The impact of a downturn in export growth on Vietnam economy

According to GSO, exports is estimated at VND112 bn, increased by 5.5% over the same period, this result is far from the target set at the beginning of the year (~10% ). At the same time, FDI sector, which is key player in term of trade activities, recorded an increase of only 8.4%, lower than the double-digit growth of previous years. With exports/GDP is around 80%, a downturn in export growth has impacts on growth of production activities of Vietnam's economy. The following analysis will evaluate the negative impacts of current trend under the view of some sectors.

Vietnam seaports system - Cargoes volume carried on strong momentum

Latest figure from Vietnam Maritime Administration (Vinamarine) showed sustainable growth in cargoes via Vietnam seaports. For the eight months to August 2016, total cargoes volume handled estimates to reach 306 million tons (up 10%yoy) – completed 66% guidance. Of which, containerised goods, making up 1/3 of the total by tonnage, recorded much faster growth rate of 19%yoy to 8.8 mil Teus. That is mainly driven by the “export headed” containers which saw a 16% yoy growth (FY2015 rate: 12%).

PGS – Quick Update

Last week, RongViet Research had a meeting with Southern Gas JSC’s representative (PGS – HNX). In Q2/2016, PGS’s revenue and PAT achieved VND 1,274 billion (+20.5% yoy) and VND 23 billion (-42.1% yoy) respectively. Gross profit margin experienced significant improvement with 19.6%, increased from 17.8% of the same period last year. For 1H2016, with extraordinary profit from CNG divestment (PGS possessed 55.2% of total shares), PAT dramatically increased by +256.0% yoy, equivalent to VND 292 billion.

Is it time for hydro power plants?

Recent weather forecast reports reached a consensus that El Nino had ended while La Nina would occur in the second half of 2016.

NKG (HSX)- Expected countervailing duty to boost growth

While long steel companies have performed a remarkable quarter in terms of both business results and share prices, subsequently, the market’s attention has appeared to shift to flat steel tickers and been expecting a similar countervailing measure. Such duties are predicted to lift domestic producers’ sales volumes in 2016 and 2017 while the current market has been flooded with Chinese dumped steel. Being the second largest domestic producer, NKG is considered to benefit largely from the feasible duty.

PAC (HSX) – 2016H1 earnings results were lower than expected due to many unfavorable factors

As mentioned in Analyst Pinboard dated August 8, 2016 about PAC 2016H1 earnings results, we would like to revise the 2016 business results forecast of this company as follows:

GDT - Fair valuation

According to the Custom, the export value of wood products of Vietnam in the first 7 months just slightly increased by 4% compared to the same period last year. This figure was also much lower than the average 10% of the period 2010-2015. However, the growth of Duc Thanh Wood Processing JSC (HSX: GDT), having around 86% from export, remained positive at 12% in the first half of 2016. Duc Thanh Wood is as known as a familiar brand name with many products being sold at big supermarkets like Coopmart, Big C and retail stores. In addition, GDT has a part of revenue coming from wooden toys for children. 

2Q2016 ETFs’ reconstitution

Db x-trackers FTSE Vietnam ETF and Van Eck Market Vector Vietnam ETF will announce the reconstitution results on 02/09/2016 and 09/09/2016. Using data updated in 19/08/2016, RongViet Research forecast the upcoming long/short volumes of these funds.

Bright outlook for Fast Moving Consumer Goods sector

According to Nielsen Report on Consumer Confidence Index (CCI), despite slightly declined in Q2/2016 to 107, Vietnam’s CCI remains in the highest group of the world (7^th globally). When it comes to savings, there was 76% of consumers wants to send their spare cash to savings (world highest portion), implying a sustainable and stable supply of capital for the economy and a credibility of Vietnam dong. In addition, high CCI suggests that customers are optimistic about the economy outlook, paving the way for further consumption and investment.

PTB – Rising from tough times

PTB is described as a prominent story as RongViet Research mentioned in early 2016. In 1H2016, PTB’s earnings results performed in compline with our expectation, in which, revenue and NPAT grew by 25% and 53% (yoy), respectively. However, taking a deeper look into wooden products exports and political upheaval in main stone products’ market (Turkey), some investors raise concerns about PTB’s growth. Based on below analysis, we suppose that PTB would likely maintain and support its strengths in order to achieve double-digit growth year after year.

IMP – Company Report

IMP is the third largest pharmaceutical company in terms of market capitalization and revenue, with business concept that focuses on manufacturing high quality products. Because sales from ETC (Ethical channel) accounted for a big proportion of total revenue before 2013, the business in recent years was significantly affected by Circular No. 01/2012/TTLT BYT-BTC guiding the drugs bidding procurement in the medical facilities. However, as its 2 plants are about to qualified for EU-GMP standard at the end of this year, IMP expects to see ETC sales bounce back strongly, starting in 2017.

Vinconship JSC (VSC-HSX) – Vip Greeport generates profit earlier than expected

Vinconship JSC (VSC-HSX) is one of the leading domestic logistics firm with established position in Northern Vietnam. The firm bases in Hai Phong - regarded as a main trade gateway in the North. To continue RongViet Research’s pinboard series on Seaport and logistics sector, we today would like to give some updates on the firm’s 2016 business results and 2017 prospects.