DVP – Bumps ahead

DVP's 2Q2019 NPAT surged 21% YoY mainly driven by unusual timing of JV’s gains recording. Its EBIT declined 5% YoY, however, showed a small reduction in port operation as their box throughput was down 19% YoY. 3Q2019 results are likely to be hit, we estimate a downside of 25% in PBT.

Currently, we arrive at 1Y target price of VND 36,000 (2020F P/E of 7x).

PNJ – 6M 2019 Business Result

Looking at the long-term picture, there is still a lot of room from the jewelry market which is still fragmented and the booming demand for fashion jewelry from the rising middle class  in Vietnam. Although Ho Chi Minh city has begun to slow down and PNJ’s growth is being affected, other provinces, especially in the North, are very potential. It will take time for PNJ to "penetrate" into these markets and change consumer’s habits there. Negative short-term business result is opportunity for long-term investors. We maintain our BUY recommendation on PNJ stock.

TCM – 6M2019 Business Result

For 2019, Rong Viet Securities continued to maintain the target price at VND 25,500 per share, plus with a cash dividend of VND 500 per share, equivalent to the expected return of 0% compared to the closing price on July 23^rd, 2019. Therefore, we recommend NEUTRAL for this stock. It should be noted that this valuation does not include contributions from TC Tower real estate project because we do not have enough information.

PVOil - Update on 2Q2019 preliminary result

The business result of PVOil has so fluctuated after IPO and the company seems to find it hard to control the key points that heavily impact on its core business. But PVOil is seen as big players in the sector, owning a wide gasoline distribution channel. Currently, the share price is being traded at a high P/E ~29x.

FRT – Q2 saw recovery but outlook doesn’t seem promising yet

FRT’s business result in Q2/2019 recovered significantly from the bottom in Q1/2019. Revenue and PBT in Q2 increased by 11% yoy and 17% yoy respectively. Looking at the monthly result, we can see that most of the recovery derived in April when Apple started to support the company through promotional programs, whereas the growths in May and June were not considerable. By the end of June, the company grew 7.5% in revenue and 10% in PBT, achieving 45% and 39% of 2019 target for revenue and PBT respectively, which signals the second half of the year will be full of challenges for the company to complete their target. 

Steel Production and Consumption in 6M2019

In 6M2019, construction value growth slowed down to 7.85% (lower than 9.16% in 2018). This has affected the demand for steel. The domestic steel industry in the first half of the year produced a total of 12.6 million tons of steel, sold 11.6 million tons, of which 2.5 million tons were exported, increasing by 7.7%, 9.8% and 6.3% respectively compared to 1H2018 according to the Vietnam Steel Association.

Updates on Vietnam’s Trade in 1H2019

In June, Vietnam’s trade surplus was at USD 1.9 billion, the highest in recent years. That was due to a plunge of import. Total import value was only at USD 19.5 billion, up 2.4% YoY, while total export value reached USD 21.4 billion, up 8% YoY. In 1H2019, Vietnam’s trade surplus was nearly at USD 1.7 billion, lower than 1H2018’s USD 3.9 billion but higher than previous years as well as 5M2019’s deficit of USD 0.2 billion.

PPC – Weak 2Q 2019 earnings was no surprise

As we have mentioned in our recent Analyst Pinboard on PPC, an expected decline in sales volume in 2019 from the high base of the same period last year would be the key factor dragging down the company’s core earnings from electricity production. While large one-off income and dividend income has hidden such issue in the first quarter of 2019, lower one-off income has even magnified it in the second quarter, resulting in a sharp fall in 2Q 2019 reported NPAT. However, we still hold no positive view on PPC as its 2Q 2019 business results only turned back to normal level from the high base of 2Q 2018.

ILB – Company overview

ICD Tan Cang - Long Binh (ILB), a subsidiary of military-based Saigon Newport Corporation (SNP), was founded in 2007 and recently listed on HOSE last May. The ownership structure is quite concentrated with nearly 80% belongs to insiders.

BWE – Aggressive Capacity Expansion Plan to Meet Rising Demand

In summary, in the middle and long term, BWE has an aggressive capacity expansion plan for both water supply and waste treatment segments to meet the rising demand. This strategy results in large capex in the coming years. With the current retained earnings of BWE, we believe that the company will arrange adequate equity, which we estimate to be VND 600 billion in the next two years, to fund its capex without issuing stocks. In addition, the increase in water selling price by 500-800 VND/cbm annually will boost earnings of the company in the coming years, strengthening our belief that the company will have enough equity to launch its expansion capacity plan.

Regarding our investment view, as the business of BWE is naturally capital intensive in the coming years and the company has monopoly on supplying water in Binh Duong province, the stock would be suitable for value investors who prefer low-risk investments and has long time horizon. In addition, we also believe that BWE could be attractive for investors with Environmental, Social and corporate Governance (ESG) constraints as the business creates net positive environmental impacts.

PVS - Update on 2Q2019 Preliminary Result

Despite the low earnings in 2Q2019, compared to the same period last year, we keep the positive view for PVS and still believe that the company will be the most beneficiary from the major Oil&Gas projects in the next few years. We reiterate ACCUMULATE for PVS at the target price of VND28,000. Plus the cash dividend of VND700 per share, the total return is 19%, compared to the closing price on July 11^th 2019.

BVH 2019 AGM – Development Plan to be Revised down

Fierce competition, low G-bond interest rate environment and  the lack of capital will be hindrances to BVH growth in the near future, causing the development plan to 2020 to be revised down. As a result, sales could not growth as strongly as in 2016-2018 period. However, Circular 01/2019 and changes in life insurance product mix are the positives that support the profit recovery of the insurance business.