Rice prospects in 2020

Vietnamese rice will face difficuties in 2020. Production, demand and prices are expected to fluctuate or seesaw meanwhile the Government has not been able to find any new export markets. As a result, we have a reluctant view on the prospect of rice in the next coming year.

Vietnam’s Foreign Trade in 2019

According to Customs’ statistics, Vietnam’s total trade value, in the first 11 months of 2019, reached USD 473 Bn, up 8.1% YoY, lower than last year’s 12.9% YoY. Export revenue was estimated at USD 242 Bn, up 8.4% YoY, and imports were USD 232 Bn, up 7.7% YoY. The 2019 trade surplus is likely to be above USD 10 Bn, marking an all-time high in Vietnam’s trade history. Notably, the trade surplus rose USD 2 Bn in November, which added to FX reserves, which are now over USD 73 Bn.

Looking back to the four-year history of Bach Hoa Xanh

Late 2015 – early 2016: Initial experiment

The Gioi Di Dong chain was still in its “golden era” and Dien May Xanh was just starting to pick up. MWG was growing at 60% annually in revenue and profit. Foreseeing that the smartphone market would soon be saturated and consumer electronics would not be enough to carry the high growth for long, MWG’s management started to think about a new retail market that is big enough for their long-term growth prospect while still fragmented with no industry leader. Foods & FMCG retail was the answer and Bach Hoa Xanh – the grocery chain was born in late 2015.

The Possible Impacts of Some New Regulations on Banks’ Performance

By late 2019 or beginning of 2020, a number of new regulations on banking sector will come into effect. We estimate that the impacts of these documents could diverge between market players with state-owned banks facing more difficulties improving their NIM while the effects on private banks would be mixed.

VN30 review in Jan 2020

The Ho Chi Minh stock exchange will review the VN30 basket based on data at the end of Dec 2019. The results will be annouced on Jan 20, 2020 and will be applied on Feb 3, 2020.

Based on the price on Dec 13 and recent free float data from Fiinpro, we assume that POW and PLX will be added to the basket as their market caps are in the top 20 of the VNALLSHARE Index. Meanwhile, DPM will be deleted from the basket as its market cap fell out of the top 40. The question is whether HOSE will delete GMD or CTD since there can only be a maximum of 30 stocks in the basket. There is no specific rule to delete either one. Hence, the Index Committee will make the final call.

The biggest fund that tracks the VN30 Index is E1VFVN30. Based on the fund structure on Bloomberg, we calculated how much the fund may buy or sell stocks. POW will be bought the most by five million shares, nearly three times its average daily trading volume for the last three months. The fund will also buy more than one million shares of PLX , nearly four times its average daily trading volume for the last three months. Contrarily, the fund will sell all of its DPM shares. All this depends on which of GMD or CTD will be removed from the basket

PVT - 3Q2019 result update and 2020 outlook

For 2020, we project that PVT could post VND8,093bn in revenue, up 1.8% YoY. The core business is projected to grow 9.2%. The NPATMI is forecasted to go up 11.6% to VND747bn. In case of selling Athena vessel, the NPATMI will be higher than our forecast. Then we keep our call BUY for this stock in 2020 with the target price of VND21,300 per share.

SMB – Attractive dividend yield

Rong Viet Securities has a positive outlook for this stock thanks to (1) better business performance through the positive transformation of the whole group, (2) an attractive valuation with trailing P/E of 6x (quite low compared to peers of 18x) and (3) high cash dividend ratio compared to the current market price. With its healthy cash flow, we believe that the firm can maintain a high cash dividend payout ratio for years.

HDG update – Awaiting the launch of Charm Villas

• We estimate that revenue and net profit in 2019 will be VND 4,512 billion (+41% YoY) and VND 795 billion (+31% YoY), respectively. As a result, HDG will fulfill 121% of its profit target for this year. 
• The company is preparing the launch of Charm Villas project (previously named Dragon City) in early-2020. The project will generate VND 2,800 billion in revenue, with an estimated GPM of above 60%, thanks to low land cost.

Construction Stocks’ 9M2019 Performance

Listed construction contractors experienced mixed results in 9M2019 due to the contrasting growth in different subsectors. 

HSG – FY18-19 Updates

This year has been difficult for HSG, as its revenue and NPAT are down VND 28,035 billion (-18.6% yoy) and VND 361.36 billion (-11.9% yoy) respectively. One of the main reasons is lower sales: 1,118,672 tons for coated steel (-12.6% yoy) and 673,613 tons for steel pipes (-11.7% yoy).

GMD – Key projects to boost long-term outlook rather than short-term business results

GMD decided to implement phase 2 of the Nam Dinh Vu port project (in Hai Phong) in November 2019, nine months after the construction resuming of Gemalink project (in Cai Mep, Vung Tau). As such, the two key projects in the long-term development strategy have been commenced in 2019. Owing to favorable locations, these projects when completed (expected by the end of 2020) will not only further enhance GMD’s presence across the country, but also the competitive position with advantages in terms of facilities and available capacity compared to other competitors in the corresponding area. These couple with (1) the strong growth momentum of demand in Cai Mep area and (2) the continuation of the downstream movement trend of international shipping lines in Hai Phong will be the supporting factors for GMD to consolidate more market share in these two regions in the long term.

DPR and PHR – Planning differently for the future

PHR's industrial parks are located in the most favorable locations of Binh Duong province so the rental price is expected to remain high, around 60–80 USD/m2 (Tan Binh IP) or at 90 USD/m2 (Nam Tan Uyen IP). In addition, the rental demand is expected to continue to increase as the FDI flows into Binh Duong province is still high. That will make the industrial parks segment become a main source of activity for PHR.

Meanwhile, the rental price of DPR’s industrial parks is still low (ranging from 40-45 USD/m2). The demand for leasing is still pretty anemic in Binh Phuoc province. As a result, the industrial parks segment will not easily replace rubber to become the main activity of DPR in the near future.