Block B – O Mon mega project: Flexibility in Implementation before final investment decision
12-02-2025
: PVS, PVD
: Oil & Gas
: Huong Le
Tags:
- In September 2024, the upstream portion of the Block B project officially commenced when PVS was awarded the full EPCI#1 contract and held a groundbreaking ceremony for the EPCI#2 contract.
- As of December 13, 2024, the progress of the EPCI#1 package reached 12.82%, while the EPCI#2 package achieved 24.39%. Design, procurement of materials, and fabrication work are ongoing as scheduled, with the project having recorded a milestone of 1 million safe hours by mid-December 2024. The efforts and flexibility of all stakeholders will undoubtedly contribute to the project's future success.
OCB – Q4/2024 PBT exceeded expectations due to solid credit growth and unexpected expansion of NIM
11-02-2025
: OCB
: Banking
: Trang To
Tags:
- Q4/24 PBT exceeded VND 1.4 trillion, showing solid growth based on the low base of the previous quarter and the same period in 2023 (+230% QoQ and +550% YoY) thanks to the following drivers: (1) NII: Credit growth surged in Q4, reaching 19.5% YTD (Q3/24: 13.5% YTD), and NIM (Q) expanded significantly by 60 bps QoQ to 4.0%; (2) NFI increased by 133% QoQ and 37% YoY; (3) Provision expenses decreased by -25% QoQ and -17% YoY.
- Full-year 2024 PBT reached VND 4 trillion, still down 3% YoY as OCB aggressively increased risk provisions and faced higher operating expenses, rising by 39% and 20% YoY, respectively. Additionally, investment securities trading activity, which had previously contributed significantly to OCB’s income, faced challenges in 2024 (-130% YoY) as government bond yields trended upward throughout the year.
- Compared to our previous 2024 forecast, strong credit growth of 19.5% (2024F: 18%) and a sharp rise in NIM to 3.5% (2024F: 3.1%) were the main factors driving PBT beyond expectations (+26% vs. 2024F). Moreover, corporate advisory fee income surged in Q4/24 (+133% QoQ and +37% YoY), which was an unexpected factor that led to stronger-than-expected NFI.
- Asset quality has not shown positive changes, with net NPL formation in Q4/24 remaining flat compared to the previous quarter (VND 1.1 trillion). The balance of debt with unresolved collateral remained nearly unchanged, and NPL ratio (including debt with unresolved collateral) stood at 4.0%, down 10 bps QoQ. The credit cost ratio in Q4/24 was 0.4%, decreasing from Q3/24 (0.6%) and still lower than the net NPL formation ratio, leading to a continued decline in the NPL coverage ratio to 38%.
- We estimate that OCB’s current market price (VND 11,400 as of February 11, 2024) corresponds to an adjusted P/B ratio (discounting for on-balance-sheet NPLs and unresolved collateralized debt) of 1.0x, implying that the current price has largely reflected OCB’s asset quality risks and limited downside risk. The 2025 forecast and target price for OCB are under review and will be updated in the upcoming report.
An Overview of Q4-2024 and 2024 Business Results of Listed Banks
10-02-2025
: BID, CTG, VCB, MBB, TCB, VPB, ACB, STB, SHB, HDB, VIB, OCB
: Banking
: Tung Do
Tags:
- The 27 listed banks recorded a combined Q4-2024 pre-tax profit (PBT) of VND 81 trillion, marking 22% YoY growth, bringing the full-year 2024 PBT to VND 299 trillion, reflecting an 18% YoY increase.
- In Q4-2024, net interest income remained the primary driver of total operating income and pre-tax profit, with a key highlight being credit growth estimated at nearly 18%, the highest level since 2018. The net interest margin (NIM) for Q4-2024, despite a 20-bps decline YoY, improved slightly by 10 bps QoQ, supported by a 15 bps increase in asset yields, while funding costs remained stable compared to Q3-2024. We believe the QoQ NIM expansion was aided by the reversal of previously written-off interest income following a notable improvement in asset quality during the quarter.
- Other incomes posted strong growth, primarily driven by recoveries from written-off bad debts, which reached nearly VND 15 trillion, representing a 66% YoY increase. Additionally, credit costs remained stable compared to the same period last year, marking another notable aspect of Q4-2024 business performance.
- Asset quality showed significant improvement in Q4-2024, with lower NPL balances, a declining NPL ratio, and reduced net new NPL formation (before write-offs) compared to the previous quarter. Notably, net new NPL formation dropped to its lowest level since Q1-2022, before the surge in bad debts caused by macroeconomic headwinds and challenges in the real estate market. Although new NPL formation declined, banks maintained their credit cost ratios at the previous quarter’s levels, leading to a mild improvement in the NPL coverage ratio to 91% from 83% in Q3-2024.
- We estimate that the banking sector is currently trading at 1.5x P/B, compared to its five-year historical average of 1.7x. We view the sector's current valuation as relatively attractive, considering the ongoing asset quality improvement, the anticipated rebound in ROE amid stronger profit growth expectations for 2025, and the potential market reclassification catalyst for large-cap stocks.
Aviation – Global air cargo volume is forecast to slow down in 2025
07-02-2025
: SCS
: Aviation
: Quan Cao
Tags:
- In 2024, Vietnam's total import and export value by air is estimated to reach USD 215 billion (+11% YoY), with a total volume of 1.1 million tons (+20% YoY). This growth is driven by the rapid expansion of cross-border e-commerce and maritime shipping restrictions during the peak season.
- In 2025, global air cargo volume is expected to grow by 3.6% YoY, supported by continued investment in technology, which boosts e-commerce, and increased aircraft purchases by airlines to meet transportation demands.
- However, the growth rate has slowed significantly compared to 2024 due to uncertain policies in President Donald Trump's second term. Key factors include a shift back to sea shipping as ocean freight rates drop following a January 2025 ceasefire in the Middle East and weakened global consumer demand if the Trump administration imposes tariffs on Canada, Mexico, and China.
Early developments in the trade war under Trump 2.0
06-02-2025
: VDS
: Macroeconomics
: Nguyen Vu Toan Vo
Tags:
- U.S. trade advantages over Canada and Mexico & China's game adjustment
- Trade tensions and potential economic impacts on the U.S., Canada, Mexico, and China
Vietnamese e-commerce market is projected to experience robust growth
05-02-2025
: VTP
: Retailing
: Quyen Nguyen
Tags:
- E-commerce platforms function as intermediaries, facilitating stakeholder transactions and delivering products from manufacturers to end consumers.
- In 2024, Vietnamese e-commerce market is estimated to reach a Gross Merchandise Value (GMV) of USD 22 billion, ranking third among the six largest economies in Southeast Asia. Vietnam is also forecasted to record the second-highest average annual growth rate in GMV for 2024–2030, at 18.7%, trailing only the Philippines.
- Supporting factors for the growth of Vietnam e-commerce market:
- Internet and smartphone adoption rates in Vietnam are high and continue to grow.
- Vietnam's per capita income is projected to grow at a solid annual rate of 7.0% for 2024–2030.
- The completion rate of major transportation projects, based on total investment value, is expected to rise.
- The value of electronic payment transactions is projected to increase at a robust annual rate of 14.5% through 2030.
- The Covid-19 pandemic changes consumer habits.
- Supportive government policies.
- Challenges to the growth of vietnam's e-commerce market:
- Underdeveloped transportation and digital infrastructure.
- High competition in the industry.
- Concerns about the safety and security of online transactions impact consumer’s demand for e-commerce services.
- Shortage of high-quality human resources.
- We believe that e-commerce will gradually capture traditional commerce and retail market share. However, with their unique advantages, traditional commerce and retail still maintain a presence and continue to grow. Opportunities exist for businesses that can integrate and leverage the strengths of both models.
Understanding the definition of milk powder and predicting raw milk powder price trends for 2025
04-02-2025
: VNM
: Food, Beverage & Tobacco
: Hung Nguyen
Tags:
- Raw milk powder provides transportation benefits by rising the shelf life (advantage over fresh milk). In addition, powdered milk is often considered as a milk substitute (reconstituted milk) with a lower cost than fresh milk, but it is judged by consumers that the nutritional content decreases due to many stages of processing (especially heat treatment).
- We also note that investors observe changes in the following countries that will skew the supply-demand balance, greatly affecting the price of raw milk powder in the world: New Zealand, Europe, the US (supply), China, Southeast Asia (demand).
- The supply of milk powder on a long-term decline and the resilient demand for milk powder will cause the price of raw milk powder to be anchored at a high level, affecting the profit margins of listed dairy companies such as VNM and IDP in 2025.
- To further reinforce the above statement, we refer to Fonterra's business plans and milk price judgments – The company accounts for ~80% of New Zealand's milk production and ~20% of Australia's milk production (the two countries account for 60-80% of the world's milk powder exports). The company has raised the forecast average price for the 2024/25 season of Farm Milk Prices from $9.00/kgMS from the end of Q9-2024 to $9.50/kgMS at the end of Nov 2024 and $10.00/kgMS at the end of Dec 2024.
Investment Support Fund (ISF) – Orientation for the development of high-tech FDI projects
24-01-2025
: KBC, SZC, VGC
: Industrial Land RE
: Thach Lam Do, CFA
Tags: KBC
- Under the domination of the global minimum tax (GMT), Vietnam's competitive advantage in income tax for large foreign partners has declined. Decree 182 on the establishment of the ISF Investment Support Fund is an appropriate step to maintain and reinforce the existing strengths in the process of attracting FDI projects in Vietnam in the coming period.
- The Investment Support Fund (ISF) states that high-tech enterprises, manufacturing products, or using high-tech in production will be entitled to monetary support (VND) for human resource development, research and development (R&D) investment, investment in fixed assets, investment in social infrastructure, and production of products if they meet the requirements on the minimum capital size, or annual revenue target and ensure the capital disbursement schedule as prescribed.
- We believe that this reflects the Government's long-term vision to position Vietnam as a high-tech manufacturing hub in the region, contributing to enhancing the global value chain of advanced industries, especially semiconductors and artificial intelligence.
DPR – The industrial park segment is expected to bring cash flow in 2026
23-01-2025
: DPR
: Industrial Land RE
: Giao Nguyen
Tags:
- Bac Dong Phu Expanded Industrial Park (317ha, Binh Phuoc) has just been approved for investment policy with a total investment capital of VND 1,360 billion, and we expect the project to be able to sign MOUs at the end of 2025 and record revenue in 2026.
- Rubber selling prices continue to increase, the average selling price in 2024 will reach 48 million VND/ton (+38.7%YoY). For 2025, we increase our expectations for the average rubber price to increase to 53 million VND/ton (+10.4%YoY)
- We estimate DPR's revenue and EBITDA in 2025 to reach VND 1,329 billion (+15.8% YoY) and VND 367 billion (+10% YoY), respectively.
TCB - Q4-2024 Financial results exceed expectations due to significant reduction in credit cost following unexpected improvement in asset quality
22-01-2025
: TCB
: Banking
: Tung Do
Tags:
- Consolidated PBT for Q4-2024 reached VND 4.7 trillion (-19% YoY), primarily due to the recognition of VND 1.8 trillion in expenses from ending the partnership with Manulife in distributing bancassurance products, as previously announcement. This period’s performance exceeded expectations due to the reversal of credit cost following an unexpected improvement in asset quality. For the full year 2024, consolidated PBT amounted to VND 27.5 trillion (+20% YoY), achieving the full-year target and exceeding projections by 3%.
- NIM for Q4-2024 continued to decline sharply, dropping nearly 30bps QoQ to 3.9%, after a 50bps reduction in the previous quarter. This was due to a 40bps drop in asset yields to 6.8%, driven by competitive pressures in the market and the maintenance of flexible pricing policies to support real estate developers, while the CoF remained unchanged from the previous quarter at 3.4%.
- Credit provision expense was VND 118 billion, down 93% YoY, corresponding to a credit cost ratio of only 0.03%, thanks to the reversal of provisions after recovering Bucket 2 loans and NPLs, in line with the managers's previous expectations that bad debt and Bucket 2 loans peaked in Q3-2024. The credit cost ratio for the entire year was 0.7%.
- Outlook for 2025: About TCB targets, NII growth of over 20%, driven by credit growth of 20-25% and NFI growth of 10%-20%, while keeping credit cost ratio under 1%.
- Overall, TCB's Q4-2024 financial results were positive in terms of strong CASA growth, asset quality control, and credit cost management, except for the significant decline in NIM. We are in the process of updating our 2025 projections and will provide a more detailed evaluation in the upcoming report.
Results of the HOSE Index Portfolio Changes for Q1/2025
21-01-2025
: VDS
: Financial Services
: Huong Le
Tags:
- The VN30 index portfolio will officially add LPB stock and remove POW stock. Accordingly, we estimate that the funds tracking this index will purchase 18.3 million shares of LPB and sell 3.2 million shares of POW during this restructuring period.
- The VNFIN LEAD index portfolio will not have any changes in its constituent stocks.
The Fisheries Sector in 2025 – Unpredictable Fluctuations
20-01-2025
: VHC, FMC, ANV
: Fishery
: Hien Le
Tags:
- The export value of pangasius in 2024 reached $2 billion (+9% YoY), driven by a 16% increase in production volume despite average selling prices being 6% lower than the same period last year. The strong export growth was mainly attributed to the U.S. market (+29% YoY), while the Chinese market slightly declined by 1% YoY, and the EU market saw a marginal increase of 1% YoY. Average selling prices in the U.S./China/EU markets were respectively -4%/-14%/-5% YoY.
- The total export value of the shrimp industry in 2024 reached $3.8 billion (+14% YoY), primarily driven by other shrimp products such as lobster, while white-leg shrimp saw a modest increase of 8% YoY and black tiger shrimp declined by -3% YoY. The robust growth in white-leg shrimp was due to a 13% increase in production volume, even though selling prices remained 4% lower than the same period last year.
- Moving into 2025, the fisheries industry will face unpredictable fluctuations due to U.S. tariff rates on various countries. However, the pangasius industry is expected to grow, supported by increased production and competitive pricing compared to tilapia and domestic Alaskan pollock in the U.S. The shrimp sector is poised to grow, leveraging competitive advantages in value-added shrimp products, while awaiting the final determination on anti-dumping duties in the U.S.
- Gross margins for fisheries companies are expected to improve, benefiting from an estimated 4% YoY decrease in soybean prices, a slight 3-5% YoY increase in selling prices (with a forecasted 3% YoY rise in the USD/VND exchange rate), and an improved supply of raw shrimp and fish due to favorable weather conditions with moderate rainfall.
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