Vietnam Enterprise - Monthly Update

Vietnam Enterprise Investments

15/01/2024 07:00

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RNS Number : 6708Z  Vietnam Enterprise Investments Ltd  15 January 2024

15 January 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 NAV performance
for December 2023 is set out in this notice.

 

Company Performance

·    As of 31 December 2023, VEIL's NAV increased by 3.6% over the
previous month against a gain of 3.4% for its reference index, the Vietnam
Index ("VNI"), both in total return USD terms. The Company's NAV per share was
US$8.67 and its total NAV was US$1.7bn.

·    VEIL's share price increased 5.5% in December and 1.3% in 2023
overall, both in USD terms.

·    VEIL's three-month NAV per share performance in USD terms is -2.0%,
+10.4% over one year and +4.5% over three years. Over the same time periods,
the performance of the VNI was -1.4%, +11.1% and +1.8%, respectively.

·    In GBP terms, VEIL's NAV increased 2.9% over the previous month and
4.1% in 2023. The Company's NAV per share was £6.80 as of 31 December and its
total NAV was £1.4bn. The GBP share price increased by 4.7% for the month and
declined 4.5% in 2023.

·    The share price discount to NAV as of 31 December reduced to 18.1%,
compared with 19.5% at the end of November. On 31 December 2022 it was 10.7%.

·    The Company repurchased 213,786 shares in December, compared with
691,730 shares repurchased in November. For the full year, 5,698,692 (2.8% of
shares outstanding as of 1 January 2023) were repurchased. The accretion to
NAV per share from the share repurchases is 0.62%.

·    The Vietnamese dong ("VND") depreciated 0.04% against the USD in
December and depreciated 2.7% in 2023. The VND depreciated 0.6% against the
GBP in December and depreciated 8.3% in 2023.

 

Dien Vu, Portfolio Manager of VEIL commented:

 

"VEIL's NAV rose 3.6% in December, culminating in an annual rise of 10.4%.
Vietnam's economy grew by 5.1% in 2023, one of the highest growth rates
globally. As of 31 December, the size of the economy reached US$430bn and GDP
per capita increased to US$4,284, approaching the upper middle-income
threshold of $4,465 as defined by the World Bank. Final consumption - defined
as direct spending by individuals and households - improved modestly, growing
by 3.5% year-on-year, contributing 2.1% to the overall GDP growth.
Furthermore, a trade surplus of almost US$28bn helped maintain the Vietnamese
dong's relative resilience.

 

"Looking ahead to 2024 our outlook is optimistic. The market is trading on a
2024F PER of 9.8x, and we currently forecast EPS growth of 15-18%. For
domestic investors, bank deposits offer unattractive average returns at an
all-time low of 4.7% for 12-month deposits, down from over 9% in April 2023.
Consequently, we believe the equity market may benefit from increased
liquidity from retail investors in 2024, who presently contribute 93% of daily
turnover.

 

"VEIL's rotation into materials in anticipation of the rise in the
Government's infrastructure spending yielded positive results. Hoa Phat Group
("HPG"), Vietnam's premier steel manufacturer, surged 51.2% over the year and
5.2% in December alone. With fiscal expansion expected to continue into 2024,
we anticipate a property market recovery, including Vietnam's largest
developer and VEIL holding Vinhomes ("VHM"), potentially enhancing HPG's sales
volumes. Notably, December's construction steel volumes reached a 20-month
high of 462,000 tonnes, an increase of 13% month-on-month and 29%
year-on-year.

 

"The banking sector rallied in December as banks lowered the deposit rate
further towards pre-pandemic levels and pushed for credit growth disbursement.
Total system credit growth was 13.7% in 2023, nearly fulfilling the State Bank
of Vietnam's ("SBV") target of 14%. Notably, the SBV announced the 2024 credit
growth target of 15%, with the full-year credit quota now being allocated to
banks at the beginning of the year rather than on a quarterly basis. We see
this as a strong message from the Government to incentivise borrowing to lift
economic growth.

 

"Despite negative returns in the retail sector in 2023, which had a -1.2%
impact on VEIL's performance for the year, our bullish stance remains intact.
We anticipate earnings will rebound over 100% in 2024, in part due to a
low-base effect, but also driven by anticipated growth in consumption fuelled
by increased public investment, a low interest rate environment, and
accelerated GDP growth leading to higher wages. Earnings weakness in 2023 was
in part caused by Mobile World Group facing challenges to clear its iPhone
inventory at a loss due to weak demand."

 

Top Ten Holdings (57.7% of NAV)

 

     Company                  Sector               NAV %  VNI %  Monthly Return %  One-year Return %
 1   Hoa Phat Group           Materials/Resources  9.1    3.6    5.2               51.2
 2   Vietnam Prosperity Bank  Banks                8.9    3.4    0.5               9.7
 3   Asia Commercial Bank     Banks                8.4    2.1    8.8               27.2
 4   Vietcombank              Banks                6.7    9.9    -5.2              15.4
 5   FPT Corporation          Software/Services    6.1    2.7    4.5               43.1
 6   Mobile World Group       Retail               4.8    1.4    11.1              -2.0
 7   Vinhomes                 Real Estate          3.7    4.2    4.6               -12.4
 8   PetroVietnam Gas         Energy               3.5    3.8    -1.3              -9.9
 9   Techcombank              Banks                3.3    2.5    7.8               19.8
 10  Gelex Group              Capital Goods        3.1    0.4    9.7               85.3

     Vietnam Index            -                           -      3.4               11.1

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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