MSN – Q1/2020 result: profits decline despite revenue doubling due to the Vincommerce acquisition

In Q1/2020, MSN’s consolidated net revenue increased 116%, mainly due to the consolidation of Vincommerce (VCM) and strong growth from Masan Consumer Holdings (MCH).

BMP – Solid core business is unaffected

1Q/2020 update

BMP sold 24,330 tons of plastic pipes during the first quarter of 2020, 8.9% higher YoY. Its 1Q2020 revenue and NPAT came at VND 1,020 and VND 102 billion respectively, 9.4% and 12.1% higher YoY. The growth came from a newly exploited market, which is the irrigation in the Mekong Delta. As per BMP’s management, the long drought in the area has caused a rise in the demand for new irrigation systems, of which plastic pipe is a common component.

VSC – Q1 2020 Earnings Soared Despite COVID-19

VSC has reported Q1 2020 financial results with total revenue of VND 409 Bn, which was slightly down 3.5% from the one-year ago quarter. On the contrary, Q1 2020 earnings jumped 41.8% YoY to VND 57 Bn.

Nam Long Group (HSX: NLG) update

Nam Long set total revenue and profit targets in 2020 of VND 1,520 billion (-40% YoY) and VND 820 billion (-15% YoY), respectively. The decline in revenue is due to the fact that the major revenue sources come from joint ventures. Hence it is not consolidated as revenue but only as the profit shared from the JVs in its income statement. Specifically, NLG expects to record a VND 620 billion gain as financial revenue, thanks to the transfer of its stakes in two residential projects in Dong Nai, namely Paragon and Waterfront during Q3/2020.

The Covid-19 epidemic negatively affected the Loc Troi Group

The demand of imported rice from other countries increased. That helped Vietnam's export rice prices to reach its highest level in the last 16 months. This partly helped LTG’s share price increase in April. However, the contribution of exported rice to the Group's total revenue and profit is relatively small. Therefore, we believe that the good news about the country's rice export has been reflected in the current price of LTG. At the moment, the Covid-19 is still badly affecting agricultural businesses and is expected to last until the third quarter. Therefore, we believe that both the first and second quarter’ results will be lower than the results of the last year.

The rice segment has been operating more effectively, however, the decrease in the sale of the pesticide and seed segments will not allow LTG to improve its results in the first half of 2020. We expect that the demand for agricultural products and the trade between countries will be better in the last six months of the year.

SCS – Update on Q1 2020 Results

SCS’ Q1 2020 NPAT climbed 8.6% YoY on the back of healthy international air freight growth, reaching VND 121 Bn. This result was rather in line with our expectation, although we expected a lower volume throughput for the quarter.

VHC – Update on 1Q2020 results and 2020 plan

The pandemic has caused export prices to continue to decline after having adjusted sharply throughout 2019. In return, thanks to a boost in export volume, 1Q2020 revenue only decreased slightly. However, 1Q2020 NPAT dropped 50% YoY mainly due to a sharp decline in gross profits.

2Q will be the most difficult period for the company's export due to the US food service segment (accounting for 60% of consumption in the US) having to stop operating to prevent the pandemic contagion. Increasing consumption in the retail segment may contribute a small part in curbing the decline in total sales. According to VASEP, export volume to the US in 2Q may decrease by about 45-50% YoY. The recovery of the Chinese market will be the saver. However, the average export price may decline because the export price to the Chinese market is lower than to the US and EU. Pangasius export prices may decrease by 31% while the export volume may  increase by 26% YoY because 2Q 2019 was the period when the export volume was lower than the annual average. The situation  was resulted from the  high stockpiles of inventories in the US and changes in China’s seafood quality control regulations at that time. 2Q2020 gross profit margin is estimated at 12%, down sharply from 21% in the same period in 2019. Accordingly, 2Q revenue is forecasted at VND 935 billion, down 54% YoY and PAT is VND 83 billion, down 76% YoY. Excluding profit from divestments in 2Q2019, 2Q2020 NPAT would drop 73% YoY.

The stock price of VHC, after a sharp decline in March, has rebounded since the beginning of April as investors believe that the pandemic in Vietnam is under control. We estimate the one-year fair value for VHC to be VND 30,500 / share. Considering the possibility that

DPM - Decline in gas input price and Urea’s sales volume recovery support 1Q2020 earnings

DPM released its business results for 1Q2020 with VND1,697 bn in the net revenue, up 7.8% YoY. Gross margin climbed from 17.1% in 1Q2019 to 20% in 1Q2020. Gross profit increased by 26.1% YoY to VND339bn. SG&A expenses over net revenue slightly increased from 12% in 1Q2019 to 12.5%. NPATMI doubled to VND105bn.

The so-called ‘re-opening’ of the US economy

Re-opening is a very strange word since this writer is not sure how you ‘close’ an economy in the first place. There is no doubt that for people younger than 75-80 years old, the coronavirus pandemic is the biggest news story that any of us have had to deal with.

Special taxes and fees for construction stone exploitations

Because stone is a non-renewable mineral resource, the Government tends to issue regulations towards economical and efficient exploitations. Therefore, related  taxes and fees such as natural resource consumption taxes and environmental protection fees tend to increase over time. Royalties fees have only been issued by the State in recent years. Tax costs tend to vary in the same direction as the revenue, because the method of calculating taxes and fees is directly related to the price and volume

Vietnam’s Better-than-Expected Export Growth in Q1 2020

Before the Government imposed social distancing on a national scale from April 1 to April 15, the trade balance was at an all-time high in the first quarter of 2020. Customs’ preliminary trade data released a noticeably different picture from the General Statistics Office’s (GSO) as the trade growth beat expectations. Domestic manufacturers of electrical and electronic products shined as their output and export revenue grew rapidly.

TCB under the impact of Covid-19

In short, TCB believes that its strong balance sheet, industry leading financial ratios and healthy liquidity would constitute an advantage to stand still amidst Covid-19. To some extent, we are still cautious about the impact of the virus on the bank’s performance. A more detailed analysis will be given upon the publication of TCB’s 1Q financial statements.

Our target price for TCB is currently 22,500 VND/share, 27% higher than the closing market price on Apr 17. This translates to a BUY rating, but the downside risk largely depends on the outlook of the real estate sector amongst the epidemic situation.