HAH- Cheap enough to initiate a buy now

FY2015 has been so far the most remarkable year for listed shares of port operators in Hai Phong city. Repeated positive news on the finalization of many FTAs (including the TPP) coincided with abnormal factor of refrigerated container storage revenue constituted an impressive rally in share prices of port operators. The rapid price gains went much faster than what the enterprises’ business performance actually were. As a consequence, the share price correction that has started since the 4Q2015 results came out faltering is bringing these shares back on earth and offer another opportunity for investors again now. In the scope of today discussion, RongViet research would like to share some views on the 2016 business prospect and valuation of Hai An Transport and Stevedoring JSC (HAH-HSX).

NT2 - Result Update report for Q12016

NT2 has demonstrated its outperform operating result since officially generated in 2012. The success of NT2 is a synchronization of the plant’s favor location, sound corporate governance, experienced staffs and modern machine. For 2016, NT2 is expected to reserve high efficiency and improving profit margin. 2016 NPAT is forecasted at VND944.4 bn and diluted EPS is VND3,455.

Slightly improved agricultural commodity prices in favour of fertilizer industry

In the first quarter of 2016, domestic producers’ earnings result recorded unfavorable due to weaker domestic demand as well as rising competition from China. However, thanks to the recent recovery of agricultural commodity prices, we suppose that the inclining agricultural commodity prices will lead to an improvement in fertilizer producers’ results in upcoming quarters.

NNC – High business efficiency, attractive valuation

In the previous AGM season, our industry analyst was able to conduct a broad view on the stone quarry sector; therefore, we can see the upward trend in business performance of all the companies in the sector. This is one key factor that drive the stock price in this industry. Out of all the firms in the stone quarry sector, we highly recommend Da Nui Nho corporation (HSX: NNC) for (1) high productivity, (2) long-term growth, (3) trading at an attractive P/E, and (4) consistently high dividend.

Oil & Gas – Pessimistic Q12016 business results

In Q12016, average price for Brent and WTI was USD 35.2/barrel and USD 33.6/barrel respectively. This price level was equivalent to -21.2% and -20.4% decline compared with Q42015. However, if we observe market movements, oil price was bias from the bottom of USD 28/barrel in mid-January. At this moment, global crude price has been relatively stable around USD 43 – 46/barrel. We believe that this price level will be maintained until at least OPEC general meeting in June 2016. Despite of recovery, oil price is still hovering around low level. As a result, Vietnam oil & gas companies’ business results are being negatively affected.

HPG to enter the coated steel sector: another reason to have HPG

Hoa Phat Group JSC (HSX-HPG) has just announced its entry to the coated steel sector by a 400,000 tons per year capacity plant, starting operation in 2018. The VND 4,000 bn investment includes a cold-rolling mills, Zn/Al-Zn coating and color coating mills is going to name HPG a big player in the flat steel sector, which means a rival to Hoa Sen Group JSC (HSX-HSG). HPG has already established itself as the largest rebar producer in the domestic market, which would help with the coated steel business, even though it might face obstacles due to the investment timing

Countervailing duty on imported coated steel: Tailwind

MOIT has initiated an Anti-dumping investigation against imported coated steel in early-March 2016. A similar story has occurred to the construction steel sector, in which HPG, VIS, VGS have surged in price after the countervailing duties on billets and rebar products were announced. SMC was one of the benefited company as well, even though it is a steel distributor but not a producer. The situation is likely to happen to coated steel companies including HSG and NKG once the protection is determined.

SHP – Q1 earnings updates

SHP’s first quarter earnings results were less attractive. Their revenue was only VND36 billion (-48% yoy) due to drop in volume generated by three plants (Da Siat, Da Dang 2 and Dambri). In first three months of this year, Southern hydrogen energy power plants, including Dambri had to store water in lakes to release for use in the second quarter, the dry season. Therefore, Dambri saw the worst decrease in output with only 14.3 million KWh, lower 34% than the same period figure. The output of the two remaining plants (Da Siat and Da Dang 2) also decreased 10.8% and 37.8%, respectively since they witnessed unfavorable hydrology conditions and do not have reservoirs for distributing flexible electricity production.

PXS – Stable construction activities maintain positive growth rate

In 2015, PXS maintained the stable construction activities on schedule. This is the notable aspect while comparing with peers under the pressure of global crude oil market. Overall, revenue and profit were closely following the plan, which implied the projects of PXS experienced no difficulties in capital and the progress of construction.

Handshake between the State Bank and Commercial banks

At the meeting “Vietnam’s Enterprises – the Driving Force for the Country’s Economic Development”, SBV has issued an important declaration on interest rate policies. Particularly, commitment to support businesses and the announcements of many commercial banks showed the consistency and enforceability of the orientation.

HSG, NKG update – Impressive growth

HRC price bottoming in late-2015 and recovering in early 2016 brought about short-term benefits to Vietnamese coated steel makers in term of input price. Low inventory prices and increasing sales prices favoured Hoa Sen Group (HSX-HSG) and Nam Kim Group (HSX-NKG)’ performances in the last quarter.

PET – Q1 result updates

Although we have predicted that distribution segment would be facing challenges since 2016, PET’s Q1 business earnings were not so negative. In this quarter, PET’s revenue and PBT were VND2,318 billion (-7% yoy) and VND66.3 billion (+17% yoy).