Mercedes-Benz – Behind the slowdown from great success in the 2010-20s
17-03-2025
: HAX
: Retailing
: Hung Nguyen
Tags: HAX
- Mercedes-Benz (MBZ) experienced a "cloudy" 2024 with car sales growth of -8.8% YoY, reaching 2,977 units, even below the overall growth of the automotive industry, +2.5% YoY according to VAMA, which has been in a gloomy period for the past 5 years. Broaderly, MBZ has had a negative sales growth rate for the second consecutive year.
- Declining competitiveness against new competitors such as BMW in the luxurious car segment gradually faded, resonating with legal troubles at the factory and policies with distributors, explaining MBZ's dark business picture as above.
- We expect Mercedes-Benz sales to grow by 1-5% YoY, a low level similar to the growth of the automobile industry in general due to unimproved consumer sentiment and the 50% registration fee support policies as in previous years. This is the baseline scenario with the assumption that Mercedes-Benz's market share remains the same.
- About HAX - the stocks on our watchlist related to the MBZ car story. We believe that HAX will also maintain the growth rate of MBZ vehicle distribution segment for 2025 equivalent to the sales growth of the whole brand due to the market share reaching the limit of this distributor (~32%).
- In addition, we also maintain the projected 2025 net margin for MBZ distribution at the same level as the industry average that HAX is receiving in 2024 (2.0%). All in all, HAX's growth has generally pivoted strongly to the MG car distribution segment and is also the main story leading the business outlook and HAX stock in the medium term.
TRADE UPDATE MAR 2025: VIETNAM PROACTIVELY MITIGATES TARIFF RISKS
14-03-2025
: VDS
: Macroeconomics
: Toan Vo
Tags:
- Exports slowed due to seasonal factors, with February 2025 export turnover declining by 6.3% MoM. The FDI sector remained the key driver but grew at a slower pace than the domestic sector. The trade balance reversed, ending an eight-month streak of surplus.
- Electronics and components continued to lead export-import growth, reinforcing their role as a key driver of trade activity.
- Major export markets showed positive momentum, with the U.S. (+16.4%), EU (+12.3%), and Japan (+15.0%) posting strong growth. However, Vietnam faces increasing trade monitoring risks as imports from China surged.
- Vietnam is proactively seeking measures to mitigate tariff risks with the U.S. and narrow the trade balance, signaling a strategic approach to maintaining stable trade relations.
PHR – The story of land conversion is gradually being unraveled
13-03-2025
: PHR
: Industrial Land RE
: Giao Nguyen
Tags:
- PHR is gradually realizing the land conversion plan for projects in Binh Duong province, including: 1/ Ho Chi Minh City – Thu Dau Mot – Chon Thanh expressway project (Phu Giao 3 Industrial Park), 2/ industrial park project invested by Thaco (Tan Lap 1 Industrial Park).
- The rubber segment is expected to play a key role in the business performance in 2025, thanks to high selling prices (around VND 50 million/ton, +15% YoY) and stable consumption demand.
- We estimate PHR's revenue and NPAT-MI in 2025 to reach VND 1,819 billion (+11.4% YoY) and VND 608 billion (+29.5% YoY), respectively.
The impact of La Niña on Vietnam's Power sector in 2025
12-03-2025
: POW
: Power
: Nguyen Duc Chinh
Tags: POW
- The operational efficiency of hydroelectric power plants heavily depends on hydrological conditions. In 2024, the prolonged El-Nino phase negatively impacted hydroelectric power, but the following La-Nina cycle helped increase hydroelectric production by 9% YoY, while reducing the need to mobilize coal and gas power.
- In 2025, the La Nina phase may extend until June or July 2025 before transitioning to a neutral phase. These conditions could support the recovery of hydroelectric power plant production, especially in 1H 2025.
- In 2024, the hydroelectric group’s production increased by 9% YoY, while the revenue of listed hydroelectric companies decreased by 13%. The revenue disparity stems from water inflows into reservoirs, with northern companies benefiting while those in the central and southern regions faced difficulties. In 2025, northern hydroelectric companies are expected to continue to benefit from favorable hydrological conditions in the north.
- In 2024, the production of coal-fired power increased by 18% YoY, but the revenue of four coal-fired power companies listed on the stock exchange only rose by 5% YoY due to climate change in the northern region. Thanks to its ability to provide cheap and stable electricity, coal-fired power production is expected to grow by about 10% YoY in 2025, in line with the forecasted system growth of 12,2% YoY.
Legalization of Resolution 42 on bad debt resolution – A Crucial Factor in Ambitious Growth Targets
11-03-2025
: VDS
: Financial Services
: Hung Le / Tung Do
Tags:
- Resolution 42/2017/QH14 (NQ 42), which provided a pilot mechanism for bad debt resolution, including creditor rights to seize collateral with the support of law enforcement and local authorities, expired on December 31, 2023. The resolution was designed to expedite the resolution process, reduce collateral disposal costs, and reinforce creditor rights.
- According to the State Bank of Vietnam (SBV), NQ 42 had a positive impact by encouraging voluntary debt repayment, expediting the sale and liquidation of collateral, and facilitating debt recovery. However, its implementation faced challenges, including a lack of collateral asset data, difficulties in executing simplified legal procedures, inconsistencies with the Land Law, and the absence of clear guidance on collateral restitution in criminal cases.
- Proposal for Legalizing Resolution 42: The institutionalization of NQ 42 into law would eliminate legal uncertainties, improve banking system liquidity through more effective collateral asset disposal, and reduce bad debt resolution costs. Non-performing loans currently account for approximately 4.6% of total credit in the economy, negatively affecting overall liquidity and growth potential.
- Key Legalization Policies and Solutions: 1/Legalizing the right to seize collateral – Enhancing banks' ability to recover debts more efficiently and reduce resolution costs. 2/Legalizing collateral asset attachment – Preventing collateral from being seized for unrelated obligations, thereby protecting financial institutions' claims. 3/Legalizing collateral restitution in criminal and administrative violation cases – Ensuring effective collateral asset handling while mitigating losses
Steel industry – Protective measures and shifting trends among manufacturers
10-03-2025
: HPG, HSG, NKG
: Materials
: Thach Lam Do, CFA
Tags: GDA
- In 2024, the export market remained a key focus for Vietnam, with finished steel exports reaching 8 million tons, maintaining the same level as in 2023. Flat steel products accounted for 75% of total exports. Coated steel exports recorded impressive growth, reaching 3 million tons (+36.4% YoY), nearly matching the 2021 export volume of 3.3 million tons—the highest level in the 2018–2023 period.
- However, the push for exports amid an unclear recovery in the global steel market posed certain risks, as some major importing countries initiated anti-dumping (ADD) investigations in 2H 2024 and early 2025.
- In February 2025, the Ministry of Industry and Trade (MOIT) announced the investigation results and imposed preliminary duties on hot-rolled steel (AD20) originating from China, ensuring the competitiveness of domestic hot-rolled steel producers (HPG, FHS, etc.). Regarding the AD19 investigation, we maintain our expectation that preliminary results will be released in Q1 2025. This will allow flat steel producers (HRC, coated steel, etc.) to redirect orders to the domestic market, mitigating risks from protective measures in export markets.
Market update on Oil & Gas transport vessels: Segmented divergence
07-03-2025
: PVT, PDV, PVP
: Oil & Gas
: Huong Le
Tags:
- We expect a slight improvement in the crude oil tanker market, driven by sanctions and production growth from OPEC+. However, if the situation between Russia and Ukraine stabilizes, this improvement may gradually diminish. The product oil transport segment is expected to see a significant increase in vessel supply this year, putting pressure on freight rates in the medium term.
- The chemical transport market is seen as positive in the near future. Restrictions from the trend of "swing tonnage" will help to reduce competitive pressure and maintain freight rates at favorable levels.
- For the LPG transport market, we expect that the increased LPG export activities in the US and the rise in oil production by OPEC+ will serve as positive supporting factors in the 2H2025, helping to sustain freight rates at long-term average levels.
- The outlook for the drybulk carrier market in 2025 predicts stagnation, as vessel demand growth is affected by China's bulk imports failing to achieve the robust growth as seen in 2023-2024. The possibility of a ceasefire agreement between Israel and Hamas is also a noteworthy factor.
Fertilizer Industry – Impact of Gas Prices on the Fertilizer Industry
06-03-2025
: DCM, DPM
: Fertilizer
: Hien Le
Tags:
- Monitoring world gas prices is an important factor to forecast urea fertilizer prices in Vietnam, while Brent oil prices play a decisive role in forecasting domestic gas prices for urea fertilizer production. If world gas prices tend to decrease, the increase in world urea fertilizer prices in the short term will also be restrained.
- Domestic urea fertilizer prices are greatly affected by world fertilizer prices, with a correlation of up to 0.9 from 2019-2024.
- The world price of urea is closely related to the price of natural gas, because gas costs account for about 70-80% of the total cost of raw materials. When gas prices increase, urea producers will adjust the selling price accordingly. The correlation coefficient between TTF gas prices and urea fertilizer prices in regions such as India, the Black Sea, the Middle East, Egypt, and Indonesia is all over 0.78 in the period 2013-March 2025.
- It is forecasted that the gradual decline in TTF gas prices may put pressure on the increase in fertilizer prices in the near future.
- Companies like DCM and DPM use Brent crude oil as a key reference for tracking input gas prices. This is because they purchase gas from PVN at prices determined based on Brent and FO, rather than international gas prices like many global companies. As a result, the gross profit margins of Vietnamese fertilizer companies tend to fluctuate more sharply compared to global firms, especially during the 2022-2023 period.
MSB – Positive financial results in Q4/2024 with expanded NIM and significant increase in income from bad debt recovery
05-03-2025
: MSB
: Banking
: Trang To
Tags:
- PBT Q4/24 exceeded VND 2 trillion, showing outstanding growth (+65% QoQ and +230% YoY) compared to the low base of Q3/24 and the same period last year, driven by (1) a significant NIM (Q) expansion to 4.2% (+84 bps QoQ, +26 bps YoY), (2) credit growth in Q4/24 reaching 18.9% YTD (Q3/24: 14.2% YTD), with the main contribution coming from retail lending, and (3) non-interest income sources, except for fee income which decreased by 15%, showing better results than the previous quarter.
- PBT for the full year 2024 reached VND 6.9 trillion, an 18% YoY growth, and met the previously set target (VND 6.8 trillion), thanks to (1) a 45 bps YoY NIM expansion, positive credit growth of 18.9%, and (2) income from bad debt recovery activities exceeding VND 1.3 trillion (8 times the same period last year).
- Asset quality improved as the net NPL formation was just over VND 200 billion (the lowest level since Q3/22), while Group 2 loans decreased by VND 1.1 trillion, suggesting that part of Group 2 loans may have been backed to standard loans. On-balance-sheet NPLs decreased by VND 200 billion compared to the previous quarter, bringing the NPL ratio (for customer loans) down by 30 bps QoQ to 2.6%.
- For 2025, MSB has set a target NPBT of VND 8 trillion (+16% YoY), a lower growth rate compared to 2024 (+18% YoY), likely due to increased investment costs for digital transformation, while income sources are expected to grow positively.
MG cars – Success story in 2024 and room for growth in reference with the Thai market
04-03-2025
: HAX
: Retailing
: Hung Nguyen
Tags:
- MG had an extremely explosive 2024 with auto sales growing +242% YoY, reaching 13,117 units, far exceeding the overall growth of the automotive industry (+2.5% YoY, according to VAMA), which has been in a gloomy period for the past 5 years.
- The secret to MG's success throughout 2024 lies in three proper strategies: (1) choosing the tier 2-3 provinces as the target market, (2) a low-pricing strategy, (3) building a dense network of showrooms, creeping nationwide with 3S standards, (4) supporting distributors to create a distribution advantage compared to other competitors.
- Despite the outstanding successes in 2024, we believe that MG's growth rate will gradually slow down in the future compared to the 2024 high base (+242% YoY) due to the challenging auto landscape and MG’s market share rising to the limit level (4.0%, reference from MG's most successful market – Thailand). In particular, the competitive advantage created from the sacrifice of MG's profit margin is hard to maintain for a long time, in addition to other giants entering the market such as BYD, Vinfast, Lynk&Co, Wulling... are also having competitive strategies in terms of pricing/promotion policies.
- Regarding HAX - the stocks on our watchlist are related to the MG car story. We think HAX will also slow down the growth rate related to MG car distribution, similar to MG brand’s total sales growth and HAX’s market sharein MG distribution, reaching the limit. (~32%)
- We doubt the ability to maintain the margin of MG car distribution at a higher level than the industry average that HAX is currently receiving (2023-24 period), implying that this may be a downside risk for HAX stock. We recommend that investors should closely monitor this factor for 2025 outlook.
CTG – Improvement in Credit Demand and Asset Quality Solidifies Positive Growth Outlook for 2025
03-03-2025
: CTG
: Banking
: Tung Do
Tags: CTG
- 4Q24 Pre-Tax Profit (PBT) Reaches VND 12.2 Trillion (+59% YoY), Full-Year 2024 PBT at VND 31.7 Trillion (+27% YoY). While total operating income grew in line with net interest income and credit growth (16.9%), increasing by 15% YoY in 4Q24 and 16% YoY for the full year, a sharp 45% YoY decline in credit costs in 4Q24 was the key driver of CTG’s PBT growth for both the quarter and the full year 2024.
- We assess CTG’s 4Q24 financial performance as positive, with a significant improvement in return on equity (ROE) efficiency, supported by the following factors: (1) asset quality continues its favorable improvement trend, aligning with our previous expectations, alongside a reduction in credit costs; (2) effective debt recovery and resolution based on a centralized debt handling model; (3) an expanded retail credit market share with competitive interest rates; and (4) strict control over operating expenses.
- We update our 2025 forecast with an upward adjustment of 19% in projected PBT compared to our previous estimate, reflecting stronger-than-expected credit growth potential and lower credit costs, underpinned by a more positive asset quality outlook following a prolonged period of prudent provisioning. The projected 2025 PBT is expected to reach VND 41.2 trillion, representing a 30% YoY increase.
- We reiterate our BUY recommendation for CTG, with an updated target price of VND 49,000 per share, a 9% upward adjustment from the previous target price, corresponding to a total expected return of 19%.
SCS –Well-positioned to become a cargo terminal operator at Long Thanh Airport
28-02-2025
: SCS
: Aviation
: Quan Cao
Tags: Aviation SCS
- Long Thanh International Airport will have two cargo terminals under component projects 3 and 4, owned by two different investors: Airports Corporation of Vietnam (Upcom: ACV) and the Ministry of Transport.
- Saigon Cargo Services Corporation (HSX: SCS) is interested in cargo terminal No. 01 of component project 3 at LTIA. Based on international rules, we assess that it is feasible for SCS to become an operator here.
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