Vietnam Holding (VNH) has published its annual results for the year ended 30 June 2022. During the year, VNH’s NAV per share declined by 4.36% in USD terms, while the market as a whole, as measured by the Vietnam All Share Index (VNAS), declined by 16.5%. However, in sterling terms, VNH’s NAV increased by 9.0% from 333.0p per share to 363.0p per share, while its share price increased by 16.8% from 265.0p per share to 309.5p. The superior share price performance reflects a narrowing of the discount over the period from 20.4% to 14.7%. VNH’s share price performance was significantly ahead of its much larger peers: Vietnam Opportunity Fund, VOF, which rose by 1.1% and Vietnam Enterprise and Investment Limited, VEIL, which fell by 3.4%. This is due to a combination of higher NAV per share performance and narrower discount between the share price and the NAV.
Performance – a story of two halves
VNH’s interim report as of 31 December 2021 characterised the first six months of the financial year as a period of resilience and divergence. During the first half, the NAV per share rose by 14.1% in USD terms, ahead of the VNAS which gained 10.6%. VNH’s manager says that, throughout the second half of the financial year, Vietnam’s equity markets themselves were divergent from the resilient macro-economic position, citing that the Vietnamese market fell by 24.5% in line with the sell-off in global markets while the Company’s NAV per share fell by 16.0%. As at 30 June 2022, the NAV per share declined by 4.2% for the full financial year, in contrast with the 99% increase in NAV per share that VNH reported for the previous financial year. Nevertheless, the Company continues to outperform its peers, and has also outperformed the VNAS on a 1, 3, 5 and 10-year basis.
Manager’s comments on VNH’s high conviction portfolio
“The Company maintains a high-conviction portfolio concentrated in 24 positions, with its top-ten positions making up 67.5% of NAV. The largest position, FPT Corporation, FPT, which is 11.5% of NAV, is the country’s leading IT and telecoms services company. It rose by 19.9% as it continues to see significant traction in its domestic and overseas business. Mobile World, MWG, which is 9.2% of NAV, is a leading omni-channel retailer. It rose by 42.7% as it strengthened its position as one of the country’s largest e-commerce players and started to reposition and streamline its grocery business. Gemadept (GMD), which is 8.5% of NAV and the largest port operator in Vietnam rose by 23.9% as it experienced strong growth in volumes and profit from its new deep-water container port. Phu Nhuan Jewelry, PNJ, is 8.1% of NAV and the leading branded jewellery retailer and gold wholesaler in Vietnam. It rose 30.5% and delivered 56.5% revenue growth and 48.0% profit growth in the second half of the financial year, as people resumed their retail lives with renewed vigour after the tough lockdown of 2021. Although we pivoted to an underweight position in banks in this financial year, taking profit after last year’s stellar performance, there are still four banks in our top-ten, and the largest, Sacombank, STB, 5.6% of NAV, was down 29.7% but continues to deliver strong core profit growth on a very undemanding valuation of 1.1x price to book. Overall, 14 of our 24 positions increased in value and 10 decreased.”
New backer for investment manager
Vindustrial Ltd has acquired a strategic shareholding of 50.5% in VNH’s investment manager, Dynam Capital from the foundation that established Dynam Capital in 2018. Dynam’s executive management shareholding of 49.5% in Dynam Capital remains unchanged.