Steel industry update: Can coated steel exports remain positive until next year?

• Coated steel export volume emerged to net off the weak domestic consumption in July as expected. Leading coated steel companies, such as HSG, NKG, recorded strong export volume.
• We believe coated steel export volume to Europe will be robust until 2022 owing to favorable trade policies and increasing demand. Besides, competitive production costs can support the profitability in the mid-term. Challenges can come in 2023 as the EU plans to introduce carbon border mechanism.
• Construction steel and steel pipes consumption remained weak due to the pandemic. We expect sales volume will still stable at low level in August, similar to in July. Gross margins in the construction steel segment will decrease in 3Q.

MWG – 7M 2021 Update

• BHX reached EBITDA breakeven in Q2 2021 as stockpiling behavior  drove sales per store (quarterly SSSG: 15%) amid the wet market ban and stringent social distancing measures.
• Solid iPhone sales and big sport events helped TGDD/DMX to post a SSSG of 14% in the quarter.
• While the management is concerned about the outlook of TGDD/DMX chain as weak demand for non-essential products may linger even after social distancing is lifted, they expect the BHX chain to sustain the EBITDA breakeven level for the whole year.
• 7M 2021 revenue of TGDD/DMX and BHX have respectively accomplished 62% and 55% of our full-year forecasts, while net profit reached 66% of the forecast. 2021F projected revenue and NPAT are VND120,332 (11% YoY) and VND4,190 (7% YoY), respectively. Maintaining a BUY recommendation with the TP of VND 148,400.

QNS – Sugar price hike to continue in 2H-FY21

• We maintain a bright look on QNS’s business results in FY2021, driven by the leading role of sugar segment to lift the company’s overall income. On the back of global sugar production deficit and prospect of tax barrier imposed on five ASEAN countries excluding Thailand, we expect Vietnam’s domestic sugar price will keep its solid price hike in 2H-FY21.
• In 3Q-FY21, we estimate QNS’s revenue at VND 2,092 Bn (USD 91 Mn, +13% YoY) and NPAT at VND 279 Bn (USD 12 Mn, +19% YoY). Premised by sugar price increase of 43% YoY, sugar segment will maintain the earning pillar with VND 84 Bn (USD 4 Mn) in NPAT, accounting for 30% of the company’s total NPAT.
• FY2021 estimated revenue and NPAT to be VND 7,607 Bn (or USD 329 Mn, +17% YoY) and VND 1,275 Bn (or USD 55 Mn, +21% YoY) respectively, completing 95% revenue target and 140% NPAT target. Correspondent 2021 EPS will be VND 4,147, and 2021 forward PER will be 11.7x. In which, we estimate sugar segment to reach VND 1,909 Bn revenue (USD 83 Mn, +92% YoY) and VND 446 Bn NPAT (USD 19 Mn), versus VND -9 Bn (USD -0.4 Mn) in FY2020.
• Based on the 50%:50% valuation mix of DCF and SoTP, we recommend to ACCUMULATE QNS share at TP of VND 53,400, equivalent to expected return of 16% with 6% cash dividend yield.

A continued ramp-up in vaccination progress could help HCMC to reopen

• The quicker vaccination progress gives us hope for the future.
• The reopening will be uneven across different provinces.

The quicker vaccination progress gives us hope for the future

According to the Plan No. 2715/KH-UBND for Covid-19 Prevention and Control issued on 15 Aug, HCMC’s authorities aimed to control the pandemic with two phases. In the first phase (from 15 Aug to 31 Aug), the city will focus on reducing the mortality rate, ensuring that all serve cases are treated, expanding “green zone” and striving to control the pandemic in Can Gio, Nha Be, Cu Chi, Phu Nhuan, 5, 7 and 11 districts. In the second phase (from 1 Sep to 15 Sep), the city will strive to reduce fatalities and the number of severe cases by 20%, the number of hospitalized patients per day should not exceed the number of discharged patients per day and the number of hospitalized patients should not exceed 2,000 per day. In addition, the city set the target that until 15 Sep, 70% of the population (over 18 years old) receives the first dose of vaccination and 15% of the people receives the second dose of vaccination.

KBC - Growth slowed down in Q2 but remains strong for now

• Target price is revised up from VND 46,200/share to VND 48,100/share. We maintain BUY recommendation with a total upside of 33% based on the closing price of August 25, 2021.

DPM – Update on 2Q2021

• 2Q2021 revenue of VND2,980bn (+34.3% YoY) while NPATMI of VND684bn (+125.7% YoY).
• DPM recorded VND99bn of other profits (including VND91bn from the insurance claim for business losses) and adjusted down VND132bn in expenses, related to 2020 depreciation (VND49bn) as well as maintenance costs (VND83bn).
• For 3Q2021, revenue and NPATMI are anticipated at VND2,716bn (+38.9% YoY) and VND391bn (+114.8% YoY), respectively.
• The stock price has been rising significantly to reflect the impressive 2Q2021 earnings but the current valuation is not cheap if looking at 2022 prospects. The fair price of DPM is evaluated at a price of VND31,600

Container Shipping: Extraordinary Growth in Global Freight Rate Shows No Sign of Relief

• Congestion has been spreading over terminals in China, Northern Europe, and Northern America due to the Covid-19-induced supply chain disruption, and as a result, intercontinental freight rates are continuously rising. The World Container Index (WCI) has more than doubled since the beginning of the year (from USD 4,359/FEU to USD 9,421/FEU).
• Pressure from growing transport demand, amid shortage of vessels and equipment, has pushed charter rates up sharply (Harpex Index has tripled YTD).
• Despite the sharp increase in international rates, domestic rates have not fluctuated much due to the disproportionate transport demand as well as sufficient transport capacity of domestic shipping liners.

Update on the construction industry 6M2021 - Near-term headwinds

• The increase in material prices along with fierce competition shrank the profit margin of construction companies. However, some players found a way to escape.
• The market suffered from several waves of Covid-19 by freezing construction activities and project launches of developers.
• Market outlook for 2H 2021: Accelerated public disbursement in infrastructure is pivotal to uplift the industry. Besides, investment opportunities are concentrated within some businesses’ own growth stories.

US Dollar as a risk signal. Is it still working?

• US inflation (CPI) data released last week were in line with expectations.
• The US Dollar (USD) reacted negatively but stocks went up.
• Decorrelation between risk aversion and a strong USD?

The outbreak takes a toll on export growth

• Vietnam’s export slowdown in Jul 2021.
• Exports of most key products saw a significant deterioration.
• Imports remained strong as Covid-19 restrictions put pressure on domestic supply.
• Vietnam’s exporters are grappling with higher operating costs and logistics bottlenecks