High yield stocks: patience is a key to success

Value investing style usually includes some substyles as: low P/E, contrarian, high dividend yield. High cash dividend yield stocks provide owners stable cash flows every year, quite similarly to fixed income investments so they are in favor of investors who have high liquidity demand every year. In Vietnam, these stocks attract many investors as funds of insurance companies and individual investors saving for old age.

Vietnam inflation has been stable compared to other countries in the region

General Statistical Office has announced the Consumer Price Index for 5/2016. Accordingly, inflation slightly increased by 0.54% m.o.m, second highest figure over the last 5 months. Group with significant improvement in 5/2016 was Transportation with 2.39% m.o.m increase. In addition, other products in CPI have been quite stable. Until now, price of goods experience almost no change (except medicine and health services + 16% yoy). May inflation rose by 1.6% yoy and core inflation rate remained below 2%.

2Q2016 ETFs’ reconstitution

Db x-trackers FTSE Vietnam ETF and Van Eck Market Vector Vietnam ETF will announce the reconstitution results on 03/06/2016 and 10/06/2016. Using data updated in 20/05/2016, RongViet Research forecast the upcoming long/short volumes of these funds.

VNM AGM note: 2016 earnings result is expected to higher growth than guidance

Last week, Vietnam Dairy Products JSC., (VNM - HSX) held 2016 AGM. Below are the summary notes from the meeting:

Listed banks’ 1Q2016 business result: Driven by credit growth

The 1^st phase of banking restructuring project ended with some encouraged results in resolving NPL. Total NPL of all system reduced to 2.55% by the end of 2015. NPLs were split out from balance sheets of commercial banks and divided into different parts to handle time to time. Not to mention the ability to recourse, which depends on both internal and external factors, banks in Vietnam at least could now concenrate on improving operation instead of worrying about negative effect of NPL on CARs and assets. To some extend, NPLs and relevant issues must be resolved in 5 or 7 more years (since 2013). Today writing in Analyst Pin-board will be an overview on Q1/2016 of listed banks to assess the recovery of banking profit in a year when there is less fear of bad debts.

REE - Company Update Introduction

We like REE for its high sound fundamentals and solid financial positions. The Company experienced a slowdown in earnings growth during 2015 and 1Q2016, largely due to foreign exchange-related losses of PPC, its largest affiliate company. Nonetheless, REE has been able to maintain high profitability in its core businesses.

ITD – Fiscal year 2015 earnings update

In fiscal year 2015 (ended in March), ITD recorded a very high growth. Its revenue and gross profit was respectively VND627.8 billion (+40% yoy) and VND177.2 billion (+45%). ITD is a project-based company so its operating cost nearly did not change despite significant surge in revenue. The administration cost to net revenue decreased from the average of 11% in previous years to 7.7% in 2015. Therefore, profit before tax doubled to VND82 billion.

Rubber prices – Firmer recovery thanks to the rebound of oil prices – DPR update

According to statistic data from IRSG, natural rubber inventory was still at a high level, about 2,7 million tons in Q3/2015. However, since the gap between supply and demand is getting narrower, rubber price is recovering from its lowest price at the end of 2015. To be more specific, up to 18/05/2016, rubber price is currently at 1.501 USD/tons (TOPCOM), 43% higher than the lowest one in 2016. Regarding the 2H2016, rubber price is expected to maintain its recovery momentum thanks to three supporting factors (1) Decreasing supply due to some hinder measures in exploiting and exporting, (2) The recovery of oil price and (3) The recovery of Chinese automobile industry.

PPC - Result Update report for Q12016

It is likely that Northern provinces were not strongly affected by El Nino as Southern provinces during early months of 2016. Hence, PPC is not expected to benefit from unfavorable weather like thermal power plants in the South. As a result, estimated volume and average selling price would be slightly down from 2015’s result.

PLC - Result Update report for Q12016

Negative Q1/2016 business result. In Q1/2015, PLC’s revenue and PAT achieved VND 1,171 billion (-36% yoy) and VND 39 billion (-34% yoy). The reasons came from (1) significant decline in asphalt demand while the Company could barely manage this segment to have profit; (2) profit margin deteriorated when PLC boosted selling volume through emulsion products and dropping selling prices.

Vietnam insurance industry – small fish in big pond

Vietnam insurance industry has been developing and integrating into global market for more than 20 years. The establishment of the ASEAN Economic Community (AEC) and the signing of TPP marked an important moves of Vietnam to open its insurance market. Though maintaining a double digit growth, Vietnam insurance market is quite young and small compared to other markets.

HAH- Cheap enough to initiate a buy now

FY2015 has been so far the most remarkable year for listed shares of port operators in Hai Phong city. Repeated positive news on the finalization of many FTAs (including the TPP) coincided with abnormal factor of refrigerated container storage revenue constituted an impressive rally in share prices of port operators. The rapid price gains went much faster than what the enterprises’ business performance actually were. As a consequence, the share price correction that has started since the 4Q2015 results came out faltering is bringing these shares back on earth and offer another opportunity for investors again now. In the scope of today discussion, RongViet research would like to share some views on the 2016 business prospect and valuation of Hai An Transport and Stevedoring JSC (HAH-HSX).