FDI and FTAs - Two key drivers for Vietnam trade growth in 2015

As many Asian countries saw a rapid decline in trade activities, Vietnam, in contrast, has witnessed various highlight spots in both trade activites as well as economic growth. According to the General Department of Customs, export - import experienced a positive growth in 2015, corresponding to 8.2% and 11.6% yoy. Thus, these numbers reached USD162.11 billion and USD165.65 billion US dollars respectively, equivalent to USD 3.54 billion for trade deficit.

GSP – one step back, two steps forward

Last week, Gas Shipping JSC announced an important change to the firm’s accounting policy regarding “vessel docking expense”. Accordingly, from October 1 2015, the firm would start to make expense provision for scheduled docking of its vessel fleet (excluding vessels co-owned by Nhat Viet subsidiary) instead of carrying on the regime of allocating docking expense already incurred. As a consequence, GSP’s 4Q2015 earnings is likely to suffer as (1) the firm has to expend the entire unallocated accumulated docking expense as of the end of 3Q2015 (about VND10.7 billion) and (2) simultaneously make an expense provision for docking activity due to take place in the next 2.5 years. Given that assumption, we forecast the firm’s 4Q2015 earnings would see insignificant change in revenue as to preceding quarter but on the contrary suffer a drastic fall in PAT to only VND1-2 billion (down 88% qoq). However, FY2015 is still regarded a milestone year for GSP given its first time breaking the VND1,000 billion in revenue mark and recording impressive growth in PAT of VND53 billion (up 67% yoy) for the whole year.

HSG - 2014-2015FY updates

At the end of Hoa Sen Group’s financial year on September 30^th 2015, the company realised VND 17,447 billion revenue and VND 653 billion NPAT respectively, 16% and 59% higher than those of the previous financial year. HSG’s sales volume exceeded 1 million tons, increasing 26% y.o.y, as the gross margin inclined 3.1 percentage points to 14.77%. The company remained the first ranking in terms of HDG market shares (38.2% in 11M2015) and came second regarding steel pipe market share (19.1%).

HPG- Company report release on January 15th 2016

The domestic steel industry has been suffering continuous difficulties from China’s steel dumping. In particular, construction steel has been greatly affected, as numerous producers and distributors reported plummeting profits or even losses due to mounting inventory and decreasing prices.

Being the leader firm in the industry, Hoa Phat Group JSC (HPG-HSX) has the ability not only to compete against tax-evading imports but also to benefit from the growth in domestic construction demand in order to expand its market share. Owning a completed production process and a nation-wide distribution channel, HPG has advantages in competing in price and stabilising its profitability.

CHP - 2015 Earnings result

Due to low water supply in Dec 2015, CHP’s trading volume was a mere 58.3 mn kWh, down by 48% yoy. Consequently, total sale volume in Q42015 was only around 273 mn kWh (-12.5%, yoy) and corresponded revenue was more than VND297 bn (-7.2%, yoy). For the whole year 2015, total volume reached 652 mn kWh (+14%, yoy) and electric sales was VND726 bn (+16^, yoy).

SVC – Growth driver expected from car services segment

Expecting a positive 2015 Earnings Result. According to VAMA, for 11M2015, distributed brands by SVC, which included Ford, Toyota, GM, Hino, Hyundai, all recorded two digit growth rate. By having big market shares in the above brands, it is predictable that total sale volume of SVC would exceed its annual target. Based on our estimation, SVC could sale over 15.500 cars (not included old cars); up 16% y-o-y.  

Will Vietnam and China stock market turn to diverge?

According to our statistics on correlation between Vietnam market (VNIndex) and China market (Shanghai Composite Index - SHCOMP Index), we realized that long-term correlation between the two markets was significant but in short-term this correlation was unstable. This means that in short-term, Vietnam market sometimes has positive correlation coefficient with China market but sometimes has negative correlation coefficient thanks to impacts of some domestic factors.

TDC - 2015 Earnings update

Binh Duong Trade and Development JSC (HSX - TDC) announced yesterday the BOD’s resolution on the estimated business results of FY2015 as well as the guidance for F2016. The document stated that TDC will record VND1,582 billion of revenue, -9.3% yoy and 110 billion of profit after tax (PAT) for FY2015. Those numbers were pretty far-fetch at first sight given that TDC posted minus VND59.4 billion of PAT for the nine months to September. As with most companies under the umbrella of Becamex IDC, however, TDC’s Q4 earnings made up almost the entire amount of annual earnings. For 2016, the firm targets 2.369 billion of revenue, +49% yoy but the PAT guidance is roughly unchanged from 2015’s estimate. Dividends are said to be 10% of share capital or greater for both financial years.

CVT - 2015 Earnings update

Thanks to optimistic recovery of real estate and construction activities, earnings results of many companies in building material sector are expected to have a growth in 2015. In our Advisory Diary dated December 25, 2015, we mentioned some prospects of CMC JSC (HNX – CVT), an enterprise benefiting from the rebound of construction material’s demand.

INFOGRAPHIC: 2015 REAL ESTATE MARKET

 2015 was a much celebrated year for Vietnam's real estate market as it marked the infliction point where the market first recovered after a 5-year crisis. Thanks to a low interest rate environment, banks' accommodative stance towards mortgage lending on top of the government's many supports, transactions boomed in almost all segments of the housing market. Having learnt a lot from the hard time, real estate developers offered a better diversity of housing products where end-users now have a equal footing with that of real estate investors and speculators. As the results, liquidity have been steady on the rise despite the fast-growing number of new launches.

SKG - 2015 Earnings update

In 2015, the number of tourists visiting Phu Quoc grew by 58.1% (yoy), reaching 1.66 million, with domestic tourists accounting for  nearly 90% of the total volume.  A remarkable growth of Phu Quoc tourism was in compliance with the development of economic activity as well as positive business performances in this island. In particular,  Superdong Kien Giang high speedboat JSC (SKG-HSX) is a representative example, in which 2015 earnings result  recorded optimistic growth thanks to the rapid development of Phu Quoc Island as well as a strong decline in oil price.

PXI – Uncertain business prospects

Recently, Rongviet Research analyst had a meeting and company tour to Petroleum Industrial & Civil Construction JSC (PXI – HSX).

PXI is one of three subsidiaries of Petro Vietnam Construction JSC (PVX – HNX) that have been listed on Vietnam stock exchanges. In contrast to mechanical engineering companies (PXS and PXT), PXT focuses more on civil construction, infrastructure and real estate investment along with building and urban businesses. However, PXI’s prospects have been uncertain due to the dependence of core business on industrial projects and investment efficiency taking a long time to make the impact on business results. In addition, with the quite real estate market in Vung Tau, PXI’s projects could not be notable aspects for company development at this moment.