PYN Elite’s portfolios’ biggest position CTG reported preliminary information on 2020 results last Wednesday. Bank’s earnings were up 43 % which was even more than our expectations. News certainly landed on the market as a big surprise.
CTG had been doing good business in the first three quarters, but in December the board of the bank approved the official and quite modest full-year earnings target. This seemed quite odd, as CTG had reached those numbers already in nine months.
This is quite a common problem with the state-owned companies in Vietnam, as their executive managers are dynamic and up-to-date in business operations but some of the procedures in the companies are still being done bureaucratically under the political principles. As the board came out with the official budget target just before the end of the year, there was some confusion regarding the full potential of CTG in the last quarter. As the real numbers were published on the Epiphany, the stock price went up substantially.
The banking sector gained 28% last year as the VN Index was up 14.9%. Quite a few banks’ stocks returned even over 50%. The sector took a breather in December with a “modest” ten percent gain aligned with the index performance. At the beginning of the year, investors’ appetite for the banking sector seems to be returning as the Q4 results are likely to beat the market expectations positively. The year 2021 looks good to the banks as the Vietnamese economy will be in full stride.