VinaCapital funds update VOF – Vietnam Opportunity Fund Ltd VNI – Vietnam Infrastructure Ltd VNL – VinaLand Ltd June 2011
Disclaimer The information contained herein has been prepared by VinaCapital Investment Management Ltd. (the “Company") and is subject to updating, completion, revision, further verification and amendment without notice. The information contained herein has not been approved by any listing authority or any investment regulator. The information does not constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for any securities nor shall they or any part of them form the basis of or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever. No undertaking, representation, warranty or other assurance, express or implied, is made or given by or on behalf of the Company or any of its directors, officers, partners, employees, agents or advisers or any other person as to the accuracy or completeness of the information or opinions contained herein 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 for any other communication written or otherwise. Past performance in relation to any of the investments contained in this presentation is not indicative of the future performance of any investment that the Company may be involved in. The performance of any investments may differ from the performance of the investments shown in this presentation and such difference may be material. There is no guarantee that any investment opportunity similar to those presented herein will materialize or that the Company will generate any favorable return or any return at all from any such investment opportunity. Certain information contained in this presentation constitutes forward-looking statements. Such statements may be subject to a number of factors and uncertainties that could cause actual events or results to differ materially from those reflected or contemplated in such forward-looking statements. This presentation is not an advertisement and is not intended for public use or distribution. The information herein may not be reproduced, re- distributed or passed to any other person or published in whole or in part for any purpose. By accepting receipt of this document, you agree to be bound by the limitations and restrictions set out above. Neither these pages nor any copy of them may be taken or transmitted into or distributed in any jurisdiction where the distribution of such material would be prohibited under the jurisdiction’s applicable securities laws. Any failure to comply with this restriction may cons titute a violation of such securities laws. 2
Contents 1. Vietnam in 2011: economy and real estate market 2. VNL overview 3. Exit track record 4. Portfolio breakdown and NAV movement 5. Top ten holdings 3
Introduction – VinaCapital Group VinaCapital Group is the leading asset management and investment banking firm in Vietnam. VinaCapital Group was founded in 2003 and is based in Ho Chi Minh City, with branch offices in Hanoi, Danang, Nha Trang, Phnom Penh and Singapore. The Group: • Manages USD1.7 billion in three listed and two unlisted funds. • Holds stakes in VinaSecurities JSC, a full-service VinaCapital Group (VCG) has over 180 investment professionals brokerage, and in VinaProjects JSC, a real estate in four offices in Vietnam. project and construction manager. Our funds: • Offers class-leading expertise in capital and debt • Vietnam Opportunity Fund (VOF) markets, securities, private equity, real estate and • VinaLand Ltd (VNL) • Vietnam Infrastructure Ltd (VNI) infrastructure investment. • Vietnam Fixed Income Fund (VFIF) • DFJ VinaCapital LP • In 2010, opened offices in Singapore and Phnom Penh. 4
Vietnam in 2011: A challenging year Vietnam’s 2010 recovery took a step backward Macroeconomic indicators and forecast in 2011 due to inflation and currency pressures. Y-o-Y 2010 May-11 YTD change • 2010 GDP growth: 6.8% with 11.8% inflation. GDP growth 1 6.8% 5.4% • By May 2011, inflation 19.8% y-o-y, while Inflation 11.8% 2.2% 12.1% 19.8% GDP growth for Q1 at 5.4% y-o-y. FDI 18.6 0.7 4.7 37.6% What happened? (USDbn) Imports • Premature monetary loosening in Q4 2010. 84 9.2 41.3 29.7% (USDbn) Credit growth too high, public investment Exports 2 efficiency too low. 71.6 7.5 34.7 32.8% (USDbn) Trade deficit • Vinashin news decreased international 12.4 1.7 6.6 22.2% (USDbn) confidence in VN debt. Exchange rate 3 19,500 20,700 6.2% n/a • Global commodity prices rose. (USD/VND) Bank deposit • FX reserves at USD13.5bn in early 2011 (only rate 12.0-14.0% 12.0-14.0% n/a n/a 1.9 months import coverage). (VND %) 5
Vietnam in 2011: Policies to combat inflation Result of Q4 2010 loosening and subsequent Vietnam key interest rates, 2008-2011 events: Base Rate Refinancing Rate Discount Rate • Currency under pressure in early 2011, February devaluation required. 16.00% • Four devaluations in past 18 months, 20% 14.00% depreciation. 12.00% 10.00% • Inflation increased rapidly; Interest rates increased, tightening policies put in place. 8.00% 6.00% • Monetary and fiscal tightening actions taken 4.00% to support currency, reduce inflation. Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 • Cost of borrowing for businesses at 23-25% makes growth financing unaffordable. Other policies put in place included: • Stabilisation funds for consumer staples. Policies options being considered: • USD3 billion in govt spending cuts. • Subsidised loans for businesses. • Gold jewelry export tax of 10%. • Increased VND reserve requirements. • Cap put on USD deposit rates of 0.5-2.0%. • Mandatory treasury bills. • SOEs forced to sell USD. 6
Vietnam in 2011: Outlook Outlook for end 2011 and 2012. • Inflation to peak in Q2 at ~22%, end 2011 at ~15%. • Current account deficit ~5% at end-2011. • F/X stable, will only change if interest rates decline notably. • Capital flight to gold should subside, banks will have improved liquidity. • GDP growth expected at 5.5-6% for 2011, with potential for return to high growth in 2012. • FDI still on pace for USD10-11bn disbursement in 2011. Downside risks: • Govt must maintain tightening policies! • Commodity price surge or debt crisis in Europe are risks. 7
Vietnam’s real estate market in 2011 A challenging, high-interest rate environment. Population density (persons/sq.km) • Commercial projects ‘under construction’ stalling as developers cannot take on high-interest loans. • Office market oversupply to continue for 18-24 months. • Operating hotels recovering as tourism numbers continue to rise. • Demand exists for 200,000 new residential units, but buyers are waiting for prices to drop (and mortgage rates to decline). Persons per household • Condo oversupply; Only 50% of the 100,000 planned units likely to be built in next few years. • Only landed property is moving (villas). Developers who can bring affordable product to market will do well. Key is bringing landed properties to market in the USD90-150,000 range; only the top developers can Long-term demand for new housing given demographic do this. and income/culture changes. 8
VinaCapital funds VinaCapital AIM-traded funds Combined NAV: USD1.7 billion (31 May 2011) VinaCapital Vietnam VinaLand Limited Vietnam Infrastructure Limited Opportunity Fund Ltd Closed-end fund Closed-end fund Closed-end fund • Opportunity fund tapping growth • Investment in existing properties • Infrastructure and related and development of Vietnam. and new developments in Vietnam. assets in Vietnam and surrounding Asian countries. • Equity and debt in listed, OTC- traded and private companies. NAV: USD745m NAV: USD687m NAV: USD206m Diversified Real estate Infrastructure 9
Performance of listed funds – comparison to competitors VinaCapital funds have performed at or above the peer average Cumulative VOF has outperformed 2008 2009 2010 YTD 2011 2008-2011 VOF -47.1% 31.0% -1.6% -3.5% -34.2% peer benchmarks VinaCapital VNL 16.8% -9.2% 1.4% -2.8% 4.6% (capital markets funds, VNI -36.9% 3.1% -13.4% -12.1% -50.5% non-VinaCapital funds VEIL -60.7% 12.1% -2.8% -18.0% -64.7% and diversified funds) VGF -61.4% 12.1% 7.6% -16.4% -60.2% Dragon VRF -23.4% -30.9% -27.8% 3.3% -60.5% VPF -6.0% 9.6% -6.8% -12.5% -16.0% VEH -23.8% 44.0% -10.7% 3.4% 1.3% VPH -2.1% 16.4% -1.1% -30.0% -21.1% SAM PXP -70.9% 76.8% -18.1% -23.0% -67.5% VNL has returned the best VEEF -73.5% 82.6% -21.2% -23.1% -70.7% PXP performance since 2009 Prudential -57.0% 47.0% 1.0% -11.1% -45.3% Mekong -67.7% 58.8% 3.5% -14.1% -54.4% Others DWS -54.0% 19.6% -9.1% -12.0% -56.0% Vietnam Holding -60.3% 57.6% -7.6% -18.7% -53.0% VNM ETF N/A 1.8% 2.7% -21.8% -18.2% FTSE Vietnam ETF -63.6% 39.7% -14.8% -26.4% -68.1% VN Index -66.0% 56.8% -2.0% -13.1% -54.6% Capital markets funds -59.8% 49.1% -7.0% -15.7% -52.8% Non-VinaCapital funds -46.7% 33.8% -7.8% -14.3% -47.3% Diversified funds -32.3% 14.1% -5.7% -10.2% -36.6% All -41.9% 28.7% -7.1% -12.7% -43.2% 10
Vietnam Opportunity Fund Ltd (VOF) 11
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