Cambodia and Laos, Fairfax believes this transaction is its great opportunities to expand its services in ASEAN region # SOUTH KOREA 18 20 16 17 Type AnDate Size (US$m) Stake Minority 15/06/2016 32.00 8.01% → 99.99% DAESANG CORP Taget Name DUC VIET FOOD JSC Seller #N/A Daesang Corp., a South Korean food-producing conglomerate has completed the acquisition of a 99.99% stake in Vietnamese meat processor and distributor Duc Viet Food JSC for US$32 mn in # September 2016, bringing the firm a bridgehead in the Southeast Asian meat processing market The purpose of buying Duc Viet Food is to foster its food processing business in Vietnam, mainly solely concentrate on frozen ham products Starting operations in 1956, Daesang dedicates in food and seasoning manufacturing, including soybean paste, marinade, soy sauce, soups, and Chinese noodle, among others Daesang first # comes to Vietnam and engage in the food market in the 1990s by building a seasoning manufacturing plant Currently, the firm has three manufacturing bases across Vietnam Miwon monosodium glutamate is known as one of its key products in Vietnam that is well recognized by the consumers as well Daesang expects to make US$42.29 million in annual sales in Vietnam by 2020 Established in 2001, Duc Viet Food specializes in manufacturing and distributing meat products, sausages, spices, and instant food The company produces several type of products including variety of sausages and bacons Main products are: High Quality Berlin sausage, Nuremberg sausage, etc to serve most special customers with the best pork; Traditional sausage with: Smoked sausage, Grill sausage, Beer garden sausage, Country sausage, smoked pork knuckle, smoked pork loin, etc These products are strongly favored and are being sold mostly in supermarkets in big cities with favorable prices Appendix 5: M&A Transaction Factsheet VIETNAM M&A TRANSACTION 2016 Sector: FOOD & BEVERAGE Acquiror 18 # SINGAPORE 20 16 Type AnDate Size (US$m) Minority 02/12/2016 25.50 17 Stake N/A → 44.99% WILMAR INTERNATIONAL Taget Name VIETNAM AGRIBUSINESS HOLDING Seller #N/A Sector: INDUSTRIAL GOODS & SERVICES Acquiror Wilmar International Limited (Wilmar), founded in 1991 and headquartered in Singapore, is today Asia’s leading agribusiness group Wilmar’s business activities include oil palm # cultivation, oilseed crushing, sugar milling and refining, manufacturing of consumer products, and fertilizers as well as flour and rice milling The company is ranked amongst the largest listed companies by market capitalization on the Singapore Exchange In early December 2016, the firm acquired almost 45% stake of Vietnam Agribusiness Holdings for US$25.5mn This transaction was made through its wholly owned subsidiary Siteki Investments So far, Wilmar is present in Vietnam as the founding shareholder of Cai Lan Oils and Fats # Industries, and joint venture partner with Vietnam’s biggest retailer Saigon Co.op in a FMCG factory VAH was a joint venture between Bunge Limited and local Vietnamese soybean meal distributor Quang Dung, which is still holding a 10% interest in the business The new agreement will reposition the firm’s animal feed business in Vietnam with a stronger footprint, Said Kuok Khoon Hong, chairman and CEO of Wilmar 18 # SINGAPORE 20 16 17 Type AnDate Size (US$m) Stake Minority 30/03/2016 25.37 15.56% → 29.71% METRO PACIFIC TOLLWAYS CORPORATION Taget Name CII BRIDGES & ROADS Seller #N/A Sector: FINANCIAL SERVICES Acquiror Metro Pacific Tollways Corporation (MPTC) is an investment company, engages in tollway business in Philippines With the strategy to expand regional footprint, in March 2016, (MPTC) # has bought 27,293,055 shares of CII Bridge and Road investment JSC(CII B&R) worth VND491.3 billion At present, MPTC has 15.56% of ownership in CII B&R Based on CII B&R experience in toll way and potential of new project, MPTC believes CII B&R is the right partner of MPTC to implement the expansion strategy In addition, according the agreement between CII B&R and MPTC, the second trade worth VND528.7 plans to conduct in September 2016, increasing MPTC’s ownership to 45% # CII Bridge and Road investment JSC (CII B&R) is a toll road company with about toll roads and bridge projects with approximately 123 kilometers The majority of the CII B&R shares is owned by the Ho Chi Minh City Infrastructure Investment Joint Stock Company (CII), CII B&R parent’s company Recently, CII has conducted the conversion of VND491.2bn of the First Tranche Convertible Bonds to shares of CII B&R to sell to MPTC This transaction has decreases CII ownership of CII B&R to 67.36% # UNITED STATES 18 20 16 17 Type AnDate Size (US$m) Stake Majority 17/03/2016 25.00 0.00% → 100.00% STANDARD CHARTERED PRIVATE EQUITY Taget Name M_SERVICE COMPANY Seller #N/A Standard Charted Bank (SCB) is leading international banking group With the advantages of having an early presence in Vietnam (since 1990), SCB Vietnam currently has more than 859 # employees and three branches operating full service operation covering retail, SMEs can Corporate clients Understanding digitizing trend providing instant and everywhere access to banking, SCB Vietnam has pursued the strategy to upgrading its digital platform for online banking, mobile bank, SMS and ATM In 2016, SCB has invested US$25mm in Momo, a mobile money service operated by M_Service JSC, with expectation to develop infrastructure for the use of cashless payment methods by launching Straight2Bank Wallet payments in Vietnam # Before this investment, SCB Vietnam used to invest in other projects including investment into Golden Gate Group, the largest service restaurant in Vietnam with US$35 million and another US$90 million into AGPPS, largest distributor of plant protection chemicals and the largest distributor of rice seeds in Vietnam M_Service is the first company in Vietnam licensed by the State Bank of Vietnam, currently providing a mobile wallet catering to the unbanked population At present, MoMo has partnership with 24 local banks also allows users to pay utility bills It also has a physical network of over 4,000 OTC agents in 45 provinces and secured 2.5 million users With the investment of SCB, M-Services believes they can develop rapidly by continuing to invest in the launch of new products and services, expanding bank and merchant connectivity to grow its banking network to 11,000 agents and serve mn people by the end of 2017 ... Review 1.1 Total Market 1.2 Inbound M&A 1.3 Domestic M&A 1.4 Outbound M&A Vietnam M&A Research Report 2017 | Issue | August 2017 Section 1: M&A Activity Review | Total Market Remarkable record... for any consequence caused by the information contained in this material • This material may be changed without any prior notice Content of this material may be changed according to any changes... of 2017 Appendix 5: M&A Transaction Factsheet VIETNAM M&A TRANSACTION 1H2017 Sector: CONSTRUCTION & MATERIALS Acquiror 18 # THAILAND 20 16 17 Type AnDate Size (US$m) Stake Majority 07/03/2017