Monthly Investor Report

RNS Number : 8605P

VietNam Holding Limited

22 February 2021

 

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

Monthly Investor Report

A report detailing the activities of the Company for the month of January 2021 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.

Back to the Future

Business and consumer confidence continues to thrive in Vietnam with yet more YoY growth rates reaching or exceeding pre-pandemic levels. Export growth for January 2021 showed solid momentum for an eighth consecutive month, increasing by 51% YoY. Imports also proved impressive having recorded further growth for a sixth straight month, 42% YoY, thanks to a rise in both domestic as well as external demand ahead of the Tet holidays. At the same time, the stock market experienced increased volatility due to bursts in global markets and news of a fresh outbreak of COVID-19 cases in the north of Vietnam. Equities rallied 20% from 31st October until 31st December and this carried on during the first week of January with record inflows of domestic money fuelled by proliferating positive sentiment.

Then, as the new COVID-19 cases emerged, an abrupt rush of profit taking, mainly by margin-funded local investors, set in before the lunar holidays. Ripple effects from the rebalancing of ETFs added to volumes traded further complicating operational issues at the Ho Chi Minh Stock Exchange. The VNI ended the month down -4.2% due to profit taking activities and the associated volatility. The selloff was particularly notable in bank stocks, which have been booming since last May due to the huge growth potential for introducing investing and borrowing products in this untapped market.

The Fund's NAV, which was up 9% midway through the month, ended the month down -1.7%. We are encouraged that the NAV (and share price) has subsequently rebounded at the time of going to press. Our retail stocks, including MWG, were positive contributors, reinforcing the confidence in Vietnam's quick containment of the new round of COVID-19 infections. In our view, the recent correction also highlights the far from stretched valuations in Vietnamese companies, as the economy continues to soar and remains relatively unscathed by the pandemic compared to other surrounding markets. EPS growth for 2021 is forecast at +23.2%, and we feel that risks come more from outside the country than within. The latest economic indicators also speak for themselves. Retail sales are nearly back to 2019 levels, hitting a historical high in January with a YoY jump of 6.4%. By the same token, industrial production strengthened for a fifth consecutive month increasing by 22% YoY and from 9.5 % YoY in December 2020. The January increase marked its biggest growth rate since February 2020. Real estate and IT remain two of the most resilient sectors in Vietnam and we expect companies in these areas to continue to be less affected by future COVID-19 disruptions around the world.

Vietnam's manufacturing sector continues to strengthen and is becoming increasingly attractive to foreign investment as a well-placed alternative to China. As an example, Apple's supplier Foxconn plans to establish a $270 million manufacturing facility in Vietnam, joining other global electronics manufacturers including Samsung and LG that are currently expanding their plants in the country. Electronics components posted a +45% YoY growth spurt with communication equipment, consumer electronics and other specialised machines up 37%, 32%, and 41% YoY respectively. Impressive growth was also attributable to the country's steel and basic iron, which was up 49% YoY.

The Domestic political landscape is also stable following the conclusion of the recent Party Congress and leadership elections and we foresee unchanged fiscal and monetary policy going forward. In addition, many of the vital projects within the government's US$ 120bn infrastructure pledge are now funded and underway in a more disciplined manner after the anti-corruption drive of previous years. The Government's policies around building a greener and more inclusive future are beginning to take shape.

We have every confidence that the future for Vietnam remains bright, the economy will continue to thrive in the future, and the Fund is well positioned to benefit directly as the economic performance advances.

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 / Giles Rolls

 

END

 

 

MSCDKBBBABKKNBB