PVD – Reversal from receivables can support profits in the short term

In 2017, besides the shortage of contracts and low rig day rates, PVD's business results were affected by the provision of PVEP's receivables.

Growth Opportunity for Textile & Garment Companies

According to the General Statistical Office (GSO), the export turnover of the textile & garment industry for the first eight months of 2018 is estimated at USD 19,4 bn, an increase of 14,9% compared to the same period last year. Major export markets recorded remarkable growth rate such as the US (+10,4%), Japan (+21,9%), South Korea (+17,7%) and ASEAN (+33,9%). Besides, Vietnamese companies are promoting their exports to new market in China with a growth rate of 43.1% in the first eight months. It is expected that by the end of 2018, the export turnover to China will reach over USD 2 bn.

The Highest Trade Surplus In The History Of Vietnam

In the first eight months of 2018, the trade surplus reached USD 4.7 Billion, never seen in the history of Vietnam. That potentially calls for a strong current account surplus in the third quarter of 2018, which will insure that the country can resist external shocks. Growing trade is also in line with the recovery of domestic industrial production.

LTG - Slow growth but potential in the near term

LTG's two main business sectors, CPC and agri-food are not expected to be potential drivers in the next five years. Regarding its core operation, CPC, the main contributor to LTG's performance, is able to maintain high gross margin but revenues will grow slowly. LTG owns high-quality rice products but needs time to penetrate the market. The restructuring process will need more time and cost to become efficient. Therefore, in the intermediate term, we expect LTG’s growth potential to be limited.

ACB - Not Jack of All Trades

In the first half of 2018, customer loans and deposits grew 11.8% and 10.9% YTD respectively. Individual loans experienced the fasted growth, 13.1% YTD and accounted for 56% of the entire loan book. In addition, including corporate bond and valued paper, credit and deposit growth was 11.8% YTD and 9.4% YTD, implying that during the first half of the year  credit grew faster than deposit.

Tile Market – Competition and Competition

Vietnam’s tile market has seen intense competition for years. Domestic manufacturers are facing two major difficulties:

• Smuggled or tax-loophole tiles from China
• Product differentiation and marketing to customers

YEG – New business needs time to be proven feasible

In 1H 2018, YEG almost doubled its revenue and tripled its NPAT compared to 1H 2017, fulfilling 42% of revenue and 54% of profit according to the 2018 plan. In 1H 2018, traditional media and digital media contributed 47% and 49%, respectively. YEG targets that in three years its revenue structure will be: 25% from traditional media, 25% from YouTube channels and 50% from the non-YouTube segment which is a new division of YEG – it enables to advertise on websites, apps and online games.

Currencies and contagion

Sharp weakness in many emerging market currencies in the past few months has brought back the old fear of contagion to smaller equity markets globally. To us this is a valid point.

PVT - Result Update on PetroVietnam Transportation Corp JSC

Not only the positive general business, the divestment story in 2019-2020 is also a good news for stock price. Based on the target price of VND 21,200 per share and the expected cash dividend of VND 700 per share, generating a total return of 26.2%, compared to the closing price on Sep 6^th 2018, we recommend BUY the stock

Insurance: New Trend in M&A - Accelerating to Transformation and Innovation

The recent research conducted on 200 insurance executives by KPMG International titled “Accelerated evolution: M&A, transformation and innovation in the insurance industry”, has confirmed the changes in M&A and cooperation in the last few years in the industry.

Banking credit growth in 1H and 2H2018

SBV’s affirmation for the absence of additional credit limits in second half of the year will not have significant impacts on banks. Those with high credit growth in the first six months have their own plans to cope with the instruction by shifting their loan book structure towards higher profit segments, through which slowdown credit expansion.

Nevertheless, we hold the view that the banks’ efforts to refrain their lending might create adverse effects if too many banks are shifting towards the high profit retail segments. This will in turn intensifies competition in these segments and squeeze the opportunities for NIM improvement.

Update on the Vietnam Bond Market

There may be some issues with the Vietnamese government bond issuance plan which can’t seem to fulfill the initial 2018 target. While the primary market is quiet, there is a remarkable foreign net outflow in the secondary market. Yields have surged in recent months.