Vietnam’s continued crackdowns on bond market irregularities and stock market manipulation with several arrests have sent the VN-Index down by 8.4% in April. PYN Elite -10.2%, led by the declines of VHM, CTG, TPB and MBB. Despite the short-term damage, we believe this housecleaning series will help to enhance market stability and a healthier business environment in the long term. Meanwhile, the market overreactions have created more opportunities than threats: The VN-Index’s forward 2022 P/E has dropped to 12.7x vs. the average 17.6x of Thailand, Philippines and Indonesia, with several blue-chips now trading below 10.x P/E despite strong growth prospects.
April macro: The economy is getting more and more vibrant: April export +25% YoY, outpacing import growth at 15% YoY and led to a $2.5 billion YTD trade surplus. Both production and consumption are gaining speed as IIP +9.4% YoY and retail sales +12.1% YoY in April, much higher than the respective growth of 6.4% and 4.4% YoY in Q1. Inflation remains well under control at only 2.64% YoY. Contrary to the market’s presumptions about the tightening of credit into real estate, our decent market-leading developers said they still got abundant loan offers from banks for both their projects and their home buyers. Several sales launches in Mar-Apr were beyond successful with thousands of units sold out in only 1-2 days.
The Stock of the month: Vincom Retail. On April 28th, Vietnam’s leading mall owner VRE successfully launched a new 68,000-sqm Vincom Mega Mall in Smart City – Hanoi, which will then be followed by the grand openings of two more Vincom Plazas in Southern Vietnam in June. The 3 malls, which have committed occupancy rates of 95-98%, mark the return of VRE’s mall expansion after the long launching delays during pandemic years. They are also well-timed to capture the soaring domestic consumption post-COVID. VRE’s total leasing GFA is planned to expand by 1.8x-2.3x by 2026, backed by its sufficient landbank and Vietnam’s low mall penetration. Its business performance is also set to recover strongly in 2022, with earnings growth targeted at 83% YoY.
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