Performance summary | 31 December 2016 | |
USD | GBP | |
NAV per share: | 4.16 | 3.36 |
Change (Month-on-month) | 0.24% | 1.20% |
Total NAV (million): | 863.7 | 699.0 |
Share price: | 3.39 | 2.74 |
Market cap (million): | 705.1 | 571.7 |
Premium/(discount) | -18.6% | -18.6% |
GBP/USD exchange rate as at 30 Nov 2016: 1.25
Cumulative change (% change) | ||||
3mth | 1yr | 3yr | 5yr | |
NAV per share (USD) | 2.0 | 25.5 | 38.3 | 89.0 |
Share price (USD) | 8.6 | 41.7 | 49.8 | 167.7 |
VN Index (USD terms) | -5.0 | 13.4 | 22.0 | 74.9 |
MSCI Emerging market | -4.6 | 8.6 | -14.0 | -5.9 |
MSCI Vietnam | -8.7 | -7.3 | -4.9 | 15.0 |
GBP/USD exchange rate as at 30 Dec 2016: 1.24 Source: Reuters
December: New Listings Continue to Make their MarkThis month saw two of our investee companies, Quang Ngai Sugar (QNS) and Novaland Group (NVL) list on the Unlisted Public Company Market (UPCoM) and the Ho Chi Minh City Stock Exchange (HOSE) respectively. QNS and NVL performed well during the month with QNS increasing 18.8% and NVL gaining 20.2% since their listing. With the contribution of both QNS and NVL, our capital market portfolio rose 0.5% month-over- month to finish the year on a positive note. Our capital markets portfolio rose 34.8% during the full calendar year, compared to 13.4% for the VN Index (in USD terms), and 8.6% for the MSCI Emerging Market Index.
During the 2016 calendar year, the fund's NAV per share increased by 25.5% from USD3.31 to USD4.16, while total NAV increased from USD710.5 million to USD 863.7 million. During this same period, VOF's share price increased 41.7% to end the year at USD3.39 per share. During the second half of 2016 (or the first half of VOF's 2017 fiscal year), NAV per share increased by 10.3% while total NAV increased by 9.8%. With the share price increasing faster than the NAV per share, we saw VOF discount contract to 18.6% by the end of the year, from a wider, mid-year discount of 25.2%.
The Vietnamese economy concluded the 2016 year with 6.2% GDP growth and we anticipate higher growth in the upcoming year. With regards to 2017, the year promises to be another exciting and possibly eventful year. We anticipate the EPS growth for Vietnam listed equities to average between 10-15% per annum, a slight improvement from 2016. Given this, our concentrated portfolio of listed equities demonstrates our high conviction to their outperformance in terms of EPS growth against the average, as well as PE multiple expansion. The average PE ratio for Vietnam listed equities continues to trade at a 20-30% discount to regional averages.
Annual performance history (% change) | ||||||
CY | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 |
NAV per share (USD) | 25.5 | 1.2 | 8.4 | 15.3 | 19.1 | -7.6 |
VN Index (USD terms) | 13.4 | 0.9 | 6.6 | 20.5 | 18.9 | -32.8 |
Global investors have already recognised Vietnam's potential in recent years, and as the pace of equitization among state owned enterprises quickens pace, in addition to more public listing opportunities becoming available, we expect the level of participation from global investors to increase, leading to an overall improvement in liquidity and growth in market capitalisation.
VOF portfolio by asset class (31 Dec 2016)2.6% 1.4%
6.0%
Listed equity
6.8%
10.0
VOF shares purchased (millions)9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
Historical share price, NAV and buyback activity4.50
Share price and NAV (USD)4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
Cash
OTC stocks Private equity
8.4%
49.4%
0.0
-
2011 2012 2013 2014 2015 2016
Shares bought back VOF share price Monthly NAV
Real estate projects Receivables & others Overseas equity Operating assets
11.7%
13.7%
Investment CaseNovaland, one of VOF's investee companies, debuted on the Ho Chi Minh Stock Exchange on 28 December 2016, ending the day by reaching the ceiling price of VND60K/share and a total market capitalisation of USD1.53 billion.
VOF portfolio allocation by sector (31 Dec 2016)In June 2015, VOF invested USD14.9 million into Novaland through a convertible preferred equity (CPE) instrument alongside two other parties. VinaCapital lead this investment with a creative structure which allowed VOF to enjoy a running yield of
Food & beverage
Real estate equities
Cash Construction materials
Infrastructure Real estate projects
Others Consumer discretionary Financial services Mining, oil & gas
Agriculture Operating assets Pharma & healthcare
Industrials
7.0%
6.8%
6.0%
4.8%
3.2%
3.2%
2.4%
1.4%
1.0%
1.0%
11.6%
14.7%
13.7%
23.2%
5% and an IRR of 15% if the instrument were to be redeemed. The instrument, at the option of the holder, can convert to common shares at two major events: the first event being the initial public offering (IPO) of Novaland at which the holder can convert shares at a 25% discount to the prevailing market price and the second event being one year after the IPO, in which the holder can convert shares at a 40% discount to the prevailing market price. Furthermore, the instrument has various minority protections expected in most common private equity investment, as well as the right to participate in the pre- IPO offering.
VinaCapital, on behalf of VOF, decided to convert the CPE into common shares and therefore enjoyed a discount of 25% to the prevailing market price of VND50k/share (OTC price before listing). In addition, VOF exercised its right to acquire additional pre- IPO shares at VND50k per share. In summary, VOF is currently enjoying an unrealized return of almost 50% on this June 2015 private equity investment, as well as benefiting from acquiring additional shares pre-IPO which have subsequently increased over 20% since their original listing. Going forward, we continue to seek similar private equity opportunities to invest into.
Macroeconomic update
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Quarterly GDP growth (%)MarJunSepDecMarJunSepDecMarJunSepDecMarJunSepDecMarJunSepDecMarJunSepDecMarJunSepDec 2010 2011 2012 2013 2014 2015 2016
The Vietnamese economy concluded the year with a total GDP growth rate of 6.2%, lower than the government's target of 6.7% set at the start of 2016. Nevertheless, the economy showed stable and sustainable growth despite unfavourable global economic conditions and a severe draught affecting agriculture earlier in the year. With major indicators demonstrating that domestic consumption and manufacturing growth will continue to rise, we project that GDP growth in 2017 will be 6.5%.
Manufacturing: The Nikkei Purchasing Manager's Index for Vietnam slowed down to 52.4 in December, from a record high of 54 in November. Despite the monthly slowdown in manufacturing, the sector continued to see strong growth in exports and new orders.
Domestic consumption: Retail sales increased 10.2% year-to-date year-on-year in nominal terms and 7.8% in real terms in December. Furthermore, the General Statistics Office (GSO) reported that Vietnam's 2016 total retail revenue was USD118 billion.
Inflation: The Consumer Price Index rose 5% year-on-year in December with the major inflation drivers being government controlled (e.g., transportation, education and healthcare costs). Therefore, it comes as no surprise that full-year inflation would meet the government's target of 5% for the year.
Vietnam Dong: The Vietnam Dong (VND) experienced some FX turbulence with the USD/ VND interbank rates reaching 22,720 by year end. For the full year in 2016, the VND depreciated approximately 1.2% against the USD. We expect the State Bank of Vietnam (SBV) to maintain a depreciation of 2-3% against the USD and we are confident that the government's estimated USD40 billion FX reserve will be sufficient to support the currency.
Trade: The GSO estimated a trade deficit of USD300 million in December, bringing the year end trade surplus down to USD2.7 billion.
Foreign Investment: Committed foreign direct investment (FDI) reached USD24.4 billion at the end of December, a 7.1% increase from the previous year, whereas actual FDI disbursements reached USD15.8 billion, a 9% year-over-year increase.
60
55
50
45
40
20
15
10
5
0
1,000
500
Macroeconomic indicators | (1,0 | ||||
2015 | Dec-16 | 2016 YTD | Year-on-year | (1,5 | |
GDP growth1 | 6.7% | 6.2%2 | |||
Inflation (%) | 0.50% | 0.2% | 4.7% | 4.7% | |
FDI commitments (USDbn) | 22.8 | 2.8 | 21.0 | 7.1% | YoY C |
FDI disbursements (USDbn) | 14.5 | 1.5 | 15.8 | 9.0% | |
Imports (USDbn)3 | 165.6 | 16.3 | 173.3 | 6 14.0% 4 | |
Exports (USDbn) 3 | 162.4 | 16.0 | 175.9 | 16.5% 2 | |
Trade surplus/(deficit) (USDbn) | (3.2) | (0.3) | 2.6 | - | |
Exchange rate (USD/VND)4 | 22,450 | 22,720 | -1.2% | ||
Bank deposit rate (VND) | 5.0% | 5.8% | 80 bps | Sour | |
Sources: GSO, Vietnam Customs, SBV, VCB |1. Annualized rate, updated quarterly | 2. GSO estimate |3. Data as of 20 Dec 2016 | 4.(-) Denotes a devaluation in the currency, Vietcombank ask rate |
- (500)
00)
00)
Purchasing Managers' IndexDec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16
Dec-16
Registered and disbursed FDI (2016, USDbn)Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Disbursed (YTD) Registered (YTD)
Monthly trade balance (USDm) Year-on-year and month-on-month inflation (%)PI MoM CPI
8 3
2
1
2013 2014 2015 2016
YoY CPI MoM CPI
0
(1)
ces: GSO, Bloomberg
Board of Directors | VinaCapital Investment Management Ltd | ||
VOF's Board of Directors is composed entirely of independent non-executive directors. | |||
Member | Role | Member | Role |
Steven Bates | Non-executive Chairman | Don Lam | Chief Executive Officer |
Martin Adams | Non-executive Director | Brook Taylor | Chief Operating Officer |
Thuy Dam | Non-executive Director | Andy Ho | Chief Investment Officer |
Huw Evans | Non-executive Director | Duong Vuong | Deputy Managing Director, Capital Markets |
Fund background | |||
ISIN | GG00BYXVT888 | ||
Bloomberg | VOF LN | ||
Reuters | VOF.L | ||
Fund summary | |||
Fund launch | 30-Sep-03 | ||
Term of fund | Five years subject to shareholder vote for liquidation (next vote to be held by 2018) | ||
Fund domicile | Guernsey | ||
Legal form | Exempted company limited by shares | ||
Investment manager | VinaCapital Investment Management Ltd | ||
Structure | Single class of ordinary shares trading on the Main Market of the London Stock Exchange plc | ||
Auditor | PricewaterhouseCoopers (Guernsey) | ||
Custodian | Standard Chartered Bank Vietnam | ||
Custodian and Administrator | Northern Trust International Fund Administration Services (Guernsey) Limited | ||
Registrar and Transfer Agency | Computershare Investor Services | ||
Brokers | Numis Securities (Bloomberg NUMIS) | ||
Base and incentive fee | Base fee of 1.5% of NAV. Incentive fees are based on two separate pools of investments direct real estate and all other investments. The incentive fee paid equates to 15% of the increase in the NAV of each pool during the year over a hurdle of 8%. The total amount of incentive fees paid in any one year is capped at 1.5% of the pool's NAV | ||
Investment objective | Medium to long-term returns through investment either in Vietnam or in companies with a substantial majority of their assets, operations, revenues or income in, or derived from, Vietnam | ||
Investment objective by geography | Investments will be in Vietnam or in companies with at least 75 per cent of their assets, operations, revenues or income in, or derived from, Vietnam at the time of investment |
2017 VinaCapital Group. All rights reservied.
Important Information
This document, and the material contained therein, is not intended as an offer or solicitation for the subscription, purchase or sale of securities in VinaCapital Vietnam Opportunity Fund Limited (the "Company"). Any investment in any of the Companies must be based solely on the Admission Document of that Company or other offering document issued from time to time by that Company, in accordance with applicable laws.
The material in this document is not intended to provide, and should not be relied on for accounting, legal or tax advice or investment recommendations. Potential investors are advised to independently review and/or obtain independent professional advice and draw their own conclusions regarding the economic benefit and risks of investment in either of the Companies and legal, regulatory, credit, tax and accounting aspects in relation to their particular circumstances.
The securities of the Companies have not been and will not be registered under any securities laws of the United States of America nor any of its territories or possessions or areas subject to its jurisdiction and, absent an exemption, may not be offered for sale or sold to nationals or residents thereof.
No undertaking, representation, warranty or other assurance, express or implied, is given by or on behalf of either of the Companies or VinaCapital Investment Management Ltd or any of their respective directors, officers, partners, employees, agents or advisers or any other person as to the accuracy or completeness of the information or opinions contained in this document and no responsibility or liability is accepted by any of them for any such information or opinions or for any errors, omissions, misstatements, negligence or otherwise.
No warranty is given, in whole or in part, regarding the performance of either of the Companies. There is no guarantee that investment objectives of any of the three Companies will be achieved. Potential investors should be aware that past performance may not necessarily be repeated in the future. The price of shares and the income from them may fluctuate upwards or downwards and cannot be guaranteed.
This document is intended for the use of the addressee and recipient only and should not be relied upon by any persons and may not be reproduced, redistributed, passed on or published, in whole or in part, for any purposes, without the prior written consent of VinaCapital Investment Management Ltd.
Investor Relations/Communications
ir@vinacapital.com
+84 8 3821 9930
www.vinacapital.com
Broker
Numis Securities
+44 (0)20 7260 1000
funds@numis.com
VinaCapital Vietnam Opportunity Fund Ltd. published this content on 18 January 2017 and is solely responsible for the information contained herein.
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