VINALAND LIMITED 
By VinaLand Limited AIM: VNL
Investment Manager 's monthly update 31 December 2013
Fund backgroundVinaLand Limited (VNL) is a closed-end fund trading on the AIM Market of the London Stock Exchange.
ISIN: KYG936361016
Bloomberg: VNL LN Reuters: VNL.L
Investment objectiveVNL targets medium to long term capital gains with some recurring income through investment in
the following real estate sectors: office; residential; retail; town- ship (large scale); and hospitality and leisure.
Click here for VNL's website.
David Blackhall
VNL is managed by VinaCapital Investment Management Ltd ("VCIM" or the "Investment Manager"), a Cayman Islands company. VCIM was established in 2008 and manages three listed and several unlisted investment companies.
More information about VCIM is
available here.
Manager's comment
VNL's unaudited net asset value (NAV) was USD439.0 million or USD0.92 per share at its close of business on 31 December 2013. This represents a decline of USD4.7 million in total NAV; however, there is no change from a net asset value per share of USD0.92 from its close of business on 30 September 2013. VNL's share price increased 6.8 percent to USD0.47 as at 31 December 2013, from a closing price of USD0.44 as at 30 November
2013. As a result, the company's share price to NAV discount is currently 49.2 percent compared to 51.8 percent at the end of November.
On 17 December 2013, VNL announced that its wholly owned subsidiary VinaLand ZDP Ltd., as at the closing of the Placing and Offer, had received valid acceptances in respect of 15 million Zero Dividend Preference Shares ("ZDP Shares"), with a Gross Redemption Yield of 8.0 percent. The ZDP Shares have an issue price of 100 pence and a final capital
entitlement of 126.0 pence per ZDP Share. The share listing on the London Stock Exchange
was completed on 20 December 2013.
The proceeds will be utilised to assist in refinancing the Company's project level debt facilities as they mature across its development portfolio, to fund potential capital investments in its project companies (as necessary) and for general working capital purposes. This issue has increased flexibility in financing and completion of some projects, contribute additional working capital and diversify funding sources.
Fund update
On 23 December 2013, VNL announced the divestment of its stake in Prodigy Pacific Limited which owns a boutique hotel located in the Hoan Kiem District of Hanoi. The asset is an operating 102 room hotel which also includes a restaurant, fitness centre as well as other amenities and was opened in September 2009. The hotel site which is situated in the Hanoi central business district was acquired by VNL in 2007 to capitalise on the then fast growing tourism business in the capital city of Vietnam. Since the opening of the hotel, the three to four star hotel segments in Hanoi have experienced a significant increase in supply which has negatively impacted the hotel performance. The Company's 100 percent stake in the project resulted in net proceeds of USD1.7 million which is 5.5 percent (USD100,000) below net asset value. As a result of the divestment, the Company's debt from the consolidated balance sheet has been reduced by USD4.0 million and VNL's future funding commitments related to this asset have now been removed.
VNL project revaluations were undertaken for the period ending 31 December 2013 with
NAV per share** (USD): 0.92
Change (Quarter-on-quarter) 0.0% Total NAV** (USD 'm): 439.0
Share price (USD): 0.47
Market cap (USD 'm): 224.2
Premium/(discount) -49.2%
* Figures in USD. Return percentages are for the period, not annualized
** NAV and NAV per share data are calculated on a quarterly basis
Cumulative change (% change)3mth 1yr 3yr 5yr
NAV per share 0.0 -11.5 -32.4 -38.7
Share price 15.8 21.4 -52.8 -2.6
2013 2012 2011 2010 2009
Q1 -1.0 -1.7 0.7 3.0 -3.3
Q2 -9.7 -4.3 -2.2 -0.7 -9.0
Q3 -1.1 0.0 0.7 3.7 -0.8
Q4 0.0 -6.3 -12.6 -3.5 1.5
YTD -11.5 -11.9 -13.2 2.3 -11.3
Current assets 31
Divestments 15 full, 1 partial and residential unit
sales
eight projects appraised by international valuation consultants. Additionally, a further seven projects were also externally appraised as part of the semi-annual update for the interim period. A majority of these projects are located in Ho Chi Minh City and its
adjoining provinces, as well as one project located in Hanoi and four projects located in the central region. As a result, ten project valuations were adjusted downward; one remained the same, while the remaining four project valuations were adjusted upward. Overall the real estate revaluations resulted in a combined write up of approximately USD440,000.
Debt Fund level (ZDPs): 5.6% of NAV
Project level (Bank): 15.5% of NAV Shares outstanding 479,648,227
1
VinaLand Limited AIM: VNL
Investment Manager 's monthly update 31 December 2013
Macroeconomic update
According to the General Statistics Office (GSO), Vietnam's gross domestic product (GDP) growth reached
6.0 percent in the fourth quarter of 2013, bringing full year growth to 5.4 percent. Evidence of a better
growth picture was seen in HSBC's September Purchasing Managers' Index (PMI) rising to 51.5, the first time
Macroeconomic indicators2012 Dec-13 YTD
Y-o-Y
change
above a neutral point of 50.0 in five months and this trend continued throughout the final three months
of the year. This expansion in manufacturing has mostly been attributed to rising orders and employment
rates; and is considered an encouraging sign that Vietnam's economy is gradually getting back on its feet.
The country's foreign direct investment numbers posted some of the highest levels of growth in more than four years, with new commitments reaching USD21.6 billion, an increase of 54.5 percent from a year ago. The majority of new capital (approximately 77 percent) flowed into manufacturing and processing, boding well for long-term production and employment growth in these sectors.
In December, month-on-month the consumer price index (CPI) grew by 0.5 percent, equating to a
6.0 percent increase year-on-year. For the month, a 2.3 percent increase in the price of housing and
construction materials led the group, while food and foodstuff prices increased just 0.5 percent due to
continued stabilization in global food prices. By spreading out price increases in many administered-price
industries and utilities over the year, the government's stabilization policy succeeded in controlling inflation.
In December, the exchange rate rose slightly to VND21,115 per USD, representing a 1.2 percent increase from VND20,855 per USD as at 31 December 2012. The State Bank of Vietnam (SBV) has followed a crawling-peg system since 2011 which has allowed flexibility in varying the official rate to reflect market developments. Additionally, estimated foreign reserves have reached USD32.0 billion, easily covering three months of imports which satisfies the International Monetary Fund (IMF) recommendation on this issue. According to HSBC, foreign reserves could increase by USD10.0 billion over the next two years, which could further advance stability in Vietnam's currency.
Fixed income
Both the primary and secondary bond market rallied in December supported by strong demand from investors for fixed income products. On the primary market, a total of USD814.7 million worth of government and government-backed bonds were issued, an increase of 11.0 percent compared to November. Bonds issued by the State Treasury remained the most favourable and accounted for 78.0 percent or USD635.5 million of total issued volume. Notably, bond yields continued to move lower in December with two- to five-year issues falling by 10 to 25 basis points compared to their last issues in
November. It is also worth noting that in December, the Vietnam Bank for Social Policy successfully attracted interest from bond investors after failing to issue any bonds over the previous four months.
In the secondary market, total trading volume for government and government-backed bonds increased significantly to USD2.3 billion for the month of December, 2.5 times more than what exchanged hands in November. This significant increase in demand came as a result of secondary bond yields declining by 20 to
50 basis points for short to medium term bonds.
GDP growth1 5.0% 6.0% 5.4% 5.4% Inflation 6.8% 0.5% 6.0% 6.0% FDI (USDbn) 13.0 0.8 21.6 54.5% Imports (USDbn) 114.3 11.5 131.3 15.4% Exports (USDbn) 2 114.6 11.6 132.2 15.4% Trade surplus/(deficit) 0.8 0.1 0.9
Exchange rate (USD/VND) 3 20,855 21,115 1.2% 1.2% Bank deposit rate (VND) 8.0% 7.5% -50 bps
Sources: GSO, SBV, VCB | 1. Annualized rate, updated quarterly 2. Includes gold 3. (-) Denotes a devaluation in the
currency, Vietcombank ask rate
Government bond yields (%)1yr 2yr 3yr 5yr
December-13 6.41 6.93 7.39 8.31
November-13 6.70 7.50 7.90 8.65
Quarterly GDP growth (%)8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
2
Quarterly GDP growth (%)
VinaLand Limited AIM: VNL
Investment Manager 's monthly update 31 December 2013
Century 21 South Residential 15.3
Danang Beach Resort Central Residential 12.4
Pavilion Square South Mixed Use 8.5
Dai Phuoc Lotus South Township 7.2
VinaSquare South Mixed Use 6.2
Times Square Hanoi North Mixed Use 6.0
Aqua City South Township 4.5
World Trade Center Danang Central Mixed Use 4.2
Trinity Park South Residential 4.1
Green Park Estate South Mixed Use 4.1
Total 72.5
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
-
NAV %
Residential Mixed Use Township Hospitality
9 assets; 2 assets under
construction and sales
6 assets; 1 asset under
construction
6 assets; 2 assets under
construction and sales
10 assets; 7 operating assets
Project Location Type Site Area (ha)Danang Beach Resort Central Residential 260.0
Dai Phuoc Lotus South Township 200.7
My Gia Central Township 158.0
World Trade Center Danang Central Mixed Use 9.0
Total: 4 assets representing a NAV of USD122.5 millionHanoi region 8.3
Central region 26.3
Ho Chi Minh City region 65.4
Valuation breakdownAssets not yet revalued * 8.0
Assets revalued 92.0
Development statusLand banking 7.3
Planning stage 59.0
Development stage 27.8
Operating assets 5.9
All NAV and NAV per share related data is calculated on a quarterly basis
* held at cost or below cost
200.0
150.0
100.0
50.0
-
Total Investment NAV Bank Debt
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
-
NAV per share Share Price
0.92
0.47
3
VinaLand Limited AIM: VNL
Investment Manager 's monthly update 31 December 2013
Board of DirectorsVNL's Board of Directors is composed entirely of independent non- executive directors.
Member RoleMichel Casselman Non-executive Chairman (Independent) Nicholas Allen Non-executive Director (Independent) Nicholas Brooke Non-executive Director (Independent) Stanley Chou Non-executive Director (Independent) Charles Isaac Non-executive Director (Independent)
Don Lam Chief Executive Officer Brook Taylor Chief Operating Officer David Blackhall Managing Director, VNL
Anthony House Deputy Managing Director, Real estate Oai Nguyen Deputy Managing Director, Real estate Contact
David Dropsey Investor Relations/ Communications
ir@vinacapital.com
+848-3821-9930
www.vinacapital.com
Brokers Edmond de Rothschild Securities
+44 (0)20 7845 5960
funds@lcfr.co.uk
Numis Securities
+44 (0)20 7260 1327
funds@numis.com
Important Information
This document, and the material contained therein, is not intended as
an offer or solicitation for the subscription, purchase or sale of securities
in VinaCapital Vietnam Opportunity Fund Limited, VinaLand Limited or
Vietnam Infrastructure Limited (each a "Company"). Any investment in any
of the Companies must be based solely on the Admission Document of
that Company or other offering document issued from time to time by that
Company, in accordance with applicable laws.
The material in this document is not intended to provide, and should not be relied on for accounting, legal or tax advice or investment recommendations. Potential investors are advised to independently review and/or obtain independent professional advice and draw their own conclusions regarding the economic benefit and risks of investment in either of the Companies
and legal, regulatory, credit, tax and accounting aspects in relation to their particular circumstances.
The securities of the Companies have not been and will not be registered under any securities laws of the United States of America nor any of its territories or possessions or areas subject to its jurisdiction and, absent
an exemption, may not be offered for sale or sold to nationals or residents
thereof.
No undertaking, representation, warranty or other assurance, express or implied, is given by or on behalf of either of the Companies or VinaCapital Investment Management Limited or any of their respective directors, officers, partners, employees, agents or advisers or any other person as to the accuracy or completeness of the information or opinions contained in this document and no responsibility or liability is accepted by any of them for any such information or opinions or for any errors, omissions, misstatements, negligence or otherwise.
No warranty is given, in whole or in part, regarding the performance of
either of the Companies. There is no guarantee that investment objectives of
any of the three Companies will be achieved. Potential investors should be
aware that past performance may not necessarily be repeated in the future.
The price of shares and the income from them may fluctuate upwards or
downwards and cannot be guaranteed.
This document is intended for the use of the addressee and recipient only and should not be relied upon by any persons and may not be reproduced, redistributed, passed on or published, in whole or in part, for any purposes, without the prior written consent of VinaCapital Investment Management Limited.
Fund summary Fund launch: 22 March 2006, new three year term commenced 21 November2012.
Term of fund: Originally seven years, but now subject to shareholder vote forcontinuation every three years.
Fund domicile: Cayman Islands Legal form: Exempted company limited by shares Investment manager: VinaCapital Investment Management Ltd Structure: Single class of ordinary shares trading on the AIM market of theLondon Stock Exchange plc.
Auditor: PricewaterhouseCoopers (Hong Kong) Nominated adviser: Grant Thornton UK LLP Fund Administrator: HSBC Trustee (Cayman) Limited Brokers: Edmond de Rothschild Securities (Bloomberg: LCFR), Numis Securities(Bloomberg: NUMI)
Lawyers: Lawrence Graham (UK), Maples and Calder (Cayman Islands) Base and incentive fee: The base fee is fixed at USD7.5 million per annum until22 November 2014, reducing each year thereafter until 22 November 2015.
No incentive fees, but the recovery of the accrued incentive fee is linked to
distributions to shareholders.
Investment policy: The Fund is now in a cash return period and will not make any investments, except where funds are required for existing projects. The Fund will seek to realise assets in the existing portfolio and continue with the development of selected projects to maximize value. Investment objective by geography: All existing investments are located in Vietnam. There will be no new investments during the current cash return period.4
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