REG - Vietnam Enterprise - Monthly Update

Vietnam Enterprise InvestmentsAnnouncement

12/02/2024 07:00

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RNS Number : 7326C  Vietnam Enterprise Investments Ltd  12 February 2024

12 February 2024

 

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 unaudited
performance for January 2024, in which NAV per share rose 1.3% (in USD terms),
is set out in this notice.

 

Tuan Le, Portfolio Manager of VEIL commented:

 

"There were encouraging economic indicators in January, including exports
reaching US$33.6bn, the highest figure since August 2022, and the Purchasing
Managers' Index registering its first expansion in five months. Headline
inflation remains well controlled at 3.4% year-on-year, while core inflation
decreased to 2.7%.

 

"Despite US$1.5bn of disbursed FDI, a US$2.9bn trade surplus and inward
remittances leading up to Vietnam's Lunar New Year holiday, the Vietnamese
dong ("VND") recorded a depreciation of 0.6% due to a strengthening US dollar
and the VND-USD interest rate differential.

 

"We believe the performance of the VND demonstrates Vietnam is not as affected
by China's economic slowdown as other nations. Many Asian and Oceanian
currencies suffered a depreciation of 2.0-3.5% in January, such as the
Malaysian ringgit (-3.0%), Indonesian rupiah (-2.6%), Thai baht (-3.0%),
Australian dollar (-3.5%), and New Zealand dollar (-3.3%). These countries
provide commodities and materials to China's production supply chain and have
had significant trade surpluses for many years. On the other hand, China is
Vietnam's largest trading partner, but Vietnam has a trade deficit with China
due to a diverse export portfolio comprising of agricultural and electronic
products, making Vietnam less vulnerable to a Chinese manufacturing
contraction.

 

"The Government expedited approval of the amended Law on Credit Institutions
and the Land Law. The amended Law on Credit reduces shareholders' ownership
and borrowing limits, and changes disclosure thresholds to individuals holding
more than a 1% stake, down from 5%. We anticipate that this will help improve
the long-term stability and transparency of the banking system. The banking
sector currently makes up 40% of VEIL's portfolio.

 

"The amended Land Law aims to resolve grey areas in property sector
regulations. Although further guidance is expected mid-year, the law intends
to expedite land clearance processes by enabling the Government to reclaim
land for existing projects. It also aims to align land compensation prices
with market value for affected households. Developers holding pre-approved
land for commercial housing should benefit from clearer land valuation methods
that promise quicker project execution. Our expectation is that this will
boost VEIL's property holdings, such as Vinhomes and Khang Dien House.

 

"Military Bank ("MBB") became VEIL's eighth largest position at the end of
January. It is one of Vietnam's leading commercial banks and has grown its
mobile banking users by 30% year-on-year. This cost-effective customer
acquisition and retention strategy is reflected in the company's results, with
PBT in Q4 2023 reaching US$258m (+38.6% year-on-year) and FY 2023 PBT of
US$1.1bn (+15.7% year-on-year). Deposit growth expanded 28.0% year-on-year and
the CASA (current account and savings) ratio grew to 40.2%; this is the
highest among peers and an indication of strong liquidity. We are encouraged
by MBB's strategy of diversifying its loan book to focus on high-growth
corporate sectors such as wholesale and retail trade, and manufacturing and
processing, which we believe positions it well for future growth."

Company Performance

·    As of 31 January 2024, VEIL's NAV increased by 1.3% over the previous
month against a gain of 2.5% for its reference index, the Vietnam Index
("VNI"), both in total return USD terms. The Company's NAV per share was
US$8.78 and its total NAV was US$1.8bn. VEIL's share price increased 2.4% in
January in USD terms.

·    VEIL's three-month NAV per share performance in USD terms is +14.0%,
+0.9% over one year and +5.3% over three years. Over the same time periods,
the performance of the VNI was +14.5%, +2.5% and +8.7%, respectively.

·    In GBP terms, VEIL's NAV increased 1.3% in January and decreased 2.5%
over one year. The Company's NAV per share was £6.89 as of 31 January and its
total NAV was £1.4bn. The GBP share price increased by 2.5% for the month and
has declined 9.5% over one year.

·    The share price discount to NAV as of 31 January 2024 decreased to
17.1%, compared with 18.1% as of 31 December 2023. On 31 January 2023 the
discount to NAV was 10.8%.

·    The Company repurchased 386,103 shares in January, compared with
213,786 shares repurchased in December. Year-to-date, 0.2% of shares
outstanding as of 1 January 2024 have been repurchased. The accretion to NAV
per share from the share repurchases is 0.04%.

·    The VND depreciated 0.6% against the USD in January and 4.2% over one
year. The VND depreciated 0.3% against the GBP in January and 7.2% over one
year.

 

 

Top Ten Holdings (59.0% of NAV)

 

     Company                  Sector               NAV %  VNI %  Monthly Return %  One-year Return %
 1   Hoa Phat Group           Materials/Resources  9.5    3.4    -1.3              20.6
 2   Vietnam Prosperity Bank  Banks                9.1    3.3    0.4               0.6
 3   Asia Commercial Bank     Banks                8.8    2.1    7.1               13.6
 4   Vietcombank              Banks                7.1    10.5   9.5               9.2
 5   FPT Corporation          Software/Services    6.0    2.6    -1.0              29.5
 6   Mobile World             Retail               4.7    1.4    4.5               -6.2
 7   Techombank               Banks                3.5    2.6    8.0               12.8
 8   Military Bank            Banks                3.4    2.4    15.9              26.0
 9   PV Gas                   Energy               3.4    3.7    -0.8              -15.3
 10  Vinhomes                 Real Estate          3.3    3.9    -4.6              -21.7

     Vietnam Index            -                           -      2.5               2.5

Source: Bloomberg, Dragon Capital

NB: All returns are given in USD terms

 

 

For further information, please contact:

 

Vietnam Enterprise Investments Limited

Rachel Hill

+44 122 561 8150

+44 797 121 4852

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

 

Jefferies International Limited

Stuart
Klein

+44 207 029 8703

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

 

Buchanan

Charles Ryland / Henry Wilson / George Beale

+44 20 7466 5111

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

 

h2Radnor

Iain Daly

+44 20 3897 1830

idaly@h2radnor.com (mailto:idaly@h2radnor.com)

 

 

LEI: 213800SYT3T4AGEVW864

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