PTB 2019 updates

PTB posted its 2019 results with net sales of VND 5,552 Bn (+18% YoY) and NPAT of VND435 Bn (+13% YoY), which were rather in line with our expectations of VND5,552 Bn for net sales and VND475 Bn for NPAT. As of results, the company fulfiled 95% profit guidance in 2019.

SCS – Update on 2019 results and 2020 forecast

SCS posted its 2019 results with net sales of VND748 Bn (+11% YoY) and NPAT of VND503 Bn (+15% YoY), which were rather in line with our expectations of VND753 Bn for net sales and VND502 Bn for NPAT.

VPB – Updates on 2019 Business Performance

The parent bank acted as growth driver in 2019 with a 38.2% YoY core earnings growth. FE Credit also maintain its recovery with a decent credit expansion (+13.8% YoY), NIM improvement (from 28.4 to 31.3%), CIR improvement (from 32.1 to 31.3%), and reasonable provision expense growth (15% YoY).

FE Credit has just received SBV’s approval to transfer into a joint stock company. This is a step towards its IPO/placement plan, expected to complete within this year, which can act as a driver for stock price in near term.

The stock has performed well with a 40% increase YTD to VND 28,050/share (PB 2020f of 1.2x.), reaching our target price set in Strategy Report 2020. Considering the bank’s potential high growth, we raise VPB’s target price to VND34,000/share, equivalent to a 21% upside compared to the current market price. We thereby recommend to BUY the stock.

Which opportunities for DRC in 2020?

The production of radial tires is on an uptrend. The production scale, price and product quality of FDI tire manufacturers is outperforming domestic tire enterprises. Therefore, exporting is an opportunity for DRC to maintain its growth. The markets which are currently applying additional import duties in order to limit Chinese tires, are DRC’s existing markets such as the US, Brazil and India. In 2020, we believe that DRC will accelerate the negotiation process with European partners in order to take advantage of restricted Chinese goods as well as the reduced import tax when the FTA Vietnam - EU comes into effect. The short-term demand from existing markets such as the US, Brazil and the potential market - EU – will allow DRC to operate at its highest capacity. Thereby, the company can reach its planned revenue and profit.

Policies in the era of nCoV-2019

Economists have recently revised their forecast for Vietnam and other Asian countries economic growth. Estimation are broad but in general have been downgraded. The main points are 1) high ambiguity and 2) sluggish outlook. The most important questions policymakers seem to be interested in are what economic stimulus packages should be put forward under the issue of the Coronavirus epidemic, trade tensions and endless geopolitical conflicts. In this note we highlight some of the ideas put forward by Asian countries and Vietnam.

Steel Production and Consumption in 2019

In 2019, domestic steel consumption grew at the same rate as the construction industry, at roughly 9%. However, there were significant differences in the growth rate of each steel segment. Domestic coated steel grew at 12.5%, due to an increase in FDI by 7%. Domestic construction steel sales went up by 6.8%. slighly better in comparison with 2018 (6.6%). However, the steel pipe segment’s growth rate went down from 5.7% in 2018 to 2.3%.

GMD – Lackluster Q4/2019 Results

GMD is trading at its three year low of VND 19,900 per share, 31% lower than the target price in our 2020 Strategy report of VND 26,000 per share. Previously, for 2020, we forecast revenue of VND 2,951 Bn (+ 12% YoY) and net profit of VND 528 Bn (+ 3% YoY). We are revising our forecast as we see potential downside in 2020F container throughput. This is because (1) GMD lost a shipping line in Hai Phong by Q4/2019 and (2) Vietnam's import and export trading activities are expected to slow down due to the corona epidemic. In addition, we also note that profit growth from associates in 2020 will be significantly lower than in 2019, due to the larger loss from Gemalink deep-water port joint venture (to be operational by Q4/2020 in Cai Mep, Vung Tau) and profit growth from SCSC is likely to slow down.

REE – Building up for the long-term

In our Strategic Report 2020, we mentioned that REE would maintain the same level of revenue and profit as in 2019. In recent updates, we have reiterated our positive view on the stock.

PVD – 4Q2019 results update and 2020 forecast

PVD announced its 4Q2019 results with sales of VND1,389 bn, down 1.2% YoY as the trading activity slumped. Drilling services was up and well service remained stable.

HDG – To exceed the 2019 plan and awaiting for 2020

Ha Do Group announced its business results for 2019 with revenue of VND 4,327 billion (+ 34%YoY) and net income of VND 842 billion (+ 33%YoY). The company has exceeded the year profit plan by 26%. The major contribution to the business results in 2019 was still the real estate segment, with an estimated share of 80%. The remaining profit was mainly from the energy segment. Specifically, the key drivers were contribution of new operational plant, namely Hong Phong 4 and the acceleration in deliveries of the Centrosa Garden project. Generally, business results were in line with our estimates.

MSH – Update on 2019’s Business Results

Generally, in the short run the firm’s main risk is the delay in delivery from fabric material suppliers in China under the negative impact of the Corona epidemic, as China is still its main material suppliers. It is likely that the firm has to increase its production and wage costs in order to meet the delivery time for fashion brands. However, this is still a good fundamental firm with high cash dividends maintained over the years, its stock price has also adjusted quite sharply since the peak of 2019 (mainly due to the impact of US-China trade war and the information of its large shareholder, FPTS registered to sell shares), we believe that investors can consider buying this stock when the nCoV epidemic has positive changes. For 2020, we still maintain our BUY recommendation for MSH with a target price of VND 60,000/share.

Rising Water and Temperature Levels : A Threat To Economic Stability?

In its recent “Global Risks Report 2020” published January 16, the rating agency Moody’s highlighted the repercussions on economic and social stability due to rising water levels and global warming. Certain countries are deemed more vulnerable, including Egypt, Vietnam and Surinam. As sea levels will probably rise by one to three meters by 2100, storms and floods will become more frequent, affecting the ecology of many countries. Developed  economies like the Netherlands and Japan are better prepared than less developed countries to respond to these challenges.