After a challenging year in 2022, Vietnam Holding (LON:VNH) now trades at an attractive discount to NAV, which is difficult to overlook as Vietnamese equities continue their recovery.
Last year was a tough year for Asian equities. Prolonged Chinese COVID-19 restrictions and concern about US interest rates curtailed interest in region and broad equity indices suffered. MSCI Asia ex Japan declined 19.35% in 2022.
The MSCI Frontier Market Index of global frontier markets, of which Vietnam accounts for 30%, was down 26.05%.
Demonstrating Vietnam Holding’s investment selection prowess, VNH’s NAV per share declined by 30.1% versus a 39.8% decline in the Vietnam All Share Index (VNAS) benchmark.
The substantial declines means the VNH Investment Trust presents value from both an earnings perspective and discount to NAV.
Vietnam Holding Price-to-Earnings
As of 28th February, the VNH portfolio has an estimated 2023 earnings Price-to-Earnings ratio of 8.3. This falls to 7.3 for 2024 earnings.
These earnings multiples represent deep value for a portfolio comprised of growth companies domiciled in a region set to be promoted to an emerging market from an frontier in the coming years.
In addition, the value in Vietnam Holding shares is compounded by the 14% share price discount to the portfolio’s NAV. The trust’s managers are conscious of the current discount and are taking steps to help reduce the disparity.
“The Board made appropriate decisions for implementing share buybacks as a means of addressing the discount between the share price and the NAV. During the period in review, the Company bought back 505,037 shares at an average price of USD 3.248, adding an estimated 0.26 % in NAV per share accretion,” said Hiroshi Funaki, Chairman of Vietnam Holding.