PYN Elite down 1.6% in May

— 06.06.2022

VN index -5.4% in May dragged down by steelmaker HPG and banks. PYN Elite (-1.6% MoM) fared better as VHM rose 10% on a successful project launch. In May, the index plunged -14%, then recovered 10% from its low. We are into the 3rd month of high-profile arrests and crackdowns on stock manipulation and unethical bond marketing, and the Chairman of the State Securities Commission and CEO of HOSE were both dismissed. In the meantime, a few companies – either mandatorily or voluntarily – bought back their corporate bonds before maturity, setting a monthly record of early repurchase of such bonds. Anecdotal evidence suggests such funding sources come from the stock market.

Trading liquidity dropped by 30% to $760m from a 12-month average of $1.1bn. Margin lending balances at leading brokers dropped by 20-30% in late May from 1Q2022.

May macro: The macro recovery continues. Industrial production +10.4% YoY, Retail sales +22.5% YoY, Export +16.4% YoY, PMI rose further to 54.7 in May, and 4M2022 passenger car sales +43% YoY. The inflation (+2.9% YoY) faced some upward pressure from petroleum prices. In May, S&P upgraded Vietnam’s sovereign credit rating to BB+ with a stable outlook, which will help to lower funding costs for banks and blue-chip companies.

Stock of the month: CMG is a low profile technology company, 30% owned by its founders, 30% owned by Samsung and 5% by PYN Elite. Similar to its much larger peer FPT, CMG has telecom (broadband + data center) and software businesses. CMG started Software Outsourcing (SO) in 2018 with 500 employees. The headcount has grown by 5 folds to 2.5K now and the company achieved breakeven last year. To ensure a sufficient supply of IT engineers, CMG acquired a university with the eventual goal of having 10,000 students. CMG set an ambitious target to grow revenue by 40% per year to reach $1bn by 2025E.

Important information regarding the text and the Fund

The attached publication is marketing material and should not be regarded as a recommendation to subscribe or redeem units of the PYN Elite Fund. Before subscribing please familiarize yourself with the Key Investor Information Document, the Prospectus and the Rules of the Fund. The material presented in this text is based on PYN Fund Management’s view of markets and investment opportunities. PYN Elite Fund (non-UCITS) invests its assets in a highly allocated manner in frontier markets and in a small number of companies. This investment approach involves a larger risk of volatility compared to ordinary broadly diversified equity investments. The value of an investment may decline substantially in unfavorable market conditions or due to an individual unsuccessful investment. It is entirely possible that the estimates of economic development or a company’s business performance presented in this presentation will not be realized as presented and they involve material uncertainties.

PYN Elite Monthly Review.pdf


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