PAC – Updates on business result

After the meeting with representatives of Dry Cell & Storage Battery JSC (HSX:PAC, we would like to would like to share to investors some updates on this company.

FX reserve: Will the 10-year-ago event recur?

Recently, SBV’s governor, Mr. Le Minh Hung, spoke of a peak of Vietnam’s FX reserve, nearly $48 billion. Therefore, the threshold of $50 billion will be reached in near future. Over 2 years, our FX reserve increased by $20 billion, which remembers all of investors what happened in 10 years ago when a new member of WTO, Vietnam, saw a massive foreign inflow. Such flow steamed from lots of sources, including FDI disbursement (nearly $17 billion in 2017), $1 billion valued FII pouring into bonds and stocks in the context of pushed-up state divestment and attractive-low yields of VGBs. In addition, there is an impressive trade surplus of $3.8 billion, the highest level in recent years.

DRC Result Update – Company Report Release on 26/12/2017

Rong Viet Securities Corporation has just released Result Update report on Da Nang Rubber JSC (HSX:DRC) with the overall opinion as follows:

VNIndex 2018 Forecast

As state divestment activities remains strong in 2018, as well as the abundant of capital in the market, we believe that a P/E contraction is unlikely. Accordingly, we set our base scenario that the index will grow at the same pace with the company's earnings growth in 2018. We estimate earnings growth of top 50 large capitalization stocks on the VNIndex (representing 87% of total market capitalization) to be 17-19%, depending on the dilution plan of banks to prepare for Basel 2. This means that the index is capable to approach, and with a little excitement, to surpass the historical peak of 1,170 points.

FPT: 11M2017 Updates

FPT posted 11-month results with total revenue of VND39.319 trillion and pretax profit of VND2.989 trillion, fulfilling 84% and 88% of the plan respectively. Telecommunication business fulfilled 90% of revenue target and 94% of EBT target for the whole year thanks to the stability of broadband internet revenue and the substantial growth rate of high pay-TV revenue. Trading and retail business continued to lead the growth, especially the EBT of retail sales increased by 41% YoY. More surprisingly, we see that the Education segment's EBT is more than VND220 billion, far surpassing the plan of 98 billion dong set earlier this year. Meanwhile, FPT’s IT segment has just completed 76% of its revenue target and 72% of its EBT target. In general, FPT's 11M2017 results are in line with RongViet Research's forecast, especially in terms of EBT, as all 4 business lines have completed around 80% of our full-year forecasts.

PVD and Oil Price Stories

PVD is a leading player in drilling and exploration sector in Vietnam. Mainly operating in upstream makes PVD sensitive to the oil price.

Comparison of Capacity Structure Between PV Power and Other State-Owned Power Generation Corporations

PV Power is one of the biggest players in Vietnam power market. Compared to other state-owned peers in cluding Generation Corporation No.1, 2, 3 (GENCO 1, 2, 3) and Vinacomin Power (UpCOM:DTK), the company has significant scale in gas-fired power with high plant utilization rate in hydropower and gas-fired power. Meanwhile, its coal-fired power segment with potential improvement in utilization rate would ride the turnaround of the company in the coming years.

Wave of excitement from States' IPO and Divestment to Continue in 2018

We believe the market will keep the excitement at the IPO and divestment deals in 2018 due to the following three reasons.

Statistics of International Visitors to Vietnam in 2017

The airlines benefit a lot from this trend as 80–85% of the international visitors arrived in Vietnam by plane. The robust growth of charter flights of VJC (mainly to serve Chinese customers) is an illustration of this opportunity. This trend is likely one of the main reasons VJC aims to transport 25 million visitors in 2018. However, we think that this goal is still a big challenge for the leading low-cost carrier in Vietnam.

Foreign Investors Still Withdrew Their Capital from the Foreign ETFs in 2017

Today is the last reconstitution day of the two foreign ETFs in 2017. Except the VNIndex going down, there was almost no significant impact on the market. The VNIndex conly decreased slightly. Though liquidity during ATC session surged strongly as usual, this level is not rare in 2017.

Will The Rubber Tire Industry Recover?

The current trend and forecasts of rubber price are affecting positively the tire manufacturers; therefore, we expect that the GPM of these companies would recover in the fourth quarter of 2017.

How do the P/E Change After Stock Markets Re-classified From Frontier to Emerging Status?

In recent AP questioning about the current P/E of the VNIndex, the author used to conclude:

“Back to the current question whether the VNIndex is overpriced or not, according to the writer, the answer is yes if we compare to other markets. However, the next big and important factor that can help make the current relatively expensive PE look more reasonable is that the market got promoted to the emerging market status.”