Vietnam Opportunity Fund profits from weddings

It is wedding season in Vietnam and these are big celebrations, routinely topping 500 guests, and up to 2,000 family and friends on occasion. Everyone needs to be fed, often within a couple of hours, so banqueting halls can squeeze a number of sittings each day, at lunch and in the evening.

In Holdings is the second largest banqueting firm in Vietnam. A private company, it grabbed the attention of VinaCapital VIETNAM OPPORTUNITY FUND (VOF), which specialises in tracking down unlisted businesses and shepherding them as they grow. Some firms end up being sold to larger rivals. Many list on the Vietnamese stock market, with VOF as a key investor.

The strategy has worked well. Midas recommended VOF in June 2020, when the shares were £3.32. Today VOF is priced at £4.59, even though the Vietnamese stock market fell more than 30 per cent in 2022 as the country grappled with rising energy prices, supply chain issues and a series of political and corporate scandals. VOF manager Andy Ho strives to ride above the local noise.

The stock market may have had a bad spell, but the Vietnamese economy grew by 8 per cent last year and is set to deliver growth of between 6 and 6.5 per cent for several years to come.

Many international businesses – including Apple, Samsung, chip-maker Intel and even Lego – are turning to Vietnam as an alternative to China, and overseas investment exceeded $22 billion last year as firms placed their faith in the country’s ability to make goods efficiently and at low cost.

The trend is helping millions of Vietnamese to earn more money, fuelling a rise in consumer spending and aspirations, such as larger homes, better healthcare and fancy weddings.

Ho has these developments in mind when he looks for additions to his portfolio, but potential investments also undergo intense analysis to ensure that they really will emerge as winners over the long term.

The rigorous approach has borne fruit. VOF was established in 2003, since when it has made around 200 investments, only a fraction of which have failed to increase in value.

Today, top investments include Vietnam’s largest private bank, Asia Commercial Bank, leading property firm Khang Dien House and airport operator Airports Corporation of Vietnam, which delivered a tenfold increase in sales in 2022 and is forecast to generate more turbocharged growth this year too.

An update this week is expected to be upbeat, including further flavour on VOF’s latest investment, Chicilon Media, which owns advertising screens peppered across lifts and lobbies in offices, blocks of flats and other buildings.

Midas verdict: Emerging markets are never risk free, but VOF has delivered strong returns and a steady stream of dividends. Further progress is on the cards so, at £4.62, existing investors should hold their stock. Adventurous investors might also be tempted by VOF’s track record and Vietnam’s attractive growth prospects.

Traded on: Main market Ticker: VOF Contact: vinacapital.com or 00 84 28 3821 9930