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VietNam Holding Ltd (VNH)

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Wednesday 11 December, 2019

VietNam Holding Ltd

Monthly Investor Report

RNS Number : 4896W
VietNam Holding Limited
11 December 2019

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

Monthly Investor Report

A report detailing the activities of the Company for the month November 2019 has been issued by Dynam Capital Limited, the investment manager of the Company. Electronic copies of the report have been made available to shareholders on the Company's website and a summary of the report is included below.

Investor Report Summary

Vietnam's macro position is the strongest it has ever been, and its high level of growth makes it the envy of much of Asia. In addition to a record level of trade surplus (estimated at USD 9 billion for the first eleven months), Vietnam is attracting record levels of Foreign Direct Investment, 70% of which is targeted to the manufacturing sector. All this good news is not, however, boosting the domestic equity markets which fell, with the All-Share index declining 3% and the Fund's NAV per share declining by 4% during the month.  The largest detractor was Mobile World (MWG), our third largest holding, down 12.5%. We visited the company very recently and remain firm in our view that the decline in share price is unwarranted. Over the last five years the company has opened one new store a day and has a 47% market share in the mobile phone retail space, 37% share in consumer electronics and is growing its mini-mart grocery format, using daily fresh grocery items as the lead category (50% of sales) to convert shoppers from the more traditional 'wet market' segment. Net profit for the first 10 months of 2019 increased by 35%, and the company trades on a forward P/E of 10x which is compelling value. There are many foreign investors who would like to own more of this company, however, as the stock is already at its 49% foreign ownership level, they can't without paying a premium of 20-30%. We remain big fans of Mobile World and think the future for the company remains bright.

Other detractors in the month included Saigon Cargo Services (SCS), down 9.1%, Thien Long Group (TLG), down 17.5%, and Dat Xanh Group (DXG), down 8.4%. Most of these mid-cap stocks fell on relatively thin volumes. Vincom Retail (VRE) was one bright spot during the month rising by 3.8%, due in part to a share-buyback programme. VRE is a key player in the modernization of the retail space in Vietnam, developing a nationwide footprint of shopping malls. At 28x P/E this stock is not cheap, but there is still foreign room available and the stock is one of a trio of Vingroup shares that collectively account for 20% of the index.

The tremendous long-term story of Vietnam is not yet fully captured in its stock markets. We look at investing with a three to five-year horizon, during which time we think the compounding growth in the Domestic Consumption, Industrialisation and Urbanisation opportunities will help the portfolio rise significantly in value. Ultimately, removal of some of the foreign ownership limits, and the eventual inclusion in the MSCI EM Index will be a game-changer for Vietnam's equities, broadening the share ownership base and deepening the liquidity. The Fund, which trades on a 15% discount to NAV, holds a portfolio of shares with a forward P/E of 10x with earnings forecast to grow by c18% in 2020.

For more information please contact:

Dynam Capital Limited                  

Craig Martin                                                                                        Tel: +84 28 3827 7590


[email protected] |


Nominated Adviser and Corporate Broker                                          Tel: +44 20 7220 0500      

William Marle / Giles Rolls

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