Slide 4 Emerging Market Performance Has Been Phenomenal the
Past Several Years
Slide 5
Slide 5 Led By Increased Profitability
Slide 6
Slide 6 Increased Earnings
Slide 7
Slide 7 And Increased Valuation Multiples
Slide 8
Slide 8 But Can it Continue?
Slide 9
Expected Future Returns Section II:
Slide 10
Slide 10 Fundamental Approach to Forecasting Future Returns
From Stock Investments Methodology: -Assume Normalized Valuation
Multiples -Assume Normalized Dividend Yield -Estimate Long Term
Future Earnings Growth Expected Future Return From Investment
Slide 11
Slide 11 Dont Expect Outsized Returns Over the Next Five Years
Results: Note: China excludes A shares
Slide 12
Slide 12 We Assume Dividends Increase to Average Historic
Levels
Slide 13
Slide 13 US
Slide 14
Slide 14 Europe
Slide 15
Slide 15 India
Slide 16
Slide 16 Korea
Slide 17
Slide 17 Singapore
Slide 18
Slide 18 Hong Kong
Slide 19
Slide 19 Australia
Slide 20
Slide 20 China
Slide 21
Slide 21 Mexico
Slide 22
Slide 22 Brazil
Slide 23
Stock Selection Section III:
Slide 24
Slide 24 Beat the Expected Country Average Returns through
Stock Picking Despite Expecting Lower Returns Over the Next Five
Years, We Continue to See Many Stock Specific Opportunities in
Emerging Markets
Slide 25
Slide 25 Established in 1977 as a housing finance company
regulated by the National Housing Bank, a subsidiary of the Reserve
Bank of India Dominant player in the Indian mortgage finance market
with a market share of 30% in 2006 Provides housing finance in
India to low and middle income individuals as well as to
corporations Mortgage growth due to rising income levels, stronger
household balance and a housing shortage Diversified in different
financial services via subsidiaries or joint ventures Citigroup has
a 12.3% stake in the company Strong brand and superior management
team EPS 10 year compound annual growth rate 20.9% Book value per
share 10 year compound annual growth rate 12.5% Market
capitalization INR 443bn (USD 10.8bn) Estimated 3/2008 P/E Ratio
24.7 Housing Development Finance Corp. Ltd.
Slide 26
Slide 26 Housing Development Finance Corp. Ltd. Source:
Factset
Slide 27
Slide 27 Leader in the production and marketing of beer in
Mexico Strong brands such as Corona, Modelo Especial, Pacifico and
Negro Modelo Has 57% of the Mexican beer market share Exports five
brands to 150 countries, with Corona the No. 1 non-European bottled
imported beer to the U.S. Total brands volume 5 year CAGR 9.6%
Exclusive Mexican importer and distributor of Anheuser-Busch beers
(Anheuser-Busch is a major shareholder of Grupo Modelo) 8 th
biggest brewer in the world Operates chain of convenience stores in
Mexico, plans to double number to 2,000 over next 12 months
Benefits of continuous cost-cutting initiatives lead on improving
margins EPS 10 year compound annual growth rate 23.3% Market
capitalization MXN 187bn (USD 17.1bn) Estimated 12/2007 P/E Ratio
16.7 Grupo Modelo S.A.
Slide 28
Slide 28 Value creation by investing capital at rates of return
that exceed their cost of capital, value according to VAMUS
calculation Grupo Modelo S.A. Source: Factset
Slide 29
Slide 29 Leading wireless service provider in Latin America
with over 40% market share Spun off from Mexican telecommunications
giant Telmex in 2001 Mexican billionaire Carlos Slim controls 66%
of America Movil Provided services to over 108m wireless
subscribers in Latin America as of Dec 2006, primarily in Mexico
and Brazil Its Mexican subsidiary, Telcel is the largest mobile
operator in Mexico Largest pre-pay wireless provider in the US with
30m subscribers Signed in 2005 a international pact with Vodafone
to jointly deliver various international services Generates healthy
amount of free cash flow High operating margins of almost 20% EPS 7
year compound annual growth rate 42.8% Market capitalization MXN
1,172bn (USD 107bn), Est. 12/07 P/E Ratio 19.4 America Movil
SAB
Slide 30
Slide 30 Value creation by investing capital at rates of return
that exceed their cost of capital, value according to VAMUS
calculation America Movil SAB Source: Factset
Slide 31
Slide 31 CVRD is the largest global producer and exporter of
iron ore and pellets with a marketshare of approx. 33% The company
has become one of the worlds largest producer of nickel, with a
production of 234,900 tons. CVRD is a natural resource powerhouse
with vast reserves of iron ore, nickel, bauxite, copper/gold
kaolin, coal, manganese, and potash. The company has offices and
operations in all five continents The growth strategy is focused on
shareholder value creation. The company believes that organic
growth is the main driver of value creation, and therefore it has
an exciting pipeline of projects to be developed in the next years
Revenues 1Q07 US-$ 7.7 bn: thereof 27,2% in Asia ex-China, 16,1% in
China High operating margins: in 1Q07, the adjusted EBIT margin was
49.2% Total shareholder return (TSR) - capital gains plus dividends
42.7% p.a. between 2001 and 2006. EPS 10 year compound annual
growth rate 38.1% Market capitalization USD 113 bn, Est. 12/07 P/E
Ratio 8.2 Companhia Vale do Rio Doce (CVRD)
Slide 32
Slide 32 Companhia Vale do Rio Doce (CVRD)
Slide 33
Slide 33 Holding company for mining, tobacco, financial and
industrial interests of the former Rembrandt Group Main investments
in: Tobacco (10% of BAT), Banking and financial services (RMB
Holdings 23.1%, First Rand 9%), Industrial (Air Products SA 50%),
Mining (Trans Hex Group 34%), Healthcare (Mediclinic 50%) Current
contribution to Remgros NAV: Financial 19%, Industrial 20%,
Trademarks (tobacco) 48%, Mining 5%, Cash & Liabilities 8%
Activities concentrated mainly on the management of investments and
the provision of support Strong dividend payment track record (5
year dividend growth 36.3%) History of share buy-backs EPS 6 year
compound annual growth rate 26.4% Market capitalization ZAR 87bn
(USD 12bn) Estimated 3/2008 P/E Ratio 15.6 Remgro Limited
Slide 34
Slide 34 Remgro Limited Source: Factset
Slide 35
Slide 35 Provides a variety of domestic telecommunications
services, like local fixed- line mobile and data services in
Indonesia Majority is held by Indonesian government (51.2%) Has a
65% stake in Telkomsel, Indonesias largest cellular operator with a
56.8% subscriber market share and 68.4% of net subscriber additions
p.q. Telkomsel has 67.8% revenue market share Network coverage and
large subscriber base are key competitive advantages for Telkomsel
Strong mobile growth in Indonesia with 3 m net subscriber additions
p.q. and low penetration at around 20% Enjoys growth profile
superior to that of most of its emerging Asia peers EPS 10 year
compound annual growth rate 23.2% Market capitalization IDR
195,552bn (USD 22bn) Estimated 12/2007 P/E Ratio 14.0 PT
Telekomunikasi - Indonesia
Slide 36
Slide 36 PT Telekomunikasi - Indonesia Value creation by
investing capital at rates of return that exceed their cost of
capital, value according to VAMUS calculation Source: Factset
Slide 37
Slide 37 Principal activities are to provide banking and other
financial services Operates through 3 segments: Retail banking,
Wholesale banking and Treasury services. Incorporated in 1994 and
headquartered in Mumbai Track record in India as well as in
international markets Healthy growth to remain the market leader in
mortgages Wide network of over 535 branches and 1,323 ATMS across
228 cities in India One of the best-run banks in Asia (named as
Best Bank in India in 2006 by Euromoney magazine) Ventured
successfully into other businesses like Life and Non-life insurance
Maintains one of the best asset quality with high ROE EPS 8 year
compound annual growth rate 31.5% Book value per share 8 year
compound annual growth rate 36.3% Market capitalization INR 345bn
(USD 8.4bn), Est. 03/2008 P/E Ratio 22.6 HDFC Bank Ltd.