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  1. Perpetual Investments Australian Equities in an Asian Century Presented by Sam Stobart Senior Investment Specialist March 2013

  2. Global growth – subdued and still Asia-dependantGlobal economic growth in the next four years 12% 2004-2007 2012-2015 9% 6% 3% 0% World USA Europe Japan UK Asia China India Australia Source: IMF, Macquarie Equities and Perpetual Investments as at 31 January 2013.

  3. Regional growth models are changing

  4. Growth of China….from fishing village Source: Rio Tinto

  5. Toworld’s fastest growing city Source: Rio Tinto

  6. Room with a view Source: UBS Australia Limited as at 31 January 2013.

  7. RIO cost out programs and production growth

  8. Seaborne Coal Trade Volumes Source: Perpetual and Factset

  9. thechina steel story has a long way left to run with india and other to follow Note: Stylistic representation Source: Correlates of War, Maddison, Global Insight, Rio Tinto, 28 November 2011

  10. Grade decline constrains the supply response % copper in process feed Average grade of Chinese domestic iron ore 50% 45% 40% 35% 30% 25% 20% 15% 10% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Brook Hunt – a Wood Mackenzie Company. Source: J.P. Morgan estimates

  11. Australian retailShort of ideas? Source: TBA

  12. Which categories are under threat? SHARE OF ONLINE SALES Source: NAB

  13. Which categories are under threat? ESTIMATED PRICE GAPS SHARE OF OFFSHORE SPEND Source: JP Morgan Source: Commonwealth Bank of Australia

  14. Failure to penetrate the online segment Average 1.4% Source: Ferrier Hodgson, Nielsen

  15. Some companies get it right • Oroton has shown strong understanding of the challenges and opportunities facing retailers in Australia • FY12 60% growth in online sales (now ≈10% of total sales) • Asian expansion plans coming to fruition • 7 stores in Malaysia & Singapore; 4 more per annum • Direct ownership of Chinese stores from 2013 • Strong growth already recorded Source: Oroton

  16. Understanding the market Australian home page Chinese home page Source: Oroton

  17. Oroton’s transformation to success Sales and store growth Earnings and share price Source: Oroton, Factset

  18. What city is synonymous with gambling?

  19. Las Vegas is a distant memory Macau gaming revenue • Revenue growth has averaged ≈30% pa for the past decade • Mainland gambling is illegal • Significant Infrastructure upgrades $US million Source: JP Morgan, Platinum Broking

  20. Mass market and VIP growth Mass market and VIP growth Macau Source: Goldman Sachs

  21. It’s a margin game VIP Profitability Estimate $ in millions Mass Market Profitability Estimates $ in millions Gaming tax at ~40% (US $40) Gaming tax at ~40% (US $40) Commission at 45% (US $45) Marketing expenses at 5% of revenue (US $5) Total VIP revenue of US $100 Total mass revenue of US $100 Operating expenses at 6% of revenue (US $6) Operating expenses at 15% of revenue (US $15) EBITDA US $10 or 10% Margin EBITDA US $40 or 40% Margin Source: JP Morgan

  22. Melco strong revenue growth Revenue Melco Crown share price Source: Factset

  23. Domestic opportunities for growth Rolling annual tourists • Tapping in to growth of Chinese VIP market in Australia • Refurbishments • Potential construction of new 6 star hotels in both Sydney and Perth • Domestically VIP margins are as strong as domestic mass market Source: ABS, Commsec

  24. The big banks in Asia • BUT WHAT ABOUT THE INSURERS?

  25. Asian growth potential • By 2020 Asia will have more middle class consumers than the rest of the world combined • A tried and tested formula;Increased wealth = increased assets = increased insurance • IAG has strong market positions in Malaysia, Thailand, China, India and Vietnam IAG owns 49% of Malaysia’s largest general insurer Source: Goldman Sachs, IAG

  26. Important note • This presentation has been prepared by Perpetual Investment Management Limited (PIML) ABN 18 000 866 535, AFSL 234426. It is general information only and is not intended to provide you with financial advice or take into account your objectives, financial situation or needs. You should consider, with a financial adviser, whether the information is suitable for your circumstances. The views expressed in the presentation are the opinions of the author at the time of writing and do not constitute a recommendation to act. Any information referenced in the presentation is believed to be accurate at the time of compilation and provided by Perpetual in good faith. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. • The PDS for Funds issued by PIML, should be considered before deciding whether to acquire or hold units in the Funds. The PDS can be obtained by calling 1800 022 033 or visiting our website www.perpetual.com.au. • No company in the Perpetual Group (Perpetual Limited ABN 86 000 431 827 and its subsidiaries) guarantees the performance of any fund or the return of an investor's capital. The total returns shown for Perpetual Funds have been calculated using exit prices after taking into account all of Perpetual's ongoing fees and assuming reinvestment of distributions. No allowance has been made for taxation. Past performance is not indicative of future performance.