Vietnam Enterprise Investments Ltd (LON: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 January 2024, in which NAV per share rose 1.3% (in USD terms), is set out in this notice.
Tuan Le, Portfolio Manager of VEIL commented:
“There were encouraging economic indicators in January, including exports reaching US$33.6bn, the highest figure since August 2022, and the Purchasing Managers’ Index registering its first expansion in five months. Headline inflation remains well controlled at 3.4% year-on-year, while core inflation decreased to 2.7%.
“Despite US$1.5bn of disbursed FDI, a US$2.9bn trade surplus and inward remittances leading up to Vietnam’s Lunar New Year holiday, the Vietnamese dong (“VND”) recorded a depreciation of 0.6% due to a strengthening US dollar and the VND-USD interest rate differential.
“We believe the performance of the VND demonstrates Vietnam is not as affected by China’s economic slowdown as other nations. Many Asian and Oceanian currencies suffered a depreciation of 2.0-3.5% in January, such as the Malaysian ringgit (-3.0%), Indonesian rupiah (-2.6%), Thai baht (-3.0%), Australian dollar (-3.5%), and New Zealand dollar (-3.3%). These countries provide commodities and materials to China’s production supply chain and have had significant trade surpluses for many years. On the other hand, China is Vietnam’s largest trading partner, but Vietnam has a trade deficit with China due to a diverse export portfolio comprising of agricultural and electronic products, making Vietnam less vulnerable to a Chinese manufacturing contraction.
“The Government expedited approval of the amended Law on Credit Institutions and the Land Law. The amended Law on Credit reduces shareholders’ ownership and borrowing limits, and changes disclosure thresholds to individuals holding more than a 1% stake, down from 5%. We anticipate that this will help improve the long-term stability and transparency of the banking system. The banking sector currently makes up 40% of VEIL’s portfolio.
“The amended Land Law aims to resolve grey areas in property sector regulations. Although further guidance is expected mid-year, the law intends to expedite land clearance processes by enabling the Government to reclaim land for existing projects. It also aims to align land compensation prices with market value for affected households. Developers holding pre-approved land for commercial housing should benefit from clearer land valuation methods that promise quicker project execution. Our expectation is that this will boost VEIL’s property holdings, such as Vinhomes and Khang Dien House.
“Military Bank (“MBB”) became VEIL’s eighth largest position at the end of January. It is one of Vietnam’s leading commercial banks and has grown its mobile banking users by 30% year-on-year. This cost-effective customer acquisition and retention strategy is reflected in the company’s results, with PBT in Q4 2023 reaching US$258m (+38.6% year-on-year) and FY 2023 PBT of US$1.1bn (+15.7% year-on-year). Deposit growth expanded 28.0% year-on-year and the CASA (current account and savings) ratio grew to 40.2%; this is the highest among peers and an indication of strong liquidity. We are encouraged by MBB’s strategy of diversifying its loan book to focus on high-growth corporate sectors such as wholesale and retail trade, and manufacturing and processing, which we believe positions it well for future growth.”
Company Performance
· As of 31 January 2024, VEIL’s NAV increased by 1.3% over the previous month against a gain of 2.5% for its reference index, the Vietnam Index (“VNI”), both in total return USD terms. The Company’s NAV per share was US$8.78 and its total NAV was US$1.8bn. VEIL’s share price increased 2.4% in January in USD terms.
· VEIL’s three-month NAV per share performance in USD terms is +14.0%, +0.9% over one year and +5.3% over three years. Over the same time periods, the performance of the VNI was +14.5%, +2.5% and +8.7%, respectively.
· In GBP terms, Vietnam Enterprise Investments’ NAV increased 1.3% in January and decreased 2.5% over one year. The Company’s NAV per share was £6.89 as of 31 January and its total NAV was £1.4bn. The GBP share price increased by 2.5% for the month and has declined 9.5% over one year.
· The share price discount to NAV as of 31 January 2024 decreased to 17.1%, compared with 18.1% as of 31 December 2023. On 31 January 2023 the discount to NAV was 10.8%.
· The Company repurchased 386,103 shares in January, compared with 213,786 shares repurchased in December. Year-to-date, 0.2% of shares outstanding as of 1 January 2024 have been repurchased. The accretion to NAV per share from the share repurchases is 0.04%.
· The VND depreciated 0.6% against the USD in January and 4.2% over one year. The VND depreciated 0.3% against the GBP in January and 7.2% over one year.
Top Ten Holdings (59.0% of NAV)
| Company | Sector | NAV % | VNI % | Monthly Return % | One-year Return % | |
| 1 | Hoa Phat Group | Materials/Resources | 9.5 | 3.4 | -1.3 | 20.6 |
| 2 | Vietnam Prosperity Bank | Banks | 9.1 | 3.3 | 0.4 | 0.6 |
| 3 | Asia Commercial Bank | Banks | 8.8 | 2.1 | 7.1 | 13.6 |
| 4 | Vietcombank | Banks | 7.1 | 10.5 | 9.5 | 9.2 |
| 5 | FPT Corporation | Software/Services | 6.0 | 2.6 | -1.0 | 29.5 |
| 6 | Mobile World | Retail | 4.7 | 1.4 | 4.5 | -6.2 |
| 7 | Techombank | Banks | 3.5 | 2.6 | 8.0 | 12.8 |
| 8 | Military Bank | Banks | 3.4 | 2.4 | 15.9 | 26.0 |
| 9 | PV Gas | Energy | 3.4 | 3.7 | -0.8 | -15.3 |
| 10 | Vinhomes | Real Estate | 3.3 | 3.9 | -4.6 | -21.7 |
| Vietnam Index | – | – | 2.5 | 2.5 | ||
Source: Bloomberg, Dragon Capital
NB: All returns are given in USD terms
