FiinPro Digest I Issue #6 I 4 December 2020 Corporate

1Financial Information • Business Information • Market Research • Credit Rating

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Corporate Earnings Back on Track

but Oil & Gas and Travel & Leisure

FiinPro Digest I Issue #6 I 4 December 2020

Prepared by: FiinGroup’s Data Analytics Team

Data-driven Analysis for 9M2020, 2020 Forecast & Sector Outlook

An Associate Company of

Nikkei Inc. and QUICK Corp.


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Table of Content

Content Page

Preface 3

Executive Summary 4 – 9

Part 1: 9M2020 Performance of Non-financial Companies 9

1.1. Earnings Growth 10 – 11

1.2. Quality of Earnings 12 – 13

Part 2: 9M2020 Performance of Banks 14

2.1. Earnings and Income Structure 15 – 20

2.2. Assets Quality 21 – 23

2.3. Operational Efficiency 24

2.4. Capital Structure and Liquidity 25 – 26

Part 3: 2020 Growth Forecast 27

3.1. Forecasting Methodology 28

3.2. 2020 Forecast for Non-Financial Sector 29 – 32

3.3. 2020 Forecast for Banks 33

Part 4: Sector Outlook 2021 34

4.1. 2020 Growth Prospect 35

4.2. Sector Outlook 2021 36 – 41

Real Estate 37

Food & Beverage 38

Basic Resources 39

Utilities 40

Content Page

Appendices 42

Appendix 1: Quarterly Revenue growth by sector 43

Appendix 2: Quarterly Earnings growth by sector 44

Appendix 3: Quarterly EBIT growth by sector 45

Appendix 4: Quarterly EBITDA growth by sector 46

Appendix 5: Quarterly Net profit margin by sector 47

Appendix 6: Quarterly EBIT margin by sector 48

Appendix 7: Quarterly EBITDA margin by sector 49

Appendix 8: Sector – Relative performance vs. VN-Index 40 – 52

Methodology and Important Notes 53

Disclaimer 54

About FiinGroup 55 – 61

@ 2020 FiinGroup Joint Stock Company

All rights reserved. All information contained in this publication is copyrighted in the name of FiinGroup, and as such no part of this publication may be reproduced, repackaged,

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Preface

Dear valued customers and partners:

We are pleased to present “FiinPro Digest #6: Corporate

Earnings Back on Track but Oil & Gas and Travel &

Leisure” which covers listed companies’ earnings growth and

quality in 9M2020 as well as growth forecast for the whole year.

The year 2020 is closing and while Q4-2020 corporate earnings

takes time to be disclosed, we would like to present an analysis

showing the pace and magnitude of corporate performance

recovery from Covid-19 with a regard to 9M2020 results.

With a desire to better help customers with having an overall

view on growth and quality of corporate earnings in 9M2020

amidst the impact of Covid-19 pandemic and building their

investment strategies for 2021, we have conducted forecast on

corporate earnings growth of Q4-2020 as well as the whole year

for a longer vision.

As part of “FiinPro Digest” series, this Report is prepared as a

value-added service primarily for subscribers of FiinGroup’s

financial information and data platform. Accordingly, FiinPro

Digest #6 focuses on analyzing financial data to give comments

and findings with specific data-driven evidences in order to

provide an independent and in-depth perspective on securities

and financial matters.

We hope that this Report will support not only analysts at investment

institutions and individual investors but also banks and relevant

agencies with working out measures or policies to lessen the Covid-

19 impact on different sectors.

Data in this Report was mainly extracted from our FiinPro Platform

which is currently used by many local and foreign institutions.

We are looking forward to receiving your comments and feedback on

this Report. If you would like more information, please contact our

service contact or email us at [email protected]

Happy and Successful Investing!

Truong Minh Trang

Senior Managing Director

Financial Information Division


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up1 In Q3-2020, net revenue and earnings of non-financial listed

companies (excluding Banks, Insurance and Financial services)

dropped by 8.4% and 8.8% YoY, respectively. However, this marks

continued improvement against the two preceding quarters (when

both sales and earnings growth hit record lows).

Earnings was seen improving at major sectors, including Basic

Resources (led by HPG and HSG), Real estate, Technology and

other consumer-facing sectors (Retail, Food & Beverage, and

Automobile & Parts).

It is noteworthy that the earnings of non-financial companies was

dragged by slow recovery of Covid-hit sectors (including Oil & Gas

and Travel & Leisure). Accordingly, if these two hardest-hit sectors

were excluded, 14/16 non-financial sectors fared better with a 6.2%

growth in net revenue and 8.5% increase in earnings.

Utilities, widely regarded as “defensive” (even when the Covid-19

pandemic broke out in Vietnam), recorded declines in both Q3-2020

sales and earnings. Low power and petrol consumption during the

Covid-19-hit period, the shortage of gas supply and the low water

level at reservoirs hurt Gas distribution and Electricity sub-sectors

(which contributed 91% of the sector’s total revenue).

The quality of corporate earnings has not yet been fully improved as

the revival in accounting profit was particularly covered by non-

recurring incomes including financial ones. While earnings declined

8.8% YoY in Q3-2020, EBIT and EBITDA saw deeper falls of 20.1%

and 17.7%, respectively.

However, QoQ improvement of EBIT helps corporates improve debt

servicing capability. The Interest Coverage Ratio (ICR) rose from

2.44x in Q2-2020 to 3.76x in Q3-2020, but still below the Q3-2019

level (4.75x).

2

3

Corporate sector earnings is back on track except for Covid-19-hit sub-sectors, while banks

continued to post a stronger growth in both Q3-2020 and 9M2020

In contrast, banks still recorded 10.8% YoY growth in total operating

income and 6.5% YoY increase in earnings.

Operating income of banks grew in all core operating segments

including net interest income (+9.4% YoY), service activities

(+31.4% YoY) and remaining activities (+2.7% YoY). Compared

to the preceding quarter, earnings declined slightly by 1% while

total operating income still jumped by 12.6%.

NIM of 21 listed banks rose by 9.7 basis points (bps) from Q2-

2020 to 0.89%. This is the highest quarterly NIM and the biggest

increase since Q1-2018 - a period of strong growth in the

banking industry. To achieve this high NIM, banks maintained a

high average lending rate at 9.2% compared to 9% in Q2-2020.

Personal credit in some banks showed signs of recovery in Q3-

2020, contributing to higher profit, especially banks with a high

proportion of retail credit such as VIB and MBB.

The NPL ratio continued to rise from the end of 2019 and the two

preceding quarters. NPL of 18 listed banks continued its uptrend

from 1.44% at the end of Q4-2019 to 1.8%, mainly due to

increasing loans in Group 3 (+78.1%) and Group 4 (+48.2%).

According to Circular 01, banks can decide to restructure the

repayment term and keep the same classification for loans of

customers affected by Covid-19. Without this restructuring, the

NPL ratio and the NPL formation rate would be considerably

higher in 2020. However, with Covid-19 being contained in

Vietnam and recovery of affected sectors, we think this is only a

short-term problem for banks. The recovery and improvement

from other sectors and diversification of income structure

especially from services will contribute to help banks offset the

bad debt issue from Covid aftershocks in the coming quarters.

Executive Summary


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up4 Forecast Results: Net revenue of non-financials to forecast to

decline by 3.2% YoY in Q4-2020, rebounding from the record fall of

18.9% in Q2-2020. Accordingly, net revenue of non-financial

companies is forecast to drop 8.2% YoY in 2020. It is noteworthy that

if two Covid-hit sectors (Oil & Gas and Travel & Leisure) are not

included, Q4-2020 net revenue of non-financials is expected to edge

down 0.8%, marginally reaching the level of the same period last

year.

We forecast earnings of non-financial companies to shrink by 21.4%

YoY for the whole year of 2020, almost equivalent to our earlier

estimate (down 20.5%) that is based on earnings guidance. However,

the two-digit decline is mostly attributed to slow recovery of Covid-hit

sectors (Oil & Gas and Travel & Leisure). If the two sectors are

excluded, the PAT of non-financials could fall at a slower pace of

6.9%.

FiinGroup’s forecast model is based on data-driven analysis of (i)

2020 earnings guidance; (ii) the ability to fulfill 2020 earnings

guidance given 9M2020 performance; and (iii) seasonality factors

applicable to different sectors. The model has been back-tested on

the previous four quarters with +/-3% deviation. Our detailed

methodology is presented in Page 27.

Forecast of Net revenue in 2020 by sectors: Real estate will lead

non-financials with a projected sales growth of 22.4% in Q4-2020 as

this is the peak delivery season for apartments. Rising consumer

demand keeps fueling growth of Food & Beverage and Retail.

Industrial Goods & Services is driven by Logistics sub-sector

[thanks to a 3.5% increase of in export turnover in 11M2020] as well

as Industrial Machinery & Electronic Equipment. We also forecast a

5.6% sales decrease for Basic Resources given high base in Q4-

2019 when VnSteel (TVN) booked VND16 trillion in revenue, tripling

the average level for the similar quarter in the preceding three years.

If excluding TVN, revenue of Basic Resources could rise 4.4% YoY in

Q4-2020.

Closing the year 2020, we forecast an overall -8.2% growth in sales growth and -21.4% growth in Profit After

Tax for corporate sectors

Sales Forecast 2020: Non-financials

Earnings Forecast 2020: Non-financials

5

786.4761.0

-8.2%

-0.8%

-40%

-20%

0%

20%

40%

60%

(2,500)

(1,500)

(500)

500

1,500

2,500

3,500

2017 2018 2019 2020

Trn

VN

D

Net revenue (9M) Net revenue (Q4)

Growth (YoY) Adjusted growth (YoY)

64.9

57.5

-21.4%

-6.9%

-30%

-10%

10%

30%

50%

70%

(100.0)

(50.0)

-

50.0

100.0

150.0

200.0

250.0

2017 2018 2019 2020

Trn

VN

D

Profit after tax (9M) Profit after tax (Q4)Growth (YoY) Adjusted growth (YoY)

Executive Summary (continued)


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6

Listed banks are forecast to see net earnings up 10.2% in 2020, supported by improving service fees and

maintaining incomes from securities investment and trading

Earnings Forecast 2020: Listed banks

Forward Valuation 2020: Non-financials & Banks

7 Forward Valuation 2020: Given recent stock market divergence, we find

it necessary to provide value metrics for non-financials and banks

separately. Our estimate shows that the forward 12-month P/E of non-

financials is 20.6x, equivalent to the current valuation (20.5x) but this

valuation marks a premium compared to its level at end-2019 (17.2x) on

expectation that EPS could decline 21.9% in 2020.

Meanwhile, bank stocks are traded at an average P/B of 1.8x and P/E of

12.2x. Earnings growth of 21 listed banks is projected at 10.1% YoY in

2020, which is translated into the forward 12-month P/E of 12.3x, but the

valuation is based on accounting profits and could change upon the

booking of Covid-related non-performing loans whose repayment terms

were restructured under Circular No. 01 or whether the circular is

extended or not.

26.9

10.2%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0

20

40

60

80

100

120

2017 2018 2019 2020

VN

D t

rilli

on

PAT (9M) PAT (Q4) Yearly PAT growth

12.32

10.0

12.0

14.0

16.0

18.0

20.0

22.0

24.0

2016 2017 2018 2019 2020F

P/E of non-financials P/E of banks (ttm)

For Banking: We expect listed banks’ earnings to increase 10.2% in

2020 thanks to high growth in all three operating segments: net interest

income, net fee and commission income, and net income from

remaining activities.

As for credit activities in Q4-2020, we forecast that banks' NIM will

remain high at Q3-2020 level since deposit rates continue to decline.

We believe that net fee and commission income and net income from

remaining activities keeps growing compared to Q3-2020, while the

cost-to-income ratio (CIR) will also increase in the last quarter as seen

in previous years. In addition, we believe that banks will manage their

accounting results in making credit provisions in Q4-2020 ahead of

expiration of Circular 01.

Our forecast is based on a model that aggregates 21 listed banks with

some key assumptions. For more details, please see forecasting

assumption on page 33.


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We have classified 2020 earnings growth of

corporate sectors into three groups

(”ACCELERATE”, “MAINTAIN”, and

“DECELERATE”) in comparison with CARG of each

sector in the most recent five years.

Accordingly, 6/16 corporate sectors have earnings

growth in 2020 evaluated as “ACCELERATE”,

consisting of Construction & Materials, Basic

Resources, Chemicals, Telecommunications, Media

and Automobile & Parts, while Food & Beverage and

Technology are rated as “MAINTAIN”.

Food & Beverage and Basic Resources contribute

one-third of sales and earnings of non-financial

sector and pose a bright growth outlook for 2021

thanks to rising demand from both local and export

markets. Food processors (including VNM, MCH,

MML, BT, DBC and KDC) lead the growth of Food &

Beverage as demand for processed and packaged

food keeps increasing. Meanwhile, Basic Resources

is forecast to grow 59.7% YoY in 2020, led by Steel

producer HPG that likely boosts export of billet to

China as well as sales of HRC on domestic market.

Price versus Value story: It is noted that the 2020

growth prospect of certain sectors have been priced

in 30%-60% upswing in the last four months. As a

result, we recommend clients not to make

investment or trading decisions solely on this

analysis.

No. SECTORS EARNINGS GROWTH VALUATION & +/-PRICE

% non-

financials

5-yr

CARG 2020F Rating

P/E

4Q (x)

% price

4 months

% price

vs.

VN-Index

1 Real Estate 28.2% 43.5% -15.7% DECELERATE 18.5 21.6% LOWER

2 Food & Beverage 20.3% 8.1% 1.9% MAINTAIN 21.3 28.2% HIGHER

3 Industrial Goods & Services 10.9% 20.8% -35.2% DECELERATE 19.1 28.2% LOWER

4 Utilities 8.9% 0.7% -22.2% DECELERATE 14.9 20.7% LOWER

5 Construction & Materials 5.3% 11.2% 12.4% ACCELERATE 13.0 27.4% HIGHER

6 Basic Resources 5.3% 13.6% 59.7% ACCELERATE 15.1 49.3% HIGHER

7 Travel & Leisure 3.5% 53.7% -274.2% DECELERATE - 17.9% LOWER

8 Chemicals 3.7% -2.1% 1.9% ACCELERATE 21.7 60.7% HIGHER

9 Telecommunication 3.0% -19.4% 265.9% ACCELERATE 29.6 25.1% LOWER

10 Oil & Gas 3.0% 16.9% -119.7% DECELERATE - 0.0% LOWER

11 Retail 1.9% 23.6% -2.5% DECELERATE 14.7 53.1% HIGHER

12 Technology 1.5% 12.6% 11.0% MAINTAIN 13.4 26.1% LOWER

13 Personal & Household Goods 1.6% 11.2% -20.9% DECELERATE 11.3 31.0% HIGHER

14 Pharmaceuticals 1.4% 4.9% -3.9% DECELERATE 14.0 14.7% LOWER

15 Media 0.9% -8.2% 221.3% ACCELERATE 56.4 -14.9% LOWER

16 Automobile & Parts 0.5% 0.9% 79.9% ACCELERATE 9.0 14.7% LOWER

Non-financials 100% 14.0% -21.4%

2020 growth forecast by sector

Several sectors having positive earnings growth in 2020 that has been priced in their stock price in a

range 30%-60% upswing



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Based on 2020 earnings forecast and 2021 outlook, these four sectors

are in our watch list for their solid fundamentals and corporate financial

strength:

• Real estate: The most positive signal is that prepaid customer

payments at end-Q3 hit record high, creating a basis for strong

accounting revenue in 2021. Mid-end housing developers have

brighter growth outlook thanks to rising demand. In addition,

Resolution 164/NQ-CP is expected to remove the legal bottleneck on

licensing procedures for real estate projects from Jan 1, 2021,

allowing restart of many projects that have been suspended due to

land right use issues.

• Food & Beverage: We believe that Farming & Fishing will lead the

sector in terms of earnings growth in 2021 thanks to rising demand for

processed and packaged food at both domestic and abroad markets.

Tax incentives under EVFTA will help improve profit margins, boost

export revenue and increase profits of listed seafood exporters.

• Utilities: Hydropower and Thermal power plants have positive growth

outlook for 2021 given rising power demand while gas-fired operators

continue to be hit by LNG shortage.

• Basic Resources: Steel billet export will continue to drive the sector

growth in 2021 on expectation that local steel consumption stays low

Further analysis on 2021 sector outlook are presented in Part 4.2 of this

Report.

We believe that other sectors may have their own growth stories such as

digital transformation (Technology) or strong recovery of Covid-hit

sectors and these stories have not yet been covered in this Report. We

will continue to provide data-driven analysis of more sectors in the

upcoming issues.

Sector outlook for 2021

Banking Sector

Banks maintained earnings growth momentum in Q3-2020, recording an

YoY increase of 6.5%. We expect earnings of 21 listed banks to grow

10.2% in 2020.

• The story of 2020 is growth of service fees, although securities income

shows signs of slowing down in Q3-2020 as interest rates hardly get

lower from their current record low. We believe that these two activities

will still be the highlight of the banking industry's profit in the coming

year of 2021. Some people believe that interest rates may soon bounce

back in 2021, but at least in the international context, analysts agree

that governments will keep low interest rates to regain growth

momentum after vaccines are made available.

• The liquidity of the Vietnamese banking system remains at a very good

level, reflected in declining Loan-to-Deposit ratio as well as record-low

interbank interest rates.

• The most significant risk factor is that bad debts could rise again at

banks still having room to record bad debts in accordance with Circular

No. 01 of the State Bank of Vietnam. However, deteriorating earnings

and weakening debt servicing capability of Covid-hit sectors (Oil & Gas,

Travel & Leisure) have been the biggest stress for the banking sector

since 2009.

• In addition to NPL issues, banks’ corporate bond exposure (including

bank bonds) is also another risk factor worth watching. As of

September 30, 2020, corporate and bank bonds accounted for 8.2% of

total outstanding loans; however, new issuance activities fell sharply

after being tightened by Decree 81 of the Ministry of Finance.

• Currently, 21 listed banks are being traded at 1.8x P/B and 12.2x P/E.

Since early August 2020, foreign investors have net sold VND3.1 trillion

of bank shares and banking sector index rose by 30.2% versus VN-

Index +25.6%



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Part 1: 9M2020 Performance of Non-financial

Companies

This section analyzes data of non-financial companies (excluding Banks, Insurance and Financial Services) which are

listed on HOSE, HNX and UPCoM.

The data was updated as of November 18, 2020 when 1,009/1,662 non-financial listed companies disclosed their

financial statements for the third quarter of 2020 and these companies represent a combined 98.3% of market

capitalization of the non-bank group on the three bourses.

In order to ensure the consistence of data coverage, only listed companies were covered in this report. Our

FiinPro Platform currently provides data on both listed and unlisted companies. Please trial our FiinPro

Platform for better experience or contact our Customers Support to have further updated data.


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9.9%

31.4%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2017 2018 2019 2020

Net revenue growth (QoQ) Profit after tax growth (QoQ0

-8.4%

-8.8%

-80.0%

-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%


2017 2018 2019 2020

Net revenue growth (YoY) Profit after tax growth (YoY)

Non-financial corporate earnings are basically back on track, but still below pre-Covid-19 level

1.1. Earnings Growth

Figure 1: Net revenue & Earnings growth by quarter (YoY)

Source: FiinPro Platform

Notes: Data covers 1009/1662 non-financial listed companies (accounting for 98.3% of the group’s market cap)

In Q3-2020, net revenue and earnings of non-financial listed

companies (excluding Banks, Insurance and Financial services)

dropped by 8.4% and 8.8% YoY, respectively, but this marks

continued improvement against the two preceding quarters (when

both sales and earnings growth hit the record lows).

The decrease in corporate earnings mostly came from slow recovery

of Covid-hit sectors (including Oil & Gas and Travel & Leisure). It

should be noted that if these two hardest-hit sectors were excluded,

14/16 corporate sectors fared better with a 6.2% YoY growth in net

revenue and 8.5% YoY increase in earnings, supported by improved

performance in Real estate, Food & Beverage and Basic Resources.

Figure 2: Net revenue & Earnings growth by quarter (QoQ)

On the quarter-on-quarter basis, Q3-2020 saw 9.9% increase in net

revenue of non-financial companies, ending a streak of two

consecutive quarters of decline. The upsurge in domestic travel

demand in the third quarter as the peak season and oil price rebound

helped boost earnings of Oil & Gas and Travel & Leisure.

Given the low base of earnings in 9M2020, the growth of non-

financial sector is forecast to revive strongly in 2021 amidst recent

positive news on Covid-19 vaccines, the substantial improvement in

fundamental factors, the resurge in consumer demand and the

abundance of cheap money.


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26.1%

22.0%

20.0%

14.5%

23.9%

-8.0%

6.4%

6.4%

16.2%

1.0%

-7.3%

-10.7%

-15.2%

-60.0%

1.4%

-85.0%

2310.1%

141.4%

116.1%

104.8%

22.4%

15.0%

7.3%

6.0%

5.3%

1.1%

-6.9%

-9.6%

-25.1%

-25.6%

-33.1%

-251.4%

Earnings recovery has been seen at not only large caps but also mid-sized and lower companies

1.1. Earnings Growth

Earnings growthNet revenue growth Sectors (# of companies - % marcap)

Figure 3: Net revenue and Earnings growth in Q3-2020 by sector (YoY)

Non-financial sectors recording growth in both net revenue and earnings are: (i) Basic Resources with “Steel in the Spotlight”, led by Hoa Phat Group

(HPG) and Hoa Sen Group (HSG). In details, HPG contributed one-third of Q3-2020 revenue of Basic Resources thanks to its tremendous export of

billets to China; (ii) Real estate with earnings growth driven by not only Vinhomes (VHM) but smaller developers (including HTN, NVL, KDH, TID and

BCM) as well; and (iii) Technology where outperformance of smaller players CMG, SAM and ICT compensated for slightly decrease of IT giant FPT.

Travel & Leisure, Oil & Gas and Industrial Goods & Services are Covid-hit sectors, and their earnings is yet to improve. In which, Travel & Leisure and

Oil & Gas saw net profit decline of 251.4% and 25.6% YoY, respectively, while Industrial Goods & Services contracted 33.1% in earnings despite a

1.4% increase in net revenue.

Utilities, widely regarde as “defensive” (even when the Covid-19 pandemic broke out in Vietnam), recorded decline in both net revenue and earnings in

Q3-2020. Gas distribution and Electricity sub-sectors, accounting for 91% net revenue of Utilities, saw their profit down 16.6% YoY, driven by (i) the

shortage of gas supply, (ii) the low water level at reservoirs amid droughts and (iii) low power and petrol consumption during the Covid-19-hit period.

Water sub-sector earnings grew 2.5% YoY, led by BWE, DNA, CLW, and TDW.

Media (29-0.8%)

Telecommunications (5-3.0%)

Basic Resources (79-5.3%)

Automobiles & Parts (12-0.5%)

Real estate (96-28%)

Construction & Materials (210-5.0%)

Technology (21-1.5%)

Retail (21-1.8%)

Food & Beverage (99-20%)

Chemicals (50-3.7%)

Pharmaceuticals (36-1.3%)

Personal & Household Goods (50-1.4%)

Utilities (104-8.9%)

Oil & Gas (9-3.0%)

Industrial Goods & Services (155-10%)

Travel & Leisure (33-3.5%)


Notes: Data covers 1009/1662 non-financial listed companies (accounting for 98.3% of the market cap)


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-80%

-60%

-40%

-20%

0%

20%

40%


2017 2018 2019 2020

Profit after tax growth (YoY) EBITgrowth (YoY)

-34.0%-38.3%

-17.7%

-60%

-40%

-20%

0%

20%

40%


2017 2018 2019 2020

1.2. Quality of Earnings

Figure 4: Earnings and EBIT growth by quarter (YoY) Figure 5: EBITDA growth by quarter (YoY)

Corporate earnings quality has been improving as well, but yet to catch up with accounting profit growth as many

companies recorded non-core items including financial incomes

In Q3-2020, Earnings before interest and taxes (EBIT) and

Earnings before interest, taxes, depreciation, and amortization

(EBITDA), two main indicators commonly used to assess

corporate earnings quality, fell by 20.1% and 17.7% YoY. This

marks the 5th consecutive quarter of decline for EBIT and 3rd for

EBITDA, extending the downtrend since Q3-2019 or three

quarters prior to the spreading of Covid-19 in Vietnam.

The decline in EBIT and EBITDA slowed down by half in Q3-

2020 from the previous quarter. This showed that core corporate

earnings have been gradually recovering, but at a slower pace

than that of accounting profit.

The QoQ improvement of EBIT helps corporates improve debt

servicing capability. The Interest Coverage Ratio (ICR) rose from

2.44x in Q2-2020 to 3.76x in Q3-2020, but still below the Q3-

2019 level (4.75x).

Figure 6: EBIT change and Interest Coverage Ratio




2.24

2.44

3.76

-13.0

-10.0

-7.0

-4.0

-1.0

2.0

5.0

-40

-30

-20

-10

0

10

20

30


2017 2018 2019 2020

Inte

rest C

ove

rag

e R

atio

(x)

+/-

EB

IT (

Trn

VN

D)

EBIT change (YoY) Interest Coverage Ratio (ICR)


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Specifically, 10/16 non-financial sectors record earnings increase in Q3-2020 but only 6/16 saw EBIT growth

1.2. Quality of Earnings

EBIT growth Earnings growth

Figure 7: EBIT growth in Q3-2020 by sector (YoY)

598.7%

99.6%

91.5%

90.5%

15.9%

2.7%

-0.2%

-1.2%

-3.1%

-4.4%

-9.7%

-20.0%

-23.4%

-27.1%

-35.1%

-220.0%

2310.1%

104.8%

141.4%

116.1%

5.3%

7.3%

6.0%

1.1%

-6.9%

22.4%

-9.6%

15.0%

-25.6%

-25.1%

-33.1%

-251.4%

Media (29-0.8%)

Automobile & Parts (12-0.5%)



Food & Beverage (99-20.%)


Retail (21-1.8%)

Chemicals (50-3.7%)


Real estate (96-28.%)



Oil & Gas (9-3.0%)


Industrial Goods & Services (155-10.0%)

Travel & Leisure (33-3.5%)

Telecommunications, Media and Automobile & Parts posted the strongest increase in core earnings in Q3-2020 but their market cap is quite

small and core earnings was dominated by leading players. Viettel Global (VGI) took the lead in Telecommunications in terms of core earnings

growth thanks to Natcom in Haiti and Mytel in Myanmar. The EBIT growth of Media was mostly contributed by Yeah 1 (YEG) and Phuong Nam

Education (SED) while Hoang Huy Investment Financial Services (TCH), Savico (SVC), Casumina (CSM) and Haxaco (HAX) led Automobile &

Parts.

Food & Beverage saw its EBIT increase outpacing the accounting profit growth (15.9% vs. 5.3%) in Q3-2020 as Masan (MSN), one of top three

players in the sector, had to cover losses of the retail business (VinCommerce) it acquired from VinGroup (VIC) earlier this year. If MSN is excluded,

the accounting profit of the remaining F&B listed companies surged 30.8% while EBIT grew at a slower pace of 20.8%, led by Vinamilk (VNM),

GTNFoods (GTN), Thanh Thanh Cong – Bien Hoa Sugar (SBT), Masan Consumer (MCH), Masan MeatLife (MML), KDC and Vilico (VLC).

Real estate, Chemicals, Retail and Construction & Materials recorded year-on-year growth in the Q3-2020 accounting profit, boosted by

financial incomes as their core earnings dropped. This showed that the quality of earnings among these sectors remained unimproved.

Sectors (# of listed companies - % marcap)




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Part 2: 9M2020 Performance of Banks

This section covers data of the Banking sector, which includes all 21 listed banks, accounting for 64.3% of the system's

total outstanding loans. For Banking, besides comparing with the same period last year (YoY) as done with non-financial

companies, we also compared with the adjacent quarter (QoQ), due to the less seasonal characteristics of banking

business.

We would like to note that Circular 01 of the State Bank allows banks to restructure loans affected by Covid-19.

The restructured loans will still be recorded as performing loans and therefore no provision is required. The

impact of Covid-19 on credit quality will be clearer once this policy changes.

In order to ensure the consistence of data coverage, only listed companies were covered in this report. Our

FiinPro Platform currently provides data on both listed and unlisted companies. Please trial our FiinPro

Platform for better experience or contact our Customers Support to have further updated data.


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Despite total operating income growth of 12.6%, banks’ earnings slid 1% QoQ on soaring provisioning expenses

2.1. Earnings and income structure


Note: Calculated from data of 21 listed banks with total outstanding loans of VND 5,587 trillion, accounting for 64.3% of the system’s loans

In Q3-2020, total operating income of 21 listed banks grew by 12.6% QoQ and 10.8% YoY. However, earnings of those banks slid by 1% QoQ and

rose by 6.5% YoY. The main reason is that provision expenses for credit losses soared by 29.5% QoQ and 19.8% YoY. This shows that banks were

more aggressive in provisioning in Q3-2020, after provision expenses fell by 15.9% in Q2-2020 compared to Q1-2020.

However, as we mentioned in previous publications, due to Circular 01/2020/TT-NHNN, provisioning expenses have not yet fully reflected the impact

of Covid-19 on profit, as banks can maintain the same loan classification for loans affected by Covid-19 and only have to provision accordingly.

In 9M2020, total after-tax profit of the banking sector still grew strongly at 10.2% while total operating income rose by 9.7% YoY.

Figure 8: Total operating income growth Figure 9: Earnings growth

-1.4%

13.1%

-1.0%

18.6%

44.8%

6.5%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2018 2019 2020

PAT growth (QoQ) PAT growth (YoY)

4.0% 5.2%

12.6%17.6%

22.4%

10.8%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2018 2019 2020

Operating income growth (QoQ) Operating income growth (YoY)


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Net interest margin (NIM) rose sharply in Q3-2020 given deposit rates falling faster than lending rates

Figure 11: Deposit and Credit growth (YoY)Figure 10: Net interest margin (NIM) and NIM Change (QoQ)



NIM of 21 listed banks rose by 9.7 basis points (bps) compared to Q2-2020 to 0.89%. This is the highest quarterly NIM and also the biggest increase since

Q1-2018 - a period of strong growth in the banking industry. To achieve this high NIM, banks still maintained a high average lending rate. Specifically, the

average lending rate of 20 banks (excluding BVB) increased to 9.2% from 9% in Q2-2020, indicating impact of the reduction of lending rates for customers

affected by Covid-19 on banks’ interest income was lessened in Q3-2020.

As lending interest rates were maintained, interest income on customer loans of 20 banks (excluding BVB) grew by 5.2% while interest income from debt

securities edged up only by 0.8% compared to Q2-2020. This shows that NIM growth and net interest income come largely from customer loans. Some

banks have a high proportion of profit from debt securities investment (around 20%), including TCB, VBB (Vietbank), TPB and MBB.

In the context of falling deposit interest rates, interest and similar income rose 4.5% QoQ while interest and similar expenses declined 2.6%. This shows

that lending rates didn’t decrease corresponding to the reduction of the deposit rates recently.

By the end of Q3-2020, customer loans grew by 5.8%, lower than customer deposit growth (7.3%), and this is the continuing trend from Q1-2020. It is

different from the trend of previous years, showing that the influence of Covid-19 pandemic on credit demand is quite large.

(2.9)

0.1 1.0

(5.7)

9.6

1.5 1.3

(0.5)(1.4)

(6.8)

9.7

0.89%

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

0.60%

0.65%

0.70%

0.75%

0.80%

0.85%

0.90%

0.95%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2018 2019 2020

NIM change (bps) NIM

20.1%

13.7%

15.7%

5.8%

15.0%

12.5%13.9%

7.3%

0%

5%

10%

15%

20%

25%

2017 2018 2019 9T2020

Customer loans Customer deposits


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Personal credit in some banks show signs of recovery in Q3-2020, contributing to increased profits,

especially banks with a high proportion of retail credit.

Figure 12: Customer loan growth structure

In 2019, although still the main driver, personal credit growth continued to decline to 22.6% from 23.6% in 2018 while corporate credit growth surged

again to 11.3% from 7.9% in 2018.

The data on corporate and personal outstanding loans was not fully disclosed by banks in Q3-2020. However, based on 5 banks with notes in their

financial statements (VPB, VIB, MBB, SHB, KLB, accounting for 18.3% of total outstanding loans of listed banks, of which VPB, VIB, MBB, KLB have a

high proportion of personal credit), the main driver for credit growth in 9M2020 was corporate credit growth of 12% while personal credit grew by only

6.1%. However, compared to corporate credit growth of 9.6% and personal credit growth of 2% at the end of Q2-2020, it can be seen that personal

credit grew faster in Q3-2020.

Personal credit accelerating again contributed to the increase in net interest income and NIM of banks, as these loans have higher interest rates and

larger NIM. The two banks with the strongest personal credit growth in Q3-2020 were MBB (from 1.1% at the end of Q2-2020 to 10.9% at the end of

Q3-2020) and VIB (from 8.2% at the end of Q2-2020 to 16.7% at the end of Q3-2020). MBB and VIB's NIM increased by 11 basis points (bps) and 12

bps in Q3-2020 to 1.31% and 1.12%, respectively, ranking 3rd and 5th among 21 listed banks.


Note: Calculated on data of 18 listed banks (excluding NVB, BAB, BVB due to not

disclosing all data on their financial statements)

Figure 13: Credit growth in 5 banks


Note: Calculated on data of 5 listed banks (VPB, VIB, MBB, SHB, KLB).

37.1%

25.1% 25.5%

6.1%

16.7%

9.9%

15.4%12.0%

24.5%

16.4%

20.0%

9.2%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2017 2018 2019 9T2020

Personal loans Corporate loans Total loans

32.4%

23.6%22.6%

14.1%

7.9%

11.3%

20.2%

13.7%15.8%

5.8%

0%

5%

10%

15%

20%

25%

30%

35%

2017 2018 2019 9T2020

Personal loans Corporate loans Total loans


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Strong growth of service fee income is the story in Q3-2020, instead of income from securities investment

and trading as noted in previous quarters

In Q3-2020, net interest income (minus provision expenses) accounted for 68.6% of the total operating income minus provision expenses, a slight

increase of 0.5% QoQ; while net fee and commission income and net income from remaining activities accounted for 16% (+1.3%) and 16.8% (-1.9%),

respectively. If the provision expenses were not deducted, net interest income accounted for 76.8% of total operating income (+1.5%).

With low credit growth but improved NIM, net interest income (excluding provisions) grew by 14.8% QoQ and 9.4% YoY. In 9M2020, net interest

income rose by 7.6% YoY.

In Q3-2020, net fee and commission income spiked while net income from remaining activities dropped from Q2-2020. However, in 9M2020, both

segments saw high growth.

The proportion of net fee and commission income after dropping to a low level in Q1-2020 continued to increase in both Q2 and Q3-2020, becoming an

important growth driver for banks in the context of low growth of net interest income.

Figure 15: Income structure



Figure 14: Income growth of major operating segments

14.8%

9.4%7.6%

17.2%

31.4%

17.2%

-4.1%

2.7%

17.3%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

Q3-QoQ Q3-YoY 9T-YoY

Net interest income Net fee and commision income

Net income from remaining activities

73.6% 70.6% 70.7% 66.7% 70.4% 68.1% 68.6%

12.9% 14.3% 13.2%14.4%

13.1% 14.7% 16.0%

7.4% 8.8% 8.2% 11.2% 6.2% 6.5% 7.7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1 Q2 Q3 Q4 Q1 Q2 Q3

2019 2020

Net interest income (- provisions) Fee & commission

Forex & gold Securities

Other activities Capital/equity investment


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Strong growth of service fees continued to come from payment services, bancassurance and especially

brokerage and guarantee activities (mainly related to bond trading)

Not all banks disclosed data on the structure of net fee and commission income. However, the published data of 11 banks (accounting for 40.9% of net

fee and commission income of 21 listed banks) shows that the proportion of net income from bancassurance slipped QoQ but still accounted for 50.9%

of net fee and commission income. Net income from this segment recorded growth rates of 6.9% QoQ and 26.6% YoY.

Net income from payment services of 11 banks grew by 5.6% QoQ and 83.4% YoY. However, its contribution dropped from 25.1% to 23.3%.

Net profit from remaining service activities (including treasury, brokerage, guarantee, trustee/ agency, and other services) jumped by 40.7% QoQ and

107.8% YoY, in which brokerage and treasury services incurred less loss compared to Q2-2020 and Q3-2019, while guarantee, trustee/agency and

other services recorded high growth.


Note: Calculated from data of 11 listed banks (BAB, KLB, MBB, NVB, SGB, SHB, TCB, TPB, VBB, VIB, VPB).

Figure 16: Structure of service fees

25.3% 26.4%19.5% 20.3%

30.8%25.1% 23.3%

57.9%

68.4%

61.5%54.6%

55.7%

54.0%50.9%

16.9%5.2%

19.0%25.2%

13.4%20.9%

25.8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1 Q2 Q3 Q4 Q1 Q2 Q3

Payment services Bancasurance Remaining services


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In Q3-2020, the contribution of net income from securities investment fell significantly compared to Q2-2020

while net income from other activities rose strongly again

The remaining activities include foreign currency trading, securities trading, securities investment, capital contribution/equity investment and

other activities.

Among remaining activities, the proportion of net income from securities (including securities trading and investment) continued to drop to

20.7% after a sudden jump in Q1-2020. In terms of growth rate, income from securities fell 32.5% QoQ and 6.7% YoY. In 9M2020, income from

securities still soared by 112.6% YoY.

The 5 banks with the highest securities income in 9M2020 were: BID (VND1,488 billion), TCB (VND1,290 billion), VPB (VND1,102 billion), MBB

(VND870 billion), ACB (VND802 billion). In terms of contribution, the banks with high ratio of securities income to total operating income (minus

provision expenses) were small banks: VBB (48.3%), BVB (16.6%), NVB (14.2%). This is the income that banks record when they sell their

portfolios and realize profit.



Figure 17: Income structure of remaining activities(mainly foreign exchange, equity investment and securities)

28.2% 26.4% 23.4%18.3%

26.0% 27.3% 27.1%

14.2%8.2%

22.8%21.0%

34.5% 29.5%20.7%

55.0%

58.0%

51.2%59.0%

37.5%37.6%

50.1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1 Q2 Q3 Q4 Q1 Q2 Q3

2019 2020

Forex Securities Other activities Capital contribution/equity investment


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0.20%

0.03%

0.14%

-0.14%

0.14%

0.06%

0.10%

-0.25%

0.23%

0.10%0.12%

-0.3%

-0.2%

-0.1%

0.0%

0.1%

0.2%

0.3%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2018 2019 2020

2.2. Assets quality

Non-performing loan (“NPL”) ratio keeps climbing compared to the end of 2019 and the two preceding

quarters

Figure 18: Non-performing loan (NPL) ratio


Note: NPL is equal to the total of loans Group 3–5 over loans to customers. Calculated from data of 18 listed banks (excluding NAB, NVB, BVB due to lack disclosure of full data)

Figure 19: NPL formation rate (QoQ)

At the end of Q3-2020, the NPL ratio of 18 listed banks continued its uptrend from 1.44% at the end of Q4-2019 to 1.8%. In absolute terms, Group 3,

Group 4 and Group 5 loans increased by 78.1%, 48.2% and 8.2%, respectively, from the end of Q4-2019.

Including 21 listed banks, NPL was at 1.74% at the end of Q2-2020 and 1.82% at the end of Q3-2020. In absolute terms, Group 3 and Group 4 loans

rose by 30.5% and 2.7%, respectively, while Group 5 loans slipped by 3.4% from the end of Q2-2020. Group 3, Group 4, Group 5 loans at the end of

Q3-2020 made up 31.8%, 19.6% and 48.6%, respectively, of total non-performing loans.

NPL formation rate (defined as Change in outstanding loans of Group 3-5 loans in the quarter divided by average total outstanding loans in the

quarter) was at 0.1% in Q2-2020 and 0.12% in Q3-2020 after rising to 0.23% in Q1-2020.

According to Circular 01, banks can decide to restructure the repayment term and keep the same classification for loans of customers affected by

Covid-19. Without this restructuring, the NPL ratio and the NPL formation rate would be higher in 2020. How high specifically will depend on the loan

portfolio of each bank and we do not have enough data to evaluate. However, you can have preliminary assessment based on each bank's loan

portfolio and reference to the performance of non-financial sector as we pointed out in Part 1 of this report.

1.44%

1.71%

1.80%

1.3%

1.4%

1.5%

1.6%

1.7%

1.8%

1.9%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2018 2019 2020


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2.2. Assets quality

Loan exposure shows focus on Personal Credit. Covid-19 hit sectors accounted for a low proportion from the

sample data that we have

Figure 20: Loan structure by industry 2019

In 2019, loan books of 19 listed banks showed that the three sectors with largest outstanding loans are Personal & Community Services (23.3%),

Manufacturing (20.6%), and Commerce (18%). Hotel & Restaurant, which have been heavily impacted by Covid-19, accounted for 1.1% of total

outstanding loans. The breakdown of outstanding loans by industry was not fully disclosed by banks in Q3-2020. However, data from 6 banks that had

disclosures in financial statements (VPB, VIB, MBB, SHB, KLB, BVB, accounting for 19% of total outstanding loans of listed banks) shows that the

above 3 sectors still accounted for high proportion. Outstanding loans to Hotel & Restaurant accounted for 2.2%.

The above data is not broken down further to evaluate the impact of Covid-19 on specific sectors and thereby on the credit quality of banks. While credit

quality will be more evident when Circular 01 expires, with profit back on track in most industries as analyzed in the Non-Financial part, in our opinion

the impact on banks will not be too serious. For example, based on data from 19 banks as shown in Figure 20 above, the hardly hit Hotel & Restaurant

industry only accounted for 1.1% of total outstanding loans.

Notably, as we pointed out in Part 1, sectors that were most affected include Oil & Gas (EBIT dropped 35% in Q3-2020) and Tourism & Entertainment

including Aviation (EBIT tumbled 220% in 3Q2020), but the breakdown of outstanding loans by industry is not detailed enough for us to make a more

specific assessment to point out the degree of impact on bad debts of the banking industry.


Note: Calculated from data of 19 listed banks (excluding NVB, BVB)

Figure 21: Loan structure by industry Q3-2020


Note: Calculated from data of 6 listed banks (VPB, VIB, MBB, SHB, KLB, BVB).

% contribution % contribution

3

13

23

24

67

68

75

139

181

194

273

Education & training - 0.3%

Financial services - 1.2%

Hotel & restaurant - 2.2%

Storage, transportation, telecom - 2.3%

Agriculture & forestry - 6.3%

Construction - 6.4%

Real estate & consulting - 7.1%

Manufacturing - 13.1%

Other industries - 17%

Commerce - 18.3%

Personal & community services - 25.7%

VND trillion

16

17

58

149

186

233

418

904

940

1072

1216

Education & training - 0.3%

Financial services - 0.3%

Hotel & restaurant - 1.1%

Storage, transportation, telecom - 2.9%

Real estate & consulting - 3.6%

Agriculture & forestry - 4.5%

Construction - 8%

Other industries - 17.3%

Commerce - 18%

Manufacturing - 20.6%

Personal & community services - 23.3%

VND trillion


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2.2. Assets quality

Banks increase their securities investment exposure (mainly government and corporate bonds) amid record low

G-bond yield

Compared to the end of Q2-2020, the value of securities portfolios (excluding provisions) of 21 listed banks rose by 9.9% to VND1,150 trillion in the

context government bond yields hit record low.

The increased value was mainly allocated to government bonds (VND73/125 trillion) and corporate bonds (VND53/125 trillion) while investment in

bonds of other credit institutions slightly declined.

This shows the trend that banks increase investment in securities in the context of slow credit growth, especially securities with higher risk but higher

returns such as corporate bonds.

Currently, the size of investment in corporate bonds is small compared to total assets of banks. Corporate bonds and credit institution bonds currently

account for 6.2% of the total assets of these 21 banks. Moreover, with the State Bank's issuance of the Draft Circular regulating the purchase and sale

of corporate bonds by credit institutions, which tightens purchase of corporate bonds by banks, it is expected that the proportion of corporate bonds in

total assets will not swell up considerably.



Figure 22: Value of securities portfolios Figure 23: Value of bond portfolios

1046

1150

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

850

900

950

1,000

1,050

1,100

1,150

1,200

VN

D t

rilli

on

Securities portfolio value 1-year G-bond yield

618

235189

536

269

176

608

263234

0

100

200

300

400

500

600

700

Government bonds Bonds of other creditorganizations

Bonds of economicorganizations

VN

D t

rilli

on

Q1-2020 Q2-2020 Q3-2020


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Cost-to-Income (“CIR”) bounces back in Q3-2020 from low level in Q2-2020

2.3. Operational efficiency

Figure 24: Cost-to-Income (CIR)


Note: Calculated from data of 21 listed banks with total outstanding loans of VND 5,587 trillion, accounting for 64.3% of the system’s loans.

After dropping to a record low of 36.7% in Q2-2020, CIR rebounded to 38.1% in Q3-2020 due to a 16.8% increase in operating expenses, larger than the

total operating income growth (12.6%).

In 20 banks (excluding BVB), on QoQ basis, staff expenses (accounting for 55.6% of total operating expenses) rose by 8.8% in Q3-2020 after dropping

14.2% and 8.1% in Q1-2020 and Q2-2020, respectively. Spending on administration activities surged 68.9% in Q3-2020 after falling 12.4% in Q1-2020

and 36.9% in Q2-2020. Asset expenses climbed 5.8% after rising 3% in Q2-2020 and dropping 22.9% in Q1-2020.

Thus, it can be seen that after the efforts to cut costs in the context of Covid-19 impact in Q1 and Q2-2020, banks have raised their spending from Q3-

2020 when the pandemic has essentially been contained and the economy has recovered, especially administration expenses (including expenses such

as travel, electricity and water, stationery, security, treasury, auditing, consulting, training, scientific and technological research, rewarding initiatives,

marketing, commission for agents and brokers, fire prevention, environmental protection).

Figure 25: Operating expenses growth

38.9%

42.6%43.7%46.2%

39.9%40.7%38.6%

44.0%

40.2%36.7%38.1%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2018 2019 2020

6.7%

-0.1%

16.8%

20.3%

8.1%

9.2%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2018 2019 2020

Operating expenses growth (QoQ) Operating expenses growth (YoY)


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2.4. Capital structure and liquidity

Figure 26: Loan-to-deposit ratio (LDR)


Note: LDR is calculated by Customer loans/Customer deposits

Calculated from data of 21 listed banks with total outstanding loans of VND 5,587 trillion,

accounting for 64.3% of the system’s loans

Figure 27: Interbank rates

Loan-to-Deposit ratio (“LDR”) continued to decline in Q3-2020 as deposits outpace lending while the average

interbank interest rate tumbled to a record low

At the end of Q3-2020, LDR of 21 listed banks was at 93.3%,

continuing the downward trend from Q2-2020 after rising continuously

from Q4-2018. The reason is that customer loans grew only 5.8% while

customer deposits rose 7.3% in 9M2020.

According to Circular 22/2019/TT-NHNN, from January 1, 2020, the

maximum LDR is 85%. The LDR here is different from LDR calculated

in accordance with Circular 22, but its decrease shows improvement in

liquidity as customer deposits outpaced customer loans.

By the end of September 2020, the whole system’s credit growth was

only 6.08%, while total means of payment climbed by 8.63%. In which,

deposits from residents rose by 5.77% and deposits from economic

organizations grew by 10.39%, according to the State Bank. This

contributed to the ample liquidity of the banking system and the

continued shift of asset allocation to government bonds and corporate

bonds in Q3-2020.

In 2020, from May, the interbank rates dropped sharply. The average

overnight interbank rate is currently close to 0% (0.1% -0.11%).


91.5%91.3%

93.4%93.2%

93.6%93.9% 94.0%

94.7%

95.7%

93.9%

93.3%

90%

91%

92%

93%

94%

95%

96%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2018 2019 2020

0%

1%

2%

3%

4%

5%

6%

Overnight interbank rate 1-week interbank rate


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2.4. Capital structure and liquidity

The use of short-term capital for medium and long-term loans remains a problem for the banking sector as the ratio of medium and long-term loans

ranges from 48.5%-48.9% of the total outstanding loans while short-term funds (under one year) account for 80.7%-86.1% of the total mobilization

structure.

By the end of Q3-2020, the lending structure of the 20 listed banks only changed slightly with the ratio of medium and long-term loans reduced to

48.6% of total outstanding loans compared to 48.9% at the end of Q2-2020.

In contrast, the proportion of short-term capital sources in 18 listed banks slid from 85.7% to 85.6%. The proportion of 3-month-to-1-year capital

sources rose to 35.3% from 33.6% at the end of Q2-2020 while the proportion of less-than-3-month capital sources continued to decline from the end

of Q4-2019. Therefore, the issue of using of short-term capital for medium and long-term loans was lessened in the last quarter.

CASA of 21 listed banks was at 19.6%, up from 18.3% at the end of Q2-2020. In 20 banks (excluding BVB with only available figures for Q2-2020

and Q3-2020), CASA was at 19.6%, higher than 18.4% at the end of Q2-2020 and 18.1% at the end of Q3-2019, also the highest level since Q1-

2019. The leading banks in CASA were still TCB (38.6%), MBB (37.7%), and VCB (30.5%).

Figure 28: Loan structure


Note: Calculated from data 20 listed banks (excluding BVB due to non-disclosure of

full data)

Figure 29: Deposit structure


Note: Calculated from data of 18 listed banks (excluding SHB, NVB, BVB due to non-

disclosure of data)

Loan exposure by term has not changed much, but the proportion of deposits under 3 months continues to

decrease

85.7%

51.5% 51.5% 51.2% 51.2% 51.3% 51.1% 51.4%

14.5% 14.1% 14.0% 13.9% 14.0% 13.9% 13.7%

34.0% 34.3% 34.9% 34.8% 34.8% 35.0% 35.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1 Q2 Q3 Q4 Q1 Q2 Q3

2019 2020

Short-term loans Medium-term loans Long-term loans

49.9% 51.5% 52.4% 52.4% 50.9% 50.6% 50.4%

30.7% 31.7% 33.6% 33.6% 35.2% 35.1% 35.3%

14.8% 12.2% 9.5% 9.5% 9.5% 9.6% 10.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1 Q2 Q3 Q4 Q1 Q2 Q3

2019 2020

< 3 months 3 months - 1 year 1 - 5 years >5 years


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Part 3: 2020 Growth Forecast

In this section, we conducts forecast on earnings growth in Q4-2020 and the whole year of 2020 for non-financials

and 21 banks listed on HOSE, HNX and UPCOM. Our forecast model is based on data-driven analysis of (i) 2020

earnings guidance; (ii) the ability to fulfill 2020 earnings guidance given 9M2020 performance; and (iii) seasonality

factors applicable to different sectors.

The data was sourced from financial statements of 1,009/1,662 non-financial listed companies and 21/21 listed

banks. These companies represent a combined 98.5% of Vietnam’s market capitalization.

In order to ensure the consistence of data coverage, only listed companies were covered in this report.

Our FiinPro Platform currently provides data on both listed and unlisted companies. Please trial our

FiinPro Platform for better experience or contact our Customers Support to have further updated data.


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3.1. Forecasting Methodology

In an effort to improve analysis quality to better support customers with forming their investment strategies, we have conducted forecast on net revenue

and earnings of non-financial listed companies which have disclosed Q3-2020 financial statements.

IMPORTANT NOTES & DISCLAIMER:

• Forecast by FiinGroup’s Data Analytics Team on

sector outlook 2021 is purely based on

fundamental data, trading data and public

information or comments.

• The forecast aims to present a view on earnings

prospects by sectors, instead of a single listed

company or bank.

• As we do not contact management board or

undertake Due Diligence or detailed valuation at

any company mentioned in this Report, clients

should not make investment or trading decisions

solely based on these analysis.

• As FiinGroup does not involve in securities

brokerage and trading advisory activities, we

guarantee and commit to the independence and

objectivity of our analysis and comments on any

stock.

• This is part of our continued efforts to serve retail

investors who are subscribers of our FiinTrade

Platform.

FiinGroup’s forecasting methodology

METHODOLOGY:

In making forecast for Q4-2020 Net revenue and Profit after tax, we use a forecasting model with criteria

and formula as outlined below:

1. Input criteria: (1) 2020 earnings guidance; (2) the ability to fulfill 2020 earnings guidance given

9M2020 performance; and (3) historical performance.

2. Formula: Our forecast on Q4-2020 Net revenue is based on the ability to fulfill 2020 earnings

guidance given 9M2020 performance in correlation with adjusted seasonality factors applicable to

different sectors under the following situations:

• Situation 1 (9M2020 Net revenue > 90% of 2020 guidance): Net rev (Q4-20) = Rev (Q4-19) x

Covid-19 adjustment factor

• Situation 2 (9M2020 Net revenue ~ 75%-90% of 2020 guidance): Rev (Q4-20) = Net rev (2020

guidance) – Net rev (9M2020)

• Situation 3 (9M2020 Net revenue ~ 50%-75% of 2020 guidance): Rev (Q4-20) = [Net revenue

(2020 guidance) – Rev (9M2020)] x Covid-19 adjustment factor

• Situation 4 (9M2020 Revenue < 50% of 2020 guidance): Rev (Q4-20) = Rev (9M2020) x 0.5

• We define Covid-19 adjustment factor as YoY revenue growth in 9M2020.

MODEL BACK-TESTING

• FiinGroup’s forecasting model has been back-tested on the previous four quarters with +/-3%

deviation. As a result, we recommend clients not to make investment or trading decisions solely on

our forecast results or use the forecast results for reference purpose at your own discretion and risk

appetite. The forecast aims to present a view on earnings prospects by sector, instead of a single

listed company or bank.

• Our forecast results on earnings of stocks in VN30 basket have been cross-checked with consensus

by analysts at prestige securities companies in October with +/- 5% differences.


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786.4761.0

-8.2%

-0.8%

-40%

-20%

0%

20%

40%

60%

(2,500)

(1,500)

(500)

500

1,500

2,500

3,500

2017 2018 2019 2020

Trn

VN

D

Net revenue (9M) Net revenue (Q4)


3.1. 2020 Forecast for Non-financial sector

We forecast net revenue of corporate sectors to decline 3.2% YoY in Q4-2020, resulting in 8.2% decrease for

the whole year

Figure 30: Sales Forecast 2020 – Non-financials Figure 31: Sales Forecast by Sector in Q4-2020

2020 Revenue growth forecast: We forecast net revenue of non-financials to decline by 3.2% YoY in Q4-2020, rebounding from the record fall of 18.9%

in Q2-2020. Accordingly, corporate sales is forecast to drop 8.2% YoY in 2020. It is noteworthy that if two Covid-hit sectors (Oil & Gas and Travel &

Leisure) are not included, Q4-2020 net revenue of non-financials is expected to edge down 0.8%, marginally reaching the level of the same

period last year.

In details, Real estate will lead non-financials with a projected net revenue growth of 22.4% in Q4-2020 as this is the peak delivery season for apartments

while rising consumer demand keeps fueling growth of Food & Beverage and Retail. Industrial Goods & Services is driven by Logistics sub-sector

[thanks to a 3.5% increase of in export turnover in 11M2020] as well as Industrial Machinery & Electronic Equipment. We forecast a 5.6% decrease in net

revenue of Basic Resources given high base in Q4-2019 when VnSteel (TVN) booked VND16 trillion in revenue, tripling the average level for the same

quarter in the preceding three years. If excluding TVN, revenue of Basic Resources could rise 4.4% YoY in Q4-2020.

Source: Forecast by FiinGroup

Notes: Adjusted growth rate is the growth rate of non-financials that does not include Oil & Gas and Travel & Leisure

22.4%

13.5%

12.2%

6.0%

3.9%

2.0%

6.8%

-2.1%

-3.9%

-5.6%

-5.8%

-12.1%

-14.2%

-24.4%

-27.2%

-56.0%

Real estate

Food & Beverage

Automobile & Parts

Chemicals

Retail

Telecommunications

Industrial Goods & Services

Utilities

Pharmaceuticals

Basic Resources

Media

Construction & Materials

Technology

Personal & Household Goods

Oil & Gas

Travel & Leisure


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638.1%

103.5%

74.4%

23.8%

18.5%

13.5%

11.4%

11.0%

9.0%

-12.3%

-13.4%

-15.2%

-21.4%

-34.6%

-39.4%

-385.8%

Media

Automobile & Parts

Basic Resources

Food & Beverage

Retail

Construction & Materials

Chemicals

Technology

Telecommunications

Personal & Household Goods

Pharmaceuticals

Utilities

Real estate

Oil & Gas

Industrial Goods & Services

Travel & Leisure


Earnings of non-financials is projected to tumble 21.4% in 2020 which is closed to the management earnings

guidance for the year

Figure 32: Earnings Forecast 2020 - Non-financials Figure 33: Earnings Forecast Q4-2020 by sector

2020 Earnings growth forecast: We forecast corporate earnings to shrink by 21.4% YoY for the whole year of 2020, almost equivalent to our earlier

estimate (down 20.5%) that is based on corporate earnings guidance. However, the two-digit decline is mostly attributed to slow recovery of Covid-

19 aftershocks (Oil & Gas and Travel & Leisure). If the two sectors are excluded, the PAT of non-financials could fall at a slower pace of 6.9%.

Basic Resources: Despite a 5.6% decline in net revenue, the sector will witness a 74.4% increase of in Q4-2020 earnings, led by HPG whose growth is

fueled by strong export of billet to China and sales of HRC to other local steel makers. Sectors that are expected to maintain earnings growth in Q4

include Food & Beverage, Retail, Construction & Materials and Technology.

Real estate: We projected earnings of Real estate to dwindle by 21.4% YoY in Q4-2020 despite a 22.4% growth in net revenue. This is because of (i)

high comparison base in Q4-2019 when high non-core incomes were booked and (ii) limited room for real estate companies to book further non-core

incomes in Q4-2020 given significant rise of 286% in 9M2020.


Notes: Adjusted growth rate is the growth rate of non-financials that does not include Oil & Gas and Travel & Leisure

64.9

57.5

-21.4%

-6.9%

-30%

-10%

10%

30%

50%

70%

(100.0)

(50.0)

-

50.0

100.0

150.0

200.0

250.0

2017 2018 2019 2020

Trn

VN

D

Profit after tax (9M) Profit after tax (Q4)



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upFigure 34: 2020 Sales and Earnings Forecast by sector

265.9%

221.3%

79.9%

59.7%

12.4%

11.0%

1.9%

1.9%

-2.5%

-3.9%

-15.7%

-20.9%

-22.2%

-35.2%

-119.7%

-190.0%

Consumer sectors are likely to generate both revenue & earnings growth in 2020 while Covid-hit sectors have

negative outlook



Net revenue growth forecast Earnings growth forecastSector (# of companies - % marcap)

15.1%

-6.8%

2.1%

4.8%

-11.1%

-2.7%

-4.7%

11.1%

4.4%

-4.7%

2.7%

-14.4%

-11.1%

-2.7%

-29.7%

-55.8%


Media (29-0.8%)

Automobile & Parts (12-0.5%)




Chemicals (50-3.7%)

Food & Beverage (99-20%)

Retail (21-1.8%)


Real estate (96-28%)



Industrial Goods & Services (155-10%)

Oil & Gas (9-3.0%)

Travel & Tourism (33-3.5%)

Food & Beverage and Basic Resources contribute one-third of corporate sales and earnings and pose a bright growth outlook for 2021 thanks to rising

demand in both local and export markets. Food processors (including VNM, MCH, MML, SBT, DBC and KDC) lead the growth of Food & Beverage as

demand for processed and packaged food keeps increasing. Meanwhile, Basic Resources is forecast to grow 59.7% YoY, led by Steel producer HPG

that boosts export of billet to China as well as sales of HRC on domestic market.

Real estate: Net revenue is projected to grow by 2.7% YoY but earnings to drop by 15.7% in 2020, ending the streak of five consecutive years of growth

- the longest growth period since 2005, mainly due to the moderate growth of leading players such as VHM and NVL. Meanwhile, many companies in

the mid-end segment will maintain high growth, such as KDH, HDG, DIG, and PDR.

Travel & Leisure, Oil & Gas, Utilities, and Industrial Goods & Services are the sectors hardest hit by the Covid-19 epidemic in 2020. While Utilities

and Industrial Goods & Services have bright growth prospects in 2021, Tourism & Leisure and Oil & Gas are likely to continue to face difficulties as the

Covid-19 epidemic has not yet been put under control completely.

Growth outlook for selected sectors in 2021 will be analyzed in Part 4 of this Report.


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1,5

79

1.6%

13.5%

-1.2%

3.1%

-21.9%

-30%

-10%

10%

30%

50%

70%

-1,000

-500

0

500

1,000

1,500

2,000

2,500

2016 2017 2018 2019 2020F

Average EPS EPS Growth (YoY)


Non-financial stocks look more expensive given EPS decline and forward 12-month P/E at 20.6x

Figure 35: EPS Growth Forecast 2020 - Non-financials Figure 36: Forward Valuation 2020 of Non-financials & Banks

EPS growth forecast for Non-financial sector: Assuming no more share issuances or treasury share transactions conducted from now till the end of

2020, we forecast EPS of non-financial listed companies to fall 21.9% YoY this year, deeper than the projected decline in 2020 earnings as the number

of outstanding shares (used to calculate EPS properly) has been adjusted to avoid the confusion arising from share issuances for capital increase.

As a result, the forward 12-month P/E of non-financials is 20.6x, equivalent to the current valuation (20.5x) but this valuation marks a premium

compared to its level at end-2019 (17.2x).

Meanwhile, bank stocks are traded at an average P/B of 1.8x and P/E of 12.2x. Earnings growth of 21 listed banks is projected at 10.1% YoY in 2020,

which is translated into the forward 12-month P/E of 12.3x, but the valuation is based on accounting profits and could change upon the booking of

Covid-related non-performing loans whose repayment terms were restructured under Circular No. 01 or whether the circular is extended or not.

Source: FiinPro Platform, Forecast by FiinGroup

12.32

10.0

12.0

14.0

16.0

18.0

20.0

22.0

24.0

2016 2017 2018 2019 2020F

P/E of non-financials P/E of banks (ttm)


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Banks’ income in 2020 is impacted by the economy’s health in the context of Covid-19 and related policies such as Circular 01. Amid Covid-19 being

contained and recovering economy, banks' business results showed positive signs in Q3-2020 and are expected to continue in Q4-2020.

We expect that, in Q4-2020, NIM of banks will remain high as deposit rates continue to decline. In addition, net fee and commission income and net

income from remaining activities will still grow compared to Q3-2020, while CIR will increase in the last quarter as in previous years. Moreover, banks

will balance the business results with provisioning in Q4-2020 to partly prepare for the future when Circular 01 expires.

Therefore, if Covid-19 is still well contained, we expect that after-tax profits of 21 listed banks will grow by 10.2% compared to 2019, a significant

slowdown compared the growth rates of previous years but still positive in the context of the ongoing pandemic and business results of enterprises

expected to decline compared to last year. We do not forecast for individual banks but use an overall model that applies to 21 listed banks with the

assumptions shown in Figure 38.

Figure 37: Earnings Growth Forecast 2020 – Banks



Listed banks are projected to achieve 10.2% after-tax profit growth in 2020

3.2. 2020 Forecast for Banks

Key assumptions in the forecast:

26.9

10.2%

0%

10%

20%

30%

40%

50%

0

20

40

60

80

100

120

2017 2018 2019 2020

Trn

VN

D

PAT (9M) PAT (Q4) Yearly PAT growth

Criteria Assumptions

Credit growth +9% in 2020

Other interest-bearing assets Unchanged from the end of Q3-2020

NIM 0.98% (unchanged from Q3-2020)

Net fee and commission income +6% compared to Q3-2020

Net income from remaining activities +6% compared to Q3-2020

CIR Slightly grow compared to Q3-2020 (40%)

Provision expenses Same as average of 3Q2020

Income tax 20%


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Part 4: Sector Outlook 2021This section analyses non-financial sectors with positive earnings prospect in 2021 by evaluating the 2020 growth

as well as considering their growth catalysts.

IMPORTANT NOTES:

Analysis by FiinGroup’s Data Analytics Team on sector outlook 2021 is purely based on fundamental data, trading

data and publicly disclosed information.

As we do not contact management board or undertake Due Diligence or detailed valuation at any company

mentioned in this Report, users should not make investment or trading decisions solely based on these analysis.

As FiinGroup does not involve in securities brokerage and trading advisory businesses, we guarantee and commit to

the independence and objectivity of our analysis and comments on any stock.

This is part of our continued efforts to serve both institutional and retail investors who are subscribers of our

FiinTrade Platform.


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No. Sector (ICB-2)Market Cap

(18/11/20)NET REVENUE GROWTH EARNINGS GROWTH VALUATION & +/-PRICE

Trn

VND

% Non-

financials

5-year

CARG9M2020 2020F Rating

5-year

CARG9M2020 2020F Rating

P/E

4Q (x)

% Price

4 months

% Price

vs.

VN-Index

1 Real Estate 947.4 28.2% 23.1% -9.7% 2.7% MAINTAIN 43.5% -12.5% -15.7% DECELERATE 18.5 21.6% LOWER

2 Food & Beverage 680.9 20.3% 6.4% 10.9% 11.1% ACCELERATE 8.1% -7.4% 1.9% MAINTAIN 21.3 28.2% HIGHER

3 Industrial Goods & Services 364.6 10.9% 7.5% -6.3% -2.7% DECELERATE 20.8% -33.7% -35.2% DECELERATE 19.1 28.2% LOWER

4 Utilities 298.6 8.9% 3.9% -11.7% -11.1% DECELERATE 0.7% -25.4% -22.2% DECELERATE 14.9 20.7% LOWER

5 Construction & Materials 177.0 5.3% 5.1% -10.7% -11.1% DECELERATE 11.2% 3.6% 12.4% ACCELERATE 13.0 27.4% HIGHER

6 Basic Resources 177.9 5.3% 10.3% 9.0% 4.8% MAINTAIN 13.6% 48.1% 59.7% ACCELERATE 15.1 49.3% HIGHER

7 Travel & Leisure 117.3 3.5% 12.2% -55.7% -55.8% DECELERATE 53.7% -252.4% -274.2% DECELERATE - 17.9% LOWER

8 Chemicals 124.3 3.7% 2.2% -8.9% -4.7% DECELERATE -2.1% -6.7% 1.9% ACCELERATE 21.7 60.7% HIGHER

9 Telecommunication 100.8 3.0% 6.9% 20.4% 15.1% ACCELERATE -19.4% 40.7% 265.9% ACCELERATE 29.6 25.1% LOWER

10 Oil & Gas 101.1 3.0% -3.1% -32.4% -29.7% DECELERATE 16.9% -161.8% -119.7% DECELERATE - 0.0% LOWER

11 Retail 62.9 1.9% 17.6% 5.6% 4.4% MAINTAIN 23.6% -6.6% -2.5% DECELERATE 14.7 53.1% HIGHER

12 Technology 51.6 1.5% 1.5% 3.3% -2.7% DECELERATE 12.6% 10.0% 11.0% MAINTAIN 13.4 26.1% LOWER

13 Personal & Household Goods 53.8 1.6% 7.2% -11.0% -14.4% DECELERATE 11.2% -23.4% -20.9% DECELERATE 11.3 31.0% HIGHER

14 Pharmaceuticals 48.4 1.4% 3.6% -4.2% -4.7% DECELERATE 4.9% 0.8% -3.9% DECELERATE 14.0 14.7% LOWER

15 Media 29.8 0.9% 9.8% -7.1% -6.8% DECELERATE -8.2% 90.0% 221.3% ACCELERATE 56.4 -14.9% LOWER

16 Automobile & Parts 17.0 0.5% 13.1% -2.0% 2.1% MAINTAIN 0.9% 64.7% 79.9% ACCELERATE 9.0 14.7% LOWER

TOTAL 3,356.8 100% 6.5% -9.2% -8.2% 14.0% -27.1% -21.4%

4.1. 2020 Growth Prospect

The growth of a certain sector is classified as ACCELERATE if the forecast growth of Net revenue/Profit after tax is higher than 0% and

exceeds the upper limit of CARG in the most recent five years.

Table 1: Sales and Earnings Forecast 2020 – Non-financial Sectors

ACCELERATE

MAINTAIN

In order to help customers have better forward-looking view on sector growth in 2021, we have classified 2020 earnings growth of corporate

sectors into three groups with certain rules convenient for tracking as below:

The growth of a certain sector is classified as MAINTAIN if the forecast growth of Net revenue/Profit after tax is NOT lower than 0% and

below the upper limit of CARG in the most recent five years.

DECELERATE The growth of a certain sector is classified as DECELERATE if the forecast growth of Net revenue/Profit after tax is under 0% and below the

upper limit of CARG in the most recent five years.


6/16 sectors have positive earnings growth forecast in 2020 that has been priced in 30%-60% upswing


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“2021 GROWTH OUTLOOK” CRITERIA:

1) Being subsectors (ICB-Level 4) with market capitalization equals to or higher than VND50 trillion as of November 18, 2020

2) 2021 outlook supported by the following themes:

On-going trend of FDI shift from China to ASEAN, including Vietnam

Increasing export thanks to preferential tariffs under multilateral trade agreements which came into effect or is set to be effective soon,

including EVFTA and RCEP

Rising consumer demand thanks to improved incomes

4.2. Sector Outlook 2021

4/16 sectors have 2020 growth forecast rated as DECELERATE, but their 2021 growth prospect is positive

and likely to drive up stock prices

Given recent positive news on Covid-19 vaccines and improved macro fundamentals, it is time for investors to look for stocks with positive

earnings outlook in 2021. With a desire to better support customers with building their investment strategies, we would like to introduce a

number of criteria in identifying sectors with bright earnings outlook as below:

Table 2: Sub-sectors with positive growth outlook in Q4-2020 and 2021


Except for Steel, the remaining sub-sectors in Table 2 have been underperformed VN-Index as their 2020 earnings forecast seem to be rather

pessimistic (as mentioned in Part 1). But these sub-sectors may set for a “strong bounce back“ next year in expectation of controlled Covid-19

pandemic, the improvement of fundamentals, the recovery of consumer demand and the surplus of cheap money. Further detailed analysis are

presented in the following pages.

SECTORS (ICB-4) MARCAPP (18/11/20) NET REVENUE GROWTH EARNINGS GROWTH VALUATION

(TTM)

PRICE

(27/7-30/11) OUTLOOK

Trn

VND

% non-

Financials

9M2020 2020F RATING 9M2020 2020F Rating P/E

(x)

EPS

(VND)

% price % price vs.

VN-Index

Residential real estate 778.6 17.3% -8.8% 5.6% MAINTAIN -9.3% -14.5% DECELERATE18.5 3,860 21.6% LOWER Detail

Industrial real estate 91.0 2.0% -16.1% -16.7% DECELERATE -20.0% -20.2% DECELERATE

Farming & Fishing 66.8 1.5% -4.3% 0.0% MAINTAIN 298.0% 532.2% ACCELERATE 18.1 2,169 24.4% LOWER Detail

Electricity 118.0 2.6% -9.1% -8.6% DECELERATE -24.9% -28.1% DECELERATE 12.8 1,576 12.9% LOWER Detail

Steel 129.1 2.9% 8.5% 2.6% MAINTAIN 57.9% 68.1% ACCELERATE 12.5 2,761 63.8% HIGHER Detail


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1.0

2.0

3.0

4.0

5.0

-

2.0

4.0

6.0

8.0

10.0

12.0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2016 2017 2018 2019 2020

(x)

Trn

VN

D

Prepaid customer paymentsNet revenuePrepaid payments/Net revenue


Real estate: Mid-end housing developers have bright outlook in 2021 amidst higher demand while industrial

property firms continue to benefit from the on-going FDI shift from China

GROWTH CATALYSTS:

- High demand for mid-end apartments in suburban areas or satellite provinces/cities with convenient transportation infrastructure connecting to the

city center amid the limited supply in the inner districts in Hanoi and HCM City

- The on-going trend of relocating manufacturing facilities from China

SECTOR OUTLOOK 2021:

Residential real estate:

‒ VHM: contributes 28.4% of revenue and 66.5% of profit of the

Residential real estate sector. VHM's 2021 growth driver will come

from the delivery of three major projects: Vinhomes Ocean Park,

Vinhomes Smart City and Vinhomes Grand.

‒ Listed housing developers in the mid-end segment (including KDH,

DXG, NLG, PDR and DIG) posted a significant increase in sales

(Figure 38), creating a basis for strong accounting revenue in 2021 if

the handover are on schedule. Prepaid customer payments of these 5

companies hit the 5-year high and are set to be booked into revenue in

the next 3-4 quarters. In addition, Resolution 164/NQ-CP is expected to

remove the legal bottleneck on licensing procedures for real estate

projects from Jan 1, 2021, allowing restart of many projects that have

been suspended due to land right use issues.

Figure 38: Prepaid customer payments hit record high

Industrial real estate: The on-going trend of FDI shift from China to

ASEAN, including Vietnam, continues to be the main growth


Notes: Data collected from Q3-2020 financial statements of KDH, DXG, NLG,

PDR and DIG

catalyst for listed industrial developers which have vacant land to lease or are planning to expand land bank with convenient transport infrastructure,

including SZC, KBC, IDV and SIP.

In addition, SZC, VRG and KBC also benefit from the trend of searching for large land bank in surroundings areas with competitive rental prices and

convenient transportation infrastructure in the context of high occupancy rate at industrial parks in Bac Ninh and Hung Yen (in the north) and Binh

Duong and Dong Nai (in the south).

SECTOR (ICB-4) # of

COMPANIES

MARCAP

(18/11/20)

NET REVENUE GROWTH EARNINGS GROWTH VALUATION

(TTM)

PRICE

(27/7-30/11)

Trn

VND

% non-

financials

9M2020 2020F Rating 9M2020 2020F Rating P/E

(x)

EPS

(VND)

% Price % price vs.

VN-Index

Residential real estate 57/73 778.6 17.3% -8.8% 5.6% MAINTAIN -9.3% -14.5% DECELERATE18.5 3,860 21.6% LOWER

Industrial real estate 21/25 91.0 2.0% -16.1% -16.7% DECELERATE -20.0% -20.2% DECELERATE


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Food & Beverage: Farming & Fishing will lead earnings growth of the sector in 2021

Shrimp (Fishing): Rising demand for convenience food and preferential tariff of 0% to EU under EVFTA will continue to be the growth driver of

Shrimp processors in 2021 while their biggest concerns are prices and supply of raw materials as below:


Figure 39: Shrimp exports to EU, U.S. keep rising

GROWTH CATALYSTS:

- Demand for processed and packaged food keeps rising in both domestic and abroad markets.

- Tax incentives under EVFTA help improve profit margins, boost export revenue and increase profits of listed seafood exporters.


Husbandry (Farming): Husbandry growth will continue to come from Dabaco (DBC) and the duo GTN Foods (GTN) and Vilico (VLC). DBC’s pig

breeding (currently contributing more than 40% of revenue) could find it difficult to maintain the same growth of this year because pork prices is falling

(down 23.1% since early July) due to the higher supply. Meanwhile, GTN and VLC have the main source of income from the consolidation of revenue

of Moc Chau Milk (MCM) – the dairy producer that is being restructured under the support of the "supreme" parent company Vinamilk or VNM.

Accordingly, net profit margin of MCM rose from 6.5% in 2019 to 9.7% in 9M2020, but it is just a half of VNM’s net profit margin (20.2%). The room for

the growth improvement of MCM remain quite big.

- MPC: is the Vietnam leading shrimp exporter, but the company has little

benefit from tax incentives under EVFTA because EU contributes just 10% of

its revenue. In its main export market (U.S.), MPC shrimp is temporarily

subject to an anti-dumping tax of 10.17%. MPC self-supplies only 30% its raw

shrimp input.

- FMC: enjoys 0% tax rate in the U.S. and high demand for value-added

(processed) shrimp in EU and the U.S. amid the impact of the Covid-19

epidemic. The main product of FMC is processed shrimp under HS16 code

whose preferential tax rates will gradually be cut to 0% within 5-7 years under

EVFTA. FMC meets 25% its raw shrimp demand by itself.

- CMX: 60% of CMX’s revenue comes from EU markets while its main products

are under HS03 code whose preferential tax rates were cut to 0% from earlier

4% under EVFTA. We estimate that a 4% tax rate cut could raise the

company’s profit after tax (PAT) margin to 5.5% from 4.2%, driving its annual

PAT up 30% given other factors unchanged. CMX meets 40% of its raw

shrimp demand by itself.

SECTOR (ICB-4) # of

COMPANIES

MARCAP

(18/11/20)


(TTM)

PRICE

(27/7-30/11)

Trn

VND

% non-

financials


(x)

EPS

(x)

% price % price vs.

VN-Index

Farming & Fishing 31/59 66.8 1.5% -4.3% 0.0% MAINTAIN 298.0% 532.2% ACCELERATE 18.1 2,169 24.4% LOWER

29.5%

54.5%

45.3%

28.6%

39.6%

38.8%

-5.0%-7.9%

2.0%

15.7%

35.4%

41.5%

T5-20 T6-20 T7-20 T8-20 T9-20 T10-20

U.S. EU


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Xuất khẩu phôi thép Tiêu thụ trong nước

HPG started

billet exports


Basic Resources – Steel billet export will continue to drive the sector growth in 2021 on expectation that local

steel consumption stays low


HPG: With the current local market share of 31.2% (+5% from 2019), HPG is the only steel maker in Vietnam to set market prices (by maintaining low

selling prices to expand market share) and be flexible in business plan (by boosting billet exports and HRC sales if local demand for construction steel

stays low)

Nguồn: FiinPro Platform

Figure 41: Billet export driving HPG growth

‒ Growth drivers in 2021 for HPG are (1) Expanded capacity

(~8mn tons of steel billet in total) once four blast furnaces at Hoa

Phat Dung Quat complex are put into operation and (2) Rising

demand for steel billet in China – HPG’s main export market

‒ Risks: include (1) domestic demand for construction steel likely

keeps declining, (2) higher input costs due to lower coke coal

price and rising ore prices [ore and coke coal account for more

than 30% of total cost each], and (3) China’s demand for billet

import may fall if China allows scrap imports again from June

2021.

Steel sheet and pipe (HSG and NKG): The on-going trend of FDI

shift from China is among major growth drivers for this steel sheet

and pipe manufacturers in 2021. In addition, the plan of divestment

from Ca Na project (for HSG) and land-use right transfer at My

Xuan B Industrial Park (for NKG) likely help boost their profits next

year.

SECTOR (ICB-4) # of

COMPANIES

MARCAP

(18/11/20)


(TTM)

PRICE

(27/7-30/11)

Trn

VND

% non

-financials


(x)

EPS

(x)

% price % price vs.

VN-Index

Steel 32/42 129.1 2.9% 8.5% 2.6% MAINTAIN 57.9% 68.1% ACCELERATE 12.5 2,761 63.8% HIGHER

GROWTH CATALYSTS:

- Vietnam’s government targets a 6% GDP growth for 2021

- Demand for steel billet keeps rising in China

Billet export Local sales


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2.1%

9.8%

0%

10%

20%

30%

0

100

200

300

2017 2018 2019 2020F 2021F

Electricity output (Bn kWh) Growth (YoY)


Utilities: Hydropower and Thermal power plants have positive growth outlook for 2021 given rising power

demand while gas-fired operators continue to be hit by LNG shortage


Hydro electricity: contributes 29% Vietnam’s electricity output in 10M2020. The return of La Niña phenomenon is expected to cause more

downpours from now till mid-2021, helping maintain high water level at reservoirs. This is a main growth catalyst for hydropower plants, especially

those located in the central and southern regions (including REE and VSH)

Gas-fired power: LNG shortage has caused Vietnam’s gas-fired power output to plummet in 2020 and the trend will likely continue in 2021. PV Gas

(GAS) has announced that it welcomed first gas flow from Sao Vang Dai Nguyet field [which has an expected annual gas output of 1.5 bn cubic

meters] and this is positive news to gas-fired power plants in the southeastern region, including Nhon Trach 2 Power (NT2).


Coal & Oil-fired power: contributes 50% of Vietnam’s power

output in 10M2020. The country’s total electricity output is set to

rise 9.8% in 2021, with coal and oil-fired power plants projected

to generate more to compensate the shortfall of gas-fired power

given limited LNG supply. Among listed thermo power

operators, Ba Ria Thermal Power (BTP), Hai Phong Thermal

Power (HND) and Pha Lai Thermal Power (PPC) has lower

financial leverage with D/E<1 and higher profit margin than their

peers. These are considered defensive and non-cyclical stocks

with dividend yield staying at high rate and/or steadily increasing

over the years.

Figure 40: Electricity production set to rise 9.8% YoY in 2021

GROWTH CATALYSTS:

- Water level at reservoirs forecast at high level from now to mid-2021

- Electricity output projected to rise 9.8% YoY in 2021 to fuel economic growth

SECTOR (ICB-4) # of

COMPANIES

MARCAP

(18/11/20)


(TTM)

PRICE

(27/7-30/11)

Trn

VND

% non-

financials


(x)

EPS

(x)

% price % price vs.

VN-Index

Electricity 37/41 118.0 2.6% -9.1% -8.6% DECELERATE -24.9% -28.1% DECELERATE 12.8 1,576 12.9% LOWER


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Update on EPS and Valuation multiples of selected stocks in Real estate, Food & Beverage, Basic Resources

and Utilities


Table 3: Update on EPS and P/E of selected stocks

This is a list of selected stocks in our data-driven analysis on 2021 sector growth outlook. More in-depth analysis with different perspective is

available on our FiinTrade platform.

It is noteworthy that positive earnings prospect of certain companies has factored in strong upswing of stocks in certain sectors such as Steel

(HPG, HSG, NKG), Industrial real estate (SIP, VRG) and Shrimp (FMC), but many other stocks have not yet been priced in.

Sub-sectors

Ticker MarCap 9M2020 Growth Q3-2020 Margin D/E Div. Yield P/E EPS % price

(3/12/20) Net Rev PAT PAT EBIT 2020F 4Q (x) Price (3/12/20)1 month 3 monthsTrn VND

Residential

real estateKDH 15,116 74.2% 50.6% 20.6% 43.5% 0.2 3.7% 12.6 2,084 26,950 10.9% 8.0%

DXG 7,463 -50.6% -111.3% 27.8% 32.9% 0.7 13.9% - (151) 14,850 20.2% 48.5%

NLG 8,134 -2.0% -51.4% 5.0% 18.9% 0.3 3.4% 10.3 2,760 29,500 8.9% 17.1%

PDR 17,233 5.7% 78.6% 33.4% 28.6% 0.4 7.7% 13.6 3,000 43,500 10.6% 52.6%

DIG 7,882 44.9% 27.2% 7.9% 12.2% 0.3 5.8% 13.9 1,508 26,500 30.2% 103.8%Industrial real

estateSZC 3,000 27.8% 41.3% 41.9% 51.5% 0.8 3.3% 16.1 1,829 29,550 14.8% 11.5%

KBC 7,634 -62.6% -84.4% -4.3% 35.4% 0.3 0.0% 21.1 743 16,200 16.5% 19.1%

IDV 976 15.0% 80.5% 162.0% 148.1% 0.1 3.5% 4.8 11,647 57,200 9.0% 16.0%

SIP 11,967 10.0% 61.6% 20.4% 16.6% 0.1 1.3% 14.5 8,927 158,984 61.8% 106.3%

VRG 703 61.3% 28.3% 72.4% -47.5% 0.0 3.7% 17.9 1,514 27,330 4.4% 46.8%Husbandry GTN 6,026 -5.5% 174.1% 11.2% 2.0% 0.0 0.0% 15.8 1,532 23,900 0.0% -5.2%

VLC 2,190 7.9% 70.7% 13.5% 7.5% 0.0 1.7% 13.1 2,304 35,387 29.9% 26.3%Shrimp FMC 1,842 16.6% -3.2% 4.3% 5.9% 0.7 6.7% 8.0 4,553 36,150 15.1% 11.6%

CMX 483 46.1% -34.5% 4.1% 6.6% 1.1 0.0% 3.9 4,028 15,900 8.2% 4.6%Steel HPG 122,094 40.8% 56.4% 15.3% 16.2% 0.8 5.4% 10.9 3,235 36,950 20.6% 48.1%

HSG 8,242 2.3% 213.9% 5.4% 7.2% 1.2 0.0% 7.1 2,589 18,400 11.9% 55.3%

NKG 2,124 -9.3% 252.0% 2.4% 1.6% 1.3 0.0% 14.6 828 13,050 54.3% 76.4%Electricity REE 14,634 11.5% -15.5% 24.4% 39.6% 0.5 3.4% 10.1 4,599 47,000 12.2% 26.0%

VSH 3,877 -34.8% -75.5% 31.1% -2.2% 1.8 0.0% 50.6 376 18,600 -3.6% 9.7%

NT2 6,751 -17.5% -23.0% -0.5% 14.8% 0.3 8.5% 10.4 2,199 23,800 5.3% 3.7%

BTP 838 -37.6% 50.6% 9.7% 31.0% 0.3 7.9% 3.8 3,657 13,900 0.0% -3.5%

HND 9,376 4.4% 51.5% 7.6% 18.2% 0.6 5.3% 5.9 3,033 18,706 5.9% 0.9%


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Appendix

Appendix 1: Quarterly Revenue growth by sector

Appendix 2: Quarterly Earnings growth by sector

Appendix 3: Quarterly EBIT growth by sector

Appendix 4: Quarterly EBITDA growth by sector

Appendix 5: Quarterly net profit margin

Appendix 6: Quarterly EBIT margin by sector

Appendix 7: Quarterly EBITDA margin by sector

Appendix 8: Sectors – Relative performance vs VN-Index


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Appendix 1: Quarterly Revenue growth by sector

QUARTERLY REVENUE GROWTH (YoY)

Sector No of

Companies

MarCap % MarCap 2018 2019 2020

(18/11/2020) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4F

ICB – L2 Trn VND % % % % % % % % % % % % %

Banks 21/21 1,009.0 22.8% 33.9% 20.3% 17.5% 3.4% 10.1% 20.9% 22.4% 29.6% 15.1% 3.5% 10.7% N/A

Insurances 11/11 59.6 1.3% 18.1% 16.1% 13.2% 10.2% 11.3% 13.0% 15.9% 15.0% 11.2% 3.3% 6.7% N/A

Financial Services 40/50 56.3 1.3% 80.1% 27.8% 10.8% -5.9% -28.8% -8.6% 1.1% 6.5% 16.9% 28.0% 19.7% N/A

Real Estate 96/121 948.8 21.4% 69.2% 52.7% 13.2% 34.5% -9.5% 45.5% 26.8% -6.8% -16.6% -30.6% 23.9% 22.4%

Food & Beverage 99/160 669.0 15.1% 6.9% 4.3% 6.1% 6.3% 7.1% 0.1% 0.8% 0.5% 7.6% 7.9% 16.2% 13.5%

Industrial Goods and Services 155/306 355.9 8.0% 23.7% 17.4% 6.5% 2.5% 1.7% 13.5% 0.3% -3.8% -5.7% -14.4% 1.4% 6.8%

Utilities 104/143 293.9 6.6% 11.3% 17.1% 12.9% 7.2% 1.0% 5.4% 7.8% 3.8% -1.0% -18.9% -15.2% -2.1%

Construction & Materials 210/382 165.8 3.7% 3.2% 10.8% 7.7% -2.5% 8.3% 2.5% -2.0% -0.6% -10.4% -13.0% -8.0% -12.1%

Basic Resources 79/120 175.1 4.0% 21.3% 32.9% 12.8% 13.3% 7.2% -3.5% -1.6% 3.9% 3.5% 3.6% 20.0% -5.6%

Travel & Leisure 33/62 115.8 2.6% 35.7% 3.8% 33.0% 3.3% 5.4% 8.6% 3.3% -10.6% -30.7% -69.9% -69.7% -56.0%

Chemicals 50/69 122.3 2.8% 1.8% 14.4% 11.5% 24.1% 6.3% -2.8% -0.6% -9.6% -13.2% -14.4% 1.0% 6.0%

Telecommunications 5/8 100.5 2.3% -21.4% -20.1% 4.7% -14.7% 5.3% 8.5% 14.8% 16.9% 22.8% 16.3% 22.0% 2.0%

Oil & Gas 9/11 100.8 2.3% 25.0% 29.4% 31.6% 7.4% 0.4% 1.3% 12.7% 7.1% -8.5% -42.7% -42.5% -27.2%

Retail 21/36 62.4 1.4% 30.4% 26.7% 19.9% 6.8% 5.7% 16.5% 12.3% 12.2% 16.0% -2.6% 6.4% 3.9%

Technology 21/32 50.9 1.1% -38.0% -30.3% -32.0% -28.9% 16.9% 5.9% -0.8% 14.8% 6.4% -4.0% 6.4% -14.2%

Personal & Household Goods 50/90 48.8 1.1% 14.6% 17.1% 14.0% 4.9% 2.0% -5.9% -3.4% 2.1% -4.5% -17.7% -10.7% -24.4%

Pharmaceuticals 36/61 45.9 1.0% 2.3% -3.4% 4.9% -5.3% 7.2% 9.2% 1.4% 9.9% 9.9% -15.9% -7.3% -3.9%

Media 29/46 27.9 0.6% 59.2% 14.1% 14.0% 21.7% -8.0% 20.0% -5.8% -11.0% -18.2% -27.3% 26.1% -5.8%

Automobiles & Parts 12/15 17.0 0.4% -4.4% -14.2% -5.8% 19.9% 25.9% 27.9% 28.1% 11.2% -11.1% -10.6% 14.5% 12.2%

Total 1081/1744 4,425.5 98.5% 19.6% 17.5% 13.4% 7.7% 4.0% 9.0% 7.4% 3.2% -2.2% -16.3% -3.8%

Financial Institutions 72/82 1,124.9 100.0% 33.0% 20.2% 16.3% 4.1% 6.9% 18.0% 20.2% 25.6% 14.7% 4.6% 10.6%

Non-financial Companies 1009/1662 3,300.6 98.3% 17.3% 16.9% 13.5% 6.4% 4.7% 6.0% 6.3% 1.6% -4.1% -18.9% -8.4% -3.2%


Note: Data is adjusted by excluding subsidiaries that are listed and consolidated into listed parent companies in the same sector

For banks, this is growth of “Total operating income” and for Insurance, this is growth of “Net revenue of insurance premium”


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Appendix 2: Quarterly earnings growth by sector

QUARTERLY EARNINGS GROWTH (YoY)

Sector No of

Companies


(18/11/2020) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4F

ICB – L2 Trn VND % % % % % % % % % % % % %

Banks 21/21 1,009.0 22.8% 56.4% 48.8% 18.2% 11.1% 11.6% 26.3% 45.5% 39.6% 2.6% 21.9% 6.1% 10.2%

Insurances 11/11 59.6 1.3% 20.6% -36.7% -4.9% -14.9% 15.5% 12.6% 43.2% 3.2% -49.8% 72.6% 23.6% N/A

Financial Services 40/50 56.3 1.3% 92.5% -1.8% 34.2% -17.6% -45.2% -15.1% -23.2% 12.9% -109.4% 146.0% 56.5% N/A

Real Estate 96/121 948.8 21.4% 94.3% 100.8% 77.9% 120.0% -11.3% 80.4% 14.8% 37.4% 18.4% -55.1% 22.4% -21.4%

Food & Beverage 99/160 669.0 15.1% 32.8% 15.0% 4.4% -12.3% 4.4% -25.4% -1.0% 16.8% -33.3% 4.5% 5.3% 23.8%

Industrial Goods & Services 155/306 355.9 8.0% 8.8% 70.8% 29.5% 13.7% 0.1% 0.5% 5.3% 13.7% -18.2% -44.1% -33.1% -39.4%

Utilities 104/143 293.9 6.6% 34.7% 37.0% -6.3% -18.0% 3.9% -1.4% 25.1% 25.4% -40.7% -14.3% -25.1% -15.2%

Construction & Materials 210/382 165.8 3.7% -38.4% -14.4% -8.7% -23.2% 3.6% 1.7% 11.0% 7.2% -17.8% 1.5% 15.0% 13.5%

Basic Resources 79/120 175.1 4.0% 2.2% 11.5% -23.1% -50.6% -49.5% -9.9% -17.9% -11.3% 23.9% 13.9% 116.1% 74.4%

Travel & Leisure 33/62 115.8 2.6% 90.1% -21.4% -10.7% 2.4% 3.2% -19.0% 31.5% -69.3% -207.5% -363.0% -251.4% -385.8%

Chemicals 50/69 122.3 2.8% 45.7% -11.1% 30.3% -1.8% -42.7% -26.8% 25.7% -33.9% -37.6% 7.1% 1.1% 11.4%

Telecommunications 5/8 100.5 2.3% 313.1% -96.0% -160.2% 170.9% 118.4% 2618.5% 553.4% 140.8% 226.3% -70.0% 141.4% 9.0%

Oil & Gas 9/11 100.8 2.3% -17.8% 13.0% -14.7% -91.7% 42.4% 19.0% -21.6% 783.9% -303.4% -109.5% -25.6% -34.6%

Retail 21/36 62.4 1.4% 31.5% 39.1% 8.4% 36.2% 20.8% 36.9% 20.1% 15.4% 1.9% -25.9% 6.0% 18.5%

Technology 21/32 50.9 1.1% 7.1% 9.3% 16.4% -32.6% 22.0% 13.6% 19.5% -1.5% 13.8% 10.9% 7.3% 11.0%

Personal & Household

Goods 50/90 48.8 1.1% 22.7% 23.3% 20.4% 18.3% 2.6% -7.7% -8.9% -1.9% -16.7% -43.9% -9.6% -12.3%

Pharmaceuticals 36/61 45.9 1.0% -6.9% -8.9% 7.1% 15.1% 0.7% 0.3% -7.2% 10.8% 9.6% -4.3% -6.9% -13.4%

Media 29/46 27.9 0.6% 85.6% 29.9% 108.2% 101.6% -8.0% -60.6% -97.4% -113.2% -38.5% 56.3% 2310.1% 638.1%

Automobiles & Parts 12/15 17.0 0.4% -35.6% 6.4% 30.9% -4.3% 42.0% -6.7% 14.7% 76.0% 12.0% 64.9% 104.8% 103.5%

Total 1081/1744 4,425.5 98.5% 32.2% 26.7% 12.7% 1.8% -0.7% 13.8% 16.8% 23.7% -27.1% -17.7% -3.0%

Financial Institutions 72/82 1,124.9 100.0% 49.9% 37.3% 17.4% 7.5% 6.1% 23.4% 38.7% 37.0% -3.9% 28.8% 9.6%

Non-financial Companies 1009/1662 3,300.6 98.3% 19.8% 9.4% 5.8% -7.4% -2.8% 0.9% 3.1% 12.4% -58.2% -28.7% -8.8% -11.4%Source: FiinPro Platform



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QUARTERLY EBIT GROWTH (YoY)

Sector No of

Companies


(18/11/2020) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

ICB – L2 Trn VND % % % % % % % % % % % %

Real Estate 96/121 948.8 21.4% 14.7% 33.2% 23.8% 20.8% 10.9% 15.0% 8.1% 10.7% -11.6% -52.5% -35.1%

Food & Beverage 99/160 669.0 15.1% 16.0% 29.4% -2.3% 0.9% -6.9% 0.7% 4.6% 2.9% -19.3% -36.7% -27.1%

Industrial Goods and Services 155/306 355.9 8.0% -11.3% 0.4% 2.8% -1.1% 10.3% 2.0% -4.3% -1.8% -20.0% 0.6% -20.0%

Utilities 104/143 293.9 6.6% 4.6% 18.1% -14.0% -40.0% -33.8% -6.2% -30.3% -1.9% 30.5% -1.3% 90.5%

Construction & Materials 210/382 165.8 3.7% 52.3% -3.1% -2.1% 118.5% 11.6% -39.3% 6.9% -76.8% -171.0% -519.2% -220.0%

Basic Resources 79/120 175.1 4.0% -8.2% -11.6% 24.8% 8.8% -8.7% -11.3% -4.5% -10.9% -36.6% -0.6% -1.2%

Travel & Leisure 33/62 115.8 2.6% 48.7% -12.3% -109.5% 88.1% 155.1% 155.7% 1978.2% 40.0% 42.9% 21.3% 91.5%

Chemicals 50/69 122.3 2.8% -6.8% 46.4% 12.9% -82.1% 29.0% 9.5% -42.3% 379.2% -263.1% -137.5% -23.4%

Telecommunications 5/8 100.5 2.3% -6.8% -8.8% -12.2% -9.1% -12.3% -5.0% 4.9% -0.2% -2.0% 5.2% -15.0%

Oil & Gas 9/11 100.8 2.3% 81.3% 3.5% 43.1% -36.4% -33.2% -1.5% -15.7% 69.4% -86.1% 97.0% 35.4%

Retail 21/36 62.4 1.4% 42.4% 44.4% 16.0% 44.6% 17.7% 31.0% 16.1% 4.5% 15.1% -20.5% -0.2%

Technology 21/32 50.9 1.1% 3.3% 12.9% 13.1% 17.4% 26.6% 16.5% 16.0% 1.5% 14.5% -7.6% 2.7%

Personal & Household Goods 50/90 48.8 1.1% 20.6% 26.9% 48.1% 30.4% 4.5% -5.6% -14.2% 12.6% -5.3% -43.6% -9.7%

Pharmaceuticals 36/61 45.9 1.0% 1.1% -8.5% 7.7% 1.4% -2.5% -0.3% -17.3% 7.3% 17.7% -8.1% -3.1%

Media 29/46 27.9 0.6% 71.7% 31.7% 15.7% 3.2% -63.8% -70.0% -89.1% -148.0% -29.4% -20.4% 598.7%

Automobiles & Parts 12/15 17.0 0.4% -22.2% 10.2% 29.9% 11.0% 28.6% -3.2% 22.2% 44.8% 16.8% 20.6% 99.6%

Non-financial Companies 1009/1662 3,300.6 98.3% 18.7% 23.2% 6.5% 0.6% -3.7% 4.2% -1.4% -6.3% -44.3% -48.9% -20.1%



Appendix 3: Quarterly EBIT growth by sector


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QUARTERLY EBITDA GROWTH (YoY)

Sector No of

Companies


(18/11/2020) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

ICB – L2 Trn VND % % % % % % % % % % % %

Real Estate 96/121 948.8 21.4% 54.1% 44.0% 9.8% 31.3% -36.5% 92.9% 59.5% 1.9% -53.2% -58.3% -6.2%

Food & Beverage 99/160 669.0 15.1% 26.2% 17.2% 22.6% -10.9% 5.9% -9.6% -15.2% 0.4% -16.1% -6.8% 13.2%

Industrial Goods and Services 155/306 355.9 8.0% 24.7% 17.8% 23.8% 18.5% 13.5% 11.2% 5.2% 2.6% -7.3% -42.1% -31.3%

Utilities 104/143 293.9 6.6% 18.6% 21.6% -5.1% -1.7% -12.6% 1.3% 2.8% 4.2% -13.1% -32.3% -24.3%

Construction & Materials 210/382 165.8 3.7% -4.6% 10.3% 0.3% 7.5% 14.4% 9.7% 8.9% 16.8% 1.7% 4.6% -6.1%

Basic Resources 79/120 175.1 4.0% 4.7% 12.6% -12.6% -35.8% -31.8% -3.1% -26.0% 1.8% 27.7% 23.5% 75.8%

Travel & Leisure 33/62 115.8 2.6% 49.1% -7.4% -2.1% 80.6% 10.7% -36.7% 7.8% -65.1% -160.0% -434.0% -203.2%

Chemicals 50/69 122.3 2.8% -6.0% -8.7% 22.9% 34.5% -3.9% -7.3% -12.2% -4.4% -27.4% 0.5% -13.4%

Telecommunications 5/8 100.5 2.3% 48.7% -12.3% -109.5% 88.1% 156.3% 155.7% 1878.8% 40.6% 42.7% 21.8% 90.1%

Oil & Gas 9/11 100.8 2.3% -4.6% 42.2% 12.8% -76.4% 26.7% 9.2% -38.0% 271.5% -237.4% -136.5% -19.4%

Retail 21/36 62.4 1.4% 38.4% 32.2% 11.4% 24.9% 20.6% 28.9% 10.8% -0.8% 11.0% -16.0% -3.0%

Technology 21/32 50.9 1.1% 6.8% 12.5% 10.9% 16.8% 24.3% 16.2% 13.7% 2.8% 12.4% -10.5% 2.8%

Personal & Household Goods 50/90 48.8 1.1% 20.3% 34.0% 42.3% 29.6% 5.7% -2.6% -11.5% 10.6% -3.9% -36.2% -10.3%

Pharmaceuticals 36/61 45.9 1.0% 3.2% -3.8% 8.6% -0.9% 8.2% 2.4% -2.8% 10.7% 8.9% -17.6% 3.6%

Media 29/46 27.9 0.6% 25.3% 17.0% 38.3% 65.8% -24.2% -51.0% -57.7% -42.3% -6.3% 122.9% 81.8%

Automobiles & Parts 12/15 17.0 0.4% -12.8% 11.9% -21.1% 16.4% 18.8% 69.0% 78.9% 76.3% 52.2% -12.9% 3.0%

Non-financial Companies 1009/1662 3,300.6 98.3% 19.4% 18.0% 7.0% 3.0% -3.4% 14.7% 6.2% 5.0% -28.8% -35.9% -13.2%



Appendix 4: Quarterly EBITDA growth by sector


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QUARTERLY NET PROFIT MARGIN

Sector No of

Companies


(18/11/2020) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

ICB – L2 Trn VND % % % % % % % % % % % %

Real Estate 96/121 948.8 21.4% 13.9% 14.3% 18.5% 15.3% 12.9% 17.1% 16.0% 22.1% 18.2% 11.0% 15.8%

Food & Beverage 99/160 669.0 15.1% 11.9% 12.9% 10.3% 8.1% 10.9% 9.3% 9.9% 9.1% 6.8% 9.0% 9.1%

Industrial Goods and Services 155/306 355.9 8.0% 12.7% 16.5% 13.1% 12.6% 11.9% 12.5% 13.6% 15.0% 10.1% 8.0% 8.8%

Utilities 104/143 293.9 6.6% 9.7% 9.8% 8.3% 8.9% 9.9% 9.0% 9.6% 10.6% 5.9% 9.5% 8.4%

Construction & Materials 210/382 165.8 3.7% 5.0% 5.5% 5.4% 5.3% 4.7% 5.4% 6.2% 5.5% 4.3% 6.4% 7.8%

Basic Resources 79/120 175.1 4.0% 6.6% 4.2% 4.2% 3.3% 3.1% 3.9% 3.5% 2.9% 3.7% 4.3% 6.3%

Travel & Leisure 33/62 115.8 2.6% 7.1% 4.0% 5.4% 4.7% 6.7% 2.9% 6.9% 1.6% -10.5% -25.1% -34.4%

Chemicals 50/69 122.3 2.8% 9.5% 5.6% 5.9% 8.4% 5.7% 6.0% 7.5% 6.2% 4.0% 7.6% 7.5%

Telecommunications 5/8 100.5 2.3% 2.9% 0.7% -1.7% 4.7% 5.9% 16.0% 6.8% 9.7% 15.8% 4.2% 13.4%

Oil & Gas 9/11 100.8 2.3% 1.8% 2.0% 2.7% 0.3% 2.5% 1.8% 1.9% 2.8% -5.6% -0.3% 2.4%

Retail 21/36 62.4 1.4% 2.8% 2.8% 2.4% 2.6% 3.2% 3.2% 2.6% 2.7% 2.7% 2.3% 2.5%

Technology 21/32 50.9 1.1% 9.5% 9.3% 10.2% 9.9% 9.9% 10.0% 12.1% 8.1% 10.6% 11.5% 12.2%

Personal & Household Goods 50/90 48.8 1.1% 5.1% 5.3% 5.2% 4.5% 5.2% 5.2% 4.9% 4.3% 4.5% 3.5% 5.0%

Pharmaceuticals 36/61 45.9 1.0% 5.9% 5.9% 5.6% 6.2% 5.6% 5.5% 5.2% 6.1% 5.8% 6.3% 5.1%

Media 29/46 27.9 0.6% 10.2% 11.4% 12.7% 10.2% 7.6% 3.3% 0.4% -1.5% 5.7% 7.0% 6.7%

Automobiles & Parts 12/15 17.0 0.4% 2.5% 3.5% 3.7% 2.6% 2.8% 2.5% 3.3% 4.1% 3.6% 4.7% 5.9%

Non-financial Companies 1009/1662 3,300.6 98.3% 7.3% 7.0% 6.9% 6.7% 6.6% 6.4% 6.7% 7.4% 3.1% 5.3% 6.6%



Appendix 5: Quarterly Net Profit margin by sector


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QUARTERLY EBIT MARGIN

Sector No of

Companies


(18/11/2020) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

ICB – L2 Trn VND % % % % % % % % % % % %

Real Estate 96/121 948.8 21.4% 15.4% 16.0% 16.9% 15.2% 9.6% 21.1% 21.0% 15.8% 4.4% 11.7% 16.1%

Food & Beverage 99/160 669.0 15.1% 14.3% 14.3% 13.5% 10.4% 12.8% 12.7% 11.3% 11.3% 9.6% 10.8% 11.3%


Utilities 104/143 293.9 6.6% 14.8% 14.0% 14.1% 14.2% 13.5% 13.2% 13.5% 13.8% 11.0% 10.3% 11.6%


Basic Resources 79/120 175.1 4.0% 9.6% 6.6% 7.1% 5.7% 5.9% 6.4% 5.0% 5.4% 7.5% 6.1% 8.0%

Travel & Leisure 33/62 115.8 2.6% 9.2% 6.2% 7.8% 5.7% 9.5% 3.4% 8.0% 1.5% -9.7% -47.1% -31.8%

Chemicals 50/69 122.3 2.8% 8.0% 6.8% 7.8% 7.1% 7.2% 6.7% 7.5% 7.0% 5.2% 7.8% 7.3%


Oil & Gas 9/11 100.8 2.3% 2.3% 2.7% 3.6% 0.6% 2.9% 2.3% 1.8% 2.7% -5.2% -1.5% 2.4%

Retail 21/36 62.4 1.4% 3.8% 3.8% 3.3% 3.5% 4.2% 4.2% 3.4% 3.3% 4.1% 3.3% 3.2%

Technology 21/32 50.9 1.1% 10.8% 11.5% 12.1% 11.0% 11.7% 12.6% 13.9% 9.3% 12.6% 12.1% 13.4%



Media 29/46 27.9 0.6% 9.3% 12.2% 8.4% 7.9% 4.2% 3.4% 1.0% -4.3% 3.6% 3.7% 5.4%





Appendix 6: Quarterly EBIT margin by sector


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QUARTERLY EBITDA MARGIN

Sector No of

Companies


(18/11/2020) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

ICB – L2 Trn VND % % % % % % % % % % % %

Real Estate 96/121 948.8 21.4% 17.4% 17.9% 18.9% 16.3% 11.8% 22.2% 22.6% 17.0% 6.8% 13.4% 17.1%

Food & Beverage 99/160 669.0 15.1% 16.7% 18.9% 17.2% 14.9% 16.5% 15.9% 14.5% 14.2% 13.2% 14.0% 14.2%


Utilities 104/143 293.9 6.6% 17.8% 15.8% 16.3% 15.6% 15.2% 15.0% 15.2% 15.5% 13.4% 12.7% 13.9%


Basic Resources 79/120 175.1 4.0% 11.1% 8.0% 8.4% 7.3% 7.6% 7.0% 6.3% 6.9% 9.1% 9.3% 8.8%

Travel & Leisure 33/62 115.8 2.6% 10.3% 7.2% 8.8% 7.1% 11.5% 5.4% 9.7% 2.0% -7.1% -42.9% -26.0%

Chemicals 50/69 122.3 2.8% 12.1% 10.3% 11.8% 9.7% 10.8% 9.6% 11.8% 10.5% 10.1% 12.2% 11.0%


Oil & Gas 9/11 100.8 2.3% 2.8% 3.1% 3.9% 0.9% 3.3% 2.6% 2.2% 3.0% -4.7% -0.9% 3.0%

Retail 21/36 62.4 1.4% 5.3% 5.6% 5.1% 5.5% 6.0% 5.8% 5.1% 5.2% 5.6% 5.3% 4.9%

Technology 21/32 50.9 1.1% 12.4% 12.7% 13.5% 12.4% 13.2% 13.9% 14.8% 10.2% 14.2% 13.2% 14.6%



Media 29/46 27.9 0.6% 34.2% 30.7% 21.5% 33.9% 20.0% 10.9% 13.4% 21.4% 23.1% 25.5% 12.7%





Appendix 7: Quarterly EBITDA margin by sector


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Appendix 8: Sectors – Relative performance vs VN-Index


Notes: Relative performance of index of a sector vs. VN-Index from 27/7/2020 to 30/11/2020

Sectors – Relative performance vs VN-Index in 4 months from 27/7/2020 – when VNIndex closed at 785.17

100.13

95

100

105

Food & BeverageSectors - Relative performance vs VN-Index

119.77

95

100

105

110

115

120

125

Basic ResourcesSectors - Relative performance vs VN-…

100.73

90

95

100

105

110Construction & Materials

125.52

90

100

110

120

130

140Chemicals

118.76

90

100

110

120

130Retail

102.68

95

100

105Personal & Household Goods


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Appendix 8: Sectors (ICB-2) – Relative performance vs. VN-Index




96.02

90

95

100

105

Real estateSectors - Relative performance vs VN-Index

95.41

90

95

100

105

UtilitiesSectors - Relative performance vs VN-Index

99.67

90

95

100

105 Industrial Goods & Services

99.62

95

100

105

110Technology

95.63

90

95

100

105

110 Oil & Gas

91.43

85

90

95

100

105Travel & Leisure


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91.7290

95

100

105

PharmaceuticalsSectors - Relative performance vs VN-Index

68.68

60

70

80

90

100

MediaSectors - Relative performance vs VN-Index

95.28

85

90

95

100

105Telecommunications

89.69

85

90

95

100

105

Automobile & Parts


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Methodology and important notes!

Data updating time:

All data in this Report are updated as of November 18, 2020. FiinGroup

updates and calculates data continuously or daily.

Data coverage:

Our data covers 1081/1744 listed companies, which include 1009/1662 non-

financial companies (excluding Insurance and Financial Services) and 21/21

banks.

The total capitalization of these companies as of November 18, 2020 was

about VND4.426 trillion, or USD189.1 billion, accounting for about 98.5% of

the total market capitalization of HOSE, HNX and UPCOM.

Representativeness of analyzed data:

The total revenue of non-bank listed companies was VND784.4 trillion in Q3-

2020, accounting for 80% of Vietnam’s GDP (at constant 2010 prices) in Q2-

2020.

Although the data doesn’t cover all private businesses and many unlisted

public companies, we think this is a large enough sample for review and

analysis with implications in assessing the health of the corporate sector and

thereby making necessary decisions in stock investment, fund management,

lending orientation or any other important financial decisions for 2020 and

beyond.

Separating non-financial and financial groups

We separate these two groups for more accurate assessment because of

different business models.

Accordingly, Financial group consists of companies having shares listed on

three exchanges and operating in the fields of Banks, Insurance and Financial

services under ICB (level 2) standard. Meanwhile, Non-financial sector are

listed companies in the remaining 16 sectors.

This report should be read and understood with the following background information and important

concepts!EBIT and EBITDA Calculation:

EBIT = Earnings Before Interest and Taxes while EBITDA = Earnings before

Interest, Taxes and Depreciation. However, there are many ways to

calculate among analysts in Vietnam. In FiinGroup, we use the following

formula:

- EBIT = Gross Profit – Sales expenses– Administrative expenses +

Profit/loss from affiliated companies (we do not take into account

other gains or losses from financial activities).

- EBITDA = EBIT + Depreciation

Key abbreviations:

YoY = comparing year on year results whether they are Year, Quarter or

Monthly figures.

QoQ = comparing this quarter with the previous quarter.

MoM = comparing this month with the previous month.

Data adjustment:

In order to eliminate the effect of consolidation of financial statements

among companies in calculating growth (Revenue, profit, EBIT, EBITDA),

we adjust by removing subsidiaries from the data if they are listed and

consolidated into parent companies. With the following group of companies,

when calculating growth of the sector or the whole market, we use only the

parent companies’ figures, for example:

VIC: VHM, VRE, VEF, VNB

FLC: AMD, ART, HAI, KLF, ROS

KDC: KDF, TAC, VOC

MSN: MSR, MCH, MML

FPT: FRT (before 2017)

SAB: WSB, BSD, BSH

And many other codes

The similar rule is applied for sector growth, if two stock of the parent

company and its subsidiary are in the same sector, we remove the

subsidiary and only calculate the growth based on the parent company's

data.


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Disclaimer

This Report is prepared by FiinGroup Joint Stock Company for reference purpose only. It does not recommend buying,

selling or holding any stock or any other particular transaction.

The information contained in this Report, including FiinGroup's data, figures, tables, analysis and comments, is used for

reference only at your own discretion and risk appetite. FiinGroup will not be responsible for any loss or consequences that

may result from the use of information contained in this report.

This Report is subject to change without notice. The content and opinion in this Report may be changed or outdated

depending on the actual situation and additional information we have. FiinGroup will not be responsible for updating,

modifying and adding content arising from those changes.

The information is compiled and processed based on public sources obtained by FiinGroup, we do not perform

independent verification of the accuracy, completeness or reliability and we make no warranty or guarantee to the

accuracy of such information.

FiinGroup Joint Stock Company holds the copyright on this report and all the content in this Report. This report is copyright

protected under the law on copyright in Vietnam and other countries under international copyright conventions and treaties

that Vietnam is a member.

None of the content, including data, figures, tables, models, and comments in this report may be duplicated, copied,

modified, commercialized, or published fully or partly in any form without the prior written permission of FiinGroup.

FiinGroup is Vietnam’s leader in financial data analytics, market research and credit rating service (credit rating service

License No. 02/GXN-XHTN of Vietnam's Ministry of Finance dated March 30, 2020). Accordingly, FiinGroup does not

participate and is not allowed to participate in securities brokerage and consulting activities, banking services and auditing

services. We impose a supervisory system to ensure all directors, managers and employees comply with these regulations

and avoid conflicts of interest to ensure absolute independence in our each and any activity.

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FiinGroup

AT A GLANCE

Corporate Profile

Business Portfolio

Product and Service


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Corporate Profile

Founded in March 2008, FiinGroup is currently a leading provider of

financial data, business information analysis, industry research, credit

rating and other analytical services based on data.

FiinGroup received 35.1% equity investment as it entered into

strategic cooperation with Japan's NIKKEI group in September

2014 and jointly supports Japanese investors into Vietnam.

The company currently serves more than one thousand domestic and

overseas institutional customers through subscription platforms and

systems, package services and on-demand services.

In October 2019, FiinGroup began offering FiinTrade Platform to

individual investors and securities brokers in Vietnam.

On June 10th, 2020, FiinGroup officially added Credit Rating

Agency business with license by the Ministry of Finance of Vietnam

dated March 20th, 2020.

FiinGroup currently has more than 100 employees, including data

analysts, business analysts, industry analysts, securities analysts,

technology engineers and product developers working at its

headquarter in Hanoi. and branch in Ho Chi Minh City.

Location: Hanoi Head Office

Ho Chi Minh City branch

Shareholders: Nikkei: 17.55%;

QUICK: 17.55%;

Management and Others: 64.9%

Charter capital: VND25 billion

No. of employees: 105 (as of December 2019)

Data Analysts, Business Analysts,

Market Analysts, Risk Analysts incl.

CFA, ACCA, CPA charterholders

IT Engineers & Client Advisors

Legal representative: Mr. Nguyen Quang Thuan

Date of establishment: March 11, 2008

FiinGroup (formerly known as StoxPlus) is Vietnam’s leader in financial data analytics,

market research and credit rating service

Auditor: PricewaterhouseCoopers

Strategic Partners:


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