PYN Elite up 0.7% in April

PYN Elite NAV edged up 0.65% supported by VN Diamond (+10% MoM), MBB (+8% MoM) and HDB (+3% MoM). VN Index gained 4% led by NVL (+63% MoM), VIC (+11% MoM), HPG (+24% MoM). Among our top holdings, VEA dropped 7.5% MoM as car sales recovery remains slow, while our banks took a pause, which caused us to underperform the Index. We do not own the conglomerate Vingroup or the cyclical steel company HPG, which have heavily weighted VN Index.

April macro remains resilient. PMI rose for the third consecutive month to 54.7, indicating the strongest improvement in the manufacturing sector since Nov 2018. Retail sales +30.9% YoY, CPI +1.27% YTD, public investments +23.9% YoY. 4M registered FDI accumulated $12.3 bn (+0.7% YoY). The covid-19 has returned to Vietnam on the last days of April, but the government has quickly acted to control the situation again.

The stock of the Month: VRE is Vietnam’s largest retail developer and operator with a solid outlook driven by the low penetration of Vietnamese retail malls vs regional countries and the continuing rise of disposal income. Footfall and retail sales have swiftly recovered post-pandemic thanks to VRE’s effective marketing strategies and support to tenants.

In 1Q2021, VRE posted stronger-than-expected net profit growth of 59% YoY. VRE plans to extend its leasing GFA by 2.5x by 2026. Notably, with the expected application of IFRS in 2023 2024, VRE’s net profit will increase as depreciation and amortization costs and gains from future value of revaluated malls are to be booked differently. VRE’s stock’s valuation ratios will become very attractive.