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Vinaland : VNL Monthly Update – September 2016

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by October 12, 2016 General

Performance summary*

31 Sept 2016

NAV per share** (USD):

0.858

Change (Quarter-on-quarter)

-1.23%

Total NAV** (USD ‘m):

326.4

Share price (USD):

0.66

Market cap (USD ‘m):

249.8

Premium/(discount)

-23.3%

* 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

-1.2

4.8

2.8

-29.9

Share price

13.5

37.4

87.2

12.8

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

0.0

3.9

0.0

-1.0

YTD

0.8

2.2

0.8

-12.4

*** Change of NAV per share adjusted for the distribution of capital in June 2016

(USD35.06m or USD0.0876 per share)

Key investments

Project Location Type % portfolio NAV

Pavilion Square South Mixed Use 13.4%

VinaSquare South Mixed Use 12.5%

Manager’s comment

As of 30 September 2016, VNL posted an unaudited net asset value (NAV) of USD326.38m or USD0.86 per share, a 1.23% decline from the previous month’s NAV per share of USD0.87. VNL’s share price increased 5.6% to USD0.66 as at 30 September 2016, from the closing price of USD0.62 reported on 31 August 2016. As a result, the company’s share price to NAV discount is currently 23.3% compared to 28.7% in August. Furthermore, VNL repurchased and cancelled 4.52 million ordinary shares in September, bringing the total of cancelled ordinary shares since October 2011 to 120.64m. Since the commencement of the share buyback program, VNL has cancelled 24.13% of the fund’s total issued shares prior to the program.

Fund update

Seven VNL project revaluations were undertaken for the period ending 30 September 2016 by international property valuation consultants as part of the ongoing appraisal program. Three of these projects were located in Ho Chi Minh City with the remaining projects located in the southern and central regions of Vietnam. The results demonstrated that there has been an improvement in general market confidence and this has flowed through to real estate valuations.

The Investment Manager continues to work on several project disposal opportunities with the view to reaching closure over the next few weeks. While liquidity has been good so far this year and overall confidence remains sound with promising FDI despite some local banks reaching their credit limits for 2016 so lending may slow slightly between now and year end.

The Board will hold an EGM in November 2016 in Zurich Switzerland where a recommendation for the continuation of VNL will be put to shareholders and the Board will release further details on VNL and the new strategy later this week.

The Investment Manager, VinaCapital will hold its annual Investor Conference from 12 to 14 October 2016 in Ho Chi Minh City where an update on VNL will be presented including details on the proposed new strategy. This presentation will also be posted on the VNL website at that time. Further details on the EGM and AGM will be circulated later in October 2016 when the EGM and AGM notices are announced.

Real estate market update

According to CBRE Vietnam, an additional 8,016 condominium units in Ho Chi Minh City and 6,842 condominium units in Hanoi were launched in the third quarter, a decline of 27% and 38% year-on-year, respectively. Sales momentum in Ho Chi Minh City and Hanoi decreased slightly by 2% year-on-year.

The average selling price on increased by between 3% and 5% year-on-year in both Ho Chi Minh City

NAV and share price performance

Per share data (USD)

1.10

Dai Phuoc Lotus South Township 11.7%

Times Square Hanoi North Mixed Use 9.7%

Aqua City South Township 8.5%

Trinity Garden South Residential 7.4%

Capital Square Central Mixed Use 7.4%

Green Park Estate South Mixed Use 6.3%

Phu Hoi City South Residential 4.9%

0.90

0.70

0.50

0.30

0.92

0.56

Distribution of Capital in Jun 2016

Historical Share Price Historical NAV per share Adjusted Share Price on Capital Return Adjusted NAV per share on Capital Return

0.86

0.66

Total 81.8%

VNL portfolio by sector (NAV %) VNL NAV by sector (USDm)

160

Additional portfolio information

Current assets

19

Divestments

27 full and residential unit sales

Debt

Fund level (ZDPs): 9.7% of NAV

Project level (Bank): 12.1% of NAV

Cash

Fund Cash: 19.4% of NAV

Shares outstanding

379,323,461

All figures are after the distribution of capital in June 2016 (USD35.06m or

USD0.0876 per share)

Residential Mixed Use Township

Hospitality

29.7%

3.0%

16.7%

120

80

40

50.6%

0

Hospitality Township Mixed Use Residential Total Investment NAV Bank Debt

and Hanoi. Even with the decreases in condominium launches, there is a sense that the condominium market is over supplied which may impact prices and inventory movement in the near future.

Regarding the landed property segment, an additional 500 units in Ho Chi Minh City and 446 units in Hanoi were launched in the third quarter of 2016, based on CBRE Vietnam. Due to limited supply, the volume of successful transactions in both Hanoi and Ho Chi Minh City continues to improve during the third quarter of 2016 while average selling price increased by between 2% to 10%, especially in fast- developing residential areas with consistent construction progress and quality.

YoY CPI

8

6

4

2

Year-on-year and month-on-month inflation (%)

MoM CPI

3

2

1

0

One new Grade B office building was completed in Q3 2016, adding around 20,000sqm to Ho Chi Minh City and Hanoi office market. The grand opening of Saigon Centrer Phase 2 and Aeon Mall Binh Tan in Ho Chi Minh City and Mipec Riverside Long Bien in Hanoi added a total of 135,000sqm to the market in Q3 2016. Office and retail rents declined across all grades due to the oversupply and the expansion of the foreign investors from Japan, Thailand and Singapore are likely to increase pressure on local landlords over the next few quarters.

7.0

2013 2014 2015 2016

YoY CPI MoM CPI

Quarterly GDP growth (%)

(1)

Macroeconomic update

6.0

5.0

The Vietnamese economy continued to be an outperformer in the region by demonstrating significant growth during the third quarter. Vietnam’s gross domestic product (GDP) grew 6.4% y-o-y during the third quarter, due in part to a slight recovery in agriculture following a crippling drought. The disbursement of foreign direct investment (FDI) accelerated in September, with a total of USD11b disbursed during the

first nine months of the year, a 12% y-o-y increase. The manufacturing sector showed improved growth

in September as the Nikkei Vietnam Manufacturing Purchasing Managers’ Index rose from 52.2 in August to 52.9 in September, the highest point in 16 months. The Index of Industrial Production increased by 7.4% y-o-y during the first nine months of the year, with growth seen in processing and manufacturing, electricity production and distribution, and water supply and treatment. On the consumer side, retails sales rose by 9.5% YTD in nominal terms and 7.7% YTD in real terms.

On the trade front, Vietnam posted a surplus of USD2.9b during the first nine months of the year. In September, exports fell 6.8% m-o-m to USD15b due to turnover reduction in items such as telephones and components, footwear, and garments. Export growth, however, increased 6.7% YTD while import growth became positive for the first time this year in September. Inflation increased 0.5% m-o-m due to a hike in tuition and education costs. The Vietnam dong (VND) remained stable during the month, especially as Vietnam’s foreign currency reserves are widely estimated to be at a record high of nearly USD40b, up from USD29b from last year.

With the agricultural sector beginning to show signs of life, foreign direct investment disbursements accelerating and the manufacturing sector continuing to expand, the economy is well positioned to finish the year strongly at the end of the fourth quarter. We believe that GDP growth for the full year will be 6.0%.

4.0

3.0

2.0

1.0

0.0

MarJunSepDecMarJunSepDecMarJunSepDecMarJunSepDecMarJunSepDecMarJunSepDecMarJunSep 2010 2011 2012 2013 2014 2015 2016

60

Purchasing Managers’ Index

55

50

45

40

Jan-12 Sep-12 May-13 Jan-14 Sep-14 May-15 Jan-16 Sep-16

Registered and disbursed FDI (2016, USDbn)

18

16

14

12

10

Macroeconomic indicators

2015

Sep-16

2016 YTD

Year-on-year

GDP growth1

6.7%

5.93%

Inflation (%)

0.5%

0.5%

3.1%

3.3%

FDI commitments (USDbn)

22.8

2.1

16.4

(4.2)%

FDI disbursements (USDbn)

14.5

1.2

11.0

12.4%

Imports (USDbn)

165.6

15.1

125.4

9.4%

Exports (USDbn)

162.4

15.0

128.2

8.6%

Trade surplus/(deficit) (USDbn)

(3.2)

(0.1)

2.8

Exchange rate (USD/VND)2

22,450

22,265

0.8%

Bank deposit rate (VND)

5%

6%

100 bps

Sources: GSO, Vietnam Customs, SBV, VCB | 1. Annualised rate, updated quarterly 2. (-) Denotes a devaluation in the

currency, Vietcombank ask rate

8

6

4

2

0

000

Jan Feb Mar Apr May Jun Jul Aug Sep

Monthly trade balance (USDm)

500

500)

000)

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

500)

Source: GSO, Bloomberg

Board of Directors

VinaCapital Investment Management Ltd

VNL’s Board of Directors is composed entirely of independent non-executive directors.

Member

Role

Member

Role

Michel Casselman

Non-executive Chairman

Don Lam

Chief Executive Officer

Nicholas Brooke

Non-executive Director

Brook Taylor

Chief Operating Officer

Nicholas Allen

Non-executive Director

David Blackhall

Managing Director, VNL

Charles Isaac

Non-executive Director

Anthony House

Deputy Managing Director, Real Estate

Tran Trong Kien

Non-executive Director

Oai Nguyen

Deputy Managing Director, Real Estate

Fund background

ISIN

KYG936361016

Bloomberg

VNL LN

Reuters

VNL.L

Fund summary

Fund launch

22-Mar-06, current term is up to a maximum of 1 year and commenced 21 November 2015

Term of fund

Originally seven years, but now subject to shareholder vote for continuation, with the next such vote to occur no later than 21 November

2016

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 the London Stock Exchange plc

Auditor

PricewaterhouseCoopers (Hong Kong)

Nominated adviser

Grant Thornton UK LLP

Custodian and Administrator

HSBC Trustee (Cayman) Limited, Standard Chartered Bank (Singapore & Vietnam)

Registrar and Transfer Agency

Orangefield (Cayman) Limited

Brokers

Numis Securities (Bloomberg: NUMI)

Lawyers

Gowling WLG (UK), Maples and Calder (Cayman Islands)

Base and incentive fee

The base (management) fee is USD390 thousand per calendar month. There is an accrued but unpaid performance fee related to disposals contracted prior to 21 November 2015, and a disposal fee of 2.8% of distributable proceeds arising from new disposals contracted after 21 November 2015 which 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.

2016 VinaCapital Group. All rights reservied.

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 (the “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 Ltd 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 Ltd.

ir@vinacapital.com

+84 8 3821 9930

www.vinacapital.com

Broker

Numis Securities

+44 (0)20 7260 1000

funds@numis.com

Vinaland Ltd. published this content on 12 October 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 12 October 2016 10:50:04 UTC.

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