Funds
Fund Performance
Le Anh Tuan
Lead Portfolio Manager
At a glance
- VEIL’s NAV rose 4.5% in August, ahead of the VNI’s 4.2% return. 3-month performance is 0.9% ahead of the reference index, while YTD is now on par at 12.1%.
- We are seeing signs of legal progress in some key property developments, a potential indicator of the anticipated recovery of the real estate sector.
- We increased holdings in real estate names we believe will be the first to benefit from this recovery.
Performance
Fund Commentary
We increased our holdings in the real estate sector, driven by notable progress in several long-stalled projects, reinforcing our view that the sector has likely bottomed and is beginning an upward trend. This shift is supported by regulatory reforms, including approvals of master plans in cities like Hanoi and Hai Phong, as well as updates to the Land Law, which are expected to drive momentum in the coming months. Additionally, the government’s recent push to approve HCMC’s long-awaited master plan has further strengthened the sector’s outlook and investor confidence. In light of this, we topped up in VHM, which is preparing to launch the 385ha Co Loa project in Hanoi, a development we believe will significantly catalyse future growth. VHM’s recently announced share buyback programme of 370 million shares (c.8.5% of OS), approved in early September, also contributed to a strong rally in the stock price. We topped up in DXG, which rallied on news of legal progress for its upcoming Gem Riverside project, a development that should substantially rerate the stock. Additionally, we finalised the KDH block deal that was initiated in July.
Having completed our rotation in the banking sector, we are now satisfied with our weightings in both tier-one private banks and state-owned SOCBs. We believe these holdings reflect an optimal balance of strong performance and attractive valuation metrics. Specifically, MBB has shown significant improvement with an increase in NIM of 47bps QoQ to 4.7% in 2Q24, alongside a reduction in its non-performing loan ratio to 1.6%. TCB’s NIM also rose to 4.2% in 1H24, with an NPL ratio of 1.2%, reflecting proactive management of asset quality. MBB and TCB are expected to achieve strong NPAT growth of 19.7% and 18.9% in 2025,respectively, and EPS growth of 20.3% and 18.9%, above the sector’s EPS growth average of 18%.
Stock in Focus: Khang Dien House (KDH)
Established in 1990, KDH is one of Vietnam’s largest property developers with a market capitalisation of $1.4bn. The company focuses on residential and industrial projects in HCMC, capitalising on its significant clean land bank in the city and its ongoing urbanisation and development. These strengths align with our investment thesis of Vietnam’s urbanisation and anticipated real estate recovery. Coupled with strong financials, and a reputation for clean, legal and timely delivery of projects, KDH is well-positioned to lead the country’s real estate resurgence.
KDH’s 1H24 results recorded revenue at $40mn, down 3% YoY, with NPAT falling by 25% YoY to $14mn. This decline was quite understandable, because most of KDH’s handovers for 2024 are expected to fall in the latter half of the year. We expect that the company will begin the handover of its project, The Privia, in October, a fully presold development of 1,040 high-rise units. This development is expected to support a 14.8% YoY increase in 2024 NPAT, reaching $35mn. Additionally, KDH is set to launch presales for its 6ha JV with Keppel Land in late 2024 or early 2025, with the company having already neared the completion of development’s construction prior to the launch date. KDH has also been active in expanding its land bank inventory by 70% over the past 1.5 years, totalling around 500ha. With its substantial land banks, strong reputation, and forecast EPS growth surging to 47.2% in 2025, KDH is best in class for those looking for exposure to Vietnam’s property sector and growth potential.
