Speculative buy Remicon

GENERAL INFORMATION

Financial Regulatory Committee’s decision on registration and permission of bond issuance:	№ 117, May 8, 2008
Share Issuer:	“Remicon” Co.,Ltd
Address of Share Issuer:	# 301,3^rd floor, Barmash Building, Chinggis Avenue, Khan-Uul District, Ulaanbaatar city, Mongolia
Location of Industry:	In the territory of Khoroo 20, Songinokhairkhan District /behind the “Buyan” LLC’s cashmere industry/
Share Name:	Remicon
Share Type:	Common
Price per share:	MNT 100
Total share:	127,642,623.
The shares to be offered to the public:	98,992,602.
Percentage of shares to be offered to the public:	77.55%
Information of owner, who owns more than five percent of bond issuer:	Gankhuyag Khassuuri is to own 22.44 percent from the company’s total 28,650,021 shares.

THE BASIS FOR PROJECT IMPLEMENTATION

The building sector has been developing rapidly in Mongolia. In order to provide Ulaanbaatar’s growing population with apartments and to furnish greater safety and a more comfortable living environment for Ulaanbaatar residents, the government of Mongolia has initiated the “40 000 Apartments” program. The initiative aims to build new apartment districts, re-plan ger areas, and improve Ulaanbaatar’s population density through the construction of new apartment districts. Due to the large size of the project, demand has increased for construction technology and building materials that meet modern requirements and standards. According to the 2006 official statement of No.1 of the Minister of Construction and Urban Development, a decision was passed to prohibit the manual preparation and usage of concrete mixture.
This decision was made in order to increase the strength and quality of concrete mixtures that would be used for buildings with combined steel and reinforced concrete carcass casting as part of the government initiative, and for Mongolia’s development in general. This combined casting also aims to minimize environmental damage. As a result of the decision, demand for the development of concrete mixtures which meet the new standards has arisen in the market.

The company drew up plans to build a concrete mixer industry equipped with modern technologies on the basis of calculation, research and monitoring done last year. Then, the company established the “Remicon” Company which was registered as a Joint Stock Company and its share is being offered to the public for the purpose of financing the project.

COMPANY STRUCTURE AND ORGANIZATION

Shareholders’ Meeting
Governing Board - Control Council
Executive Director
Marketing Department
Industrial Department
Financial Management Department
Service of Technology
Laboratory
Service of Economy Raw Material and Supply Service
Mechanic Service

¹	INDICATIONS	YEAR
¹	INDICATIONS	2008	2009	2010	2011
1	Income from main operation	13640 400 000	48 405 600 000	48 405 600 000	48 405 600 000
1.1	Income from selling	13 640 400 000	48 405 600 000	48 405 600 000	48 405 600 000
1.1.1	Ì 150	2 624 400 000	7 873 200 000	7 873 200 000	7 873 200 000
1.1.2	Ì 200	3 564 000 000	11 016 000 000	11 016 000 000	11 016 000 000
1.1.3	Ì 250	3 564 000 000	13 186 800 000	13 186 800 000	13 186 800 000
1.1.4	Ì 300	3 888 000 000	16 329 600 000	16 329 600 000	16 329 600 000
	Sum of income from selling	13640 400 000	48 405 600 000	48 405 600 000	48 405 600 000
2	Expenses of sold product	8 921469 604	31253195 699	31253195 699	31253195 699
2.1	Expenses of production	8 890 410 252	31122 582 130	31122 582 130	31122 582 130
2.1.1	Fuel	451 907 100	1 581 674 850	1 581 674 850	1 581 674 850
2.1.2	Lubricant	14 438 880	50 536 080	50 536 080	50 536 080
2.1.3	Salary	92 564 286	323 975 000	323 975 000	323 975 000
2.1.4	Health, Social Insurance Premiums	9 831 800	40 557 550	40 557 550	40 557 550
2.1.5	Wheel erosion	39 024 000	136 584 000	136 584 000	136 584 000
2.1.6	Spare parts	571 428	2 000 000	2 000 000	2 000 000
2.1.7	Expenses for technical service and repair	2 148 572	7 520 000	7 520 000	7 520 000
2.1.8	Labor protection	1 916 572	6 708 000	6 708 000	6 708 000
2.1.9	Expenses for erosion of means of transportation	266 661 824	933 316 381	933 316 381	933 316 381
2.1.10	Tax on means of transportation	494 572	1 731 000	1 731 000	1 731 000
2.1.11	Expenses for food discount	14 040 000	49 140 000	49 140 000	49 140 000
2.1.12	Expenses for diagnosis	268 572	940 000	940 000	940 000
2.1.13	Insurances	22 796 304	79 787 066	79 787 066	79 787 066
2.1.14	Erosion of capital assets	19 503 494	68 262 226	68 262 226	68 262 226
2.1.15	Expenditure of factory electricity	66 355 200	232 243 200	232 243 200	232 243 200
2.1.16	Materials	7 799 846 400	27 299 462 400	27 299 462 400	27 299 462 400
2.1.17	Others	88 041 250	308 144 378	308 144 378	308 144 378
2.2	Expense for management	31059 352	130 613569	130 613569	130 613569
2.2.1	Salary	14 185 714	49 650 000	49 650 000	49 650 000

2.2.2	Health, Social Insurance Premiums	1 392 600	5 946 600	5 946 600	5 946 600
2.2.3	Expenses for food discount	1 260 000	4 410 000	4 410 000	4 410 000
2.2.4	Stationary	171 429	600 000	600 000	600 000
2.2.5	Appointment	1 714 286	6 000 000	6 000 000	6 000 000
2.2.6	Expenses for communications	1 097 143	3 840 000	3 840 000	3 840 000
2.2.7	Workshop	171 429	600 000	600 000	600 000
2.2.8	Electricity expense	105 570	369 495	369 495	369 495
2.2.9	Tax on real estate	385 057	1 347 700	1 347 700	1 347 700
2.2.10	Advertisement expenses	8 333 334	50 000 000	50 000 000	50 000 000
2.2.11	Heating expenses	122 880	430 080	430 080	430 080
2.2.12	Cleaning	342 857	1 200 000	1 200 000	1 200 000
2.2.13	Other	1 777 056	6 219 694	6 219 694	6 219 694
	Operation expense	8 921469 604	31253195 699	31253195 699	31253195 699
3	Income before tax (loss)	4718 930 396	17 152 404301	17 152 404301	17 152 404301
3.1	Income tax expense	471 893 040	1 715 240 430	1 715 240 430	1 715 240 430
3.2	Non operation expense	4 500 000	18 000 000	18 000 000	18 000 000
4	Income after tax (loss)	4242 537 356	15 419 163871	15 419 163871	15 419 163871
5	Accumulation Fund or reinvestment of the company /30 %/	1 272 761 207	4 625 749 161	4 625 749 161	4 625 749 161
6	Net income of the certain time (loss)	2 969 776 149	10 793414710	10 793414710	10 793414710

RECOMMENDATION- SPECULATIVE BUY

In response to the Mongolian Government's new standards for the cement industry, Remicon will be involved in developing a new concrete mixer plant. The rapid growth of the Mongolian construction industry and the government's '40000 apartments' project mean Remicon's modern cement mixer will be in high demand. By providing quality materials to a growing industry, Remicon stock will be highly attractive in the short term.

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