Update on 2017 Prospects for Several Construction Stone Companies

The stock price movement for the majority of construction stone companies has recovered quite well amid the market’s continued positive performance. Specifically, the share prices of C32, NNC, KSB and DHA increased by 13.6%, 8.5%, 4.6% and 4.3%, respectively.  This recovery came shortly after these stocks reaching a 1 year low during the beginning of this month. The main reason for this increase was the previous strong correction of these stocks, strong fundamentals for these companies, and rumors relating to the expansion of Nui Nho and Tan Dong Hiep Mine. We would like to show a quick update on 2016 earnings results and the 2017 outlook for these enterprises.

CNG – Negative Prospects for 2017

On 14/02/2017, oil & gas analyst from RongViet Research has a meeting with the representative of CNG Viet Nam Joint Stock Company (CNG – HSX). 2016 business results did not show remarkable growth. 2017 will be the period that PVGAS has several changes in price mechanism for gas distribution companies. As a results, it will negatively impact on the performance of CNG.

Automotive retail industry outlook in 2017: Twilight?

The automotive retail sector has delivered positive growth in recent periods.  In 2017, we believe consumption growth is expected to continue to rise due to the increase in disposable incomes and the increased demand for transportation. At the same time, 2017 is considered as a prominent year due to the significant changes in policies that will protect Vietnam’s developing automotive industry from the pressure of FTAs. Furthermore, the wave of car imports from ASEAN countries will force operators and executives to focus on adapting to meet the new competition from imports. Our view based on 3 reasonings below:

CTI – Strong Long-Term Growth Prospects

Cuong Thuan IDICO JSC (CTI-HSX) continues to benefit from rising infrastructure demand in Dong Nai. During FY2016, the firm’s revenue and NPAT increased by 27%YoY and 66% YoY respectively. The results were driven by strong performance of road toll operations and construction activities. The company’s toll revenue was VND176 billion (74% YoY growth), which was driven by CTI receiving approval to collect toll from Phase 1 of BOT 91 and from its BOT Vo Nguyen Giap project’s toll fee rising by 60% in the beginning of 2016. Construction revenue recorded stable growth of 10%, mainly from the recognition of its own development projects.

REE – Benefits from the Recovery of the Real Estate Market

REE released it Q4 financial report and had very strong performance. Specifically, in the last quarter of 2016, the company recorded VND1,300 billion in revenue (+200% YoY) and VND620 billion NPAT (+240% YoY). For the full FY2016, REE realized total revenue of VND3,659 billion (+38.4% YoY), resulting in NPAT increasing by 30%, equivalent to VND1,171 billion.

Expanding International Routes - The Inevitable Trend

According to RongViet Research’s estimations, domestic air passenger transportation in 2016 was approximately 30 million, of which Vietjet Air (VJC) and Vietnam Airline (HVN) accounted for 13 million and 12.7 million, respectively. Despite these impressive figures, these airlines still need to exploit not only domestic, but also international routes in order to fully utilize their upcoming aircrafts.

HAH - Small Ports Have Been Hit the Hardest

Declining cargo growth and new port supply both led to intense competition for port operators in Hai Phong (Northern Vietnam) in 2016. Small port operators have been hit the hardest by these changes. Consequently, Hai An Stevedoring and Transport JSC (HAH-HSX) saw revenue and earnings after tax fall by 7%YoY and 20%YoY, respectively.

HPG’s 2016 Business Results: Thriving Profitability

Since the company has been continuously improving its recently completed plant in Hai Duong, HPG is capable of producing over 200,000 tons of construction steel products per month. As the company’s well-developed retail network assists its sales volume, HPG has now captured over 22% of the domestic market share for long products, allowing it to overcome VNSteel Group, which has a market share of 21%, and gain the top position.

Regarding steel pipes, several capacity expansions during the year enabled Hoa Phat to sell nearly 500,000 tons in 2016. At the present, HPG’s market share is approximately 26%, while its archrival, Hoa Sen recorded a reduced market share of around 20%.

The US Border Tax Adjustments (BTAs) and its Impact on Vietnam

During the Lunar New Year holiday, the market received negative news from the US, as it is considering border tax adjustments (BTAs) on imported products that will affect global trade.  This will affect a large number of global markets, particularly Vietnam.  In this note, Rong Viet Research would like to share with investors some preliminary comments on this policy and its impact on Vietnam.

MWG – Company Report on 03/02/2017

MWG continues to be the leader in the retail industry for mobile phones and consumer electronics.  However, expansion for Thegioididong could experience a slowdown this year. Consequently, DienmayXanh will be the main growth momentum for MWG for the next 2 years. RongViet Research believes that MWG will face several obstacles to achieve its similar rapid growth of the past, due to the saturation of Vietnam’s market coupled with the emergence of increased competition.

Company report Introduction - Airports Corporation of Vietnam

Airport Corporation of Vietnam (ACV-Upcom) operates 22 commercial airports across Vietnam. The firm’s business growth has been driven by the rise of incomes in Vietnam, increasingly affordable air travel expenses, and Vietnam’s deeper global economic integration. As Vietnam’s economy is still in its emerging state, we expect air traveler volume to continue growing at 15-20% in the coming years. Expansion at major airports (Tan Son Nhat, NoiBai, Da Nang and Phu Quoc) will add 23% passenger capacity between 2016-2018 and relieve the current state of under capacity. Since fixed costs make up the majority of airport operations, ACV’s recent increased service charges proposal would have a positive impact on the firm’s earnings if approved.

Auto Industry: A Look Back at 2016

The volume of automobile sales reached 304,427 units in 2016, increasing by 24% compared to the previous year. Despite its double-digit growth rate, the auto industry witnessed slower growth when compared to 2014 and 2015. Notably, there was a significant slowdown in the last two months of 2016, as automobile sales in 11/2016 and 12/2016 reached 28,431 units (-4% YoY) and 33,295 units (only +13% YoY), respectively. Passenger cars and commercial vehicles sales volume were 182,347 units (+27% YoY) and 106,347 units (+19% YoY), respectively. It should be noted that growth of demand for automobile consumption is currently in a downtrend.