The market is off to a strong start in 2023, as VN-Index +10.3% and PYN Elite +10.3% in Jan, both driven by the stellar rally of the banking stocks. In the middle of the market storm in 4Q22, we made a bold decision to increase our exposure to banks from 40% to nearly 50% of the portfolio, which yielded positive results: Our banks +16% in January and +33% from market bottoms, compared to VN-Index’s +10% and +18%, respectively. Such performance reflected the sector’s resilient earnings growth. The banking sector’s Q4 net profit jumped 24% YoY, whereas total earnings from the rest of the market declined by 52% YoY.
Macro: In January, Vietnam’s domestic consumption remained exceptionally strong: Retail sales +20% YoY, accommodation & food services revenue +37%, and tourism revenue +113%. Meanwhile, FDI disbursement -16% YoY, industrial production -8% YoY and exports -21% YoY. Declining exports matched to our expectations but note that the seasonal factor also played a role as 2023’s long Tet holiday came in January instead of February. Inflation inched up slightly to 4.9% YoY, yet still well under control. Most notably, deposit rates in banks have started to ease slightly from their peaks in December, reflecting better liquidity situation and bringing hope to several sectors which are most affected by the high interest rates.
PYN Elite stock of the month: VRE
In 4Q22, Vietnam’s leading mall owner VRE saw its earnings +549% YoY from last year’s low. 2022 net profit +108% YoY, slightly beating market expectations and also exceeding AGM target by 14%. In Q4, occupancy rates continued to improve further while footfall of the malls in Hanoi & HCMC have reached 90-95% of pre-Covid levels. During the last 3 years, the company has had several cost-saving initiatives, which helped to save 16% operating cost per sqm of GFA compared to 2019. In 2023, VRE’s net profit is expected to continue growing by 25% YoY, driven by positive rental reversions, new mall openings as well as higher property sales from the deliveries of its shophouse revenue backlog.
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 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