PYN Elite was +2.7% in January, outperformed VN Index (-1.3%), driven by VRE, MBB and CTG. Vietnam market witnessed high volatility within the month: a few speculative stocks popular among retail investors, after just having increased multiple folds in a few weeks, were sold-off by investors. The panic sell affected market sentiment. Since retail investors favor small caps, VN small cap (-15%) was hurt more while VN30 only corrected -0.2%. Banks (+6%) on good results released this month.
January macro: Companies in VN100 Index reported an average annual 40% profit growth, banks and real estate developers grew 35% and 25%, respectively. Retail saw a strong rebound in 4Q after lockdown lifted, which compensated the slow 3Q and finished the year well.
PMI ticked up further to 53.7, retail sales continued post lockdown rebound +6.7% MoM. Inflation (+1.9% YoY) is moderate. National Assembly approved a stimulus package worth of $15 billion (5% of GDP). Government targets GDP growth between 6-6.5% in 2022, Bloomberg consensus expects higher growth.
Stock of The Month: CTG (Vietinbank). Despite good growth in loan and fee income, CTG reported only a 3% net profit growth, due to its aggressive provisioning expenses (+50% YoY). While the government in Covid year 2021 required banks to make provision for 30% of Covid forbearance loans and 100% by 2023, CTG made this provision for 90%, leaving small provision burden for coming years. CTG’s outlook in 2022 looks very bright: they just held the signing ceremony of bancassurance agreement with Manulife, and can recognize upfront fee and fee income in 2022E. Besides eased provisioning pressures CTG will not face SBV guided Covid-related customer support packages anymore, which accounted for 7 trillion VND in 2021. We expect CTG to achieve 47 % profit growth in 2022.
Important information regarding the text and 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