High infrastructure investment need in Dong Nai province

Dong Nai, the largest province (6,000Km2) in Southeastern Vietnam’s important economic area, sits in the strategic location considered the main gate for this whole area and HoChiMinh City via National Highway 1A. In addition, the province is blessed with a river system which facilitates the cost effective waterways transport mode from center of mainland going downstream towards seaport via Dong Nai port (Dong nai river); GoDau, Phu My, Thi Vai port (Thi Vai river) and Long Tau canal. So, large lank bank for industrial – residential development which is geographically advantaged would serve as Dong Nai’s competitive advantage in attracting FDI.

REE - Opportunities open as earnings slide

For the six-month period ended June 2016, REE reported net revenue up by 4.45yoy while NPAT down by over a third from a year earlier, driven by the enormous foreign exchange loss recognized by PPC, its largest affiliate company by investment value. The retreat of El Nino will a big support to the business of TBC, TMP and Song Ba Ha Hydropower. In addition, there is a possibility that PPC will have extraordinary profits in H2 from the reversal of provision for Quang Ninh Thermal Power and the recovery part of PL1's power sales to EVN in 1H2016.

HSG’s new project – A bold dream

2015-16FY NPAT could be higher than estimation because of the newly announced anti-dumping duties on Chinese imports. Thanks to HSG’s brand recognition and distribution network, sales volume went up in line with capacity increase. HSG is also setting up new production lines including steel pipes and plastic pipes, as well as other steel coating lines running at full capacity. Thus in 2017, 23% increase in volume is likely to be achieved and exceeded. Any lines that operate sooner than scheduled may bring considerable increase in quarterly sales.

September Strategic Report: Stock-picking prevails as liquidity falls

Biased by large stocks, VNIndex and HNIndex have become less representative of the prevailing sentiment in the market. VNIndex being at its five-year high on top of the faltering liquidity should put a great many stocks at a disadvantage. As the likelihood of a correction runs higher, investors should consider realizing profits in those stocks that have gained substantially. Though the view of September’s stock market is not very positive, we believe there are still opportunities.

FPT – Company Report

FPT is one of the leading technology enterprises in Vietnam with 4 main segments consisting of Technology, Telecommunication, Distribution & Retail and Education. At this moment, FPT is restructuring the investment in several subsidiaries. Specifically, FPT intends to divest from Distribution & Retail segment (FPTRetail and FPTTrading) and demonstrates the willingness to increase the ownership in Telecommunication segment (acquire the stocks from SCIC). If this scenario happens this year, since 2017, FPT will have major fundamental transformation in core businesses and financial statistics. We believe that these changes will positively affect FPT’s business activities in long-term when Retail segment is facing competition and Telecommunication has optimistic prospect when optical fiber cablization completes.

Hanjin shipping line case and possible impacts

Last weekend, news on Korean shipping line Hanjin to file for bankruptcy has certainly rippled Vietnamese listed seaport stocks. However, as far as we concerned, the actual impact is rated insignificant given the small amount of Hanjin cargo handled at those listed seaports.  

SKG – Leapfrogging to success

SKG is still considered by RongViet Research as a good fundamental and stable company with monopoly power in transportation segment in Phu Quoc area. In the future, under the upcoming competition through heavy investment from competitors, we believe that SKG could still maintain the leading position with the plan to (1) invest in new boats for existing routes, (2) open new ferry route for Ha Tien – Phu quoc and (3) open new route for Soc Trang – Con Dao. Gross profit margin and operation capacity could decline during the early period. However, in long-term, SKG is confident in core businesses and service capability that help company to capture more market share in Southern transportation route.

HBC- Ample room for improvement

Hoa Binh Corporation (HBC-HSX) has concluded a remarkable half-year, with growth rates of 74% and 213% in revenue and NPAT from a year earlier in 1H2016. It is worth mentioning that HBC’s gross profit margin expanded significantly to 9.8% in the last quarter versus a flat 6% throughout 2015. Should the gross margin remain at this level for the rest of the year, HBC will likely exceed is 2016 NPAT target. Except for T2 Terminal of Tan Son Nhat Intl’ Airport and Vietinbank Tower, the pace of all projects was in line with expectations in the last six months. In fact, Holm Residences and the basement of SG Center brought higher revenue than expected thanks to faster construction.

SAM – The transformation is almost complete

Our analyst had a meeting last week with SACOM Investment & Development JSC (HSX –SAM). Being one of the first companies to list their shares, SAM has witnessed the ups and downs of both the stock market and its own businesses. By a restructuring plan first mentioned in late 2014, SAM has been transforming from a trader-manufacturer to a holding company. Besides its cable business, SAM has been actively expanding into residential and hospitality real estate and tourism. Early this year, SAM made the news when its acquired 29% of Phu Tho Tourist in the its IPO.

The impact of a downturn in export growth on Vietnam economy

According to GSO, exports is estimated at VND112 bn, increased by 5.5% over the same period, this result is far from the target set at the beginning of the year (~10% ). At the same time, FDI sector, which is key player in term of trade activities, recorded an increase of only 8.4%, lower than the double-digit growth of previous years. With exports/GDP is around 80%, a downturn in export growth has impacts on growth of production activities of Vietnam's economy. The following analysis will evaluate the negative impacts of current trend under the view of some sectors.

Vietnam seaports system - Cargoes volume carried on strong momentum

Latest figure from Vietnam Maritime Administration (Vinamarine) showed sustainable growth in cargoes via Vietnam seaports. For the eight months to August 2016, total cargoes volume handled estimates to reach 306 million tons (up 10%yoy) – completed 66% guidance. Of which, containerised goods, making up 1/3 of the total by tonnage, recorded much faster growth rate of 19%yoy to 8.8 mil Teus. That is mainly driven by the “export headed” containers which saw a 16% yoy growth (FY2015 rate: 12%).

PGS – Quick Update

Last week, RongViet Research had a meeting with Southern Gas JSC’s representative (PGS – HNX). In Q2/2016, PGS’s revenue and PAT achieved VND 1,274 billion (+20.5% yoy) and VND 23 billion (-42.1% yoy) respectively. Gross profit margin experienced significant improvement with 19.6%, increased from 17.8% of the same period last year. For 1H2016, with extraordinary profit from CNG divestment (PGS possessed 55.2% of total shares), PAT dramatically increased by +256.0% yoy, equivalent to VND 292 billion.