Last checked at 
12 Jan 2022 07:00
12 January 2022
Vietnam Enterprise Investments Limited
("VEIL" or "the Company")
Monthly Update
47.1% NAV Return in 2021 and -1.7% for December
Vietnam Enterprise Investments Limited ("VEIL") is a closed-end fund investing primarily in listed equity in Vietnam and a FTSE 250 constituent. The Company's NAV performance for December 2021 is set out in this notice.
Fund Performance
· In 2021 VEIL's NAV increased 47.1%, compared to the Vietnam Index which increased 39.0%.
· As of 31 December 2021, VEIL's NAV decreased by 1.7% over the previous month (compared with an increase of 1.1% for its reference index, the Vietnam Index) in US$ terms.
· VEIL's NAV per share was US$12.21 at the end of December, total NAV was US$2,607m.
· Seven of VEIL's top ten holdings decreased in December, with Hoa Phat Group and Vingroup the main laggards. The biggest gainer was midcap real estate developer Dat Xanh Group, all three are discussed below.
Economic Overview
· GDP recovered in Q4 following the lockdown throughout most of Q3, registering at +5.2% for Q4 to end 2021 with +2.6% growth year-on-year.
· The main driver was the manufacturing sector, which advanced +4.1% year-on-year.
· The CPI rose +1.8% in 2021, lower than observed in the US and Europe, partly because of Vietnam's more basic CPI basket but also due to more restrained fiscal and monetary policy in 2021.
· Total trade for 2021 increased 22.6% to US$668.5bn, with imports rising 26.6% to US$332.3bn, outpacing exports which gained only +19.1% to US$336.3bn, partly handicapped by pandemic constraints globally. The cumulative trade deficit of US$2.4bn in July was reversed to a surplus of US$4.0bn by December 31st.
· FDI contribution remained integral at nearly 70% of total trade. Disbursed FDI reached US$20bn in 2021, a decline of just 1.2% year-on-year. One noteworthy FDI commitment in December was Lego Group announcing a US$1bn carbon-neutral factory to be built in Vietnam with construction starting in 2H2022 on a 44-hectare site around 34 miles from Ho Chi Minh City in Binh Duong, a neighbouring industrial province.
· At the end of 2021, more than 90% of Vietnam's adult population (over 18 years old) were double-vaccinated and nearly 56% of children aged 12-17 years old were double-vaccinated. As many as two million doses per day are now being administered, with some parts of the country currently receiving booster shots.
Dien Huu Vu, the Portfolio Manager of VEIL commented:
"It is worth reflecting that not only did Vietnam have one of the best returns in Asia in 2021, at +39.0%, it also experienced significant progress in market development. There are now 63 companies with a capitalization in excess of US$1bn. Daily turnover has also reached a new normal of US$1bn - often much higher, including a daily average of US$1.4bn in December - this is above many peers classified as emerging markets.
With the majority of the population now vaccinated against Covid-19 and treatment drugs being licenced for manufacturing and distribution domestically, the Government's target for the next four years of their five-year term can turn to economic development, including a US$15bn stimulus package which was announced this week. The Regional Comprehensive Economic Partnership free trade agreement took effect from 1 January 2022 and contains preferential terms and principles that the Manager believes have the potential to continue supply-chain shifts to Vietnam and possibly even accelerate this trend."
December Commentary
Real estate developer Dat Xanh Group gained 6.6% despite surprising the market with news of the cancellation of a private placement of 200m shares, the announcement of three new large projects in Ho Chi Minh City and Binh Duong was well-received by investors.
Sentiment in Hoa Phat Group's share price was weakened by the sharp drop in Chinese steel prices, which triggered concern that profit margins may be squeezed for the steel sector. Sales volumes for December remained healthy, with the company reporting nearly 800,000 tons of steel products sold, up 14% year-on-year.
Vingroup was sold heavily by investors fearing another potential delay with the proposed US IPO of its VinFast subsidiary, this was despite preparatory steps being continued with the transfer of ownership of VinFast Vietnam to VinFast Singapore as part of the potential IPO process. In early January, VinFast also announced its exit from the ICE (internal combustion engine) car manufacturing to fully focus on EV (electric vehicle) manufacturing. The company also officially announced 3 new EV models in addition to their current VFe34 model, which started delivery in late December.
Top Ten Holdings (72.5% of NAV)
| Company | Sector | Vietnam Index % | NAV % | Monthly Change % |
1 | Hoa Phat Group | Materials/Resources | 3.7 | 12.2 | -5.6 |
2 | Vietnam Prosperity Bank | Banks | 2.8 | 10.7 | -5.4 |
3 | Asia Commercial Bank | Banks | 1.7 | 9.8 | 3.2 |
4 | Mobile World | Retail | 1.7 | 9.6 | -2.6 |
5 | Vinhomes | Real Estate | 6.3 | 6.7 | -3.5 |
6 | Vietcombank | Banks | 5.2 | 6.1 | 2.5 |
7 | Vingroup | Real Estate | 6.4 | 5.5 | -9.8 |
8 | FPT Corporation | Software/Services | 1.5 | 4.3 | -4.6 |
9 | Techcombank | Banks | 3.1 | 3.9 | -3.9 |
10 | Dat Xanh | Real Estate | 0.4 | 3.8 | 6.6 |
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