Manufacturing activities the first half of 2016

Industrial production activities showed an encouraging improvement in recent months. According to the latest survey of Nikkei, PMI increased to 52.7 points in May 2016, up 0.4 points from the previous month. This is also the highest level over a year. According to the survey, the number of orders increased sharply in the past month, especially domestic orders. This caused enterprises increasingly stocked up raw materials, inventory of raw materials increased while that of finished goods decreased is a good indicator for manufacturing activities. There is a concern regarding to high growth speed of input prices, one of the main reasons was due to supply shortages. However, output prices rose at a slower rate, thus, demand was not affected negatively and inflation is under control, according to our opinions.

HSG- Expecting a continuing growth in the second half

It is estimated that HSG sold a record high volume of total 512,028 tons of steel products in the first 4 months of 2016, +57% yoy. The sales volume went up as a result of the new steel pipe production lines, as well as other steel coating lines running at full capacity.

BTP: 2016’s AGM Updated

Last week, our analyst attended the annual general meeting of Baria Thermal Power JSC (BTP-HSX). BTP’s plant serves as an ancillary service to the electrical system with total output of 388,9 MW. During 2015 and first half of 2016, BTP was benefit from El Nino effect. However, it is likely that the convenient conditions would not appear from the second haft of 2016.

Monetary policy updates: POSITIVE

Last week, the State bank of Vietnam (SBV) has issued a number of circulars and directives on the monetary policy, including:

1. Circular No. 06 on amending and supplementing Circular 36/2014
2. Circular No. 07 on restricting lending in foreign currency by credit institutions
3. Directive 04 on solutions for monetary policy and banking activity in the last months of 2016

Gemadept (GMD-HSX) – Current shareprice basically reflects 2016 earnings prospect

As one of the leading firms in the logistics industry, Gemadept JSC (GMD-HSX) has always gotten investors’ attention. In this update report, RongViet Research hereby would like to give our perspective on GMD business prospects and target price in 2016.

PGS - Result update report Q1/2016

Extraordinary profit in Q1/2016 came from CNG divestment. In Q12016, PGS achieved a record profit after tax with VND 184.6 billion (+452% yoy) thanks to the completion in CNG Vietnam divestment with total value of approximately USD 310 billion. However, revenue and profit after tax of parent company (excluding financial profit) in Q1/2016 significantly deteriorated with -12.7% yoy and -50.3% yoy, equivalent to VND 842 billion and VND 21 billion

PDB – Good growth prospects

Thanks to the flourish of real estate market and construction activities in the Central, many ​​building material enterprises in this area have recorded positive business results, including Pacific Dinco JSC (HNX: PDB). As mentioned in previous short reports, PDB is the largest fresh concrete provider in Da Nang (~25% of market share) and Quang Nam (~40%).

High yield stocks: patience is a key to success

Value investing style usually includes some substyles as: low P/E, contrarian, high dividend yield. High cash dividend yield stocks provide owners stable cash flows every year, quite similarly to fixed income investments so they are in favor of investors who have high liquidity demand every year. In Vietnam, these stocks attract many investors as funds of insurance companies and individual investors saving for old age.

Vietnam inflation has been stable compared to other countries in the region

General Statistical Office has announced the Consumer Price Index for 5/2016. Accordingly, inflation slightly increased by 0.54% m.o.m, second highest figure over the last 5 months. Group with significant improvement in 5/2016 was Transportation with 2.39% m.o.m increase. In addition, other products in CPI have been quite stable. Until now, price of goods experience almost no change (except medicine and health services + 16% yoy). May inflation rose by 1.6% yoy and core inflation rate remained below 2%.

2Q2016 ETFs’ reconstitution

Db x-trackers FTSE Vietnam ETF and Van Eck Market Vector Vietnam ETF will announce the reconstitution results on 03/06/2016 and 10/06/2016. Using data updated in 20/05/2016, RongViet Research forecast the upcoming long/short volumes of these funds.

VNM AGM note: 2016 earnings result is expected to higher growth than guidance

Last week, Vietnam Dairy Products JSC., (VNM - HSX) held 2016 AGM. Below are the summary notes from the meeting:

Listed banks’ 1Q2016 business result: Driven by credit growth

The 1^st phase of banking restructuring project ended with some encouraged results in resolving NPL. Total NPL of all system reduced to 2.55% by the end of 2015. NPLs were split out from balance sheets of commercial banks and divided into different parts to handle time to time. Not to mention the ability to recourse, which depends on both internal and external factors, banks in Vietnam at least could now concenrate on improving operation instead of worrying about negative effect of NPL on CARs and assets. To some extend, NPLs and relevant issues must be resolved in 5 or 7 more years (since 2013). Today writing in Analyst Pin-board will be an overview on Q1/2016 of listed banks to assess the recovery of banking profit in a year when there is less fear of bad debts.