Vincom Mega Mall at Time City in Hanoi. During the two and a half years ended 30 June 2014, Vingroup's cash flows were primarily driven by sales from Royal City, Vincom Village and to a limited extent by Times City. – Photo Tinmoi.vn

SINGAPORE (Fitch) – Fitch Ratings has affirmed Vietnam property developer Vingroup JSC's (Vingroup) Long-Term Foreign and Local Currency Issuer Default Ratings (IDR), senior unsecured rating and the rating on its senior notes at 'B+'. The outlook is stable, the rating firm concludes.

Vingroup's ratings reflect its small size when compared to global property developers and its aggressive growth strategy. The ratings also capture Vietnam's improving macroeconomic conditions that are likely to accelerate property sales growth, Vingroup's strong market position as Vietnam's largest listed real estate developer, its sizable land bank, its adequate liquidity and Fitch's expectation that Vingroup's new projects - Vinhomes Nguyen Chi Thanh and Vinhomes Tan Cang - would be launched successfully, which would provide the majority of funding for the capital expenditures from 2014.

In the eight months ended 31 August 2014, Vingroup's sales rate improved to around 90% of apartment launches from the 70% to 80% that prevailed in 2013. Fitch expects Vingroup to maintain the sales rate due to a stronger macroeconomic environment and new project launches. Vingroup's acquisition of a 70% stake in the Vietnam-based hypermarket operator Ocean Retail and Real Estate Management JSC (ORC) is unlikely to result in an increase in gross debt. This acquisition would result in a marginal increase in Vingroup's businesses that generate recurring revenues like retail, healthcare and hospitality.

During the two and a half years ended 30 June 2014, Vingroup's cash flows were primarily driven by sales from Royal City, Vincom Village and to a limited extent by Times City. Having developed the first two projects to their maximum potential, Vingroup's cash flows from second half of 2014 onwards are expected to be driven by Times City, Vinhomes Nguyen Chi Thanh and Vinhomes Tan Cang. The improving market for residential apartments and the mostly mid-market positioning of the new projects are likely to support the company's current sales rate. – Fitch/Reuters/VNS

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