Funds
Fund Performance
Le Anh Tuan
Lead Portfolio Manager
At a glance
- VEIL’s NAV rose 3.3% in September and outperformed the VNI’s 2.1% return. On a YTD basis, VEIL has risen 15.8% and pulled ahead of the VNI by 1.4%.
- The VEIL portfolio restructuring is now complete with no significant changes in September.
- We were encouraged by the 8.5% YTD increase in credit growth vs. 6.6% in 9M23, which should further support our holdings in the banking sector.
Performance
Fund Commentary
The 3Q24 macroeconomic data strongly reaffirmed our view that Vietnam’s economic recovery is well underway. The VEIL team has held this conviction from the start of the year, and the portfolio has been positioned toward high-conviction growth stocks that offer the best exposure to this rebound. The restructuring of the portfolio, initiated earlier in the year, is now complete, with only minor adjustments made in September. As a result, VEIL’s performance is pulling ahead of the VNI and its turnover ratio for Septemberwas 3.4%, the lowest in six months.
The most notable portfolio transaction was our subscription to a rights issue from the brokerage SSI. This placement was aimed at bolstering the company’s capital in preparation for SSI’s roll-out of a pre-funding service. The circular on pre-funding was issued by the regulator last month and will take effect in early November. This will provide the legal framework for certain brokers like SSI to bridge the short-term funding gap between a matched order and settlement date. Given SSI’s position as one of the largest brokers in terms of capital, this development should strengthen the company’s competitive advantage. We forecast 2025 NPAT of $141mn, up from 2024’s estimate of $123mn, with 2025 EPS growth of c.15%.
In terms of attribution for September, the banking sector was the biggest contributor, with all four of VEIL’s overweight tier-1 banks (VPB, ACB, TCB, and MBB) outperforming the VNI. Sentiment in the sector has picked up following accelerating demand for credit in the economy (+8.5% YTD), a strong indication of improved economic activity when compared to previous years. We also observed similar improvement in sentiment in the property sector, where the portfolio’s three largest property holdings (VHM, KDH, and DXG) all outperformed the reference benchmark.
Stock in Focus: SSI Securities Corporation (SSI)
Established in 1999, just before Vietnam’s stock market launched in 2000, SSI has grown to become one of the country’s largest stockbrokers, with a market capitalisation of $2.2bn. Over the past 24 years, SSI is rare in that it has evolved into a full-service financial firm, ranking among the top players in brokerage, institutional services, investment banking, and asset management. As a leading name in the sector, the company has been a great proxy for investors to gain exposure to the fast-growing Vietnamese stock market.
SSI’s 1H24 performance was a return to form for the company, recording NPAT growth of 52.8% YoY. The growth was attributable to the strong rebound in its brokerage business where the average daily trading value in 1H24 rose by 68.7% YoY from $584mn to $985mn, helping to boost SSI’s 1H24 brokerage revenue by over 70% YoY. Consequently, margin lending saw significant growth, with balances reaching $825mn by end of 1H24, up 52% YoY, contributing to a 42% YoY rise in income for this segment. SSI recently completed a rights issue that will further cement its status as one of the largest and best-capitalised brokerages in Vietnam. As the capital market develops in its sophistication, SSI’s large capital base is set to become a key competitive advantage for the company, enhancing its underwriting capabilities and margin lending activities, as well as new initiatives such as pre-funding services to institutional clients. Revenue,NPAT, and EPS are all forecast to grow by approximately 15% in 2025.
