VEIL Monthly Report – March 2026

Performance

Fund Commentary

The March sell-off was largely driven by the escalation of the Iran conflict and the threat to oil supply, which raised concerns for energy-dependent Asian economies, including Vietnam. Risk appetite deteriorated sharply, as foreign investors accelerated net outflows. The correction was broad-based and indiscriminate, with large-cap names bearing the brunt as investors reduced exposure to liquid heavyweights. VEIL’s slight outperformance reflected its defensive positioning, a higher cash buffer, underweight constituents that fell heavily, and positive stock selection in residential property and chemicals. Notably, VEIL’s underweight position in VIC was the single largest alpha driver, generating approximately +35bps as the stock declined ~22.3%. The fund has been taking profit in VIC and VHM during the quarter, further enhancing positioning.

Chemicals was a key contributing sector. Fertiliser producers DCM (+11.3%) and DPM (+7.0%) benefited from improving prices and strong earnings delivery, supported by tightening regional supply. Within residential property, TCH (+13.2%) and TAL (+4.4%) were among the few gainers, although the broader sector detracted as declines in VHM (−5.7%) and DPG (−11.6%) offset those gains. We added to steel producer HPG and increased positions in retailers MWG, PNJ and FRT, reflecting our sustained conviction in domestic investment and resilient consumption.

Banks, at 36% of the portfolio, were the largest detractor (−3.8%), led by BID (−18.6%), TCB (−16.2%) and VCB (−11.4%), reflecting geopolitical risk aversion rather than any deterioration in credit quality. We maintain an elevated net cash position of 5.1% to deploy capital should market dislocations create opportunities. The portfolio trades on approximately 10x FY26 P/E against forecast EPS growth of 27.3%. While the near-term outlook is clouded by geopolitical uncertainty, we believe Vietnam’s structural growth drivers remain firmly intact.

Stock in Focus: Ca Mau Fertilizer (DCM) & Phu My Fertilizers (DPM)

DCM and DPM are Vietnam’s two largest urea producers, with market caps of $910mn and $760mn, respectively. DCM operates a fully depreciated 800,000-tonne plant in Ca Mau with a debt-free balance sheet, while DPM runs a 740,000-tonne Phu My facility alongside growing NPK and chemical lines. Both are primary beneficiaries of the global urea supply shock triggered by the Strait of Hormuz disruption and China’s tightened export restrictions, which have driven Middle East urea prices up 84% YTD to $750/mt. DCM’s recent consolidation of Korea-Vietnam Fertiliser (KVF) has doubled its NPK capacity, while DPM is investing in downstream chemical products diversification.

We hold both names, but with a preference for DCM, given its higher export exposure (~40–50% of volume) and aggressive domestic pricing, up 43% YTD versus DPM’s more measured +10%. We estimate DCM’s 1Q26 PBT at ~$32mn (+109% YoY), its strongest quarter in over three years, with full-year 2026 NPAT forecast at $132mn (+84% YoY). DPM’s 2026 NPAT is forecast at $105mn (+160% YoY), though domestic pass-through has lagged. Even with correction, we believe global urea is unlikely to return to pre-disruption pricing levels. DCM trades at 6.9x 2026F P/E with room to re-rate, while DPM at 7.3x P/E is fair relative to peak-cycle valuations.