Sugar industry – Sugar prices increase following tight global supply
29-06-2023
: QNS, LSS, SLS, SBT
: Sugar
: Loan Nguyen
Tags: Sugar outlook El Nino
- The global sugar supply is currently experiencing a notable contraction due to several factors, resulting in lower-than-anticipated output from major-producing nations.
- Vietnam's sugar prices are aligned with global trends, albeit with a delay and at a comparatively slower pace. In our assessment, the upward trajectory of sugar prices, driven by supply constraints, is anticipated to persist throughout the latter half of 2023. Therefore, we anticipate that sugar prices will remain at a relatively high level in the near future, although the rate of increase may not be as pronounced.
- World sugar futures contract prices are declining, potentially disrupting the over-positive sentiment fueling recent stock price increases. Investors should closely monitor the sugar price trend in case of short-term holdings.
Infrastructure development to be the prospect for the real estate market recovery
28-06-2023
: KDH, NLG, HDG, VHM
: Real Estate
: Thach Lam Do
Tags: Real estate
- Since 1H2023, sepecial urban cities in Vietnam (Hanoi, Ho Chi Minh) have restarted the progress of Ring road and highway system construction, as part of fiscal policies to support economic growth. The Ring road 03 and the Bien Hoa -Vung Tau expressway in HCMC organized groundbreaking ceremonies on June 18, as more than 81% of the land needed for the section of the project that crosses the city are handed over. The Ben Luc – Long Thanh highway (which is a part of Ring Road 03 and connect HCMV with Long An and Dong Nai provinces) is on the process of re-construction. The completion time will be in 2025. Those form the transport route connecting Mekong River Delta – HCMC – Southeast region.
- In the short-term, we expect that the kick-off of those projects will warm up the real estate market which has been on frozen status since 2022. In the long-term, as the market recovers and becomes more attractive for customers, projects located near the ring roads/highway system will get benefits.
- For the eastern North-South Expressway, the Ministry of Transport will try to put expressways into operation by 2025, with the goal to connect economic regions, especially between the Central and the Northern and Southern regions. In the long-term, it will be the support factor for the hospitality real estate market, especially for coastal cities in the South Central Coast. However, lack of corridors will be the bottleneck for this segment, and we expect the issues to be resolved from late 2024, after related amended Law (the Land Law, the Real Estate Trading Law, the Housing Law) are completed.
BID – Completion of enhanced provisioning process
27-06-2023
: BID
: Banking
: Chinh Nguyen
Tags:
- BID demonstrates its position as one of the leading banks in the industry by maintaining growth in most of its core business segments. Specifically, net interest income increased by 9% YoY and net fee income grew by 19% YoY. Although total operating income grew only 6.5% YoY, provision expenses became a factor that helped BID achieve a significant growth in its profit before tax of 53% YoY.
- Annualized cost of funds continued to trend up reflecting the continuous deposit rate hikes taking place in the last months of 2022, with a quarter-over-quarter 81-bps increase. Meanwhile, as average loan yield followed a lagging repricing trajectory, which improved by 57 bps and translated into a 61-bps climb in assets yield, BID’s NIMs (annualized) kept declining by 15 bps QoQ to reach 2.67% in 1Q23. Despite that, the widened share of higher-yield customer loans in total interest-earning assets allocation also made a favorable contribution to NIM, offsetting the comparatively poor average yield of debt securities.
- Strengthening the provision to supplement the LLR in the previous years will provide a basis for the company to reduce credit costs in the future. We project the bank's credit costs to be 1.4% and 1.2% for 2023 and 2024, respectively, compared to the range of 1.67% to 2.3% during the period of 2018-2022. Projected PBT for 2023-2024 is VND 26,992 billion (+17.3% YoY) and VND 35,305 billion (+30.8% YoY).
- We estimate the fair value of BID at VND 48,600/share, equivalent to a forward P/B for the one-year timeframe of 2.08x. This price is equivalent to an expected return of 9.7% compared to the closing price on June 27th, 2023. Therefore, we recommend to ACCUMULATED BID.
Update on monetary market in Jun 2023
26-06-2023
: VDS
: Macroeconomics
: Ha My
Tags: Monetary market
- Excess liquidity in June 2023.
- Credit and deposit growth slowest in 10 years.
- The SBV continued to reduce the regulatory interest rates
IMP - Continue to maintain impressive growth rate
23-06-2023
: IMP
: Pharmaceuticals, Biotechnology
: Quan Cao
Tags:
- In May 2023, net revenue and PBT were VND 142 billion (+48% YoY) and VND 33 billion (+81% YoY), respectively.
- Accumulated 5M2023, net revenue and PBT were VND 774 billion (+50% YoY) and VND 165 billion (+61% YoY), respectively completing 44% and 47% of the plan for 2023 and 37% and 38% of our forecast.
- For 2023F, net revenue and NPATMI were VND 2,110 billion (+28% YoY) and VND 346 billion (+48% YoY), of which the ETC and OTC channels revenue reached VND 975 billion (+70% YoY) and VND 1,064 billion (+8% YoY). EPS for 2023 is 4,413 VND.
- We raise the target price from 65,800 VND/share to 68,500 VND/share because the drug bidding on ETC channel is more exciting than expected and is expected to continue to be maintained in 2024. We maintain an ACCUMULATE rating.
PC1 – Growth outlook seems priced in
22-06-2023
: PC1
: Utilities
: Hoai Trinh
Tags:
- Q1/2023, PC1 recorded net revenue and NPAT-MI of VND 1,505 bn (+2% YoY) and VND 14.7 bn (-89% YoY), respectively. Despite the new contributions from nickel project and Nomura IP, the low profit is reflected in (1) lower earnings contribution from hydropower plants, whose output plummeted by 59% YoY, and (2) higher interest expenses, which totaled VND 202 bn (+81% YoY).
- In 2023, we expect net revenue and NPAT-MI to be VND 8,942 bn (+7.0% YoY) and VND 505 bn (+9.8% YoY), respectively. The earnings contribution from the Nickel project and IP real estate is expected to compensate for the power construction and hydropower segments. Although not exposed to exchange rate losses as in 2022, interest charges will continue to put pressure on the company’s earnings as PC1 extends its scale in both short-term and long-term debts.
- We raise our one-year target price to VND28,900/share (up 10% from VND26,000/share) when (1) adding IP real estate to valuation and (2) setting a new target P/E for the period between mid-2023 and mid-2024. Currently, we believe that the growth outlook seems priced in. As a result, we rate PC1 NEUTRAL with a 3% upside based on the closing price on Jun 22nd, 2023.
Bottoming out pork prices bring glimmer of hope for pork companies in 2023
21-06-2023
: DBC, MML, HAG, BAF
: Food, Beverage & Tobacco
: An Nguyen
Tags: live hog prices Higher demand commodity prices
- As of Jun 14th 2023, the average selling price of Vietnam live hog reached VND59,000 per kg (+20.4% from the bottom). Given the recovery of pork consumption, the upward trend of prices is supported by the low supply. We suppose that pork prices might keep increasing as the supply could not increase consistently with demand in the short-term.
- Although global prices of livestock commodities is forecasted to go up in 2H2023 due to the risk of low production from El Nino and Russia-Ukraine tensions, we believe that local prices of livestock commodities will be traded at the level as same as in 2022 this year. The main reason is the downward trend of global prices between Aug-2022 and Jun-2023 which will be translated into local prices in 2023.
- With the price of over VND55,000 per kg, pork breeders have profits. Therefore, we believe that the upward trend of live hog prices brings a glimmer of hope to the pig farming companies. Particularly, it will enhance the profit margin of pork breeders in the next three quarters, then generating positive growth in the 2023 bottom-line.
PVS – The stock price is reflecting a lot of expectations from the Block B project
20-06-2023
: PVS
: Oil & Gas
: Vu Tran
Tags: 1Q23 update Block B Offshore windfarm
- PVS announced 1Q2023 results with revenue of VND 3,705 bn and NPATMI of VND 214 bn. Although gross margin increased, G&A expenses were higher and there were no other profits, making the bottom line almost flat compared to the same period last year.
- PVS has been awarded lot of EPC contracts for offshore wind power segment. Recently, the company has announced new contract for the design, manufacturing, and commissioning of offshore substations for the Baltica 2 with an estimated value of USD180 mn. Previously, PVS announced 33 suction bucket jacket (SBJ) foundations contract with a value of more than USD300 mn.
- Not only EPC offshore wind contract, the market is expecting huge Block B backlog for PVS and the share price has increased strongly recently, reflecting the this high expectation. However, the project also missed the FID deadline so many times before. the Golden Camel project (the package value is smaller than Block B) is also another potential project that can contribute to the backlog for PVS. However, PVS is bidding for many large projects and has limited construction capacity. Therefore, the company must also consider the potential projects to add to its backlog.
- Despite consecutively winning many recent projects, the falling point of PVS's profit will be in 2024 with the NPATMI of VND 1,026 bn (+29.2%), equivalent to P/E 2024 of 17.1x. In case of winning Block B, CAGR of net profit will be 14.5% and P/E seems to be attractive. But excluding this project, 2024-2026 P/E is fair. With the conservative view, we have not count the Block B in our forecast and recommend NEUTRAL to PVS at the current market price.
SCS – Profit declining rate to slow from Q2-2023
19-06-2023
: SCS
: Aviation
: Tung Do
Tags: quarterly result preview air cargo
- SCS decreased the 2023 business plan for Revenue and PBT by 9% and 10% respectively compared to the previous preliminary plan in March. The final plan for revenue and PBT in 2023 are VND 780 billion (-8% YoY) and VND560 billion (-20% YoY) respectively.
- For Q2-2023, we forecast revenue vs NPAT to reach VND 175 billion (-15% YoY) and VND 125 billion (-18% YoY), mainly due to weak import-export cargo volume, forecasted to reach 34 thousand tons (-23% YoY).
- We maintain our forecast for 2023, in which revenue is VND 740 billion (-13% YoY) and NPAT is VND 525 billion (-19% YoY). 2023F EPS is VND 5,125.
- We maintain the target price for SCS at VND 69,300/share, recommending ACCUMULATE, based on the P/E valuation method (P/E target of 13x@ 2023F EPS) and DCF (Ke: 11.2% and g: 1.3%). At the closing price on June 19, 2023, SCS is trading at a P/E 2023F of 13.4x.
NTC’s 2023 AGM: THE GROWTH ENGINE RETURNED
16-06-2023
: NTC
: Industrial Land RE
: Hung Le
Tags:
- The critical bottleneck at NTU-3 has been solved. With the investment and business operation of NTU3 in the coming time, it will create a growth engine as well as add value to NTC enterprise value owing to (1) favorable location and (2) scarce supply in nearby area. Regarding the sales, we estimate that the project could bring a total of VND 9,099 billion (USD 386.7 million) from signed contracts in 8 years from 2024. The NPV of the project as of the beginning of 2023 is VND 3,096 billion (USD 131.5 million) or contribute value per share is ~VND 129,000.
- In 2023, NTC plans to lease 90 hectares, combining with the current recurring incomes from IP services, RBFs (ready built factories) leasing and financial assets could bring VND 813 billion (USD34.4 million) revenue and VND 284 billion (USD 12 million) NPAT. However, we conservatively expect NTC’s performance to be the same as the previous year with the estimated total revenue of ~ VND 389 billion (USD 16.5 million, -9% YoY) and VND 232 billion (USD 9.8 million, -10% YoY) of NPAT, respectively.
- In addition, the company plans to disburse VND 235 billion (USD 9 million) to its associate investments related to new IP projects in Binh Phuoc including Nam Dong Phu Extension Industrial Park (480ha) and Minh Hung 3 Extension Industrial Park (577.53ha).
- We saw a positive outlook for the long-term horizon in NTC due to its new growth engine, NTU-3 project, and its investment portfolio. All of them are recorded at the historical cost, which does not reflect the real accumulated earnings from these investments, as well as fair value for the stable dividend during the current years. In addition, some of these are exposed to the new industrial park projects, which could add additional value to NTC’s investment portfolio. Besides, a healthy balance sheet will help NTC maintain an annual cash dividend of at least 6,000 VND/share for the coming year.
Update on trade in 5M2023
15-06-2023
: VDS
: Macroeconomics
: Ha My Tran
Tags: Trade
- Export continued to be sluggish in May 2023.
- The Asian market demand is decreasing.
- Prospects for the export market in the second half of 2023.
Banking sector – Credit demand is expected to gradually recover from the last months of 2023 onwards
14-06-2023
: VCB, MBB
: Banking
: Thao Nguyen
Tags: 2H23 outlook 1Q23 results update
- In 1Q23, a widespread downturn in bottom-line growth was witnessed amongst most industry players, as sector earnings growth recorded a negative level of -3% YoY (or +5% YoY, if excluding VPB’s one-off upfront fee in 1Q22). Among tiers, State-owned group observed the most optimistic results, with an average 18.9% YoY growth boosted by BID’s impressive figure of 53%, whereas the remaining three tiers all experienced marginal or even adverse improvement.
- Deteriorating asset quality with escalating bad debt formation. Non-performing loans of the banking sector have been accelerating for the third consecutive quarter. However, there was also a divergence between bank groups as state-owned banks have seen diminishing signals in NPL formation whereas the deteriorations of private commercial banks’ asset quality have not ceased.
- The banking sector’s credit growth in 1Q23 reached 2.06% YTD, comparatively lower than the same period last year (5.97%) due to weak credit demand amid challenging business conditions and a gloomy real estate market. We anticipate credit demand to gradually recover from the last months of 2023 onwards, backed by the expected turnaround of the export-import sector and brighter signals on the real estate market from 4Q23.
- Banking stock prices have rebounded during the last six months, yet valuation is still below the 5-year average. We foresee this is an attractive valuation for long-term investors to accumulate banking stocks.
29-06-2023
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