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Thien Viet Growth Fund - TVFG
Thien Viet Asset Management
March 2016
Summary
I.
Investment Opportunities in Vietnam
II. Key Risks from Investment in Vietnam
III. Potential Sectors for Investment
IV. The Company – Thien Viet Asset Management – TVAM
V.
The Fund – Thien Viet Assess Management Growth Fund – TVAMGF
2
I. Investment Opportunities in Vietnam
1.
Brighter outlook of the economy
2.
Other less attractive investment options
3.
4.
§
Gold
§
Foreign exchange
§
Real estate
§
Bank deposits
Other opportunities in the stock market
§
Expansion on foreign ownership limit
§
Multiple free trades agreement
Attrative valuation of Vietnam market versus regional peers
3
I.1. Brighter outlook of the economy
GDP Growth Acceleration
8.0%
• For the past three years (2012 – 2014), the government
has shifted its policies from aiming at achieving high rate
of economic growth, which caused stocked inflation, to
aiming at stabilizing the economy through monetary and
fiscal control
GDP growth
7.0%
6.7%
• Structural reform has led Vietnam to grow on a stable
economy, backed by subdue inflation, high forex reserves,
and solid economic stance
6.0%
5.0%
2016 F
2015
2014
2013
2012
2011
2010
2009
2008
2007
4.0%
• 2015 marks the tremendous transformation with GDP
growth expanding by 6.68%, the highest in eight
consecutive years. The faster than anticipated growth in
the economy was mainly driven by the industry and
construction sectors, contributing nearly half of GDP’s
growth, followed by the services sector, contributing
nearly 30% of the growth.
• In 2016, the Government expects to have the same GDP
growth rate of 6.7% - 6.8% in 2015.
Source: GSO, Reuters, Custom Office
4
I.1. Brighter outlook of the economy
Vietnam’s GDP growth is higher than other countries
6%
• Compared to those main regional peers, Vietnam reveals
its development success with highest 5-year average GDP
growth.
5-year average GDP growth
7%
5.9%
• While the world oil prices are falling rapidly and the
international financial markets are becoming more
unstable, Vietnam’s economy grew at its fastest pace in
eight years, shaking off regional economic worries with
strong export growth, robust industrial activity and a
record foreign inflow of USD24,1 billion.
5%
4%
3%
2%
• Massive amount of awaiting Free Trade Agreements
(FTAs) will turn Vietnam into one of the most attractive
production hubs in the region.
1%
0%
Vietnam
Philippines Indonesia
Malaysia
Thailand
Vietnam’ economic growth in 2015 is the fastest among six major Southeast Asian countries
Source: GSO, Reuters, Custom Office, Asian Development Bank
5
I.1. Brighter outlook of the economy
Export – the key to economic growth
USD bn
• Exports revenue takes more than 83% of GDP in
recent years with the annual CAGR (Compound
Annual Growth Rate) reaches 17%/year – highest rate
in the region.
Exports
160
120
• In the last 5 years (2010-2014), Vietnam's exports have
doubled as competitive minimum wage and low costs of
utilities boosted foreign direct investment (FDI).
Currently, Vietnam’s export growth rate is the highest
among other surrounding nations.
80
40
Source: GSO, Reuters, Custom Office
2016 F
2015
2014
2013
2012
2011
2010
2009
2008
2007
-
• The main catalyst for expansive export has been the
nation’s movement to more open market economy in line
with WTO commitments and global integration brought
by FTAs. Foreign invested enterprises dominated trade
activities by contributing 68% to total exports turnover.
• Going forward, we believe that strong inflows of foreign
investment of massive FTAs ahead will boost exports
growth enormously.
6
I.1. Brighter outlook of the economy
Inflation within control
25.0%
• On its road to economic reform, Vietnam encountered
serious problems of soaring inflation in 2008 and 2011 with
CPI of 23% and 19% accordingly, mainly comes from the
past fiscal stimulus packages to cope with global crisis
CPI
20.0%
15.0%
• In any difficult situations, the Government’s swift shift in
policy control will help the country to ride out these
vulnerable periods and bring the macro economy under
control.
10.0%
Source: GSO, Reuters, Custom Office
2015
2014
2013
2012
2011
2010
2009
2008
2007
0.0%
2016 F
3-5%
5.0%
• At present, the Government’s inflation control policies
have generated very impressive results with CPI sets at
0.63% in 2015, the lowest rate in 15 years
• The government aims to keep inflation constrained below
5%. This would create macro-economic stability and
favorable condition to attract greater FDI inflows in the
future.
7
I.1. Brighter outlook of the economy
Massive FDI inflow
80
FDI
70
60
50
FDI disbursed (USD billion)
FDI registered (USD billion)
40
30
20
10
2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: GSO, Reuters, Custom Office
• FDI disbursement hit record high of USD14.5 billion
in 2015, increasing by 17.4% yoy
• FDI registered in Vietnam also saw a 12.5% yoy increase to
reach USD22.76 billion in 2015.
• The manufacturing and processing sector attracted high
FDI inflows at USD15.2 billion, accounting for
approximately 67% of the nation's FDI.
• Vietnam has attracted FDI enterprises from the world’s
leading firms such as Intel, Samsung, Microsoft, Formosa.
These projects are being carried out by giant corporations
will turn Vietnam into one of the largest production bases
in the world.
8
I.2. Other less attarctive investment options
Gold is in downtrend for four consecutive years
2000
Foreign exchange is controlled by the government.
23,000
Goldprice
USD/VND
22,500
1800
22,000
1600
Max 5%
volatility
21,500
1400
25%
Low liquidity
Real estate
High
investment
capital
Lending rate
Source: GSO, Reuters, Custom Office
Nov…
Deposit rate
20%
15%
10%
6%
2014
2013
2012
2011
2010
2009
2008
0%
2007
5%
Oversupply
Oct-15
Sep-15
Aug-15
Jul-15
Jun-15
May…
Apr-15
Mar-15
Feb-15
Jan-15
Dec-14
Deposits are unattractive with annual rate of 5-6%
2015
Real estate requires high investment capital
2015
2014
2013
20,000
2012
1000
2011
20,500
2010
1200
Nov…
21,000
9
I.3. Other investment opportunities in the stock market
§
Potential increase on foreign ownership limit up to 100%
Foreign ownership of Vietnamese listed companies, except for Banks and Securities, is limited to 49%. In the near
future, the Government will possibly expand the limit up to 100% for other sectors to attract more foreign investment
flows. This expansion, if applied, will stimulate the continuous growth of Vietnam's stock market in coming years.
§
Multiple free trade agreements will support economic growth
With many signed and anticipated free trade agreements (FTA), Vietnam’s economy will become more accessible and
closely integrated with large international markets, accounting for approximately 80% of the global GDP. These FTAs
are expected to motivate both export and GDP growth rates for Vietnam in the future, mainly happened from the
removal of tax reduction and other trade barriers.
•
Trans-Pacific Partnership (TPP) – effective in 2018
•
Vietnam – Korea FTA – effective since Dec 2015
•
Vietnam – Customs Union Russia-Belarus-Kazakhstan (VCUFTA)
•
Vietnam – European Union FTA (FTA VN-EU) – effective in 2018
•
Asian Economic Community (AEC) – joined in Dec 2015
10
I.4. Attractive valuation of Vietnam market versus regional peers
(x)
20.0
18.0
PE
PB
16.0
14.0
12.0
11.4
10.0
8.0
6.0
4.0
2.0
Vietnam
Singapore
China
Thailand
Indonesia
Malaysia
India
Phillipines
P/E ratio of Vietnam sets around 11x, lower than other regional peers while GDP growth is among the highest
Source: Reuters as of 31 Dec 2015
11
Summary
I.
Investment Opportunities in Vietnam
II. Key Risks from Investment in Vietnam
III. Potential Sectors for Investment
IV. The Company – Thien Viet Asset Management – TVAM
V.
The Fund – Thien Viet Assess Management Growth Fund – TVAMGF
12
II. Key risks from investment in Vietnam
High public debt
Public debt/GDP
•
62%
61%
Public debt is approximately 61% of GDP by the end of
2015, come close to the national benchmark of 65%
60%
GDP rate set by the government. The high public debt,
58%
if are not well controlled, will probably cause a reduction
in public investment and negative impacts on economic
56%
growth and stock market in upcoming years.
54%
•
Accordingly, the Government also aims to control public
52%
debt below 65% of GDP and will gradually reduce the
50%
level after 2017.
2010
2011
2012
Source: Reuters as of 31 Dec 2015
2013
2014
2015
13
II. Key risks from investment in Vietnam
VND devaluation
After depreciated by 5% in 2015, the Government targets to keep the VND devaluation rate to be lower than 5% in 2016.
The devaluation of VND is currently considered as one of key concerns for Vietnam in coming years under intensive
pressure of stronger USD and weaker CNY. The continuous decline of VND in future, if are not well controlled, will take a
negative impact on Vietnam’s macro economy as it may affects foreign debt solvency of the Government and Vietnamese
enterprises, increases imported costs of the whole economy and restricts FDI and FII attractions on Vietnam. However, in
order to properly handle global impacts such as China’s forex policy or Fed’s interest rate policy, in 2016, the State Bank of
Vietnam has applied central rate policy that allow VND/USD rate to be adjusted everyday to become more flexible with the
demand and supply of foreign currency within Vietnam and adjustments in the global markets. The new policy is expected
to reduce USD speculation and thus, release VND devaluation pressure.
14
Summary
I.
Investment Opportunities in Vietnam
II. Key Risks from Investment in Vietnam
III. Potential Sectors for Investment
IV. The Company – Thien Viet Asset Management – TVAM
V.
The Fund – Thien Viet Assess Management Growth Fund – TVAMGF
15
III. Potential sectors for investment
No.
1
2
3
Sector
Investment rationale
Construction
§ The strong rally of real estate market has stimulated higher demands on construction services.
Statistically, total construction floor areas in 2015 reached 101 million m2, increasing by 10%yoy
§ The Government will increase investment in transportation infrastructure system in coming years.
As planned, demand for transportation infrastructure development of the Government will
amount to VND187,895 billion until 2020.
§ In 2015, the Government has issued new regulation to support co-investment under Public –
Private Partner, “PPP” in infrastructure investment. The regulation will support to absorb more
capital for infrastructure investment projects.
§ Construction is one of the top contribution sectors in 2015 GDP growth.
Construction
materials
§ Benefit from the strong recovery of real estate market.
§ High growth potential in coming years thanks to intensive infrastructure investment projects.
§ Some sectors may benefit from the plummeting oil price such as plastic pipe, asphalt
manufacturing.
Logistics and
Ports
§ Benefit from transportation loading limit regulation of the Government that will spur more
demands for transportation services.
§ Benefit from the declining oil price that will support to reduce fuel cost.
§ The increase in import & export activities resulting from many awaiting Free trade agreement
(FTA, TPP) will attract stronger demands on port, transportation and logistic services. At present,
many ports in the North are overwork.
16
III. Potential sectors for investment
No
Sector
Investment rationale
4
§ Stable demands on consumer products due to rising income per capita, easing inflation and
declining oil price.
Consumer goods
§ Some sectors may benefit from declining material input cost (milk powder price – milk production,
oil price – detergent production)
5
Information
Technology
§ Telecom absorption rate in Vietnam is growing higher than global average.
§ System integration sector will likely recover in coming years follows the increase in demands from
traditional customers such as Tax, Banks, Financial institutions. The Government is also investing
in intelligent transport system for transportation infrastructure development projects.
§ High growth potential in software outsourcing comes after the recovery of oversea market and low
labor cost advantage.
§ Demands on smart phones, tablets are forecasted to post double digit growth.
Textile and
Garment
§ Textile and Garment are one of key export products of Vietnam in terms of export value. The
sector’s export value grew by over 10% in 2015.
§ Benefit from the trend of moving orders from China to Vietnam to get advantage from Free trade
agreements (TPP, FTA).
§ High growth potential from export markets arise from those anticipated Free trade agreements
(FTA, TPP) will offer favorable tax rates in the future.
6
17
III. Potential sectors for investment
No
Sector
Investment rationale
7
• Stable demands on pharmaceutical products due to better awareness of health care. The sector
posted average growth rate of over 17% during 2009 – 2014 and over 13% in 2015, according to
Pharmaceutical
BMI.
• Pharmaceutical spending per capita of Vietnam is still lower than regional average while the
income is improving - implying available room for the sector growth.
8
• Transport loading limit regulation of the Government has pushed higher demand on trucks as well
as tires and batteries.
Tire and Battery • Benefit from the impressive growth of auto sales, increasing by 40% per annum during 2011 –
Manufacturing
2014 and over 50% in 2015.
• Benefit from the strong decline of key input materials such as oil and rubber price for tire
manufacturing and lead price for battery manufacturing.
9
• High credit growth potential in coming years. In 2015, credit growth reached the highest growth
rate since 2011 of 17%. The State Bank forecasted credit growth will rise further in 2016 with
average growth rate of 21.4% YoY thanks to improvement of economic activities.
• Bad debts have been well controlled and tended to reduce. Bad debt in 2015 reduced to only 2.7%
from 4% in 2014.
• The strong rally of real estate supports the banking sector to reduce bad debts and push higher
credit growth.
Bank
18
III. Potential sectors for investment
No
10
Sector
Investment rationale
Real estate
• Real estate market has shown a clear sign of recovery. According to CBRE, total sold out
apartments increased strongly by 133% YoY in Ho Chi Minh city and 114% YoY in Ha Noi in
2015.
• The policy of allowing foreigners to buy Vietnam’s real estate, effective since 1 Jul 2015, will
support the continuous rally of real estate market in coming years.
• Low lending rate will spur more demands on real estate and reduce financing cost of real estate
companies.
• Transportation infrastructure development attracts higher demands on real estate (the Eastern area
of Ho Chi Minh)
• The soaring FDI inflows will stimulate more demands on industrial zones and residential real
estate for employees.
• Demands on tourism real estate for lease tends to increase recently in some areas such as Phu
Quoc and Nha Trang.
19
Summary
I.
Investment Opportunities in Vietnam
II. Key Risks from Investment in Vietnam
III. Potential Sectors for Investment
IV. The Company – Thien Viet Asset Management – TVAM
V.
The Fund – Thien Viet Assess Management Growth Fund – TVAMGF
20
IV. Thien Viet Asset Management - TVAM
Thien Viet Asset Management (TVAM) is a newly formed fund management company, a 99% subsidiary of Thien Viet
Securities (TVS) that offers two types of services including (1) Closed-end Fund and (2) Managed Accounts. The Company
intends to provide an opportunity for long-term investors to participate and benefit from the growth of Vietnamese economy
by making investment in Vietnam Stock market.
Investment Directors
Mr Tran Vinh Quang
He has worked for TVS since 2011 and being in-charge of all listed investments for TVS. Before joining TVS, he had 6
years experience as portfolio manager at Viet Capital Asset Management, monitoring two funds specialized in listed
stocks with total AUM of US$70 million. Prior to that, he worked as assistant manager in Finance department of
Unilever Vietnam. He earned a BA degree with distinction from the UNSW, Australia in 2005 under a full scholarship
program sponsored by the Australian government. Mr. Quang has passed all exams of ACCA (the Association of
Chartered Certified Accountants - UK) and CFA (Chartered Financial Analyst) and is currently a CFA Charterholder.
Mr Nguyen Duy Quang
Mr Quang is currently Portfolio Manager of Thien Viet Asset Management with over 14 years of experience in finance
and investment sectors. Mr Quang used to work for some multinational corporations such as PricewaterhouseCoopers,
Unilever, BP Exploration Operating, Procter & Gamble at positions of Financial Consultant, Deputy Manager of
Management Accounting in many years and managed a foreign Fund – Vietnam Equity Holding with total asset value
of over USD100 million for approx 4 years at the position of Senior Investment Manager.
21
IV.1. Experienced Investment Committee
Mr Nguyen Trung Ha
Mr. Ha is acknowledged as a prominent strategic thinker with extensive angel investment experience in Vietnam with a
portfolio of more than 30 local companies. He was a founder of FPT in 1988, where he was Chief Strategist for many
years. Mr. Ha was also a founder of Asia Commercial Bank (ACB), currently the biggest private commercial bank in
Vietnam.
Ms Dinh Thi Hoa
She is the Founder and Chairwoman of the Galaxy Group, one of the most successful and largest media and
entertainment groups in Vietnam. Ms. Hoa is the first Vietnamese who had Harvard MBA graduate in post-war period
Vietnam. She was instrumental in helping to set up a US$100mn Proctor & Gamble operation in Vietnam before
founding the Galaxy group in 1994. She is also a founder of the Hanoi School of Business and headed its Marketing
department for several years. She currently serves on the board of ABCS and REE.
Ms Bui Thi Kim Oanh
Ms Oanh has had over 18 years’ experience in the fund management area. She worked as an investment manager for
several funds such as Vietnam Equity Fund, Finansa Vietnam Fund, New S Finansa Vietnam Balanced Fund. Ms Oanh
used to work for Bao Viet Insurance Corporation for 8 years. Ms Oanh has an Economics degree from Humboldt
University in Germany and a Master degree from Asian Institute of Technology in Thailand.
Ms Nguyen Thanh Thao
She has been the CEO of TVS since Mar 2013 as well as Managing Director, Head of TVS based in Ho Chi Minh City
since Sep 2008. Prior to joining TVS in 2007 as Head of Research, she was a Senior Financial Analyst at Ameriquest
Capital Holdings, one of the largest mortgage lenders and some other financial institutions in the US. Prior to this, Thao
was a Legal Office Manager for a law firm based in California, USA. She holds a Bachelor degree in Economics from the
Moscow State University of Foreign Affairs (MGIMO) in Russia in 1997 an MBA from the USA in 2005.
22
IV.2. Thien Viet Asset Management - TVAM
TVS’s Background (The Parent company of TVAM)
Established in 2007, TVS is a fully licensed independent Investment Banking institution in Vietnam, complying with
international standard and dedicating to satisfying clients’ demand. Financial services include Investment Banking,
Institutional Clients, Brokerage, Proprietary Trading and Research.
During 2011 – 2014, TVS was always in top 6 of over 100 securities companies in Vietnam with highest Return on Equity
(ROE). TVS always focuses on two key business segments – Investment Banking and Proprietary Trading during hard
periods of financial market.
In Proprietary Trading, TVS’s Board of Directors always try to outperform the market by balancing risk and reward in line
with value investing strategy instead of speculation. In 2015, TVS’s investment portfolio increased by 15.5% versus
VNIndex’s return of 6%.
In Investment Banking, TVS is one of the leading consultants in Vietnam with 22 successful deals valued at USD660 million.
The deal Diana – Unicharm, with TVS as an exclusive financial consultant of Diana’s shareholders, was awarded the prize of
“The best deal of the year” by The Asset Magazine in 2011.
23
IV.3. Effective strategies during the last 4 years
300%
250%
200%
TVS's NAV
Fund
HSX-index
HNX-index
150%
100%
50%
0%
2011
2012
2013
2014
2011
2012
2013
2014
2015
Vina Capital VN Opportunity
-7.6
17.4
16.7
9.0
-1.3
VN Holding
-2.1
20.2
41.6
18.0
8.4
VN Emerging Equity
-30.6
24.9
30.5
12.8
7.3
VN Growth Fund
VN Index
HNX Index
TVS
-19.4
-27.5
-48.6
-20.5
30.0
17.7
-2.7
31.4
23.8
21.9
18.7
69.8
5.2
8.0
22.4
32.2
4.3
6.0
-3.6
15.5
2015
-50%
TVS’s portfolio has consistently beaten the market during the past 5 years, generating an annualized return of
21% compared with 4% of the VN-Index.
24
Summary
I.
Investment Opportunities in Vietnam
II. Key Risks from Investment in Vietnam
III. Potential Sectors for Investment
IV. The Company – Thien Viet Asset Management – TVAM
V.
The Fund – Thien Viet Assess Management Growth Fund – TVAMGF
25
V. The Fund
Structure
§
TVAMGF is a closed-end listed fund, expected to be listed on HOSE, with a well-diversified portfolio investing in listed
and prelisted securities.
§
The Fund has a 3 years lifespan. During its life, the Fund will not repurchase shares per request from shareholders. The
shares will be traded on the stock exchange just like common stocks.
Investment Objectives & Strategies
The Fund’s investment objectives are to seek for long-term growth of capital, maximize investors’ profit and outperform all
Vietnam indexes. In pursuing these objectives, the Fund will focus on investing in listed and prelisted securities of
Vietnamese companies that offer superior opportunities for growth. The Fund seeks to invest in companies with strong
characteristics including an experienced and proven management team that supports corporate governance and financial
transparency, a high-growth business model, differentiated products or services, superior competitive advantages, a
significant market share, and a clear and demonstrable exit strategy for investors.
Fees:
•
Management fee: 1.0% p.a of Ending NAV
•
Performance fee: 20% p.a. over 8% hurdle rate with high water mark.
Sector focus: All industries, except fund certificates
Investment Restrictions: No more than 20% of the NAV may be invested in a single company, no more than 30% of the
total NAV may be invested in a single sector, no more than 15% of total NAV may be invested in unlisted companies. The
Fund will not invest in more than 15% stake of any company. No gearing will be allowed
Portfolio: The Fund will generally hold between 15 - 25 securities.
26
V. The Fund
Key Terms
Fund size
VND150-300 billion
Custodian
BIDV
Listing exchange
Ho Chi Minh City Stock
Exchange
Functional
Currency
VND
Total issued shares
15-30 million shares
Auditor
KPMG
Issued price
VND10,100
Last date of
submission
28 Mar 2016
Par value
VND10,000
Investment
Director
Nguyen Duy Quang
Minimum buying
shares
10,000 shares
Fund Manager
Thien Viet Asset Management
Fund life
3 years
Investment
Committee
Nguyen Trung Ha, Dinh Thi Hoa, Bui
Thi Kim Oanh, Nguyen Thanh Thao
Dividend policy
will be decided by
shareholders at the Annual
General Meeting (AGM)
Reports
Quarterly official NAVs & annual
audited NAVs.
27
V. The Fund
Why should investors participate in TVAMGF
1. Free access to “full foreign ownership limit” stocks for investors
We are local fund and can offer free access to “full foreign room” stocks for both foreign and domestic
investors . This is our exceptional advantage over foreign funds that have limited access to “full foreign
room” stocks
2. Experienced Investment Committee and Investment Team
3. Effective investment strategies with consistent outstanding result during the past 4 years
4. Competitive service fee structure
28
V.1. Competitive Service Fee Structure
TVAM’s Service Fees
Accounting period
End of the year ( December 31 st )
Hurdle rate
8%
Management Fee
1% x Ending Net Asset Value (NAV)
Performance fee is calculated at year end after fund’s management fee
Performance Fee
§
X: percentage of profit (after management fee)
§
X <=8%:
p = 0%
§
X >8%:
p = 20% x (X – 8%) x NAV at the beginning of Accounting Period
Fee comparison with peer funds
Fund
Hurdle rate
8% fixed
Management fee
2%
Performance fee
20%
1
Dragon
4
VinaCapital
8% fixed
2%
20%
5
PXP
8% fixed
1.5%
15%
6
Vietnam Equity Holding
8% fixed
2%
20%
7
Indochina
8% fixed
2%
20%
8
TVAM
8% fixed
1%
20%
29
V.2. Fund comparisons
There are two main types of investment funds: Open-end fund and closed-end fund. The open-end fund is required to buy
back shares from investors upon request while the closed-end fund is not.
Criteria
Liquidity
Closed-end fund
Open-end fund
ETF
Stable capital helps the Fund to be The Fund always reserves cash to The Fund always reserves cash to
flexible with its liquidity need and repurchase Shares and manages repurchase Shares and manages
can invest in long-term assets
liquidity cautiously
liquidity cautiously
There are no needs to do due
Value investing philosophy with
Value investing strategy but
diligence or research on
active strategy. Proactive with due
somewhat passive. Always focus
companies. Mainly focus to
diligence and research on
on the liquidity of shares in order replicate the index by investing in
Investment Strategy
companies
and Performance
to meet investors’ redemption
stocks that match the Fund’s
capitalization and liquidity criteria
request
Target to achieve higher than
market’s return
Target to achieve market’s return
Short and medium term
Short, medium and long term
Short and medium term
investment as needed to meet
investment to maximize returns
investment as needed to meet
Timeframe
redemption request
redemption request
Buy and Sell shares
Shares is traded on the stock
exchange with commission fee
Direction from the fund with
trading fee
Direction from the fund with
trading fee
30
V.3. Investment Approach & Risk Control Process
1. Origination and Deal Flow Sourcing
We apply both Top-down and Bottom-up approaches for deal sourcing
• Top down approach starts by identifying the attractive sectors, followed by the attractive companies operating within
those sectors. The top-down approach attempts to understand the sector structure and overall business performance as
well as possible impacts from macro economy changes that could significantly affect the sector’s development.
• Bottom-up approach starts by identifying the attractive companies via a screening exercise of database of companies
based on some key financial performance indicators such as earnings growth, profitability ratios, valuation multiples and
financial health. We use Bloomberg and Reuter terminals to implement the screening exercise.
2. Due Diligence and Investment Proposal
We typically analyze the following factors to identify a target investment
• An analysis of macro economy that may impact earnings and profitability of the company;
• A thorough assessment of the company’s focused market;
• An analysis of the company’s historical performance and business plans, including an assessment of products,
differentiations, competitors, and operations;
• Comparison with other domestic and foreign peers in term of P/E, P/B and DCF valuation;
• SWOT analysis;
• The identification of particular risk factors and means of overcoming or mitigating such risks;
• An investigation of the background of the management team;
• The formulation of an exit strategy and timetable for achieving liquidity.
31
V.3. Investment Approach & Risk Control Process
3. Investment Approval
The Investment Committee will meet periodically to approve new investment proposals and advise proper investment
strategies, percentage of allocation between cash & stocks for Portfolio Manager in order to maximize profit and minimize
the risks related to macro economic and political issues. The Portfolio Manager will be responsible for all aspects of the
implementation and execution of investment decisions.
4. Investment Monitoring
The Portfolio Manager will monitor the progress and performance of each portfolio company through periodic meetings
with its management, site visits, quarterly, and when available, monthly reviews of financial data and management reports.
The Portfolio Manager will regularly consider and report to the Investment Committee on the plan to exit current
investments and make new investments.
5. Investment Realization
The Portfolio Manager will aim to realize individual investments if the realization would be in the best interest of the Fund,
ideally within one to three years time frame when exit targets are reached. The exit targets will be defined by a combination
of multiple valuation methods including P/E, P/B and DCF valuation.
32
V.3. Investment Approach & Risk Control Process
6. Risk Control
There are no limits on the sectors in which the Company can invest. However, the Company will endeavor to adhere to
the general principle of sector diversification in respect of its assets. For risk control and portfolio diversification, the
Company will apply some below restrictions on investment:
• Will not invest more than 20% of total NAV in the shares of a single company.
• Will not invest more than 30% of total NAV in the shares of a single sector.
• Will not invest more than 15% of total NAV in unlisted companies.
• Will not invest more than 15% stake of any company.
When the NAV of portfolio decreases by more than 15%, Portfolio Manager has to report and explain to Investment
Committee the reason and propose proper action - Hold or Cut Loss. The Investment Committee will make final
decision.
When stock price decreases by more than 20%, Portfolio Manager has to report and explain to Investment Committee
the reason and propose proper action - Hold or Cut Loss. The Investment Committee will make final decision.
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V.3. Investment Approach & Risk Control Process
Origination and
Deal Flow
Sourcing
Due Diligence
and Investment
Proposal
Top down
approach
Macro
economy
analysis
Bottom up
approach
Financial
forecasts
Investment
Approval
Investment
Monitoring
Investment
Committee
(IC) approval
Periodic
meetings with
firms
Risk controls
Periodic
meetings with
IC
Investment
Realization
One to three
years time
frame
SWOT
analysis
DCF, PE, PB
valuation
Management
investigation
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Disclaimer
The Company and the Board will treat information received from Shareholders as confidential and generally will not disclose such information other
than in accordance with the Charters, and the Subscription Agreement but may disclose information where such disclosure i s required by any
law or order of any court or pursuant to any direction, request or requirement (whether or not having the force of law) of any central bank or
governmental or other regulatory or taxation authority. By subscribing for Shares in the Fund, a Shareholder is deemed to consent to any such
disclosure.
Contacts
NGUYEN DUY QUANG
NGUYEN AN THIEN TRANG
THAN HONG THANH GIANG
Investment Director
Investment Manager
Investor Relations
Phone: +848 6299 2090 – Ext: 300
Phone+848 6299 2090 - Ext: 202
Phone: +848 6299 2090 - Ext: 301
Email: [email protected]
Email: [email protected]
Email: [email protected]
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