20170821 STOXPLUSs MA REPORT 2017 final tplxxxxx 20170828101507

OF DEALSReal Estate and Consumer-based sectors still witnessed high value of transactions Section 1: M&A Activity Review | Total Market Figure 2: Total M&A Deal Value US$mn & Deal Number

Thuan Nguyen, FCCA

Chief Executive Officer

Hai Khieu

Senior AssociateStoxPlus Corporationhai.khieu@stoxplus.com

Anh Nguyen

Senior AssociateStoxPlus Corporationanh.phuong@stoxplus.com

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 6 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

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

@ 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.

Section 1: M&A Activities Review

1.2 Inbound M&A 1.3 Domestic M&A 1.4 Outbound M&A

5,202 1,654

160 102

6M2016 6M2017

Remarkable record year 2016 of Vietnam M&A but less busier for 1H2017

Source: StoxPlus

Figure 1: Vietnam M&A Total Deal Value (US$mn) & Number of Deals, 2003 – 1H2017

Section 1: M&A Activity Review | Total Market

1H2017 vs 1H2016

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

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)

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.

118 34 61 299

1,719 1,117 1,140 1,750

6,314 5,143 3,504 4,788 5,235

TOTAL DEAL VALUE NO OF DEALS

Real Estate and Consumer-based sectors still witnessed high value of transactions

Section 1: M&A Activity Review | Total Market

Figure 2: Total M&A Deal Value (US$mn) & Deal Number of Top Sector, 2016

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 14thplace in 2015 to

5thrank 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

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,

Source: StoxPlus

M&A takes a knock in 1H2017 in terms of total deal value

Source: StoxPlus

Section 1: M&A Activity Review | Total Market

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

1H2011 1H2012 1H2013 1H2014 1H2015 1H2016 1H2017

TOTAL DEAL VALUE NO OF DEALS

Figure 3: M&A Total Deal Value (US$mn) & Deal Number, 1H2011 – 1H2017

9 5 2 8

10.5% 9.7% 12.1% 13.1%

Less than US$1mn US$1-5mn US$5-25mn US$25-50mn US$50-100mn More than US$100mn

Deal size analysis: Big and mega deals drive M&A 2016

Figure 5: Vietnam M&A Total Deal Value (US$mn) and Deal Number

Source: StoxPlus

Section 1: M&A Activity Review | Total Market

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 2 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

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 2 deal value limit, which took 93 deals for each range

• Following were 29 deals, 15 deals, and 8 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 18 deals, 12 deals, and 10 deals for the same value range above mentioned

Section 1: M&A Activities Review

1.3 Domestic M&A 1.4 Outbound M&A

High record for 2016 and still busy for 1H2017

Section 1: M&A Activity Review | Inbound M&A

Source: StoxPlus

Inbound M&A deals into Vietnam totaled US$4.91bn with 97 transactions concluded in 2016, which is

comparable to the previous year in terms of deal number and the proportion over total annual M&A deal value in 2015 However, absolute inbound deal value doubles its level in 2015 and is equivalent

to total value in two previous year 2014 & 2015

The most principal factor that drives inbound M&A in 2016 are 9 “MEGA” deals with total transaction

value of US$3.63bn, equivalent to approximately three-quarters of the year’s total deal value In

these agreements, foreign investors acquired majority stake in leading Vietnam domiciled enterprises including hypermarket operator Big C Vietnam, FMCG manufacturer Masan, cement manufacture Holcim Vietnam, VINAMILK, PETROLIMEX and Vietnam Airlines

Figure 6: Vietnam M&A Market by Type, 2011 – 1H2017

INBOUND M&A

VAL (US$bn)

VOL (deals)

Figure 7: Top 10 Inbound M&A Deals, 2016

Inbound M&A: Investors from Thailand are most active and Japanese investors tend to go with smaller targets

Section 1: M&A Activity Review | Inbound M&A

Figure 8: Inbound M&A Deal by Country, 2016

• Thai investors were the most active players

in acquiring Vietnam domiciled enterprises

with total transaction value of US$2.28bn,

accounting for 46.6% of total inbound deal

value in 2016 On average, Thai players paid

US$381mn per deal, proving their activeness

and aggressiveness when penetrating Vietnam

market Singapore and Japan followed

Thailand to be ranked in 2ndand 3rdplace,

respectively in terms of deal value in 2016

• Meanwhile, regarding the number of M&A

transaction, Japan kept up the momentum,

being ranked the 1stposition with 22 deals in

2016 with total value of US$609mn It is

noted that 9 out of 22 deals by Japanese

bidders do not disclose deal value or provide

estimation basis

• Singapore is the new name in Vietnam M&A

2016, climbing up from the 6thplace in 2015

to the second position in 2016 Notable transactions include Fraser & Neave’s acquiring 5.4% stake in VINAMILK from SCIC for US$497mn in December, Mapletree’s acquiring 100% stake in Kumho Asiana Plaza Saigon at US$215mn

• Hong Kong lost its leading position in 2015 and is ranked 5thand 6th in 2016 in terms of deal number and value, respectively

2215

157

76443322111

Japan Singapore United States South Korea Hong Kong Thailand Finland Luxembourg Cayman Islands

China France UK Philippines Chile Switzerland

46.6% 3.0%

Thailand Singapore Japan

South Korea United States Hong Kong

France Philippines Finland

Cayman Islands China Others

BY NUMBER OF DEALS

BY TOTAL DEAL VALUE

Thai investors aggressively put heavy investments

into Vietnam via M&A, ranking the 1 st place in

2016 in terms of total deal value.

Source: StoxPlus

192.1 80.9

250.0 21.7

United State becomes the new super star in Vietnam inbound M&A in the first four months

of 2014 with total deal value of over US$250mn

Figure 9: Inbound M&A by Country, 1H2017

Inbound M&A in 1H2017

BY NUMBER OF DEALS

BY TOTAL DEAL VALUE

• Capital inflows from United States to

Vietnam via M&A spiked up in 1H2017 to

reach US$250mnwith 7 deals, taking

away the first place from Thailand Marked

transactions include Kohlberg Kravis Roberts

& Co.’s acquiring 4.2% Masan Group and 7.5%

Masan Nutri-Science for total US$250mn,

Warburg Pincus & VinaCapital’s acquiring

Sofitel Legend Metropole Hanoi for

undisclosed value It is noted that 3 out of 7

deals by American bidders do not disclose

transaction amount

• Thai players continue to show their interest

in Vietnam market with the 2ndand 5thplace

in terms of deal value and number,

respectively Notably, SCG put heavy

investment in cement sector after eyeing the

market since 2011 The Group successfully

acquired 100% stake in Vietnam Construction

• Materials Company (VCM) at US$156mn VCM has production capacity of 3.1 and 2.5 million tonnes of clinkers and cement, respectively with 7 facilities in the Central

• Not differ to the previous trend, Singapore (21%), and Japan (6%) still maintain their ranks in the Top 5 active foreign investors in Vietnam market

Section 1: M&A Activity Review | Inbound M&A

Spotlight: Asian peers including Thailand, Japan, Singapore are still the most active players in Vietnam M&A

• Inbound M&A into Vietnam totaled

US$4.91bn in value with total 97

transactions concluded in 2016

• Strong interests from Japanese firms into

the largest volume (22 deals) compared to

other countries and territories The number

of deals from Japan accounted for 22% (22

over total 97 inbound deals) with deal value

accounted for 12% of total inbound value

This reflects Japanese buyer’s preference

for mid to small companies while doing M&A

in Vietnam

• Amongst Japan inbound M&A, in May 2016,

ANA Holdings concluded a final contract for

a business and capital partnership to acquire

8.8% stake in Vietnam Airlines for

US$109mn As part of the partnership, ANA

will dispatch one member of the board of

Vietnam Airlines and will also provide

Vietnam Airlines with know-how regarding

both business and flight operations and help

it to further improve service quality,

contributing to the growth and development

• In terms of deal value, there was a surge

in capital inflows into Vietnam from Thailand via M&A with two deals valuing at

US$2.29bn Particularly, by the end

of April 2016, Central Group acquired 100% stake in Big C Vietnam from French retailer Casino Total deal amount is estimated at US$1.14bn in a single transaction – the largest M&A deal amount recorded since

2011 The remaining deal from Thailand in

2016 is the purchase of 14.3% stake in Masan Consumer Holding by Singha Asia Holding Pte Ltd

• Following Thailand, Singapore and Japan were respectively ranked the second and third in 2016 with two mega deals of over US$100mn (AON BGN/ Landmark 72:

US$396mn and Mappletree/ Kumho Asiana: US$215mn)

Section 1: M&A Activity Review | Inbound M&A

Source: StoxPlus

Capital inflowss from Vietnam by Thai firms skyrocketed by end of

2016, especially into Retail sector.

Vietnam – a favourite investment destination

of Thai firms

• Known as an Asian “Tiger Cub”, Thailand has

built a diverse industrial base with buyers

world-wide Thai giant conglomerates such

as Central Group, Siam Cement Group

(“SCG”), Berli Juker and Singha have been

sucessful in Thai domestic market and are

pursuing oversea expansion strategy

• Thai firms are eyeing Vietnam market as a

promising destination Thanks to geographic

proximity, cultural compatibility and huge

consumer market of more than 90 million

people

• According to StoxPlus’s database,

accumlated capital inflows of Thai firms into

Vietnam via M&A since 2011 reached

US$3.92bn with total of 25 deals up to

1H2017 It is marked that there was a surge

in M&A activities in 2014, ended with

US$879mn and a booming in 2016 with total

deal amount of US$2.29bn, approximately

10 times higher compared to the year 2015

2016 had the deal value over US$100mn

 Central Group acquired 100% Big C Vietnam from French retailer Casino for

US$1.05bn;

 As of January 2016, Singha successfully acquired 14.3% stake in Masan Consumer

Holdings for US$600mn which in turn is

used to purchase 18% stake in Masan Consumer from KKR by Masan Group

 Siam Cement City Company (SCCC) purchased 65% stake in Holcim Vietnam

at US$579mn in August 2016

Ownership Structure of Massan Holding after M&A deal by Singha in January 2016

Figure 10: Inbound M&A Activities into Vietnam by Thai Investors, 2011 – 1H2017

Inbound M&A by Country: Spotlight Thailand

Section 1: M&A Activity Review | Inbound M&A

Source: StoxPlus

Thai investors prefer oriented sectors including Retail, Food & Beverage

consumer-Retail, Food & Beverage and Construction &

Materials have been Top 3 attractive sectors

for Thai firms since 2011.

• According to our database, twenty five M&A

deals by Thai firms have been identified

since 2011, indicating that Thai investors

prefer M&A to FDI channel By sector,

Retail, F&B and Construction & Materials

remain the top attractive sectors for Thai

conglomerates with 16 M&A deals valuing at

US$3.78bn Of which, 7 out of 16 deals are

mega transactions

• Other Thai investors’ targets include

Industrial Goods & Services (or supporting

industries), Oil & Gas and Travel & Leisure

(Life Heritage Resort Hoi An and Life Resort

Quy Nhon)

2016 & 1H2017 Updates:

• 2016 marked a milestone for Thai capital inflows via M&A into Vietnam market with total deal value of US$2.29bn, approximately 60% of accumulated M&A deal value during the period 2011 – 1H2017

• Target companies are the leading Vietnam domiciled enterprises with well-known brands including Big C Vietnam, Masan Consumer, Holcim Vietnam, Lan Chi Business (12 supermarket store chain), suggesting that Thai firms are the most aggressive investors with an aim to penetrate into Vietnam industries fast

• The momentum keeps up in 1H2017 with heavy investment from SCG In March 2017, the Group purchased a 100% stake in Vietnam Construction Materials (VCM) for US$156m after eyeing Vietnam cement industry in 2011 with the acquisition of Buu Long Cement In addition, SCG increased 25% stake in Long Son Petrochemical with additional

investment of US$36mn

Figure 11: Inbound M&A Deal Value (US$mn) by Thai Investors

Spotlight Thailand: Retail, Construction & Materials and

Food & Beverage are the top destinations

2,0821,060

579650

Retail Construction & Materials

Food & Beverage

Industrial Goods & Services

Oil & Gas Chemicals Travel & Leisure

Utilities ACCUMULATED 2011-2017 2016

Section 1: M&A Activity Review | Inbound M&A

Figure 12: Inbound M&A Activities into Vietnam by Singaporean Investors, 2011 – 1H2017

Inbound M&A by Country: Spotlight Singapore

TOTAL DEAL VALUE NO OF DEALS

• Look back the M&A activities from Singapore into Vietnam

border since 2011, Singaporean have accomplished several

transactions, totaling of US$1.98bn with 55 deals that

were executed in various sectors Until the first four months

of 2017, Food & Beverage has dominated with total of

almost US$0.97bn, accounting for 53% of accumulated

capital inflows from Singapore via M&A

• F&B, Real Estate and Construction & Materials are

Singaporean investors’ preference thanks to huge potentials

in Vietnam market

• Notably, the year 2016 ended with a big ticket deal

of approximately US$500mn: F&N Dairy Investments Pte Ltd successfully acquired 5.4% stake in VINAMILK from SCIC, making F&N being the major shareholder

in Vietnamese leading diary firm Especially, it is the first public auction of a slice of that held by the Vietnamese government in the company

• 1H2017 appeared to be quiet with Singaporean players There were only 5 deals recorded by StoxPlus,

of which two are in Real Estate Particularly, hotel advisory Alternaty has been merged with Savills Also, CLV Investment 5 increased 20% stake in CapitaLand-Thien Duc Company

Source: StoxPlus

Figure 13: Inbound M&A Deal Value (US$mn) from Singapore

973

621320

Technology

Travel & Leisure

ACCUMULATED 2011-2017 2016

Section 1: M&A Activity Review | Inbound M&A

Figure 14: Inbound M&A Activities into Vietnam by Japanese Investors, 2011 – 1H2017

Inbound M&A by Country: Spotlight Japan

TOTAL DEAL VALUE NO OF DEALS

• Japanese investors continued to actively look

for investment opportunities in Vietnam The

deal flows from Japan are stable, with 15-20

deals completed per year

• In 2016, Japan ranked first in terms of

volumes of M&A deals in Vietnam in 2016

Inbound M&A into Vietnam totaled US$608mn

in value in 2016 with a total of 22

transactions Notably, Japan firms show

strong interests in small and medium deals

The number of deals from Japan accounted

for 22% (22 over a total of 97 inbound deals)

but deal value only accounted for 12% of total

inbound value This reflects Japanese buyer’s

preference for strategic but small to medium

size deals, rather than aiming for the

blockbuster

• The most notable deal is the strategic

investment of ANA Holding into Vietnam

Airlines, in which the ANA Group acquired an

8.8% stake worth 2,431 billion Vietnamese

dong (US$108 million)

• Another strategic deal is Bunka Shutter, a Japanese sliding door manufacturer, investing 30% into European Plastics Window Company Ltd (Eurowindow) With this investment, Bunker Shutter is expected to boost export revenue of Eurowindow, especially in Japanese market, as well as increase their own import sales in Vietnam Deal size is not disclosed, but estimated in the range of US$10-20mn

• It can be seen that Vietnam is not just attracting large firms, but an increasing number of Japanese SMEs is now exploring business opportunities in Vietnam due to increasing challenges they are facing domestically Japanese domestic market has been shrinking due to an aging population, larger companies are moving abroad and competition with foreign companies in Japan has been increasing After the financial crisis

in 2008, Japanese companies have increased investment abroad to survive Vietnam with a large number of mid and small size

companies should become a potential market for such Japanese firms

Section 1: M&A Activity Review | Inbound M&A

Source: StoxPlus

Figure 15: Inbound M&A Activities into Vietnam by Sector

Inbound M&A Activities: Sector Analysis

1,4331,060808648167184145104104260

Food & Beverage

Retail Real Estate

Construction & Materials

Travel & Leisure

Oil & Gas Industrial Goods & Services

Health Care

Insurance Others

2016 2015

12312941

186

4

28

Food & Beverage

Retail Real Estate Construction & Materials Travel & Leisure Oil & Gas Industrial Goods & Services

Health Care Insurance Others

2016 2015

BY NUMBER OF DEALS

BY TOTAL DEAL VALUE

Regarding number of deals, the most favored sectors in Vietnam for Inbound M&A by foreign

investors are Industrial Goods & Services with 18 deals (US$145mn), Real Estate with 12 deals

totaling US$808mn, Food & Beverage with 12 deals totaling US$1.43bn and Construction & Materials with 9 deals

Retail sector saw an extraordinary deal in 2016 as there was one large transaction whereby Central Group, a privately held Thai conglomerate , acquired 100% stakes in Big C Vietnam from Casino Central Group will continue the retail business line of Big C Vietnam Total deal amount estimated

at US$1.1bn in a single transaction

Another sectors include Food & Beverage and Real Estate also saw mega deals, boosting the total value of inbound M&A deals in 2016

Figure 17: Inbound M&A Activities in Food & Beverage, 2012 - 2016

Section 1: M&A Activity Review | Inbound M&A

to the year 2015 (Closed with approximately US100.35mn) In term of deal volume, there was a decline of only 1 deal in 2016 (7 deals)

vs 2015 with 8 deals

• Apart from the two Mega deals from Thailand (US$600mn) and Singapore (US$500mn) in

2016, the United States investors following

by the 3rdplace with transaction of US$90mn Especially, one company in this sector did show its potentials to the Government of Singapore when selling 3% ownership to this organization in March 2016 The other 4 deals were ended with various limits from US$ 6 to

32 million These deals will be cover comprehensively in the following page

Source: StoxPlus

• Vietnam is forecasted to perform its Food & Drink’s growth rate at the 3rdplace

amongst the Asian region

• Vietnam' s Food & Drink sector will be an outperformer over the forecast period because of its positive demographic trends, rising incomes, robust economic growth and rapid expansion in the retail sector will drive growth and development in this sector

• Following the government's announcement that it intends to sell its entire stakes in Sabeco – the largest market share taker of 40% in the industry, it is expected that the company will be publicly listed before the state fully divests its interest in 2017

Major brewers will likely compete for a substantial stake as part of a joint venture with other domestic shareholders

• Food & Beverage’s potential is supported by

variety of positive factors such as: (i) populous

people (close to 100 million population) with its

average growth of 1,2%/an; (ii) large youthful

citizens (68% or 60,7 million people that less than

40); (iii) high urbanization growth rate - achieved

35,7% in 2015; (iv) and surplus selling channels

that encourages the more consumption in the

Deal value Number of deals

Figure 16: F&B Market in Vietnam, 2011-2016

Inbound Spotlight: Food & Beverage

Section 1: M&A Activity Review | Inbound M&A

• Out of eight inbound M&A deals concluded in 2016, two deals recorded over US$500mn

 In January 2016, Masan Group announced the first flow-in capital from the strategic partner, Singha Asia Holding Pte Ltd (Singha, a subsidiary of Boon Rawd Brewery Group – A first and biggest beer firm in Thailand since 1933) Thereby, Singha did complete its settlement of

US$650mn, in which included US$600mn to take 14.30% ownership of Masan Consumer

Holdings and the remaining US$50mn to obtain 33,3% stakes of Masan Brewery This first transaction is to undertake the strategic fundamental and growth potential of Masan when this group together with Singha to develop its business that is not only in Vietnam market but also in ASEAN region

 F&N Beverages Manufacturing Sdn Bhd and F&N Dairy Investments Pte., Ltd., the two owned subsidiaries of Fraser & Neave Ltd (F&N, Singapore) completed the purchase of a total

100%-of 78.38 million shares valuing US$500mn, equaling a 5.4% stake in Vinamilk After the

auction, F&N increased its holding in Vinamilk to 16.35% This further transaction is aimed to execute its plans to extend holdings in Vinamilk, which is a part of the group’s strategy to expand presence in Southeast Asia and enhance the group’s competitive capacity against the two largest US soft drink giants in the region, PepsiCo Inc and Coca-Cola Co F&N is among the top three soft drinks players in its home country, Singapore, as well as in Thailand and Malaysia, according to Euromonitor International However, it is not ranked in the top five in Vietnam, Indonesia, and the Philippines, where the company is looking to grow

• The other notable deals valued of roughly US$90mn were recognized by US and Singapore buyers

as follows:

 Vietnam’s food firm Kido Group finally sold the remaining stake of 20% in its confectionery unit to a US-based company, Mondelez, who acquired the 80% stake earlier Eventually, Kido

exited completely its snack business and gained the deal value of US$89.7mn The Oreo

maker previously obtained a major stake of 80% in Kido (Formerly branded as Kinh Do) in 2014 for US$370mn, with the option to buy out the Vietnamese manufacturer thereafter

 The Securities Commission of Vietnam recorded an additional 27.6 million shares, equivalent

of US$89.23mn that settled by the Singaporean Government, increased its ownership to 37

million shares (5.08%) in Masan Group This settlement was closed in March 14 2016 Before the transaction, the Singaporean Government already owned 10.27 million shares (1.38% of capital) in this group With the later purchase, this shareholder became a major shareholder

of Masan Group

Inbound Spotlight: Food & Beverage

Section 1: M&A Activity Review | Inbound M&A

Inbound Spotlight: Banks

ANZ and Shinhan Bank: a showcase that foreign banks are aggressively tapping on domestic retail banking services by Korean banks

• ANZ has been having lower returns and higher costs in its businesses in Asia Pacific The region posted low economic growth, volatility in financial markets and rising credit costs The bank’s

2016 financial statements showed a high Cost-to-Income Ratio at 69.2% and a contract of net loans and deposits by 8% and 6% respectively Last year, the bank agreed to sell its retail and wealth management businesses in Singapore, Hong Kong, mainland China, Taiwan and Indonesia

to focus on the larger institutional banking business

• ANZ is not alone in this struggle Tougher capital rules and narrowing profit margins have forced Australian banks to review and pare back their businesses in Asia Overall, banks’ net loan books

to this region is down by US$ 18.5 bn

• On the other hand, Shinhan is one of the four Korean banks operating in Vietnam and has been one of the first to explore the Vietnamese market since 1993 In 2011, Shinhan Bank acquired the 50% share capital of Shinhan Vina Bank (a JV between Vietcombank and Shinhan Bank) to become Shinhan Bank Vietnam The bank has a strong retail presence with 18 offices and 170,000 card members as of September 2016 In 2016, it was the second most profitable foreign bank after HSBC After the acquisition, Shinhan will have a total of 26 branches and an additional 125,000 customers

• Shinhan’s expansion into the retail market in Vietnam poses challenges for its competitors,

especially since the bank is already known for retail services in its parent country Korea The bank has in its ammunition a range of experiences and new products such as car loans, unsecured loans to prime customers, harness big data from its credit card business to further engage

customers and optimize technology to support its expanding customer base The acquisition of ANZ’s retail customer base will be the foundation for Shinhan’s deeper expansion in Vietnam

Section 1: M&A Activities Review

1.2 Inbound M&A

1.4 Outbound M&A

Real Estate, Food & Beverage, and Logistics top the list of M&A sectors

Figure 18: Domestic M&A Total Deal Value (US$mn) & Deal Number, 2011 – 1H2017

Section 1: M&A Activity 2016 Review | Domestic M&A

Source: StoxPlus

Source: StoxPlus

Figure 19: Domestic M&A Deal Value (US$mn) by Sector

1H2017 2016

208deals US$5.23bnDOMESTIC 2016

• For the 2016, there were 208 domestics M&A deals which lower than inbound M&A deals for the same period However, total domestic M&A deal value stayed at US$5.23bn, approximately 90% higher than domestic M&A deal value in the previous year

• The most favored sectors in Vietnam for domestic M&A by investors in 2016 are Real Estate, Media, Food & Beverage with 21 deals totaling US$301mn and Utilities with 17 deals valued at US$241mn

Basic Resources

Utilities Personal & Household goods

Travel & Leisure

Industrial Goods & Services

Construction & Materials

Automobiles & Parts

Minority Majority

240

Banks Food & Beverage Basic Resources Industrial Goods & Services

Financial Services

Utilities Health Care Construction & Materials

Real Estate Chemicals Travel & Leisure Personal & Household goods

Media

Domestic Spotlight: Real Estate

Figure 20: Domestic M&A Deal Value (US$mn) & Deal Number, Real Estate

Section 1: M&A Activity 2016 Review | Domestic M&A

Source: StoxPlus

Source: StoxPlus

• Real Estate is the top and dominating sector for domestic investors in 2016 Buying and selling real estate project has been quite active Along with great inflows capital from foreign countries via M&A, Real Estate is relatively buoyant with 44 M&A deals by domestic players, totaling at

US$ 3.16 bnwhich is 4.5xas much as its figure in 2015

• The significant M&A deal is VID Group acquiring 21.7% stake in Vingroup at US$1,084mn, accounting for approximately 35% of total domestic M&A deal value in real estate for the year 2016

• Vingroup appears to be active in 2016 with a number of M&A transactions: acquiring 62.2% stake in Can Gio at US$380mn, 81.8% share of Sinh Thai at US$267mn, 100% stake in Green City with

US$232mn, and 63.2% stake in Vicentra with US$124mn

• Other noticeable deal is Muong Thanh acquiring 95% stake in CIENCO 5 Land with US$157mn

• Domestic investors are interested in deals where they can acquire or take controlling stakes of distressed assets 25 over 44 in total of twelve real estate inbound deals in 2016, bidders acquired majority stakes in targeted companies Vingroup’s acquiring 62% stake of Can Gio Company is an typical example With US$380mn, Vingroup now is the owner of a potential real estate project in Can Gio, Ho Chi Minh City

• It is noted that domestic real estate players are more active in 2016 while foreign investors appear

to be more cautious with only US$808mn invested in real estate via M&A, which is half as much as the figure in 2015

INBOUND vs DOMESTIC

Domestic Spotlight: Food & Beverage

Figure 21: Domestic M&A Deal Value (US$mn) & Deal Number, Food & Beverage

Section 1: M&A Activity 2016 Review | Domestic M&A

Source: StoxPlus

While there were some major deals

in 2016, overall Food & Beverage sector experienced a slowdown in deal number and value.

• After a busy year 2015, Food and Beverage enjoyed downtick trend in 2016 with 21 deals totaling US$302mn in 2016 According to StoxPlus’s database, total number and value of deals in 2016

decreased by 33% and 43%, respectively compared to the previous year The slowdown can be

attributed to some problems the sector is facing including mass fish deaths in Ha Tinh and overall food safety concern which can discourage investors until the problems are solved

• By segment, 2016 marked the dominance of domestic M&A deals in farming and food production

sector Meanwhile, inbound M&A deal number remained modest as many foreign investors are still waiting for effective of important policies on foreign investment (including new investment law, new enterprise law and foreign ownership cap)

• Masan Group continues to be one of the most active players in Food & Beverage Within many M&A

deal executed in 2016, the Company is following its strategy of growth through M&A while growing its existing businesses to become the market leader

 In 2016, Masan Group successfully outbid CJ Cheil Jedang Corp to acquire 14% in processed food giant Vissan with US$64mn and increased its stake in Vinacafe Bien Hoa to a total 60.13% with US$13.59mn

 Many investors approve of Masan strategy and have great confidence in the company A worthy example is the inbound deal of Singapore Government increasing its stake to 5% in Masan with US$89.23mn

• South Korean investors became more active in the food production sector CJ CheilJedang has

been interested in buying Vissan stakes since the beginning of 2015, but was outbid by Masan in 1H this year South Korean food-producing conglomerate Daesang Corp also announced on June 30th

2016 that it will acquire 99% stake in Duc Viet Joint Stock Company for US$32mn Established in 2001, Duc Viet Food specializes in manufacturing and distributing meat products, sausages, spices, and instant food and since then has become one of the most well-known food processing brand in

Domestic Spotlight: Logistics

Figure 22: Domestic M&A Activities into Vietnam in Industrial Goods & Services

Section 1: M&A Activity 2016 Review | Domestic M&A

Source: StoxPlus

Industrial Goods & Services continued to be attractive to domestic investors with 43 deals totaling US$184mn for 2016

• In 2016, Logistics sector appeared to be an

attractive investment destination with a

remarkable increase in deal value

Particularly, total deal value for the first six

months of 2016 even was 1.5x higher than the

whole year 2015’s figure to stay at US$103mn

with 29 deals, comparing to US$72mn and 38

deals for the whole year This could be the sign

of change in the investment preference from

customer-oriented in 2014 to industrial sectors

to take advantages of many FTAs which would

come into effect in the next few years

• Of Industrials Goods & Services, Logistics

received a strong interest from domestic

investors with 21 deals totaling

 Specifically, top attractive companies

included Nha Trang Port JSC, Multi

Modal Transport Holding Company,

Southern Waterborne Transport

Corporation

No of Deals

Deal Value US$mn

Section 1: M&A Activities Review

1.2 Inbound M&A 1.3 Domestic M&A

Section 1: M&A Activity Review | Outbound M&A

Source: StoxPlus

Outbound M&A activities to be silent during 4MH2017 with only one deal valuing at US$10mn

CAPITAL OUTFLOWS

2012 - 1H2017 via M&A

US$315mn

13 Deals

Figure 24: Outbound M&A Activities by Vietnam Domiciled Enterprises

Vietnamese firms are still silent for oversea expansion

Outbound M&A by Vietnamese companies to

be silent in 2016 & 1H2017

• Acquisition of overseas business by

Vietnamese firms is almost quiet in 2016 &

1H2017 Our sources (both public and

intelligent data) have not recorded any

significant acquisitions oversea by domestic

corporations except for a US$2mn M&A deal

of 500 Startups Management Co LLC (Fund:

500 Startups II LP),IMG Investment JSC, Idea

River Run Sdn Bhd to acquire the majority

stake in Carsome Sdn Bhd

• We have reviewed strategy notes of the Top

10 domestic businesses Our review included

scrutinising financial statements, strategy

notes, annual reports where available and

interviews with executives Some of these

companies, commonly known as cash rich in

Vietnam such as Viettel, Petrol Vietnam,

Vinamilk, Hoa Phat Group, Hoa Sen Group

and Vietinbank, are silent in their M&A

activity and strategy in making acquisitions

of oversea businesses as way of expansion

• The theme of their strategy notes this year

is “to focus on home market and untapped

segments”, “exits of non-core

investments”, “time for restructuring”

and “cost reduction”.

• Looking back to outbound deal flows in recent years, large Vietnamese corporations such as Vinamilk, BIDV, FPT, Hoang Anh Gia Lai have moved up their value chain through acquiring foreign companies including from New Zealand, Laos and Cambodia

• Nevertheless, Vietnamese corporations are

still active in pursuing investments oversea via foreign direct investment channel

According to Department of Foreign Investments within MPI, there are 102 licenses with total investment capital of US$900mn granted to Vietnamese investors Largest investors oversea are still Petrol Vietnam, Viettel , Vietnam Rubber Group, Song Da Group, BKAV and Kymdan

Section 2: M&A Themes 2017

2.1.1 SCIC’s Divestment Plan 2017

SCIC is considered a key player in SOE reform

Section 2: M&A Themes 2017 | SOEs IPO & Divestment - SCIC’s Divestment Plan 2017

The number of companies under SCIC’s portfolio; downward trend

Source: StoxPlus

(84) (219) (97) (92) (35) (61) (74) (116) (73)

233

855 815

614 534

454 432

387 313

197 146

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Fully divested companies No of companies under SCIC

• The State Capital Investment Corporation (SCIC) was incorporated under Decisions

No.151/2005/QD-TTg of the Prime Minister dated 20 June 2005 Being centralized holding

company of commercial/industrial SOEs in Vietnam, SCIC is supposed to perform as above and has been acting as an “effective state capital manager to improve corporate governance practice in Vietnam

• SCIC’s track record of effectively managing state capital has not been appropriately recognized as many mistake SCIC as a pure investment company and criticize for low return on capital

• SCIC is managing only 2% of the total US$48.5bn State Capital at SOEs currently Moreover, less than 30% of equitized SOEs has been transferred to SCIC up to the end of 2014 After successful divestments from 229 companies, SCIC only keeps 16 enterprises Once the centralized State Ownership function of SCIC is well recognized in coming period, we expect the rest of equitized SOEs to be transferred to SCIC

Figure 25: No of Companies under SCIC’s Portfolio

US$>50.0mn US$10.0 - 24.9mn US$<5.0mn US$25.0 - 49.9mn US$5.0 - 9.9mn

Section 2: M&A Themes 2017 | SOEs IPO & Divestment - SCIC’s Divestment Plan 2017

SCIC mainly holds minority stake in divestee companies

STATE CAPITAL VALUE

Figure 27: Breakdown of SCIC’s Divestee Companies by State Capital Size, 2017

Source: StoxPlus

Source: StoxPlus

• According to List of Divestee Companies

2017, SCIC’s total book value to divest

in 2017 stays at US$329mn, which is relatively low compared to SCIC’s portfolio We notice that giant firms including VINAMILK do not appear in this list

• By state capital ownership, SCIC holds minority stake in 76% companies in divestee company list 2017, totaling 50.2% state capital to divest in this year

• By size, small and medium-sized companies dominate the list

Particularly, 91/100 companies has divestment amount less than US$5mn, totaling US$62.5mn

The majority of SCIC’s divestee companies 2017 are in

Construction & Materials

Section 2: M&A Themes 2017 | SOEs IPO & Divestment - SCIC’s Divestment Plan 2017

Figure 28: Breakdown of SCIC’s Divestee Companies by Sector, 2017

In number, the highest number of SCIC’s divesture in 2017 will be in Construction & Materials, followed by Food & Beverage and Industrial Goods & Services Regarding size of state capital value, enterprises under Construction & Materials, Iron & Steel, Utilities sector will be dominating

 Big construction & materials names in the list include VINACONEX, Thieu Nien Tien Phong

Plastic, Binh Minh Plastic and Thang Long Construction with total charter capital of US$3.07bn

23 61

58.0 46.0

192.8 32.4

Strategic long-term holdings

Divest following PM's guidelines

Restructure before full divesture

Immediate full divesture

STATE CAPITAL NO OF COMPANIES

Source: StoxPlus

State capital reduction as way to deal with State budget deficit and high public debt for Vietnam

Section 2: M&A Themes 2017 | SOEs IPO & Divestment - SCIC’s Divestment Plan 2017

• SOE IPOs and non-core divestment are one of three central policy

themes identified by the Government during the period 2010 –

2020 to avoid what economists call “the medium income trap” It

is clear that the Government has an ambitious plan for SOE

reform but the practical progress has been way behind schedule

As of December 2015, Vietnam has successfully conducted 375

SOE IPOs during period 2011 – 2015, around 71% of total planned

IPOs

• Public debt has risen sharply, and the risk of debt distress has

climbed The ratio of Public and Publicly-Guaranteed (PPG) debt

to GDP is projected to increase to 62 percent in 2016, up over 16

percentage points in the past five years, reflecting persistently

high budget deficits and lower-than-projected nominal GDP due

to low inflation According to IMF, the figure is projected to

increase in the short run and stabilize at around 67.5 percent of

GDP by 2021 breaching the government ceiling of 65 percent of

GDP in 2018

• The need to ward off the budget woes, on the flip side, would

lead to acceleration in structural reform or the speeding-up of

privatization and divestment In October 2015, the government

announced it would divest all of its shares in 10 enterprises held

by SCIC, which is estimated to bring approximately US$4bn for

the state budget

Public and Guaranteed debt to GDP ratio is projected to climb to 62% in 2016, promoting the Government to accelerate SOE IPOs and divestment process

Publicly-Figure 30: Top 10 Divestee Companies by SCIC, 2017

Vietnam would record mega inbound M&A deals in the upcoming period IF SCIC divests its 10 giant portfolio companies

CAPITAL(US$mn)

STATE CAPITAL(US$mn)

% STATE CAPITAL

Thai Nguyen Steel (fully divested in April 2017) Iron & Steel 125 44 35.2%

Source: StoxPlus

Section 2: M&A Themes 2017

2.1.2 Update on SOE IPOs

By stake ownership, majority of upcoming SOE IPOs in period

2016 – 2020 will offer over 50% stake to the public

• We expect this list of 545 SOEs will be projected to IPOs during the upcoming period 1H2017 – 2020

However, the Government has not confirmed any list of SOE to go IPO or divestment in this period.

• Out of over 500 upcoming SOE IPOs, there is expected to have 254 IPOs with majority stake offering

to public This is a measure to make SOE equitization more attractive to private sector However, according to our statistic and experience, the actual stake offering could be lower due to the risk-averse and skepticism from the Government

• Among 545 SOEs to go public, most SOEs fall into small and mid-size capital category 38% of these SOEs has charter capital below VND100bn (US$5mn), while only 11% has charter capital of

VND1,000bn (US$50mn) and above We believe that the equitization will become privatization in substance for these small and mid-size SOEs as the Government has lifted the foreign ownership cap for all the unconditional business sectors IPO of some large SOEs like Mobifone, PVEP, VICEM and SATRA, with charter capital over VND4,000bn, is expected to happen during the period 2017 – 2018

• Mobifone: Mobifone firmly establishes itself as one of three top mobile telecommunications corporations, which jointly dominates over 80% of mobile telecom market Mobifone itself commands 22% of market, and has average revenue growth of 23% (y-o-y) in period 2005 –

2013 Equitization of Mobifone has been awaited since 2009 Many international companies like Comvik (Sweeden), Axiata (Malaysia), Telenor (Norway), etc are said to keep eye on Mobifone equitization for strategic investment MobiFone value is estimated at US$2bn -US$3.4bn

Figure 31: Upcoming SOE IPOs, 1H2017-2020

Section 2: M&A Themes 2017

2.1.3 Update on State Capital Divestment

Rubber VNPT VINALINES CorporationSong Da VINATEX VietnamAirlines CIENCO 8 LILAMA VINAFOOD 1

Figure 32: Top 10 SEGs/SCs with Highest Remaining Non-core Investments

• It could be seen that the primary motive for all SEGs and SCs divestment in this period is the legal enforcement rather than economic rationales from SOE themselves Instead of self-

motivation by SEGs/SCs, the Government is pushing aggressively these entities to hit target of remaining VND19, 517bn divestment In terms of number of enterprise shares to divest, top 3 are Satra Group, Vietnam Rubber Group (“VRG”) and VNPT

• Having only 4 successful divestments from non-core enterprises during 2011-2014, VRG was

among the least effective SEGs However, in 2015, VRG successful withdrew their investments from 11 entities, especially the SHB Bank and Sai Gon Investment JSC As a result, number of VRG’s remaining non-core divestment from the largest in beginning of 2015 across SEGs and SCs

to the second, with 57 non-core investments in various sectors including travel & tourism,

banking, and real estate to be divested

• SATRA and VNPT also had unfavorable divestment results in period 2011 – 2016, with only 6

successful divestments from Satra and 10 from VNPT There are 63 remaining divestments from non-core enterprises for SATRA and 52 for VNPT respectively, mainly at banks,

telecommunication and real estate companies

Upcoming divestment by SEGs and SCs: Satra Group, Vietnam Rubber Group and VNPT have the highest remaining deals to

be divested

Source: StoxPlus

Section 2: M&A Themes 2017 | SOEs IPO & Divestment

• Food & Beverage sub-sector within Consumer Goods: Vietnam food & beverage sector is expected to

continue growing steadily until 2020 and the consumption level of aforementioned food & beverages

products will rise at 7% per annum Most of Food & Beverage companies are under-performing, however they have good fundamental operations and could be revitalized upon greater management and strategies

• Construction & Materials: Having the most number of entities remained for divestment, this sector will

provide State stake at many small & medium size companies which were invested by Vietnam Airlines, Vietnam Rubber Corp, Song Da Corp, Vinalines, Vinatex & VNPT The majority of companies are operating in heavy construction and transportation service subset, including local strong brands such as Ha Tien cement, Hacisco, ALS, Airserc, etc Divestment of ECs from these SMEs will give opportunities for performing

industry players to expand their business at a more economic price than building new plants

• Banking & Financial Services: Having small number of enterprises subjected to divestment but banking and

financial services sector holds the biggest amount of state capital investment For example, PVN has invested US$250mn in PVcomBank and OceanBank, while EVN has 29% stake at An Binh Securities Together, these investments already accounted for 40% of remaining divestment of this sector Commitment of giants like PVN, EVN, Vinataba, VNPT and Vinatex to accelerate selling shares from non-core business will become

a significant part of successful divestment plan

Upcoming Divestment by sector: Divestments are expected the most

at Construction & Materials, Financials and Food & Beverage

sectors

Figure 33: Upcoming Divestment By Sector

Section 2: M&A Themes 2017 | SOEs IPO & Divestment

Section 2: M&A Themes 2017