Vietnam Enterprise Investments (VEIL)
30/04/2024
Results analysis from Kepler Trust
Intelligence
Vietnam Enterprise
Investments (VEIL) has reported strong results for the 2023
financial year, ending 31/12/2023. The NAV per share rose 10.5% in
dollar terms, marginally behind the 11.1% of the VN Index. In
sterling terms, returns were lower, at 4.1% versus 5.3%. Over three
years, VEIL has outperformed the index by 2.6%.
2023 was a year of recovery
following a tumultuous year, in which Vietnam delivered GDP growth
of 5.1% with modest inflation of 3.3%. Some volatility in the
equity market emerged towards the end of the year as US yields
spiked, but the local index has since staged a recovery into early
2024.
On 01/02/2024, Le Anh Tuan
was appointed Lead Portfolio Manager of VEIL, succeeding Vu Huu
Dien, who is transitioning to a new position at Dragon Capital
group. The company will also see a new chairman of the board from
July, as Sarah Arkle will succeed Gordon Lawson. Gordon has served
on the board for ten years as an independent director and as such
will be stepping down from the board.
Kepler View
Vietnam continues to have
huge attractions in the current global environment. Its young and
educated workforce and low labour costs are supporting one of the
highest GDP growth rates in the world. Inwards investment is
encouraged by the country's strong relations with both China and
the USA, which allows it to play significant roles in the
manufacturing chains of both of the world's two largest economies.
It is government reform and investment that is driving this rapid
growth. However, this rapid change is bringing some political
volatility too, with the resignation of the President and the
chairman of the national assembly in 2024 as a part of Vietnam's
ongoing anti-corruption probe. While it seems prudent to expect
further such volatility, and for this to affect markets at times,
we think this looks like growing pains and not indicative of any
change of political direction. The managers note that over the past
year authorities have hastened investment in infrastructure, and
made moves to loosen banking credit restrictions as well as loosen
regulation on credit and on land use. Vietnam is undergoing a
significant shift of direction and culture, and while the
underlying trajectory towards greater economic freedom and
development remains intact, we think it will drive exciting
investment returns.
In that light, this looks
like an interesting time to be considering an investment in VEIL.
The shares have been volatile, like the underlying markets, with
exceptional returns in 2021 being followed by a sharp sell off in
2022. Currently, the underlying market looks attractively valued
versus regional peers. The team have the largest 80 listed
companies on a forward P/E of 9.6x versus 14.4x for Thailand, 13.9x
for Indonesia and 13x for Malaysia. Meanwhile they anticipate
mid-teens profit growth for 2024. VEIL's shares themselves trade on
a discount of 17.2% at the time of writing. All-in-all this looks
like an opportunity to buy at cheap valuations a company with a
track record of delivering high returns when the trend
shifts.
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