HANOI (Reuters) - Vietnamese private budget airline VietJet's VJC.HM market capitalization surpassed that of state-owned Vietnam Airlines HVN.HNO on Monday, only a week after it was listed.

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VietJet grabbed headlines with bikini-clad flight attendants when it was launched in 2011 and its success on the Ho Chi Minh stock exchange reflects its rapid ascent since.

It has become known in Vietnam as the “bikini airline” and female crew do still wear them, but only on some flights.

Its market share is expected to top that of Vietnam Airlines this year, a feat it has achieved by tapping into a fast-growing economy and a young population starting to travel more.

VietJet shares hit 137,400 dong ($6.03) each, valuing it at$1.8 billion, ahead of Vietnam Airlines at $1.7 billion.

On its first trading day VietJet was valued at $1.4 billion and its rival, which listed in January, at $2.1 billion.

Growth in the Vietnamese market, which is one of the fastest in Asia Pacific, and a relatively small free-float in VietJet shares for retail investors, had driven the price of the shares, brokers said.

VietJet’s stock has a lower price-to-earnings (PE) ratio of 15.75 compared with 16.63 for Vietnam Airlines, Thomson Reuters data showed.

The CAPA Centre for Aviation has said that VietJet, which currently commands 40 percent of Vietnam’s domestic market, will likely become the country’s biggest domestic carrier this year.

FUTURE GROWTH

Some analysts forecast VietJet shares will jump to more than 143,000 dong per share.

“(The) VietJet story just begins so investors still have a lot of expectation on its shares,” Nguyen Van Dung, manager of the securities consulting department at Saigon Securities, said.

“But if from investing perspective, I will buy Vietnam Airlines share as the firm has much potential to grow sustainably in (the) long-term and the price now is very good to buy,” he added.

The listings of VietJet and Vietnam Airlines were part of the government’s push on privatization to boost investment.

Vietnam, which is slowly opening up its domestic market amid considerable investment interest, has completed several major share sales and listings in recent months, including a $3.72 billion flotation of its top brewer Sabeco SAB.HM in which the government owns nearly 90 percent.

($1=22,800 dong)