SKG – Result Update report on 16/12/2016

• The company’s Q3 2016 business results displayed its ability to continue on a strong trend of growth
• Boosting its investment in existing routes will support short-term growth
• Long-term Prospects Depends on its New Routes

NT2: 4Q 2016 Business Results Update

Recently, we had a conversation with the CEO of NT2 to receive an update of the company’s business operations. During November 2016, NT2’s sales volume reached a mere 87% of its monthly plan, due to better-than-expected hydrologic condition and low electric demand. For the last month of 2016, when large hydro power plants run at low capacity to reserve water for the dry season next year, we expect that NT2’s sales volume will be higher.

VTO – Opportunity for Latecomers

Vitaco Tanker JSC’s (VTO-HSX) stock price has been extremely volatile this year. After a strong rally experienced during the middle of the year, its recent price correction could again open up a new opportunity for long-term investors.

Some Thoughts on the Fed Rate Hike Outlook

By tomorrow, markets will know the next move of the FED, which has been tightening its policy in contrast with other central banks in developed countries. The markets widely expect (nearly 100% probability) the Fed to raise rates by 0.25%.  Nevertheless, markets are longing to know projections for 2017 after this December meeting, as the US economy has experienced prominent changes in macroeconomic and political factors during 2016.

Examining Foreign Capital Flow in 2016

As of the end of last week, the VN-Index has risen by 17.76% YTD. However, the two exchanges have faced a massive sell-off from foreign investors (about VND6,731 billion). The selling began at the end of 2015, when the market expected the Fed to raise interest rates for the first time since 2008. This action has worried market participants because foreigners have never sold this strongly before. There was a period (from Feb 18^th to Aug 12^th) when they returned to buy, with the exception of April, as they sold VIC to take profit from VIC’s convertible bonds. Overall, this is the first year that foreign investors become net sellers since 2007.

VGC: Catalysts Ahead for VGC to Fully Realize its Potential

Currently, most of VGC’s building materials production lines are running at maximum capacity. Therefore, the firm is planning to add new production capacity by embarking on projects in energy saving glasses, toilet ceramics, tiles and special white glasses. Given that the majority of new projects are able to begin production in late 2017 and early 2018, the company’s main growth catalysts are likely to fully kick in after 2016.

2016 in retrospect

Following the global macroeconomic trend in 2016, with weaker growth than expected and lower trade activities, RongViet Research estimates a lower economic growth of 6.25% in 2016. The main reasons are that 1) Vietnam’s severe drought has negatively affected agricultural production 2) oil production has decreased and 3) trading activities have also decreased.

Good Business Based on the Perspective of Joel Greenblatt and Warren Buffett

The objective of investing in the stock market is choosing a good business to put money into, yet each investor has his own view about a good business. If they had to go with only one criteria, some may choose high ROE or high margins, some may choose strong revenue growth, while some may prefer competitive advantages. For Joel Greenblatt, the higher the Return on Capital Employed, the better the business.

CTI- Worth the Wait

Cuong Thuan IDICO Investment and Development JSC (CTI-HSX) has seen a notable correction recently after its strong rally experienced in previous months.  Since there have not been any adverse changes in fundamentals, any short-term stock price volatility could very well represent an opportunity for long-term investors to BUY this stock.

SAB - Company report introduction

As Vietnam’s largest brewing company, SABECO has various striking advantages among its peers including its well-known brand name and its largest nationwide distribution and production networks. However, the company has seen a slowdown in growth in recent years compared with other competitors, especially with Heineken. However, as many competitors have penetrated into the high-end segment, SABECO’s ability to maintain a high and stable market share in the mid-end segment in the past four years could be considered as an achievement. Hence, we expect that the company’s growth momentum will sustain in coming years, as it continues to perform strongly in the mid and low-end segments while gradually penetrating into the high-end segment.

The State Budget Outlook in 2017

In November 2016, the National Assembly approved the State Budget Plan in 2017; the budget proposes a 16-17% YoY increase in both revenue and expenditure. This plan itself is fairly aggressive, not to mention the further ambition to reallocate the expenditure structure.  This includes cutting down the current expenditure to 74% (2016E: 85% of the total spending) while increasing the infrastructure investment portion to 25% (2016E: only 15% of total spending). There are some key things that need to be noted regarding Vietnam’s fiscal constraints:

SAS – Future Prospects are Dependent on the Development of Tan Son Nhat Airport

Last week, RongViet Research had a meeting with Southern Airports Services JSC (SAS – UPCOM) in order to receive updates about the business results and future prospects of the company. SAS mainly operates in retail and tax-free segments, along with tourism and resort services.