Vietnam Enterprise Investments Limited (VEIL) has published its annual report for the year ended 31 December 2024, celebrating its 30th anniversary with solid returns despite emerging global challenges. During the year, VEIL’s NAV rose by 12.2% in US dollar terms, outperforming the Vietnam Index (VNI) by 3.4%. In sterling terms, NAV rose by 14.3%, though the share price increased by a slightly lower 9.9% as the discount widened from 18.1% to 21.2%. New lead manager Le Anh Tuan, who took over in February 2024, has overseen a more diversified and mid-cap-focused portfolio, which contributed to improved relative performance.
VEIL continued its active buyback programme, repurchasing 16.3m shares (8.1% of the weighted average shares outstanding) at a cost of US$121m, enhancing NAV by an estimated 1.8%. A further 4.8m shares have been bought back since year-end.
Looking ahead, a five-year conditional 100% tender offer will be triggered if VEIL underperforms the VNI between 31 March 2025 and 31 March 2030, providing an additional protection for shareholders.
Other initiatives to broaden the shareholder base included a refreshed website, the appointment of a new PR firm, the strengthening of marketing efforts, and the introduction of a USD listing alongside the existing GBP quote.
Vietnam’s economy grew 7.1% in 2024, buoyed by strong public investment, FDI, and consumer demand. However, a sharp turn in sentiment has come with the introduction of unexpectedly high tariffs by the US under President Trump’s administration. While this has clouded near-term growth expectations, VEIL’s portfolio remains focused on domestic-facing businesses that should benefit from infrastructure investment and internal demand.
VEIL’s board continues to monitor the discount and remains committed to share buybacks. They are targeting a medium-term discount of 10% or less and will consider additional steps if necessary. Despite near-term trade headwinds, VEIL remains cautiously optimistic about Vietnam’s prospects, supported by structural reforms, a young workforce, low public debt, and ambitious infrastructure spending plans. VEIL’s board encourages shareholders to vote against the five-yearly discontinuation resolution at the AGM on 18 June 2025.
[QD comment MR: The decision to shift VEIL’s portfolio further towards mid-caps under the new manager, Le Anh Tuan, appears to have paid off with it outperforming its benchmark and delivering double-digit NAV growth. The board’s efforts on buybacks, and discount control more generally, look encouraging, particularly in light of the wider discounts we are currently seeing. With the 2025 discontinuation vote rapidly approaching, the board seems, quite understandably, focused on efforts to narrow this.
The threat from US tariffs adds uncertainty to the outlook, but Vietnam’s strong domestic growth drivers, combined with a strong focus on internal-facing businesses – things that apply to all of the Vietnamese equity funds – should provide some resilience. The conditional tender offer offers additional downside protection if relative underperformance emerges, although we continue to caution against such 100% tenders as they can leave funds as hostages to fortune if they fall due when a sector or asset class is out of favour – which is precisely when managers should be taking advantage of the closed-end structure to look through the noise and capitalise on the opportunity (you can find more of our thoughts on this from when the tender was originally announced, by clicking here).]
