VinaCapital Vietnam Opportunity Fund Limited
Quarterly report 31 March 2012
Fund update
Manager comment
Portfolio data
2
Market update
Macro economy
Real estate market
5
Company and project updates
7
Note on valuation methodology
10
Historical financial information
11
Manager information
12
VinaCapital Vietnam Opportunity Fund AIM: VOF
Quarterly report 31 March 2012
Fund background
VinaCapital Vietnam
Opportunity Fund (VOF) is a
closed-end fund trading on the
AIM Market of the London
Stock Exchange.
ISIN
KYG9361Y1026
Bloomberg
VOF LN
Reuters
VOF.L
Investment objective
Medium to long-term capital
gains with some recurring
income and short-term profit
taking. Primary investment
focus areas are: Privately
negotiated equity investments;
Undervalued/distressed assets;
Privatisation of state-owned
enterprises; Real estate; and
Private placements into listed
and OTC-traded companies.
View VOF details.
Download VOF factsheet.
Manager comment
VOF’s net asset value was USD753.8 million or USD2.36 per share as at 31 March 2012, an
increase of 7.1 percent from the auditor reviewed net asset value of USD704.9 million or
USD2.20 per share at 31 December 2011. The fund’s share price rose to USD1.55 per share
at the end of the quarter, up 22.4 percent from USD1.27 in December 2011. The share price
to NAV per share discount decreased to 34.2 percent in March from 42.0 percent in the
previous period.
VOF has continued to carry out its share buyback program in Q1 2012, repurchasing a total
of 1,009,000 shares. As of the end of March, 4,597,00 shares have been repurchased,
leaving 320,013,259 in total voting rights for the fund.
For the first quarter, VOF’s capital markets portfolio increased 21.0 percent, contributing to
approximately a 9.0 percent increase in overall NAV. However, an USD8.0 million writedown on the fund’s real estate projects, negatively impacted NAV by 1.1 percent, bringing
the overall return to 7.1 percent year to date.
The fund’s listed investee companies that performed the best during the quarter
include Kinh Do Corp (KDC) up 63 percent, Development Investment Construction (DIG)
up 62 percent, Eximbank (EIB) up 34 percent and Hoa Phat Group (HPG) up 49 percent.
On 23 March 2012, VOF announced the acquisition of the remaining 75 percent stake in the
Clear Interest Group (CIG) which holds, among other assets, a 19.95 percent interest in the
Legend Hotel. The purchase gives VOF a 100 percent stake in CIG and includes a call option
to acquire a controlling stake of the hotel at a later date.
The full announcement is available here.
Andy Ho
Additionally, VOF announced there has been change in ownership of VinaCapital Group
Limited ( “Group”), the parent company of VOF’s investment manager, VinaCapital
Investment Management Limited (“Investment Manager”). The investment strategy and
operations of the listed funds managed by the Investment Manager, including VOF, remain
unchanged. The purchase consolidates the ownership of the Group and will enable senior
managers to participate in the equity of the Group, but it will have no impact on day-to-day
operations or strategic direction of the Group and VOF. More details on the announcement
is available here.
VOF is managed by VinaCapital
Investment Management Ltd
(VCIM) and requires investment
approvals from a four member
Internal Investment
Committee.
More information about VCIM
is available here.
Performance summary
Cumulative change:
31-Mar-12
3mth
1yr
3yr
2.36
7.1%
5.6%
30.9%
-24.7%
1.55
22.4%
-8.8%
64.9%
-54.9%
NAV per share
Share price
Premium/(Discount)
Market cap
5yr
(34.2%)
497m
Total NAV
753.8m
Performance history (% change on NAV)
2012
YTD
VN Index
2011
2010
2009
2008
2007
2006
7.1%
-7.6%
-1.6%
29.7% -46.6% 37.4% 64.9%
26.8%
-25.6%
-7.2%
47.7% -68.6% 23.5% 142.4%
NAV and share price performance (31 March 2012)
Fund managing director
Manager
31 March 2012
NAV 2.36 per share (↑ 7.1% q-o-q)
Total NAV: USD753.8 million
USDm
5.0
4.0
NAV 2.36
3.0
2.0
1.0
SP 1.55
0.0
The manager presented at this year’s Edmond de Rothschild Emerging Markets Fund
Conference in London on 29 February 2012. The webcast of the presentation is now
available on our website here.
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2
VinaCapital Vietnam Opportunity Fund AIM: VOF
Quarterly report 31 March 2012
Top holdings at 31 March 2012
Top 5 listed investments
Name of investee
% of NAV
Sector
Description
Vinamilk (VNM)
7.9
Consumer goods
Leading dairy company with dominant market share.
Eximbank (EIB)
6.8
Financial services
One of the top ten commercial banks.
Kinh Do Corp (KDC)
4.1
Consumer goods
Top confectionary manufacturer in Vietnam.
Hoa Phat Group (HPG)
2.5
Industrials
Phu Nhuan Jewelry
1.8
Consumer goods
% of NAV
Sector
Major steel manufacturer.
The largest jewelry manufacturer and distributor in Vietnam.
Top 5 OTC investments
Name of investee
Description
An Giang Plant Protection
4.5
Agriculture
Halico
1.3
Consumer goods
Leading plant protection chemicals firm.
Liquor producer with popular brands.
Nam Viet Oil
0.7
Mining/Oil & Gas
Major gasoline producer.
Binh Dien Fertiliser
0.4
Agriculture
Largest NPK fertiliser producer.
Tam Phuoc Industrial
0.3
Real estate
An industrial park, a subsidiary of Tin Nghia, Dong Nai’s biggest state corporation.
% of NAV
Sector
Top 5 real estate investments
Project
Description
Sofitel Metropole
7.8
Hospitality
Vietnam’s top city-centre hotel.
Century 21
3.6
Real estate
HCM City residential development.
Legend hotel
3.5
Hospitality
One of the leading 5 star hotels in Ho Chi Minh City.
Dai Phuoc Lotus
3.0
Real estate
Residential developer with townhouse sales underway.
VinaLand Ltd (AIM: VNL)
2.8
Real estate
VCIM-managed Vietnam real estate fund.
% of NAV
Sector
Top 5 private equity investments
Name of investee
Description
Prime Group
1.8
Industrials
Ceramics producer with dominant market share.
Yen Viet
1.1
Agriculture
Produces birds nest nutritional products.
IBS
1.0
Industrials
Construction materials firm.
International School, HCMC
0.7
Education
Leading international school in Ho Chi Minh City providing world-quality education.
Indochina Food
0.6
Consumer goods
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Market update
The leading sugar and ethanol manufacturer in Vietnam and Cambodia.
Company and project updates
Note on valuation
Historical financial information
Manager information
3
VinaCapital Vietnam Opportunity Fund AIM: VOF
Quarterly report 31 March 2012
Portfolio by asset class
Performance by asset class, Q1 2012 (USD’000)
Capital markets
Others 5.3%
Private equity
Cash and others
5,401
-693
Hospitality projects Real estate projects
Total P/L
70,000
Cash 5.1%
60,000
Bonds 1.2%
50,000
Private equity 7.5%
40,000
-7,366
-669
54,534
51,207
30,000
Overseas equity 1.1%
20,000
OTC stocks 7.6%
10,000
Listed equity 36.6%
0
Real estate 35.5%
Recent divestment results
Portfolio by sector
USDm
Others 5.3%
60.0
Cash 5.1%
50.0
Other sectors 4.1%
40.0
Pharma and healthcare 2%
30.0
Mining/Oil & Gas 2.6%
20.0
Agriculture 8.9%
10.0
-
Financial services 8.6%
VinaCafe
Licogi 16
Itaco
Halico
International
School
Industrials 6.2%
Investment
Consumer goods 16.2%
Hoan My Hospital
Pho 24
Exit
Hospitality 12.4%
Real estate equities 5.3%
Real estate projects 23.1%
Exit date
Dec-10
Dec-10
Dec-10
Apr-11
May-11
Dec-11
Feb-12
Entry date
Nov-04
Feb-07
Jan-07
Nov-06
Sep-04
Sep-09
Feb-07
Gross XIRR
19%
35%
-13%
59%
54%
51%
7%
1.8
1.7
0.7
5
4
2.2
1.4
Multiple
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4
VinaCapital Vietnam Opportunity Fund AIM: VOF
Quarterly report 31 March 2012
Macro economy
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Inflation
FDI
(USDbn)
Imports
(USDbn)
Exports2
(USDbn)
Trade deficit
(USDbn)
Exchange rate3
(USD/VND)
Bank deposit
rate (VND %)
Y-o-Y
change
YTD
4.0%
18.1%
0.16%
2.6%
14.2%
14.7
1.4
2.6
9.7%
105.8
9.3
24.8
6.9%
96.3
9.1
24.5
23.6%
9.5
0.2
0.3
-91.9%
21,036
20,860
-0.8%
0.0%
12.0-14.0%
13.0%
-7.1%
-7.1%
Note: GDP figure updated quarterly. Exchange rate is Vietcombank ask rate at
end of period. Sources: GSO, SBV, VCB.
1 Annualised rate. 2 Includes gold. 3 State Bank central rate.
Vietnam GDP quarterly growth
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
Historical financial information
Manager information
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
0.00
Mar-10
However, interest rates remain very high at between 15.0 and 20.0 percent for business
loans, higher for non-performing sectors of the economy. Throughout the first quarter of
2012, there have been widespread shortages of capital and an inability for businesses to
access bank credit. The government has identified the potential for the economy to enter
stagflation and have removed some restrictions on bank lending, specifically within the real
estate sector, as well as a 1.0 percent reduction in policy rates and deposit caps. Also, the
government has liberalized bank loans for the basis of consumption. An estimated 60 to 70
percent of total consumption comes from the private sector, a major driver of GDP growth.
Mar-12
5.9%
Dec-09
Interest rates remain high, but
should decrease in the nearterm as the government has
lowered policy rates and
deposit caps.
During March, the inflation rate was 0.16 percent, equivalent to 14.2 percent year-on-year
and 2.6 percent for the first quarter. The reduction in CPI has come primarily from a
weakness in aggregate consumer demand as purchasing power fell as a result of the high
levels of inflation throughout 2011. The removal of subsidies in major utility and transport
sectors such as electricity and gasoline, as well as an expected increase in the minimum wage
due in May, will continue to impose added pressure for inflation throughout 2012. However,
we project CPI to continue its descent, reaching 10.0 percent for the year, down substantially
from 18.1 percent in 2011.
GDP growth1
Sep-09
Inflation fell to just 2.6 percent
for the first quarter of 2012
The VND closed the month of March at a reference rate of approximately VND20,830 versus
the USD from the end of December 2011. Stabilizing efforts have clearly been working during
the first quarter of 2012 as the VND has actually appreciated 0.8 percent, primarily due to
the trade deficit reaching only USD300 million year to date. For all of 2011, the deficit nearly
reached USD10 billion, placing huge pressure on the government to devalue the VND last
year. Additionally, the spread between the free market exchange rate and the official bank
rate has effectively gone to zero, indicating that there is very little pressure for the VND to
devalue more in the near-term. Exporters are willing to sell their USD to the SBV or other
commercial banks providing an ample supply in the foreign exchange market. We continue
to estimate an interbank rate of VND22,000 per USD by the end of 2012.
2011
Jun-09
The VND appreciated 0.8
percent against the USD in the
first quarter.
Macroeconomic indicators and forecast
The macroeconomic headlines were dominated in the first quarter of 2012 by Vietnam’s GDP
growth of 4.0 percent versus 5.6 during the same period a year ago and the lowest since June
2009. The industry and construction sector grew 2.9 percent, while agriculture, forestry, and
fishery production increased 2.8 percent from the same period last year. Contributing the
most towards first quarter GDP growth was the services sector, which grew 5.3 percent. As a
result of the lower inflation and the deceleration of GDP growth, the State Bank of Vietnam
(SBV) lowered policy rates and the deposit rate cap by 1 percent.
Mar-09
GDP growth fell to 4.0 percent
in the first quarter, compared
to 5.6 percent last year.
5
VinaCapital Vietnam Opportunity Fund AIM: VOF
Quarterly report 31 March 2012
Real estate market
Demand throughout Vietnam’s real estate market remained slow throughout the first
Supply and demand for most quarter of 2012, which included the annual lunar new year (Tet) holiday. Additionally, the
real estate sectors are at lows quarter’s slow GDP growth of 4 percent and a high interest rate environment did not help
conditions. Construction of many residential and commercial projects have come to a halt
for an extended period of time. The only sector experiencing signs of life are affordable
residential landed housing developments. Also, for the quarter, the hotel sector performed
modestly while the retail sector is looking likely to stabilize in the near-term.
Office space construction
continued to slow, but net
absorption improved
Two major retail deals were
struck during the quarter,
bringing optimism into the
retail sector
Within the office sector, there was no added supply during the quarter in Hanoi, while Ho
Chi Minh City (HCMC) only had seven Grade C buildings become operational. The
combination of low office space demand and the financial constraints facing developers,
continues to cause significant delays in construction progress. However, net absorptions in
both Hanoi and HCMC have improved, with 14,000 sqm and 32,000 sqm in NLA
respectively, above quarterly averages for 2011. Vacancy levels have dropped due to a
reduction in rent prices. As of note, VOF has almost no exposure in the office sector.
International retailers continue to drive demand for retail space in Vietnam. During the
quarter, two major retail deals were completed. A long term lease between Takashimaya
and Keppel Land for approximately 15,000 sqm of retail space was signed for Saigon Centre,
currently in phase two. Secondly, an investment deal involving another retailer from Japan,
AEON Group, which acquired approximately 3.5ha at the retail site in Celadon City, a
development by a Malaysian group and local developer in the Tan Phu District.
In the residential condominium market, first quarter launches of new supply equaled only
648 units in HCMC, one ninth the level launched during the same quarter a year ago.
However, unit prices remained flat as developers were noticeably reluctant to further
reduce prices or add incentives. Although, anecdotal evidence from sales agents showed
positive sentiment and growing interest from prospective buyers at the end of the quarter.
Within the landed property sector, HAGL (HAG) launched a land plot project in District 9,
HCMC in April. According to HAG, the project, comprising of 300 lots at affordable prices,
ranging from USD70,000 to USD200,000 was nearly sold out over one weekend.
Hotel performance was
negatively impacted by
increased supply, despite
higher foreign tourism
During the quarter, approximately 1.9 million foreign tourists visited Vietnam, a 24.5
percent increase from a year ago. However hotel performance was modest with both
occupancy rates and revenue per available room lower across all types, year-on-year.
VinaCapital’s hotels demonstrated a slight improvement in both these categories when
compared to last year. During the quarter a wide range of hotels were launched, with 14
hotels of 3-4 star quality for a total of 877 rooms, added to the HCMC market.
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HCM City condominium market, Q1 2012
Units
USD/sqm
20,000
1,800
1,600
1,400
15,000
1,200
1,000
10,000
800
600
5,000
400
200
0
High-end
Existing Supply
New launch
Mid-end
Affordable
New completion
Current Price (as of Q1 2012)
Source: CBRE Vietnam
HCM City international hotels, as at Mar 2012
$200
100%
$150
80%
60%
$100
40%
$50
20%
$0
0%
ADR (USD)
Occupancy (%)
Source: VinaCapital
Historical financial information
Manager information
6
VinaCapital Vietnam Opportunity Fund AIM: VOF
Quarterly report 31 March 2012
VOF at 31 March 2012
held a stake in AGPP
valued at USD33.6 million
An Giang Plant Protection JSC (AGPP)
Financial highlights
An Giang Plant Protection JSC, formerly a state-owned company, is currently the market
leader in the manufacturing and distribution of pesticides in Vietnam. The company utilizes its
strong and extensive distribution network of 23 stock-keeping units (SKU), 500 wholesalers,
and 4,500 retail outlets. The company has over 900 employees in offices in Ho Chi Minh City
and Cambodia, two pesticide and five seed factories, a laboratory, and a packaging plant.
Profit and loss (VND bn)
FY09A
FY10A
FY11A
FY12E
Revenue
Gross profit
Gross margin
Net income
Net margin
EPS (adjusted)
DPS
Balance sheet (VND bn)
Total assets
Shareholders’ equity
ROE (%)
Book value per share
Valuation (VND bn)
PER (x)
P/B (x)
Dividend yield (%)
3,176
912
28.7%
328
10.3%
14,578
12,148
4,062
1112
27.4%
276
6.8%
6,195
4,444
4,869
1,361
28.0%
427
8.8%
6,876
6,876
5,599
1,565
28.0%
491
8.8%
7,907
7,907
1,538
638
51.4%
23,630
1,854
1,024
27.0%
16,490
2,707
1,225
34.9%
19,726
3,012
1,530
32.1%
24,638
19.3
6.40
1.3%
8.6
4.4
1.6%
10.2
2.8
4.4%
6.6
2.3
6.6%
In 2011, the company invested in three rice mills with capital expenditure of USD19 million as
part of its new business strategy. The expansion into the rice processing sector is to generate
more organic revenue from operations higher on the value chain of the agriculture sector.
For FY 2011, AGPP reported revenue of USD231.9 million and a net profit of USD20.3 million,
an increase of 20 and 55 percent year-over-year respectively, underpinned by improved gross
margins and a significant USD2.9 million decrease in foreign exchange losses. The company
has proposed to pay a cash dividend with a yield of 6.6 percent.
As at 31 March 2012, market capitalization was approximated USD135.7 million, with 2012
P/E and P/B of 6.6x and 2.3x respectively. Additionally, An Giang Plant Protection is planning
to list on the Ho Chi Minh Stock Exchange in the near-term.
Financial highlights
Vinamilk (VNM)
VOF at 31 March 2012
held a stake in VNM
valued at USD59.9 million
Vinamilk (VNM) is the leading dairy products manufacturer and distributor in Vietnam, with
more than 30 percent of the total dairy market. The company offers a wide range of
products, from fresh and powdered milk to condensed milk, yogurt and coffee. The domestic
market accounts for about 90 percent of total sales. It is the first Vietnamese company to be
one of Asia’ s Top 200 Small and Midsize Companies, according to Forbes, ranked 18th
among the Top 200 in terms of profit and 31st in overall market value.
In 2011, VNM achieved net revenue of USD1.06 billion, 29.5 percent YoY growth. Over the
past 3 years, VNM has achieved a CAGR of 37 percent for revenue, helping to achieve its
target revenue of USD1.0bn two years ahead of schedule. Net profit for 2011 was USD
199.3m, up 15.2 percent compared to 2010. VNM set a target to triple revenue to USD3.0
billion by 2017. The company expects these results given the growth expectations of
Vietnam’s current dairy consumption per capita, at just 9kg per capita, per year, compared to
24kg and 60kg for China and Europe, respectively.
VNM closed at VND 90,000 per share as of 31 March 2012, at a PE of 10.7x for 2012 and a
P/B 2012 of 3.3x.
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Profit and loss VND bn)
Revenue
Gross profit
Gross margin
Net income
Net margin
EPS (adjusted)
DPS
Balance sheet (VND bn)
Total assets
Shareholders’ equity
ROE (%)
Book value per share (VND)
Valuation (VND bn)
PER (x)
P/B (x)
Dividend yield (%)
Note on valuation
Historical financial information
FY10A
17,184
5,173
30.1%
3,616
21.0%
6,845
2,000
FY11A
22,264
6,554
29.4%
4,166
18.7%
7,632
3,000
FY12E
26,480
7,680
29.0%
4,690
1877%
8,420
3,000
10,773
7,964
15,564
12,412
15,564
15,000
45.4%
14,323
33.6%
22,323
33.6%
26,929
12.6
6.0
2.3%
12.0
4.0
4.4%
10.7
3.3
3.3%
Manager information
7
VinaCapital Vietnam Opportunity Fund AIM: VOF
Quarterly report 31 March 2012
VOF at 31 March 2012
held a stake in LAS valued
at USD4.6 million
Lam Thao Fertilisers and Chemicals JSC (LAS)
Financial highlights
Lam Thao Fertilizer is a leading NPK (Nitrogen, Phosphorus and Potassium) fertilizer
producer in Vietnam with a dominant position in the NPK and superphosphate fertilizer
sector. Annually, LAS produces 800,000 tons of NPK accounting for approximately 40 percent
of domestic market share. The company has over 50 fertilizer SKUs branded under the Lam
Thao registered trademark and boasts a strong distribution network.
Profit and loss (VND bn)
Revenue
Gross profit
Gross margin
Net income
Net margin
EPS (adjusted)
DPS
Balance sheet (VND bn)
Total assets
Shareholders’ equity
ROE (%)
Book value per share
Valuation (VND bn)
PER (x)
P/B (x)
Dividend yield (%)
Following its privatization, Lam Thao has restructured itself from a state-owned company
and improved efficiency throughout its operations. In FY 2011 net profit after tax was
USD14.3 million, more than four times what the company earned in 2009, due to
management efforts to restructure short-term debt and cut operating costs. LAS has set a
target of USD14.3 million profit after tax for FY 2012, despite the current macroeconomic
environment and rising material input costs.
The company’s investment pipeline includes a new fused superphosphate and a sulfate
ammonia factory to be built by 2015. LAS will spend an estimated USD100 million for these
investments mostly financed by the company’s retained earnings and long-term loans at
advantageous rates.
As at 31 March 2012, LAS traded at VND 23,500 per share, a 2012 PE of 3.8x and P/B of 1.4x.
VOF at 31 March 2012
held a stake in HPG
valued at USD18.7 million
Hoa Phat Corporation (HPG)
Financial highlights
Hoa Phat Group (HPG) is a leading industrial manufacturer in Vietnam, ranked first in steel
manufacturing market share in 2011. Established in 1992 as a trading company, HPG has
evolved into a holding group with seven subsidiaries and three affiliated companies,
specializing in construction materials such as steel, steel pipe, furniture, refrigerators,
construction and mining equipment, and industrial park operations. HPG has a well
established nationwide distribution and sales network, with a strong platform for future
product expansion and diversification.
Due to the difficult business environment in 2011, the company’s net profit was down 8.4
percent year-over year from a reduction in gross margins and higher interest expense.
HPG’s current capital expenditures include a steel complex with an annual capacity of
700,000 tons and plans for expanding operations into the mining and energy sector to
mitigate the company’s rising utility and input costs. For FY2012, management projects net
profit after tax of VND872 billion (USD41.5 million), accounting for the current high interest
rate environment and expansion costs.
Profit and loss (VND bn)
Revenue
Gross profit
Gross margin
Net income
Net margin
EPS (adjusted)
DPS
Balance sheet (VND bn)
Total assets
Shareholders’ equity
ROE (%)
Book value per share
Valuation (VND bn)
PER (x)
As at 31 March 2012, HPG traded at VND23,100 per share, equivalent to a 2012 P/E of 9.0x
and P/B of 1.0x.
P/B (x)
Dividend yield (%)
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FY09A
3,366
565
16.7%
71
2.1%
1,314
1,000
FY10A
3,609
725
20.1%
287
8.0%
5,341
1,200
FY11A
4,056
799
19.7%
300
7.4%
5,555
2,000
FY12E
4,100
800
19.5%
300
7.3%
5,555
2,000
2,208
471
15.0%
10,902
1,861
720
39.8%
13,314
2,228
875
34.2%
16,203
2,400
900
33.3%
16,667
17.8x
2.3x
4.0%
4.4x
1.8x
5.1%
4.2x
1.4x
8.5%
4.2x
1.3x
8.5%
FY09A
8,244
1,976
24.0%
1,271
15.4%
3,999
1,200
FY10A
14,492
2,458
17.0%
1,349
9.3%
4,244
1,200
FY11A
18,092
2,872
15.9%
1,236
6.8%
3,889
-
FY12E
18,200
2,730
15.0%
872
4.8%
2,535
-
10,243
4,898
25.9%
15,410
14,903
6,398
21.1%
20,129
17,524
7,413
16.7%
23,326
20,000
8,000
11.0%
23,255
7.7
7.2
4.5
9.0
2.0
5.5%
1.5
2.9%
0.8
-
1.0
Historical financial information
Manager information
8
VinaCapital Vietnam Opportunity Fund AIM: VOF
Quarterly report 31 March 2012
VOF at 31 March 2012
held a stake in KDH
valued at USD9.7 million
Khang Dien Housing Investment and Development Company (KDH)
Financial highlights
Khang Dien Company (KDH) is one of the largest real estate developers in Ho Chi Minh City,
with approximate 40ha land bank allocated over 11 projects in the rapidly growing Districts
2 and 9. The company specializes in the development of villas and townhouses, currently
the strongest performing residential real estate sector in Vietnam.
Profit and loss (VND bn)
Revenue
Gross profit
Gross margin
Net income
Net margin
EPS (adjusted)
DPS
Balance sheet (VND bn)
Total assets
Shareholders’ equity
ROE (%)
Book value per share
Valuation (VND bn)
PER (x)
P/B (x)
Dividend yield (%)
Revenue and net profit for KDH declined significantly in FY 2011, compared to FY 2010,
achieving only USD79.5 million and USD480,000. During the year, in an effort to reduce
interest expenses caused by high interest rates, KDH divested its entire Goldora project to
Indochina Land and a 70 percent stake in SpringLife Apartments in District 2 to CapitaLand.
As a result, the company received USD28.8 million in total proceeds with gross profit of
USD4.8 million, reducing debt to USD26.4 million at year’s end. The company is now
focused on selling four projects: Villa Park, Mega, Tri Minh and Doan Nguyen. Revenue and
net profit are projected at USD27.8 million and USD3.8 million accordingly for FY 2012.
Throughout the beginning of 2012, VOF has increased ownership in KDH from 14.9 percent
to 20 percent, and is now the second largest shareholder.
As at 31 March 2012, KDH closed at VND 18,800 per share, at a 2012 PE of 11.1x and P/B of
1.1x.
VOF at 31 March 2012 held
a stake in the Movenpick
Hanoi hotel valued at
USD1.5 million
Movenpick Hanoi
Financial highlights (*)
The original property was acquired by both VOF and VNL in 2008, fully renovated with 154
rooms over 11,000 sqm gross floor area and rebranded into the Movenpick, an international
5-star hotel, managed by a Swiss group. The hotel is located on Ly Thuong Kiet Boulevard, a
2,950 sqm prime plot within Hanoi’s CBD, surrounded by government offices, hospitals,
hotels and the International Exhibition Centre. The site is also within walking distance to
Hanoi’s Old Quarter.
Profit and loss (USD)
Revenue
Gross profit
Gross margin
Net income
Net margin
EPS (adjusted)
Balance sheet (VND bn)
Total assets
Shareholders’ equity
ROE (%)
Book value per share
The Movenpick Hanoi’s occupancy rate averaged approximately 73 percent throughout
2011, and generated USD7.5 million in revenue and USD3.4 million in gross operating profit
for FY 2011, including USD1.0 million in income generated by the hotel’s electronic casino.
Management expects financial results to remain stable through FY 2012, with a target of
USD8.4 million in revenue and USD3.7 million in gross profit.
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Market update
Company and project updates
Note on valuation
FY09A
145.9
77.6
53.2%
44.9
30.8%
1,380
-
FY10A
774.1
303.2
39.2%
226.1
29.2%
4,890
-
FY11A
404
63.4
15.7%
2.4
0.6%
230
-
FY12E
597
120.2
20.1%
80.2
13.4%
1,800
-
1,167
332
13.5%
23,024
2,647
439
51.5%
27,426
2,417
439
0.6%
27,426
2,400
482
16.6%
24,979
-
8.8x
1.6x
-
83.9x
0.7x
-
11.1x
1.1x
-
FY09A
1.4
(0.2)
45.3%
(3.0)
(214.3%)
-
FY10A
6.5
2.6
40.0%
(0.7)
(10.8%)
-
FY11A
7.5
3.4
45.3%
0.1
1.0%
-
FY12E
8.4
3.7
44.0%
0.3
3.6%
-
19.2
(8.4)
N/A
N/A
16.6
(9.0)
N/A
N/A
15.3
(8.9)
N/A
N/A
N/A
N/A
N/A
-
(*): Financial years are ended as at 30 June.
Historical financial information
Manager information
9
VinaCapital Vietnam Opportunity Fund AIM: VOF
Quarterly report 31 March 2012
The manager update section provides investors with information on the policies and practices of VinaCapital
Investment Management Ltd (VCIM), as well as updates on VinaCapital relevant to the performance of its
investment funds.
Valuation and NAV calculation
The accurate and fair valuation of assets held in fund
portfolios is a central component of successful fund
management. VOF follows international best practice
whenever possible in its valuation process.
Private equities
Unquoted securities will initially be valued at cost.
Revaluations of unquoted investments are conducted at 30
June annually in accordance with the guidelines issued by
the British Investment Fund Association.
Relevant dates
VOF’s financial year-end is 30 June. Audited annual results
must be announced within six months of this date. Interim
results at 31 December receive an auditor review and must
be announced within three months of this date. VOF
calculates its unaudited NAV monthly and this is normally
announced within ten days of month-end. Update reports on
the fund’s performance are issued on a monthly and
quarterly basis, in addition to an annual report with the
audited final results.
Real estate holdings
Real estate projects are initially valued at cost. Once an
investment license is obtained, or by way of other
arrangements VOF has a legal entitlement to an investment
property, the investment property is revalued. Investment
properties are revalued at least annually and may be
revalued more frequently if the investment manager or
valuation committee believes there has been a material
change in the value of a property. The valuation process
consists of obtaining two or more valuations for each
property from independent third-party valuation companies.
The valuations are reviewed by the valuation committee as
the basis for the final valuation approved by the Board. At
the end of each quarter, the manager also reviews all real
estate investments for possible impairment based on
internal calculations. If there is evidence of impairment an
independent valuation will be obtained to assess the need
for any adjustment in the value of the property.
The methods used to value different assets:
Listed equities
The value of listed securities is based on the last traded price
of the security on the stock exchange where it trades, or if
there is more than one stock exchange on which the security
trades, that which is considered the principal stock exchange
for that security.
OTC equities
The market price of OTC equities is determined based on a
sample of closing prices obtained from a minimum of three
leading securities companies in Vietnam. The price used is
normally the average of the sample, with outlying prices
removed to avoid bias.
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More information on valuation is available on the Investing
policy page of the VOF website: VOF Investing policy.
Audit and Valuation committees
VOF has both an audit and valuation committee composed
of independent non-executive members of the board of
directors of the fund, and chaired by an independent
director. The committees meet at least quarterly.
VOF Audit Committee
Michael G. Gray (Chairman)
Martin Glynn
William Vanderfelt
VOF Valuation Committee
Martin Glynn (Chairman)
William Vanderfelt
Michael G. Gray
All other assets and liabilities are recorded at their respective
fair values or cost, as required by the International Financial
Reporting Standards and as set out in the Notes to the
Consolidated Financial Statements as at 31 December 2011.
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Market update
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Historical financial information
Manager information
10
VinaCapital Vietnam Opportunity Fund AIM: VOF
Quarterly report 31 March 2012
Fund summary
Historical financial information
Years ended 30 June
2005
2006
2007
2008
2009
2010
2011
4,393
111,529
360,527
(381,067)
29,075
134,263
(8,420)
(1,522)
(39,958)
(95,164)
(34,465)
(25,869)
(29,047)
(27,214)
2,871
75,572
265,363
(415,532)
3,206
105,216
(35,634)
-
-
-
(125)
(108)
211
545
Profit for the year
2,871
75,572
265,363
(415,657)
3,098
105,005
(36,179)
Minority interests
-
523
1,196
1,347
(3,684)
311
106
2,871
75,049
264,167
(417,004)
6,782
104,694
(36,285)
96,943
277,942
924,785
723,614
718,023
793,820
764,603
702
33,012
103,121
54,727
36,111
11,319
12,697
96,241
244,930
821,664
668,877
681,912
782,501
751,906
8
76
134
(141)
2
32
(11)
1.58
2.32
3.41
2.16
1.43
1.40
1.57
75,155
122,657
250,648
324,610
324,610
324,610
324,610
118,745
283,951
853,456
699,535
462,569
455,428
509,313
1.28
2.00
3.28
2.06
2.10
2.41
2.32
Return on average ordinary share holder’s funds
7.4%
58.2%
72.8%
-67.8%
1.1%
17.0%
-6.0%
Dividend pay out as % avg. NAV
0.6%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Investment management fees/avg. NAV
7.6%
12.8%
15.6%
2.9%
2.0%
2.0%
2.0%
Statement of Income (USD’000)
Total income from ordinary activities
Total expenses from ordinary activities
Operating profit before income tax
Income tax expense
Profit attributable to ordinary equity holders
Statement of financial position (USD’000)
Total assets
Total liabilities
Net assets
Share information
Basic earnings per share (cents per share)
Share price as 30 June
Ordinary share capital (thousand shares)
Market capitalization at 30 June (USD’000)
Net asset value per ordinary share (USD)
Ratio
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Market update
Company and project updates
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VinaCapital Vietnam Opportunity Fund Ltd (“Vietnam Opportunity Fund”
or “VOF”) is a closed-end fund trading on the AIM Market of the London
Stock Exchange. Download the VOF factsheet at www.vinacapital.com
Fund launch
30 September 2003
Term of fund
Five years with continuation, subject to shareholder vote for liquidation
Fund domicile
Cayman Islands
Legal form
Exempted company limited by shares
Structure
Single class of ordinary shares trading on the AIM market of the London
Stock Exchange plc.
Auditor
PricewaterhouseCoopers (Hong Kong)
Nominated adviser (Nomad)
Grant Thornton Corporate Finance
Custodian and Administrator
HSBC Trustee
Brokers
LCF Edmond de Rothschild Securities (Bloomberg: LCFR)
Numis Securities (Bloomberg: NUMI)
Lawyers
Lawrence Graham (UK)
Maples and Calder (Cayman Islands)
Management and performance fee
Management fee of 2 percent of NAV. Performance fee of 20 percent of
total NAV increase after achieving the higher of an 8 percent compound
annual return and the high watermark
Investment manager: VinaCapital Investment Management Ltd
Investment policy: Medium to long term capital gains with some
recurring income and short term profit taking. Primary investment focus
areas are: Privately negotiated equity investments;
Undervalued/distressed assets; Privatisation of state-owned enterprises;
Real estate; and Private placements into listed and OTC-traded
companies.
Investment focus by geography:
Greater Indochina comprising: Vietnam (minimum of 70 percent),
Cambodia, Laos, and southern China.
Historical financial information
Manager information
11
VinaCapital Vietnam Opportunity Fund AIM: VOF
Quarterly report 31 March 2012
Important Information
VOF Board of Directors
This document, and the material contained therein, is not intended as an offer or
solicitation for the subscription, purchase or sale of securities in 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.
VinaCapital Vietnam Opportunity Fund Ltd (VOF) is led by a Board
of Directors composed of a majority of independent non-executive
directors.
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.
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Jump to: Fund update
Market update
Company and project updates
Note on valuation
William Vanderfelt
Michael G. Gray
Martin Glynn
Don Lam
Chairman (Independent)
Director (Independent)
Director (Independent)
Director
VinaCapital
VinaCapital Investment Management Ltd (VCIM) is the BVIregistered investment manager of VOF.
Don Lam
Brook Taylor
Andy Ho
Nguyen Viet Cuong
Dang P. Minh Loan
Contact
David Dropsey
Chief Executive Officer
Chief Operating Officer
Managing Director, Head of Investment
Deputy Managing Director, Capital markets
Deputy Managing Director, Private equity
Investor Relations/Communications
ir@vinacapital.com
+848-3821-9930
www.vinacapital.com
Vietnam Opportunity Fund (VOF)
Brokers
LCF Edmond de Rothschild Securities
+44 (0)20 7845 5960 or funds@lcfr.co.uk
Numis Securities
+ 44 (0)20 7260 1327, www.numiscorp.com
Nominated adviser
Auditor
Internal auditor
Custodian and Admin
Grant Thornton Corporate Finance
PricewaterhouseCoopers (Hong Kong)
KPMG (Vietnam)
HSBC Trustee
Historical financial information
Manager information
12