Mongolian Capital MarketsMongolian Capital Marketsg pg pDayanbilguun Danzan, CEO, BDSecFebruary 17th, 2011
1
Highlights30,000.00 60% up in the first
month of 2011Key Points:-Top 20 Index 31201.19 points-Total Stock Mkt Cap 3.3 billion SGDD il A T 256k SGD
g g
20,000.00
25,000.00
Historic transactions were made
-Daily Average Turnover 256k SGD-# of Listed Companies 336-# of Brokerage Companies 46
Market up 447%
10 000 00
15,000.00
144.2 million MNT worth of securities
800 mio MNTMarket down 63.9%
5,000.00
10,000.00 securities
1.2 billion MNT worth ofCorporate Bonds
2008
2011 онThe historic market
capitalization
-2001
First Corporate Bond
1991 Privatization
1996First Government
Bond 2007
The Bull Market
The Bear Market
2010Capital Market
2005First IPO
/Hotel Mongolia/
1995Securities Secondary
Market
Capital Market Reform
1 SGD = 979.73 MNT
StructureMongolia Stock Exchange• Founded: 1991
Listed companies by sectors
• Main activity: Securities trading• Ownership: Mongolian Government• Trading Hours: 11:00AM – 12:30PM• Available products: Stock, Bond, Gov’t Bond
17%
19%
26%
28% Mining
Manufacturing
Agriculture
Financial Regulatory Committee• Founded: 2006• Main activity: Regulatory, supervisory• Directorship: 9 members appointed by the parliament• Responsibility: Issuance of new securities, special licenses
20%26%
Construction
Trade and service
Top companies by market cap
Central Depository and Clearing House• Founded: 2004• Main activity: Securities depository, clearing, settlement• Ownership: Mongolian government
Securities Clearing House and Central Depository
p y , p
Name Industry Mkt Cap
Baganuur Coal 744.6 mio SGD
Tavan Tolgoi Coal 543 mio SGD
• Settlement system : Delivery Vs. Payment• Settlement period: T+0
• Number of companies: 46
Intermediary Companies
Shivee Ovoo Coal 471.1 mio SGD
APU Beverage 256.9 mio SGD
Sharyn Gol Coal 176.8 mio SGD• Main activities: Brokerage, underwriting, advisory
Telecom Mongolia Telecom 102.6 mio SGD
1 SGD = 979.73 MNT
Statistics
• Total stock market capitalization is about 3 3 billion SGD equal to 35% of
Stock Trading (by million SGD)
63.461 6 64.280.0about 3.3 billion SGD, equal to 35% of GDP
• Yearly stock trading volume reached 64 million SGD in 2010, up 171%
1.8 1.4 0.9 0.7 2.612.9
63.461.6
23.7
64.2
0.0
20.0
40.0
60.0
• Yearly government bond trading volume reached 30.5 million SGD in 2010, first time since 2008
• # of total accounts reached 450,077, up
Gov’t Bond Trading (by million SGD)
31.4
42.6 40.430.640.0
50.0
, , p2.2% in 2010
• MSE top 20 index closed at 31,201.19 points as of Feb 15, 2011, up 574.6% YTD
0.1
22.212.7
6.9 4.6 1.5 0.00.010.020.030.0
YTD• 2 secondary public offerings introduced
in 2010• Standard companies’ (28) market cap
t f 90 6% f th t t l k t
Corporate Bond (by million SGD)
1.2
3.0 3.1 2.8 2.7
1.0 0.9 0.51 0
2.0
3.0
4.0
accounts for 90.6% of the total market cap
4
0.0 0.00.0
1.0
1 SGD = 979.73 MNT
Expected Changesp g• London Stock Exchange arrival
– Agreement: December 2010– Master plan: April 2011
• Government support– Capital markets comprehensive policy – Privatization through the stock marketPrivatization through the stock market– Government bond issuance– 10% domestic listing requirement for strategic mineral deposits
• New Securities Market and Company Laws– Investment funds/fund management– Custodian services– Corporate governance issues
• Erdenes – Tavan TolgoiErdenes Tavan Tolgoi– Every citizen and every company to participate in the capital markets– Market capitalization and liquidity growth
• Capital Markets Development Association– Development of domestic professionals– Public education
51 SGD = 979.73 MNT
Privatization
Number of state-owned companies: 22 ( h ll d ti ll d)
Total market cap breakdown
22 (wholly and partially owned)Total market value of major state owned companies:
1.3 billion SGD
State
Private
Proposed privatization methods:Through the capital marketManagement contractThrough international tender
State owned companies by sector
Agriculture
Through international tender Public Private Partnership
Major companies to be privatized:Baganuur (coal)
1 2 13
91
81
Mining
Manufacturing
Trade & Service
Construction
AirlineShivee Ovoo (coal)Telecom Mongolia (communication)Darkhan Metallurgical Plant (steel)Khutul Cement (cement)
Airline
Energy
( )Mongolian Airline (airline)Mongol Post (post)
61 SGD = 979.73 MNT
Erdenes-Tavan Tolgoig
Total number of shares: 15 000 000 000 h
Amount of coal reserves by mio ton
15,000,000,000 sharesProposed allocation:
10% to citizens (free)10% to enterprises (par value)
6,000
2,0003,0004,0005,0006,0007,000
p (p )29% to international listing51% to government
Total amount of reserves:6 billi f ki l
512 564120 200
01,0002,000
Baganuur Shivee Ovoo
Sharyn Gol
Tavan Tolgoi
Erdenes Tavan Tolgoi
6 billion tons of coking coalEstimated market capitalization:
50 billion USDTotal population:
Chinese coal consumption (by billion ton)
2 2.19 2.382.62 2.72
2.963.2
2.53
3.5
Total population:2.7 million
Total number of account holders:450,077
1 1.111.42 1.61
2
00.51
1.52
71 SGD = 979.73 MNT
Government Bond
The last issue of government bond: 30 billi MNT (30 6 illi SGD)
1-year gov’t bond rates
12 75%30 billion MNT (30.6 million SGD) Maturity and annual interest:
1.5 years, 7.8%1 year, 7.5%
4.75%
7.8%
12.75%
y ,
List of gov’t projects suitable for long term gov’t bond financingName of project Amount Timing
0.14% 0.23% 0.27% 0.68% 0.97%
MNT historic performance against USD
Name of project Amount (mio USD)
Timing
Tavan Tolgoi Power Plant 400 2010-2015
New Rail Road 800 2010-20151400.00
1600.00
Water Supply of Gobi Region 540 2010-2015
Altanbulag-Ulaanbaatar-ZamiinUud Highway
1200 2010-2015
200.00
400.00
600.00
800.00
1000.00
1200.00
8
Citizens’ Housing 2100 2010-2015
1 SGD = 979.73 MNT
Potential Offerings in 2011
Coal Mining Gold Mining Direct Reduced Construction
g
gCompany
• Equity• Market cap – 234.6
million SGD
gCompany
• Equity• Necessary capital –
10.3 million SGD
Iron Company
• Equity• Necessary capital –
153.2 million SGD
Material Producer
• Equity• Necessary capital –
3.7 million SGD• Necessary capital –
20.4 million SGD • Timing – First half of
2011
• Timing - First half of 2011
• Timing – Second half of 2011
• Timing - First half of 2011
Logistics Company
Financial Company
Meat Processing Company
• Equity• Necessary capital – 2
million SGD• Timing - Timing - First
half of 2011
• Equity• Necessary capital –
20.4 million SGD• Timing - Second half of
2011
• Convertible Debt• Necessary capital –
30.6 million SGD• Timing - Timing - First
half of 2011
91 SGD = 979.73 MNT
About BDSec
• BDSec is the largest stock broker/investment bank in Mongolia
Top 3 brokers by equity transaction /2010/broker/investment bank in Mongolia
• Services to most of the stock market participants:
– 1/3rd of total domestic accounts 85.2 billion MNT
6.7 billion MNT
5.6 billion MNT
BDSecGlobal AssetEurasia
– 2/3rd of total foreign accounts– 28% of total corporate accounts
• Does more than a half of total trading volume:
MNT
Top 3 brokers by government bond – 68% of total equity transactions in 2010– 58% of total government bond transactions in
2010• Underwrote more than 60% of total new
transaction /2010/
4.5 billion MNT
BDSecUnderwrote more than 60% of total new issues on the MSE
– 8 IPOs out of 14 since 2005 – 4 SPOs out of 4 since 2008
4 bond offerings out of 12 since 2001
18 billion MNT
8 billion MNT
BDSecKhans InvestGendex
– 4 bond offerings out of 12 since 2001
101 SGD = 979.73 MNT
About BDSec
• Largest research database and local connection Total domestic accounts
27.4 %
72.6 %
BDSec
Other
connection– Provides investment advisory service to most
of the listed companies, conglomerates, banks and big private companies The research department covers 27 MSE
Total domestic accounts
Other– The research department covers 27 MSE-listed standard stocks, key markets (stock, bond, currency) and industries (resource, resource related industries, service, manufacturing, real estate)
43 %BDS
• Most consistent and experienced– Active since the establishment of the
securities secondary market or 1995 and market leader since 2000
Total Foreign accounts
57 %BDSec
Other– ONLY listed financial institution /The most
transparent public company of the year 2007 according to MSE/
– Biggest team in the market
111 SGD = 979.73 MNT
Shareholders
M j it f BDS h h ld i t ti l i tit ti l i t• Majority of BDSec shareholders are international-institutional investors• The board of directors (9 directors) includes 2 foreign and 2 independent directors
1.8%1.8%
1.4% 0.9% 0.8% 0.76%Founders
Alexander ZwahrGerman Individual
41.819.13%
Firebird
Exe Group
Cube capital
28%
Praetorian Offshore
Transcend Capital
Frontier Market Select Fund
12
Falcon Family
1 SGD = 979.73 MNT
Stock Performance
• BDSec went public in 2006 with MNT 1 billion IPOp• The stock price grew by 30 times from MNT 100 to MNT 3000 until we issued
1 million additional shares or 10% of the company in 2008
3000
3500
4000
4500
12,000.00
14,000.00
16,000.00
18,000.00
500
1000
1500
2000
2500
2 000 00
4,000.00
6,000.00
8,000.00
10,000.00
0
500
0.00
2,000.00
MSE TOP 20 INDEX BDSEC SHARE PRICE
131 SGD = 979.73 MNT
BDS Coal Index
• BDS Coal Index includes coal mining companies that operate in Mongolia and listed on the Mongolia Stock ExchangeMongolia Stock Exchange• The index is updated twice in a year • The member companies are required to have a market capitalization of 100 million USD and 80% of its total assets located in Mongolian territory• BDS Coal Index is calculated since January 1st 2011BDS Coal Index is calculated since January 1st, 2011
35,000.0045,000.00
Member Companies BDS Coal Index
Company Ticker Market Cap (SGD)
20,000.00
25,000.00
30,000.00
30,000.00
35,000.00
40,000.00
Company name
Ticker Market Cap (SGD)
Baganuur BAN 894,439,040
10,000.00
15,000.00
15,000.00
20,000.00
25,000.00 /1
/201
1/1
/201
1/1
/201
1/1
/201
1/1
/201
1/1
/201
1/1
/201
11/
2011
1/20
111/
2011
1/20
111/
2011
1/20
111/
2011
1/20
111/
2011
1/20
111/
2011
1/20
111/
2011
/2/2
011
/2/2
011
/3/2
011
/4/2
011
/2/2
011
/2/2
011
/2/2
011
/2/2
011
Tavan Tolgoi TTL 679, 658,078
Shivee Ovoo SHV 543,582,274
S G S G
141 SGD = 979.73 MNT
4/ 5/ 6/ 7/ 10/
11/
12/
13/0
14/0
17/0
18/0
19/0
20/0
21/0
24/0
25/0
26/0
27/0
28/0
31/0 1 / 2/ 2/ 2/ 7/ 8/ 9/ 10/
BDS Coal Index MSE Top 20 index
Sharyn Gol SHG 259,065,786
FYI: common questionsq
• Legal mattersC i l i 10%– Capital gain tax: 10%
– Tax on dividends: Free for individuals and 10% for legal entities No restriction on foreign investment– No restriction on foreign investment
– To purchase more that 33% of a company requires tender offer
• Market• Market– Trading hours: 11:00AM through 12:30PM (GMT+8)– Currency: MNT only
Regulator: FRC– Regulator: FRC– Settlement: T+0– Delivery Vs. Payment
P f di i d– Prefunding required
151 SGD = 979.73 MNT
Contact us:
BDSec Headquarter Tuv Province BranchZaluuchuud Avenue 27-18th Khoroo, Sukhbaatar DistrictUlaanbaatar, Mongolia Phone/Fax: 976-11313108
Suite 203, Government OfficeZuunmod City, Tuv ProvinceMongolia Phone: 976-99012845
Email: [email protected]
Dayanbilguun DanzanChief Executive Director
Email: [email protected]
Erdenet BranchMongolian People’s Party OfficeChief Executive Director
Email: [email protected]: 976-11321763
Munkhtulga Ganbold
Mongolian People s Party Office, Bayanundur SumOrkhon Province, Mongolia Phone: 976-99072846Email: branch2@bdsec mnMunkhtulga Ganbold
Institutional ClientsEmail: [email protected] 976-11323411
Email: [email protected]
161 SGD = 979.73 MNT
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