VJC – Company Report on 03/06/2017

Operating its first commercial flight on December 2011, VJC has grown rapidly into the second largest airline in Vietnam in a very short time. Successful application of LCC model, efficient use of capital to expand its fleet, and unique marketing strategy have helped the company to achieve what the previous airlines failed to do: stimulating and exploiting the full potential of the domestic market. VJC’s success, thus, has become a fairy tale of the aviation industry.

CTD- Strong and Wise

As a market leader in the domestic construction sector that bears no bank loans, Coteccons has significant opportunities to expand its backlog and revenue, as well as to stabilize its operating efficiency. However, CTD has also been making efforts to diversify its business lines to ease the risks from the peaking real estate market. The recent private placement shows that CTD is observant enough to make full use of the growth in demand, as well as to find feasible alternatives to achieve long-term development.

Where will the USD head to?

Donald Trump had a speech before the Congress for the first time yesterday. In contrast to many previous appearances before the public, Trump scored big time in this speech. The new president assured the Congress that significant progress has been made since November 2016, as the US stock market has increased nearly $3 trillion, GDP grew at 2% in the last quarter and employment data was better than expected.  He also talked about domestic problems in America, and about how globalization has done more harm than good to the business environment.  He also mentioned employment and the huge trade deficit of $800 billion, and suggested his plan to use $1,000 billion in infrastructure to rebuild the country. His government will proceed to build the wall across the southern border, yet his attitude towards immigration has changed, suggesting a proposal to help immigrants. Without a doubt, the USD and the stock market has received a huge boost, while gold and other safe haven assets, the JPY and bonds declined. Gold fell from its 4 months high of $1263 to $1235 and the USD/JPY saw an impressive swing in just a couple of hours, increasing from 112 to 114 (+1.7%).  It is still uncertain whether Trump’s proposals will pass through the Congress, and whether this global economic trend will continue. According to Deutsche Bank, there will be 5 stages of economic sentimental development under the new governance.

Update on Vietnam’s Economy in the First 2 Months of 2017

Macroeconomic developments in the first two months have not been so favorable and this requires wise intervention of the policy makers to promote economic growth. Inflation and the exchange rate remain under control, thus, the interest rate will not change in the short-medium term.

MWG – Growth Story Will Continue to be Told

On 24/02/2017, Mobile World Investment Corporation (MWG – HSX) organized the first analyst meeting of 2017 to announce its 2016 business results along with its current situation and future plans.  Moreover, it has also announced its Q1 2017 results.  The current price still reflects the optimism for the significant growth and the rapid expansion of DienmayXanh.  Furthermore, MWG has also been taking measures to ensure the profitability of Bachhoaxanh and to develop the management system to solve logistics issues.

Cement Industry: Harder and Harder

According to Vietnam National Cement Association (VNCA), domestic consumption reached 59.35 million tons, up 7% compared to 2016. In particular, the volume of Vicem group accounted for the largest proportion (35.9 %) of the total consumption and had the highest growth rate (11%) compared to the remaining two groups (affiliate group and other cement companies). Thanks to the implementation of many infrastructure and new real estate projects, domestic demand expected to remain strong in 2017. In contrast, the export volume decreased by 2% YoY and had no signs of recovery due to (1) fierce competition with Thailand and China and (2) application of cement export tax of 5% and no VAT refund for export making price competition more difficult than before.

PGI – Result Updates

In 2016, the company's gross premium increased by 11.3% YoY for the first time since 2012. Motor vehicle insurance accounted for 44% of its toal gross premium followed by 18% from hull and P&I insurance and 12% from personal health & accident insurance.

NT2: Business Update

We also learned from the proposal that its guidance for 2017 NPAT is VND672 billion, resulting in a cash dividend of 25%.  It is likely that it will be cautious when making its 2017 plan due to its first major maintenance, which it plans to complete during Oct 2017, Although they plan to produce 4.5 billion kWh in 2017 (equivalent to 2016), the plan for profit is 8% lower.

Fertilizer Industry Outlook: Waiting for New Opportunities

Vietnam’s fertilizer industry faced many challenges in 2016, including domestic demand decreasing, northern urea producers stopping operations, lower selling prices, increased competition, and the unfavorable tax policies.  These non-positive factors have been reflected in the business results of some companies in this industry.  In 2017, the price and output of fertilizers recovered, and the addition of NPK projects and new policies are expected to improve the outlook of this industry.

Textile Industry Prospects for 2017: Optimism Due to Recovery in Demand

Export turnover growth in Vietnam has suffered a slowdown in growth since 2015, along with the weak global textile demand. The main reasons for this included the following: (1) the slowdown in economic growth in US, Japan and the EU, which are the largest markets for Vietnam’s textile products and (2) orders shifting to other rival markets including Cambodia and Bangladesh because of favorable exchange rates and tariffs.

PAC: Opportunities Have Passed/Stable Outlook in 2017

Dry Cell & Storage Battery JSC (PAC-HSX) had a successful year in 2016 as a result of strong demand,  low material prices, and the stable exchange rate. Although there is still positive demand ahead in 2017 due to the double digit growth in automobile sales, there are still other factors that will not support PAC’s business in the future. The increase of input prices will force PAC to make some adjustments to ensure the stability of its business. On top of this, the Vinachem divestment is unlikely to take place this year. However, information relating to this divestment’s probability, as well as the enthusiasm relating to its new strategic partner, can help PAC’s valuation remain high (~15x PE). Please refer the content below for more details:

PGS – Stable Growth

On 16/02/2017, RongViet Research had a meeting with the representative of Southern Gas JSC (PGS – HNX). 2016 was a transformation period for PGS, as the company completed its divestment in CNG, which gradually improved its financial situation.  Moreover, GAS plans to increase its ownership of PGS to 51%, which will allow PGS to capture more market share and to record higher growth.