The recovery trend of Chinese tourists to Vietnam is inevitable in 2023
28-03-2023
: ACV
: Aviation
: Tung Do
Tags:
- China’s Ministry of Culture and Tourism released a second list of 40 new countries, including Vietnam, for group and package travel on March 10th, bringing the total destinations where Chinese travel agencies can sell group tours to 60.
- For those countries that are eligible for China’s group tour from Feb 6th, namely Thailand, Singapore and Philippines, inbound arrivals from Chinese tourists witnessed a markedly accelerated pace in February compared to previous month.
- We believe that the recovery trend of Chinese tourists to Vietnam is inevitable in 2023. Our baseline scenario estimates Chinese tourist arrivals could reach 20% of 2019 levels in 2023, slightly lower than recovery pace of South Korea tourist arrivals in 2022 since the difference in visa waiver policy, resulting in 1 million Chinese travelers.
Update on monetary market in March 2023
27-03-2023
: VDS
: Macroeconomics
: Ha My
Tags: Monetary market
- Liquidity is still abundant, the SBV stops withdrawing money for 91-day term.
- Lower interest rates will help improve credit growth.
- Impact of Fed rate hike in March meeting
Pharmaceutical industry - Ministry of Health issues policies to guide the ETC channel development
24-03-2023
: IMP, DBD
: Pharmaceuticals, Biotechnology
: Quan Cao
Tags:
- The Ministry of Health issues legal documents to help alleviate drug shortages and facilitate long-term growth in the ETC channel.
- The market share of OTC channels may shrink as the ETC channel has been recovering from the end of 2022. In the first two months of the year, retail pharmacy chains such as Pharmacy or An Khang closed some stores which were operated ineffectively.
- Pharmaceutical companies with long-term orientation on ETC channels such as DBD with cancer treatment and IMP with antibiotic segments will benefit from the supportive policies of the Ministry of Health.
Positive earnings growth expected for select consumer sector companies in Q1/2023
23-03-2023
: PNJ, QNS, FMC
: Retailing, Consumer Staples, Fishery
: Loan Nguyen
Tags: Quarterly forecast
- In the current economic climate in which many businesses are experiencing negative growth, it has come to our attention that a few companies within the consumer sector on our coverage list, including QNS, FMC, and PNJ, are expected to record positive growth in profits in Q1/2023, defying the prevailing trend. Moreover, we anticipate that these businesses will maintain this growth trajectory throughout the entirety of 2023.
- We expect the commendable financial performance of these companies to serve as a ray of hope amidst the current challenging stock market, thereby mitigating the potential negative impact on their stock values. Consequently, we advise investors to maintain their holdings if they already possess these stocks, or alternatively, consider exploring short-term investment opportunities at discounted price levels. Additionally, these particular stocks boast solid long-term fundamentals, making them enticing investments for investors with a long-term outlook, especially when factoring in their discounted prices.
- This report contains the latest Q1/2023 business forecasts for the aforementioned companies.
PVT – To expect a significant earnings growth in 1Q2023 but will be a challenge for FY2023
22-03-2023
: PVT
: Oil & Gas
: Vu Tran
Tags: Oil Gas transportation Charter rate hike Fleet expansion
- PVT recorded positive 4Q2022 results with revenue of VND 2,439 bn (up 17.2%) and NPATMI of VND 207 bn (up 5.1%). For FY2022, PVT also posted good performance thanks to a 30.7% in revenue growth from the core business (transportation segment) and VND 292 bn from liquidating Athena vessel (VND 205 bn), Song Hau Eagle. NPAT increased by 30.4% to VND 861 bn in 2022.
- The company keeps expanding its fleet in 2023 and benefits from the increasing freight rates of crude oil tankers as well as oil product tankers from mid-2022 till now. In 2023, PVT plans to invest in 18 vessels with a total value of USD250 mn. However, we believe that PVT is likely to purchase 5-7 vessels for 2023. In addition, the economic crisis may change the current freight rate trend, affecting negatively to the 2023 performance.
- Despite the fleet expansion and freight rate hike, we believe that 2023 profit will be difficult to grow due to the high base in 2022. However, core business is expected to grow and the P/E 2023 is still quite cheap ~ 8.8x, according to our forecast. In 1Q2023, we believe that a growth 30%-40% in earnings, compared to the same period last year, is possible. Therefore, we reiterate a BUY for PVT with a target price of 23,700 VND/share. For FY2023, revenue and NPATMI are forecasted VND 9,215 bn and VND 792 bn, respectively as we assume that BSR will implement the turn around in 2023. Then EPS 2023 is 2,300 VND.
KBC – Expect the industrial park segment to see a breakthrough thanks to large deal-size contracts
21-03-2023
: KBC
: Industrial Land RE
: Hung Le
Tags: KBC
- Excluding the revenue deduction (448 billion VND), total revenue of KBC's core businesses in 4Q2022 reached VND 115 billion, down 90% YoY. NPAT attributable to shareholders lost VND 482 billion compared to VND 211 billion of 4Q2021. In 2022, KBC recorded total revenue of VND 958 billion (-77% YoY), and NPAT-MI of VND 1,552 billion (+98%). Profit was mainly driven by additional profit (VND 2.2 trillion) from the re-evaluation of the investment in Saigon-Da Nang Investment JSC after raising its ownership to 48%.
- Based on the total leased area (official contractsl + MOUs) YTD, we see that KBC's business results in 2023 will be a breakthrough compared to 2022 (after excluding benefits from revaluation of assets. produce). In this positive scenario, revenue and EAT-CTM are estimated at VND 6,383 billion and VND 2,570 billion, respectively (EPS is VND 3,348/share, respectively). In addition, cash flow from operating activities is also a solid fulcrum for the financial plan when KBC faces pressure to pay bonds due in 2023.
- The time for approving the general planning of Hai Phong City is expected to be in September 2023. The approved planning will be the key to unlocking the bottleneck of KBC's real estate projects in Hai Phong including Trang Due IP, Trang Due Urban project, and Trang Cat Urban project. Besides, although the available GFA is limited, however, the projects including Tan Tap IP, Loc Giang IP, Phuoc Vinh Dong industrial clusters in Long An, and industrial clusters in Hung Yen are being accelerated the site clearance and constructed with aim to put into operation in the period 2024 - 2025, this will ensure KBC land bank to conduct business in the long term.
- Based on the sum of the parts methodology (SOTP), we keep our target price unchanged at VND 25,000/share compared to the previous valuation. Combined with the expected dividend payment of VND2,000/share as it was approved by the General Meeting of Shareholders at the EGM in 2022, the total expected return in the next twelve months will be +19, 8% (based on closing price of 20/03/2023).
2M2023 steel production and consumption: Slow recovery
20-03-2023
: HPG, NKG, HSG
: Materials
: Trinh Nguyen
Tags: NKG HPG HSG
- Consumption of crude steel exceeded production, inventory decreased.
- Downstream steel demand has not improved significantly as manufacturers rely on support from macroeconomic policies.
ANV – Harness the opportunities arising from China's reopening
17-03-2023
: ANV
: Fishery
: Loan Nguyen
Tags: 2023 outlook China's reopening
- Amidst the bleak prospects of the export industry, ANV, a representative stock for the investment theme of China's reopening, is exhibiting better performance than the industry average due to the resurgence of orders in the Chinese market - which was once the main market of the company, but suffered a sharp decline during the three years of the COVID pandemic. In the first 2 months of 2023, ANV's export volume remained stable at the same level as the same period last year, while the selling price decreased by 10% YoY and 30% from the peak of Q2-FY22.
- Notwithstanding the benefits of falling transportation costs and stable export volume, which offset rising financial costs and plummeting selling prices. This circumstance poses a challenge to surpass the company's record-level 2022 profit.
- While a more thorough assessment is necessary to update ANV's forecast and valuation, we hold the view that ANV is better suited for short-term trading at a discounted stock price, rather than long-term holding given the uncertainties surrounding the outlook of the export industry and ANV's business results. ANV is currently trading at a P/E of 5.8x, compared to 6.2x in the period of 2018-2019 – a period of the pangasius industry's bull cycle similar to the current situation.
VNM – High input costs remain an obstacle for profit margin improvement
16-03-2023
: VNM
: Food, Beverage & Tobacco
: An Nguyen
Tags: Result Update Consumer staple
- In Q4 2022, VNM had net revenue of VND15,069 bn
(or USD647 mn; -6.3% YoY; -4.7% QoQ), of which, both of domestic and overseas
channel went down. Due to strongly rising input costs, the net profit margin
dropped to the lowest level (12.4%) since the last decade, equivalent to
VND1,869 bn (or USD79 mn; -18.7% QoQ; -15.5% YoY).
- 2022 net sales of VNM was VND59,957 bn (or USD2,540 mn; -1.6% YoY) and NPAT of VND8,516 bn (or USD360 mn; -19.2% YoY), completing 94% and 88% revenue and profit targets respectively under rising inflation environment. 2022 results were below our expectations, thus we lowered 2023 expected sales and net profit to VND62,532 Bn (or USD2,661 mn, +4.3% YoY) and VND9,263 Bn (or USD394 mn, +8.8% YoY), respectively. The equivalent EPS comes at VND3,989 (+9.8% YoY).
- Our new target price for VNM is VND83,400, which is lower by 11% compared to the latest target price (VND93,800) on Jan-2023. Adding a cash dividend of VND3,850, the 12-months expected return is 13% compared to the closing price on Mar 15th 2023. We recommend to ACCUMULATE Vinamilk as a defensive investment with a stable cash dividend yield (~5%) and positive growth outlook.
Comments on the SBV’s cut on the regulatory interest rates
15-03-2023
: VDS
: Macroeconomics
: My Tran
Tags: interest rate
- The SBV’s cut on the regulatory interest rates
- The deposit interest rates cooled down
- A "timely and thoughtful" policy action in the current macro context
Vietnam’s T&G sector – Remain cautious despite seeing glimmers of export recovery
14-03-2023
: STK, TNG, MSH, TCM
: Textile & Garment
: Hoai Trinh
Tags:
- In the first two months of 2023, Vietnam's garment export turnover was USD 4,549 mn (-19.6% YoY), mainly due to high inventories and weak demand in main export markets which led brands to turn more conservative in placing orders for 1Q23. Yarn export turnover also plummeted, recording USD 565mn (-38.4 % YoY) due to a significant decrease in imports from China (-42.6% YoY).
- The US is by far Vietnam's largest textile importer. We expect US apparel imports to recover after the strong imports in May 2022 (bullwhip effect), bolding bleak for downstream inventory digestion in 4Q22. Meanwhile, CAFTA-DR members gained market share primarily as a result of a sharper decline in US apparel imports from the rest of the world. However, we believe this trend will not last long.
- We believe that 2023 could not be a rocky ride for Vietnam exporters when China reopens because US fashion companies continue to diversify their sourcing base. While there are some glimmers of hope, we still recommend investors wait on the sidelines for 2Q23 (after 1Q23 results are fully priced in) or stock prices drop further to provide some valuation support.
Tech Industry Layoffs Should Be a Clearer Signal for The Deceleration of IT Services Revenue In 2023
13-03-2023
: FPT, CMG
: Technologies
: Tung Do
Tags: IT Industry
- Mass job cuts in the technology sector have occurred since mid-2022 and remain more elevated in early 2023, especially in the US.
- Reasons behind massive tech layoffs consist of an unsupportive macro backdrop (economic downturn, high inflation, higher interest rates) and, particularly, overhiring during the pandemic.
- B2B tech companies specializing in software, IT infrastructure, IT services, which largely support businesses’ DX progress, also witnessed notable layoffs recently, signaling the temporary deceleration of DX-related revenue growth in 2023.
- We expect that businesses will most likely prefer lower-cost IT vendors, including Vietnam players, amid an economic downturn.
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