TIDMVEIL
RNS Number : 3704T
Vietnam Enterprise Investments Ltd
14 November 2023
14 November 2023
Vietnam Enterprise Investments Limited
("VEIL" or "the Company")
Monthly Update
VEIL is a London-listed investment company investing primarily
in listed equities in Vietnam and a FTSE 250 constituent. The
Company's NAV performance for October 2023 is set out in this
notice.
Company Performance
-- As of 31 October, VEIL's NAV decreased 13.0% over the
previous month against a fall of 11.7% for its reference index, the
Vietnam Index ("VNI"), both in total return USD terms. The
Company's NAV per share was US$7.70 and its total NAV was
US$1.6bn.
-- VEIL's share price decreased 13.1% in October and has
declined 10.3% year-to-date, both in USD terms.
-- VEIL's three-month NAV per share performance in USD terms is
-18.9%, +2.5% over one year and +11.0% over three years. Over the
same time periods, the performance of the VNI was -18.5%, +2.8% and
+9.6%, respectively.
-- In GBP terms, VEIL's NAV decreased 12.4% over the previous
month and has declined 2.8% year-to-date. The Company's NAV per
share was GBP6.35 as of 31 October and its total NAV was GBP1.3bn.
The GBP share price decreased by 12.6% for the month and has
declined 11.1% year-to-date.
-- The share price discount to NAV as of 31 October was 18.4%,
compared with 18.2% at the end of September and 10.7% as of 31
December 2022.
-- The Company repurchased 1,207,118 shares in October, compared
with 1,158,987 shares repurchased in September. Year-to-date to 31
October, 4,793,176 (2.3% of shares outstanding as of 1 January
2023) have been repurchased. The accretion to NAV per share from
the share repurchases is 0.52%.
-- The Vietnamese dong ("VND") depreciated 1.1% against the USD
in October and has depreciated 4.0% year-to-date. The VND
depreciated 1.0% against the GBP in October and has depreciated
5.2% year-to-date.
Dien Vu, Portfolio Manager of VEIL commented:
"The VNI's total decline of 17.5% in September and October
cancelled out the market and the Company's YTD gains. The Manager
believes the drop in valuations across the portfolio has been
sentiment driven. This view may be supported by the market's
recovery of 8.9% in the first seven trading days of November. The
Vietnamese market is not immune from global sentiment and is
subject to further pressure from domestic policy decisions.
"Of note in this regard is the State Bank of Vietnam's ("SBV")
decision to remove an estimated excess US$9bn in financial system
liquidity since late September via open-market operations. The move
dampened local investor sentiment who mistakenly interpreted it as
a return to monetary tightening after the SBV's 150 basis point
rate cuts earlier in the year. However, during the latter half of
October, the SBV injected US$2.5bn of liquidity into the system.
Rather than an augur of a hawkish SBV, the Manager believes the
move reflects their objective to maintain a sufficient war chest to
protect the value of the currency. The VND depreciated 1.1% against
the USD in October and follows a 0.9% depreciation in September.
The Manager maintains the viewpoint that the VND is fundamentally
solid and the SBV will continue its focus on growth with economic
stability.
"Despite the mark-to-market volatility, the Manager has not
observed any substantial deterioration in the core fundamentals of
VEIL's holdings and would like to highlight the following
companies:
"Mobile World Group ("MWG") declined 29.0% in October as third
quarter earnings reported that revenue declined 16% YoY to US$3.5bn
in the nine months to 30 September. However, MWG's market share in
Apple products increased to 42% from 30% the previous year, and
non-Apple products increased to 58% from 50%. MWG's management has
indicated that they expect profit margins to recover in 2024,
partly due to optimising truck capacity and other operational
efficiencies in the supply chain for their grocery store division
with c.2,000 outlets. The Manager believes the October fall in
MWG's share price was more likely influenced by early rumours over
its potential removal from a $665m exchange traded fund of which
MWG is a 12.5% weight, although this review is not due until April
2024.
"Vinhomes ("VHM") declined by 15.1% despite strong Q3 results.
NPAT of US$1.3bn for the first nine months of the year fulfilled
107% of the Manager's full-year forecast for 2023. The October
share price decline was in part due to a large volume of sell
orders placed in the market on 26 October as investors hedged
against its parent company Vingroup's US$250m five-year
exchangeable bond placement with the option to convert into VHM
shares.
"Hoa Phat Group's ("HPG") October sales continued to recover and
were up 7.4% month-on-month and 23.7% year-on-year. Production cuts
in China benefitted both Vietnamese steel prices and demand, and we
expect sales momentum will continue at a steady rate, supported by
the Governments infrastructure drive and gradual recovery of the
property market. With clear signs of earnings recovery and HPG's
furnaces now operating at 85% capacity, the Manager anticipates
over 40% EPS growth in 2024 whilst the price to book ratio is
currently at around a 20% discount to its three-year average."
Top Ten Holdings (62.6% of NAV)
Company Sector NAV % VNI % Monthly One-year
Return % Return %
Vietnam Prosperity
1 Bank Banks 11.4 3.3 -8.7 23.7
================== =================== ===== ===== ========= =========
2 Hoa Phat Group Materials/Resources 8.6 3.3 -13.4 48.6
================== =================== ===== ===== ========= =========
3 Vietcombank Banks 8.5 11.9 -1.7 41.0
================== =================== ===== ===== ========= =========
Asia Commercial
4 Bank Banks 8.3 2.0 -3.0 15.6
================== =================== ===== ===== ========= =========
5 FPT Corporation Software/Services 5.9 2.6 -11.4 30.6
================== =================== ===== ===== ========= =========
6 Mobile World Group Retail 5.2 1.4 -29.0 -25.4
================== =================== ===== ===== ========= =========
7 PetroVietnam Gas Energy 4.2 3.6 -16.3 -13.3
================== =================== ===== ===== ========= =========
8 Vinhomes Real Estate 3.8 4.2 -15.1 -12.4
================== =================== ===== ===== ========= =========
9 Vinamilk Food & Beverage 3.4 3.5 -9.2 -7.8
================== =================== ===== ===== ========= =========
10 Khang Dien House Real Estate 3.4 0.6 -4.6 40.1
================== =================== ===== ===== ========= =========
Vietnam Index - - -11.7 2.8
================== =================== ===== ===== ========= =========
Source: Bloomberg, Dragon Capital
NB: All returns are given in USD terms
For further information, please contact:
Vietnam Enterprise Investments Limited
Rachel Hill
Phone: +44 122 561 8150
Mobile: +44 797 121 4852
rachelhill@dragoncapital.com
Jefferies International Limited
Stuart Klein
Phone: +44 207 029 8703
stuart.klein@jefferies.com
Buchanan
Charles Ryland / Henry Wilson / George Beale
Phone: +44 20 7466 5111
veil@buchanan.uk.com
Radnor Capital Partners
Iain Daly
Phone: +44 20 3897 1830
id@radnorcp.com
LEI: 213800SYT3T4AGEVW864
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