Hydropower Industry – Industry Update Report Introduction

In 1H2017, the electricity market witnessed consumption growth overwhelming system capacity growth. Meanwhile, the hydrological condition seems to favor hydropower plants with amount of rainfall being notably higher than multiyear average  level. Compared to the situation in 1H2016, which was heavily influenced by El Nino, the above movements in 1H2017 would promise to deliver strong bounce in business result of hydropower companies.

When it comes to the second half, the most recent forecasts has dramatically reduced the risk of El Nino’s return in 2017, brightening the outlook of hydropower industry in 2H2017. However, 2H2017 business result would not have further surprise like in the first half.

Based on plan of EVN and the government’s intention to boost GDP growth in the 2H 2017, we expect that electricity consumption growth would continue to surpass system capacity growth in 2H2017. In this case, unless the hydrological conditions change badly, hydropower companies would reap positive overall 2017 business results.

DRC – Company Report Introduction

Da Nang Rubber JSC (DRC – HSX) is a leading domestic manufacturer in the tire and tube industry in Vietnam. In recent years, the company's new product - the Radial tire is still in the process of market penetration so that the result has not been as expected.

BFC - Result Update Report Introduction

Given that Q1 is the off-season for fertilizer consumption, while Q2 is the peak season, a small amount of profit transferred from Q2 to Q1 will make the Q1 results impressive. Coupled with the earlier start of the rainy season this year, we stand by our view that 2Q17 results will not record strong YoY growth as in 1Q17.

DRC - Update on Radial Tire Production and Sales

The radial tires project has become the most important and most widely held story that stock investors have set for DRC. However, in recent years, weak domestic penetration and intense competition in export, DRC's Radial segment has not shown any improvement. Moreover, DRC decided to reduce the depreciation time of equipment, which made the results of this segment more and more negative. However, since the second half of 2017, we think that Radial DRC's consumer outlook will be more positive and will likely start contributing to profit this year. With the intention of releasing a DRC update report in the next few days, we would like to share our views and perspectives on the DRC radial tire project.

HTI - Company Report Introduction

IDICO IDI (HTI–HSX) specializes in building bridge and road infrastructure. The firm is the investor of BOT An Suong – An Lac road in the Northwest of HCMC. This is the vital transport route for cargo from Southeastern and Central region to Mekong Delta region. Fast growing industrial activities and rising vehicle ownership would support traffic growth passing by HTI’s project tollbooth. The MOT forecasted traffic from HCMC to Long An to record annualized growth of 3.5% in 2011-2020 and 5.1% in 2021-2030. To strengthen its breadwinner project, HTI is investing flyovers at An Suong-An Lac’s major junctions to speed up traffic pace and create long-term competitiveness against the newly built HCMC-Long Thanh-Dau Giay and Ben Luc-Long Thanh Expressway.          

Electricity supply and demand outlook in 2017

Electricity consumption in 1H2017 grew by 8.5% and expect to grow even stronger in 2H2017 as the government has shown their determination to boost GDP growth aggressively in the second half, which implies higher electricity demand from the economy. Meanwhile, the total system capacity only increases by 3.9% in 2017, according to EVN’s plan. We regard these movements as supporting factor for electricity supply side in 2017.

CTI - Stock price facing short-term hurdle

RongViet Research would like to give investors some updates on the 1H2017 performance of Cuong Thuan IDICO (CTI-HSX) after the recent meeting with the firm’s representatives. CTI generates revenues from (1) road toll, (2) construction and (3) building materials

VCB - Positive Earnings Outlook

According to Directive 24/CT-TTg, the credit growth to the economy must reach at least 18% in 2017. As mentioned in the previous analyst pinboard, we believe that to meet this target, the credit growth of some large banks will have to increase from their current plan because: (1) With large credit market share (3 state-owned banks account for more than 33% market share), some percentage change in terms of credit growth in these banks will be large enough to fulfill the Government’s guidance and (2) The room of credit growth in 2017 of large banks has set around 15-16% while the room for smaller banks are quite high (>18%). Hence, we believe that credit growth in three state-owned banks, including BID, CTG and VCB, will increase by 2-3% from the plan set in the early year.

Concerns over the Divergence between Price and Volume Existing on the Market

Although the market has entered into an uptrend, there are still concerns regarding its liquidity. In 6M17, the market liquidity plunged on both the HSX and the HNX by 19.1% and 5.4% respectively, equivalent to absolute values of VND839bn and VND34bn respectively.

1H2017 Foreign Capital Inflows: a New Record since 2008

After 1H2017, total net buying value was VND9,200 billion, a 9-year high. Foreigners tended to pay more attention to F&B, construction and other relating sectors.

TTJ – A Small Ice Cream Company

Thuy Ta JSC (Ticker: TTJ) has been listed on Upcom for 2 weeks and was traded in the last 2 trading days. Currently, the share price is staying at VND49,900, up 60% against to the closing price of the first trading session. 

DNP - Update on water projects

Tomorrow is the ex-rights date for a stock dividend of 25% and preferential shares (40%) at par value to existing shareholders of Dong Nai Plastic JSC (HNX: DNP). This is the fourth consecutive year that DNP has paid high stock dividends, no cash and accelerated capital mobilization through the issuance of preferred shares to existing shareholders and private placement. However, DNP's earnings growth rate is good enough to maintain EPS as before dilution.