Vietnam Investments : VEIL Monthly Report – September 2026

At a glance

• VEIL’s NAV fell 3.8% in September against the VN-Index’s 2.9% fall; banks and cash cushioned the fall, but holding little of refiner BSR in its rally cost alpha.

• We built exposure along the oil, gas and fertiliser chain, and rotated within banks towards private lenders with near-term catalysts.

• GDP grew 9.95% YoY in 3Q26; top-100 free-float earnings grew 35.8% in 1H26, and the portfolio trades at 9.8x FY26 P/E on 30.0% EPS growth.

Fund Commentary

VEIL’s NAV fell 3.75% in September, behind the VN-Index’s 2.90% decline, taking the year-to-date return to -8.75% against the index’s +2.04%. Oil and US rates did the damage. Brent rose to more than $108 a barrel after US strikes on Iranian tankers, and the Fed raised rates for the first time since 2023. Foreign investors sold a net $179mn on all three exchanges, and turnover fell to its lowest since February 2025.

Banks and our cash holding added most against the index, contributing 0.38 and 0.28 points of relative return. Our banks fell 1.6%, against 2.5% for the banks in the index. VPB (+6.5%) and MSB were our largest contributors; VPB rose on near-term catalysts, including a 26.04% stock dividend and a potential private placement at a premium to the market price. The losses came in rate-sensitive sectors. Residential developers and brokers took 0.86 and 0.66 points off the absolute return: KDH fell 15.3%, while VHM lost 5.8% on foreign selling.

Energy cost us most against the index. BSR rose 18.5% on wider refining margins while we held little, costing 0.35 points across the sector. By month-end BSR was 0.4% of NAV. Crack spreads remain high, and we expect its results to beat market expectations. We also added to PVS, after its QatarEnergy contract award that almost triples its backlog to $5bn, and to PVD. We added fertiliser maker DCM as gas supply disruptions could lift global fertiliser prices, with a proposed cut in the urea export tax adding upside. Within banks we rotated towards private lenders with near-term catalysts, including stock dividends at TCB and VPB.

GDP grew 9.95% YoY in 3Q26 (GSO), a firm base for third-quarter results due from late October. Inflation is the constraint. September CPI rose 5.08% YoY, lifting the nine-month average to 4.52%, above the 4.5% target. As rates stay high, we expect earnings to be the market’s main support. Top-100 earnings grew 35.8% in 1H26 on a free-float basis, so our full-year forecast of 17.1% needs only about 3% growth in the second half. The portfolio trades at 9.8x FY26 P/E on forecast EPS growth of 30.0%. The main risk is a second oil shock that keeps rates high for longer, which would continue to hurt banks and developers.

Stock in Focus: PetroVietnam Drilling & Well Services (PVD)

PVD owns and operates offshore jack-up rigs, plus a tender-assist rig in Brunei, in Vietnam and Southeast Asia, alongside a well-services business. Clients include Petronas, Pertamina, Brunei Shell and Eneos. The regional rig market is tight: jack-up utilisation is 100% in the Far East and 88% globally. PVD ran its fleet at above 99% efficiency in 1H26, at day rates near $90,000, and well-services gross margin rose 7.9 points YoY to 31.5% in 2Q26. Second-quarter net profit fell 32% YoY, mostly on one-off costs. The largest came from PVD IX, whose Song Doc decommissioning work overran by 93 days and finished in August; the rig carried depreciation and operating costs with little revenue. The PVD VIII upgrade and higher finance costs (+139% YoY in 2Q, on floating-rate debt for new rigs) added to the drag.

Third-quarter results will still be weak, but the one-offs should fade from 4Q26. We expect 2027 to be a clean year. PVD IX works a full year overseas under a one-year Petronas contract that starts in 4Q26, and PVD X enters service with Vietsovpetro in 2Q27. With one-offs gone and two rigs added, we forecast net profit to roughly double in 2027, putting the shares on 11.9x 2027 P/E and 0.86x 2027 P/B at the end-September price. The main risk is a delay to PVD X, which accounts for about 15% to 20% of 2027 profit growth; the rest comes from one-offs fading and PVD IX’s full year.

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