Mobile World Investment Corp (HSX: MWG)

Title of presentation

Asia Commercial Bank (ACB)

ACB charts steady course to grow traditional segments

November 2018

Anh Dinh
Analyst
Anh.dinh@vcsc.com.vn

Copyright © Viet Capital Securities1

1
Investment thesis

• ACB has one the best retail/SME franchises in Vietnam. ACB allocates 90% of its bank loan book for retail and SME
customers, which allowed ACB to earn the second highest asset yields among Vietnam banks (just behind STB) in 2018.

• The best asset quality among Vietnamese banks. Despite the bank being highly exposed to retail and SME segments, ACB’s
prudent characteristics (90% of loans are collateralized) prompted the bank to limit its NPL ratio below 0.8%, lowest in the sector,
with negligible write-offs in 2018. Going forward, we expect ACB to strengthen its leading position in risk management by shifting
away from risky credit, e.g. real estate, and building its mortgage portfolio. We project its NPL ratio will go below 1%, with loan loss
reserves (LLR) to go above 100% during 2019-2021.

• Lending to SMEs still a focus going forward as a wedge to grow transaction banking fees, with preferential rates paid for
by higher yields in retail. We expect ACB to expand its retail book at an average of 16.3%, with mortgage growth in line with loan
growth at an average of 15.5%, which we forecast will allow ACB to raise its NIM consistently by 6 bps p.a. during 2019-2020. This
gain, however, will mostly be offset by lowering SME lending rates. Thus, in the medium term, we see NIM being capped and, in
the long term, CASA will eventually shine and net fee income will depend less on retail fees. We anticipate a 70-bp/p.a. increase in
CASA ratio and an average of 27.5% growth/p.a. in net fee income in the next two years, the latter growing off a low base.

• Strong capital adequacy assures sustainable credit growth. We forecast ACB to offload 41.44 million treasury shares in 2019
to create a comfortable CAR buffer ahead of the deadline of applying Basel II on 1/1/2020. Post transaction CAR (Basel I) is
projected to be 14.4%, large enough to absorb the top end of the current estimate of a 100-bp to 175-bp Basel II haircut.

2
 ACB charts steady course to grow traditional segments [O-PF +16.4%]
Industry: Banking 2018A 2019F 2020F 2021F
Report Date: Feb. 22, 2019 PPOP y/y 40.2% 14.4% 11.0% 15.2%
Current Price: VND30,500 NPAT y/y 142.5% 14.6% 11.5% 14.9%
Current Target Price: VND35,500 NIM 3.55% 3.55% 3.56% 3.57%
Last Target Price: VND35,500 NPL 0.73% 0.82% 0.92% 1.02%
CIR 47.8% 47.0% 47.0% 46.0%
Upside to TP: 16.4% Div/Sh (VND) - - - 1,000
Dividend Yield: 0.0% P/B 1.9x 1.4x 1.2x 1.0x
TSR: 16.4%

Market Cap: $1.7bn ACB Peers VNI Company overview

Foreign Room: $0.0bn P/E (ttm) 7.4x 10.7x 16.6x Founded in 1993, ACB is the fourth smallest bank
ADTV30D: $2.2mn P/B (curr) 1.9x 1.7x 2.6x among our coverage banks by total assets as of
State Ownership: 0.00% ROE 27.7% 18.8% 15.5% December 31, 2018. ACB has the fifth-largest
Outstanding Shares: 1.247bn ROA 1.7% 1.5% 2.5% network among our ten coverage banks. The bank
listed its shares in November 2006. The bank
Fully Diluted Shares: 1.289bn
primarily focuses on the retail and SME segments.

• We maintain our TP at VND35,500/share as we lower our forecast for 2019F-2020F ROE amid no cash dividend projections, which is fully offset
by our upward revision of a target 2019F P/B to 1.5x from 1.4x mostly thanks to significant improvement in capital adequacy.
• There are no significant changes in our 2019F-2023F earnings outlook. But we downgrade our rating from BUY to O-PF as a result of an
appreciation of 10.5% in the share price over the past three months.
• We project 13.1% and 11.8% diluted EPS growth in 2019 and 2020, respectively. We forecast ROAA and ROAE of 1.7% and 24.3% for 2019
and 1.7% and 21.3% for 2020, respectively.

3
2018 recap: robust earnings after removal of legacy assets
VND bn 2017 2018 Y-o-Y VCSC comments
A 9-bp rise in NIM and 16% growth in interest-earning assets helped achieve a 22.5% increase in
Net interest income (NII) 8,458 10,363 22.5%
NII.
Net fee income (NFI) (includes (1) Pure NFI increased by 26%.
1,425 1,739 22.0%
FX) (2) Gain from foreign currencies grew only by 2%.
(1) Loss from trading securities was VND78bn (USD3.3mn) vs a gain of VND25bn (USD1.1mn) in
2017.
Total Non-interest income (NOII) 2,981 3,670 23.1% (2) Gain from investment securities dropped sharply by 72.1% YoY.
(3) Net other income surged by 103.5% to VND1.8tn (USD77.3mn), of which ~95% was recovery
income including items related to “Group 6” companies and VAMC.
ACB reported a VND147bn (USD63mn) reversal of provision for other assets under operating
OPEX (6,217) (6,712) 7.9% expenses in 2018, which contrasts with a VND949bn (USD40.4mn) provision booked in 2017.
Normalized OPEX, without provision items, increased 30.2% in 2018.
Pre-provision operating profits
5,222 7,321 40.2%
(PPOP)
ACB cleared all its VAMC balance as well as legacy assets related to the “Group 6 companies” in
Provision expenses (2,565) (932) -63.7%
2017.
Net profit 2,118 5,137 142.5%
Net-interest margin (NIM)* 3.46% 3.55% 9 bps
Interest-earning asset yields (IEA)* 8.31% 8.22% -9 bps
ACB issued new VND4.3tn (USD187mn) valuable papers in November after this balance tumbled
Cost of funds (COF)* 4.94% 4.82% -12 bps by 41.1% YTD in 9M 2018 to VND4tn (USD172mn). Thus, the effect from new issuance has not
yet had a chance to make an impact on funding cost.
Cost to income ratio (CIR) 54.4% 47.8% -660 bps
(1) Write-offs/gross loans was 0.1% in 2018 vs 0.8% in 2017.
Non-performing loans (NPLs) 0.70% 0.73% 3 bps
(2) LLR stepped up to 152% in 2018 from 133% in 2017.
ACB received USD150mn (~1.7%) extra credit allowance from initial quota of 15% by the SBV in
Loan growth (YTD) 21.5% 16.2% -530 bps
November 2018.
Deposit growth (YTD) 16.6% 11.9% -470 bps
Source: ACB, VCSC

4
2019F: Sustainable profit growth with SME focus
2019F 2019F
2018 Y-o-Y VCSC comments
(Old) (New)
We forecast 15.5% growth in IEA with a stable NIM, which helps NII to grow by
Net interest income 10,363 11,808 12,051 16.3%
16.3%.
(1) Pure NFI forecast to increase by 28% to VND1.9tn (USD82mn).
Net fee income (include FX) 1,739 2,381 2,170 24.8%
(2) FX trading fees expect to grow by 5% to VND253bn (USD11mn).
We forecast ACB to receive VND1.2tn (USD51.5mn) of income from recovery of
Total NOII 3,670 3,766 3,755 2.3%
VAMC and “Group 6” companies related assets.
PPOP 7,321 8,265 8,377 14.4%
(1) Provision expenses rise as we anticipate a 7-bp and 10-bp higher NPL ratio and
Provision expenses (932) (947) (1,020) 9.4% write-offs/gross loans, respectively.
(2) LLR is forecast to be at 138%, down from 152% in 2018.
Net profit 5,137 5,846 5,885 14.6%
We expect retail and SME lending to increase by 17% in 2019. In addition, we
anticipate limited NIM expansion going forward as ACB is offering competitively low
NIM 3.55% 3.49% 3.55% 0 bps
SME lending rates to acquire new potential clients as well as retain current
customers.
Interest-earning asset yields 8.22% 8.32% 8.41% 19 bps
Cost of funds 4.82% 5.04% 5.09% 27 bps
CASA ratio 17.5% 16.2% 18.2% 70 bps
NPL ratio 0.73% 0.8% 0.8% 7 bps
Gross loans 230,527 264.748 267,412 16.0%
Customer deposits 269,999 322,018 313,198 16.0%
Total assets 329,333 377,652 376,419 14.3%
(1) We project that ACB is going to sell 41 million treasury shares in 2019 in order to
comply with BASEL II standard since the deadline is approaching on 1/1/2020. Total
Total equity 21,018 25,558 26,188 24.6% proceeds from this transaction is expected to be VND1.2tn (USD51.5mn), equivalent
to VND30,000/share.

(2) BASEL I CAR after the sale of treasury shares is at 14.4% vs 12.6% in 2018.
Source: VCSC

5
 Historical performance and VCSC’s forecast on ACB
OPEX, Provision expenses and PBT as % of TOI
NIM and NII (VND bn) (2016-2021F) TOI components (2016-2021F) (2016-2021F)
18,000 3.8% 100% 5% 2% 100%
14% 14% 10%
16,000 16% 15% 17% 22%
14% 23%
3.7% 80% 12% 12%
14,000 80% 46% 47% 47% 48%
12,000 3.6% 60% 16%
22%
60%
10,000
3.5% 40% 91% 74% 74% 76% 80% 81% 7% 6% 6% 6%
8,000
40%
6,000 3.4% 20% 62%
54%
4,000 48% 47% 47% 46%
3.3% 0% 20%
2,000 -7%

- 3.2% -20% 0%
2016 2017 2018 2019F 2020F 2021F 2016 2017 2018 2019F 2020F 2021F 2016 2017 2018 2019F 2020F 2021F

NII NIM (RHS) OPEX Provision expenses PBT

NII NFI Others

NPAT (VND bn) and growth (2016-2021F) Asset yields, funding costs and net interest spread NPLs, write-offs over gross loans and LLR
(FY2018) (FY2018)
8,000 160% 11% 5.0% 180%
10% 4.5% 160%
7,000 140%
9% 4.0% 140%
6,000 120% 8% 3.5% 120%
5,000 100% 7% 3.0%
100%
6% 2.5%
4,000 80% 80%
5% 2.0%
3,000 60% 1.5% 60%
4%
3% 1.0% 40%
2,000 40%
2% 0.5% 20%
1,000 20% 1% 0.0% 0%
- 0% 0%
2016 2017 2018 2019F 2020F 2021F BID CTG VCB VPB* STB ACB TPB MBB TCB HDB*

NPAT Growth (RHS) Funding costs Net interest spread NPL ratio Write-offs LLR (RHS)

Source: ACB, VCSC

6
Summary of VCSC’s valuation for ACB

We utilize two valuation methodologies to reach our estimated target price, including (1) a residual income method and (2) a target
P/B valuation with a 50% weighting assigned for each method.
• We decrease our residual income valuation by 8.3% to VND38,872 per share as we removed our previous forecasts for 2019
and 2020 cash dividends, which results in 0/120/180/150/110 bps lower ROE for 2019F-2023F, respectively.
• However, we increase our P/B valuation by 11.8% to VND32,202 per share as we revised up 2.5% in total equity post sale of
41 million treasury shares as well as our 2019F target P/B to 1.5x from 1.4x.
• Thus, we maintain our target price at VND35,500/share.

Fair value Weighting Contribution

Number of outstanding shares (bn) 1.289
Residual income 38,872 50% 19,436
Target P/B @ 1.5x 2019F 32,202 50% 16,101
Target Price (TP) 35,500
Current Price 30,500
Upside to TP (%) 16.4
Dividend yield (%) 0.0
TSR (%) 16.4
2019F P/B at TP 1.67x
Rating OUTPERFORM
Source: VCSC

7
Residual income model

Previous Report Revised

5-year Government bond (%) 4.5 4.5
Beta 1.0 1.0
Market risk premium (%) 8.4 8.4
COE (%) 12.9 12.9
Residual income
2019F 2020F 2021F 2022F 2023F
ROE (Beginning period) 28.0% 23.9% 22.2% 21.2% 19.8%
COE 12.9% 12.9% 12.9% 12.9% 12.9%
Residual income 15.1% 11.0% 9.3% 8.3% 6.9%
Equity value (Beginning period) 21,018 27,481 34,042 40,291 47,551
Residual income (RI) 3,174 3,016 3,150 3,355 3,274
PV of RI 2,811 2,366 2,189 2,065 1,785

Sum PV of RI 11,216
PV of Terminal value (3.0% g) 17,856
Beginning EV 21,018
Current equity value 50,090
Number of shares outstanding (bn) 1.247
Fair value per share (VND) 40,163
Source: VCSC; (*) Values in VND billion unless otherwise stated

8
Peer comparison

• Our observation suggests that ACB has consistently traded at an average premium of 5% to the peer median trailing P/B in the
past 12 months. As of 2/20/2019, ACB traded at a 5.8% premium to the peer median trailing P/B and a 9.5% premium to the peer
median in 2019F P/B.
• Given ACB’s top-notch asset quality and sustainable core growth outlook with 2019F ROAE and ROAA at 24.3% and 1.7%,
respectively, our view on this bank is positive. We believe that ACB should be traded at a premium to peers and target a 2019F P/B
at 1.5x.

Market
Bloomberg Equity
Cap. P/E P/B ROE ROA NPL
Ticker Multiplier
(USD bn)
2018 2019F 2020F 2018 2019F 2020F 2018 2019F 2020F TTM 2018 2018
BID VN 5.01 15.08 16.97 9.74 2.15 1.68 1.30 15.08 14.5% 17.2% 0.59% 24.01 1.69%
CTG VN 3.31 14.32 15.23 7.34 1.16 1.05 0.92 14.32 9.2% 14.4% 0.48% 17.26 1.56%
MBB VN 2.05 7.78 6.82 5.79 1.39 1.26 1.06 7.78 20.4% 20.3% 1.81% 10.60 1.32%
VCB VN 9.45 14.40 16.48 13.74 3.30 2.75 2.36 14.40 21.7% 21.8% 1.39% 16.79 0.98%
VPB VN 2.24 7.06 6.27 5.45 1.51 1.14 1.03 7.06 21.5% 20.7% 2.45% 9.30 3.51%
STB VN 1.00 13.10 13.35 9.41 0.95 0.88 0.79 13.10 7.7% 10.3% 0.46% 16.48 2.11%
HDB VN 1.26 10.74 10.86 14.27 1.95 1.73 1.34 10.74 20.3% 17.6% 1.40% 12.84 1.53%
TCB VN 4.15 11.04 9.81 7.92 1.86 1.57 1.33 11.04 17.2% 17.8% 2.87% 6.20 1.75%
TPB VN 0.77 9.68 6.83 5.13 1.71 1.11 1.17 9.68 18.0% 19.7% 1.39% 12.80 1.12%
Median 11.04 10.86 7.92 1.71 1.26 1.17 20.1% 18.0% 17.8% 1.39% 12.84 1.56%
ACB VN 1.63 7.40 6.88 6.41 1.81 1.38 1.23 27.7% 24.9% 21.3% 1.67% 15.67 0.73%
Source: Bloomberg as on 2/20/2019

9
Sensitivity matrix
• The above sensitivity matrix illustrates a ‘fair value’ P/B multiple for ACB at 2.15x using the Gordon Growth Model with 2019F ROE of
24.3%, cost of equity at 12.9% and terminal growth of 3.0%. This derived P/B multiple is 28.7% higher than our 2019F projected P/B
of 1.67x. There are two reasons for this difference:
• ACB is running behind peers in terms of developing high fee generating businesses, such as bancassurance, transaction banking,
wealth management and digital banking, which is a constraint on improving ROA over the forecast period relative to peers. 2018
ROAA stood at 1.67%, which is lower than MBB (1.81%) and TCB (2.87%).
• Moreover, the current leverage ratio of the bank remains high at 15.7x (vs a peer median of 12.8x) (please see Figure 12). And we
view this (and therefore 2019F ROE) as unsustainable over the longer term as leverage will have to fall in order to achieve a
comfortable CAR under Basel 2.

Sensitivity of ‘fair’ P/B for ACB for different ROEs and terminal Vietnam banks P/B (x-axis) and ROE (y-axis) (2019F)
growth rates derived from the Gordon growth model, ceteris paribus.
3.0
2019F ROE VCB
2.5
20.3% 22.3% 24.3% 26.3% 28.3%
1.5% 1.65 1.82 2.00 2.18 2.35 2.0
HDB
2.0% 1.68 1.86 2.05 2.23 2.41 TCB
Terminal 1.5
2.5% 1.71 1.90 2.10 2.29 2.48 BID TPB ACB
growth (g) VPB
3.0% 1.75 1.95 2.15 2.35 2.56 1.0 CTG
STB MBB
3.5% 1.79 2.00 2.21 2.43 2.64 0.5
4.0% 1.83 2.06 2.28 2.51 2.73
-
5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Source: VCSC; Valuation based on closing price on 2/20/2019

10
Financial statements

P&L (VND bn) 2018A 2019F 2020F 2021F B/S (VND bn) 2018A 2019F 2020F 2021F
Interest inc. 24,015 28,508 32,731 37,333 Cash & equiv. 6,129 5,950 6,855 7,872
Interest exp. (13,652) (16,458) (18,767) (21,234) Bal. with SBV 10,684 7,516 7,319 7,221
Net interest inc. 10,363 12,051 13,964 16,099 Due from FIs 18,770 24,401 30,501 35,076
Net fee income 1,739 2,170 2,701 3,323 ST investments 8,923 11,399 14,288 17,489
Other NOII 1,931 1,585 879 408 Net cust. loans 227,983 264,382 303,859 349,766
Total NOII 3,670 3,755 3,580 3,731 HTM securities 45,635 52,458 60,327 67,566
Total operating inc. 14,033 15,806 17,544 19,830 LT investments 156 146 139 132
Non-interest exp. (6,712) (7,429) (8,246) (9,122) Fixed assets 3,481 3,643 3,812 3,991
Other G&A exp. - - - - Other assets 7,573 7,819 8,619 7,305
Total operating exp. (6,712) (7,429) (8,246) (9,122) Total assets 329,333 377,712 435,718 496,417
PPOP 7,321 8,377 9,298 10,708 - - - -
Provision exp. (932) (1,020) (1,096) (1,282) Bal. from SBV 3,074 - - -
Other inc./exp. - - - - Bal. from FIs 20,718 20,926 21,135 21,346
Pre-tax profit 6,389 7,357 8,202 9,427 Other funds 160 160 160 160
Taxes (1,252) (1,471) (1,640) (1,885) Cust. deposits 269,999 313,198 363,310 419,623
Net profit 5,137 5,885 6,561 7,541 Other fin inst’ns 38 - - -
Minorities/pref divs - - - - Valuable papers 8,291 9,791 10,791 8,591
Attributable profit 5,137 5,885 6,561 7,541 Other liabilities 6,035 6,156 6,280 6,406
EPS (VND) 3,999 4,523 5,056 5,829 Total equity 21,018 27,481 34,042 40,291
DPS (VND) - - - 1,000 MI - - - -
Liabilities & SE 329,333 377,712 435,718 496,417

Source: ACB, VCSC

11
Financial ratios

RATIOS (%) 2018A 2019F 2020F 2021F RATIOS (%) 2018A 2019F 2020F 2021F
Growth Profitability
Loan growth 16.2 16.0 15.0 15.0 NIM 3.55 3.55 3.56 3.57
Deposit growth 11.9 16.0 16.0 15.5 IEA yields 8.22 8.41 8.35 8.28
TOI growth 22.7 12.6 11.0 13.0 Funding costs 4.82 5.09 5.08 5.03
PPOP growth 40.2 14.4 11.0 15.2 CIR 47.8 47.0 47.0 46.0
NPAT growth 142.5 14.6 11.5 14.9
ROE decomposition
Asset quality Pre-prov. NIM 3.38 3.41 3.43 3.45
Group2 ratio 0.2 0.2 0.3 0.3 Provisions (0.30) (0.29) (0.27) (0.28)
NPL ratio 0.7 0.8 0.9 1.0 Post-prov. NIM 3.07 3.12 3.16 3.18
Non-interest
LLR 151.9 137.9 129.3 107.5 1.20 1.06 0.88 0.80
inc.
Prov exp./ loans 0.4 0.4 0.4 0.4 Operating exp. (2.19) (2.10) (2.03) (1.96)
Taxes (0.41) (0.42) (0.40) (0.40)
Liquidity ROAA 1.67 1.66 1.61 1.62
CAR under Basel I 12.6 14.4 15.4 15.5 Equity Mult. (x) 16.56 14.58 13.22 12.54
Regulated LDR 78.6 78.3 78.4 79.3 ROAE 27.73 24.27 21.33 20.29
Source: ACB, VCSC

12
History of VCSC’s recommendations for ACB

50,000 O-PF
41,900 O-PF O-PF
45,000 38,700
38,700 BUY
40,000 35,500

35,000
30,000
O-PF
25,000 35,500
20,000 M-PF*
22,100
15,000
10,000
5,000
0
Feb-18 May-18 Aug-18 Nov-18 Feb-19
Closing prices Target prices

Source: Bloomberg, VCSC; (*) From 9/11/2017

13
Company overview

Established in 1993, Asia Commercial Bank (ACB) is the fourth-smallest bank among our 10 coverage banks by total assets as of
December 31, 2018.
• As of December 2018, there were 358 ACB branches and transaction offices in Vietnam, which leaves ACB with the fifth-largest
network among our coverage banks.
• The bank’s business model primarily focuses on the Retail and SME segments, which account for 90% of gross loan book. 90% of
the lending book is secured with collateral.
• Earnings and asset quality at ACB rank at the top among Vietnamese private banks, with FY 2018 ROE at 27.8% (highest among
peers) and credit costs at 0.4% (lowest among peers).
• FY2018 was a turning point for ACB as the bank finished cleaning up its VAMC and “Group 6” related problem assets in 2017,
closing a five-year restructuring effort.

14
Company overview – Shareholder structure

5.0%
6.8%

5.0% 30%

70%
83.2%

Dragon Financial Holdings Ltd. Sather Gate Investments Ltd.

Foreign Local
Whistler Investments Ltd. Others
Source: ACB
Source: ACB

15
Company overview – Interest-earning assets structure

FY2017 FY2018
3.1%
1.2% 1.9% 3.4%
2.2%
4.1%

20.0%
17.3%

73.6% 73.3%

Loans to Credit institutions Loans to Credit institutions

Balances with State Bank of Vietnam
Balances with other credit institutions
Investment & trading securities
Loans & advances to customers
Source: ACB
Balances with State Bank of Vietnam
Balances with other credit institutions
Investment & trading securities
Loans & advances to customers
Source: ACB

16
Company overview – Capital adequacy and asset quality

Non-performing loans (NPLs) and loan loss reserve (LLR) Tier 1 capital and capital adequacy ratio (CAR)

155% 0.9% 14%

150% 12% 12%

0.84% 0.9%
145%
10%
9% 9%
0.8% 9%
140%
0.78% 8%
8%
135% 0.73% 0.8%
6%
130% 0.70% 0.70%
0.7%
4%
125%
0.7%
120% 2%

115% 0.6% 0%
Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18

NPL + VAMC (RHS) LLR (LHS) Tier 1 CAR (Basel I)

Source: ACB Source: ACB

17
Disclaimer

Analyst Certification of Independence

I Anh Dinh, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific
recommendations or views expressed in this report. The equity research analysts responsible for the preparation of this report receive compensation based upon various factors, including the quality and accuracy of research, client feedback,
competitive factors, and overall firm revenues, which include revenues from, among other business units, Institutional Equities and Investment Banking.

VCSC and its officers, directors and employees may have positions in any securities mentioned in this document (or in any

related investment) and may from time to time add to or dispose of any such securities (or investment).VCSC may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a
primary market in issues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related
investment.

Copyright 2013 Viet Capital Securities Company “VCSC”. All rights reserved. This report has been prepared on the basis of information believed to be reliable at the time of publication. VCSC makes no representation or warranty regarding the
completeness and accuracy of such information. Opinions, estimates and projection expressed in this report represent the current views of the author at the date of publication only. They do not necessarily reflect the opinions of VCSC and are subject
to change without notice. This report is provided, for information purposes only, to institutional investors and retail clients of VCSC in Vietnam and overseas in accordance to relevant laws and regulations explicit to the country where this report is
distributed, and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction. Investors must make their investment decisions based upon independent advice subject to their particular financial situation
and investment objectives. This report may not be copied, reproduced, published or redistributed by any person for any purpose without the written permission of an authorized representative of VCSC. Please cite sources when quoting.

U.K. and European Economic Area (EEA): Unless specified to the contrary, issued and approved for distribution in the U.K. and the EEA by VCSC issued by VCSC has been prepared in accordance with VCSC’s policies for managing conflicts of interest
arising as a result of publication and distribution of investment research. Many European regulators require a firm to establish, implement and maintain such a policy. This report has been issued in the U.K. only to persons of a kind described in Article
19 (5), 38, 47 and 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (all such persons being referred to as "relevant persons"). This document must not be acted on or relied on by persons who are not relevant
persons. Any investment or investment activity to which this document relates is only available to relevant persons and will be engaged in only with relevant persons. In other EEA countries, the report has been issued to persons regarded as
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