BVH – Update on 2019 results

In 2019, Circular 01 has made a positive impact on BVH's insurance business. However, overall profit fell slightly due to the gloomy stock market. The COVID-19 pandemic, if prolongs, may adversely affect the operation of both insurance and investment businesses. Although the company has received additional capital from Sumitomo, the amount of new capital is relatively small, while the Ministry of Finance has not shown any moves related to reducing its ownership in BVH, the growth of insurance premiums in coming years may be difficult to maintain high rates as the period 2015-2018.

VN30 review in April 2020

The Ho Chi Minh City Stock Exchange will review the VN30 basket in April and make adjustments on the first Monday of May. According to statistics of Rong Viet, the weights of average 12-month freefloat market capitalization of stocks in the basket of VN30 is much different from the current weights. Accordingly, we estimate that weights of ROS, VRE, POW and SSI will be increased while weights of VPB, STB and FPT will be reduced in the VN30 basket. Currently VFVN30 ETF is the largest fund that is mimicking the VN30 index. Therefore, these stocks that will be bought / sold the most in the upcoming portfolio rebalancing.

PHR - Results in 2020 depend heavily on land transfers

In 2020, the company estimated the parent company's revenue to reach VND 2,460 billion, up 52% ​​YoY and the profit before tax of VND 1,148 billion, up 115% YoY. We believe that the planned profit in 2020 is achievable as the legal issues of the land handover from PHR to NTC has been solved, so that the company is likely to receive and book fully VND 865 billion from NTC. We expect that in the future, the land transfer to VSIP will also be completed, from which the compensation money of VND 898 billion will be booked in 2021.

PNJ – Conservative target for 2020 due to the Covid crisis

In the AGM documents just published, PNJ set an unsurprisingly conservative target for this year: 12% growth in revenue and 13% growth in PAT. This is in the context that the Covid crisis will significantly hit jewelries retailers as shoppers are staying away from public places to avoid infection, while also limiting their spending in consumer discretionary like jewelries.

Gross margin is expected to be flat in 2020, even though it has been improving significantly in recent years (+520 bps in the last 4 years and +130 bps in 2019) due to increase in retail jewelry contribution and higher margin items. We believe that is because of the increasing expansion into Tier 2 and Northern regions which have different consumer behavior. PNJ plans to open 31 new stores in 2020, the same pace as 2019 (32 new stores).

Update on Global GDP Growth – Slowdown/Recession/Crisis

In the past few days, there have been social and economic upheavals due to the coronavirus outbreak outside China. The endless increase in cases and death forces policy makers to hold emergency meetings which are highlighted by sharp interest rate cuts and the restart of quantitative easing. However, markets are shaky and negatively responding to the out-of-expected level of rate cuts. The most important question is whether the world will suffer an economic slowdown, recession or in the worst case a crisis.

HDB - Results Update Report 4Q2019

We note that HDB has achieved a better-than-expected interest income expansion thanks to impressive NIM improvement in 2019, but also hold the view that the contribution from service and other income to operating income should be more visible. For 2020-2021, we expect that interest income momentum would remain decent while service income would escalate due to the boost of bancassurance activities. On top of that, both operating expenses and provision charges should be well under control, supporting a stable earnings growth in the longer term.

HDB is currently trading at VND 21,300, equivalent to an attractive 2020f PBR of 0.9x considering the potential earnings growth and ROE of roughly 20% in the next five years. With a lower forecast of 2020 credit growth and NIM, and a higher forecast of provision cost (than they were in our 2020 Strategic report) due to potential impact of the virus epidemic, we reduce HDB’s target price to VND 29,000. This is still equivalent to a potential upside of 36% from the closing price of 18^th Mar 2020, thereby upgrading the stock to a BUY recommendation.

BID – Update on 2019 Business Performance and 2020 AGM

The bank has set a moderate earnings growth target of 16.4% in 2020, with the plan to finish its restructuring within this year as well as investing more resources on core banking and digital projects. We hold our positive view on BID’s outlook in medium term based on a stronger capital adequacy coupled with the clearance of legacy bad debts and the support from strategic partner. We forecast NPAT CAGR to reach 30% in 2020 – 2022 and ROE to approach 20% in the next three years.

Considering the possible negative impacts from the virus epidemic in this year, we reduce credit growth forecast by 2ppt and NIM forecast by 5bps, thereby revise down BID’s target price to VND 45,000. This is equivalent to a potential upside of 33% from the closing price of 17^th Mar 2020, reiterating our BUY recommendation. Downside risk includes the stronger-than-expected impacts on credit growth, NIM and asset quality due to the epidemic. Upside risk includes one-off earnings from BIDV MetLife divestment and exclusive bancassurance agreement.

PPC - Result update report

Rong Viet Securities Corporation hereby presents the Result Update Report on Pha Lai Thermal Power Plant JSC (HOSE: PPC) with the overall opinion as follows:

BCF - Brief note

Rong Viet Securities Corporation hereby presents the Brief Note on Bich Chi Food Corporation (HNX: BCF) with the overall opinion as follows:

Residential industry update

The real estate market faces headwinds in the early part of 2020. The Coronavirus outbreak will have a heavy impact on the economy, especially for those industries related to trade and transportation. We believe that the impact on the residential industry is not clear in the short term, as the demand depends on the long-term homebuyer’s plan. However, the situation is likely to be getting worse if the Coronavirus derails the economy, due to the highly cyclical nature of the real estate industry. Moreover, the percentage of buyers investing and speculating in projects in Vietnam is also relatively high, leading to the negative sentiment.

Impacts of Covid-19 on Logistics Firms

Covid-19 epidemic has dampened cargo transport activities in 2M 2020. Accordingly, freight volume has significantly slowed down compared to the same period last year. 2M 2020 freight transport reached 297.3 million tons, up 6.1% YoY (the same period in 2019 increased by 8.7%) while freight rotation reached 56.6 billion tonne kilometers, increased by 4.3% (the same period in 2019 increased by 6.4%).

China and the coronavirus

Interestingly the MSCI China Index has outperformed the MSCI World Index by 8.6% in the past two weeks. China has been outperforming because there is a growing sense that it has seen the worst of the coronavirus.