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Well positioned for recovery and long-term growth

Vietnam Enterprise Investments 29 April 2020 Review
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Vietnam Enterprise Investments

Well positioned for recovery and long-term growth

Investment companies
Vietnamese equities

29 April 2020

Price

390.0p

Market cap

£849.7m

AUM

£939.6m

NAV*

430.0p

Discount to NAV

9.3%

*Excluding income. As at 27 April 2020.

Yield

0.0%

Ordinary shares in issue

220.1m

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

315.0p

583.0p

360.0p

**Including income.

Gearing

Gross*

2.1%

Net cash*

2.2%

*As at 31 March 2020.

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 has a solid long-term performance track record (see chart below), delivering annualised NAV total returns of 10% and 8% over five and 10 years respectively. Vietnam appears to be managing the spread of the COVID-19 virus well, and is advanced in the resumption of normal economic activity. Its GDP growth of 7.0% in 2019 was one of the fastest rates globally, and while growth will be disrupted this year, economic prospects remain bright. Vietnam’s equity market fell sharply in response to the pandemic, and forward P/E valuations are now relatively modest, and at an unusually large c 30% discount to global equities, which may present an attractive entry opportunity for longer-term investors.

10-year total return (rebased): Strong long-term performance

Source: Refinitiv, Edison Investment Research

The market opportunity

Long-term economic prospects for Vietnam are bright, short-term disruptions notwithstanding. These are driven by multi-decade secular trends, including rising incomes, urbanisation and industrialisation. Vietnam is also a beneficiary of the trend for multinationals to diversify manufacturing capabilities from China. The IMF has recently published its updated forecast for Vietnam’s GDP growth, expecting it to fall sharply to 2.7% in 2020 but to rebound to 7.0% in 2021.

Why consider investing in VEIL?

Managed by Dragon Capital, the longest-established foreign institutional investor in Vietnam-listed equity.

The team is experienced and well resourced, with a rigorous bottom-up approach to finding quality companies that can deliver long-term capital growth.

VEIL is well placed to benefit from an expected increase in infrastructure spending, and the resumption of government-led privatisations.

Scope for discount to narrow

As at 27 April, VEIL traded at an 9.3% discount to NAV, which is narrower than its three-year average of 13.3%. There is scope for this discount to narrow over time if Vietnam’s strong economic prospects can attract broader investor interest, and VEIL continues to deliver a solid performance.

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.

23 April 2020: Annual results to end-December 2019 – NAV TR -0.9% in sterling terms versus 5.9% for the VN Index.

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.

Forthcoming

Capital structure

Fund details

AGM

June 2020

Ongoing charges

2.25% (see page 7)

Group

Dragon Capital

Interim results

October 2020

Net cash

2.2%

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

See page 8

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 (at 20 April 2020)

Portfolio exposure by sector (at 31 March 2020)

Top 10 holdings (as at 31 March 2020)

Company

Sector

Portfolio weight %

VN Index weight %

31 March 2020

31 March 2019

31 March 2020*

Mobile World

Retail

8.6

8.0

1.2

ACB

Banks

8.0

7.1

N/A

Vinhomes

Real Estate

7.9

6.3

7.9

Khang Dien House

Real Estate

7.1

6.5

0.4

Hoa Phat

Mat's/Res

5.7

4.4

2.0

Military Bank

Banks

4.8

5.2

1.4

FPT

Software services

4.2

3.0

1.2

Hai Phat Investment

Real Estate

3.9

2.0

0.2

Vietcombank

Banks

3.8

2.1

9.9

VP Bank

Banks

3.0

1.3

1.8

Top 10 at each date

57.0

45.8

Source: VEIL, Edison Investment Research, Bloomberg, Morningstar. Note: *N/A not in March 2019 Top 10.

Market outlook: Long-term prospects remain bright

Vietnam’s economy started 2020 in robust shape. Its 2019 GDP growth of 7.0% was one of the fastest globally, and the outlook was for it to sustain a similar level of growth in the current year, standing to benefit from a de-escalation of US-China trade tensions, and seemingly better prospects for global growth. The outbreak of COVID-19 has dramatically changed this outlook, with the impact of the disease including both demand and supply shocks around the world, and Vietnam’s economy will also suffer a setback. However, the country appears to be relatively well placed to cope with the virus. Its government, drawing on its experience of SARS in 2003, responded rapidly and rigorously with extensive testing and tracking of those infected with the disease and, to date, the number of cases in Vietnam is relatively modest, with no reported fatalities. The government has also responded with debt relief and monetary easing, and further policies aimed at stimulating economic activity are expected in due course, including an uplift in infrastructure spending.

Vietnam’s stock market fell by up to 31% in March as investors sold aggressively. Although the VN Index has rebounded significantly in April, as shown in Exhibit 2, Vietnamese equity valuations remain below their 10-year average, especially in forward P/E terms, and trade at an unusually large discount to global equities of over 30%. The long-term outlook for Vietnam’s economy and stock market, however, remains bright, driven by multi-decade secular trends including its ability to attract foreign investment, growing incomes and urbanisation. These trends are unlikely to be derailed by the current COVID-19 disruptions. In its latest April 2020 World Economic Outlook, the IMF is forecasting Vietnam’s GDP to grow by a modest 2.7% in the current year, but return to a robust 7.0% in 2021.

Exhibit 2: Vietnamese market valuation metrics

VN Index forward P/E multiple and relative valuation to world equities

Vietnam market valuation metrics

 

Last

High

Low

10-year
average

Last as % of
average

P/E 12 months forward (x)

11.1

21.1

9.0

13.1

85

Price to book (x)

2.0

3.4

1.3

2.1

94

Dividend yield (%)

2.6

5.7

1.4

3.1

83

Return on equity (%)

15.5

18.5

11.2

15.0

103

Source: Refinitiv, Edison Investment Research. Note: Index valuations as at 27 April 2020.

Fund profile: Long-established Vietnam expertise

VEIL was launched in August 1995, and is the largest and longest-established fund focused on Vietnamese equities. It is a closed-ended fund, incorporated in the Cayman Islands, and was previously listed on the Irish Stock Exchange. VEIL listed on the London Stock Exchange in July 2016, becoming a constituent of the FTSE 250 Index from July 2017.

The fund aims to deliver long-term capital growth and to outperform the VN Index on a rolling three-year basis through investing in Vietnamese equities, employing a rigorous bottom-up approach. The manager, Vu Huu Dien, is not constrained by index considerations, and the relatively concentrated portfolio of around 35–40 holdings represents his and his team’s highest-conviction ideas over a long-term horizon. The board has approved gearing up to 10% of NAV or $100m, whichever is lower; however, it is seldom above 5%. VEIL may also invest in unlisted companies, with a clear mandate to list within 18 months. As at end-March 2020, almost all of its holdings 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 of the HSX or HNX within one year. As at end-March 2020, unlisted companies account for just 0.4% of the fund.

The fund manager: Vu Huu Dien

The manager’s view: Vietnam able to recover strongly

The manager expects the short-term impact to Vietnam’s economy from COVID-19 to be significant. Prior to the outbreak, the Dragon Capital team had forecast Vietnam’s GDP to grow by c 7%. However, developments have warranted a sharp downward revision to these expectations. The team has evaluated multiple scenarios and, currently, its base case expectation is for 2020 GDP growth to be 4.9%. This assumes that the virus is contained, and that economic activity returns to normal by July or August. This GDP growth level would nevertheless be slower than that experienced in 2008 during the global financial crisis. The team has also significantly pared back earnings expectations for 2020, from 17% EPS growth at the beginning of the year, to a contraction of 2%. In the manager’s view, even though there has been a sharp fall in equity prices, the implied forward P/E multiple of Dragon Capital’s proprietary universe of stocks (representing around 80% of the index), is less than 9x, and presents attractive value for the longer-term investor.

Dien is also positive on Vietnam’s ability to recover strongly from the current crisis. He believes the Vietnamese government has handled the virus outbreak well, which helps cement the country’s attractiveness as a place for foreign investment at a juncture when many multinational companies are shifting their manufacturing capabilities to improve diversification, and reduce dependency on China. He also notes that government debt levels are relatively modest, and can accommodate significant fiscal stimulus measures. He explains that ambitious infrastructure spending and privatisation programmes have been stalled over the past two years due to a crackdown on corruption, and unfavourable market conditions. Dien believes the government is now more motivated to resume these programmes, which Dragon Capital expects could reach c US$30bn, representing around 5.5% of GDP, over the next few years. He believes the portfolio is very well positioned to benefit from an uplift in infrastructure and construction spending.

Asset allocation

Investment process: Rigorous and bottom-up

The manager follows a rigorous and bottom-up investment process, aiming to find quality companies with sustainable growth drivers, that trade on reasonable valuations. There are over 1,700 companies listed in Vietnam and a screen is applied to whittle this down to an investible universe on size, quality and liquidity criteria. In-depth analysis is then undertaken on around 140 stocks, focusing on assessing management quality, financial strength, and the intrinsic value of the business. Environmental, social and governance (ESG) evaluations are also key considerations. This investment process requires local expertise, and is time-intensive; Dien is supported by two portfolio managers as well as the resources of Dragon Capital’s investment team of 11 sector specialists. Dragon Capital is one of the earliest-established investment managers in Vietnam, and benefits from a long history of engagement with company managements. The firm is a signatory of the Principles for Responsible Investment (PRI), which has awarded it high A+ and A ratings.

Current portfolio positioning

Exhibit 3 shows VEIL’s portfolio by sector as at end-March 2020, which reflects the manager’s key long-term investment themes of growing domestic consumption, industrialisation and increasing penetration of financial services. The three largest exposures are to real estate, banks and retail. Real estate accounts for 34.4% of VEIL’s portfolio, and has increased by 6.2pp over the past year. This partly reflects the addition of Vingroup last year, which we discussed in our November 2019 review, but also continued additions to Vinhomes and Becamex IDC (BCM). BCM is a developer and operator of industrial parks and, in the manager’s view, is benefiting from Vietnam’s significant growth in foreign direct investment (FDI), which should continue to be underpinned by the shift and diversification of manufacturing bases from China to Vietnam.

The manager has also added to the portfolio’s weight in banks over the past year (+6.3pp). A new position in Vietnam Commercial Bank for Industry and Trade (CTG) was introduced in January. CTG is one of the three largest state-owned banks, and Dien expects the bank to be able to raise capital, which should support a valuation re-rating. He notes that CTG trades at a significant discount to the two other large state-owned banks, which he largely ascribes to their superior capital positions. CTG has been on the manager’s radar for purchase for some time, and Dragon Capital was able to negotiate the purchase directly with a strategic shareholder, at an off-market price that it believes to be value-accretive.

Exhibit 3: Portfolio sector exposure at 31 March 2020

% unless stated

Portfolio
31 March 2020

Portfolio
31 March 2019

Change
(pp)

VN index weight

Active weight vs index (pp)

Trust weight/ index weight (x)

Real estate

34.4

28.3

6.2

27.9

6.6

1.2

Banks

27.4

21.1

6.3

26.2

1.2

1.0

Retail

10.8

11.4

(0.6)

1.4

9.4

7.7

Materials & resources

6.2

5.1

1.2

4.1

2.1

1.5

Software & services

4.3

3.0

1.3

1.3

3.0

3.2

Food & beverage

3.7

8.1

(4.4)

12.9

(9.2)

0.3

Energy

2.7

5.3

(2.5)

6.9

(4.1)

0.4

Consumer durables

2.3

2.8

(0.4)

0.7

1.6

3.1

Capital goods

2.1

2.2

(0.0)

3.6

(1.5)

0.6

Pharmaceuticals

2.1

1.7

0.4

1.1

1.0

1.9

Transportation

2.0

3.6

(1.6)

4.6

(2.6)

0.4

Diversified financials

1.7

4.8

(3.1)

2.9

(1.2)

0.6

Automobiles & components

0.2

2.7

(2.6)

0.4

(0.2)

0.5

Other sectors

0.0

0.0

0.0

5.9

(5.9)

0.0

100.0

100.0

100.0

Source: VEIL, Edison Investment Research

Over the past 12 months, VEIL has continued to reduce its holding in dairy producer, Vinamilk. This company has been a source of cash for some time. As one of the largest and best-known companies in Vietnam, Vinamilk’s investment story is well understood and, in the managers’ opinion, is reflected in a demanding valuation, especially compared to less well discovered opportunities elsewhere. The manager also trimmed brewery company SABECO, and expects its Q120 results to be severely depressed by the government’s restrictions on alcohol consumption and sales as part of its COVID-19 countermeasures. VEIL has also disposed of its holding in oil and gas company PetroVietnam, reflecting Dien’s negative view on prospects for the company’s profitability as off-take terms, determined by the regulator, changed to its detriment.

The portfolio held net cash of 2.2% as at end-March 2020 and the manager has indicated that this level has since increased following some small trims, and should rise further in the coming weeks as a number of privately negotiated sales to strategic buyers come to a conclusion. The manager believes that this cash, combined with the flexibility afforded by its loan facility of US$60m, puts VEIL in a strong position to make purchases at opportune moments. Furthermore, the manager expects the government to resume its ambitious privatisation pipeline later this year. He notes that historically, Dragon Capital has been sought as an investor for companies looking to raise capital, on account of its long-standing relationships with corporates, large asset size and blue-chip reputation as an asset manager. In Dien’s view, some of the companies in the privatisation pipeline are very attractive franchises, offering a unique opportunity for early investors.

Performance: Solid long-term performance

As shown in Exhibits 5 and 6, VEIL has a solid long-term track record, and over five and 10 years, its NAV total return has meaningfully outperformed the VN Index (its benchmark), and the VN30 and MSCI Emerging Markets indices. Performance over shorter periods has lagged the benchmark. The portfolio is typically underweight the large-cap component of the index, as the manager usually finds less well discovered opportunities in mid- to small-sized companies. This has been unfavourable for VEIL over the three-year period. Shorter-term, markets have been exceptionally turbulent over the past three months. The Vietnam equity market collapsed in mid-March, and subsequently rallied towards the end of the month. This rally was extremely concentrated among a handful of large-cap companies, which once again worked against the portfolio. The manager is committed to investing in companies that can deliver long-term capital growth, and is not influenced by shorter-term performance issues.

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 (%)

31/03/16

10.6

11.5

5.2

1.1

(8.8)

31/03/17

60.5

61.1

49.7

41.2

35.2

31/03/18

47.0

46.3

49.0

51.2

11.8

31/03/19

(11.3)

(13.0)

(9.9)

(16.0)

0.1

31/03/20

(22.1)

(30.0)

(29.0)

(29.2)

(13.2)

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

Exhibit 5: Investment company performance to 31 March 2020

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

Price, NAV and index total return performance (%)

Source: Refinitiv, Bloomberg, 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

6.7

(1.9)

1.2

6.9

6.2

30.0

85.5

NAV relative to Vietnam VN Index

(3.6)

(2.0)

(2.8)

(0.9)

(6.2)

9.9

28.8

Price relative to Vietnam VN30 Index

8.5

(2.4)

1.8

7.1

11.6

51.7

122.0

NAV relative to Vietnam VN30 Index

(1.8)

(2.4)

(2.2)

(0.7)

(0.8)

31.6

65.2

Price relative to MSCI Emerging Markets

(4.3)

(11.1)

(18.5)

(8.9)

4.4

60.3

132.3

NAV relative to MSCI Emerging Markets

(14.6)

(11.1)

(22.5)

(16.8)

(8.0)

40.2

75.5

Source: Refinitiv, Bloomberg, Edison Investment Research. Note: Data to end-March 2020. Arithmetic calculation.

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

Source: Refinitiv, Bloomberg, Edison Investment Research

Discount: Swift recovery from sharp sell-off

As shown in Exhibit 8, concerns over the impact of the coronavirus led to a very sharp sell-off in VEIL’s shares, and its discount to NAV widened to 27.3%. This discount has since recovered to more normal levels, and is now below its three-year average of 13.3%. The board seeks to avoid large fluctuations in the discount relative to similar single-country investment companies investing in Asia ex-Japan, taking market factors into consideration, and has the ability to manage an imbalance in the supply and demand for the shares through buybacks. Although the discount has been volatile recently, the board believed there to be limited benefit to making repurchases in extreme market conditions, and activity has been modest.

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. Dragon Capital owns all of the 1,000 non-redeemable shares, which confer the right to appoint two members to the board, and carry one vote per share. Management shares are not entitled to dividends, and in a wind-up, are subordinate to ordinary shareholders for the return of capital. The company does not have a fixed life, however, at the forthcoming FY20 AGM, a special resolution will be introduced to wind up the fund, effective 31 December 2022. If it is not passed, the board will next table the special resolution in the 2025 AGM to wind up the company on 31 December in the second year following the AGM, and thereafter at five yearly intervals.

The board has the authority (renewable annually) to repurchase up to 14.99% of shares in issue; during 2019, the company repurchased 2.1m ordinary shares at a total cost of £9.3m. The repurchases represent c 1% of the current 220.1m shares outstanding. The board has approved gearing of up to 10% of NAV or $100m, whichever is lower. VEIL has a $60m borrowing facility with Standard Chartered, and as at end-March 2020, the fund had net cash of 2.2%. 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. This reduces to 1.5% of NAV above $1.5bn, and there is no performance fee.

Dividend policy and record

VEIL’s objective is to deliver long-term capital appreciation and is not focused on generating an income; therefore, the fund has not paid a dividend since its inception.

Peer group comparison

Exhibit 9 shows the 10 members of the AIC Country Specialists – Asia Pacific sector with a track record of at least three years. This is a diverse set of funds across different countries and mandates, for example, only around half of the VinaCapital Vietnam Opportunity Fund is invested in listed equities, making direct comparisons less relevant. We also present Vietnam subgroup data. VEIL is the second largest fund in the AIC sector, and the largest among the Vietnam subgroup. Over five and 10 years, its NAV total return ranks second, but first within the subgroup. Over one and three years, VEIL ranks seventh and fourth respectively in the sector, and has also lagged its Vietnam peers. VEIL’s ongoing charges are the second highest; however, it does not charge a performance fee. Its discount to cum-fair NAV is best compared against the subgroup, where it ranks first and is considerably narrower than its peers.

Exhibit 9: Country specialists – Asia Pacific peer group as at 27 April 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 Enterprise Investments

849.7

(30.0)

(10.9)

60.0

111.1

(9.3)

2.16

No

102

0.0

Aberdeen New India

211.9

(23.0)

(16.1)

6.3

70.9

(16.7)

1.17

No

109

0.0

Aberdeen New Thai

68.9

(35.1)

(29.8)

(16.9)

108.6

(12.7)

1.45

No

112

4.5

Fidelity China Special Situations

1,222.7

(6.3)

8.5

50.1

(10.1)

0.93

Yes

124

1.7

India Capital Growth

47.8

(45.0)

(47.6)

(24.4)

(15.0)

(31.9)

1.86

No

100

0.0

JPMorgan China Growth and Income

269.7

16.1

47.1

74.6

167.3

(11.7)

1.26

No

113

0.0

JPMorgan Indian

377.3

(32.9)

(30.8)

(14.5)

20.2

(16.8)

1.06

No

104

0.0

VietNam Holding

67.9

(29.7)

(34.9)

38.2

53.2

(22.4)

2.88

Yes

100

0.0

VinaCapital Vietnam Opportunity Fund

484.8

(18.9)

(7.5)

56.1

110.1

(24.0)

1.70

Yes

100

3.1

Weiss Korea Opportunity

106.9

(11.1)

(16.5)

7.9

(2.9)

1.89

No

100

3.1

Peer group average

370.7

(21.6)

(13.9)

23.7

78.3

(15.9)

1.64

106

1.3

Rank in peer group

2

7

4

2

2

2

2

6

7=

Vietnam subgroup average

467.4

(26.2)

(17.8)

51.4

91.5

(18.6)

2.25

101

1.0

Rank in subgroup

1

3

2

1

1

1

2

1

2=

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

The board

VEIL’s board consists of six directors, five of whom are independent and non-executive. Dominic Scriven (appointed in May 1995) is non-independent, and is the founder of Dragon Capital. 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).

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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 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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