Finland’s PYN Elite remains bullish on Vietnam’s bank stocks

Finnish fund PYN Elite has affirmed its projection on Vietnamese banking stocks' strong performance as this sector remained overweighed in its portfolio.

The PYN Elite portfolio's 50% allocation to Vietnamese banks represents a significant strategic investment as local banks tend to achieve a sector-specific and quite substantial rally in cycles of a few years, the fund said in its latest investor letter.

As of end-August, out of the fund’s 10 largest holdings, six were banks: Sacombank, MBBank, TPBank, HDBank, VietinBank, and OCBank, with a combined weight of 50.1%.

The chart above shows that the banks’ earnings continued to grow even during Vietnam's lackluster stock market years, while more cyclical businesses faced several earnings surprises.

Banks increased their provisions, which slowed their earnings growth, but the ratios of banking stocks have simultaneously become highly attractive as the fund awaits the next rally, it noted.

Thanks to earnings growth, banks' equity bases are accumulating, and the price-to-book (P/B) ratios of several banking stocks in the fund will fall below 1.0 within the next 6–12 months unless stock price outperformance adjusts the valuation ratios upward.

The fund said that when comparing Vietnam’s 10 largest banks with the 10 largest tech companies in the U.S., the result is “astonishing”: for the period 2019–2025, the earnings growth of Vietnamese banks is actually slightly better than that of U.S. tech companies.

“We are in the process of making some reallocations between the weightings of individual bank shares depending on the actual performance of each stock relative to our earnings expectations,” said the letter.

The fund tipped that it recently participated in a private placement by Vietnam’s leading institutional stock brokerage at “an attractive price relative to the market price of the stock”, without giving a specific name.

A filing by Ho Chi Minh City-based Vietcapital Securities revealed that PYN Elite had subscribed for the largest amount, 21.5 million shares, in its upcoming private offering of 143.63 million shares. After the sale, PYN Elite will hold a 2.99% stake in the broker.

The fund commented that Vietnamese authorities' lifting of the pre-funding practice for stock purchases is a significant motive behind this investment decision. The change will take effect at the beginning of November and is likely to substantially boost the activity of institutional investors in the stock market.