Update on trade in 5M2023
15-06-2023
: VDS
: Macroeconomics
: Ha My Tran
Tags: Trade
- Export continued to be sluggish in May 2023.
- The Asian market demand is decreasing.
- Prospects for the export market in the second half of 2023.
Banking sector – Credit demand is expected to gradually recover from the last months of 2023 onwards
14-06-2023
: VCB, MBB
: Banking
: Thao Nguyen
Tags: 1Q23 results update 2H23 outlook
- In 1Q23, a widespread downturn in bottom-line growth was witnessed amongst most industry players, as sector earnings growth recorded a negative level of -3% YoY (or +5% YoY, if excluding VPB’s one-off upfront fee in 1Q22). Among tiers, State-owned group observed the most optimistic results, with an average 18.9% YoY growth boosted by BID’s impressive figure of 53%, whereas the remaining three tiers all experienced marginal or even adverse improvement.
- Deteriorating asset quality with escalating bad debt formation. Non-performing loans of the banking sector have been accelerating for the third consecutive quarter. However, there was also a divergence between bank groups as state-owned banks have seen diminishing signals in NPL formation whereas the deteriorations of private commercial banks’ asset quality have not ceased.
- The banking sector’s credit growth in 1Q23 reached 2.06% YTD, comparatively lower than the same period last year (5.97%) due to weak credit demand amid challenging business conditions and a gloomy real estate market. We anticipate credit demand to gradually recover from the last months of 2023 onwards, backed by the expected turnaround of the export-import sector and brighter signals on the real estate market from 4Q23.
- Banking stock prices have rebounded during the last six months, yet valuation is still below the 5-year average. We foresee this is an attractive valuation for long-term investors to accumulate banking stocks.
Update on Gold
13-06-2023
: VDS
: Macroeconomics
: Bernard Lapointe
Tags: gold
- Central banks worldwide have been increasing their gold purchases in recent years.
- This has pushed the price above USD 2000 per ounce early this year (Figure 1).
FMC – Shrimp export value may bottom out in Q2/2023
13-06-2023
: FMC
: Fishery
: Loan Nguyen
Tags: Monthly update Shrimp
- In the first five months of 2023, FMC's shrimp exports reached USD 68 million, down 29% YoY.
- In Q2-FY2023, we forecast that FMC will achieve revenue and NPAT of VND 908 bn (or USD 40 mn, -10% QoQ, -36% YoY) and VND 77 bn (or USD 3.3 mn, - 32% YoY, +77% QoQ), respectively. While Q2/2023 results are continuing to decline sharply YoY, the improvement QoQ is mainly due to seasonality.
- Overall, we believe that Q2/2023 will mark the lowest point for FMC's export sales. Considering the potential recovery in the second half of 2023 and the promising long-term growth prospects, we view FMC as a viable investment option for the latter part of the year. The target price for FMC is currently being updated.
Update on Gold
13-06-2023
: VDS
: Macroeconomics
: Bernard Lapointe
Tags: gold
- Central banks worldwide have been increasing their gold purchases in recent years.
- This has pushed the price above USD 2000 per ounce early this year (Figure 1).
HPG - Market absorption will stay weak in the short and medium term
12-06-2023
: HPG
: Materials
: Trinh Nguyen
Tags: HPG
- May sales volumes improved month-on-month, but overall recovery pace remains sluggish.
- Steel market does not provide favorable conditions for results to improve in the medium term
STK – A recovery on the horizon
09-06-2023
: STK
: Textile & Garment
: Hoai Trinh
Tags:
- 2Q23 awaits a recovery. We expected STK’s performance to bottom out in 1Q23 and then recover through 2H23. As a yarn company, we expect STK to lead the rebound as demand picks up in 2H23. We expect STK’s 2Q23 net revenue and NPAT to reach VND 420 bn/USD17.8 mn (+46% QoQ, -20% YoY compared to a high base 1Q22), and VND 33bn/USD 1.4 mn (21x QoQ, -50% YoY), respectively.
- Retain ACCUMULATE; we lift our TP to VND 32,800/share (from 32,500/share). We cut our 2023 earnings forecasts by 39% largely reflecting weak 1H23 results. We roll forward our PEx valuation base to 2023-2024 (from 2023). Accordingly, we raise our TP to VND 32,800/share, implying a 17% upside, based on the closing price of Jun 9th, 2023.
Fed’s Rate Cut and Its Impact on the US Stock Market: A Historical Look
08-06-2023
: VDS
: Macroeconomics
: Tung Do
Tags:
- Since the Fed returned to targeting the Fed funds rate range approach to implement monetary policy in 1982, nine series of rate cuts were conducted.
- During those periods of rates cuts, the US equity market performance varied from time to time and largely depended on the context of the US economy and market expectations at that time.
- US stocks tend to perform well to a pause period and a “mid-cycle adjustment” following interest rate hike cycle.
DBD – Results in Q1-FY23 impressive while maintaining double-digit growth rate
07-06-2023
: DBD
: Pharmaceuticals, Biotechnology
: Quan Cao
Tags:
- Results in Q1-FY23, revenue and PBT of DBD were VND 382 billion (+7% YoY and -18% QoQ) and VND 84 billion (+33% YoY and -9% QoQ), respectively, completing 21% and 28% of the plan for 2023, comleting 22% and 24% of our forecast for 2023. Revenue of ETC and OTC channels were VND 209 billion (+35% YoY and -28% QoQ) and VNd 156 billion (+0% YoY and +2% QoQ) respectively.
- For 2023F, we maintain the forecast that revenue and NPAT are VND 1,725 billion (+12% YoY) and VND 292 billion (+20% YoY) respectively, of which ETC and OTC channel revenue are VND 947 billion (+11% YoY) and VND 649 billion (+12% YoY) respectively, EPS for 2023 is VND 3,894 (+20% YoY). We changed the BUY recommendation to ACCUMULATE DBD with a target price of VND 52,600/share due to the current upside level being narrowed after the previous bull run. The P/E forward valuation is 11.5x lower than the average P/E of 5Y by 28%.
KDH – Focusing on long-term strategy
06-06-2023
: KDH
: Real Estate
: Thach Lam Do
Tags: Real estate KDH
- In 1Q23, KDH recorded revenue of VND 425bn (or USD 18.1mn, +198%YoY), due to the handover of high-value townhouse in the Classia project. The gross profit margin (GPM) increased to 78% owing to the contribution of high-end project (average value of ~VND20 bn/unit). Gross profit reached VND 332bn (or USD 14.1mn, +329%YoY, +11%QoQ). KDH’s NPAT was VND 201bn (or USD 8.55mn), down by 33% YoY due to lack of profit from re-valuated asset as it was in Q1 2022. The results met c. 18% of our full-year forecast.
- Keppel Corporation, together with Keppel Vietnam Fund (jointly, the Keppel Consortium), have entered into binding agreements to acquire from the company a 49% interest in two adjacent residential projects, with total land area of 11.8 ha in Binh Trung Dong for VND 3,180 bn (USD 187.1mn). We expect the divestment will bring KDH a large amount of cash flow to develop other projects.
- KDH will push the sale plan from 2H2023, in-line with market recovery expectation, with the Privia (a high-end condominium project in Binh Tan district) and the Clarita (villa project in Thu Duc city) are expected to open for sale in 2H2023.
- For 2023, we estimate that KDH’s total revenue will reach VND 2,650bn (or USD 112.77mn, -9%YoY), mainly coming from the handover of ~130 units of the Classia. KDH will also record growth in term of profit, with gross profit of VND1,765 billion (+21%YoY) and net profit of VND 1,104 billion (+2%YoY). The 2023 equivalent EPS is VND 1,540.
- Using SOTP (Sum-of-the-parts) method, we get a target price at VND 38,000/share (upside +27%), equivalent to a BUY recommendation for long-term investment purpose.
MCM – The synergy with Vinamilk continues generating positive growth in profits
05-06-2023
: MCM
: Food, Beverage & Tobacco
: An Nguyen
Tags:
- In Q1 2023, Mocchau Dairy Cattle Breeding (Upcom: MCM) announced net revenue of VND734 bn (-6.7% QoQ, +8.8% YoY) and NPAT-MI of VND101 bn (+39.7% QoQ, +18.4% YoY). The strong growth in the bottom-line was driven by SG&A cost optimization as well as high financial profit from bank deposits. MCM's net profit margin increased from 9.2% in Q4 2022 to 13.8% in Q1 2023 - the highest level since being acquired by Vinamilk. This demonstrates the effective of the synergy between Vinamilk and Mocchau Milk, resulting in positive profit growth.
- We expect 2023 sales growth to come from an increase in both volume and selling prices, reaching VND3,466 bn (+10.6% YoY). 2023 net profit is expected to grow at a slower pace than revenue, reaching VND368 bn (+6.2% YoY). The main reasons are: 1) input costs (raw milk and sugar) are expected to increase from Q2 2023, and 2) SG&A expenses will rise correspondingly with the market share expansion strategy. 2023 EPS is estimated at VND3,345.
- In Q1 2023, the company has achieved 21% and 28% of the revenue and profit targets of the year, respectively. Based on MCM's business plan completion history and the 2023 positive outlook, we believe that it is able to exceed the business targets by the end of the year.
DPM – Lower earnings in 2023 but attractive cash dividend
02-06-2023
: DPM
: Fertilizer
: Vu Tran
Tags: high dividend falling selling price results update
- DPM announced 1Q2023 results with revenue of VND 3,289 bn (down 44.1% YoY) and NPATMI of VND 260 bn (down 87.6% YoY). The bad results mainly came from the drop in selling prices as well as the high gas input in the first 3 months.
- We believe that 2Q2023 number will be lower than the same period last year but improve QoQ thanks to a better selling price and higher sales volume.
- For 2023, we project that revenue and NPATMI will decrease by 28.5% and 69.4% respectively, which is mainly due to low selling price and high input gas price. Currently, we see the Brent forecast around 80 USD/barrel – 90 USD/barrel.
- With the 2023 earnings forecast of VND 1,704 bn, the P/E 2023 will be 7.5x, which is not attractive in our opinion. However, the remaining cash dividend of 2022 ~ VND 3,000/share, could be the short-term catalyst for DPM share. So we stay NEUTRAL for DPM with the target price of VND31.900.
15-06-2023
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