Vietnam Property Fund NAV and December 2012 Update (3764V)
11 Gennaio 2013 - 1:10PM
UK Regulatory
TIDMVPF
RNS Number : 3764V
Vietnam Property Fund
11 January 2013
Vietnam Property Fund Limited
"VPF" or "the Company"
NAV and December 2012 Update
Fund NAV Performance
The NAV per share closed at US$0.74 on 31 December 2012.
Investment Climate
Vietnam posted Q4 GDP growth of +5.4%, compared to +5.1% in Q3
and +4.8% in Q2. The full-year expansion was +5.0%, below the 2012
revised target of +5.2% and the 2011 growth of +5.9%. The Service
sector was the biggest contributor to growth with +6.4%, slightly
slower than 7.0% achieved in 2011. The Construction and Industrial
sectors slowed faster, as expected, from +5.5% y/y in 2011 to +4.5%
in 2012. Agriculture, accounting for 22% of GDP, slowed, too, from
4% in 2011 to 2.7% in 2012, mainly due to the limited access to
credit and severe fishery diseases. In 2013, Vietnam will aim to
achieve GDP growth of 5.5% which should be realistic given that (1)
exports are expected to remain robust and consumption imports low,
(2) credit expansion, which has been virtually frozen in the last
18 months, should gradually increase as the Government starts
tackling Non Performing Loans and (3) confidence has started
improving.
December CPI came in at 0.27% m/m or 6.8% y/y, which was lower
than 11.8% y/y in 2010 and 18.1% y/y in 2011. Excluding the
adjustments made to both the education and healthcare items, which
were policy driven and not monetary related, the CPI increased by
only 3.4% in 2012, which underlines that demand is not a concern
for inflation. We forecast that CPI y/y will technically increase
from 6.8% at the end of 2012 to 8.5-9% in Q2 2013, before slowing
down to around 7-8% by end of 2013. Equally positive news come from
the trade side, which reversed a deficit of US$10 billion in 2011
to a small surplus US$0.3 billion in 2012. This was thanks to
strong export growth and weak consumption import demand. Vietnam's
recovery is further supported by a stabilizing local currency,
which benefited from the Government's successful management of the
gold and forex market, reflected by an increase of FX reserves from
US$8 billion to around US$21 billion in 2012 and a stable USD/VND
exchange rate since March 2011. We expect FX reserves to increase
in 2013 by another US$6 billion. All this points to Vietnam being
well on its way to achieve its first stepe. to restore macro
stability.
The Government has discussed and proposed solutions to resolve
bad debts and stimulate the economy. The anticipated package
comprises three elements: (1) taxes: reduce VAT by 30% for
investments in social housing and small size apartments with less
than VND15 million/m(2) , reduce CIT??? and provide special
treatment for land-use-fees, (2) Asset Management Company (AMC) and
bad debts: Provide VND20-40 trillion cheap credit for buyers of
social housing projects, allocate VND100-150 trillion for AMC and
VND36 trillion / year for three years from the budget to resolve
Government related guaranteed debt and (3) relaxation of the rules
to allow foreigners buying property, the possibility of opening up
foreign room for some selected banks and allowing non-voting shares
to be traded. These are all good measures with positive impacts on
final consumers, but we will have to await the execution of the
program.
Investment Update
This month has been the end of a dismal year for real estate in
Vietnam. Many developers, land owners and property companies have
seen the value of their assets slashed, while rents and sale prices
continued their downward trend. Nonetheless there is no shortage of
cranes and construction projects underway and it is really
surprising how projects manage to tick along no matter how bad the
economic conditions. It is true that a number of projects have been
stalled for some time, in some cases over 12 months, but it seems
that the new year has brought more activity. It is likely that Tet,
the Lunar New Year holiday which will be celebrated in February
this year, will be the catalyst for the resumption of more
projects. There has been a lot of discussion recently that the
Government will be implementing policies to assist the real estate
sector not to only survive but recover in 2013. It is not totally
clear at this time what these policies and stimulus packages might
be but we can expect subsidized interest rates and even reform in
ownership for overseas Vietnamese (Viet Kieu) and foreigners who
wish to buy apartments. Such policies, if implemented, may provide
a fillip to the stock market in the new year so we watch this space
with interest.
Most participants in the real estate sector will be pleased to
see the back of the old year and hope for better news for 2013.
Whilst our own house view is not altogether pessimistic we are also
realistic about the slim chances for a sustained recovery in the
real estate market. 2013 will see the bottom of the market in terms
of residential sales, although the excess inventory of existing
stock will take some time to clear, thereby delaying a recovery.
This is not bad news for VPF as we have cash to spend and are now
concentrating our strategy on distressed assets. 2013 will be a
good year for selective acquistion and preparing our investments
for the inevitable upswing.
At the end of the month VPF repurchased shares totaling 2.37m
which will hopefully have removed the selling pressure for the time
being. The board of directors remains committed to a buyback
program in order to manage the discount to NAV.
For further information including the full December Monthly
Report please visit - www.vietnampropertyfund.com or contact:
Enquiries:
Rachel Hill
Dragon Capital Markets (Europe) Limited | Tel: +44 79 71 214 852
Rick Thompson,Tom Sheldon,
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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