Funds
Fund Performance
At a glance
- VEIL started the year on a positive note, with its NAV rising 1.0%, slightly trailing the VNI’s 1.5% (TR$).
- Market sentiment remained cautious, with the VNI experiencing volatility driven by external factors, mirroring broader global equity market trends.
- Despite the uncertainty, select pockets of strength emerged in January as investors focused on a strong 4Q24 earnings season.
Performance
Fund Commentary
January was marked by cautious sentiment throughout the holiday-shortened month, with liquidity down 40% from January 2024. Despite continued improvements in domestic economic conditions, external headwinds kept local retail investors on the sidelines. Nevertheless, as the earnings season is in full-swing, we observed an emerging divergence in companies with good 4Q24 earnings.
The banking sector delivered solid 4Q24 earnings, with overall growth of 22.6% YoY and 19.1% QoQ. Our overweight holdings performed particularly well, with CTG posting 59.4% YoY earnings growth in 4Q24 and 26.8% for FY24. This was driven by reduced provision expenses of $100mn, down from an average of $330mn over the last three quarters, minimal write-offs for the second consecutive quarter, and near-zero NPL formation. VPB also delivered an exceptional 127.5% YoY earnings increase in 4Q24, bringing FY24 growth to 57.0%, supported by strong credit growth of 18.6% YoY, resilient NIM of 6.0%, and a sharp rise in income from bad debt recovery. We maintain our high conviction in our portfolio positions and believe the sector will continue its current growth trajectory, with expectations of sustained credit expansion in 2025 from pro-growth initiatives.
The residential property sector also showed promising results, benefiting from regulatory improvements and better liquidity. This should improve developers’ cash flow by alleviating potential bad debts, a positive development for VEIL’s overweight positioning in the sector since late 2024. Several developers in our portfolio have successfully navigated legal hurdles for key projects in the past six months, aligning with broader sectoral improvements. A prime example is DXG’s 4.3ha Gem Riverside project in HCMC, which could yield 3,000 units, while the nearby Eaton Park project is set to receive its sales permit in 1Q25 ahead of a slated 2Q25 launch – solid proof points that reinforce our confidence in the sectors revival.
Stock in Focus: Kinh Bac City (KBC)
Founded in 2002, KBC was one of the first private enterprises to provide industrial land and services to FDI manufacturers entering Vietnam. Over the past two decades, it has grown into one of the largest private industrial park developers, with a land bank of over 6,000 ha nationwide. KBC has played a key role in attracting major manufacturers such as LG Electronics, Qualcomm, Foxconn, Oppo, and Apple suppliers Luxshare and Goertek.
KBC’s industrial park business, which is less reliant on domestic demand, allowed the company to deliver strong results in 2022 and 2023 — two difficult years for Vietnam’s economy and equity markets, with EPS growth of 38% and 33%, respectively. However, 2024 proved more challenging, as legal delays impacted revenue bookings. Nevertheless, KBC made significant progress on two of its largest long-term growth drivers: Tràng Cát Urban Zone and Tràng Duệ 3 Industrial Zone. Both projects have been under development for some time, and in January 2025, they received their investment certificates from the government. This long-awaited approval serves as a major catalyst for investor sentiment and stock performance. KBC’s earnings are expected to rebound sharply, with 2025 NPAT forecast to grow by over 200% following a 79% decline in 2024. With legal approvals secured and a strong pipeline of industrial land development, KBC is well-positioned for a renewed phase of growth.
