BMP – Maturity Stage Starts

Despite Q3 being the low season for construction activities, BMP still achieved 25,700 tons of sales volume this quarter, up slightly by 5.7% over the same period last year. Net income was stable at VND 120 billion (+4.3% yoy). For the first nine months of 2019, BMP’s sales reached 76,400 tons, (+15.6% yoy mainly due to Q1/2018’s expectedly low sales). According to the parent company Nawaplastics, BMP's sales growth is similar to the trend observed among other Southeast Asian producers in recent months, which have been affected by the prolonged dry season. BMP's 9M2019 NPAT is stable (-3.5% yoy) and its gross margin has been at 23% for a few quarters, which is within our expectations.

Outlook for the Jack Up Market in South East Asia

Due to the recent downtrend of oil price, E&P activities have slowed down and have only experienced some improvement since 2018. The demand for Jack Up rig has recovered, according to the slight increase in two main indicators: rig day rate and utilization rate.

VNM - 9M 2019 Update

Rong Viet Securities combines two valuation methods: FCFF and PE to evaluate VNM’s fair value. The stock is worth VND 135,000  per share, with a cash dividend of VND 5,000 per share in the next 12 months, resulting in a 8%  total return based on the current closing price. Therefore, we have an ACCUMULATE on this stock.

CTI_9M update

We recently had a meeting with the management of the company and the  following are the key takeaways:

• CTI posted NPAT-MI in 9M 2019 of VND 56.1 billion (-47% YoY), due to the lack of revenue from key construction projects.
• The company will revise down the profit guidance in 2019 by 29%, due to the delay in some infrastructure projects’ progress. This will result in a decrease in net profit of 19% YoY. Therefore, the stock will trade at a PE trailing 2019 of 15.6x.
• CTI also cancels the equity raising plan of VND 220 billion due to changing in business plan.
• The company will maintain a 10-15% cash dividend payment policy in coming years.

HDB – 9M2019 Business Performance Update

We are noticing a better-than-expected interest income expansion from the parent bank thanks to impressive NIM improvement, accompanied with a recovery in HD Saison who is also trying to catch up with overall credit and earnings growth. However, other incomes are shrinking and have a limited impact on operating income growth. The positive is that both operating expense and provision charges are well under control, supporting earnings growth of 20% YoY. Current CAR (under Basel II) is at 11%, which spares sufficient capital for HDB to maintain strong credit growth in next several years.

HDB is currently trading at VND 29,100, equivalent to a 2020 forward PBR of 1.2x, which is relatively attractive considering the potential growth of around 20%/year in 2019 and 2020. We raise our target price to VND 33,500, equivalent to a potential upside of 15%, thereby keeping an Accumulated rating on the stock.

EVFTA – Export taxes reduction to encourage the EU’s pangasius consumption

The EU-Vietnam Free Trade Agreement (EVFTA), expected to take effect in mid-2020, will encourage the EU’s pangasius consumption  in the upcoming years.

Industrial park_9M updates

2019 has been a good year for the industrial park industry, as leasing demand remained strong. In the North, Bac Ninh and Hai Phong are bright spots for attracting FDI inflows while Dong Nai and Binh Duong play a key roles in the South.
During the first 9 months of 2019, industrial park companies achieved impressive business results, especially developers owning available land bank for lease with large-scale areas.

Update on the brokerage sector: 3Q earning results

Based on the results of 73 brokers for 3Q, PBT reached VND 2,106 bn, -18.9% YoY. While gross profit grew steadily around 15% YoY, operating expenses (*) increased sharply by 52,8% YoY, causing the PBT to decline.

(*): We adjust interest expense into Lending segment’s expenses

QNS – 9M2019’s Business Results Update

QNS is trading at a trailing P/E of 7x, quite attractive compared to the overwhelming market share of its soy milk segment. However, the sale of shares from management and negative movement in its sugar sector caused investors to apply a high discount for the fair value of this stock. We expect that when ATIGA comes into effect and the An Khe factory is put into operation of refined extra (RE) sugar, should help QNS enhance its domestic market share and improve its gross margin. At the same time, the strategy of expanding its soy milk sector to reach US 1 bn in revenue will be a catalyst for the stock price. For 2019, Rong Viet Securities maintains a BUY recommendation for QNS with a target price of VND 40,500/share.

VJC – 3Q 2019 Business Results Update

VJC’s parent company, reflecting core airline business, posted a revenue of VND10.4tn (+17% YoY), PBT of VND1.3tn (+17% YoY), which was mainly driven by financial income. Net profit was flat at VND1.1tn as VJC is subject to higher corporate income tax rate of 20% compared to 10% last year.

VPB – Update on 3Q2019 Business Performance

VPB has reported its consolidated PBT of approximately VND 7.2 Tn (USD 310 Mn, +17.4% YoY), fulfilling 76% of its guidance for the entire year. It mostly came from the recovery of consumer lending as well as the high growth of services income. We estimated that the parent bank’s PBT decreased by 3.6% YoY to VND 3.5 Tn (USD 151 Mn) while that of FC’s PBT was up by more than 52% YoY to VND 3.7 Tn (USD 159 Mn). In 9M 2019, the parent bank contributed 51.5% and FC made up 48.5% of VPB’s total PBT.

VSC - 9M 2019 Business Results Update

VSC’ net profit dropped 33% YoY in 9M 2019. This decrease was attributable to contracted profit margins and one-off items relating to income tax expenses, such as a provision of VND26bn for underpaid tax expenses in previous years of a subsidiary named Green Logistics in 2Q 2019 and other losses of VND 14bn in 1Q 2019.