Vietnam Enterprise Investments Ltd Red.Shs · LSE:VEID
Vietnam Enterprise Investments Ltd Red.Shs — Vietnam Enterprise Investments — Investor Presentation (November 2024)
48 slides from Vietnam Enterprise Investments Ltd Red.Shs's investor presentation, November 2024
Slide 1: Disclaimer
Disclaimer This presentation has been prepared by Dragon Capital Management (HK) Limited (“Dragon Capital”). The information provided herein has been prepared for informational and discussion purposes only. It is intended only for eligible professional and institutional investors, and each recipient
Slide 2: Vietnam Enterprise Investments Limited (VEIL) November 2024
Vietnam Enterprise Investments Limited (VEIL) November 2024
Slide 3: Agenda
Agenda 01 Portfolio Restructuring - Enhanced Performance 02 Trump 2.0 - Potential Impacts 03 2025 Outlook
Slide 4: VEIL fund objectives and key facts
VEIL FUND OBJECTIVES KEY FACTS Vietnam’s long-term investment themes AUM: $1,910m Long-term capital appreciation on strong conviction Return: 10.6% annualised since 2000 Risk management Fee: 1.5% Balanced and diversified portfolio, allocated between large and mid-caps TER: 1.88% estimate for
Slide 5: Assumptions: February 2024 vs Actual
Assumptions: February 2024 vs Actual MACRO CAPITAL MARKET STRONG CONVICTION Forecast: Strong Forecast : 16% - 18% Weight: 36.5% Corporate Earnings Growth Banks GPD Actual: Strong Actual: 19% YTD Return: 19.23% Forecast : 15% Forecast : Inflow Weight: 13.0% Growth Foreign Credit Flows Retail On Track
Slide 6: What Have we Done?
What Have we Done? 31 January 2024 30 October 2024 IP Others IP Others 6.0 Metals IT IT Metals Retail Retail Property Property Banks Banks 6 Vietnam Enterprise Investment Limited (VEIL) | Nov 2024
Slide 7: What Have we Done? Restructuring Activities
What Have we Done? Restructuring Activities Highlights 25.0 % a. Simple avg return: +22.7 % ⚫ Broad restructuring across the portfolio b. Contribution to Port 5.23% 20.0 ⚫ Topped up 17 stocks of which 10 stocks are new additions 15.0 ADD 20.6% ⚫ Trimmed 18 high risk stocks, of which 4 10.0 were full
Slide 8: Performance and Contribution
Performance and Contribution Sector Breakdown (%) Contribution (%) Financials - Banks 36.5 4.02 Real Estate 16.1 -1.33 Consumer 13.0 2.85 Discretionary Materials 9.0 0.30 Information 7.9 3.47 Technology Industrials 4.2 -0.33 Consumer Staples 3.1 0.32 Financials - -0.17 2.8 Diversified Energy 2.1 -0.
Slide 9: VEIL Investment Strategy: Sectors and Growth
VEIL Investment Strategy: Sectors and Growth EPS Growth % EPS Growth % 2024F 2025F 37.6% Bank 40.4% 18.7 17.0 13.3% CONSUMPTION Retailing 3.3% 198.2 29.0 Consumer 2.8% Staples 6.3% 13.8 6.0 13.6% URBANISATION Residential 9.1% -11.5 2.0 5.7% Metals 3.7% 67.5 27.0 INFRASTRUCTURE 3.6% Energy 4.7% -22.4
Slide 10: Portfolio Construction: Strategic View
Portfolio Construction: Strategic View Banking – VEIL (37.6%) vs VNI (40.4%)* Tech / Software Services – VEIL (8.1%) vs VNI (4.1%) • Remains the primary capital provider across Vietnam’s economic • FPT is a leader in the Tech sector in Vietnam for digital transformation, development software ser
Slide 11: VEIL: Portfolio Matrix
VEIL: Portfolio Matrix EPS Growth PER PBR ROE Vietnam Enterprise Investments Limited (VEIL) Weight vs. Market Cap. Portfolio wt (%) (%) (x) (x) (%) VN Index (USD mn) Company Sector 2024 2024 2024 2024 1 Mobile World Consumer Disc. 8.8 7.0 3.8 35.3 17.5 1.6 11.1 2 FPT Corporation IT 8.1 4.3 7.9 19.5
Slide 12: Trump 2.0: Impact on Sectors
Trump 2.0: Impact on Sectors Sector Impact Reasoning Industrial parks - Shipping and logistics gain from global supply chain shifts and potential 60% tariffs on Chinese goods. Positive Transportation - Opportunity to attract high-quality FDI from China. Utilities Slightly positive - Sustainable FDI
Slide 13: Trump 2.0: Impact Mapping to VEIL
Trump 2.0: Impact Mapping to VEIL POSITIVE: 6.3% NEUTRAL: 50.4% Industrial parks 5.1 Banks 37.6 6.3% 50.4% Transportation 1.2 Residential 13.6 Retail 13.3 IT 8.1 Metals 5.7 Energy 3.6 VEIL Chemicals 3.5 PORTFOLIO Brokerage 2.9 Conglomerates 2.3 NEUTRAL to SLIGHTLY Positive NEGATIVE: 43.3% 43.3% Bank
Slide 14: Vietnam's Expected EM Upgrade: Multiples Expansion
EM Upgrade: Multiples Expansion 3Q 2022 2024 Mar 2025 Sep 2025 • August 2022: Shortening • Published Pre-funding Decrees • Pre-funding is Solved • FTSE Secondary EM Settlement Time from T+3 and Circulars • FTSE to Survey 160 Market Participants inclusion to T+2.5 Total AUM in $bn (Passive + Active)
Slide 15: Vietnam's IPO Waves: Anticipating the Next Surge
Vietnam’s IPO Waves: Anticipating the Next Surge IPO pipeline totalling $47.5bn in the next 3 years HSX LISTING FROM UPCOM CONSUMER TECH & FINANCIAL IT SERVICES SERIVES $20.3bn $12.8bn HOSPITALITY HEALTHCARE $5bn ENTERTAINMENT $4.7bn $2bn $1.9bn $0.8bn
Slide 16: The Biggest Deal Powerhouse in Vietnam
The Biggest Deal Powerhouse in Vietnam 2025-2026 220 12 Deals 2016 2020 Total Deal Size: $400m - $600m 200 10 Deals 13 Deals Total Deal Size: $233m Total Deal Size: $364m 180 160 2017 140 18 Deals Total Deal Size: $498m 120 100 80 60 40 2021 12 Deals 20 Total Deal Size: $569m 0 Jul-16 Jan-17 Jul-17
Slide 17: Trump 2.0 Potential Impacts
Trump 2.0 Potential Impacts 02
Slide 18: Trump's Policy Implications
Trump’s Policy Implications Policy Expected Actions Impact • The Trump Reciprocal Trade Act would enable US to enact reciprocal tariffs • “Broad-based tariffs unlikely” – negotiate on imports. selected countries/products Trade Policy • Tariffs of at least 60% on Chinese products. • CNY Depreciation
Slide 19: Exports to the US: Associated Risks
Exports to the US: Associated Risks Top Exports to the US - 2023 vs 2018 Products Facing Illegal Transshipment Investigation or Tariffs Machine, equipment, tools and instruments Computers, electrical products Textiles and garments Solar Washing panels machines Telephones, mobile phones Wood and wood
Slide 20: Domestic Impact: Consumption and Exports
Domestic Impact: Consumption and Exports Chinese E-commerce Giants Target Vietnam Higher Competition for Vietnamese Businesses Allow users to shop and make Chinese cheap goods flood Vietnam payment in Vietnamese from late and other SEA countries. September 2024. Overcapacity in China China Manufactu
Slide 21: Currency Manipulator Label: Low Risk
Currency Manipulator Label: Low Risk Vietnam Violates 2/3 Criteria Vietnam is Trying to Support the VND 10.0 $bn Vietnam’s Criteria Section 701 of the 2015 Act situation 5.0 5.1 0.0 Bilateral goods & services -3.9 Significant trade surplus of at least $103bn surplus with the US -5.0 $15bn -10.0 Mate
Slide 22: FX Expectations: Highly Volatile
FX Expectations: Highly Volatile 26,200 USDVND USD:VND Unofficial 25,700 25,200 USD:VND 24,700 interbank 24,200 23,700 Unofficial USD is traded at premium, Sentiment becomes weak, individuals and businesses prefer holding USD 23,200 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 May-24 Jul-24 Sep-
Slide 23: Monetary Easing: Limited Room
Monetary Easing: Limited Room Rates Remain Lower Than pre-Covid levels 14.0 % LT Lending Rate 12M Deposit Rate 13.0 12.0 11.0 • Inflation not a concern and can be managed. 10.0 • Monetary Policy: Exchange rate is the focus. 9.0 • Very challenging for the State Bank of Vietnam 8.0 to reduce interest
Slide 24: Conclusion
Conclusion • Potential selective tariffs targetting transshipment from China • Vietnam's Monetary Policy: Exchange rate remains the focus • FX is expected to be highly volatile, making it challenging for the State Bank of Vietnam to reduce interest rates 24 Vietnam Enterprise Investment Limited (VEI
Slide 25: 2025 Outlook
2025 OUTLOOK VEIL 7 VIETNAM ENTERPRISE INVESTMENTS LTD
Slide 26: Recovery in Numbers
Recovery in Numbers 10M24 Results Comment GDP Growth 7.4% FY Government Target Revised up to 6.5-7.0% FDI (Registered) $27.3bn +6.0% YoY FDI (Disbursed) $19.6bn +8.9% YoY Trade Turnover $369.6bn Exports (+14.7%), Imports (+16.5%) PMI (Oct) 51.2 New orders and external demand returning Tourism Arriva
Slide 27: Long Term Socio-Economic Targets on Track
Long Term Socio-Economic Targets on Track TIME PERIOD TARGETS ACTUAL Average annual GDP growth rate: 6.5 - 7.0% 2016 - 2019: 6.8% (2020: 2.9% - Covid) GDP per capita: $3,200 - 3,500 2020: $3,586 2016 - 2020 Urbanisation rate: 38- 40% 2020: 37% Value of Industrial & Services / GDP: 85% 2020: 85% Aver
Slide 28: Infrastructure: North-South High-Speed Rail
Infrastructure: North-South High-Speed Rail OVERVIEW Length: Construction time: 1,545 km 2027-2035 Hanoi to HCMC: Estimated annual GDP ~5 hours 26 minutes contribution: ~1.0% Speed Total investment: 350km/h ~$69bn Source: MoT 28 Vietnam Enterprise Investment Limited (VEIL) | Nov 2024
Slide 29: Macro Forecasts
Macro Forecasts 2025F 2025F Item Unit 2023E 2024F Protectionism Extreme GDP $bn 430.0 465.6 502.1 497.4 ► Growth % 5.1 6.8 6.8 5.6 Exports $bn 355.5 390.3 436.0 382.8 ► Growth % -4.4 9.8 11.7 -1.0 Import $bn 327.5 360.9 405.8 349.2 ► Growth % -9.2 10.2 12.4 -3.2 Trade Balance $bn 28.0 29.3 30.2 33.6
Slide 30: Market Forecasts And Valuations
Market Forecasts And Valuations 2025F 2025F 31-Oct-2024 unit 2023 2024F (protectionism) (extreme) Revenue Growth % 1.2 12.5 11.4 9.1 EPS Growth % -4.8 17.1 16.9 7.0 PER x 11.5 11.8 10.1 11.0 PBR x 1.5 1.6 1.5 1.5 ROE % 14.2 14.8 15.4 14.1 Net DER x 0.3 0.2 0.2 0.2 Yield % 2.2 1.4 1.5 1.6 VN Index Re
Slide 31: Conclusion
Conclusion • Long-Term Economic Outlook: Remains favourable, driven by a pro-growth leadership that offers more opportunities than risks • Short and Medium-Term: Trump’s new policies could heighten Vietnam’s equity market volatility • Stronger USD Risks: Possible foreign outflow in emerging markets
Slide 32: Appendix
APPENDIX ‘N a 0
Slide 33: In-depth: FPT Corporation – Top IT Service Company
In-depth: FPT Corporation – Top IT Service Company Investment Rationale Comprehensive Ecosystem 8.1% off VEIL compared with 3.9% of the Vietnam Index Growth Segments Cash Cow New Venture Vietnam’s leading tech/telco group with expected 20% earnings Global IT services Education Telecom Semi- CAGR i
Slide 34: In-depth: Mobile World – Diversified Retailer
In-depth: Mobile World – Diversified Retailer Investment Rationale BHX: Building up on profitability momentum Store expansion to restart 6.0% BHX: Adjusted PBT Margin (%) 8.8% of VEIL compared with 1.9% of the VNI St ores BHX: Store Count +200 Best-in-class management leading the retail transforma
Slide 35: In-depth: FPT Retail – Most exciting retail growth story
In-depth: FPT Retail – Most exciting retail growth story Investment Rationale Clear winner of the pharmacy market Vaccination as next growth driver 2.7% of VEIL compared with 0.5% of VNI Long Chau Pharmacit y An Khang 2,000 No. 1 pharmacy chain (Long Chau) in a $7bn market with # Store 1,849 DC Es
Slide 36: In-depth: VPBank – Vietnam's bank for the majority
In-depth: VPBank – Vietnam’s bank for the majority Investment Rationale Leading customer base Strongest earnings growth in 2024 8.0% of VEIL compared with 3.1% of the VNI Mn people VPB, the bank that serves the masses, has captured the 26 76.7% largest customer base in Vietnam. 20 This is attrib
Slide 37: In-depth: Industrial Real Estate Sector
In-depth: Industrial Real Estate Sector Investment Rationale Stable ASP growth with strong absorption Benefit from strong FDI inflow rate 2.5% of VEIL compared with 1.3% of the Vietnam Index Registered (LHS) No. New Projects (RHS) Benefit from global manufacturing re-location during Th.VNDb USD/m2
Slide 38: Domestic Economy
Domestic Economy 05
Slide 39: Strong Earnings Performance in 9M24
Strong Earnings Performance in 9M24 VNI Achieves 18.1% Net Profit Growth in 9M24 Importantly, Growth Spreads Across The Board VNIndex 9M24 Financials 165 companies records >20% YoY growth in 3Q, equivalent to 20.0% 42% of companies on VN Index 18.1% 18.0% 165 16.0% 158 155 14.0% 12.0% 10.0% 8.0% 6.9
Slide 40: Manufacturing: Consistent Recovery Strength
Manufacturing: Consistent Recovery Strength Power Consumption Growth (% YoY) Container Throughput Growth (% YoY) Accelerated in 3Q Despite Yagi Storm Disruptions Robust Export Activity Reflected in Double-Digit Growth 12.0 30.0 26.3 10.0 25.0 8.0 19.2 20.0 16.4 6.0 15.0 4.0 10.0 2.0 5.0 0.0 0.0 -2.0
Slide 41: Consumption: Gradual Recovery but Lacks Breakthrough
Consumption: Gradual Recovery but Lacks Breakthrough Jewelry Retailing Grows ~15% in 9M24, More Subtle Recovery in CE Spending Boosted by Rising Gold Prices Due to High Price Sensitivity Jewelry Retail Sales Growth (YoY) Mobile Phone & CE Sales Growth (YoY) 30% 30% 19% 20% 20% 16% 15% 9% 10% 10% 10%
Slide 42: Credit growth and Money supply
Credit growth and Money supply Weak Credit Demand (YTD Credit Growth) Credit growth: 15% YoY vs M2 Growth: 12% YoY 10.0% 17.0 % YoY 9.0% 9.0% 15.0 The economy is still in a recovery 8.0% phase, money velocity remains low 7.0% 13.0 6.1% 6.0% 11.0 5.0% 4.6% 4.0% 3.6% 9.0 3.0% 2.4% 7.0 2.0% 0.9% 1.0% 5
Slide 43: Understanding Weak Consumer Demand
Understanding Weak Consumer Demand: Public investment fading momentum in 1H2024 Private Sector: Capex CAGR decreased from 14% to -2.0% 30 $bn 2020 2021 2022 2023 2024 25 20 15 10 5 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Dragon Capital, MOF, CEIC, Fiinpro, Bloomberg 43 Vietnam Ente
Slide 44: Early Signs of "Animal Spirits" Returning to Real Estate
Early Signs of "Animal Spirits" Returning to Real Estate Nationwide Transactions volume at ~80% of Pre-crisis level, +31% YoY Hanoi High rise: supply & absorption surpassed Pre-covid 300 12,000 ‘thousand units Unit Unit launched Unit sold 250 10,000 200 8,000 Total transactions in both primary and s
Slide 45: The USD in official channel is decreasing
The USD in official channel is decreasing Total USD in banking system dropped to 3-year low Vietnam’s FX Reserves also decreased 50 120 $ billion 110 $ billion 45 43.8 100 90 40 39.6 80 35 70 60 30 50 40 25 30 20 20 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Feb-14 Jun-15 Oct-16 Feb-18 Jun-19
Slide 46: The Biggest Deal Powerhouse In Vietnam
The Biggest Deal Powerhouse In Vietnam 9 years – 80+ transactions $4.0+ billion transaction value “The Anchor” in IPOs and placings Deals: 18 Deals: 12 Value: $498m Value: Average: $28m $400m-600m Deals: 13 Value: $364m Average: $28m Deals: 12 Value: $569m Average: $47m Deals: 10 Value: $233m Averag
Slide 47: Contained Immediate Impact on VNI Earnings
Contained Immediate Impact on VNI Earnings US exports revenue contributes $617m in 1H24 or 1.3% of VNI ex Financials & Real Estates revenue Market Cap 1H24 US Exports Ticker L2 % of Revenue ($m) ($m) 1 NKG Metals 188 82 18.30% 2 TNG Consumer Durables 127 75 51.80% 3 VHC Consumer Staples 470 72 29.30
Slide 48: What have we done?
What have we done? 30 October 2024 31 January 2024 IP Others IP Others Metals 6.0 IT IT Metals Retail Retail Property Property Banks Banks 48 Vietnam Enterprise Investment Limited (VEIL) | Nov 2024
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