HSG – How to Prepare for a Share Issuance

Hoa Sen Group JSC recently issued a notice on a vote in April. Accordingly, HSG plans to issue shares to proceed from VND 500-1,000 billion for working capital. dynamic. While the stock market price is trading below VND 10,000, subjected to a 10:1 share bonus in April, HSG has many requirements to satisfy in order to issue shares at par value. RongViet Research believes that short-term and medium-term opportunities for investors may appear as the company is going through radical internal changes.

BFC – Dividend yield looks attractive after a huge drop in the stock price

With a strong decrease in the stock price, BFC is currently at an attractive level based on the cash dividend that is possible to be paid from the free cash flow for equity (FCFE). According to our estimates, cash/FCFE ratio in the coming years can remain above VND 3,000, equivalent to a dividend yield of up to 13.4% at the price of VND22,350. This is an attractive level compared to the current deposit rate.

BVH – 2018 Business Results

According to the 4Q/2018 financial statement, BVH's consolidated net revenue in 2018 reached VND 28,987 billion (+ 21% YoY). Life insurance gross written premium came at VND 21,507 billion (+ 23% YoY), while that of the whole market grew by 33% YoY. Non-life insurance gross written premium was VND 9,841 billion (+22% YoY), compared with an increase of 11% of the whole market. Consolidated pre-tax profit reached VND 1,365 billion (-30% YoY). The company's market share at the end of 2018 was 21.3%, a slight increase of 2% compared to that of the end of 2017 and maintained its leading position.

Insurance business recorded a loss of VND 2,612 billion due to a sharp increase in claim payment expense and provisions. However, BVH still recorded a profit because of a 69% YoY increase in financial income.

VEA – 2019 Earnings to be Fueled by Positive Performance of Joint Ventures.

The considerable growth in VEA’s 2018 NPAT was attributable to the improvement in business results of its three main Joint Ventures (JVs) including Honda (HVN), Toyota (TMV) and Ford (FVL). We believe that in 2019, financial income of VEA will continue to be a main profit source of VEA and may increase as performance of JVs is forecasted to improve strongly thank to positive outlook of automotive and motorcycle industry.

BID – Updates on 2018 Business Performance

Overall, BID is continuing to expand into the retail and SME segments, although the expansion is slowing down and funding pressure is causing difficulties in the improvement of net profit margin. Operating expenses and provision expenses are also expected to increase rapidly in 2019, keeping profit growth at a modest rate. However, we expect the benefits from the merger with KEB Hana bank will help relieve current pressures and improve the competitiveness of BID in retail and SME segments.

For 2019, we forecast BID's loans and deposits growth will reach 14%, and PBT will reach VND 10,500bn (+11% yoy), resulting in an EPS of VND 1,915 per share. The bank plans to pay cash dividend of at least VND 700 per share annually for the period of 2019-2020.

BID is currently trading at VND 32,500, equivalent to a 2019 forward P/B of 2.0x. This current price is 7.7% lower than our 35,000 VND target price. Accordingly, we recommend to Accumulate this stock.

NT2 – Favorable market conditions and lower gas prices support 2019 core earnings

Although NT2 has completed major-overhaul works in 2017, enabling the company to increase its electricity output by 10% YoY in 2018, lower contract volume (Qc) has made core earnings more vulnerable to the rise in gas input prices. As a result, 2018 recurring NPAT of NT2 fell by 32% YoY to VND 737 billion. Regarding 2019 outlook, while the expected return of El Nino conditions brings the company favorable conditions to increase sales volume, gas prices are also expected to fall. These factors support our belief that core earnings of NT2 could increase by 11% YoY in 2019. However, we also expect that adverse effect from FX rate movements in this year would keep the company’s reported earnings almost flat.

IMP – New factory is ready to operate

The stock is trading at 20x P/E 2018, while earnings growth in the next two years is not very outstanding. Thus, the high valuation makes IMP not appealing to individual investors. However, with four EU-GMP factories, IMP appears very attractive to many strategic partner. Nevertheless, the management prefers a partner that could contribute in terms of science and technology to one that is only seeking outsourcing. Therefore, it probably takes times to find an appropriate one. This means unlike DHG or DMC, IMP currently lacks a catalyst for its stock price.

We maintain a target price of VND 53,000 for IMP. The company plans to pay a 20% cash dividend this year.

STK – Recycled yarn is still a top priority

We maintain our BUY recommendation on this stock. However, adjust the target price slightly to VND 22,300 per share compared to the previous recommendation price of VND 24,300 per share due to concerns about the impact of crude oil prices that may depress its core profit.

The wood industry: Optimistic, but cautious

Vietnamese wood and wooden products exports have experienced a successful year with a total export value of USD 8.9 bn, indicating a growth rate of nearly 16%. Except for 2016, a year with the modest growth rate of only 1.1%, from 2009 to 2018, the annual growth rate of wood and wooden exports value always reached double digits, and the average growth rate of the last 10 years has been 15%.

VSC – Update 2018 Result and 2019 Forecast

VSC announced FY2018 financial statement with impressive revenue and NPAT growth of 30% and 27% respectively, thanks to the incremental contribution from VIP Green port (UpCOM: VGR).

Updates on MWG - Constantly changing to move forward

Overall, we maintain a positive view for MWG. The company has been continuously improving to keep the growth rate at a high level. The dominant market share in electronics sector and extensive store system help MWG to stand firm against the fierce competition from e-commerce websites. In addition, Bach Hoa Xanh is still on the right track and other markets outside Ho Chi Minh city are delivering optimistic signs. We maintain our BUY recommendation on MWG shares, with a target price of VND 125,000 / share.

Updates on Vietnam Trade

Recently, the Customs has published the trade data which January’s trade balance was surplus at USD 860 million, in contrast to the deficit of USD 1 billion in the first half of the month. While the domestic sector’s trade deficit has shrunk, the FDI sector keeps positive. However, trade growth slowed down, highlighted by both of export and import growth. January’s trade data implies some meaningful insights, including 1) Export revenue from Chinese market dropped strongly, 2) Export revenue from North America markets brightened and 3) The rise of Hai Phong and Hai Duong cities on Vietnam’s trade map.