CENTURY SYNTHETIC FIBER CORP

VIETNAM ACCESS DAY PRESENTATION

24 March 2015
Agenda

01 | Corporate & Business Overview

02 | Industry Overview

03 | Strategies

04 | Financials

05 | Listing

06| Q&A

2
 Company’s Vision and Mission

VISION

To become a worldwide leading pioneer in Textile sector and developing

into multi-business fields relevant with our core business.

MISSION

We adopt the advanced and environmentally friendly technology and up

to date management system, build up professional team and positive
innovation corporate culture to contribute to our society, bring new and
green products/services to the community by saving natural
resource, energy and protect natural environment.
 Product overview and its production process
Specializes in manufacturing and trading high quality polyester
filament yarns such as POY, DTY and FDY

Polyester yarn production process & textile and garment supply chain

Filaments
Weaving or
Knitting
=>Dyeing
PTA
POY DTY

Polyester
chip (PET) Fabrics Garment

FDY
MEG

4
 Company’s vision
Capturing the growth potential of the Globe’s and Vietnam’s garment & textile
sector

Global Garment & Textile
• Consumer staple with steady growth
rate (3%p.a).
• Trend of production relocation from
developed countries to developing
countries to save costs.
Opportunities
Vietnam’s Garment & Textile
• Cost competitive.
• Favorable treatment (import duty)
from key importing countries.
Polyester Filament
• Highest growth rate (8.6% p.a.).
• Continuous technology
development.
• Steadily replacing cotton and
polyester staples.

Strategies and Objectives

To offer excellent product quality at To achieve excellent growth while
To be in the top tier/market leader
a competitive price maintain healthy financial standing

How to capture the opportunities

Invest in modern production Create modern management
Build skillful and loyal workforce
facilities system & positive corporate culture
 Historical Development
The company is always in the motion for renovation and expansion

• Trang Bang phase 2 Trang Bang phase

•Establishment Trang Bang in operation
• Construction Converted Started POY phase 1 in 3 in operation
• SAP in operation
of Cu Chi plant into JSC. production operation
(4,800 tons of
DTY p.a.) 1,978
1,453 1,458 1,695
935 1,099
4 276 373 506

2000 2003 2005 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Expanded Cu •Expanded Cu • Became a Trang Bang plant

Chi plant to Chi plant to Construction public company expansion - phase 3
9,600 Tons of 15,000 tons of of Trang •Trang Bang started
DTY p.a.. DTY Bang plant – plant expansion
• Got ISO Phase 1 – phase 2 started
certificate started • SAP project
• Adopted started
Kaisen, 5S
• Expanded
export markets
Products and Customers

CSF manufactures consistently high quality

products which meet international standards
including:
 Drawn Textured Yarn (DTY). and
 Fully Drawn Yarn (FDY).

CSF’s customers are knitting and weaving

companies, which produce fabrics to supply
to the world renowned brandnames such as
Nike, Adidas, Uniqlo, Decathlon, Puma,
Columbia, Ikea, Reebok, Guess …

7
Century Products - Application
 Textile/Apparel
 Sport-Wear
 Footwear Accessories
 Industry
 Brand name
Well established brand name in both domestic and global markets

Customers’ perception of CSF’s brand

Top quality products • High technical specification

• Consistent quality

• Ability to support customers in their

product development (reasonable
solution, timely response) High
Excellent customer
• On time and accurate delivery customers’
services satisfaction
• Good after sales services (timely
response, reasonable solution, regular
customer surveys)

• CSF’s product brand name “Century” is

acknowledged and ranked by customers
Among top equally with the worldwide top class
international players polyester manufacturers such as Nan Ya
(Formosa), Lan Fa, Zig
Sheng, Hengli, LeaLea, Far Eastern
 Market Positioning
CSF is competitively well positioned in Vietnam

Capacity Vs. Product Quality of Vietnamese

Competitors Market Business
Company Capacity
Capacity segment strategy
Hualon Premium
37,000 High quality
products
CSF tonnes DTY products,
(medium
& FDY medium price
high quality)
CSF Premium
PVTex
38,400 products High quality
Formos
Formosa tonnes (medium products, high
a
DTY& FDY high quality) price
Dotihutex
Commodity Medium low
84,000 products
Hualon quality,
tonnes DTY (medium low
Product Quality
quality) low price
Commodity
Medium low
 CSF is competitively well positioned in Dong Tien 20,400 products
Vietnam’s yarn subsector in regards to quality,
Hung tonnes DTY (medium low
capacity and product quality. low price
quality)
Not yet fully 10
PVTex N/A N/A
commission
 Business Model
Excellent returns were achieved thank to the right business model

•Vertical integration.
•Large scale.
MODERN
•Modern equipment.
 Good & stable quality
FACILITIES •Management Information products to medium
System (SAP). and high-end textile WELL
companies located in
PERCEIVED
countries offering
preferential tariffs for BRAND NAME
•Skillful, disciplined and
motivated workforce. Vietnamese textile
PROFESSIONAL •Dynamic, ambitious and products.
WORK FORCE determined management  High capacity EXCELLENT
team.
•Positive corporate culture. utilization rate. RETURNS
 Margin maximization.
 High financial Revenue CAGR +32%
Net profit CAGR +61%
efficiency.
• Production planning.
• Lean production.  Effective hedging of from 2008 to 2014
MODERN price and foreign
MANAGEMENT •
Natural hedging.
PRACTICES • Strict quality assurance. exchange risks.
• Diversification (customers &
suppliers).

11
 First Class Manufacturing Facilities
CSF’s production facilities are in close proximity of each other, highly
equipped with leading edge machinery, have sound maintenance
practices which ensure long term machine efficiency
Trang Bang Factory

 Second factory. Established in

2010.
 Located in Tay Ninh province.
 50,000 sqm .

Modern Machinery
Cu Chi Factory
 Provided by Oerlikon Barmag (a world
 Main factory. reputable machinery manufacturer)
 Located in Cu Chi district.  Average utilization rate of approximately 90%
 16,800 sqm.

12
 Quality Assurance
High quality products, modern equipment, suppliers with good quality
inputs, recruitment and development of disciplined and skillful workforce

Technology Product quality

Results
Consistently met
customers’ High customer
technical satisfaction
specification: Sales growth
yarn evenness, Customer loyalty
knit dye
Best practices Margins
uniformity, no
Strict quality running break, Sustainability
control clean package, Productivity
procedures, full bobbin
which are
adheres to ISO
9001-2008,
KAIZEN and 5S

13
 Customers
 CSF has successfully built up a world wide customers’ network.
 Key customer markets such as Thailand, Taiwan, Vietnam, South
Korea, Japan, Turkey.

Ultimate Customers

14
 Customers
Expanding network of customers through a qualified sales & marketing team
and good product quality and customer service

CSF has been acquiring new customers

 Sales posted a CAGR of 32% during period
2008-2014 thanks to increasing sales to both Top 10 and 20 customers in proportion to sales
traditional and new customers. 84%
 Proven track record of providing good product 70%
64% 65% 62%
67%
quality and customer service is evident from 50% 49% 45% 46%
repeat orders from traditional customers.
 With production capacity expansion and the help
of CSF’s dynamic and qualified sales and
marketing team, CSF is well placed to serve a 2010 2011 2012 2013 2014
larger customer base located in more extensive
Top 10 customers Top 20 customers
geographies, including TPP member countries.

Revenue by market share

120%
100%
13%
80% 29% 25% 15%
23%
60%
87%
40% 71% 75% 85%
77%
Existing clients 20%
0%
2010 2011 2012 2013 2014

Export Domestic 15
 Experienced Team with Proven Credentials
Top Management Team with c. 20 years of experience is widely
recognized as responsible for driving the Company’s strong growth

Accolades Highly Experienced Management Team

 Certificate of Merit from

Vietnam Prime Minister in
2011 (Outstanding
achievements in Mr. Dang Trieu Hoa
attracting investment and (CEO cum Chairman)
contributing to HCMC’s 24 years of experience
social economic
development).
Mr. Bui
Ms. Tran
 Certificate of Merit from Mr. Lu Yen Mr. Vo Ms.
Tuong
Thi Trang
HCMC People’s Hien
Kun Thanh Nguyen Mr. Phan Lien
(Deputy
Committee in 2010 (Deputy CEO Chung Phuong Nhu Bich (Deputy
CEO cum
in charge of (Production Chi (CFO) CEO cum
(Excellent performance production) Manager) (CSO) 17 years of
Head of
HR
for 5 years (2005 – 2010). Internal
37 years of 13 years of 22 years of experience Manager)
Control)
experience experience experience 21 years of
 Certificate of Merit from 16 years of
experience
experience
HCMC Department of
Labor, Invalids and Social
Affairs in 2010
(Outstanding
achievements in social
insurance and health 16
insurance).
 Human Resources
Stringent selection process in place to ensure a skilful and highly
motivated workforce

Employee statistics as at 31 December 2014

 Employs 675 staff across the two
factories. Cu Chi Trang Bang Total
Class Senior Middle Staff Middle Staff
 High standards for recruitment.
Manager Manager Manager
 Continuous training.
Office 4 26 90 8 55 182
 Objective of attracting and retaining Workshop 0 0 228 0 265 493
a highly motivated workforce is
Total 4 26 318 8 320 676
achieved by:
 Ensuring job stability
 Promotion opportunity
 Competitive salary
 Performance bonus and share scheme
 Welfare benefits (shift meal, lodging, allowance, accident insurance, company trips)

17
 Modern Management Information System
SAP Business All in One

Plant
Maintenance
Phase 1 (“PM”)
Phase 2 Material Quality
implementatio implementation BIBO Managemen Manageme
n -Kick off -Kick off operational t (“MM”) nt (“QM”)

Human
Production Resource
Jul-11 Jan-12 Sep-12 Oct-12 Jan-13 Sep-13 planning Manageme
(“PP”) nt (“HRM”)

Business
Phase 1 QM –Go live HRM – go live Sales & Intelligent &
(FI, CO, SD, PP, MM Distributio Business
, PM) –Go live n (“SD”) Objective
(BIBO”)
Costing/
Financial
Financial
Income
Control
Benefits: (“FI”)
(“CO”)
 Industry – specific configuration
 Best practice
 Cost effective
 Control
 Transparency

18
Agenda

01 | Corporate & Business Overview

02 | Industry Overview

03 | Strategies

04 | Financials

05 | Listing

06| Q&A

19
 World Fiber Market in 2013
Polyester Filament Accounted for a Major Market Share

Unit: 1,000 tonnes

WORLD FIBER
90,107

MAN-MADE FIBER NATURAL FIBER

(67%) (33%)
60,289 29,818

SYNTHETICS BAST
COTTON (26%)
(60%) CELLULOSICS (7%) (4%)
23,553
54,367 5,922 3,724

FILAMENT STAPLE WOOL OTHERS (2%)

(40%) (20%) (1%)
1,404
1,137
36,176 18,191

Source: The Fiber Year Consulting 2014

 Global Polyester Filament Market
Polyester filament excels natural fibers in both growth rate and share in
total consumption
Million tonnes World Fiber Consumption
100 89 90
78 80
80 71 72
38% 36%
45% 43% 41%
60 44% 41%
44% 44%
46% 46% 45%
40 30
25 27
19 24
18
25 23 23 27 24
15 11 13 57% 13 59% 15 62% 64% 15
20 55% 56% 56% 56% 12 55% 59%
54% 54%
-
2005 2007 2008 2010 2012 2013
Total Cotton PES FY PES SF
Source: The Fiber Year Consulting 2014
Note: PES FY is polyester filament. PES SF is polyester staple

 The world fiber consumption grown at a CAGR of 3.2% during the period 1965-2013, driven by:
 growing population.
 rising disposable income especially in developing countries.
 During the period 2005 – 2013, the world consumption of polyester filament has experienced a
CAGR of 8.6%, vis-à-vis cotton at a negative CAGR of (-0.75%) and polyester staple at 3.7%.
 Share of polyester filament in total consumption rose from 21% (2005) to 33% (2013).
 Popularity of polyester yarns is driven by its wide use for textile (e.g. footwear and apparel, home
furnishing, etc.) and industrial purposes (e.g. tire reinforcement, safety belts, etc.).
21
 Key Drivers of Vietnam’s Polyester Filament
production

- Global demand for apparels.

- Vietnam’s growing market share
in global apparel market.
- Relocation of garment and textile
production from other countries to
Vietnam.
- Yarn forward rule of origin in
order to get favorable tax
treatment.
- Global demand for polyester yarn.
- Favorable tariff treatment for
Vietnam’s yarn in exporting
countries.
- Rising local demand driven by
development of local textile &
dyeing sector.

 Favorable import tariff on Vietnam’s

garment export.
 in Japan: currently 0%  Favorable import tariff on Vietnam’s
 in EU: will reduce from 9.6% to 0% exported yarn in Thailand, Korea, Turkey
under future FTA while other competitors (China and
 in US: will reduce from 17.5% to 0% Taiwan) are subject to anti-dumping tax.
under future TPP
 In order to get 0% tariff under TPP: all
production stages (including yarn) must be
in TPP member countries.
Unbalanced structure of Vietnam’s Garment and
Textile sector
Bottleneck in textile and dyeing sub-sector
Agenda

01 | Corporate & Business Overview

02 | Industry Overview

03 | Strategies

04 | Financials

05 | Listing

06| Q&A

24
 Our Growth Strategy
CSF continues creating value by adopting the right growth strategy to
capture market opportunities
Third phases of expansion in
Trang Bang factory
Possible extension to
Achieving
both upstream further •Diversification to lower risk of
(production of polyester economie over dependence on any
chip) and downstream s of scale single customers.
(textile and dyeing sector) Expanding •Key focus areas: Asia and
Vertical customer
integration base Europe, FDI firms in Vietnam

Order selection and price Aim to improving its

matching to effectively Growth profit margin
hedge for FX risk and strategy Focusing
FX and on high-
volatile selling prices risk value
managem- added
ent products

Strictly Professional training, HR policies

Wastage reduction, quality enforcing Building
up skillful improvement, succession plans
control, proper maintenance quality and good corporate culture
assurance workforce
of equipment and machine development
disorders reduction

25
 Investment
CSF will continue invest in the core business and other related segments
which have synergy with the yarn business

Capacity
3/2015 7/2015 Q1/2016 Q1/2017
(tons)
Cu Chi+TB1 +
37,000
TB2
TB3 7,500 7,500
TB4 8,000

Total 37,000 44,500 52,000 60,000

Capex (VNDbn) 2014 2015 2016 2017

TB3 113 525 91

TB4 274

Yarn/Textile/
Under feasibility study
Dyeing
26
Third Phase of Expansion in Trang Bang Factory
 GB ceremony was conducted in May 2014.
 Total capex: USD 33.9 million (~VND 729 billion).
 Capacity:
 15,000 tonnes POY
 15,000 tonnes DTY
 Estimated commercial operation:
 3rd Quarter 2015: commission 50% capacity (7,500 tonnes).
 1st Quarter 2016: 100% capacity comes on stream (15,000
tonnes).
 The project is aimed to capture demand of textile companies which plan
to relocate productions from other countries to Vietnam.
Total Capex (VNDbn.) 729 Total Capex (VNDbn.) 729
Equity (retained earning & new
213
Main Equipment 551 raising)
Supporting equipment 47 Debt 516
Construction 131 % of equity in total capex 29%

 Payback period: 5 years and 4 months.

 IRR: 8%.
27
 NPV: VND45.4bn.
Agenda

01 | Corporate & Business Overview

02 | Industry Overview

03 | Strategies

04 | Financials

05 | Listing

06| Q&A

28
 Business Performance in Period 2011-2014

Revenue, EBITDA,
NPAT (VNDbn)
1600 1453 1458 25.0%
1400 19.4%
1099 20.0%
1200 16.4% 15.6%
1000 935 13.4% 15.0%
800
8.8%
600 7.7% 7.3% 10.0%
5.1%
400
5.0%
200 82.5 84.2 74.4 106.1
181 180 194 227
0 0.0%
2011 2012 2013 2014

Revenue EBITDA NPAT EBITDA margin NPAT margin

Some reasons for strong revenue growth:

 Utilization of incremental capacity of Trang Bang phase 1 and phase 2 plant.
 Increasing sales to existing and new customers.
29
 2014 Budget Performance

NPAT: 106.1 billion

VNDbn.
 Higher contribution of higher grade
products and active management
of commercial activities help
raising price gap by 5.9%
compared to 2013 → gross profit
rose VND1 bn.
 Better control of G&A expense →
saving VND 8 bn.
 Better control of selling expense →
saving VND 1.6 bn.
 Better control of financial expense
2014 Gross G&A Selling Financial Corporate 2014
Budget Profit Expenses Expenses Expenses Income Tax Actual
saving VND 5.5 bn.

30
 Financial Management Policies
Moderate borrowings thanks to minimum working capital requirements and
prudent expansion plan
80 Days 0.8
70 67 0.7
0.59 58 0.57
60 57 0.6
52 0.67
50 0.5
40 0.35 0.4
67 73
30 22 56 0.3
20 18 50
20 14 0.2
10 0.1
0 0
2011 2012 2013 2014
No. of days inventory in stock No. of days AR outstanding No. of days AP outstanding Debt/Equity ratio (X)

 Lean production – minimum inventory requirement:

 Finish goods: 1.0-1.2 months of sales.
 Raw material: 1.0 months of sales.
 Strict credit terms to customers:
 Deposit and cash on delivery is required for most of customers.
 30-45 days deferred payment is only offered to very few traditional customers.
 Favorable credit terms of 90 days thanks to good relationship with suppliers.
 Prudent borrowing policies:
 Maximum debt financing for capex plan is 70%.
 Borrow in USD to minimize interest expense and optimize USD revenue stream.
 Financial Forecast for Period 2014-2016

Revenue, EBITDA & Sales volume

PAT (VNDbn) (tonnes)
2,500 60,000
1,978 50,000
2,000 1,695 47,772
1,458 40,000
1,500 40,939
33,035 30,000
1,000
20,000
500 280 358
227 10,000
106.1 116 160
- -
2014 2015 2016
Revenue EBITDA NPAT Sales volume

Key drivers under medium term growth:

 There will be organic growth through increasing sales to existing and new
customers.
 The third phase expansion in Trang Bang factory is expected to commission 50%
capacity in July 2015 and 100% capacity by 1 st Quarter 2016. 32
 Comparison between base case and best case
forecast in 2015

VNDbn

CSF can achieve higher profit in 2015 if:

 Saving from electricity cost: 5.3 bn.
 Saving from depreciation rate: 3.7 bn.
 Saving from Tax concession: 7.9 bn.

2015 Electricity Depreciation Tax 2015

Base Cost Cost Concession Best

33
Agenda

01 | Corporate & Business Overview

02 | Industry Overview

03 | Strategies

04 | Financials

05 | Listing

06| Q&A

34
 Depository and listing process

End of Jun.
2015: HOSE
approve the
Apr. 2015 – the listing
end of Jun.
2015: Lodge
application to
Feb. – Apr. VSD and
2015: Complete HOSE
sales of
treasury stocks

 The BOD will decide the listing time and listing price within 90
days from the date HOSE approves the listing application.
35
Agenda

01 | Corporate & Business Overview

02 | Industry Overview

03 | Strategies

04 | Financials

05 | Listing

06| Q&A

36
www.theky.vn