Q3 Earnings Update

Some findings about Q3 earnings (based on 590 companies that have announced their results)

ANV – 9M 2018 Business Results

In 3Q2018, ANV's net revenue came at VND 1,051 bn (+43% YoY). PAT was VND 131 bn (+245% YoY). Consolidating business results for the first nine months of this year, the company recorded net revenue of VND 2,735 bn (+30% YoY). PAT reached VND 308 bn (+253% YoY), equivalent to EPS of VND 913/share (+33% YoY). ANV is currently ranked third in the pangasius sector with export value of 5%, unchanged from the end of 2017.

STK – 9M 2018 Business Results

Century Synthetic Fiber Corp (STK) has just announced its financial results from the first nine month of 2018. Revenues reached VND 1,780.9 bn (+24.4% YoY) and NPAT was VND 131.4 bn (+96.5% YoY). We consider that the increase of its gross profit margin is a main factor to the impressive growth of NPAT as raw material price increased lower than its selling price. The company saw an increase of high-quality orders.

PAC - Valuation is not attractive

PAC is the leading player in the battery manufacturing industry, in a highly competitive market. However, PAC’s market share has remained stable for the last few years thanks to an effective distribution management system and long-standing brand name. Hence, we expect that earnings will grow at a compound annual growth rate (CAGR) of 12% in the next five years. For this reason, we believe that a forward P/E of 11.5x, which the market is applying for PAC’s peer group, is suitable. However, despite an 8% decline in the stock price recently, PAC stock is trading at a trailing P/E ratio of 18x, and we believe that this valuation is unjustified.

NLG - Profit in line with expectations

Nam Long recorded total revenues and NPAT-MI in 9M 2018 of VND 2,740 billion (+67.4% YoY) and VND 635 billion (+80.4% YoY), which is in line with our recent estimations. The strong performance was mainly driven by a stake transfer of 130ha in the Waterpoint project. We still maintain our forecast for its earning in 2018 at VND 861 billion (+60.9% YoY).

CVT – Awaiting for new high-end tiles to perform

Intense competition and delays in launching new products possibly make the whole-year targets unreachable. CVT had planned to arrive at VND 1,700 billion in sales and earnings of VND 260 billion for the year. Meanwhile, 9M’s revenue and NPAT were recorded at VND 987 billion (+15% YoY) and VND 114 billion (-12% YoY), respectively. 3Q NPAT came in at VND 41 billion (-21% YoY). The 9M slowdown came from:

• Intense competition where oversupply exists in several products such as traditional ceramics;
• A 35% increase in input prices, including coal and color glazed, which reduced gross margin from 24% to 19%;
• Heavy costs incurred for the 3^rd production line whereas operation set back.

PXS – Low earnings in 2018 is a chance to buy

PXS has just released its Q3 result with revenues down 5.7x to VND132 bn in 9M due to the shortage of new contracts. Besides, PXS cannot record revenues from the current projects like Thai Binh 2 and Song Hau 1 Thermal Power as the construction progress is too slow. On top of that, high interest expenses from a huge short-term debt aggravated the impact on net income, which was negative by VND 82 bn after 9M2018

Solar Energy in Ninh Thuan – At Rush Hour

Ninh Thuan province has favorable natural conditions and many investment incentives, so it has attracted many solar energy projects. Some of them have commenced in 2018 and are expected to generate electricity in mid-2019, promising stable cash flow to the business owner.

MBB – Updates on 3Q2018 Business Performance

MBB is amongst the banks with very positive results in 3Q2018. PBT reached VND 6,015bn, +50.3% yoy, fulfilling 88.6% of the entire year’s guidance.

We estimate that to keep the NPL ratio at 1.5% (as per MBB’s target at the beginning of 2018) and LLR at higher than 100%, MBB will need to write off about VND 1,800bn and book VND 3,178bn as provision expenses for the year. As such, provision expense in 4Q2018 is expected to reach VND 887bn. Total PBT for 2018 is forecast to reach VND 7,023bn.

MBB is currently trading at VND 21,050, equivalent to an attractive PBR forward of 1.4. This current price is about 42.5% lower than our target price of VND 30,500. We thereby reiterate a Buy rating on the stock.

PPC - Result Update on Pha Lai Thermal Power JSC

Rong Viet Securities Corporation hereby presents the Company Report on Pha Lai Thermal Power JSC (HSX: PPC) with the overall opinion as follows:

FRT – 9M Result Update

FRT posted a 9M revenue of VND 11,033 bn (+20%) and profit of 227.4 bn (+30%) yoy. The expansion of FPT Shop was quite behind the company’s plan – only opened 51 new stores, compared to 100 for the year’s target. Despite that, the 20% growth in revenue was significant, considering that the main rival – The Gioi Di Dong chain (by MWG), saw its sales only gain 2% during the same period. The difference was mainly from the two installment programs: F.Friends and Subsidy (figure 3). In 9M, F.Friends and Subsidy contributed 5.1% and 4.5% of total sales, respectively.

HAX – Optimistic 2018 Outlook

The first Mercedes cars restarted to be imported from Germany in late August. No Mercedes cars were imported so far in 2018 due to the tough requirements of Decree 116. We therefore believe that 4Q 2018 is a promising quarter for HAX’s performance.