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.

ACV: Update on Q1 2020 Business Results; Cutting 2020F Earnings by 61%

Q1 2020 earnings are expected to decline 25% YoY

Estimated total air passenger traffic reached 24.6 mn pax in 1Q 2020,  a sharp drop of 11% YoY, following the Government’s stricter control over travel ban as well as foreigners’ entry suspension to curb the coronavirus’s spread. In particular, int’l pax volume was down 29.0% YoY whilst domestic traffic declined by 0.5% YoY. In line with this, estimated Q1 2020 revenue and PBT are expected to plunge by 8.4% YoY and 24.9% to VND 4.1 Tn/VND 1.9 Tn.

DHA 2019 earning results and 2020 plan

We suppose that the company targets a reasonable revenue and profit target for 2020 as the demand for construction stone may decrease due to Covid-19 and truck loading supervision in Dong Nai province. Despite that, DHA is expected to benefit from the closure of Tan Dong Hiep and Nui Nho mines. The positive thing is that the planned output at the mines is higher than the current capacity of the company. Basically, we assess that the company's core business is quite stable and will maintain a positive operating cash flow. In addition, the company is not under pressure by interest payment as it currently has no short-term or long-term debt. The dividend yield (8.9% at the price of 7/4) may not be too attractive as the remaining dividend of 2019 is VND 500 and the dividend plan for 2020 is VND 2,000 / share. DHA is currently trading at PE 6.1, 10% lower than the 3-year average PE.

Steel Production and Consumption in 2M2020

In 2M2019, domestic steel consumption was decreased strongly by 13.5%. The main reason was that retailers reduced their inventory due to the fear that domestic prices will decrease if China’s steel producers export more. Steel prices in China have decreased significantly because of lower demand for steel during the COVID-19 outbreak. However, we suppose that Vietnam’s demand for steel still grew as the construction industry’s growth rate was 4.4% in 1Q2020.

Sonadezi Chau Duc (HSX: SZC) updates in 2020

In 2019, SZC exceeded the year’s profit target by 23%. The company posted revenue and profit of VND 329 billion (+13% YoY) and VND 109 billion (+38% YoY), respectively. Industrial park was still main contributor, with 75% and 80% to total revenue and gross profit, respectively.For 2020, SZC sets a revenue and profit target of VND 371 billion (+10% YoY) and VND 115 billion (-14% YoY) respectively.

Inflation is on the right track

According to GSO, the headline inflation averaged 5.6% yoy in Q1 2020, higher than Q1 2019’s 4.9%. Core inflation was also at 3.1% yoy, the highest level in the last five years. However, both of those numbers have been gradually decreasing since last December. We foresee a high chance of being far below the threshold of 4% in 2H 2020 because of the drop in crude oil prices, stricter controls on food prices, and administrative subsidies for electricity. Overall, inflation has been on the right track, which is critical under general macroeconomic challenges facing the nation.

PVT - Result Update Report

Higher crude oil imports from Binh Son and COVID-19 will hit the 2020 bottom line. Moreover, the slump of oil price has impacted the stock price. As a result, we lower our 2020 earnings forecast by 27%, compared to the number in our 2020 strategy report