ANV – 9M2019 Result

According to the company’s estimation, after 9M2019, ANV has completed 65% of its revenue plan and 75% its PAT plan. We appreciate the company's ability to complete its 2019 plan due to high demand in China and ASEAN countries while selling prices tend to rise from August, and the farming cost has reduced due to the sharp drop in fingerling  prices. In the long term, ANV has a good growth potential thanks to improvements and expansion in farming and market diversification to minimize risks on its export. The company has paid 15% cash dividend for 2018 and planed to pay 20% cash dividend for 2019, equivalent to a dividend yield of 7,5%. In addition, the stock is trading at a  TTM P/E 4.3 x, lower than the average TTM P/ E of 6x of the fishery sector. Therefore, we believe ANV an investment that worths considering.

Key takeaway from MWG’s 8M business result

As of the end of August MWG has fulfilled 63% of its 2019 revenue target. The fourth quarter is usually the peak season for mobile phones and consumer electronics demand. Revenue in 8M 2017 and 2018 also accounted for only 64% and 68% of the years’ actual numbers. NPAT growth is significantly surpassing the initial target, while the number of stores has already reached the year’s plan. Beside the remarkable growth of BHX, positives also came from the improvement of TGDD and DMX.

US Repo Rates: The Plumbing Of The Financial System

Last week the NY Federal Reserve had to inject around $ 300 bn into the financial system to restore ‘calm’ after overnight borrowing costs surged from 2 to over 3 per cent (see Figure 1) following the central bank decision to cut its Fed-funds rate by 25 bps. Overnight borrowing costs are a key funding mechanism for banks and hedge funds. Is it something investors should worry about? Reigniting nightmares of a systemic funding chaos a la 2008? Can this shake consumer confidence in an economy that has become so dependent on consumption? Difficult to answer at this junction but it needs to be watched closely.

ACV - Result Update Report

ACV's share price movement is facing a number of challenges in the short term due to (1) slowdown in passenger traffic after consecutive years of high growth, (2) risk of being re-nationalized, following a recent proposal of the Ministry of Transport and (3) the HSX listing plan. However, we believe that the Government may not approve the shares buyback proposal soon due to the lack of an eligible mechanism.

QNS – Positive growth for soymilk but declining in profitability due to sugar segment

In the short run, the negative impact of its sugar segment and the sale of shares from management will be risks to consider when investing in QNS. However, looking at the long-term prospects of the business, we still like this stock given its attractive valuation (trailing P/E of 7.5x) compared to its leading position in the soymilk industry. Furthermore, its soymilk segment's strategy is to reach USD 1 bn in revenue in the future. For 2019, we maintain our BUY recommendation for this stock at the target price of VND 40,500/share.

PVD - Result Update Report

Long term contracts, including potential ones in Brunei for PVD V in 2020, will secure jobs for the drilling rigs. Profitability may not be as expected especially for PVD V while the Jack Up rigs are expected to reach the break-even point next year. In our opinion, we think that PVD is getting over the most difficult time and improving its results.

Based on the P/B method, we come up with a ACCUMULATE recommendation on PVD with the target price of VND21,060 per share, equivalent to a total return of 16%, as of the closing price in September 23^rd, 2019.

Automobile industry – Brighter outlook but more competitive

Demand for cars in 8M 2019 remains high, even higher than in the same period in 2018 due to a decline in selling prices. Positive supply-demand situation led to a strong growth in 8M 2019 sales volume. However, the optimism of the market has not benefited earnings of car dealerships. Stiff competition between auto dealers even dragged their gross profit margins down in 2019.

Potentials and Challenges for Digital Banking in Vietnam

In Vietnam, the banking industry is considered to be one of the leading sectors in the application of advanced technology. New services and applications in this sector are heavily based on new technology. In the context of digital economy, digital banking lies at the heart of the service proposition and competitive advantages of banks. This trend is reinforced by the project to develop non-cash payment for the period of 2016-2020 of the Vietnamese government, which aims to lower the proportion of cash in circulation/M2 to 10% by end of 2020 (currently at 11.5%). Thus, digital banking has been promoted strongly in Vietnam during recent years. Data from the SBV said that as of end 2018, the inter-bank electronic payment system processed 137,594 transactions, worth VND 73 Mn, equivalent to 13 times of GDP.

PTB - Restructuring Efforts Expect to Maintain Growth in Stone Segment

Stone has been PTB’s leading segment as it made up 28% of revenue and 57% of gross profit in the period of 2012-18. Gross margin fluctuated around 32 - 37%. Its primary product is paving stone made by the granites and marble. Others include garden stone and gravestone.

Update on Vietnam’s Trade in 8M2019

According to Customs’ data, Vietnam’s total trade value reached USD 340 Bln in 8M2019, up 8/9% YoY. Export growth was 8.7% YoY while import growth stood at 9.2% YoY. The trade balance surplus was USD 5.2 Bln, slightly below last year’s USD 5.4 Bln. We want to point out three things, including 1) Trends of export and import growth, 2) Trade balance with US and China, and 3) FX rate movement.

Major trends in the pharmaceutical sector

Healthcare expenditures are financed by three sources: government healthcare plan, private insurance, and out-of-pocket payments. We expect the proportion of social health insurance to become bigger and bigger in Vietnam, as it happened in China. The fact that social health insurance only covers expenditures in the hospital will limit the growth of the retail market. Circular 02 issued in 2018 with the purpose to control drugs’ origin and limit prescription drugs abuse at pharmacies is and will continue to impact negatively the revenue of the pharmacy channel. Because of that, we believe that the ETC channel (hospital and clinic) will have higher growth than the OTC channel (pharmacy) in the coming years.

Reducing the central bank rate will help to stabilize the economy

We assume that cutting the central bank rate is more likely to stabilize mobilizing interest rate, especially short-term rates, than lower bank’s lending and mobilizing rates. This is probably because commerical banks have to meet capital and liquidity regulation as well as prepare capital for seasonal business at the end of the year.

SBV has, suprisingly, reduced the central bank rates by 25 bps last Friday. While macroeconomic targets including inflation, exchange rate, and GDP growth are still in-line with the government’s targets, we suppose that cutting the central bank rates to stabilize interest rates was the thing to do.

We notice that above one-year term mobilizing rates have bottomed out in 2016 and 2017 and increased in 2018. Shorter-term rates has started to increased in 3Q2019 by 15 bps. We think the movement reflect liquidity and capital regulation controls via lower maximum ratio of medium and long term loans from short-term funding and via apply Basel II.