Asian currencies are struggling under the pressure of the rising US dollar
31-12-2024
: VDS
: Macroeconomics
: Nguyen Vu Toan Vo
Tags:
- With the conclusion of the interest rate normalization phase, the Fed embarks on a new path to balance growth objectives and inflation control
- Asian currencies are struggling under the pressure of the rising US dollar
Fertilizer industry – Domesitc fertilizer selling prices are expected to decrease slightly compared to the world selling price in 2025
30-12-2024
: DCM, DPM, BFC
: Fertilizer
: Hien Le
Tags:
- Domestic fertilizer selling prices are expected to decrease according to the downward trend of world fertilizer prices. However, we expect domestic fertilizer prices to fall lower than world fertilizer prices, specifically, domestic Urea/DAP/NPK fertilizer prices will decrease by 3%/2%/2% YoY, respectively.
- According to the World Fertilizer Association (IFA) and the World Bank, the world selling price of Urea/DAP/Potassium fertilizer decreased by 7%/8%/3% YoY respectively due to the expected decrease in fertilizer demand from India and Brazil, combined with the decrease in the price of gas, coal and agricultural products (rice, rice).
- Domestic fertilizer prices are expected to decrease less than world fertilizers thanks to:
- (1) demand increases when the weather is favorable in the domestic market while agricultural product prices remain high.
- (2) domestic manufacturers increase selling costs increase to retain customers.
- (3) the VAT law is likely not to take effect directly in 2025 due to the need to wait for specific guidance decree information, so it has not helped businesses save costs.
- (4) the fluctuations in supply and demand of each type of fertilizer in the world are different, so the impact on each type of domestic fertilizer will be different.
- The gross profit margin of the fertilizer industry in 2025 is expected to increase thanks to oil prices falling faster than domestic fertilizer selling prices, while businesses remain the same or only slightly reduce selling prices. However, the increase in selling costs will prevent the net profit margin from increasing sharply.
Perspective on freight rates from geopolitical tensions and the US - Asia oil & gas transportation route
27-12-2024
: PVT, PVP, PDV
: Oil & Gas
: Huong Le
Tags:
- Geopolitical tensions show no signs of easing. In the past month, cargo volume through the Suez Canal has dropped by 74% compared to 2023, totaling only 1.2 million tons. In contrast, throughput through the Cape of Good Hope has increased by 65%, reaching nearly 6.0 million tons. Houthi attacks on Israel in the Red Sea may lead to higher freight rates for oil tankers, while the transportation route remains longer. According to BIMCO forecasts, this tense situation is expected to continue into 2024, supporting maritime freight rates.
- Increased oil production under the Trump administration is likely to boost transportation flows from the U.S. Gulf to the Asia-Pacific region. The International Energy Agency (IEA) predicts that global oil supply will increase by 1.9 million barrels per day (mb/d) by 2025, while demand will rise from 840,000 barrels per day to 1.1 mb/d, primarily driven by the Asia-Pacific region.
- OPEC+'s maintenance of production cuts may help stabilize the oil market. In this context, Vietnamese shipping companies are expanding their operations to the U.S. and Europe, forecasting a continued positive outlook for the oil and gas transportation sector in the near future.
A review on the Vietnam’s monetary market in 2024
26-12-2024
: VDS
: Macroeconomics
: My Tran
Tags:
- The VND depreciates by about 4.8% in 2024.
- The SBV flexibly regulates the open market to balance the target of stabilizing interest rates and exchange rates.
- Interest rates in the primary market increase slightly, which is linked to the credit growth trend.
- Credit growth for 2024 is estimated at 16%, significantly higher than the increase in money supply
NLG – Sales in 2025 are estimated to have a slowdown
25-12-2024
: NLG
: Real Estate
: Giao Nguyen
Tags:
- For 2024, we estimate NLG's revenue and NPAT-MI to reach VND 5,398 billion (+70%YoY) and VND 173 billion (-64%YoY), respectively, mainly from the handover: 1/ Akari 2 project (VND 3,448 billion), 2/ Nam Long Can Tho project (VND 1,284 billion).
- Presales value in 2025 will slow down, estimated at VND 5,303 billion due to: 1/ projects estimated to be launched in the next year, mostly in satellite cities (Can Tho, Long An, Dong Nai,...), 2/ low-rise, high-value products need a lot of time to absorb.
- Based on the RNAV valuation method, the fair value of NLG is VND 39,000 per share. Combined with a cash dividend of VND 500 per share, the expected total profit is 9% compared to the closing price on December 25, 2024.
Textile Industry – Slowdown in textile export revenue in 1H2025
23-12-2024
: TNG, MSH, TCM, STK
: Textile & Garment
:
Tags:
- In November 2024, the textile industry's total export revenue reached USD 5.8 billion (+11% YoY, flat compared to the previous month’s), with textiles and footwear accounting for 52% and 37%, respectively.
- For textiles, export values have slowed down across key markets such as the US, Europe, South Korea, and China due to most fashion brands increasing inventory during the peak season from June to August 2024. Specifically, export values to Japan market have declined by 2% YoY.
- We expect textile export revenue to see low single-digit growth in 1H2025 because retailers have little incentive to increase inventory, and domestic companies are slowing down their procurement of raw materials.
EU-GMP standard in pharmaceutical industry – benefits and challenges
20-12-2024
: IMP
: Pharmaceuticals, Biotechnology
: Quyen Nguyen
Tags:
- Within the GMP standards, WHO-GMP is the most common in Vietnam. However, it is no longer considered reliable due to its lack of in-depth technical criteria and inconsistent evaluation and validation standards across countries. The EU-GMP, Japan-GMP, and PIC/S-GMP standards are now regarded as more reliable and become benchmarks in the "standard-raising" race in Vietnam.
- Applying high standards such as EU-GMP offers many benefits - higher revenue and profit, export opportunities, more efficient and safer operations, improved brand positioning, and competitive advantages in bidding for the ETC channel. However, it also presents challenges for companies to comply with these standards - significant investment in terms of capital and time, and maintaining EU-GMP standard requires both higher commitment and advanced management capabilities.
- Companies with existing production lines certified to EU-GMP standard or equivalent will have a competitive advantage in ETC channel bidding as the government prioritizes high-quality domestically-produced drugs. Within listed companies, the followings benefit: IMP, DHG, PME. Besides, DBD has several projects focused on EU-GMP upgrades while DHT has completed a new pharmaceutical plant in the Hoa Lac High-Tech Park (Hanoi) based on Japan-GMP standard and waiting for evaluation
OCB – 2024 Business Results Show Sharp Decline and Weakened Asset Quality
19-12-2024
: OCB
: Banking
: Trang To
Tags:
- OCB's 9M-2024 pre-tax profit (PBT) reached VND 2.5 trillion (-35% YoY), completing only 30% of the initial full-year PBT target of VND 6.8 trillion. The sharp decline was mainly due to a 54% YoY drop in non-interest income and a surge in provisioning expenses (+98.7% YoY).
- Q4-2024 PBT is projected to reach VND 614 billion, a significant improvement from Q3's result of VND 440 billion and a strong increase compared to the same period last year (VND 220 billion). Net interest income will be the main growth driver, with expected credit growth of 14.7% YTD in Q4 (a sharp rise from Q3), though NIM will narrow to 2.9%. Meanwhile, provisioning expenses are expected to ease, declining 21.5% YoY, with Q4's credit cost ratio at 0.4% (Q4-2023: 0.8%).
- OCB's 2024F PBT is estimated at VND 3.1 trillion, down 23.5% YoY due to the following factors: (1) a loss of VND 170 billion from investment securities trading, (2) a significant increase in provisioning expenses (+36.3%), and (3) continued weakness in service income (-29.1%).
- We will update the valuation results in the next report.
PC1 – Bright outlook as investment in power sources and transmission lines accelerates
18-12-2024
: PC1
: Utilities
: Thang Hoa
Tags:
- The power construction segment continues to maintain stable, even though investments in power generation projects trail the Power Development Plan 8’s guidance. In Q4/2024, PC1 secured several power construction contracts of which total value was over VND 2,300bn (USD 91mn).
- We forecast stellar 2024F results with revenue of VND 9,596bn (+23% YoY; USD 381mn) and NPAT of VND 486bn (+247% YoY; USD 19mn).
- For 2025F, we project stable results with revenue of VND 9,144bn (-5% YoY; USD 363mn) and NPAT of VND 518bn (+7% YoY; USD 21mn). While prospects for PC1’s construction, power, and real estate segments are brighter, we expect earnings would edge up by a single-digit due to the underperformance of nickel mining segment.
- Based on a Sum-of-the-Parts (SoTP) valuation approach, we have an ACCUMULATE rating for PC1 shares with a target price of VND 26,500 per share (USD 1.05), which is equivalent to a 2024F forward P/E of 17x and an expected return of 17% based on the closing price on December 17th, 2024
The trend of liquid milk in Vietnam – The foothold of 100% fresh cow's milk enterprises is increasing
17-12-2024
: VNM
: Food, Beverage & Tobacco
: Hung Nguyen
Tags:
- The liquid milk market includes 3 types: UHT fresh milk, HTST fresh milk, reconstituted milk. People in developed countries mainly consume fresh cow's milk instead of reconstituted milk, which is common in poor/developing countries.
- In Vietnam – a developing country, we have noticed an increasing trend in the consumption of fresh cow's milk products when consumers are increasingly strict with the origin of production materials and product quality, believing that reconstituted milk products have gone through many stages of processing, so the nutritional content decreases. Milk producers have therefore shifted to producing more fresh milk.
- In terms of dairy stocks on our watch list – Vinamilk (HSX: VNM), the company is not out of the trend of shifting from reconstituted milk to fresh milk from cows with GreenFarm products, 100% Organic..., with the increase in the number of cows over the years. However, VNM's gross margin still depends heavily on the development of raw milk powder, because the amount of fresh milk ingredients from self-operated farms contributing to VNM's production structure is not high.
- In addition, the use of both self-exploited cow's milk and cow's milk imported from farmers makes the risk of liquid milk quality uneven, implying that it is difficult to create a competitive advantage in terms of taste and origin of milk in the consumer insights in our view. This has contributed to the decline in the market share of VNM liquid milk in recent years.
- In the coming years, VNM will continue to make efforts to increase the source of fresh milk from cows as a way to regain the lost market share in the liquid milk segment. We recommend investors to closely monitor the development progress of this milk source as this is a prerequisite for the Company's growth prospects in the medium term
2024 Steel industry – Output sales to recover
16-12-2024
: HPG, HSG, NKG
: Materials
: Thach Lam Do, CFA
Tags:
- 2024 marks the recovery in output of Vietnam's construction steel market, with consumption recorded significant growth and reached 15.8% YoY, supported by the recovery of civil and infrastructure construction activities. Flat steel products for construction activities (galvanized steel sheets, steel pipes) maintained output growth, in addition to domestic demand, these products also recorded demand from foreign markets (major markets including ASEAN, EU and the US).
- Hot-rolled coils recorded the same output as in 2023, in which the domestic market (accounting for 62% of total output) faced competitive pressure from China's HRC imported into Vietnam; the export market is also facing difficulties due to trade remedy activities in the EU market in 2H2024.
- To address the risks related to China's increasing steel exports, the Ministry of Industry and Trade has taken anti-dumping investigation measures to protect domestic manufacturers, with: 1/ Decision No. 1535/QD-BCT (AD19) on galvanized steel products originating from China and Korea; 2/ Decision No. 1985/QD-BCT (AD20) on hot-rolled steel products originating from China and India. In the base case scenario, we assume that dumping duties (temporary) will be imposed on flat steel products (HRC, galvanized sheet) in Q1/2025.
Update on Vietnam’s trade in 11M2024
13-12-2024
: VDS
: Macroeconomics
: My Tran
Tags:
- Export growth slows down in Q4/2024.
- Review of growth trends of key export items 2024 and prospects for 2025
31-12-2024
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