In February, the Kenno Vietnam Fund declined 5.5% in USD and 4.8% in EUR. Meanwhile, the VN Index increased 2.8% in Vietnamese Dong (VND), equivalent to about 2.5% in USD, supported by a strong rebound in Vingroup.
Within our portfolio, Mobile World Corporation (MWG) and FPT Retail (FRT) performed well, supported by their solid guidance for 2026, while the rest of our positions saw modest, sentiment-driven declines of 4–6%, following strong gains of 8–31% in January after robust 2025 results. This volatility, which is common around the Lunar New Year ahead of the week-long Tet holiday closure of the stock exchange, was to be expected.
The underlying fundamentals of our holdings remain positive, supported by healthy 2025 results and an encouraging outlook for 2026. We expect these companies’ share prices to recover as they continue to deliver steady earnings growth in the first quarter, and we do not see the situation in the Middle East having a material effect on the Vietnamese economy.
In February, concerns around liquidity in the banking system were an additional source of volatility. Early in the month, the overnight interbank rate increased to 16% due to strong demand for cash ahead of the Lunar New Year (hongbaos need to be filled with cash!). At the same time, rumors that some state-owned commercial banks had already used up their first-quarter 2026 credit quotas added to these concerns and weighed on market sentiment, despite stronger credit growth generally being positive news.
However, the State Bank of Vietnam subsequently stepped in by injecting liquidity to ease short-term funding pressures. It also lowered reserve requirements for several commercial banks, freeing up additional cash in the system. Together, these measures helped the stock market rebound. After the Lunar New Year, the VN Index recovered and moved higher toward the end of the month, as domestic retail investors are typically optimistic at the start of a new lunar year.
After the fourth-quarter 2025 (Q4/2025) earnings season wrapped up in late January and early February 2026, investors began looking ahead to listed companies’ guidance for 2026. As a result, companies that announced positive business plans for the year, including MWG and FRT, saw their share prices hold up well.
The share price of Vingroup (VIC), the conglomerate representing about 15% of the VN Index market capitalization and therefore having a significant impact on index performance, recovered 22% after falling 17% in January. The rebound was supported by strong Q4/2025 results, driven by solid real estate revenue recognition. For the full year 2025, Vingroup’s revenue grew 76% year-over-year (YoY), while net profit increased 13% YoY, exceeding the company’s annual target by 11–12%. However, at a forward P/E of 85x, the company still appears significantly overvalued and continues to generate negative free cash flow.
Trading activity is usually slower during the Lunar New Year period. In February, the average daily trading value was USD 1.2 billion, down 17% month-over-month (MoM), but still higher than the 2025 average of USD 1.1 billion. One notable highlight in February 2026 was the increase in foreign investor participation: they accounted for 14–17% of total trading value, up from 10–13% in 2025, indicating stronger participation from overseas investors.
The currency also remained stable. After gaining 1.1% in January 2026, the Vietnamese Dong depreciated slightly by 0.3% in February, as the Dollar Index edged up from 97 to 97.8.
Foreign investors continued to be net sellers throughout the month, although there were a few net-buying sessions. The most notable net selling was in FPT Corporation (FPT), driven largely by global concerns about how artificial intelligence (AI) may affect information technology (IT) service providers, as well as rumors of a potential divestment of its 46% stake in FPT Telecom (FOX) – rumors the company has denied.
FPT is one of Kenno’s core holdings, and we used this weakness as an opportunity to increase our position, as we believe the stock is currently oversold. Software outsourcing services for clients in Japan, the US, the EU, and Asia Pacific are a key profit contributor for the company. This business delivered a revenue CAGR of 27% from 2014 to 2024, supported by its labor-cost advantages.
In 2025, however, growth temporarily slowed after the Trump administration announced reciprocal tariffs, which created uncertainty in the global economy and led many corporations to delay or reduce their IT spending. As a result, FPT’s software outsourcing backlog growth fell to a low of 7% YoY in June 2025.
As visibility on tariffs improved, the backlog recovered month by month toward the end of the year and reached USD 1.5 billion in December 2025 (+23% YoY), most of which is expected to convert into revenue over the next twelve months. We expect FPT’s pre-tax profit to grow 16.4% YoY in 2026. The stock is currently trading at a reasonable valuation of 14–15x 2026E EPS for a high-quality, high-growth company.
Based on these discussions, together with our previous research, our investment team has now updated the 2026 earnings models for all portfolio companies to reflect the latest available information. Based on this work, we expect the total core net earnings of our portfolio companies to grow 19% YoY in 2026.
Several of our higher-weight holdings are forecast to deliver strong profit growth. These include FRT (+43% YoY), supported by margin improvements and continued store expansion at the Long Chau pharmacy chain; MWG (+24% YoY), driven by ongoing efficiency gains, new business initiatives across its mobile phone, laptop, and white goods chains, and accelerated expansion with improving profitability at its grocery chain; and Masan Group (MSN) (+21% YoY), benefiting from the normalization of its consumer goods manufacturing business after a challenging year of general trade disruption, along with continued margin improvements in its grocery chain and meat businesses as they scale.
In February, we used the proceeds from trimming our positions in January to increase our holdings in FRT and FPT. As mentioned above, we remain confident about FRT’s outlook – not only for 2026 but also over the next five years – with expected net earnings growth of around 30% per year from 2025 to 2030. We expect FRT to open 300 stores between 2026 and 2028, bringing its total pharmacy network to 3,700 by the end of 2030, up from 2,640 stores in 2025. This plan appears realistic, given that modern pharmacies currently account for only 15–16% of Vietnam’s pharmacy market in terms of revenue. As the business continues to scale, its net margin is expected to rise from 3.3% in 2025 to 6.0% in 2030.
In addition, we continued to add to our position in NLG, as the company’s share price declined due to concerns that homebuyers may face difficulties obtaining mortgages when bank credit quotas are fully utilized – a concern that we believe is not supported by the underlying fundamentals.
Below we highlight investment cases that illustrate our portfolio management activities during the month.
We recently met with Dien May XANH (DMX)’s management during its investor roadshow ahead of a potential initial public offering (IPO) later this year. DMX is the core business of MWG, one of our largest holdings. The company operates two major retail chains in Vietnam and another in Indonesia, selling mobile phones, laptops, accessories, consumer electronics, and home appliances. In 2025, DMX generated 68% of MWG’s total revenue and contributed more than 90% of its net profit, highlighting how central it is to the group.
After several years of rapid store expansion, management has shifted its strategy toward improving the quality and productivity of the existing store network. This change is already paying off. Even with fewer stores, DMX delivered 18% revenue growth in 2025, ahead of the market’s 13% growth rate. Same-store sales rose by more than 20% on average, with some locations growing as much as 60–70%. Net profit increased by nearly 60% YoY, helped by tighter cost control and lower depreciation following the closure of underperforming stores.
The proposed IPO is positioned as a way to unlock new growth opportunities and prepare DMX for its next growth phase. Management is targeting average annual growth of 11% in revenue and 16% in net profit from 2025 to 2030. We see these goals as reasonable, supported by five strategic priorities: (1) improving store productivity as mentioned above; (2) expanding financial and consumer services; (3) building stronger after-sales offerings alongside manufacturers; (4) turning the loyalty app into a broader service platform that can compete more directly with e-commerce players; (5) and accelerating the growth of the consumer electronics chain in Indonesia, which has proven to be a successful model. Of these five priorities, the last four are expected to create new income streams for DMX in the coming years.
The preliminary IPO valuation of USD 3.8 billion implies roughly 16–17 times 2025 earnings, or about 1x revenue. At this level, we believe the IPO could help unlock value for MWG shareholders while giving DMX greater transparency and strategic flexibility.
MSN’s share price fell 6% in February after rising 9.1% in January. The company continued to deliver strong results in 2025, with net earnings doubling after increasing fourfold in 2024. This performance was mainly driven by its core consumer businesses, including WinCommerce and Masan MeatLife, as more Vietnamese consumers shifted toward modern retail and branded meat. This trend has been supported by rising incomes and government policies that favor regulated retailers and producers that meet food-safety standards.
Masan’s mining business – an operation the company is looking to divest – also recovered in 2025, moving from a large loss to break-even thanks to higher commodity prices, efficient operations, and lower interest expenses. As tungsten is the mine’s main product and is used in applications such as missiles and armor-penetrating rounds, the mining business has also benefited from increased defense spending in Western countries. We believe this could help the company divest the asset at a favorable valuation, given that around 82% of the world’s tungsten is produced in China, and other countries are looking to secure their supply.
WinCommerce reported a net profit of VND 500 billion in 2025, equal to a net margin of 1.3%, after breaking even in 2024. This improvement was driven by stronger sales productivity and better operating leverage. The company opened 764 new stores during the year, bringing the total to 4,592, and delivered solid same-store sales growth of 9%. Having identified the right store formats for both urban and rural areas, WinCommerce accelerated its expansion.
In 2026, the company plans to open 1,000–1,500 new minimarts, upgrade its supermarkets, and target revenue growth of 15–21%, along with higher profit margins. We believe this plan is achievable, given that modern grocery retail accounted for only 12% of Vietnam’s market in 2024 and is expected to expand as living standards rise. For 2026, we expect WinCommerce to deliver revenue growth of 16% and a 117% increase in net profit.
Masan MeatLife’s core net profit reached VND 273 billion in 2025 – ten times higher than the previous year – resulting in a core net margin of 3% after breaking even in 2024. This improvement was driven by higher live hog, live chicken, and meat volumes, as well as better porker value, supported by the company allocating a larger share of each porker to processed meat products, which carry higher prices and margins. We expect Masan MeatLife’s profit margin to continue improving in 2026, supported by a growing contribution from branded fresh and processed meat.
We remain positive about MSN’s outlook for 2026. We expect revenue to grow by 14% YoY and net earnings to increase by 21% YoY. Alongside continued improvement in its core consumer businesses, stronger operating cash flow should allow the company to pay down its existing debt, helping to reduce interest expenses. In addition, if MSN is able to divest its mining business, its valuation multiple could be re-rated as that of a pure consumer company.
February was a volatile month in several ways. While the VN Index rose, our portfolio experienced a pullback after a strong January. However, we expect consumer-oriented stocks to deliver strong returns this year. The underlying fundamentals of our core holdings remain solid, supported by healthy 2025 results and encouraging guidance for 2026. We also see strong momentum among investors in consumer-driven sectors such as modern retail, FMCG, and technology services like FPT, all of which continue to benefit from Vietnam’s long-term structural growth trends and the recovery of the Vietnamese consumer.
As the conflict in the Middle East adds to investor concerns and may lead to further short-term volatility, we take comfort in the fact that earnings growth across our portfolio is expected to remain robust. Following the rebalancing and restructuring of the portfolio in 2025, we believe our investments are well positioned for the year ahead. As always, we remain focused on quality, discipline, and long-term value creation for our clients.