1 February 2022
Vietnam Enterprise Investments Limited
(“VEIL” or the “Company”)
Annual and Quarterly Update
+47.1% Return for 2021 and +6.5% in Q4 2021
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 unaudited NAV performance for Q4 2021 and FYE2021 is set out in this notice.
Company Highlights
- In 2021, the Company's NAV increased 47.1% versus 39.0% (both USD terms) for its reference index, the Vietnam Index (“VNI”).
- In Q4 2021 the Company's NAV rose 6.5% against 11.7% in the VNI.
- VEIL's NAV per share was US$12.21 at the end of the quarter, total NAV was US$2.6bn.
- Through share buybacks the Company bought back 478k shares in Q4 2021 and a total of 3.4m shares in 2021 (1.6% of shares in issue at year end), an increase from 1.1m shares in 2020.
- Following an outperformance of the Index in the first nine months of the year, the final quarter saw a rally in small and mid-cap stocks and selling in large-cap companies, resulting in the Company underperforming the Index.
- VEIL's primary strategic concentration remains the banking, property, steel and retail sectors, which the Investment Manager believes are best positioned to be the main beneficiaries of the trends currently driving Vietnam's development.
- Most of the Company's holdings have now announced their preliminary Q4 2021 and full year 2021 results, some highlights are given below.
Selected Active Returns (Bloomberg Basis)
|
TR$% |
4Q21 |
3Q21 |
2Q21 |
1Q21 |
2021 |
2 Year |
3 Year |
5 Year |
|
NAV (net) |
6.54 |
-2.80 |
26.37 |
12.41 |
47.11 |
80.62 |
86.13 |
176.87 |
|
Share Price |
8.23 |
-1.00 |
17.21 |
10.75 |
39.08 |
64.84 |
78.02 |
183.49 |
|
VNI |
11.68 |
-3.31 |
18.94 |
8.22 |
39.00 |
63.17 |
79.30 |
147.97 |
|
Active Return |
-5.14 |
0.51 |
7.43 |
4.19 |
8.11 |
17.45 |
6.83 |
28.90 |
|
Active Share Ratio: 55.24 |
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Dien Huu Vu, the Portfolio Manager of VEIL commented:
“The Company's focus on interlocking strategic sectors (banking, property, steel) was successful in H1 2021 when investors were increasing their allocations to value and growth stocks reflective of the buoyant economy, but they fell away in H2 2021 amidst heavy foreign net-selling and the spread of the Delta variant rumbling macro fundamentals. With over 90% of Vietnam's adult population now double vaccinated and economic indicators showing the country is successfully adapting to 'living with Covid', the Investment Manager expects things to normalise.
The Company made some adjustments to the portfolio during Q4, including a private placement for an industrial park developer with 5,000ha of industrial land, whose major tenants include LG, Foxxcon, Canon and GoerTek. VEIL increased positions in two banks whilst fully divesting a position in one of Vietnam's largest banks. The Company also increased its holding in a mid-cap property developer with strategically located landbanks in the outskirts of HCMC that are benefitting from both urbanisation and the Government's investment in infrastructure.
With regards to the market, the SME rally may continue in 2022 but VEIL is not looking to change its investment strategy. We believe many SME stocks are rather expensive – even when allowances are made for asset revaluations – and that having been out of favour for several years, the recent buying is cyclical. The objective of VEIL is to outperform its reference benchmark over a rolling three-year period and the portfolio management team favours sticking to fundamental stock-picking and undertaking structured deals with quality companies channelling top-down economic drivers and ESG compliance, which is an integral part of the investment process and is used by analysts in their evaluation of stocks . Given the Index has been touching its all-time high and global market volatility looks to be on the rise, we feel this is not a time to change tack.”