Vietnam Enterprise Investments Regulatory News (VEIL)

14 March 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 is a FTSE 250 constituent. The Company's NAV performance for February 2023 is set out in this notice.

Company Performance

· As of 28 February, VEIL's NAV decreased 10.8% over the previous month against a fall of 9.0% for its reference index, the Vietnam Index ("VNI"), both in US dollar terms.

· The Company's NAV per share was US$7.76 as of 28 February and its total NAV was US$1.6bn.

· VEIL's three month's NAV per share performance in US dollar terms is +1.4%, -37.2% over one year and +22.4% over three years. Over the same time periods, the performance of the VNI was +1.7%, -33.0% and +18.8%, respectively.

· The share price fell 13.4% in February and has declined 4.0% year-to-date, both in US dollar terms.

· In GBP terms, the Company's NAV per share was £6.41 as of 28 February (-9.3% for the month and -1.8% year-to-date) and its total NAV was £1.3bn. The share price was down 11.9% for the month and 4.6% year-to-date.

· The share price discount to NAV as of 28 February was 13.3%, compared with 10.8% at the end of January 2023.

· The Company repurchased 170,000 shares in February, to be held in treasury, these were the first repurchases in 2023.

Dien Vu, VEIL's Portfolio Manager commented:

"Following two months of double-digit returns the Vietnam Index fell 9.0% in February. This was mainly due to unease over recent missed payments in the corporate bond market and renewed concerns of a higher terminal Federal Reserve rate.

"The State Bank of Vietnam has granted the first tranche of credit quotas to banks for 2023, with an average allocation of 9.0%, down from 11.0% at this stage in 2022. This announcement is not expected to significantly affect lending activities or the banking system's liquidity. As a result of improving fungibility and weaker borrowing demand, the lending rate has dropped a moderate 0.4% year-to-date, and deposit rates for six months and longer reduced between 0.5% to 1.5%.

"Interest rates may remain at their current levels over the coming months due to pressure on the State Bank of Vietnam to maintain or even raise rates in line with other major central banks, and the prospect of more persistent inflation. The CPI for the first two months of the year increased 4.6% year-on-year and we believe this could be managed on average around 4.2%-5.0% in 2023.

"The service sector is looking resilient as Vietnam welcomed a total of 1.8 million visitors in January and February, and retail sales grew 13.0% year-on-year. The 2023 target of ten million international arrivals looks achievable and bodes well for foreign receipts and tourism-related businesses. Standalone macroeconomic numbers for February are impacted by seasonal holiday effects, but combined with January we can see that year-to-date industrial production fell by 6.3% against the same stage last year and total trade decreased by 12.6% to $96.1bn. These may not be stellar numbers, but on a brighter note the trade balance remained solid with a surplus of US$2.8bn, and the Purchasing Managers Index rose to 51.2, its first positive month after three months of contraction and its highest rate of expansion since August 2022.

"In the portfolio, investor concern over the bond market was pronounced, having a knock-on effect to two of VEIL's real estate holdings. Vinhomes ("VHM) and Khang Dien Housing ("KDH") were both unfortunate bystanders of sector-wide underperformance, losing over 10% in February as foreign investors turned to risk-off mode. Mobile World Group ("MWG") was also a laggard due to management giving weak 2023 guidance in its latest call, announcing 2023 revenue expectations of between US$5.7bn to US$6.4bn (an increase of 1-12% year-on-year) and net profit of US$178m to US$200m (growth of 2-15% year-on-year), anticipating a slow start to the year and an improvement over H2 2023."

Economic Overview

· Exports and imports in the first two months of the year declined 10.4% and 16.0% year-on-year to US$49.4bn and US$46.6bn, respectively, leading to a trade surplus of US$2.8bn. Exports to China grew 4.2% year-on-year whilst other key markets fell, including the US (-21.0%), EU (-4.2%), and ASEAN (-7.9%).

· Disbursed FDI fell 4.9% year-on-year to US$2.6bn in the first two months of 2023, while registrations dropped 38.0% to just US$3.1bn, mainly due to a lack of large-scale expansions of existing projects.

· The Index for Industrial Production fell 6.3% year-on-year for January and February combined, with manufacturing falling 6.9%.

· The Purchasing Managers Index rose to 51.2, showing that new orders increased for the first time in four months and indicating that production might start to pick up in the coming months.

· February's CPI rose 0.5% month-on-month and 4.3% year-on-year and can be attributed to rising petrol and gas cylinder prices which is in-line with the global trend.

· The Vietnamese dong ("VND") depreciated 1.2% against the US dollar in February, and 0.5% year-to-date. The VND appreciated 1.2% against the pound sterling in January and has depreciated 0.1% year-to-date.

Top Ten Holdings (66.8% 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