MWG: Supporting factors for Bach Hoa Xanh

Bach Hoa Xanh – the food chain that is drawing attention when talking about MWG. Many people have faith in the chain considering that the food retail sector is very fragmented and has a value of over USD 70 Bn. Some, however have a skeptical view as food retailing is a whole lot different from selling electronics. In fact, after nearly two years in operation, Bach Hoa Xanh still has not reached the break-even point, EBITDA loss of VND 60 Bn in Q1. However, the chances of success for Bach Hoa Xanh in particular and modern food retailers in general are still enhanced by the following reasons.

NT2 – Lower contract volume makes earnings more sensitive to gas prices

So far in 2018, for thermal power plants, the ratio of contract volume (Qc) to expected mobilized volume (AGO) decreased from 90% to 85%. As a result, the Qc of NT2 is 4,025 million kWh (-5.5% YoY), implying less protection from volatility in input prices. However, thanks to favorable movements of the EUR/VND exchange rate, we expect that NPAT in 2Q 2018 would improve significantly, leading to a seven percent NPAT growth for the year.

A Busy Week of Meetings mid-June

Investors will be busy next week when there are key meetings around the world. In the US, FOMC members gather to debate about the next step on the normalization of monetary policy, June 12 and 13. The current FED fund rate range is between 1.5% - 1.75%.

NTC - Plan to increase charter capital has not been decided

Bottom lines in 2017 and 1Q 2018 were driven by a strong surge in financial income. Revenue from core business was modest due to narrowing leasable areas. No space remains for lease in NTU 1 and NTU 2, while NTU 3 is in its final steps of legal application. Financial income reached VND 114 billion (+72% yoy), mostly interest income. The company currently has ample cash and short-term investments. These, along with investments in several associate companies, will partly ensure NTC’s income in 2018.

TCB – A representative of dynamic private business in Vietnam

After two trading days, TCB’s stock price decreased more than 33.3% from its initial opening price. We think it is due to profit-taking  from individual investors, who invested in TCB at a low price. In today’s analyst pinboard, we would like to briefly discuss the bank’s business.

SGP - AGM Update

Saigon Port Jsc (UpCOM: SGP) is a state-owned logistics company with Vinalines owning 64%. Freight handling (container and bulk cargo) is the core business, which accounted for 88% of net sales in 2017.

Japan continues to open its doors to foreign workers

As Japan’s population ages, the construction industry is more and more dependent on foreign workers. The country will hold the 2020 Olympic games. The country’s infrastructure is on average 40 years old.

CTD-Result Update on Coteccons Construction JSC

Rong Viet Securities Corporation hereby presents the Result Update on Coteccons Construction JSC (HSX: CTD) with the overall opinion as follows:

ANV - Improved Results thanks to Non-core Business Divestment

Since 2016, ANV has started to divest from non-core businesses and that has shown positive results.

FX Rate: Updates on Free Market’s Moves

Over 1.5 months ago, the Dong’s slight depreciation was mostly caused by the negative “spread-out” effect of ASEAN currencies’ depreciation. The USDVND on the free market increased by 0.4% during the time. In addition, an expected sessional trade deficit and significant increase in inflation also played key points in May.

Updates on Recent Market Movements

Total margin has been on the rise since 2014. Keep in mind that the data is collected at the end of every quarter. Brokerage houses manage to smooth out the numbers in a way to reduce the amount to a more reasonable level. Actual margin lending, within the year is likely to be higher.

PVS - Result Update on PetroVietnam Technical Services Corporation

We have a BUY on PVS, based on a valuation of VND22,500 per share and VND700 of cash dividend, 39% higher than the closing price in 30/5/2018. In our opinion, the drop in the stock market provides an opportunity for investors to buy this ticker.