US: Recent NABE Survey

Highlights.

Comments on recent events: Moody’s & credit quota

• Moody’s lifted Vietnam’s outlook to positive
• How can we interpret recent rumors on lower credit growth quotas?

BMP – PVC resin price reached a historical high

• PVC resin price reached a record high level during March, USD 1,400 per ton.
• Plastic pipe companies’ profit margin is going to shrink strongly.
• 2021 earnings are likely to be lower than our expectations.
• BMP is currently rated “NEUTRAL” on our list, with a VND 57,300 target price and VND 4,000 cash dividend in the next 12M.

PNJ 2M-2021 Results: Solid retail and gold bar sales led the growth

• Revenue jumped by +37.4% YoY to VND5.0Tn, primarily driven by significant gold bar sales of VND1.6Tn (+94% YoY) while retail sales hit VND2.6Tn (+15.9% YoY).
• Feb-2021 Retail sales growth accelerated to 21.5% YoY from 10.0% YoY in the previous month partly owing to surging promotion activities.
• Given the larger contribution of gold bar sales and higher marketing spending, GPM and net profit margin contracted by -3.8 pps and -1.8 pps, respectively, to 18.4% and 7.6%.
• 2M-2021 net sales/NPAT have completed 26%/30% of our full-year forecast. Pending a review on the current TP of VND 94,000, implying a total stock return of 14% consisting of a 2% dividend yield, as of Mar 24^th, 2021.

VHC – 2021: Profit recovery may be limited due to pressure in the pangasius segment and the product diversification strategy

The US market will lead the pangasius segment's growth in 2021. Volume increase will be the main factor driving sales growth, while pangasius selling prices will only recover slightly. Profit margin will shrink under the pressure of high raw material prices due to the material shortage and rising feed prices. The year 2021 is also a pivotal year for the product diversification strategy with large investments and expenses. We are going to reflect the effects of the new strategy on the stock valuation when detailed information is revealed. At this point in time, our valuation for VHC is around VND 46,200/share. With an expected cash dividend in the next 12 months of VND 1,000/share, the total return will reach 14% based on the closing price on March 23, 2021. We recommend ACCUMULATING VHC.

Robust trade growth in 2021 thanks to the US stimulus and the vaccine rollout

• Buoyant trade growth in Jan-Feb 2021.
• Manufactured products were a major reason for the surge of exports.
• Uneven recovery of external demand.
• The US stimulus package will be a boon for Vietnam’s exports.

BID – Expecting robust growth in 2021, but issues remain

• BID sets a target for 2021 PBT at VND 13,000 billion, credit and mobilization growth at 10-12% and 12-15% respectively.
• We estimate that BID could reach VND 13,300 billion in PBT or even higher.
• The capital raising is pivotal, but we think the enhancement in asset and growth quality is more crucial for a sustainable expansion.

PVB – Staying idle until large projects kickstart

• 2021 results will depend mostly on minor projects outside of the Oil & Gas industry.
• Long-term prospects rely on major domestic projects, which are expected to remain idle until 2022.
• Some quarters might experience weak bottom line.

Worth monitoring inflation expectations

Two measures of inflation expectations, the US 10-year breakeven inflation rate and the US 5-year 5-year forward inflation expectations are now at their highest level since August 2014 (Figure 1). It is perhaps sending a message that long-term bond yields are heading higher.