Vietnam Enterprise - Monthly Update

Vietnam Enterprise Investments

14/11/2023 07:00

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RNS Number : 3704T  Vietnam Enterprise Investments Ltd  14 November 2023

14 November 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 October 2023 is set out in this notice.

 

Company Performance

·    As of 31 October, VEIL's NAV decreased 13.0% over the previous month
against a fall of 11.7% for its reference index, the Vietnam Index ("VNI"),
both in total return USD terms. The Company's NAV per share was US$7.70 and
its total NAV was US$1.6bn.

·    VEIL's share price decreased 13.1% in October and has declined 10.3%
year-to-date, both in USD terms.

·    VEIL's three-month NAV per share performance in USD terms is -18.9%,
+2.5% over one year and +11.0% over three years. Over the same time periods,
the performance of the VNI was -18.5%, +2.8% and +9.6%, respectively.

·    In GBP terms, VEIL's NAV decreased 12.4% over the previous month and
has declined 2.8% year-to-date. The Company's NAV per share was £6.35 as of
31 October and its total NAV was £1.3bn. The GBP share price decreased by
12.6% for the month and has declined 11.1% year-to-date.

·    The share price discount to NAV as of 31 October was 18.4%, compared
with 18.2% at the end of September and 10.7% as of 31 December 2022.

·    The Company repurchased 1,207,118 shares in October, compared with
1,158,987 shares repurchased in September. Year-to-date to 31 October,
4,793,176 (2.3% of shares outstanding as of 1 January 2023) have been
repurchased. The accretion to NAV per share from the share repurchases is
0.52%.

·    The Vietnamese dong ("VND") depreciated 1.1% against the USD in
October and has depreciated 4.0% year-to-date. The VND depreciated 1.0%
against the GBP in October and has depreciated 5.2% year-to-date.

 

Dien Vu, Portfolio Manager of VEIL commented:

 

"The VNI's total decline of 17.5% in September and October cancelled out the
market and the Company's YTD gains. The Manager believes the drop in
valuations across the portfolio has been sentiment driven. This view may be
supported by the market's recovery of 8.9% in the first seven trading days of
November. The Vietnamese market is not immune from global sentiment and is
subject to further pressure from domestic policy decisions.

 

"Of note in this regard is the State Bank of Vietnam's ("SBV") decision to
remove an estimated excess US$9bn in financial system liquidity since late
September via open-market operations. The move dampened local investor
sentiment who mistakenly interpreted it as a return to monetary tightening
after the SBV's 150 basis point rate cuts earlier in the year. However, during
the latter half of October, the SBV injected US$2.5bn of liquidity into the
system.  Rather than an augur of a hawkish SBV, the Manager believes the move
reflects their objective to maintain a sufficient war chest to protect the
value of the currency. The VND depreciated 1.1% against the USD in October and
follows a 0.9% depreciation in September. The Manager maintains the viewpoint
that the VND is fundamentally solid and the SBV will continue its focus on
growth with economic stability.

 

"Despite the mark-to-market volatility, the Manager has not observed any
substantial deterioration in the core fundamentals of VEIL's holdings and
would like to highlight the following companies:

 

"Mobile World Group ("MWG") declined 29.0% in October as third quarter
earnings reported that revenue declined 16% YoY to US$3.5bn in the nine months
to 30 September. However, MWG's market share in Apple products increased to
42% from 30% the previous year, and non-Apple products increased to 58% from
50%. MWG's management has indicated that they expect profit margins to recover
in 2024, partly due to optimising truck capacity and other operational
efficiencies in the supply chain for their grocery store division with c.2,000
outlets. The Manager believes the October fall in MWG's share price was more
likely influenced by early rumours over its potential removal from a $665m
exchange traded fund of which MWG is a 12.5% weight, although this review is
not due until April 2024.

 

"Vinhomes ("VHM") declined by 15.1% despite strong Q3 results. NPAT of
US$1.3bn for the first nine months of the year fulfilled 107% of the Manager's
full-year forecast for 2023. The October share price decline was in part due
to a large volume of sell orders placed in the market on 26 October as
investors hedged against its parent company Vingroup's US$250m five-year
exchangeable bond placement with the option to convert into VHM shares.

 

"Hoa Phat Group's ("HPG") October sales continued to recover and were up 7.4%
month-on-month and 23.7% year-on-year. Production cuts in China benefitted
both Vietnamese steel prices and demand, and we expect sales momentum will
continue at a steady rate, supported by the Governments infrastructure drive
and gradual recovery of the property market. With clear signs of earnings
recovery and HPG's furnaces now operating at 85% capacity, the Manager
anticipates over 40% EPS growth in 2024 whilst the price to book ratio is
currently at around a 20% discount to its three-year average."

 

 

Top Ten Holdings (62.6% of NAV)

 

     Company                  Sector               NAV %  VNI %  Monthly Return %  One-year Return %
 1   Vietnam Prosperity Bank  Banks                11.4   3.3    -8.7              23.7
 2   Hoa Phat Group           Materials/Resources  8.6    3.3    -13.4             48.6
 3   Vietcombank              Banks                8.5    11.9   -1.7              41.0
 4   Asia Commercial Bank     Banks                8.3    2.0    -3.0              15.6
 5   FPT Corporation          Software/Services    5.9    2.6    -11.4             30.6
 6   Mobile World Group       Retail               5.2    1.4    -29.0             -25.4
 7   PetroVietnam Gas         Energy               4.2    3.6    -16.3             -13.3
 8   Vinhomes                 Real Estate          3.8    4.2    -15.1             -12.4
 9   Vinamilk                 Food & Beverage      3.4    3.5    -9.2              -7.8
 10  Khang Dien House         Real Estate          3.4    0.6    -4.6              40.1

     Vietnam Index            -                           -      -11.7             2.8

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)

 

Radnor Capital Partners

Iain Daly

Phone: +44 20 3897 1830

id@radnorcp.com (mailto:id@radnorcp.com)

 

 

LEI: 213800SYT3T4AGEVW864

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