Robust growth underpins long-term opportunities

Vietnam Enterprise Investments 19 November 2019 Review
Download PDF

Vietnam Enterprise Investments

Robust growth underpins long-term opportunities

Investment companies
Vietnamese equities

19 November 2019

Price

496.5p

Market cap

£1,082.7m

AUM

£1,199.6m

NAV*

551.0p

Discount to NAV

9.9%

*Excluding income. As at 14 November 2019.

Yield

0.0%

Ordinary shares in issue

218.1m

Code

VEIL

Primary exchange

LSE

AIC sector

Country Specialists: Asia Pacific

Benchmark

VN Index

Share price/discount performance

Three-year performance vs index

52-week high/low

509.0p

421.5p

583.0p

486.0p

*Including income.

Gearing

Gross*

1.3%

Net*

0.1%

*As at 31 October 2019.

Analysts

Helena Coles

+44 (0)20 3681 2522

Sarah Godfrey

+44 (0)20 3681 2519

Vietnam Enterprise Investments is a research client of Edison Investment Research Limited

Vietnam Enterprise Investments (VEIL) is the largest and longest-established closed-end fund focused on investing in Vietnamese equities. The fund aims to deliver long-term capital growth through employing a rigorous bottom-up approach to investing in a relatively concentrated portfolio of 35–40 high-conviction stocks. Over the past 10 years, VEIL has generated annualised NAV and share price returns of 10.3% and 14.0%, respectively. Better than expected Q319 GDP growth of 7.3% suggests Vietnam’s economy is relatively resilient in an environment of slowing global economic growth, which has been exacerbated by a trade recession triggered by the US-China trade dispute. Furthermore, the manager is finding plenty of exciting long-term investment opportunities in Vietnam.

Vietnam is one of the world’s fastest-growing economies

Source: International Monetary Fund, Edison Investment Research

The market opportunity

The outlook for Vietnam’s economy is positive, underpinned by multiple secular trends, including a favourable demographic profile, a rapidly increasing middle class with growing disposable income, and urbanisation. The IMF forecasts Vietnam’s growth over the five years to 2024 to accelerate from the previous five-year period, making it one of the world’s fastest-growing economies.

Why consider investing in VEIL?

Managed by Dragon Capital, the longest-established independent investment manager based in Vietnam.

A well-resourced team of fund managers and sector specialist analysts support rigorous bottom-up research and evaluation of environmental, social and governance (ESG) factors.

Strong long-term performance track record.

Discount has narrowed

VEIL currently trades at a 9.9% discount to NAV, which is narrower than its three-year average of 14.1%. The board actively monitors the discount and has the ability to manage an imbalance of supply and demand for VEIL’s shares when deemed to be in shareholders’ best interests. Focused on capital growth, the fund has not paid a dividend since its inception.

Exhibit 1: Company at a glance

Investment objective and fund background

Recent developments

Vietnam Enterprise Investments’ (VEIL) investment objective is to achieve medium- to long-term capital growth by investing in the equity securities of companies primarily operating in, or with significant exposure to, Vietnam. VEIL adopts a bottom-up approach to investment selection and does not set portfolio allocations with reference to index weightings. The VN Index is used as a performance benchmark, which VEIL seeks to outperform on a rolling three-year basis.

9 September 2019: Interim results to end-June 2018 – NAV TR +0.4% in sterling terms versus +5.2% for the VN Index.

16 May 2019: Announced appointment of Professor Entela Benz-Saliasi as non-executive director with immediate effect.

7 April 2019: Annual results to end-December 2018 – NAV TR -1.3% in sterling terms versus -6.1% for the VN Index.

Forthcoming

Capital structure

Fund details

AGM

June 2020

Ongoing charges

2.25% (see page 7)

Group

Dragon Capital

Annual results

September 2020

Net gearing

0.1%

Manager

Vu Huu Dien

Year end

31 December

Annual mgmt fee

Tiered: 2.00%; 1.75%; 1.50% of net assets

Address

PO Box 309, Ugland House,

Grand Cayman, KY11104

Cayman Islands

Dividend paid

N/A

Performance fee

None

Launch date

11 August 1995

Company life

Indefinite

Phone

+84 8 3823 9355

Continuation vote

None

Loan facilities

US$60m

Website

www.veil-dragoncapital.com

Dividend policy and history (financial years)

Share buyback policy and history (financial years)

VEIL’s investment objective is to achieve capital growth and there is currently no intention to pay a regular dividend.

VEIL has annually renewed authority to repurchase up to 14.99% of its issued capital.

Shareholder base (as at 6 November 2019)

Portfolio exposure by sector (as at 31 October 2019)

Top 10 holdings (as at 31 October 2019)

Company

Sector

Portfolio weight %

VN Index weight %

31 October 2019

31 October 2018

31 October 2019*

Mobile World

Retail

11.2

8.1

1.6

Vinhomes

Real estate

7.7

4.5

8.8

ACB

Banks

7.0

7.3

N/A

Khang Dien House

Real estate

6.7

6.0

0.4

Military Bank

Banks

5.5

5.2

1.6

Hoa Phat

Materials and resources

4.2

4.6

1.8

FPT

Software services

4.1

2.8

1.2

Sabeco

Food & beverage

3.2

5.7

4.9

Dat Xanh

Real estate

3.0

3.0

0.2

Vinamilk

Food & beverage

2.9

3.3

6.7

Top 10 at each date

55.4

50.5

Source: VEIL, Edison Investment Research, Bloomberg, Refinitiv, Morningstar. Note: *N/A where not a constituent of the VN Index.

Market outlook: Strong economic prospects

A better than expected Q319 GDP growth rate of 7.3% suggests Vietnam’s economy has been relatively resilient thus far in the current environment of slowing global economic growth. Manufacturing was a bright spot, growing 12.7% year-on-year, but the construction, trade and retail sectors were also strong contributors to Q319 growth. Although Vietnam could stand to benefit over the longer run from multinationals diversifying their manufacturing facilities beyond China, it may not be immune to the short-term effects of the US-China trade dispute, which has contributed to a manufacturing contraction in many economies around the world. Vietnam’s October PMI at 50.0 indicates the sector is not contracting; however, this reading has fallen for the fourth consecutive month.

As shown in Exhibit 2 (LHS), the Vietnam equity market valuation became overstretched in 2017, trading at a P/E multiple premium approaching 60% relative to Asia ex-Japan equities. It has since come back to more reasonable levels and currently trades at a mid-teens multiple, which is comparable to other developing Asian markets (except China). Vietnam’s economic growth prospects, however, are among the strongest in the region. As shown in the chart on the front page, the IMF forecasts Vietnam’s GDP to grow at a compound rate of 6.5% pa between 2019 and 2024, an acceleration over the previous five-year period. This is significantly faster than the forecasts for Asia-Pacific and advanced economies, and should underpin solid prospects for Vietnam’s equity market.

Exhibit 2: Vietnamese market valuation metrics

VN Index forward P/E multiple and relative valuation to Asia ex-Japan Index

Vietnam market valuation metrics

 

Last

High

Low

10-year
average

Last as % of
average

P/E 12 months forward (x)

15.0

20.8

9.1

13.0

115

Price to book (x)

3.0

3.4

1.3

2.2

140

Dividend yield (%)

1.9

5.7

1.2

3.1

61

Return on equity (%)

15.2

18.6

10.6

15.0

101

Source: Refinitiv, Bloomberg, Edison Investment Research. Note: Index valuations at 8 November 2019.

Fund profile: High conviction in Vietnamese equities

VEIL is the largest and longest-established listed fund focused on Vietnamese equities. It was launched in August 1995 as a closed-ended fund, incorporated in the Cayman Islands, and was originally listed on the Irish Stock Exchange. In July 2016, it de-listed from the Irish Stock Exchange and was admitted to the Main Market of the London Stock Exchange; it has been included in the FTSE 250 Index since July 2017.

VEIL’s investment objective is to deliver long-term capital growth. It aims to outperform the VN Index on a rolling three-year basis by employing a rigorous fundamental investment approach that is unconstrained by benchmark considerations. The portfolio is relatively concentrated, with 35–40 holdings representing the manager’s highest-conviction investment ideas. Most of its companies are listed on one of Vietnam’s three exchanges: the Ho Chi Minh Stock Exchange (HSX), the Hanoi Stock Exchange (HNX) and the Unlisted Public Companies Market (UPCoM), an exchange for newly listed state-owned companies, which must transfer to either the HSX or HNX within one year. VEIL is permitted to invest in unlisted companies, although these tend to be those with visible plans for listing in the near term.

The fund manager: Vu Huu Dien

The manager’s view: Vietnam is an outstanding opportunity

Vu Huu Dien believes Vietnam has many positive investment characteristics that make it a particularly attractive market for the long-term equity investor. These include social and political stability, and a well-managed economy that is fast-growing, yet with manageable inflation and a stable currency. In his view, its economic prospects are underpinned by a number of structural factors, such as a growing working-age population, urbanisation and rising consumption. Vietnam has a population of c 97 million and Dien notes the country adds around one million new entrants into the workforce each year, helped by a culture of gender equality, which results in high female participation. He believes Vietnam’s demographic profile, with a median age of 31 years, to be attractive: young enough to be economically active, yet at the point of generating disposable income. In the manager’s view, a highly educated workforce and its Confucian work ethic are among the factors that have made the country an attractive destination for foreign direct investment (FDI), which has helped develop its strong manufacturing capabilities. Dien expects Vietnam to continue to attract FDI, and he thinks the country is a beneficiary of multinationals looking to add or diversify capacity in Asia.

Dien argues that the risks to Vietnam’s outlook are likely to be externally driven, including the US-China trade dispute and protests in Hong Kong, which may further aggravate the relationship between these two economic giants. These international issues have a global impact, but Vietnam has been a relatively safe haven so far. Dien thinks it unlikely that the US will target Vietnam on trade issues despite its rising trade surplus. He believes the size of Vietnam’s trade with the US, while growing, is insufficiently significant for it to be targeted, and that the country represents a geopolitical counterbalance to China’s ambitions in the region. Dien also expects that, should the US take issue with Vietnam on trade, its government is likely to prefer a path of co-operation rather than retaliation, which should militate against an economically damaging outcome. He notes that the Vietnam stock market largely reflects the domestic economy, and relatively few export-oriented companies are listed. The manager believes Vietnamese equities to be attractively valued, and is finding plenty of long-term opportunities. Dragon Capital’s research team monitors its own universe of 60 stocks (covering c 75% of the market), which is currently trading on a forward 2020 P/E multiple of c 11x, based on the team’s expectations for 18% EPS growth.

Asset allocation

Investment process: Rigorous fundamental process

VEIL follows a disciplined bottom-up investment process to find well-managed companies with sustainable growth that trade on reasonable valuations. It has a well-resourced investment team of three portfolio managers (led by Vu Huu Dien) who are supported by 10 sector specialist analysts. Around 1,600 stocks are screened by quality, size and liquidity criteria, which results in a universe of around 135 stocks that are subject to in-depth analysis. Key components of the process include getting to know the managements of companies, evaluating financials and determining the intrinsic value of the business. Assessment of a company’s environmental, social and governance (ESG) standards is integrated into the investment process, and Dragon Capital’s reputation and size help facilitate effective engagement with managements. Dragon Capital is a signatory of the Principles for Responsible Investment (PRI), which has awarded the group high A+ and A ratings.

The manager is not constrained by index considerations and the portfolio typically holds 35–40 stocks, representing his highest-conviction, long-term investment ideas. The portfolio is materially different from the benchmark VN Index, which means its performance can diverge meaningfully.

Current portfolio positioning

Exhibit 3 shows VEIL’s sector exposures as at end-October 2019. The manager is focused on key domestic themes of rising income, the growth of the middle class and urbanisation, and over two-thirds of the portfolio is invested in the real estate, banks and retail sectors. The most significant sector change over the past year is a 7pp increase to real estate, which accounts for 31.4% of VEIL’s portfolio. This largely reflects the additions to the position in Vinhomes after participating in its IPO in May 2018. As at end-October 2019, Vinhomes was the second largest holding in the portfolio, at 7.7% of NAV. The company is Vietnam’s leading property developer, focused on the mid- to high-end segment of the market. The manager believes Vinhomes is very well placed for growth over the next few years, with around 40% share of the premium residential sales market and a vast land bank, which at some 20 times the size of its next largest competitor, in Dien’s view, should be sufficient for around 15 years of development.

VEIL’s exposure to the retail sector increased by 4pp over the past year, reflecting an addition to Vincom Retail and strong performance from holdings including Mobile World, the portfolio’s largest stock (11.2% as at end-October 2019). Investors had been sceptical about Mobile World’s diversification into food stores, giving the manager the opportunity to accumulate shares at weaker levels. The company’s businesses, however, have continued to be strong, and it recently announced eight-month results, reporting a 37% increase in post-tax profits.

Exhibit 3: Portfolio sector exposure at 31 October 2019

% unless stated

Portfolio
31 October 2019

Portfolio
31 October 2018

Change
(pp)

VN index weight

Active weight vs index (pp)

Trust weight/ index weight (x)

Real estate

31.4

24.5

7.0

27.8

3.6

1.1

Banks

21.5

21.3

0.1

24.3

(2.8)

0.9

Retail

14.3

10.3

4.0

1.9

12.4

7.5

Food & beverage

6.1

8.9

(2.8)

14.2

(8.1)

0.4

Materials & resources

4.7

8.0

(3.3)

3.6

1.0

1.3

Software & services

4.1

2.8

1.3

1.3

2.8

3.2

Energy

4.1

5.6

(1.6)

8.5

(4.4)

0.5

Diversified financials

4.0

5.3

(1.4)

3.0

1.0

1.3

Consumer durables

2.6

2.7

(0.1)

0.9

1.8

3.0

Transportation

2.5

4.5

(2.0)

5.0

(2.5)

0.5

Capital goods

2.2

1.6

0.6

2.2

(0.0)

1.0

Pharmaceuticals

1.5

1.5

0.0

0.9

0.7

1.8

Automobiles & components

1.2

3.0

(1.8)

0.4

0.7

2.8

Other sectors

0.0

0.0

0.0

6.1

(6.1)

0.0

100.0

100.0

100.0

Source: VEIL, Edison Investment Research

The manager also initiated a position in Vingroup, the parent company of Vinhomes and Vincom Retail. Vingroup is a large conglomerate with a broad range of businesses. In the past, Dien has been reluctant to invest in this company in view of a lack of transparency in its underlying operations. This has improved significantly with the listing of Vinhomes and Vincom Retail, and the manager believes there may be further listings in the pipeline, which would also help unlock value in the company. He thinks the group’s supermarkets and convenience store business, VinMart, may be a potential IPO candidate following a US$500m investment in the company by Singapore’s sovereign wealth fund, GIC. Dien notes that the transaction implied a valuation higher than that of Mobile World, Vietnam’s largest retailer.

Sales over the past 12 months to end-October 2019 included the long-held position in low-cost airline VietJet. The company has performed well since it launched its services in 2011. Operating in an oligopoly environment, it increased its share to c 45% of the passenger aviation market. Two new operators are set to enter the low-cost air travel market this year, and the manager believes intensifying competition will create a more challenging environment, potentially depressing profitability. He has also disposed of power generation company PV Power, which VEIL had held prior to its listing, benefiting from the stock’s re-rating when it transferred from UPCoM to the HSX in January 2019. The manager thinks the outlook for profitability has deteriorated, with pressure on tariffs from the government, as well as rising input prices. Over the past year to end-October 2019, VEIL also took profits from several positions that have outperformed, including in Vietnam Engine and Agricultural Machinery (VEAM) and Saigon Beer.

Performance: Strong medium- and long-term returns

As shown in Exhibits 5 and 6, VEIL has a solid track record for medium- and long-term NAV total return and share price performance, outperforming the VN Index over three, five and 10 years. Over these periods, VEIL has also significantly outperformed the VN30 and MSCI Emerging Markets indices. Performance over one year has lagged. Most of this underperformance occurred during Q119 when the market experienced sizeable foreign inflows, which concentrated buying in the largest and most liquid index stocks. VEIL was underweight some of the large-cap outperformers, as its focus on quality companies trading on reasonable valuations often leads it to stocks outside of the well-researched larger firms.

Exhibit 4: Five-year discrete performance data

12 months ending

Total share price return (%)

Total NAV return
(%)

Vietnam VN Index (%)

Vietnam VN30 Index (%)

MSCI Emerging Markets (%)

31/10/15

7.2

8.5

3.6

(1.4)

(11.1)

31/10/16

61.1

50.3

44.3

34.7

38.7

31/10/17

28.8

26.1

16.1

19.9

16.7

31/10/18

14.0

11.2

12.9

11.9

(8.7)

31/10/19

7.8

8.1

10.2

2.8

10.9

Source: VEIL, Refinitiv, Bloomberg. Note: All % on a total return basis in pounds sterling.

Exhibit 5: Investment company performance to 31 October 2019

Price, NAV and index total return performance, one-year rebased

Price, NAV and index total return performance (%)

Source: Refinitiv, Edison Investment Research. Note: Three, five and 10-year performance figures annualised.

Exhibit 6: Share price and NAV total return performance, relative to indices (%)

 

One month

Three months

Six months

One year

Three years

Five years

10 years

Price relative to Vietnam VN Index

1.0

8.5

5.4

(2.2)

9.5

26.4

60.4

NAV relative to Vietnam VN Index

(0.5)

3.7

2.5

(1.9)

5.0

14.5

14.8

Price relative to Vietnam VN30 Index

1.3

4.8

4.1

4.9

14.7

49.0

99.1

NAV relative to Vietnam VN30 Index

(0.2)

0.2

1.3

5.2

9.9

34.9

42.5

Price relative to MSCI Emerging Markets

(3.1)

8.6

9.7

(2.8)

34.0

87.6

94.0

NAV relative to MSCI Emerging Markets

(4.5)

3.8

6.7

(2.5)

28.5

70.0

38.9

Source: Refinitiv, Edison Investment Research. Note: Data to end-October 2019. Geometric calculation.

Exhibit 7: NAV total return performance relative to VN Index over five years

Source: Refinitiv, Edison Investment Research

Discount: Narrower than average

VEIL is currently trading at a 9.9% discount to NAV, which is narrower than its three-year average of 14.1%. The board seeks to avoid large fluctuations in the discount relative to similar single country investment companies investing in Asia ex-Japan, taking market conditions into consideration. It has the ability to manage an imbalance in the supply and demand for the shares through buy backs.

Exhibit 8: Share price discount to NAV (including income) over three years (%)

Source: Refinitiv, Edison Investment Research

Capital structure and fees

VEIL has two classes of shares in issue: ordinary shares and non-redeemable management shares. There are 1,000 management shares in issue, all owned by Dragon Capital. These shares confer the right to appoint two members to the board and carry one vote each. Management shares are not entitled to dividends, and in a wind-up situation, ordinary shareholders have priority over management shareholders in the return of capital. The board has the authority (renewed annually) to repurchase up to 14.99% of shares in issue, and year-to-date, the company has repurchased 1.5m ordinary shares, representing 0.7% of outstanding shares, at a cost of £6.9m. There are currently 218.1m shares in issue and 2.9m shares held in treasury.

VEIL is permitted to borrow up to 20% of NAV for the purposes of investment flexibility. The company has a $60m borrowing facility with Standard Chartered, of which $20m was drawn, as at end-September 2019. The alternative investment fund manager (AIFM), Enterprise Investment Management, a subsidiary of Dragon Capital, is paid an annual management fee of 2.0% of NAV up to $1.25bn, and 1.75% of NAV between $1.25bn and $1.5bn, reducing further to 1.5% of NAV above $1.5bn. There is no performance fee.

Dividend policy and record

VEIL’s objective is to deliver capital growth for shareholders over the medium to long term, rather than income, and no dividends have been paid since the fund’s launch.

Peer group comparison

Exhibit 9 shows the 10 members of the AIC Country Specialists – Asia Pacific sector with market capitalisations above £75m. This is a diverse group of funds, investing across a broad geographic region with a wide variation of economic development, making direct comparisons less relevant. We therefore focus on the Vietnam subgroup of three funds. VEIL is the largest of the Vietnam funds. Its NAV total return ranks first over one, three and five years, and second over 10 years. Its ongoing charge ranks joint-highest; however, unlike the other two Vietnam funds, VEIL does not have a performance fee. It ranks first in terms of discount to cum-fair NAV, with a considerably narrower discount than its two subgroup peers.

Exhibit 9: Country specialists – Asia Pacific peer group as at 15 November 2019*

% 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 Enterprise Investments

1,082.7

8.1

51.7

147.4

165.6

(9.9)

2.25

No

100

0.0

Aberdeen New India

280.4

17.7

19.1

66.7

193.1

(12.8)

1.17

No

106

0.0

Aberdeen New Thai

94.2

3.3

20.5

40.1

320.7

(12.7)

1.45

No

104

3.3

Fidelity China Special Situations

1,183.1

10.8

9.9

76.2

(8.3)

0.93

Yes

123

1.8

India Capital Growth

84.4

(2.4)

(11.6)

26.9

74.8

(14.9)

2.02

No

100

0.0

JPMorgan Chinese

236.3

38.7

45.8

91.5

182.9

(9.6)

1.34

No

110

1.1

JPMorgan Indian

763.4

17.2

4.0

49.3

129.1

(8.3)

1.09

No

100

0.0

VietNam Holding

94.8

0.0

(1.2)

64.4

120.7

(17.1)

2.25

Yes

100

0.0

VinaCapital Vietnam Opportunity Fund

622.4

(1.3)

28.4

92.9

166.1

(14.8)

1.70

Yes

100

2.5

Weiss Korea Opportunity

117.5

5.5

2.5

27.0

(4.7)

1.89

No

100

2.9

Peer group average

455.9

9.8

16.9

68.2

169.1

(11.3)

1.61

104

1.2

Rank in peer group

2

5

1

1

5

5

1=

5=

6=

Vietnam subgroup average

608.1

2.3

26.3

101.6

150.8

(15.9)

2.06

101

0.8

Rank in subgroup

1

1

1

1

2

1

1=

1=

2=

Source: Morningstar, Bloomberg, Edison Investment Research. Note: *Performance data to end-October 2019. TR = total return. Net gearing is total assets less cash and equivalents as a percentage of net assets.

The board

The board consists of six directors, five of whom are independent and non-executive. The sixth member, Dominic Scriven (appointed in May 1995) is the founder of Dragon Capital and is a non-independent director. Chairman Stanley Chou has served the board as the senior independent director since January 2016 and assumed his current role in June 2019. The other directors and their dates of appointment are Derek Loh (March 2011), Gordon Lawson (July 2014), Vi Le Peterson (April 2018) and Entela Benz-Saliasi (May 2019)

General disclaimer and copyright

This report has been commissioned by Vietnam Enterprise Investments and prepared and issued by Edison, in consideration of a fee payable by Vietnam Enterprise Investments. Edison Investment Research standard fees are £49,500 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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

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.

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

1,185 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

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

1,185 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

General disclaimer and copyright

This report has been commissioned by Vietnam Enterprise Investments and prepared and issued by Edison, in consideration of a fee payable by Vietnam Enterprise Investments. Edison Investment Research standard fees are £49,500 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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

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.

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

1,185 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

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

1,185 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

Share this with friends and colleagues