Monthly Investor Report

RNS Number : 3321C

VietNam Holding Limited

14 March 2014

 



VietNam Holding Limited (the "Company")

Investor Report

A report detailing the activities of the Company for the month of February 2014 has been issued by VietNam Holding Asset Management Limited, the investment manager of the Company. Electronic copies of the report have been made available to shareholders on the Company's website at http://www.vietnamholding.com/latest-publications.aspx and a summary of the report is included below.

Investor Report Summary

Vietnam News

The Vietnam stock markets ended the first month after the Lunar New Year (Tet) break with further gains amidst rather turbulent global market developments. The USD-adjusted Vietnam Index increased by 5.2% to end February at 586.5. This brought the calendar year-to-date performance to +16.2%. As a result Vietnam remains the best performing market within our usual group of peer countries.

Vietnam's market has outperformed its peers for well over a year. This is not a fluke but a reflection of Vietnam's recent comparative stronger economic performance.

We start by looking at Vietnam's perennial inflation challenges: February's CPI increased by merely 0.55%, which was the lowest monthly rate for a Tet month in ten years. This brought the country's inflation rate to a 4-year low with a y-o-y CPI of 4.65% as per end of last month. Over the past several years, Vietnam regularly ranked bottom among its peers in CPI. It has since surpassed India (8.79%) and Indonesia (7.75%), both plagued with high inflation, and caught up with the Philippines, the closest Asian peer with a y-o-y CPI of 4.10%, which trails behind Malaysia, China, and Thailand with CPIs between 3.4% and 2%.

Another encouraging macro indicator is the trade balance, which recorded a surplus of US$244m in January and February combined. The principal reasons for this positive development continues to be the stellar export performance of the foreign invested enterprises. The single biggest contributing factor continues to be smart phones:  over the first two months of 2014, Vietnam exported mobile phones for US$3.3bn, a y-o-y increase of 22.9%. During the same period, the FDI sector produced a net US$2.2bn trade surplus, which outweighed the domestic sector's US$1.9bn deficit. Historically, Vietnam's FDI net inflows in % of GDP have been the highest within the peer group. The latest statistics on approved FDI suggest that this trend will last for a while.

VNH Insights

We ended the Vietnam News story above with a glance at the future.  As far as the stock market is concerned, the listed companies' EPS growth is a better indicator for the market potential. The Bloomberg figures do not tell the entire story here. 

We have to look behind the figures. Firstly, the market-capitalization weighted 2013 EPS growth calculated by SSI, one of the leading Vietnamese brokers, is 21% for all companies included in the VNI - a bit lower than Bloomberg's 29%. However, if we back out the listed real estate companies, which had a turn-around year on the heels of a very low 2012 EPS basis, the corporate market's EPS growth was a more muted 8%.  If we continue to exclude the real estate segment of all companies included in the VN Index, the 2014 corporate EPS growth is projected by SSI at 15% and for 2015 at 14%.

In comparison, the VNH portfolio's EPS growth for 2013 was 12.9% and forward looking a 19.5% EPS growth is expected for 2014.           

VNH's February NAV performance of 4.7% lagged the VNI's increase as reported above.  Vietnam has seen considerable inflows of foreign institutional investments over the past few months. The great majority of these fund inflows was through the two Vietnam ETFs. These in turn are forced to invest in large caps that have free investment limits for foreigners. The result is that the large caps have increased substantially more than the mid- and small-caps, which in turn make up the bulk of the VNH portfolio.

VietNam Holding Asset Management Limited
Gyentsen Zatul	Telephone: [phone]
- Investor Relations
Oriel Securities Limited (Nominated Adviser and Broker)
Stewart Wallace / Neil Winward	Telephone: [phone]

 

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