MIRA INFORM REPORT

Report Date :

26.06.2008

IDENTIFICATION DETAILS

Name :	AIR SERVICES SUPPLY JOINT STOCK COMPANY
Registered Office :	No. 01, Lane 196 Nguyen Son Str, Bo De Ward, Long Bien Dist, Hanoi City
Country :	Vietnam
Financials (as on) :	31.12.2006
Year of Establishment :	1994
Com. Reg. No.:	0103015438
Legal Form :	Joint Stock Company
Line of Business :	Trading, Import and Export Garment Products, Handicraft Products Trading Hotel and Restaurant

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Satisfactory
Payment Behaviour :	No Complaints
Litigation :	Clear

SUBJECT IDENTIFICATION & LEGAL FORM
Registered English Name	AIR SERVICES SUPPLY JOINT STOCK COMPANY
Vietnamese Name	CONG TY CO PHAN CUNG UNG DICH VU HANG KHONG
Trade name	AIRSERCO
Type of Business	Joint Stock Company
Founded	1994
Business registration No.	0103015438
Re Issuance on	January 15^th 2007
Issuance by	Hanoi Department of Planning and Investment
Registered Capital	28,000,000,000 VND
Tax code	0100108092
Total Employees	270

ADDRESSES
Head Office:
Address	No. 01, Lane 196 Nguyen Son Str, Bo De Ward, Long Bien Dist, Hanoi City
Country	Vietnam
Tel	(84-4) 8271565 / 8730408 / 8272722
Fax	(84-4) 8272426
Email	info@airserco.vn
Website	www.airserco.vn
DIRECTORS
1. NAME	Mr. NGUYEN VAN DAU
Position	Director
Resident	Group 12, Thanh Luong Ward, Hai Ba Trung Dist, Hanoi City
Nationality	Vietnamese
2. NAME	Ms. NGUYEN THI HONG VAN
Position	Vice Director
Resident	No. 34 Lane 310/96 Nguyen Van Cu Str, Long Bien Dist, Hanoi City
Nationality	Vietnamese
BUSINESS NATURE AND ACTIVITIES
The subject registers and operates in the following business activities:
- Trading, import and export garment products, handicraft products - Trading hotel and restaurant - Production and trading beverage, canned food - Tourism service - Transportation services - Real estate trading, office for lease service - Processing agriculture products, forest products - Agent for receive and delivery goods - Trading, import and export machinery, materials, transportation facility, foods, consumer goods for tourism and aviation industries - Manufacture, processing and trading consumer products - Labor resource export service - Trading fertilizer and chemistry for agriculture industry - …
IMPORT & EXPORT ACTIVITIES
IMPORT: The subject imports from Singapore, Thailand, France
EXPORT: The subject export to Germany, France, Japan, Taiwan, Hong Kong, Russia
BANKERS
VIETNAM BANK FOR INDUSTRIAL AND TRADE – NORTH HANOI BRANCH
Address	GROUP 11, Nguyen Van Linh Str, Sai Dong Ward, Long Bien Dist, Hanoi City
Country	Vietnam
Tel	(84-4) 8753178
Fax	(84-4) 8753435
VIETCOMBANK
Address	No. 198 Tran Quang Khai Str, Hoan Kiem Dist, Hanoi City
Country	Vietnam
Tel	(84-4) 9343137
Fax	(84-4) 8269067
MILITARY BANK – LONG BIEN BRANCH
Address	No. 491 A Nguyen Van Cu Str, Long Bien Dist, Hanoi City
Country	Vietnam
Tel	(84-4) 8733923
Fax	(84-4) 8733922
SHAREHOLDER(S)
1. Name	VIETNAM AIRLINE CORPORATION
Contact Address	No. 200 Nguyen Son Str, Long Bien Dist, Hanoi City
Country	Vietnam
Ratio	52.994%
Shares	1,483,825 shares
Value	14,838,250,000 VND
2. Name	STAFFS OF THE SUBJECT
Position	Shareholder
Contact Address	No. 01, Lane 196 Nguyen Son Str, Bo De Ward, Long Bien Dist, Hanoi City
Nationality	Vietnamese
Ratio	12.200%
Shares	341,600 shares
Value	3,416,000,000 VND
3. Name	OUTSIDE INVESTOR
Position	Shareholder
Ratio	34.806%
Shares	974,575 shares
Value	9,745,750,000 VND

FINANCIAL DATA
BALANCE SHEET
Unit: VND
Balance sheet date	31/12/2006	31/12/2005
Number of weeks	52	52
ASSETS
A – CURRENT ASSETS	182,327,308,418	164,947,638,506
I. Cash and cash equivalents	10,361,462,212	16,941,469,091
1.Cash	10,361,462,212	16,941,469,091
2.Cash equivalents	0	0
II. Short-term investments	0	0
1. Short-term investments	0	0
2. Provisions for devaluation of short-term investments	0	0
III. Accounts receivable	129,091,950,656	99,912,674,021
1. Receivable from customers	117,739,941,338	85,404,366,389
2. Prepayments to suppliers	629,210,714	6,016,217,236
3. Inter-company receivable	0	0
4. Receivable according to the progress of construction	0	0
5. Other receivable	10,722,798,604	9,185,364,892
6. Provisions for bad debts	0	-693274496
IV. Inventories	28,144,519,172	42,659,229,666
1. Inventories	28,144,519,172	42,659,229,666
2. Provisions for devaluation of inventories	0	0
V. Other Current Assets	14,729,376,378	5,434,265,728
1. Short-term prepaid expenses	6,971,382,963	2,686,263,689
2. VAT to be deducted	2,577,553,769	2,748,002,039
3. Taxes and other accounts receivable from the State	0	0
4. Other current assets	5,180,439,646	0
B. LONG-TERM ASSETS	38,427,372,418	11,743,042,146
I. Long term account receivable	0	0
1. Long term account receivable from customers	0	0
2. Working capital in affiliates	0	0
3. Long-term inter-company receivable	0	0
4. Other long-term receivable	0	0
5. Provisions for bad debts from customers	0	0
II. Fixed assets	35,324,818,201	10,077,823,352
1. Tangible assets	30,684,123,232	4,802,814,653
Historical costs	37,881,207,987	11,353,820,926
Accumulated depreciation	-7,197,084,755	-6,551,006,273
2. Financial leasehold assets	0	0
Historical costs	0	0
Accumulated depreciation	0	0
3. Intangible assets	3,771,866,446	9,835,129
Initial costs	3,790,428,840	49,304,800
Accumulated amortization	-18,562,394	-39,469,671
4. Construction-in-progress	868,828,523	5265173570
III. Investment property	0	0
Historical costs	0	0
Accumulated depreciation	0	0
IV. Long-term investments	803,837,224	0
1. Investments in affiliates	0	0
2. Investments in business concerns and joint ventures	0	0
3. Other long-term investments	803,837,224	0
4. Provisions for devaluation of long-term investments	0	0
VI. Other long-term assets	2,298,716,993	1,665,218,794
1. Long-term prepaid expenses	1,370,707,733	735,139,992
2. Deferred income tax assets	0	0
3. Other long-term assets	928,009,260	930078802
TOTAL ASSETS	220,754,680,836	176,690,680,652
LIABILITIES
A- LIABILITIES	191,725,810,640	159,306,808,560
I. Current liabilities	185,073,171,457	157,457,573,096
1. Short-term debts and loans	122,541,364,664	113,974,497,988
2. Payable to suppliers	12,664,819,950	5,559,477,494
3. Advances from customers	2,544,622,128	3,801,946,282
4. Taxes and other obligations to the State Budget	1,107,659,447	1,356,212,197
5. Payable to employees	2,699,253,173	3,720,420,963
6. Accrued expenses	759,791,183	378554007
7. Inter-company payable	0	0
8. Payable according to the progress of construction contracts	0	0
9. Other payable	42,755,660,912	28,666,464,165
10. Provisions for short-term accounts payable	0	0
II. Long-Term Liabilities	6,652,639,183	1,849,235,464
1. Long-term accounts payable to suppliers	0	0
2. Long-term inter-company payable	0	0
3. Other long-term payable	0	0
4. Long-term debts and loans	6,652,639,183	1,849,235,464
5. Deferred income tax payable	0	0
6. Provisions for unemployment allowances	0	0
7. Provisions for long-term accounts payable	0	0
B- OWNER'S EQUITY	29,028,870,196	17,383,872,092
I. Owner's equity	28,458,908,476	15,709,932,176
1. Capital	28,000,000,000	15,348,688,431
2. Share premiums	0	0
3. Other sources of capital	0	0
4. Treasury stocks	0	0
5. Differences on asset revaluation	0	0
6. Foreign exchange differences	0	0
7. Business promotion fund	328,915,890	0
8. Financial reserved fund	129,992,586	361,243,745
9. Other funds	0	0
10.Retained earnings	0	0
11. Construction investment fund	0	0
II. Other sources and funds	569,961,720	1,673,939,916
1. Bonus and welfare funds	569,961,720	1,673,939,916
2. Sources of expenditure	0	0
3. Fund to form fixed assets	0	0
TOTAL LIABILITIES AND OWNER'S EQUITY	220,754,680,836	176,690,680,652

PROFIT & LOSS STATEMENT
Description	FY 2006	FY 2005
Revenue	379,178,738,018	352,608,801,193
Deductions Items	570,139,133	19,798,015
- Discount	0	0
- Devaluation	0	0
- Return of sold goods	570,139,133	19,798,015
- Turnover tax, Luxury tax & Export tax	0	0
Net Revenue	378,608,598,885	352,589,003,178
Costs of goods sold	346,573,990,741	323,984,306,433
Gross profit	32,034,608,144	28,604,696,745
Financial income	11,845,375,100	9,266,437,828
Financial expenses	11,538,863,675	9,685,162,845
In which: Loan interest expenses	-	-
Selling expenses	14,102,110,499	14,114,386,663
Administrative overheads	16,798,391,956	12,443,087,557
Net operating profit	1,440,617,114	1,628,497,508
Other income	351,052,211	515,721,901
Other expenses	72,208,217	224,407,967
Other profit /(loss)	278,843,994	291313934
Total accounting profit before tax	1,719,461,108	1,919,811,442
Current corporate income tax	481,449,110	537547204
Deferred corporate income tax	-	-
Profit after tax	1,238,011,998	1,382,264,238

FINANCIAL FACTORS
Description	2006	2005
Current liquidity ratio	0.99	1.05
Quick Liquidity ratio	0.83	0.78
Inventory circle	9.79	7.59
Average receive period	135.96	112.56
Utilizing Asset Performance	1.57	1.83
Liability/ Total Asset (%)	86.85	90.16
Liability/ Owner's equity (%)	660.47	916.41
Income before tax/ Total asset (%) ROA	0.78	1.09
Income before tax/ Owner's equity (%) ROE	5.92	11.04
Income before tax/ Total revenue (%) NPM	0.45	0.54
Gross Profit / Total revenue (%) GPM	8.45	8.11

PAYMENT HISTORY AND EXPERIENCES
Trade Morality	Fairly Good
Liquidity	Normal
Payment status	Average
Financial Situation	Above Average
Development trend	Up trend
Litigation data	No Record
Bankruptcy	No Record
Payment Methods	TT, L/C
Sale Methods	Supply to its parent company and customers

INTERPRETATION ON THE SCORES

The Subject was state owned company. It was established in 1994 under the management of Vietnam Airline Corporation. In January 2007, the subject has transformed into joint stock company but the State still keeps right of control through Vietnam Airline’s shares. The business of the subject specializes in manufacture and supply of goods for aviation industry. The current position in the industry of the subject is fairly good.

Airserco is direct member of Vietnam Airline which is the largest Airline Corporation in Vietnam. The subject only distributes and supplies goods for its parent company. The products of the subject are divided into some fields like manufacture garment products, canned foods products, tourism service and labors resource for export service. In previous years, the labor export service of the subject considered very large and busy. In middle 2007, the labor export center of the subject has upgraded to joint stock company (the subject hold control share). At present, the subject supplies goods and services for Vietnam airline with ticket service, foods, towel, table-cloth …etc.

The turnover of the subject is large but the profit seems low. In the financial statements of the subject, the net profit margin of the subject occupied only 0.54 (2005) and 0.45 (2006) in total revenue. It may the result of high cost of selling expenses and administrative overhead. It also reflects the not very good effect of management capacity. The liability by owner equity ratios of the subject was too high. It has improved from 2005 to 2006 but it was still larger than the average ratio of industry.

In general, the operation and financial of the subject area regard fairly good. The business scale of the subject is large but mush more depended on its parent company in sale. The subject has capacity to meet the average financial commitments and no caution needed for the normal business transactions.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.42.79
UK Pound	1	Rs.85.04
Euro	1	Rs.67.34

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions