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VALUE PARTNERS

Value Partners Limited employs a bottom-up approach to stock selection, which is research intensive, risk averse and contrarian. As true value investors, our investment managers consider themselves business analysts first and foremost, as we view each investment as purchase of a business rather than stock. This approach requires our investment team to gain in-depth firsthand knowledge of the companies they invest in through site visits, face-to-face meetings with management, and engagement with customers, suppliers and other stakeholders.

In the past year, our investment team made around 2,500 company visits. The central tenet of value investing is capital preservation. We aim to minimise investment risk by avoiding market fads and making investments with a high margin of safety This means identifying companies with quality earnings and management trading at bargain prices. This approach has helped avoid the damage done by the collapse of the dot-com bubble in 1999.

Successful practitioners of value investing often requires practitioners to have the courage of their convictions to go against the flow. At Value Partners Limited, we encourage fund managers to be contrarian and seek out value-driven investment opportunities among little known and out-of-favour stocks and investment sectors.

Value Partners Limited has established one of the most successful investment management teams in the Greater China region under the leadership of Cheah Cheng Hye, the company's co-founder, Chairman and Chief Investment Officer.

Most of the handpicked investment professionals, who form the core of this team, have been working together day-to-day for an average of up to ten years at Value Partners Group in a highly collaborative and open environment. In line with the company's policy of training fund managers from first principles, many of them have risen through the ranks to assume leadership roles today.
This high level of stability in personnel is a rare commodity in the world of fund management and one which we believe contributes greatly to achieving consistent excellence in investment management.

All our investment team members contribute their ideas to all funds ensuring that each fund benefits from the firm's investment talent. However, each individual fund has a "caretaker," known as portfolio supervisor, who is typically a senior investment team member. The portfolio supervisor is responsible for looking after the fund's well-being, thus ensuring that every fund receives individual attention despite the emphasis on team approach.

The investment team is headed by the CIO, who is supported by the senior fund managers. The CIO and senior fund managers each has the assistance of fund managers and analysts working under them. The structure is based on the forming of small units.

The actual process of research and investment is implemented at the small unit level. Each unit leader has been delegated with decision-making authority to conduct research and investment activities, and operates with a degree of autonomy. The aim is to ensure that as the overall fund size increases, the investment process is still executed through a boutique approach, by units of fund managers who retain a flexible and entrepreneurial approach. Our slogan for our investment team is "small enough to be effective, big enough to be strong."

Value Partners Limited adopts a generalist-specialist approach to the allocation of research responsibilities. This means our investment managers and analysts do not cover specific sectors but instead function as experts on individual companies.

A strong emphasis is placed on proprietary research at Value Partners Limited, with the majority of executed investment ideas generated in-house.

To ensure the risks being taken in the management of portfolios is consistent with stated investment objectives, Value Partners Limited has constituted a Risk Management Committee which ensures risk management is properly performed at three levels: