forum one – vcg partners vietnam fund (vvf)

Classified: Public

FORUM ONE – VCG PARTNERS VIETNAM FUND (VVF)Thao Ong, CFA, Portfolio Manager

29 October 2020

Classified: Public

VVF: Discipline And Loyalty To GARP Strategy Lead To Long-term Outperformance

2| As of 30 September 2020Source: VinaCapital, Bloomberg

4.005.006.007.008.009.00

10.0011.0012.0013.0014.0015.0016.0017.0018.0019.00

VVF VN-Index

VVF annualized return since inception= 6.4%

VN-Index annualized return (since VVF’s inception)= 5.7%

Performance (All in $ term) VVF VN-Index Relative performanceYTD 0.3% -5.8% 6.1%3-Year 0.9% 10.4% -9.4%Since inception 38.3% 33.3% 5.0%

Classified: Public

VVF: What Has Driven The Performance This Year


Top ten holdings – YTD change, as of 30 September 2020

11

9

7

45 4

3

5

3

8

3

9 9

7 7 7

5 5 4 4 4

00

2

4

6

8

10

12

Dec-19 Sep-20

Timely re-structuring

Focus on quality companies

High conviction, active share

Classified: Public

VVF: Index-Agnostic Portfolio


39%

17%

16%

12%

45%

71%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

VVF VN-Index

Small cap Mid cap Large cap

29%

8%

7%

1%

26%

5%

15%

3%

2%

27%

21%

10%

9%

8%

8%

5%

5%

1%

0% 5% 10% 15% 20% 25% 30% 35%

Financials

Industrials

Utilities

Information Technology

Real Estate

Materials

Consumer Staples

Consumer Discretionary

Energy

VVF VN-Index

Classified: Public

VVF: Performance Attribution By Sector


10%

8%

8%

8%

3%

1%

2%

2%

-6%

-5%

-4%

-2%

-18%

-21%

-19%

-16%

7%

8%

14%

13%

Industrials Real Estate Financials Materials IT

-6%

9%

-8%

50%

0% 1%

Real Estate

Materials

Financials

YTD return by sector

VN-Index

Relative weight vs. VN-Index

Industrials

Underweight real estate. Overweight Materials, Industrials, IT

IT

Classified: Public

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

HPG VTP VSC VNM CTG FPT ACV VHM VCB PNJ

VVF: Performance Attribution By Stock


YTD attribution

The fund’s YTD Return (as of 30 September 2020): + 0.3%

11%

37%35%

38%

15%27%

11% 7%

28%

2%

Classified: Public

7|

84103

180

232

170

88

-333

1,139

1,870

289

-50

0

50

100

150

200

250

300

-500

0

500

1000

1500

2000

2500

3000

2015 2016 2017 2018 2019

Daily turnover ($m)-(RHS) Foreign flow ($m)-(LHS)

Liquidity Driven Market In 2017-2019…

As of 30 September 2020Source: VinaCapital, Bloomberg

Classified: Public

8|

11.3 11.7

18.2 16.6

15.8

9.0

11.3

13.1

10.8 11.6

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

2015 2016 2017 2018 2019

Large caps Small & Mid caps

… Leads To A Widening Gap In Valuation Of Large Caps And Small- & Mid- Caps

Source: VinaCapital, Bloomberg

Classified: Public

9|

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

Net

Deb

t/Eq

uity

2020 Return on Equity

VN-Index

VVF

Quality portfolio of higher growth and more compelling valuation than benchmark

0

2

4

6

8

10

12

14

16

18

-15.0% -10.0% -5.0% 0.0% 5.0% 10.0%

2020

P/E

(x)

EPS growth

VN-Index

VVF

VVF: Growth At Reasonable Price Strategy

As of 30 September 2020Source: VinaCapital, Bloomberg

Classified: Public

10|

Navigating Through Extraordinary Times

CORE CYCLICAL OPPORTUNISTIC

High cash flow generating businesses

Liquid, quality stocks

Growing with positive tailwinds

Reasonable valuation

Active weight

Companies poised for upturn in sales cycle or favourable raw material cycle

Resilient post Covid-19

M&A catalyst

Spin-off

State divestment

VVF: Portfolio Strategy

Classified: Public

11|

Construction steel Steel pipes Hot rolled coil Galvanized steel

The Leading Steel Maker In Vietnam

VVF Investment Case: Hoa Phat Group (HPG)

Source: Hoa Phat Group, Vietnam Steel Association

Classified: Public

12|

2,203 2,294

2,769 3,537

24.0% 23.8%26.1%

32.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2017 2018 2019 2020E

Construction steel's sales volume ('000 tons) - (LHS) Market share (%) - (RHS)

Strong Volume And Market Share Growth Over The Years


As of 30 September 2020Source: Hoa Phat Group, Vietnam Steel Association

Classified: Public

13|

High ROE On Reasonable Gearing

25.7%

6.1%

-3.8%

44.5%

64.3%

54.3%

24.1%

33.4%

24.8%21.2%

15.8%

21.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

2015 2016 2017 2018 2019 2020E

Net debt /equity (%) - (LHS) ROE (%) - (RHS)


Source: VinaCapital, Hoa Phat Group

Classified: Public

14|

Profit Growth Acceleration

1,990

2,407

2,744

3,825

345 370 324525

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2017 2018 2019 2020E

Revenue ($m) PAT ($m)


Source: VinaCapital, Hoa Phat Group

Classified: Public

15|

Significant Stock Price Outperformance YTD

-40

0

40

80

Dec-19 Feb-20 Apr-20 Jun-20 Aug-20

HPG VN-Index


As of 30 September 2020Source: Bloomberg

Classified: Public

16|

Leading Plastic Pipe Producer In Vietnam

uPVC pipes HDPE pipes PP-R pipes

Products used in residential and infrastructure projects

Highway Airport Residential

VVF Investment Case: Binh Minh Plastic (BMP)

Source: VinaCapital

Classified: Public

17|

24.0%

21.8%

10.9%

43.3%

BMP NTP HSG Others

Largest market share


Source: VinaCapital

Classified: Public

120 143

165 169 187 195

-

20

40

60

80

100

120

140

160

180

200

2015 2016 2017 2018 2019 2020E

Revenue ($m)

18|

Steady sales growth

Revenue 5Y CAGR 10%



Classified: Public

19|

Earnings upside thanks to margin improvement

24% 22% 23%28%

892 901

853

783

720

740

760

780

800

820

840

860

880

900

920

0%

5%

10%

15%

20%

25%

30%

2017 2018 2019 2020E

Gross margin (%) - (LHS) PVC price ($/ton) - (RHS)



Classified: Public

20|

Healthy balance sheet and high dividend

40.7

27.8 30.8

42.3

70%

77%

95% 95%

19% 17% 17%

20%

0%

20%

40%

60%

80%

100%

120%

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

2017 2018 2019 2020ENet Cash balance ($m) - (LHS) Payout ratio - (RHS) ROE - (RHS)



Classified: Public

21|

-2std

-1std

+1std

+2std

Mean

2

3

4

5

6

7

8

9

10

11

Oct-15 Oct-16 Oct-17 Oct-18 Oct-19 Oct-20

5Y historical EV/EBITDA

Attractive valuation



Classified: Public

-40

-30

-20

-10

0

10

20

30

40

50

60

Dec-19 Mar-20 Jun-20 Sep-20

BMP VN-Index

22|

Strong Share Price Outperformance YTD

Entry point


Source: Bloomberg

Classified: Public

23|

Urbanization Domestic Consumption Digitalization

Source: VinaCapital

VVF: Investment Themes

Classified: Public

Disclaimer

24|

The information contained herein has been prepared by VinaCapital (the “Company") and is subject to updating, completion, revision, further verification and amendment without notice.

The information contained herein has not been approved by any listing authority or any investment regulator. The information does not constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for any securities nor shall they or any part of them form the basis of or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever.

No undertaking, representation, warranty or other assurance, expressed or implied, is made or given by or on behalf of the Company or any of its directors, officers, partners, employees, agents or advisers or any other person as to the accuracy or completeness of the information or opinions contained herein and no responsibility or liability is accepted by any of them for any such information or opinions or for any errors, omissions, misstatements, negligence or otherwise for any other communication written or otherwise.

The information herein may not be reproduced, re-distributed or passed to any other person or published in whole or in part for any purpose. By accepting receipt of this document, you agree to be bound by the limitations and restrictions set out above.

Neither these pages nor any copy of them may be taken or transmitted into or distributed in any jurisdiction where the distribution of such material would be prohibited under the jurisdiction’s applicable securities laws. Any failure to comply with this restriction may constitute a violation of national securities laws.

Past performance is not a guarantee of future returns.

Classified: Public

17th Floor, Sun Wah Tower115 Nguyen Hue, District 1, Ho Chi Minh City, Vietnam

P: +84 (0) 28 3821 9930 F: +84 (0) 28 3821 9931Email: [email protected]

Website: www.vinacapital.com

Ho Chi Minh City | Hanoi | Singapore |

http://www.vinacapital.com/

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