Investing in FLC Faros offers funds attractive returns
Investing in FLC Faros offers funds attractive returns
FTSE Viet Nam ETF was holding some 3.12 million shares of FLC Faros Construction Company (ROS), valued at over VND530 billion (US$23.3 million) as of April 10, Bloomberg data showed
This makes it the fifth-largest investee company in the fund’s portfolio.
Almost all the shares were bought during the fund’s first-quarter review in 2017, which ended on March 17, at a price of VND160,100 ($7.03) a piece, totaling VND499 billion ($21.9 million).
As a result, the investment in ROS has yielded more than $1.4 million in returns for FTSE Viet Nam ETF, the second largest ETF by net asset value (NAV) in the Vietnamese stock market, in less than one month.
Strong Buying Force from Foreign Players
FTSE Viet Nam ETF performed poorly in 2016 when its NAV per fund certificate ended the year at $22.28, down 2.4 per cent from the previous year. The fund, however, made a turnaround with its NAV increasing 10.07 per cent since the start of this year, reaching $24.62 per share as of April 10.
With the inclusion of ROS since the second quarter, the fund’s NAV is expected to perform well and be one of the best investment options.
Before FTSE Viet Nam ETF, MSCI Frontier Markets Index ETF – a wider-reaching fund that covers global frontier markets with total assets worth $589 million – had announced to add ROS to its portfolio from February 10, 2017.
Based on the last trading day on February 28, the fund is calculated to have a large amount of ROS shares at a price of VND148,000 per share, translating into a return rate of 14.8 per cent for the fund to date.
Besides the two ETFs that disclosed their operations, a number of offshore funds were early birds to invest in ROS.
Together with VietJet Air (VJC), Novaland (NVL), Mobile World (MWG) and Airports Corporation of Vietnam (ACV), ROS has become one of the cash cows for foreign funds since 2016.
Outlook on ROS
Market perspective remains unclear as the meeting season of shareholders comes to an end and short-term supportive news runs out. Against this backdrop, ROS is among the highlights as it continues to remain appealing to foreign traders, evidenced by stable trading volume and uptrend.
Positive factors are behind this bright outlook.
FLC Faros has announced it has established subsidiaries in a bid to expand its involvement in real estate products of the golf-resort-villa complex in the Nhon Hoi Economic Zone, Binh Dinh Province. In addition, it has purchased stake and become an investor in the expansion of the eco-tourism compound in Vinh Phuc.
The company is also proceeding with the mammoth golf-resort-villa-entertainment project on an area of 1,900ha in Quang Binh Province, with total investment of VND13.8 trillion ($606 million). Further, it has acquired a golf operator to improve capital usage.
Last month, FLC Faros and FLC Group received in-principle approval to invest in the high-end entertainment complex in the Van Don Special Economic Zone, Quang Ninh, with estimated investment of $2 billion. According to the preliminary plan, the project consists of a wide range of properties, such as a resort complex, a five-star hotel, an international convention centre and a casino, as well as a golf course, a safari, a museum, a farm community and a library.
Market Vectors Viet Nam ETF (VNM ETF), $294 million fund run by Van Eck Global, will reshuffle its holdings in May, part of its second-quarter review. The largest ETF in the Vietnamese stock market is likely to add ROS in its portfolio in the next review in May after the shares meet the minimum listing period of at least six months before review.
ROS can account for 5-8 per cent of the ETF’s holdings, equivalent to $15-24 million.
The requirement on listing duration is also the main obstacle for ROS to be eligible for inclusion on the VN30 Index, which represents the 30 largest tickers listed on the HOSE. Consequently, it has not been included with funds that track this index, including South Korea’s KINDEX Viet Nam VN30 ETF, whose NAV stands at over VND300 billion ($13.2 million).
ROS shares started trading on the HCM Stock Exchange on September 1, 2016.
With its listing duration exceeding six months, ROS is entitled to join the VN30 Index, given its liquidity and market capitalisation. According to the legislation, the VN30 Index is reviewed every six months and the upcoming review will take place in July.
