Vietnam Enterprise Investments — Mind the gap – it may close soon

Vietnam Enterprise Investments (LSE: VEIL)

Last close As at 21/05/2024

567.00

−13.00 (−2.24%)

Market capitalisation

GBP1,191m

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Research: Investment Companies

Vietnam Enterprise Investments — Mind the gap – it may close soon

Vietnam Enterprise Investments (VEIL) is the UK’s largest and oldest listed Vietnamese equities closed-end fund. Despite Vietnam’s bright economic outlook, Vietnamese equities were hit hard in 2022 by a toxic mix of unwelcome domestic and global developments, creating a disconnect between Vietnam’s favourable economic fundamentals and equity valuations. VEIL underperformed over this period due to its quality growth bias, as investors fled to defensive sectors, but the fund has consistently achieved its objectives of capital growth and outperformance on a rolling three-year basis and over the longer term. VEIL’s managers are confident 2023 will be a better year, both for the market and for the trust. They expect government initiatives to be effective in addressing domestic market issues, while the State Bank of Vietnam’s recent rate cuts and easing guidance should sooth investors’ rate hike jitters. If the managers are correct, the gap between Vietnam’s growth prospects and low equity valuations should begin to close, and VEIL’s performance should recover accordingly.

Joanne Collins

Written by

Joanne Collins

Analyst, Investment Trusts

Investment Companies

Vietnam Enterprise Investments

Mind the gap – it may close soon

Investment trusts
Vietnamese equities

13 April 2023

Price

564p

Market cap

£1,162m

AUM

£1,419m

NAV*

670.0p

Discount to NAV*

15.8%

*Including income. As at 11 April 2023.

Yield

N/A

Ordinary shares in issue

205.9m

Code/ISIN

VEIL/KYG9361H1092

Primary exchange

LSE

AIC sector

Country Specialists: Asia Pacific

Benchmark

VN Index

52-week high/low

771p

500p

947p

560p

Gearing

Net cash at 28 February 2023

6.0%

Fund objective

Vietnam Enterprise Investments’ (VEIL’s) 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.

Bull points

Provides otherwise hard to access exposure to Vietnam’s very positive long-term economic growth prospects.

Significant outperformance of the benchmark and peers over five and 10 years.

VEIL’s size, longevity and associated unrivalled deal power provide a significant competitive advantage.

Bear points

Emerging markets can experience significant short-term volatility, despite favourable fundamentals.

The trust has relatively high fees for an LSE-listed trust, although they are broadly in line with VEIL’s two peers, as Vietnamese funds are expensive to run.

The absence of dividend payments may deter investors seeking regular income.

Analyst

Joanne Collins

+44 (0)20 3077 5700

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

Vietnam Enterprise Investments (VEIL) is the UK’s largest and oldest listed Vietnamese equities closed-end fund. Despite Vietnam’s bright economic outlook, Vietnamese equities were hit hard in 2022 by a toxic mix of unwelcome domestic and global developments, creating a disconnect between Vietnam’s favourable economic fundamentals and equity valuations. VEIL underperformed over this period due to its quality growth bias, as investors fled to defensive sectors, but the fund has consistently achieved its objectives of capital growth and outperformance on a rolling three-year basis and over the longer term. VEIL’s managers are confident 2023 will be a better year, both for the market and for the trust. They expect government initiatives to be effective in addressing domestic market issues, while the State Bank of Vietnam’s recent rate cuts and easing guidance should sooth investors’ rate hike jitters. If the managers are correct, the gap between Vietnam’s growth prospects and low equity valuations should begin to close, and VEIL’s performance should recover accordingly.

VEIL has materially outperformed the VN Index over the past 10 years

Source: Refinitiv, Edison Investment Research

Why invest in Vietnam now?

The Vietnamese economy continues to expand at an impressive pace and the manager expects it to maintain this growth momentum for many years, supported by burgeoning domestic consumption and the government’s major infrastructure investment programme. Foreign investment should provide further impetus, as Vietnam has become a manufacturing hub, attracting many global companies.

The analyst’s view

Investors may be attracted by VEIL’s ability to provide exposure to the stocks set to benefit most from Vietnam’s very favourable economic prospects, especially as these stocks are otherwise difficult for foreign investors to access. VEIL’s performance may also appeal. Annualised returns have averaged 13.6% in NAV terms over the 10 years to end March 2023, well ahead of the benchmark return of 8.0%, providing ample evidence of the managers’ superior stock selection skills. With equities seemingly oversold, now may be a particularly good time for investors to venture into this market.

The manager: Dien Vu and two co-managers

The managers’ view: Market disconnect provides opportunities

VEIL’s managers believe Vietnam is on track to remain one of the best long-term secular investment growth stories, driven by domestic consumption and infrastructure spending (as discussed in our report on Vietnamese equities). They expect Vietnam’s per capita annual income to reach US$4,500 this year, which would lift Vietnam from a lower middle-income economy into the upper middle-income bracket, according to the World Bank’s criteria. Rising household incomes will support continued strong growth in domestic consumption and changing consumption patterns, as the increasing penetration of smart phones gives consumers online access to shopping, banking and investment services and property searches.

Infrastructure spending is the second pillar of Vietnam’s growth story. The country is becoming a new manufacturing hub, attracting increasing amounts of foreign investment as global companies such as Apple, Lego, Samsung and Intel seek to diversify their supply chains away from China. (For example, up to 60% of Samsung’s phones and 70% of Intel’s global output are now produced in Vietnam.) However, Vietnam’s infrastructure remains underdeveloped and requires major investment. The Vietnamese government is rising to this challenge and VEIL’s managers believe 2023 will be a ‘break-through’ year for public transport investment. The government is currently finalising a US$200bn national infrastructure master plan, which will include the expansion of the North South Expressway, improved southern connectivity between industrial parks and logistics terminals, the completion of metro lines in Hanoi and Ho Chi Minh City and upgrades to major airports. Such significant expenditure will in turn attract more foreign investment and stimulate high rates of economic growth well into the future. The Vietnamese economy expanded by 8.0% in 2022 and VEIL expects it to grow by 6.0–6.5% this year, and at similar, if not higher, rates over coming years.

Such a positive growth story bodes very well for the long-term performance of Vietnam’s stock market, but events during 2022 conspired to disconnect the market from its very positive long-term prospects. The Vietnamese market was one of the world’s worst performing indexes last year, declining 33%, driven by a toxic combination of several unwelcome domestic developments and externally focused anxieties.

The domestic causes of the market decline included a deterioration in the property market and a sudden evaporation of liquidity in Q422, caused by regulatory reforms to the corporate bond market, which were, ironically, intended to improve market stability. Corporate bond yields reached 30%, making it very difficult for businesses to access credit. Bond market conditions were exacerbated by fears that the market will not be able to digest the heavy schedule of bond maturities and associated roll-overs due around mid-2023. There were also adverse external influences on market sentiment related to fears about how far the US Federal Reserve would go in its efforts to quash inflation pressures. Rapidly rising US rates were a particular concern for Vietnamese investors as they may compel the State Bank of Vietnam (SBV) to raise rates at the same pace, to maintain currency stability. The high-quality, high-growth names favoured by VEIL were particularly hard hit by the ensuing market sell-off.

However, the SBV has acted quickly, taking several steps to ensure financial system stability. It has undertaken open market operations (OMO) to improve liquidity, relaxed loan-to-deposit ratio (LDRs) calculations and issued Decree 8, which is intended to mitigate bond market pressures by easing the preconditions for bond issuance. The prime minister also formed a task force to assist banks as they restructure their non-performing loans.

In mid-March, the SBV surprised markets by reducing its discount rate from 4.5% to 3.5% and cutting the OMO rate from 6.0% to 5.5%. This is the first rate cut in two years, which the bank justified on the basis that inflation is ‘well-managed’ and the currency is stable. Later in the month, as developments related to US banks suggested the Fed would need to adopt a more cautious approach to further monetary tightening, the SBV cut the discount and OMO rates by a further 50 basis points. Vietnam’s central bank has also signalled the likelihood of further rate reductions over time to ‘give additional breathing room to the property and capital markets’.

These moves were welcomed by the equity market both as meaningful steps towards solving the market’s liquidity problem, thereby easing property market pressures, and because they provide greater clarity to the outlook for Vietnamese rates, suggesting that investors’ fears about aggressive domestic rates hikes were overdone. The prospect of further cuts to Vietnamese interest rates has since improved further thanks to an easing in domestic inflation pressures (inflation slowed to an annual rate of 3.4% in March 2023) and some appreciation in the Vietnamese dong against the US dollar.

The SBV’s initiatives in concert have seen the VN Index (VNI) lift off its 2022 lows, supported by a recent surge in buying by foreign investors, and VEIL’s managers are anticipating a material improvement in market conditions in 2023, especially in the second half of the year, once the corporate bond market has digested the mid-year re-issuance glut and investors have more clarity on the US rate outlook. This suggests the possibility that the current disconnect between Vietnam’s very favourable economic fundamentals and low equity valuations will begin to reverse over the course of the year.

One positive aspect of the past year’s sharp equity market sell-off is that Vietnamese stocks are presently mispriced, and very cheap, both in terms of their price to earnings (P/E) ratios (8.6x for 2023, which is a 10-year low) and relative to their East Asian peers, which have an average P/E ratio of 15x. The Vietnamese market is also cheap in terms of its price to book (P/B) ratio. Its five-year 12-month P/B ratio is below the low reached at the onset of the pandemic. In short, in the words of VEIL’s managers, ‘the worst is behind us’ and current market conditions represent a ‘sweet spot of mispriced long-term fundamentals and growth prospects’.

With valuations at historic lows and the equity market set to improve as the year progresses, now seems an ideal time for investors to grasp the many attractive opportunities provided by the market at current levels – opportunities that VEIL’s managers believe will allow them to continue delivering alpha over the medium term.

Asset allocation

Current portfolio positioning

VEIL’s investment strategy is guided by the same secular themes of growth in middle class consumption, infrastructure and urbanisation that underpin Vietnam’s medium-term growth prospects, and the portfolio is overweight to sectors related to these themes, notably retail, technology, banking, steel and industrial parks (Exhibit 1). The trust is also usually overweight residential real estate, but it trimmed this exposure in late 2022 and early 2023 and is now slightly underweight, due to ongoing uncertainties about the sector’s near-term outlook. However, the sector remains very important to the managers and is VEIL’s second largest sectoral position.

In recent months VEIL’s managers have maintained their focus on high-growth, high-quality names, but they adopted a slightly more defensive stance to reduce portfolio risk during Q422’s volatile market conditions. In addition to the reduction in exposure to residential real estate mentioned above (via trims to positions in Vinhomes and Dat Xanh Group), the managers have also reduced holdings in retail, where consumption has fallen due to the knock-on effects of property market weakness. Partial sales of retail positions included trims to Mobile World, Vietnam’s largest retailer, which sells mobile phones, consumer electronics and groceries, and Phu Nhuan Jewelry (PNJ), the country’s leading jewellery retailer. Mobile World is one of VEIL’s largest holdings and its long-term outlook remains very bright, thanks to its strong management team and successful execution. However, Q422 earnings dropped sharply as the company cut prices to boost demand, and its latest guidance has been negative.

Conversely, PNJ has been performing strongly, with the share price rising 14.0% in Q422, thanks in part to growing demand for gold and diamonds for investment purposes, as other investment options such as stocks, property and cryptocurrencies all weakened in 2022. The company’s growth prospects remain ‘excellent’ according to the VEIL team, but they opted to take some profits.

Exhibit 1: Portfolio sector exposure at 28 February 2023

% unless stated

Portfolio
28 February 2023

Portfolio
28 February 2022

Change
(pp)

VN Index
weight

Active weight
vs index (pp)

Company weight/
index weight (x)

Banks

42.0

37.2

4.8

37.4

4.6

1.1

Real Estate

20.4

27.1

-6.7

17.7

2.7

1.2

Materials & resources (steel)

8.0

11.5

-3.5

5.6

2.4

1.4

Retail

6.6

9.6

-3.0

1.5

5.1

4.4

Software & Services

5.3

4.0

1.3

2.1

3.2

2.5

Energy

4.8

0.6

4.2

7.5

-2.7

0.6

Consumer durables

3.2

1.8

1.4

3.0

0.2

1.1

Food & Beverage

2.1

0.6

1.5

8.6

-6.5

0.2

Capital goods

1.5

1.0

-0.5

3.8

-2.3

0.4

Transportation

1.1

1.7

-0.6

3.4

-2.3

0.3

Other sectors

5.0

4.5

0.5

9.4

-4.4

0.5

100.0

100.0

100.0

Source: VEIL, Edison Investment Research. Note: Figures subject to rounding, rebased for cash.

The proceeds of these sales were used in part to modestly increase exposure to banks and steel and material companies. The managers consider state-owned corporate banks as attractive short-term investments, due to their low bond market exposure and high-quality assets, which have appealed to the market during the downturn. They have added to existing holdings in Vietcombank (VCB) and VietinBank (CTG). However, over the longer term, the managers prefer privately owned banks, as these institutions are pioneering the digitalisation of banking services, and this should help them gain market share over time. VEIL’s two key private bank holdings, which are also its two largest positions, are Asia Commercial Bank (ACB) and Vietnam Prosperity Bank (VPB).

Steel company stocks were oversold last year due to rising coal prices, which forced some companies to temporarily close plants, so valuations in this sector are attractive at present, according to the managers. In addition, steelmakers will benefit from increased demand from rising infrastructure investment, and also from China’s reopening. The managers topped up holdings in steelmakers Hoa Phat Group (HPG) and Hoa Sen Group (HSG), although overall exposure to materials and resources has declined over the past year.

However, the managers have held on to much of the cash raised by recent portfolio sales in order to raise the trust’s cash position, with the intention of maximising their capacity to take advantage of investment opportunities when they feel the time is right. The cash position at end February 2023 was 6%, compared to a usual level of around 1%.

Exhibit 2: Top 10 holdings (%)

Company

Industry

28 Feb 2023

28 Feb 2022

Change (pp)

VN Index

ACB

Banks

13.5

9.6

3.9

2.0

VPBank

Banks

12.4

11.3

1.1

2.8

Hoa Phat

Materials/Resources

7.0

11.7

(4.7)

2.8

Vietcombank

Banks

6.9

6.5

0.4

10.8

Mobile World

Retail

6.2

9.7

(3.5)

1.4

FPT

Software/Services

5.0

4.1

0.9

2.2

Becamex IDC

Real Estate

4.6

N/A

N/A

2.1

PV Gas

Energy

4.5

N/A

N/A

4.8

Vinhomes

Real Estate

3.5

6.2

(2.7)

4.4

Khang Dien Housing

Real Estate

3.1

N/A

N/A

0.4

Top 10 holdings

66.8

72.4

33.7

Source: VEIL, Edison Investment Research. Note: N/A where stocks were not among top 10 holdings in February 2022.

The managers’ high-conviction investment approach is reflected in the concentration of VEIL’s portfolio. In total, its top 10 holdings represented 66.8% of the portfolio at end February 2023, and Exhibit 2 shows significant overweights to several companies, although the portfolio is less concentrated than in February last year.

Performance: Still hitting 3y target despite a tough year

VEIL’s long-term focus on high-quality, high-growth names resulted in a negative return in the year to end March 2023, as these stocks were hit hard by last year’s market rout. VEIL declined by 28.1% in NAV terms in the 12-month period, although this was a slightly better outcome than the benchmark decline of 28.7%. The trust outperformed more decisively in share price terms, declining by 23.7% over the period. This reflects some narrowing of the trust’s discount over the year.

VEIL’s managers argue that short-term volatility of this magnitude is not uncommon in emerging and frontier markets, and that investors should look through such turbulence, and focus instead on the longer term. To this end, the trust’s return objectives are to achieve capital growth and outperform the benchmark on a rolling three-year basis. VEIL has realised these objectives in the three years to end March 2023, and over the longer term, consistently delivering significant outright gains and outperforming the index. VEIL’s average annualised NAV growth over the three-year period was 23.0%, compared to a benchmark return of 17.1% (Exhibit 3), while the average annual return over the 10 years to end March 2023 was 13.6% in NAV terms, compared to a benchmark return of 8.0%. The trust has also consistently outperformed emerging market peers over one, three and five years (Exhibit 4).

Exhibit 3: Investment company performance to 31 March 2023

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

Price, NAV and index total return performance (%)

Source: Refinitiv, Edison Investment Research. Note: Three-, five- and 10-year performance figures annualised. Performance on a total return basis in pounds sterling

Exhibit 4: Share price and NAV total return performance, relative to indices (%)

 

One month

Three months

Six months

One year

Three years

Five years

NAV relative to Vietnam VN Index

0.6

(2.9)

(9.5)

0.8

15.8

25.1

NAV relative to Vietnam VN All Share Index

(1.2)

(3.9)

(8.7)

1.0

5.9

21.8

NAV relative to MSCI Emerging markets

3.6

1.4

(17.4)

(24.7)

46.4

2.6

NAV relative to MSCI World

3.5

(2.2)

(20.5)

(27.8)

16.0

(33.8)

Source: Bloomberg, Dragon Capital, Edison Investment Research. Note: Data to end-March 2023. Geometric calculation.

Recent detractors from returns have included Mobile World, which has seen demand for consumer goods contract, resulting in a deterioration in its near-term prospects, as discussed above. VEIL’s real estate holdings have been adversely affected by investor concerns about corporate bond market illiquidity and its adverse impact on the domestic property market. Its top 10 holdings in Vinhomes (VHM) and Khang Dien Housing (KDH) were both caught up in last year’s sector-wide underperformance. VHM was also hurt by speculation about delays in property handovers, which were forecast to have a significant impact on Q422 and full-year earnings.

PetroVietNam Gas (GAS) came under pressure at the end of 2022 as global oil prices fell, sparking concerns that lower prices would damage 2023 earnings, while FPT Corporation, a technology, telecoms and education conglomerate, also detracted. FPT has a high return on equity and strong growth prospects, as the company is well-positioned to benefit from the digitalisation trend and migration to the cloud, according to VEIL’s managers. And the company’s various segments have been performing well overall. However, performance during Q422 was hurt by financial write-downs and weakening in pre-tax profits, due to higher labour costs and FPT’s exposure to the depreciation in the Japanese yen, as Japan accounts for 40% of the company’s global IT revenue.

Exhibit 5: Five-year discrete performance data

12 months ending

Total share price return (%)

Total NAV return (%)

Vietnam VN Index (%)

MSCI Emerging Markets (%)

31/03/19

(11.3)

(13.0)

(16.5)

0.1

31/03/20

(22.1)

(30.0)

(32.4)

(13.2)

31/03/21

78.5

87.8

79.8

42.8

31/03/22

26.1

37.9

25.2

(6.8)

31/03/23

(23.7)

(28.1)

(28.7)

(4.5)

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

Peer group comparison

VEIL is a member of the Association of Investment Companies’ (AIC’s) Country Specialists sector of funds. As can be seen in Exhibit 7, which includes a subset of Chinese and other Asian trusts with market caps above £60m and track records of three years or more, this is a diverse collection of funds, spread across different countries at various levels of economic development, so direct comparisons beyond VEIL’s immediate peers, VinaCapital Vietnam Opportunity Fund (VOF) and VietNam Holding (VNH), provide limited insight.

The key features of VEIL are shown in Exhibit 6, alongside those of its two London-listed Vietnam-focused peers, VOF and VNH.

Exhibit 6: London Stock Exchange listed Vietnamese investment trusts

Feature

VEIL

VNH

VOF

Market cap

£1,165m

£75m

£692m

Inception

September 1995

June 2006,
managed by Dynam Capital since July 2018

September 2003

Type

Closed end, long only

Closed end, long only

Closed end, long only

Investments

Listed and pre-listed equity only

Listed and pre-listed equity only

Listed and unlisted equity

Style

Growth at a reasonable price, as identified by Dragon Capital

Growth at a reasonable price approach

Investing in both public and private companies (c one-third of the portfolio at end-2021), primarily via privately sourced deals

Listed

London Stock Exchange since July 2016

London Stock Exchange; moved from AIM to the Main Market in March 2019

London Stock Exchange

Objective

Rolling three-year outperformance of VN Index

Long-term capital appreciation

Medium- to long-term capital appreciation

3-year NAV TR*

29.2%

54.7%

53.5%

Latest discount to NAV*

21.1%

13.4%

17.0%

Fees

The reduced fee structure (effective from 1 July 2021) is: 1.85% per year of NAV for the first $1.25bn of the company's NAV, 1.65% per year for NAV between $1.25bn and $1.5bn and 1.50% per year for NAV above $1.5bn.

1.75% per year on NAV below $300m, 1.5% per year on NAV between $300m and $600m, and 1.0% per year on NAV above $600m.

A tiered rate of 1.5% of net assets up to $500m, 1.25% from $500m to $1.0bn, 1.0% from $1.0–1.5bn, 0.75% from $1.5–2.0bn, and 0.50% above $2.0bn.
Performance fee of 12.5% of any increase in NAV above 8% per year, capped at 1.5% of average net assets.

Total expense ratio/ ongoing charge**

c 1.82% (ongoing charge c 1.7%)

2.57%

3.06% (ongoing charges of 1.66%)

Source: company data, Edison Investment Research, Morningstar. Note: Prices as at 23 March 2023. *To end-February 2023. **Last financial year.

VEIL is the second largest fund in its broader peer group. Its performance over the past year places it at the bottom of its peer group, and has distorted returns over three years, but the trust has outperformed all its peers over both five and 10 years and significantly outpaced its two Vietnamese peers over these periods. VEIL’s discount to NAV is somewhat above the average for its broader peer group, while the charges of VEIL and its two Vietnamese peers are among the highest. This is because the Vietnamese market is a relatively expensive market in which to trade, as it has only a few asset managers and thus lacks scope to outsource various administrative function that would, in other more developed markets such as the UK, usually be undertaken at a lower cost by third-party providers. Unlike many members of the broader peer group, VEIL only uses its cash management facility for short periods and is not using it at all at present. Like the majority of its broader peer group, VEIL does not pay dividends.

Exhibit 7: Country Specialists – China and other Asian peer group*

% unless stated

Market cap £m

NAV TR
1 year

NAV TR
3 year

NAV TR
5 year

NAV TR
10 year

Discount (cum-fair)

Ongoing charge

Perf.
fee

Net gearing

Dividend yield

Vietnam Enterprise

1,165.4

(30.3)

29.2

143.8

596.8

(14.5)

1.70

No

100

0.0

Aberdeen New India

284.3

(2.1)

25.0

26.7

143.8

(19.7)

1.06

No

110

0.0

Asoka India Equity

200.5

0.9

66.1

-

-

(0.4)

0.45

Yes

100

0.0

Baillie Gifford China Growth

160.6

(12.6)

(10.1)

(14.5)

26.9

(10.1)

0.73

No

102

2.8

Fidelity China Special

1,203.7

(3.5)

20.1

11.8

230.8

(8.9)

0.94

Yes

120

2.2

India Capital Growth Ord

116.8

10.9

60.0

17.0

155.3

(7.6)

0.43

No

95

0.0

JPMorgan China Growth & Income

262.9

(13.1)

3.2

15.0

145.5

(8.9)

1.09

No

115

4.3

JPMorgan Indian

578.3

5.0

28.3

20.9

121.2

(18.5)

0.80

No

102

0.0

VietNam Holding

75.0

(22.6)

54.7

21.8

244.8

(13.4)

2.73

No

94

0.0

VinaCapital Vietnam Opp Fund

691.9

(16.5)

53.5

30.3

231.2

(17.0)

1.54

Yes

98

3.1

Weiss Korea Opportunity

124.8

(6.3)

41.2

24.7

-

0.5

1.78

No

96

3.5

Simple average

442.2

(8.2)

33.8

29.8

210.7

(11.4)

1.20

103

1.5

Rank

2

11

6

1

1

8

3

6

6

Source: Morningstar, Bloomberg, Refinitiv, Edison Investment Research. Note: *Data at 23 March 2023 in pounds sterling. TR = total return. Net gearing is total assets less cash and equivalents as a percentage of net assets.

Discount: Scope to narrow if markets stabilise

Like many other investment companies, VEIL’s share price declined relative to its NAV in early 2022, at the onset of Russia’s war with Ukraine, and continued to trade around 20% until late 2022, when it began to narrow, and it has since settled around 15%, broadly consistent with its long-term average (Exhibit 8).

VEIL’s board actively manages the discount to avoid large fluctuations and to ensure that it remains consistent with the discounts of other regional single-country funds invested in Asia, ex-Japan. To this end, in the financial year ended 31 December 2022, the company repurchased a total of 6.8m shares. This compares with purchases of 3.4m shares in the previous financial year ended 31 December 2021. So far in the current financial year, the company has repurchased a further 0.8m shares.

VEIL’s strong track record of outperformance suggests that its discount has scope to narrow closer to parity once near-term market instability abates and performance returns to form.

Exhibit 8: Three-year discount to NAV

Source: Refinitiv, Edison Investment Research

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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 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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

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

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

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

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

Copyright: Copyright 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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