CTG – Improvement in Credit Demand and Asset Quality Solidifies Positive Growth Outlook for 2025

• 4Q24 Pre-Tax Profit (PBT) Reaches VND 12.2 Trillion (+59% YoY), Full-Year 2024 PBT at VND 31.7 Trillion (+27% YoY). While total operating income grew in line with net interest income and credit growth (16.9%), increasing by 15% YoY in 4Q24 and 16% YoY for the full year, a sharp 45% YoY decline in credit costs in 4Q24 was the key driver of CTG’s PBT growth for both the quarter and the full year 2024.
• We assess CTG’s 4Q24 financial performance as positive, with a significant improvement in return on equity (ROE) efficiency, supported by the following factors: (1) asset quality continues its favorable improvement trend, aligning with our previous expectations, alongside a reduction in credit costs; (2) effective debt recovery and resolution based on a centralized debt handling model; (3) an expanded retail credit market share with competitive interest rates; and (4) strict control over operating expenses.
• We update our 2025 forecast with an upward adjustment of 19% in projected PBT compared to our previous estimate, reflecting stronger-than-expected credit growth potential and lower credit costs, underpinned by a more positive asset quality outlook following a prolonged period of prudent provisioning. The projected 2025 PBT is expected to reach VND 41.2 trillion, representing a 30% YoY increase.
• We reiterate our BUY recommendation for CTG, with an updated target price of VND 49,000 per share, a 9% upward adjustment from the previous target price, corresponding to a total expected return of 19%.

SCS –Well-positioned to become a cargo terminal operator at Long Thanh Airport

• Long Thanh International Airport will have two cargo terminals under component projects 3 and 4, owned by two different investors: Airports Corporation of Vietnam (Upcom: ACV) and the Ministry of Transport.
• Saigon Cargo Services Corporation (HSX: SCS) is interested in cargo terminal No. 01 of component project 3 at LTIA. Based on international rules, we assess that it is feasible for SCS to become an operator here.

AGG – Enterprises have a potential land fund but need time to realize revenue

• Business results in 2024 recorded growth as the company  continues to hand over the remaining products at Westgate (Binh Duong) and Standard projects, when the Southern Real Estate market began to show signs of recovery, with revenue and NPAT-MI increasing by 50.83% and 69.7% YoY, respectively. However, in 2025 business results are expected to decline to VND 800 billion (-58% YoY) in revenue, mainly from the handover of the remaining products of The Song, Westgate and Standard projects.
• The Gio Riverside project is a growth engine for AGG in the period from 2027-2029 with total revenue from handover estimated at VND 7,000 billion.
• AGG owns a potential land fund in Ho Chi Minh City. Ho Chi Minh City and neighboring provinces are the premise for the company's long-term growth. However, we realized that the company needed more time to complete the legality, implementation and revenue realisation.

HDB - Underperform Q4 2024 business results due to a sudden decline in asset quality

• Consolidated PBT for Q4/24 reached over VND 4 trillion, lower than the previous forecast (VND 4,600 billion), driven by (1) provision expenses up 68% QoQ and 47% YoY after a sharp rise in net NPL formation to VND 1,900 billion, (2) operating expenses up 20% QoQ and 35% YoY as the bank increased staff cost.
• HDB's Q4/24 business results were generally unfavorable as (1) a sudden rebound in other income from credit activities offset the decline in average lending yield, and (2) asset quality unexpectedly deteriorated and could remain a concern in 2025 due to a sharp surge in group 2 loans. These developments pose downside risks to NIM projections and credit costs for 2025.
• For 2025, HDB targets continued growth in PBT (around 25% YoY) through expected higher credit growth compared to 2024, alongside continued control of NPL ratio under 2%.
• The target price for HDB shares is currently VND 24,300. We will update the 2025 projections and provide a more detailed assessment in upcoming reports.

MONETARY MARKET UPDATE FEB 2025: STABILIZE TOWARDS THE END OF THE MONTH

• Net withdrawal was the dominant trend in the open market in February due to a large amount of maturing from the forward contract channel. From 01-21/02/25, the SBV net withdrew about VND38.0 trillion in the open market.
• Overnight lending rates in the interbank market increased sharply in the first half of the month but then stabilized. On 21/02, the VND overnight lending rate was 3.98%/year, unchanged from the end of January.
• The USD has not been able to increase since Trump took office and has had a similar adjustment rhythm to the Trump 1.0 period. Uncertainty in tariff policy will remain high while tariff plans will likely be finalized in the coming months. Along with that, the Fed's cautious policy stance on implementing further interest rate cuts will likely continue to support the US dollar.
• The most notable development in the USD/VND exchange rate in the past month was the SBV's continuous adjustment of the central exchange rate and changes in the USD buying and selling prices. This implies that the SBV is choosing a more market-oriented and flexible approach to exchange rate management, which can be considered a measure to preserve foreign exchange reserves.
• Some directions for monetary policy management in 2025:
  • The SBV has raised the credit growth target to 16%, higher than the 15.1% increase in 2024.
  • The Government's loosening of the inflation target to 4.5-5.0% may indirectly affect the direction of money supply/credit management in 2025.
  • The management of interest rate and exchange rate is considered a challenging task

KBC – Unlocking the potential of existing projects

• In 2024, KBC recorded revenue and gross profit of VND 2.78 trillion (-51% YoY) and VND 1.28 trillion (-65% YoY), respectively. The weak performance was mainly due to the decline in revenue from land and infrastructure leasing in industrial parks, which reached only VND 815 billion (-77% YoY). During the period, the company recorded lease revenue from an area of 33 hectares (-80% YoY).
• For 2025, with bottlenecks in land clearance being resolved, we expect the company to achieve relatively positive revenue. The net profit attributable to the parent company could reach VND 2.8 trillion (+557% YoY) under the scenario where approximately 180 hectares of industrial park land is delivered, mainly in Nam Son Hap Linh and Hung Yen Industrial Cluster. The projected EPS for 2025 is VND 3,700.
• In the long term, in addition to focusing on industrial parks that had previously received investment approvals, KBC plans to expand its business with newly approved industrial parks (Trang Due 03, Kim Thanh), increasing the total leasable land area to nearly 2,000 hectares.
• Using the Sum-of-the-parts method, we maintain the target price for KBC stock at VND40,600/share (Upside +36%, compared to the closing price on 24/02/2025), which is equivalent to the BUY recommendation for the long-term target. KBC continues to be the preferred IP company in 2025, as the company has readily available land for lease and continues to attract interest from FDI enterprises, particularly Chinese companies, in the coming period.

Aviation industry – The cargo terminal segment is an attractive playground for logistics companies

• The field of cargo operations at airports possesses a strong competitive advantage due to high barriers to entry, good negotiation capacity with both customers and suppliers, and a low level of competition in the industry. Therefore, this field consistently enjoys high profit margins and remains highly attractive to logistics companies.
• In the long term, the profit margin of the cargo terminal operation segment in Vietnam has significant room for expansion, driven by increased cargo traffic from the boom in cross-border e-commerce and the policy of developing free trade zones in Da Nang, Cai Mep – Thi Vai, and Hai Phong, as well as optimizing operating costs through the application of modern technology

US-China strategic confrontation reshapes the global supply chain landscape

• US-China tensions reshape the global supply chain landscape
• China’s response strategy through export diversification and FDI shapes global supply chains

Fertilizer Industry – A Perspective on Famous Mergers in the Fertilizer Industry

• M&A is a useful strategy for fertilizer enterprises to expand their scale, improve production efficiency and competitiveness in the market.
• Notably, the type of fertilizer a company produces significantly impacts the execution price of an M&A transaction, as determined by the EV/EBITDA ratio. Companies producing Potash fertilizers are typically valued at the highest average EV/EBITDA multiples, while those producing Phosphate and NPK fertilizers have lower transaction value/EBITDA ratios, with Urea fertilizer producers having the lowest valuations
• Comparing the financial ratio of merged enterprises in the world, we found that the net profit margin and gross margin of the Potassium fertilizer business enterprise were the highest, followed by NPK and Urea fertilizers and finally the phosphorus fertilizer business.

Vietnamese CEP market – promising potential but intense competition

• According to the Ministry of Information and Communications (MIC), Vietnam’s courier, express and parcel (CEP) delivery  industry generated VND 71,140 bn (USD 2,825 mn) in revenue in 2024, with an average annual growth rate of 19.7% from 2017 to 2024. By 2032, the industry is projected to grow at an average annual rate of 5.8%, reaching VND 111,686 bn (USD 4,432 mn), according to Claight Corporation (Expert Market Research). Key growth drivers include rapid urbanization, rising income levels and living standards, post-Covid shifts in shopping behavior, the booming e-commerce sector, and progress in major transportation projects (measured by total investment value).
• However, the delivery market also faces several challenges, including limited logistics infrastructure, intense competition, and the dominance of cash-on-delivery (COD) payment method (over 80% of transactions) which complicates cost reduction efforts, making it difficult to manage and reconcile transactions, and add to the difficulty of managing deliveries.
• Three core factors determine the success and operational efficiency of a delivery company:
  1. Parcel volume and coverage: measured by the total number of orders delivered and the average service radius.
  2. Logistics optimization: optimizing delivery routes to maximize parcel volume per trip, measured by cost per shipment.
  3. Service quality and customer satisfaction: sssessed through on-time delivery rates, successful delivery rates, Customer Satisfaction Score (CSAT), Net Promoter Score (NPS), and churn rate.
• Vietnam currently has over 700 postal and delivery companies (including both traditional and tech-driven firms). The top 6 players—SPX Express, GHTK, VNPost, VTP, J&T Express, and GHN—account for more than 70% of the market share in 2023, despite representing only about 1% of total industry players. The top four domestic delivery firms (VTP, VNPost, GHTK, and GHN) controlled 46% of the market in the same year. As foreign e-commerce platforms continue to expand into delivery industry, the market share of international delivery companies is rising.
• In the medium to long term, we expect that well-performing State-owned enterprise (VTP) and foreign firms—with their superior infrastructure and financial strength—will continue to gain market share by excelling in the most critical success factor: scaling up order volume.

TRADE UPDATE FEB 2025: RECIPROCAL TARIFF ON VIETNAM EXPORTS TO THE US

RECIPROCAL TARIFF ON VIETNAM EXPORTS TO THE US?

• The decline in trade growth in the first month of the year was due to the impact of the Lunar New Year holiday.
• The Government's trade growth target for 2025 is 12%, equivalent to Rong Viet's forecast.
• Some key export items still recorded positive growth in January 2025. Meanwhile, the overall import scale decreased, but the demand for imported raw materials for the production of electronics, machinery and equipment still increased. This implies that export orders in the first quarter of the year continued to grow.
• The proportion of imported goods from China increased sharply in January 2025, implying a shift of goods and supply chains to Vietnam in the short term, while also increasing the risk of becoming a target of US tariffs.
• 3 possible scenarios for the roadmap for reciprocal tariffs.
• Vietnam is in the low-risk group in terms of tariff relations with the US and the possibility that the Trump administration will consider considering VAT as a trade barrier for imports from the US.
• However, Vietnam's risks will be high in terms of its trade deficit with the US (~$123 billion (2024), ranking 4th after China, the EU and Mexico) or the fact that Vietnam is still under scrutiny for currency manipulation and has not been recognized by the US as a market economy.

Understanding Tungsten Definition and Tungsten Price Trends in 2025

• China is the world's largest producer and importer of tungsten ore today, but also the world's largest consumer of midstream tungsten. Therefore, issues surrounding the flow of Tungsten production-trade in China can greatly affect the price movement of upstream/midstream/downstream Tungsten
• On February 4th, 2025, China announced export controls targeting five metals used in defense, clean energy and other industries just minutes after an additional 10% tariff on Chinese goods imposed by U.S. President Donald Trump took effect. Of the five metals that have the presence of Tungsten, China in particular has restricted the production of eight types of products made from Tungsten
• Tungsten has not been commercially mined in the U.S. since 2015. The country is completely dependent on imports of midstream Tungsten (APT, tungsten oxide, etc.), mainly from China to produce Tungsten applied products instead of importing Tungsten ore concentrate (primary) for refining
• We aim for a scenario where the price of Tungsten products will increase in price in the short term. Masan Resources (UpCOM: MSR) may be the beneficiary of the above information but moderately due to the liquidation of its investment in H.C. Starck – specializing in refining midstream/downstream tungsten products (such as tungsten carbide powder) – products that directly benefit from the US-China trade war