Monthly Update

RNS Number : 2461W

Vietnam Enterprise Investments Ltd

14 April 2023

 

14 April 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 March 2023 is set out in this notice.

Company Performance

· As of 31 March, VEIL's NAV increased 6.7% over the previous month against a gain of 5.5% for its reference index, the Vietnam Index ("VNI"), both in US dollar terms.

· The Company's NAV per share was US$8.28 as of 31 March and its total NAV was US$1.7bn.

· VEIL's three-month NAV per share performance in US dollar terms is +5.5%, -32.5% over one year and +85.2% over three years. Over the same time periods, the performance of the VNI was +6.7%, -29.4% and +69.3%, respectively.

· VEIL's share price rose by 5.6% in March and has increased 1.4% year-to-date, both in US dollar terms.

· In GBP terms, VEIL's NAV increased 4.5% over the previous month and 2.6% year-to-date.

· The Company's NAV per share was £6.70 as of 31 March and its total NAV was £1.4bn. The sterling share price increased by 3.4% for the month and has declined 1.4% year-to-date.

· The share price discount to NAV as of 31 March was 14.2%, compared with 13.3% at the end of February 2023.

· The Company repurchased 537,373 shares in March, to be held in treasury, compared with 170,000 shares repurchased in February. Year-to-date to 31 March 2023, 0.3% of shares outstanding as of 1 January 2023 have been repurchased.

Dien Vu, the Portfolio Manager of VEIL commented:

"The VNI increased by 5.5% in March, due in part to the Government issuing two decrees aimed at reviving the corporate bond market and supporting the real estate sector, which in turn helped improve overall market sentiment.

"These measures had the desired beneficial effect, as twelve new bonds were issued with a total value of US$1.1bn, 90% of which came from real estate companies. This was a significant increase compared with the previous six months during which the corporate bond market experienced hardly any new issuances. A circular allowing banks to buy back corporate bonds traded within the last 12 months has also been drafted and given the weak Q1 2023 data and record low M2 (money supply) growth of just 0.6% year-to-date, we believe the Government will be more aggressive in Q2 2023 with its directives to support the economy.

"The State Bank of Vietnam ("SBV") cut rates twice, reducing all policy rates by a minimum of 50bps year-to-date, including the discount and open market operations rates by 100bps, and the 6-month deposit cap rate and refinancing rates down from 6.0% to 5.5% per annum. 

"The CPI saw its biggest drop since September 2021 with a 0.2% month-on-month decline, helped by a 4.9% year-on-year fall in transportation costs, lower food prices and a decline in tuition fees. 2023 inflation forecasts from the SBV, Ministry of Finance, and General Statistics Office, were collectively revised downwards from 4.2-5.0% to 3.8-4.8%. Weakening external demand was reflected in exports falling 14.8% year-on-year in March, while the inventory index increased by 4.4%.

"In the market, the real estate and banking sectors responded positively to the Government's regulatory changes, increasing 12.5% and 4.6% in March, respectively. Within VEIL's real estate holdings, Vinhomes ("VHM"), the Company's largest real estate position and a top ten holding, recorded a strong recovery, gaining 25.8%. VHM benefitted from news it is in talks to divest some of its assets to a Singaporean developer at a valuation of over US$1bn. VEIL's other significant holdings in the real estate sector, Khang Dien House and Dat Xanh Group, increased by 9.9% and 27.2%, respectively. VEIL's largest holding, Vietnam Prosperity Bank ("VPB"), gained 25.1% as investors reacted to the deal for Sumitomo Mitsui Banking Corporation ("SMBC") to strategically purchase a 15% stake being issued by VPB for circa US$1.5bn which will, once completed, see VPB become Vietnam's second biggest bank by charter capital. Vincom Retail also rose 12.2% on news that a group from Thailand is looking to acquire a majority stake in the company."

Economic Overview

· Exports in March reached US$29.6bn and imports US$28.9bn, both recording double-digit increases compared with February although were still year-on-year declines of 14.8% and 11.1%, respectively.

· S&P Global announced the Vietnam Manufacturing Purchasing Manager Index (PMI) dropped to 47.7 index points in March vs 51.2 in February. Output, new orders and employment all declined amid weakened demand.

· The Index of Industrial Production rose by 9.6% in March but declined 1.6% year-on-year.

· The CPI decreased by 0.2% month-on-month, rising 3.4% year-on-year.

· The Vietnamese dong ("VND") appreciated 1.4% against the US dollar in March, and 0.7% year-to-date. The VND depreciated 1.5% against the pound sterling in March, and 2.0% year-to-date.

· Year-to-date as of 31 March, State revenue has reached US$20.9bn and expenditures US$15.5bn, increases of 1.3% and 7.2% year-on-year, respectively.

Top Ten Holdings (66.8% of NAV)

	Company	Sector	VNI %	NAV %	Monthly Return %	One-year Return %
1	Vietnam Prosperity Bank	Banks	3.3	14.6	25.1	-17.4
2	Asia Commercial Bank	Banks	2.0	13.2	3.9	-8.0
3	Hoa Phat Group	Materials/Resources	2.8	7.4	5.4	-40.7
4	Vietcombank	Banks	10.2	6.1	-0.9	8.3
5	Mobile World Group	Retail	1.3	5.4	-2.3	-48.2
6	Vinhomes	Real Estate	5.3	5.2	25.8	-32.0
7	FPT Corporation	Software/Services	2.0	4.6	-0.4	-11.8
8	Becamex IDC	Real Estate	2.0	4.6	0.4	10.8
9	PetroVietnam Gas	Energy	4.6	4.4	-0.1	-5.8
10	Khang Dien House	Real Estate	0.5	3.3	9.9	-44.1
	Vietnam Index	-	-	-	5.5%	-29.4

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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