Pharmaceutical – Steady but Slow Progress

We believe rising healthcare spending and the replacement of foreign drugs with domestic ones in healthcare facilities are a big and inevitable trend. However, poor results of many listed companies in 2018 has proven that the transition will probably take many years. Therefore, we only have a NEUTRAL view on the pharmaceutical industry for 2019 even though the transition progress in hospital channels may somehow speed up. Investor may expect 2019 to be a tough year for equity markets and consider into this defensive sector. However, winner in the sector needs to have proper facilities, a supportive strategic partner, and eventually manage to sell the drugs to end-users.

PGI – Result Update on Petrolimex Insurance Corporation

For 2019, we expect the original cost of sales will increase by 7.8% YoY. The loss ratio forecasted is 53.55%, mainly due to the fact that spare parts prices will continue rising. The expense ratio and combined ratio are estimated at 46.4% and 99.9%, respectively. The investment business is expected to yield 7.7%. EPS arrives at VND 1,966.

Update on LDG

Long Dien Group’s business includes real estate and tourism. Real estate has become its core segment since 2010 with a focus on selling townhouses and land lots in Dong Nai. During recent years, the company has benefited from: 1) the low-cost of land lots purchased in the past and 2) land prices booming in neighbor provinces such as Dong Nai.

TNG – 10M 2018 Business Results

During the first 10 months of this year, TNG’s net revenue was VND 3,040 bn (+46.6% YoY) while its NPAT reached VND 147 bn (+48.5%). Compared to its guidance, TNG exceeded revenue by 10.6% and 15.9% of NPAT. Gross margin slightly improved over the same period, up from 17.2% (10M 2017) to 17.5% (10M 2018).

VSC - Maintaining Impressive Utilization Rate

2019 outlook: Lower growth momentum

We expect that the volume growth will slow down as the VIP Green Port is reaching its maximum capacity, while the Green Port has limited potential growth due to a location that does not provide much advantages. We estimate total container throughput in 2018 and 2019 will be 1,048K TEU (+31%) and 1,056K TEU (+1% YoY).

On the other hand, we expect the new circular that regulates higher range of international container handling tariffs to apply in Hai Phong next year. This will be an upside potential for VSC.

How close is Vietnam to the FTSE’s Secondary Emerging Market status?

In the last FTSE’s annual review published in September 2018, Vietnam was added to the watch list for possible upgrade to Secondary Emerging Market in the future. In general, a country needs to be on the watch list for at least one year before a possible upgrading announcement and then another year before the official reclassification. Therefore, in an ideal scenario, Vietnam reach this status in September 2020.

Kuwait, China A shares and Saudi Arabia were the newest Secondary Emerging markets. Let’s have a look at their journeys below and see how close Vietnam is to the status.

Changes in The Money Market Last Week

The money market always plays a key role in the short-term, highlighting how the State Bank of Vietnam (SBV) responds to changes in the market. Recently, there has been clearly some pressure on interest rates in the interbank market as well as on  G-bond yields in the secondary market. Therefore, it is necessary for SBV to switch from withdrawing to injecting money into the banking system.

DVP - Update 9M2018 Business Result

DVP's 9M2018 earnings remained stable, posted a flat growth as the Dinh Vu Port has reached its capacity. However, in 3Q2018 only, NPAT increased significantly of 21% due to higher volume of reefer container and JV’s gain record.

HAX – Gross Profit Margin of the Automobile Business May Peak in 2018

In 9M 2018, HAX experienced a growth of 9% YoY in NPAT as gross profit margin (GPM) in the automobile business segment which improved significantly. We believe that GPM of this activity will remain good in 4Q 2018, resulting in an expectation of strong performance in the last quarter of this year.

PNJ – Result Update on Phu Nhuan Jewelry JSC

At the current price, PNJ's forward PE of 2018 is about 16x, not too cheap compared to the average P / E of the jewelry industry. However, with a strong leadership position in the industry along with high growth expectation in the coming years from the core business, we believe that PNJ is a worthy investment. Negative news from Dong A Bank , if any, will only have short-term psychological effects and will not affect long-term prospects of PNJ.

Labor Productivity – TFP – ICOR : Key Drivers of FDI to Vietnam

• Vietnam is among countries with high labor productivity growth in Southeast Asia from 2012 to 2017
• Minimum wage grew faster than labor productivity in the region
• High employment in agriculture and an insignificant improvement in manufacturing moderated labor productivity growth
• TFP contributed 15.5 percent to GDP’s growth during 2010 and 2015
• Vietnam had the second ICOR among its peers in the region
• Vietnam has its own strengths to compete for FDIs with other countries in the region

KBC - Strong leases ahead

FY2019 - Expecting the first lease contribution from Nam Son Hap Linh & a notable handover from Phuc Ninh   

Northern leasing activities should remain buoyant in FY2019 as demand stays strong, underpinned by (1) manufacturing shift from China and (2) enhanced production activities in the northern region. Kinh Bac, in particular, has advantages in attracting vendors from its major tenants. LG Display, Foxxcon, Canon and JA Solar are the ones that attract the most customers. The company is under negotiation with several suppliers of JA Solar and Apple in Quang Chau and Que Vo 2. We suppose that Nam Son Hap Linh will contribute 30 ha to a total of 110 ha land leased in FY2019. On the other hand, we assume Phuc Ninh to hand over 2.8 ha of land plots as the ongoing construction is reaching the final stages. Rong Viet projects FY2019 revenue and NPAT-MI to increase 17% and 13% respectively.