MBB – 2018 Business Results: Thriving with top service income growth

Overall, with substantial NIM and significant service income expansion, MBB has been able to maintain a high income growth of 40.9% yoy. Thanks to a reduction in provision expense without VAMC provision burden, earnings reached an even higher growth rate, of 68.3% yoy. In the coming years, we expect that MBB’s restructuring efforts, low funding cost advantage and substantial service income growth will help the bank to achieve higher growth than the industry average.

MBB is currently trading at VND 20,700, equivalent to an attractive PBR 2019f of 1.1x. This current price is about 47% lower than our target price of VND 30,500. We thereby reiterate a Buy rating on the stock.

Updates on Vietnam’s Financial Market

As being mentioned in the yearly strategy report, geopolitical risk, highlighted by US-China relations and EU fragmentation, plays an important role in the world. The good news stemming from softer talks between the US and China are making significant contribution to the improvement of Vietnam’s financial market. Short-term interest rates stop to go up while net buying foreign investment flow was reported.

HAX – Update on 2018’s Business Result

Thanks to benefits from the difficulties in the automobile market as well as relatively high incentives from MBV, revenues and NPAT of HAX in 2018 reached VND 4,756 billion (+24% YoY) and VND 98 billion (+16% YoY), respectively.

DGW – Update on 2018’s Business Result

Ending the year of 2018, DGW posted an impressive business result: VND 5,943 bn (+56% YoY) in revenue and VND 109 bn (+39% YoY) in NPAT, completing 126% and 108% of 2018’s plan, respectively. The company plans to grow 20% in revenue and 25% in NPAT for 2019 with two growth engines: Mobile phone and Office equipment.

The Trend of Overseas Long-term Loan Facility Agreements

In recent years, the trend of securing long-term loan facilities from international financial organizations has become more popular amongst Vietnam banks. Vietnamese banks have been upgraded by international rating agencies such as Moody and Fitch. The positive ratings, according to Fitch, considers the Vietnamese banking system's enhanced operating environment, with improved economic policies.  Authorities promote a stable and predictable macroeconomic environment. We believe that these favorable conditions have contributed significantly to Vietnam banks’ chances to get into more loan facility deals with international financial organizations.

An Overview of Iron Ore Supply and Demand

Iron ore and Steel scraps are the two main raw materials for the steel industry and the changes in these inputs price would affect significantly the business performance of the steel mills. Driven by the supply and demand forces, understanding the key players in both sides would give the investors a better view in order to forecast the trend of the steel industry. The market share of suppliers and buyers in this industry is highly concentrated when China accounted for two-thirds of the global iron ore import annually and on the opposite, there are only two nations in charge of 70% world ore export (2017), which are Australia (50%) and Brazil (21%). As a consequence, any news affected the steel industry from these countries would impact the global price of iron ore strongly.

PPC – Update on 4Q 2018 Business Performance

Thanks to favorable market conditions and lower major overhaul expenses, PPC had a surprising performance in 4Q 2018: The PBT is estimated to reach VND 363 billion, about 3.6 times as high as that of 4Q 2017. Moreover, the company achieve this result without the one-off income from the reversal of financial expenses from FX differences in 2016.

Update on Industrial Parks

Vietnam is appealing for various reasons including geographical advantages and close proximity to China, enabling road transport. Further, no industrial zones are deep inland and the key ones are tied with seaports, underpinned by increasing investment in infrastructure.

Update on EU-Vietnam Free Trade Agreement (EVFTA)

It is clear that EVFTA plays an important role in Vietnam’s economic prospects for the next decades due to its full-scale impact. Vietnam is facing a “once-in-a-decade” opportunity to integrate itself into the global value chain. Many companies have massive expectations on the benefits from EVFTA, similar to what they had with TPP three years ago. However, the ratification of EVFTA is still in a bit of a gridlock because of issues related to ‘illegal cash fishing and human rights’ in Vietnam. In our opinion, the government should concentrate on pushing the EVFTA ratification in 2019 even though there are tough obstacles related to significant political changes in the EU.

How Yeah1 can grow its digital media business

The digital media division, even though very young (started in 2015), is contributing 55% of revenues and 47% of gross profits for Yeah1 (in 9M 2018) and is targeted to be the main segment of the company in the future. However, the company’s digital ads are displayed mostly on Google’s platforms. Google pays a very low CPM (Cost per 1000 impressions) for views from Vietnam (USD 0.09 per 1,000 views), while that number is much higher for views from developed countries (USD 3.05 for the US and USD 1.85 for Australia). Therefore, if Yeah1 wants to get bigger, it has to grow outside of Vietnam.

Binh Minh Plastic JSC: Managing costs may keep 2018’s targets out of reach

As per the company’s guidance for 2018, Binh Minh Plastic (BMP) aims to reach 100,000 tons in selling volume and about VND 4,620 in revenue. For 2018, BMP may not reach all of its target numbers. The company is unable to control costs and expenses.

Real estate: 2018 review and looking ahead to 2019

In term of stock price’s performance, almost real estate companies have a good return in 2018, of which VIC, DXG, KDH, HDG and KDH are among the best. On the other hand, the worst stocks are VRE, DIG, VHM, TDH, LDG and SJS. Generally, 2018 was considered to be a year for real estate stocks as almost mid-to-large-cap stocks beaten the VN-index.