VGS- Company Report published on 06/04/2018

Rong Viet Securities Corporation hereby presents the Company Report on Vietnam Germany Steel Pipe JSC (HNX:VGS) with the overall opinion as follows:

Fishery - New Project for Sustainable Development Strategy of Vietnam’s Pangasius

On March 20, the project of 3-level linking pangasius breed production in the Mekong Delta has been approved by the Government. The idea is to build An Giang as the high-quality pangasius breeding center in the Mekong Delta.

NCT – A fine dividend play

While NCT is not a growth story, the company has paid back almost all the money it made to its shareholders. It has been consistently paying a high cash dividend of VND 9,000-10,000/share for years, implying a dividend yield of 9% at today’s closing price. This is an appropriate choice for investors seeking a high yield paying company.

In addition, NCT has invested VND 65 billion in ALS, equals to 10% of ALS shares at par value. The fair value of ALS could be much higher, implying an added potential appreciation of 5-10% for the stock price.

VNM – A look at the performance of dairy industry leader

2017 was a difficult year for the dairy market due to the fluctuation of raw material prices, and the increase of the number of competitors in the industry. However, Vinamilk (VNM), the leader in dairy industry, has proved its ability to increase its market share through an efficient business strategy. It increased its total market share of the domestic market to 58% (increase by 2% compared to 2016). Major product lines such as liquid milk, powdered milk, and yogurt have grown significantly compared to other competitors.

Updates on Foreign Capital Q1/2018

Over the first 3 months, foreign investors net bought more than VND 11,080 billion in the HSX while they net sold VND 647 billion in the HNX

Review REE's Sustainable Growth from the EPS Perspective

Before 2007, REE made a large exposure to stock market with a half of earnings coming from financial investment activities. However, the 2008 Financial Crisis has led to huge volatility in its business results and left the company a big lesson. After that, the restructure in REE’s portfolio with focus revolving around power & water utilities segment and improving management of its investee companies has shown its effectiveness with sustainable annual growth rate of around 13% in EPS.

FRT’s Annual General Meeting: Ambitious plans for the future

2017 was still a good year for electronics retailers, while MWG – the market leader posted a growth of 49% in revenue and 40% in NPAT, FRT was right behind with growth of 49% in revenue and 39% in NPAT. However, with MWG’s massive advantage in market share, its gross margin reached 16.5% which was significantly higher than 13.8% of FRT. Considering that MWG stops expanding its phone’s division to focus on developing Bach Hoa Xanh, we believe FRT will be more freely expanding its phone’s retailing business.

FMC - Shareholder Meeting 2018 Update

In 2017, FMC recorded net revenues of VND 3,248 Bn (+6.8% y/y). Net profit margin came at 3.8%, net income reached VND 122 Bn (+29.7% y/y) and EPS of VND 3,296 (+22.3% y/y).

A quick glance at Industrial Parks

Recalling 2017, Vietnam has seen a strong FDI pump into the economy with US$35.8 billion registered (+44.4% YoY) as well as a new-record disbursed amount of US$17.5 billion (+10.8% YoY). Industrial parks (IPs) in Ha Noi, Ho Chi Minh City (HCMC) and Bac Ninh are among the first beneficiaries.

Vietnam will benefit from US tariffs on Chinese imports

On 22^nd March 2018, President Donald Trump signed a memorandum that will slap tariffs of up to USD 50 billion for about 1,300 different Chinese goods imported into the US. The idea behind this is to decrease the theft of intellectual property and US trade patents by the Chinese government. It is suspected that some companies from China have invested in the US for the purpose of gaining from large-scale technology transfers. Taxable items may include: furniture, textiles, shoes, clothing, toys as well as information technology products, electronics and telecommunications equipment. At the same time,  China’s Department of Commerce also proposed a list of 128 US products worth USD 3 billion as a retaliatory measure. According to our observation, the war begun in 2017:

The VIX

Volatility is back so we look at what exactly that the VIX measures and what to make of it.

REE – Target for 2018 is still conservative

While setting a target of flat earnings for 2018, we believe that their NPAT could grow by over 20% versus 2017. In addition, the rise in 2018 earnings would come from three key business segment including M&E, Utilities, Office Leasing and Real Estate Development.