In recent times, the recovery of commodity prices is increasingly mentions by investors, especially after the dramatic increase of crude oil price. Until now, the number of negative forecasts about oil price (such as oil prices may fall to $20/barrel or even $10/barrel) have decreased compared to the beginning of the year. Since then, Rong Viet Research supposes that expectations in the recovery of oil prices and commodity prices in according with the impacts on related manufacturing listed companies should be considered.
Dong Nai Port JSC (PDN-HSX) held the 2016 AGM yesterday on March 15 2016. Blessed with geographical advantage being situated in the heart of various Southeastern Vietnam industrial zones (Song than, Amata, Bien Hoa, Nhon Trach,…), PDN is earmarked to greatly benefit from increasing trade activities in the area as Vietnam becomes globally integrated looking forwards. Recognizing that ample room of growth for logistics services, the firm has mobilized resources to expand current facilities and infrastructure in Long Binh Tan and Go Dau ports.
Over the first 3 months this year, global crude prices have recovered at much faster rate than expectation. Specifically, Brent and WTI achieved the increases of +44.87% and +35.27% respectively compared to the bottom on 20/1/2016, equivalent to USD40.39 and USD35.28/barrel.
As the housing market is threatened by a tightening in credits, stock investors do not seem to have much taste for real estate stocks recently. In our opinion, the amendment of Circular 36/201/TT-NHNN (C36), if it is implemented will have different levels of impact on real estate projects. Changes to C36, i.e. higher risk coefficient and low ratio of short-term deposits to long-term loans, will firstly affect be speculation based on leverage on projects under construction and those without complete legal works. In this aspect, KDH has edge over its peers as the firms only sell land with complete house and ready LURs.
Yesterday, Thuan An Wood Processing JSC (GTA –HSX) operates its AGM, update on 2015 earnings results and 2016 annual target. In 2015, GTA achieved revenue and NPAT about VND 484.7 bn (+0.12% y-o-y) and VND 13.6 bn (+1.88% y-o-y) respectively. 2015 also witnessed a change in revenue structure as sale volume of preliminary product increased whereas sale volume of refined production decreased. Thus, even though average rubber prices significantly decreased (-20%) but GTA gross margin down from 7.57% to 7.4%.
The domestic steel industry has been supported by good news from both local and international markets. On March 7th, iron ore price jumped over 26% on the news that the Chinese government has targeted 2016 growth rate of 6.5-7% and the country’s recovering real estates. Vietnam’s Ministry of Trade (MOT) has announced a prevailing safeguard duty on imported steel billet and rebar products in order to protect local producers.
Last year, when the information about TPP agreement was relatively "hot", the new participation of new members of the textile industry, Century Synthetic Fiber Corporation (HSX:STK), was welcomed positively. Today, the industry continued to get other member, Viet Tien Garment Company, officially traded on Upcom with VGG code. Being a large-scale sales (up to $288 million in 2015) and owning a good brand positioning, the share price of VGG climbed to ceiling in the first minute of the trading session. However, the trading volume was only 9,000 shares, the overbought at ceiling prices was up to 788,700 shares.
In recent sessions, natural rubber tickers have jumped significantly, particularly PHR (+27%), DPR (+8%). As our view, the increase came from the global rubber price. Especially in PHR case, information in AGM documents supports the ticker to maintain momentum
2016 could be another year of sliding world commodity price. According to Bloomberg, the price of cotton futures contracts fell by an average 17% compared to 2014. At the same time, the fall in oil prices (47.5% in 2015) was pulling fiber prices fell sharply; many fiber companies faced some difficulties. With 30-35% of revenue coming from the fiber segment, 2015’s earnings of TCM was somehow negatively influenced. However, our industry analyst realized that TCM has made some proactive measures to address the situation.
Pharmaceutical industry is getting the attention of investors due to a breakthrough in their price level in the first two months of this year. Cuu Long Pharmaceutical (DCL - HSX), which is a medium size pharmaceutical company, held an AGM last week. Based on its 2015 earnings result and 2016 plan, RongViet Research had some brief updates on DCL prospect.
The bid winning price was out of our forecast when reached level of VND 80,000/share. With this price, P/E forward is estimated at 58x. In the 3 following years, there is not any significant cash flow from major projects. Thus, normal investors as well as financial institutions are difficult to accept the price
Business scale of listed companies have recovered. After a significant slowdown in 2011 and 2012, the operating scale of listed companies has slightly accelerated since 2013. In 2015, due to external difficulties, the sales growth is a mere 6%, slower than the growth of 15% in 2014. Meanwhile, equity growth (2015: 25%) has helped total assets grew faster (2015: 17%).