CASA and Digital Payment Promotion Initiatives

Currently, MBB and VCB are two banks with the highest CASA ratio and lowest funding cost in the sector. However, the competition for CASA will become more intensive because of deeper penetration of private banks. The investment in digital banking and promotion initiatives, on one hand can support CASA ratio, but are also likely to raise operating cost and settlement expense. Therefore, banks will need to have effective investment and competitive strategies to maintain CASA while securing long-term benefits.

3Q 2019 Haiphong Seaports Market Preliminary Review

According to Hai Phong Statistical Office, estimated total cargo throughput in Hai Phong seaports in 9M 2019 reached 90.6 million tons, up 15% YoY. Accordingly, the total revenue of the seaport sector in Hai Phong in 9M 2019 was VND4.11tn (+ 9% YoY).

PVS – No significant contracts impact on the short-term outlook

Despite the negative performance of the stock price due to the lack of new contracts recently, we believe that PVS is still capable of getting new contracts in the future to add to the current backlog. For 2019, we project that revenue and NPATMI will reach VND17,665 bn (+20.7% YoY) and VND 1,103 bn (+5.3% YoY), respectively. The target price for PVS is still maintained at VND 25,080 per share, same as the latest update in our recent oil & gas report

TDH – Plan to develop large-scale land bank

We recently had a meeting with the management representatives of the company, and the  following are the key takeaways:

• During 1H 2019, net profit was only VND 57 billion (-24% YoY)), driven by financial incomes from its divestment in a residential project. Per management, 2H 2019’s result will be stronger thanks to hand-over of existing real estate projects, namely the Citrine and TDH Riverview.
• In 2019, TDH set a high net profit target of VND 231 billion (+100% YoY). However, we are concerned about the ability to achieve that goal.
• Real estate development plan: Due to prolonged legal situation in Ho Chi Minh City, TDH tries to expand its coverage into neighbor provinces likes Can Tho, Binh Duong, etc. As of their plan, these projects will generate cash flow since 2021 onwards.    

PC1 – 9M2019 Performance: Taking Advantage Of A Dynamic Renewable Energy Market

According to PC1’s management, the estimated 9M2019 performance was around three-quarters of the company’s annual guidance, which was in line with expectations. PC1’s revenue and NPAT were approximately VND 4,393 billion (73% of annual guidance) and VND 300 billion (71% of annual guidance) respectively. PC1’s revenue grew steadily by 23% yoy. Main contributors were the construction and manufacturing segments. In contrast, the real estate segment caused a decrease of 27% yoy in the bottom-line figure, even though electricity generation grew substantially as expected.

ANV – 9M2019 Result

According to the company’s estimation, after 9M2019, ANV has completed 65% of its revenue plan and 75% its PAT plan. We appreciate the company's ability to complete its 2019 plan due to high demand in China and ASEAN countries while selling prices tend to rise from August, and the farming cost has reduced due to the sharp drop in fingerling  prices. In the long term, ANV has a good growth potential thanks to improvements and expansion in farming and market diversification to minimize risks on its export. The company has paid 15% cash dividend for 2018 and planed to pay 20% cash dividend for 2019, equivalent to a dividend yield of 7,5%. In addition, the stock is trading at a  TTM P/E 4.3 x, lower than the average TTM P/ E of 6x of the fishery sector. Therefore, we believe ANV an investment that worths considering.

Key takeaway from MWG’s 8M business result

As of the end of August MWG has fulfilled 63% of its 2019 revenue target. The fourth quarter is usually the peak season for mobile phones and consumer electronics demand. Revenue in 8M 2017 and 2018 also accounted for only 64% and 68% of the years’ actual numbers. NPAT growth is significantly surpassing the initial target, while the number of stores has already reached the year’s plan. Beside the remarkable growth of BHX, positives also came from the improvement of TGDD and DMX.

US Repo Rates: The Plumbing Of The Financial System

Last week the NY Federal Reserve had to inject around $ 300 bn into the financial system to restore ‘calm’ after overnight borrowing costs surged from 2 to over 3 per cent (see Figure 1) following the central bank decision to cut its Fed-funds rate by 25 bps. Overnight borrowing costs are a key funding mechanism for banks and hedge funds. Is it something investors should worry about? Reigniting nightmares of a systemic funding chaos a la 2008? Can this shake consumer confidence in an economy that has become so dependent on consumption? Difficult to answer at this junction but it needs to be watched closely.

ACV - Result Update Report

ACV's share price movement is facing a number of challenges in the short term due to (1) slowdown in passenger traffic after consecutive years of high growth, (2) risk of being re-nationalized, following a recent proposal of the Ministry of Transport and (3) the HSX listing plan. However, we believe that the Government may not approve the shares buyback proposal soon due to the lack of an eligible mechanism.

QNS – Positive growth for soymilk but declining in profitability due to sugar segment

In the short run, the negative impact of its sugar segment and the sale of shares from management will be risks to consider when investing in QNS. However, looking at the long-term prospects of the business, we still like this stock given its attractive valuation (trailing P/E of 7.5x) compared to its leading position in the soymilk industry. Furthermore, its soymilk segment's strategy is to reach USD 1 bn in revenue in the future. For 2019, we maintain our BUY recommendation for this stock at the target price of VND 40,500/share.

PVD - Result Update Report

Long term contracts, including potential ones in Brunei for PVD V in 2020, will secure jobs for the drilling rigs. Profitability may not be as expected especially for PVD V while the Jack Up rigs are expected to reach the break-even point next year. In our opinion, we think that PVD is getting over the most difficult time and improving its results.

Based on the P/B method, we come up with a ACCUMULATE recommendation on PVD with the target price of VND21,060 per share, equivalent to a total return of 16%, as of the closing price in September 23^rd, 2019.

Automobile industry – Brighter outlook but more competitive

Demand for cars in 8M 2019 remains high, even higher than in the same period in 2018 due to a decline in selling prices. Positive supply-demand situation led to a strong growth in 8M 2019 sales volume. However, the optimism of the market has not benefited earnings of car dealerships. Stiff competition between auto dealers even dragged their gross profit margins down in 2019.