Investing in Asian Equities_JK

This presentation is intended for professional and qualified investors only

Investing in Asian equities with a value approach

LFP JKC China Value

LFP JKC Asia Value

March 2013


Table of contents

JK Capital Management Ltd

7

LFP JKC China Value

21

36

49

LFP JKC Asia Value

Asia rising: One continent 54

61

66

80

Appendices

84

94

2



Overview


JK Capital Management Ltd. Company information

4

JK Capital Management is a Hong Kong based fund management company. It is owned by Randolph Kwei, a well-known

local investor, and by Fabrice Jacob, a fund manager who moved to Hong Kong 18 years ago. JK Capital Management is the

result of the merger of their companies four years ago. Out of the five long-only products currently managed, two of them enjoy

the longest and most successful track records available on the market.

JK Capital Management Ltd. is :

18 years of existence under the supervision of the Hong Kong Securities and Futures Commission

Two founders with extensive backgrounds in banking and private equity

Eleven employees including four specialized analysts

US$350 million under management

Two UCITS IV SICAVs for European investors: LFP JKC China Value with a 15- year track record and LFP JKC Asia

Value

A managed account for US-based manager Russell Investments under the China Value strategy

A managed account for Danish manager Danske Capital under a PIPE version of the China Value strategy

A Limited Partnership for US investors: JK Asian Invest LP with an 18- year track record

A coverage of equity markets spanning nine countries of Asia

A specific expertise in bottom-up stock picking with special emphasis on due diligence


JK Capital Management Ltd. Company structure

5

I.T.* Garrick Chan

Administration Bela Chu

Compliance* Compliance Asia

CFO/Risk Manager Alex Leung, CFA

Accounting* Edmund Lo

LFP JKC China Value PM: Fabrice Jacob

JK Asian Invest

LP PMs: Randy Kwei &

Fabrice Jacob

LFP JKC Asia Value PM: Fabrice Jacob

Analysis

Joel Chow CFA

Terence Tsui CFA

Patrick Tang

Yu Tao Zhang CFA

Research

Walter Woo

Jackie Xu

Product Specialist Guillaume

Dhamelincourt

Chief Executive Officer Fabrice Jacob

27 years of experience in corporate finance

and portfolio management including 18 in

Asian equity markets

35 years of experience in banking and

portfolio management in Asia

Chairman Randy Kwei

Administration Finance and

compliance Fund Management Equity Research

Business

Development

*delegated Russell Investments Managed Account

PM: Fabrice Jacob

Walter Woo

Jackie Xu

Middle Office

Support

Danske Capital Managed Account

PMs: Fabrice Jacob &

Joel Chow


Yu Tao Zhang, CFA

Born in Shanghai. Bachelor degree in Commerce from the University of Sydney

Property, infrastructure and commodities

China, Indonesia, Malaysia and the

Philippines

Joined JK Capital in

2011

Joel Chow, CFA

Born in Macau. Bachelor degree in

science, Hong Kong University.

Industrial and consumer China, Korea, Thaland

and Indonesia


2006

Analyst Education Sector coverage Geographical specialisation JKC

Randy Kwei, PM

Born in Shanghai and having studied in the US Randy

moved back to Hong Kong 33 years ago.

Before the creation of his own management company in

1994, Randy had many different functions in the

investment and private equity sector in the US, Asia and

the Middle East.

Fabrice Jacob, PM

Born in France, Fabrice has been in Hong Kong for 18 years.

Private equity specialist, Fabrice has a solid experience in

Asian especially Chinese- investments.

Fabrice has been the manager of LFP JKC China Value and

LFP JKC Asia Value since inception.

JK Capital Management Ltd. The management team

Terence Tsui, CFA

Born in Singapore. Bachelor in

Engineering, Chinese University of HK

Bank, insurance and shipping

China, Indonesia, Singapore, Thaland and

the Philippines


2010

Patrick Tang

Bachelor of Science in Engineering Physics, HK

Polytechnic University

Technology and healthcare

Korea, Taiwan and China Joined JK Capital in

2011

6



Management philosophy and investment process


Investment Philosophy A value approach

JK Capital targets a superior long-term absolute return taking advantage of the extensive experience of its team, its knowledge of Asian dynamics and economics and its detailed analysis of company fundamentals and risk factors.

LFP JKC China Value and LFP JKC Asia Value target value companies, i.e. companies that are not on the radar screens of most sell side analysts, rarely represented in the indices and therefore trading with lower multiples than the indices. Value companies generally have positive cash flows, strong dividend payout policies, low debt levels and cheap valuations.

The country weighting of the Asian fund is based on the macro outlook and currency dynamics with divergence from indices.

For the China exposure of the Asian fund, the fund takes advantage of the detailed knowledge the management team has of the Chinese market and the best picks of LFP JKC China Value.

LFP JKC China Value and LFP JKC Asia Value are Value funds as opposed to a Growth funds.

8

Source: Factset, CLSA Asia-Pacific Markets January 2013

Note: Backtest based on MSCI Asia ex-Japan with three or more analyst coverage. Performance is MSCI

weighted US-dollar price return and factor quintiles are rebalanced on monthly basis.

Breakdown of MSCI Asia ex-

between Value stocks and Growth stocks


Investment process A Bottom-Up approach in 4 steps

Quantitative

analysis

Stock selection

Government

policies and

incentives

Corporate

governance

Management

Macro Overlay Financial approach Private Equity approach

Portfolio

Construction 40-50 stocks

Top-down

Analysis

Country allocation

Sector allocation

Face-to-face

meetings Market timing

Correlation with

stocks in the

portfolio

Ratio filtering *

Indicators analysis

Qualitative

analysis

* Launched every 2 days by analysts and once a week by the portfolio manager

Hong Kong/

China

Taiwan

Korea

Singapore

Philippines

Thailand

Indonesia

Malaysia

shares

Investment

Universe

9


Investment process Step 1: Investment universe

Sourcing of

investment ideas:

Definition of a universe

Contacts with analysts and PMs within the industry through

events such as roadshows and conferences

Automatic filtering of the universe (deletion of ghost

Companies under scrutiny are mostly listed in Hong Kong,

Taiwan, Korea, Singapore, Philippines, Thailand, Indonesia

and Malaysia. The bulk of their activities is in Asia.

10


Investment process Step 2: Macro Overlay

Defining the countries with

the most attractive profiles

and their sector specific

growth drivers

Political risk

Economic analysis, risk/return profile

Currency expectations

Country specific sectorial analysis

Country/sector correlation analysis

11


Investment process Step 3: Quantitative analysis

Quantitative analysis

EV/EBITDA < 8x *

P/E < 12x *

PEG < 1x

P/Book


Investment process Step 4: Qualitative analysis

Qualitative analysis

Connected transactions

Cash flow

Financial investments

Receivables and inventory

Debt profile

Share issues

Salaries and stock option plans

Family relationships between directors and management

Changes in management

Identity of Independent Non-Executive Directors

Acquisition of assets outside the core business

Once these aspects are studied, the team proceeds with a due diligence of the company and its management

through discussions with sell-side analysts, local press reports and the analysis of the IPO prospectus when the

company was first listed.

13


Investment process

Meeting with the management of the company under review: The analysts or the Portfolio Manager systematically

contact the management of the company under review. The purpose is to identify catalysts that may have an impact on

the company valuation going forward.

Whenever possible on-site visits are organised, assuming the conclusions reached through the prior steps are positive. A

member of the team (analyst or Portfolio Manager) will visit the company on-site to inspect its facilities. These site

visits allow the team to double-check information gathered previously and to see how the company operates (through

meetings with factory managers, analysis of the production cycle, of the inventory of raw materials and finished goods, of

employees shifts...). This is systematic for mainland China investments where corporate governance can be an issue.

In total, more than 700 meetings and site visits are organized

throughout Asia by members of the team every year

14


Investment process Step 5: Investment decision and portfolio construction

Investment decision The team gathers daily to discuss all work in progress. Investment

decisions are made collectively during investment committees. In case

of disagreement, the Portfolio Manager has the final word.

Technical analysis This analysis is performed by two team members who have to

determine the best point of entry for each new position.

Portfolio construction Prior to adding a new stock to the portfolio, the team verifies its impact

on the correlation matrix and the portfolio beta.

Concentrated portfolio : 40 to 50 stocks

under normal market conditions

15

This presentation is intended for professional investors and financial advisors only


Risk management


Risk management A rigorous process

Liquidity

Portfolio hedging

Corporate governance

Bankruptcy risk

Portfolio construction

Portfolio diversification

75% of the portfolio can be sold in one day

Active cash management

Transparency is fundamental

Rigorous corporate governance due diligence

Use of correlation matrices

UCITS IV regulations + specific guidelines

17


The Risk Manager produces every week a Risk Management Report that highlights certain quantitative risk

parameters, allowing the Portfolio Manager to assess the overall portfolio risk:

VaR Monte Carlo 95% and 99%

Sector VaR

Stress tests

Portfolio concentration, largest price and volume drops, liquidity risk analysis

The Risk Manager also checks that regulatory limitations attached to the UCITS IV format as well as internal

limitations are all met:

10% maximum exposure to any single stock

40% maximum exposure to stocks that individually represent more than 5% of the portfolio

75% of the portfolio must be able to be liquidated in one trading day

10% maximum exposure per sector

Risk management Risk control

18


Systematic sale of a stock in case of:

Unjustified connected transaction between the company and its controlling shareholder

Sudden diversification

Negative rumours in the market

Partial sale of a stock in case of:

PEG >1

Exposure reaching 6% of the portfolio

Strong correlation with a new stock

20% drop from the recent peak

Partial sale of the portfolio in the event of an uncertain macro context and strong market volatility.

Risk management Stop-loss policy

19


Risk Management EUR/USD Hedging

EUR shares are systematically hedged against USD shares.

Euro-denominated shares in the fund are hedged against fluctuations in the Euro/USD exchange rate to give the

opportunity to Euro-based investors to limit currency risk exposure. As a result, performances of Euro and USD classes of

shares are very similar (however not identical due to the cost of hedging and to tracking errors) whatever the volatility of

the Euro/USD exchange rate.

Hedging is implemented by Banque Degroof Luxembourg, the administrator of the fund, using monthly futures contracts,

daily checks and adjustments and using a tracking error objective, calculated over a period of 52 weeks, of 0.8%.

The cost of hedging is 1bp per month applied to the bearer of the Euro denominated shares.

20


LFP JKC China Value

China macro picture: The challenges to nurture growth


GDP growth recovery

After having slowed down through 2011 and 2012, the long awaited rebound has appeared and is expected to

carry on through 2013, although it should be a mild rebound

22

Full year GDP in 2012 rose 7.8%, above the expectations of 7.7%; the forecast for 2013 is 8.1%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

China real GDP growth YoY (quarterly figures annualised)

Source: Bloomberg, CICC Research January 2013

CICC

Forecast


Rebounding industrial activity

The Chinese industrial sector rebound is gaining momentum with SMEs catching up on SOEs

23

New order less inventory: official vs HSBC/Markit

Source: Capital Economics, CFLP, NBS, HSBC/Markit, Bloomberg - December 2012

Source: National Bureau of Statistics December 2012 Source: Capital Economics December 2012

35

40

45

50

55

60

Official and HSBC/Markit PMIs

Offical PMI HSBC/Markit Flash PMI

Source: CEIC, HSBC/Markit, Bloomberg - January 2013

-10

-5

0

5

10

15

20

25

30

(% Y

oY

)

Industrial value-added and electricity output growth

Indutrial value-added

Electricity output

40

45

50

55

60

Official Manufacturing PMI by Company Size (2012)

Headline PMI Large firm PMI

Medium-sized firm PMI Small firm PMI

-10

-5

0

5

10

15

New Order - Inventory (Official)

New Order - Inventory (HSBC/Markit)


Investment and real estate still strong

Though not of the same scale as in 2008, investments have been the primary tool so far, both through

State-Owned Enterprises (SOE) and infrastructure projects

24

Source: CEIC Data, National Bureau of Statistics, Capital Economics - December 2012

0

20

40

60

Fixed Investment (real, 3m % y/y)

Investment by state-owned and state-held firmsTotal urban fixed investment

Source: Capital Economics - September 2012

Property on the other hand is kept on a short leach but is still seeing strong flows

0

100

200

300

400

500

600

700

800

(mil

lio

n s

qm

)

Sales by Gross Floor Areas (GFA) breakdown by different tier cities

Tier 1 Tier 2 Tier 3

Source: CLSA Asia-Pacific Markets - September 2012

-10

0

10

20

30

40

50

(% YoY) Fixed Asset Investment (nominal, 3m % y/y)

FAI in infrastructure Residential real estate investment

Average daily sales volume in 42 Chinese cities (30

day moving average)

Source: Wind, CEIC, China Confidential December 2012


Consumption growth is intact

The consumption story in China is still alive pushed by a stable employment environment and income growth

25

0

5

10

15

20

Real Per Capita Urban Income (% y/y)

Urban Disposable Income Real GDP

Source: Capital Economics December 2012

0.8

0.9

1.0

1.1

Ratio of Job Openings to Job Seekers at Local Employment Bureaus

More jobs than job seekers

More job seekers than jobs

Q4 2008


40

45

50

55

60

65

70

40

45

50

55

60

65

70

2004 2005 2006 2007 2008 2009 2010 2011 2012

Households - Current & Future Income

Future income confidence Current income sentiment


Still strong wage income growth support retail sales

Source: HSBC Global Research, Bloomberg December 2012

-10

-5

0

5

10

15

20

25

30(%yr)

Retail Sales Total Wages


The New Leaders Agenda Challenges ahead

Although growth is rebounding China will need to address fundamental challenges to nurture it.

26

Burundi Niger

North Korea

Botswana Brazil China

Oman Malaysia

Taiwan Switzerland

U.S. Hong Kong Singapore

Japan

Saudi Arabia

Mexico

Peru Indonesia

Philippines

Thailand

0

1

2

3

4

5

0 1 2 3 4 5

20

08

pe

r c

ap

ita

in

co

me

rela

tive

to

Un

ite

d S

tate

s (

log

of

%)

1960 per capita income relative to United States (log of %)

Middle Income Trap

Low-income

"trap"

Middle-income

"trap"

Becoming poor

From low-

income to

middle-income

Middle-

income to

high-

income

Staying rich

Source: World Bank, Maddison Database

0

20

40

60

80

100Corruption Perception Index

CPI 2007 Score CPI 2012 Score

0

20

40

60

80

(%) Consumption & Investment (% of Nominal GDP)

Household & Government Consumption

Investment & Inventory Building

Source: National Bureau of Statistics, Capital Economics , CICC Research Dec 2012

Source: Transparency International December 2012

Year 2008 0.491

Year 2012 0.474

0.47

0.48

0.49

0.50

China Official Gini Coefficient

Source: National Bureau of Statistics - January 2013; United Nations (2011)

International Comparison (2011)

China Official 0.474

Belgium 0.330

Germany 0.283

Finland 0.269


The New Leaders Agenda Urbanisation

Urbanisation was highlighted in most speeches delivered by future government members, it is key to the

development of China and it covers three main themes:

The pursuit of the migration from rural areas to cities

The modernisation of rural China into a modern and integrated agricultural area

The reform of the Hukou system to leave fewer people living outside the education and welfare system

27

Beyond urbanisation this reform paves the way to a fiscal reform to deal with the funding of local governments

and to the development of welfare system

0

10

20

30

40

50

60

(%)

The rise and rise of urbanisation

China urban population as % of total

0

10,000

20,000

RMB

Urban Income Exceeding Rural Income in China

(Per Capita Annual Income)

Urban Household

Rural Household

0

20

40

60

80

100

Urbanisation: Following in the footsteps of the US

US China (upper scale)

Rural population as % of total

Source: Bloomberg December 2012 Source: Bloomberg December 2012 Source: US Census Bureau, World Bank, HSBC December 2012


The New Leaders Agenda Funding reform

Until now the burden of fundraising was for the State and banks to bear which gave limited options to private

companies and put too much weight on State finances. With the increasing costs of urbanisation, including

welfare, new funding sources had to be developed.

Beijing wants to lift the share of direct and promote the development of the

bond Xi Jinping, 17th November 2012

28

This reform is particularly important as it leads the way for a stronger private sector that can occupy the space

that until now was reserved to SOEs.

The Meng Xi Hua railway line: for the first time an infrastructure project saw 15.7% of its equity sold to private

investors.

0

50

100

150

200

250

300

350

The surge of corporate bond issuance

Corporate Bond Issuances (RMB bn)

0

100

200

300

400

500

Local Government Financing Vehicle bond issuance

LGFV Bonds (RMB bn)

Source: HSBC December 2012 Source: CIA, HSBC December 2012 Source: Bloomberg, PBOC, HSBC December 2012

0

50

100

150

200

250

China's bond market lags Asian peers (% of GDP)

Government Debt (%) Corporate Debt (%)


The New Leaders Agenda Liberalisation of the RMB and internationalisation of equity markets

Long criticised for being under valued the RMB appears to be now close to its fair value (trade balance almost

neutral) leaving the door open to liberalisation.

29

Pushing through this reform is essential if China wants to keep growing and become the second top global player

in terms of influence the same way it currently is the second largest economy in the world

0%

2%

4%

6%

8%

10%

12%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

China current account and foreign reserves

China FX Reserves (USD bn, L.H.S.)

Current acc. / GDP (%, R.H.S.)

0

5

10

15

20

25

30

35

-

1,000

2,000

3,000

4,000

5,000

6,000

RMB trade settlement taking off

Trade settlement in RMB (bn)

RMB trade settlement as % of China's total trade (%)

QFII Investors Expanding

Source: CEIC, HSBC December 2012 Source: Bloomberg, National Bureau of Statistics Dec 2012 Source: Bloomberg, HSBC December 2012


The New Leaders Agenda Fight corruption

recent change of government was stained very publicly by many scandals. It led to a strong outrage of the

Chinese population expressed publicly through modern media and it pushed the fight against corruption to the

top of the new agenda.

Already a few symbolic actions took place:

Very public high officials arrests

The announced reform of labour camps

A meal policy for all officials

The long banned for movie was aired on CCTV4 on

14th December 2012 during prime time, uncut

Activism for cleaner Chinese politics through blogs is now accepted

30

Such measures are still very symbolic but social activism is pushing for

more which gives us confidence that the new government will carry on in

this direction


The New Leaders Agenda

What we expect:

Our GDP forecast : 8.1% - 8.5%

Inflation : ~3%

Overcapacities management

1 or 2 RRR cuts

Loan growth: 15%

An extended but mild rebound of the

economy

Reforms to be gradually introduced in no

hurry

31

What we do not expect:

A strong stimulus

A strong rebound of the economy

Interest rates cuts

Reforms to be swiftly implemented

Drastic changes in economic policies


0

10

20

30

40

50

60

Historical A/H - Shares Price/ Earnings

Shanghai Composite Heng Seng Index

-20

0

20

40

60

80

100

A-Shares Premium/ Discount over H-Shares width band

Premium/ Discount width band (%)

Investing in Chinese Growth

32

Source: Bloomberg December 2012 Source: Bloomberg, National Bureau of Statistics Dec 2012 Source: Bloomberg December 2012

The question of the Hong Kong stock exchange vs the Shanghai and Shenzhen stock exchanges is more and

more relevant as the topic of the opening of Chinese markets is at the top of the new agenda.

While the domestic market tends to open through QFIIs and both market trade at similar levels we favour the H

share market for:

The quality of the regulator SFC vs CSRC

The quality of the companies: the best Chinese companies favour the Hong Kong market to gain access to foreign

investors

The involvement of foreign and institutional investors

The reporting standards imposed on listed companies

The stringency of the HK regulator towards new listings at a time when the A share market is at risk of over-flooding

0.1 % 1.6 %

share market based on QFII quotas


-

50

100

150

200

250

Average daily turnover of China and Hong Kong stock markets

Shanghai + Shenzhen (RMB bn) Hong Kong (HKD bn)

Investing in Chinese Growth

33

Source: Bloomberg January 2013 Source: Bloomberg January 2013

17,629

3,727 3,501 3,462 3,141 2,085 1,742 1,615 1,400 1,320

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Bloomberg World Market Capitalisation (Billion USD)

Source: Bloomberg - January 18th 2013

-

1,000

2,000

3,000

4,000

5,000

Market capitalization for China and Hong Kong

Shanghai + Shenzhen (USD bn) Hong Kong (USD bn)


China has the highest GDP growth in the world (7.8% in 2012) and the second cheapest valuation in the region

China trades at a 18% discount to Asia Pacific ex Japan, 29% to Indonesia and 44% to the Philippines

Markets are still pricing a downbeat scenario following a year-long negative news flow

Investing in Chinese Growth Why invest in China today?

34

0

2

4

6

8

10

12

14

16

18

CLSA Asia Pacific ex-Japan universe 12M-fwd PE (x)

Source: CLSA January 2013


How to benefit from the current context?

35

Macro

Understand the central government policy, never stand against it

Stay aware of all macro data published to understand if and how policies are implemented

Beware of the press. Situation is complex and most journalists superficial.

Sectors

Identify the sectors that drive the growth, avoid others

Avoid benchmarking indices that are all market cap weighted

Companies

Carry detailed and thorough due diligence with a team aware of local practices

Understand every connected transaction to identify bad apples

Stay close to the investment and meet the management often. In a high growth environment, conditions often change very fast

In the current context, it all comes down to sector and stock picking

With an experienced local team, a deep understanding of Chinese macro and a proven Value stock picking methodology, LFP JKC China Value has all the keys to

add value in this tough environment


LFP JKC China Value

Performances and portfolio


LFP JKC China Value Performances as at February 28th, 2013

37

Past performances do not guarantee future results

Portfolio turnover: 252% in 2011 (Source: Long Form Report 2011 KPMG)

LFP JKC China Value MSCI China Free

YTD 2013 10.0% 0.0%

2012 28.2% 18.7%

2011 -31.0% -20.2%

2010 23.4% 2.2%

2009 108.6% 58.1%

Performance 3Y 26.9% 3.6%

Performance 5Y 35.5% -15.3%

Since inception (February 1998) 206.4% 17.1%

Source: Bloomberg / JKC- February 28th 2013

0

50

100

150

200

250

300

350

LFP JKC China Value: Performance since inception

LFP JKC China Value

MSCI China Free

Source: Bloomberg / JKC; 28/02/2013.

80

100

120

140

160

180

200

220

240

260

LFP JKC China Value: Performance since 2009

LFP JKC China Value

MSCI China Free

Source: Bloomberg / JKC; 31/01/2013


0

20

40

60

80

100

120

140

160

180

200(USD m)

AuM as at 05/03/13: USD 177m 2013 Morningstar Research Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be

accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any

damages or losses arising from any use of this information. Past performance is no guarantee of

future results

LFP JKC China Value AuM and fund statistics

38

AuM since March 2009

(transfer of the fund to Luxembourg)

Indicators as at

February 28th, 2013 1 Y 3 Y 5 Y

Fund volatility 14.6% 21.3% 23.3%

Index volatility 18.6% 21.7% 23.7%

Tracking error 10.0% 11.3% 12.2%

Information ratio 2.10 0.63 1.15

Sharpe ratio 1.48 0.38 1.05

Bloomberg Ranking as at 06/03/13

Source: Bloomberg/JKC-March 6th ,2013.


Source: Bloomberg/JKC- March 6th 2013. Past performances do not guarantee future results

Source: Bloomberg/JKC- February 28th 2013. Past performances do not guarantee future results

Morningstar RatingTM as at 28/02/13:

(I share in USD)


LFP JKC China Value Portfolio as at February 28th, 2013

39


PE 2013 (e) 12.5 x

PEG 0.64 x

Price/Book 2.6 x

EV/EBITDA 2013 (e) 13.8 x

Dividend yield 2.3%

ROE 18.3%

Net Debt/Equity 18%

MSCI China Free 0.85

Hang Seng Index 0.92

Hang Seng China Enterprise Index 0.70

Shanghai A-Share Index 0.58

Key ratios as at February 28th, 2013 Beta over 4 years

Only 14.7 % of the fund overlaps with the MSCI China Free

A confirmed Value approach


Using a top-down macro approach, the fund targets sectors that offer the most attractive risk/return profiles at any

point in time.

Such sectors are not necessarily well represented in the indices like sectors that are already developed, with large market

caps.

This approach leads to significant overweighting and underweighting of certain sectors compared to indices that

are traditionally overweighted in financials, energy and telecoms.

LFP JKC China Value Specificities of the fund: the Sector approach

40

These elements are not contractual and can be changed at any time without prior information

1% 6%

8%

23%

5% 9%

17%

12%

4% 7% 8%

17%

4% 6% 5% 5% 1%

40%

7% 11%

3% 0%

Industry breakdown comparison as at 28th February 2013


Source: Bloomberg / JKC; 28/02/13 - using iShare MSCI China ETF as a proxy for MSCI China Free Index


LFP JKC China Value Specificities of the fund: the Mid-Cap bias

41

JK bottom-up stock picking process leads to a portfolio that, under normal market conditions, is overweighted in

small and mid caps (defined as being under USD 5bn market cap).

Small and Mid-Caps are more volatile than large caps on the up-side as well as on the down-side. This is where

outperformance often originates.

Small and mid-caps also tend not to be part of indices which makes the comparison between the Fund and indices more

difficult.

31%

61%

8%

90%

10%

0%

Large cap Smid cap Cash

Large and Smid caps breakdown Comparison as at 28th February 2013


Source: Bloomberg / JKC; 28/02/13 - using iShare MSCI China ETF as a proxy for MSCI China Free Index


LFP JKC China Value Specificities of the fund: the cash management

42

To mitigate the downside volatility due to the mid-cap bias, the fund manager has the possibility to withdraw partially

from the market by keeping up to 50% of the fund in cash, skewing the volatility

The cash is kept in USD, the reference currency of the fund


0

50

100

150

200

250

300

0%

10%

20%

30%

40%

50%

60%

LFP JKC China Value: Performance and cash level from 2005 to 28th February 2013

Cash (RHS) LFP JKC China ValueSource: Bloomberg / JKC; 28/02/2013


LFP JKC China Value Performance attribution by sector FY2012

43

Source: Bloomberg/JKC-December 31st , 2012. Past performances do not guarantee future results


LFP JKC China Value Performance attribution by market cap FY2012

44

Source: Bloomberg/JKC-December 31st , 2012. Past performances do not guarantee future results


Portfolio is positioned for a mild but steady rebound of the Chinese economy. It is less defensive than it has been

throughout 2012.

Most consumer staples companies were swapped for consumer discretionary companies (Goodbaby, Sunny

Optical, Brilliance, Zhongsheng, Great Wall Motors, Ju Teng, Minth).

Exposure to high beta cyclical stocks was increased in January and then reduced in March. It involves property

developers and building materials (COGO, CR Land, Sunac, Xinyi Glass, Anhui Conch, CNBM).

Exposure to defensive utilities was reduced (Datang Power, Huaneng Power, CR Gas), while exposure to Real

Estate Investment Trusts (Fortune REIT, Prosperity REIT, Hui Xian REIT) was maintained.

Increased exposure to the banking sector that offers compelling value and will be among the first sectors to benefit

from the economic rebound (BoC, BoCom)

Overweight the infrastructure and social housing sectors (CCCC, CSCI, CCS, Zhuzhou CSR)

Overweight logistics companies (Lenovo, Haier)

Cash level 5-8%

LFP JKC China Value Portfolio profile as at February 28th, 2013

45

Current portfolio positioning



LFP JKC China Value Associated risks

Investing in equity securities may offer a higher rate of return than those in short-term and long-term debt securities. However, the

risks associated with investments in equity securities may also be higher, because the investment performance of equity securities

depends upon factors which are difficult to predict.

Risk of loss of capital: investors are warned that their capital is not guaranteed, and it is therefore possible that it will not be

returned to them.

Investment in the designated countries to the extent described in the investment objective and policy described here before offers

new growth opportunities. However, certain target markets may be affected by risks inherent to emerging markets, basically such

as social and political modifications encountered in such countries.

Certain economic or financial factors such as inflation rates, regulations and restrictions on foreign exchange, restrictions on

investments, limited liquidity of the markets, higher volatility in prices, rates and currencies, delayed settlements and transaction

costs, counterparty risks linked to payments made prior to delivery of securities, differences in auditing and information on the

issuers of securities, entail a degree of risk greater than the degree of risk associated with investments in more sophisticated

markets such as Hong Kong.

The fundamental risk associated with any equity portfolio is the risk that the value of the investments it holds might decrease in

value and hence decrease the net asset value of the fund. Equity security values may fluctuate in response to the activities of an

individual company or in response to general market and/or economic conditions.

46


LFP JKC China Value Main characteristics (I class)

47

Legal structure SICAV, UCITS IV

Domicile Luxembourg

Isin codes I class Euro: LU0547182096

I class USD: LU0438073230

Reference index MSCI China Free

Exchange rate exposure for class EUR shares are systematically hedged against USD shares

Suggested holding period 5 years

NAV computation Daily

Minimum subscription Class I- EUR 150,000/USD 200,000

Subscription fees 5% max

Current fees* 2.21%

Including running and management fees 1.5%

Performance fees** 15% of the NAV appreciation with High Water Mark

Investment Advisor JK Capital Management Limited

Management Company La Franaise AM International

Custodian Banque Degroof Luxembourg

Fund administration Banque Degroof Luxembourg

Auditor KPMG

*The given fees can be different from one accounting year to another. Current fees include running and management fees, transaction fees and fees related to

investments in other funds

6.48%. The given performance fees correspond to the last accounting year and can change from one year

to another. La Franaise Finance Services receives a commission for the distribution of this product in conformance with a distribution agreement signed between La

Franaise Finance Services and La Franaise AM International


LFP JKC China Value Our keys to success

48

Exceptional Track Record

In-depth understanding of Asian economics

Quantitative methods to identify high potential

companies

Value Approach

Local team in constant contact with portfolio

companies

Cash management to mitigate downside

volatility

Rigorous risk management and

compliance

Currency Hedging of the Euro shares

UCITS IV structure to maximize transparency

LFP JKC

China Value


LFP JKC China Value

Investment example


Goodbaby International

Investment rational

Taking market share from peers in the manufacturing business

Favorable regulatory policy regarding baby car seats

Robust demand ( > + 30%) for its own brand business as the company built an in-depth distribution

channel

Goodbaby is an original product manufacturer of durable juvenile products. It supplies more than 30% of all

baby strollers sold in the world. It also sells its products under its own brands (Goodbaby and Happy Dino)

in China, Southeast Asia, Middle East and Russia.

Market Cap USD 543m

PE 2013 15.7x

PEG 0.5

Net debt to equity -27.0%

Date of investment Oct 2012

Weight in the portfolio 2.2%

LFP JKC China Value Investment example

Source: Bloomberg- 7th March2013

50


Ju Teng

Investment rational

Industry leader with strong margin expansion story

Faster than expected recovery draws more market attention and re-ratings.

Cheap valuation: EV/EBITDA: 6.3x, 2012 EPS growth: +96%

Ju Teng International is a world leading plastic casing manufacturer for notebook (NB) computers. It has

more than 30% global market share. It has long-term relationships with the top NB ODM makers and its

products are extensively used in the world leading NB brands such as HP, Dell, Lenovo, Asus and Acer.

Market Cap USD 623m

PE 2013 7.2x

PEG 0.3

Net debt to equity 41%

Date of investment Mar 2012



51



Sunny Optical

Investment rational

Strong growth in a niche industry with excellent management and the right customers

Still relatively unknown to the investment community, under-covered by analysts

Cheap valuation: EV/EBITDA: 8.5x, 2012 EPS growth: +52%

Sunny Optical is a fast growing camera lens and module manufacturer based in Ningbo. Its main market are

Chinese mobile phone manufacturers who are quickly upgrading their product offering from cheap handsets

to smartphones.

Market Cap USD 923m

PE 2013 12.9x

PEG 2013 0.40

Net debt to equity -14.0%

Date of investment Sep 2010



52



China Overseas Grand Oceans

Investment rational

Shares excellent management with its parent China Overseas Land Investment who is arguably the

best residential developer in China

High Growth of low base

Low gearing ratio

COGO is a 38% subsidiary of China Overseas Land and Investments, one of the largest and most reputable

state-owned property developers in China. Its projects are mainly located in Tier 3 cities (Hohhot, Jilin, Hefei,

Guilin etc.) as well as Beijing and Guangzhou. Land bank is 7.8m m2.

Market Cap USD 3.2bn

PE 2013 / PEG 8.6x / 0.3

Discount to NAV -15%


Date of investment Feb 2012



53



LFP JKC Asia Value

Asia rising: One continent several growth rates


China

Population: 1,350m

2012 GDP Growth: 7.8%

GDP 2011: USD 7,300 bn

Stock Exchange (HK):

- USD 1,907 bn total market

cap

Asia rising: One continent several growth rates Asia fundamentals

Thailand

Population: 64m


GDP 2011: USD 340 bn

Stock Exchange:

- USD 266 bn total market

cap

Malaysia

Population: 29m



Stock Exchange:


cap

Singapore

Population: 5m

2012(e) GDP Growth*: 2.0%


Stock Exchange:


cap

Korea

Population: 49m

2012 GDP Growth : 2.0%

GDP 2011: USD 1,134 bn

Stock Exchange:


cap

Taiwan

Population: 23

2012 GDP Growth : 1.25%


Stock Exchange:


cap

Philippines

Population: 95m



Stock Exchange:


cap

Indonesia

Population: 240m



Stock Exchange:


cap

* UBS estimate December 2012

55


Asia rising: One continent several growth rates A growing region

33.5%

29.1%

6.8%

31.7% 30.9%

10.1%

28.2% 28.1%

16.2%

21.02%

23.81%

29.73%

EU US Asia ex Japan

1990 2000 2010 2030

0% 10% 20% 30% 40% 50% 60%

Malaysia

China

Thailand

Asia ex-Japan

Indonesia

Philippines

India

Middle class population

2015

2010

2,719

4,763

6,875

10,971

552 1,440

3,294

8,283

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

1980 1990 2000 2010

GDP per capita (Purchasing Power Parity) 1980-2010

World

Asia Ex Japan

Source: World Bank - 2012

Source: CLSA - 2012 Source: World economic database - 2012

56


Asia rising: One continent several growth rates An outperforming region

Index Performance between Jan

2000 and Feb 2013

MSCI Asia Ex Japan +60%

Dow Jones Industrials +22%

Euro Stoxx 50 -46%

Comparison of main regional indices from 2000 to 28th February 2013

Source: Bloomberg- January 15th, 2013. Past performances do not guarantee future results

Source: Bloomberg- February 28th, 2013. The ratio calculates the excess return against the risk free rate per unit of volatility over a 5-year period. Higher Sharpe

ratio indicates better historical risk-adjusted performance.

57

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

Sharpe ratio over the past 5 years

0

50

100

150

200Dow Jones Indus. Euro Stoxx 50 MSCI AC Far East Ex Japan


Asia rising: One continent several growth rates Different growth drivers

Within emerging markets, Asia is often presented as a single monolithic bloc, yet nothing could be further from the truth !

Understanding the differences between each country and their specific growth drivers, beyond what indices present, is the key to invest throughout the region and benefit from its outstanding growth.

GDP per

capita

Weight in Asian

indices Growth drivers

China $5,400 + + Investments in infrastructure

and household consumption

Korea $23,100 + + Consumer goods exports throughout the world

Taiwan $20,260 + + IT goods exports throughout the world

Singapore $52,200 + + Banks, properties, shipping companies

and oil rigs servicing companies

Indonesia $3,500 - Household consumption, coal exports to China

Malaysia $9,600 - - Crude palm oil exports to Asia

Philippines $2,350 - -

Household consumption, call centres and

services outsourcing, foreign overseas

workers

Thailand

$5,300 - - Household consumption, tourism

Source: World Bank - 2012

58


Asia rising: One continent several growth rates Healthy fundamentals

Consequence of the 1998 Asian crisis: Asian countries have kept a healthy economic profile throughout the following decade which provides them today with a solid foundation to preserve their growth in the global slowdown.

2012(e)

GDP growth (%) Trade balance

(US$ bn)

2011 Budget

surplus/(deficit)

(% of GDP)

FX reserves

(US$ bn)

Sovereign

debt

(% of GDP)

China 7.8 254.2 (1.6)% 3,220 42.1%

Indonesia 6.0 30.6 (2.1)% 113 24.0%

Korea 2.2 41.9 0.0% 304 35.6%

Malaysia 5.0 40.3 (5.3)% 131 55.8%

Philippines 5.8 -10.4 (3.5)% 60 52.3%

Singapore 2.0 3.5 0.7% 238 0 %

Taiwan 1.2 26.9 0.1% 382 52.1%

Thailand 5.5 32.3 (2.1)% 179 42.3%

Source: World Bank 2012 ; GDP growth forecasts UBS December 2012

59


Asia rising: One continent several growth rates The Value approach

Asia is a complex region and it is often more correct to speak of several Asia(s) to highlight the differences between Asian developed and often exporting countries (Korea, Taiwan, Hong Kong and Singapore), Asian high growth developing countries for which domestic consumption is the main driver (Indonesia, Malaysia, Thailand and the Philippines), and the country that stands in between, China.

Each of the above categories, each country, has its own specificities and growth drivers. A deep understanding of them is essential to benefit from the extraordinary development of the region beyond indices that are usually representative of the largest sectors which seldom are the most attractive ones.

For that purpose, the approach which focuses on the growth potential of companies and their relative valuations to identify the real actors of a growth is the most adequate.

LFP JKC Asia Value is an ad hoc product that benefits from the experience and success of the JK Capital Value approach to tap into Asian growth opportunities

60


LFP JKC Asia Value

Genesis of the Fund


LFP JKC CHINA VALUE JK ASIAN INVEST LP.

Legal Structure: SICAV UCITS IV

Inception: 1998

Strategy: Absolute return

Style Value

Focus: China/Hong Kong

Valuation: Daily

Liquidity: Daily

AUM: USD 175m

Genesis of the Fund Two funds with extended track records

Legal Structure: US Limited Partnership

Inception: 1994

Strategy: Absolute return

Style GARP

Focus: Asia ex-Japan ex-India

Valuation: Monthly

Liquidity: Quarterly

AUM: USD 58m

Two outperforming strategies with different structures and investor bases

As at 28/02/13 Fund MSCI Asia ex-Japan

YTD 2013 6.4% 1.8%

2012 17.6% 19.0%

2011 -19.3% -16.8%

2010 13.4% 16.7%

2009 69.6% 65.0%

3 years 23.3% 25.1%

5 years 33.7% 1.4%

Since inception 237.7% 30.9%

As at 28/02/13 Fund MSCI China

YTD 2013 10.0% 0.0%

2012 28.2% 18.7%

2011 -31.0% -20.2%

2010 23.4% 2.2%

2009 108.6% 58.1%

3 years 26.9% 3.6%

5 years 35.5% -15.3%

Since inception 206.4% 17.1%

62


Genesis of the Fund A new fund capitalising on their combined strengths

LFP JKC Asia Value was launched in July 2011 for European investors

Legal structure: UCITS IV Sicav

Liquidity: Daily

A fast growing market: Asia

Euro denominated class of shares hedged against changes in the EUR/USD exchange rate to avoid unwanted currency risk

Advantages

A Value strategy to capture the growth of the region

An absolute return strategy that overweights countries and sectors with higher potential than those heavily weighted by indices

An efficient bottom-up stock picking methodology that has proven itself

Strengths

63


Genesis of the Fund An extension of JK Asian Invest LP

LFP JKC Asia Value was designed to be the UCITS-compliant version of JK investment approach in Asia

which significantly outperformed the market over the past 18 years.

The correlation between the two funds since July 2011 is 0.96

February 28th, 2013

Source: JKC/Bloomberg, - February 28th, 2013. Past performances do not guarantee future results

64

0

50

100

150

200

250

300

350

400

JK Asian Invest LP. LFP JKC Asia Value MSCI AC Far East Ex Japan

70

80

90

100

110


Genesis of the Fund A portfolio positioning away from benchmarks to invest in each

MSCI AC Far

East ex Japan

LFP JKC

Asia Value

Heavily weighted sectors in

local indices Value sectors Sectors to avoid

China/Hong

Kong 40.3% 45.0%

Banks, telecommunication

services, petrol, property in

Hong Kong

Infrastructure, staple goods,

property in China, utilities

(electricity)

Property in Hong Kong,

shipping materials,

specialised retail

Indonesia 4.4% 5.7% Banks, telecommunication

services, mines

Banks, property,

consumption, infrastructure Mines

Korea 22.4% 3.5% Information technology, car

sector, steel, banks

Information technology, car

sector

Banks, property,

consumption, shipyards,

steel

Malaysia 4.7% 1.7% Banks, crude palm oil, petrol Infrastructure, consumption Crude palm oil

Philippines 1.4% 18.3% Telecommunication services,

utilities (electricity), property

Property, banks,

consumption Mines

Singapore 7.5% 6.3% Banks, telecommunication

services, property -

Banks, property, crude

palm oil

Taiwan 15.6% 7.0%

Information technology,

telecommunication services,

banks

Information technology

(Apple suppliers)

Banks, property,

consumption

Thailand 3.7% 12.3% Petrol, banks Banks, property,

consumption

-

65

Source: Bloomberg / JKC; 28/02/13 - using iShare MSCI AC Far East ex Japan ETF (IFFF) as a proxy for MSCI AC Far East ex Japan Index


LFP JKC Asia Value

Performances and portfolio


LFP JKC Asia

Value

MSCI AC Far East

ex Japan

YTD 2013 7.1% 1.8%

2012 26.0% 19.0%

Since inception

(July 2011) 3.9% -2.5%

LFP JKC Asia Value Performances as at February 28th 2013

Source : Bloomberg/JKC February 28th 2013. Past performances do not guarantee future results

PE 2013 (e) 12.8 x

PE/Growth 0.67 x

Price/Book 2.0 x

EV/EBITDA 2013 (e) 10.9 x

Dividend yield 2.5 %

ROE 17.3%

Net debt/equity 29 %

Standard deviation (weekly) 1.7 %

Key ratios as at February 28th, 2013

Performance and cash level since inception

(04/07/2011-28/02/13) AUM since Inception

(04/07/2011-28/02/2013)

67

0

5

10

15

20

25

30

35

(USD m)

0

0.1

0.2

0.3

0.4

0.5

0.6

0

20

40

60

80

100

120

Cash (RHS)

LFP JKC Asia Value

MSCI AC Far East ex Japan


2 4

5 7 8 9 11 12 14 15 16 18 19 20 21 23

26 27

1

28 29

32

37

39

3

6

10 13 17 22 24 25

30 31 33

34 35 36

38

40

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

0 5 10 15 20 25 30

1 Y

ear

To

tal R

etu

rn %

Standard Deviation 1 Year

Competitive landscape analysis of the main Europe distributed Asian funds

Genesis of the Fund Competitor analysis

LFP JKC Asia Value stands out from its competitive landscape through its un-benchmarked Value approach which

allowed it to rank well in the universe of Asian funds.

Source : Bloomberg 14 September 2012

Bloomberg page extract:06/03/13

Source : Bloomberg March 5th , 2013. Past performances do not guarantee future results

68

1 LFP JKC Asia Value 15 Aviva Investors Sicav - Asia Equity Income Fund 29 BlackRock Global Funds - Asian Dragon Fund

2 Pictet - Asian Equities Ex-Japan 16 Nordea Invest FjernOsten 30 Comgest Panda SICAV

3 Nordea Far East Fund 17 Investec Global Strategy Fund Ltd - Asian Equity Fund 31 Amundi Funds - Equity Asia Ex Japan

4 SW Fidelity South East Asia - Pension 18 GAM Star Asia Pacific Equity 32 Fidelity Funds - South East Asia Fund

5 BSI-Multinvest - Asian Stocks 19 Comgest CG Nouvelle Asie 33 Morgan Stanley Investment Funds - Asian Equity Fund

6 Invesco Funds SICAV - Asia Consumer Demand Fund 20 DWS Emerging Asia 34 SEB Asienfond exkl Japan

7 Julius Baer Multistock - Asia Stock Fund 21 Dexia Equities L - Asia Premier 35 MSCI Far East ex Japan

8 Edmond de Rothschild Asia Leader 22 Fidelity Investment Funds ICVC - South East Asia Fund 36 Baring International Umbrella - Baring Asia Growth Fund

9 UBS CH Equity Fund-Asia 23 INVESCO Asian Equity Fund 37 HSBC Global Investment Funds - Asia ex Japan Equity

10 Eastspring Investments - Asian Equity Fund 24 Value Partners Classic Fund 38 UBS Lux Key Selection Sicav - Asian Equities

11 Skandia Far East 25 HSBC Global Investment Funds - Asia ex Japan Equity 39 Russell Investment Company PLC - The Pacific Basin Equity Fund

12 Goldman Sachs Asia Portfolio 26 BNP Paribas L1 - Equity Best Selection Asia ex-Japan 40 T Rowe Price Funds SICAV - Asian ex-Japan Equity Fund

13 Investec Funds Series ii - Asia Ex Japan Fund 27 ING L Invest - New Asia

14 Asia Pacific Performance 28 APS Far East Alpha Fund


LFP JKC Asia Value Specificities of the fund: the Geographical approach

Using a top-down macro approach, the fund targets countries that offer the most attractive risk/return profiles at any

point in time

Such countries are not necessarily well represented in the indices which traditionally focus on the more established

companies in the most developed markets with large market caps

This approach leads to significant overweighting and underweighting of certain countries as compared to indices

69

5.5%

17.7%

11.9%

43.5%

1.7%

6.8% 6.1% 3.4% 3.4% 4.4% 1.4%

3.7%

40.3%

4.7%

15.6%

7.5%

22.4%

0.0%

Geographical breakdown comparison as at 28th February 2013

LFP JKC Asia Value MSCI AC Far East ex Japan



LFP JKC Asia Value Specificities of the fund: the Sectorial approach

Using a top-down macro approach, the fund targets sectors that offer the most attractive risk/return profiles at any

point in time

Such sectors are not necessarily the most heavily-weighted in the indices

This approach leads to significant overweighting and underweighting of certain sectors as compared to indices

70

0.0% 2.0%

10.4% 15.5%

3.5% 2.4%

45.0%

14.3%

0.6% 2.8% 3.4%

6.5% 6.3% 10.0% 9.2%

4.8% 0.4%

33.5%

18.8%

6.7% 3.7%

0.0%

Industry breakdown comparison as at 28th February 2013




LFP JKC Asia Value Specificities of the fund: the Mid-Cap bias

JK bottom-up stock picking process leads to a portfolio that, under normal market conditions, is overweighted in

small and mid caps (defined as being under USD 5bn market cap).

Small and Mid-Caps are more volatile than large caps on the up side as well as on the down side. This is where

outperformance often originates.

LFP JKC Asia Value is an absolute-return fund that does not benchmark any index.

These elements are not contractual and can be changed at any time without prior notice

71

36.0%

60.7%

3.4%

88.3%

11.8%

0%

Large and Smid caps breakdown comparison as at 28th February 2013




LFP JKC Asia Value Performance attribution by country FY2012

72

Source : Bloomberg/JKC December 31st, 2012. Past performances do not guarantee future results


LFP JKC Asia Value Performance attribution by sector FY2012

73



LFP JKC Asia Value Performance attribution by market cap FY2012

74



Growth is not achieved the same way across Asia. Sector and country weighting need to take into account

specific dynamics to extract value :

LFP JKC Asia Value Country and sector selection

Sector / Country HK/China Taiwan Singapore Korea Indonesia Malaysia Thailand Philippines

Country exposure + - = - - + - + + + +

Energy - - - - -

Materials

Mining - - -

Industrial - - - - -

Consumer discretionary - =

Consumer staple = - = -

Health - -

Finance - - - -

Information technology

Telecommunication services

Utilities

75


Current portfolio positioning Companies on our radar screen

Property developers in South East Asia

Infrastructure plays in China

Banks in South East Asia and China

Consumer plays in the Philippines, Thailand,

Indonesia and China

Car industry in Korea and Indonesia

Samsung Electronics in Korea (Galaxy phones)

Rubber gloves in Malaysia

Strong overweight of South East Asia vs North Asia

Strong overweight of the Philippines and Thailand

Slight overweight of China

Overweight Indonesia

Underweight Korea and Malaysia

Equal weighting on Singapore and Taiwan

Overweight financials and consumer related stocks

Underweight energy and commodities

51 positions

3.4% cash

LFP JKC Asia Value Portfolio profile as at February 28th, 2013

76



LFP JKC Asia Value Associated risks

Investing in equity securities may offer a higher rate of return than those in short-term and long-term debt securities. However, the

risks associated with investments in equity securities may also be higher, because the investment performance of equity securities

depends upon factors which are difficult to predict.

Risk of loss of capital: investors are warned that their capital is not guaranteed, and it is therefore possible that it will not be

returned to them.

Investment in the designated countries to the extent described in the investment objective and policy described here before offers

new growth opportunities. However, certain target markets may be affected by risks inherent to emerging markets, basically such

as social and political modifications encountered in such countries.

Certain economic or financial factors such as inflation rates, regulations and restrictions on foreign exchange, restrictions on

investments, limited liquidity of the markets, higher volatility in prices, rates and currencies, delayed settlements and transaction

costs, counterparty risks linked to payments made prior to delivery of securities, differences in auditing and information on the

issuers of securities, entail a degree of risk greater than the degree of risk associated with investments in more sophisticated

markets such as Hong Kong.

The fundamental risk associated with any equity portfolio is the risk that the value of the investments it holds might decrease in

value and hence decrease the net asset value of the fund. Equity security values may fluctuate in response to the activities of an

individual company or in response to general market and/or economic conditions.

77


LFP JKC Asia Value

Main characteristics (I Class and $)

Legal structure SICAV, UCITS IV

Domicile Luxembourg

Isin codes I class Euro: LU0611874057

I class USD: LU0611874131

Reference index MSCI AC Far East ex Japan

Exchange rate exposure for class EUR shares are systematically hedged against USD shares

Suggested holding period 5 years

NAV computation Daily

Minimum subscription I class : 150,000, I class $: $200,000

Subscription fees 5% max

Current fees* 3.48%

Including running and management fees 1.5%

Performance fees 15% of the NAV appreciation with High Water Mark

Investment Advisor JK Capital Management Limited

Management Company La Franaise AM International

Custodian Banque Degroof Luxembourg

Fund administration Banque Degroof Luxembourg

Auditor KPMG

78

*The given fees can be different from one accounting year to another. Current fees include running and management fees, transaction fees and fees related to

investments in other funds

financial year the performance fee was 0.00%.The given performance fees correspond to the last accounting year and can change from one year

to another. La Franaise Finance Services receives a commission for the distribution of this product in conformance with a distribution agreement signed between La

Franaise Finance Services and La Franaise AM International


LFP JKC Asia Value Our keys to success

Exceptional Track Record in Asia

In-depth understanding of Asian economics

Quantitative methods to identify high potential

companies

Value Approach

Local team in constant contact with portfolio

companies

Cash management to mitigate downside

volatility

Rigorous risk management and

compliance

Currency Hedging of the Euro shares

UCITS IV structure to maximize transparency

LFP JKC

Asia Value

79


LFP JKC Asia Value

Investment examples


Tat Hong Holdings

Investment rational

Large fleet and wide range of products that allow the company to bid for diversified procurement

contracts

Turnaround situation with fast growing utilisation rate of the fleet

High GP margin of 30%+ and cash cow business with a 10 year amortisation policy applied to

equipment that lasts up to 40 years

Listed in Singapore, Tat Hong is the largest distributor and rental company of cranes in Asia, and the 7th

largest in the world. It operates throughout the region and has the second largest market share within the

construction crane segment in China. Growth is also strong within the oil and gas industry.

Market Cap USD 745m

PE 2013 12.7x

PEG 0.2


Date of investment Jan 2013


LFP JKC Asia Value Investment examples

81



LFP JKC Asia Value Investment examples

Investment rationale:

One of the most attractive developers in the Philippines with a discount to net assets close to 35%.

The residential sector benefits from the strong and steady growth of overseas workers remittance

(+5% to 6% per annum) and from a healthy supply and demand dynamic

The BPO sector is growing very rapidly, with estimates of +19% per annum over the 2012-2016 time

frame

Filinvest

Filinvest is a Filipino property developer. The main business revolves around three sectors:

residential, Business Process Outsourcing and shopping centres.

Market cap (USD) USD 1.2bn

PER 2013/PEG 12.3x/ 0.7

Discount to Net Assets -25%

Net debt/Equity 51%

Date of investment July 2011

Portfolio weighting 3.8%

82



Appendices

False Ideas about China

The JK Capital Management Team


False ideas about China

A few examples



Net Exports contribution to GDP

Gross Exports as a

share of GDP 2011

China 26%

India 18%

South Korea 50%

Taiwan 66%

Thailand 66%

Malaysia 81%

Source: Bloomberg data - April 2012

Comparison with other regional countries

Within GDP, net exports is now less than half of what it was four years ago. Any drop in exports today has a minimal impact on GDP

China is now focusing on the exports of higher value-added products. T shirts and sneakers can no longer be systematically associated with China

85

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2006 2007 2008 2009 2010 2011

China GDP Breakdown (2005 - 2011)

Net exports Capital Formation

Government Consumption Private Consumption

Source: National Bureau of Statistics, Capital Economics - April 2012


False ideas about China

Exports to developed countries are becoming less strategic

86

Since the 2007 Lehman crisis, growth of exports is led by sales to emerging markets

The gap has even widened with the European sovereign debt crisis

0

20,000

40,000

60,000

80,000

100,000

(US

D b

n)

Exports by destination ($bn, seas. adj.)

US & Europe Emerging economies

Source: Capital Economics - September 2012



US Treasuries outstanding: US$15 trillion

China total FX reserves: US$ 3.3 trillion

reserves invested in US Treasuries: US$ 1.1 trillion

US Treasury Ownership

US Institutions and Individuals 42.3%

Social Security Trust 15.8%

US Civil Service Retirement

Fund 7.1%

Other Public Funds 2.2%

Foreign Ownership 32.6%

of which China 7.6%

67.4%

Source: US Federal Reserve Bank as at December 2011

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China is an important creditor for the US, but not that important



Given the size and complexity of China, numbers cannot be accurate. However they are good indicators of trends.

Upcoming Premier Li Keqiang was once asked the same question about GDP growth. He bluntly said that he

only trusts his own index: A mix of new bank loans, cargo traffic and electricity consumption.

In June 2012, the New York Times published an article entitled Chinese Data Mask Depth of

commenting on a mismatch between electricity production and consumption numbers published and stating that

it could only be explained by a tampering of the numbers by the government to mask the depth of the Chinese

slowdown.

As it turned out, a mismatch between the figures is not an unusual thing and some difference can be explained

by the absence in power generation data of private electricity generation and inefficient measuring systems,

particularly with hydro power generation.

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There is a tremendous amount of macro data published every week, analysed by economists worldwide. A lack of coherence between numbers would suggest tampering, something that no

economist has recently suggested.

Numbers include a margin of errors, however trends should be seen as reliable

May 12 June 12 July 12

Electricity Consumption (tWh) 406.1 413.6 455.6

Electricity Generation (tWh) 389.8 393.4 435.1



After a small drop in the middle of 2012 the RMB has resumed its appreciation against the USD, be it at a

slower pace than before.

RMB has appreciated by 34% between July 2005 and December 2012

In Q2 2012 China has been a net seller of FX and a net buyer of RMB to prevent the RMB from dropping

further, the daily closing rate hitting systematically the bottom of its authorized and expanded daily fluctuation

range

Trade balance only shows a small surplus of 3% of GDP

Under the present circumstances, the RMB seems to be close to its fair value

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6

6.3

6.6

6.9

7.2

7.5

7.8

8.1

8.4

Renminbi/dollar exchange rate

Reference rate (set by the PBoC) Closing spot rate

Source: Bloomberg - January 2013

6.1

6.2

6.3

6.4

Focus on the past 12 months


government debt remains reasonable, even taking into account the provincial debt and the Local

Government Financing Vehicles


213

129 107 97 97 89

77 72 65 64 53 46 44 42 35 26

87

0

50

100

150

200

250Government Debt as a % of GDP

Note: China number includes debt at provincial level

Whichever way you look at numbers, sovereign debt in China remains low

90



Price levels in Tier 1 cities are often interpreted as the tell-tale of a bubble on the verge of bursting, this is the tree

that masks the forest

Property prices have risen in China, but salaries have risen even faster with the emergence of a large

middle class

References to the high prices in Tier 1 cities are misleading

0

25

50

75

100

125

Property Price to Wages ratio (affordability ratio)

Source: Capital Economics - September 2012 Source: Capital Economics - September 2012

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Number of cities 6 20 114

Price (RMB / sqm) 19,347 9,677 6,249

Property Ownership (%) 53.8% 48.9% 24.0%

0

100

200

300

400

500

600

700

800

(millio

n s

qm

)

Sales by Gross Floor Areas (GFA) breakdown by different tier cities


Source: CLSA Asia-Pacific Markets - September 2012



The number of flats built every year in China often leads to the assertion that no matter how big the population is,

such demand has to be speculation.

The demand for properties in China is a unique combination of 3 items:

Property ownership only exists since 1993

In most cities and because of the gender imbalance, a young man will find it very difficult to get married if he own

a flat

Confucianism: A cornerstone of Chinese culture is piety" (xiao [ ] in Mandarin Chinese), the attitude of obedience,

devotion and care toward parents.

An urban couple with one child and two sets of parents has an ultimate objective to own 3, if not 4 flats.

The real issue is they are often not allowed to

A recent Capital Economics report estimates China will need to build an average of 10 million new flats

per year until 2020 to meet the increase in urban population. It built 6m/yr over the past 15 years

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59%

54%

33% 37%

8% 9%

0%

20%

40%

60%

80%

100%

First Time Buyers Upgraders Investors

Source: CRR, CLSA - September 2012

Months to clear inventory 21 city average

Source: Deutsche Bank September 2012



Cheep labor has often been considered as main competitive advantage. With wages and consumption

increasing and the RMB getting more expensive many think China has lost its edge over other countries, this is

forgetting the productivity gains.

China has been pushing out the low margin factories it was well known for to retain the higher margin industries building up a

more qualified workforce the cost of which remains low in most finished products value.

In the last three years during which wages have increased by 56%, prices of US imports from China have increased by

only 4% in total.

Productivity gains have well maintained the competitive edge of China and whilst those cannot possibly

go on forever, the recent performance of China in that area makes it too early to discount them.

93

90

95

100

105

110

115

120

Price of Manufactured Goods Imports into US ($) (2003 = 100)

Imports from emerging economiesImports from China

Source: Capital Economics, November 2012


The JK Capital Management Team


Fabrice Jacob CV

Co-founder and CEO of JK Capital Management Ltd.

Registered as an Investment Adviser with the Securities and Futures Commission of Hong Kong

Career

Since1997 JK Capital Management Ltd., Hong Kong CEO

1995-1997 Banque Worms Hong Kong Senior Vice President, Head

of Investment Banking

1989-1995 Banque Worms Paris Vice President Investment Banking

1987-1989 Banque Paribas Capital Markets, London, Mergers and Acquisitions

1985-1987 Banque Paribas New York, Leveraged Capital Group

Portfolios managed Since 2013 Danske Capital managed account Portfolio Manager

Since 2012 Russell Investments managed account Portfolio Manager

Since 2011 LFP JKC Asia Value Portfolio Manager

Since 1998 LFP JKC China Value Portfolio Manager

2002-2009 MYM High Yield Bond Trust Portfolio Manager

1995-2004 Yu Ming Investments Ltd Director, Portfolio Manager High Yield investments

1995-2005 Matignon Investissements FCPR, Portfolio Manager - Asia

1995-1998 SHK Convertibles Ltd Director, co-Portfolio Manager

1995-1997 Chine Investissement 2000, co-Portfolio Manager

Diplomas MBA, Finance and Investments, City University of New York, Baruch College Maitrise de Sciences de Gestion, Universit de Paris Dauphine

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Randy Kwei CV

Co-founder and Chairman of JK Capital Management Ltd.

Registered as Investment Adviser with the Securities and Futures Commission of Hong Kong

Career

Since 2007 Chairman of JK Capital Management Ltd.

1992 -2007 Pacific Capital Management Ltd., Hong Kong Founder and CEO

Before 1992 Asian Oceanic Group Managing Director

Asian Special Situation Equity Trust, a private equity fund (IRR of

16.8% over 7 years) Manager

Citibank, Head of consumer banking for Canada, Country Head for the

United Arab Emirates

American Express Bank Regional Head for North Asia

ORIX Investment in Japan Advisor

CIGNA in the United States Advisor

Diplomas MBA Columbia University

B.E. Yale University

Randy Kwei is Trustee of the New Asia College University of Hong Kong, director of the Rotary Club of

Hong Kong and was chairman of the Yale Club of Hong Kong.

He published his memoirs East to West to East in 2009.

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The team CV

Mr. Alex Leung CFA, CFO et Risk Manager

Over 11 years of experience in managing Chinese equities.

Prior to joining JK Capital Management, Alex Leung worked at

Yu Ming Investment Management on private equity

investments, corporate finance and mergers and acquisitions

for listed and unlisted companies.

He graduated from Melbourne University (Bachelor degree in

Commerce)

Mr. Joel Chow CFA, Analyst

Over 7 years of experience analysing listed Chinese

companies.

Prior to joining JK Capital Management, Joel Chow was working

in the credit risk management of a Hong Kong commercial

bank.

He is a graduate of Hong Kong University (Bachelor degree in

science)

Mr. Terence Tsui CFA, Analyst

Investing in Asian Equities_JK

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