REG - Vietnam Enterprise - Monthly Update

Prosperity BancsharesAnnouncement

13/12/2021 08:00

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RNS Number : 4076V  Vietnam Enterprise Investments Ltd  13 December 2021

13 December 2021

 

Vietnam Enterprise Investments Limited

("VEIL" or "the Company")

 

Monthly Update

+1.7% NAV Return for November and 49.6% in 11M2021

 

 

Vietnam Enterprise Investments Limited ("VEIL") is a closed-end fund investing
primarily in listed equity in Vietnam and a FTSE 250 constituent. The
Company's NAV performance for November 2021 is set out in this notice.

 

Fund Performance

·    As of 30 November 2021, VEIL's NAV increased by 1.7% over the
previous month (compared with 2.5% for its reference index, the Vietnam Index)
in US$ terms.

·    YTD VEIL's NAV has increased 49.6%, compared with the Vietnam Index
which has increased 37.4%.

·     Seven of VEIL's top ten holdings rose. Six of the top ten moved in
a narrow band of +/- 1% change in share price for the month.

·     The most noteworthy performer was Saigon Securities Corporation, a
brokerage VEIL built a position in during Q3, which was up 38.2% for the
month.

 

Economic Overview

·      Vietnam's post-lockdown recovery continued in November, with
businesses in the pandemic hotspot of HCMC moving closer to full operation and
the PMI registering at 52.2.

·      Industrial production moved up 5.5% month on month and 5.6% year
on year.

·      Trade returned to a surplus, with 11M exports +17.5% at $299.7bn
and imports +27.5% at $299.5bn.  The Manager expects that in the coming
months, as forced inventory accumulation drops out of the numbers, export
growth is likely to accelerate while import growth falls.

·      The service sector is still struggling.  Retail sales were +6.2%
month on month but -12.2% year on year.

·      Vietnam's daily COVID-19 cases bottomed at around 3,000 in
September, but with the country coming out of lockdown they are currently
averaging 13,500. The death rate is currently 0.8% vs. 2.4% at the height.

·      Most cases are mild, stay-at-home ones. The Manager does not see
any evidence these are overwhelming hospital systems. Many are also in regions
with relatively low GDP contribution.

·      Nearly 130mn vaccine doses have been administered; 55% of adults
are fully vaccinated, 75% have received one dose.

 

Dien Huu Vu, the Portfolio Manager of VEIL commented:

 

"The market saw an encouraging performance in November, with record-highs
reached as vaccinations accelerated and a further economic recovery was
evident. Daily liquidity across Vietnam's three stock exchanges averaged
$1.8bn for the month and bullishness even continued into December despite a
global decline in markets.  Rumours of Omicron variant spreading to Vietnam
did take the market lower, but the mood so far seems to be one of uncertainly
rather than panic.

 

Other than the new Omicron variant, the main macro worry for investors appears
to be the currency, although we currently believe the risk seems low.
External-account surpluses are returning, currency reserves are around US
$108bn, equivalent to nearly four months of imports.  The Vietnam Dong has
appreciated +0.4% YTD, and our expectation is that tapering is unlikely to
reverse this given low foreign debt, positive real rates and negligible
foreign investment in bonds. Inflation is under control, Vietnam's CPI has
risen 2.1% year on year, low inflation is currently also being observed in the
rest of ASEAN. With respect to Vietnam, we see numerous reasons for this: lack
of fiscal and monetary excesses, falling food prices, stable power, health and
education prices, minimal ownership of cars and other consumer goods dependent
on imported inputs."

 

 

November Commentary

 

Brokerage firm Saigon Securities ("SSI") had strong month fuelled by positive
investor sentiment and an increasingly bullish outlook on Vietnam's capital
markets. This was evidenced by a record number of retail account openings in
Vietnam, more than 220,000 during the month. Daily liquidity averaged more
than US$1.4bn on the Ho Chi Minh Stock Exchange, the highest monthly trading
average ever.

 

VEIL's third largest holding, Mobile World Group ("MWG"), announced positive
10M results, with NPAT at $169m (+19%) and a monthly record of US$25m, largely
due to the reopening of cellphone and consumer-electronics outlets and the
pent-up demand created during lockdown. Additionally, iPhone sales surged as
new models were introduced, and the Apple-approved Topzone stores (operated by
MWG) opened.

 

Vingroup ("VIC") saw positive reaction to the news that the company is
restarting its subsidiary Vinfast's IPO process. VIC, via a Bloomberg article,
announced it is looking to raise up to $3bn with a valuation range of $25bn to
$60bn post-IPO and a potential US-listing. At home, Vinfast also receives a
boost from the Government's proposal to cut special consumption tax for
electric vehicles as the delivery of its first EV line draw nears.

 

On the downside, HPG had a rough month as sentiment in the steel sector turned
negative from falling output prices in China. November volumes were down 21%
month on month and were also affected as local agents delayed building their
inventories until prices stabilised. The Manager believes that sales volumes
should hold up well in 2022, particularly given Vietnam's commitment to
infrastructure investment.

 

 

Top Ten Holdings (75.2% of NAV)

 

     Company                  Sector               Vietnam Index %  NAV %  Monthly Change %
 1   Hoa Phat Group           Materials/Resources  3.8              13.0   -14.2
 2   Vietnam Prosperity Bank  Banks                2.9              11.1   -0.8
 3   Mobile World             Retail               1.7              9.9    5.8
 4   Asia Commercial Bank     Banks                1.6              9.3    1.0
 5   Vinhomes                 Real Estate          6.5              7.1    -1.0
 6   Vietcombank              Banks                6.4              6.3    1.0
 7   Vingroup                 Real Estate          7.0              6.2    9.7
 8   FPT Corporation          Software/Services    1.5              4.8    0.3
 9   Techcombank              Banks                3.2              4.0    0.5
 10  Saigon Securities        Brokers              1.0              3.5    38.2

 

 

For further information, please contact:

 

Vietnam Enterprise Investments Limited

Rachel Hill

Phone: +44 122 561 8150

Mobile: +44 797 121 4852

rachelhill@dragoncapital.com (mailto:rachelhill@dragoncapital.com)
 

 

Jefferies International Limited

Stuart
Klein

Phone: +44 207 029 8703

stuart.klein@jefferies.com (mailto:stuart.klein@jefferies.com)

 

Buchanan

Charles Ryland / Henry Wilson / George Beale

Phone: +44 20 7466 5111

veil@buchanan.uk.com (mailto:veil@buchanan.uk.com)

 

LEI: 213800SYT3T4AGEVW864

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