The VN Index rose 10.6% in USD in April, but over 80% of the gain concentrated in Vingroup (VIC) and Vinhomes (VHM), which we see as an unsustainable recovery. Meanwhile, the Kenno Vietnam Fund’s net asset value increased 1.2% in USD and declined 0.6% in EUR, with our performance mainly dragged by FPT Retail (FRT) (-5%) and Phu Nhuan Jewelry (PNJ) (-6.5%). While PNJ was affected by the recent drops in gold prices, the decline of FRT does not reflect its strong underlying businesses; therefore, this is expected to be temporary. On the other hand, Vincom Retail (VRE) (+25.4%) and Traphaco (TRA) (+10.3%) were top performers last month as both companies reported better-than-expected Q1/2026 results and announced cash dividends that directly enhance shareholders’ returns.
We take comfort in the current uneven rally and believe that a strong earnings growth outlook across our portfolio companies will ultimately translate into clients’ returns.
The VN Index rebounded strongly in April, rising 10.7% in local currency. However, this headline gain masks a very uneven market, as most stocks saw far more modest moves. The rally was largely driven by two Vingroup‑related stocks – VIC and VHM – which together accounted for more than 80% of the index’s advance, with support from a small number of banks.
In our view, this reflects a surface‑level recovery rather than a broad‑based improvement in the market as a whole. The key catalyst was a sharp upward revision to 2026 targets by both companies ahead of their AGMs. VHM raised its revenue target by 14% and its net profit target by 20%, implying earnings growth of around 56% this year. VIC also lifted its 2026 profit target by 40%, which suggests more than a threefold increase from last year’s level.
Despite these announcements, we remain cautious on the sustainability of the rally. By the end of 2025, VIC had net debt of nearly USD 10 billion, equivalent to around 1.7 times equity, which is the highest level among listed real estate developers, limiting room for further debt financing. At the same time, capital expenditure needs remain substantial at the group level. Two proposed high‑speed railway projects alone could require around USD 10 billion, with a similar amount earmarked for the energy segment. VinFast is also expected to continue investing more than USD 1 billion per year, despite still operating at a steep loss. Ultimately, much of this investment burden depends on Vinhomes’ ability to monetize its land bank nationwide, which is likely the main assumption behind the recent increase in earnings guidance by both VHM and VIC. However, this is something we see as very challenging in the current high‑interest‑rate environment and the stricter controls on credit to the real estate segment. Against this foundation, and with VIC trading at around 140 times earnings, we believe the recent share price rally looks disconnected from underlying fundamentals.
At the same time, we think the market is overlooking some more fundamental, positive shifts taking place beneath the surface. One of the most important is FTSE Russell’s decision to upgrade Vietnam to Secondary Emerging Market status. The upgrade will come into effect on 21 September 2026, with full passive index inclusion expected to be phased in by September 2027. Several of our holdings, including Masan Group (MSN), FPT Corporation (FPT), VRE, and FRT, are among the names being considered for FTSE Russell’s preliminary inclusion list. These are also core positions where we see strong alignment between the companies' fundamentals and longer‑term structural benefits from foreign capital inflows. More importantly, we view the FTSE upgrade as a meaningful long‑term catalyst for the general market. It should help reverse the recent trend of foreign outflows and reflect genuine progress in market accessibility, transparency, and governance standards. The fact that consumer‑focused companies feature prominently on the potential inclusion list also reinforces our confidence in domestic consumption as a key driver of Vietnam’s next growth phase.
On the domestic front, the State Bank of Vietnam (SBV) has reaffirmed its supportive monetary stance following the appointment of the new Governor. The SBV has signaled its willingness to support system‑wide liquidity and encourage lower funding costs, and banks have responded by cutting deposit rates by around 0.5 to 1 percentage point over recent weeks. At the same time, there is a clear policy emphasis on channeling credit toward productive sectors rather than real estate, which should help maintain financial stability. Lower interest rates are normally favorable for the stock market, while controlling speculation helps ensure economic stability. Taken together, we see these developments as supportive for the equity market, both in the near term and over the longer run.
Last month, we talked about the conflict in the Middle East and what it could mean for Vietnam. Despite a challenging external environment, we believe the Government has managed the situation very well – keeping energy supplies stable and limiting the extent to which higher global oil prices feed into domestic prices. Most economic activity has continued without disruption, and the retail prices of several key petroleum products have fallen by 30–40% from their March peak. The national petroleum reserve has been raised from 30 days to roughly 45 days as of now, and is expected to improve further in the coming months. All this suggests that the authorities’ response measures have been effective. While uncertainty remains, Vietnam appears better positioned today to manage these risks.
This effective handling of energy prices is also reflected in currency movements. Even though energy import costs have risen since March, and the fact that Vietnam is a net energy importer, the USD/VND exchange rate remained largely stable in April, and rose by just around 0.2% year‑to‑date (YTD). A similar pattern was visible in the unofficial market, pointing to limited speculative pressure following the March event. Looking ahead, we expect some depreciation pressure over the full year and currently assume the VND will weaken by around 2–3% against the U.S. dollar in 2026. This mainly reflects higher import costs and a more modest level of foreign exchange reserves. Compared with two years ago, we estimate that reserves now cover around two months of imports, down from more than three months previously and below the level typically recommended by the International Monetary Fund (IMF). Importantly, we have already factored in the expected currency depreciation into our return assumptions, as we always look to invest in high-earnings-growth businesses.
Turning to Q1/2026, Vietnam’s economy grew 7.8%, the strongest first‑quarter performance in nine years. In addition to continued support from strong public investment disbursements, which rose 40% year on year, and solid FDI disbursements, up 9%, the most notable development was the recovery in domestic consumption. Retail sales increased by nearly 11% in the first quarter, up from over 9% a year earlier. This is consistent with our expectations of improving consumer sentiment following last year’s strong economic growth and is also in line with what we are seeing on the ground. Leading retailers reported robust revenue growth driven by both higher volumes and pricing, while retail malls saw double‑digit growth in footfall, translating into stronger‑than‑expected tenant sales. Overall, we expect this momentum to carry through the rest of 2026 and into the coming years, providing a clear tailwind for our consumer‑focused holdings.
Looking more closely at consumption trends, the shift toward a more formal economy in Vietnam is accelerating and continues to reshape the market. Stricter enforcement of e‑invoicing and tax compliance has sped up the transition from traditional to modern trade, as well as from unbranded to branded products. Put simply, we are not only investing in a growing consumer market, but we are also backing companies that we believe are well-positioned to capture a much larger share of that growth.
April is the peak of the AGM season in Vietnam. During the month, our investment team attended meetings not only with portfolio companies, but also with their competitors and other businesses that we are monitoring as potential investments.
At the AGM, our top holding, FPT, reaffirmed its positive outlook for global IT services. Management emphasized the company’s fast‑track shift toward becoming an AI‑first provider, alongside rising demand for legacy system modernization in the AI era. They also shared more details on how different phases of the AI cycle are unfolding and how FPT is positioning itself to stay relevant. We will revisit this topic in more depth in a later section.
Separately, Vincom Retail (VRE) announced a cash dividend for the first time in seven years. The payout amounts to around 46% of its 2025 core profit, equivalent to a dividend yield of roughly 3.5% at the current share price. This is a decision we have consistently encouraged, as we believe VRE holds excess cash relative to its capital expenditure needs. The dividend should improve shareholder returns by lifting return on equity and, in our view, help attract greater interest from foreign investors who have previously been cautious about the company’s links to Vingroup and potential funding demands from other capital‑intensive businesses within the group. For context, Vingroup divested its majority stake in VRE in 2024 and now holds only around 18% in the company.
This month, we would also like to highlight two clear outcomes from our active ownership efforts. Giang, our Head of Investments, has taken on the role of Chairwoman at TNH, following the step‑down of the previous chairman, who had been with the company since its early days. We believe this leadership transition will help accelerate the group’s ongoing restructuring and further strengthen corporate governance over time. In the first quarter of this year, TNH posted revenue growth of 26% year on year, despite the company still being expected to report a loss. This points to a clear recovery at its three existing hospitals after a weak 2025. Looking ahead, the new facility in Lang Son province remains on track to begin operations in Q2/2026, which should further reinforce TNH’s position as a leading private hospital group in northern Vietnam.
On the other hand, we continued our engagement with Traphaco on strengthening corporate governance and capital efficiency. It is encouraging that the company decided to pay a one‑off cash dividend on top of its regular payout this year. Based on our estimates, this should raise the 2026 dividend yield from 5.4% to 7.8% and improve return on equity from 17% to 18%, directly enhancing shareholder returns. That said, our proposal to abolish the Supervisory Board was not approved at this AGM. While the proposal did receive some support – 17.7% of shareholders voted in favor – it did not pass. SCIC, the largest shareholder with a 35.7% stake and veto power, indicated that it did not have sufficient time to review the proposal on this occasion. However, SCIC has committed to further review and expressed its intention to proceed with the proposal at the next AGM.
Overall, these developments demonstrate that our active ownership approach is translating into tangible outcomes and delivering real value for investors.
Below, we highlight investment cases that illustrate our portfolio management activities during the month, with more of our insight into FPT flow-driven movements in recent times.
FPT’s share price has remained under short‑term pressure, mainly due to continued foreign selling. As a reminder, this trend is not unique to FPT and broadly mirrors what we are seeing across global IT services companies such as Accenture, Infosys, and Tata Consultancy Services. We reaffirmed our view that the recent pullback has been driven more by market flows than by fundamentals, and the decline appears excessive relative to the company’s underlying business outlook.
Building on our discussions over the past few months, we believe that AI is changing how FPT delivers services, but it does not weaken the company’s growth prospects. While AI has attracted significant attention, its real‑world application at most companies remains fragmented. In many cases, AI is used mainly as a personal productivity tool, helping individuals work faster rather than being fully embedded into core business processes. The next stage – where AI is systematically integrated across teams and operations – has been slower to arrive. Progress is often held back by fragmented data systems, limited technical standards, and concerns around security, governance, and accountability.
Despite this hesitation from clients, FPT has been proactive in working with them to adopt AI in a practical and scalable manner. In 2025, revenue from AI‑related services grew by more than 40% year on year and accounted for around 7% of FPT’s global IT services revenue, a faster pace than many international peers. Looking further ahead, there is growing discussion around so‑called “agent‑based” AI, which could significantly reshape how work is done. Reaching that stage, however, will require substantial investment in infrastructure, standardized data, and modernized IT systems. Rather than reducing demand for IT services, this transition is likely to create new opportunities for FPT, particularly as companies upgrade legacy systems and migrate more workloads to the cloud.
This confidence is supported by FPT’s solid first‑quarter 2026 results, with net profit rising 14.4% year on year despite a temporary slowdown in global IT spending. More importantly, the signed backlog grew 22%, creating a gap between contract wins and reported revenue. This is understandable, as larger and longer‑term contracts typically take more time to ramp up. As a result, we expect revenue and profit growth in the global IT services segment to strengthen from the second half of the year. We maintain our forecast of 18% net profit growth in 2026 and a three‑year compound annual growth rate (CAGR) of around 17%. On this foundation, we believe that FPT’s current valuation is highly attractive at around 11 times forward earnings, a historical low level since 2021.
After a very strong performance in 2025, when core net profit increased more than tenfold, MML continued to build momentum in the first quarter of 2026. Revenue grew 20% year on year, while net profit rose 27%, supported by both higher selling prices and stronger volumes in chilled and processed meat.
As part of Masan Group’s ecosystem, MML has benefited from WinCommerce (WCM)’s largest modern retail and Masan Consumer (MCH)’s nationwide traditional trade reach. Growth in chilled meat has been closely linked to the expansion of WCM’s modern retail network, where MML’s branded MeatDeli products benefit from better shelf space, higher traffic, and improved visibility. WinCommerce opened 764 net new stores in 2025 and added a further 225 stores in Q1/2026, providing a steadily widening distribution base. At the same time, processed meat sales have benefited from MCH’s extensive traditional trade network, with more than 500,000 selling points nationwide. Thanks to longer shelf life achieved through sterilization technology, these products are well-suited to Vietnam’s fragmented logistics and storage conditions, especially in traditional retail channels.
Looking ahead, 2026 is a pivotal year as MML targets a larger share of Vietnam’s roughly USD 15 billion meat market, where it currently holds only about 2%. Chilled meat remains concentrated in urban areas and is sold mainly through minimarts and supermarkets, limiting reach. To broaden penetration, MML plans to scale national cold chain logistics and work more closely with MCH’s general trade network to expand into rural markets.
Based on these initiatives, management is targeting revenue growth of 9–14% in 2026, with much faster growth expected in subsequent years. This has clearly positioned MML as one of the most important growth drivers within Masan’s five‑year strategy. We view these targets as achievable as consumers shift toward safer, more traceable food, reinforced by tighter enforcement against substandard products – tailwinds that align with MML’s strengths. Accordingly, we forecast a 15% revenue CAGR and 30% core profit CAGR over the next three years.
While MML is positioned as the key growth focus for the next five years, WinCommerce has been Masan Group’s biggest success story over the past five years. Since being acquired by Masan in 2019, when it was posting losses of more than USD 100 million a year, WinCommerce has gone through a deep restructuring. Today, it is generating sustainable profits while continuing to expand its nationwide store network.
The broader market environment has also become more favorable for modern retail. Tighter enforcement of tax rules and e‑invoicing has accelerated the shift away from traditional retail, directly benefiting leading chains such as WinCommerce. In the past, it typically took around four years for modern trade to gain two percentage points of market share. More recently, that same gain has taken just one year, as seen in 2025. Under our base‑case assumptions, we expect WinCommerce to grow its store network at a compound annual rate of around 12% over the next three years, while net margins improve from 1.3% in 2025 to about 3.2% by 2028. As scale and efficiency continue to improve, this also creates a clearer path toward a potential IPO, which could help unlock additional value for the group.
Alongside WinCommerce, Masan Consumer is also set to recover meaningfully from 2026, following a two‑year overhaul of its distribution model. Previously, the company relied heavily on third‑party distributors, which limited visibility into end‑consumer demand and slowed product rollouts. After the restructuring, Masan Consumer now sells directly to traditional stores across more than 3,300 wards and communes, supported by its own logistics network and a digital ordering platform. This allows the company to track sales in real time and enables shop owners to place restocking orders quickly and efficiently, improving both availability and execution.
Taking a broader view, we believe 2026 will be a strong year for Masan Group across most core businesses. Built on a foundation of retail, consumer brands, and technology, Masan Consumer, WinCommerce, and MML are expected to account for roughly 97% of group revenue and about 70% of operating profit in 2026. At the same time, non‑core segments are also improving, particularly Masan Resources, which stands to benefit from surging tungsten prices and recent expanded mining licenses. Overall, these factors support our decision to raise Masan’s 2026 earnings growth forecast to around 66%, followed by solid growth in the years thereafter.
April was another challenging month, even though the broader market posted a strong increase. However, we believe that most of the positive policy progress, such as a more supportive monetary stance and Vietnam’s market upgrade by FTSE Russell, has not yet shown up in share prices. Though the Government has addressed the energy issues very well so far, the market still reflects investors’ ongoing caution about the scenario of a prolonged conflict in the other part of the world.
Within our portfolio, several companies reported very strong Q1/2026 earnings growth, ranging from 40% to 70% year on year, and indicated solid momentum for the rest of the year. These results are broadly in line with our expectations. However, this strength has also not yet been reflected in their share prices. We see this gap as a temporary disconnect, and it is exactly where we believe active, long‑term investors can add value by taking advantage of short‑term market inefficiencies.