Monthly Update

Vietnam Enterprise Investments Ltd

15 June 2023

 

15 June 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 May 2023 is set out in this notice.

Company Performance

·    As of 31 May, VEIL's NAV increased 1.4% over the previous month against a rise of 2.5% for its reference index, the Vietnam Index ("VNI"), both in total return US dollar terms. The Company's NAV per share was US$8.24 and its total NAV was US$1.7bn.

·    VEIL's share price increased 2.1% in May and has declined 2.6% year-to-date, both in US dollar terms.

·    VEIL's three-month NAV per share performance in US dollar terms is +6.2%, -21.7% over one year and +37.7% over three years. Over the same time periods, the performance of the VNI was +6.6%, -16.6% and +29.1%, respectively.

·    In GBP terms, VEIL's NAV increased 2.8% over the previous month and 1.8% year-to-date. The Company's NAV per share was £6.65 as of 31 May and its total NAV was £1.4bn. The sterling share price increased by 3.6% for the month and decreased 5.5% year-to-date.

·    The share price discount to NAV as of 31 May was 17.1%, compared with 17.8% at the end of April 2023 and 10.7% as of 31 December 2022.

·    The Company repurchased 174,734 shares in May, compared with 440,978 shares repurchased in April. Year-to-date to 31 May, 1,323,085 (0.6% of shares outstanding as of 1 January 2023) have been repurchased.

·    The Vietnamese dong ("VND") depreciated 0.1% against the US dollar in May and has appreciated 0.6% year-to-date. The VND appreciated 0.9% against the pound sterling in May and has depreciated 2.0% year-to-date.

Dien Vu, Portfolio Manager of VEIL commented:

"The VNI increased 2.5% in May following another 50bps cut to key policy interest rates, which helped boost average daily turnover in the market to US$591m, up 10.6% month-on-month. Given the strong macro policy support, the Investment Manager believes that the beginnings of a recovery phase may be evident, with four out of our five key criteria now satisfied, namely: declining interest rates, a stable Vietnamese currency, improving liquidity, and solutions for some troubled real estate companies. All that remains is an improvement in earnings, where the Manager believes quarterly earnings for the top 80 companies under its coverage bottomed out in Q4 2022, and positive earnings growth will start to recover in H2 2023.

"Vietnam's State Securities Commission also reiterated its determination to speed up the implementation of a new trading system, which is being undertaken in partnership with the Korean Stock Exchange and is currently aimed at being in place by the end of this year. Its purpose, once completed, will be to further improve stock exchange liquidity, as well as to enable the introduction of new products and services, and ultimately bring it one step closer to an upgrade by index providers.

"Vietnam's latest economic data underscores the intricate interplay between global demand and its trade performance, with internal and external factors contributing to a recent slowdown: year-to-date to the end of May, exports reached US$136.2bn, while imports stood at US$126.4bn, down 11.6% and 17.8% year-on-year, respectively. May's Purchasing Managers' Index of 45.3 - the lowest reading in almost two years - reasserted this contractionary trend, although the Government has taken prompt action to address these challenges.

"Post-pandemic inventory destocking, a consequence of excessive lockdown orders, has presented challenges to trade dynamics. Notably, the electronic devices sector, constituting nearly 35% of exports, has experienced a substantial decline of 20% year-to-date. Tighter global lending standards and higher rates have further dampened international purchasing power, leading to Vietnam's exports to the EU and US respectively decreasing by 17% and 20% year-on-year. This significantly impacts export-oriented industries such as fisheries, down 28%, and textiles, down c.20%.

"Local enterprises have also had to confront funding difficulties due to elevated financing costs, although these are steadily coming down from 14-16% in H2 2022 and are now around 10-12%, while delays in receiving VAT refunds have also hindered cashflows. At the more granular administrative level, Vietnamese businesses are having to overcome day-to-day hurdles such as the adoption of higher import standards designed to promote greener production methods, which has created longer processing times.

"Acknowledging that challenges exist, proactive measures have been taken within the Government to support economic growth. The State Bank of Vietnam has implemented three policy rate cuts totalling 100bps from March to May 2023. The Prime Minister also released an urgent dispatch focused on addressing administrative obstacles, while incentivising businesses to explore potential markets such as India, the Middle East, and Latin America."

Top Ten Holdings (67.4% of NAV)

	Company	Sector	VNI %	NAV %	Monthly Return %	One-year Return %
1	Asia Commercial Bank	Banks	2.0	13.5	4.8	-0.7
2	Vietnam Prosperity Bank	Banks	3.0	13.2	-3.1	-7.8
3	Vietcombank	Banks	10.4	7.0	3.7	17.6
4	Hoa Phat Group	Materials/Resources	2.9	6.4	-2.2	-20.3
5	Vinhomes	Real Estate	5.4	5.4	7.9	-24.1
6	Mobile World Group	Retail	1.3	5.1	-0.1	-46.2
7	FPT Corporation	Software/Services	2.2	5.0	8.4	-7.4
8	Becamex IDC	Real Estate	1.9	4.5	-1.0	6.2
9	PetroVietnam Gas	Energy	4.1	3.9	-0.1	-20.0
10	Khang Dien House	Real Estate	0.5	3.5	-0.5	-23.3
	Vietnam Index	-	-	-	2.5	-16.6

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