BMP: Update on 1H 2018’s result

As of the end of 1H2018, BMP had almost no growth over the same period last year in most of the key indicators such as output, sales and EAT, completing over 40% of the year guidance. Given the seasonality of the construction materials sector, BMP's 1HFY2018 results turned out to be within expectations.

Equity Markets Correlation and Currency Volatility

We notice that in the past six weeks correlations between the VN Index and other equity markets has somehow evolved. In June the correlation between the VN Index and the MSCI Frontier Market Index was around +52% It has now decreased to a negative level of 20%.  Noticeably the correlation with the S&P 500 has risen to 30%.

Tariffs and Trade

The bottom line is that so far trade tariffs have not noticeably impacted overall global growth. However, there are no signs that the US and China are any closer in finding any agreement on the issue. The likelihood is that the dispute will run beyond the November US mid-term elections. Politically Mr. Trump is in a weak position following many by-elections where the Republican Party lost ground in key states that it controls, notably Ohio and Kansas.

MWG: Update on 1H 2018’s result - Strengthening confidence in Bachhoaxanh

In the first half of 2018 MWG posted an impressive growth of 43% in net revenue and 44% in net profit YoY. This is the direct result from the fact that the store counts of Thegioididong and Dienmayxanh increased by 45 and 320 respectively. Moreover, even though it still has to make a profit, Bachhoaxanh- the minimart brand- is constantly improving and getting very close the break-even point.

Vietnam’s shopping mall industry overview

Modern retail channels is taking off in Vietnam, supported by many positive factors such as young population, expansion of middle class and retail spending boom. In general, traditional retail expected to continue to dominate the whole retail market due to Vietnamese people’s shopping habits. The growth of retail property has closely related to the development of retail industry. In 2017, department stores records current value growth of 15% in 2017, to reach VND 8,326 billion. Over the forecast period, department stores is expected to see a value CAGR of 27% at constant 2017 prices, to reach VND 27,457 billion in 2022. Compared with other regional markets, Vietnam still has a huge potential for retail property.

Growing Retail Market and the Uprising of Experiential Retail

Along with the development of retail markets, the growing model in which companies open more stores to acquire market share is coming to an end. The collapse of Toys R Us and Dick Smith or the difficulties that Best Buy, Michael Kors and other major retail chains are facing are putting pressure on the traditional retail model to renew itself. In this context, experiential retail is a model that many big retailers are pursuing.

Overview on the Alcohol Market in Vietnam

Alcoholic drinks are considered to be a method for connecting and expanding the relationship for a long time and it has become an indispensable part of the communication culture of the Vietnamese people. With a young population structure and a growing middle-class, alcoholic drinks are forecasted to keep growing at a CAGR of 11.8% during 2018-2022 (according to BMI). Besides, beer is still a ‘must’ consumption item, accounting for 97% of total alcoholic consumption.

REE – Update on 2Q 2018 Business Performance

Because of a strong business performance in 1H 2018, we expect that REE’s 2018 earnings growth will be around 20% in 2018 and 15% in 2019. However, as we go into specific business segments, we see several significant issues that arose recently, potentially weakening market sentiment on the stock.

HDB - 2Q2018 Business Results Update

The parent bank is still driving HDB’s current growth. However, the parent bank is under a pressure to seek additional approval for credit expansion limit from SBV to make room for further growth in 2H2018. This will become even more challenging in the context of SBV’s gradually monitoring closely credit expansion, as per their recent announcement.

Regarding HD Saison, though possessing many strengths such as top three position in the consumer finance industry and nationwide transaction network, the company still performs under expectation. Similarly, FE Credit – the market leader in consumer finance – only achieved a 4% credit growth in 1H2018. This reflects a negative signal for the future growth of consumer finance which needs to be watched carefully. This will be a mutual challenge of HD Saison and other players in the industry.

PVOil – Still Facing More Challenges

PVOil is the second leading player in gasoline distribution with a market share of 22%. After completing its IPO and being listed on HOSE, PVOil share price is expected to rise due to its current positioning. However, the 2018 conservative plan has put pressure on the stock price recently.

TRA – Expecting Improvement in 2H 2018

TRA recorded a 7% decline in revenue and 47% decline in NPAT in 1H 2018. EPS is VND 1,356, compared to VND 2,633 in the same period last year. This is the first time the company grew at a negative rate since 2014.

Domestic export growth is higher than FDI-related corporations’

According to Customs’ data, Vietnam’s export value reached, in 1H2018, USD 114 Bn, up 16.3% YoY. In details, FDI’s export value accounted for 70% and grew at an annual rate of 15.7% YoY. Notably, domestic export growth, around 19.5% YoY, is higher than FDI-related corporations for the first time in recent years.