Monthly Investor Report

RNS Number : 2917W

VietNam Holding Limited

17 August 2022

 

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

Monthly Investor Report

A report detailing the activities of the Company for the month of July 2022 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 - Through the Looking Glass

Last month global equities continued to fluctuate with a score of moving parts rattling market sentiment. However, as inflationary implications and other economic woes in countries around the world caused more concern, Vietnam managed to maintain resiliency with a continued strengthening of its macro backdrop. While external risks became more evident and ongoing volatility summed up its stock market, Vietnam still recorded an impressive trade surplus of USD 764m for the first seven months of the year (7M2022). Its manufacturing sector continued to expand throughout the month of July as others, for example, in China, Korea and the EU slowed. Additionally, thanks to intervention by the State Bank of Vietnam, the VND remained more stable than other currencies in the region, particularly against the strong US dollar. While a weaker VND would enhance the country's competitiveness, Vietnam continues to sustain controllable foreign debts as a percentage of GDP as well as a diversified range of trading partners. Perhaps most notable for Vietnam last month was the 43% YoY jump in holiday travel, which in fact also highlights how domestic tourism for the first half of 2022 is 40% above pre-pandemic levels. Retail sales continue to recover strongly from the Delta wave lockdowns, and consumer confidence is on a high, which is why we are overweight the sector despite the recent correction. Retail, a sector in which VNH is overweight, suffered from profit-taking activities by both local and foreign investors in July due to mixed Q2 earnings results and concern over continued growth in 2023 given the ever-growing global inflationary risks. The Fund's NAV for the month was down -0.6% because of our conviction in some retail positions, such as MWG whose profits were down due to restructuring and expansion expenses. Nonetheless, like other leading retailers in our portfolio - such as PNJ - it is benefitting fundamentally from being able to increase market share, and good business results overall had little effect on stock prices in July given the weakened sentiment in equities markets at home and abroad. Moreover, VNH's top ten holding companies are showing evidence of compelling growth, and market valuation in Vietnam is in general at a more attractive level following the diverse Q2 earnings releases.

Consumerism in Vietnam in particular is on an upward trajectory as living standards, digitalisation and domestic production in the country advance, and we remain focused on this transition as part of our approach to investing and selection criteria. Vietnamese consumers are becoming much more aware in terms of choice and impact, and as HSBC recently reported, Vietnam is set to become the tenth largest global consumer market by 2030, larger than Germany's. Interestingly, Vietnam ranks ninth in countries with the highest beer consumption, according to a recent report published by Visual Capitalist, partly reflecting the country's expanding middle-class who earn more money and enjoy consuming more expensive and varied brews, as the latest report from GlobalData affirms. 

July also further highlighted the strong increase in foreign direct investment (FDI), which in line with our expectations surged by 59.3% to USD 7.24bn over the 7M2022 period, according to Vietnam's Ministry of Planning and Investment's Foreign Investment Agency's latest report. It stated that over 900 new foreign projects, capitalised at USD 5.7bn, were licensed in the first seven months of the year. The number of projects was down 8% YoY but that was due to the fact that some large-scaled projects worth over USD 100m were already registered in the 7M2021 period.

Last month we reported on Apple's announcement to manufacture iPad parts in Vietnam, and weeks later Samsung released plans for the trial production of semiconductor parts in its facility in the Thai Nguyen Province from July 2023. During a meeting with Prime Minister Pham Minh Chinh on August 5th Samsung Electronics' CEO also revealed plans to invest an additional USD 3.3bn in Vietnam later this year on top of the new investments it had already made in its other factories in the country. The new initiatives from Samsung alone potentially enhance the value chain for technological products in Vietnam, supporting the country's growing production and exports sectors as well as attracting even more FDI investment.

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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