Monthly Update

Vietnam Enterprise Investments Ltd

17 May 2023

 

17 May 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 April 2023 is set out in this notice.

Company Performance

·    As of 30 April, VEIL's NAV declined 1.8% over the previous month against a fall of 1.4% for its reference index, the Vietnam Index ("VNI"), both in total return US dollar terms. The Company's NAV per share was US$8.13 and its total NAV was US$1.7bn.

·    VEIL's share price declined 5.9% in April and 4.6% year-to-date, both in US dollar terms.

·    VEIL's three-month NAV per share performance in US dollar terms is -6.6%, -29.5% over one year, and +52.2% over three years. Over the same time periods, the performance of the VNI was -5.4%, -23.6%, and +42.7%, respectively.

·    In GBP terms, VEIL's NAV declined 3.4% over the previous month and 0.9% year-to-date. The Company's NAV per share was £6.47 as of 30 April and its total NAV was £1.3bn. The sterling share price decreased by 7.5% for the month and 8.7% year-to-date.

·    The share price discount to NAV as of 30 April was 17.8%, compared with 14.2% at the end of March 2023.

·    The Company repurchased 440,978 shares in April, compared with 537,373 shares repurchased in March. Year-to-date to 30 April, 1,148,351 (0.6% of shares outstanding as of 1 January 2023) have been repurchased.

·    The Vietnamese dong ("VND") appreciated 0.1% against the US dollar in April, and 0.7% year-to-date. The VND depreciated 0.9% against the pound sterling in April, and 2.9% year-to-date.

Dien Vu, the Portfolio Manager of VEIL commented:

"The market's average daily trading value jumped 28% month-on-month to US$576mn, a four-month high. However, the year-to-date daily trading value across Vietnam's three exchanges is down 60% compared to the same period last year. Foreign investors net bought US$234mn in the first four months of the year, lower than Indonesia (US$828mn net bought) although in contrast with the net selling in Thailand (US$1.9bn) and the Philippines (US$484mn).

"Renewed trading volumes could be interpreted as reflecting investors' recognition of the varied measures being taken by the Government to stimulate GDP. With fiscal policy requiring time for implementation, monetary policy is the Government's primary short-term economic tool. April's CPI inched up modestly by 2.8% year-on-year, and as the Federal Reserve is widely forecast to be approaching the peak of its rates cycle, the State Bank of Vietnam ("SBV") signalled its intention to continue reducing lending rates, which have declined between 1-2% YTD, with the latest policy rate cut of 0.5% being announced on 3 April. The SBV added US$1.6bn to its currency reserves in April, now estimated to be over US$90bn, shoring up its fiscal position. The SBV also introduced several new regulations, including encouraging banks to repurchase corporate bonds and provide loan forbearance. Nevertheless, in the immediate term, and with global uncertainties in mind, the Investment Manager currently expects that 2023 GDP growth may only reach 5.5%-6.0%, lower than the Government's target of 6.0-6.5%.

"With interest rates being lowered for the second time this year in early April, and the Government's two new decrees aimed at reviving the corporate bond market and supporting the real estate sector, it appears to have boosted investor sentiment in midcap developers. Khang Dien House's 9.9% share price rise in March was followed by an 8.0% increase in April as the broad midcap property rally continued. Whilst the immediate outlook for both earnings and new property developments will likely remain subdued in the short term, many midcap developers are trading at multi-year lows following the Q4 2022 sell-off, which we believe is attracting value investors.

"In the technology sector, despite reporting Q1 2023 earnings growth of 20.6%, FPT Corporation ("FPT") declined 2.0% in April, in part due to weakness in their retail subsidiary caused by slowing demand. FPT's core global IT services segment was strong, with profit before tax growth of 33% year-on-year, and future earnings were secured by an increase of 44% in new orders. FPT Education recorded year-on-year revenue growth of 47% and profit before tax growth of 60%.

"VEIL's largest holding, Vietnam Prosperity Bank ("VPB"), declined 5.4% and may have endured some profit-taking after a 25.1% share price rise in March following news of a US$1.5bn private placement from Sumitomo Mitsui Banking Corporation. This deal also boosted April's registered FDI to a six-month high of US$3.4bn.

"Supporting the above, the Vietnamese Dong appreciated 0.1% in April due to solid foreign inflows, stable liquidity in the Vietnam banking system, and the weakening of the US Dollar Index (DXY). While exports and imports remained relatively weak, a trade surplus of US$2.7bn was recorded in April, reaching a record high for this stage in the year of US$7.6bn. So far in 2023, exports and imports amounted to US$107.2bn and US$99.6bn, -13.0% and -17.7% year-on-year, respectively."

Top Ten Holdings (68.0% of NAV)

	Company	Sector	VNI %	NAV %	Monthly Return %	One-year Return %
1	Vietnam Prosperity Bank	Banks	3.2	14.0	-5.4	-20.4
2	Asia Commercial Bank	Banks	2.0	13.0	-3.2	-9.4
3	Hoa Phat Group	Materials/Resources	3.0	7.4	4.1	-35.3
4	Vietcombank	Banks	10.2	6.4	-0.9	9.5
5	Mobile World Group	Retail	1.4	5.3	1.7	-48.2
6	Vinhomes	Real Estate	5.1	5.1	-3.8	-23.3
7	FPT Corporation	Software/Services	2.0	4.6	-2.0	-11.4
8	Becamex IDC	Real Estate	1.9	4.5	-5.0	-9.6
9	PetroVietnam Gas	Energy	4.2	4.0	-9.0	-11.9
10	Khang Dien House	Real Estate	0.5	3.6	8.0	-33.0
	Vietnam Index	-	-	-	-1.4	-23.6

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

 

END