KDH – Maintaining earnings growth

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

• In 2019, KDH set a profit guidance of VND 1,046 billion (+29% YoY), driven by the hand-over of the Verosa Park project. Looking forward to 2020 and 2021, profit growth is maintained at a high level with the recognition of profits from existing projects such as Jamila, Safira and new projects such as Lovera, Verosa Park or Clarita (to be launched in 2020).
• Real estate development plan: KDH continues to develop its land bank in District 9, HCMC, with the launch of the Verosa Park in 2019 and Clarita projects in 2020. Both projects are low-rise components, located in premium location in the East of HCMC. We believe that these projects will have a high absorption rate.

Update on Vietnam’s G-Bond Market in 9M2019

According to the latest data, the State Treasury of Vietnam (VST) mobilized VND 52.6 trillion via Government bond auctions, equivalent to 70% of the quarterly plan and down 2.5% YoY. The winning/offering ratio was at 90%. In the first nine months of 2019, VST raised VND 155 trillion, only completing 59% of the yearly plan but the winning/offering ratio rose to 80% from 50% in 9M2019.

PHR – On its way to be a “key player” in the industrial park segment

In terms of industrial parks, good positioning coupled with a smooth land clearance process are the main reasons PHR’s IPs operate much effectively than other IPs. Their faster processing plan will allow to lease most of their projects next year.

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.