August Trade Preview: Stable Growth in Q3

• Vietnam export growth surprised on the upside in August.
• Exports of electronic products improved while that of textiles, footwear and bags products showed slowdowns.
• Imports of investment goods (machinery equipment and steel) signaled slower growth in Q3 due to a seasonal effect.
• Trade growth was stable in Q3, continuing to pick up in the last quarter of this year.

HUT - Company report introduction

Tasco (HNX:HUT) is a large private infrastructure investor in Northern Vietnam. The firm has actively raised fund to finance various PPP toll roads in the past years. Upon operation, these projects would provide the firm with a steady stream of cash flow over a long period. To create short-term growth, HUT decided to venture in real estate taking advantage of the land bank exchanged for ready-built infrastructure. FY2017 guidance is highly achievable given three open-for-sale real estate projects got sold out and await handovers. In 2018-2019, Foresa My Dinh villa project is expected as a source of earnings driver while full year operation of BOT Cau Nghin toll road from 2018 would improve HUT’s operating cash flow. We take HUT’s recent stance on postponing new BOT investments a positive signal with regard to lesser future capital need and reduced risk of share dilution. However, recent social unrest on toll road projects in Vietnam may put the firm under more scrutiny.

Real Estate Projects Update in Phu Nhuan District, Ho Chi Minh City

Real Estate Projects Update in Phu Nhuan District, Ho Chi Minh City

Replacing Foreign Drugs with Cost-effective Domestic Medicine – a Trend in Upcoming Regulations

Overall, Rong Viet Research estimates that domestic pharmaceutical companies will benefit significantly from these policies, especially those with modern factories that manufactured quality generic drugs to replace imported drugs. Five years after Thailand implemented UHC, generic drugs produced by state owned companies replaced use of branded generics and generics produced by other foreign firms in some areas. The Government Pharmaceutical Organisation supplies 80% of the drugs in public hospitals, as Government produced drugs receive preferential status from hospital purchasers. The situation is replicating in Vietnam with a recent push by the central government for the majority of public tenders for drugs to be locally manufactured.

SMC- Focus on Improving Gross Margins

SMC Trading Investment JSC (HSX:SMC) is one of the largest firms in the business of steel product distribution. Its major activities include trading and importing various types of steel, metal goods, construction materials, interior design materials and construction equipment of all kinds, mechanical equipment, frame warehouses, factories with aluminum structures, steel and stainless steel. SMC’s distribution market share is estimated at 7.6% in 7M 2017.  Its sales volume, concentrated in the southern region, could account up to 15% of the region’s total volume.

VSH - Company report release on Sep 06, 2017

Vinh Son–Song Hinh Hydropower JSC (HSX:VSH) is a big player among the listed hydropower companies with potential for large expansion capacity in the next three years. In the short term, we highly appreciate VSH for the high operating efficiency of its two current plants, resulting to high competitiveness in the Competitive Generation Market (CGM). In the long term, the contribution from Thuong Kon Tum hydropower plant with increasing profit would drive the growth story of the company and become the main reason for its stock price to reach new heights.

Quick updates on VNR

Total inward reinsurance premium for the 1H2017 recorded VND849.4 billion (-4.3% YoY, 48% year plan). Net earned premium reached VND278 billion (-11.1% YoY, 47.1% year plan). Such slight decrease comes from the temporary slow down of the whole non-life insurance market in 1H2017. Total premium increased only 11.7% compared to 15% of 1H2016. Some segments of VNR witnessed this slow down such as:

Major Oil&Gas Projects in Vietnam - Part 2

The business results of upstream and midstream companies have been hurt at the expense of the falling oil price since middle 2014. Subsequently, we saw a significant tumble in the stock price to the bottom in many years. However, a recovery in oil price from 2016 is cutting down the pressure on the stock price and creating an attractive price level in the long term.

HSG- Anticipating a Sharp Rebound in Q4 FY2016-2017

HSG has gone through a rough quarter mainly due to the effects of the sliding HRC price on the company’s record-high inventory level in the beginning of the quarter. In addition to the poor performance, the Chairman’s announcement of ownership reduction took a toll on the share price. However, RongViet Research maintains the positive view on this stock owing to HSG’s potential in Q4 FY2016-2017. We anticipate a bounce back in their net profit because of the recent HRC price rally.

Multiple Impacts from the Amendment Proposals on VAT Regulations

The Ministry of Finance (MoF) recently proposed some changes on the VAT policy, in which fertilizer products will be subject to change from non-VAT to 5% or 10% VAT, with preference to the lower rate. The MoF expects these changes to take effect on 1 January 2019.

Major Oil&Gas Projects in Vietnam - Part 1

The business results of upstream and midstream companies have been hurt at the expense of the falling oil price since middle 2014. Subsequently, we saw a significant tumble in the stock price to the bottom in many years. However, a recovery in oil price from 2016 is cutting down the pressure on the stock price and creating an attractive price level in the long term.

Manufacturing and Consumption Could Boost GDP Growth in Q3

Yesterday, GSO announced data about Vietnam economy in eight months of 2017. Based on the data, we saw three main movements as follows: