This year’s index target at 1,500 points

— 27.04.2021

PYN Elite core holdings include 15 positions representing 94 percent of the portfolio. Half of the core holdings have already published their Q1 results. Airfreight company SCS’s earnings were up only 11 percent, and the company’s business will be returning to normal only towards the end of the year. Housing developer NLG’s earnings spiked in Q1 by 231 percent because of a one-off appraisal, but based on business growth also company’s whole year earnings is expected to reach 30 percent YoY. Our four banks were also able to increase their earnings significantly, between 41 and 130 percent in Q1. Banks’ whole year earnings growth likely to reach robust +35–40% YoY.

The VN-Index is targeted to reach the 1,500 points milestone this year.

VN-Index ended the year 2020 with 1,097 points. Since then the index has gained 14.2 percent YTD (now at 1,248). Last year the VN-index gained 15% while PYN Elite was up 32%. Recently, however, PYN Elite has underperformed the index: our NAV is up YTD 7.4% while VN-index has gained 14.2% YTD.

The brisk price gains in the property market have increased speculations about the SBV’s intervention in the market, and that probably caused our bank stocks to idle in April. However, this should be short-lived, and we expect this year’s earnings growth will push the bank stocks to higher levels. Strongly cyclical steel companies have been in a big role with VN-index performance. We do not have in our portfolio HSG, which has a strong weighting in the index, or any other steel companies.

Recently Vingroup’s holding company’s VIC’s stock spiked as the company announced plans to expand manufacturing of Vietnamese car brand Vinfast in the USA and possibly be listed in the New York Stock Exchange. So far the company has made losses with its car business. We do not have any position in VIC, we rather not put bets for a new brand to enter the USA automobile market, as we concentrate on our holdings with the companies that benefit from the high growth of the domestic demand in Vietnam.

It is also worth mentioning that in our portfolio especially VEA (cars and mopeds), ACV (airports), SCS (air freight), and VRE (shopping malls) all suffered in 2020 from Covid-19. We have taken those positions last year at bargain prices for three years’ hold. Their earnings will improve only later this year.

We share the consensus forecast that the Vietnamese stock market can continue to perform well this year due to the solid earnings growth as well the bright outlook for years to come. In the first quarter, the foreign investors have been net sellers in the Vietnamese stock market, but we assume the tide must turn as the year goes along.