Steel and steel material prices in 3Q2023: Stable trend but dampened demand
17-07-2023
: HPG
: Materials
: Trinh Nguyen
Tags: Steel
- World steel material prices were mixed: iron ore and scrap remained up, while coking coal and HRC decreased.
- Price trend in Q3: low construction season, unlikely to drop sharply, but demand from the domestic market is going to remain weak and cannot provide a sustainable driver for steelmakers’ profitability to recover
HDB – Stable growth trajectory
14-07-2023
: HDB
: Banking
: Chinh Nguyen
Tags:
- HDB has maintained a strong performance across most of its core operations. Specifically, net interest income has grown 19.7% YoY, and net fee income of 11.3% YoY growth. Total operating income has shown a significant growth rate of 10.4% YoY. However, the Bank has simultaneously increased its provision for credit losses during the period, leading to an 8.5% YoY increase in PBT.
- As asset yield improved by a smaller extent due to the lagging repricing period, 1Q23 NIM returned to 5.1% after a steady upward momentum of 5.2% in 4Q22, on a consolidated basis. Specifically, the parent’s bank NIM was down to 3.9% from 4% in 4Q22 and NIM of HDSaison also declined to 28.7% from 30.2%, yet the falling degree remained quite modest compared to peers.
- HDB's NPL ratio from customer loans increased to 1.8%, reaching a 5-year high, yet it is still well-controlled compared to other joint stock commercial banks in the same tier.
- We estimate the fair value of HDB at 21,000 VND/share, equivalent to a forward P/B for the one-year timeframe of 1.2. This price is equivalent to an expected return of 11% compared to the closing price on July 14th, 2023. Therefore, we recommend to ACCUMULATE HDB.
MWG – 5M 2023 results: A slight signal of sales recovery in Q2
13-07-2023
: MWG
: Retailing, TCGs Retailing, Consumer Staples
: Loan Nguyen
Tags:
- MWG's May 2023 revenue dropped 10% YoY but rose 4% MoM, driven by higher CE demand in hot weather and effective promotions. Accumulated 5M 2023, MWG’s sales plunged by 21% YoY to reach VND 47,144 Bn (or USD 2.0 tn).
- ICT segment's earnings recovery is expected to follow a U-shaped pattern, with limited short-term improvement due to the lack of significant signs of improvement in consumer income and purchasing power, key drivers for a sustainable revival in the electronics retail sector. The breakeven point of BHX, anticipated in late 2023 or early 2024, is an important catalyst to consider for a potential upward revision.
- We forecast MWG’s net revenue and net income figures of VND 114/132 tn (-15%/+16% YoY) and VND 1.5/4.4 tn (-64%/+192% YoY) in FY2023/2024, respectively. 2023/2024 EPS to reach VND 1,018/2,973.
- Using the SOTP method, we arrive at a target price of 51,200/share, representing a 5% upside from the closing price on July 13th, 2023. We recommend ACCUMULATING this stock.
Vietnam’s T&G sector – Yarn exports are showing signs of revival, while textile exports are not out of the woods yet
12-07-2023
: STK, MSH, TNG, TCM
: Textile & Garment
: Hoai Trinh
Tags:
- In the first six months of 2023, Vietnam's textile and garment export turnover was 15.7 bn USD (-17.4% YoY), mostly due to declining export market consumption and brands’ destocking cycle as well as caution when placing new orders.
- While textile & garment are not out of the woods yet, fiber & yarn are showing signs of improvement, with 17% & 18% YoY volume growth in May and June, respectively. This recovery theme aligns with our expectation that since mid-2Q23, textile customers are gradually placing more new orders for season 1H24.
- Per our Q2/2023 results estimates, almost of the T&G companies in our coverage list have core business results that improve QoQ while still recording negative YoY growth.
Stock market – 1H2023 market recap
11-07-2023
: VDS
: Financial Services
: Hung Le
Tags:
- In the first half of 2023, Vietnam’s stock market witnessed the second-best return in the last eight years. 70% stocks witnessed positive YTD returns. The strong reversal of the stock market was driven by investor’s expectations about the macro-outlook as both global and local environments are favorable for the market.
- Small Cap index (24.59% YTD) and UPCOM index (+20.03% YTD), which includes speculative stocks, outperformed the others. Notably, VN Small Index is beyond the 5-years valuation range.
- Market liquidity improved gradually in the 1H2023, remarking a new stage of Vietnam stock market.
HDG – Energy to face headwinds, real estate segment to lack new projects.
10-07-2023
: HDG
: Real Estate, Power
: Thach Lam Do
Tags:
- In 1Q23, HDG recorded revenue of VND 956bn (USD 40.4mn, +40%YoY) and gross profit reached VND 575bn (or USD 24.3mn, +24%YoY, -6%QoQ). The gross profit margin (GPM) reached 60% owing to the high GPM of the energy segment (1Q23 gross profit of VND 398bn with GPM of 73%).
- For the residential segment, HDG continues to handover villas at the Ha Do Charm – phase 2 project, with expected 2023 revenue of VND 750bn (USD 31.7mn, -32%YoY). At the same time, it plans to open the third phase of sales in late 3Q2023. Given the high selling price (VND 15-25bn/unit), however, we expect that the market can absorb ~30% of total units, equivalent to an expected pre-sale value of VND 570bn.
- For the energy segment, the 2Q23 power output was 197mn Kwh (-45%QoQ, -36.5%YoY), as the hydrological conditions were negatively affected by the dry season and the El Nino phenomenon. With the high probability that El Nino phenomenon can last until 1Q24, we expect the 2023 output of power plants will reach 1,517mn Kwh (-8%YoY), and revenue of VND 1,943bn (USD 82mn, -8%YoY).
- We estimate 2023 NPAT of VND 1,112bn (-18%YoY, 115% of the company’s business plan). The 2023 EPS will be VND 3,138. Using the SoTP (Sum-of-the-parts) method, we maintain the target price of VND28,600/share (Upside -5%), equivalent to a NEUTRAL recommendation for Hado Group Jsc. We like the company’s asset with power plants and high-potential residential land bank. However, the company’s 2023 business results could poor perform due to the weaken of hydropower and residential segments as mentioned, we recommend investors to wait for further discount on the stock price to accumulate for long-term investment.
Vietnam dairy industry will benefit most from reduced input costs
07-07-2023
: VNM, MCH, KDC, QNS, SAB
: Food, Beverage & Tobacco
: An Nguyen
Tags: commodity prices Vietnam consumer staple Vietnam dairy
- The downward trend of agricultural and livestock commodity prices in 1H2023 will be reflected on the 2H2023 gross margin of Vietnam F&B companies which were hurt by the surge of input prices during the 2021-2022 period. On the expectation that the consumption of F&B products is stable, we believe that when cheap raw materials takes effect, the gross margin of the F&B industry will recover.
- Among commodities, prices of raw milk powder is below-year ago level at the end of Jun-2023 while the prices of corn, wheat, soybeans or palm oil have surged since the beginning of Jun-2023. We suppose that the lower milk powders imported from China will be the main factor limiting the upside of global milk powder prices.
- Since Apr-2023, the price performance of Vietnam F&B stocks has bottomed out. Overseas investors has turned to net buyers on F&B shares since the end of Jun-2023. Meanwhile, the trailing P/E of some leading F&B stocks such as VNM or QNS have recovered since Apr-2023. Cash seems to be moving to F&B stocks.
PVT – 2Q2023 results to benefit from new vessels and higher freight rates.
06-07-2023
: PVT
: Oil & Gas
: Vu Tran
Tags: results update rising charter rates Fleet expansion
- In 1Q2023, PVT recorded revenue of VND 2,043 bn (+1.1% YoY), while NPATMI reached VND 182 bn, (+19.2% YoY). Gross margin improved thanks to the transportation segment, which was driven by the petroleum/chemical tanker.
- With the fleet expansion and favorable freight rate trends, 2Q2023 results is anticipated to maintain its growth momentum. In details, the crude oil tanker and LPG tanker are expected to be the driving forces in 2Q2023, offsetting a slight decline in the petroleum/chemical tanker. Additionally, PVT has recorded abnormal profits from the liquidation of the Apollo Pacific and PVT Dragon vessels.
- Although 1H2023 number is positive, the 2H2023 may face challenges due to a high base last year, mainly attributed to the liquidation of Athena vessel. For the full year 2023, we forecast PVT's revenue to be up 2.1% and reach VND 9,233 bn. Meanwhile, NPATMI is expected to remain at VND861bn, equivalent to P/E 2023 of 9,3x.
- We keep a positive view for PVT as core business still records 10% growth in 2023. Assuming freight rates remain at the current levels in 2024 and the fleet is still expanding, we think that 2024 profit will still grow. Therefore, maintaining the BUY recommendation for PVT stock at 26,000 VND/share.
FPT – 5M-2023 Results Update
05-07-2023
: FPT
: Technologies
: Tung Do
Tags: results update
- 5M-2023 revenue reached VND 20 trillion (+23% YoY) while NPAT-MI amounted to VND 2.5 trillion (+20% YoY), fulfilling 38% and 40% of our full-year forecasts respectively.
- Global IT services have not yet witnessed any signs of deceleration, growing by 32% YoY in revenue and by 29% YoY in EBT. This result was mainly due to the superiority of the Japanese market (+41% YoY) and APAC (+50% YoY), which offset the deceleration of the US market (+15% YoY).
- The Telecom sector and domestic IT services segments faced a challenging business landscape, recording EBT growth of 6% YoY and -61% YoY respectively.
- We maintain the TP for FPT at VND83,400, equivalent to an expected return (including cash dividends) of 14%. Given that FPT has rallied 11% since the last recommendation, we downgrade our recommendation to ACCUMULATE.
Seaport industry – Too early to expect a recovery at the beginning of 2H2023
04-07-2023
: GMD, HAH, VSC
: Seaports
: Quan Cao
Tags:
- Vietnam's major export markets are the US, China, and the EU, with export market shares of 28%, %, and 11%, respectively, experiencing negative growth. In 5M2023, the estimated export value through sea containers to these markets was USD 21.9 billion (-19% YoY), USD 9.1 billion (-4% YoY) and USD 8.5 billion (-9% YoY), respectively. In the first two months of Q2-FY23, the export value to European-American markets continued to grow in double digits, while there were signs of recovery for the intra-Asian region.
- In the Vung Tau region, there was a significant decrease in container throughput compared to the Hai Phong region. Accumulated 5M2023, the total container throughput in the Hai Phong and Vung Tau areas were 2.4 million TEUs (-5% YoY) and 1.8 million TEUs (-25%), respectively.
- In June 2023, Vietnam's PMI of 46.2 was still below 50 points for the fourth consecutive month, showing that the health of the manufacturing industry continues to decline. Weak demand conditions are the main cause of a decrease in the number of new orders. We think that the seaport industry will unlikely recover as soon as 2H2023 as expected because the picture of trade activities is not bright.
Steel industry in the first half: Consumption bottoming out
03-07-2023
: HPG, HSG, NKG
: Materials
: Trinh Nguyen
Tags: Steel
- Recovery remains unsustainable even after more than a half year from trough.
- HRC exports took a rare spotlight.
- 2Q2023 earnings season is starting, investors should monitor profits
PHR – The upside value is on potential mode
30-06-2023
: PHR
: Industrial Land RE
: Hung Le
Tags:
- We think that there is still uncertainty related to rubber price and progress of handover to the tenants in VSIP3, that may affect the success of 2023 business plan. In our base case, the total revenue is estimated at VND 1,685 billion (USD 73.8 million, -1.4% YoY), NPAT could reach VND 528 billion (USD 23.1 million, - 40.4%YoY), fulfill 96% 2023 plan. The corresponding EPS will be 3,896 VND.
- In the long term, the rubber segment seems not profitable compared to the industrial park business. PHR is in transition phase to focus on IP segment. However, there are still barriers ahead related to regulations including 1/ Restructuring plan of GVR – a state own enterprise (SOE), 2/ Land used after going equitization following 60 resolution/2018/QH2014 as it require the asset has to be used as the initial register purpose, 3/ Decree 167/2017/ND-CP on disposition of public property, which required auction process, and 4/ the investment law that regulates who to be chosen as the investor of the project. GVR and PHR are trying to solve each of these bottlenecks.
- Target price is revised up by 19.5% to VND 49,000/share as we reflect positive outlook of NTU-3 (Ownership of 32.85%) when the crucial bottleneck was solved, and land handover of the project will be processed further. Combined with an annual cash dividend of VND 3,000/share, the total expected return is +11.7% (based on the closing price as of June 30th, 2023).
17-07-2023
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