COVID resurgence caused the VN index to correct by -7% in July, and PYN Elite dipped by -5.5%. VN Index still gained +18.7% YTD, being the 2nd best performing index in Asia, topped only by Mongolia which enjoyed a commodity boom. PYN Elite climbed 16.6% YTD, driven by MBB (+71%), HDB (+42%) and VN Diamond (+48%). HOSE deployed a new system from FPT, which increased capacity by 3X and eased trading constraints.
Macro: Numbers softened: PMI stays at 45.1 in July, as social distancing orders reduced factory capacity utilization and caused supply chain disruptions. Retail sales 19.8% YoY, industrial production +2.2% YoY, exports slowed to +8.4% YoY (+28.4% YoY in 1H 2021).
Vietnamese companies are not too worried. They shared to us that it is already the 4th wave that both government and companies had experienced. Although Vietnam has currently a very low vaccination rate, companies are confident vaccinations will accelerate in 2H2021 from the deals that have been negotiated by the government. Our colleagues and friends in Vietnam are generally satisfied with government work on active tracing, testing, vaccines, supporting packages, etc. This is a sharp contrast to Thailand, where we had several heated street protests amid ever-increasing cases.
PYN Elite stock of the month: VN Diamond gained +48% YTD, both on 1) underlying companies’ solid 1H profit growth, and 2) local share price catching up to narrow ‘foreign premium’. On average, VN Diamond companies reported 50% YoY profit growth in 1H and completed 53% of our full-year forecast. We expect VN Diamond companies’ profits to grow 25% YoY in 2021E and 21% CAGR 2020 2023E.
Our other core holdings also did well: average profit was + 47% YoY and completed 49% of the full-year forecast. Their share prices have not fully performed (on average +17% YTD), as some companies are more sensitive to COVID news.
PYN Elite Monthly Review.pdf