A brief look at ERP system, from the recent issue of PNJ

The impact of the ERP incident on business results and stock price in the short term is inevitable, but this does not affect PNJ's competitive position and growth potential in the long term. PNJ's decline in Q2 revenue is also not a sign that the company is entering a difficult period when demand decreases. On the other hand, it can be seen that difficulties in implementing ERP on a large-scale system is a significant barrier in both cost and difficulty for other jewelry chains if they want to catch up with PNJ. We believe that short-term corrections of PNJ stock price will be good buying opportunities for investors with long-term vision.

Vietnamese Pangasius Industry: in the Initial Stage of Restructuring

Decree 36/2014 / ND-CP has set the foundation for restructuring Vietnamese pangasius industry. Solutions, though still need time to create changes on the industry level, have shown a new stage of development focusing on quality.

Consumer megatrends in Vietnam

Vietnam’s consumer market has always been attractive due to supportive demographic, economic growth and high urbanization rate. As Vietnam’s real GPD will growth by 91.4% during 2019 – 2030, consumer expenditure will also rocket (figure 2). By 2030, 46 million urban consumers will have USD 169 bn worth of spending while that for 61 million of rural counterpart will be USD 173 bn. More importantly, middle class - the foundation of consumer is rising fast: in 2030, 49% of households will have an annual disposable income of USD 5,000 to USD 15,000, an increase from 33.8% in 2018. Those create huge opportunities for companies that can adapt to the market’s changes.

Will FED cut its rate?

There are many economic and political events in June. In addition to G20 meeting in Japan which is likely to see US-China talks on the sideline, financial investors are looking for chances in FED’s rate cuts. In June meeting, the officials will release their economic assessment and monetary policy’s directions in 2H2019. Whether FED will cut rates becomes an important issue.

PC1- Result Update Report

Rong Viet Securities Corporation hereby presents the Result Update Report on Power Construction JSC No. 1 (HSX: PC1) with the overall opinion as follows:

“We appreciate PC1’s efforts to operate three distinctive business while maintaining the overall efficiency. Its power construction business still has ample room to grow owing to EVN’s demand on new electricity infrastructure. This also provides opportunities to its steel structure manufacturing business. Regarding PC1’s hydropower business, we think its stability will stand out as a major contributor of earnings to PC1. In fact, PC1’s electricity portfolio, including two HPPs under construction and five other initiated projects, contributes the largest proportion in our PC1’s sum-of-the-parts valuation. Last but not least, we appreciate PC1’s ability to obtain prime-location land banks and its residential projects’ profitability, which can act as a surprise factor to the company’s earnings. 

IMO 2020

The International Maritime Organization (IMO) has regulated that from January 1, 2020, all vessels operating outside the emission control area (ECA) will have to use fuel with a maximum sulfur content of 0.5. % compared to the current limit of 3.5%. This regulation is designed to reduce the amount of sulfur oxide (SOx) from ships discharging into the environment and minimize the impact on the global warming. Previously, in emission control areas (ECA)* and ports in Europe, IMO has regulated that the sulfur limit in fuel oil used on board is only 0.1%.

Funds may increase Vietnam's weights in near future

• Most funds had similar trend performance with MSCI Frontier Market Index
• Most funds reduced its exposure to Vietnam as of June 5th compared to April 1st
• Vietnam and Kuwait stock market's weights are still lower in most funds than in MSCI Frontier Market Index
• We suppose that the funds may reduce Argentina market’s weights and add Kuwait and Vietnam markets weights
• However, the flow may not big as investors still concern about trade wars and other global uncertainties

BMP – Improving Efficiency is The Top Priority

BMP’s 4M2019 performance was in line with its guidance in terms of its top line. 4M2019’s sales volume and revenue were 31,700 tons and VND 1,323 billion respectively.

PPC – Low sales volume weakens 2019 earnings outlook

In summary, although PPC’s 2019 earnings outlook is weaker than last year’s, the strong cash flows and rising contribution of both QTP and HND, the two biggest investments of PPC, support our belief in the company’s ability to maintain annual cash dividend at VND 3,000 /share in the coming years, corresponding to a yield of 11.5% at the closing price of June 6, 2019. We consider this dividend yield relatively attractive. We are in progress of revising our target price on PPC stock and will update in the next report.

FRT – Result Update on FPT Digital Retail JSC

Our target price for FRT is 50,000 VND / share. We have a NEUTRAL recommendation on the stock.