a_Q210 Investor Presentation Eng(20101111)

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a_Q210 Investor Presentation Eng(20101111)

  1. 1. Mirae Asset SecuritiesInvestor presentationQ2 FY2010 Company fiscal year starts in April
  2. 2. DisclaimerThis presentation may contain forward-looking statements about Mirae AssetSecurities and unaudited preliminary figures internally collected as of September 2010.These figures are subject to change without prior notice, and Mirae Asset Securities isneither obligated to provide revisions, nor responsible for any loss or inconveniencecaused by changes regarding the projection and forecast presented in this document. 1
  3. 3. Table of contents I. Industry overview 3 II. Company overview 6 III. Company operational overview 10 IV. Group overview 20 23 Appendix 2
  4. 4. I. Industry overview I. Mutual fund industry II. 3
  5. 5. Industry overview I. Mutual fund industry While the mutual fund market loses 16% of AUM, equity fund EUM shrank even more by 26% during the same period. Mirae Asset Investments also lost 18% of Mutual fund AUM, but it still dominates the mutual fund industry Mutual fund industry Equity fund market Mirae Asset Investments KrW TrillionKrW Trillion KrW Trillion 80 Others Domestic Equity fund 61 MMF400 Others 390 150 Overseas Equity fund Fixed income fund Portion of SIP 144 60 -18% MMF -16% Balanced fund 49.8 Fixed income fund 328 -26% Equity fund Stock fund300 Balanced fund 18% 107 40 Equity fund Stock fund 100 23% 20 33.1200 Equity fund M/S 16% 55% 31% 10% 50 0 2006.03 2007.09 2008.09 2009.09 2010.09100 Market Share 33% 0 0 2006.03 2007.09 2008.09 2009.09 2010.09 2006.03 2007.09 2008.09 2009.09 2010.09 Source : KOFIA Source: KOFIA, As of Sep, 2010 Note: SIP(Systematic investment plan) Source : KOFIA (As of Sep, 2010) 4
  6. 6. Industry overview II. Regardless of approx. 19 trillion won of YTD redemption out of equity fund KrW Billion80,00080,000 8,000 800 2 160,00060,000 600 6,000 Fund flow is to be already priced in the current share price.40,00040,000 400 4,000 There is almost no correlation20,00020,000 200 2,000 between net fund flow and the r = -0.18) 0 0 0 Thus, fund flow is not a swing-20,000 -200 -2,000 factor of share price any more.-40,000 -400 -4,000-60,000 -600 -6,000 2010.01 2010.03 2010.05 2010.07 2010.09-80,000 -800 -8,000 Source: KOFIA 5
  7. 7. II. Company overview I. Diversified revenue & superior return II. Outstanding growth III. Managing growth and cost 6
  8. 8. Company overviewI. Diversified revenue & superior returnThe Company seeks well-diversified and balanced biz model generating stable Net revenue comparison Korea top 5 Mirae Asset Securities 2006 2007 2008 2009 2010 2010 Return on Equity 26% 30% 31% 34% 47% 46% Mirae Asset (Unit : %) Securities 23.6 20.3 21.1 18.7 37% 32% 32% 15.6 13.3 12.9 14.0Brokerage 34% 13% 9.8 9.5 20% 7.8 7.8Wealth 6%management 6% 6% 3% 9% 8%Investment 18% 32%banking 14% 19% 31% 32%Interest profit 12% 10% 9%& other 1% 3% -1%Trading income& PI 7
  9. 9. Company overview II. Outstanding growth Wealth management and brokerage revenue remained modestly flat QoQ Wealth management Brokerage KrW Billion KrW Billion120 6090 One-time fee 45 55%60 3030 15 0 0 2005.09 2006.09 2007.09 2008.09 2009.09 2010.09 2005.09 2006.09 2007.09 2008.09 2009.09 2010.09 Investment banking Interest profit KrW Billion KrW Billion 40   60   30   45   20   30   10   15   0   0   2005.09 2006.09 2007.09 2008.09 2009.09 2010.09 2005.09 2006.09 2007.09 2008.09 2009.09 2010.09 Excl. PI profits 8
  10. 10. Company overview III. Managing growth and cost Based on stable revenue in the wealth management and institutional brokerage business, the Company is to realize economies of scale thru efficient cost management and new growth drivers Revenue growth vs. cost EBT growth Growth initiatives KrW Billion KrW Billion250 400 VIP Marketing Asset gathering Safe asset & - Revenue200 - Cost strategic products expansion 300 PB service thru WM center150 Retirement Pension 200 Enhancing brand image thru DC Model Portfolio Wrap100 Strengthen Infra & Contents 100 Overseas business 50 Focus on Emerging Market Biz Brokerage, WM & Fee based IB 0 0 Utilizing overseas network 2006 2007 2008 2009 20102010.09 2005 2006 2007 2008 2009 2010 Note: Excl. OTC trading gain/loss 9
  11. 11. III. Company operational overview I. Wealth management II. Brokerage III. Investment banking IV. Retirement pension plan V. Overseas business 10
  12. 12. Operational overview I. Wealth management asset remain stable and M/S in SIP sector went up to 6.7% Fund sales balance # of SIP account Industry (mn) Company M/S KRW Trillion 6.2% 6.7% 5.8% 43.8 43.2 43.6 20 7.0% Other 0.8   6.0% 0.1   0.4   0.2   0.7   0.7   MMF 15 1.3   1.3   1.9   4.3% 5.0% 3.2   3.6   Balanced fund 10 4.3   15.1 4.0% Fixed-Income fund 24.2 11.9 12.7 10.2 23.0 5 Domestic equity fund 3.0% 14.2   Overseas equity fund 4.0 0 2.0% 14.7   4.0 19.9 2007. 2008. 2009. 2010. 0.2 16.0   Other : PEF, REIT etc. 0.3 09 09 09 09 2.9 3.7 2.5 14.7 0.9 1.3 0.7 Structured products 2.3 2.9 7.4 ELS new issuance 1.8 KrW Billion 0.2 1.0 6.5 Commission rateKRW Trillion 1.3 8.7 ELS,  DLS 24.2   5.1 23.0   1.3 Retirement  Pension 19.9   0.7 4.5 1.0 Trust 1.0 Bond,  CP 8.9 8.3 3.1 6.4 Customers  deposits 4.7 Fund 1.6 2008.09 2009.09 2010.09 2006.09 2007.09 2008.09 2009.09 2010.09 2008 2008 2009 2010 2010 Source: Company .12 .06 .12 .06 .09 11
  13. 13. Operational overview I. Wealth management Majority of redeemed asset from equity fund was transferred to alternative investment vehicles such as Wrap accounts without leaving the capital market Growth of Wrap account Top 3 vs. Mirae Asset SecuritiesKrw Trillion 0% 28.5 5% 7% Others30.0 Others 2.5 Fixed income type Companys equity type wrap Fund type Companys fund wrap25.0 2.0 57% Equity type Industry 21.9 0.1 2.0 79% Note: As of Sep, 2010, Top 3(D, H, W) Source: Company 20.0 1.7 19.320.0 0.1 16.4 1.4 0.7 1.4 1.5 36% 0.1 5% 1.2 0.1 0.6 10%15.0 13.3 1.1 1.1 0.1 0.3 0.3 Mirae Asset Mirae Asset Mirae Asset 0.1 0.1 1.0 Top 3 Mirae Asset Securities 0.2 Securities Securities Securities10.0 0.2 0.1 1.2 0.9 1.0 1.0 1.0 0.5 -Equity type: 2.8%~3.2% 5.0 0.8 0.8 (no additional brokerage fee) - -Fixed income type: 10~20bp 0.0 0.0 2009.03 2009.06 2009.09 2009.12 2010.03 2010.06 2010.09 Source: KOFIA, Company 12
  14. 14. Operational overview II. BrokerageIn spite of the drop in brokerage M/S from the peak of 8.5% to 6.2%, brokerage sector hasmaintained growth trend by virtue of our strong institutional biz Brokerage breakdown Brokerage M/S 9.0% 8.1% 8.2% 8.5% Trading value Commissions 7.1% 6.9% 6.2% 6.0% 13% 22% 24% 0% Institution 3.0% 45% 46% 1% 3% 0.0% FY05 FY06 FY07 FY08 FY09 1H  FY10 Off-Line 12% 10% (Retail) 87% 77% 73% Commission rate 45% 42% On-Line - Institution : 14~15bp (Retail) - Off-line(Retail) : 38~40bp Q2 FY09 Q2 FY10 Q2 FY09 Q2FY10 3 Top 3 - On-line(Retail) : 2.9bp average Note : Top 3 (S, D, W), as of June 2009 13
  15. 15. Operational overview III. Investment banking & Others The investment banking group focuses on generating stable cash flow through specializing in advisory and fee based business, and we recently set up DCM division to develop and provide fixed-income related services IB revenue Interest incomeKrW Billion 5% 3% 5% 7% 7% 7% 8% 30 Underwriting 10% 9% 13% 14%13% Advisory fee 14% 17% 0.9 16% 28% 27% 36% 29% 20 31% 33% 25.8 0.9 10 3.4 62% 58% 54% 52% 51% 1.2 46% 46% 4.3 2.8 4.9 5.5 11.6 0.7 8.6 7.7 2.7 5.1 0.9 4.2 4.3 4.3 0.8 2.3 2.7 2.3 3.3 0 2007 2008 2008 2009 2009 2010 2010 2007 2008 2008 2009 2009 2010 2010 .12 .06 .12 .06 .12 .06 .09 .12 .06 .12 .06 .12 .06 .09 FY2010 Q2 Margin loan IPO: FILA Korea, IMK, Igloosec and etc. Loan Issuing CP: SK E&C, Samsung Card and etc. Bank deposit & Others Advisory: DKT, TJ media and etc. Fixed-income 14
  16. 16. Operational overview IV. Retirement pension plan While RPP market is growing at a rapid pace, the company continues to increase pension AUM and M/S. The company has been ranked #1 within the securities sector Retirement pension M/S Koreas expected RPP market size as % of GDPKrW Trillion M/S 18.9 (RHS) 3.7% KrW Trillion 15 3% 300 CP Mkt AUM 100% 35% % of GDP 250 250 10 14% 2% 75% 200 5 51% 1% 149 150 50% 2006.09 2007. 09 2008.09 2009. 09 2010.09 100 86 Pension AUM rank 22% 25% KrW billion 50 13% Bank Life insurance 50 29 8% KB 2,105 Samsung 3,643 17 3% 5% 10 2% Woori 1,829 Kyobo 903 1% Shinhan 1,805 Korea 513 0 0% IBK 1,301 Mirae Asset 285 NH 1,011 Dongyang 137 2009 2010(E)2011(E)2012(E)2013(E)2014(E)2015(E) Securities Property insurance Note: Based on KIRIs 2015 estimate of 250 tn KrW and Mirae Asset 745 Samsung 636 applying CAGR of 71% from 2009 to 2015 CAGR 3% GDP Samsung 403 LIG 344 growth assumption applied from 2009 to 2015 Korea Inv 302 Hyundai 85 Dongyang 293 Dongbu 63 Shinhan 224 Meritz 35 Source: FSS (Sept. 2010) 15
  17. 17. Operational overview IV. Retirement pension plan overall adoption rate is still 16%, there are good chances for Mirae Asset Plan performance AUM & Plan type mix FY2010 Q2 # of companies (5 or more employees) % of companies (already adopted RPP system ) 6.7   DC DB Thousands 4.9   4.5   3.9   3.7   3.5  3.4   2.7  Mirae Asset Bank Securities Insurance Securities FY05 Q4 ~ FY10 Q1 32.6   DC DB 29.2   26.9   Securities Insurance Bank 22.8   23.0   22.5   22.2   20.2   2005.12 2006.12 2007.12 2008.12 2009.12 2010.09 Source: FSS (Sept. 2010)Mirae Asset Bank Securities Insurance Portion of DC Securities Note: % based on 52K number of corporations Source: FSS (as of Sept. 2010)Source: FSS Note: Others(reserve to be invested) 16
  18. 18. Operational overviewIV. Retirement pension planRetirement pension market is expected to evolve thru three phases to DCdominant market benefiting securities firms that has brand value and betterconsulting capabilities Phase I Phase II Phase III Adaption Add-on Shift Old RIP New DB/DC Existing DB + DC DC IRA Banks & insurance have Lg. CO active adding DC Baby boomers retire advantage Cross-selling improves DB dominant over DC SME active adapting DC margin (Adaption rate still very low at 15% for 1all Advantageous for DC However, DC to grow faster providers and securities enterprise and 35% for firms Underfunding, liability, 2large enterprise) high cost, ease of administration Insurance Securities Bank IRA DC DB 24% 33% 36% 8% 12% 25% 14% 21% 34% 40% 68% 50% 67% 33% 35% 2006.03 2010.05 20xx 2010.05 20xx 2010.12 2011.121 Companies with 5 or more employees2 Companies with 300 or more employees 17
  19. 19. Operational overviewIV. Retirement pension plan Aging/Aged/Post-aged society Aging problem The aged Productive population 1) Post-aged 36yrs 80yrs 26yrs society 2006 2012 2026 1 1 20% 1 Aged society 1972 1994 2018 14% 8 3 Aging 1 society 1932 1970 2000 7% 2005 2030 2050 1) It is classified as post-aged society when more than 20% of the population is consisted of people with age 65 or more pension market as % of GDP Trend of USA pension market as % of GDP150% 123% 125% 116% 116% 107% 100% 86%100% 79% 82% 75% 51% 50% 50% 25% 1.4% 0% 0% Korea UK USA Netherlands OECD Ave. 1985 1995 2005 2007Source: KIRI, HRI, PRIMA (2007 for USA, 2008 for others, 2009 for Korea) 18 Source : PRIMA
  20. 20. Operational overviewV. Overseas businessOverseas business is one of the three growth drivers to extend our success story to thefuture. Even before the financial crisis, we saw the potential of emerging market and havebeen heavily focused on EM business since 2007 Mirae Asset Securities HQ HK, UK: Institutional Brokerage biz utilizing global research center Hong Kong 2007 (57) US: Institutional Brokerage and WM biz, started EM funds sales to US market Vietnam: Retail & Institutional Brokerage and Vietnam US UK WM biz thru local branches 2007 (43) 2008 (6) 2008 (8) Brazil Others Brazil: started as an online brokerage firm 2010 (30) 2007 (8) No. 1 securities firm offering comprehensive financial services in the Brazilian market Mirae Asset Securities China: started as a investment advisory and : Hong Kong, Vietnam, U.K, U.S, China, Brazil research company Asset Management affiliates : Hong Kong, India, Brazil, Vietnam, China, U.K, U.S * Others: Mirae Asset Securities Beijing representative office(2007), Mirae Asset Investment Consulting (Shanghai) * (# of employee) 19
  21. 21. IV. Group overview I. Company profile II. Mirae Asset Group structure 20
  22. 22. Group overview I. Company profile Shareholder Information 1999 Established Mirae Asset Securities(Capital stock 50billion won) 2000 Began selling mutual funds 2003 Launched MAPS Wrap account service Began the bancassurance business Mirae Asset Capital 37% 2005 Won a license for the Trust and retirement pension business Mirae Asset Life Insurance 1% ESOP 2% Affiliated party 4% 2006 Listed on the Korea exchange Domestic institutional investor 14% Won a license for derivatives business Domestic retail investor 25% Overseas investor 9% 2007 Established Mirae Asset Securities (HK), Mirae Asset Securities (Vietnam), Mirae Asset Securities Beijing representative office 2008 Established Mirae Asset Securities (UK), Mirae Asset Securities (USA), Mirae Asset Investment Consulting (Shanghai) 2009 Opened Mirae Asset Securities (Vietnam) Hanoi branch* 41,892,216 shares outstanding as of March 31, 2010 Established Wealth management center Market Capitalization 2.5 trillion won 2010 Opened service on FX margin trading & overseas futures trading Established Mirae Asset Securities (Brazil) Number of Employees 2,127 Launched industrys first iPhone & Android phone trading service Number of Branches 118 21
  23. 23. Group overviewII. Mirae Asset Group structureSince established in 1997, Mirae Asset group has become one of the topmoney managers* investing in Emerging Markets Hong Korea Korea Mirae Asset Securities Kong Hong Wealth management U.S.A Kong Brokerage service Mirae Asset Global Investments Investment banking U.K. U.S.A. Securities Asset Retirement pension Traditional long only equity Management Vietnam Mirae Asset Mirae Asset Life Insurance Financial U.K. Brazil Group Life insurance Life Variable insurance Insurance Mirae Asset Maps Vietnam Retirement pension Capital Global Investments & Venture Korea Alternative investments(PEF, REITs) India Mirae Asset Capital & Venture Korea Brazil M&A Advisory service Investment in start-up companies * Mirae Asset Financial Total AUM ranked 6th largest in Korea and 15th largest in Asia ex Japan in 2008 Institutional Investor 100 Top money manager 2008. Asian Investor, Hong Kong based monthly magazine publisher that specializes in Asian asset management industry, awarded annual Investor 2009 Investment Performance in May 2009. Mirae Asset Global Investments won both the best Market and Onshore Fund awards this year. 22
  24. 24. Appendix I. Summary income statement II. Summary balance sheet III. Mutual fund fee structure 23
  25. 25. Appendix I. Income statementFiscal year ends March FY2010 FY2009 FY2009 FY2008 FY2007 FY2006 FY2005(Unit: Billion KrW) Q2 Q1 Q4 Q3 Q2 Q1Operating Income 338.8 345.1 1,809.2 412.7 382.3 463.8 550.4 2,064.8 2,531.8 604.1 432.1 Net Revenue (Operating Profit + G&A Expense) 136.4 109.1 525.4 151.8 126.7 107.1 139.8 482.5 686.8 330.7 285.9 1) Wealth Management 45.3 45.6 170.3 42.0 45.7 43.3 39.3 179.6 279.1 113.5 62.0 2) Brokerage 33.4 37.6 167.1 35.7 31.0 49.5 50.9 164.6 195.3 114.6 141.7 3) Investment Banking 8.8 3.0 30.1 5.4 9.2 7.1 8.4 30.3 65.1 27.7 9.7 4) Net Interest Profit & Other 52.9 53.9 169.1 47.3 48.4 31.2 42.3 171.7 137.3 45.3 53.7 5) Trading Income & Principal Investments 14.9 (22.0) (7.4) 3.0 (6.7) (12.4) 8.7 6.4 64.2 33.4 36.6Operating Expense 288.0 321.0 1,602.4 336.6 341.8 433.6 490.4 1,872.9 2,166.9 446.5 294.6 General and Administrative Expense 85.6 85.0 318.6 75.7 86.2 76.9 79.8 290.7 322.0 172.7 148.4 1) Salary Expense 52.6 52.5 188.4 41.8 49.2 41.4 56.0 171.9 198.9 102.5 92.7 2) Marketing Expense 5.0 6.7 25.5 9.5 6.8 6.1 3.2 21.4 37.4 26.9 18.0 3) Fixed Expense 13.0 12.4 47.6 12.7 12.0 12.3 10.5 47.0 34.6 19.7 17.2 4) Other Expense 15.0 13.4 57.0 11.7 18.1 17.0 10.2 50.4 51.0 23.5 20.5 Salary as % of G&A Expense 61.5% 61.8% 59.1% 55% 57% 54% 70% 59% 62% 59% 62% Marketing Expense as % of G&A Expense 5.9% 7.9% 8.0% 13% 8% 8% 4% 7% 12% 16% 12% Fixed Expenses as % of G&A Expense 15.1% 14.6% 14.9% 17% 14% 16% 13% 16% 11% 11% 12%Operating Profit 50.8 24.1 206.8 76.1 40.6 30.2 60.0 191.9 364.8 158.1 137.5 Non-Operating Income 10.8 9.3 28.3 (11.5) 8.6 16.5 14.7 4.4 10.9 4.3 4.6 Non-Operating Expense 1.3 3.1 10.6 (2.3) 1.5 2.7 8.6 22.2 8.5 2.0 13.8Net Income Before Tax 60.2 30.3 224.6 66.9 47.6 44.1 66.0 174.0 367.3 160.3 128.3Net Income 42.4 23.8 168.2 53.1 33.4 33.7 47.9 126.1 267.2 115.7 91.5 Note: Current and historical numbers are based on pr-audit results provided for investors convenience. 24
  26. 26. AppendixII. Balance sheet FY2010 FY2009 FY2008 FY2007 FY2006 FY2005(In KrW billions) Q2 Q1Total Asset 9,911.5 8,928.3 7,895.9 6,619.8 6,871.3 3,915.2 1,509.7 1. Cash and Deposit 1,437.9 1,343.8 1,340.4 1,201.1 991.3 1,062.6 745.7 2. Securities 6,177.5 5,876.4 5,314.6 4,615.7 4,668.1 2,278.4 370.8 3. Derivatives 43.6 27.6 45.5 22.7 6.6 0.0 0.0 4. Loans 1,046.9 977.1 824.0 440.2 814.4 329.8 159.8 5. Tangible Fixed Asset 15.5 18.1 20.9 31.6 44.8 14.5 13.3 6. Other asset 1,190.1 685.3 350.6 308.5 346.1 229.9 220.1Total Liabilities 8,089.0 7,143.4 6,123.6 4,944.6 5,283.6 2,958.8 979.4 1. Deposit Liabilities 987.7 981.8 913.8 902.3 777.3 704.8 869.9 2. Leveraged Liabilities 5,953.9 5,551.8 4,910.5 3,787.1 4,163.7 2,115.2 15.8 3. Other Liabilities 1,147.4 609.8 299.3 255.1 342.6 138.8 93.7Total Stockholders Equity 1,822.5 1,784.8 1,772.3 1,675.2 1,587.7 956.4 530.2 1. Capital Stock 209.5 209.5 209.5 199.7 199.6 185.5 134.8 2. Capital Surplus 856.2 856.2 856.2 866.1 863.3 499.7 213.0 3. Accumulated other Comprehensive Income (28.5) (23.8) (43.4) 84.3 4.5 (0.1) (0.1) 4. Retained Earning 785.4 743.0 750.1 609.8 520.3 271.3 182.5Total Liabilities & Stockholders Equity 9,911.5 8,928.3 7,895.9 6,619.8 6,871.3 3,915.2 1,509.6 Note: Current and historical numbers are based on pr-audit results provided for investors convenience. 25
  27. 27. Appendix III. Mutual fund fee structure Industry Mutual fund fee structure MAS Mutual fund fee structure MAS WM fee(Recurring Vs. one-time) Management fee (LHS%) KrW Billion3.00 One-time fee Distribution fee (LHS%) 200 100% distribution fee (%) WM fees (Recurring) Distribution portion (RHS%) One-time fee portion (RHS) 70% 175 75% 1502.00 50% 125 1.55 60% 1.27 1.32 100 25% 1.24 0.58 1.15 1.01 0.41 0.46 0.50 751.00 0% 0.30 0.46 50% 50 0.97 -25% 0.71 0.84 0.81 0.82 25 0.700.00 40% 0 -50% 2005 2006 2007 2008 20092010.08 2008 2008 2009 2009 2010 2010 2008. 2008. 2008. 2008. 2009. 2009. 2009. 2009.12 2010.03 2010.06 2010.09 03 .09 .03 .09 .03 .09 . Note 3: Weighted average Note 1: Mirae Asset Securities average Note 2: One-time: MFs upfront fee, structure Source: KOFIA, Industry weighted average 1) Balanced: Mirae Asset independence hanareum balanced product issuance fees 2) Bond: Mirae Asst Solomon government & public bond 1 Total WM fees: MFs recurring portion, WRAP, 3) MMF: Mirae Asset New MMF A-4 Bancassurance, trust and etc. 4) REITs: Mirae Asset Maps frontier real estate 4 Source: Company Source: Company, Simple average 26

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