VINALAND LIMITED Performance summary* | 31 Dec 2016 |
NAV per share** (USD): | 0.88 |
Change (Quarter-on-quarter) | 2.5% |
Total NAV** (USD 'm): | 314.8 |
Share price (USD): | 0.69 |
Market cap (USD 'm): | 246.1 |
Premium/(discount) | -21.8% |
* Figures in USD. Return percentages are for the period, not annualized ** NAV and NAV per share data are calculated on a quarterly basis | |
Manager's comment
As of 31 December 2016, VinaLand Limited (the "Company" or "VNL") posted an unaudited net asset value (NAV) of USD314.77 million or USD0.88 per share, a 2.46% increase from the previous quarter's NAV per share of USD0.86. VNL's share price increased 4.40% to USD0.688 as at 31 December 2016, from the closing price of USD0.659 reported on 30 September 2016. As a result, the company's share price
to NAV discount is currently 21.82% compared to 23.28% in September. Furthermore, VNL repurchased and cancelled 21.38 million ordinary shares in the fourth quarter of 2016, bringing the total of cancelled ordinary shares since October 2011 to 142.03 million. Since the commencement of the share buyback program, VNL has cancelled 28.41% of the fund's total issued shares prior to the program.
During the last quarter of 2016, the Manager continued to purchase shares which has reached 22,417,333 and equates to 6.26% of the company's total voting rights.
Fund update
Cumulative change (% change) | ||||
3mth | 1yr | 3yr | 5yr | |
NAV per share | 2.5 | 3.3 | 6.4 | -17.9 |
Share price | 4.4 | 27.3 | 68.8 | 17.8 |
Following the Investor Conference from 12 to 14 October 2016 in Ho Chi Minh City, the Annual General Meeting (AGM) and Extraordinary General Meeting (EGM) were held on 18 November 2016 in Zurich, Switzerland, where shareholders met to review the Fund's performance since the 2015 EGM as well as the new strategy recommended by the Board and to vote on the resolutions put forward in the AGM and EGM.
All four AGM resolutions were supported. While at the EGM, shareholders supported recommendations of the Board regarding Resolutions 1, 2 and 3, however the Board recommendation for Special Resolution
4 was not supported and as such Special Resolution 5 was not put to a vote. In summary, the meetings ran smoothly and all shareholders appeared to be content with the new continuation strategy and outcome. The Investment Manager, VinaCapital will continue to manage VNL with the primary objective being to continue with the project disposals in a controlled and orderly manner enabling distributions to shareholders.
Quarterly performance history (% change) | ||||
2016 | 2015 | 2014 | 2013 | |
Q1 | 0.6 | -3.3 | -0.4 | -1.0 |
Q2 | 1.4 | 1.1 | 1.2 | -5.8 |
Q3 | -1.2 | 0.6 | 0.0 | -5.2 |
Q4 | 2.5 | 3.9 | 0.0 | -1.0 |
YTD | 3.3 | 2.2 | 0.8 | -12.4 |
On 20 October 2016, VNL announced that Mr. Nicholas Allen resigned from the Board. Mr. Allen was elected as a Non-Executive Director in 2010 and was the Chairman of VNL's Audit Committee and Remuneration and Nomination Committee as well as a member of VNL's Valuation Committee. The Board of Directors appointed Mr. Ian Lydall as a new Non-Executive Director, effective 25 October 2016. Mr. Ian
Lydall, aged 61, is a United Kingdom chartered accountant (Financial Conduct Authority- FCA) with over 15 years experience in accounting, audit and corporate governance in Vietnam, which will greatly assist VNL as it continues to develop and realize its property portfolio.
On 16 November 2016, VNL announced that it divested its stake in Project Ceana. The project, acquired by VNL in 2007, is a 7.3-hectare parcel of land located in central Vietnam and has approval for a future residential villa resort development. VNL disposed of its entire stake at a total valuation 12.9% above the 30 September 2016 unaudited NAV and 42.5% below the NAV at the time of VNL's previous EGM
in November 2012. This transaction resulted in net proceeds of USD7.6 million to VNL which was received in full. The proceeds received from this exit in conjunction with those collected from past and
Key investments | |||
Project | Location | Type | % portfolio NAV |
Pavilion Square | South | Mixed Use | 14.9% |
VinaSquare | South | Mixed Use | 13.6% |
Dai Phuoc Lotus | South | Township | 12.7% |
Times Square Hanoi | North | Mixed Use | 11.3% |
Aqua City | South | Township | 8.8% |
Trinity Garden | South | Residential | 8.1% |
Capital Square | Central | Mixed Use | 7.8% |
Green Park Estate | South | Mixed Use | 6.5% |
Phu Hoi City | South | Residential | 5.1% |
Total | 88.8% | ||
1.30
1.10
0.90
0.70
0.50
0.30
Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14
Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15
Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16
Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16
0.10
NAV and share price performance
0.88
0.69
Adjusted Share Price on Capital Return Adjusted NAV per share on Capital Return
VNL portfolio by sector (NAV %) VNL NAV by sector (USDm)
Additional portfolio information | |
Current assets | 17 |
Divestments | 29 full and residential unit sales |
Debt | Fund level (ZDPs): fully redeemed |
Project level (Bank): 18.7% of NAV Fund Cash: 13.8% of NAV | |
Shares outstanding | 357,939,461 |
Residential Mixed Use Township Hospitality
26.4%
3.1%
15.3%
55.2%
200.0
150.0
100.0
50.0
-
Hospitality Township Mixed Use Residential Total Investment NAV Bank Debt
future disposals will be used to cover VNL's commitments including operating costs and distributions to
shareholders.
On 16 December 2016, VNL announced that Mr. Nicholas Brooke, a member of the Board of Directors resigned which took effect on 31 December 2016. Mr. Brooke was appointed on 13 January 2006 as a
Non-Executive Director of VNL when launched in 2006 and served on the Board since then in the capacity of Director and Chairman. Mr. Brooke was appointed as Chairman in 2010 until he stepped down as Chairman in October 2013 however continued to serve as both Director and member of various Board committees including Valuation, Audit, Remuneration and Nomination and Divestment Committees during his service. Mr. Brooke resigned to pursue new challenges thus the total number of VNL Board members, effective on 1 January 2017, was reduced to four members. As the Company's portfolio is reducing, the VNL Board resolved to maintain four Board Directors going forward.
The full redemption of the VinaLand Zero Dividend Preference (VNL ZDP) Share s occurred on 19 December 2016 and the VNL ZDP shares are no longer traded. Following the redemption, the VNL debt at the fund level reduced to zero, so only debt at the project company level remains. VNL project level debt will also diminish as existing projects are divested.
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Quarterly GDP growth (%)
MarJunSepDecMarJunSepDecMarJunSepDecMarJunSepDecMarJunSepDecMarJunSepDecMarJunSepDec 2010 2011 2012 2013 2014 2015 2016
Purchasing Managers' Index
Nine VNL project revaluations were undertaken for the period ending 31 December 2016 by international property valuation consultants as part of the ongoing appraisal program. Five of these projects were located in Ho Chi Minh City and Hanoi with the remaining projects located in the southern and central regions of Vietnam. The overall results were upward, demonstrating some continued improvement in the market and overall confidence which has flowed through to real estate land valuations.
Macroeconomic update
The Vietnamese economy concluded the year with a total GDP growth rate of 6.2%, lower than the government's target of 6.7% set at the start of 2016. Nevertheless, the economy showed stable and sustainable growth despite unfavourable global economic conditions and a severe draught affecting agriculture earlier in the year. With major indicators demonstrating that domestic consumption and manufacturing growth will continue to rise, we project that GDP growth in 2017 will be 6.5%.
Manufacturing: The Nikkei Purchasing Manager's Index for Vietnam slowed down to 52.4 in December, from a record high of 54 in November. Despite the monthly slowdown in manufacturing, the sector continued to see strong growth in exports and new orders.
Domestic consumption: Retail sales increased 10.2% year-to-date year-on-year in nominal terms and 7.8% in real terms in December. Furthermore, the General Statistics Office (GSO) reported that Vietnam's 2016 total retail revenue was USD118 billion.
Inflation: The Consumer Price Index rose 5% year-on-year in December with the major inflation drivers being government controlled (e.g., transportation, education and healthcare costs). Therefore, it comes as no surprise that full-year inflation would meet the government's target.
60
55
50
45
Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16
Dec-16
40
Registered and disbursed FDI (2016, USDbn)
20
15
10
5
Vietnam Dong: The Vietnam Dong (VND) experienced some FX turbulence with the USD/ VND interbank rates reaching 22,720 by year end. For the full year in 2016, the VND depreciated approximately 1.2% against the USD. We expect the State Bank of Vietnam (SBV) to maintain a depreciation of 2-3% against the USD and we are confident that the government's estimated USD40 billion FX reserve will be sufficient to support the currency.
Trade: The GSO estimated a trade deficit of USD300 million in December, bringing the year end trade surplus down to USD2.7 billion.
Foreign Investment: Committed foreign direct investment (FDI) reached USD24.4 billion at the end of December, a 7.1% increase from the previous year, whereas actual FDI disbursements reached USD15.8 billion, a 9% year-over-year increase.
0
1,000
500
Macroeconomic indicators (1,0 | ||||
2015 | Dec-16 | 2016 YTD | (1,5 Year-on-year | |
GDP growth1 | 6.7% | 6.2%2 | ||
Inflation (%) | 0.50% | 0.2% | 4.7% | 4.7% |
FDI commitments (USDbn) | 22.8 | 2.8 | 21.0 | 7.1% |
FDI disbursements (USDbn) | 14.5 | 1.5 | 15.8 | 9.0% YoY C |
Imports (USDbn)3 | 165.6 | 16.3 | 173.3 | 8 14.0% 6 |
Exports (USDbn) 3 | 162.4 | 16.0 | 175.9 | 16.5% 4 |
Trade surplus/(deficit) (USDbn) | (3.2) | (0.3) | 2.6 | 2 |
Exchange rate (USD/VND)4 | 22,450 | 22,720 | -1.2% | - |
Bank deposit rate (VND) | 5.0% | 5.8% | 80 bps | |
Sour Sources: GSO, Vietnam Customs, SBV, VCB |1. Annualized rate, updated quarterly | 2. GSO estimate |3. Data as of 20 Dec 2016 | 4.(-) Denotes a devaluation in the currency, Vietcombank ask rate | ||||
- (500)
00)
00)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Disbursed (YTD) Registered (YTD)
Monthly trade balance (USDm)
Year-on-year and month-on-month inflation (%)
PI MoM CPI
3
2
1
0
2013 2014 2015 2016
YoY CPI MoM CPI
(1)
ces: GSO, Bloomberg
Current strategyFollowing the outcome of the 2016 AGM and EGM, the Investment Manager, VinaCapital will continue with project disposals enabling further distributions to shareholders. The combination of improving market conditions in conjunction with the new term for VNL enables the Investment Manager to focus on the ongoing disposal program so further distributions can be made to shareholders over the next 2-3 years.
In line with the approved strategy at the 2016 EGM, the Investment Manager will continue with the development of residential projects that are currently under development to maximize value in conjunction with the disposal of projects. The continuation of the 2016 market conditions into 2017 will support this strategy and will ultimately result in further distributions to shareholders.
USDm
80.0
VNL divestment historical post November 2012 EGM70.0
60.0
50.0
40.0
30.0
20.0
10.0
-
NAV at time of exit
Post EGM (November 2012)
Full Divestments | Nguyen Du | Sheraton | Signature 1 | Hao Khang | Prodigy | Vina Properties | Hospitality investments | Marie Curie | Saigon Quy Nhon | Vung Bau Phu Quoc | HAS | NPV | Danang Marina | Century 21 | Danang Golf | HBT Court | Project Pham Hung | Resort Project | Project Ceana | Total |
Type | Office | Hotel | Land | Land | Hotel | Hotel | Hotel | Land | Hotel | Land | Township | Land | Residential/ Development | Land | Residential/ Development | Serviced Apartment | Land | Residential/ Development | Land | |
Exit date | Q1 2013 | Q2 2013 | Q3 2013 | Q4 2013 | Q4 2013 | Q1 2014 | Q3 2014 | Q3 2014 | Q1 2015 | Q1 2015 | Q3 2015 | Q4 2015 | Q2 2016 | Q2 2016 | Q2 2016 | Q2 2016 | Q2 2016 | Q3 2016 | Q4 2016 | |
NAV at exit (USDm) (1) | 3.0 | 2.7 | 2.8 | 4.5 | 1.8 | 13.5 | 19.1 | 9.5 | 0.5 | 4.6 | 6.8 | 14.8 | 1.3 | 75.2 | 37.5 | 0.6 | 16.3 | 7.0 | 6.7 | 228.1 |
Net proceeds to VNL (USDm) (2) | 3.2 | 3.1 | 2.7 | 4.6 | 1.7 | 16.1 | 19.9 | 10.9 | 0.6 | 4.7 | 10.5 | 19.1 | 1.3 | 75.4 | 37.5 | 0.5 | 16.2 | 7.0 | 7.6 | 242.7 |
Net proceeds vs. NAV | 7.9% | 15.1% | -3.3% | 2.8% | -5.5% | 19.2% | 4.5% | 14.3% | 27.3% | 2.9% | 53.5% | 29.4% | 0.4% | 0.2% | 0.0% | -11.0% | -0.2% | -1.0% | 12.9% | 6.4% |
Debt removed, VNL portion (USDm) | 0 | 25.0 | 4.0 | 1.7 | 6.0 | 0.0 | 33.3 | 8.5 | 0.0 | 0.0 | 0.0 | 78.5 | ||||||||
NAV at EGM 2012 (USDm)(3) | 3.4 | 2.7 | 2.8 | 5.0 | 2.5 | 14.9 | 6.3 | 8.7 | 0.5 | 4.1 | 7.5 | 12.4 | 2.5 | 63.5 | 40.1 | 1.1 | 9.6 | 21.0 | 13.2 | 221.8 |
Net proceeds vs. NAV at EGM (Adjusted) (3) | -6.1% | 15.1% | -3.3% | -7.8% | -31.7% | 8.2% | 215.3% | 24.6% | 24.5% | 1.6% | 36.3% | 51.7% | -49.2% | 18.8% | -6.4% | -52.1% | 69.8% | -66.8% | -42.5% | 8.9% |
All "NAV at exit" figures above are based on most recent audited numbers prior to the exit date.
Net proceeds from exit include all transfers of money between the fund and project companies, including dividends, shareholder loans, and capital contributions.
Adjusted with investments/return since EGM 2012 for comparison purpose
While overall it continued to be a successful year for Vietnam's real estate market, 2016 did not come without some turbulence. First came the British withdrawal from the European Union ("Brexit") in June 2016. Post-Brexit, the surprise victory of Donald Trump in the race for United State Presidential Election in November 2016 continued to send shockwaves through global markets. Then, on 14 December, the United States Federal Reserve (Fed) announced the sec- ond raise of its benchmark interest rate by 0.25 percentage point to between 0.5% and 0.75%. For the full year in 2016, the Vietnam Dong (VND) depreciated approximately 1.2% against the United State Dollar (USD). However, VND remains one of the more stable currencies against the USD compared to regional peers as Vietnam continued to maintain foreign currency reserves that the State Bank of Vietnam (SBV) reported to be USD40 billion.
Also of note in 2016 was the approval of revisions to Circular 36. This regulation, issued by the State Bank of Vietnam (SBV), will restrict lending over the medium-to-long-term to not exceed 50% of short term funding since 1 January 2017 and not exceed 40% by 1 January 2018, from the current limit of 60%. However, based on SBV, non-performing loans reached below 3% by end of 2016, while credit growth has been managed closely and loans to the real estate sector remain under control. Overall, investment in Vietnam's real estate has remained steady after numerous fluctuations of the market. According to the Ministry of Planning and Investment, real estate remained to rank second in attracting FDI of Vietnam in 2016, with newly registered capital reaching USD1,523 million.
Landed property sectorThe landed property sector has also had more new launches in close proximity of future infra- structure development around Ho Chi Minh City and Hanoi. An additional 500 units in Ho Chi Minh City and 600 units in Hanoi were launched in the fourth quarter of 2016, based on Savills Vietnam. Due to limited supply, the volume of successful transactions in both Ho Chi Minh City and Hanoi continued to improve during the fourth quarter of 2016 while average selling price in 2016 increased by between 5% to 15% year-on-year, especially in fast developing residential areas with consistent construction progress and quality. Project designs and unit layouts have changed to favour smaller unit sizes to meet buyers' budgets.
Condominium sectorDevelopers actively pushed to sell units to buyers before the year-end, resulting in a number of new condominiums launched in both Ho Chi Minh City and Hanoi during the last quarter of 2016. According to CBRE Vietnam, an additional 9,145 condominium units in Ho Chi Minh City
and additional 9,128 condominium units in Hanoi were launched in Q4 2016. Total new launch- es in 2016 reached 37,419 condominium units in Ho Chi Minh City and 30,028 condominium units in Hanoi, a drop of 10% and 13% year-on-year, respectively. As a result, the average selling price in 2016 increased by 5% year-on-year in both cities. Vietnam's condominium market continued to see some signs of improvement with more launches and transactions within the mid-end property segment during 2016. A number of new condominiums will continue to launch during the next three years hence the developers will be under pressure to soften the sale prices or offer new projects with longer repayment terms.
Office sectorIn 2016, the average asking rents in the office sector improved approximately 8% year-on-year in Ho Chi Minh City but decreased by 3% year-on-year in Hanoi due to new supply. Accord- ing to CBRE Vietnam, office market welcomed two new buildings in Ho Chi Minh City and six new buildings in Hanoi in 2016. Total office stock in 2016 both in Ho Chi Minh City and Hanoi increased 10% and 20% year-on-year, respectively so average occupancy rate dropped in both cities. Small tenancies of 100-300sqm remain the most sought after by office tenants.
Retail sectorSupply in Ho Chi Minh City and Hanoi retail space increased significantly in 2016, adding
around 355,000sqm to Ho Chi Minh City and Hanoi retail markets. Many foreign developers are now entering the retail market with their own brands and models. Retail market in 2016 also witnessed more contemporary spaces and added with new retail formats such as Takashimaya shopping mall in Ho Chi Minh City's Saigon Centre. Rents for retail sector both in Ho Chi Minh City and Hanoi improved approximately 3 - 15% year-on-year in CBD locations but reduced approximately 4 - 6% year-on-year in non-CBD locations.
Vinaland Ltd. published this content on 25 January 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 25 January 2017 10:06:08 UTC.
Original documenthttp://vnl-fund.com/report/?file_id=8678
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