Monthly Update

RNS Number : 8155J

Vietnam Enterprise Investments Ltd

15 December 2022

 

15 December 2022

Vietnam Enterprise Investments Limited

("VEIL" or "the Company")

Monthly Update

1.9% NAV Return in November 2022

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 2022 is set out in this notice.

Fund Performance

· As of 30 November, VEIL's NAV increased 1.9% over the previous month against a rise of 2.9% for its reference index, the Vietnam Index ("VNI"), both in US dollar terms.

· The Company's NAV per share was US$7.65 as of 30 November (-37.3% YTD) and its total NAV was US$1.6bn.

· VEIL's NAV per share performance in US dollar terms is -25.3% over three months, -38.4% over one year and +13.0% over three years. Over the same time periods, the performance of the Vietnam Index was -21.9%,

-33.6% and +6.4%, respectively.

· The share price rose 7.8% in November and has declined 34.3% YTD, both in US dollar terms

· In GBP terms, the Company's NAV per share was £6.42 as of 30 November (-1.5% for the month and -28.7% YTD) and its total NAV was £1.3bn. The share price was up 4.2% for the month and down 25.2% YTD.

· The share price discount to NAV as of 30 November was 10.9%, compared with 15.8% at the end of October.

· The Company didn't repurchase any shares in November, compared with 20,000 shares repurchased in October. As of 30 November 2022, 3.2% of issued shares have been repurchased since 1 January 2022.

Dien Vu, the Portfolio Manager of VEIL commented:

"The market experienced a volatile November with the Vietnam Index declining 12.9% by mid-month under pressure from cross-margin calls on two real estate stocks, and investor concerns around higher interest rates, currency depreciation and the global economic slowdown. VEIL followed a similar trajectory but lagged the month-end recovery by 1.0% as heavy net foreign buying ultimately buoyed the index by 2.9%. Notably, the US$662m of net foreign inflows for the month was the second highest in the market's history. Further, fears of policy paralysis were allayed as the Government announced its intention to improve liquidity in the economy, and its action helped local investor sentiment.

"Though it is early days, the second half of November and first half of December suggest that Vietnam's equity market might have finally found its footing. Despite mixed overall performance, four of the Company's top ten holdings witnessed double-digit share price growth. Two of the Company's top ten holdings that had been out of favour, Vietnam's biggest property developer, Vinhomes, and the country's largest steel producer, Hoa Phat Group, experienced rebounds in their share prices. We believe this likely reflects value-driven investors taking advantage of their price-to-book ratios being at their lowest levels since 2018 and 2012, respectively.

"Vietcombank ("VCB") and Phu Nhuan Jewelry ("PNJ") were the other two top ten holdings with double-digit share price growth. Whilst the banking sector has gone through a derating process - VCB continues to benefit from investors' flight to quality. The bank's fundamentals are arguably the strongest in the industry, with low exposure to the property sector, excellent asset quality, and a solid capital base, an encouraging mix for investors during turbulent times. PNJ's monthly reports continue to impress investors with its 10-month results exceeding the company's full year target by 12%, up 114% year-on-year albeit from the low base of a COVID-dampened 2021.

"By contrast, sentiment in Mobile World Group ("MWG") deteriorated quickly following its latest analyst meeting during which the company revised its guidance to a 10% drop in earnings this year due to weak demand in consumer electronics. MWG is still expected to return to double-digit earnings growth next year, whilst the company continues exploring its different options regarding the potential pre-IPO placement of its grocery business.

"With regards to the economy, as global recessionary forces continued accelerating, industrial activity slumped. Exports and imports both fell year-on-year in November, and while they were still up 13.4% and 10.1% year-to-date, respectively, this was some way off the 15-20% recorded in previous months. There was, however, still a trade surplus of US$0.6bn in November, totalling US$10.6bn year-to-date, but economic indicators indicate that the slowdown in global demand is now evident in Vietnam. The Industrial Production Index rose only 5.3% year-on-year and the Purchasing Manager's Index fell to 47.4 following thirteen months of expansion. It was not all gloom, however, with disbursed FDI at US$19.7bn year-to-date, a record high. Further, Vietnam and Korea officially upgraded their relationship to "comprehensive strategic partnership", and to mark this, Korean companies immediately pledged to invest US$15bn in new plants, including $6bn from LG and Samsung, showing long-term optimism to expand capacity even if they are currently shipping fewer goods."

Economic Overview

· November's CPI rose 0.4% month-on-month and 4.4% year-on-year with the increase attributed to increased construction material costs as well as petrol prices gradually increasing.

· The Vietnamese dong appreciated 0.8% against the USD in November, putting the total depreciation at 4.9% YTD as of 30 November. The Vietnamese dong depreciated 3.1% against the pound sterling in November and its total appreciation was 3.9% YTD as of 30 November.

· November exports and imports declined 8.4% and 7.3% year-on-year, respectively, this was attributed to a slowdown in global demand.

· YTD exports reached US$342.2bn and imports US$331.6bn, making a trade surplus of US$10.6bn so far in 2022, at the same stage last year the trade surplus was recorded at US$225m.

· The Vietnam Purchasing Manager's Index registered below 50 for the first time in thirteen months, at 47.4 points for November.

· Disbursed FDI was US$2.3bn in November, with the total year-to-date figure reaching US$19.7bn (+15.1% year-on-year).

Top Ten Holdings (64.4% of NAV)

	Company	Sector	VNI %	NAV %	Monthly Return %	One-year Return %
1	Asia Commercial Bank	Banks	1.8	11.9	-0.6	-23.5
2	Vietnam Prosperity Bank	Banks	2.7	11.9	3.5	-38.4
3	Mobile World Group	Retail	1.5	8.9	-13.9	-41.1
4	Vietcombank	Banks	9.2	5.6	11.0	-2.5
5	FPT Corporation	Software/Services	2.0	5.1	-0.6	-13.2
6	Vinhomes	Real Estate	5.7	4.7	22.0	-38.9
7	PetroVietnam Gas	Energy	5.1	4.7	-0.1	6.2
8	Hoa Phat Group	Materials/Resources	2.6	4.2	18.5	-54.2
9	Becamex IDC	Real Estate	2.0	3.9	-0.5	40.9
10	Phu Nhuan Jewelry	Retail	0.7	3.4	10.7	9.5
	Vietnam, Index	-	-	-	2.9	-33.6

Source: Bloomberg, Dragon Capital

NB: All returns are given in USD terms

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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