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TVS Weekly NewsBrief - The Vietnam Streetwise - Wk25.2018

26-06-2018 15:22:56

What’s on deck in economics?Official VND/USD devaluated slightly by 0.83% YTD following the incline of Fed’s rate. Data collected by Thomson Reuters showed that the official dong exchange rate to the U.S dollar has devaluated slightly by 0.83% YTD in nominal term following the incline of Fed’s rate. Although the State Bank of Vietnam (SBV) reported a record-high foreign reserves of around US$ 63bn in the first four month of 2018, equal to around 3.6 months of import, we believe the VND will continue weaken in the remaining 2018 by 1-2% amid Fed’s intention to two more increases to key interest rates remaining in the year and persistent currency declines across the region. (Chart of the Week) Market Watch Vietnam stock market extended slide to retake below 1,000 level when the market fell into “correction” territory. The Vnindex closed sharply lower, falling around 33.34 points, or 3.28%, to 983.2, below 1,000 level amid no supportive information and global threats to trade. All nine primary Vnindex sectors finished in negative territory, led by loss in consumer cyclicals and energy, a drop in 5.76% and 5.68% respectively. The consumer cyclicals sector dragged down by a decline in VNM (-1.39 %), SAB (-3.94%) and MSN (-5.02%) when the investors took advantage of market bounce-back to get short-term profit. The foreign investors maintained net selling position with USD 29.19mn with VIC, HPG, VRE and MSN as top selling

TVS Weekly NewsBrief - The Vietnam Streetwise - Wk24.2018 VN

18-06-2018 17:37:43

What’s on deck in economics? Fed lifting the federal-fund rates to a range of 1.75% - 2% for second time in 2018. The Federal Reserve on Wednesday lifted rates by a quarter-percentage point — to a range of 1.75% to 2%; signaling, perhaps, two more increases to key interest rates remaining in the year. The rise in rate hinted foreign capital outflow from Vietnam through “carry trade” traders, in our view. Weekly average O/N rate edged down to 1.43% while the central bank withdrew a hefty value of VND 47,700 via T-bill issuance. The weekly average O/N rate fell slightly to 1.43%, from 1.6% last week. The lower O/N rate implied the back-to-normal liquidity in banking system. The central bank turned to net-withdrawal position at large scale of VND 47,700bn through T-bill issuance. It noted that T-bill was with longer tenor of 28 days and 91 days, instead of 7 days. It implies that the SBV do not wish to inject more money in next 3 months. Market Watch Vietnam stock market retreated to close lower when the investors increased their profit-taking activities. The Vnindex fell in correction territory after two-week winning streak when the investors increased their profit-taking activities as well as received no supportive macro news. Admittedly, the Vnindex fell 22.5 points, or 2.17%, to close 1016.5. All nine primary Vnindex sectors finished in negative territory, led by loss in financials and basic materials, a drop in 2.96% and 2.72% respectively. The financial sector dragged down by a decline in VHM (-2.96 %), TCB (-1.22%) and CTG (-5.18%) when the investors following “buy on dip” strategy to take short-term profit. The foreign investors turned to be net seller with USD 63.83mn, focusing on VIC and HPG, when it is the last week for ETF quarterly portfolio rebalance.   

TVS Weekly NewsBrief - The Vietnam Streetwise - Wk22.2018

05-06-2018 10:01:46

What’s on deck in economics? Inflation accelerates to highest level since April 2017. According to data released by the General Statistics Office (GSO), May 2018 CPI accelerated to 3.86% year on year (YoY), marking the 12-month highest CPI headlines since April 2017. The data supported our view in last report (The Vietnam StreetWise Wk.052018) when the base effect dropped out and cost-push inflationary pressure came from the rise in global oil prices. The annual food and transportation reached 3.36% (up from negative 2.31% last year) and 7.83% (down from 8.10% last year); contributing the most to inflation. The inflationary pressures is expected to leave no room for SBV use the loose monetary policy. We, however, expect the inflation will trend upward at slower pace when core inflation, which excludes food and energy prices, registered to 1.37% YoY, the manageable level. (Chart of the Week)   Market Watch Vietnam stock market turns corner as inflation risks are already priced in. The Vnindex seems to have turned the corner, overcoming concerns about inflation, as witnessed by solid weekly gain. Admittedly, the Vnindex rose 28.97 points, or 3.01%, to close at 992.8 above the key level of 943.68 (weekly MA50) when the investors left the higher May inflation of 3.81 YoY behind. The investor welcomed the higher index when they weighted on the coming 1H2018 earning season. 6/9 sectors finished in positive territory. The financial and basic material led the gain, up 6.18% and 4.79% respectively. In financial sector, VIC (+11.08%) and VCB (+13.87%) were notable gainers when VIC welcomed listing of subsidiary Vinhomes and VCB got foreign investors following “buy on dip” strategy. The foreign investors continued to be net seller of hefty value of USD 47.67mn following the money outflow from frontier market due to mounting concern over Argentina high-inflation economy as well as taking the profit.

TVS Weekly NewsBrief - The Vietnam Streetwise - Wk19.2018

15-05-2018 14:15:20

What’s on deck in economics? The state budget is on track for fiscal consolidation. Data released by Ministry of Finance (MoF) showed that the budget was on track for fiscal consolidation. On the revenue side, the government collected USD 19.63bn, marking a 12.1% YoY increase, owing to improved local tax collection (+14.5%) and rising crude oil collection (+27%) in spite of lowing customs revenue (-4.1%) resulting from applying ASEAN duty-free regime. On the expenditure side, the government spent USD 18.03bn, representing a slight 4.6% YoY increase, largely owing to a 5.2% drop in investment expenditure. The faster pace of revenue collection leaves the budget surplus of USD 1.6bn. The minor surplus underpins fiscal consolidation in 2018 as the government seeks to rein in the country’s ratio of public debt to GDP. (Chart of the Week)   Market Watch Vietnam stock market eked out a modest gain, snapping 04-week losing streak. The Vnindex was up 18.05 points, or 1.76%, to 1044.8; ending 04-week losing streak. In our view, it is only the weekly correction after AGM and earning season factors fading. The energy sector had been the biggest gainer (+8.21%) of which notable gainers was GAS (+13.33% owa), following US President’s decision to pull out of a multilateral nuclear deal with Iran, leaving the oil price retreat from its highest level since 2014. The industrial sector helped to push index into positive territory, led by FLC (+9.81%), VJC (+7.28%) and CTD (7.55%). The foreign investors turned to net buyers with modest value of USD 6.38mn.

FW: PMG [NOT-RATED] - Aggressive Southward Expansion as Main Catalysts - AGM Notes - 26 April 2018

26-04-2018 11:52:04

We attended PMG’s AGM with the following key points: 2017 Performance: Strong Growth after M&A with V-Gas. ·         PMG posted strong growth in 2017. Revenue achieved VND 886bn (+98% YoY) and net profit after tax reached VND 49bn (+119% YoY). The top-line and bottom–line both exceeded 61% and 49% of the 2017 plan, respectively. ·         Maintaining dominant position in Central region. PMG’s current market covers from Hue province to South-West, locating in Vietnam Central region, in which Hue province accounts for 90% market share, followed Quang Nam - Binh Dinh province (>75%), Highland (>50%), Dong Nai province and Ba Ria province (>45%), Ho Chi Minh city and South-West region (20-30%). ·         Higher new entry barrier from Decree 19-2017/NQ-CP. Ministry of Finance (MoF) implemented the new requirements for gas distribution sector. In particular, MoF required gas distributors must have at least 100,000 gas cylinders, and 300m3 storage. ·         Stock dividend payment: The company will pay 15% of stock dividend. 2018 – 2020 onwards Plan – M&A and market share expansion are the main catalysts. ·         In 2018, the company sets a revenue of VND 1,062bn (+20% YoY), NPAT of VND 58bn (+15% YoY) and dividend payment of 15-20%. ·         Southward expansion after M&A with V-GAS. It aims to gain more Southern market share and develop its brand name through horizontal merger with V-Gas. The region is a promising market due to high population density compared with Central and Highland regions. ·         High demand due to low gas consumption per capita. Vietnam has lowest gas consumption per capita (116 m3) compared with region such as Malaysia (1,300 m3) and Thailand (778 m3). This creates more room for growth for gas distribution business in Vietnam. ·         In 2020, the company’s revenue is projected to achieve VND 2,000bn, with a CAGR of 46.78%.

TVS Weekly NewsBrief - The Vietnam Streetwise - Wk13.2018 VN

02-04-2018 11:11:17

What’s on deck in economics? 1Q2018 Vietnam economy started strong foot. Data released by General Statistics Office (GSO) on March, 29 2018 confirmed the Vietnam economy is doing well. The real GDP growth came in at a strong 7.4% YoY in 1Q2018. It appears that the strong momentum in manufacturing has carried over into the start of 2018, with output growing by 13.6% YoY while the mining sector on the road to recovery recorded growth by 0.4%, ending the double-digit contraction (10% YoY) since 1Q2017. Agriculture sector also recorded its 6-year high of 4.05%. Services sector growth came in at a modest 6.7%, on a par with the 6.5% last year. The first quarter robust outturn means that the full-year real GDP growth target of 6.7% is well within reach. Although economic activities remains strong in 1Q2018, the consumer price index (CPI) dipped in March for the first time since June 2017, leaving the inflation increased by 2.66% YoY (or 0.97% YTD). It appears to be simply an ironing-out of Tet holiday-related factors. (Chart of the Week)  Market Watch Vietnam stock market logged six winning streak with technology and financial sectors leading the rally. The VNindex was on track for sixth weekly gain in a row. The Vnindex was up 20.87 points, or 1.81%, to finish weekly record above 1174 since 2007. The index clinched its sixth straight weekly advance since Tet Eve. The smart money was on rotational buying ahead of 1Q2018 earnings and AGM seasons. The technology sector rallied 4.47% of which notable gainers was CMG (+13.19% owa). The financial sector helped to push index into positive territory, led by VIC (+7.07%) and VRE (2.54%). The surge in VIC’s stock marked the Vingroup as the first-time largest market capital, surpassing Vinamilk. The foreign investors turned to net selling value of USD 1.19mn to log 1Q2018 profit/loss in Net Asset Value (NAV) report

MWG [BUY - 38.9%] - BHX We Will Get There - Equity Update - 29 March 2018

30-03-2018 09:38:12

We reiterate BUY rating for MWG with a revised 12M TP of VND 158,500 (previously VND 162,500) – a 38.9% upside including 2018F DPS of VND 1,200. This revision is primarily due to the longer-than-expected BHX’s breakeven period 1 year. Below are key investment highlights:   § MWG – We are still convinced by the long-term success of BHX. MWG reported net sales of VND 66.3trn (+49% YoY) and NPAT of VND 2,206bn (+40% YoY), beating our sales forecast by 3%. BHX – assumed as MWG’s growth engine after 2018F – was still making loss. We expect this grocery chain would turn profitable no earlier than 2020F, which is 1 year longer than our prior estimate due to difficulties in acquiring new customers and optimizing operations. That said, we are still convinced by the long-term success of BHX though mid-term challenges and their unfavorable impact on MWG are inevitable.   § BHX: “We will get there” – A statement by Mr. Robert Alan Willett (MWG’s board member & BestBuy International’s ex-CEO) when being asked in the AGM whether BHX can survive and become the No.1 grocery retailer in Vietnam has confirmed the Company’s confidence and commitment to replicate the success of TGDD & DMX in their “younger brother” BHX. Still, BHX is facing unsolved operating issues especially in fresh stock management, resulted in net loss of VND 161bn last year. We estimate 2018F revenue to be VND 4.5trn and net loss to be VND 338bn (-20% and +275% vs. prior estimates). GPM of fresh foods and packaged foods would extend 400bps and 100bps to 16% and 12% respectively. We expect BHX to turn profitable no earlier than 2020F with net sales of VND 27trn and NPAT of VND 297bn. Our estimated new BHX stores and SSSG in 2018/19/20F are 500/1500/1500 and 20%/25%/15% respectively.   § DMX – High double-digit sales growth is expected in 2018F. DMX was the key growth factor of MWG last year with VND 30.2trn in sales (+120% YoY) and 642 stores by end-2017 (+386 stores vs. 2016). For 2018F, we estimate DMX to continue being MWG’s sales powerhouse given that 386 new stores opened last year will run full year. Particularly, sales is expected to climb to VND 41.5trn (+37% YoY) with 70-80 new stores. SSSG may decrease to 5% (2017: 6.5%) and GPM would increase to 17% (+80 bps YoY).   § TGDD – Matured but still a major sales contributor. TGDD posted VND 34.6trn in sales, up 13.2% despite of negative SSSG (-2%) for the first time after 13 years in market. MWG now plans no expansion for TGDD from 2018F onwards. We estimate 0% SSSG and 0 net new store for TGDD in 2018F. Accordingly, sales would grow slightly 4.2% YoY to VND 36trn, mostly attributable to 2017 new stores that will run full year.

TVS Weekly NewsBrief - The Vietnam Streetwise - Wk12.2018

26-03-2018 15:11:17

What’s on deck in economics? Underground economy accounted for 25-30% GDP. In 2018, the government is working hard to bring the underground economy into the formal sector. Some media reported that the sector accounted for some 25-30% GDP and employed nearly 60% of workers. Putting informal work into the statistics supports more tax collection and reduce fiscal deficit when the import duties from ASEAN are phased out, in our view. In addition, the informal work makes Debt/GDP ratio more rosy when the size of GDP increases at least by 20%. Market Watch Vietnam stock market logged five winning streak albeit the worries of global trade ware rose. The VNindex was on track for fifth weekly gain in a row. The Vnindex was up 3.64 points, or 0.30%, to finish weekly session at 1,153. The index clinched its fifth straight weekly advance since Tet Eve. The smart money was on rotational buying ahead of 1Q2018 earnings and AGM seasons. The healthcare sector extended rally 4.30% of which notable gainers was DHG (+10.43% owa). The energy sector helped to push index into positive territory after oil prices extended advance by 6.16%. The foreign investors snapped 05 selling streak with net buying value of USD 29.89mn, a good support amid market sideway.