NAV and January 2012 Update (1101X)
09 Février 2012 - 10:34AM
UK Regulatory
TIDMVPF
RNS Number : 1101X
Vietnam Property Fund
09 February 2012
Vietnam Property Fund Limited
"VPF" or "the Company"
NAV and January 2012 Update
Fund NAV Performance
The NAV per share closed at US$0.735 on 31 January 2012.
Investment Climate
January consumer price index ("CPI") came in at +1%
month-on-month ("m/m") which was higher than last month. This was
mainly due to the Vietnamese New Year ("Tet") which was much
earlier this year than usual. Compared to last year this was much
lower when m/m inflation reached 1.75% in January and 2.5% in
February. CPI year-on-year ("y/y") continued to drop and recorded
17.3% in January, down from 18.1% last month. Prices were generally
more stable during this Tet with both food and non-food m/m
inflation decelerating in January compared to last year: Food
+1.02% this year vs. 2.5% last year and non-food +1.0% this year
vs. 1.22% last year. Given the current weak demand and monetary and
fiscal policies, we expect y/y inflation to further reduce to 11.8%
in April and to single digit in May or June.
The General Statistics Office ("GSO") estimated exports in Jan
at US$6.5bn, or -11.1% y/y, and imports at US$6.6bn, or -18.7% y/y,
implying a much reduced trade deficit compared to last year when
trade deficit reached US$880m. As a result, our 12 month rolling
core trade deficit (ex oil and gold) came down to US$8.5bn, the
lowest in two years. Core export growth 3m/3m decelerated fast from
29.2% in December to 15.1% while core import growth 3m/3m dropped
from 15.8% in December to only 5.8%. We believe that this was
mainly due to Tet which this year was much earlier than in previous
years and we therefore expect export growth to bounce back in the
coming months.
In 4Q 2011, the market was worried that USD loan redemptions and
the traditionally high demand for USD before Tet would put pressure
on the VND to depreciate. But instead the VND became stronger since
November thanks to a decelerating inflation, falling trade deficit
and rich USD inflows. There are many factors that can impact the
currency: inflation, trade deficit, gold flow and sentiment. The
first two are on a downward trajectory according to our view. The
latter two are hard to predict but we believe that sentiment on
gold and USD is much less bullish compared to last year. We are
therefore optimistic and believe that depreciation of the VND in
2012, if any, will be very modest in the range of 2-3%.
As expected, interbank rates have come down thanks to the
seasonal impact of Tet which lowered payment demand: O/N was down
from 14.5% to 13% and 2 week down from 16% to 15%. We expect the
Government to continue working on the restructuring of the banking
system to enhance their efficiency and to lower lending rates in 2Q
2012. We have seen recently some signs for further banking sector
consolidation and signs are positive that the Government continuous
pursuing the banking sector reform vigorously.
Investment Update
The traditionally quiet month of January between the calendar
New Year and the Lunar New Year holiday was made shorter with the
Tet holiday coming early and writing off a week. However, the
performance of the VN Index during January was very encouraging
with an increase of 10.7% making it the best performing stock
market in Asia behind only Hong Kong. Consequently, the listed
portion of our portfolio experienced some much needed performance
increasing by 8.1% although total returns were slightly more muted.
The macroeconomic picture continued to improve with inflation
dropping to 17.3%, an almost continual month on month drop since
August last year with the exception of December. The inflation
target of under 10% by the year end is looking more and more
realistic with interest rates likely to fall as a consequence. We
believe this is the key to unlocking the sluggish real estate
market.
We were also pleased to see higher return from VPF's investment
in the PDD Office building in 2011, despite an extremely difficult
office market across Vietnam. The PDD company reported a rise of
7.4% in net profit after tax, depreciation and amortization
("NPAT") during 2011, which is also 39% higher than the company's
budget. We have expressed concerns in the past about the lack of
efficiency in the running of this building and are glad to note
that this is improving. PDD's 4.6% reduction in revenue was
effectively offset by 16% reduction in operating costs. Also, in
2011, the company managed to obtain approval to amend the
depreciation schedule of its fix assets which significantly reduces
the annual depreciation by 41%. The higher NPAT made VPF's net
investment yield rise to 15% (as opposed to 14% in 2010) for this
specific holding.
For further information including the full January Monthly
Report please visit - www.vietnampropertyfund.com or contact:
Enquiries:
Rachel Hill
Dragon Capital Markets (Europe) Limited | Tel: +44 79 71 214 852
Freddy Crossley
Seymour Pierce Limited (Nominated Adviser and Broker) | Tel: +44
20 7107 8000
This information is provided by RNS
The company news service from the London Stock Exchange
END
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