PYN Elite up 9.9 in May

PYN Elite rose strongly (+9.9%) in May supported by all our banks (+30% May and +50% YTD on average) and VN Diamond (+12% May, +42% YTD). VN index also went up by 7.2% on the banking sector rally. Last year we made a big contrarian decision to divest our full FOL stocks with a significant foreign premium, and reinvested the proceeds into VN Diamond. VN Diamond is already +51% from the cost. If we hadn’t made the move, our gain in previously held FOL stocks would be single digit, as the foreign premium has narrowed significantly since then, despite the local share prices have performed. VN Diamond gained popularity – the number of units grew by +69% YTD with a net flow of $180m.

Macro: Compared with neighboring countries, Vietnam again controlled new waves of Covid well without a full lockdown. In May, export growth was almost not affected at +35.6% YoY, PMI 53.7, Industrial production moderated at 11.6% YoY due to some industrial parks were temporarily affected by Covid, retail sales weakened -1.1% YoY. Inflation remained low at 1.3% YoY in 5M21, below the government target of 4%. Stock market trading liquidity remained strong and stayed above $1 billion almost every day.

PYN Elite stock of the month: TPB

The value of TPB went up by +130% since our investment in its IPO. Despite a significant unrealized profit, we still have strong expectations for TPB share price performance this year. TPB has a high ROE of 24% (industry: 18%), but currently trading at a 1.7X 2021E PB (industry: 2.1X PB). TPB’s closest peer VIB is trading at 3X PB. TPB and VIB are very similar – they have same network size, enjoy fast loan growth and are in a leading position in digital banking. They used to trade at similar PB range. For past half year, VIB received investors’ attention on many catalysts such as stock dividends, change of listing to mainboard HOSE, and inclusion into ETFs. VIB quickly got re-rated from 1.5X PB to 3X PB. We noticed that investors have already started to pay attention to TPB’s attractive valuation, as the share price started to pick up strongly in recent trading sessions.