Jean Christophe ganz

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ESG Investing in Vietnam Jean-Christophe Ganz Chairman – VietNam Holding Asset Management TBLI Conference, Zurich 15 November 2013

description

Measuring the impact of investments remains a main challenge for sustainable finance professionals and, together with Climate Change, an overarching theme at TBLI. Sixteen related workshops offer debate on ESG and Impact Investing trends, private equity, portfolio strategy, food production, emerging markets, sustainable energy or philanthropy investing.

Transcript of Jean Christophe ganz

Page 1: Jean Christophe ganz

ESG Investing in Vietnam

Jean-Christophe GanzChairman – VietNam Holding Asset Management

TBLI Conference, Zurich

15 November 2013

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Value investment approach

Long-term growth megatrends

Portfolio of mid-cap leaders with superior EPS growth

Dynamic portfolio management

Seven year performance track record

Experienced local team

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VietNam Holding (VNH)

Sources: Bloomberg, VNHAM. 8 November 2013.

Investment

Themes Domestic Consumption / Agri-Business

Class Listed / OTC Equity

Single Investment 10% max.

Single Industry 30% max.

Portfolio Companies 25

Listing

IPO June 2006

London (AIM) VNH:LN

Frankfurt (Entry Standard) VH1:GR

Market Capitalization USD 76.3 M

Net Asset Value USD 106.2 M

Share Price Discount to NAV 28.2%

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Vietnam Country Profile

Sources: IMF, GSO, HSBC, EIU, CIA, US Census Bureau / December 2012.

Population 91.5 million - 13th largest

Transition economy - 10+ year lag to China

Demographic dividend - Median age 27.8 yrs

Labor education - Literacy 94%

Resources - Minerals, Oil & Gas, Tourism etc.

Homogenous population - 85.7% ethnic Kinh

Trade stability - ASEAN+3

Maturing stock market - Since 2000

Located in the center of East Asia and South-East Asia, Vietnam is one of the world’s fastest growing markets

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The ESG Investment Challenge in Vietnam

No ESG rating agency covering Vietnamese equities

Most fund managers are local players with limited ESG sensitivity

Environmental damage in Vietnam still relatively low, yet increasing quickly

Corporate ESG awareness, investor & consumer pressure growing but still scant

Environmental regulation slowly being built

Poor monitoring and limited enforcement

No compelling disclosure standards

Bottom-up environmental awareness building

Benefit of hindsight (China experience)

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The VNH Approach

Integrate ESG criteria in investment analysis

Combine ESG ranking with focus on financial return

Actively promote sustainability and good governance practices as part of our core values

Expand the VNH Forum as an ESG commitment platform with investees and government

Pursue and expand a tangible social commitment through the VNH Foundation philanthropy

Assumption: ESG sensitive investees show better long term performance

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Integrating ESG

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ESG Analysis

Financial Analysis

Investment Universe 600 Listed / 1400 OTC

RequirementsMarket Cap / Liquidity / Governance

Materiality

Investment SelectionIndustry Allocation

VNH PortfolioReview / Rebalance

Engagement

Sustainable Investment

Sound enterprise management

Long-term earnings

Risk-adjusted returns

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Engagement

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Investee Engagement

Engage senior management

Private bilateral dialogue

ESG and financial key issues

Board member involvement

Network Leverage

Knowledge exchange

Resource pooling with peers

Coordinated voting & action

Advisory Council access

VNH Forum

Global best practice in local context

Partnership with government

Audience of senior executives

Public presence through local media

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Portfolio Composition

8Sources: Bloomberg, VNHAM / 31 October 2013.

1 Vinamilk 8.50%

2 Hau Giang Pharma 7.88%

3 AnGiang Plant Protection 7.65%

4 Traphaco 7.21%

5 Petrovietnam Drilling 6.56%

6 Binh Minh Plastic 6.46%

7 Hung Vuong Corp. 5.78%

8 Viconship 4.73%

9 Hoa Phat Group 4.34%

10 Thien Long Group Corp 4.08%

Industry Allocation Top 10 Holdings

20%

18%

17%8%7%

7%

6%4%

4% 4% 3% 2% 1% 0%Health CareConstruction & MaterialsFood & BeverageChemicalsOil & GasBasic ResourcesIndustrial Goods & ServicesPersonal & Household GoodsAutomobiles & PartsTelecommunicationsRetailBanksTravel & LeisureReal Estate

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Outperformance

9Sources: Bloomberg, LCF Rothschild / 31 October 2013.

-80%

-60%

-40%

-20%

0%

20% Vietnam Hold-ing

PXP Vietnam

Dragon's VEIL

VN Equity Hold-ing

DWS Vietnam

VNI USD ad-justed

Performance vs. VNI USD adjusted:

41.5%

18.2%

14.4%

5.7%

4.1%

NAV Performance vs. Peer Group and Vietnam Index (VNI)

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VNH Profile

Differentiators

Local sustainability analysis

ESG value & risk management

Active ownership with investees and regulators

Goals

Profitability and reputation of investee companies

Above average returns under consideration of ESG factors

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Generating high risk-adjusted returns by combining rigorous financial analysis with interactive sustainability research

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Contact

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Vietnam Holding Asset Management Ltd.

London AIM VNH LN

Frankfurt Entry Standard VH1:GR

Bloomberg VNH LN Equity

Reuters VNHq.L

ISIN KYG9361X1043

www.vietnamholding.com | [email protected]

Ho Chi Minh City

1202 Fideco Tower81-85 Ham Nghi, Q1Vietnam +848 3823 0465

Zurich

Gartenstrasse 19CH - 8002Switzerland+41 43 500 2810

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ESG Analysis & Engagement

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• Financial & ESG Category

• Dimension and Relevance

Research

• Issue within Sector Context

• Business Impact

Investment Analyst • Prioritize Issues

• Management Recommendation

Investment Team

• Performance Indicators

• Management Milestones

Valuation & Engagement

1. Identify material ESG dimension

2. Analyze and assess business impact

3. Set issue priority and agree on management recommendation

4. Define performance indicators and target management milestones

5. Agree on engagement schedule

6. Monitor performance progress

The Vietnam Holding (VNH) approach:

Appendix