EXECUTIVE SUMMARY

IPO Merex JSC Company- and Listing

information Only for qualified investors

Disclosure

The Financial Regulatory Commission (FRC) has approved the initial public offering

(IPO) of Merex JSC on December 18th 2013 and as a result the newly issued shares of

MEREX JSC are now publicly tradable.

Following document is part of the marketing material created by Standard Investment

LLC in order to promote the Merex JSC initial public offering.

All official information on the Securities Issuer can be found in the official prospectus

submitted to the FRC on September 18th 2013 in Mongolian language.

Investing in securities involves risk of loss that a client should be prepared to bear. An

investor must understand and be willing to accept those risks. Those risks include the

risk of changes in economic and market conditions and the volatility of securities.

IT IS NOT ALLOWED TO COPY, REPRODUCE AND/OR DISTRIBUTE PARTS OF THIS RESEARCH REPORT (OR

THE WHOLE CONTENT) TO THIRD PARTIES WITHOUT THE WRITTEN CONSENT OF STANDARD INVESTMENT

LLC.

© 2013 Standard Investment LLC

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Content

1. The Market | Concrete in Mongolia

2. Merex JSC | Company Information

3. The Offering | Critical Numbers

4. Contact | Get in touch

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The Market Concrete in Mongolia

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1. The Market | Concrete in Mongolia

DEMAND FOR CONSTRUCTION MATERIAL IS HIGH

“ Strong demand from both the public and private sectors will keep Mongolia’s construction industry busy for the

foreseeable future, though the heavy calls on the building trade is stretching resources and pushing up costs.

According to a World Bank report issued in early 2013, capital expenditure in Mongolia has experienced a 35-fold increase

over the past 10 years, with the construction sector’s contribution to GDP expanding by 25.6% in 2012, mainly due to a rise

in public spending. More than 16% of all bank loans went to the construction industry in 2012, the report said, up from

11.8% the prior year, while the real estate sector’s share of lending climbed to 17.3%, higher than mining’s 14.4%. The

expectation is that demand for housing will remain high for some years to come, as citizens in lower income brackets seek

to take advantage of inexpensive loans and developers launch real estate projects aimed at the growing higher end of the

market. “ Source: oxfordbusinessgroup.com

2006 2007 2008 2009 2010 2011 2012 2013e 2014e 2015e

1,000

2,000

3,000

4,000

5,000

Concrete consumption in 1,000 m3

Sources: National Statistics Office Mongolia, Standard Investment

2014-2015e

2012

Residential Commercial Infrastructure

0.9

1.1

0.5

1.5 1.8

1.0

+100% +63% +66%

Estimated growth of market segments

MEREX JSC Company Information

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2. Merex JSC | Company Information

THE COMPANY

Merex LLC was established in September 2012 in Ulaanbaatar.

The CEO of the Security Issuer will be independent and work for the company

under contract. The CEO of the Security Issuer is decided to be Munkhzolboo

MUNKHDULAM who is working with the company since its establishment. He has

graduated with a bachelor degree of International Relation from Istanbul

University, Turkey in 2007.

In 2013 the company invested 3.9 billion MNT in total into the company which

came from the shareholders capital, and chose to build the batching plant on an

area of 20,000m2.

The concrete batching plant was bought from Korea with a 5 year guarantee.

After the plant was built in Songino Khairkhan district, Korean engineers were

contracted to come to inspect the plant to check all installations for any

construction errors.

The Security Issuer also owns 5 pump trucks, 1 loader and 1 automobile. The

fleet is currently the Security Issuer’s largest asset.

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2. Merex JSC | Company Information

MANAGEMENT

COO

Byambabayar Gombajav

Ex Sales Manager at Remicon JSC between

2008-2013

CEO

Munkhzolboo Mukhdulam

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2. Merex JSC | Company Information

PROFILE AND PRODUCTION CAPACITY

Capacity

150 m3 /hour

252,000 m3 /year

Land

20,000 m2

Equipment

5 Pump Trucks(36m, 43m, 44m)

24 Mix Trucks

Employees 12 Employees (planned 79 in 2015)

Competition

45 concrete manufacturers exist in Ulaanbaatar. Many of them are owned by

construction companies. The majority of competitors do not own their own fleet.

Merex JSC is one of the only 4 companies who own batching plant, mixer trucks and

pump trucks. The high number of mix trucks and pump trucks allows Merex JSC to

deliver quickly and finish its work at the construction site fast.

The Offering Critical Numbers

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Merex JSC

Type of Security: Common Stocks

Offerting Price: MNT 100 (~ USD 0.06)

Number of shares offered: 26’000’000

Placemenet: 40% of Total Capital

Lock-up Periode: none

Bookrunner: Standard Investment LLC

Stock Exchange: Mongolia Stock Exchange (MSE), Ulaanbaatar

Listing: February 2014

Release Date of Prospectus: 18.12.2013

Dividend Policy: 25% of Net Profit

3. The Offering | Critical Numbers

THE IPO

3. The Offering | Critical Numbers

THE IPO

Rationale for Merex JSC’s valuation

The offering price of 100 MNT per share gives the Security Issuer a total

market cap of 6,500,000,000 MNT at the IPO. This amount almost equals the

amount directly invested into the business with no additional value added.

Merex JSC basically lists at book value.

№ Investing items Investing money Percentage Investment amount

Pre IPO investment IPO investment

1 Land 948,000,000 15% 948,000,000

2 Batching plant 1,118,000,000 17% 1,118,000,000

3 Office and infrastructure 130,000,000 2% 130,000,000

4 Equipment 3,594,000,000 55% 1,833,500,000 1,760,500,000

5 Furniture 50,000,000 1% 50,000,000

6 Current assets 660,500,000 10% 1,000,000 659,500,000

Total amount 6,500,500,000 100% 3,900,500,000 2,600,000,000

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The only other MSE listed concrete manufacturer is Remicon JSC.

Remicon JSC, which started with the same production capacity as Merex JSC

became one of the MSE TOP 20 companies with a current market cap of 13.2

bln MNT (December 30th, 2013)

3. The Offering | Critical Numbers

COMPARABLE COMPANIES

Remicon JSC Merex JSC

Market Cap at IPO 7.8 bln. MNT

in 2008

6.5 bln. MNT

in 2014

Projections for 2014

3. The Offering | Critical Numbers

PROJECTIONS

2014e (in MNT)

2015e (in MNT)

Sales income 14,773,836,000 22,160,754,000

Cost of Sales 10,396,992,467 15,595,488,701

Gross Profit 4,376,843,533 6,565,265,299

Operational Cost 2,167,502,000 2,540,867,600

EBIDTA 2,209,341,533 4,024,397,699

Cost of Tax 220,934,153 556,099,425

Net Profit 1,988,407,379 3,468,298,274

Dividend Distribution 25% 497,101,845 867,074,569

Contact Standard Investment

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Standard Investment LLC

Jargal Chuluuntulga

CEO

+976 9906 5017

info@standardinvestment.mn

4. Contact | Get in touch

CONTACT