VinaCapital Vietnam Opportunity Fund Limited AccumUSD · LSE:VOF
VinaCapital Vietnam Opportunity Fund Limited AccumUSD — VinaCapital Vietnam Opportunity Fund — FY2020 Earnings Presentation
42 slides from VinaCapital Vietnam Opportunity Fund Limited AccumUSD's earnings presentation, Oct 27, 2020
Slide 1: VinaCapital Vietnam Opportunity Fund Results for the Financial Year 2020
VinaCapital Vietnam Opportunity Fund Results for the Financial Year 2020 Analyst Presentation Andy Ho Chief Investment Officer Managing Director 27 October 2020 1| Classified: Public
Slide 2: VinaCapital's Mission and About VinaCapital
VinaCapital’s Mission To enable our investors to prosper by capitalising on Vietnam’s rich opportunities. About VinaCapital ● Founded in 2003, today is one of Vietnam’s largest independent asset managers. ● USD3.2 billion under management, across alternative and traditional assets. ● Team of 70+ inv
Slide 3: Agenda
Agenda 1. Vietnam and COVID-19 update Andy Ho Chief Investment Officer 2. Results summary Khanh Vu Deputy Managing Director 3. Macroeconomic update Michael Kokalari Chief Economist 4. Market update Ismael Pili Head of Research 5. Portfolio and strategy Andy Ho Chief Investment Officer 6. Questions 3
Slide 4: Results
01 RESULTS Khanh Vu Deputy Managing Director 4| Classified: Public
Slide 5: Financial Year 2020 Results Highlights
Financial Year 2020 Results Highlights -1.5% 5.5 CENTS $33 MILLION $876 MILLION NAV PER SHARE D IVIDEND DECLARED 3 , SHARE BUYBACK 4 $4.97 PER SHARE 1 TOTAL RETURN ANNUAL YIELD 2.7% 4 DISCOUNT 19.5% ( VN INDEX -11.3%) 2 1. Total NAV and NAV per share, USD terms 2. Source: Bloomberg. VN Index total r
Slide 6: NAV has staged a strong recovery post-year end
NAV has staged a strong recovery post-year end VOF 30 June 20191 30 June 2020 30 September 20202 USD GBP USD GBP USD GBP NAV 955.3 750.6 876.1 708.0 933.3 722.9 NAV per share 5.17 4.06 4.97 4.02 5.41 4.19 Share price 4.34 3.41 4.07 3.29 4.16 3.22 Discount 16.0% 19.5% 23.1% VOF NAV by Asset Class (%)
Slide 7: VOF delivers long term outperformance
VOF delivers long term outperformance USD 5-year performance (USD) 7.00 0.07 6.00 0.06 VOF's 5 yr annualised TR$ = 10.5% 5.00 0.05 4.00 0.04 VN Index's 5 yr annualised TR$ = 8.0% 3.00 0.03 2.00 0.02 1.00 0.01 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 NAV/share (TR$
Slide 8: Less volatile risk-adjusted performance over the long term
Less volatile risk-adjusted performance over the long term VOF Share Price VOF NAV per Share For period ending 30 June1 Annualised Return2 Annualised Return2 VN Index2 Calendar year to 30 June 2020 (7.1)% (0.2)% (13.8)% 1-Year (3.2)% (1.5)% (11.3)% 3-Year 5.2 % 4.2 % 3.4 % 4-Year 12.3 % 9.2 % 8.3 %
Slide 9: Economy
02 ECONOMY Michael Kokalari Chief Economist 9| Classified: Public
Slide 10: What investors need to know about COVID & Vietnam
What investors need to know about COVID & Vietnam Short-Term: Resilience & Stability ✓ Positive GDP growth in 2020 ✓ Stable macro economy (FX rate, interest rates, inflation) Long-Term: Vietnam’s Growth Story Improved in 2020 ✓ COVID accellerates the re-location of manufacturing from China ✓ COVID d
Slide 11: Vietnam's resilient GDP growth
Vietnam’s resilient GDP growth Consensus GDP growth forecasts for 2020 Vietnam’s GDP grew 2% in 9M20 supported by: 4% Rebound in Resilient Consumption Manufacturing 2% (66%/GDP) (~20%/GDP) 0% -2% -4% -6% -8% 11| Classified: Public
Slide 12: Confident consumers drive domestic demand
Confident consumers drive domestic demand “V-Shaped” Recovery in Domestic Demand 10% 4.9% 5% 0% Jan & Feb Mar Apr May Jun July Aug Sep -5% -10% -15% -20% -23.0% -25% Nominal Retail Sales (yoy) • Vietnam Consumer Confidence, #2 in the World after India (Nielsen) • Confidence in the Government’s handl
Slide 13: Vietnam makes Stay-At-Home and Work-At-Home products
Vietnam makes Stay-At-Home and Work-At-Home products US PC & IT Sales US AV Equipment Sales 80 350 300 60 250 200 40 150 20 100 00 04 08 12 16 20 00 04 08 12 16 20 US Furniture Sales US Garment Sales 350 250 300 200 250 150 200 100 150 00 04 08 12 16 20 00 04 08 12 16 20 • Vietnam’s Exports to the U
Slide 14: Vietnam Long-Term Growth Story Improved in 2020
Vietnam Long-Term Growth Story Improved in 2020 ! 14| Classified: Public
Slide 15: The next wave of FDI has started
The next wave of FDI has started Over 20% of China’s Manufacturing base to relocate in 5-10 years 80% of US Consumers don’t want to buy “Made in China” products Vietnam is the #1 Preferred Re-Location Choice: 1) High quality, low wage workforce 2) Geographic proximity to Asia’s supply chains 3) Viet
Slide 16: Vietnam's next FDI wave will significantly boost GDP growth
Vietnam’s next FDI wave will significantly boost GDP growth FDI companies will help build Vietnam’s local suppliers by: ✓ Second executives to Vietnamese firms ✓ Transfer knowledge & Best practices ✓ Long-term procurement contracts In the past, FDI companies built up local suppliers in: Singapore, T
Slide 17: Apple starts building a local supply chain in Vietnam
Apple starts building a local supply chain in Vietnam Apple will manufacture its $350, Airpods Studio Earphone product in Vietnam For the first time, Apple will manufacture in Vietnam before perfecting production in China Apple is embarking on a “Multi-Year Process” to “Create a New Cluster of Compo
Slide 18: Market
03 MARKET Ismael Pili Head of Research 18| Classified: Public
Slide 19: VN Index performance during COVID-19
VN Index performance during COVID-19 1,000 FIRST WAVE SECOND 24 Jan to 24 Apr OUTBREAK 950 21 Jul to 31 Aug 900 850 800 750 700 650 600 19| Source: Bloomberg, VinaCapital. 16 October 2020. Classified: Public
Slide 20: VN Index vs MSCI ASEAN
VN Index vs MSCI ASEAN MSCI Global, +3.0 VNI-INDEX, -1.8 MSCI ASEAN, -22.5 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 20| Source: Bloomberg, VinaCapital. 16 October 2020. Classified: Public
Slide 21: Sector performance YTD
Sector performance YTD 44.8%, PHR Materials 39.6 93.1%, DCM Consumer Staples 12.1 102.3%, HSG Financials Ex Real Estate 8.8 51.4%, HPG Information Technology 6.4 44.4%, APH VNIndex Index -1.8 Consumer Discretionary -7.5 -9.1%, PPC Real Estate -9.3 -25.9%, GEG -44.1%, PGD Health Care -9.6 -10.0%, POW
Slide 22: 1H20 Sector earnings growth and contribution to net profit
1H20 Sector earnings y/y growth 1H20 Sector contribution to net profit Materials +34.8 Information Technology +18.7 Others Financials +12.9 7% Health Care Utilities +12.6 8% Consumer Staples -12.8 Materials Real Estate -15.7 10% Financials 46% Consumer Discretionary -20.7 Consumer Other -26.3 Staple
Slide 23: Net profit resilience and consensus growth estimates
Net profit resilience (y/y growth) Consensus net profit growth estimates Vietnam Indonesia Malaysia 3Q20E -0.5% Philippines Singapore Thailand 2Q20 39.6 40.8 -8.5% 35.7 32.0 28.4 1Q20 -8.1% 12.9 12.6 10.1 9.1 7.6 7.2 4Q19 23.7% 3Q19 24.7% -4.6 -9.3 -11.9 2Q19 23.8% -16.8 1Q19 3.5% -38.6 -35.2 -41.
Slide 24: Valuations
Valuations ASEAN market P/E (x) VN Index Indonesia Malaysia Philippines Singapore Thailand 21.1 22.3 20.1 19.5 18.5 18.6 17.1 16.9 17.8 16.8 16.3 15.9 15.1 15.2 14.8 14.4 13.7 13.1 12.7 11.8 12.6 12.2 11.0 10.7 2019 2020F 2021F 2022F 24| Source: Bloomberg, IMF Classified: Public
Slide 25: Ample market liquidity
Ample market liquidity ADT YTD 2020 increased by 30.6% compared to Vietnam Indonesia Malaysia Philippines Singapore Thailand ADT OF 2019 USD MN USD MN 1,759.5 232.1 222.3 1,446.1 180.0 170.2 103.5 721.4 92.6 83.8 542.7 430.7 472.4 186.8 222.3 265.7 170.2 92.9 89.7 2014 2015 2016 2017 2018 2019 2020
Slide 26: Foreign flow
Foreign flow Net foreign flow YTD 2020 Accumulative net foreign flow into Vietnam Vietnam Indonesia Malaysia Philippines Thailand Vietnam Indonesia Malaysia Philippines Thailand 1500 W/otrade Block Block trade 1000 W/o Block trade 500 0 -500 -1000 -1500 Net foreign flow Net foreign flow USD MN W/O b
Slide 27: Solid corporate earnings & GDP growth
Solid corporate earnings & GDP growth Consensus earnings growth estimates GDP growth (IMF) Vietnam Indonesia Malaysia Vietnam Indonesia Malaysia Philippines Singapore Thailand Philippines Singapore Thailand 39.6 40.8 7.87.4 35.7 7.0 6.7 32.0 6.1 28.4 5.9 5.0 5.0 4.3 4.0 12.9 12.6 2.4 10.1 9.1 1.6
Slide 28: Risks: Exogenous factors
Risks: Exogenous factors • COVID-19 • ECONOMIC RECOVERY • GEOPOLITICAL NOISE • CORPORATE EARNINGS 28| Source: Bloomberg, IMF Classified: Public
Slide 29: Six thematic baskets
Six thematic baskets DOMESTIC LOWER RATE INFRASTRUCTURE ‘DEFENSIBLES’ FDI CONSOLIDATION RECOVERY BENEFICIARIES • Banks – generally • Airport • Companies with Positive impact: • Industrial Parks – • Banks – too many less asset quality industry leading • Brokers – Higher those with ample in the countr
Slide 30: Portfolio
04 PORTFOLIO Andy Ho Chief Investment Officer Managing Director 30| Classified: Public
Slide 31: VOF's investment strategy
VOF’s investment strategy 01Growth Capital 02Minority Protections • Capital to support expansion and growth • Volatility and weak corporate governance is pervasive • Sectors benefitting from the growing domestic economy • Downside protections coupled with clear exit mechanisms • Long term investment
Slide 32: VOF's Private Equity approach to investing
VOF’s Private Equity approach to investing Due diligence Performance rights commitment Management Downside involvement Target IRR protection +20% Corporate Milestone governance / disbursement ESG Exit plan 32| Classified: Public
Slide 33: What we look for in any company when investing
What we look for in any company when investing 01Scale 02Brand 03Distribution (PNJ) Focusing on sectors and industries that present Focus on domestic consumption-related businesses In the fragmented and unorganized Vietnam considerable headroom for growth, be it in that have brands that consumers re
Slide 34: ESG factors into our investment process
Environmental, Social and Governance factors into our investment process 13% of Asia-Pacific investors incorporate ESG factors into their decisions or take concrete actions to improve their VinaCapital is a signatory to the portfolio’s ESG performance UN’s Principles for Responsible Investing Privat
Slide 35: Privately negotiated investments – brand, scale, and distribution
Privately negotiated investments – investing in brand, scale, and distribution Brand Scale Distribution USD38.4 million USD 85.7 million USD62.9 million Vietjet Air Hoa Phat Group Vinamilk 2016 - 2019 2007 - Present 2003 - Present Fully Realized Partially Realized Partially Realized IRR: 87.6%, MOIC
Slide 36: Sector Allocation – a risk-return based approach
Sector Allocation – a risk-return based approach NAV breakdown by Sector (%) Current Private Equity Current Public Equity 20.5% (Listed and OTC) 19% 19% Target sector allocation 15.2% 15% 11.4% 11% 11% 10% 7.6% 6.3% 6% 6.0% 5.2% 4.4% 2.8% 3% 2.9% 3% 2% 0.3% 0% 36| As at 30 September 2020, unaudited.
Slide 37: Private Equity: significant transactions during FY2020
Private Equity: significant transactions during FY2020 PE: Thu Cuc International PE: Ngoc Nghia USD21.4m General Hospital USD26.2m PE: Petrolimex Aviation USD8.5m PE: IN Holdings USD25.4m 37| Classified: Public
Slide 38: Public Equity: A concentrated portfolio of high-quality companies
Public Equity: A concentrated portfolio of high-quality companies New names initiated… …while others sold 38| As at 30 September 2020 Classified: Public
Slide 39: Our focus and priorities
Our focus and priorities Asset classes Sectors Structured Investments Real Estate Minimum IRR, protections Financials / Banks Why? Clear exits Private Equity Healthcare Aggressively pursue Uncertain performance Materials Information Technology and Public Equity Education Sufficient capacity Meaningf
Slide 40: Risks, opportunities and resiliency
Risks, opportunities and resiliency Risks • Currency volatility • Weak corporate governance • Dependency on global economies Opportunities • Investing into future leaders • Access to a deep pipeline of deals • Strong domestic economy and consumer Resiliency • Local economy and businesses • VOF’s por
Slide 41: VinaCapital Vietnam Opportunity Fund (VOF) – October 2020
VinaCapital Vietnam Opportunity Fund (VOF) – 23 October 2020 Fund type: Closed-end listed fund (LSE: VOF) Listing: London Stock Exchange Premium Market Listing, FTSE 250 Focus: Alternative assets, Vietnam, multi-sector, high-growth focus NAV1: USD956 million (USD5.58/share) | GBP731 million (GPB4.27
Slide 42: Disclaimer
DISCLAIMER The information contained herein has been prepared by VinaCapital Group Limited (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 inves
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