Finland-based PYN Elite captures rosy gains thanks to banking stocks since 2012

In May, PYN Elite rose strongly (up 9.9 per cent) supported by all of its banks (up 30 per cent in May and 50 per cent year-to-date on average) and VN Diamond (up 12 per cent in May and up 42 per cent year-to-date). The VN-Index also went up by 7.2 per cent on the back of the banking sector rally.

“Last year we made a big contrarian decision to divest our full foreign ownership limit (FOL) stocks with a significant foreign premium and reinvested the proceeds into VN Diamond. VN Diamond has already increased by 51 per cent 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 local share prices performing well. VN Diamond gained popularity – the number of units grew by 69 per cent year-to-date with the net flow of $180 million,” noted Maggie Yi, analyst at PYN Elite.

Compared with neighbouring countries, Vietnam controlled successive waves of COVID-19 well without a full lockdown. In May, export growth was almost not affected, up 35.6 per cent on-year, the Purchasing Managers' Index (PMI) hit 53.7, industrial production moderated at 11.6 per cent on-year due to some industrial parks being temporarily affected by COVID-19, retail sales weakened (down 1.1 per cent on-year).

Inflation remained low at 1.3 per cent on-year in the first five months of 2021, below the government target of 4 per cent. Stock market trading liquidity remained strong and stayed above $1 billion almost every day, according to PYN Elite.

Despite a significant unrealised profit, the fund still has strong expectations for the performance of TPBank shares this year. TPBank has a high return on equity (ROE) of 24 per cent, while the general industry features 18 per cent. However, currently TPBank is trading at a 1.7x price-to-book value (P/B) while the industry level is 2.1x. TPBank’s closest peer VIB is trading at 3x P/B.

“TPBank and VIB are very similar – they have similar network size, enjoy fast loan growth, and are in a leading position in digital banking. They used to trade at a similar P/B range. For the past half a year, VIB received investors’ attention on many catalysts such as stock dividends, change of listing to the mainboard of the Ho Chi Minh City Stock Exchange, and inclusion into ETFs," Yi added.

PYN Elite noticed that investors have already started to pay attention to TPBank’s attractive valuation, as the share price started to pick up strongly in recent trading sessions.