Wednesday, February 8, 2017

Vietnam Opportunity Fund December 2016 update

VOF:

(snip)

During the 2016 calendar year, the fund’s NAV per share increased by 25.5% from USD3.31 to USD4.16, while total NAV increased from USD710.5 million to USD 863.7 million. During this same period, VOF’s share price increased 41.7% to end the year at USD3.39 per share. During the second half of 2016 (or the first half of VOF’s 2017 fiscal year), NAV per share increased by 10.3% while total NAV increased by 9.8%. With the share price increasing faster than the NAV per share, we saw VOF discount contract to 18.6% by the end of the year, from a wider, mid-year discount of 25.2%.


The Vietnamese economy concluded the 2016 year with 6.2% GDP growth and we anticipate higher growth in the upcoming year. With regards to 2017, the year promises to be another exciting and possibly eventful year. We anticipate the EPS growth for Vietnam listed equities to average between 10-15% per annum, a slight improvement from 2016. Given this, our concentrated portfolio of listed equities demonstrates our high conviction to their outperformance in terms of EPS growth against the average, as well as PE multiple expansion. The average PE ratio for Vietnam listed equities continues to trade at a 20-30% discount to regional averages.

All systems go for Vietnam. The country continues to make progress in opening up its capital markets by listing more State Owned Enterprises and by allowing greater foreign ownership of companies. Shares in the VOF still trade at around an 18% discount to the net asset value of the fund. I expect this to continue to contract over the next year. The management of VOF apparently sees the discount and was buying back some shares late in 2016.  


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