Arriving at the French Colonial hotel in the quaint downtown (old quarter), I checked in and headed out for an evening walk to have dinner. What became immediately apparent upon stepping outside of my hotel was the height of many of the completed buildings and all of those which were under construction in the area—Vientiane is going vertical. What used to be a neighbourhood of low rise, often single storey wooden houses had largely morphed into ten to fifteen storey hotels, apartments, and office buildings. Naturally on some streets which had gone completely vertical, the colonial charm had given way to modernity, though there were still plenty of streets to get lost in time walking down.
The next morning, I had my first meeting with BCEL, the largest bank in Laos and a listed company on the Laos Stock Exchange. Majority owned by the government, BCEL had problems several years ago with too much lending to government companies and the construction sector which led to a significant rise in their non-performing loans. I was highly encouraged when we discussed this issue as the bank has dramatically decreased its exposure to government related companies and projects and had no new non-performing loans as of late. Now the bank is more focused on financing the private sector, in particular hydropower companies. Another topic we discussed was their interest in dual listing and their hope that the Laos Securities Commission passes legislation on dual listing as management realizes their shares are grossly undervalued, trading at a P/E of less than 4x, a P/B of 0.75x and offering a dividend yield of over 13%.
My next meeting was with the Deputy Secretary General of the Laos Securities Commission to discuss just this. We had a lengthy conversation about the benefit of dual listing and how it would ultimately drive liquidity in the Laos market and potentially encourage new IPO’s to further deepen the market. Dual listing could be a boon for Laos, creating a better functioning financing mechanism for SOE’s to partially privatize, as well as offering many private companies in search of capital an alternative to the banks.
Having some free time in the afternoon, I wanted to visit Vientiane Center, a mall I had passed in the morning. Strolling through what is currently the largest mall in the country, it didn’t have much beyond local vendors, a KFC, and a modest movie theatre. Directly across the street, however, a brand new and modern mall was under construction which is expected to be the anchor location for new international brands that are expected to enter the country, and I’m sure it will be crowded on the weekends as locals seek an escape from the Laotian heat.