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% Update on trade growth in August 2024
16-09-2024
: VDS
: Macroeconomics
: My Tran
Tags:
- The trade balance hit a record high in August 2024.
- Electronics imports and exports can no longer maintain a steady growth rate.
- Trade growth may slow down in the first half of 2025
DBD – Expecting better performance in 2H2024
13-09-2024
: DBD
: Pharmaceuticals, Biotechnology
: Quyen Nguyen
Tags:
- DBD recorded net revenue of VND 433 billion (+5% YoY, +13% QoQ) and NPAT of VND 72 billion (+1% YoY, +8% QoQ) in 2Q2024. Although the ETC channel saw slow YoY growth, it exhibited considerable growth on quarter-over-quarter basis, driven by localization policies. Meanwhile, the OTC channel remained flat QoQ.
- For 1H2024, net revenue reached VND 817 billion (+3% YoY), while NPAT stood at VND 140 billion (-1% YoY). The ETC channel contributed VND 516 billion (+10% YoY), and the OTC channel generated VND 273 billion (-3% YoY). The slight decline in NPAT was attributed to rises in the COGS/revenue ratio and in the SG&A expenses/revenue ratio.
- We expect improving business results in 2H2024 compared to 1H2024, supported by favorable policies and seasonality.
Vietnam Sugar Market – Government support keeps domestic sugar prices high
12-09-2024
: QNS
: Sugar
: Hung Nguyen
Tags:
- As of August 2024, the global raw sugar price reached USD0.41/kg (-23.2% YoY), and is unlikely to resume its upward trend in 2024 due to a more balanced global supply-demand situation. This is largely attributed to the recovery of sugarcane production in Brazil, the world's largest sugar producer and exporter, during the 2023-24 crop season.
- Vietnam, a major sugar importer, has implemented several protective policies for its domestic sugar industry. Combined with an estimated 5% YoY increase in demand this year, these measures have kept domestic sugar prices high. As of August 2024, An Khe sugar factory's price stood at VND 20,000/kg (-3.8% YoY). With continued government support, we expect domestic sugar prices to remain relatively stable for the remainder of 2024 compared to the closing price in August.
- We note the correlation between domestic sugar price movements and the stock prices of sugar companies such as QNS is 92%. Therefore, we recommend investors monitor domestic sugar price fluctuations closely to make decisions regarding their short term and long term investments in sugar industry stocks.
Energy sector – Expecting strong earnings momentum for hydropower plants in 2025
11-09-2024
: POW
: Power
: Thang Hoang
Tags:
- We expect total electricity consumption to increase 9.5% in 2024 and 10% in 2025, which is driven by both industrial and residential demand for energy. We believe that the operation of power plants to improve in 2025.
- We maintain a positive view on hydropower companies in 2025 with the expectations of (1) strong volume growth due to La Nina cycle, and (2) the average electricity selling price for hydropower plants would hardly decline, while that could increase once EVN improve its financial performance.
HSG – Impressive business results, supported by the domestic market
10-09-2024
: HSG
: Materials
: Dung Ma
Tags:
- Revenue and gross profit surge: HSG reported revenue for Q3 of FY 2024 at VND 10,840 billion (+17.2% QoQ, +25.4% YoY), with gross profit reaching VND 1,337 billion (+19.7% QoQ, +49.9% YoY), as the gross profit margin improved to 12.3%. By the end of Q3, revenue reached VND 29,162 billion and gross profit reached VND 3,404 billion, showing a strong increase of +74.03% YoY. Net profit after tax stood at VND 695.62 billion, a significant improvement from the net loss recorded in the same period in 2023, achieving 231% of the annual business plan.
- Domestic volume growth: Domestic coated steel consumption reached 175,773 tons (+50.7% QoQ, +42% YoY), while total consumption reached 527,267 tons (+15.1% QoQ, +36.7% YoY). By the end of Q3, total consumption reached 1,446,432 tons, growing +15.8% YoY.
- Pressure from export markets: we anticipate that challenges in the export market will lead to a -26.4%QoQ decline in consumption volume. However, the domestic market is expected to continue its recovery, driven by demand from the industrial park sector and a gradual rebound in the residential real estate market. Accordingly, total revenue is estimated to reach VND 8,808 billion (+7% YoY), with gross profit projected at VND 956 billion, reflecting a gross profit margin of 10.8%. Net profit after tax for Q4 FY 2024 is forecasted to reach VND 136 billion (-69% YoY).
- We employed two methods to value the stock: FCFF and P/B, with a 70% weighting on the P/B method, the fair value of HSG is determined to be VND 23,500 per share. This corresponds to a total expected 12-month return of 17.6% based on the closing price as of September 9, 2024. In the short term, HSG shares are facing negative pressure due to declining HRC prices and a narrowing gap between domestic and international steel prices. However, given its discount to the target price and its leading position in the domestic coated steel market, investors may consider short-term trades in the stock when the price of its key raw material, HRC, recovers.
CTG – Positive signals for the second half of the year
09-09-2024
: CTG
: Banking
: Tung Do
Tags:
- 1H-2024 pre-tax profit (LNTT) increased by 3% YoY, despite a 15% YoY growth in total core operating income (excluding net gain from other activities). This modest growth was due to a significant 20% YoY increase in provisioning expenses, following a large new bad debt in Q2-2024 (net bad debt formation increased by nearly VND 15 trillion during the period). However, the positive news is that this bad debt was brought under control and reclassified to standard debt in July
- We have revised our forecast for 2024 pre-tax profit upward by 3% to VND 295 trillion (+182% YoY), based on expectations of reduced provisioning pressure, given the positive signs in CTG's asset quality, such as a decline in bucket 2 debts and adjusted net NPL formation in Q2-2024
- We foresee multiple growth drivers for CTG in the second half of 2024, including a promising credit growth outlook compared to last year (most credit disbursements in 2023 occurred at the end of the year, whereas this year’s credit growth has been relatively stable throughout the months this year), effectively controlled operating costs, bad debt recovery, and reduced credit cost pressures. Our current pre-tax profit forecast suggests an approximately 32% YoY growth for 2H-2024
- We have raised our target price for CTG by 12% to VND 41,500, reflecting an expected total return of 17% as of September 9, 2024. We reiterate our ACCUMULATE recommendation
Seafood Industry – Long-Term Export Prospects for Pangasius and the Shrimp Sector in the US Market
06-09-2024
: VHC, FMC
: Fishery
: Hien Le
Tags:
- According to the July 2024 report by the Organisation for Economic Co-operation and Development (OECD) on the 10-year outlook for 2023-2033, the global average per capita seafood consumption for 2021-2023 was 20.85 kg/person/year. Among regions, Asia had the highest seafood consumption and is expected to see the highest growth by 2033.
- Although the growth in per capita consumption is slowing, we note that pangasius is gradually gaining market share from tilapia, and since pangasius is a farmed product, it will increasingly replace wild-caught seafood. Therefore, we expect pangasius export market share to gradually increase across markets. We estimate that the compound annual growth rate (CAGR) for total export volume in the US/EU/China markets for 2023-2028 will be 10%/2.2%/9.3%, respectively. Regarding fish prices, we expect the CAGR for pangasius prices during the stabilization period to match inflation growth, approximately 2%.
- The shrimp industry in the US continues to face fierce competition; however, Vietnam has gained market share from Ecuador, thanks to the growth in breaded shrimp and frozen headless shrimp. This is due to Vietnam significantly lowering the price of headless shrimp while maintaining the lowest prices for breaded shrimp compared to other countries. In the long term, value-added shrimp producers like FMC are expected to remain competitive in the US market.
VSC – Strong profit growth due to core business
05-09-2024
: VSC
: Seaports
: Quan Cao
Tags: VSC Seaport
- In 6M2024, container throughput reached 562,000 TEUs (+15% YoY), with volumes at VIP Green, Green, and Nam Hai Dinh Vu (NHDV) ports recorded at 320,000 TEUs (+6% YoY), 135,000 TEUs (-3% YoY), and 107,000 TEUs, respectively.
- In 6M2024, revenue and PBT stood at VND 1,304 billion (+31% YoY) and VND 203 billion (+93% YoY), completing 53%/63% of the annual targets and 52%/52% of our projections.
- In July 2024, VSC recovered VND 705 billion from its equity investment in the Hyatt Place hotel project. The capital raised through issuing shares to existing shareholders and the hotel investment project was used to increase its ownership stake to 100% in Nam Hai Dinh Vu port, with the total value of the transaction amounting to VND 3,200 billion (USD 127 million).
- We have revised our projections for 2024F, with revenue and net profit attributable to the parent company forecasted at VND 2,524 billion (+16% YoY) and VND 240 billion (+93% YoY), representing a 5% and 26% increase from our previous estimates, respectively.
- Using the FCFF method (WACC: 12%, g: 1%) and P/B (@P/B: 1.5x), our target price for VSC is VND 21,400/share, implying a total expected return of 16% compared to the closing price on September 5, 2024. We recommend an ACCUMULATE for VSC.
NTC – Fulfilling financial obligations on land is the basis for promoting business
04-09-2024
: NTC
: Industrial Land RE
: Giao Nguyen
Tags:
- In June 2024, Binh Duong province issued Decision No. 1784/QD-UBND on approving the unit price of land to calculate land rent (phase 1) for the Nam Tan Uyen Industrial Park (NTU Industrial Park) 3 project in Tan Uyen city. With a total land price determination area of 344 hectares, a term of use of 70 years as of September 13, 2068, the unit price of land used is VND 2.4 million/m2. After deducting the number of years of land use levy exemption from the present time and deducting compensation and resettlement costs, the total land use cost payable for the NTU3 project is VND 2,751 billion, equivalent to the unit price of 10.76 billion VND/commercial ha.
- In the base case for 2024, we estimate NTC's revenue and EBITDA at VND678 billion (+188% YoY) and VND 336 billion (+12% YoY), respectively. Revenue will mainly come from the industrial land lease business, when handing over 90 hectares with an average rental price of 130 USD/m2. EPS 2024 is expected to reach VND 13,996.
- We maintain our BUY recommendation on NTC stock with a target price of VND 299,000/share, for a long-term target based on the potential from the commercialization of NTU3 Industrial Park. Combined with the expected cash dividend of VND 6,000/share in the next 12 months, the total expected return is 53% compared to the closing price on September 4, 2024.
IMP – Growth prospects in 2H2024
30-08-2024
: IMP
: Health Care Equipment
: Quyen Nguyen
Tags:
- In 1H2024, IMP reported net revenue of VND 1,008 bn (USD 40 mn; +10% YoY) and pre-tax profit of VND 161 bn (USD 6 mn; -19% YoY). IMP continued growing its ETC channel (in line with its strategy) and expanded sales to pharmaceutical retail chains. Production volume at high-standard plants also saw an increase.
- However, operational efficiency showed a contrasting trend with revenue, recording a YoY decline, due to: 1) IMP recorded production costs from the IMP4 plant which began operations in 3Q2023; and 2) the input prices of Active Pharmaceutical Ingredients (API) increase 3% YoY.
- We believe investors can expect strong growth in revenue and profit in 2H2024. For 2024, we project IMP's net revenue to reach VND 2,201 bn (USD 87 mn; +10% YoY) and NPAT to reach VND 306 bn (USD 12 mn; +2% YoY).
HPG - Maintaining long-term growth potential
29-08-2024
: HPG
: Materials
: Thach Lam Do, CFA
Tags: HPG
- In Q2 2024, HPG reported revenue of VND 39,600 billion (USD 1.6bn, +34% YoY, +28% QoQ). Construction steel sales volume continued to improve due to demand from public investment projects and real estate developments. However, hot-rolled coil (HRC) sales volume saw a slight decline compared to the previous quarter due to Europe's imposition of HRC import quotas. The gross profit margin in Q2 remained at 13.3%, with gross profit reaching VND 5,247 billion (USD 210mn, +26% QoQ, +64% YoY), supported by stable raw material prices and selling prices. As a result, HPG reached VND 3,320bn profit after tax (USD 133mn) that marked a strong growth of 129% compared to the same period last year.
- In 2H2024, the domestic market is expected to continue its recovery momentum that supports the company's sales volume. With risks arising from the export market (mainly for HRC products), HPG may proactively shift orders to meet the demand of local coated steel companies. Net profit in 2H2024 could reach VND 5,800 billion (USD 232mn, +16% YoY, -6% HoH). For 2024, we maintain our forecast for HPG's net profit at VND 12,000 billion (USD 480mn, +77% YoY), corresponding to an EPS of VND 1,775.
- The construction progress of the Dung Quat 02 project is meeting expectations that allows the plant to begin producing commercial products and generating revenue in Q1 2025. We maintain our expectation that the plant can operate at a relatively high efficiency in 2025 (80% for phase 01, equivalent to 2.2 million tons), with substantial support from the domestic market, especially as the Ministry of Industry and Trade takes measures to protect the domestic steel industry.
- By using a combination of the FCFE and PB methods, the fair value of HPG stock is estimated at VND 34,000 per share that corresponds to a total expected return of +33% (based on the closing price as of August 29, 2024). HPG leads industry position and has strategic investment plans to capitalize on the recovery cycle, as it remains our top pick in the steel sector for the 2024-2025 period.
Bach Hoa Xanh, Winmart: Vietnam's consumer characteristics create considerable medium-term growth opportunities
28-08-2024
: MWG
: Retailing
: Hung Nguyen
Tags:
- Vietnam's current transportation infrastructure is not yet conducive to strong growth in the automotive market in the medium term. Instead, the population is expected to maintain its “dominant motorcycle culture.” This trend favors the proliferation of traditional markets, convenience stores, and mini-marts such as Bach Hoa Xanh and Winmart, rather than the shopping mall/hypermarket model popular in developed countries like Thailand, China, and the United States.
- Regarding the competition between two models: (1) traditional markets and convenience stores, and (2) mini-mart chains like Bach Hoa Xanh and Winmart, we believe that mini-marts, with their appeal to the fast-growing young population (Gen Y, Z) and higher-income office workers who are gradually replacing the older generation (Gen X), have a strong foundation to quickly gain market share from traditional markets and convenience stores in the coming years from the current low base (~7-8%).
- However, traditional markets still hold significant strengths in terms of low prices, a wide variety of goods, fresh products, and their deep-rooted presence in Vietnamese consumer habits. Therefore, we believe that this model will continue to lead the market with a high share of 60-65% in the medium term, a decline from the current 85%.
- Among the mini-mart chains, Bach Hoa Xanh and Winmart have stood out in revenue growth over the past two years, particularly after their comprehensive restructuring campaigns. We expect these two chains to lead the growth ofthe mini-mart segment in Vietnam in the coming period.
16-09-2024
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