Monthly Investor Report

RNS Number : 9686R

VietNam Holding Limited

17 September 2014

 



VietNam Holding Limited ("VNH" or the "Company")

Monthly Investor Report

A report detailing the activities of the Company for the month of August 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 Purchasing Manager's Index (PMI) was 50.3 in August, down from 51.7 in July, the fourth consecutive monthly loss but also the twelfth straight month in expansion territory. Output growth appears to be slowing, while both new domestic and export orders are also declining.  Inflation remains benign, with a YoY figure of 4.31% in August, compared with 4.94% in July.  A spate of reductions in petroleum prices at the pumps have helped in this regard.  The low inflation is expected to allow the State Bank of Vietnam to ease indicative interest rates further.  The VND was broadly unchanged in August, ending the month at VND 21,195 to the USD.

No adjustments were made to Vietnam's credit ratings in August, which currently stand at BB- by S&P (since June of last year), B1 by Moody's (since July), and B+ by Fitch (since January).  Fitch has a positive outlook for Vietnam, while Moody's and S&P both have a stable outlook, so no downgrades anticipated.  There has been some speculation in the local media that Hanoi is contemplating a US$1bn bond issuance later this year.  If so, this would be its third overture to the international capital markets, the previous two being in 2005 and 2010.

Credit growth remains slower than policy-makers had hoped for this year.  In addition to limited demand for debt financing, the banks also seem more cautious than usual to lend.

The Vietnam Asset Management Company (VAMC) has found it harder than it anticipated to buy and then sell-on bad loans acquired from commercial banks.  One local report suggested that in the first five months of this year, the VAMC had only been able to acquire US$538.4m in NPLs, and sold a mere 2% of the US$2.4bn in bad loans it currently has on its books.

VNH Insights

The Vietnam All Share Index (VNAS) rose by 6.2% to end the month at 607.4. That takes the VNAS's performance to a commendable 19.5% year-to-date, outperformed by the even stronger Vietnam Index's (VNI) performance of 26.2%, which in turn was propelled by PetroVietnam Gas' (GAS) 86.5% performance. At the end of August GAS made up 20.9% or the VNI's total market capitalization.

The market in turn took its main cues from the good macro-economic headlines:

•             Trade surplus widened to a record US$3bn year-to-date

•             Inflation has slowed down, driven by three consecutive gasoline price cuts

•             Automobile sales numbers still robust, August typically being a slow month

•             Prime Minister urged measures to push weak domestic demand

•             Disbursed FDI on track, registered FDI to increase towards year-end

•             Prime Minister approved privatization of Vietnam Airlines

•             Vietnam to privatize 150 State-owned Enterprises by end of 2014       

VNH portfolio's trailing P/E of 11.4x remains below the 13.8x of VNAS and is substantially lower than the VNI's 15.8x.  Its forward P/E has moved up to 15.6x.

VNH's year-to-date NAV increase was 21.2%. The portfolio valuation has increased by a lower 16.1%. This is mostly due to VNH's introduction of the Urbanization investment theme. Many of the companies included in this new portfolio continue to have valuations well below the market's - for example Hoa Phat Group and Bin Minh Plastics trade at 9.9x and 8.5x trailing P/E, respectively. But several others additions to the Urbanization theme are in the construction or real estate development sectors. These are mostly in turnaround situations, showing low or no profits this year but are expected to produce much higher profits during the next 4 quarters.  A good example is Becamex, with a forward P/E of 24.7x.

For more information please contact:

VietNam Holding Asset Management Limited	Tel: [phone]
Gyentsen Zatul - Investor Relations
Altium Capital Limited (Nominated Adviser)	Tel: [phone]
Tim Richardson
Winterflood Investment Trusts (Broker)	Tel: [phone]
Joe Winkley / Neil Langford
Buchanan Communications	Tel: [phone]
Charles Ryland / Sophie McNulty

 

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