联合利华项目建议书

,April19,2002,Strictlyprivate&confidential,Unilever(China)LimitedAsharemarketworkshop,Presentationto,3850,1,AARandCITICSTeam,ProjectLeader,*Attendeesoftoday,sworkshop,TonyMokHeadofABNAMROConsumerIndustriesGroup,Asia,InvestmentBanking&Coverage,HassanElNahas*ABNAMROConsumerIndustriesGroup,AsiaPanMuping*ChiefRepofNMRothschildJasonRynbeckDirectorofABNAMROCorporateFinanceConsumerGroup,Asia,ECM,ProjectLeader,PuJianBoardDirector,VicePresidentofCITICS,InvestmentBanking,RichardHeald*JointCEOofAARGlobalKolaLuu*HeadofAARGreaterChinaXiaomeiLiu*AARChinaTeam,WangChangqingGeneralManagerofInvestmentBanking,ShanghaiJoeChen*SpecialassistanttothepresidentofCITICSMaoYanmin*SeniorManagerofInvestmentBanking,ShanghaiLiuKebin*SeniorManagerofInvestmentBanking,ShanghaiLiuZhenManagerofInvestmentBanking,ShanghaiChangLiang*ManagerofInvestmentBanking,Shanghai,2,Tableofcontents,1.IntroductiontoAARandCITICSecurities2.UpdateondomesticandinternationalequitymarketsforChinaissues3.ValuationapproachandpricingmechanismforAshareIPOsandsectorvaluationinAsia4.UpdateonforeigncompanylistinginAsharemarket-DirectlistingbyMNCsandChina5.Asharelistingprocedure6.RoleofadvisorsAppendices:I.AARcredentialsII.CiticSecuritiesCredentialsIII.RecentAshareofferingcasestudiesIV.ValuationofcomparablecompaniesV.ComparisonofAsharemarketandHongKongmarket,1.IntroductiontoABNAMRORothschild(AAR)andCITICSecurities(CITICS),4,IntroductiontoABNAMRORothschild,Drawingonthefullfinancialresourcesofitsparentgroups,ABNAMRORothschildoffersworldclassequitycapitalmarketsexpertise,Amongsttheworldslargestprivately-ownedbanks36officesin27countriesEstablishedandhighlyregardedskillsinhandlingmergerandacquisition,corporateadvisory,privatisationandprojectfinanceassignmentsStrongspecialistindustrysectorteamsbasedworld-wide,World-wideretailandwholesalebankingoperationsemployingover109,000personnelGroupcapitalofEUR34.0billion.TotalassetsofEUR597.4billionMembershipof47stockexchangesworld-wideincludingLondon,NewYorkandNASDAQOver880equityresearch,salesandtradingpersonnelDedicatedequitiesdistributionpersonnellocatedintheUStosellinternationalofferingsintotheUS,Establishedcorporatefinanceskillsandrelationships,Investmentbanking,capitalstrengthandglobalequitydistributionpower,Unrivalledequitycapitalmarketsexpertise,+,=,Top5EuropeanequitycapitalmarketshouseTop10internationalequitycapitalmarketshouseOver160dedicatedequitycapitalmarketsspecialistslocatedinkeyregionalcentresgloballyEstablishedtrackrecordinkeysectorsandregions,5,StrongrankingsintheQ12002bookrunnerleaguetables,AARteamscontinuetobeactiveintheinternationalequitycapitalmarkets,TopBookrunnersofEuropeanEquityIssues,Q12002,TopBookrunnersandJointLeadManagersofInternationalEquityIssues,Q12002,6,No.1rankedinkeyEuropeanmarkets,TopGlobalCo-ordinators,Europeanequityofferings,H22001,SourceCapitalDataBondware,globalco-ordinatorrolesonly,excludesrightsissuesandthedomestictranchesofinternationalofferings,InH22001,ABNAMRORothschildwastheNo.1rankedGlobalCo-ordinatorinEuropeanmarkets,7,AARhaspioneeredandcompleted30transactionswithtotalsizeofUS$2,133minChina,HG/NMR/AARBookrunnerinChinasEquity&EquityLinkedtransactionssince1991,PioneeredBshareIPO-ChinaSouthernGlass,FirstHshareCB-QinglingMotors,FirstGEMlistingupgradetoHKmainboardwithplacement,8,ABNAMROsresearchstrengthinHK/ChinaandConsumersector,Respectedbyinvestors,AARhastoptierAsianconsumerresearchteamtoprovidein-depthcoverage,JeremySutch-HeadofHKResearch/HeadofConsumer/RetailKalinaIp-HeadofChina&StrategyAntonKwang-PropertiesEddieWong-AsianChiefEconomistCheukWanFan-ChinaStrategy&RedChipsOsbertTan-Airlines/Transport/LogisticsAndrewLeeming-HeadofAsianBanksAdrianFung-Utilities&TollroadsMarioZhu-Electronics/ConsumersLianaYung-Technology/Internet/SoftwareMicheleMak-Technology/Hardware,Inadditiontoin-depthindividualcompanyanalysis,theteamalsoproducesperiodicpublicationsDailyflashnotesWeeklyequityreviewQuarterlysector,economicandstrategyreports,TheHK/Chinateam,IntroductiontoCITICSecuritiesCo.,Ltd(CITICS),10,ChinaInternationalTrust&InvestmentCorporation(CITIC),CITICFinancingHolding,CITICIndustrialBank,CITICKaWahBank,CITICSecuritiesCo.,Ltd,ChangsengFundmanagement,CITICPrudentialLifeInsurance,CITICChinaslargestfinancingandinvestmentgroup,CITICFinancingHolding,whichwillholdallthefinancingsubsidiariesinCITIC,istobeestablishedsoonAsofendof2000totalassetswereRMB358.6BillionnetassetswereRMB39.6BilliontotalincomewasRMB32.5BillionnetprofitwasRMB2,500Million,ThelargestFinancingandinvestmentcorporationinChina,withglobalpresence,CITICSecuritiesCo.,Ltd,CITICGroup,11,CorporateFinanceCommitteeInvestmentbanking(Beijing,Shanghai,ShenzhenandQindao)FixedincomeSales(equivalenttoEquityCapitalMarkets)M&ARestructuring&advisory,CITICSamajorbracketfirmintheinvestmentbankingindustryinChina,Rapidlygrowingbusiness,withsolidtrackrecord,Notes:thebluebarsrepresentnetasset,Corevalue,Service,Satisfactions,Smart,Safety,Success,Asset(RMB100million),Profit(RMB100million),AssetmanagementBrokeragebusinessProprietarytrading,12,Leadingpositionsinequityofferingandsponsorshipinrecentyears,Keytransactions,13,1998,1999,2000,2001,RMBmillion,No.1bondhouseindomesticcorporatebondmarket,Unparalleledcorporatebondissueexperience,BondissueinChina(1998-2001),AmountunderwrittenbyCITIC,2.UpdateonChinadomesticandinternationalequitymarket,15,ChinatotalissuanceisreachingUS$50billion.,*,*includingduallistedHshareandRedChipofferingswhichamountedtoUS$30billionfortheperiod,ChinaIssues(1991-2001)(US$m),*,*,*,16,Asharenewissuealreadyexceedsinternationaloffering,Chinanewissuancepipeline,ThesecondlargestmarketinAsiabymarketcapitalisation(US$500bnvsHongKongsUS$450bn),onlynexttoTokyoThereare1,100+companieslistedinShanghaiStockExchangeandShenzhenStockExchangeAsharemarketishighlyfragmented,thetop10stocksaccountforonly12%oftotalmarketcapitalizationvs.33HangSengIndexstocksaccountforover80%ofthetotalmarketcapofHKmarketMajorqualitycorproatesarebeocmingincreasinglythefocusofthemarket,Asharemarkethasbecomemajorfundraisingmarketplace.,andalsothefastestgrowingmarketintheworld,Inlast5years70%ofChinanewissuancewerecompletedinthedomesticmarkets(intermsofdollarvolume)TotaldomestictransactionsamountedtoUS$100bnvsUS$50bnforinternationalofferingsAsharemarkethasdemonstrateditscapacitytoabsorblargeissuessuchasChinaMerchantBank(US$1.32bn,Apr02),HuanengPower(US$335m,Nov01)andSinopec(US$1.43bn,Jul01),17,ImplicationofliberalizationofAsharemarket,18,Changepercentage2002todate,Chinamarkethasunderperformedinlast6months,SourceBloomberg,Changepercentagesince“911”,19,Asharemarketshaverecoveredsincethebeginningoftheyearaftersignificantdeclinein2H2001,Marketrelativeperformance(since2001),Asharevolume(since2001),Marketbecamebullishonpositiveeconomicdataandearningsprospects,Governmentsannouncementofcrackdownonillegalfundsfinancedbybankcredittothestockmarket,Governmentdecidedtosuspendthesaleofstate-ownedshares,Announcementofreductionofstampdutyofsecuritiestrading,MarketwasspeculatingthatnofurthermarketboostingpolicymeasureswouldbeimplementedinneartermandworriedaboutovermassiveoverhangofSinopecAshares,ShanghaiA,SourceBloomberg,20,Newissueperformance-ChinaIPOssince2001,International:postIPOperformance.mixed,Domestic:postIPOperformancestrong.,21,CurrentvaluationforChinastocksinHKmarket,ABNAMROtoppicks,22,Asharemarketvaluationisstillattractivetopotentialissuer,Comparisonwithothermarkets,AveragedP/Eof50 xplus,Bubbleswillbesqueezedoutasmorelargequalitycompaniesbeinglistedandthemarketbecomesmoreregulated,HighlevelofvaluationduetoscarcityofstocksorotherinvestmentinstrumentsAnestimatedRMB500bncorporateandinstitutionalfundsandRMB800bnprivatefundsareavailabletotheprimarymarket(i.e.IPOsubscriptions)-inaddition,investorleveragehasbeencommonplaceHeavyretailparticipationmeansthemarketismainlydrivenbymomentum/sentimentratherthaninvestmentrationale“False”highlevelofvaluationsforsomestocksduetomarketspeculation/manipulationandlackofshort-sellmechanismValuationhascomeoffconsiderablysinceJulysGovernmentcrackdownonillegalfundsfinancedbybankcredittospeculateinthestockmarketItiswidelyanticipatedthevaluationlevelofAsharemarketwillgraduallydeclineoverperiodwhencapitalmarketstructuralreformadvancesandvaluationbubblediminishesHowever,premiumvaluationwouldstillbeachievableforthosebetter-runcompanieswithbetterassetsalthoughtheIPOpricingisdefactocontrolledbyCSRCwithacapof20 xhistoricalPEratio,SourceBloomberg,23,LiberalizationinChinascapitalmarket,CDRprogramme,AimtointroducerespectableinternationalcompaniesincludingRedChipcompaniestodomesticinvestorsPriorityisexpectedtobegiventoRedChipcompaniesAnumberofRedChipcompaniesareintheprocessofpreparingCDRissuesandsomeofMNCshavealsoshowedinterestTheCDRproposalisbeingreviewedbytheStateCouncil.However,notimetableisgivenOneofthemajorissuesremainstheforeignexchangecontrolbythegovernment,QDII,Asharelisting,AimtointroducegoodinternationalcompaniesincludingMNCsandlargeTaiwanandHongKonginvestedcompaniestoChinasequitymarketPriorityisexpectedtobegiventoMNCsChinaoperationcompanies,followedbylargeTaiwanandHongKonginvestedcompanies.Eventually,MNCsparentcompaniescouldalsobeallowedtolistinAsharemarketonceRMBbecomesfullyconvertibleintoforeigncurrencyCSRChasalreadyannouncedthedetailedlistingrequirements(seesection4)AnumberofMNCsChinaoperationcompaniesareconsideringtheAsharelisting.,AimtoallowqualifiedChineseinstitutionalinvestorstoinvestinoverseasmarketsHongKonggovernmentisverykeenonthisproposalastheyexpectHongKongwouldbenefitgreatlyintermsofcapitalflowandmarketsentimentTheQDIIproposalisbeingreviewedbytheStateCouncil.However,notimetableisgivenOneofthemajorissuesremainstheforeignexchangecontrolbythegovernment,24,AlcatelChinaEricssonChinaKodakChinaMotorolaChinaProcter&GambleChinaUnileverChina,PotentialMNC(withChinaoperation)candidatesforAsharelisting,Company,Sector,TelecomequipmentTelecomequipmentPhotorelatedTelecomequipmentConsumerConsumer,HouseholdnamesandMNCsarelikelycandidatestogototheAsharemarket.However,mostofabovementionedcompanieshavenotstartedtheprocessyetWithaviewtoimprovingtheoverallqualityofAsharecompanies,CSRChasalreadystartedtalkingtosomeJVsandsolelyforeignownedcompaniesinordertoobtaintheirviews/feedbackonthisnewpolicyWeexpectmoreMNCswouldjointhepartyasCSRCannouncedthedetailedAsharelistingimplementationrulesforforeignenterprisesbyissuingthenotificationon“specialrequirementsonthecontentandformatofprospectusforforeigninvestedcompanies”on1April,2002,3.ValuationapproachandpricingmechanismforAshareIPOsandsectorvaluationinAsiaandChina,26,ValuationapproachandpricingmechanisminAsharemarket,Bottomline:ValuationmustexceedNAV(bookvalue)pershareasdeterminedbyMOFformulaforSOEsMethodologies-alltheapproachescommonlyusedininternationalmarketsDCFMultiplesofcomparablecompaniesPEEV/EBITDAandP/CFDividendyieldPricingmechanismSecondarymarketvaluationbenchmarkMarketexpectationofIPOdiscount(asappropriate)SubjecttoCSRCsapprovalunderapproximately20 xP/E(historical)under2xNAVpershare,27,Keyvaluationdrivers,Keydriversofvaluation,Keyvaluationdrivers:corporatespecifics,EarningstrackrecordTrackrecordofmanagementGrowthpotentialCompetitiveadvantagesandmarketpositionrelativetopeergroup/competitorsFocusoncorebusiness,Industryoutlook,MarketoutlookOpportunityforbusinessdevelopmentandearningsgrowthIndustryconsolidationopportunities,Chinaspecifics,Dividendpolicy:abalancebetweencashdividendandnewSizeoffreefloatandmarketcap:thegreaterthesize,thelowerthevaluation,Otherfactors,MarketsentimentRegulatoryguidelines,28,P/EistheoverridingmethodologyfortheAsharemarket,DCF,AprincipalpricingmethodusedbyinvestorstovaluecompaniesBasedongrowthrateofthemarketandmarketshareandinvestorsviewofappropriatediscountrate/costofcapitalInvestorassumptionswillvary(particularlyonpricesanddiscountrates),dependingoninformationdisclosure,CommonvaluationapproachforbothdomesticinstitutionalfundsandretailinvestorsUsehistoricaldataasnoresearchforecastavailableAshareindexusedasbenchmark,P/E,Certaininvestorswillconsiderdividendyield(mainlyretailinvestorsandincomefunds),Dividendyield,Usedascross-checkwithDCFvaluationUsehistoricaldataasnoresearchforecastavailableAlsousedforcomparisonwithpeergroup,EV/EBITDAandP/CF,ComparisonwithcomparablepubliclylistedcompaniesinAshareandinternationalmarketsAnalysisofkeyoperationalandfinancialdifferencesbetweencomparableswilldriveratingdifferentials,Comparablepubliccompanies,Valuationapproach,29,PricingprocessinAsharemarket,Since2000,thefollowingpricingprocesshasbeenadopted,Step1,Step2,Step3,SubmitapricinganalysisreporttoCSRC,Setpricerangeformarketing,Pricingupontheofferclose,Writtenbyunderwriter/leadmanagerKeycontentsmethodologydiscussionpreliminarypricingrange,Sendthesummaryofdraftprospectus(nomentionofcompanynameallowedbyCSRCregulation)toinstitutionalinvestorsandbrokersPre-marketingtoinstitutionalinvestors(2-3days)SetanupdatedpricerangebasedonpreliminaryfeedbackfrominstitutionalinvestorsSendtheupdatedpricerangetoCSRCStarttheofferingonceCSRCissuesagoaheadletterDistributeprospectuswiththepricerangetoinstitutionalinvestorsandbrokers,Pressconferenceroadshowandinternetbookbuilt,includinginstitutionsandpublic(2-3days)Pricingbasedontheorderbook,30,Consumerrelatedequityofferings,ConsumerrelatedofferingshavenotbeenactiveAverageissuesizeisUS$75mandUS$90mforNJAandAsharesmarketrespectivelyWithUnileversbrandnameandscarcityvalue,UnileverChinaIPOshouldbeverywellreceived,Consumerrelatedequityoffering,31,PerformanceofUnileverAsiansubsidiaries,PTUnileverIndonesiaandHindustanLeverarethetwoUnileversubsidiarieslistedinAsiaPTUnileverhasoutperformedJakartacompositeindex(JCI)by30%since2001anditscurrentmarketcapisUS$1,710mln(Rp21,200pershare)HindustanLeverhasoutperformedSensexIndexinIndia,reflectingthedefensivenatureofstrongbrandnamecompany.HindustanLeverscurrentmarketcapisUS$10,013.8m(INR222.55pershare),RelativePerformance:UNVRvsJCIIndexsince2001,RelativePerformance:HLVRvsSENSEXsince2001,IPOAug1991,IPOJan1991,32,CurrentvaluationofAsianconsumer/food&beverage/personnelcarecomparables,Valuationsummary:PE02rangingfrom12xto32x,Weattempttouse2criteriatoselectpotentialAsiancomparablesinthesimilarsectorsinwhichUnileverChinaoperatesMNCslocalbusinesseslistedinlocalmarketsOverseaslistedcompanieswhichmainlyoperateinChina,SelectedUnileversistercompanies,Selectedfoodcompanies,Nestle(Malaysia)BhdUni-PresidentEnterprisesCo.,LimitedTingyi(CaymanIslands)HoldingCorpUniversalRobinaCorporationWantWantHoldingsLimitedCadburyIndiaLtdNestleIndiaLtdDairyFarmInternationalHoldingsLtd,Selectedbeverage/brewingcompanies,TsingtooBreweryCompanyLtdFostersGroupLtdGuinessAnchorBHDCarlsbergBreweryMalaysiaBHDSanMiguelCorporationVitasoyInternationalLtd,PTUnileverIndonesiaTbkHindustanLeverLtd,33,ValuationofselectedlistedChinesecompaniesinsimilarsectors,Valuationsummary,HistoricalPEratioisreaching70 x.,Relativelyhighvaluationisduetorelativesmallersizeoftheconsumerstocksretaildriven,4.UpdateonforeigncompanylistinginAsharemarket-DirectlistingbyMNC,35,ForeigninvestedcompaniesarenowallowedtolistintheAsharemarkets,CSRChasannounceddetailedrequirementsonAsharelistingofforeigninvestedcompaniesArecentCSRCopinionpaperstatedthatforeignenterprisesareallowedtobelistedineitherAorBShareMarketsifthefollowingrequirementsaremet:FollowingtherelevantforeigninvestmentandownershiprestrictionsondifferentindustrysectorsComplyingwithPRCCompanyOrdinanceMeetingminimumlistingrequirementsPassingtheannualforeignenterprisereviewfor3consecutiveyearspriortothelistingMaintainingforeignownershipofnolessthan10%afterthelisting(however,tomaintainforeigninvestedcompanysstatusfortaximplications,aminimum25%offoreignownershipisrequired)Maintainingsameminimumdomesticownershipafterthelisting,ifapplicableFilingthelistingwithMOFTECafterthelisting,36,RegulatoryoverviewforforeigninvestedcompaniestobelistedintheAsharemarkets,Nationalpeoplescongress,StatecouncilTheultimatepolicy-makingbody,StateeconomicandtradecommissionOverseestheperformanceandrestructuringofSOEs,StatedevelopmentandplanningcommissionApprovesmajornewprojectsandIPOs,MinistryofInformationIndustry(MII)Regulatestelecomequipmentmanufacturingcompanies,ChinaSecurityRegulatoryCommission(CSRC)ListingapprovalRegulateslistedcompanies,Policyorigination,Approvalprocess,Policyregulationandimplementation,MinistryofForeignTradeandEconomicCooperationRegulatesforeignenterprises,CSRC/ShanghaiandShenzhenStockExchangesOverseeslistedcompanies,37,CSRCencouragesFortune500ChinaoperationstolistintheAsharemarkets,PrioritywouldbegiventojointventurecompanieswithMNCs,PrioritywouldbegiventojointventurecompanieswithMNCs(e.g.Fortune500)asopposedto100%foreignownedMNCsubsidiariesoperatedinChina.ItisalsopossibleMNCgroupswouldbeeligibleforAsharelistingeventuallyThereareanumberofspecialdisclosurerequirementsforforeigninvestedcompaniesAsharelistingRiskfactorsincludingthelevelofdependencyofpurchase,supply,technologytransfer,patentsandtechnologyonoverseaspartiesaswellaspotentialchangesinforeignlaws/regulationsConnectedpartytransactionsincludingpurchase,supply,technologytransferandpatentsinlast3yearswithforeignshareholdersDetailedinformationofnationalitiesandpermanentresidencyofdirectorsandseniormanagementsandotherpositionsheldinoverseasbythemThepurposeoftheserequirementsistoaddressfollowingconcernsinvestorsmayhaveforforeigncompanies:LackofindependenceProfittransferlackofcontrolofcoretechnologyandintangibleassetswhichmayresultindeterioratingofitscompetitiveadvantagesAccordingtoCSRCofficials,apilotprogrammewillbeusedinhandlingforeigninvestedcompaniesAsharelisting.MNCswithsoundoperationsandlongtermcommitmentinChina(i.e.withregionalheadquartersandR&DcentreinChina)willhaveadvantagesofbeingselectedforthe“experiment”UnileverislikelytobeselectedtoparticipatetheexperimentbyCSRCanddetaileddisclosureissuescouldbediscussedandagreedinthetermsacceptabletobothsides,Specialdisclosurerequirements.,toaddressinvestorconcerns,MNCslikelytobecomethecandidatesofthepilotprogramme.,38,Corporatestructureforlisting,Thelistingvehiclehastobeashareholding/operatingcompany,Thelistingentityhastobeajointstockcompanyformedinacc