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July, 2019
OUTLOOK REPORT 2H.2019
by
RESEARCH DEPARTMENT
PROSPECTIVEE INDUSTRIES &
FIRMS
STOCK MARKET
MỤC LỤC
MACROECONOMY
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
The global economy’s outlook weakened in
the context of global trade has declined since
the end of 2018 due to the effects of trade
war.
According to the WB, US GDP growth is
projected to slow to 2.50% in 2019 then
continued to grow moderately by 1.70% and
1.60% in 2020 and 2021 respectively.
At the same time, the growth of EU region
especially in the manufacturing sector
seemed to dwindle.
After the year of natural disasters, the
economy of Japan recovered. However, the
recovery speed is still slow in the context of
trading activities with important partners:
China declined.
WORLDWIDE PICTURES
3
Central banks of countries in the Asia-
Pacific region are lowering interest rates to
stimulate the economy when the US-China
trade war becomes worse, economic
instability rises.
The way of central banks especially FED
tends to change monetary policy from
tightening to easing which is forecasted to
create an impact:
(1) The movement of capital flows in
marginal and emerging markets.
(2) The prices of USA goods listed in the
context of USD forecast to discount.
The risk of capital withdrawal from
marginal and emerging markets is
significantly declined.
Expected impact on inflows to Vietnam
market: in the current political-economic
context when the general trend of foreign
investment flows (both indirect and direct)
is still trying to leave the areas of aging
population and political instability
escalating war, Vietnam continues to be one
of the attractive destinations with foreign
investment inflows.
That the yield curve of US Government bond
reversed, resulted in concerns about the
recession in the future.
It is noteworthy that according to statistics
within the past 60 years (since the end of the
Second World War), whenever the yield curve
reversed, it is always followed by an economic
recession of one or several major economic
players around the world a few years later. In
case reversed yield curve is confirmed with
certainty, the probability of a slow economic
slowdown / recession in the next 12 months
shall be be around. 25-30%.
Global economy’s growth is forecasted to slow down The trend of reversing monetary policy of
central banks
The unstable factors increase
Alter and shift to 5G technology.
Blockchain technology is more widely
accepted and has a transition.
Big data analysis.
Consumer trends based on technology.
Trend of using cloud computing.
Some new technology trends
0%
1%
2%
3%
4%
5%
6%
2015 2016 2017 2018 2019f 2020f 2021f
Forecast of trade and global GDP
growth (%)
Global trade GDP
Source: WB, VCBS collected
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
GDP growth in June 2019 was 6.76%, lower than the increase of the first 6 months of
2018 but higher than the increase of the first 6 months of in the period 2011-2017.
Processing-manufacturing industry continues to be the bright spot of the economy.
There is a certain shift in the structure of growth contribution (1) between FDI and other
enterprises; (2) among sectors within the same FDI sector. At the same time, disbursed
FDI continues to be an important resource of the economy.
Although consumer demand is still increasing, the growth rate tends to slow down.
Disbursement of public investment is still laggard compared to the plan.
Import-export turnovers grow more slowly than the same period because the global
trade activities tended to decrease.
FDI Implemented continues to grow ~7% - 8% compares to the same period.
ECONOMIC GROWTH - REMAINS IN THE BRIGHT SIDE
4
Source: CEIC, GSO, VCBS compiled
Agriculture Mining and Quarrying
Manufacturing
Electricity and Gas Construction
Wholesale, Retail Sales
& Motor Vehicles
Transportation &
Storage
Transportation &
Storage
Information &
Communication
Real Estate
Water Supply
Education & Training
Human Health & Social
Work Activities
Arts, Entertainment &
Recreation Other Service
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
0 0.02 0.04 0.06 0.08 0.1 0.12 0.14
Growth point
% growth of sector
Contribution to GDP growth
The circular size represents the ratio of industry to GDP
-8
-3
2
7
12
17
22
01
/16
03
/16
05
/16
07
/16
09
/16
11
/16
01
/17
03
/17
05
/17
07
/17
09
/17
11
/17
01
/18
03
/18
05
/18
07
/18
09
/18
11
/18
01
/19
03
/19
05
/19
US
D b
n
Import-Export
Exports Imports Trade Balance
6
7
8
9
10
11
12
13
0
50
100
150
200
250
300
350
400
12/16 04/17 08/17 12/17 04/18 08/18 12/18 04/19
Tn
. V
ND
Retail Sales
Trade Hotel & Restaurant Services & Tourism Growth rate (%)
9.10
0
3
6
9
12
Jan Feb Mar Apr May Jun
US
D b
n
FDI Implemented through years
2017 2018 2019 Linear (2019)
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
The consumer price index (CPI) in June 2019 decreased by 0.09% compared to the previous month due to the impact of 2
adjustments in gasoline prices. In general, in the first 6 months of the year, the consumer price index rose the lowest level
within the last 3 years, mainly (1) Efficient administrative efforts by the Government. (2) Crude oil prices and food prices
(mainly pork) decreased over the same period.
Upward pressure to increase inflation is greater in the next 3-6 months:
Higher basic salary from July. Consequently, price of some services calculated based on this shall also higher.
Further effect from increase in electricity.
New school year in Q3.2019 bring higher education services’ price.
Uncertainties overwhelm commodities market notably crude oil price. It can be clearly seen that crude oil price is
determined by political geography instead by pure supply &demand.
However, we still believe that 4% inflation target set by the Government is still within reach.
STABILITY OF THE ECONOMY- INFLATION
5
-2%
0%
2%
4%
6%
8%
-0.5%
0.0%
0.5%
1.0%
1.5%
01/1
6
04/1
6
07/1
6
10/1
6
01/1
7
04/1
7
07/1
7
10
/17
01/1
8
04/1
8
07/1
8
10/1
8
01/1
9
04/1
9
07/1
9
10/1
9
Projection for CPI in 2019
CPI (mom) CPI (yoy)
Source: CEIC, GSO, VCBS compiled
-6
-4
-2
0
2
4
6
8
10
12
07/2
017
08/2
017
09/2
017
10/2
017
11/2
017
12/2
017
01/2
018
02/2
018
03/2
018
04/2
018
05/2
018
06/2
018
07/2
018
08/2
018
09/2
018
10/2
018
11/2
018
12/2
018
01/2
019
02/2
019
03/2
019
04/2
019
05/2
019
06/2
019
CPI (yoy)
Transportation Food & Food stuffs CPI Core inflation
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
Till June 28th, the center exchange rate +1.06% ytd,
meanwhile exchange rates quoted at commercial banks
+0.45% ytd, and stayed far away from floor rate, which is
calculated based on center exchange rate.
The US added Vietnam to currency manipulation watchlist.
Hence, State Bank shall be more conservative when it
comes to build up foreign reserve.
VCBS believe that surrounding big events in worldwide
market, center exchange rates may under upward pressure.
However, the devaluation of VND this year, calculated
based on center exchange rate shall not exceed 2%.
STABILITY OF THE ECONOMY- EXCHANGE RATE
6
News, Events, which may have impact on exchange rate Events to follow specifically Expected impact
Reasonable measures of SBV, flexible coordination of operator's
tools
Actively regulated center
exchange rate by SBV
+
FED may consider lower rates inflation and global risks worsen. FOMC in July, September,
October, December
+
Concern derives from uncertainties in worldwide market notably
risk from inverted yield curve; trade war, global economic
growth
Tariff reactivated when
negotiations ended up with no
deal.
_ _
Investment flows continue to choose Vietnam thanks to
macroeconomic stability
Data on inflows of FII and
FDI.
+
Source: CEIC, SBV, VCBS compiled
20,700
21,100
21,500
21,900
22,300
22,700
23,100
23,500
23,900
24,300
08/15 01/16 06/16 11/16 04/17 09/17 02/18 07/18 12/18 05/19
USD/VND Exchange rate
Reference exchange rate Ceiling exchange rate
Floor exchange rate VCB spot bid exchange rate
VCB spot offer exchange rate
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
Highlight: Orientation of operating in state banks, aiming to meet the global standard Basel II through circulars, legislative documents
=> tighten safe rates, guarantees the system works clean and safe .
Consequences:
• Clear divergance in term of credit growth between banks that have/haven’t achieve Basel II standard.
• Higher cost of capital (reflect through interbank interest rates)
• We forecast that long term interest rates (>12months) may keeps increasing and may be observed noticeably in some individual banks.
On average, we estimate that deposits may increase by 80bps. Note that in 1H.2019, deposits rates have already increased a little bit.
• Stock markets will take time to get used to higher cost of fund (note that they are indirect influences and shall take time to be felt by
market participants).
• End of cheap funding period, investors are accepting higher risks exposure, diversify investment product to get better profit margin.
ECONOMIC STABILITY – INTEREST RATES
7
4.50
5.00
5.50
6.00
6.50
7.00
7.50Interest rates(%)
HĐ 1 tháng HĐ 3 tháng HĐ 6 tháng HĐ trên 12 tháng
0.0%
2.0%
4.0%
6.0%
Jan-1
6
Mar
-16
May
-16
Jul-
16
Sep
-16
Nov
-16
Jan-1
7
Mar
-17
May
-17
Jul-
17
Sep
-17
Nov
-17
Jan-1
8
Mar
-18
May
-18
Jul-
18
Sep
-18
Nov
-18
Jan-1
9
Mar
-19
May
-19
Jul-
19
ON 1W 2W 1M
Source: Bloomberg, GSO, VCBS compiled
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
Agreement Partner Status
EVFTA EU (28 members) Signed, not yet
valid
RECP ASEAN, China, Korea, Japan, India,
Australia, New Zealand
Negotiating
Vietnam EFTA
FTA
EVFTA (Switzerland, Norway,
Iceland, Liechtenstein)
Negotiating
Vietnam -Israel Israel Negotiating
OPPORTUNITIES AND CHALLENGES FROM FREE TRADE AGREEMENTS
8
Table: The status of negotiating and signing some Free Trade Agreements
Source: VCCI, Ministry of Industry and Trade, VCBS compiled
As of July 2019, Vietnam has participated in 12 FTAs.
According to data from the Ministry of Industry and Trade, the total export
turnover taking advantage of tariff preferences under FTA in 2018 reached
USD 46.2 billion, accounting for 39% of the total export turnover to the
markets signing FTAs, and increased by 5%. with 2017.
Regarding to commodity structure: Meanwhile, agricultural products make
good use of tariff preferences; Industrial goods: the rate is not high due to
more complicated rules of origin.
Top 3 countries that Vietnamese commodities take
advantage of tariff preferences (2018)
$12 bn $11 bn $8,5 bn
2018:
942.371 profile ilegible
to C/O certificate
+35% in value
+25% in quantity
Residue increased with the rate of using tariffs still from some typical
trade agreements: India, Chile, South Korea, etc. In the future, we expect
tariff preferences with the CPTPP, EVFTA or RECP Agreement.
Challenge:
Restrictions on the ability to meet special code of origin for industrial
products.
The preparation and adaptation of domestic enterprises.
The issue of production scale of the critical economy: Infrastructure,
labor, and supporting industries
Requirement to meet the standards of FTAs is highly innivative such as:
intellectual property, information transparency in public investment
activities
Prospects & opportunities:
Opportunities to diversify export markets.
Resources from foreign investment flows into Vietnam to enjoy tariff
preferences.
Expect a positive change in the long term from institutional reforms to
meet commitments in FTAs.
Thus, VCBS believes that the investment highlight in 2019 as well as in
the medium term is an opportunity from free agreements with
investment flows.
Expect a public effect to enjoy some free trade agreements Expect a public effect to enjoy some free trade agreements
Source: CEIC, GSO, VCBS compiled
-50%
-30%
-10%
10%
30% Export growth in value (yoy)
2018 6M.2019 Growth in 6T.2019 % Export value
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
Vietnam is at risk of being subject to US sanctions.
Regarding to trade, Vietnam is in top 10 countries with large trade
deficit to US and continuously increasing trend
Vietnam is at risk of becoming a country for China to take advantage
to get ây with US tariff measures.
2 BIGGEST RISKS TO MACROECONOMIC FACTORS
9
China conducts monetary tightening to cope with the crisis
Top countries with trade surplus with the US and the
share in total trade activity (May 2019)
US do not have enough motivation to put sanction on Vietnam:
Vietnamese products exported to the US (except for Telephones
from Samsung) are mainly consumer goods such as garments,
footwear, furniture, ... => technology content is not high
The proportion of Vietnam's trade in the overall US trade activity is
very small (May 2019 accounts for 1.8%)
Finally, also the most important factor, the US-initiated trade
problems have political motives instead of trade alone.
=> VCBS believe that US will not put sanctions against Vietnam
-40
-35
-30
-25
-20
-15
-10
-5
0
US
D b
n
Trade deficit of US to Vietnam
Country Surplus
(USD bn)
% total
trade
1. Mexico 257.70 15.00%
2.Canada 253.90 14.80%
3. China 223.00 13.00%
4. Japan 91.60 5.00%
…. … …
13. Vietnam 30.10 1.80%
Chance that US applies sanctions to Vietnam
Source: US Census Bureau, VCBS complies
In the past, when CNY fell sharply in 2015, VND also had a strong
and sudden price monitoring step.
At the present time, the market has become acquainted with the
possibility of trade tension that may not end soon.
At the same time towards China, measures to adapt to prolonged trade
stress are also more diverse.
Eliminate all restrictions on foreign ownership in the areas of
brokerage and life insurance by 2020; cut restrictions on
telecommunications and transportation.
The statement is more open, more transparent for foreign
investment and the business environment will be further
improved. => Retain FDI and FI capital flows
From the US ‘s viewpoint, the FED tends to reverse the monetary
policy, making the outlook for the greenback weaker. Thereby,
reducing the possibility of CNY depreciation.
For Vietnam, with developments at this time, VCBS expects Vietnam
can continue to benefit from capital flows shifting from the world's
second largest economy.
In the latest news, the world's second biggest economy only grew by
6.2% in Q2.2019, meaning China needs to continue implementing
economic stimulus measures to prevent hard landing.
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
GDP growth in 2019 is forecast to reach 6.75% - 6.86%. In particular, FDI inflows continue to be an important resource for the economy.
Public investment is expected to only improve slightly in the second half of 2019.
Expectations with the remaining areas:
Growth in aggregate demand for goods and services continues to be maintained.
Projects and constructions continue to operate and exploit: Nghi Son Petrochemical Refinery, Formosa 2 High Furnace, continue to contribute to growth over the same period.
Although FDI enterprises, although no longer growing suddenly, are still an important driving force for the economy.
Stable contribution of the agricultural sector.
In conclusion, in 2019, Vietnam's macroeconomic picture is quite bright in general. However, in a context of beyond controlled uncertainties, investors need to screen harder for more profit opportunities and diversify the portfolio in order to get the balance between potential profits and risk exposure.
2019 OUTLOOK FORECAST & MEDIATION
10
Medium term forecasting Summary of macroeconomic forecast 2019
-4.7 -4.3
-3.6
-2.7 -2.5 -2.5
-6
-4
-2
0
2014 2015 2016 2017 2018e 2019f
Budget deficit (%GDP)
58
61
63.8
61.4
58.4
58.3
55
57
59
61
63
65
2014 2015 2016 2017e 2018e 2019f
Trần nơ công (65% GDP)
Nợ công (%GDP)
In recent years, the Government has shown consistent views on
macroeconomic management policies with inflation targeting. With the
target of public debt / GDP ratio forecasted at a safe level and under
control, the Government will have plenty of room to implement long-
term goals in which it is important to continue restructuring. banking
system, gradually bringing the system to Basel II international
standards
However, with the context of various uncertainties, the government's
primary goal will still be to maintain stability and improve the
investing environment in order to attract capital into Vietnam with
undeniable advantages:
The political environment is stable;
The economy grows well, the population structure is relatively young and
the labor force is abundant with relatively competitive labor costs;
Policy of macroeconomic management towards stability with the
orientation to reduce barriers to market entry and call for foreign
investment (both direct and indirect);
Source: MOF, IMF, WB Source: MOF, VCBS compiled
6,75- 6,85%
6,85-
7,05%
0%
2%
4%
6%
8%
Q1 Q2 Q3 Q4
GDP growth (qoq)
2015 2016 2017 2018 2019Source: VCBS compiled
~4.00%
Deposit rates
+80 bps
GDP growth
6.60%-6.80%
Central
exchange rate
+ 2.00%
CPI
FIXED INCOME
11
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
Bond market continued to expand its size.
Recognized the investment shift, diversification of investment channels to other types such as corporate bonds when the
level of Government bond yields is lower than many countries in the region.
The ratio of issued corporate bonds/ issued government bonds tends to increase gradually over the years. As of the end of
Q2.2019, according to the estimated figures, the debt balance of the Corporate bonds/GDP continued to rise above 9%.
Outlook
Market participants continue to shift trend of investment channels in the upcoming period.
However, the size of the Government bond market still remains as the demand from financial institutions always exists
BOND MARKET – Diversified to Corporate bonds
12
BOND OUTSTANDING IN 2018 WAS ~38.80% GDP (+1.20% YOY)
Source: HNX, Bloomberg, VCBS
28,707
34,412
48,047 42,769
97,413
115,416
146,039
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
2012 2013 2014 2015 2016 2017 2018
Bond Issuance
Gov Bond Gov-Backed Bond Muni Bond Corp Bond
1.95% 2.73%
2.50% 3.40%
5.27% 6.19% 7.86%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2012 2013 2014 2015 2016 2017 2018
Bond oustanding/GDP
Gov Bond Gov-Backed Bond Muni Bond Corp Bond
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
Tenor 2019
Plan
1H. 2019
Plan
Issued in
1H. 2019
% complete
1H.2019
% complete
2019
5Y 40,000 17,000 4,256 25.0% 10.6%
7Y 30,000 10,500 3,550 33.8% 11.8%
10Y 70,000 56,000 43,332 77.4% 61.9%
15Y 78,000 56,000 41,605 74.3% 53.3%
20Y 20,000 8,000 7,085 88.6% 35.4%
30Y 22,000 6,000 5,285 88.1% 24.0%
Total 260,000 153,500 105,113 68.5% 40.4%
GOV BOND MARKET– Primary market
13
Issuing volume focused on 10Y and
15Y tenors.
Winning rates in 1H.2019 decreased
considerably in almost all tenors.
Successful amount of 20Y and 30Y
tenors suddenly increased rapidly at the
end of June.
ST’S ISSUANCE FOCUSED ON 10Y & 15Y
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Jan
Feb
Mar
Ap
r
May Jun
Jul
Au
g
Sep
Oct
No
v
Dec
VND Billion Bonds Matured in 2019
ST VDB VBSP Other
Source: HNX, VCBS
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
5Y 7Y 10Y 15Y 20Y 30Y
VND bn
Offering volume Winning volume
Winning-to-offering ratio Issuing plan
Issuance and 2019
0
2000
4000
6000
8000
10000
12000
2.50%
3.50%
4.50%
5.50%
6.50%
7.50%
8.50%Vol (VND bn) Winning rates GB Auction results
Volume 5Y 7Y 10Y 15Y 20Y 30Y
5.05 5.75
8.7
13.03 12.41
13.35
3
5
7
9
11
13
15
2014 2015 2016 2017 2018 6T.2019
Average issuance tenor
-
60
120
180
240
300
Jan 1
7F
eb 1
7M
ar 1
7A
pr
17
May
17
Jun
17
Jul
17
Aug
17
Sep
17
Oct
17
Nov
17
Dec
17
Jan 1
8F
eb 1
8M
ar 1
8A
pr
18
May
18
Jun
18
Jul
18
Aug
18
Sep
18
Oct
18
Nov
18
Dec
18
Jan 1
9F
eb 1
9M
ar 1
9A
pr
19
May
19
Jun
19
VN
D T
ril
lio
n
Secondary market
Outright Repo
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
VND 1,021,313 bn (-22.00% yoy) was traded on the secondary
market. In detail, outright and repo value traded recorded at VND
459,119 bn (-26% yoy) and VND 562,194 bn (-18% yoy). Average
trading volume each session decreased slightly compared to 2018.
Yield curve moved downward in H1.2019 thanks to: (1) Domestic macro-
economic indicators in this period are stable: (i) GDP growth rate is still
remained; (ii) Inflation is well-controlled. Along with that, (2) Banking
system liquidity is abundant and (3) Political uncertainties stopped
escalating.
Foreign investors net bought VND 10,189.6 billion in almost all
tenors, especially short-term tenors (<3 years).
GOV BOND MARKET – Secondary market
14
Source: HNX, Bloomberg, VCBS
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
> 10Y 7-10 5-7 3-5 <3
Outright
-339
4,050
2,530
215
1,254
-335
-1,274
1,429
789 270 422
-222
1,681
-275
-465
624
-655
1,209 963
2,121
1,445
2,933
48
720
2,870
06
/17
07
/17
08
/17
09
/17
10
/17
11
/17
12
/17
01
/18
02
/18
03
/18
04
/18
05
/18
06
/18
07
/18
08
/18
09
/18
10
/18
11
/18
12
/18
01
/19
02
/19
03
/19
04
/19
05
/19
06
/19
FI in the secondary market Net position (Unit: bn.VND)
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
01/1
6
04/1
6
07/1
6
10/1
6
01/1
7
04/1
7
07/1
7
10/1
7
01/1
8
04/1
8
07/1
8
10/1
8
01/1
9
04/1
9
Bond yields
2Y 3Y 5Y 7Y 10Y 15Y
1,668
3,642 3,655
6,354
8,962 8,756 8,582
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
0
300
600
900
1,200
1,500
1,800
2,100
2,400
VN
D b
n
x1
,00
0 V
ND
bn
Total volume (left side) Average daily volume (right side)
Average daily volume
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
Interbank rate for ON-3M tenors were recorded at 3.871%, 3.907%, 3.957%, 4.05% and 4.186%.
The average interbank interest rate level may continue to be higher than the same period last year. However, this only
shows a higher cost of capital in the context of the State Bank's consistent with the goals of ensuring safety ratios and
access to international standards. Nevertheless, we expect that no tensional liquidity recorded in the upcoming period:
(1) Speed of disbursement for infrastructure is still slow and behind the schedule. Therein, disbursement for infrastructure from
the beginning of the year to June 15 was VND 112.1 trillion, equaling to 26.1% of the whole year’s estimates (the same period
of 2018 reached 27.8%). However, we anticipate this issue could be significantly improved at the end of the year.
(2) Credit growth of the first half year reached 7.33%, equivalent to last year, ensuring risk control and supporting economic
growth, which focused on improving credit quality instead of increasing the loan balance.
(3) In H1.2019, the SBV bought a large amount of foreign currency, creating a reserve to deal with adverse impacts from
outside. In the context of stable liquidity but higher cost of capital makes market participants tend to accept shifting to higher
risk investment channels to find adequate yields.
GOV BOND MARKET – Secondary market
15
THE AVERAGE INTERBANK RATE LEVEL IS HIGHER
0.0%
2.0%
4.0%
6.0%
01/1
6
03/1
6
05/1
6
07/1
6
09/1
6
11/1
6
01/1
7
03/1
7
05/1
7
07/1
7
09/1
7
11/1
7
01/1
8
03/1
8
05/1
8
07/1
8
09/1
8
11/1
8
01/1
9
03/1
9
05/1
9
ON 1W 2W 1M
Interbank rates
Source: HNX, Bloomberg, VCBS
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
GOV BOND MARKET –2H.2019 OUTLOOK
16
Primary market
Demand still grows especially from insurance sector
Average issuing tenor remained above 10.
Secondary market
The average interbank interest rate level may continue to be higher
than the same period last year; however, the liquidity is expected
to be stable, less likely to be shortfall
More pressure on Q3.2019 => more upward pressure on bond
yields market. Despite the increasing pressure in the next period,
bond yields at the end of 2019 are forecasted to be equivalent to
the previous year.
In the context of stable liquidity but higher cost of capital makes
market participants tend to accept a partial shift to higher-risk
investment channels to obtain adequate yields.
Yield curve tends to be flatter.
KEY FACTORS
Disbursement for infrastructure is
expected to improve in 2H.2019
SBV’s regulating policy
Liquidity on Interbank market
Sentiment over macro-economics
foundation
Source: HNX, VCBS Research
0
50
100
150
200
250
2017 2018 2019E 2020E
x 1
,00
0 V
ND
bn
Bond Matured Bond issued
COMMODITIES
PRICE
UPDATES
BRENT CRUDE OIL
18
40
45
50
55
60
65
70
75
80
US
D/b
arr
el
World’s oil price 6M.2019
Daily Weekly Monthly Quarterly Yearly YTD
-1.14% 1.43% 7.36% 0.18% -15.39% 22.29%
Price change (as at June 28th, 2019)
• World’s oil prices recorded a strong upward trend in
1H.2019, from nearly USD 51 per barrel at the
beginning of the year to over USD 60 per barrel at
the end of Q2.2019, mainly due to the geopolitical
factors (US sanctions imposed on Iran, an
agreement to cut output between Russia and OPEC,
etc) and the expectations of global economic growth
may be weakened by the US - China trade tension.
• As can be forecasted, oil prices will continue to
fluctuate in the range of USD 55 – USD 75 per
barrel. Specifically:
• Goldman Sachs forecasted that Brent crude oil
price will fluctuate around USD 60.55 per
barrel (the closing price on June 03rd, 2019).
• Meanwhile, Morgan Stanley has lowered its
forecast to USD 60 per barrel from the
previous forecast of USD 65 per barrel, and
said that the oil market will be more balanced
in 2019.
RUBBER
19
Daily Weekly Monthly Quarterly Yearly YTD
-1.74% 0.20% -2.84% -0.14% 10.93% 17.95%
Price change (as at June 28th, 2019)
• The world rubber price in the first 6 months
experienced a strong increase and reached the
highest level of USD 157 per kg on May 31st, 2019,
due to some reasons:
• The escalating US – China trade tension
• Seasonal factors affect rubber production from
some major producing countries (Malaysia,
Indonesia, etc)
• However, the upward momentum of rubber prices
will be weakened because:
• Excess supply although major producing
countries have cut down productivity.
• Rubber is the main raw material for the
production of tires (spare parts), while the
consumption in some major markets such as
China, the US and the UK tends to decrease.
110
115
120
125
130
135
140
145
150
155
160
US
D/k
g
World’s rubber price 6M.2019
STEEL
20
Daily Weekly Monthly Quarterly Yearly YTD
0.00% 1.49% 1.16% -0.33% -4.37% 4.61%
Price change (as at June 28th, 2019)
• Chinese spot steel prices rose sharply in
1H.2019, especially in April, thanks to the
peak consumption season, rising raw material
prices.
• Prices fluctuate due to impacts around US-
China trade tension.
• Iron ore prices rose after the Vale dam failure
on January 25th and the storm at the end of
March 2019.
• The Chinese steel market is expected to slow
down compared to the beginning of the year
due to some factors:
• Excess supply for steel.
• Low consumption in the context of the
escalating US - China trade tension.
• Challenge from the deceleration of the
Chinese economy.
540
560
580
600
620
640
660
CN
Y/t
on
Chinese spot steel prices 6M.2019
PROSPECTIVE INDUSTRIES & FIRMS
STOCK MARKET
MỤC LỤC
MACROECONOMY
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
1H.2019’S STOCK MARKET HIGHLIGHTS
22
90
98
106
114
122
130
138
146
825
875
925
975
1,025
2-Jan 16-Jan 30-Jan 20-Feb 6-Mar 20-Mar 3-Apr 18-Apr 7-May 21-May 4-Jun 18-Jun
VN Index HNX Index
VN Index +6,53% HNX Index +0,82%
Cash flow advances into
the market – psychology
effect after the Lunar
New Year
Credit growth achieving
6,22% 6M.2019
CPI decreasing by
0,09%, increasing
by 2,64% yoy in the
corresponding June
GDP growth
achieves
6,71%
6M.2019.
Profit-taking
pressure
taking place
The US govt. bond
yield curve inverting Large-cap
stocks
leading the
market
Viet Nam being placed higher
on the S&P Global Ratings
Oil prices overseeing
highest quarterly price
hike in a decade. Cautious
mindsets
leading the
market
Trading volume
increases significantly
Electricity prices increasing
by 8,68% from 20.03
Trade tensions between
US-China escalating
FED suggesting to
decrease interest
rates in July/20190
Source: Bloomberg, VCBS
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
HIGHLIGHTS OF Q1.2019
23
800
850
900
950
1,000
1,050
50
150
250
350
450
02/01/19 22/01/19 11/02/19 03/03/19 23/03/19
Mil
lion
s
VOLUME VN INDEX
-0.50%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
TOP 5 stocks contributing to the increase/decrease of VNINDEX
Q1.2019
In Q1, the market is somewhat sluggish due to a strong
downtrend occurring at the end of 2018, causing investor
psychology to become more wary of the initial sessions in
2019. Market liquidity maintains at a lower rate as the index
recovers slowly.
However, after the Lunar New Year holiday, huge cash
flows start to head back towards the market among with
great optimism, helping the VN Index approach closely to
the 1000 points benchmark at the end of February. During
this period, the market starts to experience short-term profit-
taking pressure. This along with the poor result of the US-
NK Summit in Hanoi have caused the public mindset to
switch to short selling, aggressively pushing down the
index.
Until March, the market returns to being stabilized and
successfully achieves the benchmark at 1000 points during
mid-March. But profit-taking pressure swiftly returns to
dominate the market amid quite depressive domestic as well
as worldwide macro-economic news (local electricity’s
prices increase by 8,68%, the US Gov. Bond yield curve
inverts, ...), blocking the index from amplifying its previous
growth.
VN Index achieves growth at 9,51% at the end of Q1. Stock
tickers that have the highest contribution to the uptrend are
large—cap ones such as VHM, VIC. VCB. Source: Fiinpro, Bloomberg, VCBS
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
HIGHLIGHTS OF Q2.2019
24
800
850
900
950
1,000
1,050
50
150
250
350
450
01/04/19 21/04/19 11/05/19 31/05/19 20/06/19
Mil
lio
ns
VOLUME VN INDEX
-1.50%
-1.00%
-0.50%
0.00%
0.50%
1.00%
TOP 5 stocks contributing to the increase/decrease of VNINDEX
Q2.2019
Depressive mindset from investors at the end of Q1 continues and
extends to the beginning span of Q2, in which is expressed through the
index continuously decreasing due to constant pressure to strong sell as
well as the market liquidity becoming more weakened as active cash
flow streams are standing outside of the market. Since profit-taking
pressure focuses mostly on large-cap stocks, the general indexes have
taken a great hit.
May is appeared to have gloomy signals on the world’s economic growth
when US President Donald Trump announces to apply tariffs totaling to
$200 billion worth of goods imported from China, causing the world’s
stock market to fumble. Afterward, China retaliates by hiking up import
tariffs on US goods, causing experts and big financial companies around
the world to forecast a downfall on the world’s economic growth rate. As
more information on the next economic recession starts to grow, the VN
Index dives back to the area around 950 points towards the end of May,
even though it has had a small recovery to the area around 990 points
earlier during the middle of the month.
In June, market conditions still reflect continuing shorting pressure as
investors actively try to stay out of the market to wait for the result of
G20, which would occur at the end of June. Additionally, VN Index has
received a decent amount of support at the end of June with positive
macro-economic news and the news of EVFTA being officially signed at
30/06.
At the end of Q2, VN Index decreases by 3,14% due to large-cap stocks
that have had steady growth in Q1 having to deal with high profit-taking
pressure in Q2 such as VHM, VNM, BID Source: Fiinpro, Bloomberg, VCBS
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
FOREIGN INVESTORS’ TRADING ACTIVITIES
25
-1,000
0
1,000
2,000
3,000
4,000
5,000
02/01/19 11/02/19 23/03/19 02/05/19 11/06/19
Foreign net buying/selling value (billion VNĐ)
-4,000
-2,000
0
2,000
4,000
6,000
VN
D b
n
Top 5 stocks in terms of net buying/selling value in the market
The first half of 2019 oversees positive conditions from foreign
investors with total net buying value at more than 10.000 billion
VND, equating to more than 150 million shares.
Stock with the highest foreign net buyers is VIC with a business
purchasing deal from SK corporation (S.Korea) of 5.617 billion
VND worth of value during mid-May/2019. The followers are
respectively MSN with total net buying value at around 2.700
billion VND, and E1VFVN30 at higher than 2.4000 billion VND.
Source: Fiinpro, Bloomberg, VCBS
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
HIGHLIGHTS OF THE DERIVATIVE MARKET
26
750
800
850
900
950
0
90000
180000
270000
360000
450000
02/01/19 11/02/19 23/03/19 02/05/19 11/06/19
VOLUME OPEN INTEREST VN30F1M VN30 INDEX
During the first half of 2019, the derivative market continuously demonstrates stable growth with average volume listing at more than 100
thousand matching contracts and open interest (OI) at 20 thousand contracts. The VN30F1M Index continues to be the most favored futures
contract thanks to its high market liquidity and market conditions mirroring that of the underlying asset, providing investors with many
chances. Along with the VN30 Futures Contract, the SSC (State Security Commission of Vietnam) has also shown great interest and priority
in expanding the derivative market through new products that would be introduced and officially rolled out into the market in the last half of
2019 such as Covered Warrant, of which would officially be able to transact at 28/06 and Bond Futures, rolling out on 04/07. Growth from
the derivative market will provide investors more chances in raising profits from joining the market as it also hopes to attract foreign
investments so the market could further its growth and improvement. Source: Fiinpro, Bloomberg, VCBS
STOCK MARKET
OUTLOOK 2H.2019
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
We see no particular reason to expect VN Index to surpass
1.000 points in Q3.2019. Despite the latest progress between
U.S. and China to reconcile their current trade war after the G20
Osaka (Japan) summit in June 2019, there is still a long way for
the two largest powerhouses to reach a final deal. Moreover,
deposit rates of Vietnam’s commercial banks are likely to keep
rising in the 2nd half of 2019 and in turn affect the discount rate
and valuation of assets in the stock market. Besides, although we
are still optimistic regarding Vietnam’s economic growth, we
view that the economy is still “adapting” to the shift of global
production chain and therefore is unlikely to reach an even
higher growth rate in the short run.
Similarly, HNX is likely to fluctuate between 100.00 – 110.00
points in Q3.2019.
However, we expect both indices will perform better in the last
quarter of the year after changes in capital cost is factored in
stock valuations. In addition, the last quarter of the year usually
witnesses listed companies book the biggest proportion of their
yearly revenue and profit, which often lifts investors’ sentiment
as well as the overall market up. We forecast VN Index will
end the year between 1.000 and 1.050 points, while HNX
index will reach 110.00 – 115.00 points.
MARKET PROSPECTS IN 2H.2019
28
INDEX MOVEMENT FORECAST
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME
As Vietnam is still “adapting” its economy to the shift of global
production chain, we view that investment opportunities in the later half of
2019 will mostly arise from:
1. Industries benefiting from manufacturing relocation due to the trade
war between U.S. and China. Several noteworthy ones may be pointed out,
e.g. industrial park real estate and seaport-logistics, as they serve the
relocating process of manufactories moving out from China, whose goods are
the target of U.S. import tariff, to other nations with more competitive labor
cost.
2. Affiliated companies of leading economic holdings in Vietnam. As a
result of “forming an enabling state” orientation by the Government, business
environment in Vietnam is continuously improved and companies are
encouraged to expand their business, especially those in the private sector.
Thus, affiliated companies of leading economic holdings with long-term
resources and visions are expected to become key players in the economy in
the future, e.g. Viettel group’s subsidiaries, Vingroup’s member companies,
etc.
3. Companies benefiting from free trade agreements (e.g. CPTPP,
EVFTA, etc.) between Vietnam and other partners, focusing on
aquaculture and textile ones meeting import standards and technological
barriers of partners.
4. Other companies with “inner investment catalysts” regarding M&A,
foreign strategic investors, share IPOs and listings, etc.
MARKET PROSPECT IN 2H.2019
29
INVESTMENT OPPORTUNITIES
PROSPECTIVE INDUSTRIES & FIRMS
STOCK MARKET
MỤC LỤC
MACROECONOMY
EQUITY OUTLOOK
31
• ACB MBB VIB Banking
• HDG NLG Real estate
• HVN ACV SCS Aviation
• VGC HPG Construction materials
• MWG PNJ Retail
• PVB PVS PVD Oil & Gas
BANKING
SECTOR
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
Credit growth of banks depends on asset quality and operational safety
requirement
Credit growth of total economy reached 7.33% at the end of June 2019 (1H.2018 was
6.10%). Forecasted credit growth was around 14%.
Lending interest rate may not be highly fluctuated in 2019. One of the operational
objectives of the State Bank is still to stabilize lending interest rates.
Some banks have been allowed to apply Basel II standard, their higher credit growth limit
may be approved by the SBV, thereby ensuring profit growth in 2019. The remaining banks
have a large demand to raise capital for ensuring safety ratios. In particular, certain banks
face difficulties in raising capital, which will affect their credit growth and interest income
in 2019.
BANKING SECTOR
33
7.33%
-5%
0%
5%
10%
15%
20%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Credit growth ytd
2014 2015 2016
2017 2018 2019
9.61%
11.10%
8%
9%
10%
11%
12%
13%
Jan-1
6
Apr-
16
Jul-
16
Oct
-16
Jan-1
7
Apr-
17
Jul-
17
Oct
-17
Jan-1
8
Apr-
18
Jul-
18
Oct
-18
Jan-1
9
Apr-
19
Average CAR of banking sector
State-owned banks Other JSC banks
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
CAR of banks
2017 2018
Source: SBV, commercial banks, VCBS summaries
Banks was approved to apply Basel II
according to Circular number 41/2016
Effective on Bank
End of 2018 VCB, VIB, OCB
1/5/2019 ACB, MBB, VPB, TPB
1/7/2019 TCB, MSB
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
Deposit growth and deposit interest rates follow
capital needs of banks
Deposit growth of total economy reached 6.09% at June 18th,
2019 (1H.2018 was 7.76%).
The average deposit interest rate remained at a high level
compared to the same period in 2018. Forecasted deposit rates
may increase towards the end of 2019 when banks need to
increase deposit in medium and long-term to meet safety
requirements of the SBV.
BANKING SECTOR
34
Source: SBV, commercial banks, VCBS summaries
6.09%
-5%
0%
5%
10%
15%
20%
25%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Deposit growth ytd
2014 2015 2016 2017 2018 2019
32.63% 31.05%
35.62% 33.89% 33.31%
37.00%
33.45%
29.30%
37.41%
31.50% 33.00%
36.50%
33.60%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
ACB BID CTG EIB KLB LPB MBB SHB STB TCB TPB VIB VPB
Short-term funds used for medium and long term loans
2017 2018
4.50
5.00
5.50
6.00
6.50
7.00
7.50
Average deposit rates (Unit: %)
D.R (1 month) D.R (3 months) D.R (6 months) D.R (above 12 months)
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
A minority of banks can improve NIM
A majority of banks meet difficulty in improving their
NIM due to increasing cost of fund and stable lending
interest rate.
A minority of banks such as VCB, MBB, ACB, TCB, VIB
can improve NIM. These banks are able to expand their
credit portfolio to segments which have higher lending
rates (increasing the proportion of retail credit segment)
or having low cost of fund, reflected in high CASA.
BANKING SECTOR
35
Source: SBV, commercial banks, VCBS summaries
Total operating income of banks is on an
upward trend
Interest income follows credit growth and ability to
increase NIM of banks.
Diversification of non-interest income allows banks to
reduce dependence on interest income and increase the
proportion of non-interest income on total operating
income.
Improving the cost income ratio (CIR) is an vital factor
that helps banks maintain growth. Operating expenses are
reduced thanks to improvements in technology,
automation and digital banking.
3,490
453
10,705 9,632
1,017
2,466
289 1,370
5,454
192 1,543
3,542 4,395
1,906
11,768
1,714
7,963
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
ACB BAB BID CTG EIB HDB KLB LPB MBB NVB SHB STB TCB TPB VCB VIB VPB
Total operating income of banks (VND billion)
Q1.2019 Growth yoy
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
ACB BID CTG EIB HDB KLB LPB MBB BAB NVB SHB STB TCB TPB VCB VIB VPB
NIM of banks
NIM 2018 NIM Q1.2019
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
Handling NPL process put a strong pressure on banks to
maintain growth
High number of VAMC bonds that need to make provision (VND 75
trillion, statistics on 17 listed banks at 31.12.2018).
The group of banks that completed their handling NPL process consist
of VCB, ACB, MBB, TCB and VIB. These banks have advantages to
maintain growth in long term, because they do not need to make large
provisions and they are able to record extraordinary income through
debt collection.
On the contrary, other banks which have large non-performing loans
such as STB, CTG, BID, NVB, and SHB are in restructuring process.
They need time to make credit risk provisions, thus profit is difficult to
grow suddenly in 2019.
BANKING SECTOR
36
197
6,462
11,197
3,351
492 60 538
6,569 5,830
37,663
438 2,371
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
BAB BID CTG EIB HDB KLB LPB NVB SHB STB TPB VPB
VAMC bonds need to make provision at 31.12.2018
(VND billion)
2017 2018
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
ACB BAB BID CTG EIB HDB KLB LPB MBB NVB SHB STB TCB TPB VCB VIB VPB
Accrued interest and fee receivable on Loans to customers
2018 Q1.2019
Source: SBV, commercial banks, VCBS summaries
0.00%
30.00%
60.00%
90.00%
120.00%
150.00%
180.00%
0.00%
1.00%
2.00%
3.00%
4.00%
ACB BID CTG EIB HDB KLB LPB MBB SHB STB TCB TPB VCB VIB VPB
NPL ratio and LLR of banks
NPL Ratio Loan loss ratio
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
Diversified business results of banks in 2019
Banks that have been held to Basel II standards will have a larger room for growth. These banks have acquired higher credit growth and
completed handling the NPL process. With improved NIM, profit will grow strongly. Non-interest income is contributed by service
income, risk provision reversal, and income from debt collection.
Credit institutions, whose business’ focus is on consumer finance, are vulnerable. When macroeconomic changes, it is difficult to make
loans that impact negatively on interest income while asset quality is on a downward trend due to problematic supervising activities and
weak debt recovery.
Other banks will continue the restructuring process. Large non-performing loans will limit credit growth and significantly reduce the
profitability of some banks. Capital raising is an urgent issue for banks to meet the system’s operational safety standards. VCBS expects
that some banks in this group will make significant progress in 2019, and take steps to orient the core activities for the next process,
thereby having a basis for growth from 2020.
BANKING SECTOR
37
26.38%
10.10%
13.47%
8.01%
3.30%
17.53%
6.36%
8.79%
19.38%
1.21%
10.92%
9.18%
16.78%
18.87%
24.66% 23.28%
19.68%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
ACB BAB BID CTG EIB HDB KLB LPB MBB NVB SHB STB TCB TPB VCB VIB VPB
ROE TTM of banks
2018 Q1.2019
Source: SBV, commercial banks, VCBS summaries
5,878
2,521 3,153
2,617
1,783 2,424
1,707 1,102
350
1,061 853 810 511
29%
24%
33%
22%
19%
25% 23%
22%
32%
40%
27%
24%
27%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
VCB BID CTG TCB VPB MBB ACB HDB EIB STB TPB VIB LPB
Profit before tax Q1.2019
PBT 9M.2018 (VND bn) Completed year target
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
BANKING SECTOR
38
Sector statistic in Q1.2019
Indicators Unit VCB MBB VIB ACB TCB TPB CTG BID VPB HDB LPB SHB EIB STB
Total assets Q1.2019 VND bn 1,073,332 383,219 144,836 335,803 326,112 139,944 1,146,774 1,342,939 322,080 202,563 181,901 333,106 150,715 425,033
Loans to customers
Q1.2019 VND bn 673,022 229,168 101,904 237,358 163,835 84,724 861,590 1,024,435 231,458 128,937 123,758 226,014 101,016 271,020
Deposits from customers
Q1.2019 VND bn 838,277 242,252 88,668 275,070 207,978 77,913 824,613 1,014,935 188,117 126,694 125,843 232,940 122,019 377,223
Credit growth 2018 % 14.60% 16.56% 17.00% 16.00% 19.97% 18.20% 6.10% 7.20% 17.30% 17.80% 17.30% 15.00% 2.70% 14.00%
Credit growth target 2019 % 15% 15% 35% 13% 13% 20% 6-7% 12% 15% 24% 16% 13% 11% 16'%
Total equity Q1.2019 VND bn 72,992 36,131 11,253 22,383 53,875 11,342 70,125 56,652 36,180 17,713 11,618 17,066 15,236 25,477
Market cap VND bn 247,382 42,796 13,189 36,043 74,477 20,329 74,840 107,348 43,853 26,389 7,017 8,422 21,822 21,013
Net interest income
Q1.2019 VND bn 8,499 4,135 1,385 2,857 3,359 1,284 7,950 8,545 6,785 2,030 1,401 1,353 829 2,458
Non-interest income
Q1.2019 VND bn 3,269 1,319 329 634 1,035 622 1,683 2,160 1,177 436 -32 190 188 1,084
Profit before tax Q1.2019 VND bn 5,878 2,424 810 1,707 2,617 853 3,153 2,521 1,783 1,102 511 744 350 1,061
Target profit before tax
2019 VND bn 20,000 9,560 3,400 7,279 11,750 3,200 9,500 10,500 9,500 5,077 1,900 3,068 1,077 2,650
NIM (TTM) % 3.08% 4.60% 3.91% 3.53% 4.13% 3.88% 2.09% 2.72% 8.88% 4.12% 3.15% 2.02% 2.40% 2.41%
ROE (TTM) % 24.66% 19.38% 23.28% 26.38% 16.78% 18.87% 8.01% 13.47% 19.68% 17.53% 8.79% 10.92% 3.30% 9.18%
ROA (TTM) % 1.54% 1.84% 1.79% 1.66% 2.70% 1.49% 0.48% 0.57% 2.17% 1.43% 0.52% 0.56% 0.33% 0.55%
NPL Q1.2019 % 1.03% 1.41% 2.52% 0.68% 1.78% 1.39% 1.85% 1.74% 3.62% 1.45% 1.36% 2.40% 1.88% 2.14%
LLR Q1.2019 % 169.17% 96.49% 40.27% 158.10% 87.66% 88.83% 101.93% 70.17% 48.30% 73.94% 93.41% 55.34% 56.53% 65.30% Source: SBV, commercial banks, VCBS summaries
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
Interest income
Credit room of ACB was allowed to increase from 13% to 17% in 2019 by the
SBV. Therefore, ACB have 8% of credit to grow in 2H.2019.
Credit portfolio concentrates on individual segment that have high profitability.
SME segment is developed by adding credit packages, large corporate segment
has selective growth.
Lending to deposit ratio (LDR) maintains at 78%, under the permitted level of the
SBV.
Non-interest income
Fee and services income and income from debt collection.
ASIA COMMERCIAL BANK - ACB
39
Source: SBV, commercial banks, VCBS summaries
134,032
163,401
198,513
230,527
178,156
213,789
248,301
278,289
0
50,000
100,000
150,000
200,000
250,000
300,000
2015 2016 2017 2018
Loans - Deposits
Net loans to customers Deposits from customers and valuable papers
VN
D b
n
8.25%
4.70%
3.55%
3.00%
5.00%
7.00%
9.00%
2014 2015 2016 2017 2018
NIM
Interest income on earning assets
Cost of fund
NIM
-
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2014 2015 2016 2017 2018
Operating expenses (VND billion)
Operating expense CIR
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
Asset quality is under control
Low NPL ratio and high loan loss reserve coverage compared to sector average allows ACB to control its asset quality.
ACB concentrates on the growth of credit segments that have low non-performing loans, abandoning the group of high-interest customers
with high credit risks.
Charter capital will increase to VND 16,627 billion in 2019
30% stock dividend, expected to be completed in 2019.
ACB expects to use 6.2 million treasury shares for ESOP. Source from welfare fund and ESOP price is not lower than VND 16,072 per
share, the bank currently holds about 42 million treasury shares. The remaining 35 million treasury shares will be private offering to
investors.
ASIA COMMERCIAL BANK - ACB
40
Source: SBV, commercial banks, VCBS summaries
-
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
-
500
1,000
1,500
2,000
2,500
3,000
2014 2015 2016 2017 2018
Provision (VND billion)
Provision LLR
0.73%
0.89%
0.00%
1.00%
2.00%
3.00%
2015 2016 2017 2018
NPL ratio
NPL ratio Group 2-5 debts/Total loans
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
ASIA COMMERCIAL BANK - ACB
41
Unit: VND bn 2015 2016 2017 2018 2019F
Interest income 14,082 16,448 20,320 24,015 27,757
Interest expenses (8,198) (9,556) (11,862) (13,652) (15,497)
Net interest income 5,884 6,892 8,458 10,363 12,261
Non-interest income 337 671 2,981 3,670 4,334
Total operating income 6,220 7,563 11,439 14,033 16,595
Operating expenses (4,022) (4,678) (6,217) (6,712) (8,104)
Operating profit before
provision 2,199 2,885 5,222 7,321 8,492
Provision (1,186) (1,218) (2,565) (932) (1,150)
Profit before tax 1,013 1,667 2,656 6,389 7,341
Tax (286) (342) (538) (1,252) (1,468)
Profit after tax 727 1,325 2,118 5,137 5,873
Indicators 2017 2018 2019F
NIM 3.45% 3.55% 3.68%
ROE 14.08% 27.73% 25.58%
NPL ratio 0.70% 0.73% 0.80%
Loan loss reserve coverage 132.7% 151.8% 154.8%
VALUATION
Indicators 2019F
Book value per share (VND) 19,972
Fair P/B 1.84
Fair value (VND/Share) 36,748
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
Interest income
MBB have been allowed to apply Circular number 41/2016 from 1/5/2019. Therefore,
MBB may have a higher credit growth compared to banks have not completed Basel II
standard.
Credit portfolio concentrates on retail segment with high CASA (25% compared to sector
average around 15%) allows MBB to maintain low cost of fund and be able to improve
NIM.
Non-interest income
Fees and services income takes advantages from high CASA. Additionally, bancassurance has bright prospects. MBB Ageas Life aims to break even in 2019.
Debt collection brings back extraordinary income.
MBBank plans to seek strategic foreign shareholders for MBS while the bank still owns dominant shares of at least 51%.
MILITARY COMMERCIAL BANK - MBB
42
151
184
215
229
197
226
251 257
100
120
140
160
180
200
220
240
260
280
2016 2017 2018 Q1.2019
Th
ou
san
ds
Loans – Deposits (VND bn)
Net loans to customersDeposits from customers and valuable papers
7979
11219
14583
4135
9855
13867
19537
5454
3651 4616
7767
2424
0
5000
10000
15000
20000
25000
2016 2017 2018 Q1.2019
Total operating income and Profit (VND bn)
Non interest income Total operating income PBT
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2016 2017 2018 Q1.2019
Operating expenses (VND bn)
Operating expenses CIR
Source: SBV, commercial banks, VCBS summaries
7.84%
3.26%
4.58%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
2016 2017 2018 Q1.2019
NIM
Interest income on earning assets
Cost of fund
NIM
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
Asset quality is under control
MBB has finished handling NPL process and VAMC bonds.
NPL ratio may maintain at a low level. High loan loss reserve coverage is around 90 – 100%, which shows good asset quality compared to
the sector average.
Charter capital will increase to VND 25,841 billion in 2019
Capital raising plans include: (1) 8% stock dividends; (2) ESOP about 43 million shares (equivalent to 2% of charter capital); and (3)
issuing around 211 million new shares and selling 47 million treasury shares to domestic and foreign investors, equivalent to 10% of
charter capital after dividend payment and ESOP.
In case of success, private issue plan 10% of MBB's charter capital will create a higher base for long-term growth. Increased charter
capital allows MBB to have larger room for credit growth and capacity investment, thereby improving profitability and asset quality.
There are assumptions foreign room is increased to a maximum of 30% and all 10% of charter capital will be issued separately to foreign
investors. After MBB successfully implemented all 3 capital raising plans, opened foreign room on the market will be about 50.9 million
shares. In case 10% of the charter capital is issued to both domestic and foreign investors, the opened foreign room will be higher.
MILITARY COMMERCIAL BANK - MBB
43
1.32% 1.20%
1.33% 1.41%
2.58%
2.93% 3.04%
3.26%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
2016 2017 2018 Q1.2019
NPL ratio
NPL ratio Group 2-5 debts/Total loans
103.2% 95.9%
112.3%
96.5%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
-
500
1,000
1,500
2,000
2,500
3,000
3,500
2016 2017 2018 Q1.2019
Provision (VND bn)
Provision LLR
896 736 1,100 1,179
477 668
798
1,486 615
814
962
565
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2016 2017 2018 Q1.2019
Group 3 – 5 debts
(VND bn)
Group 3 Group 4 Group 5
Source: SBV, commercial banks, VCBS summaries
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
MILITARY COMMERCIAL BANK - MBB
44
Unit: VND bn 2015 2016 2017 2018 2019F
Interest income 13,538 15,552 19,876 24,824 28,503
Interest expenses (6,219) (7,574) (8,657) (10,241) (11,882)
Net interest income 7,319 7,979 11,219 14,583 16,621
Non-interest income 1,453 1,876 2,648 4,953 6,315
Total operating income 8,772 9,855 13,867 19,537 22,936
Operating expenses (3,449) (4,175) (5,999) (8,734) (9,634)
Operating profit before
provision 5,323 5,681 7,868 10,803 13,302
Provision (2,102) (2,030) (3,252) (3,035) (3,413)
Profit before tax 3,221 3,651 4,616 7,767 9,889
Tax (709) (767) (1,125) (1,577) (2,008)
Profit after tax 2,512 2,884 3,490 6,190 7,880
Indicators 2017 2018 2019F
NIM 4.19% 4.58% 4.66%
ROE 13.2% 20.6% 22.4%
NPL ratio 1.20% 1.33% 1.40%
Loan loss reserve
coverage 95.85% 112.29% 112.29%
VALUATION
Indicators 2019F
Book value per share (VND) 17,798
Fair P/B 1.5
Fair value (VND/Share) 26,696
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
Interest income
VIB has been accepted to apply for Basel II standards at the end of 2018. Therefore,
VIB may be allowed to acquire higher credit growth from the SBV in 2019.
NIM may be improved due to expansion in individual credit segment which accounts
for 75% of total outstanding loans from VIB. However, low CASA makes higher
funding costs
Non-interest income
Service income has room for growth, especially in bancassurance.
VIETNAM INTERNATIONAL JSC BANK - VIB
45
Source: SBV, commercial banks, VCBS summaries
54,103
67,466
86,623
101,160 106,389
66,077
94,580
111,239
124,455 129,874
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2015 2016 2017 2018 Q1.2019
Loans – Deposits (VND bn)
Loans to customers Total deposits
2,344 2,626
3,456
4,825
1,385
2,929
3,401
4,092
6,086
1,714
655 702
1,405
2,743
810
0
1,000
2,000
3,000
4,000
5,000
6,000
2015 2016 2017 2018 Q1.2019
Total operating income and Profit (VND bn)
Interest income Total operating income Profit before tax
8.18%
4.28%
3.91%
0.00%
3.00%
6.00%
9.00%
2015 2016 2017 2018 Q1.2019
NIM
Interest income on earning assetsCost of fundNIM
1,765
2,093
2,325
2,690
748
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
0
500
1,000
1,500
2,000
2,500
3,000
2015 2016 2017 2018 Q1.2019
Operating expenses (VND bn)
Operating expenses CIR
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
Asset quality is improving
VIB has finished handling NPL process and VAMC bonds.
VIB recorded a large amount of collaterals, 3 times higher than the bank's outstanding loans to customers. High collateral value is one of
the reasons that helps VIB maintain their safety regulations while loan loss reserve coverage is only around 40%.
Charter capital will increase to VND 10,909 billion. VIB plans to list on HOSE in 2019
Capital raising plan is based on: (i) 18% share bonus to existing shareholders (maximum 141 million shares); (ii) Issuance of new shares
and/or convertible bonds to investors (up to 166.4 million shares, equivalent to 18% of charter capital after shares bonus), offering price is
not lower than book value per share at December 31, 2018. Time limit for implementing the above two options is December 31st, 2019.
VIETNAM INTERNATIONAL JSC BANK - VIB
46
Source: SBV, commercial banks, VCBS summaries
509
606
361
653
156
76.1%
65.5%
47.6%
36.2% 40.3%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
0
100
200
300
400
500
600
700
2015 2016 2017 2018 Q1.2019
Provisions (VND bn)
Provision LLR
2.07%
2.58% 2.49% 2.52% 2.52%
3.15% 3.32%
3.07%
3.74% 3.97%
1.00%
2.00%
3.00%
4.00%
5.00%
2015 2016 2017 2018 Q1.2019
NPL ratio
NPL ratio Group 2 - 5 debts/Total loans
68,342 77,353
107,656
145,698 155,805
124,537
160,465
220,991
291,172 303,978
47,777 60,180
79,864 96,139 101,904
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2015 2016 2017 2018 Q1.2019
Total collaterals (VND bn)
Real estate Total collateral value Credit to customers
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
VIETNAM INTERNATIONAL JSC BANK - VIB
47
Unit: VND bn 2015 2016 2017 2018 2019F
Interest income 4,794 5,292 7,208 10,086 11,965
Interest expenses (2,450) (2,666) (3,753) (5,260) (6,242)
Net interest income 2,344 2,626 3,456 4,825 5,723
Non-interest income 585 775 637 1,260 1,430
Total operating income 2,929 3,401 4,092 6,086 7,153
Operating expenses (1,765) (2,093) (2,325) (2,690) (3,018)
Operating profit before
provision 1,164 1,308 1,767 3,396 4,135
Provision (509) (606) (361) (653) (1,025)
Profit before tax 655 702 1,405 2,743 3,110
Tax (134) (140) (281) (549) (622)
Profit after tax 521 562 1,125 2,194 2,488
Indicators 2017 2018 2019F
NIM 3.12% 3.79% 3.87%
ROE 12.83% 22.55% 21.94%
NPL ratio 2.49% 2.52% 2.40%
Loan loss reserve coverage 47.56% 36.25% 38.25%
Indicators 2019F
Book value per share (VND) 16,334
Fair P/B 1.31
Fair value (VND/Share) 21,397
VALUATION
REAL ESTATE
SECTOR
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
New policies:
- Real estate credit:
- According to Circular 19/2017 /TT-NHNN, the
risk factor of credit for real estate has been raised
to 200% from 150%. This circular has caused
many difficulties in the process of capital
mobilization of real estate businesses.
- For personal real estate credit, the State also
tightened up the risk factor to 150% with loans of
over VND 3 billion.
- Issue new land price list for the period 2020-2025 for all
cities in early 2020.
- Draft law for condotel ownership.
49
REAL ESTATE INDUSTRY
Overview:
- In 2018, real estate industry is still growing steadily but the growth rate has declined compared to that of previous years. In addition,
there has been variations between real estate segments.
- The mid-end segment of the condominium market is still trading actively. Supply in Ho Chi Minh City has declined significantly due
to difficulties in new project licensing processes.
- The office market is in great demand while supply is limited, causing the occupancy rates of office buildings to be high. It is expected
that many office buildings will come into operations in the next few years.
- The landed property market continues to record growth trends, especially in the areas of completed infrastructure and the surrounding
areas of big cities.
- FDI into the real estate market is high
1.3
3.05
6.6
1.1
0
2
4
6
8
2016 2017 2018 Q1.2019
FDI to real estate sector (Billion USD)
435 471
1.236 1,377
0
500
1000
1500
2016 2017 2018 Q1.2019
Credit for real estate (thousands billion VND)
(Source: Ministry of Construction)
(Source: State Bank of Vietnam)
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 50
CONDOMINIUM MARKET: opposite directions between Hanoi
and Ho Chi Minh markets.
Supply: In Q1.2019, when supply in Hanoi was high with 11,822 new
apartments sold from 26 projects (+ 46% yoy), the supply in the Southern
market was quite limited, only reaching 4,423 new units for sale (-46%
yoy) due to difficulties in legal procedures for licensing new projects
(according to CBRE).
Trading volume: In Hanoi, about 9,390 units were sold in Q1.2019 (+
36% yoy). In HCM, about 5,924 units were sold (-28% yoy). More than
60% of units sold were in the mid-end segment, demonstrating real needs
for living spaces from buyers.
Selling price: The selling prices in both Hanoi and HCM increased with
averaged prices of USD 1,333/m2 and USD 1,764/m2 respectively
(according to CBRE).
Expectations for upcoming time:
In Hanoi: The supply located far from the CBD and in the mid-end
segment, it will continue to account for a large proportion of trading and
the selling price is expected to increase slightly by around 1%.
In HCM: The supply is expected to be more abundant in the second half
of the year, concentrating in the eastern area of the city with mid-end
apartments accounting for a large proportion. Selling price is expected to
increase from 3% -5%/year. In addition, the number of high-end and
luxury apartments supplied to the market is increasing, aiming to meet
the housing demands of foreigners.
REAL ESTATE INDUSTRY
(Source: CBRE)
0
5000
10000
15000
20000
25000
30000
35000
40000
2016 2017 2018 2019F 2020F
New apartments open for sale in Hochiminh
Affordable Mid-end High-end Luxury
0
10000
20000
30000
40000
50000
2016 2017 2018 2019F 2020F
New apartments open for sale in Hanoi
Affordable Mid-end High-end Luxury
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 51
LANDED PROPERTY:
continue to be vibrant in Hanoi, Ho Chi Minh City and
neighborhood areas
Supply: In Hanoi, new supply in Q1.2019 increased to 2,600 units
with about 86% of units in the east of the city. In contrast, in HCMC,
due to limited land availability and difficult legal procedures, supply
declined when only 296 units were opened for sale in Q1.2019.
Demand is very high when more than 80% of new units have been
sold.
- Local land booming have appeared in some cities and provinces due
to the deployment of infrastructure projects, airports and economic
potential of the region.
Selling price increased significantly. In Hanoi, averaged villa prices
increased by 3% and in HCMC, prices increased by 4% -5% after
each period, according to CBRE.
Expectations for upcoming time: The land plot will continue to be
an attractive investment destination, mainly located in suburban areas
where will be upgraded to be Districts in Hanoi and the eastern area
of Ho Chi Minh City.
- Infrastructure factors involving construction projects such as first
Metro line project, urban planning, deployment plans of large- scale
real estate projects are the main motivations for the developments of
this segment.
REAL ESTATE INDUSTRY
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2016 2017 2018 Q1.2019
New property for sale and sold property in Hanoi
New property open for sale Sold property
0
1000
2000
3000
4000
2016 2017 2018 Q1.2019
New property for sale and sold property in
Hochiminh
New property open for sale Sold property
(Source: CBRE)
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 52
Office market: high occupancy rate
Supply: In Q1.2019, supply was limited.
Demand for rent is very positive with average occupancy
rate from about 90% to 95%.
Rental rates were relatively stable compared to previous
quarters, although there was a slight increase in Grade A
buildings.
Expectations for upcoming time: According to CBRE,
supply in 2019 will continue to expand in Hanoi especially
in the West.
- In Ho Chi Minh City, 11 projects are expected to be
launched with total area of about 206,000 m2.
- It is expected that Grade A rental rate will continue to
increase slightly while Grade B rental rate is stable.
REAL ESTATE INDUSTRY
22
24
26
28
30
1,400,000
1,500,000
1,600,000
1,700,000
1,800,000
1,900,000
2,000,000
2016 2017 2018 Q1.2019
Rental area and rental rate in Hochiminh
Rental area (NLA) Averaged rental rate
16.5
17
17.5
18
18.5
19
19.5
1,500,000
1,600,000
1,700,000
1,800,000
2016 2017 2018 Q1.2019
Rental area and rental rate in Hanoi
Rental area (NLA) Averaged rental rate
(Source: Savills)
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
Industrial Park: Surge in demand
Remarkable increase in the number of industrial parks:
Currently, Vietnam has roughly 320 industrial parks with more
than 95,000 hectares – in which 70 industrial parks are being
built/developed.
Positive outlook for demands for industrial parks: Chinese
corporations are moving their production out of the country due
to the trade war between America & China to avoid tariffs.
Vietnam is expected to be the potential country for Chinese
production thanks to stability in GDP growth, politics, and low
labor costs.
Positive outlook for surge in the rental price: In Q1.2019,
average rental price of industrial parks in Vietnam has
increased by 15% - 30%.
REAL ESTATE INDUSTRY
53
(Source: CBRE)
(Source: CBRE) (Source: GSO)
-
20
40
60
80
100
120
140
160
HCMC Binh
Duong
Dong Nai Long An Ha Noi Hai Phong Bac Ninh Vinh Phuc
Industrial park rental price (USD/m2)
Q4.2018 Q1.2019
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
-
50
100
150
200
250
300
350
400
450
500
2014 2015 2016 2017 2018 2019F 2020F
Number/Scale of industrial parks (hectares)
Number of industrial parks Scale (hectares)
-
500
1,000
1,500
2,000
2,500
3,000
3,500
-
5
10
15
20
25
30
35
40
2014 2015 2016 2017 2018 2019F
Vietnam FDI ($ billion)
Newly-registered fund Operating fund New projects
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 54
REAL ESTATE INDUSTRY
Prospects of the real estate industry
The market maintains stable growth.
The mid-end segment of the apartment market still has numerous transactions due to increasing income and demand to buy houses from almost all people.
Land in some suburban areas of Hanoi and Ho Chi Minh City is still active. Land prices may increase slightly when supply decreases.
Office market’s demands remain high with good absorption rate and stable price.
Projects with unique products possessing outstanding features such as green living space, smart apartments will be consumed well.
Industrial real estate is still a bright spot of the industry with supporting factors from the US-China Trade War and infrastructure development policies.
Prospects of listed real estate businesses
Businesses own clean land fund in areas having potential for infrastructure development. Enterprises that have
accumulated a large land fund with reasonable costs will be advantageous ones.
Enterprises tend to shift projects from the city center to the surrounding areas such as the east and west of Hanoi,
the east of Ho Chi Minh City or neighbor provinces.
Businesses with projects in completed steps and being eligible for handover can achieve positive business
performances.
Industrial real estate businesses with large-scale projects, clean land and infrastructure available for new tenants.
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
HA DO GROUP JOINT STOCK COMPANY- HDG
55
The main business activities of the company include:
1. Real estate & real estate leasing business
2. Construction
3. Energy
4. Hotels and services
The Board holds 44% of HDG shares.
Real estate is the main growth driver. In 2019, the company's real estate revenue is
expected to reach over 2,000 billion dong, coming mainly from the handover of the
remaining apartments of two Orchid buildings and handover new apartments of two
Jasmine buildings. Two smaller projects, Ha Do Dragon City and Ha Do Riverside are
also expected to contribute to 2019’s revenue.
Energy is a strategic business activity that brings stable cash flows in the future. In June of 2019,
Hong Phong solar power project started generating electricity commercially.
OVERVIEW
No Project name Scale Total expected revenue
(Billion VND)
1 Hado Centrosa 2,187 apartments.
VND
9,000 bil
9,000 m2 NLA for commercial 57 bil /year
2 Hado Dragon City 528 villas 1,900 bil
3 Hado Riverside 256 apartments 270 bil
PROSPECTS
2009 2013 2018 2020
Expected revenue: 140 bil/year
Za Hung Hydroelectricity (30 MW)
Expected revenue:
220 bil/year
Nhan Hac
Hydroelectricity
(59MW)
Expected revenue: 140 bil/year
Nam Pong Hydroelectricity (30 MW)
Expected revenue: 195 bil/year
Hong Phong 4 Solar power (48 MW)
Expected revenue: 470
bil/year
Đak Mi 2 Hydroelectricity (98,MW)
Expected revenue: 200 bil/year
Song Tranh 4
Hydroelectricity(
48 MW)
Officially generating electricity Constructing
2019
Nguyen
Trong
Thong-
35.04%
Nguyen
Van To-
8.94%
Foreign
stockhold
ers
13.71%
Other
local
stockhold
ers-
42.31%
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
HA DO GROUP JOINT STOCK COMPANY- HDG
56
BUSINESS PERFORMANCE
RISKS
VALUATION AND RECOMMENDATIONS
Real estate segment:
-Difficulties in raising capital when Circular 19 dated
28.12.2007 become effectively in narrowing credit to
real estate industry from 60% to 40% in 2020.
-Land fund expansion via M&A, limited cheap land
fund from Department of Defense.
Energy segment:
-Pressures on raising capital for energy projects.
Segments P/E EPS forward
2019
Stock value
Real estate 36,821
Construction 5.6 117 660
Leasing real estate 8.8 232 2,039
Hydroelectricity power 8.9 1,176 10,524
Hotels and other services 8.8 362 3,185
Total 53,229
Conclusion: Target price is 41,760 VND per share
(equivalent to 53,200 VND/stock before cash dividend of 10% and stock dividend of 25%).
1,158
1,865
607
712
131
144
324
363
80
119
0 1000 2000 3000 4000
2017
2018
Real estate Construction Services Energy Hotels
- Revenue grew by averaged 17% from 2016 to
2018. Real estate and constructions are the main
contributors when accounting for 80% of total
revenue.
1,988 2,297
3,203
4,674
236 178 608 772
28.8%
34.0% 37.5%
36.09%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
1,000
2,000
3,000
4,000
5,000
2016 2017 2018 2019F
Revenue Profit after tax Gross profit margin
- We forecasted in 2019, the company reached revenue of VND 4,674
billion and net profit after tax of VND 772 billion.
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
Overview
- Total asset over VND 9,500 billion, land-bank over 600
hectares, NLG focuses on developing affordable-housing
for the middle class.
- Co-operation with Japanese partner in developing high
quality projects.
- 3 main products: Ehome (below VND 1 billion), Flora
(from VND 1.5 billion), and private house/villa Valora
(from VND 3 billion).
2018-2019 Performance
- NLG 2018 revenue was VND 3,553 billion (+12%
yoy), NPAT was VND 884 billion (+17% yoy, 122%
annual target) – EPS of VND 3,509/share.
- By the end of Q1.2019, NLG’s revenue was VND 332
billion (-38% yoy), NPAT was VND 151 billion (+140%
yoy). Remarkable decrease in revenue was attributable
to new projects (Novia, Waterpoint, Paragon Đại
Phước...) as they are under constructions.
NAM LONG JSC - NLG
57
(Source: Nam Long Corp)
(Source: Nam Long Corp)
14%
11%
6%
69%
Shareholders
Nguyen Xuan Quang
Ibeworth Pte
PYN Elite Fund
Others
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2012 - 2019 (VND billion)
Revenue Gross profit NPAT Gross margin Net margin
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
2019 -2020 revenue will mainly come from the following projects:
NAM LONG JSC - NLG
58
Recommendation:
Nam Long has potential outlook for growth and financial stability in the future.
Target price: VND 30,574 per share.
Methods Price (VND per
share) Weight
P/E 34,182 60%
P/B 25,162 40%
Price 30,574 ( +5,6%)
N.o Proejct Scale (hectares) Detail
1 Flora Novia 1.1 581 Flora apartments
2 Mizuki Park 37.4 279 Valora villas, 3,959 Flora apartments, 1,678 EhomeS apartments
3 Akari City 8.8 4,617 Flora apartments
4 South Gate 165 3,000 Valora villas, land
Performance 2017 2018 2019F
Revenue (VND billion) 3,164 3,479 3,650
NPAT (VND billion) 756 887 880
AVIATION
SECTOR
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
SLOWER GROWTH
60
• After the booming period from 2014, the growth rate in the domestic market has
dropped to one figure in 2018. The international market has become the main driver
with the rapid increase of international tourist arrivals (80% come to Vietnam by air).
• The two largest markets of Vietnam tourism are China and South Korea, contributing
over 50% of the international tourist arrivals. Therefore, fluctuations from these two
markets significantly impact the overall growth of the tourism and aviation industry.
• In the first half of 2019, the number of Chinese visitors to Vietnam has decreased by
3.3% over the same period, making the total number of international visitors increased
by only 7.5%.
Sources: CAAV, VNAT, VCBS
7.9 10.0
12.9
15.5 17.6
0%
5%
10%
15%
20%
25%
30%
35%
0
5
10
15
20
2015 2016 2017 2018 2019F
mil
. v
isit
ors
Number of international visitors to
Vietnam
By sea and road By air Growth
63.0
80.8 94.1
106.7 118.2
0%
5%
10%
15%
20%
25%
30%
0
20
40
60
80
100
120
140
2015 2016 2017 2018 2019F
mil
. p
ax
Passenger volume through
Vietnam's airports
International Domestic Growth
32.0%
22.5%
5.3%
4.6%
4.4%
31.1%
Structure of international
visitors to Vietnam 1H.2019
China Korea Japan Taiwan US Others
965 1,103
1,366
1,562 1,745
0%
5%
10%
15%
20%
25%
30%
0
500
1,000
1,500
2,000
2015 2016 2017 2018 2019F
tho
usa
nd
to
ns
Cargo volume through Vietnam's
airports
International Domestic Growth
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
GREATER COMPETITION
61
57% 49% 43% 42% 38%
31% 31%
37% 40% 45%
11% 19% 20% 16% 17%
2014 2015 2016 2017 2018
Domestic market share
Vietnam Airlines Vietjet Air
Jetstar Pacific Others
128 119
36
14
0
20
40
60
80
100
120
140
Vietnam
Airlines
Vietjet
Air
Jetstar
Pacific
VASCO
ng
hìn
ch
uy
ến
Number of flights
2017 2018
120
100
20
40
0
20
40
60
80
100
120
140
Vietnam
Airlines
Vietjet Air Jetstar
Pacific
Bamboo
Airways
air
cra
fts
Fleets
04.2019 12.2019 12.2020
• Due to the slower increase in demand and the difficulties in opening new domestic routes,
airlines are focusing on expanding the international market.
• In early 2019, Bamboo Airways entered the domestic market. Its current fleet has about 10
aircraft.
• Positive market outlook and more relaxed legal conditions could promote the entry of new
airlines in the near future.
• In addition, the plan to expand and upgrade the fleet of the companies is quite ambitious, in
which there is increased competitive pressure to gain market share and maximize
exploitation efficiency.
Sources: CAAV, VCBS
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
AVIATION INFRASTRUCTURE
62
3.6
8.6
14.5
29.6
42.8
3.1
7.6
13.3
27.1
39.4
2.7
6.4
10.8
24.7
36.0
Phu Quoc
Cam Ranh
Da Nang
Noi Bai
Tan Son
Nhat
mil. pax
Passenger volume through airports compared to nominal capacity
2017 2018 2019F
40%
40%
10%
10%
AHT’ ownership structure
Taseco AOV Hancorp ACV
55%
15%
10%
10%
10%
CRTC’s ownership structure
IPP Group Nasco Logistics ACV
Vietjet Air Viet Xuan Moi
• The rapidly growing aviation market puts pressure on infrastructure development
and human resources.
• All of Vietnam's five largest airports including Tan Son Nhat, Noi Bai, Da Nang,
Cam Ranh and Phu Quoc are serving the number of passengers exceeding the
nominal capacity, especially Tan Son Nhat (about 40%).
• Recently, there were some new investors in aviation infrastructure such as AHT
(Da Nang), CRTC (Cam Ranh) or Sun Group (Van Don).
• Infrastructure investors lead a new group of businesses to participate in the
auxiliary services such as ground services, catering.
Sources: CAAV, VCB
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
STATISTICS
63
Airport Airlines Cargo Services Other Aviation Services
ACV HVN VJC SCS NCT SGN NCS SAS MAS NAS CIA AST
Exchange UPCoM UPCoM HSX HSX HSX HSX UPCoM UPCoM HNX HNX HNX HSX
Market cap (bn VND) 184,179 59,994 70,139 9,045 1,837 2,969 569 3,417 198 250 200 2,880
State ownership 95.4% 86.2% 0% 13.1% 65.1% 48.0% 60.2% 49.1% 36.1% 51.0% 18.6% 0%
Foreign ownership 3.6% 9.9% 20.1% 19.9% 13.6% 8.4% 1.7% 0.8% 13.6% 0.9% 2.3% 33.6%
2018 sales growth 16.3% 16.7% 26.7% 14.8% -4.2% 15.4% 3.2% 12.2% -19.7% 9.0% -32.9% 31.2%
2017 sales growth 20.6% 18.4% 53.8% 18.6% 4.5% 26.2% 15.4% 13.4% -0.9% 1.1% 61.0% 107.9%
2018 GPM 48.3% 12.7% 14.0% 78.2% 5.0% 36.1% 15.0% 45.6% 18.6% 45.2% 28.4% 53.9%
2017 GPM 40.8% 12.9% 15.5% 77.0% 54.6% 34.7% 21.9% 44.6% 24.4% 43.1% 23.7% 52.8%
2018 ROE 21.1% 12.9% 43.3% 48.0% 55.2% 44.3% 19.8% 22.1% 62.1% 13.2% 12.0% 31.4%
2017 ROE 15.9% 14.1% 66.2% 40.9% 62.3% 49.2% 41.2% 19.4% 62.1% 12.0% 26.0% 43.9%
EPS (ttm) 3,319 1,833 9,812 7,538 8,977 7,942 2,457 2,653 3,564 3,226 1,555 3,740
P/E 24.6x 23.4x 13.1x 21.1x 8.0x 11.6x 12.9x 9.6x 12.9x 9.0x 11.6x 16.9x
BVPS 15,020 13,615 28,629 16,154 18,782 20,841 13,559 12,156 14,137 17,852 26,203 13,295
P/B 5.4x 3.1x 4.5x 9.8x 3.8x 4.4x 2.3x 2.1x 3.3x 1.6x 0.7x 4.8x
EV/EBITDA 17.8x 9.5x 10.3x 16.9x 6.4x 6.3x 8.6x 9.9x 5.8x 7.0x 4.9x 11.7x
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
VIETNAM AIRLINES - HVN
64
86.2%
8.8%
Shareholder structure
MOT ANA Holdings Inc. Others
550
393
298
194 188 142
0
100
200
300
400
500
600
TCS SKYPEC NCT VACS VIAGS VAECO
bn
VN
D
EBT of some subsidiaries of HVN
2016 2017
0
10
20
30
40
50
60
70
80
90
100
Jan
-16
Mar
-16
May
-16
Jul-
16
Sep
-16
No
v-1
6
Jan
-17
Mar
-17
May
-17
Jul-
17
Sep
-17
No
v-1
7
Jan
-18
Mar
-18
May
-18
Jul-
18
Sep
-18
No
v-1
8
Jan
-19
Mar
-19
May
-19
US
D/b
arr
el
Fuel prices
Brent Oil Jet A1
• Vietnam Airlines owns the largest flight fleet in Vietnam with 93 aircraft (110 aircraft if
including Jetstar Pacific) at the end of 2018. Domestic market share is 39.7% and
international market share is 25.5% in 2018.
• Operates on 100 routes, including 44 domestic routes and 56 international routes,
connecting 51 destinations.
• HVN owns many subsidiaries in many segments of the aviation value chain, including
segments with high profit margins. Jetstar Pacific has profit in 2018 after many years of
restructuring.
• Q1.2019 business results: revenue +4,6% yoy and NPAT +13,7% yoy.
Sources: Bloomberg, Vietnam Airlines. VCBS
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
VIETNAM AIRLINES - HVN
65
Unit: bn VND 2015 2016 2017 2018 2019F
Net revenue 69,030 65,942 70,089 82,951 98,537
+/- yoy (%) -4.5% 6.3% 18.4% 18.8%
Gross profit 7,472 9,023 10,843 10,673 12,681
EBT 724 1,049 2,601 3,155 3,678
NPAT 164 506 2,055 2,371 2,763
+/- yoy (%) 207.7% 306.1% 15.4% 16.6%
EPS (VND) 163 404 1,507 1,727 2,088
ROE 3.8% 6.6% 13.0% 15.3% 16.0%
Target price (VND) 44,800
EV/EBITDAR method 44,000
FCFF method 45,600
FORECAST INVESTMENT HIGHLIGHTS
• Increasing the capacity when the fleet (including Jetstar
Pacific) expands by 10 units to 120 units due to delayed
delivery of 20 A321 NEO aircraft since 2018.
• Jet A1 fuel price decreased in the first half, averaging 79
USD/barrel (-5.9% yoy). In 2018, fuel costs account for
37% of the HVN’s total operation cost.
• Business results of subsidiaries continue to grow steadily
(~ 15%/year), following the general trend of the industry.
This can partly offset the fluctuation from the airline
segment of the parent company. These companies
contributes about 25% of HVN's consolidated profit.
• HVN has been listed on the HSX since May 5th and
joined the list of top 20 stocks with the largest market
capitalization. Along with the state divestment plan until
2020, HVN has the opportunity to find more new
investors and strategic partners, supporting to improve
business efficiency.
VALUATION
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
AIRPORTS CORPORATION OF VIETNAM - ACV
66
• ACV is exploiting 21/22 airports in Vietnam (except Van Don airport).
• Revenue from passenger service and screening security contributed 80% of service
revenue.
• The state divestment plan until 2020 opens up opportunities to find new investors
and strategic partners, supporting to improve the business performance.
• Long-term prospect of ACV depends on the ability to implement important aviation
infrastructure projects such as Terminal 3 Tan Son Nhat and Long Thanh
international airport.
• Q1.2019 business results: revenue +13% yoy and NPAT +105,1% yoy.
95.4%
Shareholder structure
MOT Others
2017 2018 2019F
Passenger volume (mil. pax)
International
Domestic
94.10
30.30
63.80
103.50
36.70
66.90
118.20
Cargo volume (thousand tons)
International
Domestic
1,366
905
461
1,517
971
546
1,710
Landing and take-off (thousand turns)
International
Domestic
605
206
399
652
235
417
693
Source: ACV, VCBS compiled
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 67
Unit: bn VND 2015 2016 2017 2018 2019F
Net revenue 13,173 15,949 13,830 16,090 17,224
+/- yoy (%) 21.1% -13.3% 16.3% 7.1%
Gross profit 3,517 5,879 5,648 7,772 8,506
EBT 2,277 6,669 5,343 7,575 8,409
NPAT 1,712 5,105 4,101 6,135 6,810
+/- % 198.2% -19.7% 49.6% 11.0%
EPS (VND) 2,208 1,883 2,630 3,128
ROE 8.5% 21.1% 15.1% 20.0% 21.2%
Target price (VND) 96,900
P/E method 90,700
EV/EBITDA method 103,100
• The passengers volume through airports is expected to
increase by 10% in 2019, reaching 112 million.
• The cargo volume through airports is expected to
increase by 11.7% in 2019, reaching 1.7 million tons.
• Service prices increased from July 1, 2018 according to
Decision No. 2345/QD-BGTVT, positively impacting
business results in the first half of 2019. The increase in
service prices contributed about 3% to ACV revenue
growth. in 2019.
• The higher proportion of international passengers
improves the average service price.
• Revenues from franchising for 02 international terminals
in Cam Ranh and Da Nang increased by 12% from 2019,
estimated at about VND 500 billion.
• ACV has the potential to become the investor of the
Terminal 3 Tan Son Nhat after being approved and
submitted to the Prime Minister by the Ministry of
Transport and the State Capital Management Committee.
FORECAST INVESTMENT HIGHLIGHTS
VALUATION
AIRPORTS CORPORATION OF VIETNAM - ACV
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
SAIGON CARGO SERVICE - SCS
68
• SCS is one of two enterprises providing cargo services at Tan Son Nhat airport
(with TCS - a subsidiary of HVN).
• SCS currently serves 32 domestic and foreign airlines.
• Cargo volume in 2018 reached 205 thousand tons (+10.1% yoy, 102.5% of terminal
capacity). Market share reached 37% in 2018, up 2% compared to 2017.
• In addition, the company also has 02 stable revenues from yard rental for aircraft
and office leasing, reaching about VND 50 billion/year.
• The cost of SCS is mostly fixed.
• Q1.2019 business results: revenue +17,4% yoy and NPAT +16,8%.
Sources: CAAV, SCS, VCBS
32.3%
13.1%
12.6%
42.0%
Shareholder structure
Gemadept ACV A41 Aircraft Repairing Company Others
431 479
527 560
600
0%
2%
4%
6%
8%
10%
12%
14%
0
100
200
300
400
500
600
700
2015 2016 2017 2018 2019F
tho
usa
nd
to
ns
Cargo volume through Tan Son
Nhat airport
International Domestic Growth
117
161 186
205 228
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
50
100
150
200
250
2015 2016 2017 2018 2019F
ng
hìn
tấ
n
SCS cargo volume
International Domestic Growth
2.3 2.6
2.8 2.9
3.1
71.8% 71.7%
78.2% 77.3% 76.2%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2014 2015 2016 2017 2018
mil
. V
ND
/to
n
Average service price of SCS
Service price International propotion
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 69
Unit: bn VND 2015 2016 2017 2018 2019F
Net revenue 341 496 588 675 778
+/- yoy (%) 45.4% 18.6% 14.8% 15.2%
Gross profit 238 359 453 528 619
EBT 155 275 384 467 554
NPAT 135 245 344 416 494
+/- yoy (%) 81.3% 40.5% 20.7% 18.8%
EPS (VND) 2,824 5,143 6,515 7,716 9,880
ROE 25.4% 34.8% 45.4% 34.7% 35.4%
Target price 176,800
P/E method 175,300
FCFE method 178,300
• The volume of goods through Tan Son Nhat airport
continues to grow steadily at about 10%/year.
• SCS is expected to upgrade the cargo terminal to
300,000 tons/year by 2020, while its competitor TCS is
almost operating at full capacity.
• Service prices tend to increase over the years and higher
contribution of international goods with high service
prices.
• After the leasing area of SCSC building has been filled,
SCS plans to start SCSC-2 office building in 2019 and
finish in 2020, with an investment of 9 million USD.
• Apron area rental fee with ACV will be renegotiated
when the 10-year contract ends in February 2020.
• In the long term, SCS intends to participate in catering
segment at Tan Son Nhat with a project of 3 million
portions per year.
FORECAST INVESTMENT HIGHLIGHTS
VALUATION
SAIGON CARGO SERVICE - SCS
CONSTRUCTION
MATERIALS SECTOR
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
Industry update
• Level of competition sharply increased as capacity soared. Market structure tended to be
more fragmented. Industry leaders had to trade off profit margin for market share
maintenance
• Input cost rocketed. especially iron ore, coal, energy. Oil price moderately adjusted
downward. strongly fluctuating due to politic instability
• Output price rose as a result of environment protection policy in China which limited the
supply of construction materials such as iron, facing tile, cement, etc.
• Profit margin narrowed as the increase in input price is as higher as output. On the other
hand, any decrease in oil price can only create room for more price discount of plastic
products due to strict competition in this market.
INDUSTRY HIGHLIGHTS: DIFFERENTIATE AMONG PRODUCTS
71
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
Industry capacity soared. especially granite tile product (new ceramic
production is limited by MOC). The ratio of sale/production decrease.
resulting from dramatic increase in capacity and slower growth rate of
residential construction activity
Industry capacity (million sqm per annum)
Gross margin has been improved in Q1.2019. Tile producer improved
production technology. developing new product with new higher quality to
maintain the output price. Therefore. the downtrend in tile price somehow has
stopped in Q1.2019.
FACING TILE: TEMPORARILY LOWER PRESSURE
72
70.0%
75.0%
80.0%
85.0%
90.0%
95.0%
0
200
400
600
800
2011 2012 2013 2014 2015 2016 2017 2018
Mil
lion
sq
m
Chart 1: Industry sale volume
Production Sale Sale/production
Source: Construction material institute. Vietnam Report
Product 2015 2016 2017 2018
Ceramic 350 440 542 575
Granite 67.5 96.5 112.5 162.5
Source: Vietnam Ceramic Association. Viglacera Corp
0
5
10
15
20
25
30
35
40
VIT CVT TTC GMX NHC
Chart 2: Facing tile producer gross margin
2015 2016 2017 20118 Q1.2019
Source: Company FS, VCBS compiled
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
After an aggressive growth period. plastic industry has come into slowdown
phase. In 2018. industry grew by 2.8% in value and 7% in volume. HSG and
Tan A Dai Thanh joined the market. raising the competition level
Lower oil price in 2019Q1 (as compared to 2018) resulted in lower input price
(plastic bead). Therefore. GPM in 2019Q1 of plastic producers such as BMP
and NTP slightly improved. However. GPM of these companies cannot reach
to the same level as in 2017 when the plastic bead price is close to that in
2019. This fact indicates that decrease in oil price allows more discount in
output price to maintain the market share.
Source: VPAS, Vietnam Customs
(*) In 2018. NTP changed its depreciation rate on machine. improving its profit
margin. Adjusting to former rate. GPM in 2019 Q1 of NTP slightly decreased
PLASTIC INDUSTRY: GROSS MARGIN DEPENDS ON OIL PRICE
73
0
20
40
60
80
01/1
7
03/1
7
05/1
7
07/1
7
09/1
7
11/1
7
01/1
8
03/1
8
05/1
8
07/1
8
09/1
8
11/1
8
01/1
9
03/1
9
05/1
9
US
D p
er b
bl
Chart 4: WTI Oil price
Time Average plastic
bead (USD per ton)
% change in
bead price
BMP gross
margin (%)
NTP gross
margin (%)
2016 1.380 -11.2 32.05 36.06
2017 1.491 8.0 24.13 33.24
2018 1.624 9.0 22.25 29.45
Q1.2019 1.457 -10.3 22.58 31.04
Source: CEIC. VCBS compiled
0
1
2
3
4
5
6
7
2013 2014 2015 2016 2017 2018
Mil
lion
ton
Chart 3: Domestic sale volume
Source: VPAS, GSO, VCBS compiled
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
Industry sale volume in 5M2019 reached 9.78 million ton (+11.1% yoy). most of
which are attributable to the HRC production from Formosa (accounting for 4%
growth in 11% total). Export volume was about 2 million ton (+6% yoy). Noticeably.
construction steel contributed the most to export growth while other regular export
products such as galvanized sheet and steel pipe recorded a decrease rate of 10% -
15% yoy in recent months.
Profit per ton of steel plunged as unfavorable movement of input and output price.
Dam disruption occurring in Brazil prevented Vale (among the leaders of global iron
ore miners) from getting mining license. As a result. their export volume is expected
to decrease by 6% - 10%. making the iron ore price soar up to USD 120 per ton in Jun
2019
Meanwhile. Vietnamese steel price slightly decreased after Hoa Phat Group (HSX:
HPG) and Formosa raised their capacity. Average steel bar price is fluctuating around
VND 12.5 million per ton (matching our forecast from the beginning of 2019).
Production cost by BOF technology has sharply increased. which is mostly
attributable from the increase in iron ore price. Detailed calculation is illustrated in
table below
STEEL INDUSTRY: PROFIT MARGIN NARROWED
74
-20%
0%
20%
40%
60%
01/1
8
02/1
8
03/1
8
04/1
8
05/1
8
06/1
8
07/1
8
08/1
8
09/1
8
10/1
8
11/1
8
12/1
8
01/1
9
02/1
9
03/1
9
04/1
9
05/1
9
06/1
9
Chart 6: Movement of steel bar and
iron ore price
Steel bar Iron ore
Input Change in price
per unit
Contribution to the change in
output price
Iron ore 58.3% 18.7%
Hard coking coal 11.1% 2.7%
Other 10% 5.5%
Production cost 26.9% 26.9% Source: VSA, Bloomberg
0
500
1000
1500
2000
2500
Jan Feb Mar Apr May
Th
ou
san
d t
on
Chart 5: Industry sale volume
2018 2019
Source: VSA
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
The gap between production cost of BOF and EAF technology slightly narrows
as iron ore has sharply been increasing while scrap price remains stable.
Moreover, government is making their effort to improve process of scrap
inspection at the port. In detail, specialists from Ministry of Resource and
Environment are no longer checking imported good directly. As a result, scrap
importing expense should decrease.
A number of protectionism policies has been released in Vietnam and other
countries
• Decision 1230/BCT – imposing 10.9% tax rate on wire rod.
• Decision 1711/BCT – imposing temporary anti-dumping tax on color coated
steel from China (3.45% - 34.27%) and Korea (4.48% - 19.25%)
• Decision 4086/BCT – excluding Malaysia and Kazakhstan from exemption list
of safeguard tariff due to imported billet from these countries accounting more
than 3% total imported volume to Vietnam
• The US imposed a tax rate of 456% on steel sheets which are processed from
Taiwan and Korean hot rolled coil (or cold rolled coil also).
• Thailand initiated a review of the anti-dumping tax imposing on cold rolled
carbon steel products which are originated from Vietnam, China and Taiwan
• Malaysia came to conclusion of imposing 2% - 13.68% anti-dumping tax on
Vietnam original cold rolled coil.
=> Obiviously, these protection barriers are risen against CRC and galvanized sheet
products rather than construction steel.
STEEL INDUSTRY: FILL THE GAP BETWEEN BOF & EAF
75
11,500
12,000
12,500
13,000
13,500
14,000
VN
D/k
g
Chart 8: Steel bar price movement
7.7
9.3
11.5 12
2018 2019
VN
D m
illi
on
per
ton
Chart 7: Production cost estimation
BOF EAF
Source: VSA
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
Industry sale volume reached 33.45 million ton in 4M.2019 (+8.00% yoy).
21.65 million ton of which are domestically consumed (+0.20% yoy), while
the reset 13.80 million ton are exported (+23.00% yoy).
China become the biggest importing partner of Vietnam. Emission cut in China
resulted in shut down of many small and medium factories which do not meet
environmental requirement. Therefore, China shifted from the biggest cement
exporter to clinker importer. Clinker and cement export price soared.
Those southern leading manufacturers who can produce from clinker enjoy
benefit from the shortage of of this product (As northern producers export to
China). Vicem Ha Tien, INSEE, FICO are the 3 typical companies. The cement
price in southern are also increasing, offsetting the negative effect from the
soar in coal and energy price.
CEMENT INDUSTRY: RISING OUTPUT PRICE
76
0%
10%
20%
30%
40%
50%
60%
0
500
1,000
1,500
2,000
Chart 7: Cement export to China
Sản lượng (ngàn tấn - LHS) Tỷ trọng trong xuất khẩu
Source: Vietnam Custom
25
30
35
40
45
-
1,000
2,000
3,000
4,000
Pri
ce p
er u
nit
– U
SD
per
ton
Exp
ort
volu
me,
th
ou
san
d t
on
Chart 8: Cement export – total sale volume
and price
Sản lượng (ngàn tấn - LHS) Đơn giá (USD/tấn - RHS)
Individual
crusher
20% FICO
11%
VICEM
18% INSEE
23%
Other
28%
Crusher with
clinker furnace
80%
Chart 9: Individual crushing station provide 20% of
cement in southern area
Source: VCBS compiles Source: Vietnam Custom
Volume (x1000 ton-LHS) % of export volume
Volume (x1000 ton-LHS) Unit price (USD-RHS)
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
OUTLOOK: FOCUS ON INDUSTRY LEADERS WITH INTERESTING STORIES
77
Both US – China trade tension and successful engagement in big FTA
including CPTPP and EVFTA made Vietnam an attractive destination for
investment. The growth in 1H2019 FDI value supported our argument
(+8.00% yoy).
Demand from infrastructure improvement will drive the growth of basic
material such as steel, cement.
High expansion rate of urbanization results in demand for end-phase
construction material comprising of facing tile and plastic. According to
our forecast, urbanization rate of Vietnam should reach 57.7% in 2035.
However, civil construction showed some slowdown signals while there are
excess supply in domestic markets of these products
0
2000
4000
6000
8000
10000
Jan-1
8
Feb
-18
Mar
-18
Apr-
18
May
-18
Jun-1
8
Jul-
18
Aug-1
8
Sep
-18
Oct
-18
Nov-1
8
Dec
-18
Jan-1
9
Feb
-19
Mar
-19
Apr-
19
May
-19
Jun-1
9
Mil
lion
US
D
Chart 10: Implemented FDI grew by 8% in
6M2019
Implemented Registered
y = 17.017ln(x) - 92.977
R² = 0.9282
0
20
40
60
80
100
120
0 10 20 30 40 50 60
Urb
an
izati
on
rate
(%
)
Income per capita (x1000 USD/person/year)
Chart 11: Correlation between average income
per capita and urbanization rate in ASEAN
Malaysia
Singapore
Chấm xanh đậm là Việt Nam
Engaged
Negotiating
Picture: FTA between Vietnam and other countries and regions
Source: WTO centre, VCBS complies
Source: Ministry of Planning and Investment
Source: World Bank. VCBS compiles
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
OUTLOOK: FOCUS ON INDUSTRY LEADERS WITH INTERESTING STORIES
78
Steel production cut in China
Those construction products whose capacity being cut in China such as steel,
cement, facing tile remain in our favourite list as level of competition in these
markets is temporarily lower
We highly appreciate those manufacturers meeting export requirement because (1)
higher quality indicates higher competitive advantage and profit margin, (2) the
companies do not depend solely on domestic market, accordingly upon completion
of new plant, they can operate at maximum capacity.
Potential products for export
Facing tile: New technology is being applied, enhancing
quality up to export requirement. Vietnam is acquiring
market share from China in global market.
Glass: Ultra-white glass which is a crucial component of
solar panel enjoy benefit from EVFTA
Sanitary ware: Vietnam is developing a series of
monolithic kiln products which have higher quality than
partial assembly one.
Construction steel: Vietnam is replacing China,
exporting steel in ASEAN.
RECOMMENDATION
Viglacera Corp, jsc (HSX: VGC)
BUY – Target price VND 26,258 per share
Hoa Phat Group, jsc (HSX: HPG)
BUY – Target price VND 29,706 per share
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
VGC – GROWTH DRIVEN BY INDUSTRIAL PARK SECTOR
79
IP Business outlook
• We expect IP business to be the key driver of VGC growth
in the next 2 years. Such formerly unattractive IPs as
Dong Mai, Phong Dien, Tien Hai are now popular due to
cheap price and favorable location. These IP contributed a
majority of VGC’s profit in 1H2019
• In 2H2019, VGC expects to record another 440 PBT in
parent company from these IPs expansion. In addition,
VGC is launching 2 new potential IPs including Yen
Phong 2C (221 ha), Yen My (280 ha). These IPs locate
close to Hanoi capital, which promises a higher rental fee
and occupancy rate.
Real estate business: There is less room for growth as
most of high value projects have been recorded in 2017
Phu Ha IP
Yen Phong 2C IP
220 ha. Launched in 2019 - 2020
Tien Hai IP
Compensated for 100ha site
clearance to lease in 2H2019
Dong Mai IP
Plan to lease another 80 ha in
2H2019. Expected to fully occupied
in 2020
Phong Dien IP
248 ha. Become more popular, more
customers are approaching
Yen My IP
280 ha. Launched in
2019-2020
Surely, VGC is setting up 80ha of
Dong Mai IP and 100 ha of Tien
Hai IP, and 200 ha from other IPs
for leasing.
$69/m2
$33/m2
$69/m2
$33/m2
$33/m2
$58/m2
Industrial park in 2019 - 2020
Project Detail
Dang Xa 2 102 low-rise apartments
Thang Long #1 –
phase 2
Land use fee has been paid. Plan to build 2
building block with 25 – 30 levels each
Houses for workers
in IP
Yen Phong, Tien Son, Dong Van, Phu Ha
IPs
Kim Chung Social
Houses
Being constructed
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
VGC – ENHANCE CAPACITY OF CONSTRUCTION MATERIAL
80
Improve capacity of facing tile and sanitary ware, restructure business
model of glass
• Until 2020, VGC will raise the capacity of facing tile by 11.50 million
spm per year, of sanitary ware by 1.35 million unit per year. The
products from the new factory should meet requirement of export. In
detail, the facing tile product will be colourful body whose colour glaze
penetrates into the core, as a result, the appearance can resist external
factor. The sanitary ware will be monolithic kiln. And glass factory will
focus on Ultra-while, Low-E products whose prices are higher, and
competition level is lower
• Restructure business model of glass. In 2019 – 2020, we expect a strong
recover in gross margin of glass product thanks to:
(1) Average oil price is as 20% lower as 2H2019
(2) VGC establishes a glass trading company (as they did with facing tile and
sanitary ware trading company) in order to reduce internal competition, and
control price better.
(3) In 2020Q1, Phu My Glass factory will come into operation, producing
ultra-white product (a component of solar panel). As Vietnam has engaged in
EVFTA, glass product of VGC can penetrate into European market
Project Product Capacity
per year
Time to
operation
Phu Ha Ceramic tile 6 mn sqm 2020
Thai Binh Phase 3 Granite tile 3.5 mn sqm 2020
My Duc Phase 2 Granite tile 2 mn sqm n/a
My Xuan Sanitary
ware
750,000 unit Operating,
2020 get profit
Viet Tri Sanitary
ware
600,000 unit 2020
Vung Tau (*) Ultra-white
glass
36 mn
standard sqm
2020Q1
(*) This factory is joint venture of VGC, IDICO and Chinese company.
24.7
3.1 1.67
25.7
10
3.3
29.4 27.3
3.6
Facing tile Building glass Sanitary ware
Production volume in our forecast
2018 2019 2020
Tile: million sqm pa
Sanitary ware: million unit pa
Glass: million standard sqm pa
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
VGC – FORECAST AND VALUATION
81
Assumptions on construction material sector
• Facing tile and brick plants have reached their maximum
capacity. Moreover, product price has slightly decreased.
Therefore, we expect no growth of this sector until 2020.
• Sanitary ware is expected to slightly grow as My Xuan factory
operate by the end of this year, breaking through in 2020 when
this plant operates properly.
• Building glass recorded a slight recover in revenue but an
expansion in gross margin as VGC has restructured its business
model.
Assumptions on Real estate
• Real estate in 2019 recorded revenue from former projects
including 671 Hoang Hoa Tham, Dang Xa phase 2. Until 2020,
VGC will launching projects of worker house in their IPs,
creating new growth in revenue. However, profitability from
these projects is less than existing projects.
• IPs revenue is generated from Yen Phong expansion, Phu Ha,
Tien Hai and Dong Van 4. In addition, more revenue is coming
from Dong Mai and Phong Dien. We expect revenue from this
business to rise by 30% yoy this year
As profit growth is mainly generated from parental company
(especially from IPs and building glass), we believe growth in
EPS should be higher than that of revenue and EBT.
Year 2018 2019F 2020F
Revenue 8,812 9,175 10,274
EBITDA 1,831 2,025 2,374
EBT 847 1,065 1,207
EPS 1,261 1,722 1,952
FORECASTING PERFORMANCE
10,000
15,000
20,000
25,000
30,000
Jul-
18
Au
g-1
8
Sep
-18
Oct
-18
No
v-1
8
Dec
-18
Jan
-19
Feb
-19
Mar
-19
Ap
r-19
May
-19
Jun-1
9
Jul-
19
VGC share price
VND 26,258 per share
P/E fw = 15x
EV/EBITDA = 8.8x
FCFF @ 1%g. 11% WACC
Unit: VND billion
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
HPG – IMPROVE CAPACITY, EXPANSE MARKET SHARE
82
Additional sale volume in 6M.2019 is attributed to trading activities, which do
not bring any profit. As blast furnace phase 1 from Dung Quat comes into
operation this Q3, HPG may generate profit from this additional sale volume,
despite the rise in iron ore price
(*) Estimate under iron ore price of USD 100 per ton
We believe HPG may remain selling price about VND 12.5 mil per ton in
2H.2019 as (1) Input price is staying at high level, making most of the industry
suffers from loss, HPG is under less pressure to decrease price, (2) Safeguard
tariff is a barrier against Chinese steel, (3) HPG is finding market outside of
Vietnam, exporting more in 6M.2019.
Galvanized sheet and steel pipe suffered from global protectionism and stricter
competition in domestic market. Therefore, we lower the outlook of these
products despite some anti-dumping taxes against colour-coated and galvanized
sheet being released by MOIT
Real estate contributes less because revenue from Mandarin Garden 2 project is
not much left. Nguyen Duc Canh project is expected to generate PBT of VND
100 bn
198
164 180 178
228
147
199 179
221 250
220 213
250
200
247 236 226
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Th
ou
san
d t
on
Construction steel sale volume monthly
2018 2019
Origin From trading From blast furnace (*)
Billet cost (VND per kg) 12,292 9,273
Gross profit from each kg of
steel bar 463 2,420
26%
24%
22% 21%
22%
19%
24%
22%
27% 28%
26% 25%
27%
25% 25% 26%
25%
15%
20%
25%
30%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
HPG is acquiring more market share recently
2018 2019
Source: VSA, VCBS compiles
Source: VSA, VCBS compiles
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
HPG – FORECAST AND VALUATION
83
We build our forecast based on below assumptions:
• Average iron ore price input reaches USD 100 per ton
• Furnace phase 1 from Dung Quat complex starts operating from the
beginning of this July. The second one should operate since this
October. In our expectation, initial utilization rate of these 2 furnaces
will be 75% this year, and be 100% in 2020
• Sale volume grows by 30% yoy in 2H2019. Total sale volume this year
is expected to reach 3.3 million ton, 400k ton of which comes from
trading activities.
Year 2018 2019F 2020F
DTT 55,836 68,931 91,344
EBITDA 12,836 11,958 15,406
LNST 8,573 7,313 10,292
EPS 4,037 2,516 3,541
Business performance forecast
699
1001
1381
1804
2203
2377
3320
4600
0 1000 2000 3000 4000 5000
2013
2014
2015
2016
2017
2018
2019F
2020F
Thousand ton
Construction steel sale volume
Valuation
15,000
20,000
25,000
30,000
35,000
Jun-1
8
Jul-
18
Au
g-1
8
Sep
-18
Oct
-18
No
v-1
8
Dec
-18
Jan
-19
Feb
-19
Mar
-19
Ap
r-19
May
-19
Jun-1
9
HPG share price
VND 29,706
per share
P/E fw = 12x
EV/EBITDA = 8.7x
FCFF @ 1%g. 12% WACC
Unit: VND billion
RETAIL
SECTOR
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 85
INDUSTRY ACTIVITY IN 1H2019
The modern Vietnamese retail industry is considered to
have good growth potential. According to ATK earny's
assessments in 2019, Vietnam is ranked 6th on the GRDI
index (the index describing the level of attractiveness for
investment activity in retail industry), with a stable
developing economy and positive changes towards
liberalization in investment law.
However in the industry, there is a strong competition
between international players and Vietnamese market-savvy
enterprises, which are evident through two events H1/2019
Shop & Go event transferred 87 stores to Vin
Commerce in early April 2019. This chain of foreign
supermarkets with capital from Singapore started operating
in Vietnam in 2006, by the time of 2016, this scale of the
supermarket chain has reached nearly 130 stores. However,
under strong competitive pressure from the number of
convenience stores increased rapidly over the years (chart
2), the Shop & Go chain has gradually narrowed its
activities in the period of 2017-2019, by the time of April
2019, there were only 87 stores operating in Hanoi and Ho
Chi Minh City.
The fact that Auchan supermarket chain has withdrawn
from Vietnam after nearly 4 years of operation and signed
a contract to transfer 18 supermarkets to Saigon Co.op in
the last days of June 2019. After successful reception,
Saigon Co.op has raised the number of supermarkets
nationwide to 129 supermarkets (as of June 30, 2019). This
event also shows that compared to foreign investors,
Vietnamese retailers still have great advantages when they
understand how to operate the retail chain in Vietnam,
somewhat different from the world and Vietnamese
consumer culture.
Figure 1: Top 10 countries with the highest GRDI index
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 86
ACTIVITY IN DEVELOPING STORE CHAINS
The number of supermarkets nationwide recorded a
slight increase in the number of new stores. In the first
half of 2019, there was 9 supermarkets opened nationwide.
In particular, mainly belongs to the two largest scale
supermarket chains are Co.op Mart and Vinmart.
The number of supermarkets nationwide
increased slightly
19
35
94
13
63
24 21
35
109
13
108
24 18
35
111
14
114
Aeon
Citimart
Auchan Big C Co.op MartLottle Mart Vinmart
2017 2018 06/2019
Co.opmart: increased its market share after opening 2
supermarkets in Ho Chi Minh and Da Nang, bringing
the total size of Co.opmart brand across the country to
111 supermarkets (not including 18 Auchan
supermarket is transferred). According to Saigon Co.op
company, after being transferred 18 supermarkets from
Auchan, Saigon Co.op will quickly launch these new
stores in the form of supermarkets Co.opmart,
Co.opXtra, Finelife . So far, Saigon Co.op is currently
the largest supermarket chain management company in
Vietnam.
Vinmart opened 6 supermarkets in the first half of
2019, bringing the total to a number of enterprises with
the second largest supermarket chain in the country.
Lotte Mart in quarter 01/2019 opened Lotte Mart Cau
Giay supermarket. This is the 3rd supermarket of Lotte
chain in Hanoi and the 14th supermarket in the
country.
Figure 2: Number of supermarkets 2017-06 / 2019
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 87
ACTIVITY IN DEVELOPING STORE CHAINS
166 262
1,121
139 157
283 181
157 104
307
1,700
168
405 313
66 219 147
344
87 168
3
607
370
72
226 115
6 41 25
Family
Mart
Circle K VinMart + Shop&Go B's mart Hapro BHX Co.op
Food
Co.op
Smille
Satra MiniStop An Nam
Gourmet
Qmart + Lan Chi
2017 2018 06/2019
Mini supermarkets and convenience stores recorded strong
growth in the number of local businesses, while foreign
businesses showed slowdown.
Vinmart + after a grand opening of 117 stores at the
end of 2018, Vinmart + chain opened more than 100
convenience stores in the first half of 2019, reaching
more than 1800 stores nationwide
Mini supermarkets and convenience stores still maintained good growth
Bach Hoa Xanh (BHX), as of 30/06/2019, number of
BHX stores reached 607 stores, increased 202 stores
compared to the beginning of the year. In the first 5
months of the year, the chain of BHX chain expansion
activities was implemented in the provinces of Dong
Nai, Binh Duong and the Mekong Delta provinces
when Long Binh (Dong Nai) and My Tho (Tien
Giang) distribution centers were put into operation.
Figure 3: Number of mini supermarkets & convenience stores 2017-06/2019
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 88
PROSPECT: INCOME GROWTH AND CHANGE OF PAYMENT METHOD
Potential for modern retail chains
According to USDA data, in 2017 total grocery retail value
(grocery sales) from modern retail stores in Vietnam
reached about USD 3,612 million, accounting for only
about 5% of the total retail value of the country. Compared
to developed countries such as the US, South Korea and
Japan, consumption of goods through traditional models
(mom & pop) has a negligible proportion and is rarely
mentioned in newspapers, or compared to Thai Lan, the
proportion of retail value of goods through modern
channels in 2016 accounted for over 70% (according to
USDA). Therefore, in combination with the factors of
changing shopping habits (food safety, time saving, e-
banking payment, change and experience), the Vietnamese
young generation is gradually shopping at the convenience
stores, supermarkets, and expectations of income growth
are driving the development of modern retail models in
Vietnam.
Per capita income is expected to be higher, about 40% of
the population will become a middle class before 2021.
Total household expenditure is expected to grow at an
average rate of 11.4% during the period 2017-2021,
according to Euromonitor.
Per capita income increased
Consumer credit growth and changes in
E-banking payment
In 2018, consumer credit accounted for 19.7% of total
outstanding loans, higher than 12.3% and 18% and for the
two years 2016-2017. At the same time, the Government is
encouraging banks and organizations to develop E-banking
payment platform to save costs, limit inflation, corruption
and transparent payment. These trends are actively
supporting the development of modern retail chains in the
long term.
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 89
MWG – ĐMX IS GROWING, BHX IS IMPROVING
Revenue
According to MWG, accumulated in the first 5 months of 2019,
MWG recorded a good growth of VND 42,800 billion , +15.4%
of revenue and VND 1,792 billion, up +39% of EAT over the
same period. The main growth driver comes from increasing
market share of business chains.
Dien May Xanh chain recorded an impressive
growth rate of more than VND 25,200 billion,
+22.6% yoy, accounting for 59% of the results
from the chain store expansion and converting a
number of TGDĐ stores into creative and effective
in innovating the way of displaying products at
mini DMX stores.
TGDĐ chain, by the end of May 2019, the number
of mobile phone stores decreased by 15 stores
compared to the number at the end of 2018,
included 2 newly opened stores and 17 converted to
mini DMX. Average revenue of a store also
recorded a slight decrease in the first 5 months of
2019 (VND 2.8 bil/month/store year 5 months/
2019, VND 2.9 bil/month /store for 5 months /year
2018) because some stores have big sales were
converted to mini ĐMX.
Bach Hoa Xanh chain represented a very rapid
revenue growth in the early stages of development,
+160% yoy, increasing the proportion of
contribution to 7.3% in revenue structure compared
to the same period in 2018 this figure is only about
3.2% of activities to promote chain expansion..
Chart 4: MWG revenue Revenue
25.9
14.7 10.9
0.3
37.1
15.3 20.6
1.2
42.8
14.4
25.2
3.1
0
5
10
15
20
25
30
35
40
45
Tổng doanh thu TGDĐ ĐMX BHX
Ngàn tỷ
T5/2017 T5/2018 T5/2019
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 90
MWG- Accumulated 5 months/2019
Gross profit
Gross margin in Q1/2019 has improved slightly over the
same period (up 20 bps). In particular, the main contribution
comes from the process of gradually transforming some
stores of TGDĐ into high-performance ĐMX. BHX's gross
margin in the first quarter remained at 18%, equivalent to that
of Q4/2018, and has improved in April and May.
17.5%
17.7% 17.7%
17.8%
17.7%
17%
17%
17%
18%
18%
18%
18%
18%
3,200
3,400
3,600
3,800
4,000
4,200
4,400
4,600
Q1/2018 Q2/2018 Q3/2018 Q4/2018 Q1/2019
Tỷ đồng
Lợi nhuận gộp BLN gộp
As of May 2019, EAT is VND 1,792 billion, +39% yoy.
Net margin in the first 5 months of 2019 increased to
4.2% compared to 3.5% at the same period because the
proportion of SG&A on revenue decreased due to changes
to ĐMX’s outlets and converting some TGDĐ stores into
mini ĐMX with increasing revenue while operating costs
remain unchanged or increase slightly.
3.8% 3.7% 3.5% 3.5% 3.5%
4.4% 4.2% 4.2% 4.2% 4.2%
0%
1%
2%
3%
4%
5%
-
500
1,000
1,500
2,000
Tỷ đồng
LNST Biên LNSTEAT Net margin
Net profit
Figure 5: MWG gross profit Figure 6: MWG net profit
Gross Profit Gross Profit Gross margin
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 91
MWG-Catalyst 2019
ĐMX chain BHX chain
Compared to Q1/2019, there was only 24 stores, but
only in Q2/2019, the number of stores increased by 76
stores, 3 times higher than Q1/2019, reached 67% of
the plan for 2019.
The average revenue of a store in 2019 expected to
increase to VND 78.00 bil/store/year compared to
2018 of VND 65.60 bil/store/year thanks to
improvements in store display. goods at mini stores, as
well as the opening of new big stores.
The number of stores BHX also recorded strong
growth in Q2.2019 with 138 stores increasing, more
than double the figure in Q1.2019. Total number of
BHX stores increased in 1H.2019 reached 68% of the
plan for 2019.
The average revenue of a store BHX also recorded
positive growth to VND 1.40 bil/month/store,
+17.00% compared to the end of 2018.
In Q1.2019, BHX's profit margin remained around
18%. However, BHX's Q2.2019 gross margin has
recorded many positive changes.
2019 prospect surpasses profit target by boosting the expansion of the BX and BHX
chain from Q2.2019 and improvements in business operations
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 92
MWG-Forecast 2019 & Valuation
VND billion 2017 2018 2019F
Rev 66.340 86.516 105.974
+/- yoy (%) 49% 30% 22%
Gross profit 7.214 11.142 18.842
+/- yoy (%) 54% 37% 23%
NPAT 2.880 2.880 3.906
+/- yoy (%) 40% 30% 36%
Gross margin 16.80% 17.70% 17.80%
Net margin 3.30% 3.30% 3.70%
Forcast
DCF 114.000
VND/CP
Targer price
+19,5% UPSIDE
Valuation
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 93
GROW IN BOTH QUALITY AND QUANTITY
93
14,571
960
-
5,000
10,000
15,000
20,000
Doanh thu LNST
VND Bil
2014 2015 2016 2017 2018
CAGR 2014-2018: 12%
CAGR 2014-2018: 39%
9% 5%
14% 18%
18% 20%
11%
31% 33%
29%
2014 2015 2016 2017 2018
ROA ROE
32%
17%
8%
21% 20%
12%
-1%
12% 14%
0% 2014 2015 2016 2017 2018
SSSG cửa hàng vàng SSSG cửa hàng bạc
169 194
219 269
324
2014 2015 2016 2017 2018
The number of stores increased rapidly in 5 years
Revenue EAT
SSSG gold
jewellery store
SSSG silver
jewellery store
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 94
Growth comes from fragmented market
94
The jewelry industry is highly fragmented in
Vietnam with about 70% market share focusing on
small gold shops, while big brands such as PNJ, SJC,
DOJI ... currently accounting for only about 30%.
The fact that large enterprises such as PNJ with stores
across the country and their prestige is easier to access
market.
Small stores;
70%
Big brand
name; 30%
According to data of WGC, CAGR 2016-2018
consumption of gold jewelry in Vietnam reached
+9.00%/year, which is still in a positive growth group
compared to other countries in the world and in the
region.
Figure 1: CAGR 2016-2018 gold jewellery
Figure 2: Jewelry retail market share
-7%
3%
-2%
3%
11%
-5%
-1%
4%
-5% -2%
-5%
1%
9%
Mid
dle
Eas
t
Am
eric
as
Euro
pe
ex C
IS
Chin
a
HongK
ong
Tai
wan
Japan
Indones
ia
Mal
aysi
a
Sin
gap
ore
Kore
a, R
epubli
c of
Thai
land
Vie
tnam
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 95
LEADING IN COMPETITIVE STRATEGIES
Leading the retail jewelry system
nationwide
The largest factory in the country with a capacity of 4
million products/year, which is 8 times higher than
the adjacent rival SJC.
PNJ currently has about 800 jewelers, including more
than 160 artisans, accounting for about 70% of
artisans in Vietnam.
Outstanding production capability
Digital Transformation strategy with
Big Data platform
Pioneering in the retail jewelry industry in Vietnam,
collecting customer data to catch up with trends and
continuously innovate products to increase customer
service quality. At the same time, the ERP system also
combines with production management activities to
optimize quantity, cost, and production time suitable to
business operations.
260
42 67
13 4
102
PNJ SJC Doji BTJ Bảo Tín
Minh Châu
Thế Giới
Kim
Cương
Currently, PNJ is leading the jewelry retail industry in
the number of jewelry stores, with 344 stores in 51
provinces and cities nationwide, 2.6 times more than
the second jewelry retail chain is The gioi Kim cuong
with 102 store.
Due to certain unique characteristics of the gold
industry, PNJ owns a chain of stores across the country
to increase value for customers and helps PNJ expand
its market.
Figure 3: Number of stores of companies
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 96
Risk
96
Supply of shopping centers, which is forecasted to decrease, would
affect the chain opening plan in the period 2020-2021. Set by the 2019
plan to open 40 more stores, by the time of June 30, 2019 PNJ has
opened 20 stores, reaching 50% of the plan and we expect the target
would be reached in 2019. However, the number of shopping centers
decreasing sharply in the period of 2018-2019 is expected to affect the
opening rate of PNJ when most new open stores are concentrated in
supermarkets and shopping centers.
The demand for buying gold jewelry in the world is reducing and
these luxuries are replaced with technology products. Although in the
demand for gold and jewelry in Vietnam is relatively good, PNJ will face
this risk in the long term.
The early phase of ERP implementation may face some initial
difficulties, in which the impact may last until the end of the third quarter
of this year.
Concerns about the economic recession: because the main business of
PNJ consists of luxury products. Therefore, the psychological impact of
the world’s general recession will cause people to hold gold bars (with a
low GPM of 2%) and jewelry shopping activities tend to slow down
(high LNG margin 30 %).
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 97
PNJ-Forecast 2019 & Valuation
VND billion 2017 2018 2019F
Rev 10.977 14.573 16.800
+/- yoy (%) 49% 33% 15%
Gross profit 7.214 2.779 3.600
+/- yoy (%) 35% 45% 30%
NPAT 725 960 1.200
+/- yoy (%) 61% 32% 25%
Gross margin 16.60% 17.50% 17.80%
Net margin 6.60% 6.60% 7.10%
Forecast
DCF 74.600
VND/CP
Target price
Outperform Recommendation
Valuation
OIL & GAS
SECTOR
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 99
BRENT OIL
99
-15
-10
-5
0
5
10
15
54
56
58
60
62
64
66
68
70
72
74
US Inventories Brent Oil
-2
-1
0
1
2
20
12
20
13
20
14
20
15
20
16
20
17
20
18
Giàn khoan Mb/ngày
Volumes Rigs (RHS)
80
85
90
95
100
105
-4
-2
0
2
4
20
11Q
1
20
12Q
1
20
13Q
1
20
14Q
1
20
15Q
1
20
16Q
1
20
17Q
1
20
18Q
1
1Q
2019
Triệu
thùng/ngày
Mb/ngày
OECD OPEC Khác Tổng Cung
82
84
86
88
90
92
94
96
98
100
102
104
-1
0
1
2
3
20
12Q
1
20
13Q
1
20
14Q
1
20
15Q
1
20
16Q
1
20
17Q
1
20
18Q
1
20
19Q
1
Triệu
thùng/ngày
Mb/ngày
China IndiaOther non-OECD OECD
As our forecast in earlier report, in
early 6M.2019, Brent oil price
climbed three times in a row from
early 2019 mainly based on tightening
supply.
Unfortunately, the oil price pattern
repeated its slump movement in late
2018. VCBS think that Brent oil is
manipulated by speculators since a
scheduled OPEC meeting is going to
negotiate each member’s output that
mainly result to strong fluctuations of
Brent Oil in the short term.
In particular, it is no doubt that Brent
Oil’s price movement this time was
obviously different from its pattern in
the past. It fluctuates dramatically
with a wide range of amplitude in the
short term.
Recommendation: VCBS will
maintain their forecast of aggregate
Brent Oil price at USD73/barrel.
However, given the unpredictable
fluctuations of Brent Crude’ price,
VCBS revise our recommendation
from “Outperform” to
“Conservative” for Viet Nam Oil &
Gas industry prospect in 2H.2019.
Brent Crude’s Movement in 1H.2019 US’s Shale Oil Production
Global Supply – Demand Of Brent Crude
Source: VCBS
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 100
VIETNAM OIL&GAS PROJECTS
100
PVS PVD PXS PVB
OFFSHORE
Sao Vang – Dai Nguyet
(2018-2020) Topside package major contractor Bidding TAD drilling rig Sub Contractor of Jacket package -
Nam Con Son 2 – phase 2
(2019-2022) Bidding EPC 118km & 46 km pipeline -
Sub Contractor of Onshore
package
Coating 118 km pipeline + 46 km
pipeline
Block B
(2019 -2021)
Bidding 4 x WHPs, 4 Jacket, interconnecting
pipeline 1 Tender Barge, 1 Jack - up
Sub Contractor of Jacket &
Interconnecting pipeline package Coating450 km pipeline
Red Emperor(2019-2021) 1 x FPSO (PVS 51% - Yinson 49%) Bidding TAD drilling rig - Coating 30km pipeline
Kinh Ngu Trang
(2019-2021) Sub Contractor -
Major contactor 1 x WHP, 1 x
Jacket & 30 km pipeline -
Nam Du - U Minh
(2020-2022) 1 x WHPs, 1 FPSO - - -
Blue Whale (2020-2023) Sub Contractor of Jacket & Topside package - - Bidding 90km offshore pipeline +
15 km onshore pipeline
ONSHORE
Thi Vai LNG Storage (2019 –
2021) Major contractor - - -
Figure: Key Of Oil & Gas Projects
Source: VCBS
VCBS issue OUTPERFORM recommendation for Upstream in 1H.2019. However, VCBS has revised our recommendation from
“OUTPERFORM” to “CONSERVATIVE” for Upstream segment in 2H.2019 basically based on.(1) Our Oil & Gas portfolio, which performed
well in 1H.2019, has recorded a high price almost reaching our target; (2) VCBS down Oil & Gas prospect in 2H.2019 as well as the
fluctuations of Brent Crude Oil.
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 101
Jobs 2019 2020 2021 2022 2023
Nam Con Son 2 – Phase 2 160 km pipeline with total investment of
USD40 mn
White Lion 70 km pipeline with total investment of USD15
mn
Block B – O Mon 430 km pipeline with total investment of USD150 mn
Blue Whale 88 km 36inch pipeline with total
investment of USD20 mn
PETRO VIETNAM COATING
101
4Q2018
FEED
1Q2019
FID
2Q2019
EPCI
3Q2019
M&C
3Q2020
First Gas
Note
: Idle
: Implement
: Pending
Figure: PVB’s Job Schedule
INVESTMENT POINT
Nam con son 2 – Phase 2: As mentioned from the previous part. Nam Con Son 2 – phase 2 are implementing on schedule in order to be just in
time with Sao Vang – Dai Nguyet project. PVB is responsible for coating 160km pipe line in 2019-2020 with total value of USD40 mil. PVB is
expected to put this project into operation and record its sale & profit from 3Q.2019.
The potential project: PVB is tracking some potential project such as: White Lion, Block B – O Mon, Blue Whale… In which, Block B –
Omon is a major project in which PVB will be set as its priority due to the big size of it. VCBS expect
RISK
Risk in profit distribution between PV GAS & PVB: PVB is one of the subsidiaries of PV GAS, which is why PVB is supposed to have the
approval of the government to be a contractor of Nam Con Son 2 – Phase 2 invested by PV Gas. VCBS is skeptical of PVB‘s performance in
case of the earning manipulations made by PV GAS.
Internal risk of project: PVB faces some problem with its current business structure. PVB’s performance mainly depends on Oil & Gas
projects, especially in offshore project relevant to pipeline
Figure: Nam Con Son 2’s Timeline
Source: VCBS
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back 102
PETRO VIETNAM COATING
102
VALUATION
DCF Methods 2019
Risk Free rate (Rf) 4.65%
Equity Risk Premium for VN: (Rm - Rf)+CP 10.27%
Beta 1.30
WACC = Re * E/(E+D) + Rd*(1-Tc)*D/(E+D) 18.00%
Matrix of Valuation
ASSUMPTION Worst case Base case Good case
Brent Oil 57 72 87
GPM
- NCS 2 – phase 2 15% 20% 25%
- White Lion – phase 2 13% 18% 22%
- Block B – O Mon 15% 20% 25%
- Blue Whale 10% 15% 20%
BUSSINESS RESULT
NPAT 27,206 35,201 43,196
EPS 1,260 1,630 2,000
VALUATION
DCF 21,083 27,585 33,988
Discount* 10% 15% 20%
Target price 18,974 23,447 27,190
Upside (%) +11.61% +37.92% +59.94%
27,555
33,865
10,385
18,376
19,011
29,437
36,428
10,482
22,575
19,469
0 10,00020,00030,00040,00050,00060,00070,00080,000
FCFF
FCFE
P/E
P/B
EV/EBITDA
Current Price
SCENARIO ANALYSIS
ASSESSION:
VCBS think that 2H.2019 will be its turning point mainly based on
“Recording sales and profit of Nam Con Son 2 – Phase 2”. VCBS forecast
PVB’s sales and NPAT are at VND 279.90 bn (+38.20% yoy) and VND 35.20
bn (+52.40% yoy), respectively.
RECOMMENDATION:
VCBS evaluate the value of PVB’s share at VND 23,447 per share.
We keep to recommend BUY to PVB in 2H.2019.
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
PETROVIETNAM TECHNICAL SERVICE CORPORATION
103 103
M&C (mn
USD)
Job
description
Total
value
Implement
Schedule
201
8
Back
log
2019
Backl
og
2020
Sao Vang
– Dai
Nguyet
Major EPCI
Contractor of
1 x CPP, 1 x
WHPs &
pipeline
USD700
mn
Q1.2018 –
Q4.20120 250 325 225
AI
Shaheen
Major EPCI
Contractor of
3 x WHPs &
pipeline
USD320
mn
Q4.2018 –
Q4.2020 - 120 200
1Q.2019
•Nam Con Son 2- Phase 2 (GPP2 package): FEED
•Blue Whale: FEED
2Q.2019
•Thi Vai LNG Storage: Bidding EPCI
•White Lion - Phase 2: Bidding FEED
3Q.2019
•Kinh Ngu Trang: 1 x WHPs, 30km of pipeline
•Nam Con Son 2 - Phase 2 : Bidding EPCI of 118 km of offshore pipeline
4Q.2019
•Nam Du – U Minh: Bidding EPCI of 1 x WHPs and pipeline.
INVESTMENT POINT
PVS’s bottom up receives a robust from backlog’s job volumes : In 2019, PTSC M&C continue to contribute a huge amount in sale and profit
to PVS.
Dissolution of PTSC - CGGV: PVS completely restructured its PTSC – CGGV, which would support its EPS in 2019 thanks to the reduction of
loss burden from PTSC – CGGV relatively of VND200 – 300bn each year.
The potential project: In 2H.2019, PVS continue to track bidding schedules of some onshore & offshore projects such as: Nam Con Son 2 –
Phase 2, Nam Du – U Minh… and some overseas project. Additionally, PVS increasingly earn revenue from PVS & MSCI venture thanks to
depreciation cost deductions of Ruby FPSO.
RISK
VCBS think that PVS suffers two main risk factor (1) The fierce competition of M&C segment market; (2) Risk from progress of Oil & Gas
Project.
Source: VCBS
Figure: Job’s Back log Timeline of Oil & Gas Projects Process
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
PETROVIETNAM TECHNICAL SERVICE CORPORATION
104 104
VALUATION
DCF 2019
Risk Free rate (Rf) 4.65%
Equity Risk Premium for VN: (Rm - Rf)+CP 10.27%
Beta 1.35
WACC = Re * E/(E+D) + Rd*(1-Tc)*D/(E+D) 18.34%
Matrix of Valuation
ASSUMPTION Worst case Base case Good case
Brent Oil 57 72 87
GPM
- Sao Vang – Dai Nguyet 4% 8% 12%
- AI Shaheen 0% 3% 5%
BUSSINESS RESULT
NPAT 934 1,080 1,226
EPS 1,936 2,238 2,539
VALUATION
DCF 23,199 25,239 27,283
P/E 23,232 26,856 30,468
Target Price 23,215 26,048 28,875
Upside (%) -1.2% +10.8% +22.8%
SCENARIO ANALYSIS
ASSESSION:
VCBS think that 2H.2019 will be a good year for PVS, mainly thanks to a
good performance of PTSC & FPSO/FSO segment. VCBS forecast PVS’s
sales and NPAT are at VND 16,747 bn (+14.10% yoy) and VND 1,080 bn
(+196.00% yoy), respectively.
RECOMMENDATION:
VCBS evaluate the value of PVS’s share at VND 26,048 per share.
We recommend : OUTPERFORM to PVS in 2H.2019.
18,042
15,480
11,654
16,635
14,859
18,845
18,501
19,702
11,946
21,829
15,204
20,871
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000
FCFF
FCFE
P/E
P/B
EV/EBITDA
EV/Sales
Current Price
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
PETROVIETNAM DRILLING&WELL SERVICES CORP
105 105
Driling 01/18 02/18 03/18 04/18 05/18 06/18 07/18 08/18 09/18 10/18 11/18 12/18
PVD I Vietsovpetro
PVD II Vietsovpetro Sabura - Malaysia Client Malaysia
PVD III Repsol Malaysia
PVD VI Vietsovpetro Eni Others
PVD V
Notes
: Already secured
: Bidding
: Rig move
: Idle
0%
10%
20%
30%
40%
50%
60%
70%
0
10
20
30
40
50
60
70
80
90
Utilization Rate Jack - up Day Rate Brent Oil
VCBS expect that average utilization jack-up rate will increase from 85,1% in 2018 to 94% in 2019 due to the increase in the number of
upstream’s projects.
In 1H.2019, PVD has successfully bid some long-term contracts (six month – one year term) for PVD I, which signals a bounce in utilization rate.
PVD’s performance should be better because the Rig move and maintenance cost incurred from long term contracts is as lower as from short term ones.
Rig rents - Operating rigs: The day rate of Jack rig - up in
the Asia - Pacific region is on the rise again in 1H.2019
thanks to the volume of projects. Drilling and exploitation
projects in the region are showing signs of recovery.
VCBS's assessment: PVD's operating activities are heavily
dependent on foreign markets such as Malaysia, Indonesia ...
In these markets, when the oil price is above the breakeven
level within> 1 year, the projects will be restarted
simultaneously. The main reason is that PVD has many
drilling contracts in Malaysia and regional countries. Too
much dependence on the external market is also a risk factor
in business activities.
Source: VCBS
Source: VCBS
28
23
7
16 1
Figure 4: Rigs in South East Asia
Drilling Warm stacked
Cold stacked Under construction
Fixing
62.5
56.43
70
75
45.91
27.26
34
51
0
10
20
30
40
50
60
70
80
2016 2017 2018 2019F
Figure 5: Supply - Demand of drilling services in
South East Asia
Rigs Supply Rigs Demand
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
PETROVIETNAM DRILLING&WELL SERVICES CORP
106 106
SCENARIO ANALYSIS VALUATION
DCF 2019
Risk Free rate (Rf) 4.65%
Equity Risk Premium for VN: (Rm - Rf)+CP 10.27%
Beta 1.30
WACC = Re * E/(E+D) + Rd*(1-Tc)*D/(E+D) 16.09%
Matrix of Valuation
ASSUMPTIONS Worst case Base case Best case
Brent Oil (USD/bbl) 57 72 87
Jack – up .avg day rate (USD/day) 50,000 60,000 70,000
Jack – up .avg utilization (%) 85% 95% 95%
BUSINESS RESULT
EAT (mn USD) 8.2 13.4 388.7
EPS (VND/share) 494 809 1,020
VALUATION
DCF 15,836 18,883 21,714
Target price 15,836 18,883 21,714
19,352
15,480
11,654
21,114
14,859
18,845
20,698
19,702
11,946
26,345
15,204
20,871
0 10,000 20,000 30,000 40,000 50,000 60,000
FCFF
FCFE
P/E
P/B
EV/EBITDA
EV/Sales
Current Price
ASSESSION:
VCBS think that PVD's performance in 2H.2019 will be positive thanks to
significant workload improvement, along with depreciation policies that will
help PVD have a competitive advantage in bidding. VCBS forecast PVD's
sales and NPAT in 2019 are at VND 6,268.00 bn (+13.80% yoy) and VND
309.90 bn (+88.70% yoy).
RECOMMENDATION:
VCBS evaluate the value of PVD’s share at VND 18,883 per share.
We keep to recommend HOLD to PVD in 2H.2019.
MACROECONOMY STOCK MARKET PROSPECTIVE INDUSTRIES & FIRMS FIXED INCOME Back
RECOMMENDATION MATRIX
107 107
BRENT CRUDE 55-65 USD 65-75 USD 75-85 USD INVESTMENT POINT
UP
ST
RE
AM
PVS Completing corporate restructuring with the backlog volumes from 2018 will helps PVS
to grow in 2019.
PVB Nam Con Son 2 – Phase 2 will be the key growth of PVB in 2019, the project is
implemented in time without being affected by oil prices.
PVD
Utilization and day rate increased slightly in 2019 to help PVD improve cash flow.
However, PVD is still operating below breakeven. With a large supply of drilling rigs,
VCBS rated PVD's activities still negatively affected if oil prices fell.
PXS VCBS expect that 2020 will be a good year for PXS thanks to Long Son project and
Wind Farm.
MID
ST
RE
AM
GAS
GAS's business activities are directly affected by world crude oil prices that lead to risky
of GAS’s performance.
BSR
In theory, world crude oil price does not affect BSR's business results. However, sudden
changes in oil prices will negatively affect the cost of goods sold and inventory reduction
costs of BSR.
DO
WN
ST
RE
AM
PGS
CNG
PGD
PLX The effect of oil prices on PLX and PV Oil's business results is due to the difference
between 30-day stock and adjusting the 15-day average selling price according to
government regulations. OIL
Note
: BUY (>15%)
: OUTPERFORM(5% - 15%)
: HOLD (-5% - 5%)
: UNDERPERFORM (< -5%)
Source: VCBS
This report is designed to provide updated information on macroeconomics, fixed-income, including
bonds, interest rates, industries, equity outlook and some other related. The VCBS analysts exert
their best efforts to obtain the most accurate and timely information available from various sources,
including information pertaining to market prices, yields and rates. All information stated in the
report has been collected and assessed as carefully as possible.
It must be stressed that all opinions, judgments, estimations and projections in this report represent
independent views of the analyst at the date of publication. Therefore, this report should be best
considered a reference and indicative only. It is not an offer or advice to buy or sell or any actions
related to any assets. VCBS and/or Departments of VCBS as well as any affiliate of VCBS or
affiliate that VCBS belongs to or is related to (thereafter, VCBS), provide no warranty or
undertaking of any kind in respect to the information and materials found on, or linked to the report
and no obligation to update the information after the report was released. VCBS does not bear any
responsibility for the accuracy of the material posted or the information contained therein, or for any
consequences arising from its use, and does not invite or accept reliance being placed on any
materials or information so provided.
This report may not be copied, reproduced, published or redistributed for any purpose without the
written permission of an authorized representative of VCBS. Please cite sources when quoting.
Copyright 2012 Vietcombank Securities Company. All rights reserved.
DISCLAIMER
108
CONTACT INFORMATION
109
Tran Minh Hoang
Head of Research
tmhoang@vcbs.com.vn
Tran Minh Hoang
Head of Research
tmhoang@vcbs.com
Ly Hoang Anh Thi
Deputy Head of Research
lhathi@vcbs.com.vn
Mac Dinh Tuan
Head of Equity Research
mdtuan@vcbs.com.vn
Le Duc Quang
Head of Equity Research
Construction materials
ldquang@vcbs.com.vn
Le Thu Ha
Head of Macroeconomic Research
ltha_ho@vcbs.com.vn
Nguyen Huy Hoang
Aviation, Logistic
nhhoang@vcbs.com.vn
Nguyen Thi Thu Hang
Aquaculture, Agriculture
ntthang-hcm@vcbs.com.vn
Nguyen Hoang Minh
Market Strategist
nhminh@vcbs.com.vn
Ngo Phuong Anh
Banking
npanh@vcbs.com.vn
Ngo Duy Tai
Oil & Gas
ndtai@vcbs.com.vn
Tran Hai Nam
Derivatives
thnam01@vcbs.com.vn
Pham Lan Huong
Real estate, Technology
plhuong@vcbs.com.vn
Trinh Van Ha
Textile
tvha@vcbs.com.vn
Dang Khanh Linh
Fixed Income
dklinh@vcbs.com.vn
Truong Anh Quoc
Real estate
taquoc@vcbs.com.vn
Tran Ky Anh
Retail
tkanh@vcbs.com.vn
Hoang Tung Vu
Commodities
htvu@vcbs.com.vn
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