Real Estate Sector – Initiation – 20180823

• The World Bank expects Vietnam’s middle-class population to grow by 8.7% p.a. in 2018-20F, driving huge demand for mid-range and affordable condos, in our view.
• Mass metro rail network and upgraded road system in Ho Chi Minh City and Hanoi will make new suburban areas more attractive for future residential development.
• We believe the supply is now better aligned with real housing demand compared to the last five years, which bodes well for future market liquidity, in our view.
• Our sector top picks are NLG and KDH as they focus on the mid-range condo segment and have land reserves to support multi-year development pipelines.
• We initiate coverage on the sector with an Overweight rating, along with Add ratings on KDH (TP: VND36,700) and NLG (TP: VND35,500)

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