VinaCapital Vietnam Opportunity Fund Limited

Good morning, ladies and gentlemen, and welcome to the Vena Capital investor presentation. Throughout today's meeting, investors will be in listen-only mode. Questions are encouraged. They can be submitted at any time just using the Q&A tab situated on the right-hand corner of your screen. Please simply type in your questions at any time and press send. The company may not be in a position to answer every question they received during today's meeting. However, the company can review all questions submitted today and will publish those responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll, and I'm sure the company would be most grateful for your participation. I'd now like to hand over to Eric Levinson, Head of Business Development.

Good afternoon. My name is Eric Levinson with Vena Capital, and we're excited to present today for the Investor Meet Company presentation. Today, our agenda is as follows. I'll do a quick introduction to Vietnam Capital. We'll then have Michael Coccolari, our chief economist, present the opportunity in Vietnam and the economy. And then finally, Con Vu, portfolio manager of the Vietnam Opportunity Fund, will talk about how we invest in Vietnam to really take advantage of the great opportunities with the growing economy. Now, first, a quick introduction to Vietnam Capital. We've been invested in Vietnam for over 21 years. We currently manage about $3.7 billion. And it's interesting here, we're unique in Vietnam that we have about 200 professionals, and we have multi-asset class platform. We manage equities, fixed income, private equity, venture capital, real estate, energy, and carbon. And we mention that because what it does is we have a very collaborative team. And so even though today, Con will talk about what the Vietnam Opportunity Fund does in both private equity and equity, the fact that we manage all of the other asset classes and each of those asset classes have dedicated teams gives Vietnam Capital additional insights, additional information to ultimately make the best decisions for the Vietnam Opportunity Fund. So with that, I'm going to turn the call over to Mr. Michael Cocolari, who will introduce you to the Vietnam economy.

Thanks, Eric. Okay. So I think a lot of you will have heard about the buzz that's happening in Vietnam, you know, peripherally in the newspaper. It pops up in some newspaper articles occasionally. And what I want to do is just start by giving kind of the main snapshots, what we think are kind of the main things that investors should be aware of. Because, again, the awareness that a lot of people have, particularly in Europe, is a sort of periphery awareness. Like, oh yeah, that country is buzzing, but what is it all about? So the main points of what it's about, first and foremost, is the demographics. You might be surprised to know that Vietnam is 100 million people, and the age is very young. It's a very young demographics. Vietnam and probably India are, I would say, two of the countries in the world that have really the best demographics. The other thing that's been happening for years in Vietnam, I've been here for almost 20 years, and the chart over here on the right, you can see that The proportion of Vietnam's exports that are high-tech products has really skyrocketed over that time as companies like Intel, Samsung, et cetera, move more and more of their production of electronics, smartphones, and other high-tech products here. So this is the key part of the story. The FDI keeps flowing into the country, and particularly FDI is flowing into the production of high-tech products. So these are two of the first key points of what Vietnam is all about. And another really important point is that Vietnam is one of the countries in the world that's kind of in a very unique position in that they have very good relations with the whole China sort of orbit, BRICS orbit of countries, and also with the U.S. sort of friend-shoring orbit of countries. And that helps to explain a couple things. First of all, it helps to explain why I don't think that Vietnam is going to be targeted by Trump, and that's a big topic for this week that we'll Come back to it in a second. But it also explains why Vietnam was such a big beneficiary of the first trade war between U.S. and China. In fact, I would say Mexico and Vietnam were really the two countries that benefited the most during Trump 1.0. And the last topic, sort of a broad overview to introduce you the key points about Vietnam, is that the government here is very pro-growth oriented. And they're also very pro-stability. When we think about emerging markets, investing in emerging markets, you know, you think about big up and down with inflation and currency and all those kind of things. But the government here has recognized that by having a very stable macroeconomic environment, they make it very suitable place for foreign investors in particular to put their money here. They want to encourage that. One little snippet I would tell you is that during the post-COVID period, When inflation in places like the UK and the US went up to almost double digits, inflation in Vietnam was very well controlled, something like around 4% or something like that. So that's sort of the overall picture of the country. And now I'll go a little bit more into details. This chart here, is how we think about the long-term growth of Vietnam. It's got these three elements to the story. And the first is that right now in Vietnam, the manufacturing is about 25 percent of GDP. And when you look at the other Asian tigers, like Japan, Taiwan, et cetera, manufacturing went up to 30, even 30-plus percent of GDP. Just that alone means that we have a long way to go with just more build-out of the industrial base here of the manufacturing facilities. Vietnam is following what's called the East Asian Development Model. This is the same development model that all the Asian tigers follow. So we're following the same growth model. India, which I think is a country that has a lot of wonderful things from an investment point of view, is not following this East Asian development model. So they have a different approach than we have. Vietnam is the only one that's following this approach. And that's the only sort of guaranteed way that has been repeated over and over that the Asian countries were able to get rich quickly, basically. So that's the core. Now, when this industrialization is happening, the factories are hiring more and more workers. That's helping to boost the middle class. So the factory wages, people move from the farm to the factory, and also the urbanization. Right now, about 40% of the people live in the cities, and they move from the farm to the factory to get these factory jobs. So this is kind of a core part of the story. And then I mentioned that with Vietnam's kind of unique, they call it bamboo diplomacy here, like a bamboo tree that kind of sways in the wind. So Vietnam's government has been very savvy to sort of stay friends with everyone. And that helps to make sure that these investment flows keep coming to the country. That coupled with the macro stability, the focus on stability that I mentioned before. So this is kind of the core of the story. Regarding the middle class, we look at this kind of recipe, and some of these I've already mentioned. These are sort of recipes for the formation of a very rapidly growing middle class in Vietnam. One of the things that I didn't mention yet is that Vietnam has a very, very high female labor participation rate. So we're really getting the full utilization of the workforce here, which you don't see in a lot of places in Asia. So you can see the workforce participation rate is almost the Sweden level, above UK, by the way. So that's another component of the whole emerging middle class story. And next, I want to talk about something that's very topical, very in the news right now, is what to expect under Trump 2.0 and Vietnam. Now, Vietnam does have a very large trade surplus with the U.S. I mentioned back here at the beginning slide, you can see that this is the exports from the U.S. point of view, imports. The amount of stuff that the U.S. imported from China plunged, and then you can see Vietnam was one of the biggest. Mexico is not on here. We just have Asia only. But Vietnam and Mexico are the two biggest beneficiaries. So given that success story, now some people are saying, okay, but there's a lot of newspaper articles saying, well, Vietnam will get targeted by Trump in what's coming up. And our answer to that is that the reality is that the U.S. is now in a position where they really need Vietnam. There's a lot of newspaper headlines you can read about that topic. and that have affected, let's say, emerging markets in general. But here's a couple key points we want to make here. The first is that, and this is from the US point of view, the US imports an enormous proportion of many consumer products that are made here in Vietnam. So consumer electronics, 95% is imported to the US. The idea that the US can reshore the production, which is kind of Trump's sort of stated, one of his stated targets, is that he wants to get factories to move back to the US. Tariffs to encourage that and also some other more complicated dynamics involving tariffs and the value of the US dollar with people now calling the Mar-a-Lago Accord or the Plaza Accord 2.0, some people refer to it. But the core point here is that from a U.S. point of view, they need to buy these products from somewhere. And we see really three reasons why we don't expect Trump to really put onerous tariffs on Vietnam, despite the fact that we have a big trade surplus with the U.S., So it's against the U.S. economic interest. I just showed on the last slide how much of the type of products that we make here are imported. So if you don't want to purchase them from China, let's say like number two here, or you don't want to purchase them from Mexico or other countries, you've got to buy them from somewhere. And we do have very, very good relations with the U.S. And that's the second point. And the third point is that, well, to put it very candidly, Trump's own family has some economic interests in this country, and I'll come back to that in a second. So these are kind of three main reasons that we don't think that Vietnam is going to get targeted, and I'm mentioning that because it's very much in the news this week. So this idea from a national security point of view You see more and more articles on, you know, these are from very kind of famous publications. Foreign Policy is a very important publication that a lot of policymakers in Washington, D.C. either contribute to or read. So we should really pay attention to what we see in these type of publications. The policymakers are sort of signaling to you, you know, what their focus is. And again, The two biggest beneficiaries during Trump 1.0 was Vietnam and Mexico. And what you can see here is Mexico is not going to benefit this time around. Okay. Trump's family is involved, or his company, his extended company, is involved in a very big real estate development project here. And all that came up sort of around the time of the election. So I think the right way to think about this is that Thank you very much. Thank you. of Trump, both when he was a business leader and in the last presidency. We know kind of what the things that type motivate him. And so I think this is one thing that makes me feel quite comfortable that he's not going to do anything that would really economically harm Vietnam. More reasons, I think some of the headlines I have here are important because you see that the Vietnamese government has really taken a lot of steps to try to engage with the U.S. administration, to try to engage with the people around Donald Trump, to, you know, what steps can we do to make sure that we're not going to be, you know, get targeted. And I mentioned before, we have a very large trade surplus, about $120 billion. I think it's the third biggest, depending on how you count it, It's basically the third biggest, from a country point of view, trade surplus with the U.S. And so there's a lot of discussion now about buying more aircraft engines, Vietnam buying more aircraft engines, buying more LNG, this kind of stuff, to shrink that trade deficit that the U.S. has with Vietnam. So the Vietnamese have been very proactive in trying to do whatever it takes to sort of remain on Trump's good side. By the way, I know I'm kind of really belaboring this point about the tariff thing, but this is like the only thing people ask us about these days. I mean, we get asked about this really constantly. Another thing I would point out is that there were some, you can read some newspaper articles about the risk that exports from China to the U.S. are kind of flowing through Vietnam. So, you know, there was some concern. What if, you know, I mentioned before that a lot of factories have moved, both from China and from other countries, moved here to produce products that we export to the U.S. And there was some newspaper articles talking about this idea, like, was there a risk that the Trump administration would clamp down because exports are just sort of flowing through Vietnam, they stick a native Vietnam stamp on it, and then they go off to the U.S. And so here's a study from Harvard University a couple months ago talking about the idea that there's actually not a big risk for that in Vietnam. The Vietnamese authorities have really clamped down on any kind of a trans-shipment type risk because they want to keep the good relations with the US. Okay, next, I want to talk a little bit about what's going on in the economy this year. And it actually links quite nicely into what my colleague Khong Vu is going to talk about the investment environment. Because what happened in Vietnam, and it has nothing to do with the Trump story or tariffs or any of that kind of stuff. What's happening right now in Vietnam is is that last year, 2024, was an amazing year for Vietnam's exports to the U.S. So our high-tech exports to the U.S. were up almost 40, 40%. Our overall exports were up huge, like more than 20%. It actually didn't have anything to do with Trump and tariffs. I know that in some other countries in Asia, they saw sort of a burst in exports to the US because they were afraid, companies were afraid that, oh, what if the products I want to buy from Asia are going to get tariff? Let me try to import them. That happened with China a lot, by the way. That's not what the story was in Vietnam last year. It was just a kind of quirky confluence of when we look at the details of those big companies like Nike, Walmart, what's happening with their inventory cycles. So their inventory cycles sometimes go up and down. And it just so happened that last year was a year that they were rebuilding their inventories. And also there's some demand for high-tech products because of all the interest in AI. People are upgrading their laptop computers, this kind of thing. So we had a big surge in exports to the U.S. last year, and that's kind of flattening out this year, not dropping off a cliff, but just sort of normalizing, coming back to, I mentioned last year our exports to the U.S. was around 20 plus percent. Maybe this year it'll be high single digits, 8, 9 percent, something like that. So that story that boosted the GDP last year is sort of flattening out, and instead what's picking up the slack is is domestic-driven growth. So this is things, think about like real estate development, think about infrastructure spending. The government recently announced plans to increase infrastructure spending in Vietnam by almost 40, 40%. We have a new subway open here in Ho Chi Minh City where we're located. and that's kind of built a lot of momentum in both the civil servants and also among the population that there's a lot of enthusiasm for further infrastructure spending. The government's finances are actually in really good shape and those projects had previously been held up for a couple different reasons and now all those blockades are sort of getting out of the way. And you're going to see a lot more of that and also a lot more real estate development. I think right now the real estate market has been kind of bumbling along for the last couple of years. And we can talk more about the details of that. The demand for real estate in Vietnam outstrips supply. I'm talking about housing units for sort of normal middle-class people. Outstrips supply by a factor of two to one. So it's a very, very different story than in China where they overbuilt and now they have lots of vacancy. We don't have that. We had other issues that were kind of Clamping is a pretty big pickup and I call it here real retail sales, retail sales stripping out inflation. This is kind of the best proxy for like consumption. So pretty big noticeable pickup in consumption and then kind of a flattening out of the manufacturing and that's again because most of the stuff we manufacture here we export, particularly the US is our biggest export market. So that whole story is kind of flattening out. But the key thing that I want to point out here, and so my colleague, Khambu, we call KV, is going to go through this in more detail in a minute, is that when the growth shifts to more domestic Domestic-Driven Growth particularly this year, and that's going to be really good to present a lot of investment opportunities, both in the listed equity and the private equity. So I'm going to bring up now our KV, who is the head of the Voth Fund here, who's going to talk about that.