Real Estate Market 9M2024 – Supply Balance Expectations
23-10-2024
: KDH, NLG, PDR
: Real Estate
: Giao Nguyen
Tags: KDH NLG PDR
- In Q3/2204, condos accounted for nearly 70% of the new supply for sale, with most of them coming from the high-end and luxury segments (selling price over VND 50 mn/ m2 for condo), in which the Hanoi condos market continued to record positive signals in terms of both supply and absorption.
- Primary selling prices continued to maintain an upward momentum, the Hanoi market was close to VND 64 mn/m2 (+9%QoQ, +26%YoY), while the Ho Chi Minh City market increased slightly and reached 66 million VND/m2 (+4%QoQ, +8%YoY). We believe that the upward trend in prices (in both primary and secondary markets) will continue in Q4/2024 and the first half of 2025, implying that the demand for condos remains high.
- We expect the supply constraints of Ho Chi Minh City. Ho Chi Minh City will soon be dismantled with changes in new laws and mechanisms: 1/ piloting the expansion of land for commercial housing to remove the supply to the market, 2/ announcing a new land price list for Ho Chi Minh City, accelerate the process of compensation and calculation of land use levy for projects with legal problems. Some listed investors have projects expected to open for sale in Q4/2024, including: KDH (Foresta), NLG (Mizuki Park, Nam Long Can Tho), PDR (NTMK, Bac Ha Thanh).
PVS – O&G projects to be 2024-2025F growth drivers; offshore wind energy for further development
22-10-2024
: PVS
: Oil & Gas
: Thang Hoang
Tags:
- 2024 marks a significant milestone for PVS with the implementation of several critical oil and gas projects such as Block B, Su Tu Trang, and Lac Da Vang. However, during the project's first year, PVS focus mainly on surveying, design drafting, and equipment procurement, meaning the construction work will be concentrated in 2025 and 2026.
- We project revenue of VND 22,730 billion (+17% YoY) and NPAT-MI of VND 1,107 billion (+8% YoY) for 2024. Looking forward to 2025, we expect strong growth earnings growth for PVS, with revenue of VND 38,235 billion (+68% YoY) and NPAT-MI of VND 1,509 billion (+36% YoY).
- In the long term, we believe PVS will continue to benefit from the growing trend of offshore wind power projects.
- We have an ACCUMULATE rating for PVS shares with a target price of VND 42,300 per share (+10%) based on the FCFF and P/E methods. Despite the company's positive outlook, we believe the current price already reflects its growth potential from continuously securing contracts, with a P/E of 20x, close to the three-year average of 21x
Coated steel market update for Q3/2024 – Maintaining growth
21-10-2024
: HSG, NKG
: Materials
: Dung Ma
Tags:
- In Q3/2024, total domestic consumption reached 629,433 tons (-1.4% QoQ, +23.9% YoY). Notably, the Northern region recorded outstanding growth (+41.5% YoY, +2.5% QoQ), while the Southern region remained the largest consumer with 365,270 tons. Exports continued to grow at a high rate in Q3/2024 (+39.4% YoY); however, the export share compared to domestic consumption dropped to 50% in September 2024, as global steel prices showed unfavorable conditions.
- In September 2024, news of the People's Bank of China's economic stimulus package provided a positive boost to the steel industry, with Chinese HRC prices reacting by increasing 12% since the beginning of September. There is optimism that steel prices in Q4 will recover to the USD530–580/ton range. For 2025, we expect Vietnam's domestic steel industry to maintain a growth rate of +10% YoY, however, the export market may face challenges (with volumes down 5% YoY), due to anti-dumping and anti-subsidy investigations on CORE steel and a slow recovery in global demand.
- Based on the current information, we maintain a short-term investment recommendation for HSG stock in Q4, with a target price of VND 23.500 (+14% from October 18, 2024) due to: 1/ The domestic real estate market, especially in the Northern region, is recovering, where HSG leads the market share, 2/ The dependency on exports is gradually decreasing (59.7% in Q3/2024 compared to 68.9% in Q1), and 3/ Domestic steel prices are rising again, improving HSG's profit margins in Q4 2024.
CTG – Notes from 2024 EGM and Q3-2024 & 2024 Forecasts Update
18-10-2024
: CTG
: Banking
: Tung Do
Tags:
- On October 17, CTG successfully held an Extraordinary General Shareholders' Meeting, during which two additional members were elected to the Board of Directors for the 2024-2029 term
- For Q3-2024, we forecast Net Interest Income (NII)/Total Operating Income/Consolidated Profit Before Tax (PBT) to grow by 19% YoY/12% YoY/42% YoY, respectively. The key expected drivers for PBT growth include (1) a 5basispoint (bps) expansion in NIM from a low base in the same period, (2) credit growth of approximately 16% YoY (or 9% year-to-date), and (3) a 7% YoY reduction in credit risk provisioning costs. Credit costs are also expected to decrease by 12% compared to the previous quarter, thanks to the partial reversal of provisions set aside for non-performing loans (NPLs) in Q2-2024, which have since been controlled and reclassified as standard loans. As of the end of Q3-2024, the NPL ratio before CIC adjustments stood at 1.4%
- For 9M-2024, PBT is estimated to reach VND 19.9 trillion, up 14% YoY, fulfilling 67% of the current 2024F PBT forecast
- For the full-year 2024F projection, we have revised our forecast downward by 5%, reducing the expected PBT to VND 27.9 trillion (+12% YoY) from the previous estimate of VND 29.5 trillion (+18% YoY). This adjustment is based on: (1) a slight reduction in consolidated credit growth for the year from 14.4% to 13.8%, as the credit growth recovery remains unstable, and (2) a 7 bps decline in NIM to 2.92%
- We have adjusted CTG's target price downward by 3% to VND 40,400 per share, reflecting the revisions in our updated forecast. With a total expected return of 11% based on the closing price as of October 18, 2024, we maintain our ACCUMULATE recommendation for CTG
Decoding the 1,200+ of VN-Index after more than 20 years
17-10-2024
: VDS
: Financial Services
: Hung Le
Tags:
- After the 2007-2009 financial crisis, international stock indices such as the Dow Jones and S&P 500 showed strong growth, while the VN-Index hovered around 1,000 points for more than 20 years.
- The VN-Index reached a high P/E valuation (35 times), reaching an all-time high of 1,155 points in March 2007, but investment returns were not attractive, leading to a correction to more reasonable levels after the 2008 crisis.
- The investment performance of the VN Index has been correlated with the S&P 500 since 2009, although the S&P 500 has outperformed since 2016 due to a higher P/E valuation.
- The valuation range and EPS growth trend of VN Index maintained around +8.4%/year or more implying an expected return of over 14.2%/year in the long term (Table 1).
Update on Vietnam’s trade in 9M2024
16-10-2024
: VDS
: Macroeconomics
: My Tran
Tags:
- Trade maintains a high growth rate in Q3/2024.
- Agricultural, forestry, and fishery exports strengthen their position in Vietnam's export structure.
- Q4 exports may maintain double-digit growth, around 10-13%
EraBlue – MWG's ambitious game needs more proof
15-10-2024
: MWG
: Retailing
: Hung Nguyen
Tags:
- Compared to the most recent “going abroad” in Cambodia, MWG’s “Erablue” move to cooperate with the large ICT retail chain Erajaya, aiming to penetrate the Indonesian CE market makes more sense when this market is at a stage when it is likely to explode in the near future and has much larger potential market size than both Vietnam and Cambodia.
- The “necessary” conditions for Erablue’s success are already there (market factors), however, we believe that Erablue needs additional “sufficient” conditions to compete with traditional mom-and-pop stores, other CE retailers, and especially “online platforms” – currently growing rapidly in Indonesia, to become the “second Dienmayxanh”.
- We believe that Erablue has the potential to capture ~70% market share in the CE pie from other small stores/retail chains, thanks to DMX’s successful formula and the operational experience from Erayaja. However, the chain's growth depends heavily on the speed of converting purchases to e-commerce platform, which have price advantages and are growing "fast" in CE field, similar to the Vietnamese market.
- We recommend that investors closely monitor the pace of store openings and the chain’s specific quarterly financial reports to accurately assess the potential of the Erablue and the level of impact on the overall valuation of MWG (accounting for 45% of the chain's shares)
Industrial Park - Development orientation for ready-built factories/warehouses
14-10-2024
: LHG, SIP
: Industrial Land RE
: Thach Lam Do, CFA
Tags: SIP LHG
- We observe stable growth in demand for ready-built factories and warehouses (RBFs/RBWs), a sector that industrial park developers may increasingly focus on for long-term expansion. According to JLL, from 2019 to 2023, the supply of RBFs/RBWs recorded an average annual growth rate of 14.5%, with a total leasable area increasing by 6 million sqm. By 2027, the total leasable area is expected to reach 19 million sqm, with a projected average growth rate of 8% per year between 2023 and 2027.
- For Vietnam’s industrial park developers, expanding into RBFs is also a strategy to capitalize on available industrial park land, though it remains on a small scale. We believe this development model will attract more attention from industrial park companies in the near future due to its key advantages: 1) Providing stable cash flow; 2) Suited to small and medium-sized customers; 3) Meeting the high demand for RBWs, particularly serving e-commerce activities in Tier-1 cities like Hanoi and Ho Chi Minh City.
- Among companies in our watchlist, we see several have aligned their investment strategies with this business segment to maximize the potential of their industrial park land. In 2024, LHG completed the construction and has begun leasing RBFs at lot 3A 26-19 (LH3 Industrial Park) and plans to build additional RBFs at lot 3A and high-rise RBF in 2025, raising the total leasable area to 136,800 sqm (+20% YoY). SIP is partnering with CBRE to develop a system of RBW and a logistics center at LMX03, which will enhance LMX03’s business performance in the coming years.
Textile Industry – Profit faces challenges in highly competitive context
11-10-2024
: TNG, TCM
: Textile & Garment
: Quan Cao
Tags:
- Vietnam's textile industry is facing intense competition, not only from other countries but also among domestic companies.
- The room for margin exansion is shrinking due to increasing competition.
- In the long term, growth opportunities will arise for companies that adopt advanced technologies to improve productivity or focus on high value-added products such as designer goods
Rubber prices – supply shortage creates a driving force for price anchoring in the medium term
10-10-2024
: DPR, PHR
: Industrial Land RE
: Giao Nguyen
Tags:
- In early October, rubber prices continued to increase and peaked after 13 years and reached VND73.6 million /ton (RSS3) (+96.7%YoY, +10.3%MoM). The main reason comes from supply shortages in key manufacturing regions in Southeast Asia. We believe that the trend of world rubber prices is expected to remain at a high level when the supply is forecasted to remain in short supply; the shortage is forecast to extend to 1H2025.
- For the Vietnamese market, output in 2024 is forecast to decrease only slightly by 3.5% because rubber-growing areas are less directly affected by the storm. Rubber prices are expected to continue to be anchored at a high level (over $1,600/ton) and react to the supply and demand situation of the world rubber industry.
- We believe that DPR and PHR's core business segments are expected to benefit. In which, PHR's revenue and profit after profit in 3Q2024 were VND 497 billion and VND 120 billion, respectively, with revenue from rubber reaching VND 484 billion (+88%YoY). DPR's revenue and profit after tax in 3Q2024 are estimated at VND 358 billion and VND 60 billion, revenue from the rubber segment contributed VND 313 billion (+34%YoY).
The pharmaceutical retail market — Long Chau leads the market
09-10-2024
: FRT
: Retailing
: Quyen Nguyen
Tags:
- There are approximately 50,000 pharmacies in Vietnam, with mom & pop drugstores dominating the market, holding about 85% market share. However, modern pharmacy chains, led by Long Chau, are continuously expanding their scale.
- We anticipate that competition in the pharmaceutical retail market will increase in the near future. However, we believe that Long Chau will continue to lead as the top modern pharmacy chain.
Power Sector — Favourable cycle to support hydropower generation companies in 2025
08-10-2024
: PC1, REE
: Utilities
:
Tags: PC1 REE
- System-wide electricity consumption achieved stellar growth in 9M2024, driven by the recovery of industrial production activities and increasing residential electricity demand. We expect electricity demand to continue growing in 2025, alongside an improvement in the financial performance of power companies in general.
- For hydropower generation companies, we remain optimistic due to (1) increasing sales volume in 2025 thanks to the ongoing La Niña cycle, and (2) stable or potentially higher average electricity prices in 2025, given the possibility of improved financial conditions for EVN.
23-10-2024
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