SMC – Focusing on the coil processing segment

We expect SMC to exceed its NPAT target as its result in 2Q is likely to grow QoQ. HRC prices are still in an uptrend, and the demand for SMC’s products is strong. The company has accumulated a large inventory of VND 2,850 billion in 1Q (+55% QoQ) at a low price, hence, we expect its gross margin will still be as good as in 1Q. Currently, SMC is trading at a TTM P/E ratio of roughly 3.75x, which we think is low compared to other downstream steel producers. Hence, it is one of our favorite stocks in the steel industry as it is relatively undervalued, and the company still has strong growth potential in the next few years. We come up with a fair value of VND 38,900 per share. Together with a cash dividend in the next 12 months of VND 1,000/share, the total return is 32%, based on the closing price as of April 26th, 2021. Hence, we recommend BUY this stock.

PPC – Financial income saves 1Q2021 earnings

We maintain our target price for PPC at VND 24,400. The remaining dividend of VND 4,394  will be paid soon as mentioned in the AGM’s proposal, offering a total return of 6%. Hence, we recommend to accumulate this stock in 2021.

Robust steel demand in domestic and key export markets

The steel consumption grows strongly YoY in 1Q2021 due to the support from high demand overseas and recovering domestic construction activities. Finished steel production and consumption (including construction steel, steel pipe, and coated steel) reached 4.6 million tons (+18.2% YoY) and 4.4 million tons (+21.7% YoY) respectively. The export volume grew strongly in coated steel segment, and the domestic market boosted sales in HRC, construction steel, and steel pipe segments. For 2Q2021, we expect export activities will still strong as several coated steel producers received sufficient orders until mid-August 2021. Meanwhile, construction steel consumption is likely to increased QoQ as construction activities are often more dynamic in 2Q compared to 1Q due to the seasonality and infrastructure projects.

PNJ Q1-2021 Results: Riding on the recovering jewelry consumption demand

• Q1 2021 net sales reached 2Tn (+44% YoY) while NPAT jumped to VND513Bn (+26% YoY).
• Retail sales and NPAT in March 2021, in particular, posted robust growth of 91% YoY and 99% YoY, respectively, mainly due to the low base in the same period last year when PNJ’s operations were hit by the pandemic.
• Q1-2021 GPM and net profit margin contracted by -2.5pps YoY and -1.0 pps YoY, respectively, to 18.4% and 7.1% as product mix changed with higher gold bar sales’ contribution and higher marketing and promotion expenses.
• PNJ’s sales and NPAT has respectively completed 34% and 42% of 2021 guidance, tracking ahead of our expectation. We are reviewing current forecasts and the current TP of VND 100,000 for upside potential.

HDB – Sustaining growth

• HDB is proposing a plan for strong growth in 2021. This pace is expected to be sustained in the next three to four years.
• We do not think the current provision buffer is strong, as well as the credit costs.
• Our projection for 2021 PBT is VND 7,491 bn (USD 325.7 mn, +29% YoY), 3% higher than that of the proposed annual plan.
• We have a target price of VND 31,600/share and maintain an ACCUMULATE This translates to an upside of 16% from the closing price of April 20, 2021.

Exports resilience in 1Q2021 was mainly attributed to FDI sector

• Trade growth remained robust in Mar 2021.
• FDI led export growth while exports from the domestic sector slowed down.
• Vietnam’s trade primed for uneven pace across countries.

European Central Bank (ECB) Annual Report 2020

The Annual Report describes the tasks and activities of the European System of Central Banks (ESCB) and reports on the Eurosystem’s monetary policy. The objective of the report, other than stating the obvious, is to consider whether and how the ECB should adjust its monetary policy strategy for the second half of 2021.

Animal husbandry - Part 1: 3F model will help Vietnamese animal feed companies to be more competitive

In the series of animal husbandry, we will have three analyst pinboards to analyze each stage of 3F model (Feed - Farm - Food) and the contribution of them to the results of DBC, MSN and HPG. At this analyst pinboard, we will analyze the current stage and future prospects of the animal feed industry. The other segments such as farm and food will be analyzed in the next analyst pinboards.

The animal feed market still has a lot of potentials to develop; that is an opportunity for businesses to expand revenue and profit. However, Vietnamese companies are facing difficulties as they are less competitive than FDI companies due to the lack of control of their input costs. Therefore, the 3F (feed - farm - food) model is the best direction for domestic businesses to go in the future.

HCMC’s residential real estate market: strong yearly recovery

• HCMC’s residential market in the first quarter of 2021 recorded a better performance versus Q1 2020 but still slower than Q4 2020.
• The high-end and luxury segments were key supply contributors.
• The effectiveness of ‘Law on amendments to the Construction 2020’ , and ‘Decree 148/2020/ND-CP’ along with commitment of the HCMC People’s Committee to reduce legal procedures will be key driver to gradually uplift market supply.
• For infrastructure development, the ground breaking ceremony of Long Thanh Airport is the most notable news along with the update on Tan San Nhat Airport (runway upgrade), Trung Luong My Thuan Expressway, Metro Line 2 Ben Thanh – Tham Luong, etc.

NT2 - Modest earnings yet prosperous cash flow in 2021

We maintain our target price for NT2 at VND 25,600, offering a 16% upside from the closing price on April 13^th, 2021. Though NT2 is going to pay the 2020 dividend of VND 1,000 as stated in AGM's proposal, we believe NT2 will soon pay out most of its spare cash as a 2021 dividend under POW’s domination (59% ownership) when the company finishes its debt obligation in 2021. Thus, we recommend investors, particularly those seeking high dividend yield, to ACCUMULATE NT2  this year.

Monetary policy spillovers towards emerging markets.

• Monetary policy actions by the US Federal Reserve have a significant influence on financial condition in global emerging markets, whereas spillovers from policies of the European Central Bank (ECB) are smaller and affecting mostly emerging Europe.
• Positive growth news in the US is associated with improved growth prospects in emerging markets, leading to higher expected monetary policy rates in these countries.
• Given the economic significance of USD lending by global banks to emerging markets firms, US monetary policy plays an important role as a “push factor”.