ACV - Improving Non-aeronautical Revenue Takes Times

Non-aeronautical revenue account for only 19% of ACV’s revenue in 2017. Non-aeronautical revenue/pax is also very low compared to other airports.

Fertilizer – 2018 business results and opportunities for 2019

The fertilizer industry is going to end 2018 with lower net profit compared to 2017. Expecting a change in the VAT policy continues to be a key point which created “tiny waves” in stock prices in 2018. However, the sector has to wait for another year to get the confirmation from the Ministry of Finance (MoF) about the proposed amendments on VAT regulations. On the back of less support from fundamental factors, we believe the 2019 drivers for fertilizer stocks will come from the adjustment in VAT policies and the expectations about divestment.

The Progress of Compliance to Basel II Capital Adequacy

Ten commercial banks, including VCB, BIDV, CTG, TCB, ACB, VPB, MBB, Maritime Bank, STB and VIB, are selected to pilot for Circular 41 one year in advance, since 01/01/2019.

So far, only three of them (VCB, VIB, VPB) and OCB (a non-pilot bank) submitted registration documents to adopt Circular 41 in advance. VCB and VIB have become the first two banks that received approval from the SBV to apply the new standard. These two banks also affirmed that they will continue to implement Circular 13 and will request for early adoption within 2019. VPB and OCB are awaiting approvals.

Business Registration in 2018 in Vietnam

In 2018, there have been significant changes in the number of business registrations as the number of shutdown and suspended companies climbed up while that of newly established ones grew at a slower pace. From our point of view, the current reforms do not seem comprehensive enough. Small-scale companies are more likely to be affected by the slow progress of reforming the ‘business environment’.

2018 recap of listed retailers

As 2018 is coming to an end, companies in the retail sector (MWG, FRT, PNJ and DGW) have had quite a good year with estimated NPAT growth of over 30%. The overall story is that MWG and FRT expand to other businesses, PNJ increased its jewelry retailing segment and DGW claims growth in niche markets. Let’s have a brief look at their activities this year.

Economic activity in China

The National Bureau of Statistics (NBS) revealed that the manufacturing Purchasing Managers Index (PMI) declined to 50.0 in November, a threshold level. It was at 50.2 in October and is now at its lowest since July 2016.

The non-manufacturing PMI came at 54.3, from 54.9 in October, due to contraction in the construction sector.

The imports sub-index dropped to 47.1 and the new export order index stayed stagnant at 47.0.

Overall it shows that the economy’s rate of growth is decelerating slightly. Slower external demand growth probably weighs on activity growth.

DRC – 4Q 2018 Business Update

In the last quarter of 2018, sales in the radial tire segment, a key product of DRC, may continue to experience strong growth. On the contrary, bias tires will witness a decline in selling volume. We anticipate that earnings in 4Q 2018 will fall compared to the same period last year.

The Growth Potential of Banks’ Service Income

In near-term, we believe that key generators of fee income growth include the settlement and insurance activities. Each bank can has its own advantage and corresponding strategy to expand service oncome. In the long-term, excluding one-off income, we expect total services income of banks under our coverage to grow with at a CAGR of 25.9% p.a. until 2022. We also expect that the contribution of service income on TOI will be expanded from 8.6% (estimated in 2018) to 10.0% in 2019 and 13.8% in 2022.

Overview on Vietnam’s wrist watch market

Wrist watches are not just for time tracking, they are also considered jewelries, showing the wearer's personality and class. The watch market in Vietnam is estimated to be worth around VND 17,000 bn (according to the PNJ research division). The market is highly fragmented rate and also very "all over the place" when it comes to products’ origin. PNJ and Doji, two major jewelry chains, are looking to expand into this business with the goal of meeting the needs of the middle and high-income consumer segment.

PC1 – 9M2018 Business Results Update

In December 2018, we attended the analysts meeting held by PC1 in Hanoi to update business results in 9M2018 and development plans for 2019.

In 9M 2018, PC1's business results show strong growth compared to the same period last year. Revenue increased by 55% YoY and PAT was up 122% YoY mainly due to the growth from real estate transfer and the hydropower segment.

Construction: Entering the ‘Mature’ stage

The construction industry is showing signs of entering the mature stage of its life cycle. Intense competition and bargaining power from customers (i.e. project investors) as well as tight legal and regulation issues, badly affected the industry’s gross profit margins.

2019 Seaport Industry Outlook

We believe Vietnam seaport’s throughput will continue to grow at double-digit and in-line with trade activities. Our view is predicated on the Government’s efforts to open up trading by participating in regional and international free trade agreements. A number of important FTAs has been implemented such as Vietnam - Korea, CPTPP and Vietnam - EU (expected effective in 2019). Particularly, the CPTPP could significantly boost international trade between Vietnam and other countries in the bloc. According to BMI Research, Vietnam’s total trading value is forecasted to increase 12% per annum over the next four years, reaching a nominal value of USD 735 bn by 2022.