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Vietnam Enterprise (VEIL)


Tuesday 14 June, 2022

Vietnam Enterprise

Monthly Update

RNS Number : 7760O
Vietnam Enterprise Investments Ltd
14 June 2022

14 June 2022


Vietnam Enterprise Investments Limited

("VEIL" or "the Company")


Monthly Update

-8.8% NAV Return in May 2022



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


Fund Performance

· As of 31 May, VEIL's NAV decreased 8.8% over the previous month against a fall of 6.1% for its reference index, the Vietnam Index, both in US dollar terms.

· The Company's NAV per share was US$10.53 as of 31 May, and its total NAV was US$2.2bn (£1.7bn).

· VEIL's NAV per share performance was -14.7% over three months, -6.2% over one year and +62.5% over three years. Over the same time periods, the performance of the Vietnam Index was -14.4%, -1.9% and +42.6%, respectively.

· The Company's share price decreased by 7.0% in May and 15.8% YTD, and its discount to NAV as of 31 May was 17.2%, compared with 18.7% at the end of April.

· The Company repurchased 1,051,782 shares in May, to be held in treasury, compared with 875,517 shares repurchased in April. As of 31 May 2022, 2.2% of issued shares have been repurchased since 1 January 2022.



Dien Huu Vu, the Portfolio Manager of VEIL commented:


"The market continued to decline in May, falling 6.1%.  Global issues such as Fed tightening, the lockdown in China and the Russia-Ukraine conflict were compounded by domestic ones, with worries about tighter bond market scrutiny and forced deleveraging sending the Vietnam Index to a mid-month slump of 14.3%. Despite the recovery of the Index in the second half of the month and a record 477k new retail trading accounts being opened, investor sentiment remained shaky, and on the combined stock exchanges average daily turnover fell by 32% to US$734m. Foreigners were once again net buyers and their inflows of US$138m brought cumulative net selling for the year down to $11m, from US$430m as at mid-March.


At the end of a challenging month for the market there was good news on an economic front when S&P Global Ratings upgraded Vietnam's long-term sovereign credit rating from BB to BB+ with a stable outlook; this is significant as it is just one notch below investment grade and may help attract more international investors to Vietnam.


S&P Global Ratings attributed this to several encouraging factors, including Vietnam's solid economic recovery and growth prospects, significant improvements in the Government's administrative processes, robust external position and resilient FDI flows, which were evidenced during the pandemic with disbursement of US$20bn in both 2020 and 2021, and a year-to-date record of US$7.8bn by the end of May 2022. Apple announced it will relocate iPad manufacturing to Vietnam, and Xiaomi commenced production of smart phones in Vietnam.


That said, trade has been under pressure. Although increased year-on-year, it has recently declined month-on-month, first in April and now in May. China's lockdown has been restricting imports of raw materials and intermediate goods, in turn holding back exports.   Additionally, with Brent crude oil import prices rising and Vietnam's refineries not operating at capacity, more foreign-produ ced distillates have been bought than in previous years. These trends saw exports fall 8.5% in May, while imports only slipped 0.8%, leading to a US$1.8bn deficit for the month and a cut in the year-to-date surplus to US$0.5bn. But China is now showing signs of reopening and Vietnam has made some progress in sourcing more semi-finished products from Korea, Japan and southeast Asia. The Investment manager believes that if oil is near US$120 per barrel, trade patterns can normalise after a few months.





Economic Overview

· S&P Global reported Vietnam's Manufacturing Purchasing Managers' Index (PMI) rose to 54.7 in May, the biggest increase in the ASEAN region and a meaningful gain from 51.7 in April.

· May retail sales increased 22% year-on-year, helped by strong travel demand, with domestic tourists rising by 68% for the first five months of the year.

· Disbursed foreign direct investment reached US$7.7bn, +7.8% year-on-year and at a record level for the first five months of the year.

· Exports and imports were US$153.3bn and US$152.9bn YTD at the end of May, +16.7% and +15.3% year-on-year, respectively.

· The trade surplus fell from US$2.5bn year-to-date at the end of April to US$0.5bn at the end of May. At the same stage last year this was a deficit of US$0.4bn before Vietnam ended the year with a US$4.0bn surplus.

· Inflation has stayed under control, rising 0.38% month-on-month and 2.9% year-on-year.  Oil prices have pushed the transport component of the CPI up by 18.4% year-on-year, accounting for almost two-thirds of the increase.

· In May, the Vietnamese dong depreciated 1.0% against the US dollar, year-to-date depreciation is 1.7%.


May Commentary


Eight of VEIL's top ten holdings ended the month lower, with only Vinhomes and FPT Corporation rising. The biggest decliners were Dat Xanh Group ("DXG"), Hoa Phat Group ("HPG") and VP Bank ("VPB"), all of which fell by double-digit percentages.


Steel manufacturer HPG experienced weak sentiment partly due to lockdowns in China causing steel prices to drop, indirectly impacting Vietnamese steel prices. The sales volume growth is still positive at 4% but has been lower than expectations due to reduced demand both domestically and overseas. Higher raw material prices have also resulted in margin compression. In the short term the effect from a gradual drop in output price continues to weigh on investor sentiment.


VPB was affected by the news that it may take more time before new credit quotas are granted to banks. The Investment Manager believes that VPB's fundamental picture remains largely unaffected by this, and over time the bank's solid earnings growth should start being reflected in its share price performance.


Real estate firm DXG's share price fell 25%, which was significant although the Investment Manager believes this was largely caused by volatility and sentiment toward the property sector rather than any substantial change in the outlook for the company.


Vinhomes ("VHM") had a strong month despite an overall fall of 7.5% in the property sector. Official guidance was expectedly lower than last year with the company's net sales and net earnings projected to be down 18% and 23% year-on-year, respectively. Still, if achieved, this would mark the third consecutive year that VHM delivered at least $1bn in net earnings. Overall, the Investment Manager believes that Vinhomes' pipeline remains excellent for medium- to long-term growth while its shares are trading at an undemanding 10x forward PER.


FPT Corporation gained 3.7% on solid fundamentals, with its results for the first four months to end of April reporting double digit revenue growth across all business segments and consolidated net profit up 32% year-on-year to US$89.7m.



Top Ten Holdings (66.2% of NAV)





Vietnam Index %


Monthly Change %


Vietnam Prosperity Bank






Mobile World Group






Asia Commercial Bank






Hoa Phat Group







Real Estate





FPT Corporation






Dat Xanh Group

Real Estate












Real Estate





Military Bank







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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