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Transcript of Baring asset management
Baring AssetManagement Limited155 Bishopsgate,London EC2M 3XY
Tel +44 (0)20 7628 6000Fax +44 (0)20 7638 7928
www.barings.com
Baring ASEAN Frontiers FundCitywire Montreux
April 2012
For Professional Investors only
1
Why ASEAN?MSCI South East Asia has outperformed the region during 2008 crisis,since crisis and 2011!
Source: Factset as at 31 March 20121 Market peak to bottom (29/10/2007 – 3/3/2009)2 Market bottom to end Feb 2012 (3/3/2009 – 31/3/2012)
MSCI Index Performance In U.S. Dollar
20.1
9.9
21.1
19.3
21.6
8.5
4.1
13.7
13.2
2012YTD
(37.2)
(18.2)
(2.4)
(17.9)
0.1
0.1
6.5
(6.1)
(17.1)
2011
20.9
4.8
56.3
22.2
35.5
37.0
34.6
32.4
19.9
2010
79.0(65.4)62.6China
125.7
275.5
158.5
183.4
141.2
312.3
187.9
130.5
2008Crisis
Recovery2
(69.4)102.8India
(57.3)77.3Thailand
(61.0)74.0Singapore
(53.5)68.0Philippines
(42.7)52.1Malaysia -EM
(63.9)127.6Indonesia
(56.5)75.0South East Asia
(63.2)72.5AC Asia ex JP
2008Crisis12009
… attractive risk – return proposition vs Asia
29
1623
3037
44
12 15 18 21 24 27 30
Std Dev
3 YearAnnualisedReturn
Baring ASEAN Frontiers A EUR Amundi Fds Eq ASEAN AU-CFidelity ASEAN A-USD Invesco ASEAN Equity"JF ASEAN Equity A (acc) - EURPeer Group: Open End Funds - Europe/HKG/TWN/SGP –
Asia-Pacific ex-Japan Equity
Source: Morningstar Direct, Barings as at 31 March 2012
2
Baring ASEAN Frontiers FundC
ore
ASEA
N M
arke
ts
Philippines
Thailand
Indonesia
Malaysia
Singapore
FrontierMarkets
AndOthers
70% CoreASEANMarkets**
Bangladesh
Sri Lanka
Laos, etc
Vietnam
FrontierM
arkets
ASEAN to be at least 70%
Investment Universe
Others
Source: Barings * As there are no stock markets in Laos and Cambodia, exposure to these economies is gained by investing in companiesactive in these countries but listed elsewhere. ** At least 70% of the Fund will be invested in Core ASEAN markets.
3
Baring ASEAN Frontiers FundPeer ranking(as at 31st March 2012)
13.7
13.4
2nd (3/6)
2012 YTD
32.2
37.4
1st (1/5)
2010
-39.0
-42.7
2nd (3/5)
Aug 2008 –Dec 2008
50.1
47.1
1st (1/5)
SinceInception*
74.6
86.3
1st (1/5)
2009
-6.3Index**
-11.6Fund Performance
3rd (4/5)Quartile (Peer)Ranking
2011
*Cumulative, Inception date: 1 August 2008. **MSCI South East Asia Total Net Return IndexFund performance numbers are bid to bid, with gross income reinvested, US$. Transactions in derivatives, warrants and forward contracts andother fund derivatives instruments may be used for the purpose of meeting the investment objective of the Fund. The Net Asset Value of the Fundmay have a high volatility due to these instruments and techniques being included in its scheme property and may involve a greater degree of risk.
Source: Barings/Morningstar-quartile ranking is customised.
Past performance is not an indication of future performance.Standard & Poor’s
Fund Management Rating
Morningstar Overall Ratings
4
Barings Asian Investment TeamTeam structure
WILFRED SITChief Investment Officer, Asia
AJAY ARGALHead of Indian Equities
AGNES DENGHead of HK China Equities
COLIN NGHead of Asian Equities
WILLIAM FONGHK China
QUANT(LONDON)
JIM CHENHK China
WINSTON KEHK China
DERICK LEUNGHK China
ZHI ZHI TANHK China
SOO HAI LIMASEAN / Australia
KAI YANG LEEASEAN
EUNICE HONGTaiwan / Korea
HYUNG JIN LEEKorea
NICOLA LAITaiwan
MULTI ASSET(LONDON)
KHIEM DOHead of Asian Multi-Asset
As at December 2011
TBAHead of Asian Debt
FIXED INCOME(LONDON)
MANOJ SHROFFIndia
LIN TANGHK China
TIE BIN LIUASEAN
Total Headcount: 20
DAVID LEUNGQuantitative Analyst
5
Investment Process
Strategic Policy GroupTop-down global asset class preferencesCountry, sector and currency preferences
TOP DOWN INPUTS
Company meetingsOnsite Research visitsLocal contacts and newsflowInteraction with Global Sector and GEMteamsStocks scored 1 - 5
BOTTOM UP INPUTS
Quantitative teamStock screensImplied alphaPortfolio styleValue at RiskMacro sensitivities
BAM PROPRIETARYQUANTITATIVE INPUTS
Asia ex Japan team
Hong Kong China team
India team
PORTFOLIOCONSTRUCTION
Tracking error concentration90/120 Forward P/E guidelineStyle exposure – growth/value/momentum/sizeStock score monitoringActive weights – stock/country/sectorPortfolio Liquidity
RISK MANAGEMENT
6
What do we look for in a stock?Stock Research Framework
Pace and durationCompetitive positionOpportunities for realgrowthQuality of earningsCulture of innovation
Clear, credible strategyCompany cultureCorporate governanceDemonstrable track recordAcquisitions and disposals
EV/EBITDA*Price/cash flowPrice/earningsAsset undervaluationSector/market/cross bordercomparison
Capital structureInterest costs andcoverageCashflow generationand usageFuture direction ofinterest rates
FX make-up of assets andliabilitiesFX make-up of revenues andcostsLikely direction of currencyEffect of currency moves oncompetitive position
*Enterprise Value/Earnings Before Interest, Tax, Depreciation and Amortization
Unrecognizedgrowth
Ability to financegrowth
Sensitivity tocurrency
Crediblemanagement
Favorablerisk/reward
GROWTH MANAGEMENT VALUATIONCURRENCYLIQUIDITY
G M VCL
7
Quantitative Inputs and Risk ManagementProcess and Tools
Independent Risk Management
Source: Barings
IND
EPEN
DEN
T
Detailed monthly and ad hocrisk analysis
Regular monitoring of internalguidelines and regulatorylimits
Monthly meeting with CIO
M. ValensiseCIO
Giuseppe TedoneHead of
Quantitative Research
Portfolio Managers
Executive Risk Reports
Implied Alpha & Risk Budgeting
Macroeconomic Sensitivities
Style Exposure Analysis
Style VaR
Portfolio Risk Analysis Tools:
QUANTITATIVEANALYTICS
RISKMANAGEMENT
RISK ANDQUANTITATIVE TOOLS
Ex-ante and proactive use ofquantitative tools
Monthly meetings with IMs onquant input
RiskManagement
QuantitativeResearch
RiskMetrics
Northfield Risk Models
Style Research
Barings Proprietary Tools
J. BurnsCOO
Rob ChambersHead of
Risk Management
Portfolio Managers
8
Asia Ex Japan Screen - ASEAN*Decile 1 stock are the most attractive and Decile 10 stocks are the least attractive 30 Mar 2012
Rank Growth Factors (45%) Value Factors (55%)
ID Name Ranked since RankChange
1-Monthreturn
VaRMom
Liquidity$m Value Growth BAM
Score ASEAN MSCI SEAsia
ActiveWeight
EPS RevFY1
EPS MomNTM
ROA 1YrChg
EarningsYld
CashFlow Yld
DividendYld ROE Cash
Flow ROI
Decile 1 8.96 8.08 0.88 Consumer Discretionary633156 Berjaya Sports Toto 30 Dec 11 0 -0.23% 0.84 1.52 1 3 0.20 -0.20 11.44 0.00 18.3 7.10 8.35 5.72 81.60 0.72 Consumer StaplesB2927P First Resources Lt Npv 30 Mar 12 2 4.09% 4.28 2.33 4 1 1 1.20 1.20 7.69 0.00 10.1 8.45 9.45 1.62 22.20 0.19653567 Pp London Sumatra Idr100.00 30 Sep 11 0 8.49% 2.87 3.44 3 1 2 0.94 0.94 6.67 0.00 38.8 8.66 8.85 0.00 32.74 0.46 EnergyB1359K Ptt Exploration & Prod 30 Mar 12 2 -5.42% 1.19 22.45 2 3 1.27 -1.27 16.14 0.00 -12.5 7.72 16.43 3.09 22.37 0.31642038 Ptt 31 Jan 12 0 -2.48% 1.88 44.43 2 2 2 1.90 -1.90 2.24 0.00 12.7 10.43 17.30 3.04 18.94 0.22642039 Ptt Public Company Thb10(Alien Mkt) 30 Sep 11 0 -3.40% 1.06 0.01 2 2 2 1.86 1.86 2.24 0.00 12.7 10.43 17.30 3.04 18.94 0.22B0300P Thai Oil 29 Feb 12 0 -4.61% 2.75 23.15 1 1 2 0.37 -0.37 10.10 0.00 55.7 10.04 18.37 4.11 18.69 0.16 FinancialsB29Y9F Alam Sutera Realty Idr100 30 Mar 12 2 8.77% 7.05 6.46 4 1 1 1.42 1.42 40.00 0.00 59.3 5.43 12.47 0.00 24.33 0.66 IndustrialsB29TTR Sime Darby 29 Feb 12 0 0.52% 1.36 34.47 4 1 2 1.78 1.66 0.12 10.00 0.00 239.7 7.36 9.46 3.08 17.87 0.14B1VT03 Yangzijiang Shipbuild 30 Mar 12 3 -2.21% 1.65 22.83 2 2 2 0.49 0.39 0.10 15.79 0.00 4.8 15.56 16.55 4.15 30.65 -0.19 Materials617802 Resource Alam Ind Idr50 30 Sep 11 0 -13.50% 8.25 1.58 4 1 2 0.50 0.50 33.33 0.00 44.1 6.38 7.04 1.24 93.41 2.14 Telecommunication Services641256 Advanced Info Service 30 Sep 11 0 15.00% 6.28 21.08 3 1 1 1.03 -1.03 36.67 0.00 30.5 4.07 8.45 5.55 56.60 1.28641259 Advanced Info Serv. Fgn 30 Sep 11 0 14.47% 6.20 0.02 3 1 1 0.76 0.76 36.67 0.00 30.5 4.07 8.45 5.55 56.60 1.28608624 Digi.Com 30 Mar 12 1 1.00% 3.86 10.24 3 2 0.80 -0.80 8.93 0.00 5.1 3.97 7.67 4.31 88.87 2.35628486 Globe Telecom 30 Mar 12 4 -2.24% 3.14 1.82 2 2 0.17 -0.17 11.54 0.00 -0.3 6.53 18.80 5.53 20.64 0.32B1CNDB Starhub 31 Jan 12 0 5.44% 1.92 5.45 1 3 0.29 -0.29 2.08 0.00 20.1 5.94 12.00 6.45 1396.02 1.37
Decile 2 18.60 15.40 3.19 Consumer Staples609249 Astra Agro Lestari 29 Feb 12 0 4.71% 0.93 3.04 2 4 0.19 -0.19 0.83 0.00 2.7 6.54 8.60 4.03 29.55 0.43616447 Golden Agri Resources 30 Mar 12 1 7.53% 2.28 40.32 2 4 1 1.97 0.81 1.16 0.00 0.00 -27.1 16.68 17.92 2.00 15.80 0.08 EnergyB29SK7 Indo Tambangraya Megah 29 Feb 12 0 0.23% 0.62 6.98 1 6 1 1.05 0.36 0.69 -2.50 0.00 125.5 9.69 10.57 3.62 42.57 1.22 Financials
Fund Weight
BAM Proprietary Quant ScreenComplements qualitative screening & also used as cross check on existing holdings
1,6001,8002,0002,2002,4002,6002,8003,0003,200
Apr-11 Jul-11 Oct-11 Jan-12 Apr-12
IDR
2700
2900
3100
3300
3500
3700MYR
London Sumatra Indonesia Crude Palm Oil (RHS)
•Stock upgraded to Decile 1 from 4 in Jun 2011 => potential GARP idea•Top down view on CPO was early 2012 better entry•Qualitative and Quantitative views aligned by Feb2012 => BUY
Source: Barings, Bloomberg, Factset, April 2012
Decile 1 stock sinceend May 2011
Bought in Feb
9
-0.06
-0.44
-0.02
0.35
-0.24
0.04
0.39
-0.12
0.320.360.15
-0.40
0.470.470.28
-0.08-0.04-0.09
-0.6-0.4-0.2
00.20.40.6
Book
to P
rice
Div
iden
d
Earn
ings
Yld
IBES
Eng
s
C'F
low
Yie
ld
Sale
s to
EBIT
DA
to
Rtn
on
Equi
ty
Earn
ings
Inco
me/
Sale
s
Sale
s
IBES
12M
th
IBES
1Yr
Mar
ket C
ap
Mar
ket B
eta
Mom
entu
m
Mom
entu
m
Deb
t/Equ
ity
Styl
e Ti
lt™
0
10
20
30
40
50
Large Value Large Growth Small Value Small Growth
% WeightPortfolio Benchmark Coverage
Style Exposure Analysis & Style VaRThe Style Analysis & Style VaR provides a bottom-up based view of the portfolio’s relative tilts to the mostimportant style factors; and the risks associated with those exposures
Source: Barings, MSCI, Style Research, 31 March 2012
Is the portfolio consistent with the Barings GARP investment approach?
Portfolio Relative Value at Risk Breakdown
1.0%
2.7%
5.4%
7.2%
10.0%
8.7%
18.7%
0.2%
0.9%
1.2%
4.2%
4.7%
4.7%
9.4%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Value VaR
Growth VaR
Size VaR
Momentum VaR
Total Style VaR
Tracking Error
Total Relative VaR
Relative VaR at 84% and 95% Confidence
Portfolio Style Exposures
0.35
0.22
0.69 -
0.31
-0.80 -0.60 -0.40 -0.20 0.00 0.20 0.40
Value
Growth
Size
Momentum
standard deviations from MSCI AC Asia Pacific
10
Implied Alpha Analysis
Check that the portfolioreflects the portfoliomanager views
Learn about risk/returntrade-offs
Risk budgeting atCountry, Sector andstock level
The Implied Alpha Analysis is based on the concept of reverse portfolio optimisation and provides a usefulguide to the strength of the bet taken on individual stocks, countries and sectors within the portfolio
Source: Barings, MSCI, Northfield System, 31 March 2012
Is the portfolio well diversified and efficient?
-15.0%-10.0%
-5.0%0.0%5.0%
10.0%15.0%20.0%25.0%30.0%35.0%40.0%
Indu
stria
ls
Con
sum
er
Discr
etiona
ry
Mat
erials
Info
rmat
ion
Tech
nology
Ener
gy
Hea
lth C
are
Utili
ties
Con
sum
er S
taples
Teleco
mm
unicat
ion
Serv
ices
Fina
ncials
Active Wgt % Cont. to TE
Name Sector Country Beta tobenchmark
AnalystScore
% contribto trk err.
ImpliedAlpha
Alam Sutera Realty Financials Indonesia 1.589 1 6.80% 11.22%Singapore Telecommunications Ltd. Telecommunication Services Singapore 0.697 1 5.98% -3.66%Alliance Global Group Inc. Industrials Philippines 1.346 1 4.38% 7.51%DMCI Holdings Inc. Industrials Philippines 1.520 2 4.17% 8.35%Summarecon Agung Consumer Discretionary Indonesia 1.361 1 4.06% 7.87%First Resources Ltd. Consumer Staples Singapore 1.534 1 3.70% 7.22%IndoFood Sukses Makmur Consumer Staples Indonesia 1.584 #N/A -1.46% 7.65%Keppel Land Ltd. Financials Singapore 1.847 #N/A -1.58% 9.37%Bumi Resources Energy Indonesia 2.266 #N/A -3.93% 11.98%Baring China A-Share X USD [UNASSIGNED] Ireland 0.720 #N/A -4.49% -3.07%U.S. Dollar [CASH] [Cash] 0.000 #N/A -7.49% -7.90%
11
5,000
15,000
25,000
35,000
45,000
55,000
65,000
Jul-08 Jun-09 May-10 Apr-11 Mar-12
IDR
0
10
20
30
40
50
60
70
80
90M
Volume (M) - RHS Price (IDR) - LHS
Added
Investment Philosophy and ProcessAn example
GLCMV Research frameworkGrowth (+) : volume + price
Liquidity (+) : net cash balance sheet
Currency (-) : marginally negative
Management (+) : good track record
Valuation (+) : 7x PER in 7% dividendyield in March
Indo Tambangraya Megah
Historical performance
Performance Source: Factset as at 14 March 2012, please see Important Information
SPGMATERIALS: positivesecular view, Score (2)in March 2009
Asian TeamGovt small minesclosure in ChinaChinese coal importsgrowth sustainable
Conviction to Add in Mar 09 trough
12
ASEAN – Association of South East Asian Nations
1.1
1.7
1.1
0.7
0.7
1.7
1.1
1.5
3.3
1.9
5-yr CAGR(%)
3469
2255
1362
5281
804
8617
912
1204
50714
36521
GDP percapita (US$)
242.3
94.9
88.8
69.5
48.3
28.9
14.3
6.3
5.2
0.4
2010 pop.(m)
Indonesia
Philippines
Vietnam
Thailand
Myanmar
Malaysia
Cambodia
Laos
Singapore
Brunei
Country
Source: UBS as at April 2012
ASEAN population and five-yearhistorical CAGR
A diverse group, commonality of superior growth prospects
Population in millions, 2011
0
400
800
1,200
1,600
Rus
sia
Bra
zil
US
A
Eur
oar
ea
EU
27
Ase
an
Indi
a
Chi
na
Population millions, 2011
GDP in USD billion, 2011
0
2,000
4,000
6,000
8,000
Rus
sia
Indi
a
Ase
an
Italy
Bra
zil
UK
Fran
ce
Ger
man
y
Japa
n
Chi
na US
GDP (USD bn, 2011)USD 15,065bn
13
DemographicsRising Income
Middle class in ASEAN and as % ofpopulation
Source: CLSA as at March 2012
Exponential rise in consumption
0 5 10 15 20
Singapore
Malaysia
Thailand
Philippines
Indonesia
(%)
Nominal discretionary spending powerMiddle class
Growth in middle-class and nominaldiscretionary spending power, 2010-2015CL
20152010CAGR(%)20152010as % of populationin million
Middle Class population
25.617.78.8157103ASEAN7.1
5.6
0.9
9.2
7.1
5
7.1
12.9
7.1
1.5
7.4
32.2
5.1
20.3
3.1
18.9
0.4
68.4
0.8
0.4
6.0
36
100
14
4.5
53
5.0
16
4.0
100
8.2
46
100
20
6.1
63
6.7
28
5.3
100
5.3
24.5
4.8
13.1
2.2
14.8
0.3
37.2
0.6
0.4
Vietnam
Thailand
Singapore
Philippines
Myanmar
Malaysia
Laos
Indonesia
Cambodia
Brunei
14
ASEAN: Deleveraging over last 10 yearsIndonesia: Posterchild of ASEAN
Indonesia: Public Debt to GDP
Source: Morgan Stanley as at April 2012
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
% ofGDP
Public Debt: Domestic Public Debt: External
0%
10%
20%
30%
40%
50%
60%
70%
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Bank Credit:Household Bank Credit:Corporate
Indonesia, % of GDP
Credit penetration is lowest inthe region
6
7
8
9
10
11
12
13
Jan-
03Ju
l-03
Jan-
04Ju
l-04
Jan-
05Ju
l-05
Jan-
06Ju
l-06
Jan-
07Ju
l-07
Jan-
08Ju
l-08
Jan-
09Ju
l-09
Jan-
10Ju
l-10
Jan-
11Ju
l-11
Jan-
12
%
3
4
5
6
7
8
9
10
11%
Policy Rate Core Inflation (RHS)
Core inflation & policy rate – on astructural decline
15
2012 Investment Outlook
Positives- Strong domestic demand suggest better ability to mitigate Developed Economies
slowdown/recession
- ASEAN markets generally have less global cyclical exposure
- Fiscally robust enough to pump prime- Valuations still attractive despite strong performance
- Monetary easing commenced in Thailand, Indonesia and Philippines
Key risks:- External shocks e.g. Europe Sovereign debt concerns?
- Policy risks e.g. inflation management; poor execution/implementation on infrastructure- ASEAN markets have outperformed 4 consecutive years*. Crowded trade?
- Political – likely elections in Malaysia in 2012, potentially in Thailand?
* comparing with MSCI Asia ex Japan, April 2012.
16
ASEAN:Exposure to Global Cyclicals versusDomestics
35%12%19%14%0%19%Singapore
32%0%27%20%18%4%Indonesia
10%4%5%22%15%44%Taiwan
27%8%12%12%23%18%MXAPJ35%0%11%7%46%0%Thailand
21%25%35%19%0%0%Philippines30%5%30%22%5%8%Malaysia
15%2%5%10%20%49%Korea21%6%13%16%29%15%India20%41%13%16%0%10%Hong Kong36%8%15%14%22%5%China37%8%12%5%38%1%Australia
Rate-SensitiveFinancials
Asset- SensitiveFinancialsDefensivesDomestic
CyclicalsCommodity
CyclicalsGlobal Cyclicals
2012 earnings weights by markets and macro slices
ASEAN earnings/markets less vulnerable to global slowdown
Sources: Factset, I/B/E/S, MSCI, GS Global ECS Research estimates as at September 2011
17
Indonesia: Underperformed YTD over Fuel Price HikeConcerns
N.A-0.60%6.10%0.60%MSCI Indo relative 3M after2
-12% (YTD)14.40%1.90%-1.30%MSCI Indo relative 1M before2
N.A6.25%5.11%5.87%GDP growth (yoy) 1Q after2
6.39% (e)6.30%5.84%5.96%GDP growth (yoy) before2
1.8% (4W)2.5% (4W)5.1% (4W)5.1% (4W)
2.0% (2W)3.1% (2W)7.5% (2W)7.5% (2W)Incremental fuel expense as % ofincome, for lowest bracketmotorcycle/car owners3
3469223713001300GDP per capita (US$)2
N/A+1.5ppt+2.75ppt+0.8pptPolicy response (to the peak)2
3ppt (estimated)3.1 ppt9.3 ppt1.6 pptCPI change (to the peak)2
33.30%33.30%87.50%32.60%% Change1
4,500 (6000)4,500 (6000)2,400 (4500)1810 (2400)Price before (after)1
April, 2012May 25, 2008October 1, 2005March 1, 2005
1 Source: Citi, as at March 20122 Source: Bloomberg, Barings, as at March 20123 Source: Deutsche Bank, as at March 2012
Historical experience suggest limited impact to market performance
18
Key Investment Themes
ASEAN Healthcare- Hospitals both domestic secular growth and medical tourism play
Consumer / Modern Retailing- Mitra Adiperkasa, Home Product
ASEAN Tourism- Genting Singapore, Minor International, AirAsia
Infrastructure Plays- Semen Gresik, Indocement, Jasa Marga, DMC Holdings, Sino-Thai
Agriculture- Golden Agri, Charoen Pokphand Food, Olam
Asset reflation/Rising home ownership from falling interest rates- Summarecon Agung, Ciputra Development, Alam Sutera,
Frontier Exposures: Vinamilk (Vietnam), John Keells, Sampath Bank (Sri Lanka)
19
ASEAN HospitalsDefensive growth
India19%
Thailand38%
Singapore33%
Malaysia2%
Philippines8%
Global medical tourist expenditures
Source: Credit Suisse as at April 2012
20
35
58
0
1020
3040
5060
70
2006 2009 2012E
US$ bn
20% CAGR
SE and South Asia medical tourist expenditures
2.0
4.2
9.0
0
2
4
6
8
10
2006 2009 2012E
US$ bn
28% CAGR
Market share of medical tourism - Southeast andSouth Asia
Thailand has competitive pricing
43.512.012.09.0Hip replacement40.512.510.08.5Knee replacement
9.0
13.0
13.0
19.3
SG
62.5
57.5
159.5
125.0
USA
Spinal fusion
AngioplastyHeart valve replacementHeart bypass
Average (‘000 US$) THIN
7.05.5
13.011.0
10.39.3
11.510.0
Medical tourism an ASEAN strength supplementing domestic growth
20
ASEAN HospitalsDefensive GrowthThai healthcare expenditureper capita
Source: (Upper) World Health Organisation (WHO), UBSas at April 2012; (Lower) Ministry of Health, Credit Suisseas at April 2012
Added
Tooksomeprofit
Bought
405060708090
100110120
Apr-11 Jul-11 Oct-11 Jan-12 Apr-12
THB
3504505506507508509501050
IndexBGHMSCI Thailand
Healthcare penetration
Bangkok Dusit Medical Service(BGH): Price Performance
As the market leader, Bangkok Dusit MedicalServices is well positioned to benefit from theincreasing spending in private hospital sector.
BGH plans to add 270 beds (7% of total) over2 years in the Eastern and Southernprovinces.
The company is in a good position toconsolidate the smaller player and cement itsmarket leadership
Bought
4
5
6
7
8
9
10
Apr-11 Jul-11 Oct-11 Jan-12 Apr-12
THB
300350400450500550600650700750
IndexKHMSCI Thailand
Bangkok Chain Hospital(KH): Price Performance
Bangkok Chain Hospital operates six privategeneral hospitals and serves patients undersocial security scheme.
Public sector hospitals have becomeoverburdened due to rapid demand growthoutpacing the supply growth. Given its mid-market focus, KH is well positioned forpatients trading-up from overburdened publichospitals.
KH aims to open a new 324 bed premiumhospital in 1H 2012, which is a 26% increaseto KH’s total beds
Performance Source: Factset as at 19 April 2012
21
0500
1000150020002500300035004000
Indo
nesi
a
Phi
lippi
nes
Thai
land
Mal
aysi
a
Sin
gapo
re
Chi
na HK
Aus
tralia
Can
ada
US
A
Ger
man
y
Squaremeter
-5
101520253035404550
Indi
a
Indo
nesi
a
Phi
lippi
nes
Thai
land
Mal
aysi
a
Sin
gapo
re
Chi
na
Hon
gkon
g
Aus
tralia
Can
ada
US
A
Ger
man
y
Starbucks KFC Mcdonalds
ASEAN Modern RetailersA Secular Growth Theme
Retail space per thousand population No. of F&B outlets per millionpopulation
Source: Euromonitor, Barings, as at March 2012
Multi year growth story for these franchises
22Performance Source: Factset as at 26 April 2012
Fund Holding Stock ExampleMitra Adiperka (MAPI)
MAPI is the largest lifestyle retailer in Indonesiaby number of brands, with a portfolio includingdepartment store, fashion goods and F&B.
It provides a rare direct exposure to thediscretionary consumption growth in Indonesiadue to the rising middle class.
Both revenue and profits are expected to grow atover 20% for the next few years, on the back ofdouble digit growth in retail space and singlestore sales.
Portfolio includes Starbucks, Zara, Sogo, Seibu,etc
Price performance
Bought
Added
Added
1,800
2,400
3,000
3,600
4,200
4,800
5,400
6,000
6,600
7,200
Apr-11 Jul-11 Oct-11 Jan-12 Apr-12
IDR
2,600
3,900
5,200
6,500
7,800
9,100
10,400Index
MAPI MSCI Indonesia (RHS)
23
ASEAN InfrastructureMultiyear Growth Thematic
2010-2014 PPP Book Infrastructure as % of GDP
Source: Deutsche Bank, as at March 2012
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2005 2006 2007 2008 2009 2010
Philippines Indonesia India China
Underinvested and about to take off
PotentialProjects
PriorityProjects
Projects ReadyFor Offer
Sector / Sub Sector ProjectCost
(US$mn)QTY
ProjectCost
(US$mn)QTY
ProjectCost
(US$mn)QTY
3892972833327361Total
40455--------Power
--
--220
522
--
7592
--
--
--
--
47299Investment, US$mn
--
--3
6
--
18
--
--
--
--
--
----
--
--
--
--
36
--
--
--
--3
18
--
17
9
11
2
7
--
--57
1328
--
19261
9547
2859
274
1558
--
----
--
--
--
--
1
--
--
Oil and Gas
TelecommunicationSolid Waste/Sanitation
Water Supply
Water Resources
Toll Road
Railways
Marine Transport
Land Transport
Air Transport
Source: Morgan Stanley, CLSA, Barings, as at March 2012
24Performance Source: Factset as at 26 March 2012
Fund Holding Stock ExampleJASA Marga (JSMR)
JSMR is the largest toll road company inIndonesia, controlling total length of 545km or72% of Indonesian toll roads.
Organic growth comes from 3-4% traffic volumeincrease per annum and bi-annual tariffadjustment at inflation rate.
JSMR have nine toll road projects totaled 215kmin the pipeline, providing significant medium termgrowth.
Price performance
Bought
Added Added
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
Apr-11 Jul-11 Oct-11 Jan-12 Apr-12
IDR
2,8003,3003,8004,3004,8005,3005,8006,3006,8007,3007,8008,300
Index
JSMR MSCI Indonesia (RHS)
Indonesia n toll road summary
2
1
No
28,1723,12385TOTAL
17,375
10,797
28,172
N.A.
Investment(US$ m)
- Tender
- Under development
In the pipeline
Operational
Status Length(km)
No. ofSections
1,39932
97225
2,37257
75128
25
Baring ASEAN Frontiers FundCountry and Sector Allocation Strategy(as at 31st March 2012)
Source: Barings as at 31 March 2012*MSCI South East Asia Total Net Return Index
13.0
15.2
15.8
--
--
--
--
9.6
11.5
13.4
-0.6
5.6
13.4
--
--
--
--
9.8
13.4
9.0
EPSGrowth
12 monthforwardPE (x)
11.8
13.9
16.6
--
--
--
--
17.2
16.6
25.3
ROE
2012E (%)
14.720.0Thailand
Weight (%)
36.325.9Singapore
24.015.1Malaysia
5.54.3Philippines
--0.2Other
--0.9Vietnam
--2.3[Cash]
Bench-mark
Index*Portfolio
--2.7Sri Lanka
--3.4China
19.525.2Indonesia
Country Positions
--3.6[Funds]
29.124.5Banks
4.5--Utilities
10.51.3Telecom Services
0.42.4Health Care
4.77.9Materials
Weight (%)
6.210.5Real Estate
2.00.7Div. Financials
37.335.7Financials
7.06.0Energy
10.110.4Consumer Staples
9.810.5Consumer Disc
Bench-markIndex*
Portfolio
--2.3[Cash]
15.719.9Industrials
Sector Positions
5.7
5.3
3.4
2.7
2.3
0.9
0.2
-1.2
-8.9
-10.4
Underweight Overweight
-1.0
-1.6
4.3
-1.3
-4.6
-4.5
-9.2
4.2
3.6
3.2
2.3
2.0
0.7
0.3
Underweight OverweightUnderweight Overweight
26
Baring ASEAN Frontiers FundPortfolio Characteristics (as at 31st March 2012)
Portfolio Characteristics Market Capitalization Comparison
Risk Summary
* Benchmark Index: MSCI South East Asia Total Net Return Index.Source : MSCI, Style Research, Barings
Portfolio(%)
BenchmarkIndex* (%)
Over US$10 bn 42.8 61.8
US$1-10 bn 43.9 38.2
Below US$1 bn 11.0 --
Weighted Avg (US$ bn) 10.8 14.7
Tracking Error vs. Benchmark Index 4.7
Beta vs. Benchmark Index 1.1
Portfolio Risk 29.1
Benchmark Index Risk 26.0
10.9%16.6%EPS Growth(12 Mth Fwd)
Portfolio(%)
BenchmarkIndex* (%)
Forward P/E 12.8x 13.8x
Price/Book 2.2x 2.1x
ROE 21.7% 21.2%
27
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