Overhyped _ Myanmar Market Strategy

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20 April 2012
Asia Pacific/Thailand
Equity Research
Emerging Growth (Strategy)
Myanmar Market Strategy
THEME
Overhyped
Figure 1: Very small GDP by regional standards
5,862
1,595
1,012
708
430
319
239 223 223 200
104
45
0
300
600
900
1,200
1,500
1,800
CN IN KR ID TW TH MY HK SG PH VN Myanmar
(US$ bn)
Source: International Monetary Fund (IMF), CEIC
■ Exciting developments, but no investment conclusion. Rapid political
liberalisation, improved prospects for a lifting of Western sanctions and the
initiation of economic reforms could be setting Myanmar on a higher growth
path, but the country’s significance for equities investors remains limited.
■ Too small, with too many uncertainties. Although much welcome change
is coming, a host of issues will likely keep Myanmar a marginal destination for
institutional investors. Myanmar is the second-poorest country in Asia after
Afghanistan, with an economy probably only 14% the size of Thailand’s.
Purchasing power is low, and the country takes only 1% of Thailand’s total
exports. The official growth figures appear exaggerated. A huge human
capital deficit, an overvalued currency and weak institutions pose daunting
development challenges.
■ Different from China or Vietnam. Comparisons with China or Vietnam
appear misguided. China and Vietnam benefited hugely from the investment
and expertise of overseas communities, and both had long experience with
capitalism before their communist interludes. Myanmar lacks a prosperous
overseas community and an experienced entrepreneurial class.
■ Few NJA stocks with Myanmar exposure. We identify only three stocks in
NJA under coverage that will have significant interests in Myanmar in the
next five years. The stock with the biggest planned investment—ITD—has
lost money for four straight years and is unappealing as an investment.
PTTEP and PTT could see upside from new gas finds, but an unrelated
equity increase overhang leaves PTTEP unattractive.
Research Analysts
Dan Fineman
662 614 6218
dan.fineman@credit-suisse.com
Siriporn Sothikul, CFA
662 614 6217
siriporn.sothikul@credit-suisse.com
Paworamon (Poom) Suvarnatemee, CFA
662 614 6210
paworamon.suvarnatemee@credit-suisse.com

2. 20 April 2012
Myanmar Market Strategy 2
Focus charts
Figure 2: Thai exports by destination—Myanmar takes
only 1% of the total
Figure 3: Officially reported real GDP growth too good to
believe
0
5
10
15
20
25
30
CN
EU
JP
US
MY
SG
ID
VN
PH
Cambodia
Myanmar
Laos
(US$ bn)
100
200
300
400
1998 2000 2002 2004 2006 2008 2010
(Indexed)
Myanmar China
Source: Bank of Thailand (BOT) Source: Asian Development Bank (ADB)
Figure 4: Investment as a % of GDP—low number calls
into question the accuracy of official GDP
Figure 5: Public expenditure on education as % of GDP
43
42
36
29
25
22 22 21 21
15 15
27
0
10
20
30
40
50
CN
VN
IN
KR
TH
ID
MY
TW
HK
SG
PH
Myanmar
(%)
7.5
5.0
4.4
4.1 3.9
3.2 3.1
2.5
1.9
1.3
0
3
6
9
MY TH IN KR HK PH SG ID CN Myanmar
(%)
Source: ADB, Ministry of National Planning and Economic
Development
Note: All data for 2001 with the exception of China (1999) and India
(2000); Source: World Bank
Figure 6: Strong market rate for kyat a problem Figure 7: Military still in firm control of the Parliament
550
800
1,050
1,300
1,550
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
(Kyats/US$)
USDP (Pro-
military party)
51%
Reserved for
active soldiers
25%
Others
18%
NLD
6%
Source: The Irrawaddy News magazine Source: The Myanmar Union Election Commission

3. 20 April 2012
Myanmar Market Strategy 3
Overhyped
Exciting developments
Exciting events are unfolding in Myanmar. The pace of political reform is rapid. Western
countries could lift sanctions soon. Economic reforms are beginning. Though not large, the
population is big enough to form a significant domestic market, at some point in time. Gas
exports are significant and rising.
But starting from very small base
That said, Myanmar remains too small to move the needle economically for any NJA
country, including Thailand. Although impossible to determine with any accuracy,
Myanmar’s GDP is probably only 14% the size of Thailand’s. It takes only 1% of Thailand’s
exports. Most of the population is too poor to buy anything other than locally-produced
subsistence goods. We expect growth to accelerate, but rapid expansion of the sort seen
by China and others at similar stages of development is not assured. Official numbers
showing double-digit GDP growth during 1999–10 appear exaggerated to us. Flat
electricity consumption, slow import growth and low levels of investment indicate that the
actual GDP growth rate has been more in the low-to-mid-single digits.
Major challenges remain
Myanmar faces serious economic and political challenges. The country’s human capital is
arguably the weakest in Asia outside East Timor. The currency is likely overvalued. The
military consumes as much as two-thirds of the budget, leaving little for infrastructure and
education. Inflation is structurally high. In contrast to China or Vietnam, there is no
prosperous overseas community ready to inject capital and expertise upon liberalisation.
We are positive on the political outlook but feel compelled to note the remaining risks.
Conservatives in the military may yet block reform, and ethnic insurgencies continue. The
2015 general election seems an especially risky event, as only then will the military be
faced with the prospect of losing control of the government.
Few stocks with Myanmar exposure
Although a number of NJA companies plan to invest in Myanmar, we identify only two
groups—ITD and the PTT group—as having business ties of any size with the country in
the next five years. We consider ITD unattractive due to its ongoing losses, while
Myanmar’s potential appears too limited to justify buying PTT or its subsidiaries.
1-2 decades away from investability
Myanmar is at least 1-2 decades away from being a significant destination for equities
investors. Myanmar is a decade or more behind Vietnam, which itself is probably a decade
away from being as significant as the Philippines as a stock market. Private equity
investors could find much of interest in Myanmar in the next three to five years, but
secondary market investors likely have a long wait.
Natural gas, rapid reform
and the likely lifting of
sanctions make Myanmar
interesting…
…but it is still too small to
matter economically to its
neighbours
Daunting economic and
political challenges
Only three NJA stocks with
significant Myanmar
exposure
1-2 decades away from
investability for secondary
market equities investors

4. 20 April 2012
Myanmar Market Strategy 4
Exciting developments
Rapid political change is driving a major reassessment of Myanmar’s growth prospects.
Political liberalisation is opening the path for an end to sanctions and economic reform,
and potentially could allow for greater exploitation of natural resources.
Dizzying pace of political reform
Myanmar is still not democratic, but one academic we spoke to has described the pace of
political reform as “dizzying.” Over the past two years, Myanmar has acquired a civilian
leadership, released nearly a thousand political prisoners, allowed pro-democracy leader
Aung San Suu Kyi to run in elections and eased controls on the media. The main
opposition party, the National League for Democracy (NLD) won 43 out of 45 seats
contested in the 1 April bye-elections, which independent monitors from EU and the US
judged free and fair. Though we will note in a later section that political risk remains
considerable, the trajectory of reform is highly positive.
Sanctions on their way out
For much of the past decade, the US and EU have maintained a variety of sanctions
ranging from visa restrictions and asset freezes of politically important Burmese, to a US
ban on imports from and new investment in Myanmar. The US ban on exports of financial
services to Myanmar effectively excludes it from the international clearing system for the
US dollars (Figure 8)
Figure 8: The current sanctions regime
Sanctioning entity Sanction
USA
No new investment by US individuals or companies
Ban on all imports from Myanmar
Ban on export of financial services to Myanmar
Ban on import of precious stones, even if processed in third country
Visa bans and asset freezes on prominent leaders and businessmen
Tourist advisories
Informal discouragement of IMF and World Bank assistance
EU
Ban on imports of timber, metals and minerals, precious stones
Ban on exports of equipment relevant to these industries
Denied access to preferential tariff rates
Visa bans and asset freezes on prominent leaders and businessmen (recently lifted)
Source: International Crisis Group
The successful 1 April bye-elections are leading to an easing of sanctions. The US will
reopen its aid office, allow senior Myanmar leaders to visit the US and cease blocking the
activities of multilateral development agencies. A full lifting of sanctions would require
congressional legislation, but in the short run the Obama administration plans to waive
sanctions on some economic sectors such as finance, agriculture, tourism and
telecommunications. By suspending rather than lifting sanctions, the US hopes not only to
reward the government for the free and fair April elections, but also to retain leverage in
case conservatives seek to block further reform. The EU will begin consideration of its
sanctions next week and will likely take a similar approach.
Companies might be reluctant to make major investments while the re-imposition of
suspended sanctions remains possible, but the permanent removal of sanctions would
potentially be a major event. Sanctions have effectively blocked any new investment from
US firms, and even European and Japanese firms have been reluctant to invest due to
reputational risk. Just the prospect of sanctions being removed has evoked tremendous
interest from investors in the months leading up to the elections.
Several reasons to take
note of Myanmar
Rapid political reform
Sanctions are easing

5. 20 April 2012
Myanmar Market Strategy 5
Important economic reforms
The new civilian government has already implemented one economic reform, and more
could follow. The most significant reforms enacted and under consideration include:
■ Currency unification: Until this month, Myanmar was burdened with multiple
exchange rates. The official kyat rate, MMK6.4/USD, was more than 100 times the
market rate of MMK818/USD. The unrealistic official rate has discouraged foreign
investment and created opportunities for corruption. With the help of the IMF, the
government this month moved the official rate to a level close to the market rate. It is
not entirely clear how the new currency mechanism will work, but a managed float like
China’s appears most likely.
■ Central Bank reform: The Central Bank has historically been under the control of the
Finance Ministry. The Wall Street Journal has reported that the government is
considering legislation to give the bank more independence, but we do not know
whether it would get full policy independence or merely operational independence.
■ Telecommunications licensing: At present, cellular penetration is just 1% and cell
phones can cost 10 times or more than in other countries. Blackberries and foreign cell
phones do not work in Myanmar (Figure 9). To improve the telecommunications
infrastructure, the government is considering issuing operating licences to foreign
companies.
Figure 9: Cell phone penetration rates
143
120 118
113
100 97
92
65 63
1
168
0
30
60
90
120
150
180
HK SG TW MY TH KR ID PH IN CN Myanmar
(%)
Source: International Telecom Union, Credit Suisse estimates
■ Financial sector reforms: The Central Bank governor told The Wall Street Journal
that financial sector reforms are being contemplated, though he provided few details.
We believe that the government is not only eager to jump-start the economy, but that it is
getting good advice. The government is consulting closely with the IMF on currency
unification and other issues, and listening carefully to the recommendations of private
economists and think-tanks. This government “gets it” on the economy, in our view.
Easy wins
Political reform could also lead to two easy wins:
1. A peace dividend: The military now consumes two-thirds of the budget,
according to one academic study. Were civilian control to be established, these
funds could be diverted to infrastructure and education. Please note that budget
numbers have not been published since 2000, so only estimates are available.
Exchange rate unification
has already been
implemented, and reforms
to the central bank, the
telecommunications sector
and financial sector under
consideration
Reduced military
expenditures and less
grandiose white elephant
projects represent easy wins
for the economy

6. 20 April 2012
Myanmar Market Strategy 6
2. Fewer white elephants: The previous military government had a penchant for
extravagant, wasteful projects. IMF estimated that construction of the new capital,
Naypyidaw, cost 2.4% of GDP, while one academic observer places the price tag
at US$3–5 bn, or 10% or more of GDP. No outsider knows for sure why the
capital was moved from Yangon, but some observers believe it was due to fears
of a US invasion or for astrological and numerological considerations. Under a
democratic government, taxpayers would probably prevent such wastage.
Moderately large population
Myanmar’s population is big enough to form a significant domestic market at some point in
time. Because a census has not been performed since 1983, no one knows the true
population of Myanmar, but estimates range from 44 mn (Ministry of Home Affairs) to 59
mn (Ministry of Immigration and Population) or even 62 mn (IMF). Taking the midpoint,
Myanmar would rank as a mid-sized Asian population, far smaller than China, India and
Indonesia and considerably smaller even than Vietnam, the Philippines and Thailand, but
larger than Korea, Taiwan or Malaysia (Figure 10).
Figure 10: Mid-sized population
1,349 1,203 240
95
64
53
49
29
23
7 5
0
25
50
75
100
125
150
CN IN ID PH TH Myanmar KR MY TW HK SG
(mn)
Source: National Statistical Office of Myanmar, Credit Suisse estimates
Significant gas reserves
Natural gas is an additional point of interest. Although current production ranks far behind
Malaysia, Indonesia and even Thailand (Figure 11), it rates better as an exporter (Figure
12). Because the economy is so undeveloped, internal consumption is low and exports
high. Myanmar gas is particularly important for neighbouring Thailand, which imports 20%
of its gas from Myanmar.
Mid-sized population
A significant gas exporter

7. 20 April 2012
Myanmar Market Strategy 7
Figure 11: Natural gas production not high… Figure 12: …but gas exports significant
3,120
2,343
892
486 453
330
149
0
500
1,000
1,500
2,000
2,500
3,000
3,500
ID MY TH Brunei Myanmar VN PH
('000 Terjoules)
1,489
1,037
373
326
0
300
600
900
1,200
1,500
1,800
ID MY Brunei Myanmar
('000 Terjoules)
Source: International Energy Agency (IEA) Source: IEA
Expansion is on the way. Two new pipelines are planned, one to southern China from the
Shwe field of western Myanmar scheduled to open next year, and the other to Thailand, to
supplement the existing pipeline. Gas production is set to increase sharply by 2013–14,
and Wood Mackenzie forecasts that production will not peak until 2016.
Figure 13: Myanmar gas production set to rise
0
300
600
900
1,200
1,500
1,800
2,100
2,400
01 02 03 04 05 06 07 08 09 10 11 12E 13E 14E 15E 16E 17E 18E 19E 20E
(mmcfd)
Source: Wood Mackenzie
Gas is by far Myanmar’s most important product. In 2010, gas accounted for 43% of total
exports and at market exchange rates, it likely is the most important source of revenue for
the government, though the lack of published budget numbers makes it difficult to confirm.
It’s in East Asia
Perhaps the biggest advantage Myanmar has is geography. Every East Asian country
other than autarchic North Korea has either already reached developed status or has had
an early period of rapid growth. Even Cambodia and land-locked Laos are now enjoying
high growth. In the early stages of development, where Myanmar now finds itself, it seems
that all an East Asian nation needs to do to generate rapid growth for 3–5 years is: (1)
establish internal peace, (2) open up to foreign investment and (3) allow their acquisitive
population the freedom to pursue their dreams. We would be surprised if Myanmar did not
witness at least a short period of surging GDP.
Simple geography—i.e.,
location in East Asia—
perhaps its biggest plus

8. 20 April 2012
Myanmar Market Strategy 8
But starting from very small base
Unfortunately, Myanmar remains too small to move the macro needle of any regional
market for a decade or longer. We will discuss in a later section the opportunities for a
handful of Thai firms with the potential to reap significant gains in Myanmar, but the
country’s economic significance is still limited.
A small economy
No one knows the true size of the Myanmar economy, but under any reasonable estimate
it remains very small.
First, consider the difficulty of measuring the economy. GDP for 2010 is reported at
MMK40.5 tn. Translated at the previous official rate for 2010, that equals to US$7.3 tn,
making Myanmar the world’s second-largest economy. Translated at the new market rate
it equals US$50 bn. As will be discussed later, even this figure appears exaggerated, and
IMF’s estimate places GDP at US$45 bn.
If we take IMF’s number as close to the truth, Myanmar appears a very small place. It
would only be 14% the size of Thailand, 19% the size of Malaysia and 23% the size of
Philippines. India’s GDP is 35 times bigger, and China’s 130 times (Figure 14). Myanmar
would need to grow at 10% per year for 16 years just to reach the Philippines’ current size.
Figure 14: Tiny economy
5,862
1,595
1,012
708
430
319
239 223 223 200
104
45
0
300
600
900
1,200
1,500
1,800
CN IN KR ID TW TH MY HK SG PH VN Myanmar
(US$ bn)
Source: International Monetary Fund (IMF), CEIC
Based merely on considerations of size, Myanmar’s domestic market appears too small to
boost growth even in Thailand, much less Myanmar’s mega neighbours, China and India.
Myanmar’s tendency to import heavily from China and the imminent arrival of new
exporters from Western countries further diminish the country’s significance for Thai
exporters. Thailand’s exports to Myanmar are only about 1% of total Thai exports and less
than one quarter of exports to Malaysia. The four million inhabitants of Laos take roughly
as much of Thailand’s exports (Figure 15).
Myanmar is still too small to
matter economically for its
neighbours
Economy only about one-
tenth size of Thailand’s
Takes only 1% of Thailand’s
exports, i.e. less than one-
quarter of what Malaysia
takes

9. 20 April 2012
Myanmar Market Strategy 9
Figure 15: Thai exports by destination—Myanmar takes only 1% of the total
0
5
10
15
20
25
30
CN
EU
JP
US
MY
SG
ID
VN
PH
Cambodia
Myanmar
Laos
(US$ bn)
Source: BOT
Low purchasing power
Low purchasing power further limits Myanmar’s potential as an export market. The IMF
gives Myanmar the second-lowest per capita GDP on a PPP basis in Asia after
Afghanistan. Myanmar ranks poorly not just on an Asian scale, but on an African measure
as well (Figure 16). A population this poor spends a large amount of its income on
subsistence and has little left for discretionary purchases of imported goods.
Figure 16: Per capita GDPs on PPP basis—poor even by African standards
0
10,000
20,000
30,000
40,000
50,000
60,000
SG
HK
TW
KR
EquatorialGuinea
Botswana
Gabon
MY
SouthAfrica
TH
CN
Namibia
Angola
Swaziland
RepublicofCongo
ID
PH
CapeVerde
IN
VN
Pak
Laos
Nigeria
Cameroon
Cambodia
Gambia
Senegal
Kenya
Côted'Ivoire
Chad
Zambia
Ghana
Bangladesh
Tanzania
Benin
BurkinaFaso
Lesotho
Myanmar
Afghanistan
(US$)
Source: IMF
Per capita GDP low even by
African standards

10. 20 April 2012
Myanmar Market Strategy 10
Extraordinary logistical challenges
The difficulty of getting goods to customers further complicates the picture for potential
exporters to Myanmar. Infrastructure is primitive and traditional markets and shops still
dominate the retail sector. Outside of Yangon, the capital and one or two second-tier
cities, the vast majority of purchases are of local goods sold in local wet markets or small
shops.
High growth still a hope, not a reality
Although we expect growth to improve with an easing of sanctions and implementation of
reforms, Myanmar’s GDP has yet to show rapid expansion. Rapid growth remains a
potential, not a reality.
The official numbers indicate that Myanmar has already been generating great growth for
over a decade. The government reported 1999–10 GDP CAGR of 12.1% and double-digit
growth every year since 1998. Even during the GFC in 2009, official GDP grew 10.6%
(Figure 17). Based on the official numbers, Myanmar has grown faster than China since
1998.
Figure 17: Officially reported real GDP growth too good to believe
100
200
300
400
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
(Indexed)
Myanmar China
Source: ADB
Almost certainly, however, the official numbers exaggerate both the level and growth of
GDP. Consider these data points:
■ Electricity consumption declined in 2010 and was flat over 2005–10 (Figure 18). The
large 2010 decline raises questions about the quality of the electricity data, but that
also raises questions about the GDP numbers.
■ From 1998 to 2010, nominal GDP saw a 30% CAGR on our calculations, but imports
grew just 6% p.a.
■ Investment as a percent of GDP is just 15%, roughly half of Korea’s and one-third of
China’s (Figure 19).
Goods hard to get to market
for foreign firms
Official numbers give higher
growth than in China
But power consumption,
import and investment
numbers indicate GDP
exaggerated

11. 20 April 2012
Myanmar Market Strategy 11
Figure 18: Weak electricity consumption contrasts with
strong reported GDP
Figure 19: Investment as % of GDP—low number calls
into question accuracy of official GDP
4,353 4,355
4,438
4,701
4,579
4,936
4,000
4,250
4,500
4,750
5,000
2005 2006 2007 2008 2009 2010
(mn kwh)
43
42
36
29
25
22 22 21 21
15 15
27
0
10
20
30
40
50
CN
VN
IN
KR
TH
ID
MY
TW
HK
SG
PH
Myanmar
(%)
Source: Asian Development Bank Source: Asian Development Bank (ADB), Ministry of National
Planning and Economic Development
The latter point seems especially telling. Every Asian country that has enjoyed extended
periods of 8%+ growth has had investment rates well above 20%, and most other than India
have had 30% or more. The 15% officially reported number would be barely sufficient to
cover depreciation of the existing capital base. Most likely, the denominator in the equation—
GDP—is exaggerated, leading to an excessively low investment ratio.
Considering the statistical anomalies, the Economic and Social Survey of Asia and the
Pacific estimates growth in 2007/08 and 2008/09 at 5.5% and 2.0%, respectively, while
IMF calculates rates at 5.5% and 4.5% respectively. The Economist Intelligence Unit
estimates 3.4% and 0.9%, respectively (Figure 20). We consider these figures as good as
any and assume that growth in the past decade has been in the low- to mid-single digits.
Figure 20: Outside GDP growth estimates far below official numbers
5.5 5.5
3.4
2.0
4.5
0.9
0
2
4
6
8
Economic and Social Survey of Asia
and the Pacific
IMF The Economist Intelligence Unit
(%)
2007/08 2008/09
Source: The Economic and Social Survey of Asia and the Pacific, IMF, The Economist Intelligence Unit
Actual GDP growth probably
only at 3–5%

12. 20 April 2012
Myanmar Market Strategy 12
Less important than Vietnam or Bangladesh
To put Myanmar’s significance in perspective, consider two of its peers—Vietnam and
Bangladesh. Compared with Myanmar, Vietnam’s population is 67% larger, its GDP is
128% bigger and its per capita GDP is 117% higher, yet Vietnam took only 3% of
Thailand’s 2011 exports. Bangladesh’s population is triple the size, with a GDP 132%
larger and per capita GDP 9% higher, yet investment banks are not holding Bangladesh
conferences (Figure 21Error! Reference source not found.).
Figure 21: Myanmar smaller and poorer than Vietnam and Bangladesh
Bangladesh Myanmar Vietnam
Nominal GDP (US$ bn) 106 45 104
GDP per capita based on PPP (US$) 1,585 1,448 3,143
Population (mn) 164 53 88
Source: International Monetary Fund (IMF)
Much less important than
Vietnam or Bangladesh, so
why the hype?

13. 20 April 2012
Myanmar Market Strategy 13
Major challenges remain
Although we believe a short growth surge is likely, Myanmar faces serious economic and
political challenges to overcome if it is to achieve sustainable growth. The country is
starting in a deeper hole than previously closed economies that have opened up such as
China, Vietnam and Cambodia. It would be perilous to assume that Myanmar will
necessarily follow their paths to higher growth.
Human capital deficit
Myanmar’s human capital deficit is daunting. Two generations grew up in isolation from
the outside world starting from 1962 when a new military government turned the country to
autarchic socialism, and the dictatorship closed universities for prolonged periods to stifle
student activism. Investment in education has been woefully inadequate. Myanmar spends
1.3% of GDP on education, compared with almost 8% and 5% for Malaysia and Thailand,
respectively (Figure 22). Because of the decline of universities, a majority of PhDs in
Myanmar are over 50.
Figure 22: Public expenditure on education as % of GDP
7.5
5.0
4.4
4.1
3.9
3.2 3.1
2.5
1.9
1.3
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
MY TH IN KR HK PH SG ID CN Myanmar
(%)
Note: All data for 2001 with the exception of China (1999) and India (2000); Source: Worldbank
Inadequate infrastructure
The primitive telecommunications system is emblematic of a national infrastructure unable
to support a manufacturing export economy. Blackouts are frequent in cities and much of
the countryside goes dark at night.
Excessive military spending
Excessive military spending explains much of the under-investment in education and
infrastructure. The military takes two-thirds of the national budget according to one
estimate, compared with 5–10% in other ASEAN economies (Figure 23). Reduction of
military spending will likely require both continued progress in democratisation and
sustainable peace agreements with ethnic insurgents on the borders.
Country still faces huge
challenges
Large human capital deficit
Infrastructure inadequate for
manufacturing
Military budget crowds out
infrastructure and education
expenditures

14. 20 April 2012
Myanmar Market Strategy 14
Figure 23: Military spending as % of total budget is huge
66.0
9.5 8.9
5.5
0
15
30
45
60
75
Myanmar TH MY ID
(%)
Source: World Bank, Harvard Ash Centre
Overvalued currency
Although unification of the multiple exchange rates is a major positive, an excessively
strong currency poses serious risks. Gas export receipts, sale of state assets requiring
repatriation of capital flight funds and investors arbitraging high local interest rates have
helped the market kyat rate rise 77% the past five years (Figure 24). In a sense, the
currency appreciation is a healthy sign of increasing confidence, but the strong kyat
threatens Myanmar with the Dutch Disease. As happened to the Netherlands after the
discovery of oil in the North Sea in the 1960s, Myanmar faces the risk that a strong kyat
resulting from rising gas exports will prevent the emergence of a manufacturing economy.
One of the few export successes of recent years—bean and pulse sales to India—is under
heavy pressure at the current exchange rate. The country’s few manufacturers are
struggling to survive.
Figure 24: Strong market rate for kyat a problem
550
800
1,050
1,300
1,550
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
(Kyats/US$)
Source: The Irrawaddy News magazine
Currency appears
overvalued

15. 20 April 2012
Myanmar Market Strategy 15
Inefficient financial system
Myanmar’s banking system fails to provide some of the most basic financial services. Few
in Myanmar trust banks with their savings, depriving institutions of deposits, and banks
engage in little lending. Excessively strict LDR rules prevent most farmers from obtaining
credit, and repressive liquidity requirements force banks to keep most of their assets in
government bonds. Credit card and ATM transactions are still almost entirely impossible to
conduct in Myanmar.
Structurally high inflation
Myanmar has a history of high inflation that could require years of tight monetary policy to
wring from popular expectations. Inflation during 2006–11 was 10.7% on a CAGR basis, in
large part due to central bank monetisation of public sector debts (Figure 25). Given the
fairly slow GDP growth, these are uncomfortably high numbers.
Figure 25: History of high inflation
9.9
1.5
17.9
20.9
0
5
10
15
20
25
2007 2008 2009 2010
(%)
Source: ADB
As in Vietnam, where hyper-inflation in the 1980s left locals with a preference for dollars
and gold over dong, a history of demonetisation has left the people of Myanmar distrustful
of the kyat as a store of value. The most recent demonetisation was in 1987, when the
government declared all bills of 75 kyat or less—three-quarters of the currency by value—
no longer legal tender. Bank deposits are just 10% of GDP, indicating that much of the
country’s savings are in gold, dollars or stuffed in mattresses.
Conglomerates and uncompetitive SOEs
The structure of Myanmar’s corporate sector weighs on prospects. The IMF estimates that
SOE losses absorbed 23% of tax revenue in the middle of the last decade. Key SOEs are
connected with the military and none could be considered globally competitive. Unwieldy
conglomerates dominate the private sector. Even by Asian standards, Myanmar
conglomerates are unfocused and concentration of ownership appears undesirably high.
Conglomerates acquired much of their assets in a series of privatisations before the 2010
elections. The political opposition has characterised the privatisations as de facto asset-
stripping, whereby the military allocated valuable assets to friends. Given the weakness of
domestic financial institutions, it will be hard to privatise SOEs without selling them to the
existing conglomerates, leading to an even greater concentration of ownership of the economy.
Financial system not
providing capital to private
sector
High inflation will be hard to
wring from the system
Uncompetitive corporate
structures

16. 20 April 2012
Myanmar Market Strategy 16
Bubble risk
The success in attracting foreign investment poses perhaps the greatest risk to
sustainable growth. The 2006 bubble in Vietnam highlights the dangers of big increases in
capital inflows to Frontier Markets with weak financial systems. The inflows led to property
bubbles, overvalued currencies and misallocated resources. We fear that Myanmar-mania
could lead to a de-stabilising boom and bust.
Political risk remains
We are more optimistic about politics than other aspects of the Myanmar development
story, but even here we worry that many observers are overlooking the considerable risks.
We believe that Myanmar will continue to reform politically, but a lot can still go wrong.
Much of the military apparently supportive
We find the apparent support from much of the military for reform as highly encouraging.
The reformist president is a former general close to the previous military strongman, Than
Shwe, who resigned as head of state and head of the military-dominated State Peace and
Development Council last year. The reformist speaker of Parliament, almost all cabinet
members and most of the MPs are also former military officers. The military component in
Parliament has voted in favour of various reformist measures, and Than Shwe seems to
have genuinely removed himself from day-to-day governance.
Some observers believe that Than Shwe is engineering a transition to partial or full
democracy to ensure himself a peaceful retirement. His predecessor, Ne Win, spent his
dying days under house arrest after losing power, and his military protégé—Khin Nyunt—
and some Ne Win family members were given stiff jail sentences. According to this theory,
the 78-year-old Than Shwe hopes that a transition to civilian rule will prevent a future
military strongman from punishing Than Shwe and his family.
Business community a possible driver of reform
We consider the small but influential business community as another force for reform.
Although key SOEs and crony businesses have historically found it profitable to operate
under heavy protection against foreign competition, increasingly, businessmen have come
to believe that the removal of sanctions and reform of the economy could open exciting
opportunities for the domestic sector. We believe that lobbying by local businesses has
played a key role in pushing the reform agenda.
But 2015 still an uncertainty
Myanmar has come a long way politically over the past 12 months, but it has much farther
to go before it can create a stable democracy. So far, the military-dominated government
has released dissidents, liberalised censorship and allowed generally free and fair bye-
elections but has given up no real power. The bye-elections opened only 7% of the 664
seats in Parliament, and 25% of all seats are still reserved for sitting military officers. The
vast majority of the remaining seats are held by the pro-military Union Solidarity and
Development Party (USDP). Altogether, forces associated with the military control 80% of
the seats in Parliament as well as all important cabinet positions and regional governments
(Figure 26). Aung San Suu Kyi is still barred by law from serving as president.
High risk of property bubble
Considerable political risk
remains
Encouraging that military
has supported political
reforms
Business community also
seems supportive
But 2015 elections could be
a flash point for renewed
instability

17. 20 April 2012
Myanmar Market Strategy 17
Figure 26: Military still in firm control of the Parliament
NLD
6%
Others
18%
Reserved for active
soldiers
25%
USDP (Pro military
party)
51%
Source: The Myanmar Union Election Commission
The 2015 general elections remain a huge medium-term overhang. The 1 April bye-
elections posed no immediate threat to the control of government by pro-military forces,
but the 2015 general elections would likely deprive the military of control of government if
they were conducted fairly. We likely will not know if those elections will be free and fair
until they are complete. If they are not free and fair, Myanmar could again suffer instability
and international sanctions. Some pessimists believe that the military will allow only
enough liberalisation to see sanctions lifted and that a later confrontation between
conservatives and pro-democracy forces is inevitable.
We tend to agree with the optimists who argue that the democratic genie is wiggling out of
the bottle and that at some point reform achieves self-sustaining momentum. However, we
see significant risk that back-tracking and renewed confrontation is possible.
Ethnic minority issue unresolved
Ethnic minority insurgencies pose an additional political risk. Only 68% of the population is
ethnic Burman, with the rest Shan, Karen, Kachin, Karenni, Wa, Royhinga and numerous
other ethnic groups (Figure 27). Several dozens of these groups have armed movements
and histories of conflict with the military dating back to independence. Most larger groups
have reached de facto cease fires with the military, but the Kachin and Wa, among others,
have not agreed to stop fighting. Although the president has made sincere efforts to
reconcile with minorities, a military offensive against the Kachin late last year raised
questions as to whether the army would allow diplomacy to work.
Continuing ethnic conflicts
could block full removal of
sanctions and keep military
spending high

18. 20 April 2012
Myanmar Market Strategy 18
Figure 27: Ethnic minorities almost one-third of the population
Mon
2%
Indian
2%
Chinese
3%
Other
5%
Karen
7%
Rakhine
4%
Shan
9%
Burman
68%
Source: Central Intelligence Agency (CIA)
The ethnic struggles pose two economic risks. First, the US has linked its remaining
sanctions with a resolution of ethnic conflicts. Second, pipelines and logistical links between
the gas fields and China and Thailand pass through Kachin and Karen territory, respectively.
The security of those infrastructure investments requires a resolution of the conflicts.
Bigger challenges than Vietnam or China had faced
It would be dangerous to assume that Myanmar will follow the hugely successful path of
China, or even the moderately successful economic career of Vietnam. We note significant
advantages that those countries enjoyed vis-à-vis Myanmar:
(1) Overseas communities: Vietnam benefited from the return and investment of
overseas Vietnamese in America, while overseas Chinese in Hong Kong, Taiwan and
Southeast Asia contributed hugely to China’s development. Myanmar lacks a large,
prosperous overseas population who can offer capital and expertise.
(2) History of capitalism: Both China and Vietnam benefited from a class of capitalists
who were able to use their business skills once the communist interlude ended.
Vietnam’s south had been continually capitalist until the 1975 unification of the
country, and southerners had to wait only about 13 years before reforms again
allowed private business to operate. Chinese capitalists spent about 25 years in Hong
Kong or Taiwan or lying low on the mainland, but re-emerged as active mainland
investors after Deng’s reforms began in 1979. Myanmar lacks these human resources.
A large number of the Indian and Chinese capitalists forming the core of the colonial
era business class were forced to leave after independence in 1947, and a big
domestic capitalist class never developed. The imposition of autarchic socialism
during 1962–88 kept private businesses extremely small and uncompetitive.
(3) Technical skills: Although grossly inefficient, the Chinese communists’ effort to build
heavy industry in the 1950s and 1960s left the country with a large pool of technically-
skilled engineers and ample science and technology universities. Myanmar lacks good
science and technology institutes and skilled workers. Although China and Vietnam
cut themselves off from the West, they drew heavily on technical assistance from the
Soviet Union. Myanmar, from 1962 to 1988, cut itself off from everyone.
Growth, but from very low base
We believe that Myanmar can accelerate growth, but the challenges it faces may keep
growth from reaching the take-off levels achieved by China, Thailand, Malaysia and
others, and could limit sustainability. Because the base is so low, Myanmar needs at least
one to two decades of rapid growth to achieve enough size to matter to neighbouring
economies, or to have a stock market of meaningful size.
Unlike China or Vietnam,
Myanmar lacks overseas
community who can provide
capital and expertise
Growth to accelerate, but
from very low base

19. 20 April 2012
Myanmar Market Strategy 19
Few stocks with Myanmar exposure
Myanmar remains too small to have a significant impact on most NJA stocks. We identify
only three stocks likely to have significant investments in or sales to Myanmar over the
next five years: Italian-Thai Developments (ITD.BK, Bt3.52, UNDERPERFORM, TP
Bt2.50), PTT Exploration & Production (PTTE.BK, Bt173.00, UNDERPERFORM, TP
Bt175.00) and PTT Public Company Limited (PTT.BK, Bt335.00, NEUTRAL, TP
Bt376.00). The first we consider a poor investment and non-Myanmar events will matter
most for the latter two.
Dawei and Italian-Thai Development
ITD is by far the NJA stock with the greatest Myanmar potential. ITD’s Dawei investment is
a potential game-changer for the stock.
The Dawei project would create a land bridge linking Myanmar with Thailand and by
extension, Indochina. Dawei is located in the southernmost region of Myanmar, 300 km
west of Bangkok. The plan is to build two deep sea ports, three industrial zones for heavy,
medium, and small-scale industries, residential areas and a commercial complex in a 250
sq km area. Eventually, oil and gas pipelines to Thailand would be added. The heavy
industries would include an integrated steel mill, a petrochemicals complex and a fertiliser
plant. The first phase is targeted for completion in 2015 with the final completion in 2020.
In theory, Dawei would provide a cheaper, quicker transport link to Indochina than
passage through the Straits of Malacca and Singapore. Originally, 4,000 MW of coal-fired
electric capacity was planned, but local environmentalist opposition has forced the
government to now plan on gas-fired power.
Figure 28: Dawei industrial and logistics project
Source: Bangkok Post
Only three NJA stocks with
significant Myanmar
exposure
Dawei a potentially game-
changing project for ITD, but
prospects for both the
project and ITD are clouded

20. 20 April 2012
Myanmar Market Strategy 20
Figure 29: Investment plans on Dawei
Southern deepwater port
4-Lanes Toll Highway link to Thai border
Border check-point
Road to Dawei Airport
93 mn m3
reservoir
Coal-fired power plant
Roads network within the industrial estate
Irrigation systems
Waste water treatment system
Townships
Residential areas
First Phase
(2011–2015)
Areas for one-stop governmental services
Further development of roads network and water system within the industrial estate
Expansion of Toll Highway link to Thai border from 4-lanes to 8-lanes
Commercial complex
Second Phase
(2013–2018)
Improvement of water channels
Northern deepwater port
Further development of roads network and water system within the industrial estate
Railway network
Electricity grid lines
Third Phase
(2016–2020)
Gas and Oil pipelines to Thailand
Source: Office of the National Economic and Social Development Board (Thailand)
For ITD, Dawei is potentially huge. The Myanmar government gave ITD exclusive rights
for 75 years to develop Dawei, which it plans to do through Dawei Development
Corporation (DDC). ITD hopes to sell 49% of DDC and retain 51% ownership. A local
Myanmar investor plans to take 25%. The total investment cost for Dawei has been
estimated at US$8 bn. Apart from the special zone itself, ITD has also won a contract from
the Myanmar government to build the road link with Thailand, and a separate major power
project is under consideration. The project has attracted interest from overseas investors
in Thailand, Japan, the Middle East and Europe. Investors from Japan, the Middle East,
China, South Korea and PTT have been indentified as potential investors.
All told, Dawei could transform ITD’s finances. ITD’s market cap is just under US$500 mn.
Dawei makes some sense to us, but it faces several daunting obstacles before it becomes
a reality:
(1) ITD: ITD seems a weak vehicle to spearhead such a massive effort. ITD’s book value
is just US$262 mn, and it has lost money for four straight years (Figure 30). We are
not sure if it is financially capable of leading the project.
(2) Political opposition: Environmentalists have already blocked the coal-fired electrical
plants, and we cannot rule out the possibility that NGOs and locals will oppose
construction of polluting industrial plants as well.
(3) Ethnic minorities: The pipeline and highway and rail links pass through ethnic Karen
territory. The main Karen insurgent group, the Karen National Liberation Army, has
complained that locals are not being properly compensated. Fighting near the planned
road has been common.
(4) Not what Myanmar most needs: Myanmar should certainly exploit its potential as a
logistics hub, but heavy industry does not meet its most immediate needs. For now,
the country should be focusing on light industry that could employ its big, under-
utilised labour force.
(5) Integrated steel plant? Myanmar would not seem a promising location.
Dawei project large relative
to ITD’s balance sheet
Dawei’s obstacles: ITD’s
financial weakness, political
opposition, ethnic conflicts

21. 20 April 2012
Myanmar Market Strategy 21
Even if we felt more confident of Dawei’s prospects, we would be uncomfortable with ITD.
Its continuing losses and poor disclosure make it a highly risky investment. We maintain
an UNDERPERFORM rating on the stock.
Figure 30: ITD earnings—losses in five of last six years
-1,171
1,135
-2,288
-1,595
-1,055
-1,698
-3,000
-2,000
-1,000
0
1,000
2,000
2006 2007 2008 2009 2010 2011
(Bt mn)
Source: Company data
PTTEP and gas prospects
PTTEP is the NJA company with the greatest current Myanmar exposure and the greatest
potential for new business. Even here, though, Myanmar’s potential for accelerated growth
is a relatively small factor for the stock.
PTTEP has done businesses with Myanmar for over 20 years. In 2011, Myanmar
accounted for 8% of PTTEP’s sales and 30% of its reserves. PTTEP plans 20% of its total
capex for the next five years in Myanmar.
Figure 31: PTTEP's exposure to Myanmar
DCQ (mmscfd)
Project name
Stake
(%) Export to
Thailand
Domestic
Note
Yadana 25.5 565 150
Production
Yetagun 19.3 460 n/a
Development
Zawtika (M-9 and
part of M-11)
80 240 60
Targets first gas at end-2013, US$4 bn
investment
M-3 100 Second drilling program in 4Q12
M-11 100 To reduce stake to partners within 2012
PSC-G 100
Exploration
EP-2 100
Expected licenses to be officially awarded
in 2Q12
Source: Company data, Credit Suisse estimates
Existing projects
PTTEP has two large existing offshore projects in Myanmar, Yadana and Yetagun. PTTEP
owns 25.5% and 19.3% of the Yadana and Yetagun concessions, respectively, with 80%
and 100% of their gas output sent to Thailand through two pipelines owned by the
concessionaires. Yadana and Yetagun are the only two viable projects close enough to
Thailand to pipe economically.
PTTEP has greatest current
Myanmar exposure of any
NJA company under
coverage
Yadana and Yetagun the
only two major producing
offshore projects in
Myanmar

22. 20 April 2012
Myanmar Market Strategy 22
Figure 32: Ownership structures of Yadana, Yetagun and Zawtika projects
TOTAL, 31.2 TOTAL, 40.9
TOTAL, 20.0
Chevron, 28.3
PTTEP, 80.0
PTTEP, 19.3
PTTEP, 25.5
Chevron, 20.5
MOGE, 15.0 MOGE, 19.3
0
25
50
75
100
Yadana Yetagun Zawtika
(%)
Source: Company data
Figure 33: Yadana—80% of output sold to Thailand Figure 34: Yetagun—100% of output sold to Thailand
Source: Company data Source: Company data
PTTEP’s 80%-owned concession in Zawtika targets initiation of production at the end of 2013.
Total daily production is targeted at 300 mmscfd, of which 80% would be piped to Thailand.
More projects in exploration stage
There are positive exploration results with flow of gas and condensate in the first round of
drilling in 2011 of the M3 Block in the Gulf of Maottama. The second drilling is scheduled
in 4Q12. If the second drilling is successful, PTTEP has committed to drill three more wells
in 2013 before deciding whether to proceed with the project.
Given the block’s proximity to land, M3 gas would be sold to the domestic market in
Myanmar. Due to the shallow water and shorter distance to shore, PTTEP estimates that
the project would be economical with a reserve size of 1.5Tcf or more, assuming 200
mmscfd volume over 20 years. If the exploration outcome is positive, management
expects the first gas in 2016. Based on previous projects in Myanmar where delays were
typical, however, we expect that M3 would start its first production in 2018.
PTTEP has signed a PSC for offshore Block M11 in 2005. Block M11, also located in the
Gulf of Moattama, is a deepwater acreage which PTTEP plans to partly divest to partners
who are more experienced in offshore drilling.
Zawtika project to start at
end-2013
M3—second round of
exploration drillings in 2012
to confirm positive find
Output likely to be sold to
Myanmar
M11—PTTEP plans to dilute
stakes to partner with
deepwater experience

23. 20 April 2012
Myanmar Market Strategy 23
Figure 35: PTTEP’s M3 and M11 blocks
Source: Company data
In addition to M3 and M11, in December 2011 Myanmar’s Energy Ministry declared
PTTEP a winner of two onshore exploration rights—EP2 (1,344km2) and PSC-G
(13,333km2). The PSC contract signing, however, has been delayed from the initial target
dates in February. Once the PSCs are signed, planned exploration activities will follow. If
there is a positive find, we expect the project start-up to be in 2018 at the soonest.
Future opportunities
Myanmar could offer more blocks. PTTEP expects to see more opportunities for
deepwater blocks off the Rakhine and Tanintharyi coasts and more blocks (both
deepwater and shallow water) in the Moattama offshore area.
How Myanmar’s growth prospects fit in
PTTEP’s existing production and the new Zawtika field are piped to Thailand and thus not
dependent on economic events within Myanmar. Only M3 and other possible new
ventures would benefit from accelerated growth in Myanmar. Geography and size make
gas from those projects uneconomic for export to Thailand or China, and thus they would
benefit from growth in domestic Myanmar gas demand.
In conclusion, although Myanmar gas is highly important to PTTEP, the country’s
economic development matters much less.
PTT—limited downstream opportunities
PTT also could invest in projects selling into Myanmar’s domestic market, but options
could be limited. PTT expressed interest in investing in the planned 4,000MW coal-fired
power plants in Dawei, but, as noted, opposition from environmentalists forced the
government to scuttle the project. Opportunities for development of gas-based
petrochemical investments in Myanmar also seem limited as Myanmar’s natural gas so far
has been dry with no ethane or propane content. As such, there is no opportunity to
recreate PTT’s complex in Thailand, which takes wet gas from the Gulf of Thailand. Gas
from Zawtika (M9), targeted to start in 2013, is also dry gas.
PTT’s main opportunities in Myanmar are for power plants in the M3 block area, if
commercialisation proved feasible, CNG, refineries, fertiliser production and methanol
plants. CNG is widely used in Myanmar with 45 refuelling stations, with plans to install
more stations along the domestic pipeline corridor.
PTTEP currently holds
100% of both M3 and M11
blocks
Two more onshore
exploration rights to be
signed
More bidding to come
Myanmar an important
source of gas for PTTEP,
but growth prospects of the
country matter relatively little
Limited investment options
for PTT parent since most
Myanmar gas is dry

24. 20 April 2012
Myanmar Market Strategy 24
Under any realistic scenario, we expect Myanmar to provide less than 5% of PTT parent’s
revenues for 5–10 years.
Credit Suisse’s energy analyst Poom Suvarnatemee discusses the significance of
Myanmar for PTT and PTTEP in greater detail in Valuing the Myanmar Hype.
Nothing else of consequence
Besides ITD and the PTT group, we do not expect any other NJA countries to do
significant amount of business with Myanmar over the next five years. A number of
companies are looking at Myanmar for exports or investment, but the contribution to
revenues for none is likely to exceed 1–2% for several years, or much, much longer.
Myanmar unlikely to provide
more than 5% of PTT parent
revenues for 5–10 years
No other NJA firms have
significant business
interests in Myanmar

25. 20 April 2012
Myanmar Market Strategy 25
1-2 decades away from investability
GDP growth looks set to accelerate, but the stock market is likely 1-2 decades from being
big enough to merit international investor attentions. In the mean time, the country will be
of greatest interest to private equity funds and FDI investors.
Only two companies on OTC
Myanmar’s stock market has only two listed companies. The market is OTC and trades
are recorded on a whiteboard in a one-room exchange. Daiwa Securities hopes to help the
country set up a new exchange, but the main factor limiting Myanmar’s emergence as an
investable market is not the lack of a platform, but the underdevelopment of the economy
and corporate sector. It will take decades for both to reach a state of development
sufficient to support a liquid market.
Vietnam precedent discouraging
Vietnam’s precedent is not encouraging. Vietnam began opening up its economy in 1988,
but now 24 years later the market remains too small and illiquid for the vast majority of
investors to consider. Total trading on Vietnam’s two markets averaged just US$34
mn/day in 2011, and no stocks traded even US$1 mn/day (Figure 36).
Figure 36: None of Vietnam’s top stocks trades even US$1 mn/day
0.9
0.9
0.8
0.7
0.5 0.5
0.4 0.4 0.4
0.3
0.0
0.3
0.6
0.9
1.2
STB VIC HAG FPT VCB MBB EIB VNM BVH MSN
(US$ mn)
Source: Bloomberg
Possible candidate for private equity
For the foreseeable future, there will be very few opportunities for secondary market
investors, but Myanmar could be of interest to private equity funds. Although Vietnam is
still too small to support an active secondary market, private equity investors are active.
We believe that similar opportunities could appear in Myanmar. If Myanmar follows the
Vietnam path, a property bubble could also provide some trading opportunities, but
foreigners will likely find it difficult to exploit. Once sanctions are fully lifted, we would also
expect the government to issue a sovereign bond, which could prove of interest to fixed
income investors.
Driven by global liquidity
As with frontier markets in general, global liquidity will likely matter as much as events on
the ground for interest levels in Myanmar. Given the rapid pace of political reforms, we are
not surprised that investors are paying attention to the country, but if risk aversion globally
increases, we would expect interest levels to drop sharply, even if reforms continued.
At least 1–2 decades from
having investable secondary
equities market
Only two companies in the
OTC market
Myanmar’s equities
development is 10–20 years
behind Vietnam, and
Vietnam is 10–20 years
behind Philippines
Best opportunities for
foreseeable future in private
equity
Surging interest in Myanmar
is a creature of excess
global liquidity

26. 20 April 2012
Myanmar Market Strategy 26
Companies Mentioned (Price as of 19 Apr 12)
Italian-Thai Developments (ITD.BK, Bt 3.56, UNDERPERFORM, TP Bt 2.50)
Masan Group Corp (MSN VM, D 117,000, NOT RATED)
PTT Exploration & Production (PTTE.BK, Bt 175.50, UNDERPERFORM, TP Bt 175.00)
PTT Public Company Limited (PTT.BK, Bt 351.00, NEUTRAL, TP Bt 376.00)
(Masan Group Corp, đ17,000, Not rated)
(Vietnam Dairy Products JSC, đ90,000, Not rated)
(Vincom JSC, đ99,000, Not rated)
(Bao Viet Holdings, đ73,000, Not rated)
(Saigon Thuong Tin Commercial, đ25,200 Not rated)
(Vietnam Export-Import Commer, đ18,200, Not rated)
(JSC Bank for Foreign Trade, đ33,500, Not rated)
(Military Commercial Joint, đ15,400, Not rated)
(Hagl JSC, đ30,200, Not rated)
(FPT Corp, đ59,500, Not rated)
Disclosure Appendix
Important Global Disclosures
Dan Fineman & Paworamon (Poom) Suvarnatemee, CFA each certify, with respect to the companies or securities that he or she analyzes, that (1)
the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his
or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.
See the Companies Mentioned section for full company names.
3-Year Price, Target Price and Rating Change History Chart for ITD.BK
ITD.BK Closing
Price
Target
Price Initiation/
Date (Bt) (Bt) Rating Assumption
17-Sep-09 3.3 3.1
4-Mar-10 2.54 2.5
3
3
2
3
3
4
4
5
5
6
6
7
7
20-Apr-0920-Jun-0920-Aug-0920-Oct-0920-Dec-0920-Feb-1020-Apr-1020-Jun-1020-Aug-1020-Oct-1020-Dec-1020-Feb-1120-Apr-1120-Jun-1120-Aug-1120-Oct-1120-Dec-1120-Feb-12
Closing Price Target Price Initiation/Assumption Rating
Bt
O=Outperform; N=Neutral; U=Underperform; R=Restricted; NR=Not Rated; NC=Not Covered

27. 20 April 2012
Myanmar Market Strategy 27
3-Year Price, Target Price and Rating Change History Chart for PTTE.BK
PTTE.BK Closing
Price
Target
Price Initiation/
Date (Bt) (Bt) Rating Assumption
18-May-09 118 101
30-Jul-09 138 132
2-Sep-09 138.5 130
10-Sep-09 147.5 148
28-Oct-09 151.5 138 U
16-Nov-09 138 136
12-Jan-10 148.5 141
18-Jan-10 149 149
1-Feb-10 135 136
27-Apr-10 150 155
29-Apr-10 149 157
4-Jun-10 147.5 152
22-Jun-10 149 154
13-Jul-10 144 R
24-Aug-10 143.5 U
31-Aug-10 143.5 152
21-Sep-10 144.5 154
28-Oct-10 171 156
4-Jan-11 167 169
4-Feb-11 178 183
25-Jul-11 182.5 163
28-Nov-11 159 147
10-Jan-12 181 156
12-Mar-12 179 169
101
132130
148
138136
141
149
136
155157
152154 152154156
169
183
163
147
156
169
UR
U
96
116
136
156
176
196
20-Apr-0920-Jun-0920-Aug-0920-Oct-0920-Dec-0920-Feb-1020-Apr-1020-Jun-1020-Aug-1020-Oct-1020-Dec-1020-Feb-1120-Apr-1120-Jun-1120-Aug-1120-Oct-1120-Dec-1120-Feb-12
Closing Price Target Price Initiation/Assumption Rating
Bt
O=Outperform; N=Neutral; U=Underperform; R=Restricted; NR=Not Rated; NC=Not Covered
3-Year Price, Target Price and Rating Change History Chart for PTT.BK
PTT.BK Closing
Price
Target
Price Initiation/
Date (Bt) (Bt) Rating Assumption
19-May-09 218 163
14-Jul-09 222 185
17-Aug-09 235 227
2-Oct-09 261 252
28-Oct-09 251 280 N
2-Dec-09 225 273
3-Dec-09 227 247
8-Mar-10 235 261
4-Jun-10 251 283
13-Aug-10 250 285
21-Sep-10 287 299
15-Nov-10 332 320
4-Jan-11 330 346
21-Mar-11 343 362
13-Jan-12 322 374
163
185
227
252
280
273
247
261
283 285
299
320
346
362
374
N
163
213
263
313
363
20-Apr-0920-Jun-0920-Aug-0920-Oct-0920-Dec-0920-Feb-1020-Apr-1020-Jun-1020-Aug-1020-Oct-1020-Dec-1020-Feb-1120-Apr-1120-Jun-1120-Aug-1120-Oct-1120-Dec-1120-Feb-12
Closing Price Target Price Initiation/Assumption Rating
Bt
O=Outperform; N=Neutral; U=Underperform; R=Restricted; NR=Not Rated; NC=Not Covered
The analyst(s) responsible for preparing this research report received compensation that is based upon various factors including Credit Suisse's total
revenues, a portion of which are generated by Credit Suisse's investment banking activities.
Analysts’ stock ratings are defined as follows:
Outperform (O): The stock’s total return is expected to outperform the relevant benchmark* by at least 10-15% (or more, depending on perceived
risk) over the next 12 months.
Neutral (N): The stock’s total return is expected to be in line with the relevant benchmark* (range of ±10-15%) over the next 12 months.
Underperform (U): The stock’s total return is expected to underperform the relevant benchmark* by 10-15% or more over the next 12 months.
*Relevant benchmark by region: As of 29th May 2009, Australia, New Zealand, U.S. and Canadian ratings are based on (1) a stock’s absolute total
return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe**,
with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities.
Some U.S. and Canadian ratings may fall outside the absolute total return ranges defined above, depending on market conditions and industry
factors. For Latin American, Japanese, and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of
the relevant country or regional benchmark; for European stocks, ratings are based on a stock’s total return relative to the analyst's coverage
universe**. For Australian and New Zealand stocks, 12-month rolling yield is incorporated in the absolute total return calculation and a 15% and a
7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds
replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively.
**An analyst's coverage universe consists of all companies covered by the analyst within the relevant sector.

28. 20 April 2012
Myanmar Market Strategy 28
Restricted (R): In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications,
including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other
circumstances.
Volatility Indicator [V]: A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24
months or the analyst expects significant volatility going forward.
Analysts’ coverage universe weightings are distinct from analysts’ stock ratings and are based on the expected
performance of an analyst’s coverage universe* versus the relevant broad market benchmark**:
Overweight: Industry expected to outperform the relevant broad market benchmark over the next 12 months.
Market Weight: Industry expected to perform in-line with the relevant broad market benchmark over the next 12 months.
Underweight: Industry expected to underperform the relevant broad market benchmark over the next 12 months.
*An analyst’s coverage universe consists of all companies covered by the analyst within the relevant sector.
**The broad market benchmark is based on the expected return of the local market index (e.g., the S&P 500 in the U.S.) over the next 12 months.
Credit Suisse’s distribution of stock ratings (and banking clients) is:
Global Ratings Distribution
Outperform/Buy* 46% (59% banking clients)
Neutral/Hold* 42% (57% banking clients)
Underperform/Sell* 10% (51% banking clients)
Restricted 2%
*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy,
Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's
decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.
Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the
market that may have a material impact on the research views or opinions stated herein.
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Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research:
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Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot
be used, by any taxpayer for the purposes of avoiding any penalties.
See the Companies Mentioned section for full company names.
Price Target: (12 months) for (ITD.BK)
Method: Our 12-month target price of Bt2.5 for Italian-Thai Developments is based on three-components valuation which takes into account BV,
forecast contribution of existing backlog, and value of future works.
Risks: Risks to our Bt2.5 target price for Italian-Thai Developments include: 1) delays in flow of new contracts and 2) margin assumptions being
affected by the cost of raw materials, especially steel, cement and oil. In addition, ITD has invested about B3bn in a Spacial Prospecting license for
potash deposit in Thailand. However, mining license has not been granted, raising a risk on potential write-off of this investment.
Price Target: (12 months) for (PTTE.BK)
Method: Our 12-month target price for PTTEP of Bt175/share is set based on Discounted Cash Flow assuming Weighted Average Cost of Capital
(WACC) at 10.5%, Cost of Equity (COE) at 12.0%, Cost of debt at 4.5%, Beta at 0.8, 50%-50% weighted of CS oil price assumption and current
forward curve of oil prices.
Risks: Risks to PTTEP's target price of Bt175/share are 1) a strong Baht exchange rate; 2) oil price fluctuation; 3) start-up of new fields, especially
Arthit field; and 4) political risks in Myanmar.
Price Target: (12 months) for (PTT.BK)
Method: We arrive at Bt376/sh target price for PTT based on Sum-Of-The-Part (SOTP) valuation at the target price of its affiliates, which have
recently been upgrades.
Risks: Key risks to our target price of Bt376 for PTT include: 1) oil prices, 2) refining margins , 3) petrochemicals margins, 4) the Thailand economy
and therefore gas demand growth, and 5) construction risks on new projects.
Please refer to the firm's disclosure website at www.credit-suisse.com/researchdisclosures for the definitions of abbreviations typically used in the
target price method and risk sections.
See the Companies Mentioned section for full company names.
The subject company (PTTE.BK, PTT.BK) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of
Credit Suisse.
Credit Suisse provided investment banking services to the subject company (PTTE.BK, PTT.BK) within the past 12 months.
Credit Suisse has received investment banking related compensation from the subject company (PTTE.BK, PTT.BK) within the past 12 months.
Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (ITD.BK, PTTE.BK,
PTT.BK) within the next 3 months.
Important Regional Disclosures
Singapore recipients should contact a Singapore financial adviser for any matters arising from this research report.

29. 20 April 2012
Myanmar Market Strategy 29
The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (ITD.BK, PTTE.BK, PTT.BK)
within the past 12 months.
Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares;
SVS--Subordinate Voting Shares.
Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not
contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report.
For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit
http://www.csfb.com/legal_terms/canada_research_policy.shtml.
As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.
Principal is not guaranteed in the case of equities because equity prices are variable.
Commission is the commission rate or the amount agreed with a customer when setting up an account or at anytime after that.
For Thai listed companies mentioned in this report, the independent 2010 Corporate Governance Report survey results published by the Thai
Institute of Directors Association are being disclosed pursuant to the policy of the Office of the Securities and Exchange Commission: Italian-Thai
Developments(Very Good), PTT Exploration & Production(Excellent), PTT Public Company Limited(Excellent).
Taiwanese Disclosures: This research report is for reference only. Investors should carefully consider their own investment risk.
Investment results are the responsibility of the individual investor. Reports may not be reprinted without permission of CS. Reports
written by Taiwan-based analysts on non-Taiwan listed companies are not considered recommendations to buy or sell securities under
Taiwan Stock Exchange Operational Regulations Governing Securities Firms Recommending Trades in Securities to Customers.
To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important
disclosures regarding any non-U.S. analyst contributors:
The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts
listed below may not be associated persons of CSSU and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on
communications with a subject company, public appearances and trading securities held by a research analyst account.
• Dan Fineman, non-U.S. analyst, is a research analyst employed by Credit Suisse Securities (Thailand) Limited.
• Siriporn Sothikul, CFA, non-U.S. analyst, is a research analyst employed by Credit Suisse Securities (Thailand) Limited.
• Paworamon (Poom) Suvarnatemee, CFA, non-U.S. analyst, is a research analyst employed by Credit Suisse Securities (Thailand) Limited.
For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at www.credit-
suisse.com/researchdisclosures or call +1 (877) 291-2683.
Disclaimers continue on next page.

30. 20 April 2012
Asia Pacific/Thailand
Equity Research
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