REG - Vietnam Enterprise - Monthly Update

Vietnam Enterprise InvestmentsAnnouncement

14/04/2023 07:00

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RNS Number : 2461W  Vietnam Enterprise Investments Ltd  14 April 2023

14 April 2023

 

Vietnam Enterprise Investments Limited

("VEIL" or "the Company")

 

Monthly Update

 

VEIL is a London listed investment company investing primarily in listed
equities in Vietnam, and a FTSE 250 constituent. The Company's NAV performance
for March 2023 is set out in this notice.

 

Company Performance

·    As of 31 March, VEIL's NAV increased 6.7% over the previous month
against a gain of 5.5% for its reference index, the Vietnam Index ("VNI"),
both in US dollar terms.

·    The Company's NAV per share was US$8.28 as of 31 March and its total
NAV was US$1.7bn.

·    VEIL's three-month NAV per share performance in US dollar terms is
+5.5%, -32.5% over one year and +85.2% over three years. Over the same time
periods, the performance of the VNI was +6.7%, -29.4% and +69.3%,
respectively.

·    VEIL's share price rose by 5.6% in March and has increased 1.4%
year-to-date, both in US dollar terms.

·    In GBP terms, VEIL's NAV increased 4.5% over the previous month and
2.6% year-to-date.

·    The Company's NAV per share was £6.70 as of 31 March and its total
NAV was £1.4bn. The sterling share price increased by 3.4% for the month and
has declined 1.4% year-to-date.

·    The share price discount to NAV as of 31 March was 14.2%, compared
with 13.3% at the end of February 2023.

·    The Company repurchased 537,373 shares in March, to be held in
treasury, compared with 170,000 shares repurchased in February. Year-to-date
to 31 March 2023, 0.3% of shares outstanding as of 1 January 2023 have been
repurchased.

 

Dien Vu, the Portfolio Manager of VEIL commented:

 

"The VNI increased by 5.5% in March, due in part to the Government issuing two
decrees aimed at reviving the corporate bond market and supporting the real
estate sector, which in turn helped improve overall market sentiment.

 

"These measures had the desired beneficial effect, as twelve new bonds were
issued with a total value of US$1.1bn, 90% of which came from real estate
companies. This was a significant increase compared with the previous six
months during which the corporate bond market experienced hardly any new
issuances. A circular allowing banks to buy back corporate bonds traded
within the last 12 months has also been drafted and given the weak Q1 2023
data and record low M2 (money supply) growth of just 0.6% year-to-date, we
believe the Government will be more aggressive in Q2 2023 with its directives
to support the economy.

 

"The State Bank of Vietnam ("SBV") cut rates twice, reducing all
policy rates by a minimum of 50bps year-to-date, including the discount and
open market operations rates by 100bps, and the 6-month deposit cap rate and
refinancing rates down from 6.0% to 5.5% per annum.

 

"The CPI saw its biggest drop since September 2021 with a 0.2% month-on-month
decline, helped by a 4.9% year-on-year fall in transportation costs, lower
food prices and a decline in tuition fees. 2023 inflation forecasts from the
SBV, Ministry of Finance, and General Statistics Office, were collectively
revised downwards from 4.2-5.0% to 3.8-4.8%. Weakening external demand was
reflected in exports falling 14.8% year-on-year in March, while the inventory
index increased by 4.4%.

 

"In the market, the real estate and banking sectors responded positively to
the Government's regulatory changes, increasing 12.5% and 4.6% in March,
respectively. Within VEIL's real estate holdings, Vinhomes ("VHM"), the
Company's largest real estate position and a top ten holding, recorded a
strong recovery, gaining 25.8%. VHM benefitted from news it is in talks to
divest some of its assets to a Singaporean developer at a valuation of over
US$1bn. VEIL's other significant holdings in the real estate sector, Khang
Dien House and Dat Xanh Group, increased by 9.9% and 27.2%, respectively.
VEIL's largest holding, Vietnam Prosperity Bank ("VPB"), gained 25.1% as
investors reacted to the deal for Sumitomo Mitsui Banking Corporation ("SMBC")
to strategically purchase a 15% stake being issued by VPB for circa US$1.5bn
which will, once completed, see VPB become Vietnam's second biggest bank by
charter capital. Vincom Retail also rose 12.2% on news that a group from
Thailand is looking to acquire a majority stake in the company."

 

Economic Overview

·    Exports in March reached US$29.6bn and imports US$28.9bn, both
recording double-digit increases compared with February although were still
year-on-year declines of 14.8% and 11.1%, respectively.

·    S&P Global announced the Vietnam Manufacturing Purchasing Manager
Index (PMI) dropped to 47.7 index points in March vs 51.2 in February. Output,
new orders and employment all declined amid weakened demand.

·    The Index of Industrial Production rose by 9.6% in March but declined
1.6% year-on-year.

·    The CPI decreased by 0.2% month-on-month, rising 3.4% year-on-year.

·    The Vietnamese dong ("VND") appreciated 1.4% against the US dollar in
March, and 0.7% year-to-date. The VND depreciated 1.5% against the pound
sterling in March, and 2.0% year-to-date.

·    Year-to-date as of 31 March, State revenue has reached US$20.9bn and
expenditures US$15.5bn, increases of 1.3% and 7.2% year-on-year, respectively.

 

 

Top Ten Holdings (66.8% of NAV)

 

     Company                  Sector               VNI %  NAV %  Monthly Return %  One-year Return %
 1   Vietnam Prosperity Bank  Banks                3.3    14.6   25.1              -17.4
 2   Asia Commercial Bank     Banks                2.0    13.2   3.9               -8.0
 3   Hoa Phat Group           Materials/Resources  2.8    7.4    5.4               -40.7
 4   Vietcombank              Banks                10.2   6.1    -0.9              8.3
 5   Mobile World Group       Retail               1.3    5.4    -2.3              -48.2
 6   Vinhomes                 Real Estate          5.3    5.2    25.8              -32.0
 7   FPT Corporation          Software/Services    2.0    4.6    -0.4              -11.8
 8   Becamex IDC              Real Estate          2.0    4.6    0.4               10.8
 9   PetroVietnam Gas         Energy               4.6    4.4    -0.1              -5.8
 10  Khang Dien House         Real Estate          0.5    3.3    9.9               -44.1

     Vietnam Index            -                    -      -      5.5%              -29.4

Source: Bloomberg, Dragon Capital

NB: All returns are given in USD terms

 

 

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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