14 March
2024
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 unaudited performance for
February 2024, in which NAV per share rose 6.2% (in USD terms), is
set out in this notice.
Tuan Le,
recently appointed Lead Portfolio Manager of VEIL
commented:
"VEIL had a strong February with NAV per share
increasing by 6.2%, with all the portfolio's top ten holdings
ending the month registering share price gains, supported by a
favourable macroeconomic backdrop.
"The Purchasing Managers' Index stayed above 50
for the second month in a row after five consecutive months of
contraction, with a 5.7% year-on-year increase in the Index of
Industrial Production for the first two months of 2024. Total
exports rose 19.2% year-on-year to US$59.3bn, while imports
increased less by 18.0% to US$54.5bn. New export orders continued
to rise, with meaningful growth registered in major markets with
which Vietnam has recently upgraded diplomatic relations, such as
the US and Japan, both surging 34% year-on-year.
"Retail sales
grew 5.0% year-on-year in the first two
months of the year, driven by increased demand over the Tet holiday
and tourism, which confirms the recovering domestic consumption
trend. FDI disbursement over the
same period reached US$2.8bn, up 9.8%, building on a strong 2023
base which underscores Vietnam's increasingly established appeal as
a key alternative for investors diversifying from China.
"Both lending and deposit rates continued to
drop to record lows, with current 12-month deposit rates averaging
4.5-5.0%, down considerably from the 2023 peak of more than 11%.
This adjustment likely contributed to the 24.8% month-on-month
spike in liquidity on the Ho Chi Minh City Stock Exchange to
US$828mn, highlighting the equity market's allure over fixed-term
deposits. The Vietnam Index also surpassed last years' high of
1,245 points, climbing to 1,252 points by the end of the
month.
"The Ministry of Finance reported a 21.8%
year-on-year increase in domestic investment and development
(including infrastructure) spending to US$2.4bn in the first two
months of 2024. This push looks set to reinvigorate the materials
sector, especially steel, and aligns with our expectation of
increased demand spurred by infrastructure initiatives. VEIL's top
holding, Hoa Phat Group ("HPG"), is Vietnam's largest steel
producer, with 35% market share in construction steel and 28% in
steel pipes. HPG invited investors to visit its new hot rolled coil
("HRC") plant at the end of March, which is due to open in early
2025. HRC is the company's most profitable line, and this expansion
is set to increase annual HRC production from 3.4mn to 8.0mn tons
over the next 12-24 months. In the first two months of 2024, HRC
volumes doubled due to rising demand, helping total sales volume to
rise 26.9% year-on-year.
"VEIL's strategic 5x overweight position (2.5%
vs 0.5% of the Vietnam Index) in real estate developer Khang Dien
House ("KDH") aligns with our projection of a recovery in the
sector. KDH's +12.1% increase in February was due in part to the
recent amendments to the Land Law, which prioritises developers
with ready landbanks for project approvals. With one of the largest
landbanks in HCMC, KDH is well-positioned to lead the sector
revival. These comprise five separate projects including c.1,400
apartments in 2024, a 110ha industrial park extension starting in
2025, and a major 329ha mixed-use project starting in
2026.
"The Government's tech drive includes a
programme for IT enrolment and it is yielding tangible benefits,
particularly for FPT, Vietnam's leading software services company.
Management reported that recruitment is becoming easier and plans
to hire up to 3,000 additional engineers this year, doubling the
2023 figure of approximately 3,000 to 6,000. This is underpinned by
an anticipated 22-25% growth in global IT revenue for 2024, with
Japan projected as the fastest-growing market at 35%. FPT's recent
acquisition of Next Advance Communications, a Japanese IT services
firm, is a strategic move that establishes a solid foothold in
Japan. This sets a clear path towards achieving its US$1bn revenue
target in Japan by 2027 from US$388mn in 2023, approximately 38% of its global IT revenue."
Company Performance
· As
of 29 February, VEIL's NAV increased by 6.2% over the previous
month against a gain of 6.6% for its reference index, the Vietnam
Index ("VNI"), both in total return USD terms. The Company's NAV
per share was US$9.32 and its total NAV was US$1.9bn.
·
VEIL's share price increased 2.3% in February and 4.8%
year-to-date, both in USD terms.
·
VEIL's three-month NAV per share performance in USD terms is
+11.4%, +20.1% over one year and -0.2% over three years. Over the
same time periods, the performance of the VNI was +13.0%, +20.0%
and +4.7%, respectively.
· In
GBP terms, VEIL's NAV increased 7.0% over the previous month and
8.4% year-to-date. The Company's NAV per share was £7.37 as of 29
February and its total NAV was £1.5bn. The GBP share price
increased by 3.0% for the month and 5.6% year-to-date.
· The
share price discount to NAV as of 29 February increased to 20.2%,
compared with 17.1% at the end of January. On 31 December 2023 the
discount was 18.1%.
· The
Company purchased 740,269 shares in February, compared with 386,103
shares purchased in January. Year-to-date to 29 February, 1,126,372
(0.56% of shares outstanding as of 1 January 2024) were
purchased.
The accretion to NAV per share from the share
repurchases was 0.13% year-to-date to 29 February.
· The
Vietnamese dong ("VND") depreciated 0.9% against the USD in
February and 1.6% year-to-date. The VND depreciated 0.9% against
the GBP in February and 1.2% year-to-date
Top Ten
Holdings (60.0% of NAV)
|
Company
|
Sector
|
NAV %
|
VNI %
|
Monthly Return %
|
One-year Return %
|
1
|
Hoa Phat Group
|
Materials/Resources
|
9.9
|
3.6
|
10.7
|
49.6
|
2
|
Asia Commercial Bank
|
Banks
|
9.0
|
2.2
|
7.7
|
32.5
|
3
|
Vietnam Prosperity Bank
|
Banks
|
8.8
|
3.1
|
1.6
|
18.3
|
4
|
Vietcombank
|
Banks
|
7.3
|
10.8
|
8.9
|
18.6
|
5
|
FPT Corporation
|
Software/Services
|
6.4
|
2.7
|
12.9
|
53.7
|
6
|
Mobile World
|
Retail
|
4.2
|
1.3
|
1.7
|
12.5
|
7
|
Techcombank
|
Banks
|
4.1
|
2.9
|
21.0
|
53.7
|
8
|
Military Bank
|
Banks
|
3.6
|
2.5
|
10.0
|
59.3
|
9
|
Vinhomes
|
Real Estate
|
3.4
|
3.7
|
3.6
|
0.9
|
10
|
PV Gas
|
Energy
|
3.3
|
3.5
|
1.7
|
-10.3
|
|
|
Vietnam Index
|
-
|
|
-
|
6.6
|
20.0
|
Source: Bloomberg, Dragon Capital
NB: All
returns are given in USD terms as of 29 February
2024
For further information, please
contact:
Vietnam Enterprise Investments
Limited
Rachel Hill
+44 122 561 8150
+44 797 121 4852
rachelhill@dragoncapital.com
Jefferies International
Limited
Stuart
Klein
+44 207 029 8703
stuart.klein@jefferies.com
Buchanan
Charles Ryland / Henry Wilson /
George Beale
+44 20 7466 5111
veil@buchanan.uk.com
h2Radnor
Iain Daly
+44 20 3897 1830
idaly@h2radnor.com
LEI: 213800SYT3T4AGEVW864