How Can Investors Partake in Vietnam’s Growth Without Buying Shares in the Country?

Vietnam is one of the chief investment destinations in Southeast Asia. With the advantages of a strategic location, stable gross domestic product growth, and competitive labour costs, the country attracts a significant amount of investment capital every year.

So, it was not surprising that in 2017, several Singapore-listed companies either expanded their presence in, or set up shop in, Vietnam. Investors who wish to have an exposure to the country – one of the fastest growing economies in the world – can look to the aforementioned companies, without having to go through the trouble of finding Vietnam stocks to invest in.

One example is Thai Beverage Public Company Limited (SGX: Y92). Last month, an indirect-associate of Thai Beverage, Vietnam Beverage, won a bid to buy a 53.6% stake in Saigon Beer Alcohol Beverage Joint Stock Corp (Sabeco) for about 110 trillion dong (S$6.5 billion).

Sabeco, which is a state-owned Vietnamese brewer, has the largest market share in Vietnam’s beer market. It owns famous brands such as Saigon Beer and 333 Beer. Vietnam is the most prominent beer market in Southeast Asia, and the third largest in Asia.

The acquisition gives Thai Beverage access to extensive distribution networks in Vietnam, and helps to diversify its own products geographically. (Thai Beverage itself produces alcoholic beverages such as spirits and beer; its main market is currently Thailand) The deal will also help to solidify Thai Beverage’s position as the largest beverage company in Southeast Asia, which is in line with its Vision 2020.

Another example of a Singapore-listed company with exposure to Vietnam is Jardine Cycle & Carriage Ltd (SGX: C07). In November, the conglomerate invested US$1.2 billion for a 10% stake in Vinamilk, a leading dairy producer in Vietnam with a market share of approximately 58%. The investment is part of Jardine Cycle & Carriage’s strategy of investing in market-leading South-east Asian companies, and increases its business presence in Vietnam’s economy.

Jardine Cycle & Carriage is the second largest overseas investor in Vinamilk, after Thai Beverage’s unit, Fraser and Neave Limited (SGX: F99), which has a 19.2% stake.

Thirdly, we have education outfit MindChamps PreSchool Limited (SGX: CNE), which is 20% owned by Singapore Press Holdings Limited (SGX: T39). MindChamps announced recently that Vietnam’s Evergrande Group had signed a master franchise agreement, with plans to open 20 preschools and reading centres in Vietnam. In Singapore, MindChamps holds the largest market share for premium-range preschools, at 38.5%.

Last but not the least, Boustead Projects Ltd (SGX: AVM) is growing its presence in Vietnam through its wholly-owned indirect subsidiary, Boustead Projects Land (Vietnam) Co Ltd, or BPLV in short.

In December 2017, BPLV announced that it will be subleasing land from Thao Dien Real Estate Corporation to develop industrial leasehold properties in Vietnam. The land is located at Nhon Trach 2 – Nhon Phu Industrial Park in the Dong Nai Province, south-east of Ho Chi Minh City. It is within Vietnam’s south-east economic zone, and is in close proximity to Ho Chi Minh City, the most populated city in the country. These traits make the plot of land a “strategic logistics location,” according to Boustead Projects.

Wong Yu Wei, Boustead Projects’ deputy chairman and executive director, had the following comments on the deal:

“We are encouraged by our growing presence in Vietnam, which follows shortly after our recent award of a design-and-build contract there for a power solutions manufacturing facility. Diversifying our business outside Singapore remains one of our core priorities and we will continue to work hard at our business development efforts in Vietnam and other target overseas markets.”

A Foolish Takeaway

Many companies that are listed in Singapore have businesses outside of the country. Investors who want to partake in Vietnam’s growth for 2018 and beyond can consider investing in Singapore-listed companies that already have a presence in Vietnam.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P owns shares in Boustead Projects.