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.  

PC1 Update

Among our conviction list, PC1 is one of the few companies shielded from the COVID-19 epidemic. Overall, we find that the core businesses remain active because of the industry’s characteristics.

PNJ – Update on Q1/2020 result and 2020-2021 forecast

In Q1/2020, PNJ recorded a 5% in YoY sales growth and -4% in PAT growth. Retail and wholesale saw slowdown in the context of Covid-19. In March, retail sales went down 10% YoY due to social distancing and store temporary shutdowns. Gold bar sales surged 75% YoY in the month. However, gold bar has very little profit margin compared to other segments; therefore, PAT still went down 34% YoY in the month.

Technical analysis - Have we reached the bottom?

The S&P 500 e-mini Index rebounded from its low of nearly 2200 on March 23^rd to close at 2780 on Friday (April 9). That is a 50% retracement from the all-time high of 3400 (Figure 1). From a Fibonacci perspective, this was expected. Sharp falls are usually followed by V-shaped types of rebounds. The  question is: where do we go from here? Is the relatively rare condition of intense stock market fear, combined with a generally calm bond market, a powerful combination for ensuing stock market returns in the future?

BMI – 2019 results and 2020 plan

Changes in strategy in 2019 have proved effective for the insurance business as the loss ratio improved significantly. Meanwhile, investment profit only increased slightly due to the gloomy stock market. In 2020, the pandemic COVID-19 will adversely affect both the insurance business and investment activities of the company. In addition, the divestments of two major shareholders SCIC and AXA have not made any new progress.

The psychological reaction of investors has caused BMI's share price to plunge more than 35% since the beginning of the year and is trading at a P/B of 0.7, lower than P/B of 0.9 - 1.5 in the last four years. Although the current valuation looks "attractive", we recommend that investors be cautious, as the impact of the pandemic on BMI's business results is likely to be stronger from 2Q.

Rice exports in the context of Covid-19

Due to the complicated development of the Covid-19 epidemic, many countries are under pressure to increase their reserves. Therefore, global demand for rice will still remain high. Production and export activities of many exporting countries have been negatively affected. As a result, the rice supply is forecasted to be lower than before. Thus, we think that in the second quarter, Vietnam's rice exporters will continue to benefit as prices should stay at a high level. Among rice companies listed on the stock exchange, LTG is one of the potential ones as they have restructured their rice segment since the second half of 2019 to focus only on branded rice. GPM of LTG rice is estimated to be higher than 10% in the 2M2020, a huge improvement compared to 1.5% in 2019.