HND: A New Choice for Risk-Averse Investors

HND’s manufacturing volume was still lower than its designed volume (7.2 billion kWh per annum), despite HP1 and HP2 being in operation for six and two years, respectively. Hence, in the very first phase of HND’s life, we believe that there is room for HND’s output growth in the upcoming years. The CAGR is forecasted at 2.7% between 2016 - 2018. Moreover, the company initiated a cash dividend of 550 dong per share in 2013, and gradually increased it in the following years. For FY2016, the cash dividend is planned at 4% due to its liability to allocate unrealized FX loss from previous periods. We expect that HND’s dividend amount will increase after full allocation.

VSC – 3Q Results update report introduction

VSC’s YoY slump in Q3 2016 and 9M2016 earnings was anticipated in our April initial report, given last year’s extraordinary profit recognition from refrigerated cargo (reefer) in the same period. In the short run, VSC’s earnings growth could be slower than expected.  VIP Greenport’s higher cargo throughput makes up somewhat for Greenport’s projected decline amid rising seaport supply in Hai Phong, and the new cargo source from FDI invested projects will take time to kick in.

Oil & Gas – Construction Companies Cling onto Long-term Prospects (Part 1)

At the present time, construction and manufacturing companies in the oil & gas industry have already announced the business results for Q3 2016. As expected, published figures continue to demonstrate the downtrend of the oil & gas industry over the last 2 years. Accordingly, revenue and profit of 4 mentioned companies which are PVS, PXS, PVB and PXT, all experienced deterioration compared to the same period last year. In 2017, construction companies in the oil & gas industry could not benefit from the initiation of several major energy projects due to the early phase of construction. However, long-term prospects for 2018 and onward could be future catalysts for the growth and turn-around of such companies after a long period of “pessimistic” business results.

NKG – Business result update release

Nam Kim Steel JSC (NKG-HSX) is one of the largest producers in the domestic coated steel market and also has been known for its stock price performance of nearly 100% increase in the most recent 6 months. While input prices for the steel industry have been strongly fluctuating in the last year, coated steel makers’ business results have drawn attention owing to several three-digit NPAT growth rates. The recent improvements are expected to remain and NKG is predicted to stabilise its efficiency in Q4 2016 and 2017.

Comment on VNR’s 9M2016 Business Results

In the third quarter, the inward premium of VNR was 431 bn VND (-5.1% YoY). The minor drop can be explained by the Samsung Galaxy Note 7 of Samsung, as VNR is the reinsurer of Samsung’s export products. Indeed, the import/export insurance posted the largest decline after 9 months. Despite this decline in Q3 2016, the company still posted a YoY increase of 1.4% after 9M2016 thanks to strong growth in the 1^st half of FY2016. The 9-month reinsurance premium was 1,354 bn VND, equivalent to 78.4% of FY2016’s plan. The outward premium, on the other hand, sought an increase of 9% YoY. According to these movements, the 3-quarter net earned premium of VNR was 441 bn VND (-5.9% YoY).

October macro data review: Steady growth, higher inflation and slowly currency depreciation

Growth steady with supportive policy:  Industrial production growth was stable at 7% yoy in October. The most notable thing is that manufacturing growth, the best monthly proxy for GDP growth, stayed high at 11.9% yoy. Recall of flawed Galaxy Note 7 phones forecast to have small impact on exports, this problem might reduce Vietnam’s 2016 exports by 0.3%, according to GSO. In addition, computer, electronic and optical products’ production index show that growth momentum remained steady. As a result, we expect Vietnam to grow around 7% yoy in the final quarter of 2016. Policy stance is moving toward expansionary to achieve new GDP growth target (6.3-6.5% in 2016).

Real estate Q3 earnings at a glance

Several real estate companies announced Q3 and nine-month earnings last week. While some posted upbeat revenue and earnings growth, others reported a sharp decline in sales and profitability.

HABECO and SABECO: Potential for improvement in business performance

Today is the first trading day of Habeco (BHN - Upcom), which is one of the two largest domestic brewing companies (18% market share). Similar to Sabeco, the BHN’s process of listing as well as state divestment draw the attention of many investors.

Using ROE is considered as the simplest and easiest way to measure company performance. We use DuPont Analysis (5 steps) to break apart ROE in order to take a deeper look into HABECO, SABECO and three other Asian brewers’ business performance. 

CTD- Change to achieve long-term growth

CTD has concluded a stable Q3/2016 compared to the previous quarter, recording revenue and NPAT of over VND 5.300bn and VND 366bn respectively, +39% and 74% yoy. Year to date, CTD delivered revenue and NPAT growth rates of 64% and 114%, remarkably higher than those of 2015.

SVI - Remains solid in competitive environment

RongViet Research has just discussed with the representative of Bien Hoa Packaging company (SVI – HSX), one of the biggest packaging manufacturer in Southest Vietnam, with main competitors being Box-Pak (Malaysia) and Vinh Hung. Most of its customers is in the consumer goods industry, including Unilever (16% of revenue), Sabeco (new customer this year, 5-6% revenue), Pepsi, Cocacola (2-3% each).

BFC - Company report release

Binh Dien Fertilizer, owning the well-known brand “Dau Trau”, is the leading domestic firm in producing and distributing NPK products. With well-established history, the company has built a strong and efficient distribution network nationwide and regionwide.

PPC: 3Q2016 business result update

PPC has been facing an uneasy FY2016 due to (1) prolonged PPA negotiation for plant PL1, (2) major maintenance of 2 units and (3) declining selling prices in CGM. However, with new contract, we expect PL1 could operate at capacity of 82% - 85% in FY2017 compared to 63% in FY2016 thanks to a surge in contracted revenue. In conclusion, we think PPC has survived its toughest time and will recover in FY2017. At today close price VND14,900/share, PPC is traded 24% discount from our target price.