Monthly Investor Report

RNS Number : 9861P

VietNam Holding Limited

15 February 2023

 

VietNam Holding Limited ("VNH" or the "Company")

Monthly Investor Report

A report detailing the activities of the Company for the month of January 2023 has been issued by Dynam Capital Limited, the investment manager of the Company. Electronic copies of the report have been made available to shareholders on the Company's website  and a summary of the report is included below.

Manager Commentary - Just the Beginning 

January provided some interesting insights into what is to come in Vietnam in 2023. As liquidity continued to improve and FX risks stabilised, political events hogged headlines with the extraordinary resignations of two (out of the four) deputy prime ministers - one in charge of diplomacy and the other of public health - in the first week of the month alone. News of both being linked to mishandlings of Covid-19 supplies and repatriation flights had been brewing over recent months, and in an unprecedented twist, the Party Central Committee went on to also announce that the President, Nguyen Xuan Phuc, would be resigning from all his positions, including the Politburo - the highest policy-making body - for "violations and wrongdoing" by officials under his control.

Despite the noise, retail sales remained upbeat thanks to the Tet holiday and while Vietnam's manufacturing sector lost some momentum, more to do with global economic uncertainties, it was the country's biggest FDI industry recipient in January with 153 new projects and additional registered capital of US$ 1,200m, according to the Ministry of Planning and Investment. FDI disbursement is at an all-time high with public investment also accelerating and clearly becoming a key growth driver for Vietnam moving forward.

VNH's NAV was +11.1% for the month, slightly lower than the index. This followed the Fund's outperformance of the Vietnam All Shares Index (VNAS) for the 2022 calendar year, with its NAV declining 30.1% versus the VNAS' decline of 39.8%. Strong double-digit growth in Retail stood out in 2022, and we expected that to continue in the lead up to Tet. In January, VNH benefitted from its overweight in outperforming banks, STB, ACB and MBB, as well as its underweight in Real Estate, keeping to our conviction that banks were oversold in 2022 and that real estate companies would face increasing headwinds due to the lagging impacts of rising interest rates. The Fund's overweight in Industrials - IDC (up +28.4%) and GMD (up +17.7%) - along with its continued convicted positions in Telecoms and Retails, also all paid off.

We feel optimistic about a more stable VND in 2023 as external and internal risks have reduced, but also expect divergence of EPS growth among sectors and stocks to increase. Additionally, on top of very attractive valuations, market liquidity also continues to move in the right direction following the indiscriminate selloffs and short-term shocks of 2022. Foreign investors net bought US$ 179m in January and we saw a comeback of both foreign and local participants in the equity market. As with several ASEAN countries, Vietnam is kicking off 2023 in a strong position to outstand the rest of the world in terms of GDP growth - forecasted at 6.5% for the year.

However, companies will need to strengthen their corporate governance - their internal controls, due diligence, organisational structure, culture, and transparency - if they are to maintain resilience given the global uncertainties and black swans that persist in today's poly-crisis norm. This is something we continue to work on with investee companies and Vietnam's business community at large. As many companies look to expand, take advantage of new technologies and access necessary capital to help them grow and innovate, long-term performance has become much more contingent to how they address environmental, social and governance (ESG) matters. Although challenges remain, Vietnam is unarguably on a positive path with considerable potential for building a more sustainable economy and society.

As most of its backbone industries are ESG intensive - this includes the steel and rapidly expanding manufacturing sectors - Vietnam has a lot at stake compared to neighbouring countries. Through our engagement with companies, we see a growing recognition that the integration of ESG principles not only enhances a company's reputation, but if properly put into practice also creates more positive outcomes for stakeholders. The government's launch of the Sustainable Development Strategy of Vietnam, the One Strategic Framework for Sustainable Development Cooperation, and the Vietnam Corporate Sustainability Index are already raising awareness, in this respect. In addition, over recent months, and weeks, we see government authorities also passing more laws related to environmental protection, sustainable development, and corporate social responsibility. If the last year tells us anything, it is that enforcement of these will be real.

We thank you for your continued support.

For more information please contact:

Dynam Capital Limited  

Craig Martin  Tel: [phone]

[e-mail] | www.dynamcapital.com

www.vietnamholding.com

finnCap

Corporate Broker and Financial Advisor     Tel: [phone] 

William Marle

 

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