Mongolia Growth Group Ltd. · TSXV:YAK.H
Mongolia Growth — Q2 2014 Earnings Presentation
31 slides from Mongolia Growth's earnings presentation, Sep 12, 2014
Slide 1: Second Quarter, 2014 Financial Presentation
SECOND QUARTER, 2014 FINANCIAL PRESENTATION
Slide 2: Forward Looking Statement
FORWARD LOOKING STATEMENT Caution Regarding Forward-Looking Information This presentation contains statements that, to the extent that they are not historical fact, may constitute "forward-looking information" within the meaning of applicable securities legislation. Forward-looking statements or inf
Slide 3: Strategic Vision
STRATEGIC VISION Gain exposure to the rapid growth of the Mongolian economy thru the property sector – Mongolia is expected to be one of the fastest growing economies in the world for the next decade Leverage our unique position and first mover advantage as the only institutional investment plat
Slide 4: The MGG Property Platform
THE MGG PROPERTY PLATFORM Currently the only institutional property management platform in Mongolia with a full suite of services Acquisitions & Disposals – Have completed 150 purchase transactions and over 30 sale transactions Property Management – Have signed over 250 leases with tenants and
Slide 5: Key Economic Statistics
I oe | 3 JABXAP LEY: GROWTH GROUP
Slide 6: One of the Fastest Growing Economies
ONE OF THE FASTEST GROWING ECONOMIES* 20 19.0 17.5 18 15.9 16 14.8 14 12.2 12.8 12.0 12 10.6 US$ bln 10 8.9 8.8 8 6.9 6.4 6 5.3 3.9 3.9 4 2 0.2 0 2008 2009 2010 2011 2012 2013 2014 2015 *Data from Mongolia’s Ministry of Economic Development 6
Slide 7: Recent Legal Advancements
RECENT LEGAL ADVANCEMENTS New Foreign Investment Law Securities Markets Law Investment Funds Law Reduced Gold Mining Royalty Reduced Taxes On Small Businesses 7
Slide 8: Business Conditions Improving
BUSINESS CONDITIONS IMPROVING The World Bank Ease Of Doing Business Survey 2011 – 2014* 160 160 Outperforming Popular Emerging Markets In 2014 Annual Doing Business Rankings For Mongolia 140 140 134 120 120 116 108 100 96 99 89 100 80 80 80 76 80 60 60 40 40 20 20 0 2011 2012 2013 2014 0 China Vietn
Slide 9: Declining Corruption
DECLINING CORRUPTION Corruption Perception Index 2009 – 2013* 140 120 120 120 116 100 94 Global Ranking 83 80 60 40 20 0 2010 2011 2012 2013 2014 CPI 9 *Based on data from Transparency International. Lower CPI Indicates Improvement
Slide 10: Surrounded by Resource Consumers
SURROUNDED BY RESOURCE CONSUMERS* *Presentation By Mongolian Ministry Of Mining 10
Slide 11: Mega Projects Are Underway
MEGA PROJECTS ARE UNDERWAY Industrial & Infrastructure mega projects are underway Total investment: USD $56.96 bln 11 Presentation By Mongolian Ministry Of Mining
Slide 12: Property Landscape in UB
Moncoua PROPERTY LANDSCAPE IN UB
Slide 13: Overall Trends in Downtown Commercial Space
OVERALL TRENDS IN DOWNTOWN COMMERCIAL SPACE* RETAIL OFFICE Supply Occupancy New Requests For Space Rental Rates *Based upon observations by management. 13
Slide 14: International Brands Continuing to Enter the Market
INTERNATIONAL BRANDS CONTINUING TO ENTER THE MARKET Market Entrants Since 2013 14
Slide 15: Portfolio Highlights
Moncotia PORTFOLIO HIGHLIGHTS
Slide 16: Current Property Portfolio
CURRENT PROPERTY PORTFOLIO As of June 30, 2014 Asset Type Number Meters 2 Percentage June 2014 Percentage of Of Portfolio Billed Monthly Of Total Properties Based On Rent (‘000 Revenue Cost Mongolian Togrog) Residential 3 - 0.6% 3,572 1.5% Office^ 4 3,414 17.1% 106,351 43.9% Retail – High Street 22
Slide 17: Strong Comparable Rental Growth
STRONG COMPARABLE RENTAL GROWTH* 45% 40% NEW FOREIGN 35% INVESTMENT LAW PASSED 30% Comp Revenue 25% 20% 15% 10% 5% 0% Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec Jan Feb Mar. Apr. May. Jun. 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2014 2014 2014 2014 2014 2014 Same Store Com
Slide 18: Rental Growth Has Continued
RENTAL GROWTH HAS CONTINUED Average Portfolio Rents Per Meter (Core Portfolio)* 45,000 40,000 35,000 30,000 MNT Per Month 25,000 20,000 15,000 10,000 5,000 - High Street Retail Secondary Street Office Buildings *Based on MNT per Meter per month for the various components of the core portfolio. 18
Slide 19: Vacancy Has Remained Low
VACANCY HAS REMAINED LOW* 100% 80% Occupancy Rate 60% 40% 20% 0% Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Primary Street Retail Secondary Steet Retail Office *Tracks the core portfolio occupancy rate. Q1, 2013 had elevated office vacancy as 2 buildings undergoi
Slide 20: Some of Our Valued Tenants
Monco.ta SOME OF OUR VALUED TENANTS KHAN BANK 7 : OludIONS & smi YOUR TRUSTED FRIEND © coson @Skytel SOB manga &) @ <8 GLOBALIDEAS Qe Conga Farane & Conetiry Cmwery
Slide 21: Focused on Performance
Moncoia FOCUSED ON PERFORMANCE
Slide 22: Changing Goals for a Growing Company
CHANGING GOALS FOR A GROWING COMPANY 2011-2013 Goals 2014 Onwards Build a property management platform. Platform is built. Focus is on improving productivity. Build a portfolio of assets that are leveraged to Focus on larger institutional assets. Have the Mongolian economy. undertaken a portfolio re
Slide 23: $500,000 Cost Cutting Initiative
$500,000 COST CUTTING INITIATIVE Savings Targets Excess Corporate Expenditures Professional Fees Travel Better Efficiencies In Mongolia Reduced Holding Costs For Non-Core Assets 23
Slide 24: Improved Leasing and Sales
IMPROVED LEASING AND SALES Rebranded Our Operating Unit In Mongolia As MGG Properties Completely Revamped MGGProperties.com Dedicated More Manpower To Leasing Resulted in Lower Vacancies and Higher Rents on New Signings 24
Slide 25: Disposing of Smaller Assets for Better Returns
DISPOSING OF SMALLER ASSETS FOR BETTER RETURNS* 100 90 Sale Comittments Available For Sale 80 PPE 70 Renovation Number of Properties 60 Residential 50 Redevelopment Office 40 Secondary Steet 30 Retail High Street Retail 20 10 0 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
Slide 26: Using Sales Proceeds to Reinvest
USING SALES PROCEEDS TO REINVEST Tuguldur Acquisition Details Total land package consists of approximately 4,000 meters of prime downtown land including approximately 70 meters of frontage on Peace Avenue (the primary street in Ulaanbaatar) Existing building to be renovated and expanded Total
Slide 27: Tuguldur Renovation and Development Plan
TUGULDUR RENOVATION AND DEVELOPMENT PLAN Before After 27
Slide 28: Future Growth Initiatives
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Slide 29: Initiating Plans to Become an Asset Management and Development Company
INITIATING PLANS TO BECOME AN ASSET MANAGEMENT AND DEVELOPMENT COMPANY Current Future Leverage Existing Capability Into Higher Returns On Capital Utilize Other Investor’s Capital MGG MGG On Our Projects To Increase Returns To MGG Earn Stable Fee Based Revenue Property Assets Asset Management & Devel
Slide 30: Private Investment Vehicles
PRIVATE INVESTMENT VEHICLES Management Is Discussing Private Investment Vehicles With Institutional Investors Will Allow MGG To Earn Management Fees Along With Performance Allocations Based On Appreciation Of Assets Targeting 10-20% MGG Ownership Of Underlying Assets, With The Majority Owned B
Slide 31: Successes Since Inception
SUCCESSES SINCE INCEPTION Listed MGG On TSX-Venture Exchange Raised CDN $51 Million Built The Only Institutional Property Investment Platform In Mongolia Acquired One Of The Most Attractive Property Portfolios In Ulaanbaatar 31
Mongolia Growth Group — Q2 2014 Earnings Presentation on 6ix