Bancassurance income outlook at some listed banks

In the context of closer control on credit growth and more litmited room to expand NIM, banks are trying to boost service income from cross-selling activities.  During 9M2019, the portion of service income on TOI for ten banks under our watch list have moved up to 10.5% from 9.6% in 2018, reflecting a more sustainable income structure. We found that amongst many activities that became popular service income sources for banks, bancassurance became a crucial growth driver, especialy bancassurance life-premium. We see bancassuance income to have much potential to grow both at sector-wide and individual banks level.

Vietnam’s pharmaceutical industry – Opportunities and Challenges

The Vietnamese pharmaceutical market has a lot of potential coming from the demographic, rising income and priority policies of the Government, however, as with any development of other industries, after the fragmented phase will be the competitive and selective one. The end goal is for consumers to use medicines with high quality standards and reasonable prices.

VHC – 11M2019 update and 2020 forecast

VHC in the short term, particularly in 2020, more or less, will be affected by cyclical fluctuations of the pangasius sector. In the long term, continuous investment in capacity of farming, processing, product development, especially the potential collagen-gelatin segment, as well as diversifying distribution channels will help the Company minimize the cyclical effects of the industry on profitability. Based on the closing price on December 31^st, 2019 of VND 39,650 / share, we recommend BUY for VHC with a target price of VND 49,200/share. Total return is 24%. The company does not pay cash dividends for 2019.

PVB - 2019 result update and 2020 forecast

We forecast that the revenue will reach VND714 at least while the maximum of net profit is likely to be around VND128 bn. Noted that most of its profit will be booked in 1H2020 due to the progress of two main projects Nam Con Son 2 Phase 2 and Sao Vang Dai Nguyet.

Food & Beverage Industry - 2019 Review

After a period of deceleration in 2018, the FMCG market regained its positive momentum. According to Kantar Worldpanel, rural areas recorded higher growth faster than urban four key cities in the past 2 years. Specifically, in 11M2019 rural areas achieved a 9.3% value growth, while urban areas grew by 6.1% over the same period last year, mainly driven by the increase in sales volume.

DIG - Solid growth

The company will achieve its profit guidance in 2019, with NPBT of VND 550 billion (+29% YoY). The main contributions are from the deliveries of existing projects like the Phonenix and Gateway and financial incomes from divestments in subsidiaries. Looking forward 2020, , as updates of management representatives, DIG’s profit growth is still guaranteed, thanks to hand-over of Gateway, Cap Saint Jacques and a part of Nam Vinh Yen. As of results, DIG set a NPBT guidance in 2020 of VND 800 billion (+45% YoY).

PPC – The Big Question on 2020

The last two-year period has been nurturing to PPC's business results as it has fully converged its internal capacity to take advantage of the external factors. Additionally, abnormal factors in the year also resulted in high income growth and substantial cash inflows to maintain high dividend payouts to shareholders. For many years, especially since paying off long-term loans in 2018, PPC has stood out as a company with industry power who operates stably in its mature phrase and maintains solid financial health. PPC shares became attractive to investors who prefer regular cash dividends. However, we believe that it is high time shareholders assessed PPC’s capability of maintaining high dividends, because operational risks are going to affect the business results in the near future

HPG - Updates

HPG has sold roughly 2.5 million tons of construction steel in 11M2019 (+15.0% YoY). Noticeably, HPG’s construction steel selling volume has been growing fast in Vietnam’s southern and central markets, increasing by 104.7% (11M2019, YoY) and 54.4% (11M2019, YoY) respectively. According to management, HPG’s construction sales could reach 2.7 million tons in 2019 and 3.7 million tons in 2020.

The Dung Quat steel complex is 90-95% completed. HPG’s first HRC line will start production in 2Q/2020. HRC factories might take six months to one year to run smoothly because it is HPG’s first time producing HRC. While the first furnace has run smoothly and the second was launched in November 2019, the third and fourth furnaces will be launched in 2Q and 3Q/2020 respectively. These factories will be depreciated in 12 years, after six months of testing.

Update On Seaports In Hai Phong

2019 is a relatively tough year for port operators in Hai Phong as they have faced many headwinds such as:

(1) Overall market growth has decelerated.  After China tightened unofficial importing policy on these products from Vietnam in the mid-2019, the volume of agricultural and seafood products shipped to the Northern Vietnam (to be exported to China afterward) has declined. As these products have been one of the main cargo source through seaports in Hai Phong, cargo volume here went flat in 11M 2019, reaching 4.5mn TEUs (Figure 1). The growth rate was weaker compared to 9% in 2018. In line with this market trend, the growth rate of container volume through several ports here has slowed down as well (table 1). As a result, this has decelerated revenue and core EBT growth of these enterprises (except for GMD due to recognition of robust growth from gains from JVs) (Figure 3).

Rice prospects in 2020

Vietnamese rice will face difficuties in 2020. Production, demand and prices are expected to fluctuate or seesaw meanwhile the Government has not been able to find any new export markets. As a result, we have a reluctant view on the prospect of rice in the next coming year.

Vietnam’s Foreign Trade in 2019

According to Customs’ statistics, Vietnam’s total trade value, in the first 11 months of 2019, reached USD 473 Bn, up 8.1% YoY, lower than last year’s 12.9% YoY. Export revenue was estimated at USD 242 Bn, up 8.4% YoY, and imports were USD 232 Bn, up 7.7% YoY. The 2019 trade surplus is likely to be above USD 10 Bn, marking an all-time high in Vietnam’s trade history. Notably, the trade surplus rose USD 2 Bn in November, which added to FX reserves, which are now over USD 73 Bn.

Looking back to the four-year history of Bach Hoa Xanh

Late 2015 – early 2016: Initial experiment

The Gioi Di Dong chain was still in its “golden era” and Dien May Xanh was just starting to pick up. MWG was growing at 60% annually in revenue and profit. Foreseeing that the smartphone market would soon be saturated and consumer electronics would not be enough to carry the high growth for long, MWG’s management started to think about a new retail market that is big enough for their long-term growth prospect while still fragmented with no industry leader. Foods & FMCG retail was the answer and Bach Hoa Xanh – the grocery chain was born in late 2015.