Review on 3Q 2018 Business Results of Listed Banks

Listed banks for which we collected data account for more than 50% of the lending market. Therefore, although there is no official data from the SBV on the entire banking industry’s credit growth in 9M 2018, we think the overall growth was also around 11%. YTD. Thus, we assume there will be around VND391 Tn of credit that could flow into  the economy in the last quarter of 2018. Considering the lending amount in the fourth quarter of previous years, we think that such an amount will be enough to meet the entire demand of the economy in 4Q 2018. Hence, we believe the credit growth for 2018 will be around 16.5 - 17%. However, the growth will vary between banks, depending on their financial health and output for capital flows.

FPT 9M Result Update – Growth on the back of the technology segment

In 9T 2018, FPT posted a revenue of VND 16,261 bn (+21% yoy) and profit before tax of VND 2,738 bn (+33% yoy). In terms of regions, overseas sales grew strongly by 31% and made up for 39% of FPT’s revenues (VND 6,397 bn. The company has fulfilled 74% of revenue and 95% of profit before tax targets for the year.

BFC – Finding the answer for growth

The divestment story from Vinachem will be the rare support for the stock price as the earnings outlook for the next few years is not too bright. We adjust the target price to VND26,800 per share, plus cash dividend of VND2,500, generating a total return of 11%, compared to the closing price on Nov 7^th 2018. So ACCUMULATE.

VSC - Updates 9M 2018 Business Result

VSC's 9M2018 results are quite postive. Accordingly, net sales reached VND1,244 billion (+ 30% yoy) and EBT came to VND288 billion (+ 33% yoy). With this result, VSC has fulfilled 92% of its net revenue target and surpassed 3% of the EBT target for 2018. PATMI in 9T2018 grew 30% yoy, at VND223 billion, net margin maintained at 18%.

Temporary Stabilisation of the FX Market

Global FX markets have been stable although the US Dollar remains strong. While many Asian countries saw rising of 5-year CDS, risky currencies have rallied after selling-off in the second and third quarter of 2018. In general, the current situation is better and supports our view of a chance for disbursements in the Vietnam’s stock market in November.

REE – Earnings growth in 2018 is quite certain

Even though 3Q 2018 NPAT-MI of REE fell by 21% YoY and the decline was seen in four out of five key segments, only real estate development segment actually experienced unexpected business issue. However, we still estimate that REE’s 2018 NPAT would still reach about VND 1,650 billion (+20% YoY), corresponding to EPS of 5,272 VND/share.

BID – Updates on 9M2018 Business Performance

BID has announced its Q3 performance results with PBT of VND 7,254bn, fulfilling 78.0% of its full year guidance.

Overall, BID’s net interest income in 3Q2018 was affected by squeezing NIM. The stagnation of TOI in 3Q2018 is slowing down TOI growth momentum that took place in the first half of the year. Meanwhile, the growth of PBT is a bit more positive than TOI’s because of the improvement in operating efficiency as well as the deceleration of provision expenses. However, given an increasing NPL ratio and the plan to clear all VAMC bonds by June 2019, we expect that provision expenses will accelerate either in 4Q2018 or 1H2019.

BID is currently trading at VND 32,800, equivalent to a PBR forward of 2.2x, not very attractive compared to other banks (except for VCB). This current price is about 6.7% lower than our target price of VND 35,000. Therefore, we recommend to Accumulate the stock.

Q3 Earnings Update

Some findings about Q3 earnings (based on 590 companies that have announced their results)

ANV – 9M 2018 Business Results

In 3Q2018, ANV's net revenue came at VND 1,051 bn (+43% YoY). PAT was VND 131 bn (+245% YoY). Consolidating business results for the first nine months of this year, the company recorded net revenue of VND 2,735 bn (+30% YoY). PAT reached VND 308 bn (+253% YoY), equivalent to EPS of VND 913/share (+33% YoY). ANV is currently ranked third in the pangasius sector with export value of 5%, unchanged from the end of 2017.

STK – 9M 2018 Business Results

Century Synthetic Fiber Corp (STK) has just announced its financial results from the first nine month of 2018. Revenues reached VND 1,780.9 bn (+24.4% YoY) and NPAT was VND 131.4 bn (+96.5% YoY). We consider that the increase of its gross profit margin is a main factor to the impressive growth of NPAT as raw material price increased lower than its selling price. The company saw an increase of high-quality orders.

PAC - Valuation is not attractive

PAC is the leading player in the battery manufacturing industry, in a highly competitive market. However, PAC’s market share has remained stable for the last few years thanks to an effective distribution management system and long-standing brand name. Hence, we expect that earnings will grow at a compound annual growth rate (CAGR) of 12% in the next five years. For this reason, we believe that a forward P/E of 11.5x, which the market is applying for PAC’s peer group, is suitable. However, despite an 8% decline in the stock price recently, PAC stock is trading at a trailing P/E ratio of 18x, and we believe that this valuation is unjustified.

NLG - Profit in line with expectations

Nam Long recorded total revenues and NPAT-MI in 9M 2018 of VND 2,740 billion (+67.4% YoY) and VND 635 billion (+80.4% YoY), which is in line with our recent estimations. The strong performance was mainly driven by a stake transfer of 130ha in the Waterpoint project. We still maintain our forecast for its earning in 2018 at VND 861 billion (+60.9% YoY).