2017 Domestic Steel Price: A Stronger Bounce is Ahead

The global steel industry witnessed a supply shock in 2016, resulting from China’s policies to control steel production. With the aim of wiping out small-scale and inefficient steel mills to reform the industry, China has put a cap on coking coal mines’ production days.  This has resulted in commodity prices surging by 247% during 6 months, reaching the peak of nearly USD309 per ton in November 2016. Consequently, scrap and iron ore prices rose by 67% and 85% YoY respectively.

ACB: Notable Resolution of its Legacy Problems

ACB has been able to restructure its business much sooner than the banking industry in general, and has mostly resolved its legacy issues as of the end of 2016.  While many competitors of ACB are still under the restructuring progress, ACB is currently in a better standing, as it has already resolved many of these issues. For 2016, we expect that ACB’s PBT will reach VND1,556 billion, 3.5% higher than its guidance and up by 18.4% YoY.  Its NPAT is projected to reach VND1,245 billion (+21% YoY). At the closing price of VND19,200, ACB is trading at 1.29x its 2017 PBR.

VGT – Vietnam’s Textile Giant Joins the UPCoM

A total of 500 million shares of Vietnam National Textile and Garment Group (VGT) were listed on the UPCoM today with an initial reference price of VND13,500/share. The strong demand pushed the stock’s price up to VND17,100, resulting in a market capitalization of VND8,550 billion. 24% of VGT’s shares are restricted from being transferred, which includes 120 million shares of strategic shareholders.  The government holds 53.49% of VGT’s stake, following by VID Group (~14%) and Vingroup (~10%).

Sale and Leaseback Model in the Aviation Industry

The sale and leaseback is a very popular model in the aviation industry.

2016: A Peaceful Year for Vietnam’s Economy

Vietnam’s economy was more favorable at the close of this year, as compared to the beginning of this year. Specifically, risk factors for Vietnam, such as China’s economy and the FED’s rate hike, have not been as negative as expected. To sum up 2016, industrial production demonstrated persistent growth with stable consumption. In contrast, the agriculture sector grew poorly, and there was also a steep decline in crude exploitation due to low global oil prices. The big picture of Vietnam has been built on the stability of inflation, interest rates and exchange rates. However, the downturn of the commercial sector and the eliminated expectations for the TPP have caused investors to be somewhat pessimistic about future prospects. In today’s Pinboard, RongViet Research will point out the crucial economic factors in 2016.

NVL – An Impressive Entrance

Today was the first trading day of Novaland Investment Group Corporation (Novaland-NVL) on the HSX. The stock surged at the opening of the session to the ceiling price of VND60,000, and remained at this price throughout the day.  The market’s reaction today was widely expected, as Novaland has a very strong reputation in Vietnam, and  this listing has been highly anticipated for two years.

Brief Note about Three Breweries that will be Listed Soon

Apart from the listing of SAB and BHN, some of Sabeco’s subsidiaries also plan to list in the near future.  In today’s Analyst Pinboard, RongViet Research makes a brief assessment of the business activities of three brewing companies that plan to list on the UPCoM in late-2016 and early-2017.

TCM – Some Positive Changes Ahead Next Year

TCM is one of few companies in Vietnam’s textile industry that operates in fiber, garment, and fabric production, and has consequently been the most highly desired textile stock by foreign investors.  However, the recent declining growth rate of the textile industry coupled with the TPP appearing to be out of question has caused investors to be less interested in TCM and the industry in general.  These concerns have also been met with company specific concerns regarding TCM’s poor performance in its yarn segment, as well as issues in the performance of its Vinh Long Factory. The company’s PE is now between 6 and 7, quite low when compared to its historical average. However, we have observed that the company has restructured some of its operations, which could bring good business results from FY2017.

GTN – Company Visit Note

GTN is a company which has used an M&A strategy to gain a strong position in Vietnam’s F&B and agriculture industry. GTN will restructure all of its subsidiary and associate companies to achieve better business results, by implementing stronger branding and distribution.

C32 - Business Result Update

Construction Investment Corporation 3-2 (HSX: C32) announced its projected business results today for 2016, as well as its guidance for FY2017. Revenue and NPAT of 2016 was VND523 and VND97.5 billion, a decline of 6.2% and 3.8% YoY, respectively. The decrease was mostly caused by its weakening construction segment (VND32 billion lower) which had barriers due to qualification and its business relationships. 

VGC – New Listing on the HNX

Viglacera Corporation – JSC (VGC) will move from the Upcom to the HNX tomorrow. The stock’s price band on the first transaction date is +/-30% from its reference price of 15,600 per share.

As mentioned in our initial report on December 14, 2016, we appreciate the growth potential of the company thanks to its (1) large production capacity and stable operations in building materials, (2) capacity expansion in the building materials segment, (3) large industrial park land bank at favorable locations and (4) expectation of increased efficiency due to the state divestment.

Oil & Gas – Supply and Demand for 2017

In our Analyst Pinboard on 01/12/2016, we noted that the crude demand in 2017 could surpass the supply, creating momentum for the improvement of oil prices. Today’s Pinboard will provide a more detailed analysis of the current state of the global crude oil market, as well as the prospects for oil prices in 2017.