Plastic material – Remain advantage from low-cost raw materials
28-10-2024
: BMP, NTP
: Materials
: Thach Lam Do, CFA
Tags:
- For 9M24, companies have not recorded revenue growth, as demand for construction plastic products has not recovered significantly; with revenue of BMP and NTP reaching VND 3.6 trillion (-3% YoY) and VND 3.8 trillion (equivalent to the same period in 2023), respectively. However, there is a bright spot in that the profit margins to improve compared to 2023, when PVC resin prices decreased to USD 790/ton (-9% YoY), due to: 1/ Oversupply of plastic raw materials in the Chinese market; 2/ Demand for construction materials has not fully recovered. Gross profit margins (GPM) of BMP and NTP in 9M24 reached 43% (vs. 41% in 2023) and 30.5% (vs. 30% in 2023), respectively, remaining at the highest level in the 2020-2024 period.
- For Q4/2024, the peak period of domestic construction, we expect output to recover slightly (compared to Q3/24 and to the same period in 2023), when the residential real estate market shows signs of recovery. In terms of raw materials (PVC resins), demand has not yet recovered significantly, thereby we expect raw material prices to fluctuate within a narrow range of USD790/ton (equivalent to Q3/2024).
- For the company in the coverage list - BMP, we expect Q4 sales volume to reach 25 thousand tons (up 2% YoY), corresponding to estimated revenue of VND 1,468 billion (equivalent to Q4/2023). GPM margin remains at 43% (equivalent to Q3/24, based on PVC price scenario), with SG&A expense/revenue ratio to reach 15% (when BMP maintains discount policy with agents to maintain market share), we estimate BMP's Q4/24 net profit to reach VND 282 billion (+13% YoY). For the whole year of 2024, BMP's NPAT can reach VND 1,042 billion (equivalent to 2023 and completing the company's business plan).
Update on monetary market in Oct 2024
25-10-2024
: VDS
: Macroeconomics
: Ha My
Tags:
- The dong has increased rapidly following the recovery of the DXY index.
- Monetary policy remains supportive but is ready to respond to short-term pressures
Seaport – The period of rapid growth is over and unpredictable factors await
24-10-2024
: GMD, HAH, VSC
: Seaports
: Quân Cao
Tags:
- In September 2024, commercial activity contracted compared to the previous month. The estimated value of seaborne container imports and exports reached USD 19 billion (+15% YoY) and USD 13 billion (+18% YoY), respectively. For 9M2024, the value of seaborne container imports and exports reached USD 164 billion (+14% YoY) and USD 110 billion (+16% YoY), respectively.
- Compared to the previous month, the throughput at both Hai Phong and Vung Tau ports contracted in September 2024, in line with the trade flows. Total throughput in these two regions decreased by 10% MoM and 12% MoM, respectively, yet still showed positive growth of 7% YoY and 33% YoY, reaching 602 thousand TEUs and 548 thousand TEUs, respectively. This decline reflects an annual pattern typical of the industry's peak season. The peak season falls between June and August, accounting for 27% of the value and volume of seaborne container imports and exports.
- Cargo clearance is forecast to slow down in Q4-FY24 but should still maintain positive growth compared to the same period last year. We expect demand for non-essential goods to improve more markedly in 2H2025, driven by the Federal Reserve's interest rate cuts, which ease debt burdens and increase real purchasing power for US consumers.
- The outlook for global trade in 2025 remains clouded by "lingering" risks that could skew forecasts, including the US presidential election on November 5, 2024, and persistent geopolitical tensions.
Real Estate Market 9M2024 – Supply Balance Expectations
23-10-2024
: KDH, NLG, PDR
: Real Estate
: Giao Nguyen
Tags: KDH NLG PDR
- In Q3/2204, condos accounted for nearly 70% of the new supply for sale, with most of them coming from the high-end and luxury segments (selling price over VND 50 mn/ m2 for condo), in which the Hanoi condos market continued to record positive signals in terms of both supply and absorption.
- Primary selling prices continued to maintain an upward momentum, the Hanoi market was close to VND 64 mn/m2 (+9%QoQ, +26%YoY), while the Ho Chi Minh City market increased slightly and reached 66 million VND/m2 (+4%QoQ, +8%YoY). We believe that the upward trend in prices (in both primary and secondary markets) will continue in Q4/2024 and the first half of 2025, implying that the demand for condos remains high.
- We expect the supply constraints of Ho Chi Minh City. Ho Chi Minh City will soon be dismantled with changes in new laws and mechanisms: 1/ piloting the expansion of land for commercial housing to remove the supply to the market, 2/ announcing a new land price list for Ho Chi Minh City, accelerate the process of compensation and calculation of land use levy for projects with legal problems. Some listed investors have projects expected to open for sale in Q4/2024, including: KDH (Foresta), NLG (Mizuki Park, Nam Long Can Tho), PDR (NTMK, Bac Ha Thanh).
PVS – O&G projects to be 2024-2025F growth drivers; offshore wind energy for further development
22-10-2024
: PVS
: Oil & Gas
: Thang Hoang
Tags:
- 2024 marks a significant milestone for PVS with the implementation of several critical oil and gas projects such as Block B, Su Tu Trang, and Lac Da Vang. However, during the project's first year, PVS focus mainly on surveying, design drafting, and equipment procurement, meaning the construction work will be concentrated in 2025 and 2026.
- We project revenue of VND 22,730 billion (+17% YoY) and NPAT-MI of VND 1,107 billion (+8% YoY) for 2024. Looking forward to 2025, we expect strong growth earnings growth for PVS, with revenue of VND 38,235 billion (+68% YoY) and NPAT-MI of VND 1,509 billion (+36% YoY).
- In the long term, we believe PVS will continue to benefit from the growing trend of offshore wind power projects.
- We have an ACCUMULATE rating for PVS shares with a target price of VND 42,300 per share (+10%) based on the FCFF and P/E methods. Despite the company's positive outlook, we believe the current price already reflects its growth potential from continuously securing contracts, with a P/E of 20x, close to the three-year average of 21x
Coated steel market update for Q3/2024 – Maintaining growth
21-10-2024
: HSG, NKG
: Materials
: Dung Ma
Tags:
- In Q3/2024, total domestic consumption reached 629,433 tons (-1.4% QoQ, +23.9% YoY). Notably, the Northern region recorded outstanding growth (+41.5% YoY, +2.5% QoQ), while the Southern region remained the largest consumer with 365,270 tons. Exports continued to grow at a high rate in Q3/2024 (+39.4% YoY); however, the export share compared to domestic consumption dropped to 50% in September 2024, as global steel prices showed unfavorable conditions.
- In September 2024, news of the People's Bank of China's economic stimulus package provided a positive boost to the steel industry, with Chinese HRC prices reacting by increasing 12% since the beginning of September. There is optimism that steel prices in Q4 will recover to the USD530–580/ton range. For 2025, we expect Vietnam's domestic steel industry to maintain a growth rate of +10% YoY, however, the export market may face challenges (with volumes down 5% YoY), due to anti-dumping and anti-subsidy investigations on CORE steel and a slow recovery in global demand.
- Based on the current information, we maintain a short-term investment recommendation for HSG stock in Q4, with a target price of VND 23.500 (+14% from October 18, 2024) due to: 1/ The domestic real estate market, especially in the Northern region, is recovering, where HSG leads the market share, 2/ The dependency on exports is gradually decreasing (59.7% in Q3/2024 compared to 68.9% in Q1), and 3/ Domestic steel prices are rising again, improving HSG's profit margins in Q4 2024.
CTG – Notes from 2024 EGM and Q3-2024 & 2024 Forecasts Update
18-10-2024
: CTG
: Banking
: Tung Do
Tags:
- On October 17, CTG successfully held an Extraordinary General Shareholders' Meeting, during which two additional members were elected to the Board of Directors for the 2024-2029 term
- For Q3-2024, we forecast Net Interest Income (NII)/Total Operating Income/Consolidated Profit Before Tax (PBT) to grow by 19% YoY/12% YoY/42% YoY, respectively. The key expected drivers for PBT growth include (1) a 5basispoint (bps) expansion in NIM from a low base in the same period, (2) credit growth of approximately 16% YoY (or 9% year-to-date), and (3) a 7% YoY reduction in credit risk provisioning costs. Credit costs are also expected to decrease by 12% compared to the previous quarter, thanks to the partial reversal of provisions set aside for non-performing loans (NPLs) in Q2-2024, which have since been controlled and reclassified as standard loans. As of the end of Q3-2024, the NPL ratio before CIC adjustments stood at 1.4%
- For 9M-2024, PBT is estimated to reach VND 19.9 trillion, up 14% YoY, fulfilling 67% of the current 2024F PBT forecast
- For the full-year 2024F projection, we have revised our forecast downward by 5%, reducing the expected PBT to VND 27.9 trillion (+12% YoY) from the previous estimate of VND 29.5 trillion (+18% YoY). This adjustment is based on: (1) a slight reduction in consolidated credit growth for the year from 14.4% to 13.8%, as the credit growth recovery remains unstable, and (2) a 7 bps decline in NIM to 2.92%
- We have adjusted CTG's target price downward by 3% to VND 40,400 per share, reflecting the revisions in our updated forecast. With a total expected return of 11% based on the closing price as of October 18, 2024, we maintain our ACCUMULATE recommendation for CTG
Decoding the 1,200+ of VN-Index after more than 20 years
17-10-2024
: VDS
: Financial Services
: Hung Le
Tags:
- After the 2007-2009 financial crisis, international stock indices such as the Dow Jones and S&P 500 showed strong growth, while the VN-Index hovered around 1,000 points for more than 20 years.
- The VN-Index reached a high P/E valuation (35 times), reaching an all-time high of 1,155 points in March 2007, but investment returns were not attractive, leading to a correction to more reasonable levels after the 2008 crisis.
- The investment performance of the VN Index has been correlated with the S&P 500 since 2009, although the S&P 500 has outperformed since 2016 due to a higher P/E valuation.
- The valuation range and EPS growth trend of VN Index maintained around +8.4%/year or more implying an expected return of over 14.2%/year in the long term (Table 1).
Update on Vietnam’s trade in 9M2024
16-10-2024
: VDS
: Macroeconomics
: My Tran
Tags:
- Trade maintains a high growth rate in Q3/2024.
- Agricultural, forestry, and fishery exports strengthen their position in Vietnam's export structure.
- Q4 exports may maintain double-digit growth, around 10-13%
EraBlue – MWG's ambitious game needs more proof
15-10-2024
: MWG
: Retailing
: Hung Nguyen
Tags:
- Compared to the most recent “going abroad” in Cambodia, MWG’s “Erablue” move to cooperate with the large ICT retail chain Erajaya, aiming to penetrate the Indonesian CE market makes more sense when this market is at a stage when it is likely to explode in the near future and has much larger potential market size than both Vietnam and Cambodia.
- The “necessary” conditions for Erablue’s success are already there (market factors), however, we believe that Erablue needs additional “sufficient” conditions to compete with traditional mom-and-pop stores, other CE retailers, and especially “online platforms” – currently growing rapidly in Indonesia, to become the “second Dienmayxanh”.
- We believe that Erablue has the potential to capture ~70% market share in the CE pie from other small stores/retail chains, thanks to DMX’s successful formula and the operational experience from Erayaja. However, the chain's growth depends heavily on the speed of converting purchases to e-commerce platform, which have price advantages and are growing "fast" in CE field, similar to the Vietnamese market.
- We recommend that investors closely monitor the pace of store openings and the chain’s specific quarterly financial reports to accurately assess the potential of the Erablue and the level of impact on the overall valuation of MWG (accounting for 45% of the chain's shares)
Industrial Park - Development orientation for ready-built factories/warehouses
14-10-2024
: LHG, SIP
: Industrial Land RE
: Thach Lam Do, CFA
Tags: SIP LHG
- We observe stable growth in demand for ready-built factories and warehouses (RBFs/RBWs), a sector that industrial park developers may increasingly focus on for long-term expansion. According to JLL, from 2019 to 2023, the supply of RBFs/RBWs recorded an average annual growth rate of 14.5%, with a total leasable area increasing by 6 million sqm. By 2027, the total leasable area is expected to reach 19 million sqm, with a projected average growth rate of 8% per year between 2023 and 2027.
- For Vietnam’s industrial park developers, expanding into RBFs is also a strategy to capitalize on available industrial park land, though it remains on a small scale. We believe this development model will attract more attention from industrial park companies in the near future due to its key advantages: 1) Providing stable cash flow; 2) Suited to small and medium-sized customers; 3) Meeting the high demand for RBWs, particularly serving e-commerce activities in Tier-1 cities like Hanoi and Ho Chi Minh City.
- Among companies in our watchlist, we see several have aligned their investment strategies with this business segment to maximize the potential of their industrial park land. In 2024, LHG completed the construction and has begun leasing RBFs at lot 3A 26-19 (LH3 Industrial Park) and plans to build additional RBFs at lot 3A and high-rise RBF in 2025, raising the total leasable area to 136,800 sqm (+20% YoY). SIP is partnering with CBRE to develop a system of RBW and a logistics center at LMX03, which will enhance LMX03’s business performance in the coming years.
Textile Industry – Profit faces challenges in highly competitive context
11-10-2024
: TNG, TCM
: Textile & Garment
: Quan Cao
Tags:
- Vietnam's textile industry is facing intense competition, not only from other countries but also among domestic companies.
- The room for margin exansion is shrinking due to increasing competition.
- In the long term, growth opportunities will arise for companies that adopt advanced technologies to improve productivity or focus on high value-added products such as designer goods
28-10-2024
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