PNJ – Gold supply shortage remains a major risk

We attended the investor meeting of Phu Nhuan Jewelry JSC (Ticker: PNJ), with the company's management team present. Key points we would like to highlight are as follows:

DGW – Xiaomi's products led growth in Q3-2024

• DGW's Q3-2024 business results are consistent with our previous forecast, with net revenue of VND6,226 bn (24.3% QoQ, +15.0% YoY), and NPAT-MI of VND122 bn (+36.7% QoQ, +18.9% YoY).

IMP – Returning to the growth trajectory

We attended the IMEXPHARM Pharmaceutical JSC investor meeting (Ticker: IMP), with the company's Investor Relations team representing IMP. Here are some key takeaways from the meeting:

REE – Hydropower segment’s results exceed our expectations in Q3 as hydropower cycle returns

• In Q3/2024, REE achieved revenue of VND 2,029bn (USD 80mn; +3% YoY; -7% QoQ) and NPAT-MI of VND 480bn (USD 19mn; -8% YoY; +34% QoQ), mainly driven by the recovery of its core power segment (which accounted for 40% of revenue and 80% of NPAT-MI). Other segments’ results remained flat.
• As the most challenging period for REE has passed, we forecast that the company’s NPAT-MI to continue recovering in Q4 due to (1) higher contributions from the real estate segment and (2) hydropower cycle returnsd, with REE’s peak typically in Q3 and notably Q4. For FY2024, we forecast revenue of VND 7,992bn (USD 317mn; -7% YoY) and NPAT-MI of VND 1,911bn (USD 76mn; -13% YoY). Looking forward to 2025, we expect REE’s growth to resume as (1) hydropower output recovers with the La Niña cycle and (2) the occupancy rate of the Etown 6 building increases.
• Based on the SoTP method, we set a 12-month target share price for REE at VND 71,700, corresponding to a forward P/E of 16.5x and an expected return of 17%, based on the closing price as of November 5, 2024.

The US economy is still expanding because of private consumption

• The US economy is still expanding as a result of private consumption
• An increase in US bond yields affects prospects of a Fed rate drop
• The Fed and other major central banks are cutting interest rates at different rates

International jewelry market update – China and US down, India grew

• We have observed that economic growth (affecting actual spending power and consumer confidence) had a significant impact on retail jewelry sales in major global markets, including China and India.
• In the U.S. market specifically, despite favorable GDP growth, retail jewelry sales have been affected, possibly due to uneven wealth distribution and/or economic growth not being driven by consumer spending.
• Based on the latest financial performance data, the operational efficiency of all companies have been impacted by gold prices (except for Pandora).

GMD – Q3-FY24 Results Update: Sustaining robust growth

• In Q3-FY24, net revenue reached VND 1,234 billion (USD 49 million; +24% YoY). Specifically, the stevedoring segment recorded VND 1,095 billion (USD 43 million; +11% QoQ, +40% YoY), while the logistics segment underperformed with VND 139 billion (USD 6 million; -29% QoQ, -36% YoY).
• Throughput at Nam Dinh Vu Port reached 337,000 TEUs (+10% QoQ, +19% YoY), and Gemalink (GML) handled 475,000 TEUs (+5% QoQ, +87% YoY). The growth momentum was driven by a general recovery in import-export demand and an increase in service routes compared to the SPLY.
• Profits from joint ventures (JVs) maintained a strong growth rate and played a significant role in GMD's net income attributable to NPAT-MI. JVs accounted for 66% of NPAT-MI, contributing VND 222 billion (USD 9 million; +279% YoY).
• For 2024, revenue and NPAT-MI are forecast to reach VND 4,154 billion (USD 165 million; +8% YoY) and VND 1,182 billion (USD 47 million; +55% YoY), respectively, excluding profit from the divestments of Nam Hai and Nam Hai Dinh Vu ports. The current target price for GMD stands at VND 71,000 per share. We will review projections, and valuations, and provide an update to investors in our following reports.

FMC – Q3/2024 revenue hits record high but NPAT-MI is under- expectations

• Q3-2024: Revenue reached VND 2,845 billion (or USD 113 mn; +59% YoY) as a 41% YoY increase in shrimp volume and a 14% YoY estimated rise in shrimp selling prices in VND. Shrimp prices in VND rose 6% QoQ, but the gross margin fell short of our forecast, reaching 10.8% (down from 11.3% in Q2/2024). Selling expenses surged by 150% YoY due to a threefold increase in transportation costs, reducing NPAT-MI to VND 80 billion (or 3,2 mn; -1% YoY).
• For 2024, we have raised our revenue projection to VND 7,279 billion (or USD 291 mn,+43.1% YoY) with a 29% YoY volume increase and a 12% YoY price increase. However, we have revised down our NPAT-MI projection to VND 280 billion (or USD 11.2 mn, +1.3% YoY) from VND 342 billion due to a 37% increase in selling expenses over the previous forecast. Adjusted 2024 EPS after the welfare fund allocation is VND 4,235 (+1.3% YoY).
• We find FMC not particularly attractive in the short term as it is currently trading at an adjusted 2024 forward P/E of 10.9x, which is higher than the 5-year average of 7.5x from 2018-2023. We will update our long-term projections for this stock in an upcoming report.

HAX – Q3-2024 results exceeded our expectations thanks to significant profit margin expansion

• In Q3-2024, according to VAMA, Vietnam's automobile sales recorded 59,743 units, an impressive growth of +29.4% QoQ, +13.4% YoY, contributed by the recovery of purchasing power coupled with support from the policy of cutting registration fee by 50% for domestically assembled vehicles (CKD), effective for 3 months from September 1st, 2024. The market share of CKD vehicles such as Hyundai TC, Toyota, Mitsubishi, Mercedes-Benz (MBZ) accordingly, also recovered well in this quarter.
• HAX recorded an impressive Q3-2024 net sales of VND 1,536 bn (+36.8% QoQ, +37.7% YoY), thanks to the general market factor (as mentioned) and increased market share for distributing MG cars when opening 5 new showrooms during this period.
• HAX's NPAT-MI in this quarter reached VND 62 bn (x7 times QoQ, YoY). The most notable factors are (1) expanding gross margin of MBZ segment, (2) reducing selling exp/net sales for both MBZ and MG, and (3) other abnormal income of VND 21 bn in subsidiaries (mainly MG, x3 times QoQ, x~2 times YoY) which may come from the bonus recognition from MG after 1 year of successful cooperation with SAIC Motor (July-2023).
• For 2024, we forecast HAX's net revenue and NPAT-MI to reach VND 5,373 bn (+34.9% YoY), VND 143 bn (+322% YoY), respectively, corresponding to EPS in 2024 reaching VND 1,328/share.
• We believe that HAX is no longer an attractive investment opportunity in the short term when the 2024 fwd PE at the closing price on October 28th, 2024, reached 12.6x, which is higher than its 2012-23 average (9.2x). We will continue to update the long-term forecast and valuation in the following report.
  

Plastic material – Remain advantage from low-cost raw materials

• For 9M24, companies have not recorded revenue growth, as demand for construction plastic products has not recovered significantly; with revenue of BMP and NTP reaching VND 3.6 trillion (-3% YoY) and VND 3.8 trillion (equivalent to the same period in 2023), respectively. However, there is a bright spot in that the profit margins to improve compared to 2023, when PVC resin prices decreased to USD 790/ton (-9% YoY), due to: 1/ Oversupply of plastic raw materials in the Chinese market; 2/ Demand for construction materials has not fully recovered. Gross profit margins (GPM) of BMP and NTP in 9M24 reached 43% (vs. 41% in 2023) and 30.5% (vs. 30% in 2023), respectively, remaining at the highest level in the 2020-2024 period.
• For Q4/2024, the peak period of domestic construction, we expect  output to recover slightly (compared to Q3/24 and to the same period in 2023), when the residential real estate market shows signs of recovery. In terms of raw materials (PVC resins), demand has not yet recovered significantly, thereby we expect raw material prices to fluctuate within a narrow range of USD790/ton (equivalent to Q3/2024). 
• For the company in the coverage list - BMP, we expect Q4 sales volume to reach 25 thousand tons (up 2% YoY), corresponding to estimated revenue of VND 1,468 billion (equivalent to Q4/2023). GPM margin remains at 43% (equivalent to Q3/24, based on PVC price scenario), with SG&A expense/revenue ratio to reach 15% (when BMP maintains discount policy with agents to maintain market share), we estimate BMP's Q4/24 net profit to reach VND 282 billion (+13% YoY). For the whole year of 2024, BMP's NPAT can reach VND 1,042 billion (equivalent to 2023 and completing the company's business plan). 
  

Update on monetary market in Oct 2024

• The dong has increased rapidly following the recovery of the DXY index.
• Monetary policy remains supportive but is ready to respond to short-term pressures

Seaport – The period of rapid growth is over and unpredictable factors await

• In September 2024, commercial activity contracted compared to the previous month. The estimated value of seaborne container imports and exports reached USD 19 billion (+15% YoY) and USD 13 billion (+18% YoY), respectively. For 9M2024, the value of seaborne container imports and exports reached USD 164 billion (+14% YoY) and USD 110 billion (+16% YoY), respectively.
• Compared to the previous month, the throughput at both Hai Phong and Vung Tau ports contracted in September 2024, in line with the trade flows. Total throughput in these two regions decreased by 10% MoM and 12% MoM, respectively, yet still showed positive growth of 7% YoY and 33% YoY, reaching 602 thousand TEUs and 548 thousand TEUs, respectively. This decline reflects an annual pattern typical of the industry's peak season. The peak season falls between June and August, accounting for 27% of the value and volume of seaborne container imports and exports.
• Cargo clearance is forecast to slow down in Q4-FY24 but should still maintain positive growth compared to the same period last year. We expect demand for non-essential goods to improve more markedly  in 2H2025, driven by the Federal Reserve's interest rate cuts, which ease debt burdens and increase real purchasing power for US consumers.
• The outlook for global trade in 2025 remains clouded by "lingering" risks that could skew forecasts, including the US presidential election on November 5, 2024, and persistent geopolitical tensions.