Last close As at 05/08/2026
GBP3.21
▲ 1.50 (0.47%)
Market capitalisation
GBP60m
Research: Investment Companies
VietNam Holding (VNH) posted a solid net asset value (NAV) per share total return (TR) in the first seven months of 2024 (7M24) of 14.5% in US dollar terms, which was ahead of the Vietnam All Share Index’s (VNAS’s) return of 8.1%. Over the last 10 years, VNH has delivered a c 10% return pa and consistently outperformed VNAS by c 3pp pa. The index in turn performed ahead of both emerging and frontier markets averages. Vietnamese equities offer a combination of undemanding valuations (a 20% discount to 10-year historical average based on one-year forward multiples) and solid earnings outlook, with LSEG Data & Analytics consensus expectations of 28% EPS growth over the next 12 months for local equities and 6% GDP growth in Vietnam in 2024. VNH’s shares trade at a 10% discount to NAV.
VietNam Holding |
Steady outperformance and solid fundamentals |
Investment companies |
19 August 2024 |
Analysts
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VietNam Holding (VNH) posted a solid net asset value (NAV) per share total return (TR) in the first seven months of 2024 (7M24) of 14.5% in US dollar terms, which was ahead of the Vietnam All Share Index’s (VNAS’s) return of 8.1%. Over the last 10 years, VNH has delivered a c 10% return pa and consistently outperformed VNAS by c 3pp pa. The index in turn performed ahead of both emerging and frontier markets averages. Vietnamese equities offer a combination of undemanding valuations (a 20% discount to 10-year historical average based on one-year forward multiples) and solid earnings outlook, with LSEG Data & Analytics consensus expectations of 28% EPS growth over the next 12 months for local equities and 6% GDP growth in Vietnam in 2024. VNH’s shares trade at a 10% discount to NAV.
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VNH five-year performance against VNAS, MSCI Frontier, MSCI Emerging |
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Source: LSEG Data & Analytics, Edison Investment Research. Note: Total returns in pounds sterling. |
Why invest in Vietnam?
Vietnam’s growth continues to be fuelled by foreign direct investment (FDI) inflows, predominantly in manufacturing as global giants are diversifying their supply chains (GDP growth was 5.1% in 2023, ahead of neighbouring countries). Strong economic growth paired with favourable demographics translates into rapidly growing domestic spending. We anticipate that a potential upgrade to emerging markets by global index makers could result in a meaningful influx of new capital and investors to the market and a re-rating of the Ho Chi Minh City Stock Exchange (HOSE).
VNH’s nimble investment strategy proves successful
VNH positions its portfolio to benefit from the three main macrotrends it sees in Vietnam: industrialisation, the rise in domestic consumption and urbanisation. This accounted for 92% of the portfolio at end-July 2024 (including banks as a play on broad economic growth). VNH’s manager has identified a list of 60–80 investable stocks in Vietnam, within which the trust rotates its portfolio around 20–30 stocks. This approach and its small size allow VNH to quickly reposition its portfolio and the manager estimates VNH can liquidate its portfolio within a month. It allows the manager to swiftly seize market opportunities, which we believe has been an important contributor to its outperformance versus the broader market.
VNH: A play on key secular trends in Vietnam
Vietnam continues its solid GDP growth, with 6.4% growth in H124 and LSEG Data & Analytics consensus currently implying 6% for 2024. Growth was driven by returning demand for ‘made in Vietnam’ products, with the export of manufactured, processed industrial goods increasing by 15.4% y-o-y in the 7M24 and accounting for 84.6% of the total export value. The fastest growth was seen in electronics, with computers, electronic products and components expanding by 30% yoy and cameras, camcorders and components increasing by 52% y-o-y. VNH positions its portfolio to benefit from key secular drivers underpinning economic growth in Vietnam (see Exhibits 1 and 2). For more background on VNH, watch our recent interview with Craig Martin, executive chairman of Dynam Capital (VNH’s investment manager).
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Exhibit 1: VNH’s portfolio split by industry (July 2024) |
Exhibit 2: VNH’s portfolio split by theme (July 2024) |
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Source: VNH |
Source: VNH |
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Exhibit 1: VNH’s portfolio split by industry (July 2024) |
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Source: VNH |
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Exhibit 2: VNH’s portfolio split by theme (July 2024) |
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Source: VNH |
New investments are pouring into Vietnam
Increasing diplomatic ties between Vietnam and the US, Japan and Australia are strengthening Vietnam’s role in global trade and supporting the outlook for continuous export growth. This is reflected in accelerating FDI inflows, with registered capital for new projects increasing 36% y-o-y in the 7M24, after a record year of disbursements in 2023 of US$23bn. VNH invests in companies forming the ecosystem around Vietnam’s manufacturing base. This includes, for example, its second-largest holding PV Technical Services (7.6% of NAV, up from 4.4% at end2023), which provides technical services for increasing offshore wind power generation. PV Technical Services delivered H124 revenue and net income growth of 10% and 13% y-o-y, respectively. Another example is Gemadept (fourth-largest holding at 5.7%, down by 0.8pp), a port operator that recorded revenue and net income growth of 21% and 62%, respectively. Overall, VNH’s exposure to the industrialisation theme amounts to 46% of NAV as at end-July 2024.
On the other hand, the utilisation of the public spending budget was low in H124 (29.4% of the 2024 budget, while still 5% higher y-o-y nominally). According to Bloomberg, the deceleration of public spending is likely associated with the caution of officials amid the ongoing anti-corruption campaign, which resulted in the resignations of two out of the four top government officials, the president and the chairman of the National Assembly. Following the appointment of their successors and the resulting reduction in political uncertainty, the government has confirmed its plans to accelerate spending in H224 to reach 95% of the budget by the end of the year.
Significant growth in disposable income
The average income in Vietnam has increased by 7% pa over the last 10 years in US dollar terms and there is a significant influx of people in cities. This benefits consumer-facing companies, as well as banks offering housing finance and investment products. Banks remain VNH’s largest industry exposure (27% as at July 2024) and include four out of VNH’s 10 largest holdings, with strong share price growth in 7M24 (see Exhibit 3). Dynam Capital expects credit growth in 2024 to be around 13–15% and that the Vietnamese government will continue to ease monetary and fiscal policy throughout the second half of the year. VNH has a 13% exposure to retail, including Mobile World Investment, which is an omnichannel retailer. The company reported a surge in profits in H124 to US$83m (compared to US$1.6m in H123) and, after a 50% share price rally in the 7M24, it has become the third-largest portfolio company (7.3% of NAV).
VNH maintains a concentrated, high-conviction portfolio
As at end-July 2024, the top 10 companies represent 65% of VNH’s portfolio, slightly up from 62% at end-2023. The largest company remains FPT Corporation (13.5% of NAV), which is the biggest IT services company in Vietnam. In the 7M24, FPT delivered a 55% share price increase, supported by solid results (H124 net profit up 21% y-o-y) and good newsflow (eg the announcement of an AI factory in strategic partnership with chip giant NVIDIA). VNH has used the opportunity to partially realise its profits on FPT. Dynam Capital recently hosted a webinar with FPT to discuss Vietnam’s role in the global AI and semiconductor supply chain.
Exhibit 3: VNH top 10 exposures at end-July 2024
Company |
July 2024 |
December 2023 |
Exposure change |
7M24 performance |
FPT Corporation |
13.5% |
14.9% |
(1.4pp) |
55% |
PV Technical Services |
7.6% |
4.4% |
3.2pp |
7% |
Mobile World Investment |
7.3% |
N/A |
N/A |
50% |
Gemadept |
5.7% |
6.5% |
(0.8pp) |
17% |
Techcom Bank |
5.4% |
N/A |
N/A |
51% |
MB Bank |
5.3% |
5.6% |
(0.3pp) |
34% |
Hoa Phat Group |
5.3% |
N/A |
N/A |
7% |
IDICO |
5.2% |
5.5% |
(0.3pp) |
21% |
Asia Commercial Bank |
5.2% |
4.9% |
0.3pp |
22% |
Vietnam Prosperity Bank |
4.7% |
N/A |
N/A |
4% |
Total top 10 |
65.2% |
61.5% |
3.7pp |
55% |
Source: VNH, LSEG Data & Analytics, Edison Investment Research. Note: N/A when not in top 10 exposures at end-December 2023.
Exhibit 4: VNH’s discrete performance versus public markets (%)
12 months ending |
VNH (equity) |
VNH (NAV) |
VNAS |
MSCI World |
MSCI EM |
MSCI Frontier Markets |
31/07/20 |
(16.0) |
(25.8) |
(20.6) |
(25.1) |
0.5 |
(0.3) |
31/07/21 |
59.2 |
87.8 |
80.1 |
56.1 |
26.3 |
14.2 |
31/07/22 |
29.1 |
12.0 |
2.2 |
3.4 |
2.7 |
(8.3) |
31/07/23 |
(4.6) |
(2.3) |
(5.5) |
(5.5) |
7.3 |
2.9 |
31/07/24 |
27.5 |
14.3 |
3.2 |
(3.8) |
17.8 |
6.9 |
Source: VNH, LSEG Data & Analytics, Edison Investment Research. Note: Total returns in pounds sterling.
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Research: Energy & Resources
Kolibri Global Energy (KEI) reported Q224 results that saw double-digit increases across all financial and operating metrics on a y-o-y basis, with production and EBITDA up 37% and 40%, respectively. Sequentially, EBITDA fell 7%, while netback was 5% higher at US$40/bbl. KEI has started drilling three new 1.5-mile lateral wells, slated for completion in early Q4. If successful, these wells could potentially see an up to 1.5x increase in production rates and lead to a change in the field development plan. We have updated our valuation to US$6.9/share as we await more details about the performance of the new wells and KEI’s next steps. The potential change in field development strategy is yet to be priced in by the market.