Vietnam Enterprise - Monthly Update

Vietnam Enterprise Investments

12/12/2023 07:00

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RNS Number : 4618W  Vietnam Enterprise Investments Ltd  12 December 2023

12 December 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 November 2023 is set out in this notice.

 

Company Performance

·    As of 30 November, VEIL's NAV increased 8.7% over the previous month
against a gain of 8.0% for its reference index, the Vietnam Index ("VNI"),
both in total return USD terms. The Company's NAV per share was US$8.37 and
its total NAV was US$1.7bn.

·    VEIL's share price increased 7.2% in November and has declined -4.0%
year-to-date, both in USD terms.

·    VEIL's three-month NAV per share performance in USD terms is -10.7%,
+9.4% over one year and +8.7% over three years. Over the same time periods,
the performance of the VNI was -10.9%, +8.0% and +8.9%, respectively.

·    In GBP terms, VEIL's NAV increased 4.1% over the previous month and
has increased 1.2% year-to-date. The Company's NAV per share was £6.61 as of
30 November and its total NAV was £1.3bn. The GBP share price increased by
2.7% for the month and has declined 8.8% year-to-date.

·    The share price discount to NAV as of 30 November was 19.5%, compared
with 18.4% at the end of October and 10.7% as of 31 December 2022.

·    The Company repurchased 691,730 shares in November, compared with
1,207,118 shares repurchased in October. Year-to-date to 30 November,
5,484,906 (2.7% of shares outstanding as of 1 January 2023) have been
repurchased. The accretion to NAV per share from the share repurchases is
0.59%.

·    The Vietnamese dong ("VND") appreciated 1.2% against the USD in
November and has depreciated 2.7% year-to-date. The VND depreciated 2.4%
against the GBP in November and has depreciated 7.7% year-to-date.

 

Dien Vu, Portfolio Manager of VEIL commented:

 

"The VNI recovered 8.0% in November following a 17.5% decline in September and
October. In addition to global markets rallying, sentiment also improved after
the State Bank of Vietnam ("SBV") ceased SBV-bill issuance on 9 November as
uncertainties over currency depreciation subsided, resulting in a net
injection of approximately US$7.5bn into the banking system. Some state-owned
commercial bank deposit rates are now at pre-pandemic levels of 4.8%, with
abundant liquidity in the system. The Manager believes this to be the reason
for the 14.1% month-on-month rise in daily turnover to US$794mn across
Vietnam's exchanges as investors moved out of term deposits and sought higher
returns in the capital markets.

"On 27 November, Vietnam upgraded its diplomatic relations with Japan to its
highest level of Comprehensive Strategic Partnership. This is a step up from
the Strategic Partnership status established in 2009 and has the potential to
amplify foreign direct investment ("FDI") from Japan, which has increased
annually for the past decade. Accumulated Japanese FDI was US$29bn in 2012 and
increased to US$80bn at the end of 2022. The manager believes this will
support some of VEIL's portfolio holdings, including FPT Corporation ("FPT")
and Duc Giang Chemicals ("DGC").

 

"FPT generated US$700mn in revenue from global outsourcing in the first three
quarters of 2023, with approximately 40% of this coming from Japan.
Domestically, the upgrade will help fulfil Japan's future need for a digital
presence, with FPT, Vietnam's leading software outsourcing and technology
company, likely to benefit most. FPT's revenue is forecast to grow by 20% in
2024, with outsourcing showing a solid growth of 25% from Japan.

 

"VEIL has recently increased its position in DGC as both a long-term play on
the semiconductor industry and a short-term focus on the anticipated recovery
in yellow phosphorus prices, which fell 36% in the first nine months of 2023.
This decline was due to significant inventory digestion and production cuts at
semiconductor companies. However, the demand from leaner semiconductor
inventory and gradually improving consumer electronics demand is driving the
price back up.

"Residential developers experienced a broad-based rally due to optimism that
current legal impediments, including the Land Law revision, will see
substantial progress by H1 2024. This included VEIL portfolio companies such
as midcap developers Khang Dien House ("KDH") (+10.5% month-on-month), Dat
Xanh Group (+21.6%), and Phat Dat Real Estate (+31.5%).

 

"KDH's recent Privia project launch in HCMC saw a near 90% uptake of the first
phase of 1,024 units. KDH have sound legal status on their projects, which
are ready to launch when the property market starts warming up. In addition to
the Privia project, KDH recently started breaking ground on a six-hectare
mixed-use project (200 low-rise and 600 mid-rise units) in cooperation with
Singaporean developer Keppel Land.

 

"VEIL strategically topped up in infrastructure construction company Vinconex
("VCG"), which was up 21.0% month-on-month. VCG currently looks set to benefit
from upcoming Government infrastructure projects, including the north-south
expressway, the expansion of the existing HCMC airport in 2024 and the
development of the new HCMC international airport, which the Government is
aiming to have phase one completed by 2025."

 

Top Ten Holdings (58.4% of NAV)

 

     Company                  Sector               NAV %  VNI %  Monthly Return %  One-year Return %
 1   Vietnam Prosperity Bank  Banks                9.2    3.0    1.5               21.3
 2   Hoa Phat Group           Materials/Resources  9.1    3.6    16.9              46.6
 3   Asia Commercial Bank     Banks                7.9    2.0    3.9               20.8
 4   Vietcombank              Banks                7.3    11.0   -1.2              25.5
 5   FPT Corporation          Software/Services    6.1    2.7    12.1              47.2
 6   Mobile World Group       Retail               5.0    1.3    3.4               -10.5
 7   PetroVietnam Gas         Energy               3.8    4.1    1.1               -12.3
 8   Vinhomes                 Real Estate          3.8    4.2    7.2               -23.0
 9   Khang Dien House         Real Estate          3.2    0.6    10.5              27.3
 10  Military Bank            Banks                3.0    2.1    5.4               22.6

     Vietnam Index            -                           -      8.0               8.0

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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