Update on Vietnam’s Economy in the First 2 Months of 2017

Macroeconomic developments in the first two months have not been so favorable and this requires wise intervention of the policy makers to promote economic growth. Inflation and the exchange rate remain under control, thus, the interest rate will not change in the short-medium term.

MWG – Growth Story Will Continue to be Told

On 24/02/2017, Mobile World Investment Corporation (MWG – HSX) organized the first analyst meeting of 2017 to announce its 2016 business results along with its current situation and future plans.  Moreover, it has also announced its Q1 2017 results.  The current price still reflects the optimism for the significant growth and the rapid expansion of DienmayXanh.  Furthermore, MWG has also been taking measures to ensure the profitability of Bachhoaxanh and to develop the management system to solve logistics issues.

Cement Industry: Harder and Harder

According to Vietnam National Cement Association (VNCA), domestic consumption reached 59.35 million tons, up 7% compared to 2016. In particular, the volume of Vicem group accounted for the largest proportion (35.9 %) of the total consumption and had the highest growth rate (11%) compared to the remaining two groups (affiliate group and other cement companies). Thanks to the implementation of many infrastructure and new real estate projects, domestic demand expected to remain strong in 2017. In contrast, the export volume decreased by 2% YoY and had no signs of recovery due to (1) fierce competition with Thailand and China and (2) application of cement export tax of 5% and no VAT refund for export making price competition more difficult than before.

PGI – Result Updates

In 2016, the company's gross premium increased by 11.3% YoY for the first time since 2012. Motor vehicle insurance accounted for 44% of its toal gross premium followed by 18% from hull and P&I insurance and 12% from personal health & accident insurance.

NT2: Business Update

We also learned from the proposal that its guidance for 2017 NPAT is VND672 billion, resulting in a cash dividend of 25%.  It is likely that it will be cautious when making its 2017 plan due to its first major maintenance, which it plans to complete during Oct 2017, Although they plan to produce 4.5 billion kWh in 2017 (equivalent to 2016), the plan for profit is 8% lower.

Fertilizer Industry Outlook: Waiting for New Opportunities

Vietnam’s fertilizer industry faced many challenges in 2016, including domestic demand decreasing, northern urea producers stopping operations, lower selling prices, increased competition, and the unfavorable tax policies.  These non-positive factors have been reflected in the business results of some companies in this industry.  In 2017, the price and output of fertilizers recovered, and the addition of NPK projects and new policies are expected to improve the outlook of this industry.

Textile Industry Prospects for 2017: Optimism Due to Recovery in Demand

Export turnover growth in Vietnam has suffered a slowdown in growth since 2015, along with the weak global textile demand. The main reasons for this included the following: (1) the slowdown in economic growth in US, Japan and the EU, which are the largest markets for Vietnam’s textile products and (2) orders shifting to other rival markets including Cambodia and Bangladesh because of favorable exchange rates and tariffs.

PAC: Opportunities Have Passed/Stable Outlook in 2017

Dry Cell & Storage Battery JSC (PAC-HSX) had a successful year in 2016 as a result of strong demand,  low material prices, and the stable exchange rate. Although there is still positive demand ahead in 2017 due to the double digit growth in automobile sales, there are still other factors that will not support PAC’s business in the future. The increase of input prices will force PAC to make some adjustments to ensure the stability of its business. On top of this, the Vinachem divestment is unlikely to take place this year. However, information relating to this divestment’s probability, as well as the enthusiasm relating to its new strategic partner, can help PAC’s valuation remain high (~15x PE). Please refer the content below for more details:

PGS – Stable Growth

On 16/02/2017, RongViet Research had a meeting with the representative of Southern Gas JSC (PGS – HNX). 2016 was a transformation period for PGS, as the company completed its divestment in CNG, which gradually improved its financial situation.  Moreover, GAS plans to increase its ownership of PGS to 51%, which will allow PGS to capture more market share and to record higher growth.

Update on 2017 Prospects for Several Construction Stone Companies

The stock price movement for the majority of construction stone companies has recovered quite well amid the market’s continued positive performance. Specifically, the share prices of C32, NNC, KSB and DHA increased by 13.6%, 8.5%, 4.6% and 4.3%, respectively.  This recovery came shortly after these stocks reaching a 1 year low during the beginning of this month. The main reason for this increase was the previous strong correction of these stocks, strong fundamentals for these companies, and rumors relating to the expansion of Nui Nho and Tan Dong Hiep Mine. We would like to show a quick update on 2016 earnings results and the 2017 outlook for these enterprises.

CNG – Negative Prospects for 2017

On 14/02/2017, oil & gas analyst from RongViet Research has a meeting with the representative of CNG Viet Nam Joint Stock Company (CNG – HSX). 2016 business results did not show remarkable growth. 2017 will be the period that PVGAS has several changes in price mechanism for gas distribution companies. As a results, it will negatively impact on the performance of CNG.

Automotive retail industry outlook in 2017: Twilight?

The automotive retail sector has delivered positive growth in recent periods.  In 2017, we believe consumption growth is expected to continue to rise due to the increase in disposable incomes and the increased demand for transportation. At the same time, 2017 is considered as a prominent year due to the significant changes in policies that will protect Vietnam’s developing automotive industry from the pressure of FTAs. Furthermore, the wave of car imports from ASEAN countries will force operators and executives to focus on adapting to meet the new competition from imports. Our view based on 3 reasonings below: