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Vietnam Enterprise (VEIL)


Wednesday 04 May, 2022

Vietnam Enterprise

1st Quarter Results

RNS Number : 2493K
Vietnam Enterprise Investments Ltd
04 May 2022

4 May 2022

Vietnam Enterprise Investments Limited

("VEIL" or the "Company")


2022 First Quarter Update

+0.5% in Q1 2022


Vietnam Enterprise Investments Limited ("VEIL") is a closed-end fund investing primarily in listed equity in Vietnam, and a FTSE 250 constituent.  The Company's unaudited NAV performance for Q1 2022 is set out in this notice.



Company Highlights

· In Q1 2022, the Company's NAV increased 0.5% compared to -0.3% (both in USD terms) for its reference index, the Vietnam Index ("VNI").

· Over one- and three-year periods, VEIL's NAV has increased 31.5% and 83.1% compared to an increase of 28.0% and 62.4% in the VNI, respectively.

· VEIL's NAV per share was US$12.27 at the end of the quarter, total NAV was US$2.6bn ( £2.0bn).

· The Company's share price decreased by -4.2% over the quarter and its discount to NAV as of 31 March widened to 19.1%, compared to 15.1% on 31 December 2021.

· The above movement is in line with other discounts in the Investment Trust sector, and longer-term the share price still outperforms the VNI.

· Through share buybacks the Company repurchased 2.8m shares in Q1 2022 (1.3% of shares in issue at the start of the period), an increase from 478k shares repurchased in Q4 2021.

· Compared to the VNI, VEIL remained heavily overweight in banking, steel, retail and technology, and moved to modestly overweight property in the quarter. T hese are the sectors the Investment Manager believes are best positioned to be the main beneficiaries of the key trends currently driving Vietnam's development.



Dien Huu Vu, the Portfolio Manager of VEIL commented:


" In Q1 2022, trading initially moved into market large-caps but returned to the small/mid-cap buying trend seen from retail investors in H2 2021, we believe due to investor uncertainty regarding global events. VEIL remains committed to its high conviction approach of holding stocks in the sectors we believe will benefit most from Vietnam's main top-down force of middle-class formation, in turn driving infrastructure, urbanisation, financial services and consumption. At the end of Q1 2022, these sectors made up 62% of the Company's holdings and 23% of the Vietnam Index. Many holdings are large-caps although were first invested in when considered small/mid-caps and have subsequently outperformed the market, we still see them as still being industry leaders whose competitive advantages give them solid growth prospects.  The Company's focus remains on value for sustainable growth and quality.


In Q1 2021, VEIL focused more on adjusting the weightings of existing positions, including reducing its position slightly in integrated steel manufacturer Hoa Phat Group ("HPG"). Although HPG holds the largest market share in its sector and we feel is integral to the large infrastructure and property development being seen in Vietnam, margins have come under pressure due to coal price rising more than steel prices since the beginning of the Russia-Ukraine conflict.


In the property sector, VEIL has been increasing its allocation to selected mid-cap companies with big land banks, strong execution, and good marketing teams. During Q1 2022, VEIL increased its position in Dat Xanh Group ("DXG") a midcap developer which is currently accelerating project sales and expanding its landbank in strategic locations."



S elected Active Returns (Bloomberg Basis)








NAV (net)






Share Price












Active Return

0. 77

3. 28


2 3 . 30

1 5 . 42

Active Share Ratio: 57.71




Macro Commentary


· GDP maintained its recovery in Q1 2022, rising 5.0% as Vietnam's economy continued to reopen, this was higher than 4.7% in Q1 2021 and 3.7% in Q1 2020.

· Manufacturing remained as the main growth driver, expanding +7.8% year-on-year.

· This was underpinned by strong trade growth, exports increased +13.4% to reach US$89.1bn and imports rose +15.2% to US$87.6bn, making a trade surplus of US$1.5bn for the quarter.

· The service sector rose +4.6% year-on-year and has made a strong recovery since lockdown ended in October.

· The government sees the hospitality part of this sector as vital to economic recovery, setting a target of 5m inbound visitors in 2022 (28% of pre-covid level) following the reopening for international tourism in March.

· The average CPI rose +1.9% year-on-year in Q1 2022, the second lowest Q1 level in five years.

· Disbursed FDI in Q1 2022 was US$ 4.4bn, up 7.8% year-on-year and a record high for Q1.

· The Vietnamese dong depreciated 0.3% against the US dollar in Q1 2022.



Market Commentary


· At the end of March, the chairmen of two property companies (one small-cap, the other unlisted) were arrested in unconnected cases, one of market manipulation, the other on charges of falsifying information in private bond sales. VEIL has never held a position in either company.

· The Investment Manager does not foresee a lasting impact and believes the news may potentially help to promote transparency and shareholder protection and move investors towards more fundamentally based stocks.

· Total market capitalisation for Vietnam's three exchanges was US$343bn at the end of Q1 2022, up 36% from US$253bn at the end of Q1 2021.

· Average daily traded value across Vietnam's three stock exchanges increased 62% year-on-year in Q1 2022 to US$1.4bn.

· Foreign investors sold net US$290m in Q1 2022, the outflow of US$161m in March was the eight consecutive month of net foreign outflows.

· The impact of eKYC (electronic Know Your Customer) and investment in technology from brokers to help ease the account opening process continues to be evidenced, a record 270k accounts were opened in March 2022, far above 2021's average of 125k per month.



Q1 Company Performances


Vietnam Prosperity Bank ("VPB") - 11.6% of NAV


First invested in by VEIL in 1996, VPB is a commercial bank with an asset management division, and owns 50% of a large microfinance company, FE Credit (52% market share in Vietnam). VPB has put significant resources into digitalisation, using modern technologies to maximise customer acquisition and retention at a low cost.


· Consolidated results for Q1 2022 showed net profit of US$ 387mn (+179% year-on-year).

· This contained one-off income from an upfront bancassurance fee from global insurance company AIA Group for more than US$ 200m as VPB extended its exclusive deal from 15 to 19 years.

· VPB have also expanded their financial services offerings with the acquisition of a securities firm and non-life insurance company during Q1 2022.

· VPB now has the largest customer database of the Vietnamese banks with around 19m customers, from a population of nearly 100m people. Combined with their increased financial services offering, this gives VPB a vital competitive advantage in cross-selling activities and customer acquisition and retention.



Hoa Phat Group ("HPG") - 9.9% of NAV


Held by VEIL since 2009, HPG is a fully integrated steel producer and the largest private steel manufacturer in Vietnam. HPG's organically funded expansion has enabled it to continually gain market share and the Investment Manager expects the company will benefit from both the reopening of the economy and the infrastructure play created by the government's fiscal spending programme.


· Q1 2022 net profit increased 17.5% year-on-year to US$ 357m, with revenue rising +41% to US$ 1.9bn over the same period.

· HPG sold nearly 2.5m tonnes of steel products (+14.8% year-on-year) with strong demand both domestically and overseas for their steel products. The commencement of new residential projects post-Lunar New Year, an increase in steel demand for infrastructure projects and a rise in agency inventory drove up domestic demand.

· Hot-rolled coil volumes increased +14.6% to 763k tonnes, mainly for domestic consumption.

· Steel sheet volume jumped by +43.7% year-on-year to 106k tonnes on strong export demand.



Asia Commercial Bank ("ACB") - 9.4% of NAV


Held by VEIL continuously since 1996, ACB is a commercial bank primarily focused on retail and SME segments and display prudent risk management, the Investment Manager believe this is one of the best banks in Vietnam in terms of asset quality.


· Q1 2022 results showed total operating income of US$ 297.8m and bottom-line net profit of USD143m, +20.7% and +32.4% year-on-year respectively.

· The net profit after tax increase was due to a 17.3% year-on-year increase in net interest income and sixfold rise in in net other income.

· Non-performing loan ratio of 0.86% relatively low compared to peers.



FPT Corporation ("FPT") - 4.6% of NAV


A portfolio holding since 2008, FPT is a technology and telecoms conglomerate with high levels of growth and ROE, stable dividends generated from strong cashflow. The Investment Manager believes the business remains undervalued. Their results are achieved from segments such as IT services, telecom services and education. With the surge of Technology adoption & Cloud migration globally, the Investment Manager believes FPT is well positioned to benefit.


· Preliminary Q1 2022 results recorded revenue of US$ 423m and NPAT of US$54m, up +28% and +24% year-on-year, respectively.

·   Software Outsourcing revenue rose +30%, with profit before tax up +35% year-on-year as   profit margins expanded by 60 bps year-on-year to 16.2% in Q1 2022, mainly due to a larger revenue contribution from digital transformation services.

· Telecom Services revenue grew +18% and profit before tax +21% year-on-year on double-digit broadband and pay TV subscriber growth. FPT Education's revenue increased 38% year-on-year.


Top Ten Holdings (71.6% of NAV)







Q1 2022 Performance %


Market Cap


Vietnam Prosperity Bank





US$ 7.2bn


Mobile World





US$ 4.7bn


Hoa Phat Group





US$ 8.8bn


Asia Commercial Bank





US$ 3.9bn







US$ 17.0bn


Dat Xanh Group

Real Estate




US$ 1.2bn



Real Estate




US$ 14.4bn


FPT Corporation





US$ 4.2bn







US$ 7.6bn


Military Bank





US$ 5.4bn



For further information, please contact:


Vietnam Enterprise Investments Limited

Rachel Hill

Phone: +44 122 561 8150

Mobile: +44 797 121 4852

[email protected]  


Jefferies International Limited

Stuart Klein 

Phone: +44 207 029 8703

[email protected]  



Charles Ryland / Henry Wilson / George Beale

Phone: +44 20 7466 5111

[email protected]  


LEI: 213800SYT3T4AGEVW864


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