ACV - AGM note: Timing to reopen international markets remains uncertain. Review of FY20 forecasts pending.

We attended ACV’s 2020 AGM last Friday in which all the proposals submitted were approved owing to the agreement of a distinct majority of shareholders including the Commission for the Management of State Capital at Enterprises (CMSC), representing 95.4% of total shares outstanding. In the AGM, ACV shared a more negative view on the FY20 outlook compared to our previous forecast in May as the second wave of covid-19 hits many key international markets. As such, we are reviewing FY20 financial forecasts as well as the target price (current TP of VND 65,000).

Will Economists Revise Their Forecasts?

The world is broadly reopening as people start losing their tempers with shelter-in-place orders even with non-stop increases in new cases of COVID-19. Economic activities are back to a ‘new normal’ and the market pays heavy attention to the early post-lockdown statistics. Interestingly, more and more preliminary economic data have beaten economists’ forecasts which reflected deeply pessimistic views on the outlook. While manufacturing is slightly below the positive territory, service providers are more optimistic about residents’ potential consumption caused by forced savings and generous stimulus.

Steel Production and Consumption in 5M2020

In 5M2020, the domestic steel consumption and construction industry were hit strongly by COVID-19. The government’s measures to control the pandemic, including travel restriction on people and goods, social distancing, and the disruption in the international supply chain affected negatively steel production and consumption. The construction industry grew at a pace of 4.4% in 3M2020, significantly lower than the pace of 9.2% in 2019. Meanwhile, domestic consumption of construction steel and steel pipes fell by 9.2% and 10.1%, respectively. Noticeably, the domestic consumption of coated steel still grew by 4.5%.

GMD - AGM note: Economy recession concerns cloud FY20 Outlook; Maintain TP

The FY20-21 outlook for GMD remains subdued as 1) the pandemic and its prolonged impacts will drag heavily on the cargo volume throughput, 2) the rise in competition in Hai Phong will likely further squeeze port operations’ profit margins while 3) the loss of Gemalink will be the key factor to follow closely next year.

Indexes' review for July 2020

Based on the data as of June 18, 2020, we forecast that BVH and CTD may be eliminated from the VN30 basket during this review period. While BVH could be eliminated due to freeloat requirements while CTD because the 12-month average market capitalization slipped out of the top 40 stocks. By contrast, VN30 could add KDH and GEX, but the rules for adding new components are not so clear. For VNFinlead Index, no stocks will be added while only BVH will be deleted due to freefloat requirements. VNDiamond basket will not change index components in July but it will do so in the October review.

In short, we notice that ROS (10.7 mn shares), EIB (3.5 mn), GEX (3.5 mn), and KDH (2.6 mn) are among the top buying stocks by domestic ETFs in this review period. Meanwhile CTG (3.2 mn), HPG (3.1 mn), STB (2.4 mn) and VPB (1.6 mn) will be sold the most.

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.