VEA – 2019 Earnings to be Fueled by Positive Performance of Joint Ventures.

The considerable growth in VEA’s 2018 NPAT was attributable to the improvement in business results of its three main Joint Ventures (JVs) including Honda (HVN), Toyota (TMV) and Ford (FVL). We believe that in 2019, financial income of VEA will continue to be a main profit source of VEA and may increase as performance of JVs is forecasted to improve strongly thank to positive outlook of automotive and motorcycle industry.

BID – Updates on 2018 Business Performance

Overall, BID is continuing to expand into the retail and SME segments, although the expansion is slowing down and funding pressure is causing difficulties in the improvement of net profit margin. Operating expenses and provision expenses are also expected to increase rapidly in 2019, keeping profit growth at a modest rate. However, we expect the benefits from the merger with KEB Hana bank will help relieve current pressures and improve the competitiveness of BID in retail and SME segments.

For 2019, we forecast BID's loans and deposits growth will reach 14%, and PBT will reach VND 10,500bn (+11% yoy), resulting in an EPS of VND 1,915 per share. The bank plans to pay cash dividend of at least VND 700 per share annually for the period of 2019-2020.

BID is currently trading at VND 32,500, equivalent to a 2019 forward P/B of 2.0x. This current price is 7.7% lower than our 35,000 VND target price. Accordingly, we recommend to Accumulate this stock.

NT2 – Favorable market conditions and lower gas prices support 2019 core earnings

Although NT2 has completed major-overhaul works in 2017, enabling the company to increase its electricity output by 10% YoY in 2018, lower contract volume (Qc) has made core earnings more vulnerable to the rise in gas input prices. As a result, 2018 recurring NPAT of NT2 fell by 32% YoY to VND 737 billion. Regarding 2019 outlook, while the expected return of El Nino conditions brings the company favorable conditions to increase sales volume, gas prices are also expected to fall. These factors support our belief that core earnings of NT2 could increase by 11% YoY in 2019. However, we also expect that adverse effect from FX rate movements in this year would keep the company’s reported earnings almost flat.

IMP – New factory is ready to operate

The stock is trading at 20x P/E 2018, while earnings growth in the next two years is not very outstanding. Thus, the high valuation makes IMP not appealing to individual investors. However, with four EU-GMP factories, IMP appears very attractive to many strategic partner. Nevertheless, the management prefers a partner that could contribute in terms of science and technology to one that is only seeking outsourcing. Therefore, it probably takes times to find an appropriate one. This means unlike DHG or DMC, IMP currently lacks a catalyst for its stock price.

We maintain a target price of VND 53,000 for IMP. The company plans to pay a 20% cash dividend this year.

STK – Recycled yarn is still a top priority

We maintain our BUY recommendation on this stock. However, adjust the target price slightly to VND 22,300 per share compared to the previous recommendation price of VND 24,300 per share due to concerns about the impact of crude oil prices that may depress its core profit.

The wood industry: Optimistic, but cautious

Vietnamese wood and wooden products exports have experienced a successful year with a total export value of USD 8.9 bn, indicating a growth rate of nearly 16%. Except for 2016, a year with the modest growth rate of only 1.1%, from 2009 to 2018, the annual growth rate of wood and wooden exports value always reached double digits, and the average growth rate of the last 10 years has been 15%.

VSC – Update 2018 Result and 2019 Forecast

VSC announced FY2018 financial statement with impressive revenue and NPAT growth of 30% and 27% respectively, thanks to the incremental contribution from VIP Green port (UpCOM: VGR).

Updates on MWG - Constantly changing to move forward

Overall, we maintain a positive view for MWG. The company has been continuously improving to keep the growth rate at a high level. The dominant market share in electronics sector and extensive store system help MWG to stand firm against the fierce competition from e-commerce websites. In addition, Bach Hoa Xanh is still on the right track and other markets outside Ho Chi Minh city are delivering optimistic signs. We maintain our BUY recommendation on MWG shares, with a target price of VND 125,000 / share.

Updates on Vietnam Trade

Recently, the Customs has published the trade data which January’s trade balance was surplus at USD 860 million, in contrast to the deficit of USD 1 billion in the first half of the month. While the domestic sector’s trade deficit has shrunk, the FDI sector keeps positive. However, trade growth slowed down, highlighted by both of export and import growth. January’s trade data implies some meaningful insights, including 1) Export revenue from Chinese market dropped strongly, 2) Export revenue from North America markets brightened and 3) The rise of Hai Phong and Hai Duong cities on Vietnam’s trade map.

View on US-China Trade Talks

• President Trump mentioned an extension of 60 days for the US-China negotiation as an affirmation that the US is serious about finding a deal with China.
• A comprehensive agreement between the US and China will be difficult to achieve in a short time.

HDB – Update on 2018 Business Performance

Overall, HDBank is still expanding its loan portfolio effectively with the focus on retail and SME segment while operating cost and asset quality are controlled closely. However, it should be noted that the current strategy of HDBank is dependent on credit volume growth, which is very sensitive to the credit tightening policy of SBV. In case the merger with PGBank is approved, it is more likely that the bank will have higher room for credit growth.

Our current target price for HDB is VND34,000, equivalent to a P/B forward of 1.8x. The stock is currently trading at VND30,400 (closing price in Feb 17th), equivalent to a P/B forward of 1.6x. Combined with the expected VND 1,000 cash dividend in the next 12 months, the total expected return is 15.1%. Therefore, we recommend to Accumulate the stock.

GMD – Update 2018 Result and 2019 Forecast

GMD FY2018 financial statements was strongly influenced by capital transfer activities and in line with our expectations.