AGM note: GTA - a rough road ahead

Yesterday, Thuan An Wood Processing JSC (GTA –HSX) operates its AGM, update on 2015 earnings results and 2016 annual target. In 2015, GTA achieved revenue and NPAT about VND 484.7 bn (+0.12% y-o-y) and VND 13.6 bn (+1.88% y-o-y) respectively. 2015 also witnessed a change in revenue structure as sale volume of preliminary product increased whereas sale volume of refined production decreased. Thus, even though average rubber prices significantly decreased (-20%) but GTA gross margin down from 7.57% to 7.4%.

Safeguard duty on imported steel- Large firms benefit

The domestic steel industry has been supported by good news from both local and international markets. On March 7^th, iron ore price jumped over 26% on the news that the Chinese government has targeted 2016 growth rate of 6.5-7% and the country’s recovering real estates. Vietnam’s Ministry of Trade (MOT) has announced a prevailing safeguard duty on imported steel billet and rebar products in order to protect local producers.

VGG in comparison with other competitors

Last year, when the information about TPP agreement was relatively "hot", the new participation of new members of the textile industry, Century Synthetic Fiber Corporation (HSX:STK), was welcomed positively. Today, the industry continued to get other member, Viet Tien Garment Company, officially traded on Upcom with VGG code. Being a large-scale sales (up to $288 million in 2015) and owning a good brand positioning, the share price of VGG climbed to ceiling in the first minute of the trading session. However, the trading volume was only 9,000 shares, the overbought at ceiling prices was up to 788,700 shares.

Rubber: Supply still exceeds demand but with narrow surplus

In recent sessions, natural rubber tickers have jumped significantly, particularly PHR (+27%), DPR (+8%). As our view, the increase came from the global rubber price. Especially in PHR case, information in AGM documents supports the ticker to maintain momentum

TCM - Discovered the notable prospects for 2016

2016 could be another year of sliding world commodity price. According to Bloomberg, the price of cotton futures contracts fell by an average 17% compared to 2014. At the same time, the fall in oil prices (47.5% in 2015) was pulling fiber prices fell sharply; many fiber companies faced some difficulties. With 30-35% of revenue coming from the fiber segment, 2015’s earnings of TCM was somehow negatively influenced. However, our industry analyst realized that TCM has made some proactive measures to address the situation.

AGM note – DCL: Ambitious plan amid the increasing competition in pharmaceutical industry

Pharmaceutical industry is getting the attention of investors due to a breakthrough in their price level in the first two months of this year. Cuu Long Pharmaceutical (DCL - HSX), which is a medium size pharmaceutical company, held an AGM last week. Based on its 2015 earnings result and 2016 plan, RongViet Research had some brief updates on DCL prospect.

The surprised auction result of Vissan

The bid winning price was out of our forecast when reached level of VND 80,000/share. With this price, P/E forward is estimated at 58x. In the 3 following years, there is not any significant cash flow from major projects. Thus, normal investors as well as financial institutions are difficult to accept the price

Financial data from listed companies raise a question of whether or not the economy is ready for an upcoming rate hike

Business scale of listed companies have recovered. After a significant slowdown in 2011 and 2012, the operating scale of listed companies has slightly accelerated since 2013. In 2015, due to external difficulties, the sales growth is a mere 6%, slower than the growth of 15% in 2014. Meanwhile, equity growth (2015: 25%) has helped total assets grew faster (2015: 17%).

TDH - A breakthough is needed

Our real estate analyst just had a meeting with Thu Duc Housing Development JSC (HSX-TDH). As a renowned developer of affordable condominiums and residential land, TDH should be little affected by the curb of real estate lending the Draft Amendment of Circular 36/2014/TT-NHNN is enforced.

1Q2016 ETFs’ reconstitution

The new component lists of FTSE ETF and VNM ETF will be announced on 05/03/2016 and 12/03/2016 with the expected results:

HPG: Prominent profitability despite failing to meet expectations

Hoa Phat Group JSC (HPG-HSX) has just announced Q4/2015 performance, which records revenue and NPAT of VND 7,122 billion and 565.9 billion, growing by 8.2% and 14.2% y.o.y, respectively. The annual figures for revenue and NPAT are VND 27,452.7 billion and 3,485.4 billion respectively. RongViet Research’s previous forecast was adequate in term of revenue, whereas the actual NPAT falls 10.4% below our expectation. Noticeably, the 4^th quarter contributed over one fourth of the annual revenue but that of NPAT was only 16.4%. In addition, Q4/2015 gross margin was 18.3%, lower than the annual figure of 20.3% and Q4’s Trade discount went up by 25% y.o.y infer that Hoa Phat in fact, has had to incur more expenses to stabilise its billion-dollar revenue.

HPG’s income statement also display a considerable increase in many expenses. Interest expense for Q4/2015 went up by 11.6% y.o.y but administrative cost was more than double y.o.y. Eventhough the administrative expense often inclines in the fourth quarters, the VND 420 billion amount in the last quarter has taken us by surprise. On the other hand, the stabilised input and product prices has helped HPG to cut VND 156 billion in provision for inventory value loss in Q4/2015 y.o.y.

Macroeconomic in the first 2 months of 2016

Industrial Index Production (IIP) plummeted 22.3% in 2/2016 compared to the previous month due to the impact of seasonal factors, Lunar New Year holiday while the Consumer Price Index (CPI) rose 0.42% m.o.m. That is the highest monthly inflation increase in the last 2 years However, RongViet macro analyst do not believe that it was the early signal of high inflation progress but it was a positive sign when the market has shown a match between consumer confidence and the level of consumption (according to ANZ, consumer confidence had increased steadily since 8/2015 and reached 144.8 points in 12/2015, the highest level since early 2014). IIP were still up 7.9% compared to the same period of last year. Although the Purchase Managers’ Index (PMI) went down to 50.3 points from 51.5 points of the previous month, the PMI is still in the level of improvement. Based on the above analysis, RongViet macro analyst believe the economy is stable in the first months of the year.