Vietnam Enterprise Investments Regulatory News (VEIL)

19 July 2023

Vietnam Enterprise Investments Limited

("VEIL" or "the Company")

Correction - Monthly Update

The following correction relates to the Monthly Update announcement released on 17 July 2023 at 07:00 under RNS Number 2044G.

The release covers the Company's performance for June 2023. It contains an error stating that VEIL's three-month NAV per share performance was +11.6%. The correct number is +4.6%.

All other details remain unchanged. The full amended text is shown below.

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 June 2023 is set out in this notice.

Company Performance

· As of 30 June, VEIL's NAV increased 5.1% over the previous month against a rise of 4.1% for its reference index, the Vietnam Index ("VNI"), both in total return US dollar terms. The Company's NAV per share was US$8.66 and its total NAV was US$1.8bn.

· VEIL's share price increased 9.1% in June and has risen 6.3% year-to-date, both in US dollar terms.

· VEIL's three-month NAV per share performance in US dollar terms is +4.6%, -11.3% over one year and +48.0% over three years. Over the same time periods, the performance of the VNI was +5.2%, -6.1% and +40.1%, respectively.

· In GBP terms, VEIL's NAV increased 2.4% over the previous month and 4.3% year-to-date. The Company's NAV per share was £6.81 as of 30 June and its total NAV was £1.4bn. The sterling share price increased by 6.4% for the month and 0.5% year-to-date.

· The share price discount to NAV as of 30 June was 14.0%, compared with 17.1% at the end of May 2023 and 10.7% as of 31 December 2022.

· The Company repurchased 583,504 shares in June, compared with 174,734 shares repurchased in May. Year-to-date to 30 June, 1,906,589 (0.9% of shares outstanding as of 1 January 2023) have been repurchased.

· The Vietnamese dong ("VND") depreciated 0.4% against the US dollar in June and has appreciated 0.2% year-to-date. The VND depreciated 3.2% against the pound sterling in June and has depreciated 5.3% year-to-date.

Dien Vu, Portfolio Manager of VEIL commented:

"VEIL outperformed the index in June, primarily due to steel manufacturer Hoa Phat Group's ("HPG") 22.9% increase and retailer Mobile World Group's ("MWG") 10.0% gain. HPG benefitted from rising steel prices and increased sales volumes, while MWG's aggressive market share expansion strategy amidst consumption weakness appears to be working. As concerns over the bond and property markets subside, the Investment Manager believes that a resurgence in consumer confidence can be expected, including a rise in consumption over the next six months, presenting an opportunity for leading retail players to further strengthen their market positions.

"In June, the State Bank of Vietnam announced its fourth interest rate cut since March. The Investment Manager believes the Company's banking and real estate holdings will benefit from the 150-basis point decline in interest rates so far this year. VEIL's property investments selectively target companies with the financial strength to endure the current period of consolidation, with holdings split between residential and industrial parks. The residential segment of the portfolio focuses on quality developers with strategically located landbanks and strong growth outlooks, while the Company's industrial park holdings are comprised of selected stocks that the Investment Manager views as attractive and financially robust.

"Vietnam's economy achieved 3.7% growth in H1 2023, an H1 low for the country, which has seen a solid growth trajectory over the past decade, bar the impact of Covid in 2020. GDP growth accelerated from 3.3% in Q1 2023 to 4.1% in Q2 2023 and was supported by the aforementioned rate cuts. The big question, however, is whether Vietnam can maintain its loose monetary policies in the face of global market complexities and contrarian policy movements.

"The Investment Manager believes that leveraging monetary policy to boost the economy will not precipitate significant inflationary pressure. Headline inflation edged up by just 2.0% year-on-year in H1 2023, with the average CPI in 2023 projected to hover between 3.5%-4.0% year-on-year. Additionally, borrowing demand and total money supply remain weak, with total credit and M2 expanding by a mere 4.7% and 3.2% YTD, respectively. These figures underscore the necessity for supportive policies, as a weakened money cycle presents obstacles for the economy to regain its momentum.

"The Investment Manager believes that synchronisation with global monetary policy is vital for a sustainable economic recovery. While the world's leading central banks continue to tighten monetary policy and raise interest rates, policy divergence could instigate short-term exchange rate volatility, and in turn, compromise the effectiveness of Vietnamese accommodative measures. This is particularly relevant in the context of the renminbi retesting 7.3 against the US dollar, while Vietnamese interest rates are lower than in the US. Should other central banks adopt a more favourable stance next year, the Investment Manager expects a healthy increase in global and Vietnamese product demand, leading to an increase in export orders."

Top Ten Holdings (67.1% of NAV)

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

LEI: 213800SYT3T4AGEVW864