REG - Vietnam Enterprise - Monthly Update

Prosperity BancsharesAnnouncement

12/01/2022 08:05

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RNS Number : 1914Y  Vietnam Enterprise Investments Ltd  12 January 2022

12 January 2022

 

Vietnam Enterprise Investments Limited

("VEIL" or "the Company")

 

Monthly Update

47.1% NAV Return in 2021 and -1.7% for December

 

 

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 December 2021 is set out in this notice.

 

Fund Performance

·     In 2021 VEIL's NAV increased 47.1%, compared to the Vietnam Index
which increased 39.0%.

·     As of 31 December 2021, VEIL's NAV decreased by 1.7% over the
previous month (compared with an increase of 1.1% for its reference index, the
Vietnam Index) in US$ terms.

·     VEIL's NAV per share was US$12.21 at the end of December, total NAV
was US$2,607m.

·   Seven of VEIL's top ten holdings decreased in December, with Hoa Phat
Group and Vingroup the main laggards. The biggest gainer was midcap real
estate developer Dat Xanh Group, all three are discussed below.

 

Economic Overview

·     GDP recovered in Q4 following the lockdown throughout most of Q3,
registering at +5.2% for Q4 to end 2021 with +2.6% growth year-on-year.

·     The main driver was the manufacturing sector, which advanced +4.1%
year-on-year.

·     The CPI rose +1.8% in 2021, lower than observed in the US and
Europe, partly because of Vietnam's more basic CPI basket but also due to more
restrained fiscal and monetary policy in 2021.

·     Total trade for 2021 increased 22.6% to US$668.5bn, with imports
rising 26.6% to US$332.3bn, outpacing exports which gained only +19.1% to
US$336.3bn, partly handicapped by pandemic constraints globally. The
cumulative trade deficit of US$2.4bn in July was reversed to a surplus of
US$4.0bn by December 31(st).

·     FDI contribution remained integral at nearly 70% of total trade.
Disbursed FDI reached US$20bn in 2021, a decline of just 1.2% year-on-year.
One noteworthy FDI commitment in December was Lego Group announcing a US$1bn
carbon-neutral factory to be built in Vietnam with construction starting in
2H2022 on a 44-hectare site around 34 miles from Ho Chi Minh City in Binh
Duong, a neighbouring industrial province.

·     At the end of 2021, more than 90% of Vietnam's adult population
(over 18 years old) were double-vaccinated and nearly 56% of children aged
12-17 years old were double-vaccinated.  As many as two million doses per day
are now being administered, with some parts of the country currently receiving
booster shots.

 

Dien Huu Vu, the Portfolio Manager of VEIL commented:

 

"It is worth reflecting that not only did Vietnam have one of the best returns
in Asia in 2021, at +39.0%, it also experienced significant progress in market
development. There are now 63 companies with a capitalization in excess of
US$1bn. Daily turnover has also reached a new normal of US$1bn - often much
higher, including a daily average of US$1.4bn in December - this is above many
peers classified as emerging markets.

 

With the majority of the population now vaccinated against Covid-19 and
treatment drugs being licenced for manufacturing and distribution
domestically, the Government's target for the next four years of their
five-year term can turn to economic development, including a US$15bn stimulus
package which was announced this week. The Regional Comprehensive Economic
Partnership free trade agreement took effect from 1 January 2022 and contains
preferential terms and principles that the Manager believes have the potential
to continue supply-chain shifts to Vietnam and possibly even accelerate this
trend."

 

 

December Commentary

 

Real estate developer Dat Xanh Group gained 6.6% despite surprising the market
with news of the cancellation of a private placement of 200m shares, the
announcement of three new large projects in Ho Chi Minh City and Binh Duong
was well-received by investors.

 

Sentiment in Hoa Phat Group's share price was weakened by the sharp drop in
Chinese steel prices, which triggered concern that profit margins may be
squeezed for the steel sector. Sales volumes for December remained healthy,
with the company reporting nearly 800,000 tons of steel products sold, up 14%
year-on-year.

 

Vingroup was sold heavily by investors fearing another potential delay with
the proposed US IPO of its VinFast subsidiary, this was despite preparatory
steps being continued with the transfer of ownership of VinFast Vietnam to
VinFast Singapore as part of the potential IPO process. In early January,
VinFast also announced its exit from the ICE (internal combustion engine) car
manufacturing to fully focus on EV (electric vehicle) manufacturing. The
company also officially announced 3 new EV models in addition to their current
VFe34 model, which started delivery in late December.

 

Top Ten Holdings (72.5% of NAV)

 

     Company                  Sector               Vietnam Index %  NAV %  Monthly Change %
 1   Hoa Phat Group           Materials/Resources  3.7              12.2   -5.6
 2   Vietnam Prosperity Bank  Banks                2.8              10.7   -5.4
 3   Asia Commercial Bank     Banks                1.7              9.8    3.2
 4   Mobile World             Retail               1.7              9.6    -2.6
 5   Vinhomes                 Real Estate          6.3              6.7    -3.5
 6   Vietcombank              Banks                5.2              6.1    2.5
 7   Vingroup                 Real Estate          6.4              5.5    -9.8
 8   FPT Corporation          Software/Services    1.5              4.3    -4.6
 9   Techcombank              Banks                3.1              3.9    -3.9
 10  Dat Xanh                 Real Estate          0.4              3.8    6.6

 

 

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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