Catalyzes the conversion of 7,8-dihydroneopterin to 6-hydroxymethyl-7,8-dihydropterin. Can also catalyze the epimerization of carbon 2' of dihydroneopterin to dihydromonapterin. 7,8-dihydroneopterin = 6-hydroxymethyl-7,8-dihydropterin + glycolaldehyde 7,8-dihydroneopterin = 7,8-dihydromonapterin Optimum pH is 9.5. Cofactor biosynthesis; tetrahydrofolate biosynthesis; 2-amino-4-hydroxy-6-hydroxymethyl-7,8-dihydropteridine diphosphate from 7,8-dihydroneopterin triphosphate: step 3/4. Homooctamer. Four molecules assemble into a ring, and two rings come together to give a cylinder with a hole of at least 13 a diameter. Belongs to the DHNA family.