It wouldn’t surprise anyone who’s been to Vietnam that a company specializing in air conditioning would be successful. But Vietnam’s climate is only part of the explanation for the strong reputation of REE (the acronym and stock symbol for Refrigeration Electrical Engineering Corporation).
The company has gained prominence as an example of Vietnam’s corporate potential: a well-managed company in a country where corporate governance, transparency and bookkeeping are suspect. REE’s board is small group with global experience, including the European head of one of Vietnam’s largest foreign capital investors, a 30-year-old economics graduate of the University of Virginia, and chaired by a Germany-educated engineer who has been with the company for almost 20 years.
The company has been impressing investors with solid performance, despite the global recession, and has maintained a focus on core competencies — manufacturing air conditioners and outfitting them in buildings, some of which REE manages.
REE’s financial numbers make the company appear to be an attractive investment opportunity (40% 1-year return, 4.4 P/E ratio, 11% dividend that has grown rapidly), but there’s a problem if you’re a foreigner: You may not be able to buy REE stock until another foreigner sells it. Vietnam law limits foreign ownership to 49% of a company, and REE has been maxed out recently.