Vietnam’s Consumer Sector Sector_VAD... · Rising incomes and consumer confidence buoy discretionary spending 17 Source: Nielsen (percentages represent the % of survey respondents

1

Vietnam’s Consumer Sector Capitalizing on Vietnam’s middle-affluent class

SEPTEMBER 2019 Viet Capital Research

Content

2

● Upbeat sector outlook ○ Accelerating household consumption

○ Strong consumer optimism

○ Fast-growing middle-affluent class

● Key secular, investable consumer trends ○ Modern trade, e-commerce taking off

○ Vibrant indulgent consumption

○ Consumer up-trade

● Stock recommendations o Top consumer picks: MWG, PNJ, VEA, SAB, MSN

o Other BUYs: FPT, PTB, VHC

o Other notable stocks: VTP, VNM, QNS, FRT

Content

3

Upbeat sector outlook

• Accelerating household consumption

• High consumer confidence

• Rapidly expanding middle-affluent class

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GDP/cap (PPP,USD) - LHS

GDP/cap (current USD) - LHS

Household consumption (current USD, bn) - RHS

Vietnam is at an inflection point of accelerating household consumption

4

Source: World Bank, Statista, VCSC

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4,000

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1,000

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2,000

2,500

3,000

3,500

4,000

4,500

5,000

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4,000

6,000

8,000

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Thailand 2001

GDP/cap (current USD): USD1,900

GDP/cap (PPP, USD): USD7,600

Median age: 30.5

China 2007



Median age: 33.0

Vietnam 2018



Median age: 31.0

Consumer optimism is spurring spending

5

Source: General Statistics Office of Vietnam, Nielsen

Vietnam’s retail sales growth and consumer confidence

80

90

100

110

120

130

140

0%

4%

8%

12%

16%

Ju

l-1

3

Ja

n-1

4

Ju

l-1

4

Ja

n-1

5

Ju

l-1

5

Ja

n-1

6

Ju

l-1

6

Ja

n-1

7

Ju

l-1

7

Ja

n-1

8

Ju

l-1

8

Ja

n-1

9

Ju

l-1

9

Price growth

Real growth

Nielsen's Consumer confidence index

7M 2019 Real 8.7%

7M 2019 Nominal 11.6%

Vietnam boasts one of the fastest-growing middle-affluent classes in the region

6

Source: Boston Consulting Group

25%

34%

44%

60%

78%

Vietnam The Philippines Indonesia Thailand Malaysia

5.5% 5.5%5.2%

2.2%

2.9%

Vietnam ThePhilippines

Indonesia Thailand Malaysia

Middle-Affluent Consumers (MAC) as % of population, 20172017-2030 CAGR forecast for MACs

239

17

10

29

37

1931

517

2017 2030

Affluent

Established middle class

Emerging middle class

Aspirant

Poor

+11%

+4%

+2%

-4%

-7%

CAGR ✓ Definition of MACs for Vietnam: monthly household

income of at least USD660, encompassing Affluent and

Established Middle Class.

✓ MACs to account for 45% of population in 2030 vs 25%

in 2017.

✓ Affluent consumers as % of population to widen from 5%

in 2017 to 16% in 2030.

Vietnam’s consumer class breakdown (mn people)

Booming MACs propel premiumization of products/services, indulgent consumption

7Source: Boston Consulting Group

✓ Embracing premiumization: more expensive products

in same categories, more indulgent consumption

✓ Searching for quality and value: luxury brands need

worthy quality; consumers searching for proof of value

(e.g. craftsmanship, advanced tech, special/quality

ingredients).

✓ Seeking exclusivity: products as a means to

differentiate oneself.

Six common behaviors of the Mass Affluent

✓ Relishing immersive experiences: in-store

experience, omnichannel, special in-store events.

✓ Using digital media: pre-purchase research, online

shopping, commerce on social media.

✓ Travel frequently: strong propensity to spend

while traveling.

Premiumization follows distinct patterns for various products

Stable with income Maturing with income Continuous growth Inflection points

• Toothpaste

• Instant noodles

• Fresh food

• Refrigerators, TVs

• Smartphones

• Quick-service restaurants

• Cosmetics and skin care

• Beer

• Baby gear

• Cars

• Travel and vacation

• Spirits

Poor Aspirant Emerging middle class Middle class Affluent

Key consumer trend

8

Modern trade, e-commerce taking off Beneficiaries: branded modern retailers, e-commerce players

Stocks: MWG, VTP

Modern retail is thriving as consumers seek convenience & better shopping quality

9

Source: Kantar Worldpanel (Q1 2019), VCSC

Currently in Vietnam:

9,000 wet markets vs <500 supermarkets

1.5 million mom-and-pop shops vs ~4,000 mini-stores

Modern retail is almost non-existent in rural areas

FMCG consumption by retail channel (Q1 2019)

Medium-sized street shops

24%

Small street shops40%

Wet market12%

Specialty stores5%

Hyper/Supermarkets9%

Minimarts/CVS3%

Online1%

Others6%

10% in 2017

The shift to modern retail is only beginning in Vietnam

10

China Taiwan

Korea

India

Indonesia

Malaysia

ThailandPhilippines

Vietnam

0%

20%

40%

60%

80%

100%

- 5,000 10,000 15,000 20,000 25,000 30,000 35,000

2017 GDP per capita (USD)

Modern trade penetration in FMCG across Asian countries as of Q2 2018

Source: Kantar Worldpanel, World Bank, VCSC

Busier lifestyles, shrinking family size point to future prosperity of mini format

11

Source: Nielsen, VCSC

I’m on the move

Smaller household

size

More white-collar labor force

Large school-aged

population

Modern retails &

food chains

Fresh & just-in-time

food

Ease of access, nearby location

All-in-one shopping

Healthy shopping/

eating

Easy browsing,

quick billing

Long opening hours

Small formats are spearheading the emergence of modern trade

12

Average monthly shopping frequency of Vietnamese consumers across channels

Source: Nielsen

FMCG YoY growth by retail channel in top four urban cities in Vietnam

Source: Kantar Worldpanel (Q1 2019)

8%

-1%

7%

7%

14%

32%


Small street shops

Wet markets

Specialty stores

Hyper/Supermarkets

Minimarts/CVS

25.2

8.8

1.20.0

3.3

18.9

9.5

4.52.2 2.5

18.7

7.04.2 3.7

2.3

Wet market Traditional grocerystores

Convenience stores Minimarts Supermarkets

2010 2018 Q1 2019

Minimart is outgrowing convenience store

13

Source: VCSC compilations

Store count of major CVS chains in Vietnam

168

108

59

0

300

160

118

24

337

147

118

32

Circle K Family Mart Aeon Ministop 7-Eleven

Sep-16 Dec-18 Jun-19

Store count of major minimart chains in Vietnam

1,700

408

233 215

1,800

600

353

226

Vinmart+ Bach Hoa Xanh Coop Foods Satra Foods

Dec-18 Jun-19

E-commerce expected to grow the fastest in Vietnam among top ASEAN countries

14

SEA e-commerce market size (GMV, USD bn)

Source: Google, Temasek (2018)

2 1 1 1 1 0.4

12

2 2 23 3

7

5 5

13

15

Indonesia Malaysia Philippines Singapore Thailand Vietnam

2015 2018 2025

53

87%

27%

22%

16% 49%

23%

42%

19%

27%

CAGR = 23%

94%

20%

Vietnamese are well-connected

15

Source: We Are Social (January 2019), Internet World Stats, VCSC

Active internet users

64 million

or

66% of population

Unchanged vs Jan 2018

143 million mobile

subscriptions

vs population of 97

million

Smartphone

penetration

>70%

65 million 3G & 4G

subscriptions

vs population of 97 million

Key consumer trend

16

Vibrant indulgent consumption

Beneficiaries: discretionary & luxury goods

Stocks: PNJ, VEA

Rising incomes and consumer confidence buoy discretionary spending

17

Source: Nielsen (percentages represent the % of survey respondents selecting a choice)

What Vietnamese consumers will spend on after covering necessities

76%

35%33%

30%27% 26%

72%

48%

53%

47% 48%46%

Saving Travel Clothing Tech devices Homedecoration

Entertainment

Q4 2016 Q3 2018

+28% YoY

+35% YoY

-

50,000

100,000

150,000

200,000

250,000

2013 2014 2015 2016 2017 2018 7M 2019

Soaring car ownership a reflection of Vietnamese’s new wealth

18

Source: VAMA

Number of passenger cars sold in Vietnam

Consumers delayed purchases in 2017 in

anticipation of a steep reduction in tariffs on cars

imported from ASEAN. Sales got back on a

growth track in 2018.

38%

CAGR

Key consumer trend

19

Product premiumization

Beneficiaries: FMCG companies with superior product innovation

and brand-building capabilities

Stocks: SAB, MSN

Broad-based premiumization

20

Premium + semi-premium beer

Market share ballooned from <20% in 2011 to >30% currently.

Vinamilk Organic Milk

Launch: December 2016

Features: 100% organic fresh milk, 1.8x price of mainstream

Supply inefficient to meet demand

Premium fish sauce

Household penetration broadened by ~7 ppts YoY in 12 months

ending September 10, 2018 (to 57% in urban and 39% in rural)

Source: Kantar Worldpanel, Heineken, VCSC

Those who don’t innovate are bound to lose (1)

21

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2010 2011 2012 2013 2014 2015 2016 2017 2018

CAGR of

44%

Lackluster product innovation and

brand building

QNS’s historical soymilk revenue (VND bn) during 2010-2018

Source: QNS

SKUInception

yearSKU

Inception

year

Fami 1997Fami

Kid2014

Vinasoy 2012Soy

Men 2015

Vinasoy

sesame2012

Fami

Go2018

Fami

canxi2013

QNS’s key soymilk SKUs and their inception years


Laggard - QNS

Those who don’t innovate are bound to lose (2)

22

Outperformer - VNM

VNM’s new products during 2018-2019

2018

2014 2015 2016 2017 2018

Liquid milk 51% 53% 56% 58% 59%

Condensed milk 80% 80% 80% 80% 79%

Spoon yogurt 85% 85% 85% 83% 83%

Powdered milk (volume) NA NA 41% 42% 42%

VNM’s historical market share by category

Source: VNM

Source: VNM, VCSC compilations

2019

Consumer sector: key data

23

Code Rating

Market

cap,

USD

mn

State

O'ship

%

Foreign

limit %

Foreign

avail,

USD

mn

ADTV

30D,

USD

mn

Share

price,

VND ps

Target

price,

VND ps

Target

price,

updated

Upside

%

Div.

yield

%

12M

TSR %

MWG BUY 2,212 0.0% 49.0% 0.0 4.2 116,900 215,000 12/08/2019 83.9% 1.3% 85.2%

VHC BUY 318 0.0% 100.0% 207.1 0.6 80,200 108,700 05/08/2019 35.5% 5.0% 40.5%

FPT BUY 1,539 6.0% 49.0% 0.0 3.7 53,100 69,300 22/08/2019 30.5% 3.8% 34.3%

MSN BUY 3,767 0.0% 49.0% 325.0 1.5 75,400 95,900 30/08/2019 27.2% 0.0% 27.2%

FRT O-PF 161 0.0% 49.0% 0.1 0.3 44,000 54,000 29/07/2019 22.7% 2.3% 25.0%

PNJ BUY 786 0.0% 49.0% 0.0 1.2 82,200 95,000 01/08/2019 15.6% 2.2% 17.8%

PTB O-PF 140 0.0% 49.0% 41.1 0.4 69,000 80,200 07/08/2019 16.2% 1.4% 17.7%

SAB O-PF 7,514 36.0% 100.0% 2,739.6 0.4 273,000 310,500 16/08/2019 13.7% 1.8% 15.6%

VEA BUY 3,148 88.5% 49.0% 1,367.0 1.2 55,200 59,800 15/08/2019 8.3% 7.1% 15.4%

VNM M-PF 9,155 36.0% 100.0% 3,800.0 4.0 123,000 124,600 23/08/2019 1.3% 3.7% 5.0%

QNS O-PF 396 0.0% 49.0% 135.5 0.4 30,600 29,800 26/08/2019 -2.6% 4.9% 2.3%

VTP N/A 342 68.1% 49.0% 106.0 0.3 136,200 N/A N/A N/A N/A N/A

Source: VCSC, share prices as of August 30, 2019

Consumer sector: summary valuations

24

Code

Share

price,

VND ps

EPS g

2019F

%

EPS g

2020F

%

EPS g

2021F

%

P/E

TTM x

P/E

2019F x

P/E

2020F x

P/E

2021F x

EV

/EBITDA

2019F x

ROE

2019F

P/B LQ

x

Net D/E

LQ x

MWG 116,900 34.6% 34.8% 21.7% 14.8 13.0 9.6 7.9 8.0 37.3% 5.0 0.1

VHC 80,200 10.8% 6.7% 10.6% 4.4 4.7 4.4 4.0 3.7 34.6% 1.6 0.0

FPT* 53,100 27.3% 21.2% 20.8% 13.4 11.8 9.7 8.0 6.8 24.8% 2.7 -0.1

MSN* 75,400 7.8% 24.3% 33.7% 22.2 21.7 17.4 13.0 10.8 12.9% 3.0 0.5

FRT 44,000 14.9% 15.3% 9.5% 10.0 9.7 8.4 7.6 7.9 30.3% 3.1 1.0

PNJ 82,200 20.8% 20.3% 23.3% 20.1 16.7 13.9 11.2 11.7 28.7% 4.7 0.3

PTB 69,000 12.7% 22.9% 36.2% 8.5 7.9 6.4 4.7 5.8 25.3% 2.0 0.9

SAB 273,000 25.3% 22.5% 17.4% 40.8 35.2 28.7 24.5 24.9 32.9% 10.0 -0.8

VEA 55,200 6.6% 15.9% 10.4% 10.4 9.7 8.4 7.6 N/A 29.2% 2.8 -0.4

VNM 123,000 4.6% 7.0% 6.3% 22.6 22.2 20.8 19.6 14.7 40.2% 7.6 -0.3

QNS 30,600 -11.7% 17.9% 9.9% 7.3 8.3 7.0 6.4 4.6 19.4% 1.6 -0.1

VTP** 136,200 36.0% 36.0% 28.0% 28.4 24.4 18.0 14.0 N/A N/A 10.6 -0.9

Source: VCSC; share prices as of August 30, 2019

* Earnings-related metrics are based on recurring earnings

** Based on company guidance

Content

25

Top consumer stock picks

MWG, PNJ, VEA, SAB, MSN

Mobile World Investment Corp (HSX: MWG)

Title of presentation

26Copyright © Viet Capital Securities

Mobile World Corp (HSX: MWG)

The crown jewel of Vietnam’s modern retail sector

September 2019

Investment thesis 1: Top diversified retailer in Vietnam

27

• #1 mobile retailer

• 45% market share at YE2018

• 1,011 stores as of June 2019

• Focus on SSSG

• #1 electronics retailer

• 35% market share at YE2018

• 838 stores as of Jun-19

• Medium-term profit driver

• #1 minimart chain

• 600 stores as of June 2019

• Key long-term profit driver


Investment thesis 2: Dominant omnichannel (online/offline) + best execution

28

Source: MWG, VCSC

MWG’s online sales contribution to mobile

phone and electronics revenues

Roll-out of new products such as watches, small home appliances and kitchenware is boosting same-store sales

0

500

1,000

1,500

2,000

2,500

3,000

2015 2016 2017 2018 H1 2019

TGDD (mobile phones) DMX (consumer electronics) BHX (minimart)

MWG’s historical store count by chain

8%9%

15%

17%

18%

2016 2017 2018 2019F 2020F

Investment thesis 3: Modern retail sector has extensive growth headroom in Vietnam

29

Modern retail formats are growing rapidly but their penetration remains low in Vietnam compared to other countries

China Taiwan

Korea

India

Indonesia

Malaysia

Thailand

Philippines

Vietnam

0%

20%

40%

60%

80%

100%

- 5,000 10,000 15,000 20,000 25,000 30,000 35,000

2017 GDP per capita (USD)

Modern trade penetration in FMCG across Asian countries

as of Q2 2018

Source: VCSC compilations, Kantar Worldpanel

8%

-1%

7%

7%

14%

32%


Small street shops

Wet markets

Specialty stores

Hyper/Supermarkets

Minimarts/CVS

FMCG YoY growth by retail channel in top four urban cities

in Vietnam (Q1 2019)

Investment thesis 4: Electronics, grocery to drive strong medium/long-term growth

30

Revenue forecasts by chain (VND bn)

Source: MWG, VCSC forecasts

NPAT forecasts by chain (VND bn)

2018 2019F 2020F 2021F 2022F 2023F

TGDD (mobile) DMX (electronics) BHX (minimart)

23% CAGR 29% CAGR

750

1,000

1,150

1,300

1,450 1,500

2018 2019F 2020F 2021F 2022F 2023F

DMX store count projections

405

950

1,800

2,800

3,800

4,800

2018 2019F 2020F 2021F 2022F 2023F

BHX store count projections

2018 2019F 2020F 2021F 2022F 2023F

TGDD + DMX BHX




Phu Nhuan Jewelry (HSX: PNJ)

The queen of Vietnam’s fashion gold jewelry

September 2019

Investment thesis 1: The unquestioned leader in gold fashion jewelry market

32


PNJ’s store count vs competitors

324

4853

19

101

0

50

100

150

200

250

300

350

2014 2015 2016 2017 2018

Num

be

r o

f sto

res

PNJ SJC

DOJI PRECITA

TheGioiKimCuong

PNJ

DOJI

PRECITA TheGioiKimCuong

Investment thesis 2.1: Extensive headroom for store expansion

33

10.6

10.8

4.8

2.6

1.3

HCMC

Da Nang

Can Tho

Hanoi

Hai Phong

Number of PNJ gold stores per million people in

Vietnam’s tier-1 cities.

Source: PNJ, General Statistics Office Of Vietnam

(as of YE2018), VCSC estimates


(as of YE2018; inclusive of silver standalone stores)

PNJ’s store network

The South

202 stores

64% of PNJ store count

Highlands

25 stores


Central

32 stores


North

61 stores


Investment thesis 2.2: Headroom for footprint expansion even in HCMC

34

Source: VCSC compilations (as of end-Q2 2019)

PNJ’s store network in HCMC

Investment thesis 3: Large headroom for further increase in sales/store

35

Source: VCSC compilations (CTF, CSS and LF’s financial year ends March 31)

PNJ’s gold jewelry retail sales/stores compared to those of Chow Tai Fook (CTF), Chow Sang Sang

(CSS) and Luk Fook (LF) in Mainland China in FY2018

1.3

2.62.4

1.8

FY2018

US

Dm

n

PNJ's sales/store/year

CTF's Mainland China sales/store/year

CSS's Mainland China sales/store/year

LF's Mainland China sales/store/year

Given similarities in gold consumption habits between Vietnam and China, we expect PNJ’s sales/store to

gradually catch up with the current level of Chinese peers as income rises in Vietnam. Currently, China’s GDP per

capita is nearly 4x that of Vietnam.

Investment thesis 4: Attractive valuation/growth profile

36

Source: Bloomberg consensus for peers, VCSC forecasts for PNJ (data as of August 30, 2019)

23.9%20.2%

12.2% 11.2%

7.2% 8.3%

21.5%

Titan Tiffany & Co Chow TaiFook

Lao FengXiang

Luk FookHoldings

Chow SangSang

PNJ

2018-2021F EPS CAGR

3.3

1.5 1.5 1.3 1.4

0.9 0.9

Titan Tiffany & Co Chow TaiFook

Lao FengXiang

Luk FookHoldings

Chow SangSang

PNJ

3y-PEG (2018 PER / 2018-2021F EPS CAGR)

Investment thesis 5: Bright earnings prospects

37

EPS projections (VND)

Store count projections

Gold jewelry retail SSSG projections

Revenue projections (VND bn)

21%

CAGR

Source: PNJ, VCSC forecasts

56% 57%58%

60%

0%0%

0%1%14,573

16,855

20,265

23,565

2018 2019F 2020F 2021F

Jewelry retail revenue Watch retail revenue Others

324364

404444

14 3467

110

2018 2019F 2020F 2021F

Jewelry store count Watch POS count

4,083

4,932

5,932

7,314

2018 2019F 2020F 2021F

20%

5%

13%12%

2018 2019F 2020F 2021F

Gold Jewelry retail SSSG




VEAM Corp (UPCoM: VEA)

Gateway to Vietnam’s motorization

September 2019

39

30%

VEA’s ownership in Honda

25%

VEA’s ownership in Ford

20%

VEA’s ownership in Toyota

VEA provides exposure to Vietnam’s

booming car and extensive motorbike

markets thanks to its 20%-30% stakes

in Honda, Toyota and Ford Vietnam.

VEA’s associates commanded a

combined ~40% market share in

passenger cars (PC) and 76% in

motorbikes in 2018.

Toyota26%

Honda11%

Ford4%

PC market share (2018)

Honda

76%

Motorbike market share (2018)

480 392

325

119 114 99 52 33 21 17

Jap

an

Ma

laysia

Ko

rea

,R

ep

.

Th

aila

nd

Sin

ga

pore

Ch

ina

Ind

on

esia

Ph

ilip

pin

es

Vie

tna

m

Ind

ia

Number of PCs

per 1,000 Car consumption is poised to take off in

Vietnam on the back of Vietnam’s low

penetration and rising incomes.

Source: VEA, VAMA, VCSC compilations

Investment thesis 1.1: Exposure to booming car and extensive motorbike markets

Investment thesis 1.2: VEA’s associates are poised to acquire more market share

40

Source: VEA, VCSC

Drivers for market share expansion: strong brand equity; new model/facelift launches; better flexibility to diversify

products thanks to a healthy mix of locally assembled and imported cars

26.2%

11.0%

4.1%

25.7%

14.2%

4.8%

Vietnam’s passenger car market share in 2018 (inside) and 2021F (outside)

Toyota Honda Ford Thaco Huyndai Others

2018:75.9%

2021F:82.0%

We expect Honda to continue gaining market share in motorbikes

Honda Others

Investment thesis 2: Attractive valuation and dividend yields

41

VEA’s PER vs regional peers We forecast robust EPS growth and dividend yields

9.7x

14.6x

12.8x

VEA's 2019F PER Asian EM carpeers' TTM PER

media

Asian motorbikepeers' TTM PER

median

Source: VEA, VCSC forecasts, Bloomberg (data as of August 30, 2019)

VEA is trading at a discount of 27% to the TTM PER of regional peers, which is attractive in our view despite VEA’s lack

of control over its automobile associates

5,321 5,6706,572

7,257

7.1%9.2%

10.3%11.6%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2018A 2019F 2020F 2021F

EPS (VND) Dividend yield @VND55,200/share




Sabeco (HSX: SAB)

Extensive earnings upside from restructuring under ThaiBev

September 2019

Investment thesis 1.1: Extensive headroom for margin expansion

43

Source: SAB, VCSC

Source: company disclosures, VCSC

(1) Based on SAB’s reported numbers, whereby revenue and COGS include excise tax attributed to volume sourced from

associate breweries (i.e., SAB holds minority stakes in these breweries). We further attribute all of SAB’s reported SG&A to

its beer segment.

(2) We strip out excise tax attributed to volume sourced from associate breweries from SAB’s reported revenue and COGS,

using our own estimates.

(3) For an apples-to-apples comparison with SAB, we strip out excise tax and other tax items inclusive in these companies’

reported revenue and COGS.

Profit margins across leading beer companies in Asia (FY2018)(3)

67%64%

58%

26%34% 35%

39%33%

26%

14%18%

9%

30%+27%

20%

0%

10%

20%

30%

40%

50%

60%

70%

80%

HeinekenMalaysia

CarlsbergMalaysia

AB InBevAsia

Sabeco'sbeer

segment,reported (1)

Sabeco'sbeer

segment,underlying

(2)

ChinaResources

HeinekenVietnam

HeinekenAsia Pacific

CarlsbergAsia

GPM EBIT margin

Investment thesis 1.2: Extensive headroom for margin expansion

44

Source: SAB, VCSC

Based on SAB’s reported numbers, whereby revenue and

COGS include excise tax attributed to volume sourced from

associate breweries (i.e., SAB holds minority stakes in these

breweries). We further attribute all of SAB’s reported SG&A to its

beer segment.

2018 and 2021F beer GPM and EBIT/beer revenue %

26.1%

14.4%

34.3%

21.4%

Reported beer GPM EBIT/beer revenue

2018 2021F

Margin enhancement initiatives

✓ ASP/mix: larger contribution from the high-margin Saigon Special

brand and price hikes on the back of strengthening brand equity.

✓ Joint procurement of raw materials and advertising services with

ThaiBev.

✓ Packaging reformulation and more efficient use and management

of packaging materials.

✓ Improved efficiency at breweries: larger scale and application of

new production standards and efficiency programs.

✓ Reduced sourcing from non-controlling breweries.

✓ Easing transportation costs thanks to competitive bidding and

route optimization.

✓ Distribution optimization: fewer but bigger distributors.

✓ Other initiatives: closing excessive offices and warehouses;

digitalizing operational processes.

Investment thesis 2: We forecast SAB to gain market share going forward

45

Source: company disclosures, VBA, VCSC

~40%

25%+

15%

8%

Sabeco Heineken Habeco Carlsberg Others

Volume market share structure of Vietnam’s beer industry (2018)

Drivers for market share expansion: better product freshness, effective marketing, improved sales

and distribution capabilities, stepped up presence in big cities

VCSC’s forecast for future market shares

Investment thesis 3: Market volume expected to grow 5% annually through 2022

46

Source: VBA, Euromonitor, VCSC

Vietnam’s historical total beer consumption (million liters) and per capita (liters)

2,4202,622

2,9783,190 3,247

3,400

3,7864,006

4,206

27 2933 34 35 36

40 42 43

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2010 2011 2012 2013 2014 2015 2016 2017 2018

Total market volume PCC

Total beer consumption posted a 5.7% CAGR over the last five years on the back of a 4.7% CAGR in per capita

consumption

Drivers for future growth: one million people reaching the legal drinking age per year; increasing urbanization and

rising income; upbeat consumer sentiment

Investment thesis 4: Highly capable management team

47

Source: SAB, VCSC

Key changes/additions to board of directors following ThaiBev’s acquisition

Members Working experience

Mr. Koh Poh Tiong - Chairman

CEO of Asia Pacific Breweries from 1993 to 2008.

CEO of Fraser & Neave (F&B division) from 2008 to 2011.

Undertaking board directorships at several leading corporations in Asia.

Ms. Tran Kim Nga – Board

member Played an instrumental role in the business expansion of Berli Jucker in Vietnam.

Mr. Michael Chye Hin Fah –

Board member

Group CFO – International Beverage Holdings Ltd (January 2017- Present).

Executive Vice President, Brand Investment Management – Thai Beverage (February 2017 – Present).

Mr. Phornprapha – Board

member Worked at the Boston Consulting Group from 1994 to 2014 (Managing Director from 2001 to 2014).

Current board of management

Members Working experience

Mr. Bennett Neo - Chairman

CEO of Fraser & Neave (food division) prior to joining SAB.

2005-2014: senior positions in Asia Pacific Breweries, including his last role of Regional Director,

covering Indochina, Singapore, Heineken-Kirin Japan, Heineken Taiwan, Tiger Global Exports and

Heineken Asia Pacific Exports.

Mr. Teo Hong Keng - CFO Spent 17 years with Asia Pacific Breweries, including being the CFO of Heineken Malaysia, Finance

Director of APB Singapore, Head of Finance of Cambodia Brewery Ltd and Tiger Export Pte Ltd.

Mr. Hoang Dao Hiep – Deputy

CEO, Marketing

Managing Director of Saatchi & Saatchi Vietnam prior to joining SAB. Before that, he was Regional

Marketing Director of Carlsberg in Southeast Asia.

Mr. Nguyen Hoang Giang –

Deputy CEO, Supply Chain

CEO of Vinafco JSC, one of the leading logistics companies in Vietnam, prior to joining SAB. Before

that, he was Head of Logistics in Southeast Asia for IKEA Trading.

Mr. Lam Du An – Deputy CEO,

ProductionHas been with SAB since the early 1990s.

Melvyn Ng Kuan Ngee – Deputy

CEO, Sales Spent 15 years at Asia Pacific Breweries.

Investment thesis 5: Superior earnings growth outlook vs international peers

48

Source: Bloomberg, VCSC (as of August 15, 2019)

Company name

Market

cap

(USDmn)

ROE ROA D/E2018

PER

2019F

PER

2018-

2021F

EPS

CAGR

2019-

2022F

EPS

CAGR

2018

three-

year PEG

2019

three-

year PEG

2018

EV/EBITDA

2019F

EV/EBITDA

2018-

2021F

EBITD

A

CAGR

2019-

2022F

EBITD

A

CAGR

ANHEUSER-

BUSCH I189,453 10.8% 3.1% 152.9% 38.1 17.4 34.8% 7.9% 1.1 2.2 14.1 13.0 6.2% 6.8%

HEINEKEN NV 59,537 13.1% 4.3% 96.4% 27.8 21.0 15.5% 10.4% 1.8 2.0 14.6 12.4 9.0% 6.5%

ASAHI GROUP

HOLD21,840 13.5% 4.9% 91.1% 14.5 14.3 4.6% 6.3% 3.2 2.3 10.2 10.0 4.1% 3.9%

CARLSBERG-B 21,437 11.5% 4.6% 50.1% 27.3 24.2 11.2% 11.7% 2.4 2.1 12.5 11.4 5.9% 5.1%

KIRIN HOLDINGS 18,245 7.7% 3.1% 39.8% 11.5 21.7 -1.8% 20.2% NA 1.1 9.2 11.1 1.0% 8.2%

CHINA

RESOURCES14,819 5.2% 2.4% 3.8% 119.3 58.3 55.4% NA 2.2 NA 33.1 22.2 29.5% 15.7%

MOLSON

COORS-B11,069 6.5% 3.0% 76.4% 9.7 11.3 -3.3% 8.9% NA 1.3 8.3 8.9 -2.7% NA

TSINGTAO

BREW-A8,574 8.5% 4.6% 3.3% 44.0 35.6 18.7% 4.6% 2.4 7.7 15.3 16.1 6.9% NA

BEIJING YAN-A 2,309 1.4% 1.0% 0.4% 90.0 60.0 26.6% NA NA NA 13.1 13.6 8.9% NA

SAPPORO

HOLDINGS1,824 6.4% 1.6% 157.6% 22.4 22.2 7.1% 3.6% 3.2 6.2 11.5 10.8 5.0% 4.0%

CARLSBERG

BREWER1,764 NA NA 41.4% 26.5 24.4 8.0% NA 3.3 NA 19.1 17.3 8.5% NA

HEINEKEN

MALAYSIA1,628 68.8% 34.3% 28.3% 24.2 22.4 7.2% NA 3.4 NA 14.2 14.9 2.7% NA

Average 29,375 14.0% 6.1% 61.8% 37.9 27.7 15.3% 9.2% 2.5 3.1 14.6 13.5 7.1% 7.2%

Median 12,944 8.5% 3.1% 45.8% 26.9 22.3 9.6% 8.4% 2.4 2.1 13.6 12.7 6.0% 6.5%

SABECO 7,596 27.1% 19.5% 1.9% 44.6 35.6 21.7% 18.8% 2.1 1.9 32.3 25.2 22.9% 18.8%




Masan Group (HSX: MSN)

Leading packaged F&B player

September 2019

Investment thesis 1: Well positioned to ride on Vietnam’s consumption story

50

Seasonings

65%+ market share

Growth drivers: premiumization; expansion to adjacent categories

(granule, oyster sauce); launch of ready-to-cook seasonings

Convenience foods

20%+ market share

Growth drivers: premiumization; expanding meal-solution portfolio;

ramp up of presence in the mainstream segment

Coffee

~30% volume market share in instant coffee

Growth driver: potential entry into the roasted and ground coffee

segment

Beverages

~7% market share in energy drinks

Growth drivers: expanding distribution; widening product offerings

180,000

Food

POS

160,000

Beverage

POS

Investment thesis 2: Extensive meat opportunity

51

Chilled fresh pork

“MEATDeli” brand,

sold through own

showrooms, modern

trade and agent

shops

Current capacity of

230,000-250,000

porkersFarm

Feed

Cyclical; limited

long-term growth

due to farming

sector consolidation

Recruiting

contracted farmers

to scale up supply

Will serve Masan’s

own farms and

contracted farmers

in the future

~USD10bn market;

increasing demand

for safe and hygienic

meat

Processed meat

Partner with Jinju

Ham, a processed

meat player in

South Korea

Processed meat =

1%-2% of total meat

consumption in

Vietnam, compared

to >10% in China

Investment thesis 3: Robust earnings outlook

52

Source: VCSC

-6,000

-4,000

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

2018 2019F 2020F 2021F

EBIT TCB Net financial exp. Others Tax & MI

EBIT: 12% CAGR

Including F&B EBIT CAGR of 11%

Techcombank’s contribution: 10% CAGR

Net financial exp: -16% CAGR

NPAT-MI: 25% CAGR

2018-2021F recurring NPAT-MI breakdown (VND bn)

Content

53

Other BUYs

FPT, PTB, VHC




FPT Corp (HSX: FPT)

Vietnam’s Software/Telecom powerhouse

September 2019

Investment thesis 1.1: Fast-growing software outsourcing player riding on cost advantage

55

Median annual salary (USD) of an experienced

software engineer in Vietnam vs China and India

19,581

14,866

32,190

India Vietnam China

>24% <54%

Source: VCSC compilations, Payscale, Glassdoor

~16,000

software engineers

~2,400

software engineers

~2,500

software engineers

FPT Software has the largest engineer pool in Vietnam

Investment thesis 1.2: Moving up the software value chain

56

Typical software development life cycle


Investment thesis 2: FPT Telecom – Superior services with competitive pricing

57

FPT Viettel VNPT

HCM

Package

Speed

(Mbps) VND000/mth

VND000

/Mbps Package

Speed

(Mbps) VND000/mth

VND000

/Mbps Package

Speed

(Mbps) VND000/mth

VND000

/Mbps

Super 35 35 225 6.4 Net1 Plus 30 185 6.2 Home 1 30 189 6.3


Super 65 65 340 5.2 Net4 plus 70 300 4.3 Home 3 50 259 5.2

Hà Nội

Package

Speed

(Mbps) VND000/mth

VND000

/Mbps Package

Speed

(Mbps) VND000/mth

VND000

/Mbps Package

Speed

(Mbps) VND000/mth

VND000

/Mbps



Super 65 65 440 6.8 Net4 plus 70 300 4.3 Home 3 50 259 5.2

Đà Nẵng

Package

Speed

(Mbps) VND000/mth

VND000

/Mbps Package

Speed

(Mbps) VND000/mth

VND000

/Mbps Package

Speed

(Mbps) VND000/mth

VND000

/Mbps




Super 65 65 400 6.2 Net5 Plus 150 400 2.7

Source: VCSC compilations (as of September 2019)

Internet package comparison between main telcos

Investment thesis 3: FPT University’s rising reputation fuels vibrant new enrollments

58

FPT Education’s total number of students FPT Education’s new enrollments

Source: FPT Source: FPT

19,501

24,732

36,635

YE2016 YE2017 YE2018

8,195

12,517

19,381

YE2016 YE2017 YE2018

CAGR of

37%CAGR of

54%

59



Copyright © Viet Capital Securities

Phu Tai JSC (HSX: PTB)

Small-cap name with robust growth outlook

September 2019

Investment thesis 1: Leading player in domestic stone market

60

• PTB operates three main businesses: stone, wooden furniture exports and an automobile dealership.

• In paving stone, PTB’s strong position is premised on its large reserve of 53 million m3 that could operate for at least

another two decades, per management, and its superior know-how evidenced by having successfully turned around

stone mines acquired from smaller companies.

0

200

400

600

800

1,000

1,200

Vietnam(2018)

China(2016)

Taiwan(2016)

World(2016)

Paving/dimension stone consumption per capita of select

countries (sqm)

PTB, 28%

PTB’s domestic stone* market share in 2018

Source: PTB, Ministry of Construction, Rapporto 2017, VCSC

*Only counting paving and dimension stones

Investment thesis 2: At forefront of Vietnam’s growing wooden furniture exports

61

Source: International Trade Center, Japan External Trade Organization, VCSC

Global wooden furniture export market shares of

Vietnam and China during 2018-2018

0%

5%

10%

15%

20%

25%

30%

35%

40%

0%

2%

4%

6%

8%

10%

12%

Vietnam (LHS) China (RHS)

-

2,000

4,000

6,000

8,000

10,000

12,000

Total cost of a manufacturing worker in Asia-Pacific in

2018 (USD per year)

• PTB is at the forefront of the wooden furniture export industry thanks to its scale and track record in product quality and

wood origin. In 2018, PTB accounted for nearly 1% of Vietnam’s furniture exports, per our estimate, and was listed as

one of Vietnam’s most trustworthy wood exporters in 2017 by the Ministry of Industry and Trade.

Investment thesis 3: Riding on Vietnam’s fast-growing car consumption

62

Source: PTB, VAMA, VCSC

Toyota Vietnam’s sales volume by region and

PTB’s share in 2018

PTB’s auto revenue and Toyota’s sales volume in

central Vietnam (2014-2018)

• PTB currently owns two Toyota showrooms in Binh Dinh and Da Nang (central Vietnam).

• We currently expect passenger car sales in Vietnam will grow more than 20% per annum through 2021.

• Toyota is the top car brand in Vietnam, premised on its brand equity, wide range of models and extensive distribution

network.

3%9%

38%

50%

PTB

Others in Central

North

South

0

2,000

4,000

6,000

8,000

10,000

0

300

600

900

1,200

1,500

1,800

2014 2015 2016 2017 2018

PTB's auto revenue (LHS)Toyota's sales volume (RHS)

VND bn unit

Investment thesis 4: Attractive valuation against 2018-2021F EPS CAGR of 23%

63

PTB’s TTM PER during 2015-2019VCCS’s forecasts for PTB’s gross profit during 2019-2021F

(VND bn)

• PTB is planning a foray into real estate in H2 2019. We estimate PTB’s first residential project will contribute 14% to our

2021F NPAT-MI forecast, but there are potential cyclicality and execution risks.

• Downside risks to our positive view on PTB: slowdown in domestic construction activity; potential tariffs on Vietnamese

wooden furniture, especially by the US; sluggish real estate execution.

Source: PTB, Bloomberg, VCSC

Gross profit

CAGR

–

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2018 2019F 2020F 2021F

Stone Wooden furniture

Auto dealership Real estate

23% EPS CAGR

30%

14%

15%

8.1

8.5

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Jan 15 Jan 16 Jan 17 Jan 18 Jan 19

TTM PER Five-year average

Five-year weighted-

average peer TTM

PER: 10.7

2019F PER: 7.9x




Vinh Hoan Corp (HSX: VHC)

World’s leading pangasius fish exporter

September 2019

64

Investment thesis 1: Best of breed in Vietnam’s monopoly pangasius export market

65

• VHC is the world’s largest pangasius

(Vietnamese catfish) exporter with a

global market share of ~17% in 2018.

• It has a long track record in product

quality, traceability and regulatory

compliance, which is demonstrated by its

~50% market share in the US.

• The company is riding on rising

pangasius demand amid limited wild-

caught whitefish and consolidation of the

pangasius value chain.

• New free trade agreements (especially

the upcoming VN-EU FTA), a potential

pork shortage following ASF outbreaks in

China and the US’s new tariffs on

Chinese whitefish are potential boons to

pangasius demand and VHC.

Global pangasius export

market share (2018)

Vietnam, 94%

Global pangasius exports by

country (2018)

Global seafood production by

capture and aquaculture (mn tonnes)

89.5 90.4 93.2

66.4 83.6 93.6

0

50

100

150

200

2012 2017 2030F

Capture Aquaculture

0.32

0.16 0.14

0.0

0.1

0.2

0.3

0.4

0.5

US EU China

2010 2017

Pangasius consumption per capita in

2010-2017 (kg)

Source: Worldbank, FAO, ITC, VASEP,

Agromonitor, NOAA, VCSC estimates

VHC17%

TTM 4.4x

8.0x

3

6

9

12

15

18

TTM PER 5-year average

Investment thesis 2: Solid earnings outlook and attractive valuations

66

We forecast a 9% EPS CAGR over 2018-2021F driven by a 10%

volume CAGRCheap valuation compared to historical average

2019F PER: 4.7x

Source: VHC, Bloomberg, VCSC

VND

20.0%

20.5%

21.0%

21.5%

22.0%

22.5%

0

5,000

10,000

15,000

20,000

25,000

2018 2019F 2020F 2021F

VHC's reported EPS (LHS) VHC's GPM (RHS)

Content

67

Other notable stocks

VTP, VNM, QNS, FRT

68




Viettel Post (UpCOM: VTP)

Riding on Vietnam’s e-commerce boom

September 2019

Investment thesis 1: 2nd leading postal company with large e-commerce exposure

69Source: VTP, Ministry of Information and Communication, VCSC

VN Post, 31.9%

Viettel Post, 23.0%

DHL-VNPT, 10.3%

EMS, 7.5%

Lazada Express,

6.6%

Others, 20.7%

E-commerce-related delivery

57%

Non-E-commerce

delivery and other services

31%

Trading12%

VTP’s 2018 revenue by segmentVietnam’s postal market shares in 2017

• VTP is the 2nd largest postal company in Vietnam with a market share of 23% in 2017, per the Ministry of Information and

Communication.

• VTP has one of the most extensive postal outlet networks in Vietnam with 1,300 post offices and 6,000 drop-off points, only

behind Vietnam’s national postal company – VN Post.

• As a subsidiary of Viettel Group, which is the largest telco in Vietnam with 2018 revenue of USD10bn, VTP receives strong

support from its parent company regarding manpower, facilities and technology.

Investment thesis 2: E-commerce has ample growth headroom in Vietnam

70Source: National Bureau of Statistics of China, Google & Temasek, GSO, Nielsen, U.S. Census Bureau, VCSC

Share of e-commerce in retail sales in China during 2007-2018

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Emerging stage

Share: < 1%

Growth: >50%

Developing stage

Share: <10%

Growth: 20-30%

Developed stage

Share >10%

Growth: <20%

Vietnam’s current

level: ~2%

• According to Google and Temasek, Vietnam’s B2C e-commerce GMV amounted to USD2.8bn in 2018 and is expected to

record a 27% CAGR to reach USD25bn by 2025.

• Per our estimate, e-commerce accounted for just 2.0% of Vietnam’s total retail sales in 2018, compared to China’s 18.4%

and the USA’s 9.9%.

Investment thesis 3: Positive management guidance for 2018-2024

71

VTP’s profit before tax during 2016-2024G based on company guidance

Source: VTP, VCSC

78% 45% 64% 36% 36% 28% 24% 19% 14%

0

200

400

600

800

1,000

1,200

1,400

1,600

2016 2017 2018 2019G 2020G 2021G 2022G 2023G 2024G

PBT growth

PBT(VND bn)

Continual investments in technology to bolster growth

• In July 2019, VTP rolled out a new on-demand delivery app called MyGo to outsource a portion of its last-mile operation.

• Also in July 2019, VTP launched an ecommerce platform named Voso.vn, which is aimed to support its merchant clients

that are doing business on Facebook.

• VTP is upgrading its sorting centers by applying automation. The current sorting capacity of VTP’s automatic conveyor belts

amounts to ~36,000 parcels per hour per line, which is the highest in Vietnam, per VTP.




Vinamilk (HSX: VNM)

Dominant dairy player but valuation looks full against moderate growth

September 2019

Investment thesis 1: Market volume to grow 3.5%-4% p.a. over the next ten years

73

21 22 28 33

74 76

Vietnam Malaysia Thailand China Japan Korea

Dairy consumption per capita in Vietnam vs Asian peers in 2017 (kg)

2005: 21 kg 2005: 22 kg

We expect Vietnam’s dairy market to post annual volume growth of 3.5%-4.0% over the next ten years

✓ Dairy consumption per capita in China and Thailand grew 2.5%-3.5%/year from 2005-2017

✓ Vietnam has population growth of 0.5%-1%/year

Source: EMI, VCSC estimates and compilations

Investment thesis 2: VNM is the prime beneficiary of Vietnam’s dairy consumption

74

51%

80%85%

40%

22%

59%

42%36%

81% 83%

Liquid milk Infant formula(volume)

RTD infantformula (volume)

Condensed milk Spoon yogurt

2014

2015

2016

2017

2018

VNM’s market share across categories

Drivers for market share gain

✓ Active new product launches; pioneer in bringing higher-quality products to consumers (e.g., organic milk & A2 milk)

✓ Top-of-mind brand name

✓ Extensive nationwide distribution network that spans 270,000 POS

✓ Significant scale advantage, enabling VNM to overwhelm smaller competitors with strong marketing activities

Source: VNM

Investment thesis 3: Valuation looks full vs growth outlook

75

Comparable peers

Source: Bloomberg (data as of August 20, 2019)

(USD mn)

CompanyTicker Mkt cap

TTM Net

Sales

Y-o-Y

%

TTM

NPAT

Y-o-Y

%

Debt/

Equity %ROE % ROA%

TTM

P/ELQ P/B

China Mengniu Dairy 2319 HK 16,423.2 10,435.7 14.7 460.4 48.6 48.3 12.7 4.9 37.9 4.6

Inner Mongolia Yili

Industrial Group 600887 CH 24,629.6 12,302.0 15.5 985.9 3.9 5.8 24.7 13.0 26.4 6.6

MEIJI Holdings 2269 JP 10,581.7 11,315.8 1.7 533.7 -3.4 21.0 11.6 6.1 18.1 2.0

Bright Dairy & Food 600597 CH 1,885.2 3,169.9 -2.0 52.1 -38.6 69.4 6.3 2.0 38.2 2.4

PT. Ultrajaya Milk

Industry & Trading ULTJ IJ 1,220.6 403.0 N/A 58.7 N/A 2.2 18.1 14.6 20.4 3.4

Dutch Lady Milk

Industries BerhadDLM MK 982.2 256.9 -3.1 31.7 7.6 14.4 93.0 30.4 31.9 29.5

Henan Kedi Dairy 002770 CH 388.2 192.6 1.4 20.2 6.4 67.9 7.8 4.3 19.8 1.5

Median 1,885.2 3,169.9 1.5 58.7 5.2 21.0 12.7 6.1 26.4 3.4

Average 8,015.8 5,439.4 4.7 306.1 4.1 32.7 24.9 10.8 27.5 7.2

Vinamilk VNM VN 9,230.7 2,344.4 5.9 453.6 7.6 4.9 38.8 27.6 22.6 7.6

We project VNM’s EPS CAGR over 2018-2021F to slow down to 6% vs 10% during 2015-2018




Quang Ngai Sugar (UPCoM: QNS)

Management selling pours cold water on re-rating hopes

September 2019

77

Soymilk & other

F&B businesses(1)

Sugar & biomass

7081,291

2,0653,295

4,7055,732

6,9708,084

-484-1,258 -1,569

-2,467

-4,565-5,433-5,998

-7,031

2012 2013 2014 2015 2016 2017 2018 2019F

Accumulated since 2012Unit: VND bn

Accumulated NPAT Accumulated capex

Contributed 80%-95% to

QNS’s NPAT between 2014 and 2019F

Responsible for the majority of capex

between 2014 and 2019F

Source: QNS, VCSC, (1) includes beer, confectionary, mineral water

Investment thesis 1.1: Ineffective capital allocation

78

1,881 2,1153,020

3,783 3,683 3,899 3,863

40.3% 39.6% 40.5% 40.0% 40.2% 39.6%

43.6%

25.0%

30.0%

35.0%

40.0%

45.0%

01,0002,0003,0004,0005,0006,0007,0008,000

2012 2013 2014 2015 2016 2017 2018

Soymilk revenue (VND bn) Soymilk GPM

1,525 1,828 1,6532,387

1,4661,867

2,422

11.3% 12.6%9.8%

13.8%19.1%

2.7%

12.8%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2012 2013 2014 2015 2016 2017 2018

Sugar revenue (VND bn) Sugar GPM

Soymilk✓ Consumer staple product that generates high profit margins.

✓ 84% market share in the branded soymilk market in 2018.

✓ Strong cash generation.

✓ Reactivated product launching and modernized marketing

campaigns since late 2018 should bolster top-line growth.

Sugar✓ Volatile, low-margin commodity business.

✓ Upcoming tariff removal (starting 2020) under the ATIGA

could further expose Vietnam’s sugar industry to

international competition.

✓ Capital intensive.

Source: QNS, VCSC

Ineffective capital

allocation

35.2%

20.0%

23.8%

32.8%

29.4%

18.1% 18.9%

15.1%

2012 2013 2014 2015 2016 2017 2018 2019F

QNS's ROIC

Investment thesis 1.2: Ineffective capital allocation

79

6

7

8

9

10

11

12

13

Jan-1

8

Feb

-18

Ma

r-18

Apr-1

8

Ma

y-1

8

Jun-1

8

Jul-1

8

Aug-1

8

Sep-1

8

Oct-1

8

No

v-1

8

De

c-1

8

Jan-1

9

Feb

-19

Ma

r-19

Apr-1

9

Ma

y-1

9

Jun-1

9

Jul-1

9

Aug-1

9

QNS’s historical TTM PER

20,000

25,000

30,000

35,000

40,000

45,000

Jan-1

8

Feb

-18

Ma

r-18

Apr-1

8

Ma

y-1

8

Jun-1

8

Jul-1

8

Aug-1

8

Sep-1

8

Oct-1

8

No

v-1

8

De

c-1

8

Jan-1

9

Feb

-19

Ma

r-19

Apr-1

9

Ma

y-1

9

Jun-1

9

Jul-1

9

Aug-1

9

QNS’s historical stock price (VND)

Source: Bloomberg, VCSC compilation,

Investment thesis 2: Management selling pours cold water on re-rating hopes

-0.7

-1.1

-0.5

-0.6

-3.7-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

Se

p-1

9E

Au

g-1

9

Ju

l-19

Ju

n-1

9

Ma

y-1

9

Ap

r-19

Ma

r-19

Feb-1

9

Ja

n-1

9

De

c-1

8

No

v-1

8

Oct-1

8

Se

p-1

8

Au

g-1

8

Ju

l-18

Ju

n-1

8

Ma

y-1

8

Ap

r-18

Ma

r-18

Feb-1

8

Ja

n-1

8

Monthly and accumulated insider buying/selling since 2018 (unit: million shares)

Monthly insider buying (selling)

Accumulated insider buying (selling) since Jan 2018

VCSC’s 2018-2021F NPAT forecasts

80

Projected NPAT breakdown by segment between 2018-2021F

69% 82%76%

78%

12%

10%

9%19%

18%

14%

13%

0

200

400

600

800

1,000

1,200

1,400

1,600

2018 2019F 2020F 2021F

Soymilk Sugar & biomass Others F&B businesses

VND bn

+10% CAGR

-7% CAGR

-3% CAGR

Source: VCSC


FPT Retail (HSX: FRT)

Capable retailer trying to build its next leg of growth

September 2019

Investment thesis 1: A young but proven retailer

82

FRT is the youngest company among the leading mobile phone retailers in Vietnam and it has quickly risen to

the second position

Number of mobile shops among key retailers in

Vietnam as of June 2019

Source: FRT Source: VCSC

50

100

163

252

385

473

533

2012 2013 2014 2015 2016 2017 2018

FRT’s year-end store count since inception

1,849

558

298184

MWG FRT Viettel VienThongA

Investment thesis 2: Potential long-term growth from pharmacy

83

Store count of major pharmacy chains in Vietnam as of

June 2019

Nationwide

>50,000

Monthly sales/store by pharmacy chain (USD thousand)

FRT scores a good head-start in pharmacy with acquisition of Long Chau

✓ Long Chau is a top-of-mind pharmacy chain in HCMC when it comes to prescription drugs

✓Extensive product assortment (>5,000 SKUs), which makes Long Chau a one-stop shop for customers

Source: VCSC compilations Source: FRT, VCSC estimates

200

5934

12 10 9

Pharmacity Phano Long Chau An Khang ECO Minh Chau

74

28 27 25

18

Long Chau Pharmacity An Khang ECO Phano

Disclaimer

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I, Phap Dang, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly,

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VCSC Contacts

85

RESEARCH INSTITUTIONAL SALES

Head of Research Head of Institutional Sales

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