Vietnam Property Fund Net Asset Value and November 2012 Update (4589T)
13 Décembre 2012 - 11:29AM
UK Regulatory
TIDMVPF
RNS Number : 4589T
Vietnam Property Fund
13 December 2012
Vietnam Property Fund Limited
"VPF" or "the Company"
NAV and November 2012 Update
Fund NAV Performance
The NAV per share closed at US$0.73 on 30 November 2012.
Investment Climate
The HSBC Vietnam Manufacturing Purchasing Managers' Index
("PMI") increased to 50.5 in November, up from 48.7 in October.
Although the PMI only increased marginally, the latest figure was
the highest since September 2011. The improvement in operating
conditions was reflected by a return to growth in both production
levels and new orders during November. The production index
continued to increase to 51.3, a steady improvement from the low of
41 in July. New orders increased despite a drop in new export
orders, which means that the demand is domestic-led. Another
positive indicator is that employment showed the fastest monthly
increase in 20 months, which means that more firms anticipate a
recovery soon. Imports of vehicles and vehicle parts improved also
and motorcycle imports showed improvement too, from -66% quarter on
quarter ("3m/3m") in September to -45% 3m/3m in November.
Automobile imports growth has stopped falling in the period since
July. However, the backlog of work index is still indicating low
capacity utilisation while the output price index still shows
contraction. We will need to see whether the PMI will continue
improving in the months ahead before we can safely call a
sustainable recovery.
In a recent meeting, the Prime Minister ("PM") stated that the
Government will accelerate the restructuring of state owned
enterprises & banks and that it will aim to contain inflation
below 6% in 2013, which is lower than the target of 78% approved by
the National Assembly. This is without doubt an encouraging signal
from the PM as it implies supportive Government policies. If this
target can be attained the Government will have more room to
maneuver with its monetary policy, especially as the forex and gold
markets are now stable. In our opinion, a 6% target, however, is
tough but feasible given the current weak aggregate demand. To
achieve this target the Government will need to improve domestic
food supply and avoid sudden shocks to healthcare and education
prices. Lending rates are still high at between 14-16% while
interbank rates are below 4-5%. We believe this implies that
lending rates could go down much further as and when the banking
system liquidity is solved thoroughly and inflation is reduced
further. However, room for further fiscal stimulus is small given
the low efficiency of the public sector and the current high level
of budget deficit.
The State Bank of Vietnam (SBV) has bought US$8 billion
year-to-date ("YTD") to increase forex reserves, implying that
current forex reserves should be above US$21 billion. Next year we
expect exports to continue to outpace imports and the balance of
payments to show again a surplus of more than US$6 billion. We also
forecast CPI year on year ("y/y") will accelerate slowly to 9-10%
until Q3 2013 given its low base in 2012, but then it will go down
to below 8% y/y again in Q4. We therefore expect the Vietnamese
Dong (VND) to remain stable in 2013.
Investment Update
As we move towards the end of a very challenging year it is
worth highlighting that distressed opportunities are now available
in the real estate market in Vietnam for the first time since the
inception of the fund. The market is still very weak from an end
user point of view, as indicated, by example, through flat or
negative office rental growth and residential sales remaining very
slow. We do, however, get the feeling that there is quite a lot of
pent up demand waiting for the market to bottom out. The number of
distressed, or at least reasonably priced, projects increases on a
weekly basis and whilst the majority of these are essentially
uninvestable for foreign investors such as ourselves (due to issues
relating to ownership/title, land compensation, debt/banking or
local partners) there are good deals to be had. The banks
themselves have even started to contact us to try to off-load some
of the projects they hold as collateral over non-performing loans.
Going back to the question of demand, anecdotal evidence suggests
that there is a potential wave of investors and owner occupiers who
would consider buying villas, townhouses or apartments when there
is a general consensus that the market has bottomed out. We expect
that this may happen in 2013. There is not going be a wholesale
recovery in every subsector although we feel the polarised nature
of the residential market will favor well located luxury villas -
especially with river frontage - or affordable townhouse units with
land and freehold title. The hugely oversupplied mid to high end
apartment subsector will continue to underperform for some time. To
succeed the focus must be on Vietnamese buyers as the Vietnamese
still want to own land, not apartments. Land prices are now low
enough that we feel comfortable to be able to deliver good quality
units at prices that salaried professionals will be able to
afford.
We have managed to source a number of interesting projects and
the background work we have put in this year is beginning to bear
fruit. It has been a very frustrating 2012 for the VPF team as
struggling sellers have continued to maintain unrealistic prices
for what we consider distressed products. We have therefore spent
the year concentrating on building and maintaining relationships so
that we can push the button quickly on the best deals when they
come forward. We have found it hard to find good development
partners with a solid track record of delivery and sales but we are
confident that we now have a small but strong stable of excellent
partners to call on when the right projects come forward. It is our
conclusion that not having an 'in house' development team here at
Dragon Capital has been the right move as we can select a
development partner who we think will be most appropriate for each
scheme as opposed to picking our projects based on our expertise.
We anticipate that in the run up to Christmas this period will be a
busy period for VPF's Investment Committee as we carefully select
the best projects and benefit from the empty playing field we are
currently standing on. We believe our strategy of focusing on
distressed assets is proving to be the right one.
For further information including the full November Monthly
Report please visit - www.vietnampropertyfund.com or contact:
Enquiries:
Rachel Hill
Dragon Capital Markets (Europe) Limited | Tel: +44 79 71 214 852
Tom Sheldon, Richard Thompson
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
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