Suburban, exurban, and provincial property markets are hot; major urban centers are not

The medium-term outlook for residential property remains positive given supportive monetary and fiscal policy and the ongoing strucural trends of urbanization and expansion of the middle class. Interestingly, property markets in the “peaceful” countryside have woken up in the past year, whereas the major urban centers of Hanoi and HCM have (perhaps unsurprisingly) become drowsy.

Landbank is the key to operational outperformance. Our strategic preference is to focus on quality management, solid balance sheets, and cash flow across all sectors. For property developers specifically, we would add an additional factor to that list of positive characteristics: substantial and attractively located landbank, which provides such developers the option of rapid monetization through divestment to third parties (i.e., cashed-up foreign players). This offsets possible concerns about cash flow, boosting both debt sustainability and equity valuations.

Our top stock picks are VHM and KDH which both tick the “quality” boxes discussed above. We reiterate our HOLD-Outperform ratings on NLG and NVL. In this report, we also discuss recent developments in the major urban property markets of Hanoi and HCMC and provide updates on three non-rated stocks: KBC, LCG, and TDC.

For the complete report, please access here:  The peripheral markets awaken – Residential RE sector-final

Analyst: Tam Nguyen, tam.nguyen@yuanta.com.vn