Updates on Foreign Capital Q1/2018

Over the first 3 months, foreign investors net bought more than VND 11,080 billion in the HSX while they net sold VND 647 billion in the HNX

Review REE's Sustainable Growth from the EPS Perspective

Before 2007, REE made a large exposure to stock market with a half of earnings coming from financial investment activities. However, the 2008 Financial Crisis has led to huge volatility in its business results and left the company a big lesson. After that, the restructure in REE’s portfolio with focus revolving around power & water utilities segment and improving management of its investee companies has shown its effectiveness with sustainable annual growth rate of around 13% in EPS.

FRT’s Annual General Meeting: Ambitious plans for the future

2017 was still a good year for electronics retailers, while MWG – the market leader posted a growth of 49% in revenue and 40% in NPAT, FRT was right behind with growth of 49% in revenue and 39% in NPAT. However, with MWG’s massive advantage in market share, its gross margin reached 16.5% which was significantly higher than 13.8% of FRT. Considering that MWG stops expanding its phone’s division to focus on developing Bach Hoa Xanh, we believe FRT will be more freely expanding its phone’s retailing business.

FMC - Shareholder Meeting 2018 Update

In 2017, FMC recorded net revenues of VND 3,248 Bn (+6.8% y/y). Net profit margin came at 3.8%, net income reached VND 122 Bn (+29.7% y/y) and EPS of VND 3,296 (+22.3% y/y).

A quick glance at Industrial Parks

Recalling 2017, Vietnam has seen a strong FDI pump into the economy with US$35.8 billion registered (+44.4% YoY) as well as a new-record disbursed amount of US$17.5 billion (+10.8% YoY). Industrial parks (IPs) in Ha Noi, Ho Chi Minh City (HCMC) and Bac Ninh are among the first beneficiaries.

Vietnam will benefit from US tariffs on Chinese imports

On 22^nd March 2018, President Donald Trump signed a memorandum that will slap tariffs of up to USD 50 billion for about 1,300 different Chinese goods imported into the US. The idea behind this is to decrease the theft of intellectual property and US trade patents by the Chinese government. It is suspected that some companies from China have invested in the US for the purpose of gaining from large-scale technology transfers. Taxable items may include: furniture, textiles, shoes, clothing, toys as well as information technology products, electronics and telecommunications equipment. At the same time,  China’s Department of Commerce also proposed a list of 128 US products worth USD 3 billion as a retaliatory measure. According to our observation, the war begun in 2017:

The VIX

Volatility is back so we look at what exactly that the VIX measures and what to make of it.

REE – Target for 2018 is still conservative

While setting a target of flat earnings for 2018, we believe that their NPAT could grow by over 20% versus 2017. In addition, the rise in 2018 earnings would come from three key business segment including M&E, Utilities, Office Leasing and Real Estate Development.

EU- Vietnam Free Trade Agreement

After 6 years, the EU-Vietnam FTA (EVFTA) will be signed hopefully by the end of 2018. Before looking at our assessment of the EVFTA’s impact on Vietnam, there are a few things to notice:

• The EVFTA is the second biggest benefit that Vietnam can expect after the US withdrew from TPP.
• The EU sped up the process of negotiating and signing FTAs with some regional countries in Asia, such as Japan, Singapore, etc.
• The EVFTA is split into two separate ones: the Free Trade Agreement and the Investment Protection (IP) Agreement because the issues of human rights in Vietnam. Although the Free Trade Agreement shall include the entire contents of the deal, the Investment part consists only the Liberalization of foreign direct investment.
• Vietnam is still under the impact of the EU’s yellow card over illegal fishing.

HPG- AGM on 22/03/2018: Medium-term Growth Motive is Small Scale Projects

On March 22^nd , HPG will hold its annual shareholders' meeting to pass resolutions on profit distribution, plan for fiscal year 2018 and update its operations. We think this is an important stage for Hoa Phat as it is carrying out many remarkable projects at the same time. In particular, the USD 2 billion steel complex in Dung Quat, Quang Ngai, is under construction and scheduled to start operation in Q3/2018 while the Mandarin Garden 2 apartment is being handed over to customers and a series of other agricultural projects are underway at the same time.

Overview of Chinese Outbound Tourism

China's outbound tourists are still less than 10% of the country's total population, and only 10% of the population hold the passports, which suggests huge potential in China’s outbound travel market. Vietnam, as a rising popular destination, should benefit greatly from it.