Tailwind for Timber Exports

Opportunities for both short- and long-term  timber exports. In the short term, the US - China trade dispute is benefiting Vietnam. As well, exports, especially to the EU market, will grow because of the VPA/FLEGT, EVFTA and Vietnam’s Forest Law.

Next Drivers for Vietnam’s Economy

Let’s remind ourselves of Murphy’s law: “Anything that can go wrong, will go wrong”. These words sort of describe the current changes in the global economy. The latest contraction of Singapore’s GDP growth, a bellwether of foreign trade, not only reflects the expected corollary of the trade war but also draws a gloomy picture for the global economy. Recent surveys point out entrepreneurs’ deepening pessimism over the economy and foreseen business expansion plans. Hence, the rising importance of the visible hand, first noted by economist John Maynard Keynes, could be a blessing. By that we mean a coordinated response from both the monetary and fiscal ‘hands’. Such a response would be unconventional  under the circumstances of limited room to lower interest rates. Nevertheless, that is closely related to the “helicopter money” strategy proposed by former FED president Ben Bernanke in 2002.

BFC - Recovery in 2H2019

Facing difficulties in the first half of 2019 such as (1) weak demand and strong competition in the South Market (2) significant increase in raw material prices, results have been below expectations. However, BFC should be able to improve its performance in 2H2019 thanks to higher sales volume as well as lower input prices. But the 2019 result is still worse than last year, in our estimation. So we adjusted our target price for BFC to VND15,900 per share and rate the stock ACCUMULATE at this time

Seasonality: what is it saying?

Which month(s) offers the best and worst returns for investors? If you guessed April and August, respectively, you were right.

Looking at equity markets returns in local currency since 1997, August is the worst month across major bourses while producing a low probability of positive returns. April and December, on the other hand, produce the best returns with a high probability of positive attribution.

Breaded shrimp in the US – Vietnam has shown sign of gaining market share from China’s

While the shrimp sector in 1H2019 showed a slight drop of 2% YoY in export value to the US market due to fierce competition from major producers (India, Ecuador and Indonesia), breaded shrimp turned out to be a bright spot, with export value and volume rising 50% YoY and 53% YoY, respectively. This means that Vietnamese breaded shrimp is able to benefit from the US-China trade tensions.

KSB – 1H2019 Update

BImico (HSX: KSB) specializes in the mining and processing of building stones. The firm owns four quarries:  Tan Dong Hiep, Phuoc Vinh, Tan My and Thien Tan. In addition, the company also operates in the industrial park sector, with a total of 500ha land area in Binh Duong province. In 1H 2019, KSB posted revenue and net profit of VND 589 billion (+12% YoY) and VND 153 billion (flat YoY). Gross profit for the stone building and industrial park businesses were VND 180 billion and VND 70 billion, respectively.

PC1- 1H2019 Update

PC1 had a decent 1H as it completed 50% of its 2019 revenue target and 55% of its NPAT target. PC1’s 1H2019 business results achieved 49% and 58% of our 2019 estimations for revenue and NPAT respectively. PC1’s 1H2019 revenue went up by 24% yoy because the construction segment doubled its revenue. However, the bottom-line decreased by 19% due to the drop in the real estate segment’s contribution into NPAT as PC1 had no new projects to handover in 1H2019.

Vietnam economy can be affected by Japan-S. Korea’s tension

While the US-China trade war has not been resolved, tensions between Japan and S. Korea have accelerated. It started to rise since S. Korea’s Supreme court ordered Japanese companies to financially compensate Koreans workers and families affected by forced labor in World War II. Even though officials of both sides have met several times since then, there is no sign of progress.

Samsung in Vietnam will be fine in August and September. The production will peak in next few months as Samsung has just released the Galaxy Note 10. However, if Japan continues to tighten its specialized products export to S. Korea, Samsung’s production in 4Q will be affected. As a result, the Vietnam economy could be affected

VNM – Domestic Demand to Lead Growth

Management stated that new product lines launched in Q2/2019 have been received favorably by consumers. This is a positive signal for the demand for dairy products in the second half of 2019. Rong Viet Securities estimate the fair value of VNM at VND 134,000/share, equivalent to a forward P/E of about 22 times. We recommend to ACCUMULATE the stock.

MWG – the definition of flexibility in retail

Having found a certain success for Bach Hoa Xanh, MWG is replicating it to other regions and the results are promising so far. Even though break-even is not yet reached, Bach Hoa Xanh is doing great in terms of sales growth and customer awareness. Therefore, becoming profitable is just a matter of time in our opinion. Regarding The Gioi Di Dong and Dien May Xanh, the new CEO is bringing fresh ideas with new strategies to growth with more stores and an increase in same stores sales. Even though the stock price has gone up significantly, we believe it is still undervalued. Hence, we maintain our BUY recommendation.

FMC – 1H2019 Result Update

While exports of the industry in the first half of this year fell due to US- China trade tensions disturbing traditional shrimp trade flows across the globe, oversupply resulting from heavy investments in shrimp production by world major producers and the BREXIT event deteriorating consumer confidence in Europe, FMC still kept its impressive and sustainable profit growth. Product strategies announced at the 2019 AGM have proven its ability to improve profits.