Last checked at 
15 Jan 2024 07:00
15 January 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 NAV performance for December 2023 is set out in this notice.
Company Performance
· As of 31 December 2023, VEIL's NAV increased by 3.6% over the previous month against a gain of 3.4% for its reference index, the Vietnam Index ("VNI"), both in total return USD terms. The Company's NAV per share was US$8.67 and its total NAV was US$1.7bn.
· VEIL's share price increased 5.5% in December and 1.3% in 2023 overall, both in USD terms.
· VEIL's three-month NAV per share performance in USD terms is -2.0%, +10.4% over one year and +4.5% over three years. Over the same time periods, the performance of the VNI was -1.4%, +11.1% and +1.8%, respectively.
· In GBP terms, VEIL's NAV increased 2.9% over the previous month and 4.1% in 2023. The Company's NAV per share was £6.80 as of 31 December and its total NAV was £1.4bn. The GBP share price increased by 4.7% for the month and declined 4.5% in 2023.
· The share price discount to NAV as of 31 December reduced to 18.1%, compared with 19.5% at the end of November. On 31 December 2022 it was 10.7%.
· The Company repurchased 213,786 shares in December, compared with 691,730 shares repurchased in November. For the full year, 5,698,692 (2.8% of shares outstanding as of 1 January 2023) were repurchased. The accretion to NAV per share from the share repurchases is 0.62%.
· The Vietnamese dong ("VND") depreciated 0.04% against the USD in December and depreciated 2.7% in 2023. The VND depreciated 0.6% against the GBP in December and depreciated 8.3% in 2023.
Dien Vu, Portfolio Manager of VEIL commented:
"VEIL's NAV rose 3.6% in December, culminating in an annual rise of 10.4%. Vietnam's economy grew by 5.1% in 2023, one of the highest growth rates globally. As of 31 December, the size of the economy reached US$430bn and GDP per capita increased to US$4,284, approaching the upper middle-income threshold of $4,465 as defined by the World Bank. Final consumption - defined as direct spending by individuals and households - improved modestly, growing by 3.5% year-on-year, contributing 2.1% to the overall GDP growth. Furthermore, a trade surplus of almost US$28bn helped maintain the Vietnamese dong's relative resilience.
"Looking ahead to 2024 our outlook is optimistic. The market is trading on a 2024F PER of 9.8x, and we currently forecast EPS growth of 15-18%. For domestic investors, bank deposits offer unattractive average returns at an all-time low of 4.7% for 12-month deposits, down from over 9% in April 2023. Consequently, we believe the equity market may benefit from increased liquidity from retail investors in 2024, who presently contribute 93% of daily turnover.
"VEIL's rotation into materials in anticipation of the rise in the Government's infrastructure spending yielded positive results. Hoa Phat Group ("HPG"), Vietnam's premier steel manufacturer, surged 51.2% over the year and 5.2% in December alone. With fiscal expansion expected to continue into 2024, we anticipate a property market recovery, including Vietnam's largest developer and VEIL holding Vinhomes ("VHM"), potentially enhancing HPG's sales volumes. Notably, December's construction steel volumes reached a 20-month high of 462,000 tonnes, an increase of 13% month-on-month and 29% year-on-year.
"The banking sector rallied in December as banks lowered the deposit rate further towards pre-pandemic levels and pushed for credit growth disbursement. Total system credit growth was 13.7% in 2023, nearly fulfilling the State Bank of Vietnam's ("SBV") target of 14%. Notably, the SBV announced the 2024 credit growth target of 15%, with the full-year credit quota now being allocated to banks at the beginning of the year rather than on a quarterly basis. We see this as a strong message from the Government to incentivise borrowing to lift economic growth.
"Despite negative returns in the retail sector in 2023, which had a -1.2% impact on VEIL's performance for the year, our bullish stance remains intact. We anticipate earnings will rebound over 100% in 2024, in part due to a low-base effect, but also driven by anticipated growth in consumption fuelled by increased public investment, a low interest rate environment, and accelerated GDP growth leading to higher wages. Earnings weakness in 2023 was in part caused by Mobile World Group facing challenges to clear its iPhone inventory at a loss due to weak demand."
Top Ten Holdings (57.7% of NAV)
Company | Sector | NAV % | VNI % | Monthly Return % | One-year Return % | |
1 | Hoa Phat Group | Materials/Resources | 9.1 | 3.6 | 5.2 | 51.2 |
2 | Vietnam Prosperity Bank | Banks | 8.9 | 3.4 | 0.5 | 9.7 |
3 | Asia Commercial Bank | Banks | 8.4 | 2.1 | 8.8 | 27.2 |
4 | Vietcombank | Banks | 6.7 | 9.9 | -5.2 | 15.4 |
5 | FPT Corporation | Software/Services | 6.1 | 2.7 | 4.5 | 43.1 |
6 | Mobile World Group | Retail | 4.8 | 1.4 | 11.1 | -2.0 |
7 | Vinhomes | Real Estate | 3.7 | 4.2 | 4.6 | -12.4 |
8 | PetroVietnam Gas | Energy | 3.5 | 3.8 | -1.3 | -9.9 |
9 | Techcombank | Banks | 3.3 | 2.5 | 7.8 | 19.8 |
10 | Gelex Group | Capital Goods | 3.1 | 0.4 | 9.7 | 85.3 |
| Vietnam Index | - |
| - | 3.4 | 11.1 |
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
Radnor Capital Partners
Iain Daly
Phone: +44 20 3897 1830
id@radnorcp.com
LEI: 213800SYT3T4AGEVW864