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Moving ahead

VietNam Holding 8 February 2022 Review
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VietNam Holding

Moving ahead

Investment trusts
Vietnamese equities

8 February 202210 February 2022

Price

323.0p

Market cap

£95.4m

AUM

£111.8m

NAV*

378.7p

Discount to NAV*

14.7%

*Including income. As at 7 February 2022.

Yield

0.0%

Ordinary shares in issue

29.5m

Code/ISIN

VNH/GG00BJQZ9H10

Primary exchange

LSE

AIC sector

Country Specialists: Asia Pacific

Benchmark

VN All Share Index

52-week high/low

358.0p

202.0p

401.6p

236.9p

*Including income.

Gearing

Net cash at 31 December 2021

3.4%

Fund objective

VietNam Holding’s investment objective is to achieve long-term capital appreciation by investing in a diversified portfolio of companies that have high growth potential and an attractive valuation. The fund has experienced several significant changes since September 2017, including a new board and appointment of the current manager, Dynam Capital.

Bull points

ESG considerations are a key part of the manager’s approach.

A very concentrated portfolio (c 20–25 holdings) and mid- to small-cap focus gives investors exposure to less well researched, high-growth companies.

The proactive board is committed to promoting shareholders’ interests.

Bear points

The relatively small market cap of c £95m (note: up from c £75m 12 months ago) limits liquidity and increases volatility, to some extent.

Very strong 2021 performance could limit 2022 return potential to an extent.

The trust has relatively high fees for an LSE-listed trust, but is in line with its two peers, as Vietnamese funds are expensive to run.

Analysts

Victoria Chernykh

+44 (0)20 3077 5700

Sarah Godfrey

+44 (0)20 3681 2519

VietNam Holding is a research client of Edison Investment Research Limited

2021 was a remarkable year for the Vietnamese equity market, with the VN All Share Index (VNAS) rising 53.0% compared with a 1.3% fall in the MSCI Emerging Markets (EM) Index. VietNam Holding (VNH), managed by Dynam Capital (Dynam) for over three years, returned 65.6% (NAV total return), outperforming the VNAS. Vietnam has handled COVID-19 with some lag to the developed world (as the pandemic visibly hit Vietnam in 2021, rather than 2020), but the situation has now stabilised. For 2022 the IMF forecasts that the Vietnamese economy will grow 6.6%, outpacing the expected world GDP growth of 4.9%. Dynam’s investment team chooses a tightly focused selection of businesses for VNH’s portfolio. These are set to benefit from well-established positive demographic, industrial and urbanisation trends, as well as newly emerging trends such as rapid growth and the development of financial markets in Vietnam.

Vietnamese equities and VNH materially outperformed EMs in 2021

Source: Refinitiv, Edison Investment Research. Note: Data to end-December 2021.

Why VNH?

According to the manager, VNH is differentiated from its two London-quoted peers. Dynam believes the fund’s nimble size gives the team the flexibility and speed to rebalance the portfolio more quickly than the larger peers. After the strong 2021 performance, the manager expects the repositioned portfolio to benefit further in 2022. The team anticipates allocation to economically sensitive sectors like banks, industrials and retail to boost performance, should the economy continue to be supported by the global cyclical recovery and ongoing domestic growth. Dynam considers ESG principles an integral part of its investment process.

The analyst’s view

We believe this country specialist fund offers investors exposure to a high-growth frontier market with conviction stock ideas across the market cap spectrum and can be held as part of a global growth portfolio. VNH’s board is proactive and, having listened to shareholders, initiated a tender offer, intending to manage the discount. Executed in September 2021 for 12.7m shares (30% of all shares outstanding) repurchased for $56.7m (equivalent to £41m), this has brought about the desired outcome. Between November and December 2021 the discount to NAV narrowed from c 15% to c 5%, but January’s volatile equity market saw the discount widening to the mid-teens again.

The manager’s view: Ample opportunities from continued economic growth

The Vietnamese economy

Vietnam’s economy has been one of the fastest growing in the world over the past two years, growing steadily at 6.8% compared to the 2.6% growth of the global economy (according to International Monetary Fund (IMF) data at October 2021), as global growth stalled because of the pandemic. Vietnam’s GDP grew by 2.9% and 3.8% in 2020 and 2021, respectively, while global GDP declined 3.1% in 2020 and caught up with growth at 5.9% in 2021. For 2022 the IMF forecasts the Vietnamese economy to grow 6.6%, outpacing expected world GDP growth of 4.9%. Vietnam GDP per capita (c $2,800 at 2020 as per World Bank data) has trebled since joining the WTO in 2007. Exhibit 1 illustrates that while the COVID-19 pandemic slowed down the country’s growth in 2020–21, Vietnam’s handling of the pandemic resulted in a much softer negative economic impact than in the ASEAN region, advanced economies and the world.

Exhibit 1: Stable GDP growth of Vietnam outpaces the growth of most world economies

Source: IMF at end-October 2021, Edison Investment Research. Note: *Indonesia, Malaysia, Philippines, Thailand and Vietnam.

While Vietnam had only a handful of COVID-19 cases during 2020, in 2021 it became heavily exposed to COVID-19 variants, but the country has managed the situation fairly well. Vietnam continued to make progress on its vaccination roll-out during December 2021 and January this year, with at least 70% of the population now fully vaccinated (as defined in Vietnam). Although the road to recovery in H221 remained segmented, renewed growth in several areas of the economy strengthened by Q421 and continues into Q122.

Vietnam remains a very open economy for international trade, having recently signed a number of trade agreements, including entering the Regional Comprehensive Economic Partnership, covering the Asia-Pacific region, and EU and UK free trade agreements. Vietnam has already become a key part of the global supply chain. Its trade volumes are around twice its GDP and further international collaboration is likely to stimulate its economy and growth in trade.

The economy is also expanding internally, as the growing middle class is transforming Vietnam into an increasingly consumer-driven society. Dynam believes that Vietnam is currently at an inflection point in terms of its internal consumption trends. The team estimates that Vietnamese consumer power could double by 2035 from the current level, with increased demand for consumer goods through rapidly growing modern trade and retails chains. In February 2021, the country entered the next stage of economic progression with a new five-year plan. It focuses on reducing corruption and market inefficiencies and encourages investment in domestic infrastructure.

Portfolio update

True to its name, Dynam Capital adopts an agile approach to capture investment opportunities within three mega trends in Vietnam by investing in listed companies: industrialisation (c 25% of thematic exposure in VNH’s portfolio at end-December 2021), urbanisation (c 19%) and consumer (c 15%).

The agility of the investment approach is demonstrated by the ability of the team to adapt the portfolio to the rapidly changing market environment by adjusting the exposure to market segments with best potential, as perceived by the team. We note that Dynam Capital does this largely by buying new or increasing stock exposure, rather than by asset allocation, and the market cap split of the portfolio is a result of stock picking (please see page 7 for details on the investment manager and process). With retail investors becoming much more active during 2021, the Dynam Capital team increased the share of mid-cap stocks to 31% from 19% in 2020 (Exhibit 2). This was achieved by reducing the proportion of large caps to 60% from 73% in 2020. Exhibit 2 also illustrates the active portfolio dynamics during 2020, when the team substantially increased large-cap exposure, buying banks and other cyclical stocks.

Exhibit 2: VNH portfolio's market cap split

Source: Dynam Capital

The portfolio contained 27 holdings at end-December 2021 (28 holdings at end-April 2021), a couple of holdings higher than the targeted 20–25 range.

Exhibit 3: Portfolio sector exposure at 31 December 2021

% unless stated

Portfolio
31 Dec 2021

Portfolio
31 Dec 2020

Change
(pp)

VNAS weight

Active weight vs index (pp)

Company weight/ index weight (x)

Banks

24.6

29.8

(5.2)

31.7

(7.1)

0.8

Real estate

20.3

11.0

9.3

22.8

(2.5)

0.9

Financial services

17.5

3.0

14.5

8.4

9.1

2.1

Industrial goods & services

11.4

25.7

(14.3)

10.0

1.4

1.1

Retail

10.3

9.7

0.6

4.7

5.7

2.2

Telecommunications

8.7

9.1

(0.4)

3.5

5.2

2.5

Food & beverage

1.4

4.6

(3.2)

6.5

(5.1)

0.2

Technology

2.1

0.0

2.1

0.2

1.9

10.7

Construction & materials

0.2

0.0

0.2

4.3

(4.1)

0.0

Basic resources

0.0

0.0

0.0

0.7

(0.7)

0.0

Chemicals

0.0

2.1

(2.1)

2.1

(2.1)

0.0

Utilities

0.0

2.1

(2.1)

1.0

(1.0)

0.0

Cash

3.4

2.8

0.7

0.0

N/A

N/A

100.0

100.0

100.0

Source: VNH, Edison Investment Research. Note: Figures subject to rounding.

As shown in Exhibit 3, two major changes over the past 12 months were the increase in the financial services weighting (+14.5pp) from a low level (3.0% at end-December 2020) and a reduction in the industrial goods & services sector (-14.3pp). The bulk of the reduction within industrial goods & services included sales of three defensive logistics businesses, ABA Cooltrans (ABA Bond), Saigon Cargo Service (SCS) and Viettel Post (VTP) – all exited at a profit.

In H121 VNH was overweight the banking, telecommunications and steel sectors. Dynam expected telecommunications and steel companies to benefit from the measures introduced to tackle the COVID-19 pandemic, and many of these expectations came to fruition (see the performance section on pages 4–6 for more details).

The portfolio management team also expected the share prices of banks to appreciate during 2021. Banks were unpopular among investors for a few years until around 2021, and their share prices remained stale for a number of years. At the same time, fundamentally, these highly regulated entities maintained healthy balance sheets and operational resilience. Exhibit 3 shows the reduction in banking sector weight (5.2pp) to 24.6%, which is an underweight position relative to VNAS weight of 31.7%.

The team selectively reduced the weight of some large-cap holdings, mainly banks and steel-maker Hoa Phat Group (HPG), to allocate into smaller-cap names, particularly in the rapidly growing brokerage and real estate sectors. HPG is no longer among the top 10 positions, being reduced from 10.3% at end-April 2021 to 2.7% at end-December 2021

Sixteen new holdings purchased during 2021 included seven real estate stocks. The team expects the wider property market in Vietnam will continue to perform well in 2022 as government-supported investment in infrastructure is accelerated. The team bought stocks of four market-leading brokerage companies, well positioned to capture business opportunities, as the country’s capital markets gradually mature and expand. The new purchases included the top 10 holding entrants VNDirect Securities (VND, 6.5% at end-December 2021), an institutional broker with a diverse suite of services, and Khang Dien House (KDH, 6.0%), a real estate developer and construction company.

Exhibit 4: Top 10 holdings (%)

Company

Industry

31-Dec-21

31-Dec-20*

Change

FPT Corp

Telecommunications

8.7

9.1

(0.4)

Mobile World

Retail

7.4

4.4

3.0

VNDirect Securities

Financial Services

6.5

N/A

N/A

Saigon Thuong Tin Commercial Bank

Banks

6.3

N/A

N/A

Khang Dien House

Real Estate

6.0

N/A

N/A

Gemadept Corp

Industrial Goods & Services

5.6

7.4

(1.8)

Vietnam Joint Stock Commercial Bank

Banks

5.5

8.6

(3.1)

Military Commercial Bank

Banks

5.2

4.8

0.4

Vietnam Prosperity JSC Bank

Banks

4.8

6.0

(1.2)

Masan Group

Food & Beverage

4.6

N/A

N/A

Top 10 holdings

60.6

N/A

Source: VNH, Edison Investment Research. Note: Figures subject to rounding. *N/A where not in end-December 2020 top 10.

Performance

Exhibit 5 shows VNH’s discrete performance over the past five years; Dynam is responsible for the last three and a half. 2019 was the year of the fund’s transition and VNH underperformed the Vietnamese indices. While this concentrated fund’s return was more negatively affected by the market slump in March 2020 than the Vietnam VN Index and Vietnam VNAS, the fund bounced back well and performed very strongly in 2021. VNH returned 65.6% on a net asset value (NAV) total return (TR) basis over the 12 months to end-December 2021, outperforming both the Vietnam VN Index (38.6% TR) and the Vietnam VNAS (53.0% TR), demonstrating the fund’s strong alpha relative to these two indices.

Exhibit 5: Five-year discrete performance data

12 months ending

Total share price return (%)

Total NAV return
(%)

Vietnam VN All-Share Index (%)

Vietnam VN Index (%)

Vietnam VN30
Index (%)

MSCI Emerging Markets (%)

31/12/17

12.4

32.1

36.7

35.6

45.7

25.8

31/12/18

(9.4)

12.6

(8.5)

(5.7)

(6.7)

(8.9)

31/12/19

(3.8)

(13.6)

(0.6)

3.6

(0.3)

14.3

31/12/20

9.1

10.8

18.7

11.7

(4.5)

15.0

31/12/21

81.8

65.6

53.0

38.6

46.1

(1.3)

Source: VNH, Refinitiv, Bloomberg. Note: All % on a total return basis in GBP.

Exhibit 6 illustrates a material improvement in performance, relative to the VNAS, over Dynam’s tenure since 2018. VNH’s favourable positioning in relation to the cyclical market recovery has paid off. VNH’s share price outperformed the index over the past three years on a TR basis (90.8% versus 82.3% to end-December 2021). During 2021 the country’s equity market was boosted by many retail investors opening brokerage accounts and buying locally listed shares. The Dynam team took advantage of its specific stock knowledge and reinvested profits taken from a number of principally large-cap positions into the rising market, particularly in mid-cap stocks.

In addition, skilful thematic stock picks contributed to VNH’s outperformance of the index. For example, lockdowns resulted in the populations of entire cities communicating virtually and telecom companies, such as VNH top-10 holding Mobile World (MWG), benefited. During 2021, MWG’s share price rose by 11.5% in TR terms, compared to a 1.8% fall in the VNAS.

Also, the fund’s nimble size helped the team to swiftly reposition the portfolio away from large caps and towards mid caps (see pages 3–4), and benefit from the mid-cap rally during 2021, outperforming Vietnam VNAS. Profits were taken primarily from the banking and steel sectors. Dynam reinvested cash into the real estate, brokerage and retail sectors because it expects these sectors to outperform when the economy reopens. In our view, this shift should further support VNH’s performance in 2022.

As Exhibit 6 illustrates, 2021 was a very beneficial year for investors in Vietnamese equities, when it performed very strongly at a difficult time for EMs. The MSCI Emerging Markets Index outperformed Vietnamese equities during 2019–20, until the tough measures of Chinese regulators sent Chinese equities into a slide, taking the MSCI EM Index (c 40% Chinese stocks) into a downward trajectory.

Exhibit 6: Three-year performance

Source: Refinitiv, Edison Investment Research. Note: Data to end-December 2021.

Exhibit 7 presents the averages for the Vietnam peer group of three London-listed trusts, where VNH remains the smallest. VNH’s market cap is close to £100m, despite the tender offers in November 2020 and September 2021 (see page 7 for details).

As the current manager was appointed in July 2018, the one- and three-year NAV TRs are both relevant. VNH ranks top over one year, on an NAV TR basis, when very strong 2021 performance brought VNH to the top performer position. VNH made a shift to the real estate, brokerage and retail sectors, anticipating these would outperform when the economy reopens. If the recovery continues, higher exposure (relative to the benchmark) to banks and some other cyclical stocks, such as retail and real estate, positions the fund well to continue its sustainable outperformance of the indices.

VNH has a different mix of sectors compared to its two peers. Being a smaller fund, it can more quickly shift its portfolio than the two larger peers, making tactical sector shifts by adding and reducing single stock positions, particularly within the banking and steel sectors. Combined with sharp stock selection, this swift rebalancing has allowed VNH to take profits and outperform peers over one year period.

Vietnam Enterprise Investments (VEIL) remains more overweight banks (36% versus the reduced exposure of 25% for VNH, 32% for the VNAS) and still has more real estate (28% versus the increased exposure of 20% for VNH, 23% for the index). VinaCapital Vietnam Opportunity Fund’s (VOF) highest weightings are in two similar sectors: real estate (26%) and financials (22%). VOF allocates a 22% weighting to materials and has about a third of its portfolio in unquoted investments.

While VNH’s ongoing charges are highest of the three funds (smaller funds tend to incur higher charges), in 2020 the board removed the performance fee for a 25bp increase in the management fee to 1.75% pa on NAV below $300m and 1.5% on NAV between $300m and $600m. The board notes that the initiative lowers the total expense ratio (TER) of the fund by c 80bp on a forward-looking basis.

Exhibit 7: Country specialist – Vietnam peer group*

% unless stated

Market cap £m

NAV TR
1 year

NAV TR
3 year

NAV TR
5 year

NAV TR
10 year

Discount (cum-fair)

Ongoing charge

Perf.
fee

Net gearing

Dividend yield (%)

VietNam Holding

95.1

64.2

84.9

88.4

457.5

(14.7)

2.57

No

100

95.1

Vietnam Enterprise

1,581.6

49.4

85.1

143.8

596.8

(18.1)

2.19

No

100

1,581.6

VinaCapital Vietnam

847.8

41.8

73.5

104.2

386.9

(18.6)

1.66

Yes

100

847.8

Simple average

841.5

51.8

81.2

112.1

480.4

(17.1)

2.14

100

841.5

Rank

3

1

2

3

2

1

1

1

3

Vietnam VN Index

45.3

62.6

97.8

314.8

Source: Morningstar, Bloomberg, Refinitiv, Edison Investment Research. Note: *Data to end-January 2022. TR = total return. Net gearing is total assets less cash and equivalents as a percentage of net assets.

Corporate activity

In August 2021 (FY22) the board announced a tender offer for up to 30% of the company’s issued share capital (then 42.6m shares).

Exhibit 8: Share buybacks and issuance

Source: Morningstar

In September 2021 it bought back 12.7m shares under the tender offer at $4.4528 per share for a total of $56.7m (equivalent to £41m), which was 30% of the total shares outstanding. Since then, the trust has also bought back c 0.08m shares (c £0.03m) under its share repurchase programme. VNH currently has 29.5m shares outstanding.

The manager: Dynam Capital (Dynam)

Dynam has two managing partners, Craig Martin, the chairman, and Vu Quang Thinh, the chief investment officer, and a dedicated team of 12 professionals based in Vietnam. The manager follows a growth at a reasonable price (GARP) investment process, unconstrained by any index, to invest in a highly concentrated portfolio of 20–25 conviction stocks. Dynam employs both bottom-up and top-down analysis in its investment approach.

The approach remains focused on three core themes: industrialisation (best-in-class manufacturers, international logistics); urbanisation (purposeful real estate, transportation, clean energy and clean water); and domestic consumerism and its enablers (sustainable retail, domestic logistics, products and finance). These themes are interlinked, as industrialisation and urbanisation foster further robust growth in GDP and domestic consumption. The team looks for companies that are well managed industry leaders with strong competitive positions and healthy balance sheets, yet which are attractively valued.

Dynam invests across the market cap spectrum, but typically favours small- and mid-cap companies, as these are often less well researched and more open to engagement. VNH’s relatively small size gives it the flexibility to invest in companies further down the market capitalisation spectrum, and around half of the portfolio is held in sub-$1bn companies.

General disclaimer and copyright

This report has been commissioned by VietNam Holding and prepared and issued by Edison, in consideration of a fee payable by VietNam Holding. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

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General disclaimer and copyright

This report has been commissioned by VietNam Holding and prepared and issued by Edison, in consideration of a fee payable by VietNam Holding. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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