Privileged Client - Hidden Champions Fund · PERMANENT CAPITAL S$21 million from 8IH S$ 5M ABSOLUTE RETURNS Around 27.4% cumulative positive absolute returns since inception in Oct

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Privileged ClientSoft Launch of the Hidden Champions Fund

KEE Koon Boon

Chief Investment Officer & CEO

8 Capital Pte LtdSubsidiary of 8I Holdings Limited (ASX: 8IH)

[email protected]

mailto:[email protected]

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Table of Contents

Current Highlights of the Hidden Champions Fund

Why Invest in Hidden Champions

Investment Process and Portfolio Highlights

Subscribe into the Fund

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APRIL 2017

RFMC License from Monetary Authority of Singapore

PERMANENT CAPITALS$21 million from 8IH

S$ 5M ABSOLUTE RETURNS

Around 27.4% cumulative positive absolute returns since inception in Oct 2015

AUM of USD$23 millionCurrent NAV is

>USD116 per unit

OPENING HCFTo external investors

Highlights of the Hidden Champions Fund


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Refreshments by Hidden Champions: Parsi Billionaire Nusli Wadia’s Britannia (+7,000% to US$6.7 Billion)

How did Britannia outsmart Nestle, Mondelez/Kraft with more iconic brands and better distribution reach in India?Nusli Wadia: Family business in textilesThe compounding power of high-conviction investing: small equity stake to 5% to 20+% and acquisition of 25% stake held by Danone at $250m

valuation to eventual >50% stake of a company with US$6.7bn market valueOur investment strategy, DNA and long-term vision right from Day One: High-conviction investing in the Britannias in Asia – at an earlier or

tipping point stage before they become popular. High-conviction in 20 to 30 Britannias. Convert to listed investment company like Investor AB,“Sweden’s Warren Buffett”, which has compounded over 5,500,000% with the dividends reinvested to a market value of US$27.3 billion, and ithas a fairly concentrated investment approach, with 47% of its gross assets in four major listed companies: SEB, Atlas Copco, ABB and AstraZeneca; a further 24% in seven listed holdings that include Wartsila, Electrolux, Nasdaq and Husqvarna

Hidden Champions are all around us if we look hard enough. Essilor of your Crizal lens is up 2,000%!.. They are focused market leaders insophisticated, hard-to-imitate niche products and valuable critical niche services that are largely invisible to the average consumer, yet are indispensableto our well-being in daily life

Fund capacity buildup: 5% in $1bn Okamoto is $50m and 20 Okamotos = $1bn fund to compound. Our current fund capacity buildup is $2bn.Special treat: Founding Partnership Bonus in the Hidden Champions Fund!


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Makrand and Rinni Appalwar(MD and CFO)

Source: Bombay Stock Exchange (BSE)http://www.bseindia.com/xml-data/corpfiling/AttachHis/B92FC9F9_CEED_4BEE_8666_E2A4B165A9BF_085301.pdf

Business Overview: Emmbi Industries is one of India's largest technical textile and specialtypolymer processing company manufacturing (1) woven sacks and FIBC (Flexible IntermediateBulk Containers) which are used in transportation of bulk commodities like chemicals, fertilisers,cereals, detergent (39% of FY16 sales); (2) advanced composites of pharma and food grade, suchas anti-carcinogenic, anti-bacterial, anti-corrosive and tapered-proof FIBC, with an R&D centerrecognized in Apr 2016 by India's Department of Scientific and Industrial Research (DSIR) todifferentiate from its other peers in the fragmented industry (43% of FY16 sales); as well asvarious technical textiles and advanced composites such as container liners, protective irrigationsystem, canal liners, first to introduce flexible water tanks (patent registered), car covers used inwater conservation (16% of FY16 sales) and (4) agricultural products (2.8% FY16 sales).

Established in 1994 by first generation owner-operators and husband-wife team, Makrand andRinku Appalwar, Emmbi is based in Maharashtra with its manufacturing facility located at Silvassain Gujarat in which 48% of their product sales are derived from international markets. Emmbi’scustomers include established consumer and industrial companies such as Hindustan Unilever,Tata Chemicals, Godrej Industries and ITC, as well as ecommerce players like Flipkart, Amazonand eBay. Emmbi generates an ROE of 30.2%, trades at an EV/EBIT of 16.4x.

India’s Emmbi Industries: One of Our Core Stocks and We Are the Top Foreign Investor in this Under-Researched Quality Company


BSE:533161 BSE:509557 TSE:3402 TSE:3401

Emmbi

Industries

Garware-

Wall Ropes

Toray

Industries

Teijin

Limited

EV/EBIT 15.4 15.5 14.9 11.2

ROE (EBIT/EQUITY) 30% 27% 14% 17%

ROA (EBIT/TA) 13% 12% 6% 6%

GP/TA (GROSS PROFIT/TA) 36% 57% 18% 26%

VQ (EV/EBIT/EBITOE) 0.5 0.6 1.1 0.7

3yr Sales Growth (%) 12.9 8.0 3.0 -0.7

3yr EBIT Growth (%) 26.9 39.5 10.0 41.7

http://www.bseindia.com/xml-data/corpfiling/AttachHis/B92FC9F9_CEED_4BEE_8666_E2A4B165A9BF_085301.pdf

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Taiwan’s Nyquest Technology: One of Our Core Stocks and We Arethe Major Share Holder in this Under-Researched Quality Company

Source: Taiwan Market Observation Post Systemhttp://mops.twse.com.tw/mops/web/t146sb10

Guo Qiuli郭秋麗 (CEO), Chen Jianlong陳建隆 (President) Lin Mengyi林孟逸 (VP)


Business Overview: Nyquest Technology, Taiwan’s innovative fabless IC designer, is the company behind thewinning story of Hasbro and the survival of many other toymakers in supplying value-added consumer IC;including the voice-synthesizer chip, which gives smart toys a voice and soul. It designs and provides solutionssuch as (1) Voice-synthesizer IC (38% FY2016 sales); (2) Micro-control unit (53% FY2016 sales); (3) Others (9%FY2016 sales). Currently Nyquest generates an ROE of 24.3%, trades at an EV/EBIT of 10.5x. Established in 2006by the three musketeers, Chen Jianlong 陳建隆 , Guo Qiuli 郭秋麗 , and Lin Mengyi 林孟逸, Nyquest target theWestern and Chinese markets of consumer ICs powering devices and appliances, and it has a diversifiedcustomer base including Hasbro, Mattel, Spin Master, Hallmark, MGA, Gemmy, Little Tikes, Fisher-Price, Bratz,Bandai, Sega, Benesse, Takara Tomy, Auldey, Blue Cat藍貓, and Goodbaby International 好孩子國際 etc.

Wide-Moat Competitive Advantage: Nyquest reminds us of Zara who is renowned for its ability to design anddeliver new clothes to stores and in small batches in about 20 days, at least four to five times faster than itspeers. Nyquest found a growing niche in designing good quality, fast-to-deliver and solution driven OTP (one-time programming) ICs with its proprietary software and development tools that can offer its clients acomprehensive library of customized solution to choose from and delivered in as short as three days!Additionally, given the much short product cycle of toys, this helps shorten the lead time in launching newproducts to the market and reduce inventory risks, critical qualities that the customers value. Nyquest’s masteryof speed and responsiveness in designing and delivering mass-customised batches of consumer and voicesynthesiser ICs reminds us of the equivalent of Zara in the growing smart toy and smart appliances industry.

GTSM: 6494NasdaqGS:

MCHP

NasdaqGS:

NXPI

Nyquest

Technology

Microchip

Technology

NXP

Semiconductor

EV/EBIT 11.2 30.3 67.3

ROE (EBIT/EQUITY) 28% 22% 5%

ROA (EBIT/TA) 17% 9% 2%

GP/TA (GROSS PROFIT/TA) 54% 26% 19%

VQ (EV/EBIT/EBITOE) 0.4 1.4 14.6

3yr Sales Growth (%) 8.8 21.5 22.0

3yr EBIT Growth (%) 18.8 15.4 -11.5

http://mops.twse.com.tw/mops/web/t146sb10

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Keyence (3,000 Employees) Vs Nidec (100,000 Employees): Who Do You Prefer?

V.S.

Employees: 3,400

Employees: 100,000

Nidec’s founder Shigenobu NagamoriKeyence’s founder Takemitsu Takizaki

“Keep aiming high or you'llbecome a fossil.” - A 350-million-year-old ammonite fossil isdisplayed at the entrance of theJapanese headquarters; otherfossils of long-dead creaturesalign the corridors and meetingrooms.

“My firm belief is that if you arenumber two, you are the bottomof the pile. When I travel by air,my seat is always number one. Inthe shinkansen bullet train, Ialways sit in seat number one.This building we're in now is thenumber one tallest building inKyoto. So it should come as nosurprise that my technology isalso number one.”

Nidec: 80% global market share in HDD spindle motorKeyence: Laser sensors for Factory Automation (FA)

“Services/Solutions” “Products”


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Nidec and Keyence: Great Companies Forged From the “StrongYen” Period (1968-2000) When USD/Yen Went From 350 to 100

Nidec: US$31.4bn market cap Keyence: US$55.4bn market cap

An article in TODAY in April 2013 about Keyence vs Nidec:

“Singapore is too small and its talent pool is too small to produce a world-class manufacturing giant of the Fortune500 class”, Singapore’s former Minister Mentor Lee Kuan Yew once said. A cryptic remark indeed because it doesnot imply that the venerable founder of modern Singapore thinks Singapore cannot produce knowledge-basedgiants, or resilient “Bamboo Innovators”.

Keyence, established in 1974, is an illustration of the unconventional Asian firm. Takemitsu Takizaki, the 67-year-oldfounder, liberated the firm from manufacturing conventions and built a knowledge-based enterprise in laser sensorsfor use on automated factory assembly lines serving over 100,000 customers in 70 countries. Despite having onlyless than 1 percent global market share in a commodity-like product and only around 3,000 employees, Keyencecommands a US$17 billion market value, approximately similar to Singapore’s Keppel Corp, a global leader inoffshore oil rig design and building. It is also double the value of Nidec, another outstanding Japanese companywhich has more than 80 percent global market share in miniaturized motor and 100,000 employees.


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Keyence & Instant Noodles: Commoditized Laser Sensor Product to Knowledge

Focus on manufacturing, leave sales to distributors,

wholesalers and agents

Observation of customer: Instant noodle thickness consistent?

R&D: Laser sensor that could measure noodle to 1/100th of a millimeter

100,000Customers

$55.4BMkt Cap

25%Sales from

new products

3,400Employees

>$100KAverage Pay

Conventional Knowledge


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Why Our First HNW Client Invested $1 Million

Client invested on her own in stocks $20-50k but dare notinvest big sums of money.

Client invested in a fund and exclaimed with great relief thatshe pulled out her money: HK-listed Rexlot (555 HK) accountingfraud scandal.

Client is a Moat Report Asia subscriber for nearly three years– reads about Akio Nitori of Nitori Holdings as well as otherhardworking and farsighted Hidden Champions.

Client appreciates the importance of intensity and dedicationin research and monitoring to execute a high-convictioninvesting strategy at the Hidden Champions Fund.

As the CIO of the Hidden Champions Fund, a majority of my personal savings is invested in the Fundalong the same terms and fees as the incoming external client. I have zero investments other than theFund.

We are keenly aware that caring is an exacting, serious and demanding business, especially when itcomes to being entrusted to invest in another person’s financial assets, which represent much more thanmoney – they are a tangible product of one’s life’s work and a repository of aspirations for the future.

How You Make Your Wealth Grow *Matters*: Growing together with the Hidden Champions to protectand compound your hard-earned wealth. To paraphrase Da Vinci, “May your Work - and Investments! -be in keeping with your Purpose.”


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Our StoryWhy We Do What We Do

With over a decade-plus in the Asian capital markets, Koon Boon, our ChiefInvestment Officer, has witnessed many investors, including family andfriends, be taken in by the popular mantra: “Ride the Asian Growth Story!”stories and invest their hard-earned money, only to find themselves subjectto emotional upheavals when these stocks turn out to be inherently sickand prey to economic vicissitudes. They may seem to grow faster initially,but the sustainability of their returns is far too uncertain to be the subjectof a wise investment. Worse still, some turned out to be involved inaccounting frauds, where financial numbers were “propped up” artificiallyto lure in more funds from investors, and the previous assessed asset valuehad already been “tunneled out” or expropriated. This issue is compoundedas western-based fraud detection tools and techniques have not beenadapted to the Asian context to avoid these traps. It is disheartening towitness many fraud perpetrators go away scot-free and live a life of superluxury, on these unsuspecting minority investors’ hard-earned money.

Hidden Champions Fund was set up with a simple philosophy: Invest inhardworking Asian entrepreneurs and capital allocators who are serious inbuilding a wide-moat business, and avoid these dubious companies. Wehave always been fascinated by why and how even under the most austereof conditions and environment, wide-moat business models remainresilient and continue to compound value. Some of these companies aredominant global players that focuses on sophisticated, hard-to-imitateniche products and valuable critical niches, but are largely invisible to theaverage consumer. Investing at an earlier stage or the tipping point in thelong-term growth trajectory path of Hidden Champions has been provenrewarding. We aim to grow with these Hidden Champions by investing inthese owner-operators, and grow our clients’ wealth together while makinga difference in the world.


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The Perils of “Value Investing” Based on Statistically Cheap Stocks in Asia


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The Perils of “Value Investing” Based on Statistically Cheap Stocks in Asia

“When noise traders are optimistic about particular securities, it pays

arbitrageurs to create more of them. These securities might be new share

issues, penny oil stocks, or junk bonds: anything that is overpriced at the

moment. Just as entrepreneurs spend resources to build casinos to take

advantage of gamblers, arbitrageurs build investment banks and brokerage

firms to predict and feed noise trader demand.”


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The Best Strategies for the Worst Crises

How to prepare for crisis? Time market? Buy Put Options?(Costly..) Buy “Safe Haven” Bonds?

Quality stock strategy benefits from a “flight to quality”effect during crises

“While quality stocks logically deserve a higher price-to-book ratio, in reality they do not always exhibit such apremium. Towards the end of the bull market, quality stocksoften looked underpriced. Then, when the market has adrawdown, these stocks have outperformed, benefitingfrom the so-called flight-to-quality effect.”

Quality factor delivered 43.7% returns when marketswere down -45.3% in crisis periods.


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Chasing the Highest Short-Term Yields While We Stay Disciplined in Hunting for QualitySince 4Q2016 following Trump's election, market rally is mostly in

financials, cyclicals, commodities (ex-Noble), high-yield junk debt,Singapore + HK penny stocks, bitcoins/ethereum, and even mega-tech stocks - assets which are susceptible to the "carry-trade"phenomenon in which ultra-low-cost financing are obtained tofinance a grope or chase of the highest short-term yields.

Since Day 1, we have made it a strategy to not invest in thesecyclicals and financials and we avoided HK-listed stocks given theprevalence of statistically-cheap stocks that we believe are frauds –e.g. Rexlot which a number of prominent value funds invested in andsome of these funds may have also quite a number of HK-listedsuspended stocks that are not properly valued.

Our Value-to-Quality ratio has been far superior 270% (as at 1September 2017) across Asian comparables - our portfoliocompanies continue to achieve strong growth in sales and profitsand we believe our fund is substantially undervalued - hence i havealso invested a majority of my little savings in the fund along thesame terms and fees as the incoming external client.

We expect to outperform as the current market hype over the“flight to junk” carry trade that’s groping for yield subsides and theoverall market retreats – our Fund tends to do better when theoverall market is tepid and lacklustre. For instance, in 2016, whenMSCI and STI were flattish to down at +2.5% and -0.1% respectively,the Hidden Champions Fund is up 14.3%.


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Value-to-Quality (VQ) Quadrant: We Believe Our Fund Is Substantially Undervalued

The portfolio of companies in the Hidden Champions Fund are substantially higher in Quality and yet aresignificantly Undervalued to the comparable companies of similar operating profit range. Powered by the portfoliocompanies’ ability to generate strong revenue and profit growth in difficult economic and market conditions,coupled with a lower value-to-quality ratio at 46 cents of value per dollar of quality in the portfolio, we stronglybelieve the Fund has low downside risk to protect investors and strong upside potential.


0.46 HCF

2.47 Australia

1.31 Japan

3.10 Singapore

2.12 Hong Kong

1.09 Taiwan

1.75 Thailand1.23 India

1.70 Market Average

0

5

10

15

20

25

30

35

0% 5% 10% 15% 20% 25% 30%

Value-to-Quality (VQ) ratio

“Value”:

EV/EBIT

“Quality”: ROE (EBIT/Equity)

Undervalued Zone

Overvalued Zone

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Serenity, Growth and Resilience Navigating the Harsh World with Hidden Champions

Featuring Asia’s Hidden Champion role models:

• Adi Godrej of India’s Godrej Consumer

• KBS Anand of India’s Asian Paints

• Alan Wilson of Australia’s Reece

• Scott Lin of Taiwan’s Largan Precision

• Akio Nitori of Japan’s Nitori Holdings

• Takemitsu Takizaki of Japan’s Keyence Corporation

• Shigetoshi Sakamoto of Japan’s Hoshizaki Corp


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1. Why Invest In Hidden Champions

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Why Hidden Champions?Essilor, Rational AG, ASSA Abloy, Ambu A/S

You cook with them – peep inside a professional kitchen and you

can find a Rational intelligent cooking system on a Norwegian

submarine, a Saudi prince’s yacht, as well as in hospitals and

restaurants around the globe. Rational AG commands a global 54%

market leadership in the world’s professional kitchens that include

the Buckingham Palace and the White House, and is behind the

success of such famous culinary names as Gordon Ramsay. Rational

AG is up 1,000% since 2000

You may even use them in emergency care situations, the Ambu

bag for manual resuscitation in hospitals, by ambulance services

– in fact in all kinds of emergency environments all over the

world. Ambu A/S, the company whom millions of patients and

healthcare professionals worldwide depend upon the

functionality and performance of its products, is up 6,000% since

1992.

You lock with them, the ASSA Abloy system for your door. ASSA

Abloy AB, the global leader in innovative door opening solutions

to improve our lives through security, safety and convenience,

its share price has risen 10,000% since 1994.

You wear them, the Crizal lens on your eyewear. Essilor

International, the world’s leading ophthalmic optics company

behind the Crizal and Transition lens, is the company is powered

by a unique owner-oriented corporate culture with its inclusive

plan to enable 50% of employees worldwide become

shareholders, compared to 20% currently. Its share price has

compounded 2,000% since 1986.

+2,000%

+10,000

%

+1,000%

+4,000%

1. Why Invest In Hidden Champions?

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Special Tribute to Hermann Simon of Simon-Kucher & Partners

The Hidden Champions-type companies have their roots in theesprit de corps of Germany's Mittelstand who are the 3.5 million smalland midsize family enterprises that form the backbone of Germany'sresilient export-driven economy, employing more than 78% of workersand contributing more than half of the country's GDP.

Mittelstand enterprises that became well-known giants includeBMW, Audi, SAP AG, Adidas, Robert Bosch, Siemens, consumer giantsBeiersdorf and Henkel, dialysis giant Fresenius, pharmaceuticals giantBayer, chemicals giant BASF, industrial gas specialist Linde AG, truckand engine maker MAN SE, and so on.

There are also lesser-known, quiet, resilient, successfulcompounders, including sanitary systems specialist Geberit,commercial kitchen equipment company Rational AG, diagnostic andlife-supporting equipment maker Ambu A/S, ophthalmic lenses andophthalmic optical equipment maker Essilor International S.A., doortechnology systems specialist ASSA Abloy.

Asian Hidden Champions include the world's leading velcro makerTaiwan Paiho, Australia's premier plumbing and bathroom specialistReece Ltd, Japan's dominant home furnishing retailer Nitori Holdings,India's Godrej Consumer Products, Indonesia's integrated consumerhealth and nutrition specialist Kalbe Farma, and many more.


Why Hidden Champions?The Origin…

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From a value investing perspective, investing at an earlier stage in the long-term growth trajectorypath of these Hidden Champions - in Asia - should be rewarding.

Traits of Hidden Champions:

• Extremely Successful, yet Low Profile

• Top 3 Global or Domestic Market Leadership

• Innovative champions in sophisticated, hard-to-imitate niche products and valuable critical nichesthat are largely invisible to the average consumer, yet are indispensable to our daily lives. TheHidden Champions create maximum benefits for a target customer group, solving their mostburning problems better than any competitor. This innovation strategy requires a deep knowledgeof customer needs, which is generated through direct customer contact. Successfully solving thiscustomer problem would then create a “success spiral”.

Why Hidden Champions?

• Outcome of corporate events and intrinsic outperformance of Hidden Champions is often not linked to economic conditions, thus offering potential de-correlated returns

• Overlooked and underappreciated

• Scalable business model with long runway to compound growth


Why Hidden Champions?De-Correlated Returns & Investment Resilience In Difficult Market Conditions

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Unearthing Asian Hidden ChampionsTaiwan Paiho - World’s Number One Velcro Manufacturer

Zheng Sheng Mei (L),Zheng Guo Yan (R)

Spec-In Partner to All Top 20 Global Sports Shoes Brands

Do you know the top 20 sport shoes brands in theworld have a same supplier in Taiwan Paiho, theworld’s no.1 Velcro design manufacturer?

Nike, Adidas, Under Armor, Lululemon, Skechersand other sports apparels giants all seek designadvice from Paiho!


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Unearthing Asian Hidden ChampionsPaiho: 2006 Factory Visit

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The resiliency of Sealink is supported by long governmentcontracts and delivery of critical services to provide essential,stable, and long recurring cash flows – even in bad times. It hasmonopoly in most of the routes it services.

Not to be seen as an asset-heavy operator, this company is atechnology champion utilizing dynamic pricing, growing e-commerce sales, and machine learning pricing predictions.


Unearthing Asian Hidden ChampionsSealink Travel - Australia’s Largest Tourism & Transport Group

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Unearthing Asian Hidden ChampionsSealink Travel (ASX: SLK): Australia’s Largest Tourism & Transport Group

“The harder you work, the luckier you become”, this is Jeff Ellison’s motto for leadingSeaLink Travel Group for decades resulting in index outperformance and garnering 471%growth in market cap 16 October 2013.

With a strong vision to connect Australian icons and landscapes to the world, SeaLink isAustralia’s largest tourism and transport company serving more than six million customersannually. With strong quasi-monopoly market share across its diversified product offering,SeaLink is the undisputed leader in its tourism industry – a representative of Australia’s neweconomic transformation in services and tourism. In a symbolic mutually beneficialpartnership, the relevant authorities prefer working with SeaLink to deliver tourismexcellence and grants SeaLink long-term contracts to promote the unique tourism andcultural experiences.

Started with a two-boat Kangaroo Island ferry operator, it consolidated the tourism assetsacross Australia with intelligent acquisitions of Transit System Marine, Captain Cook Cruises(Sydney) and later Captain Cook Cruises (Western Australia). As of 1HFY 2016, SeaLinkoperates 71 fleets. Subsequently, SeaLink infused its expertise in operations and marketing toscale them. Amassing 3.3 million unique visitors across their 16 websites and carrying 6million passengers per year, SeaLink innovates with dynamic pricing, marketing partnernetworks, e-commerce, IT investments and language proficiencies while their peers becamefaltered.

73Well-maintained

Fleet

14Brands With

Leading Mkt Share

A$400milMkt Cap

23%of Sales Generated

Online

>8milPassengers Yearly


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No.1In Japan

2,000+Employees

50%Market Share

GlobalTop 3 Brand

$1.1bilMkt Cap

Under the motto of using science to enrich

everyday lives, Okamoto is a quiet

innovator in leveraging upon its

accumulated deep material science and

chemistry know-how to continuously

launch innovative new products, from

ultra-thin condoms to OsmoPad that helps

heal wounds by absorbing moisture, a

technology that it adapted from its

popular food wrapping film household

product, to protective film-coated lining

for motorcycle seats where it commands a

dominant 80% market share in US.


Unearthing Asian Hidden ChampionsOkamoto Industries (TSE: 5122): Japan’s Largest Condom Brand

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Imitators We Exclude

India’s Amtek Auto

HK’s DBA Telecom

Imitators with potential accounting fraud and misgovernance risks would be eliminated by our rigorous systematic investment process to filter out fourcategories of commonly-used tunneling methods used by actual insiders, manipulators and syndicates to expropriate corporate assets: (1) Money-go-roundintercorporate loans, guarantees, other receivables and investments, (2) Capex irregularities, (3) Deals potion, (4) Consolidation craftiness e.g. the improperpushing of operating expenses and debt liabilities into unconsolidated entities in which the listco has effective economic control and power to artificiallyinflate its own profit and balance sheet asset value

PT Davomas Abadi Tbk,

“Indonesia’s Largest Cocoa

Processor”

HK’s Dynasty Fine Wines


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2. Investment Process & Portfolio Highlights

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“Charlie and I decided long ago that in an investment lifetime, it’s too hard to make hundreds of smart decisions. We adopted astrategy that required our being smart only a very few times.. If you are a know-something investor, able to understandbusiness economics and to find five to ten sensibly-priced companies that possess important long-term competitive advantages,conventional diversification makes no sense for you. It is apt simply to hurt your results and increase your risk. I cannotunderstand why an investor of that sort elects to put money into a business that is his 20th favourite rather than simply addingthat money to his top choices – the businesses he understands best and that present the least risk, along with the greatestprofit potential. In the words of the prophet Mae West: Too much of a good thing can be wonderful.”

Many successful investors such as Warren Buffett, CharlieMunger, Seth Klarman, Lou Simpson, Martin Whitman,Investor AB’s Wallenberg family, Melker Schorling havecreated and compounded wealth through employingconcentrated strategies.

Empirical studies have found that investors findsignificant, lasting success with active management morereadily when they use high-conviction strategies. A low-conviction, benchmark-like portfolio with activemanagement costs appears highly unlikely to produceoutperformance. A high-conviction strategy consists oftaking a meaningful portion of total fund risk with highlyactive strategies that represent the absolute best ideas ofthose responsible for manager selection.

High-conviction strategies require a long-term focus andpatience with short-term volatility

Source: Yeung, Danny, Paolo Pellizzari, Ron Bird, and Sazali Abidin

(2012), “Diversification versus Concentration …and the Winner is?”


Less Is More: The Compounding Power of High-Conviction Portfolio Approach

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In the book Damn Right!, Buffett commented that Munger initially followed thefundamentals of value investment established by Graham, but was always farmore concentrated than other traditional value investors like Walter Schloss:“Charlie’s portfolio was concentrated in very few securities and therefore hisrecord was much more volatile but it was based on the same discount-from-valueapproach. He was willing to accept greater peaks and valleys of performance.”

Munger defines “very few securities” as “no more than three stocks”: “My owninquiries on that subject were just to assume that I could find a few things, saythree, each which had a substantial statistical expectancy of outperformingaverages without creating catastrophe. If I could find three of those, what werethe chances my pending record wouldn’t be pretty damn good.”

Munger’s rationale for holding so few stocks was based on practicalconsiderations – “How could one man know enough to own a flowing portfolio of150 securities and always outperform the averages? That would be a considerablestump.”

In seeking his edge, Munger pursued small, unknown stocks that wouldn’t be ofinterest to the bigger investors: “I tended to operate, as to many successful valueinvestor do, not looking at Exxon and Royal Dutch and Procter & Gamble and Coca-Cola. Most of the value investors, if you analyze who’ve been successful over along time, have operated in less followed stocks.”

Less Is More: The Compounding Power of High-Conviction Portfolio Approach in Less-Followed Stocks


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Investment Process & StrategySeparating Winners From Losers

Eliminating companies with potential accounting tunneling FRAUD and misgovernance riskprevalent in Asian companies with unusual related-party transactions which escape thedetection by western-based financial tools and techniques, based on our proprietary fact-basedforward-looking fraud detection system that we are grateful to have the opportunity to beinvited to present to the top management of the Singapore financial regulator;

Analysing business model for QUALITY, we seek companies with resiliency to maintainprofitability and protect market positions through up/downturns in the economy and to allowthe companies to better manage rapid, sometimes disruptive, technological change;

• Strong leading market positions with proven records across business cycles as thisenhances pricing power and creates the foundation for sustainable profitability and anattractive position in the value chain without being dependent on specific suppliers orcustomers;

• Continuous innovation and R&D to achieve and ensure strong market positions, createnew categories of growth and profitability over time; Long runway and addressablemarket to compound growth from solving pressing problems for their customers;

• Exposure to service and after-market sales to improve the understanding of customerneeds, build customer loyalty, and offers attractive profitability, additional growthopportunities and increased product penetration;

• Prudent stewardship and allocation of capital; Strong balance sheet and robust cashflow generation that can be used for reinvestment into the business (i.e. R&D andmarket expansion), to capture attractive opportunities;

• We are watchful for longer-term fundamental changes, as opposed to reacting to short-term news “catalysts” which could be manipulated to create buzz around a stock,monitoring the ratio of the sales contribution from new products/ services and markets/customers

Selecting entrepreneurs and owner-operators with VALUES & PASSION for their business.This is seen through their thought leadership and value-add to the community whilst servingwith integrity, and the corporate culture they build.

STEP 1: FRAUD

INVESTMENT UNIVERSE

>25,000 LISTED COMPANIES IN ASIA PACIFIC

20-30COMPANIES

STEP 2: QUALITY

FOCUSED COMPANIES

STEP 3: VALUES & PASSION

500 HIDDEN CHAMPIONS


http://www.adsadvance.co.uk/boeing-sees-china-leading-on-new-aircraft-in-asia-pacific.html

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Step 1: Value Investing Needs to be Adapted in Asia to Mitigatethe Risks of Accounting Irregularities and Misgovernance.

https://www.smu.edu.sg/sites/defa

ult/files/smu/news_room/smu_in_th

e_news/2015/august/aug19/BT_2015

0819_1.pdf


https://www.smu.edu.sg/sites/default/files/smu/news_room/smu_in_the_news/2015/august/aug19/BT_20150819_1.pdf

Page 33

Investment Process & StrategyStep 2: Analyzing Business Model Quality

Some of the unconventional but intuitive metric we employ include;

Still staying hungry or contented/conservative/complacent ( 小富即安 )? Salescontribution from new products/ services and markets/ customers

Still scalable? Not stuck by sticky costs? Can business model overcome sticky super-variable overhead (SGA costs) to scale up? Selling, General and Administrative (SG&A) costis thought by many Asian entrepreneurs to be a “fixed” or at least a “semi-fixed” cost butthey had increased even faster than sales. Check whether SGA as % of Total Asset and SGAas % of Sales are declining despite rising sales.

Still naive & over-confident? Gone through baptism of fire? Incremental EBIT per dollarof capex to assess the tipping point in mastering the learning curve to scale up

Going global? % of overseas sales in replicating business model in overseas markets aftercommanding domestic market leadership, ideally at between 5 to 15% for tipping point


Page 34

Investment Process & StrategyStep 3: Selecting entrepreneurs and owner-operators with VALUES & PASSION for their business.


Page 35

Why Our First HNW Client Invested $1 Million

Client invested on her own in stocks $20-50k but dare notinvest big sums of money.

Client invested in a fund and exclaimed with great relief thatshe pulled out her money: HK-listed Rexlot (555 HK) accountingfraud scandal.

Client is a Moat Report Asia subscriber for nearly three years– reads about Akio Nitori of Nitori Holdings as well as otherhardworking and farsighted Hidden Champions.

Client appreciates the importance of intensity and dedicationin research and monitoring to execute a high-convictioninvesting strategy at the Hidden Champions Fund.

As the CIO of the Hidden Champions Fund, a majority of my personal savings is invested in the Fund. Ihave no other investments other than the Fund.

We are keenly aware that caring is an exacting, serious and demanding business, especially when itcomes to being entrusted to invest in another person’s financial assets, which represent much more thanmoney – they are a tangible product of one’s life’s work and a repository of aspirations for the future.

How You Make Your Wealth Grow *Matters*: Growing together with the Hidden Champions to protectand compound your hard-earned wealth. To paraphrase Da Vinci, “May your Work - and Investments! -be in keeping with your Purpose.”


Page 36

Unearthing Asian Hidden ChampionsValuation & Evolution Path of Wide-Moat Compounders

3 7 10 15

Time (Years)

2.5

2.0

1.5

1.0

0.5

Fundamental PEG or Value-to-Quality Ratio = (EV/EBIT)/ ROE

Financial market holds back, as company grew in market cap too fast despite the strong fundamentals and growth; market panics and PEG falls

As company continues to deliver, there is positive re-appraisal of the company and PE re-rating; PEG climbs back up again

PEG remains relatively steady as company “milks the cow” for cashflow –or company gets complacent with size and falters

Stage I Stage II Stage III Stage IV

Emerging LeadersRides the Rising Tide, Niche

Potential Transforms to Mass Market

Milks the Cow/ Consolidation or “Icarus-Faltering”

Dominance/ Legacy/ Build-to-Last

Growth slows down, but PEG climbed due to “dominance” or “winners-take-most” factor, resulting in steady market cap

0.8

1.0

0.6

0.4

0.2

PEG = PE/ Net Profits Growth

Small-to-Mid CapMV: $50M-S$1B

Mid-to-Large CapMarket Value: $1-20B

Large-to-Mega CapMarket Value: >$20-400B

20X: $50M to $1Bn 20X: $1B to $20Bn 20X: $20B to $400Bn Compounding Potential

MV: US$1.1bn

MV: US$14.7bn

MV: US$53m

MV: US$320m

MV: US$55m


PERFORMANCE SINCE INCEPTION(NET OF ALL FEES)

INVESTING $100,000 AT INCEPTION, TODAY IT WOULD BE WORTH…

+27.4% $127,400

* Net performance figures of overall portfolio including cash as at 1 Sept 2017

PORTFOLIO ANALYTICS

# of stocks 14

Sharpe ratio 0.68

Alpha -1.8%

Active share vs MSCI AC Asia Pac 98.6%

Weighted market cap (USD'mil) $326

Weighted ROE 26.7%

3Yr Revenue growth 16.7%

3Yr EBIT growth 33.4%

EV/Sales (x) 1.9

EV/EBIT (x) 12.3

13.2%

14.0%

17.4%

27.4%

30.2%

0% 5% 10% 15% 20% 25% 30% 35%

ASX200

Nikkei 225

STI

HCF

MSCI Asia Pac

Net Returns since HCF Inception

Page 38

Portfolio PerformanceFUND PERFORMANCE

PORTFOLIO HIGHLIGHTS & CHARACTERISTICS

PORTFOLIO COMMENTARY

Our cumulative consolidated absolute gains fromadopting the focused investment strategy of investingin successful yet relatively low-profileunderappreciated Hidden Champions since inceptionin 31 September 2015 is S$5.2 million as at 1September 2017, or a return of 27.4% against theMSCI Asia Pacific index return of 30.2%.

Resilient Structural Growth in Quality Earningswith Robust Returns on Equity: Our portfolio stockcharacteristics displayed excellent and improvingfundamentals with many of our portfolio companiesdelivering record profits on the back of innovativeproducts and services. Our portfolio weighted marketcapitalisation is US$326 million and weighted revenuegrew by 16.7% over the past three years, generatingincreasing returns to scale with a 33.4% growth inoperating profit with weighted return on equity (ROE)of 26.7% (Dec 16: 23.9%). This is due to the scalabilityof the business model forged by an indestructibleintangible knowhow accumulated over the years tocreate new categories of growth for their targetedcustomers and compound growth with resilience in adifficult business environment.


Page 39

Portfolio Performance

To illustrate the application of the VQ ratio with a simple example, oneof our portfolio stocks Sealink Travel Group generates an operating profitof S$38.7 million on ROE of 25.4% with a long runway for growth, due tothe structural rise of Australia as the new Mecca for global tourism. Ittrades at EV/EBIT 12-14x and has a market value of around S$400-450million. When compared with ASX-listed tourism-related companySkydive the Beach, which has a VQ ratio of 1.38x (a weaker ROE of 14.6%and more expensive EV/EBIT of 20-21x), Sealink’s superior fundamentalqualities and valuation attractiveness is amplified. We believe SealinkTravel could rise to a market value of A$750-900 million in the next 12-18 months as it continues to deliver A$50-60 million in operating profitand trading at an EV/EBIT of 15x, indicating an upside of 70-100%.

Value-to-Quality (VQ) ratio of Hidden Champions Fund is 270% Superiorthan Market Comparable: When we compare the weighted profits of ourportfolio companies in the Fund to 612 Asia Pacific companies with a similaroperating profit range of US$20-30 million, our weighted portfolio return onassets (ROA) and return on equity (ROE) are around 87% and 76% respectivelybetter than the comparable Asian companies of comparable profit scale, yet thevaluations in terms of EV/EBIT is around 52% cheaper. With the VQ ratio of ourHidden Champions Fund presently superior by 270% than the marketcomparable, we believe the Fund is significantly undervalued relative to itsintrinsic value and the downside risks are limited to protect investors. Guided bythis, we will open the Fund to external clients in an initial subscription for alimited window period before soft closure. As an added disclosure, both seniormanagement of 8IH and the entire Hidden Champions Fund investment teamhave invested our own personal capital into the Fund to commit our skin – andmore importantly, our soul – in the Fund alongside our clients on the sameterms and fees. The VQ ratio is to help educate clients to look through thewindshield of valuation resiliency backed by intrinsic fundamentals, not therearview mirror of past price performance.

Outlook: We expect to outperform as the current market hype over the “flightto junk” carry trade that’s groping for yield subsides and the overall marketretreats – our Fund tends to do better when the overall market is tepid andlacklustre.

VQ: Sealink vs SkydiveSealink Skydive

Market value (S$m) 400-450 250-300

EBIT (S$m) 38.7 14.3

(A) “Value”: EV/EBIT 12-14x 20-21x

(B) “Quality”: ROE (= EBIT/Equity) 25.4% 14.6%

(C) Value-to-Quality (VQ) ratio (A/B) 0.50x 1.38x


Page 40

Value-to-Quality (VQ) Quadrant: We Believe Our Fund Is Substantially Undervalued

The portfolio of companies in the Hidden Champions Fund are substantially higher in Quality and yet aresignificantly Undervalued to the comparable companies of similar operating profit range. Powered by the portfoliocompanies’ ability to generate strong revenue and profit growth in difficult economic and market conditions,coupled with a lower value-to-quality ratio at 46 cents of value per dollar of quality in the portfolio, we stronglybelieve the Fund has low downside risk to protect investors and strong upside potential.


0.46 HCF

2.47 Australia

1.31 Japan

3.10 Singapore

2.12 Hong Kong

1.09 Taiwan

1.75 Thailand1.23 India

1.70 Market Average

0

5

10

15

20

25

30

35

0% 5% 10% 15% 20% 25% 30%

Value-to-Quality (VQ) ratio

“Value”:

EV/EBIT

“Quality”: ROE (EBIT/Equity)

Undervalued Zone

Overvalued Zone

Page 41

It is inevitable that investors will look at a fund’s track record as an approximation of possible future returns but due to various mistakes, the chancesthat the investor receive the same returns are very unlikely. Peter Lynch managed the Fidelity Magellan Fund from 1977 to 1990, during which time itbeat the S&P 500 Index in 11 years and achieved an average return of 29% per annum but when they dig further into individual unitholder's averagereturns, more than half the investors in his fund had lost money. So how does the typical investor in a fund run by one of the most successful managersof all time end up falling behind the overall market? The reason is simple: they were fleeting investors in the mutual fund who did not stay the course.

Most investors are impatient and are very poor at trying to time the market. They will tend to chop and change their portfolios in an overly-activemanner in which Lynch described this in an interview: One Saturday, early on in his tenure, he was working at the office and answered the phone. Thecaller was a Magellan holder who was calling to cash in the investment. Lynch explained how he was excited about the growth prospects for theeconomy and his fund, and asked him why. The caller said: “Because I am breaking even.” Magellan then went on to record compounded annual growthof around 20% for a decade during the 1980s. As Lynch said: “Far more money has been lost by investors preparing for corrections, or trying toanticipate corrections, than has been lost in corrections themselves.”

Through the study, Lynch guided a profitable investment strategy for their clients: Buy more units of the fund whenever the fund experiences adrawdown, despite the healthy and improving fundamentals of the portfolio.


Outperforming by Underperforming: The Buffett And Lynch Way to Winning By Staying the Course

Page 42

Short-term performance pressures can be frustrating and subtracting to sustainable long-term results. Every investment approach, even ifskilfully applied, will run into environments for which it is ill-suited. To illustrate the case, even the great Warren Buffett has lagged themarket in one out of every three years, and in many cases the underperformance was significant. There have been ten separate episodeswhere Berkshire underperformed the index fund by more than 10% over a one-year period and many other periods of underperformancethat lasted significantly longer.

Through these difficult times, Buffett and Berkshire have remained committed to their core philosophy and investment process. This isvery important because if you do not have courage in your convictions coupled with the necessary patience and toughness, you can’t be aninvestor. You will constantly be driven to fall in line with the consensus by buying at the top and selling at the bottom. You have to be willingto not participate in everything that goes up, but only the things that fit your approach. As Howard Marks articulated, “to be a disciplinedinvestor you have to be willing to stand by and watch while other people make money that you passed on.” In order to be able to stick withan approach or decision until it proves out, which can be a long time, investors have to be able to weather periods when the results areembarrassing. This can be very difficult.

Outperforming by Underperforming: The Buffett And Lynch Way to Winning By Staying the Course

Peak Trough RecoveryPeak-to-Trough

UnderperformanceTime to Breakeven

October 1985 January 1986 September 1987 18.1% 1.9 Years

October 1989 September 1990 February 1993 25.6% 3.3 Years

February 1996 November 1996 March 1998 22.1% 2.1 Years

June 1998 February 2000 July 2002 54.4% 4.1 Years

September 2002 September 2005 February 2008 29.9% 5.4 Years

October 2008 April 2012 Ongoing 32.7% 8.1 Years


Page 43

From $2 billion to over $20 billion in AUM in less than 2 years. An incredible growth story. Near theend of 2013, Marketfield had beaten “97 percent of its peers over the previous fiveyears.” Marketfield, which can bet on share declines and use options, now oversees more than $20billion, making it New York Life’s largest mutual fund. And so, investors did what they do best: chasepast returns.

Did the “really strong performance” continue? No. Marketfield would finish 2014 down 12.3%, 2015down 8.3%, and 2016 down 3.4%. The cumulative losses over that period exceeded 22% with amaximum drawdown of 28%. During the past 3 years, the fund has underperformed 97% of its peers.

Investors tend to race into funds after a period of strong performance. As a result, they appear to bebuying high (as funds are coming off a strong period) and selling low (as funds are coming off a weakperiod). This pattern of behavior is in clear violation of the cardinal rule of successful investing: buy lowand sell high.

The Story Of Marketfield Fund


Page 44

Suppose you had picked one of the best-performing 25% of American equity mutual fundsin the 12 months to March 2013. In the subsequent 12 months, to March 2014, only 25.6%of those funds stayed in the top quartile (see chart). That result is no better than chance. Inthe subsequent 12-month periods, this elite bunch is winnowed down to 4.1%, 0.5% and0.3%—all figures that are worse than chance would predict.

Successful managers attract more clients, and the size of their fund grows. So they have toexpand the number of stocks they buy, diluting their best ideas. As the fund grows larger, itlooks more like the overall market.

The industry’s answer to this problem is to launch a lot of funds. Some of them are boundto be near the top of the charts and can be trumpeted in adverts; the losers can then bekilled off. Almost 30% of the worst-performing (bottom quartile) equity funds over the fiveyears to March 2012 had been merged or liquidated by March 2017.

Even the great Warren Buffett had two 50% drawdowns. It’s probably smart to stick withtop managers who are underperforming, if they are investing consistently within their styleand process, even if it happens to be out of favor.

The Truth About Top-Performing Fund Managers

Source: The Truth AboutTop-Performing MutualFund Managers, AAIIJournal, July 2011


Page 45

Ralph Wanger (former Acorn Fund: $8m to $20bn): How Funds Overcome Asset Size Barrier to Returns

Ralph Wanger grew the Acorn Fund from$8m to $20bn from 1970 to 2003 with hismultibagger investing style. In a USAToday national survey, professionalmoney managers voted for theinvestment professional whom theywould most like to manage their money—Wanger was #1

“I am reminded of the old plate spinner act you used to see on television variety programs. Thespinner puts a thin rod into a socket resting on the floor, places a dinner plate atop the rod, andpumps the rod vigorously until the plate is spinning fast enough to stay on top of the rodunaided. After plate one has stabilized (working as a simple gyroscope), the spinner sets upanother rod with another plate on it. Soon plate number two is spinning alongside number one.Number three sets up easily, then number four – but now number one is wobbling dangerouslyand needs cranking up again. The spinner keeps adding plates – a dozen or more – justmanaging to rescue the one about to fall and shatter on the floor. As the act builds toward itsclimax, the spinner is running from plate to plate faster and faster, cranking desperately, untileveryone in the audience is laughing uncontrollably. Everyone, that is, except the mutual fundportfolio managers watching. They are reminded, painfully, of every day at the office. Trying tokeep current on fifty or hundred and fifty stocks in a mutual fund, while studying new ones,can be a plate-spinning nightmare. The manager is forever hastening from crisis to crisis, withsome positions always on the edge of a crash, with results that may be anything but hilariousfor the fund shareholders.

Every stock in a portfolio is a spinning plate, cranked up with security analysis instead of energy.Since this analytic work must factor in political, economic, and market variables as well ascorporate developments, keeping all one’s stocks in the air at once is a prodigious job. And theworld is crueller than is evident, for portfolio management theory demands that the risks andrewards of each stock be constantly compared with those of every other stock, both thosewithin the portfolio and all other possibilities. The truth is, it cannot be done: no organization,no matter how large, can keep that many plates spinning. We could hire a very large staff ofanalysts to cover more companies, but large organizations usually haven’t had very goodresults as fund managers. Superior analysts are rare, and funds seem to do well only as longas the decisions are made by a small group of talented people. “


Page 46

High-conviction investment strategy with transparency: 20-30 Hidden Champions

The Fund employs zero leverage in its investments

We are a Top 20 Shareholder for 5 of these Hidden Champions. We aim to be a Top 20 Shareholder of thecompanies we invest in as a demonstration of our conviction and transparency in the investment process.We look to become a substantial shareholder with a 5% stake as they continue to deliver in their businessfundamentals. We can be a Top 20 shareholder in some of these Hidden Champions who are at a tippingpoint stage for an upward re-rating in valuation because:

(1) they are under-researched despite their quality and growth;

(2) we are one of the earlier foreign institutional investors and our Hidden Champions are poised to enjoygreater quality institutional sponsorship as they continue to deliver on their fundamentals;

(3) founding owner-operator and promoter group have a substantial equity stake to provide stability in theshareholder base, and we have a rigorous systematic investment process to eliminate entrenchedcontrolling owners who treat the business as their personal ATM and abuse minority shareholders;

We do not invest in stocks in cyclical industries, including commodities & energy, property & construction,and banks.

Salient Highlights of Portfolio

Top Portfolio Stocks

Market Cap US$327M

Market CapUS$55M

Market Cap US$53M

Portfolio Companies By Market Cap Range

"Value": EV/EBIT 12.5x"Quality": ROE 25.4%Value-to-Quality (VQ) 0.49




Market Cap US$83M


Still Building Position

Educational Services Innovator

Page 47

Nyquest Technology (GTSM: 6494): Taiwan’s Innovative Fabless IC Designer in Valued-Added Consumer & Voice ICs

47

Nyquest Tech

Market Value (US$m) 55

EBIT (US$m) 4.0

3 Yr Rev Growth (%) 8.8

3 Yr EBIT Growth (%) 18.8

(A) “Value”: EV/EBIT 11.2

(B) “Quality”: ROE (=EBIT/Equity)

28.0

(C) Value-to-Quality (VQ) ratio (A/B)

0.4

Guo Qiuli郭秋麗 (CEO), Chen Jianlong陳建隆 (President)

and Lin Mengyi林孟逸 (VP)

Toymaker Hasbro generating all-time high profits – and achieved record share price - in the iPad/iPhone digitalage. Despite the toy product being classified as a discretionary consumer item, Hasbro displayed defensivecharacteristics given the desire for parents to do the best they can for their children, which includes helping themfeel joy. Toys fulfill this “need” in a relatively inexpensive way. While a family may cut back on vacations or eveneating out, spending some money to buy a toy is likely to continue, particularly during the holiday season or abirthday, when toys are top of mind as gifts, which provides some safety and consistency should the macroeconomy face a slowdown.

The winning story of Hasbro – and the survival of many other toymakers - is powered Nyquest Technology九齊科技 (GTSM: 6494), the innovative fabless IC designer supplying value-added consumer ICs, including the voice-synthesizer chip, to give smart toys a voice and a soul. Nyquest has market leadership in the niche market forvoice-synthesizer ICs and MCUs (microcontrollers) for smart toys which is experiencing a rising recurring demand.Nyquest generates an ROE of 24.3%, trades at an EV/EBIT of 9x and has a sustainable cash dividend yield ofaround 6% backed by its healthy net cash balance sheet that is around 20% of its market value and strongcashflow generation ability. Nuvoton Technology Corporation (TSEC: 4919), part of Winbond Electronics (TSEC:2344), is also a strategic shareholder with a 16.9% stake to provide stability in the shareholder base.

Nyquest has a diversified customer base, breaking into theecosystem of Hasbro and Mattel in 2016, adding on to itsNorth America customers that include Canadian-listed toymaker Spin Master, Hallmark, MGA, Gemmy, Little Tikes,Fisher-Price, Bratz; penetrating into the supply chain ofJapanese toy makers Bandai, Sega, Benesse, TakaraTomy in2014-15. Nyquest recently announced in May 2017 that theywon orders from Spin Master to supply the chips for itspopular Hatchimals product range.

Super-cycle in demand for microcontrollers (MCU) withmultiple applications/solutions in the Internet-of-Things (IoT)trend powering smart appliances and devices.

Nyquest found a growing niche in designing good quality, fast-to-deliver and solution-driven OTP (one-timeprogramming) ICs that can deliver to its customers in as short as three days to help them shorten the lead time inlaunching new products to the market and reduce inventory risks, critical qualities that the customers value dueto the much shorter product cycle of toys.


Page 48

Darth Vader Mask Talk Back Hamster

Choose your toys application:

Pokemon Scanner BLE Card GameInteractive Lunch Tray

Drones Plush Toy

Cup Coaster



https://www.youtube.com/watch?v=RcIfzyYSh7A

https://www.youtube.com/watch?v=YiVBgM8riLg

https://www.youtube.com/watch?v=neEbXW839m0

https://www.youtube.com/watch?v=P5n_MIMTY5k

https://www.youtube.com/watch?v=v6Rb02srpVI

https://www.youtube.com/watch?v=Sd-PkVgAcaE

https://www.youtube.com/watch?v=kzgT3WaLng4

https://www.youtube.com/watch?v=gL02BI_EDPg

Page 49



Page 50

Emmbi Industries (NSE: EMMBI): India’s Woven Sack And Technical Textile Specialist

Emmbi Industries

Market Value (US$m) 50

EBIT (US$m) 4.0

3 Yr Rev Growth (%) 12.9

3 Yr EBIT Growth (%) 26.9

(A) “Value”: EV/EBIT 15.6

(B) “Quality”: ROE (=EBIT/Equity)

30.0

(C) Value-to-Quality (VQ) ratio (A/B)

0.50

Makrand and Rinni Appalwar(MD and CFO)

Emmbi Industries is one of India's largest technical textile and specialty polymer processing companymanufacturing (1) woven sacks and FIBC (Flexible Intermediate Bulk Containers) which are used in transportationof bulk commodities like chemicals, fertilisers, cereals, detergent (39% of FY16 sales); (2) advanced composites ofpharma and food grade, such as anti-carcinogenic, anti-bacterial, anti-corrosive and tapered-proof FIBC, with anR&D center recognized in Apr 2016 by India's Department of Scientific and Industrial Research (DSIR) todifferentiate from its other peers in the fragmented industry (43% of FY16 sales); as well as various technicaltextiles and advanced composites such as container liners, protective irrigation system, canal liners, first tointroduce flexible water tanks (patent registered), car covers used in water conservation (16% of FY16 sales) and(4) agricultural products (2.8% FY16 sales).

Established in 1994 by first generation owner-operators and husband-wife team, Makrand and Rinku Appalwar,Emmbi is based in Maharashtra with its manufacturing facility located at Silvassa in Gujarat in which 48% of theirproduct sales are derived from international markets. Emmbi’s customers include established consumer andindustrial companies such as Hindustan Unilever, Tata Chemicals, Godrej Industries and ITC, as well as ecommerceplayers like Flipkart, Amazon and eBay. Emmbi generates an ROE of 30.2%, trades at an EV/EBIT of 16.4x.

In recent years, Emmbi launched an increasing number of innovative products whose applications can be foundin food, safety, water conservation, agriculture, infrastructure, e-commerce, crop protection, hazardous & nuclearpower plant waste management and solid waste management. For instance, Emmbi recently inaugurated theworld’s widest width pond lining facility at its Silvassa plant in Gujarat in Apr 2017. Emmbi will produce 4,380pond liners per year under "Jalasanchay Brand", creating an extra water storage capacity of 48 million litres perday for rural India. The states of Maharashtra and Rajasthan where the company is presently active in thebusiness, has a plan to produce 110,000 & 50,000 pond liners per year respectively for the next five years. This isthe new market segment for Emmbi with a potential size of Rs2,000 crore (US$310 million). Emmbi is a top 3players in pond liner business and aspires to get 10% of the market share of pond lining business in the comingyears. Emmbi is also working with five banks to make funds available for farmers for its pond-liner business, whichthe management expects to bring in huge opportunities going forward.

Upcoming new innovative products to drive Emmbi’s growth include: (1) Advanced composites: The start of theclean-room food and pharmaceutical grade packaging plant in July 2017; Pneumatic human safety fall arrestsystems & dunnage systems; E-commerce tamper evident multi trip packaging; Infrastructure road & roofingunderlayment, Fire retardant scaffolding; (2) Water conservation: Retail distribution of pond liners, flexi tanks;canal liners, check dams, lapeta pipes; (3) Agro-Polymers: Export substitution crop protection, mulch films, silageincubators, agro sheds.


Page 51

Emmbi Industries (NSE: EMMBI): India’s Woven Sack And Technical Textile Specialist


3. Subscribe Into The Fund

Page 53

The Hidden Champions FundProtecting and Growing Your Wealth With Asia’s Hidden Champions

Minimum additional investment: As indicated above and in multiples of USD $100

Minimum redemption request: USD $ 25,000 in multiples of USD $100

Minimum holdings from partial redemptions: Not to fall below USD $ 25,000

FEES HIDDEN CHAMPIONS FUND

Fund Class Series A Series B Series C

Subscription Charge Nil Nil Nil

Management Fee2.0% Of AUM Per Year

(All Inclusive)1.6% Of AUM Per Year


(All Inclusive)Performance Fee (With High Watermark)

20% 16% 12%

Early Exit Charges10% within 1st year5% within 2nd year0% after 2nd year

Minimum Investment USD $100,000 USD $5,000,000 USD $20,000,000

Subsequent Investment USD $25,000 USD $25,000 USD $100,000

NAV Calculation Last Trading Day, Weekly

Subscription Period Weekly on 1st Dealing Day

Redemption PeriodWeekly on 1st Dealing Day (20 Business Day’s Notice)


Page 54

The highest NAV of a fund to date is known asthe "high water mark".

It is the concept that the fund managers willreceive the incentive fees only if the fundexceeds the highest NAV it has previouslyachieved to ensure that it first recover lossesbefore charging a performance fee on newprofits.

For example, an investor started investing inthe fund in Year 0 when the NAV was $100. InYear 1, when the NAV of the fund reaches $120, aperformance fee is charged on the 20% returnsand a high water mark is set at $120.

Subsequently in Year 2 and 3, when the fundNAV is at $108 and $115, no performance fee willbe payable to the investment manager as it doesnot surpass the previous water mark at $120.

It is only in Year 4, when the fund NAV reaches$130, surpassing the water mark at $120, that aperformance fee will be charge on the additional10% ($130 – $120 = $10) returns generated. Thenew watermark will be $130.

By having this high water mark feature, theHidden Champions Fund is aligned with itsinvestors to ensure that we do not get paid forpoor performance.

Period Action Fund NAV WatermarkPerformance Fee

Calculation

Year 0Purchased HCF Units

@ $100$100 $100 -

Year 1 - $120 $120 (New) ($120 - $100) x 20% = $4

Year 2 - $108 $120$0

(Fund NAV is Lower than Watermark)

Year 3 - $115 $120$0

(Fund NAV is Lower than Watermark)

Year 4 - $130 $130 (New) ($130 - $120) x 20% = $2

Total Returns $30 $4 + $2 = $6


Aligning Our Interests With You –High Watermark Feature

Page 55

Auditors:

KPMG

KPMG Centre, 30 St George Street

Port Louis, Republic of Mauritius

Custodian:

Standard Chartered Bank

Crescenzo, 3rd Floor, C- 38/39, G Block,

Bandra Kurla Complex,

Bandra (East), Mumbai 400 051, India

Banker:Standard Chartered Bank (Mauritius) LimitedUnit 6A and 6B, 6th FloorRaffles Tower, Lot 19Cybercity, Ebene, Mauritius

Independent Administrator:Trident Trust Company (Mauritius) Limited5th Floor, Barkly WharfLe Caudan WaterfrontPort Louis, Mauritius

We achieved an important business milestone in April 2017 as 8 Capital Pte Ltd, a wholly-owned subsidiary of 8IH, hasobtained approval from the Singapore regulator Monetary Authority of Singapore (MAS) to operate as a Registered FundManagement Company (RFMC). 8 Capital is the fund manager to the Hidden Champions Fund. Permanent capital of S$21+million is provided by 8IH to provide stability to the investment strategy.

Compliance with regulatory standards; external custodian & banker (Standard Chartered Bank) to safekeep clients’ asset,external NAV calculation by auditor (KPMG), independent administrator (Trident Trust).

Our separation of function is effective as it not only gives peace of mind to our clients that their assets are duly protectedin compliance with regulatory standards but it also allows our investment team to focus solely on providing astute investmentexpertise.

New institutional investors, high net-worth individuals and accredited investors subscribe to get units in the fund, like aunit trust or mutual fund. Fund registered with regulators/agencies in various jurisdictions for distribution permission in US,UK, Switzerland and HK. Handling regulatory reporting requirements such as issuing PFIC statements for US investors.


The Hidden Champions FundRegulatory & Compliance

Page 56

My mentor, the kind and wise Prof KSLeong, and “Justice Bao” Soo Ping, formerAuditor General of the Republic ofSingapore.

Koon Boon (KB) is the Chief Investment Officer & CEO at 8 Capital Pte Ltd, a Registered FundManager (RFM) holder with the Monetary Authority of Singapore (MAS), and a wholly-ownedsubsidiary of ASX-listed 8I Holdings Limited (ASX: 8IH), where he is responsible for the sustainablegrowth and outperformance of listed Asian equity investments in the Hidden Champions Fund. KBis an internationally featured investor rooted in the principles of value investing for over a decadeas a fund manager and analyst in the Asian capital markets who started his career at a boutiquehedge fund in Singapore and, later, at Korea’s largest mutual fund company. KB was part of thecore investment decision committee which achieved 700% in returns (net of fees) in its flagshipAsian fund during his tenure.

KB is also Managing Editor of the Moat Report Asia, a research service focused exclusively onhighlighting undervalued wide-moat businesses in Asia. Subscribers to the Moat Report Asia fromNorth America, Europe, the Oceania and Asia include professional value investors with over $20billion in asset under management in equities, some of the world’s biggest secretive global hedgefund giants, hidden billionaires and savvy private individual investors who are lifelong learners inthe art of value investing. KB was also a faculty (accounting) at SMU teaching accounting coursesand had pioneered the course on Accounting Fraud in Asia, an official module in the SMUundergraduate curriculum.

KB also served investors and the public in contributing his thought leadership on the topics ofvalue investing, business model innovation and accounting fraud in local and international media,such as TEDxWallStreet, Investopia, BeyondProxy, Greatinvestors.tv, Jakarta Post, The StraitsTimes, TODAY, The Business Times, and in top banking, finance and investment conferences inSydney, Cape Town, HK and Beijing, Italy, as well as in the Value Investing Seminar, Value InvestingSummit, Emerging Value Summit, Wide Moat Investing Summit and Asian Investing Summit. KB isalso honored to be able to have the opportunity to be invited by Singapore’s financial regulatorMonetary Authority of Singapore (MAS) to present to their top management team aboutimplementing a world’s first fact-based forward-looking fraud detection framework to bringabout benefits for the capital markets in Singapore and for the public and investment community.

Speaking at Ciccio’s 11th Value InvestingSeminar (VIS) July 2014, Trani, Italy


The Hidden Champions FundInvestment Team Members

Page 57

THO Jinliang

Business Development Analyst

• Graduated from University of Adelaide with aBachelor in Commerce (InternationalBusiness).

• He was from the branding team in 8I Holdings,where he assisted in content creation for theirsocial media platforms for brand awareness,stakeholder engagement and advertising.With experience communicating with variousstakeholders in the 8I Group, he is able toadvise on the Fund’s stakeholdersperspectives and handle all client relations.

• He is responsible for promoting the HiddenChampions Fund both through digital andoffline platforms. He is also responsible forproviding copy writing duties for HiddenChampions publications.

Joshua ZHANG Yaolin

Investment Manager

• Graduated from the University of New SouthWales, Sydney, with a Bachelor in MechanicalEngineering (Honours).

• In his previous engineering tenure at Envipureand KeppelFels, he garnered extensive on-the-ground experience in projectmanagement, leading and fulfilling multi-million dollar global projects on watertreatment systems and rig piping systems. Hisedge in engineering synergized with investingenables him to identify strong, well-runbusinesses beyond quantitative numbers,particularly when conducting due diligencetrips and assessing management quality.

Joyce PANG Qin

Investment Analyst

• Graduated from the University College Dublinwith a Master Degree on Science ofManagement (2nd Upper Honours) and aBachelor in Mechanical Engineering fromShanghai Ocean University.

• She is trained in her analytical mind andmeticulous hands-on approach as an engineerfor a decade in reputable MNCs that includesDaikin, Siemens and Keppel. As an engineer,she specializes in building technologies andsystem automation, energy management, andapplying critical thinking for solving problemsand proposing best solutions for clients basedon data intelligence gathered. Her mantra inwork and life: Making ‘things’ that work andmaking ‘things’ work better.


The Hidden Champions FundInvestment Team Members

Page 58

With over a decade-plus in the Asian capital markets, Koon Boon, our ChiefInvestment Officer, has witnessed many investors, including family andfriends, be taken in by the popular mantra: “Ride the Asian Growth Story!”stories and invest their hard-earned money, only to find themselves subjectto emotional upheavals when these stocks turn out to be inherently sickand prey to economic vicissitudes. They may seem to grow faster initially,but the sustainability of their returns is far too uncertain to be the subjectof a wise investment. Worse still, some turned out to be involved inaccounting frauds, where financial numbers were “propped up” artificiallyto lure in more funds from investors, and the previous assessed asset valuehad already been “tunneled out” or expropriated. This issue is compoundedas western-based fraud detection tools and techniques have not beenadapted to the Asian context to avoid these traps. It is disheartening towitness many fraud perpetrators go away scot-free and live a life of superluxury, on these unsuspecting minority investors’ hard-earned money.

Hidden Champions Fund was set up with a simple philosophy: Invest inhardworking Asian entrepreneurs and capital allocators who are serious inbuilding a wide-moat business, and avoid these dubious companies. Wehave always been fascinated by why and how even under the most austereof conditions and environment, wide-moat business models remainresilient and continue to compound value. Some of these companies aredominant global players that focuses on sophisticated, hard-to-imitateniche products and valuable critical niches, but are largely invisible to theaverage consumer. Investing at an earlier stage or the tipping point in thelong-term growth trajectory path of Hidden Champions has been provenrewarding. We aim to grow with these Hidden Champions by investing inthese owner-operators, and grow our clients’ wealth together while makinga difference in the world.


Our StoryWhy We Do What We Do

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How to Know If We are Right for Each Other?

You want to:

Grow together with the Hidden Champions who appear on my path to help me fulfil mypurpose aligned with my values and to protect and grow my hard-earned wealth;

Understand the simplicity of the investment philosophy and its compounding power;

Have Clarity where you are going, that the investment path to generate returns is not anopaque black box;

Appreciate the Intensity and Dedication that go into building and monitoring a high-conviction portfolio;

Cultivate knowledge and inspiration about the business model innovations of the HiddenChampions and how the hardworking entrepreneurs overcome the business challenges andpersonal struggles with resilience to help me create a life of meaning and significance in myown Work;

Take action on opportunities to enrich your life. The root of Opportunity is Port, meaningthe entryway by water into a city or place. When the tide and winds were right and theport opened, it allowed entry. But only those who recognized the opening could takeadvantage of the open port, or Opportunity.


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Find an Investment Manager Based on Enduring Characteristics

“If your intention is, as it should be, to find the investment manager you can staywith indefinitely, if not forever, then your selection will not be based on recentyears’ investment results, on current holdings, or on individual investmentmanagers. Rather your selection will, like the selection of a spouse, be based onsuch enduring dimensions as character, values, beliefs, capabilities, andpersonality. In a business organization, these enduring characteristics are a firm’sculture – the so-called soft factors that will actually sustain it over many yearsand through many situations while the hard factors like investment performanceall too quickly come and go.”

- Charles D. Ellis in his book “Capital: The Story of Long-Term InvestmentExcellence”. Charles Ellis is the recognized expert in investment management andone of only ten individuals honoured for lifetime contributions to the investmentmanagement profession


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INNOVATION

PROPRIETARY KNOWHOW

UNFAIR ADVANTAGE

COMMITTED & MOTIVATED EMPLOYEES

ECONOMIC MOAT

SCALABLE BUSINESS MODEL

ROOTED IN

RESILIENCE

GLOBAL ORIENTATION

LONG RUNWAY &

ADDRESSABLE MARKET

PRUDENT CAPITAL

ALLOCATION

CLOSENESS TO CUSTOMERS

UNIQUE CORPORATE CULTURE

FOSTERING INNOVATION

STRONG CORPORATE GOVERNANCE

MANAGEMENT FOCUS &

INTEGRITY

PURPOSE TO SERVE

PRICING POWER


The Hidden Champions FundCharacteristics of Hidden Champions

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The Fund logo symbolizes how Hidden Champions are rooted in a Greater Purpose, guided by an InnerCompass and belief system while they navigate trials and adversities, which enables them to serve theirtargeted customers and solve their most burning problems better than any competitors in the market and inthe process generate growth with resilience.

Like a lotus growing with determination, rising up from the murky water, removing obstacles in its stems whileits petals remains unstained and pure, the lovely blooms of the lotus flower typifying a chaste and noble heart,opening under the light of value creation in the murky Asian capital jungles.

The muddier and more opaque the water, the greater the beauty of the Lotus flower bloom when it emerges;the tougher the economic environment, the more tenacious the Hidden Champions become, growing to createand compound value whilst being rooted in resilience.


The Hidden Champions FundAbout Our Fund Logo

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Overview: Why Invest in the Hidden Champions Fund

High performance team in generating outperformance with lower risk under turbulent market conditions: The Hidden Champions Fundhas generated 18.9% absolute positive returns as at 16 June 2017 with an AUM (asset under management) of around US$19.7 million since31 September 2015. The Hidden Champions Fund is managed by 8 Capital Pte Ltd, a Registered Fund Manager (RFM) holder with theMonetary Authority of Singapore (MAS), and a wholly-owned subsidiary of ASX-listed 8I Holdings Limited (ASX: 8IH).

Why Invest in Hidden Champions: The investment objective is to invest at an earlier or tipping point staged innovative Hidden Championsin Asia with a long-term growth trajectory path, and a wide-moat that is usually overlooked and underappreciated. They are focused marketleaders in sophisticated, hard-to-imitate niche products and valuable critical services that are largely invisible to the average consumer, yetare indispensable to our well-being in our daily lives. These Hidden Champions weather crises and recession to deliver outperformance oftennot linked to general economic conditions, thus offering de-correlated and resilient investment returns. Join us and participate in the journeyof the outstanding and hardworking founders and owner-operators invested by our Fund - including Jeff Ellison of Australia’s Sealink Travel,Yoshiyuki Okamoto of Japan’s Okamoto Industries, Akio Nitori of “Japan’s IKEA” Nitori Holdings, the husband-wife team Makrand and RinkuAppalwar of India’s woven sack and technical textile specialist Emmbi Industries, the trio Guo Qiuli, Chen Jianlong and Lin Mengyi of Taiwan’sinnovative fabless IC designer Nyquest Technology, and so on - who have and are likely to continue to outperform and deliver compoundingreturns over the long-term.

High-Conviction Investment Strategy with Transparency: We adopt a high-conviction investment strategy of investing in 20 to 30 HiddenChampions. The Fund employs zero leverage in its investments.

Market Cap

US$322M

Market Cap

US$1,187MMarket Cap

US$47M

Market Cap

US$52MMarket Cap

US$16.6bn


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Overview: Why Invest in the Hidden Champions Fund

Top 20 Shareholder in Under-Researched Quality Firms: We are a Top 20 Shareholder for 4 of these Hidden Champions. We aim to be aTop 20 Shareholder of the companies we invest in as a demonstration of our conviction and transparency in the investment process. We lookto become a substantial shareholder with a 5% stake as they continue to deliver in their business fundamentals. We can be a Top 20shareholder in some of these Hidden Champions who are at a tipping point stage for an upward re-rating in valuation because: (1) they areunder-researched despite their quality and growth; (2) we are one of the earlier foreign institutional investors and our Hidden Champions arepoised to enjoy greater quality institutional sponsorship as they continue to deliver on their fundamentals; (3) founding owner-operator andpromoter group have a substantial equity stake to provide stability in the shareholder base, and we have a rigorous systematic investmentprocess to eliminate entrenched controlling owners who treat the business as their personal ATM and abuse minority shareholders;

Resilient Structural Growth in Quality Earnings with Robust Returns on Equity: Our portfolio stock characteristics displayed excellent andimproving fundamentals with many of our portfolio companies delivering record profits on the back of innovative products and services. Ourportfolio weighted market capitalisation is US$655 million and weighted revenue grew by 17.9% over the past three years, generatingincreasing returns to scale with a 44.0% growth in operating profit with weighted return on equity (ROE) of 27.6% (Dec 16: 23.9%). This is dueto the scalability of the business model forged by an indestructible intangible knowhow accumulated over the years to create new categoriesof growth for their targeted customers and compound growth with resilience in a difficult business environment;

Value-to-Quality (VQ) ratio of Hidden Champions Fund is 179% Superior than Market Comparable: When we compare the weightedprofits of our portfolio companies in the Fund to 380 Asia Pacific companies with a similar operating profit range of US$40-55 million, ourweighted portfolio return on assets (ROA) and return on equity (ROE) are around 75% and 65% better than the comparable Asian companiesof comparable profit scale respectively, yet the valuations in terms of EV/EBIT is around 40% cheaper. With the VQ ratio of our HiddenChampions Fund presently superior by 179% than the market comparable, we believe the Fund is significantly undervalued relative to itsintrinsic value and the downside risks are limited to protect investors. Guided by this, we will open the Fund to external clients in an initialsubscription for a limited window period before soft closure. More details will be shared later. As an added disclosure, both seniormanagement of 8IH and the entire Hidden Champions Fund investment team have invested our own personal capital into the Fund tocommit our skin – and more importantly, our soul – in the Fund alongside our clients on the same terms and fees. The VQ ratio is to helpeducate clients to look through the windshield of valuation resiliency backed by intrinsic fundamentals, not the rear-view mirror of past priceperformance.

Outlook: We expect to outperform as the current market hype over the “flight to junk” carry trade that’s groping for yield subsides and theoverall market retreats – our Fund tends to do better when the overall market is tepid and lacklustre. For instance, in 2016, MSCI and STIwere +2.5% and -0.1% respectively, while the Fund is up 14.3%.


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http://www.smu.edu.sg/sites/default/files/smu/news

_room/smu_in_the_news/2010/sources/BT_20101230_

1.pdf

http://www.smu.edu.sg/sites/default/files/smu/news_

room/smu_in_the_news/2010/sources/LHZB_20100809

_2.pdf


AppendixSharing Insights In Media

http://www.smu.edu.sg/sites/default/files/smu/news_room/smu_in_the_news/2010/sources/BT_20101230_1.pdf

http://www.smu.edu.sg/sites/default/files/smu/news_room/smu_in_the_news/2010/sources/LHZB_20100809_2.pdf

Page 66

http://www.smu.edu.sg/sites/default/files/smu/news_

room/smu_in_the_news/2013/sources/apr8/today_2013

0408_1.pdf

http://www.smu.edu.sg/sites/default/files/smu/news

_room/smu_in_the_news/2013/sources/apr1/st_20130

401_2.pdf


AppendixSharing Insights In Media

http://www.smu.edu.sg/sites/default/files/smu/news_room/smu_in_the_news/2013/sources/apr8/today_20130408_1.pdf

http://www.smu.edu.sg/sites/default/files/smu/news_room/smu_in_the_news/2013/sources/apr1/st_20130401_2.pdf

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Fund SubscriptionProtecting & Growing Your Wealth With Asia’s Hidden Champions

67

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Minimum additional investment: As indicated above and in multiples of USD $100

Minimum redemption request: USD $ 25,000 in multiples of USD $100

Minimum holdings from partial redemptions: Not to fall below USD $ 25,000

FEES HIDDEN CHAMPIONS FUND

Fund Class Series A Series B Series C

Subscription Charge Nil Nil Nil

Management Fee2.0% Of AUM Per Year



(All Inclusive)Performance Fee (With High Watermark)

20% 16% 12%

Early Exit Charges10% within 1st year5% within 2nd year

Minimum Investment USD $100,000 USD $5,000,000 USD $20,000,000

Subsequent Investment USD $25,000 USD $25,000 USD $100,000

NAV Calculation Last Trading Day, Weekly

Subscription Period Weekly on 1st Dealing Day

Redemption PeriodWeekly on 1st Dealing Day (20 Business Day’s Notice)


Page 69

① SUBSCRIPTION APPLICATIONNotification of application status within 3 business days upon submission of documents.

② FUNDS TRANSFERNotification of sighting of funds within 2-4 business days upon bank funds transfer.

③ CONFIRMATIONConfirmation of subscription into Hidden Champions Fund within 10 business days.


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1) Subscription Application Form (Exhibit A).

2) Risk-Profile Questionnaire.

3) Original Utility Bill or Mobile Phone Bill issued to residential addressissued within the last 3 months.

4) Current Valid Passport, Identity Card or Driver’s License.

*After submitting info to [email protected], you will be notified by our fund administrator (Trident Trust) on the application status within 3 business days.

① SUBSCRIPTION APPLICATION


mailto:[email protected]

Page 71

Methods Of Transfer:

1. Bank Walk-In

2. Online Funds Transfer

*Further instruction for bank transfer will be given upon confirmation of application. Within 2-4 business days upon bank funds transfer, you will be notified when funds are sighted.

② FUNDS TRANSFER


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For Online Transfers:

• Ensure overseas transfer limit meetsinvestment amount.

• Add Hidden Champions Fund as a newrecipient.

For Bank Walk-Ins:

• Inform the bank staff that you would liketo Transfer Funds to Overseas Account.

• Fill in the bank funds transfer form withthe following details.

NAME DETAILS

Transfer Currency USD – US Dollar

Transfer AmountUSD x,xxx,xxx(minimum USD $100,000)

Beneficiary / Recipient Name

HIDDEN CHAMPIONS FUND

Beneficiary / Recipient Account Number

010011209100

Beneficiary / Recipient Address

5th Floor, Barkly WharfLe Caudan WaterfrontPort Louis, Mauritius

Beneficiary / Recipient Bank

Standard Chartered Bank (Mauritius) Limited

Swift Code SCBLMUMU

Beneficiary / Recipient Bank Country

Mauritius

Payment Detail/ Instructions for Recipient

For the Account of [# Name] [# Account Number] [# Purpose]

Bank Charges Borne by the remitting party

EXAMPLE:Payment Detail / Instructionsfor Recipient

For the Account of Mr. Michael Tan Li Jun (189-65432-1)Subscription to Subscriber Shares


Page 73

CONGRATULATIONS!

WELCOME TO THE CLUB OF THE HIDDEN CHAMPIONS.

Stay updated with:

1. Weekly NAV reporting from Fund Administrator, Trident Trust.

2. Follow our monthly thoughts, interesting reads and findings at our blog on www.hiddenchampionsfund.com.

3. Subscribe to our quarterly newsletter and fund commentary.

*Confirm of Fund subscription within 10 Business Days upon funds transfer.

③ CONFIRMATION


http://www.hiddenchampionsfund.com/

Page 74

1) Subscription Application Form (Exhibit A).

2) Risk-Profile Questionnaire.

3) Bank Transfer Form

FORMS FILLING WALK-THROUGH


Page 75


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1. TERMS & CONDITIONS OF SUBSCRIPTION

Fund manager’s ability to accept, reject & delay client’s application.

2. COVENANTS

Fund manager’s ability to close fund and return investments to client.

Subscriber’s rights to redeem investments.

Fund manager’s payment for services rendered. (Stated in presentation)

3. REPRESENTATIONS AND WARRANTIES

Fund manager’s ability to make decisions for the fund’s purchase to perform stated duties.

Subscriber’s acknowledgement of investment risk.

Subscriber’s acknowledgement of accuracy of documents submitted.

Subscriber’s acknowledgement that funds are from legitimate sources.

Subscriber’s acknowledgement that if withdrawn, funds will be deposited to the same account it was subscribed with.


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3. REPRESENTATIONS AND WARRANTIES

Subscriber is not a US citizen. (Different form required)

Subscriber’s acknowledgement of adherence to respective laws of the land including taxes.

4. CHARGES

Subscriber agreement fees paid for services rendered as per PPM.

5. INDEMNIFICATION

Subscriber agreement to hold harmless the fund due to subscriber’s failure to fulfil terms or conditions stated here.

6. MISCELLANEOUS

Subscriber agreement to furnish such additional information at the request of Fund or Administrator


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DisclaimerConfidential: This contents of the presentation, and all accompanying material (‘the Presentation’), by 8I Holdings (‘8IH’) or any of its subsidiaries (jointly referred to as ‘8I’), whether related to the Hidden Champions Fund or otherwise, constitute confidential and proprietary material, and may not be reproduced or further distributed in part or full to any other person without the written permission of 8I or its licensed partner, IIFL Private Wealth ( Mauritius) Ltd (‘IIFL’). This presentation is the property of 8I and must be returned to 8I upon request.

For Discussion Only: This Presentation and the Intention of Interest Form are for discussion purposes only and do not constitute an offer, recommendation or solicitation to buy or sell any securities, futures or options. Offers to invest in the Hidden Champions Fund or any other 8I investments are made only by the PPM of 8I and the relevant supplements (the “Offering Documents”). Investors should carefully review the Offering Documents before investing.

No Advice: The presentation is provided for assistance only and is not intended to be used for taking investment decisions or otherwise. The trainers, analysts and associates specifically disclaim any responsibility for any liability, loss, or risk, professional or otherwise, which isincurred as a consequence, directly or indirectly, of the use and application of any of the contents of the report.

The presentation is not investment, legal, tax, or accounting advice. Prospective investors should also inform themselves, and should take appropriate advice, on the legal requirements and as to the possible tax consequences, foreign exchange transactions or exchange control requirements that may encounter under the laws of the countries of their citizenship, residence or domicile and that may be relevant to the subscription, purchase, holding, exchange, redemption or disposal of any investments related to 8I or IIFL .

Past Performance: Past Performance is not an indicator/guarantee of future returns.

Risks: An investment in 8I and/or IIFL’s products would be speculative and is inherently subject to significant market risk. There is neither any assurance that it would generate any profits nor any guarantee of the capital in any respect and the investor could lose all or substantial portion of their investment. Investors should carefully consider the risk factors in the Offer Documents before making any investment.

Distributor / Advisor Only: Investments in the Hidden Champions Fund are not being offered directly by 8I or the IIFL Group (India). They are merely being distributed by offshore subsidiaries of the IIFL Group. They may also be advised by the offshore / domestic subsidiaries of the IIFL Group but the advice is in the nature of non-binding and non-exclusive advice.

Limit on Liability: Whilst every care has been taken in preparing the presentation, 8I, IIFL, and their affiliates and agents to the fullest extent permitted by applicable law disclaim any liability or responsibility for any error or omission or inaccuracy or mistake of any nature or any consequences of the use of the material/ information displayed in the Presentation. Notwithstanding the aforesaid, nothing set out above shall exclude liability for any undertaking, representation, warranty or other assurance made fraudulently.

Non-Registered Offering: Neither any 8I related investments, Share Classes of EIFF nor EIFF nor the investment manager IIFL PRIVATE WEALTH (MAURITIUS) LTD. nor the participating shares of EIFF shall be registered in any jurisdiction other than Republic of Mauritius. EIFF is registered as an expert Fund in the Republic of Mauritius. Hence the investor shall be required to ensure that his investment is not in contravention of the regulations of his jurisdiction and also that such an investment does not trigger any registration obligation on EIFF or its investment manager IIFL PRIVATE WEALTH (MAURITIUS) LTD. or its Participating Shares

Not An Offer: The Presentation and its accompanying documents are not an offer to invest . Please read the offer document carefully before investing. The 8I related investments are being offered on a private placement basis only and are available for investment to sophisticated investors only. It is the responsibility of any person in possession of this document to inform themselves of, and to observe, all applicable laws and regulations of relevant jurisdictions with respect to this investment.

Information Subject to Change: The information given in this document is not exhaustive and is subject to change without notice. In the terms of all the above, the Investors are and shall be solely responsible for the consequence of their own investment decisions.

Investment Advisor: Offers non-binding advisory services to the Investment Manager and 8I. The final investment decision will be taken independently by the investment manager and the portfolio constructed may or may not be as per the advice given by Investment Advisor.

Discretionary Mandate: Please note that the investor will not have discretion to purchase/sell the underlying investments.

U.S. Private Placement: The offer and sale of Participating Shares have not been, nor will they be, registered under the U.S. Securities Act of 1933, as amended (the “1933 Act”), or registered or qualified under the securities laws of any state or other political subdivision of the United States. Also 8I and IIFL PRIVATE WEALTH (MAURITIUS) LTD. is not registered under the US Investment Company Act 1940 As amended. Except as specified in the private placement memorandum, the Participating Shares or any investment instruments related to 8I or the Hidden Champions Fund may not be offered, sold, transferred, or delivered, directly or indirectly, in United States or to, or for the account or benefit of, any U.S. Person. IIFL Capital Inc and its personnel including the members of their households hold positions in some of securities described in this presentation. IIFL Capital Inc is regulated by the Financial Industry Regulatory Authority (FINRA). IIFL Capital Inc does not employ any research analysts and uses research material furnished to it by its affiliates. Any such research material is reviewed by IIFL Capital Inc before it is distributed to IIFL’s customers and other persons, but IIFL Capital Inc has not independently investigated the companies, industries, markets, or other matters that are the subject of such research. This Presentation/document by IIFL Capital Incshould not be construed as an offer of any securities or other products to, nor a recommendation of any investment or trading strategy for, any customer or potential customer of 8I or IIFL Capital Inc. Such offers and/or recommendations are made by 8I and IIFL Capital Inconly to persons who have been accepted as customers of 8I or IIFL Capital Inc, based on 8I’s or IIFL Capital Inc’s evaluation of the suitability of such securities or trading strategies in relation to the specific needs and circumstances of each customer. The trading strategies described in the Presentation involve various kinds of risk, including, without limitation, market risk, counterparty risk, settlement risk, and risk related to the particular securities or products used. There can be no assurance that these strategies will produce favorable results. Past performance is not a guarantee of future performance.

Disclosure for DIFC Clients: This marketing material is distributed by 8I and IIFL Private Wealth Management (Dubai) Ltd and directed at professional clients, not Retail clients. IIFL Private Wealth Management (Dubai) Limited is a company limited by shares registered in the Dubai International Financial Centre with registered number 0973. IIFL Private Wealth Management (Dubai) Limited is authorised and regulated by the Dubai Financial Services Authority. The financial products or financial services to which this marketing material relates to will only be made available to a professional client who satisfies the criteria to be a “Professional client" under Dubai Financial Services Authority (DFSA) regulations.

Disclosure for UK Residents : Where the Presentation is used or is capable of having an effect in the United Kingdom, it is approved by IIFL Wealth (UK) Ltd (IIFL), which is authorised and regulated by the Financial Services Authority (FSA). The governing law is the law prevailingin England and Wales. The investments or investment services detailed are only directed to Eligible Counterparties and Professional Clients as defined by the FSA. Other persons should not rely on this document. IIFL has proper systems in place to prevent receipt of thiscommunication by persons other than Eligible Counterparties and Professional Clients.

Disclosure for Hong Kong Clients: The contents of the Presentation have neither been reviewed or endorsed by any regulatory authority in Hong Kong nor has the document been registered with the registrar of companies in Hong Kong. This product has not been authorized bythe Securities and Futures Commission in Hong Kong accordingly this product can only be offered or sold in Hong Kong to persons who are "professional investors" within the meaning of the Securities and Futures Ordinance of Hong Kong.

Disclosure For Singapore Clients: The contents of the Presentation have neither been reviewed or endorsed by any regulatory authority in Singapore nor has the document been registered with the registrar of companies in Singapore. This product has not been authorized bythe Monetary Authority of Singapore in Singapore accordingly this product can only be offered or sold in Singapore to persons who are “accredited/institutional investors" within the meaning of the Securities and Futures Act of Singapore

Disclosure For the People’s Republic of China Clients: The contents of the Presentation have neither been reviewed or endorsed by any regulatory authority in China nor has the document been registered with the registrar of companies in China. This product has not beenauthorized in China and accordingly this product can only be offered or sold in China to persons who are the equivalent of “accredited/institutional investors" within the meaning of the Securities and Futures Act of Singapore.