PPC - Update on Outlook for Business Results in Q3 2017

Recently, RongViet Research had an opportunity to receive an update from the representative of Pha Lai Thermal Power JSC (HSX:PPC) about the company’s business performance, current progress of major repairs work, and plan to repay its JPY denominated debts in H2 2017. Compared to the same period last year, the core business of PPC in Q3 2017 is expected to improve with higher average selling price while the JPY/VND exchange rate is having favorable movements, resulting in positive outlook for the quarter.

Supply and Demand Conditions are Showing Positive Signals

Within a month, the world oil market showed positive signals as WTI rose 8.5% to USD50.6 per barrel while Brent also recorded a significant increase of 11% to USD56.8 per barrel. The main reasons come from the optimistic forecast about world oil demand as well as the better compliance of output cuts from OPEC and non – OPEC to eliminate the oil glut.

PHR – To Allocate Most of Extraordinary Income in Coming Years

Phuoc Hoa Rubber JSC (HSX:PHR) expects to have large amount of extraordinary earnings from different sources including: (1) liquidation of rubber trees, (2) compensation from land transfer to VSIP 3 and Nam Tan Uyen industrial parks (HSX:NTC), (3) divestment from NTC and financial investment in two hydropower plants. Below are some key updates about the income from our recent conversation with the company’s representative.

Mercedes – Benz Vietnam: The Leading Position of “Three – Pointed Star” Brand

We believe Mercedes-Benz's sales will continue growing as a leading brand in the Vietnamese's high-end car market, with annual growth rates estimated at around 20% over the period 2018 - 2020.

MBB – Business Update

Although being a commercial bank, MBB has advantage in mobilizing capital, especially high ratio of liquidity deposit (MBB’s CASA is around 37-38%), which results MBB’s low funding costs compared to that of the other commercial banks. In addition, thanks to its well-controlled loan portfolio, better-than-regulated capital adequacy and liquidity ratios, MBB still has room for pushing credit growth without pressure of raising capital. Therefore, we recommend investors to accumulate MBB at current market price of VND22,900. Using the PBR of 1.7x, we adjust MBB's target price to VND26,800 per share, from our previous target price of VND21,000 per share (in June 2017 strategic report). With a cash dividend of at least VND500 per share, the total expected return on MBB is 19%.

TCM – Investors Too Pessimistic on Fire Incident

On September 16, the fabric storehouse of Thanh Cong Textile Garment Investment Trading JSC (HSX:TCM) caught fire. The storehouse area is 2,167m², containing 700,000m of woven fabric, which is worth about USD1.4M-USD1.5M.

As a result, TCM’s stock price decreased by 5.6% to VND28,600. We believe that the market is putting too much pessimism in considering the impact of the incident.

IMP – Company Update Released on 18th September, 2017

We have decided to change our recommendation from NEUTRAL to BUY for IMP. Considering the growth prospects of IMP, we believe that a valuation of VND80,000/share, equivalent to P/E of 21x is appropriate for 2018. Compared to the closing price of VND63,000/share on September 15, the target price, coupled with a stable dividend of VND1,800/share, yields a total expected return of 30%.

PAC – A Low Downside Risk in The Short Term

After the recent meeting with the company’s representatives, RongViet Research would like to give investors some updates on the business activities of Dry Cell & Storage Battery JSC (HSX:PAC).

LHG – High demand for industrial land to get EPS back on growth track

Long Hau JSC (HSX:LHG) is the developer of Long Hau industrial park (IP) in Can Giuoc Town, Long An province. The IP is located 19km from Ho Chi Minh City center and 12km from the city’s well known Phu My Hung residence. Enterprises invested in the IP will have logistics cost advantage with the park located within 3km from the adjacent Hiep Phuoc port cluster. LHG develops its industrial park in three phases as follows:

LTG – Company Report Released on September 14th 2017

Loc Troi Group (LTG – UPCOM) is a big firm in agriculture which was listed on UPCOM on 24/07/2017. Formerly know as An Giang Plan Protection JSC, LTG has been expanding into seed and rice segment to make up a vertical food production value chain.

BID – Business Update

Bank for Investment and Development of Vietnam Jsc. (HSX: BID) is a state owned bank, which is the largest in the banking system group in terms of total assets and equity capital. BID is also known for its largest credit and deposit market share and highest bad debt sold to VAMC. Therefore, BID is expected to be one of the banks that will benefit the most from the directive of accelerating credit growth in 2017 of over 20% of the entire banking sector and from Resolution 42 on piloting bad debt settlement. However, in the next few years, we believe that BID will focus on improving their asset quality rather than pursuing growth.

HBC- Company Report Released on September 12th 2017

RongViet Research has just published a Company report on HBC, in which we present our outlook and recommendation as following: