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Weak sentiment provides opportunity

VietNam Holding 16 March 2020 Review
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VietNam Holding

Weak sentiment provides opportunity

Investment companies
Vietnam equities

16 March 2020

Price

132.5p

Market cap

£67.4m

AUM

£87.7m

NAV*

172.4p

Discount to NAV

23.1%

*As at 13 March 2020.

Yield

0.0%

Ordinary shares in issue

50.9m

Code

VNH

Primary exchange

LSE

AIC sector

Country Specialists: Asia Pacific

Share price/discount performance

Five-year performance vs index

52-week high/low

195.0p

131.0p

241.7p

172.4p

**Including income.

Gearing

Gross*

0.0%

Net cash*

1.7%

*As at 29 February 2020

Analysts

Helena Coles

+44 (0)20 3681 2522

Sarah Godfrey

+44 (0)20 3681 2519

VietNam Holding (VNH) aims to generate long-term capital growth through investing in companies listed in Vietnam, employing a fundamental approach. The fund has undergone significant changes since September 2017, including the appointment of a new board and management company, to address previous governance and performance shortcomings. The wide discount to NAV partly reflects these historic issues, and has been amplified by weak investor appetite for Vietnam equities due to uncertainties such as the impact of the coronavirus outbreak. The restructured VNH may provide long-term investors with the opportunity to participate in Vietnam’s strong medium- to long-term economic prospects, with the potential of a narrowing discount should some of the above concerns be alleviated.

Vietnam’s economic growth is almost double that of the world

Source: IMF WEO October 2019, Edison Investment Research

The market opportunity

Vietnam is one of the fastest-growing economies in the world, according to International Monetary Fund forecasts. Although expectations are likely to be tempered in the short term by the coronavirus outbreak, the country has positive secular trends, including rising disposable incomes, urbanisation and industrialisation, which drive multi-year growth opportunities for its companies.

Why consider investing in VietNam Holding?

The manager follows a rigorous investment process, with environmental, social and governance (ESG) considerations a key part of its approach.

Mid- to small-cap focus gives investors exposure to less well-researched, high-growth companies.

VNH has been restructured by a relatively new and proactive board, which is committed to promoting shareholders’ interests.

Significant discount has scope to narrow

VNH’s current 23.1% discount to its NAV is appreciably wider than the three-year average of 16.0%. The portfolio also has potential hidden value that is not fully reflected in the NAV, due to Vietnam’s foreign ownership limit (FOL) rules. There are multiple drivers that may help the discount to narrow, including improved performance under the new manager, and a turnaround in investor sentiment.

Exhibit 1: Trust at a glance

Investment objective and fund background

Recent developments

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 Limited.

8 November 2019: Announced appointment of Hiroshi Funaki as chairman, replacing Sean Hurst, who takes on the role of senior independent director.

9 October 2019: Annual results to end June 2019 – NAV TR -11.2% in US dollar terms versus -5.6% for the Vietnam All Share Index.

17 May 2019: Announced appointment of Saiko Tajima as non-executive director with immediate effect.

Forthcoming

Capital structure

Fund details

AGM

November 2020

Ongoing charges

2.23%

Group

Dynam Capital Limited

Annual results

October 2020

Net cash

1.7%

Manager

Vu Quang Thinh, Craig Martin & team

Year end

30 June

Annual mgmt fee

Tiered (see page 8)

Address

De Catapan House,
Grange Road,
St Peter Port,
Guernsey. GY1 2QG

Dividend paid

N/A

Performance fee

Yes (see page 8)

Launch date

30 June 2006

Company life

Indefinite

Phone

+8428 38277590

Continuation vote

Five yearly, next in 2023

Loan facilities

None

Website

www.dynamcapital.com

Dividend policy and history (financial years)

Share buyback policy and history (financial years)

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

VNH’s authority (renewable annually) to repurchase shares was increased from 10.00% to 14.99% in July 2018. Allotments to warrant holders.

Shareholder base (as at 4 March 2020)

Portfolio exposure by sector, adjusted for cash (as at 29 February 2020)

Top 10 holdings (as at 29 February 2020)

Portfolio weight %

Company

Sector

End-February 2020

End-February 2019*

Weight in VNAS Index %**

FPT Corp

Telecommunications

13.7

8.7

5.0

Phu Nhuan Jewelry

Retail

11.7

10.1

1.6

Mobile World

Retail

8.3

5.8

2.5

Military Commercial Bank

Banks

7.0

5.9

1.1

Khang Dien House

Real estate

6.0

7.4

(1.4)

Sai Gon Cargo Service Corp

Industrial goods & services

5.0

9.0

(4.0)

Hoa Phat Group

Industrial goods & services

4.8

7.2

(2.4)

ABA Cooltrans

Industrial goods & services

4.7

N/A

N/A

Dat Xanh Real Estate

Real estate

4.3

N/A

N/A

Vincom Retail

Real estate

3.7

N/A

N/A

Top 10 (% of portfolio)

69.2

70.8

Source: VNH, Edison Investment Research, Bloomberg, Morningstar, Refinitiv. Note: *N/A where not in end-February 2019 top 10.

Market outlook: Uncertainty favours the brave

The outlook for Vietnamese equities is currently clouded by uncertainty related to the coronavirus epidemic. Fears for a synchronised global recession at the start of 2019 had led central banks to reverse stances to withdraw liquidity and shrink balance sheets, instead resuming accommodative monetary policies. The US Federal Reserve cut interest rates three times, and the People’s Bank of China and the European Central Bank also undertook stimulus measures. Towards the end of the year, there were positive signs of economic stabilisation and recovery, including an improvement in global PMIs. Inventories around the world were at unusually low levels, which would normally augur well for Vietnam’s open economy. However, just as global economies seemed poised for recovery, the coronavirus outbreak came to light in January, in Wuhan, China, significantly disrupting manufacturing activity and consumption globally. Vietnam’s economic growth this year will be dented – manufacturing accounts for around 16% of the country’s GDP, while China, Korea and Japan represent over 30% of its total exports. However, it is too early to gauge the full impact from the virus, and what further government responses may be. As shown in Exhibit 2 (LHS), Vietnamese equity valuations have corrected meaningfully since the beginning of the year and now trade at a discount to Asian equities, having typically commanded a premium over the past several years. The country’s long-term economic prospects, however, remain very positive and the IMF forecasts its growth over 2019–24 to be among the fastest in Asia, and to accelerate compared to the previous 10-year period (see front page chart). The current market setback may thus provide an entry opportunity for long-term investors.

Exhibit 2: Vietnamese market valuation metrics

VN index forward P/E multiple premium/discount 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)

12.5

21.1

9.0

13.1

95.3

Price to book (x)

2.4

3.4

1.3

2.2

112.4

Dividend yield (%)

2.4

5.7

1.4

3.1

77.5

Return on equity (%)

16.0

18.5

11.2

15.1

106.1

Source: Refinitiv, Bloomberg, Edison Investment Research. Note: Index valuations at 9 March 2019.

Fund profile: Fundamental and ESG aware

VNH was launched in April 2006 as a closed-ended fund, incorporated in the Cayman Islands and listed on AIM. It changed its legal domicile to Guernsey in February 2019, de-listed from AIM and was admitted to the Main Market of the London Stock Exchange in March 2019. The fund has been managed by Dynam Capital since July 2018, replacing the previous manager VNH Asset Management, which had been in place since VNH’s inception.

The fund’s objective is to generate long-term capital appreciation through investing in a relatively concentrated, yet diversified portfolio of c 20–25 companies that have high growth potential at attractive valuations. The disciplined investment approach is both bottom up and top down, with ESG considerations a part of the process. The company has been a signatory of the Principles of Responsible Investment (PRI) for over a decade, and adopts its guidelines to exclude certain investments, such as companies with significant exposure to alcohol and tobacco, and those that do not commit to reducing, in a measurable way, pollution and environmental problems arising from their business activities. Gearing is permitted up to 25% of NAV; however, VNH has historically not used this capability. The fund is also able to invest up to 20% of NAV in private companies; it currently has one unlisted holding accounting for less than 5% of the portfolio.

The fund manager: Dynam Capital team

The manager’s view: Outstanding long-term prospects

The manager believes the coronavirus outbreak will have a meaningful and negative impact on Vietnam’s GDP growth in 2020. The team’s prior expectations for 7% growth this year will be cut, but there remains much uncertainty on the duration and impact of the virus. However, in Dynam’s view, when normality returns, there is likely to be a rapid rebound in domestic confidence, which should be reflected favourably in the domestic stock markets. The manager notes that Vietnam’s economy was robust prior to the outbreak, with record levels of foreign currency reserves, and this should help provide a buffer to some of the short-term impacts.

The team is focused on the longer term, and believes Vietnam has outstanding economic prospects. The economy is one of the fastest growing in the world, and Dynam expects it to be one of the largest 20 in the world by 2050. The manager identifies three key secular growth trends – rising incomes, urbanisation and industrialisation, and believes these underpin excellent long-term opportunities for investing in Vietnam. The team notes that the country’s GDP per capita, at c $3,000, is typically the inflexion point for acceleration.

Following a correction in Vietnamese equities, the manager believes that the market is attractively valued at a forward P/E multiple of c 11x (excluding outliers). Dynam also believes there is considerable hidden value in the NAV of the fund because nearly half of the portfolio is held in stocks that have reached their foreign ownership limit (FOL). When this limit is reached, foreign buyers often offer a premium to the listed share price; however, NAVs must use the quoted price. Premiums for FOL companies currently range between c 7% and c 30%.

Asset allocation

Investment process: Rigorous analysis, company engagement

The manager follows a rigorous fundamental investment process, unconstrained by any index, to invest in a relatively concentrated portfolio of 20–25 of its highest-conviction stocks. Dynam employs both bottom-up and top-down analysis in its investment approach. The team is looking for companies that are well-managed industry leaders with a strong competitive position and healthy balance sheets, yet which are attractively valued. ESG assessments are integrated into the company analysis and the manager believes firms that score highly on this front tend to outperform over the long term. Engagement with managements is important and Dynam seeks to add value to a company by advising it in areas such improving corporate governance, board restructuring and training, and raising awareness of environmental and social initiatives. Dynam believes its active approach to ESG differentiates VNH from many Vietnamese equity products and that it is a thought-leader within the country. CIO Vu Quang Thinh leads Dynam’s company engagement process. Also a member of the Vietnam Institute of Directors, he is held in high regard in business circles on ESG matters in Vietnam.

The manager is typically biased in favour of 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. As a signatory of the PRI, the fund follows its guidelines which exclude certain investments, including companies with significant revenues from alcohol, tobacco, armaments and gambling. The fund will also not invest in companies that do not commit to reducing pollution and environmental problems caused by their business activities.

Current portfolio positioning

Exhibit 3 shows VNH’s exposure as at end-February 2020 and changes over the previous year. The most notable increase is to the utilities sector (6.7pp). This includes the purchase of two water supply companies, Thu Dau Mot Water (TDM) and Binh Duong Water-Environment (BWE). Both companies operate in the south-east region of the country, serving the economic hinterland of the capital, Ho Chi Minh City (HCMC). A large number of industrial economic zones are located in this area, which receives significant foreign direct investment (FDI), particularly from Japanese and Korean multinationals. In the manager’s view, this economic area is one of the fastest growing in Vietnam, and is well placed to receive infrastructure investment, especially as Dynam expects global manufacturers to accelerate geographical diversification efforts to reduce their dependency on China.

The manager also added a new position in Gemadept, one of the first companies to list in Vietnam in 2002. Gemadept operates seven ports across the north and south of the country, and is currently developing Vietnam’s largest deep-water container port to serve the fast-growing HCMC and Mekong Delta area. The company also has a logistics business, which includes nationwide transportation and distribution centres. The Dynam team believes Gemadept has the scale and capacity to benefit from the country’s rapid economic growth.

The team has also turned more positive on Vietnam banks, introducing three banks to the portfolio: Vietcombank (VCB), VPBank (VPB) and Vietinbank (CTG). In the manager’s view, the sector’s overall balance sheet health has improved as a result of preparation for compliance with Basel II requirements. Dynam believes banks represent a leveraged exposure to Vietnam’s economic growth prospects, and expects the three banks to have robust earnings growth prospects over the medium term.

Exhibit 3: Portfolio sector exposure at 29 February 2020

% unless stated

Portfolio
29 Feb 2020

Portfolio
28 Feb 2019

Change
(pp)

VNAS index weight

Active weight vs index (pp)

Company weight/ index weight (x)

Retail

22.8

21.2

1.6

5.4

17.4

4.2

Industrial Goods & Services

20.1

17.7

2.4

7.7

12.3

2.6

Real Estate

18.4

20.5

(2.1)

27.7

(9.3)

0.7

Telecommunications

13.7

8.7

5.0

3.1

10.6

4.4

Banks

11.4

9.7

1.7

25.0

(13.6)

0.5

Utilities

6.7

0.0

6.7

1.2

5.5

5.4

Personal & Household Goods

2.2

1.3

0.9

0.9

1.3

2.4

Oil & Gas

2.0

3.9

(1.8)

2.0

0.0

1.0

Food & Beverage

1.0

0.6

0.4

12.8

(11.8)

0.1

Financial Services

0.0

6.6

(6.6)

4.8

(4.8)

0.0

Travel & Leisure

0.0

8.1

(8.1)

3.7

(3.7)

0.0

Other sectors

0.0

0.0

0.0

5.3

(2.3)

0.1

Cash

1.7

1.6

0.1

0.0

100.0

100.0

100.0

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

The largest sector decline over the past 12 months is to travel & leisure (-8.1pp). This includes the sale of budget airline, VietJet. The company launched its services in 2011, and performed well in an oligopoly environment, capturing around 45% of the passenger aviation market. However, the manager notes that the competitive landscape has deteriorated recently with two new entrants.

The manager has also trimmed stationery manufacturer and supplier Thien Long. The company is Vietnam’s largest school and office stationery provider with over 110 distributors, and exports to over 60 countries. The team continues to believe the firm has a solid and well-managed business; however, it considers the company’s growth prospects over the next few years to be lacklustre, compared with investment opportunities elsewhere.

Performance: Affected by transition issues

The current manager, Dynam Capital, was appointed in July 2018; therefore the most relevant performance numbers to consider are for one year and less, and since change (SC). As shown in Exhibits 5 and 6, VNH’s NAV total return over one year has been flat relative to the VN All-Share Index. Since the change of manager, the fund has underperformed, partly reflecting some transition-related issues. Shortly after the appointment of Dynam Capital, the board conducted a tender offer for up to 15% of issued equity, requiring the manager to provide liquidity to accommodate repurchases. This represented a distraction from the day-to-day investing activities for the team. Furthermore, the new manager inherited two illiquid holdings it did not wish to keep: Yeah1 and VietCapital Securities. These disposals were the largest detractors to relative performance since change. Performance for periods less than one year have also lagged the index; however, the manager has a long-term investment horizon and is not influenced by short-term numbers.

Exhibit 4: Five-year discrete performance data

12 months ending

Total share price return (%)

Total NAV return
(%)

Vietnam VN All Share Index (%)

Vietnam VN30 Index (%)

MSCI Emerging Markets (%)

29/02/16

14.8

20.6

4.0

0.9

(14.8)

28/02/17

31.8

33.2

31.9

31.5

45.5

28/02/18

22.8

15.5

42.5

53.9

18.3

28/02/19

(17.9)

(15.7)

(9.4)

(14.2)

(6.3)

29/02/20

(10.0)

(6.5)

(6.5)

(4.9)

2.6

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

Exhibit 5: Investment company performance to 29 February 2020

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 (%)

 

Three months

Six months

One year

Three years

Five years

10 years

SC*

Price relative to Vietnam VN All Share index

(10.1)

(6.0)

(3.8)

(24.9)

(17.2)

72.3

(14.4)

NAV relative to Vietnam VN All Share index

(3.8)

(5.3)

0.0

(24.6)

(11.7)

27.1

(7.5)

Price relative to Vietnam VN30 index

(11.4)

(7.9)

(5.4)

(27.8)

(17.7)

45.1

(13.0)

NAV relative to Vietnam VN30 index

(5.2)

(7.2)

(1.7)

(27.5)

(12.3)

7.1

(6.0)

Price relative to MSCI Emerging Markets

(13.3)

(16.4)

(12.3)

(20.2)

(2.7)

65.4

(16.5)

NAV relative to MSCI Emerging Markets

(7.3)

(15.8)

(8.8)

(19.8)

3.8

22.0

(9.8)

Source: Bloomberg, Dynam Capital, Edison Investment Research. Note: Data to end-February 2020. Note: Geometric calculation. *Since change (SC) denotes performance since the start date of the current manager on 16 July 2018.

Exhibit 7: NAV total return performance relative to VN All Share Index over one year

Source: Refinitiv, Edison Investment Research

Discount: Significant discount has scope to narrow

VNH trades at a 23.1% discount to its total return NAV, which is considerably wider than its three-year average of 16.0%, partly reflecting the relatively short tenure of the new manager, and the company’s historic governance issues associated with the previous board and management company (discussed in our initiation report). It also reflects investors’ lowered risk appetite in the current uncertain environment, which has resulted in wider discounts across the peer group since the outbreak of the coronavirus. A new board was appointed in September 2017 and is committed to narrowing VNH’s discount and promoting the interests of shareholders. It has made significant changes to address the fund’s previous shortcomings and broaden its appeal to shareholders; these include the appointment of the current manager, a reduction in the management fee, the change of the fund’s domicile, and re-listing on the Main Market of the London Stock Exchange. These changes, combined with increased market efforts and improved sentiment towards Vietnam equities, may help VNH’s discount to narrow. The board has the authority (renewed annually) to repurchase up to 14.99% of shares outstanding.

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

Source: Refinitiv, Edison Investment Research

Capital structure and fees

VNH is a closed-ended, Guernsey-domiciled investment company with one class of share; there are 50.9m shares in issue and none held in treasury. During FY19, the company repurchased 14.7m shares at a total cost of £40.7m. This included a tender offer for 15% of issued shares, which resulted in the repurchase and cancellation of 9.7m shares at $2.72 per share. Repurchases to date during FY20 have been modest at 0.4m shares. Gearing is permitted up to 25% of the NAV; however, VNH has not used this capability and there is presently no loan facility in place. As at end-February 2020, the fund had a net cash position of 1.7% of NAV.

Dynam Capital receives an annual management fee of 1.5% of NAV for assets up to $300m, which would be reduced to 1.25% on assets between $300m and $600m, and then 1.0% on assets above $600m. There is an incentive fee of 12% of the excess performance in each financial year over an 8% compound hurdle, starting with a high-water mark as of 30 June 2018, capped at 3% of NAV in any financial year. As at end-June 2019, VNH’s ongoing charges ratio was 2.23%, lower than 2.69% the previous year.

Dividend policy and record

VNH’s objective is to generate capital growth over the medium and long term, rather than income. No dividends have been paid by the fund since its inception.

Peer group comparison

Exhibit 9 shows the 10 members of the AIC Country Specialists – Asia Pacific sector (funds with a market capitalisation above £70m). This is a diverse group of funds, investing in countries across a wide range of economic development stages. Therefore, we also present the averages for the Vietnam subgroup. VNH is one of the smaller funds in the sector, and the smallest among its Vietnam peers. As the current manager was appointed in July 2018, the one-year NAV total return is the most relevant, where it ranks eighth. Its ongoing charges are the second highest and it is one of five funds that do not pay a dividend, reflecting its focus on capital growth. VNH’s discount to its cum-fair NAV is one of the widest in the peer group, but ranks second for the Vietnam funds. Discounts across the peer group have widened since the coronavirus outbreak, reflecting increased investor risk aversion during uncertain times.

Exhibit 9: Country specialists – Asia Pacific peer group as at 13 March 2020*

% 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

67.4

(5.1)

(7.6)

48.2

108.2

(23.3)

2.2

Yes

100

0.0

Aberdeen New India

232.5

7.8

13.2

34.9

137.5

(12.4)

1.2

No

109

0.0

Aberdeen New Thai

68.4

(17.0)

(7.2)

6.1

192.3

(7.3)

1.3

No

113

4.6

Fidelity China Special Situations

1,161.8

4.9

22.0

75.2

(10.5)

0.9

Yes

124

1.8

India Capital Growth

60.8

(9.7)

(18.4)

10.6

38.2

(23.1)

2.0

No

100

0.0

JPMorgan China Growth & Income

241.4

29.6

60.7

94.7

197.0

(8.6)

1.3

No

112

4.4

JPMorgan Indian

632.7

6.0

2.4

20.7

83.0

(5.6)

1.1

No

103

0.0

Vietnam Enterprise Investments

776.3

(1.4)

29.2

117.6

199.9

(18.9)

2.3

No

100

0.0

VinaCapital Vietnam Opportunity Fund

451.4

(4.3)

11.3

84.6

148.4

(27.9)

1.7

Yes

100

3.4

Weiss Korea Opportunity

108.6

0.6

(2.2)

26.8

(8.9)

1.9

No

100

3.1

Peer group average

380.1

1.1

10.3

52.0

138.1

(14.6)

1.6

106

1.7

Rank in peer group

9

8

9

5

6

9

2

6

6

Vietnam subgroup average

431.7

(3.6)

10.9

83.5

152.2

(23.4)

2.0

100

1.1

Rank in subgroup

3

3

3

3

3

2

2

1

2

Source: Morningstar, Bloomberg, Edison Investment Research. Note: *Performance data to end-February 2020. TR = total return. Net gearing is total assets less cash and equivalents as a percentage of net assets.

The board

Since September 2017, the company has undergone significant corporate governance changes including the appointment of a new board, in response to shareholder concerns over historic failings of the former board. The VNH board consists of five independent non-executive directors, four of whom were appointed in September 2017. Hiroshi Funaki has recently been appointed chairman in November 2019, taking over from Sean Hurst, who now serves as the senior independent director. Damien Pierron and Philip Scales were also appointed in 2017. Saiko Tajima was appointed in May 2019. The board has a breadth and depth of skills, including asset management, private equity and investment banking.

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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 Holding and prepared and issued by Edison, in consideration of a fee payable by VietNam Holding. 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 2020 Edison Investment Research Limited (Edison).

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

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