05-11-2025VNINDEX1660.488.500.51% HNXIndex266.580.670.25% UPCOM115.790.510.44% VN301906.468.750.46% VN1001821.249.140.50% HNX30577.712.900.51% VNXALL2859.5913.850.49% VNX503156.9717.520.56% VNMID2354.879.430.40% VNSML1542.550.020.00% CTG – Notes from 2024 EGM and Q3-2024 & 2024 Forecasts Update
18-10-2024
: CTG
: Banking
: Tung Do
Tags:
- On October 17, CTG successfully held an Extraordinary General Shareholders' Meeting, during which two additional members were elected to the Board of Directors for the 2024-2029 term
- For Q3-2024, we forecast Net Interest Income (NII)/Total Operating Income/Consolidated Profit Before Tax (PBT) to grow by 19% YoY/12% YoY/42% YoY, respectively. The key expected drivers for PBT growth include (1) a 5basispoint (bps) expansion in NIM from a low base in the same period, (2) credit growth of approximately 16% YoY (or 9% year-to-date), and (3) a 7% YoY reduction in credit risk provisioning costs. Credit costs are also expected to decrease by 12% compared to the previous quarter, thanks to the partial reversal of provisions set aside for non-performing loans (NPLs) in Q2-2024, which have since been controlled and reclassified as standard loans. As of the end of Q3-2024, the NPL ratio before CIC adjustments stood at 1.4%
- For 9M-2024, PBT is estimated to reach VND 19.9 trillion, up 14% YoY, fulfilling 67% of the current 2024F PBT forecast
- For the full-year 2024F projection, we have revised our forecast downward by 5%, reducing the expected PBT to VND 27.9 trillion (+12% YoY) from the previous estimate of VND 29.5 trillion (+18% YoY). This adjustment is based on: (1) a slight reduction in consolidated credit growth for the year from 14.4% to 13.8%, as the credit growth recovery remains unstable, and (2) a 7 bps decline in NIM to 2.92%
- We have adjusted CTG's target price downward by 3% to VND 40,400 per share, reflecting the revisions in our updated forecast. With a total expected return of 11% based on the closing price as of October 18, 2024, we maintain our ACCUMULATE recommendation for CTG
Decoding the 1,200+ of VN-Index after more than 20 years
17-10-2024
: VDS
: Financial Services
: Hung Le
Tags:
- After the 2007-2009 financial crisis, international stock indices such as the Dow Jones and S&P 500 showed strong growth, while the VN-Index hovered around 1,000 points for more than 20 years.
- The VN-Index reached a high P/E valuation (35 times), reaching an all-time high of 1,155 points in March 2007, but investment returns were not attractive, leading to a correction to more reasonable levels after the 2008 crisis.
- The investment performance of the VN Index has been correlated with the S&P 500 since 2009, although the S&P 500 has outperformed since 2016 due to a higher P/E valuation.
- The valuation range and EPS growth trend of VN Index maintained around +8.4%/year or more implying an expected return of over 14.2%/year in the long term (Table 1).
Update on Vietnam’s trade in 9M2024
16-10-2024
: VDS
: Macroeconomics
: My Tran
Tags:
- Trade maintains a high growth rate in Q3/2024.
- Agricultural, forestry, and fishery exports strengthen their position in Vietnam's export structure.
- Q4 exports may maintain double-digit growth, around 10-13%
EraBlue – MWG's ambitious game needs more proof
15-10-2024
: MWG
: Retailing
: Hung Nguyen
Tags:
- Compared to the most recent “going abroad” in Cambodia, MWG’s “Erablue” move to cooperate with the large ICT retail chain Erajaya, aiming to penetrate the Indonesian CE market makes more sense when this market is at a stage when it is likely to explode in the near future and has much larger potential market size than both Vietnam and Cambodia.
- The “necessary” conditions for Erablue’s success are already there (market factors), however, we believe that Erablue needs additional “sufficient” conditions to compete with traditional mom-and-pop stores, other CE retailers, and especially “online platforms” – currently growing rapidly in Indonesia, to become the “second Dienmayxanh”.
- We believe that Erablue has the potential to capture ~70% market share in the CE pie from other small stores/retail chains, thanks to DMX’s successful formula and the operational experience from Erayaja. However, the chain's growth depends heavily on the speed of converting purchases to e-commerce platform, which have price advantages and are growing "fast" in CE field, similar to the Vietnamese market.
- We recommend that investors closely monitor the pace of store openings and the chain’s specific quarterly financial reports to accurately assess the potential of the Erablue and the level of impact on the overall valuation of MWG (accounting for 45% of the chain's shares)
Industrial Park - Development orientation for ready-built factories/warehouses
14-10-2024
: LHG, SIP
: Industrial Land RE
: Thach Lam Do, CFA
Tags: LHG SIP
- We observe stable growth in demand for ready-built factories and warehouses (RBFs/RBWs), a sector that industrial park developers may increasingly focus on for long-term expansion. According to JLL, from 2019 to 2023, the supply of RBFs/RBWs recorded an average annual growth rate of 14.5%, with a total leasable area increasing by 6 million sqm. By 2027, the total leasable area is expected to reach 19 million sqm, with a projected average growth rate of 8% per year between 2023 and 2027.
- For Vietnam’s industrial park developers, expanding into RBFs is also a strategy to capitalize on available industrial park land, though it remains on a small scale. We believe this development model will attract more attention from industrial park companies in the near future due to its key advantages: 1) Providing stable cash flow; 2) Suited to small and medium-sized customers; 3) Meeting the high demand for RBWs, particularly serving e-commerce activities in Tier-1 cities like Hanoi and Ho Chi Minh City.
- Among companies in our watchlist, we see several have aligned their investment strategies with this business segment to maximize the potential of their industrial park land. In 2024, LHG completed the construction and has begun leasing RBFs at lot 3A 26-19 (LH3 Industrial Park) and plans to build additional RBFs at lot 3A and high-rise RBF in 2025, raising the total leasable area to 136,800 sqm (+20% YoY). SIP is partnering with CBRE to develop a system of RBW and a logistics center at LMX03, which will enhance LMX03’s business performance in the coming years.
Textile Industry – Profit faces challenges in highly competitive context
11-10-2024
: TNG, TCM
: Textile & Garment
: Quan Cao
Tags:
- Vietnam's textile industry is facing intense competition, not only from other countries but also among domestic companies.
- The room for margin exansion is shrinking due to increasing competition.
- In the long term, growth opportunities will arise for companies that adopt advanced technologies to improve productivity or focus on high value-added products such as designer goods
Rubber prices – supply shortage creates a driving force for price anchoring in the medium term
10-10-2024
: DPR, PHR
: Industrial Land RE
: Giao Nguyen
Tags:
- In early October, rubber prices continued to increase and peaked after 13 years and reached VND73.6 million /ton (RSS3) (+96.7%YoY, +10.3%MoM). The main reason comes from supply shortages in key manufacturing regions in Southeast Asia. We believe that the trend of world rubber prices is expected to remain at a high level when the supply is forecasted to remain in short supply; the shortage is forecast to extend to 1H2025.
- For the Vietnamese market, output in 2024 is forecast to decrease only slightly by 3.5% because rubber-growing areas are less directly affected by the storm. Rubber prices are expected to continue to be anchored at a high level (over $1,600/ton) and react to the supply and demand situation of the world rubber industry.
- We believe that DPR and PHR's core business segments are expected to benefit. In which, PHR's revenue and profit after profit in 3Q2024 were VND 497 billion and VND 120 billion, respectively, with revenue from rubber reaching VND 484 billion (+88%YoY). DPR's revenue and profit after tax in 3Q2024 are estimated at VND 358 billion and VND 60 billion, revenue from the rubber segment contributed VND 313 billion (+34%YoY).
The pharmaceutical retail market — Long Chau leads the market
09-10-2024
: FRT
: Retailing
: Quyen Nguyen
Tags:
- There are approximately 50,000 pharmacies in Vietnam, with mom & pop drugstores dominating the market, holding about 85% market share. However, modern pharmacy chains, led by Long Chau, are continuously expanding their scale.
- We anticipate that competition in the pharmaceutical retail market will increase in the near future. However, we believe that Long Chau will continue to lead as the top modern pharmacy chain.
Power Sector — Favourable cycle to support hydropower generation companies in 2025
08-10-2024
: PC1, REE
: Utilities
:
Tags: REE PC1
- System-wide electricity consumption achieved stellar growth in 9M2024, driven by the recovery of industrial production activities and increasing residential electricity demand. We expect electricity demand to continue growing in 2025, alongside an improvement in the financial performance of power companies in general.
- For hydropower generation companies, we remain optimistic due to (1) increasing sales volume in 2025 thanks to the ongoing La Niña cycle, and (2) stable or potentially higher average electricity prices in 2025, given the possibility of improved financial conditions for EVN.
Fertilizer Industry – A Perspective on Global Demand and Short-term Selling Prices
07-10-2024
: DPM, DCM, BFC
: Fertilizer
: Hien Le
Tags:
- The domestic fertilizer market has become saturated with supply exceeding demand. As a result, companies are shifting their focus towards exporting fertilizers to global markets. However, export growth is expected to come from capturing market share from other countries rather than relying on natural growth, as global supply for each type of fertilizer is projected to exceed demand.
- Regarding fertilizer selling prices, according to World Bank data, the average selling prices of fertilizers are expected to decrease in 2024 and 2025 as supply is expected to increase due to India and Brazil expanding production capacity to reduce import demand, while China continues to restrict exports.
- Currently, domestic Urea prices remain stable at 10,000 VND/kg and are expected to slightly increase by 5%-10% during the Winter-Spring crop season as agricultural demand returns. However, the increase will not be too significant as global Urea prices remain stable in the range of 300-350 USD/ton. Domestic Urea fertilizer prices correlate with global fertilizer prices with a correlation coefficient of 0.9.
Vietnam chilled-fresh meat market – Significant long-term potential but difficult to realize in
04-10-2024
: MML, VSN
: Food, Beverage & Tobacco
: Hung Nguyen
Tags:
- Euromonitor predicts that growth in the meat market will slow down to a CAGR of 4.1% over the period 2024-28, as rising consumption of new types of meat such as beef and goat will not be enough to offset saturation in consumption of pork and poultry, the main products consumed in Vietnam
- Although overall market growth may be limited, the potential for a shift in consumer preferences from hot-fresh to chilled-fresh meat in Vietnam continues to attract major brands. However, the market still faces obstacles, including long-standing consumer habits of buying hot-fresh meat in traditional markets and the higher price of packaged chilled-fresh meat in retail chains
- The pace of development of modern supermarket channels, along with the ability to raise public awareness of the benefits of chilled-fresh meat, is key to unlocking the long-term potential of this market, creating investment opportunities for chilled-fresh meat stocks such as MML and VSN
- Investors should also pay attention to the market share growth of supermarket chains associated with chilled-fresh meat producers, such as Co.op Mart (VSN), BHX, Lan Chi, Go! (CP, G) and Winmart (MML) when making investment decisions in these stocks. Due to fierce competition, a meat brand will typically only distribute through a few specific supermarket chains it has developed
VPB – Expectation of Maintaining Strong Profit Growth in Q3 2024
03-10-2024
: VPB
: Banking
: Tung Do
Tags:
- For Q3-2024, we estimate consolidated pre-tax profit (PBT) to grow 80% YoY, reaching VND 5.6 trillion. This is based on expectations of a significant 90 basis points YoY increase in consolidated net interest margin (NIM) to 5.8%, as VPB's NIM hit its lowest point in the same period of 2023. Consolidated credit growth is projected at 17.4% YoY (or 9.5% year-to-date). Consequently, net interest and total operating income are expected to grow 37% YoY and 38% YoY, respectively, providing VPB with additional resources to increase provisions in the year's second half prudently. At the same time, VPB is expected to record high-profit growth, benefiting from a low base in 2023. Provision expenses are estimated to rise 22% YoY to approximately VND 6 trillion but will decrease by about 28% from the previous quarter, as VPB repurchased VAMC bonds in the prior quarter, which temporarily increased provisioning pressure.
- For the first nine months of 2024, consolidated PBT is projected to reach VND 14.3 trillion, up 72% YoY, achieving 62% of the full-year PBT target. Of this, the bank’s standalone PBT for the nine months is expected to reach VND 13.7 trillion (up 25% YoY), fulfilling 66% of the full-year target. Regarding FE Credit, we forecast the consumer finance company to report a profit of more than VND 200 billion in Q3-2024, bringing cumulative PBT to negative VND 108 billion (full-year target of VND 1.2 trillion).
- For the 2024F forecast, we have revised down our consolidated PBT estimate by 8% from our previous projection to VND 19.0 trillion (+73% YoY) from VND 20.7 trillion (+88% YoY). This adjustment is based on a downward revision of the full-year consolidated credit growth assumption from 23% to 16%, and an increase in the credit cost ratio from 3.3% to 3.6%, reflecting our expectation that VPB will adopt a more cautious approach in managing risks for the remainder of the year.
- We have slightly reduced VPB's target price by 3% to VND 22,500 per share. With an assumed cash dividend payout ratio of 10% over the next 12 months (corresponding to a payout ratio of 54%), the expected total return is 17%. We reiterate our recommendation to ACCUMULATE VPB.
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