Yet they don’t trade on the Vietnam stock exchange, so what do I mean then..

In my last blog post I mentioned how in mid-September I was pleasantly surprised that the risks surrounding covid-19 seemed to be reducing across South East Asia. The vaccine rollout gained momentum, yet from my observations some relevant stocks to this theme showed little reaction to this. I ended up accumulating some stocks that I think shall stand to benefit from an improving economic outlook in the region in 2022.

They don’t actually trade on the Vietnam stock exchange. Some might have correlations to Vietnam’s economic fortunes however at least to a small degree anyway. If not, well more so South East Asia generally as I shall elaborate later on.


Whilst Vietnam was one of the latest countries to get their vaccine rollout going with momentum, I would not conclude that this creates problems for the outlook of the Vietnam stock market in 2022.

I wrote the below blog post in mid-August when covid cases where surging to over 10k a day. It might be interesting for those that want to look back and see the progress Vietnam has made from that time which looked quite concerning back then.


Vaccine rollout momentum recently is boosting Vietnam economic optimism for 2022.


I tried to emphasise back then that it would make sense for Vietnam stocks to eventually shake off the 15% correction. That was because markets are always forward looking and the picture in terms of obtaining vaccine supplies was improving a lot back then, despite the worsening case numbers. Also importantly the Vietnam people expressed a strong willingness to go ahead and get vaccinated when they could.

Now that supplies are coming in fast, Vietnam and other South East Asian countries are vaccinating their population very quickly. Covid-19 case numbers have fallen substantially off their highs even as restrictions are being eased, and importantly the pressures on hospitals seem to be past their worst points.


Now let’s get back to thinking about some stocks that might do well in 2022 as the Vietnam economic outlook improves, as does that of South East Asia more generally.


A couple of stocks that trade in Singapore and Hong Kong respectively that I accumulated mid-September are the following:

  • NAGACORP (HK:3918)

Let’s now briefly examine these two.


Thai Beverage (SGX:Y92) description – Whilst Thai beverage is most well known for its beer brand in Thailand of Chang, the company’s big acquisitions have now made it much more than that.

In 2013 they made a big takeover of conglomerate Fraser and Neave, a big player in Singapore at the time, but more recently a big stake in Vietnam’s top brewer Sabeco.

In hindsight some may question getting the timing right with Sabeco. Having said that, a shareholder would have done pretty well just sticking with Thai Beverage over the last decade. That is despite the shares currently being more than 30% down from their peak. I know because I personally thought I was clever banking some gains around 2012 only to see the shares continue to do well afterwards. Last month though I got tempted to get back in around the 66 cents level. Given the solid long term record it is hard to be too critical of management with the Sabeco acquisition. They have some runs on the board and obviously covid-19 was hard to predict in advance!

So Thai beverage owns a majority stake of Sabeco, a bit over 50%, and Sabeco itself dominates the Vietnam beer market with a market share of over 40%. For more context, come analysts might attribute close to 20% of the Thai Beverage valuation to its majority stake in Sabeco. Therefore betting on Thai Beverage is also to a significant extent a bet on Vietnam.

Thai Beverage (SGX:Y92) pe ratio – 18 times but 2022 estimates forward pe circa 14 times.

Why Thai Beverage (SGX:Y92) might be a good stock to buy for 2022 – As I shall do with Nagacorp shortly, I will focus on some of the factors that are turning off potential investors first. I think negative sentiment surrounding them may be over done and things might be looking up from here.

I have already spent time touching on the fact that vaccine supplies and rollouts are gaining momentum, even though the share price here hasn’t bounced in a major way just yet.

Some other concerns though have been the size of the Sabeco acquisition and how things have unfolded since surrounding the whole capital structure of Thai Beverage. For example in an ideal world they would have by now done an IPO of “Beer Co” to sell 20% of the beer unit. That is still the intention after being initially delayed, which may help the overall capital structure.

Another cloud has been over the future ownership structure of Sabeco. There has been speculation Thai Beverage will sell their stake. It is all a bit of a stalemate in a way, as the second largest shareholder is the Vietnam ministry of industry and trade (VMIT) which has a stake of 36%. Speculation pops up that VMIT might also want to sell their stake soon. This prompts speculation sometimes that even Thai Beverage might want to extend their balance sheet to buy this stake, and this sometimes weights on the Thai Beverage share price. Or sometimes that VMIT wants to buy the stake back that they sold to Thai Beverage in 2017. Confusing right!

What we are seeing now though is pretty buoyant conditions in asset market across the globe with plenty of corporate deals happening. This is a good backdrop I feel for something to happen on this front. Whatever way it is sorted out it wouldn’t surprise me if it was a positive catalyst for Thai Beverage shares. After all the market hates uncertainty. Management broadly speaking should be relied on taking a measured approach to which ever way they go, so any certainty on this front has scope to be perceived well by the market.

Thai Beverage has usually traded at a significant discount to comparable brewers across the globe so perhaps its time for some of this big discount to be removed.

Another issue aside from covid and capital structure issues, has been Vietnam cracking down on drink driving. Whilst the early days of this in early 2020 saw some effects on alcohol sales that concerned some analysts, I think such concerns might have been overdone. Consumers could adapt without necessarily reducing their alcohol consumption overall in the medium term. Anyway I personally welcome the stricter stance on the laws in this regard.

With their big foothold into the Vietnam beer market with a big market share, this could be a decent way to play a general rise in affluence across the Vietnam population. They do like a beer!


NagaCorp (HK:3918) description – Nagacorp trades on the Hong Kong Stock Exchange but is a casino in Phnom Penh, Cambodia.

It is a uniquely structured investment because it enjoys some strengths that other casinos would be envious of. There is an agreement with the government that means no other casino can operate within 200km of it. Currently this is in place to 2045. It was extended from 2035 a few years ago and despite the market having some concerns for a while, Nagacorp secured a good deal. They have also negotiated well to enjoy tax rates that are very favourable compared to most other casinos.

Up until covid -19 hurting them, they had delivered a long history of growth. They focused particularly on growing VIP revenues and the growing economy of Cambodia and its tourism growth was a tailwind.

With such growth it made sense for the casino itself to expand the premises. In 2017 the casino built Naga 2 right next to it, I went there a few times in 2019 it was a big change and very impressive. In 2019 as this was running smoothly they also then announced further expansion plans for Naga 3. This seems more aimed at tapping in on the future tourism potential.

Whilst I am not suggesting that Nagacorp is a stock to own that directly is a play on an improving Vietnam economic story I still thought it was an interesting one to discuss. After all Cambodia is very close by and both Vietnam and Cambodia are some of the fastest growing countries in the world in the last decade or two based on GDP trends. This means as time goes on more in the region are attracted to opening up businesses in these two countries.

Nagacorp have highlighted themselves they expect to benefit from high net worth business people and increasing amount of business travel between the likes of China, Vietnam, Thailand, Indonesia, Singapore, Malaysia and into Cambodia.

NagaCorp (HK:3918) pe ratio – Given the effects of covid to this business I think it is worth noting that around the $HK 7 a share mark this is a multiple of circa 7 times 2019 earnings. Looking at one broker forecast for 2022 numbers the forward P/E would be circa 10 times. However since that forecast P/E a few months ago I would argue the concerns over covid risk overall may have come down.

Why NagaCorp (HK:3918) might be a good stock to buy for 2022 – I have followed Nagacorp since I first visited this casino in 2010. I did well as a shareholder from 2010-2012, then later holding again around 2016-2018. The times I sold it went on to go a lot higher soon after! The stock is volatile though and now is about 50% off the highs we saw pre covid so now might be the time to have it one one’s radar again. That’s what has happened with me and I got tempted to buy again about the 6.60 mark mid-September.

Having said that, despite the huge share price fall in recent times for obvious reasons, it is worth noting I would have been smarter to just keep my shares from 2010 until now. Nagacop has also paid high dividends all the way through. I bring this up as it highlights management have done a good job over the long term. That brings me to highlight some points where some investors have concerns over Nagacorp. This may however be the opportunity itself. When looking at a stock I like to flip things around and think about all the negative points others are bringing up.

Management concerns have been raised in the sense of the influence the majority shareholder has. The aggressive expansion plans have often meant the capital structure is biased to accommodating deals that favour founder shareholder Dr Chen Lip Keong. Mr Keong owns more than 70% of the company yet I would argue the long-term shareholder returns I was talking about go a long way to alleviating such concerns. I also note the founder has been buying shares lately which might be a good sign.

The points around the favourable structure I discussed earlier in the monopoly arrangement and favourable tax rates are often cited as risks. Clearly they are risks but some context must be given to the fact you often get to buy Nagacorp at effectively at a very cheap PEG ratio. Another point is these are risks I have heard over and over again since 2010. They have navigated such issues well by extending the monopoly like arrangement and keeping future favourable tax rates going.

Their reliance on gamblers from China has been highlighted as a risk of China cracking down. This risk might be overstated as Cambodia arguably has a better relationship with China than most and that Phnom Penh and Cambodia generally stands out as a great tourist destination aside from just a place to gamble.

It also has expansion plans with investments in Russia, and that, along with doing business in Cambodia in the casino industry usually does not place it on top spot for ESG themed investment products these days! That might also explain the cheaper valuation you often get. If the market doesn’t re-rate this with multiple expansion though you usually receive large dividends along the way. It seems some ESG tagged funds still prefer to fund other less regulated addiction companies that deal in the addiction of social media instead!

I think with the discussions on this stock and Cambodia more generally many I observe overlook how consistently the Cambodia economy has performed in the last decade or two. In terms of major political tensions flowing through to society well Cambodia might be considered to have been quiet of late compared to what we see unfold in many other parts of the world. Parts of the world that the analysts apply very high earnings multiples to on the basis of overall stability.

In summary, keeping things simple I think the valuation I discussed earlier is too conservative. I can see a scenario that the analysts get too bearish whilst turning points are taking place. Markets are forward looking and might soon focus on how the environment is looking in the back half of 2022, hopefully a lot better for tourism by then! I could see Nagacorp getting a lot closer to their 2019 numbers by 2023 than many think.


For those investors that like looking at Taiwan stocks, it might be worthwhile checking my last blog post about the Vaneck Vietnam stock market ETF (VNM) below.


Two prominent holdings of the VNM ETF are listed in Taiwan. Although they have generally underperformed the strong Vietnam stock market in 2021, their fortunes could perhaps now benefit from an improving Vietnam economic outlook in 2022.

một hai ba YO!

If some of the above stocks don’t work out for me, at least in the case of Thai beverage it won’t be a case because of me as a customer not trying enough of their products. Like many, 2021 hasn’t been a great year for me personally to date.

Hopefully luck changes soon and can celebrate a better 2022 over a few Chang and 333 beers!

Usual disclaimer applies in DYOR I am not a financial advisor and get many things wrong! Whilst I don’t own those Taiwan stocks, at the time of writing I am a shareholder in Thai Beverage and Nagacorp, but that could change without me necessarily updating the blog here.

Is Vietnam a good investment?

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