Vietnam Enterprise Investments Regulatory News (VEIL)

21 September 2022

Vietnam Enterprise Investments Limited

("VEIL" or "the Company")

Monthly Update

6.8% NAV Return in August 2022

VEIL is a closed-end fund investing primarily in listed equity in Vietnam, and a FTSE 250 constituent. The Company's NAV performance for August 2022 is set out in this notice.

Fund Performance

· As of 31 August, VEIL's NAV increased 6.8% over the previous month against a rise of 5.7% for its reference index, the Vietnam Index ("VNI"), both in US dollar terms.

· The Company's NAV per share was US$10.24 as of 31 August (+6.8% for the month and -16.1% YTD) and its total NAV was US$2.1bn.

· In GBP terms, the Company's NAV per share was £8.80 as of 31 August (+11.7% for the month and -2.3% YTD) and its total NAV was £1.8bn

· VEIL's NAV per share performance in US dollar terms is -2.8% over three months, -8.7% over one year and +48.4% over three years. Over the same time periods, the performance of the Vietnam Index was -1.5%, -5.1% and +35.1%, respectively.

· The Company's share price increased by 1.1% in August and decreased 21.6% YTD (both in USD Terms), and its discount to NAV as of 31 August was 20.7%, compared with 16.2% at the end of July.

· The Company repurchased 349,727 shares in August, to be held in treasury, compared with 733,980 shares repurchased in July. As of 31 August 2022, 2.7% of issued shares have been repurchased since 1 January 2022.

Dien Vu, the Portfolio Manager of VEIL commented:

"Recognition of Vietnam's economic strength continues, with Moody's upgrading the country to Ba2, two notches below investment grade and upgrading their GDP growth forecast to 8.5% for 2022; this follows on from S&P's upgrade in May to BB+, one notch below investment grade. Moody's statement credited 'Vietnam's growing economic strengths relative to peers and greater resilience to external macroeconomic shocks' which Moody's also noted should continue due to the economic benefits of 'supply chain reconfiguration, export diversification and continued inbound investment in manufacturing'.

"Meanwhile, the World Bank also revised its forecast for Vietnam's 2022 GDP growth upward to 7.5% from 5.8% in June 2022. In addition to a solid growth outlook, the country remains fiscally sound, with the General Statistic Office of Vietnam reporting total State revenue of US$51.6bn for the first eight months of the year, this compared to US$40.9bn in expenditures and creates a US$10.8bn fiscal surplus (triple the amount at the same point in 2021) for the Government to support the economy should it be required to combat any further global slowdown.

"With the US dollar index surpassing 110 and reaching its highest level in 20 years, emerging market currencies were impacted, and Vietnam was not spared. The Vietnamese dong experienced a 0.5% depreciation against the US dollar in August, which is 2.7% year-to-date; a modest figure compared to other currencies such as the Euro falling below parity and Japanese Yen tumbling to a 24-year low. Year-to-date, the pound sterling has depreciated 11.3% against the Vietnamese dong.

"The Vietnam Index reached an eleven-week high at the end of August, and average daily trading value across the three exchanges rose 36% month-on-month to US$792mn, its highest level in four months. The average daily liquidity across the three bourses for the first eight months of the year was a healthy US$989mn, down just 2.3% year-on-year despite the global economic uncertainty that exists."

Economic Overview

· Vietnam recorded a US$3.9bn trade surplus in August, putting the year-to-date total at US$5.5bn

· Exports in August registered at US$34.9bn while imports totalled US$31.1bn, representing monthly gains of 14.1% and 1.7% month-on-month, respectively.

· The sharp rise in exports was in part due to the release of the Samsung Galaxy Fold, which can be observed in the 39.4% month-on-month increase in mobile exports.

· In the first eight months of 2022, exports reached US$252.6bn and imports US$247.1bn, gains of 18.2% and 13.7% year-on-year, respectively.

· Disbursed FDI reached US$12.8bn (+10.5% year-on-year) year-to-date to the end of August.

· Manufacturing and processing were most attractive FDI sectors, accounting for 64% of the US$16.8bn registered year-to-date.

· The Vietnam Purchasing Manager's Index increased to 52.7 having registered at 51.2 in July, an eleventh consecutive monthly expansion.

· The Index of Industrial production rose 15.6% year-on-year at the end of August

· Retail sales increased over 50% year-on-year, albeit from a low base.

· August's CPI rose 2.9% year-on-year from 3.1% in July as further cuts to petrol prices largely offset the effects of higher tuition fees ahead of the new school year, as well as essential goods and services.

· The Vietnamese dong depreciated 0.5% against the US dollar in August, the year-to-date depreciation is 2.7%.

August Commentary

Following a decline of 14.9% last month, Mobile World Group ("MWG") bounced back, rising 20.8% in August, the single largest positive contribution in VEIL's portfolio. The increased sentiment was due to optimism that the grocery chain, Bach Hoa Xanh ("BHX"), has improved store performance after restructuring. Monthly average revenue/store for Jul hit c.US$55,000, with some observers believing that based on current trajectory that the figure can keep growing toward c.US$63,000 by year end. In addition, the response for the newly launched iPhone 14 was positive, with almost 30,000 registered buyers after five days of debuting, which is understood to be almost double last year's figure for the iPhone 13. This gives further confidence to the company achieving US$1bn in revenue from Apple products in 2023, which would make MWG the largest account that Apple have in ASEAN. In a recent meeting with investment analysts, MWG's chairman shared that the company has already started its advisor selection process to sell up to 20% of BHX in a pre-IPO deal that could potentially unlock significant value for the group, with the transaction is expected to be completed by the end of 2023 at the latest.

VPB rose as the banking sector rebounded from the July's decline on the long-awaited news of increased credit quotas from the State Bank of Vietnam. The stock also rallied on further positive news regarding the private placement from strategic investor Sumitomo Mitsui Banking Corporate, which the Investment Manager also thinks is likely to be a key catalyst for the bank's future performance. Post-placement, VPB is expected to be one of the best-capitalised banks in Vietnam, giving them a strategic advantage over other banks in the sector.

Top Ten Holdings (63.6% of NAV)

Source: Bloomberg, Dragon Capital

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