Monthly Update

RNS Number : 4076V

Vietnam Enterprise Investments Ltd

13 December 2021

 

13 December 2021

Vietnam Enterprise Investments Limited

("VEIL" or "the Company")

Monthly Update

+1.7% NAV Return for November and 49.6% in 11M2021

Vietnam Enterprise Investments Limited ("VEIL") is a closed-end fund investing primarily in listed equity in Vietnam and a FTSE 250 constituent. The Company's NAV performance for November 2021 is set out in this notice.

Fund Performance

· As of 30 November 2021, VEIL's NAV increased by 1.7% over the previous month (compared with 2.5% for its reference index, the Vietnam Index) in US$ terms.

· YTD VEIL's NAV has increased 49.6%, compared with the Vietnam Index which has increased 37.4%.

· Seven of VEIL's top ten holdings rose. Six of the top ten moved in a narrow band of +/- 1% change in share price for the month.

· The most noteworthy performer was Saigon Securities Corporation, a brokerage VEIL built a position in during Q3, which was up 38.2% for the month.

Economic Overview

· Vietnam's post-lockdown recovery continued in November, with businesses in the pandemic hotspot of HCMC moving closer to full operation and the PMI registering at 52.2.

· Industrial production moved up 5.5% month on month and 5.6% year on year.

· Trade returned to a surplus, with 11M exports +17.5% at $299.7bn and imports +27.5% at $299.5bn.  The Manager expects that in the coming months, as forced inventory accumulation drops out of the numbers, export growth is likely to accelerate while import growth falls.

· The service sector is still struggling.  Retail sales were +6.2% month on month but -12.2% year on year.

· Vietnam's daily COVID-19 cases bottomed at around 3,000 in September, but with the country coming out of lockdown they are currently averaging 13,500. The death rate is currently 0.8% vs. 2.4% at the height.

· Most cases are mild, stay-at-home ones. The Manager does not see any evidence these are overwhelming hospital systems. Many are also in regions with relatively low GDP contribution.

· Nearly 130mn vaccine doses have been administered; 55% of adults are fully vaccinated, 75% have received one dose.

Dien Huu Vu, the Portfolio Manager of VEIL commented:

"The market saw an encouraging performance in November, with record-highs reached as vaccinations accelerated and a further economic recovery was evident. Daily liquidity across Vietnam's three stock exchanges averaged $1.8bn for the month and bullishness even continued into December despite a global decline in markets.  Rumours of Omicron variant spreading to Vietnam did take the market lower, but the mood so far seems to be one of uncertainly rather than panic.

Other than the new Omicron variant, the main macro worry for investors appears to be the currency, although we currently believe the risk seems low. External-account surpluses are returning, currency reserves are around US $108bn, equivalent to nearly four months of imports.  The Vietnam Dong has appreciated +0.4% YTD, and our expectation is that tapering is unlikely to reverse this given low foreign debt, positive real rates and negligible foreign investment in bonds. Inflation is under control, Vietnam's CPI has risen 2.1% year on year, low inflation is currently also being observed in the rest of ASEAN. With respect to Vietnam, we see numerous reasons for this: lack of fiscal and monetary excesses, falling food prices, stable power, health and education prices, minimal ownership of cars and other consumer goods dependent on imported inputs."

November Commentary

Brokerage firm Saigon Securities ("SSI") had strong month fuelled by positive investor sentiment and an increasingly bullish outlook on Vietnam's capital markets. This was evidenced by a record number of retail account openings in Vietnam, more than 220,000 during the month. Daily liquidity averaged more than US$1.4bn on the Ho Chi Minh Stock Exchange, the highest monthly trading average ever.

VEIL's third largest holding, Mobile World Group ("MWG"), announced positive 10M results, with NPAT at $169m (+19%) and a monthly record of US$25m, largely due to the reopening of cellphone and consumer-electronics outlets and the pent-up demand created during lockdown. Additionally, iPhone sales surged as new models were introduced, and the Apple-approved Topzone stores (operated by MWG) opened.

Vingroup ("VIC") saw positive reaction to the news that the company is restarting its subsidiary Vinfast's IPO process. VIC, via a Bloomberg article, announced it is looking to raise up to $3bn with a valuation range of $25bn to $60bn post-IPO and a potential US-listing. At home, Vinfast also receives a boost from the Government's proposal to cut special consumption tax for electric vehicles as the delivery of its first EV line draw nears.

On the downside, HPG had a rough month as sentiment in the steel sector turned negative from falling output prices in China. November volumes were down 21% month on month and were also affected as local agents delayed building their inventories until prices stabilised. The Manager believes that sales volumes should hold up well in 2022, particularly given Vietnam's commitment to infrastructure investment.

Top Ten Holdings (75.2% of NAV)

	Company	Sector	Vietnam Index %	NAV %	Monthly Change %
1	Hoa Phat Group	Materials/Resources	3.8	13.0	-14.2
2	Vietnam Prosperity Bank	Banks	2.9	11.1	-0.8
3	Mobile World	Retail	1.7	9.9	5.8
4	Asia Commercial Bank	Banks	1.6	9.3	1.0
5	Vinhomes	Real Estate	6.5	7.1	-1.0
6	Vietcombank	Banks	6.4	6.3	1.0
7	Vingroup	Real Estate	7.0	6.2	9.7
8	FPT Corporation	Software/Services	1.5	4.8	0.3
9	Techcombank	Banks	3.2	4.0	0.5
10	Saigon Securities	Brokers	1.0	3.5	38.2

For further information, please contact:

Vietnam Enterprise Investments Limited

Rachel Hill

Phone: [phone]

Mobile: [phone]

[e-mail]  

Jefferies International Limited

Stuart Klein 

Phone: [phone]

[e-mail]  

Buchanan

Charles Ryland / Henry Wilson / George Beale

Phone: [phone]

[e-mail]  

LEI: 213800SYT3T4AGEVW864

 

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