Funds
Fund Performance
At a glance
- VEIL’s NAV declined by 4.8% in October, slightly outperforming the Vietnam Index by 0.2%.
- The financial sector led Q3 earnings, contributing over 50% of profits and reinforcing our high-conviction positions in the sector.
- The Fund is considering several private placement opportunities and potential IPOs anticipated for 2025.
Performance
Fund Commentary
Earnings growth has been a key focus for us in 2024 after two consecutive years of negative growth. We positioned VEIL to capture the anticipated turnaround, and our outlook has been validated by a strong first half, with EPS growth of 16.0% in our Top-80 coverage universe. The 19.0% growth reported in 3Q24 continues to support our full-year forecast of 16-18% – a solid recovery that strengthens our high-conviction positions. The primary contributors to this earnings momentum have been the banking, IT, metals, and retail sectors, which make up over 70% of VEIL’s portfolio. We have maintained an overweight stance in these sectors, anticipating they will drive further performance as economic growth gains traction.
We have taken proactive steps to enhance the portfolio through selective participation in capital market opportunities. VEIL completed three accelerated book-build transactions, taking advantage of favourable valuations to strengthen our positions. We also participated in three private placements, allowing existing investees to raise capital for their next growth phases, thereby positioning us to benefit from their expansion. Currently, we are assessing five additional placements and evaluating several promising IPOs anticipated in 2025, leveraging VEIL’s unique advantage of reputation and scale which allow it to undertake large-scale transactions to capture illiquid but long term alpha.
That said, Vietnam does not operate in isolation; Trump 2.0 is likely to introduce some volatility to the market. However, our analysis suggests a potentially strong position for Vietnam. Once the short-term volatility subsides, we believe Vietnam’s strong track record of adapting to external conditions, coupled with its internal commitment to supporting and fostering growth, will provide a solid foundation for the market to perform well.
Stock in Focus: Kinh Bac City (KBC)
Established in 2002, KBC is one of Vietnam’s leading industrial park developers, with its main operations in Northern Vietnam and additional sites in Central and Southern regions. The company holds an industrial park land bank of over 5,000 ha, with over 1,000 hectares still leasable. Its parks host some of Vietnam’s largest FDI players, including LG, Qualcomm, Canon, and more recently Apple vendors including Goertek, Luxshare, and Foxconn. In addition, KBC manages a substantial residential land bank of over 1,000 ha in tier-2 cities surrounding its industrial zones.
While 2024 was not without its challenges, the company has been focusing on expanding its industrial land bank. KBC is in the final stages of obtaining the investment license and its related support for the approximately 700 ha project of Trang Due 3 in northern Hai Phong. Together with its upcoming land bank in Hung Yen and Long An, Trang Due 3 will be the key growth drivers for its industrial zone development in the coming years.
To prepare for these new investments, KBC is in the process of issuing up to 50 million new shares via private placement, which the company expects to complete early next year. With these developments, KBC is positioned for solid growth over the next 2-3 years as it prepares for an accelerated expansion phase. We forecast an increase in net revenue and NPAT from $112mn and $27mn in 2024 to 178mn and 62mn in 2025, respectively, representing an EPS growth of 135% in 2025.
