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), VNM has been introducing new high-quality fresh milk products from purebred farm cows, such as GreenFarm, 100% Organic lines, leveraging the increasing size of its cattle herd over the years. Additionally, VNM has merged with MCM, a heritage dairy brand established in 1958, which operates a herd of nearly 27,000 cows in northern Vietnam. However, VNM's gross profit margin still depends heavily on the development of raw milk powder, because VNM has a baby formula industry, so part of its product portfolio is still affected by SMP developments.
- 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
PVT – Expanding fleet capacity in positive industry outlook
12-12-2024
: PVT
: Oil & Gas
: Huong Le
Tags:
- PVT plans to expand its fleet for 2024-2025. For 11M2024, the company has added 7 new vessels, bringing its total fleet size to 56, including 47 owned ships and 9 bareboat chartered vessels. We estimate that PVT will dispose of older vessels to reinvest in younger ships, aiming to increase profits.
- The oil tanker market remains positive, with expectations that charter rates for 2024-2025 will stay higher over the 2022-2023 period. Although some segments are predicted to experience oversupply due to an increase in vessel availability, potentially leading to lower rental rates, we expect that PVT will maintain its operational efficiency. This is primarily due to its advantage of keeping management and operational costs 10-15% lower than foreign competitors and contributions from its newly added vessels.
Understanding AI Factories: Definitions, Roles, Benefits, and Challenges
11-12-2024
: FPT
: Technologies
: Tung Do
Tags:
- AI Factory is a concept referring to a comprehensive platform for large-scale data processing and training AI models, based on the hardware and software infrastructure developed by Nvidia.
- AI factories play a crucial intermediary role in the global AI value chain, connecting input elements (hardware, software, and data) with output applications built on AI models.
- AI factories, instead of producing physical products like industrial manufacturing plants, create AI models and services that can be applied across various industries and sectors.
- As the value creation hub of the AI industry, AI factories hold significant short-term and long-term potential in the context of the rapidly growing demand for large-scale data processing infrastructure and AI model training. This growth is expected to accelerate in line with the overall AI industry's expansion. According to Infinitive Data Expert, the AI market is projected to reach USD 1.6 trillion by 2030, expanding at a CAGR of 39% from now until 2030.
- Investing in AI factories faces barriers such as very high initial investment costs, scarcity of specialized human resources, U.S. government regulatory restrictions on the export of high-capacity AI equipment, Technological Obsolescence risks, and dependence on a limited number of suppliers. To mitigate financial pressure and limit these risks, technology service companies often establish strategic partnerships with major partners like Nvidia, AWS, or other tech giants and divide the AI factory development process into phases.
27-12-2024
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