Updates on LDG

Huge financial gain from full divestment from Suoi Mo, while residential revenue dropped in the 1H 2019. LDG posted net revenue of VND 355 billion (+117% YoY) and NPAT of VND 198 billion (+1,058% YoY); respectively completing 11% and 33% of the year targets. Residential sales shrunk 29% due to modest handovers in the 1H, mainly from Viva City and Viva Square. Meanwhile, financial income of VND 150 billion resulting from the full divestment in Suoi Mo – its non-core subsidiary, made up a major part of earnings. More projects are expected to be handed over in the 2H 2019, including the remaining parts of Viva City, Viva Square, Viva Park, Marina Tower and Loc Phat. Procedures for High Intela and West Intela are supposed to be done by October in order to fulfill the land-use-rights obligation. LDG can thereby sign the official contracts in these two projects.

DRC – We expect a rebound in 2019

Overall, we maintain our 12-month target price for the stock at 23,600 VND/share. This target price, combined with expected cash dividend of 1,000 VND/share in the next 12 months, yields a total return of 10% (calculated based on the closing price on 20 August). Therefore, we have an ACCUMULATE recommendation on DRC.

VPB – 1H 2019 Business Results Updates

1H 2019 saw a positive growth of consolidated performance with a normalized earning growth of 23.4% YoY. Continuing with the quality growth strategy, the parent bank decided to restructure its CommCredit to stabilize this segment’s impaired loans despite still keeping this as a long-term focus. As such, the parent bank’s growth slowed down and the consolidated growth in the first half was mainly driven by FE Credit who expanded credit strongly while managing better asset quality. We consider this a recovery sign of FE Credit which might support consolidated earnings growth going forward. However, we hold the view that the consumer finance business is still under policy risk and the outlook depends on the finalized regulation on cash loan tightening.

DIC (HSX: DIG) – Business update

The company targets 2019’s net revenue and NPBT of VND 2,900 billion (+11%YoY) and VND 550 billion (+28%). The main contributions will be from the deliveries of existing projects like the Phonenix and Gateway and a part of Nam Vinh Yen. Looking further into 2020-2021, key drivers will be from the deliveries of the Gateway and Nam Vinh Yen projects.

Where are the opportunities as PVD V is awarded a contract?

There is a rumor that PVD V has won a long-term contract in Brunei. This rig would operate next year after being in cold stacked mode for three years. This information is considered very positive and has pushed the stock price significantly. Especially, PVD V used to be the most profitable rig and contributed the most to the bottom line.

FPT - Valuation compared with other regional peers

We believe that FPT deserves a higher P/E, considering high and sustainable growth as well as better profit quality. On the other hand, foreigner ownership limit has always been a factor hindering the potential of the stock price, though, the fact that FPT is included in VN-Diamond Index or even further, the approved "Non-Voting Depositary Receipt" could solve this problem. However, it will take time for the market to revalue FPT, while in one year vision, we maintain our BUY recommendation for FPT, with target price of VND 64,000 / share.

Jackson Hole FED Summit: Challenges for Monetary Policy

Last week, there was an annual economic policy symposium hosted by the Federal Reserve Bank of Kansa City in Jackson Hole, Wyo. The FED chairman, Jerome H. Powell, delivered a speech on the FED’s question answering process throughout the last century. Although the market was a little bit disappointed by no clear signal of September’s next rate cut which has been priced in, we’d like to concentrate on FED’s policy-making process which is marked by changes in the assessment framework and toolkit to maximize employment and price stability, and sustain the expansion now.

SCS – Maintaining high growth pace

SCS's 1H2019 NPAT surged 15% YoY, mainly driven by incremental international cargo volume which was a result of new airline clients. Profit margin slightly reduced compared to same period last year as the company increased labor wages in late 2Q2018.

Tailwind for Timber Exports

Opportunities for both short- and long-term  timber exports. In the short term, the US - China trade dispute is benefiting Vietnam. As well, exports, especially to the EU market, will grow because of the VPA/FLEGT, EVFTA and Vietnam’s Forest Law.

Next Drivers for Vietnam’s Economy

Let’s remind ourselves of Murphy’s law: “Anything that can go wrong, will go wrong”. These words sort of describe the current changes in the global economy. The latest contraction of Singapore’s GDP growth, a bellwether of foreign trade, not only reflects the expected corollary of the trade war but also draws a gloomy picture for the global economy. Recent surveys point out entrepreneurs’ deepening pessimism over the economy and foreseen business expansion plans. Hence, the rising importance of the visible hand, first noted by economist John Maynard Keynes, could be a blessing. By that we mean a coordinated response from both the monetary and fiscal ‘hands’. Such a response would be unconventional  under the circumstances of limited room to lower interest rates. Nevertheless, that is closely related to the “helicopter money” strategy proposed by former FED president Ben Bernanke in 2002.

BFC - Recovery in 2H2019

Facing difficulties in the first half of 2019 such as (1) weak demand and strong competition in the South Market (2) significant increase in raw material prices, results have been below expectations. However, BFC should be able to improve its performance in 2H2019 thanks to higher sales volume as well as lower input prices. But the 2019 result is still worse than last year, in our estimation. So we adjusted our target price for BFC to VND15,900 per share and rate the stock ACCUMULATE at this time

Seasonality: what is it saying?

Which month(s) offers the best and worst returns for investors? If you guessed April and August, respectively, you were right.

Looking at equity markets returns in local currency since 1997, August is the worst month across major bourses while producing a low probability of positive returns. April and December, on the other hand, produce the best returns with a high probability of positive attribution.