CTD- The Search for Growth Drivers Has Just Begun

After many years of surpassing the annual guidance, CTD unexpectedly failed to reach the target of VND1,750 billion in NPAT despite achieving the revenue target of VND27,000 billion. The main reason is that Q4/2017 business results did not reach the expected growth as CTD recorded only VND414 billion NPAT, equivalent to the same period last year. Thus, in the whole year 2017, CTD's revenue reached VND 27,153 billion, +31% over the same period; NPAT is VND1,653 billion, +16% over the same period.

VCB: Business Updates

At the current market price of VND63,300 per share, VCB is trading at PBR and PER forward of 3.7x and 27x respectively. This valuation is not attractive when compared with the average PBR of its peers in Vietnam as well as in the region. However, there are many catalysts for VCB such as (1) VCB’s market cap accounts around 8% of total market cap in HSX (closing price on 19^th Jan) and there is more than 9% of room for foreign investors, VCB is considered as a feasible investment case for offshore funds; (2) Positive outlook for the banking sector in 2018, in which VCB with its high market share in terms of lending, deposit and services, will be significantly benefit. In addition, if VCB can finish its divestment plan in 2018, its PBT can grow more than 30% YoY; and (3) The prospect of its private placement plan (issuing around 10% of current charter capital to strategic or financial investors) becomes more apparent when the methods to define issuance price is more flexible, which will base not only on modeling but also on VCB’s current market price. Therefore, we think that VCB’s market price is strongly driven by the market. The stock price can rally further, however, we think it could be risky for long-term investors to invest in VCB at this time.

PGI Updates

PGI organzied an Analyst Meeting recently to inform about the estimates for FY2017 earnings and target for FY2018.

Outlook for Fertilizer Stocks in 2018

Although the weather in 2017 was better than in the previous year, the fertilizer industry saw business results that were below expectations. only 5%, while NPAT to be almost flat. The severe over-supply condition, along with adverse movements of input prices due to the rally of crude oil, was the main drag for the industry. We expect these headwinds to continue in 2018 considering the expansion of fertilizer manufacturers as well as the positive forecast for crude oil prices in the near future. Therefore, we believe drivers for fertilizer stocks will come from the adjustment in policies and the expected divestments, rather than profit growth.

HSG- AGM Updates

Hoa Sen Group JSC (HSX-HSG) went through a tough financial year, according to the company’s management, achieved growth in volume and revenue but its NPAT was lower than the annual target due to unfavourable steel price movements. The company also sets the NPAT growth for FY2017-2018 at only 1%, saying that it needs to accept lower margin to face up with the fierce competition in the coated steel sheet market.

Consumer electronics retail outlook

The consumer electronics retail was once a “delicious cake” for not only big corporations but also small private stores. However, by now, it has probably passed the golden times and is starting to slump. Major retail chains such as Mobile World, Blue Appliance, FPT Shop, Nguyen Kim are acquiring overwhelming market shares compared to mom-and-pop stores. The trend for now and onwards is the promotion of big chains to acquire more share and by that, increase market concentration. 

Changes in the China paper industry’s policy and their impact on the Vietnam paper industry

China paper industry will see great changes in 2018 as its government officially adopts new policies. We believe these policies’ changes will have a positive impact on paper companies in Vietnam.

Draft Amendment of Decision 87/QD-UBCK and the Viewpoint from Kelly Criterion

On the afternoon of January 12, 1818, the SSC sent a document to the securities companies to comment on the draft amendment of Decision 87 / QD-UBCK. Accordingly, the SSC plans to increase the initial margin from the current 50% to 60%. We think this could create both postive and negative effects:

Green Grocery and success model of Alfamart from Indonesia

As seen in Mobile World Group’s (HOSE: MWG) report on business result in 11 months of 2017, Green Grocery contributed VND1,194 billion to total revenue of VND58,964 billion (made up 2% revenue). Even though the breakeven point was reached in Q4 with gross profit margin of 14%, Green Grocery might still suffer a loss of VND119 billion in the whole year of 2017. This chain will start contributing to MWG’s profit from 2018 onwards, especially in Q4 2018. This will be the most promising segment of MWG in the near future considering that mobile phone market is almost saturated and electronic devices market is also slowing down in growth.

Viglacera – Business result update

Viglacera – Business result update

Viglacera announced its business result in 2017. The combined pre-tax profit of the corporation was VND1,019 billion, representing 112% of the full year target. Total combined revenue was VND 16,486 billion, which saw an increase of 13% compared to 2016. As our report in November 2017, we estimated that revenue and NPAT-MI in 2017 will be VND8,800 and VND750 billion, respectively.

M10 – Mismatch Between Efficiency and Stock Price

Garco 10 Corporation (UPCOM:M10) is among the top large textile companies in Vietnam, mainly aiming for American and European customers. Although its income still depends heavily on processing garment orders for foreign brands (accounting for 89%), it has an outstanding brand name (May 10) and owns a chain of five M10Mart fashion shopping centers, all of which are located in northern Vietnam.

9M2017 Non-life Insurance Statistics

The data from ISA showed that after 9M2017, non-life insurance sector recognized a total premium of VND30,154 billion (+12% YoY).