DPM - Update 2Q2020 - Unexpected earnings growth

Despite strong earnings growth in 2Q2020 as well as full-year 2020, we maintain the opinion that DPM is only seen as a dividend player and not a growing company. So we prefer the dividend yield when buying this stock. With the possible cash dividend of VND1,200 to VND1,500, the dividend yield at this market price ranges from 7.8% - 9.7%. Besides, we raise the target price from  VND13,600 to VND14,940 as the net profit is much higher than our previous forecast and maintain our NEUTRAL call for this stock

Comparing frontier and emerging equity markets

Assets under management in the so-called “frontier” asset class have collapsed to only about USD 5bn currently, after peaking at around USD 50bn in 2014. This collapse in assets under management, with many frontier funds now being closed, has coincided with a collapse in valuations which is why it makes sense for those with a long-term view to invest today in tomorrow’s emerging markets. The total size of the emerging market asset class is, by contrast, over USD 4 trillion. As for performance (Figures 1 and 2), the MSCI Frontier Markets Index has declined by 23% in USD terms since January 2020 while the MSCI Emerging Markets Index is down 13%. The Frontier Index was launched in December 2007 and has since fallen by 53% in USD terms, compared with a 15% decline in the MSCI Emerging Markets Index.

PHR - Rubber faces many difficulties and high expectations on land transfers

In 2020 PHR expects PBT to reach VND 1,148 billion, up by 115% YoY. We believe that the planned profit in 2020 can be achieved as VND 865 billion of compensation from NTC accounts for 75.3%. At the same time, the earnings from joint ventures and rubber wood liquidation are relatively stable. In the long term, Tan Lap IP and expanded Tan Binh IP will be the main sources of profit as the rubber segment is still facing many difficulties. Therefore, PHR's stock price will depend mainly on the time when the legal issues of these two projects are solved.

PNJ - AGM update

Management proposed a new business plan for FY2020, in which revenue and NPAT-MI are VND 14,485 bn (-15% YoY) and VND 832 bn (-30% YoY), respectively. These targets are equivalent to 93% and 92% of our full year’s revenue and NPAT-MI forecasts, respectively.

The 2020 business plan is considered to be cautious due to the impact of Covid-19 on (1) consumer spending as disposable income drops and unemployment rises and (2) retail footfall as temporarily store closures and social distancing directives. On the other hand, demand for jewelries has been plummeting significantly before Covid-19 as PNJ incured negative same-store-sales growth and store traffic droped by 30-40% YoY in Q1-2020

HDG update: Ramping up its investment in the energy sector

Generally, business results are in line with our expectations so far this year. Major income still came from the deliveries in Iris towers at the Centrosa Garden, as the construction progress exceeded the company’s plan. The energy segment has seen more positive news about the development of renewable plants, including Infra 1 solar power and 7A Thuan Nam wind power plants. Rong Viet Securities maintains an optimistic view on HDG's business activities, with a target price for HDG at VND 25,000/share. We will revise up our target price when factoring the Infra 1 plant into our model.

Fishery Sector – 4M2020 Pangasius and Shrimp Exports and 2H Forecast

In 4M2020, Vietnam's seafood exports reached USD 2.23 billion, down 8% YoY due to the negative impact of COVID-19. Exports value plunged when the orders of social distancing and suspension of business were implemented in almost all markets. Exports to the EU, the US, China-Hong Kong, the ASEAN bloc decreased by 34%, 2%, 11% and 9%, respectively, over the same period in 2019. Only the Japanese market posted a positive growth of 5% as this country only implemented social distancing for a short time. Preliminary statistics of the Vietnamese Ministry of Industry and Trade showed that seafood exports in May reached USD 620 million, down 18% YoY and approximately the value of April.

MWG – 2020 AGM Update

Though the company’s 2020 guidance was rather conservative and lower than our forecast, we maintain our estimates for the year.  Revenue should reach VND 114,595 bn (+12% YoY) while we expect NPAT to stay flat at VND 3,929 bn (+2% YoY). Despite the flattish NPAT growth, we expect MWG to issue approximately 2% of total shares outstanding as ESOP for 2020 as a result of the new policy. While this new ESOP policy remains controversial, we believe it is necessary to maintain working incentive for employees, following numerous cost-cutting measures to deal with the Covid-19 including management’s salary cuts, as well as to preserve substantial amount of capital for BHX’s expansion.

The stock price is trading at a forward PER of 9.4x, which is relatively attractive considering a forecasted EPS’s 5Y CAGR of 20%. We reiterate our BUY on MWG with a target price of VND 131,000. Coupled with a cash dividend of VND 1,500, the total upside is 50% from the closing price as of June 12^th 2020.

Vietnam recorded a trade surplus May

Vietnam’s trade surplus surprised the market and overshot the forecast of the General Statistics Office (GSO) again. That marked a new high in 5M2020, promising to beat the 2019’s peak of over USD 10 Bn as the busiest season is coming. Vietnam’s exporters still managed to exploit fragmented opportunities caused by disrupted global trade, which empowered Vietnam’s total export to bound back in May. Although how successful will Vietnam’s export be in 2020 highly depends on Western countries’ economic restart. Vietnam’s manufacturers are ready to fulfill overseas orders quickly.

NNC update

We believe that NNC's business objectives in 2020 are still possible to be achieved as Nui Nho could perform better than planned to make up for the Tan Lap mine. However, looking at the long-term prospects, while NNC will only operates the Tan Lap mine after 2021, it is paying dividends from the development investment fund. Therefore, after fully collecting the remaining output from the NNC mine, the company's profit will drop sharply as the gross profit from the Tan Lap mine accounts for less than 20% of the gross profit of 2019. Hence, we do not think NNC can keep up with its current dividend policy by 2021. In addition, the company still has no specific plan for land development at the Nui Nho quarry after closure. Currently, NNC is trading at a PE of 8.8x higher than KSB’s (PE 5.4x) and DHA’s (6.8x).

PPC– Maintaining the current profit level would be enough

Although the output is relatively high in the first five months of the year, the decrease in electricity demand during Tet and the social distancing period make it difficult for participants in the competitive generation market (CGM). Accumulated 5M2020, PPC reached a total output of 2.6 billion kWh, up 27% over the same period last year. Contract output (Qc) reached 2.2 billion kWh, up 22% over the same period.

Seaport Industry Update

Container throughput at Vietnamese seaports in 4M-FY20 diverged strongly

Nationwide total container volume, as per Vinamarine, rose by 11% YoY to 6.7 mn TEUs (import/export container volume +7% YoY, domestic volume +18% YoY), which was mainly driven by the robust growth in terminal groups located in Vung Tau (+19% YoY). We estimate other key import/export container terminal regions posted lackluster performance. Accordingly, Ho Chi Minh City’s volume modestly ticked up by 2% YoY to approximately 2.3 mn TEUs while Hai Phong’s volume declined by 1% YoY to approximately 1.6 mn TEUs.

HDB - 1Q2020 updates – Growth still driven by NII

HDB achieved a moderate earnings growth in 1Q (+13.5% YoY), mainly driven by the impressive expansion of net interest income, while other income streams were somehow limited under unfavorable economic conditions. We note that in 1Q the bank has escalated some reserves for trading & investment securities, operating expense and provision expense in case of worsen virus situation. For 2020, we expect net interest income momentum to remain strong, but service income would be more quite at least until the exclusive bancassurance agreement is finalized. We also expect that the bank’s relatively prudent provisioning in 1Q would be able to moderate the virus impact on bottom line in the subsequent quarters. We forecast 2020E earnings growth at 16.4% YoY, giving an EPS 2020f of VND 4,293.

Our target price on the lastest Result Update report for HDB is VND 29,000, equivalent to a potential upside of 6% versus current market price. We note that 2Q business results is likely to reflect the negative impact of Covid-19 more clearly, representing a window for investors to ACCUMULATE the stock.