TCM – Some Positive Changes Ahead Next Year

TCM is one of few companies in Vietnam’s textile industry that operates in fiber, garment, and fabric production, and has consequently been the most highly desired textile stock by foreign investors.  However, the recent declining growth rate of the textile industry coupled with the TPP appearing to be out of question has caused investors to be less interested in TCM and the industry in general.  These concerns have also been met with company specific concerns regarding TCM’s poor performance in its yarn segment, as well as issues in the performance of its Vinh Long Factory. The company’s PE is now between 6 and 7, quite low when compared to its historical average. However, we have observed that the company has restructured some of its operations, which could bring good business results from FY2017.

GTN – Company Visit Note

GTN is a company which has used an M&A strategy to gain a strong position in Vietnam’s F&B and agriculture industry. GTN will restructure all of its subsidiary and associate companies to achieve better business results, by implementing stronger branding and distribution.

C32 - Business Result Update

Construction Investment Corporation 3-2 (HSX: C32) announced its projected business results today for 2016, as well as its guidance for FY2017. Revenue and NPAT of 2016 was VND523 and VND97.5 billion, a decline of 6.2% and 3.8% YoY, respectively. The decrease was mostly caused by its weakening construction segment (VND32 billion lower) which had barriers due to qualification and its business relationships. 

VGC – New Listing on the HNX

Viglacera Corporation – JSC (VGC) will move from the Upcom to the HNX tomorrow. The stock’s price band on the first transaction date is +/-30% from its reference price of 15,600 per share.

As mentioned in our initial report on December 14, 2016, we appreciate the growth potential of the company thanks to its (1) large production capacity and stable operations in building materials, (2) capacity expansion in the building materials segment, (3) large industrial park land bank at favorable locations and (4) expectation of increased efficiency due to the state divestment.

Oil & Gas – Supply and Demand for 2017

In our Analyst Pinboard on 01/12/2016, we noted that the crude demand in 2017 could surpass the supply, creating momentum for the improvement of oil prices. Today’s Pinboard will provide a more detailed analysis of the current state of the global crude oil market, as well as the prospects for oil prices in 2017.

DGW – Adapting for the Future

Digiworld Corporation (DGW – HSX) operates mainly in technology distribution segment. At this moment, industry scale is over VND155,000 billion with 2011 – 2015 CARG at 15.02%. This segment still appears as a fertile ground for a veteran as DGW (almost 20 years old) to continue the exploitation and exploration as a major distributor.  However, thrive for future, DGW transforms into the first company in Vietnam to provide market development service with the bold plan to expand into other industries.

SKG – Result Update report on 16/12/2016

• The company’s Q3 2016 business results displayed its ability to continue on a strong trend of growth
• Boosting its investment in existing routes will support short-term growth
• Long-term Prospects Depends on its New Routes

NT2: 4Q 2016 Business Results Update

Recently, we had a conversation with the CEO of NT2 to receive an update of the company’s business operations. During November 2016, NT2’s sales volume reached a mere 87% of its monthly plan, due to better-than-expected hydrologic condition and low electric demand. For the last month of 2016, when large hydro power plants run at low capacity to reserve water for the dry season next year, we expect that NT2’s sales volume will be higher.

VTO – Opportunity for Latecomers

Vitaco Tanker JSC’s (VTO-HSX) stock price has been extremely volatile this year. After a strong rally experienced during the middle of the year, its recent price correction could again open up a new opportunity for long-term investors.

Some Thoughts on the Fed Rate Hike Outlook

By tomorrow, markets will know the next move of the FED, which has been tightening its policy in contrast with other central banks in developed countries. The markets widely expect (nearly 100% probability) the Fed to raise rates by 0.25%.  Nevertheless, markets are longing to know projections for 2017 after this December meeting, as the US economy has experienced prominent changes in macroeconomic and political factors during 2016.

Examining Foreign Capital Flow in 2016

As of the end of last week, the VN-Index has risen by 17.76% YTD. However, the two exchanges have faced a massive sell-off from foreign investors (about VND6,731 billion). The selling began at the end of 2015, when the market expected the Fed to raise interest rates for the first time since 2008. This action has worried market participants because foreigners have never sold this strongly before. There was a period (from Feb 18^th to Aug 12^th) when they returned to buy, with the exception of April, as they sold VIC to take profit from VIC’s convertible bonds. Overall, this is the first year that foreign investors become net sellers since 2007.

VGC: Catalysts Ahead for VGC to Fully Realize its Potential

Currently, most of VGC’s building materials production lines are running at maximum capacity. Therefore, the firm is planning to add new production capacity by embarking on projects in energy saving glasses, toilet ceramics, tiles and special white glasses. Given that the majority of new projects are able to begin production in late 2017 and early 2018, the company’s main growth catalysts are likely to fully kick in after 2016.