VEIL Monthly Report

At a glance

VEIL’s NAV rose 9.5% in July, outperforming the VNI by 0.6%, as the market posted its strongest gain in two years on foreign inflows and bullish retail sentiment.
Our banks, residential real estate, and brokers led on higher credit growth, clearer earnings visibility, record trading value, and potential FTSE EM upgrade.
We maintain high-conviction positions and continue to seek cyclical and reform-driven growth opportunities.

Performance

Fund Commentary

July marked a decisive rebound for VEIL, with active sector reallocations driving a 9.5% NAV gain to finish 0.6% ahead of the VNI. Performance was led by overweight positions in banks (+3.9% attribution), residential real estate (+2.3%), and brokerages (+1.4%). Banks benefited from accelerating credit growth and stronger-than-expected Q2 earnings, with asset quality stabilising as NPLs peaked. We increased exposure to brokerages, which rallied on record-high market turnover and heightened expectations of a FTSE EM upgrade as early as October, potentially unlocking around $1.5bn in passive inflows, with operational leverage amplifying gains in a higher liquidity environment.

In residential real estate, we recycled capital from retail and IT into higher-conviction names, reflecting stronger earnings visibility for developers. We also rotated into under-owned leaders to capture valuation upside, while taking profits in select outperformers to manage risk and preserve cash buffers for new opportunities should they arise.

Several near-term catalysts could sustain momentum. The FTSE EM review should keep Vietnam on global investor radars, while Q3 earnings season is likely to confirm earnings resilience in our top holdings. Our overweight in banks positions us to benefit from continued credit expansion, and our infrastructure holdings are aligned with accelerating public investment disbursements.

Our consumer and digital exposure should benefit from rising disposable incomes, a trend we see strengthening into 2026. The portfolio is positioned to capture both cyclical upside and long-term reform-driven growth. Our bias toward liquid large caps provides flexibility to act decisively if macroeconomic or policy shifts create dislocations, while selective mid-cap exposure offers potential for outsized returns as market breadth improves, a balance we believe captures opportunities while maintaining disciplined downside protection.

Stock in Focus: Sacombank (STB)

Founded in 1991, STB is one of Vietnam’s leading private commercial banks, with a market cap of $3.6bn. Known for its extensive branch network and strong retail and SME lending focus, it is well placed to benefit from structural growth in domestic consumption and credit demand. In 1H25, STB posted total operating income of $599mn (+11.0% YoY) and PBT of $282mn (+37.2% YoY), meeting expectations at 48% and 46% of FY25 forecasts. Net interest margin slipped to 3.6% in 1H25 due to competition but should rebound in 2H25 as credit demand recovers. Asset quality was stable with the NPL ratio improving to 2.5% and loan loss reserve coverage at 75.4%.

STB expects to complete its restructuring in 2025. Two major catalysts could drive substantial upside: the recovery of bad debt from Phong Phu Industrial Park, which could unlock a $242mn provision reversal and lift FY25 profit by up to 65% YoY, and the auction of STB’s 32.5% VAMC stake (legacy bad debt transferred to the state asset manager), which could add up to $577mn to book value, about 25% of current equity.

Completion of these legacy issues and resumption of dividend payments would mark the end of STB’s restructuring and the beginning of a new growth era, unlocking further value for shareholders. STB trades at 1.4x FY25 PB and 8.0x PE, with ROE of 19.7%. FY25 EPS growth is forecast at 62.9%.