Update on EU-Vietnam Free Trade Agreement (EVFTA)

It is clear that EVFTA plays an important role in Vietnam’s economic prospects for the next decades due to its full-scale impact. Vietnam is facing a “once-in-a-decade” opportunity to integrate itself into the global value chain. Many companies have massive expectations on the benefits from EVFTA, similar to what they had with TPP three years ago. However, the ratification of EVFTA is still in a bit of a gridlock because of issues related to ‘illegal cash fishing and human rights’ in Vietnam. In our opinion, the government should concentrate on pushing the EVFTA ratification in 2019 even though there are tough obstacles related to significant political changes in the EU.

How Yeah1 can grow its digital media business

The digital media division, even though very young (started in 2015), is contributing 55% of revenues and 47% of gross profits for Yeah1 (in 9M 2018) and is targeted to be the main segment of the company in the future. However, the company’s digital ads are displayed mostly on Google’s platforms. Google pays a very low CPM (Cost per 1000 impressions) for views from Vietnam (USD 0.09 per 1,000 views), while that number is much higher for views from developed countries (USD 3.05 for the US and USD 1.85 for Australia). Therefore, if Yeah1 wants to get bigger, it has to grow outside of Vietnam.

Binh Minh Plastic JSC: Managing costs may keep 2018’s targets out of reach

As per the company’s guidance for 2018, Binh Minh Plastic (BMP) aims to reach 100,000 tons in selling volume and about VND 4,620 in revenue. For 2018, BMP may not reach all of its target numbers. The company is unable to control costs and expenses.

Real estate: 2018 review and looking ahead to 2019

In term of stock price’s performance, almost real estate companies have a good return in 2018, of which VIC, DXG, KDH, HDG and KDH are among the best. On the other hand, the worst stocks are VRE, DIG, VHM, TDH, LDG and SJS. Generally, 2018 was considered to be a year for real estate stocks as almost mid-to-large-cap stocks beaten the VN-index.

VPA/FLEGT and the future of Vietnamese timber exports

A Voluntary Partnership Agreement (VPA) is a legally binding trade agreement between the EU and a timber-exporting country outside the EU. VPAs will obviously promote trade in legal timber, and moreover, address the causes of illegality by improving forest governance and law enforcement.

VCB: Business Update

The State Securities Commission of Vietnam (SSC) approved of VCB offering its shares to financial investors. Accordingly, we learned that the bank will issue nearly 108 Mn new shares to GIC and Mizuho, and received USD 270 Mn in return. Hence, the average offered price is around VND 57,000 - 57,500 per share.

Key Logistics Service Providers In Vietnam E-commerce

Owing to the country’s increasing internet penetration and the emerging trend of online shopping, Vietnam is one of the fastest growing E-commerce markets in Southeast Asia. In accordance with Vietnam E-Commerce Whitebook 2018, the market size of B2C E-commerce was USD 6.2 bn in 2017 and is forecasted to continue rising rapidly in upcoming years. In tandem with such booming, the demand for logistics service within the E-commerce ecosystem, E-logistics, is expected to be a very high. Vietnam e-commerce retail logistics market is valued at EUR90 mn in 2018, and is forecasted to experience an average growth of 42% per year till 2022F, according to Ken Research.

Personal Insurance Continues to be The Main Source of Revenue for The Insurance Industry

For the whole year of 2018, total market premium revenue is estimated at VND 133,654 bn (+24% YoY), of which life insurance premiums came at VND 87,960 bn (+33% YoY), non-life insurance premiums reached VND 45,694 bn (+10% YoY). This is the fifth year in a row that the  Vietnam insurance market has achieved a premium growth rate of over 20%. The high growth of the sector is mainly attributed to personal insurance, including life insurance, healthcare insurance and motor vehicle insurance.

Another country is shifting towards the right

In Brazil, on January 1^st, Jair Bolsonaro, was inthronized as the new president of Latin America’s largest economy. Elected in October 2018, his victory represents the rising extreme right: more power to the state, climate skepticism, misogynism, homophobia, fighting corruption using the strength of the military.

VHC – 11M2018 Business Results

11M2018 export value is estimated at USD 348 mn, +27% YoY, driven by good selling prices. The average selling price (ASP) of pangasius rose by 34% YoY in 11M2018, while the volume decreased slightly by 5% YoY.

Development of The Corporate Bond Market

• Vietnam corporate oustanding bonds reached 1.45% of GDP in 2018, compared with 21.48% GDP of VGBs. Thailand, Indonesian, Malaysian and Singaporean corporate bonds reached 20.80%, 2.87%, 33.77%, and 46.34% of each country's GDP, respectively, according to the Asian Development Bank.
• In addition, the corporate bond market is more likely interesting for public listed companies. Because unlisted companies are often small businesses, auditing costs and high interest rates prevent them from issuing bonds.
• In our opinion, the Vietnam’s corporate bond market lacks two main factors in order to develop itself and catch up with regional countries.
• Individual investors have difficulties entering the corporate bond market.
• We think that in order to develop the corporate bond market, the number and size of funds needs to grow.

Update on CTI

For FY2018, revenue and NPAT are supposed to arrive at VND 1,114 billion (+2% YoY) and VND 147 billion (-4% YoY), respectively. Cuong Thuan IDICO (HSX: CTI) announced its FY2019 target revenue of VND 1,795 billion (+61% YoY) and NPAT of VND 192 billion (+30% YoY). Earning growth should come from increasing production of quarries. We think CTI has geographic advantages in supplying quarries to nearby construction projects. Jobs from Long Thanh Airport could be a catalyst in 2019 as construction activities are pushed up.