10.29-31.2012, PRESENTATION, Corporate Presentation, Nick Cousyn

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BDSec JSCCorporate Presentation

BDSecuritiesMongolia’s largest Broker

Broker of the YearBy MSE 2011

Entrepreneur of the YearBy MNCCI 2011

Mongolian Top CompanyBy MNCCI 2011

August, 2012

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BDSecuritiesMongolia’s largest Broker COMPANY OVERVIEW

� Founded in 1991, BDSec is the largest brokerage and investment banking firm in Mongolia

� Provide following services:- Equity & bond broking- Advisory- Underwriting

� Listed on the MSE, BDSec has a market value of US$ 28 million

� BDSec is the only publicly traded financial company in Mongolia

� Most experienced team in the market, we maintain strong relationships with local companies

� The Board of Directors is comprised of BDSec management as well as experienced foreign investors

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BDSecuritiesMongolia’s largest Broker BOARD OF DIRECTORS

Dayanbilguun DanzanDirectorCEO of BDSec since 1999Served as Board Director of MSECurrently Board Director of Sharyn Gol

Lkhagvadorj BurenmendChairmanFirst Deputy CEO of BDSec since 1999Member of the New Securities Market Law discussing committee

Batgerel NarangerelDirectorDeputy Director of BDSec since 2009B.A. in International Relations from National University of Mongolia (NUM)

Amgalanbayar DaramranzDirectorAdministrative Officer at MSM LLCWorked as CFO at BDSec until 2004B.A. in Economics from NUM

James PassinDirectorCo-founder and Director of Firebird Management LLC which is the biggest investor in the Mongolian Stock Market

Hitoshi TaniDirectorDirector and President of EXE CorporationManaging Director of Sakura Ventures Pte Ltd.

Alexis de MecquenemDirectorAssociate at Cube Capital Ltd. Previously worked with Savills Vietnam, Credit Agricole, and Marriott International

Enkhbayar BayartogtokhDirectorGeneral Manager at Sanaa EXE LLCPreviously worked with Deutsche Securities, Goldman Sachs Japan, JPMorgan Securities Asia

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BDSecuritiesMongolia’s largest Broker CLIENTS

� 740 international clients73 institutional clients

� Our partners: CLSA in Asia & AuerbachGrayson in USA

� Regularly organizes client meetings with corporate managers as well as government officials in Mongolia

Dr.Mark Mobius of Templeton during client visit at Sharyn Gol JSC (MSE: SHG)

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→ From more than 30 countries

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BDSecuritiesMongolia’s largest Broker BROKERAGE

8.4

90.370.6

22.6

92.4

172

4645%

57%36%

46%

68% 68%85%

2006 `07 `08 `09 `10 `11 `12 JulBDSec Others Mrkt. Share

� Executed 85% of total equity transactions on the MSE for the first half of 2012 (25% increase y/y)

� 44% of total foreign accounts, 25% of total local accounts, 30% of total institutional and corporate accounts

� 92% of total block trading through BDSec in 2012

� There were more block trades than any other transactions so far in 2012

Market Share (equity mil US$)

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BDSecuritiesMongolia’s largest Broker RESEARCH

Mongolia portfolio strategy

MGG initiation of coverage

Berkh Uul initiation of coverage

� Daily trading snapshot� Weekly market update� Special reports & analysis

Research products include:

� Investment proposals � In-depth research coverage � Brief research reports

� Macro analysis � Industry overviews

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Nick CousynCOOHead of Research

New securities market law

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BDSecuritiesMongolia’s largest Broker INVESTMENT BANKING

� Acquired first underwriting license in Mongolia and managed first IPO in Mongolia in 2005

� Managed 12 IPOs out of total 17 since 2005, all 4 secondary issues, and 5 bond offerings out of 13 since 2001

� Also provide pre-IPO financing, private placement, M&A, and corporate finance advisory services

� Our clients enjoy advantages participating in the deals we manage

Major ECM deals

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PIPELINE

Projects underway

� Beren Mining JSC To raise US$ 100 million by IPO on MSE

� Berkh Uul JSC Convertible loan , $11.5 million, int. rate 10%-15%, maturity 2-3 years

� HGN Steel JSC To raise US$ 9.4 million by private placement

� Jump Alt LLC To raise US$ 3.5 million by private placement

� Beren Construction and Automation Co., Ltd To raise US$ 50 million to US$ 100 million by bond issue and private placement

� Just Agro LLC To raise US$ 4 million by corporate bond , maturity 12 months

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BDSecuritiesMongolia’s largest Broker FINANCIALS

Million MNT

2009 2010 2011 2012 2QYOY

increase

Sales revenue 1,765.4 2,675.5 4,946.9 3,033.1 31%

Gross profit 83.0 2,046.6 4,135.6 2,236.6 30%

EBITDA (302.1) 1,000.0 1,696.9 1,028.8 74%

Operating profit (498.1) 934.5 1,614.8 976.0 60%

Net profit after tax (455.3) 819.5 1,430.8 827.2 68%

Dividend Per ShareDividend yield

501.5%

ROE - 12.51% 16.36% 9.16%

EPS -41.4 74.5 130.1 75.2 30.55%

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0.8 0.70.4

3.2

0.2

19.2%21.6%

11.2% 11.2% 11.2%

16.2% 16.2%

2006 `07 `08 `09 `10 `11 `12

Corp. Bond Trading Annual Yields

• In 2011, total government bond trading reached a historic high of 177.9 million USD and corporate bond trading reached 3.2 million USD

• Year of 2011 saw the first corporate bond issuance in 3 years (Just Agro)

• We expect significant growth in the corporate bond market in the years to come

Government bond trading (US$mil) Corporate bond trading (US$mil)

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3.6

31.5

1.223.8

177.9

0.1

8.6% 8.4%9.5% 9.5%

7.3%8.0% 7.5%

2006 `07 `08 `09 `10 `11 `12

Gov't Bond Trading Annual Yield

BDSecuritiesMongolia’s largest Broker BOND MARKET

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GROWTH POTENTIAL

� Government has indicated it will continue its policy of privatization

� Regulatory environment is improving with more companies coming to market in

2013

→ MSE liquidity will increase offering opportuni�es for investors

68% of the free-float is owned by BDSec clients

75%

25%

State-owned

share in MSE

listed companies

Privately-owned

shares in MSE

listed companies

Free-float

owned by clients

of others

brokerage

companies

Free-float

owned by BDSec

clients

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MONGOLIA PORTFOLIO STRATEGY

Price targets

Equities:The Mongolian economy is forecasted to almost quadruple in size by 2017, offering equity returns of 500%-1000%

MSE Top 20 price target of 25,000 → 32% increase over the next 12 months

Currency:Mongolia is one of the few countries in the world where monetary policy is tightening

We expect the Mongolian Togrog to appreciate anywher e from 10-20% against the world’s major currencies over the next 12-18 months

MSE Top 20 – 25,000

MNT/USD – 1,200 MNT

MNT/EUR – 1,400 MNT

MNT/CNY – 180 MNT

MNT/JPY – 13.75 MNT

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Price targets

Sovereign bonds:We forecast lower yields and an improving credit rating due to:-Strong economic growth-Sound fiscal policy -Tighter monetary policy

BUY rating: Mongolian Sovereign debt is very attrac tive for foreign investors, especially denominated in MNT

Corporate bonds:For local corporations to grow in line with the Mongolian economy, they need greater access to capital with longer duration

We expect rapid growth in corporate borrowing via t he capital markets over the next several years

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A word about global inflation and money printing

� Currency debasement and negative real rates around the world result instrong commodity prices, which combined are both the cause and the effect ofhigh inflation

� A high inflation world benefits the owners of hard assets, at the expense ofthe consumer of those assets

→ This act as a transfer of wealth to commodity rich countries like Mongolia

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US economy & equity markets from 1980-2000 as a tem plate for Mongolian capital markets

� The S&P 500 ↗ from a price of 102 to 1498

� The Prime Rate hit 20% in ‘81 (not dissimilar to current borrowing costs in Mongolia)

� Duration of such bull markets = 20 years → We suspect the same will happen in Mongolia

� Only 2 recessions in the US (‘81-’82, ‘90-’91) → We expect the next recession for Mongolia to be a long way off

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BDSec HeadquarterZaluuchuud Avenue 27-18th Khoroo, Sukhbaatar DistrictUlaanbaatar, Mongolia Phone/Fax: 976-11313108Email: [email protected]

Munkhtulga GanboldInstitutional ClientsEmail: [email protected] 976-11323411

Tuv Province BranchSuite 203, Government OfficeZuunmod City, Tuv ProvinceMongolia Phone: 976-99012845Email: [email protected]

Erdenet BranchMongolian People’s Party Office, Bayanundur SumOrkhon Province, Mongolia Phone: 976-99072846Email: [email protected]

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BDSecuritiesMongolia’s largest Broker CONTACT INFORMATION

10.29-31.2012, PRESENTATION, Corporate Presentation, Nick Cousyn

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