Vietnam Holding (VNH ) has published an annual report describing the annual period to 30 June 2021 as an “extraordinary” time in which the Vietnam market showed great resilience.
The Company’s GDP managed to grow by close to 3% and is estimated to increase by close to 4% in 2021. ‘This is nearer to its remarkable multi-decade growth average even though like many countries it has been grappling with the rapid spread of the Delta variant,’ it highlighted.
It outlined that Vietnam’s equity market has been ‘one of the best performing stock markets in the world’ and as a result of an active stock selection and investment management process the firm’s Net Asset
Value per share has also performed strongly, almost doubling in value.
The discount between the share price and the NAV per share at the end of FY21 was 20.4%. The average level of the discount was 20.2%, having fluctuated between 10.1% and 27.5%.
Over the period, the Board took to further develop its marketing activity to help narrow the discount, improve liquidity in the Company’s shares as well as widen its shareholder base.
The Company said the average daily volume of shares traded in Vietnam has increased by 327% above the previous year and the Company’s Shareholder base has broadened ‘with new institutional investors, family offices, wealth management platforms and retail investors.’
In 1H21,Vietnam’s NAV per share increased by 38.7% to $3.201m, in line with return of 38.8% in the Vietnam All Share Total Return Index in USD terms, and from 1 January 2021 to 30 June 2021, the NAV per share (USD) increased by 43.7%, therefore outperforming the index.
In FY21, NAV per share rose by 99.3% and over a one year, three year and ten year period to 30 June 2021, NAV per share outperformed the Vietnam All Share Index in USD terms.
In terms of liquidity within its portfolio, the median market capitalisation of the fund rose by a significant amount during the year - from $540m at 30 June 2020 to $1.98bn at 30 June 2021.
It said this was due to its rising allocation in banks - which tend to be larger cap companies - and the performance of some of its previously ‘mid-cap’ holdings, which are now large-cap.
In addition, ‘the dramatic growth in top five positions such as HPG - now a $10bn market capitalisation company - also contributed to this surge’, the company told its shareholders.
In particular, the Company’s larger cap stocks, which account for 76% of the portfolio, continued to outperform the small and mid-cap stocks for most of the financial year.
Also within its report, the Company hailed the macro performance of the Vietnamese market during 2020. Over the period, the country was one of the few in the world to post positive GDP growth (at around 2.91%1), and it outperformed all of its ASEAN neighbours.
Whilst the firm thinks the nature of the Delta variant will mean that 3Q and 4Q 2021 corporate earnings will be inevitably weakened, Vietnam said it expects to bounce back strongly in 2022, and think domestic consumption will drive the growth of the economy moving forward.
‘The portfolio in 2022 may be different to that in 2021 in terms of some of the key names and themes, but we are targeting EPS growth of more than 20% across the portfolio and remain committed to maintaining our significantly lower carbon footprint than the equivalent index,’ it said.
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