Market softening hits Vietnam Enterprise Investments in first half

Closed-end investment fund Vietnam Enterprise Investments announced its reviewed interim results for the six months ended 30 June on Wednesday, with its net asset value per share falling 3.6% in dollar terms to $6.81, trailing the VN Index by 1.1% and reflecting “volatile” market conditions over the second quarter according to the board.

The FTSE 250 firm said that In sterling terms, its net asset value per share fell 1.2% to £5.16.

Its share price fell 5.1% in sterling terms over the period, with the share price discount at the end of the period widening to 18.5%, from 15.3%.

It launched a share buyback programme in June, with more than 1.34 million shares repurchased in the period.

On the investment front, VEIL said it maintained its strategy of fundamental stock picking rather than targeting specific sector weightings, with a particular focus on the privatisation of state-owned companies and IPOs.

During the period, it said it continued to unlock value through its participation in the IPOs of Techcombank and Vinhomes.

The company also successfully participated in a range of privatisations including Binh Son Refinery, PVOil, and PVPower.

VEIL said it continued to hold the majority of its portfolio in listed equities, with only 5.6% in OTC and pre-listing equities.

Its ‘top 60’ companies were expected to deliver 28% growth in earnings per share on 14 times forward earnings in 2018, the board reported.

“While rising uncertainty in the global economy has impacted emerging markets in general, it also has affected Vietnam's solid fundamentals on both macro and micro levels,” said chairman Wolfgang Bertelsmeier.

“This concern was reflected as VEIL outperformed the VN Index in the first five months of the year but lagged the market in June.

“However, illustrating VEIL's impressive longer-term track record, VEIL continued to significantly outperform the index over three years and five years by 22.4% and 26.3% respectively.”

Bertelsmeier said the board saw opportunities arising from the market softening that its differentiated proposition could leverage, supported by the knowledge that Vietnam's economic outlook remained positive with sustainable growth expected for the remainder of the year and beyond.

“In this context, VEIL is very well positioned to benefit from Vietnam's long-term growth and the country's developing stock market and to continue to deliver attractive returns for Shareholders.”

Vu Huu Dien, portfolio manager of VEIL, added that Vietnam was among the range of emerging markets that were unable to avoid rising headwinds from global political volatility during the period, explaining the “relatively minor” drop in both the VN Index and VEIL's performance in the first half.

“However, we believe that the market correction has provided an exciting opportunity for VEIL, playing to our strategy of in-depth, fundamental analysis to identify stocks that could outperform the market.

“Additionally, we work closely with our investees to unlock accretive value for shareholders through implementing and executing value-additive measures such as a comprehensive IR strategy and ESG awareness.”