CapitaLand announced that it has acquired for US$51.9m a prime site in Ho Chi Minh City, which can potentially be developed into two towers – a 17-storey residential tower and a 22- storey serviced residence tower. The serviced residence component will be managed by the group’s serviced residence arm, The Ascott Limited, under its Somerset brand. Management indicates that they remain confident about Vietnam’s economic outlook and that residential sales in the country were strong in 1H2016 with about 460 units sold (worth about S$80m), which translates to a 20% YoY growth in terms of sales values and volume.

We like that this project will deepen the group’s exposure to the growing Vietnamese market and note that this is CapitaLand’s third acquisition in the country since June 2015. Maintain BUY with an unchanged fair value estimate of S$3.68.  

Source: OCBC Research - 26 Sept 2016