VNS – Brief update released on 08/11/2016

Regarding stock price valuation, we believe VNS is undervalued compared to other companies with similar performance and the market as a whole. However, under the current circumstance where competition is fierce and going to remain so in the future, we made a MONITOR recommendation for VNS’s stock.

PHR’s 2016 Earnings Estimate

In recent times, natural rubber is one of the most interesting industries which drew the attention of many investors when natural rubber prices recently experienced a significant increase. Below is a brief update and some assessments for 2016 and 2017 of Phuoc Hoa Rubber JSC (PHR – HSX).

Oil & Gas – Construction Companies Cling onto Long-term Prospects (Part 3)

At the present time, construction and manufacturing companies in the oil & gas industry have already announced the business results for Q3 2016. As expected, published figures continue to demonstrate the downtrend of the oil & gas industry over the last 2 years. Accordingly, revenue and profit of 4 mentioned companies which are PVS, PXS, PVB and PXT, all experienced deterioration compared to the same period last year. In 2017, construction companies in the oil & gas industry could not benefit from the initiation of several major energy projects due to the early phase of construction. However, long-term prospects for 2018 and onward could be future catalysts for the growth and turn-around of such companies after a long period of “pessimistic” business results.

HSG: Coated Steel Business to Remain Profitable

HSG’s market share remained around 38% for coated steel sheets and 22% for steel pipes, the highest among Vietnamese producers, followed by NKG (13.8%). HSG is also increasing its domestic proportion, which reached two-thirds of their total sales in the last financial year. The strategy is considered appropriate, as HSG’s current power in the domestic market is offering stronger demand growth and ASP compared to the fierce competition and AD risks in the export markets.

Oil & Gas – Construction Companies Cling onto Long-term Prospects (Part 2)

At the present time, construction and manufacturing companies in the oil & gas industry have already announced the business results for Q3 2016. As expected, published figures continue to demonstrate the downtrend of the oil & gas industry over the last 2 years. Accordingly, revenue and profit of 4 mentioned companies which are PVS, PXS, PVB and PXT, all experienced deterioration compared to the same period last year. In 2017, construction companies in the oil & gas industry could not benefit from the initiation of several major energy projects due to the early phase of construction. However, long-term prospects for 2018 and onward could be future catalysts for the growth and turn-around of such companies after a long period of “pessimistic” business results.

HND: A New Choice for Risk-Averse Investors

HND’s manufacturing volume was still lower than its designed volume (7.2 billion kWh per annum), despite HP1 and HP2 being in operation for six and two years, respectively. Hence, in the very first phase of HND’s life, we believe that there is room for HND’s output growth in the upcoming years. The CAGR is forecasted at 2.7% between 2016 - 2018. Moreover, the company initiated a cash dividend of 550 dong per share in 2013, and gradually increased it in the following years. For FY2016, the cash dividend is planned at 4% due to its liability to allocate unrealized FX loss from previous periods. We expect that HND’s dividend amount will increase after full allocation.

VSC – 3Q Results update report introduction

VSC’s YoY slump in Q3 2016 and 9M2016 earnings was anticipated in our April initial report, given last year’s extraordinary profit recognition from refrigerated cargo (reefer) in the same period. In the short run, VSC’s earnings growth could be slower than expected.  VIP Greenport’s higher cargo throughput makes up somewhat for Greenport’s projected decline amid rising seaport supply in Hai Phong, and the new cargo source from FDI invested projects will take time to kick in.

Oil & Gas – Construction Companies Cling onto Long-term Prospects (Part 1)

At the present time, construction and manufacturing companies in the oil & gas industry have already announced the business results for Q3 2016. As expected, published figures continue to demonstrate the downtrend of the oil & gas industry over the last 2 years. Accordingly, revenue and profit of 4 mentioned companies which are PVS, PXS, PVB and PXT, all experienced deterioration compared to the same period last year. In 2017, construction companies in the oil & gas industry could not benefit from the initiation of several major energy projects due to the early phase of construction. However, long-term prospects for 2018 and onward could be future catalysts for the growth and turn-around of such companies after a long period of “pessimistic” business results.

NKG – Business result update release

Nam Kim Steel JSC (NKG-HSX) is one of the largest producers in the domestic coated steel market and also has been known for its stock price performance of nearly 100% increase in the most recent 6 months. While input prices for the steel industry have been strongly fluctuating in the last year, coated steel makers’ business results have drawn attention owing to several three-digit NPAT growth rates. The recent improvements are expected to remain and NKG is predicted to stabilise its efficiency in Q4 2016 and 2017.

Comment on VNR’s 9M2016 Business Results

In the third quarter, the inward premium of VNR was 431 bn VND (-5.1% YoY). The minor drop can be explained by the Samsung Galaxy Note 7 of Samsung, as VNR is the reinsurer of Samsung’s export products. Indeed, the import/export insurance posted the largest decline after 9 months. Despite this decline in Q3 2016, the company still posted a YoY increase of 1.4% after 9M2016 thanks to strong growth in the 1^st half of FY2016. The 9-month reinsurance premium was 1,354 bn VND, equivalent to 78.4% of FY2016’s plan. The outward premium, on the other hand, sought an increase of 9% YoY. According to these movements, the 3-quarter net earned premium of VNR was 441 bn VND (-5.9% YoY).

October macro data review: Steady growth, higher inflation and slowly currency depreciation

Growth steady with supportive policy:  Industrial production growth was stable at 7% yoy in October. The most notable thing is that manufacturing growth, the best monthly proxy for GDP growth, stayed high at 11.9% yoy. Recall of flawed Galaxy Note 7 phones forecast to have small impact on exports, this problem might reduce Vietnam’s 2016 exports by 0.3%, according to GSO. In addition, computer, electronic and optical products’ production index show that growth momentum remained steady. As a result, we expect Vietnam to grow around 7% yoy in the final quarter of 2016. Policy stance is moving toward expansionary to achieve new GDP growth target (6.3-6.5% in 2016).

Real estate Q3 earnings at a glance

Several real estate companies announced Q3 and nine-month earnings last week. While some posted upbeat revenue and earnings growth, others reported a sharp decline in sales and profitability.