13 February 2015By: Andrew Stotz, CFA and Sornsak Kongcharoenpanich

SAMPLE

Profitable Growth analysis: 10 companies

13 February 2015 2Source: A. Stotz Investment Research

A. Stotz Profitable Growth

'10 '11 '12 '13 '14

2 3 1 1 1

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14

2 3 1 1 1 8 6 3 4 5

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14

4 4 3 4 4 3 3 2 2 2 8 6 5 5 4 9 8 2 3 6

Profitable growth

Asset utilization Profit margin Sales growth Margin change

Profitability Growth

Profitable growth: growth with minimum asset useWhy: The way to be world class and sustainable in the long runRisk: One without the other is not enough

Profitability: ROA – generating the most profit out of your assetsWhy: Getting more out of assets means you need less capitalRisk: Only high returns, but no asset growth, is not sustainable

Growth: EPS growth – the market values it and so should youWhy: Grow earnings to grow firm valueRisk: Focus on short-term results is not a sustainable strategy

Profit margin: cost control to expand marginWhy: Internal improvement of efficiency and profitabilityRisk: Too tight cost control prevents growth

Sales growth: externally driven EPS growthWhy: Essential to grow your businessRisk: Growth without profit doesn’t win in the long run

Asset utilization: amount of revenue per unit of assetsWhy: Careful asset growth preserves capital Risk: Too tight asset policy prevents growth

Margin change: internally driven EPS growthWhy: Getting more profit from every saleRisk: Too high prices, or low costs could hurt sales growth

13 February 2015 3

Profitable Growth

'10 '11 '12 '13 '14

1

2 1

3 1 2

4 2 3 1

5 3 4 2

6 4 5 3 1

7 5 6 4 2

8 6 7 5 3

9 7 8 6 4

10 8 9 7 5

9 10 8 6

10 9 7

10 8

9

10

Source: A. Stotz Investment Research.

Note: 1 = top ranking and 10 = worst. Most recent year’s data is based on the last 12 months of published data.

UNVR (UNVR IJ): Struggle to grow the business

'10 '11 '12 '13 '14

1 1 1 1 1

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14

1 1 1 1 1 6 4 4 4 6

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14

1 1 1 1 1 2 2 2 2 2 8 5 4 3 3 5 4 5 5 7

Benchmarked against 300 Cons. Staples companies across Asia.

Profitable Growth

Asset utilization Profit margin Sales growth Margin change

Profitability Growth

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Mar-10 Aug-12 Jan-15

UNVR

Price (IDR)

Five years of ranking

Decile ranking improved to no. 1 from no. 6 among its peers

How to read the diagram

Company was ranked in 3rd decile in 2013

13 February 2015 4Source: A. Stotz Investment Research.

Note: 1 = top ranking and 10 = worst. Most recent year’s data is based on the last 12 months of published data.

PetroChina (857 HK): In the middle on Profitable Growth

'10 '11 '12 '13 '14

4 5 5 4 4

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14

4 4 4 3 4 5 8 6 4 4

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14

4 3 3 3 3 5 5 5 4 4 3 4 6 5 5 6 8 6 3 4

Benchmarked against 140 Energy companies across Asia.

Profitable Growth

Asset utilization Profit margin Sales growth Margin change

Profitability Growth

-

2

4

6

8

10

12

14

Mar-10 Aug-12 Jan-15

PetroChinaPrice (HKD)

13 February 2015 5Source: A. Stotz Investment Research.

Note: 1 = top ranking and 10 = worst. Most recent year’s data is based on the last 12 months of published data.

MPPA (MPPA IJ): Continuous improvement on Profitable Growth

'10 '11 '12 '13 '14

1 9 5 4 3

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14

8 9 7 4 3 9 9 1 2 4

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14

6 6 3 1 1 8 9 8 7 6 10 8 2 5 3 6 7 3 3 4

Benchmarked against 730 Cons. Disc. companies across Asia.

Profitable Growth

Asset utilization Profit margin Sales growth Margin change

Profitability Growth

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Mar-10 Aug-12 Jan-15

MPPAPrice (IDR)

13 February 2015 6

'10 '11 '12 '13 '14

10 10 10 1 1

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14

10 10 10 1 1 6 9 3 1 1

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14

10 10 9 6 6 10 10 10 1 1 7 8 7 1 1 3 10 1 1 1

Benchmarked against 770 Info Tech companies across Asia.

Profitable Growth

Asset utilization Profit margin Sales growth Margin change

Profitability Growth

Source: A. Stotz Investment Research.

Note: 1 = top ranking and 10 = worst. Most recent year’s data is based on the last 12 months of published data.

Inotera (3474 TT): Profitable Growth jumps to 1st from 10th decile

-

10

20

30

40

50

60

Mar-10 Aug-12 Jan-15

InoteraPrice (TWD)

13 February 2015 7Source: A. Stotz Investment Research.

Note: 1 = top ranking and 10 = worst. Most recent year’s data is based on the last 12 months of published data.

Medy (086900 KS): Profitability and growth are in sync

'10 '11 '12 '13 '14

1 1 1 1 1

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14

1 1 1 1 1 6 7 2 7 1

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14

7 8 6 6 6 1 1 1 1 1 4 8 1 7 1 8 9 3 9 1

Benchmarked against 280 Health Care companies across Asia.

Profitable Growth

Asset utilization Profit margin Sales growth Margin change

Profitability Growth

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Mar-10 Aug-12 Jan-15

Medy

Price (KRW)

13 February 2015 8Source: A. Stotz Investment Research.

Note: 1 = top ranking and 10 = worst. Most recent year’s data is based on the last 12 months of published data.

SIA (SIA SP): Struggling to get Profitable Growth

'11 '12 '13 '14 '14

4 8 7 7 8

'11 '12 '13 '14 '14 '11 '12 '13 '14 '14

6 8 7 6 7 1 9 4 5 8

'11 '12 '13 '14 '14 '11 '12 '13 '14 '14 '11 '12 '13 '14 '14 '11 '12 '13 '14 '14

7 6 5 5 5 5 8 7 7 7 7 8 6 7 7 2 9 3 5 7

Benchmarked against 930 Industrials companies across Asia.

Profitable Growth

Asset utilization Profit margin Sales growth Margin change

Profitability Growth

-

2

4

6

8

10

12

14

16

18

Mar-10 Aug-12 Jan-15

SIA

Price (SGD)

13 February 2015 9Source: A. Stotz Investment Research.

Note: 1 = top ranking and 10 = worst. Most recent year’s data is based on the last 12 months of published data.

STPI (STPI TB): Best Profitable Growth but worst margin change

'10 '11 '12 '13 '14

1 3 1 1 1

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14

1 2 1 1 1 5 9 1 2 3

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14

5 10 7 6 3 1 1 1 1 1 10 10 1 1 1 1 7 8 4 10

Benchmarked against 640 Materials companies across Asia.

Profitable Growth

Asset utilization Profit margin Sales growth Margin change

Profitability Growth

-

5

10

15

20

25

Mar-10 Aug-12 Jan-15

STPIPrice (Bt)

13 February 2015 10Source: A. Stotz Investment Research.

Note: 1 = top ranking and 10 = worst. Most recent year’s data is based on the last 12 months of published data.

VLL (VLL PM): Room for improvement in growth

'10 '11 '12 '13 '14

5 4 3 3 3

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14

5 4 3 3 3 6 5 4 5 4

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14

5 4 4 4 4 4 5 4 4 4 6 5 5 5 4 6 6 4 6 5

Benchmarked against 360 Real Estate companies across Asia.

Profitable Growth

Asset utilization Profit margin Sales growth Margin change

Profitability Growth

-

1

2

3

4

5

6

7

8

Mar-10 Aug-12 Jan-15

VLLPrice (PHP)

13 February 2015 11Source: A. Stotz Investment Research.

Note: 1 = top ranking and 10 = worst. Most recent year’s data is based on the last 12 months of published data.

ADVANC (ADVANC TB): Amazing profitability but neutral growth

'10 '11 '12 '13 '14

1 1 1 1 1

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14

1 1 1 1 1 4 6 3 6 6

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14

2 1 1 1 2 3 3 2 2 2 5 5 6 8 9 3 7 2 4 3

Benchmarked against 50 Telecom companies across Asia.

Profitable Growth

Asset utilization Profit margin Sales growth Margin change

Profitability Growth

-

50

100

150

200

250

300

Mar-10 Aug-12 Jan-15

ADVANCPrice (Bt)

13 February 2015 12Source: A. Stotz Investment Research.

Note: 1 = top ranking and 10 = worst. Most recent year’s data is based on the last 12 months of published data.

FGEN (FGEN PM): Profitability is declining

'10 '11 '12 '13 '14

5 8 2 7 6

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14

7 7 3 6 6 1 8 1 8 4

'10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14 '10 '11 '12 '13 '14

3 3 3 5 5 7 8 5 6 5 5 7 2 9 7 2 7 2 7 3

Benchmarked against 120 Utilities companies across Asia.

Profitable Growth

Asset utilization Profit margin Sales growth Margin change

Profitability Growth

-

5

10

15

20

25

30

35

Mar-10 Aug-12 Jan-15

FGENPrice (PHP)

1313 February 2015

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