HDB - Results Update Report 4Q2019

We note that HDB has achieved a better-than-expected interest income expansion thanks to impressive NIM improvement in 2019, but also hold the view that the contribution from service and other income to operating income should be more visible. For 2020-2021, we expect that interest income momentum would remain decent while service income would escalate due to the boost of bancassurance activities. On top of that, both operating expenses and provision charges should be well under control, supporting a stable earnings growth in the longer term.

HDB is currently trading at VND 21,300, equivalent to an attractive 2020f PBR of 0.9x considering the potential earnings growth and ROE of roughly 20% in the next five years. With a lower forecast of 2020 credit growth and NIM, and a higher forecast of provision cost (than they were in our 2020 Strategic report) due to potential impact of the virus epidemic, we reduce HDB’s target price to VND 29,000. This is still equivalent to a potential upside of 36% from the closing price of 18^th Mar 2020, thereby upgrading the stock to a BUY recommendation.

BID – Update on 2019 Business Performance and 2020 AGM

The bank has set a moderate earnings growth target of 16.4% in 2020, with the plan to finish its restructuring within this year as well as investing more resources on core banking and digital projects. We hold our positive view on BID’s outlook in medium term based on a stronger capital adequacy coupled with the clearance of legacy bad debts and the support from strategic partner. We forecast NPAT CAGR to reach 30% in 2020 – 2022 and ROE to approach 20% in the next three years.

Considering the possible negative impacts from the virus epidemic in this year, we reduce credit growth forecast by 2ppt and NIM forecast by 5bps, thereby revise down BID’s target price to VND 45,000. This is equivalent to a potential upside of 33% from the closing price of 17^th Mar 2020, reiterating our BUY recommendation. Downside risk includes the stronger-than-expected impacts on credit growth, NIM and asset quality due to the epidemic. Upside risk includes one-off earnings from BIDV MetLife divestment and exclusive bancassurance agreement.

PPC - Result update report

Rong Viet Securities Corporation hereby presents the Result Update Report on Pha Lai Thermal Power Plant JSC (HOSE: PPC) with the overall opinion as follows:

BCF - Brief note

Rong Viet Securities Corporation hereby presents the Brief Note on Bich Chi Food Corporation (HNX: BCF) with the overall opinion as follows:

Residential industry update

The real estate market faces headwinds in the early part of 2020. The Coronavirus outbreak will have a heavy impact on the economy, especially for those industries related to trade and transportation. We believe that the impact on the residential industry is not clear in the short term, as the demand depends on the long-term homebuyer’s plan. However, the situation is likely to be getting worse if the Coronavirus derails the economy, due to the highly cyclical nature of the real estate industry. Moreover, the percentage of buyers investing and speculating in projects in Vietnam is also relatively high, leading to the negative sentiment.

Impacts of Covid-19 on Logistics Firms

Covid-19 epidemic has dampened cargo transport activities in 2M 2020. Accordingly, freight volume has significantly slowed down compared to the same period last year. 2M 2020 freight transport reached 297.3 million tons, up 6.1% YoY (the same period in 2019 increased by 8.7%) while freight rotation reached 56.6 billion tonne kilometers, increased by 4.3% (the same period in 2019 increased by 6.4%).

China and the coronavirus

Interestingly the MSCI China Index has outperformed the MSCI World Index by 8.6% in the past two weeks. China has been outperforming because there is a growing sense that it has seen the worst of the coronavirus.

Implication of Lower Crude Oil Prices for Vietnam’s Economy

Crude oil prices crashed by over 30% last Friday because of disagreements between OPEC and Russia on cuts in production. There are many episodes of plummeting oil prices in the last 50 years due to multiple causes. This short note focuses on the driver of the recent drop in crude oil prices and its implications for Vietnam’s economy which is a net importing country as net spending reached nearly USD 1.8 Bn on purchasing offshore crude oil in 2019.

SMC - 2019 update

SMC’s financial performance was fine due to decreasing steel prices. The company’s ROE was 7.3%, higher than NKG’s (1.6%) and HSG’s (6.6%). SMC’s operating performance was better as its selling volume grew 16%. However, its net income decreased by 43% to VND 97 billion, of which VND 80 billion in net income came from its core business, while the remaining was the profit from selling 65% of its ownership in Ha Noi Coil Center.

TDM- AGM Update

fter TDM's AGM, we have pointed out the main points in the company’s 2019 performance and 2020 plan below

OPEC and its allies deal cut

In its latest meeting, OPEC+ could not reach an agreement on output as Saudi Arabia and Russia once again disagreed with each other’s production targets. While Saudi Arabia expects a major cut – up to 1.5 million barrels/day from the current 1.2 million barrels/day, Russia wants to maintain its current production level.

ANV – Update on 2019 results and 2020 forecast

In 2019, export prices have dropped sharply but good volume  growth into China and ASEAN kept the growth momentum for the company's revenue and profit. ANV recorded net revenue and profit before tax of VND 4,481 billion and VND 831 billion, respectively, increasing 8.8% YoY and 20.4% YoY, respectively. Adjusted for provision reversals in 2018 and abnormal profits from asset liquidation in 2019, PBT from core operation in 2019 reached VND 809 billion, up 25.4% YoY.