LHG - 2019 AGM Update

We attended LHG’s AGM in April 8. The meeting was well attended with all documents being approved by the shareholders. FY2018 results were reported with net revenue of VND 478 billion (-12% YoY) and NPAT of VND 177 billion (+7% YoY). Leasing activities contributed 67% of gross earnings. During the year, LHG leased 16.5 ha; in which, 10.5 ha were re-leased.

PVD - Cost Saving Policies

When the business faces difficulties, the company must cut cost to survive. And PVD is not the exception as the company has been applying many policies to maintain its business for years. Overall, PVD is currently using two main methods (1) cut the operating cost (2) change the depreciation methodology since 2015.

STK – 2019 AGM Update

In 2019, STK sets a target for net revenue and NPAT growth of 8% and 12%, respectively, at VND 2,603 billion and VND 199.5 billion. The development strategy will still focus on increasing the proportion of recycled yarn on revenue. This year is considered a pivotal year to prepare resources in order to develop further projects.

LTG - A long road ahead

We assess that Loc Troi is a company with strong fundamentals and solid core business activities. The CPC sector has a low growth rate but it has a high gross profit margin and a leading position in the CPC market. The rice segment has improved both its gross profit margin and its revenue contribution to LTG but the efficiency has not been significant. Recently, the company has focused on developing and promoting its rice sector but due to objective reasons from the general market, this sector contribution is still modest. In addition, we believe that LTG's joint venture with Vien Thi Ho Nam in China in the context of its tightening of rice export conditions will bring advantages to the company compared to other traders.

Retail leasing industry updates: The rise of shopping malls

The Savills report has recently updated the overall performance in retail leasing market in both key markets, including Hanoi and Ho Chi Minh cities. From 2014 to 2018, Ho Chi Minh City’s retail leasing stock grew 15% pa on average, while Hanoi was 12%.

African Swine Flu - Every Challenge Provides an Opportunity

We believe that ASF should be considered both a challenge as well as an opportunity for the large-scale livestock enterprises such as Dabaco Group (HNX: DBC), Masan Group (HOSE: MSN),  VISSAN Joint Stock Company (UpCOM: VSN).

VSC –2019 AGM Update

Although the competition situation in the port industry in Hai Phong continued to be stressful, VSC achieved impressive NPAT growth of 27% in 2018. This is thanks to strong growth in container volume from 2 major shipping lines, Maersk and Evergreen, and satellite carriers that have a slot purchase agreement with these two shipping lines. The highlights of business activities in 2018 are as follows:

REE – 2019 AGM Update

In 2018, REE surprised the market when its NPAT-MI grew by 30% YoY to a record high of VND 1,784 billion. This performance was attributable to important contribution from power and water utilities segment as its total NPAT rose by 73% YoY and accounted for 61% of REE’s total earnings. Regarding 2019 plan, the company remained conservative as usual when it set a NPAT target at 18% below FY2018 performance. However, we still consider the target for 45% reduction in NPAT of power and water “too conservative”.

GDT - 2019 AGM Update

GDT’s business has been tested through a whole cycle of the economy. The company has grown consistently in 2009-2018 period without much capital needed.  In that period, CAGR revenue and profit are 9% and 13%. ROE has improved from 25% in 2009 to 35% in 2018.

GDT offers a 12% dividend yield, one of the highest in the stock market. We think this yield is sustainable, making GDT a good investment at this stage of the market.

VPB – Credit Growth to Slow Down

For 2019, we expect customer loan growth of parent bank and FC will decrease to 19% YoY and 14% YoY. Parent bank will make more provision on VAMC bond so its total provision expense will equivalent to 2018’s while FC’s provision expense will slightly increase. Consolidated PBT will be around VND 9.3 Tn (+1% YoY), excluding one-off income of VND 856 Bn in 2018 (from banca upfront fee), 2019 PBT will grow 11% YoY.

At the current price of VND 20,300, VPB is trading at PBR of 1.4x, which significant decreased from that of earlier 2018, and is slightly lower than its peers’ average PBR. However, we think it is difficult for the bank’s PBR to be reverted to high level as previously unless VPB’s consumer lending, mostly targeting into cash loan, shows improvement. Using DCF and PBR valuation methods, our 12M target price is VND 24,800, 22% higher than its current market price. However, due to the slowdown in consumer lending segment, as well as the new draft circular regarding to this business, investor should wait until there is latest announcement from the officials.

VIB – Update on 2018 Business Performance and 2019 Plan

By actively raising capital and boosting lending over the last two years, VIB has expanded significantly from a small bank to become one of the well-known players in retail banking. We appreciate VIB's sales competence and business efficiency improvement when expanding into retail lending and bancassurance. VIB is also one of the first two banks who were approved to adopt Circular 41 capital adequacy requirements, for which the bank expects to be granted a higher credit growth limit than other banks. Although the quota given by SBV is not likely to reach 35% as per the bank’s plan, we think VIB can still push non-interest income to compensate for lending constraint. However, we hold the view that the profit generation ability in securities, gold and foreign exchange trading needs to be enhanced further. In addition, the bank also needs to spare more resources to improve it current asset quality. Last but not least, the boosting of retail lending on the back of mortgage loans can pose a risk for VIB in case the real estate sector falls into a downward cycle.