Mekong Capital celebrates 13-year high

Chris Freund, managing partner of Mekong Capital, said this year had delivered the best results in his fund’s 13-year history in terms of the performance of its investee companies. According to Mekong Capital’s latest report, MobileWorld’s net profit in the first five months of this year topped VND261 billion, or $12.4 million, a dramatic 391 per cent boost over the same period last year. The firm attributed the outstanding result to operational improvements implemented over the last two years.

Likewise, PNJ achieved a net profit growth of 60 per cent during the same period. Even Traphaco, which was said to have been underperforming since the beginning of this year, is making significant improvements. Freund said he believed the pharmaceutical producer would boast a much healthier financial performance in the second half of the year onwards.

Freund said the economic rebound was a significant contributory factor in Mekong Capital’s success.

“I think Vietnam’s 5 per cent GDP growth rate for the first half of this year is excellent. Retail sales are growing faster than this, and both retailers and consumer product companies have big opportunities to gain market share in what is still a very fragmented market in Vietnam,” he said.

“The only sector that I believe macro-economic forces are still not very favourable is the real estate market, but even that is improving,” Freund added.

Freund claimed that besides the steady economic growth, a clear long-term vision also played a vital role in the success of Mekong Capital’s investee companies such as mobile retailer MobileWorld, plant protection maker An Giang and jewellery trader PNJ.

“These companies have been working with outside experts and consultants, who have helped to introduce international best practices. All of these companies also understand the importance of having a strong culture, and building a team of people that share the company’s values,” said Freund.

Struggling firms have tended to blame the macro-environment. But in Freund’s opinion, this has been rolled out as an excuse and the main reason for disappointing performance was poor management.

“The level of awareness of international best practice in Vietnam is very low, yet people don’t know what they don’t know. For example if you take the area of retailing, most Vietnamese retailers aren’t aware of basic best practices in areas such as category management, forecasting, purchasing, store layout, managing customer experience and brand strategy,” he said. “We also apply a framework called Vision Driven Investing, which ensures all of the key components are in place for our investee companies to grow on a sustainable basis and achieve their long-term goals.” 

According to Freund, Mekong Capital sees its role that is to help introduce international experts to portfolio companies and also work together with them to ensure that the advice of these international experts is successfully implemented. 

“So we try to invest in companies that are the most open to absorbing and applying international best practices. This is certainly a part of why companies such as MobileWorld and Golden Gate have been so much more successful than their competitors,” added Freund.