VinaCapital Vietnam Opportunity Fund Limited AccumUSD · LSE:VOF
VinaCapital Vietnam Opportunity Fund Limited AccumUSD — VinaCapital Vietnam Opportunity Fund — Frostrow Capital Investment Companies Seminar 2022
36 slides from VinaCapital Vietnam Opportunity Fund Limited AccumUSD's conference presentation, May 2022
Slide 1: VinaCapital Vietnam Opportunity Fund - Frostrow Capital Investment Companies Seminar
VinaCapital Vietnam Opportunity Fund LSE: VOF.LN Frostrow Capital Investment Companies Seminar MAY 2022 Classified: Public
Slide 2: Our mission: to enable our investors to prosper
Our mission: To enable our investors to prosper by capitalising on Vietnam’s rich opportunities. $4.0BN 19 YEARS 75 MULTI - ASSET PUBLIC AND PRIVATE INVESTMENT ASSETS UNDER INVESTING EQUITY, REAL PROFESSIONALS , MANAGEMENT IN V IETNAM ESTATE , VENTURES , GLOBAL EXPERIENCE FIXED INCOME 2| Classified:
Slide 3: Macroeconomic Update
01 MACROECONOMIC UPDATE 3| Classified: Public
Slide 4: Vietnam is learning to "Live with Covid"
Vietnam is learning to “Live with Covid” Domestic daily cases spiked in early 2022 but have Rapid rate of vaccinations over past 9 months, >80% now retreated significantly (LTM to Apr 2022) population fully vaccinated, >95% HCMC and Hanoi 4| Source: https://ourworldindata.org/covid-vaccinationsm as
Slide 5: Why Vietnam? A recipe for Vietnam's emerging middle class
Why Vietnam? A recipe for Vietnam’s Emerging Middle Class #1 FDI <40% 98 MILLION >90% ♀ INFLOWS BOOST URBANIZATION POPULATION , YOUNG HIGH FEMALE LOCAL INCOMES ( VS >60% CHINA ) FAVOURABLE WORKFORCE AND CONSUMER TREMENDOUS DEMOGRAPHICS PARTICIPATION SPENDING GROWTH 5| Source: VinaCapital Research Cl
Slide 6: Why Vietnam? Diversification away from China
Why Vietnam? Diversification away from China https://www.thetimes.co.uk/article/955dd448-c244-11ec-8e50- 6| d692b1fbef48?shareToken=948f9888298697840a9e4d7b25937d95 Classified: Public
Slide 7: The FDI story is still very strong in 2021
The FDI story is still very strong in 2021 LG Display to Expand Vietnam Production Capacity 25% “VN Remains an Attractive Destination for Foreign Investors” (Samsung to Expand Foldable Device Capacity by 50%) Toshiba to Shift Electronics Production from China, to VN Vietnam is the #1 choice for Japa
Slide 8: FDI remains positive despite the pandemic
FDI remains positive despite the pandemic Disbursed FDI Still Positive Despite Negative News USD bn (%) 30 80 60 20 41.7 40 10 16.0 8.7 9.0 10.8 9.1 15.2 20 6.7 0 -2.0 7.8 0 12.5 -1.2 -6.5 (10) -8.0 -11.8 -6.6 -13.9 -20 -22.0 (20) -40 2014 2015 2016 2017 2018 2019 2020 2021 YTD-22 FDI Disbursement (
Slide 9: Vietnam is one of the most interconnected countries in global trade
Vietnam is one of the most interconnected countries in global trade with 17 free-trade agreements Imports by Country 2021 Exports by Country 2021 9| Source: Government Statistics Office of Vietnam, CEIC, VinaCapital, 31 March 2022 Classified: Public
Slide 10: Vietnam's modest exposure to China
Vietnam’s modest exposure to China Vietnam has Minimal Exposure to China’s Domestic Economy Vietnam Imports from China Exports to US * CHINA USA 15%/GDP Trade Deficit 22%/GDP Trade Surplus VIETNAM 10| * Circa ⅔ of Vietnam-China Trade is in Electronics and Garments Classified: Public
Slide 11: Urbanization: Vietnam is 20 years behind China
Urbanization: Vietnam is 20 years behind China China Urban Population (% of Total Population) 60% Vietnam Is Here (36% Urbanization) 50% 40% 30% 20% 10% 0% 1975 1980 1985 1990 1995 2000 2005 2010 2015 Urbanization Rate # of Years After Reforms to Pre-Reforms Reach 36% Urbanization China 20% 30 years
Slide 12: Infrastructure spending set to surge ~40% over next 5 years
Infrastructure spending set to surge ~40% over next 5 years Vietnam's New PM Rose to Prominence Developing His Province's Infrastructure Vietnam Breaks Ground on $16 Billion International Airport Major Projects Pipeline 2021 2022 2023 2024 2025 2026 2027 2028 New HCMC Airport ($4.9B) North-South Hig
Slide 13: Vietnam's Demographic Dividend to continue for 10+ years
Vietnam's "Demographic Dividend" to continue for 10+ years Consumption by Age* Vietnam Population, Age 45-50 Thousands 1.4 10,000 1.3 Peak at Age 50 8,000 45-50 year old population cohort 1.2 1.1 6,000 1 4,000 0.9 0.8 10+ More Years 2,000 of Booming Consumption 0.7 0.6 0 20 30 40 50 60 70 80 90 1980
Slide 14: Female Labor Participation: Vietnam Leads Asia & EM
Female Labor Participation: Vietnam Leads Asia & EM Female Labor Participation Rate Sweden Vietnam Australia UK Japan Russia Singapore China US Thailand Brazil Korea Indonesia Malaysia India 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Many of Vietnam's Leading Companies are Run by Women Top Management Po
Slide 15: 6.5% GDP growth forecasted for 2022
6.5% GDP growth forecasted for 2022 Vietnam – Annual GDP YoY Growth (%) ASEAN – Real GDP YoY Growth (%) 10 8 7.6 6.5 6.3 7 6.5 5.6 5.7 5.6 5 3.7 4.1 6 2.9 2.6 3.1 3.2 1.6 5 0 4 3 2.6 -2.1 -5 -4.1 2 -5.6 -6.2 1 -10 0 -9.6 2020 2021 2022 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2022E 2022E 20
Slide 16: Market Update
02 MARKET UPDATE 16| Classified: Public
Slide 17: VN Index +36% (VND terms) in 2021, 1Q22 -0.4%
VN Index +36% (VND terms) in 2021, 1Q22 -0.4% VN Index (pts) Performance of VN Index and Daily Turnover Daily Turnover (USD mn) 1,600 2000 OUTBREAK OUTBREAK OUTBREAK 21 Jul to 31 Aug 19 Jan to 8 Feb 27 Apr to Now 1800 1,400 1600 1400 1,200 1200 1,000 1000 800 800 600 400 600 Daily Turnover in USD 20
Slide 18: Domestic investors remain the dominant force
Domestic investors remain the dominant force Local Retail Investors VN Index Foreign Capital flows as a continue to dwarf all other Percentage of Market Cap Investor types 2.0% 100% 1.5% 6% 90% 5% 80% 1.0% 70% 60% 50% 0.0% 88% -0.1% 40% 30% -0.5% 20% -1.0% 10% -1.1% 0% -2.0% Mar/18 Jun/18 Mar/19 Jun
Slide 19: Market liquidity remains high driven by domestic investors
Market liquidity remains high driven by domestic investors Liquidity has stabilized after a period of ADTV still leads all regional significant increase in Average Daily peers excl. Thailand (USDm) Turnover Value (ADTV) (USDm) 1600 3,000 1400 2,444 2,500 1200 1,140 2,000 1000 800 1,500 1,140 600 1,0
Slide 20: Vietnam's stock market remains attractively valued
Vietnam’s stock market remains attractively valued with earnings forecast to continue to expand in 2022 ASEAN PER (x) Consensus Net Profit Growth (%) ASEAN 2022F Avg 12.8x 25 100 ID CY21: SG CY21: 329% 182% 20 75 15 50 10 25 5 0 0 VN ID MY PH SG TH VN ID MY PH SG TH 2021 17.3 20.0 15.0 20.9 13.6 17.
Slide 21: Why Vietnam? What are the Risks?
Why Vietnam? What are the Risks? A faster growth story with plenty of runway Two broad risk buckets • Stable political environment • Geopolitical tensions • Advantageous environment for FDI • Tighter policy, monetary and fiscal • Sustainable economic growth Other walls of worry • Stronger earnings g
Slide 22: VOF Strategy and Portfolio
03 VOF STRATEGY AND PORTFOLIO 22| Classified: Public
Slide 23: Why VOF? We deliver long-term performance
Why VOF? We deliver long-term performance 23| Classified: Public
Slide 24: VOF's differentiated investment approach focuses on private investments
VOF’s differentiated investment approach focuses on private investments and privately negotiated deals in quoted businesses $1.4BN 200+ 79% FOCUS ASSETS UNDER INVESTMENTS SINCE RETURN OVER PAST PRIVATE AND PUBLIC MANAGEMENT INCEPTION 5 YEARS EQUITY, PRIVATE CREDIT % >$350M BOARD DIVIDEND YIELD SHARE
Slide 25: VOF's Investment Strategy
VOF’s Investment Strategy What we do? How we do this? VOF invests growth equity in privately negotiated Vietnam is still a frontier market with low liquidity and weak opportunities across listed, private equity and SOE assets. governance. VOF makes concentrated, high-conviction investments supported
Slide 26: Investment Criteria: what we look for in investee companies
Investment Criteria. What we look for in our investee companies Scale Brand Distribution Focusing on sectors and industries that Focus on domestic consumption-related In the fragmented and disorganized present considerable headroom for businesses that have brands that consumers Vietnam market, a dis
Slide 27: What do our typical investments look like?
What do our typical investments look like? $25 - $50 million 5% – 40% 4 – 7 years TICKET SIZE EQUITY STAKE INVESTMENT HORIZON Fewer investments, larger in ticket size, Minority stake significant enough to exert Long enough to grow and impact change, accretive to NAV. influence and board representati
Slide 28: Privately negotiated opportunities are where we focus
Privately negotiated opportunities are where we focus our efforts 80% % NAV* by Entry Method 60% ON AVERAGE OF NAV COMES 49% 50% FROM PRIVATE EQUITY INVESTMENTS 40% Private equity investments play a significant and increasingly important part 30% 28% of the portfolio, although the flexibility of the
Slide 29: VOF's portfolio by asset class and sector
VOF’s portfolio by asset class and sector 31 March 2022 NAV by Asset class1 Private Equity Cash & Others Real Estate 25.8% (10.5%) (0.5%) Materials 20.7% Financials 20.1% Public Equity with Private Industrials 8.9% Terms (13.3%) Consumer Staples 6.5% Health Care 5.3% Consumer Discretionary 5.0% Unli
Slide 30: Top Public Equities and Private Equity holdings
Top Public Equities and Private Equity holdings 31 March 2022 Top 10 Public Equity Investment1 NAV USDm % NAV Public Equity with Private terms2 NAV USDm % NAV 1 Hoa Phat Group (HPG) 180.4 12.9% 1 An Cuong Wood Working (ACG) 49.1 3.5% 2 Norfolk II & III (NVL) 57.1 4.1% 2 Khang Dien House (KDH) 175.2
Slide 31: Recent Investment and Divestment Highlights
Recent Investment and Divestment Highlights Private Equity investment: Ngoc Nghia Industries (NNG) Invested: USD17m Divested: USD27m (through VN’s first public-tender offer with foreign investor) IRR / MOIC: 21% / 1.6x Activities: • Strengthened corporate governance, restructured capital structure,
Slide 32: Pipeline Overview - $200m+ potential investments
Pipeline Overview - $200m+ potential investments Project Name Sector Implied Deal Size Stake Instrument/ Classification Current Status Equity Value (post-money) (US$m) (US$m) (%) 1 Hong Kong Real Estate $2.1b $25m 1.2% Equity / Pre-IPO 10% deposit made 2 Shanghai Real Estate $173m $40m 30% Equity /P
Slide 33: Governance and Dividends
Governance and Dividends: VOF is the only Vietnam fund that pays a regular dividend and has a fully independent, diverse Board >$350M 2% GOVERNANCE DIVIDEND YIELD FULLY INDEPENDENT, SHARE BUYBACKS SINCE 2016 OVER DIVERSE BOARD SINCE 2011 $100 M DISTRIB . Huw Evans Thuy Dam Julian Healy Kathryn Matth
Slide 34: VOF: Our focus is Vietnam…
VOF: Our focus is Vietnam… https://www.thetimes.co.uk/article/63391752-c3d9-11ec-96a8- 34| ce9dac41fe90?shareToken=5147be8b104d7f14e4edbf6980903321 Classified: Public
Slide 35: … to deliver long-term performance
… to deliver long-term performance If you are worried about backing China, take a look at Vietnam instead https://www.thetimes.co.uk/article/955dd448-c244-11ec-8e50- 35| d692b1fbef48?shareToken=948f9888298697840a9e4d7b25937d95 Classified: Public
Slide 36: Disclaimer
DISCLAIMER The information contained herein has been prepared by VinaCapital (the “Company") and is subject to updating, completion, revision, further verification and amendment without notice. The information contained herein has not been approved by any listing authority or any investment regulato
VinaCapital Vietnam Opportunity Fund — Frostrow Capital Investment Companies Seminar 2022 on 6ix