Vietnam Property Fund Net Asset Value and October 2012 Update (7558Q)
2012年11月9日 - 6:27PM
RNSを含む英国規制内ニュース (英語)
TIDMVPF
RNS Number : 7558Q
Vietnam Property Fund
09 November 2012
Vietnam Property Fund Limited
"VPF" or "the Company"
NAV and October 2012 Update
Fund NAV Performance
The NAV per share closed at US$0.738 on 31 October 2012.
Investment Climate
The October Consumer Price Index ("CPI") came in at 0.85%
month-on-month ("m/m"), much lower than the 2.2% m/m in September
thanks to lower price increases in Healthcare and Education, but
higher than the 0.36% m/m in October last year. As a result, CPI
year-on-year ("y/y") rose from 6.5% in September to 7.0% in
October. Recognising that sudden and large healthcare fee increases
will strongly impact headline inflation and hit consumers hard, the
Government has suggested to provinces not to adjust fees too fast.
As a result Healthcare, which accounts for 5.6% of the CPI basket,
slowed down sharply from +17% m/m in September to +5.9% m/m in
October. Excluding Healthcare and Education, CPI increased 0.58%
m/m in October which is lower than the 0.88% in September.
Meanwhile Food and Foodstuffs increased modestly by 0.3%.
At the National Assembly meeting which took place in
mid-October, the Government set the following goals for 2013:
-- GDP growth at 5.5% (slightly higher than last year's goal of 5.0-5.2%)
-- Fiscal deficit of 4.8% of GDP (same as last year's goal)
-- Inflation of 7-8% (similar to the estimated year-end figure for 2012)
-- Trade deficit of below 8% of total export
Given the expected 5.0% GDP growth this year, we believe that
the goal of 5.5% GDP growth for 2013, which is lower than the 5.9%
forecasted by International Monetary Fund, is achievable given that
the short and long term goals appear reasonably balanced. At the
National Assembly meeting, the Government also confirmed that it
will stick with its original fiscal deficit target of 4.8% for
2012. However, considering the fiscal deficit after the ten months
in the current year to date and the weak business conditions at
present, it appears unlikely that the Government will meet its 2012
fiscal deficit target. Set against this background, the Government
decided not to increase capital expenditures for development in
order to leave some room for minimum wage increases and social
benefits. We believe this to be a sensible decision as the fiscal
multiplier effect for minimum wages is much higher than for public
investment given the low efficiency of the state owned enterprises.
It looks, however, unrealistic to simultaneously achieve GDP growth
and fiscal deficit goals in 2013 unless the Government accelerates
the economic restructuring to get out of the liquidity trap and
improve the confidence of the private sector to encourage
investments. Given the weak aggregate demand, we believe Vietnam
should have targeted 4-5% inflation in 2013 instead of 7-8% in
order to provide more room for monetary policies. The trade deficit
goal for 2013 is US$10 billion assuming that export growth is 10%
and import growth is 16%. This looks very much achievable as we
expect export growth in 2013 to continue outpacing import growth,
albeit by a smaller margin than in 2012. We are waiting for the
detailed proposal provided by the State Bank of Vietnam to the
National Assembly on 15 November on how to tackle bad debts.
Investment Update
Our view on the property market in Vietnam is that it is
reaching its lowest point, probably since the Asia crisis back in
1997/98, with continued difficulties in sales, rentals and company
governance. Further investigations of senior company officials at
several listed real estate companies have led to poor performance
in share prices although we believe that this will be short lived.
Sales of residential units, particularly apartments for sale,
remain virtually non-existent as buyers either cannot afford to buy
or to wait for further reductions in prices. Many developers can no
longer afford to continue construction and, as a result, the
skyline of Ho Chi Minh City is full of stationary cranes. It is
unlikely that many developers and land owners will be saved by a
recovery in the real estate market. Distress is closer than ever
here in Vietnam and it is therefore now the time to focus on
opportunities and keep cash ready for purchases. We have finally
seen some genuinely good value opportunities in the residential for
sale sector to purchase cheap land and develop affordable town
house and villa projects and we are confident that our patience
will soon pay off. The market may be tough for most but our strong
relationships with the best developers in Vietnam and healthy cash
position stand us in a good position and will be beneficial going
forward.
With our existing assets the story is not quite so positive but
we believe we are not in as poor a position as most. In fact, our
careful downside planning in the past, which has in the past been
met with disapproval by other Vietnamese investors in this sector,
are we believe helping to minimise distress. With our SSR project
we have received a very good quote from a design and build
contractor that will contribute to a reduction in the construction
costs substantially, thereby making the project more affordable and
taking advantage of economies of scale. Furthermore, we have been
able to reduce costs to our JV company to a virtual minimum and we
therefore don't need to launch sales whilst the apartment for sale
market is weak. This will help to set us apart from our rivals who
are being strongly damaged by interest accruals. We will, however,
be ready to launch during the inevitable market recovery. It is
tough here in Vietnam at the moment and we feel quite lonely on
this emptying property investment playing field. It almost feels
Darwinian in so far as natural selection removes more and more
developers and investors from the game. Only the fittest will
survive and at VPF we are very much still here.
For further information including the full October 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
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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