April 2018

— 05.05.2018

VNIndex hit its all-time high early in April but unfortunately, could not maintain the momentum as the month went and tumbled 10.6% following big sell-offs in large caps and the lack of foreign net inflows. If subtracting put-through transaction of Novaland, foreigners actually net sold USD 86 mn. Moreover, rumors about margin lending tightening for local investors added to the negative sentiment. PYN Elite’s NAV declined only 1.5% and finally outperformed VNIndex for the first time in 7 months. We would expect that from now on we could see a more rational market in which money could be allocated into value by stock picking in the broader market from big caps to medium and small cap stocks based on each company’s earnings momentum.

MWG had a stellar result in 1Q2018 with revenue up 46% YoY and NPAT up 45% YoY, strongly supported by CE chain which grew 84% YoY. Revenue from mobile phone segment grew modestly 5.6% YoY while their new minimart chain saw revenue jumped 331% YoY. In 2H2018, CE will continue to drive earnings thanks to robust same store sales growth and full contribution of stores
opened last year. Management has applied stricter store location KPIs for minimart chain, which would result in slower expansion of store number but on the other hand, average sales per store and gross margin would improve as well as operational efficiency. The initial result is quite encouraging, average sales per stores is up and so is the number of break-even stores.

Our PYN Asia Research team has been busy attending many AGMs and management meetings throughout the month. Notably, the AGM of HD Bank has approved the merger with PG Bank which we see very positive for HD Bank as they can expand their ecosystem and strengthen their retail banking position with the support of PLX, PG Bank’s largest shareholders. HDB’s 1Q result is
also very impressive with net profit up 2.8x compared to the same period last year. This month also marked the debut of TP Bank on Ho Chi Minh Stock Exchange. TP Bank posted their 1Q NPAT growth of 138% YoY, driven by net interest income, net fee income and income from securities investment.

Macro fundamentals remained solid. The Nikkei PMI improved to 52.7 in April from 51.6 last month. In 4M2018, trade surplus reached USD 3.4 bn thanks to robust export growth of 19% YoY. CPI edged up only 0.08 MoM. April retail sales increased 9.5% YoY supported by strong domestic consumption and the 30% YoY growth of international tourist arrivals.

PYN Elite Review Apr 2018.pdf