Sector Report
Economic reopening should allow for nationwide power consumption to heat up; coupled with the temporary limited coal supply continues to push prices on competitive market higher. The average price on competitive market (CGM price) advanced +37% YoY in 1Q2022 which likely will save thermal power plant earnings from negative growth (i.e. NT2, POW, HND). 1Q2022 nationwide power consumption was 63 bn kwh and improved +7.8% YoY (vs. 2021 level of +4%) on the back of 1Q GDP growth of 5.03% YoY. Given the economic reopening, we expect power consumption to recover. We expect power consumption growth of +9.2% YoY in 2022. What if commodity prices keep rising? Commodity prices (incl. oil, gas and thermal coal) could lead to global stagflation which no doubt will impact Vietnam’s export activities, along with Vietnam’s GDP growth (from 6.8%-7.2%YoY to between approx. 5%-6%YoY), and power consumption (from 9.2%YoY to approx. 7%YoY).
18/04/2022
DownloadWe expect annual earnings growth for all banks under coverage during 1Q 2022 will be between single digits or low teens. However, such a comparatively low growth vs. yesteryear performance is largely attributable to the retreat of CTG and VCB from their 2021 high base. The remaining banks could perform well and produce robust pretax profit growth, in our view. For the full year, we infer from preliminary plans that PBT growth could approx. between 24%-25% YoY, with stock dividends ranging between 15%-35%. We believe that the release of the first quarter results and AGM plans act as a supportive factor for banking sector share price performance over the short-term. We maintain a positive view on the banking sector for 2022.
24/03/2022
DownloadBrent crude oil prices reached USD 131 USD/barrel on 7th March 2022, marking its highest level since July 2008. YTD, oil prices have surged 69%. The sharp increase in oil prices is attributed to a combination of various reasons, but the primary factor has been the escalating tensions between Russia and Ukraine, followed by the ban on Russian oil, and Russia’s threat of stopping gas supplies to Europe. In addition, a strong demand recovery post-Covid-19 while supplies were carefully managed (OPEC+ sticks with oil output plan, based on recent meeting in March) while additional oil from Iran may take months to come on line. Major global organizations have increased oil price forecasts for 2022 to take geopolitics into account. Oil and gas supply in recent years has not increased sharply due to the strategy of reducing investment in fossil fuels and increasing investments in renewable energy while demand recovery remains in sight. According to OPEC, the total number of rigs operating in 2021 has exceeded the level 2020 but they are much lower than in 2019. As investment activities have shifted to green fuels, the investment in fossil fuels has decreased during past years. As a result, the oversupply may not be likely in the short-term, supporting oil prices.
09/03/2022
DownloadWe anticipate that the growth of residential market will be maintained in 2022, as many large residential developers resume their sales plan and project development after a low-base year in 2021 to match with the huge demand for property products. However, as the legal framework for the property market is still under review progress coupled with more upcoming inspections activities of the local government in various developer’s projects, market supply may stand at a modest level compared to 2018-2020 period. The fundamental story remains in place, including the favorable interest rate environment and infrastructure spend from the stimulus package. These are supportive factors for the property market.
21/01/2022
DownloadThe scrip of selected industrial park developers under coverage increased 62% YTD, outperforming the VN Index which increased 34%. Key performers: Most industrial park (IP) shares witnessed a remarkable increase in 2021, especially in the mid and small-cap space. TID was the best performer, increasing 247% YoY in 2021 due to leased land in IPs increased by 96% YoY and leased price increased by 12% YoY. IDC shares gained 125% in 2021 due to strong expected growth of 117% YoY in adjusted parent company profit in 2022 (compared to the plan in the 2021 AGM) and there is possibility to unlock more foreign ownership with the maximum of 49%. KBC shares increased 146% YoY in 2021, reflecting the debut of the Trang Cat Urban Area, as well as the Company’s aggressive land bank expansion in key IP hubs.
20/01/2022
DownloadDomestic demand can recover, while export volume may slowdown: We believe that growth in domestic demand can go back to a normal pace of between 5%-7% in 2022 off of the low base in 2021 due to pent-up demand, a rebound in the residential segment, and an acceleration in public investment. On the other hand, growth in exports may decelerate due to the slowdown in Chinese demand, which is reflected in the -15% decline in Chinese cement prices from their Oct peak due to the decline in the property market. Clinker typically accounts for between 60%-70% of total export volume of cement and clinker. A decline in clinker exports would increase competitive pressure on the domestic market.
18/01/2022
DownloadShare of healthcare companies increased 25% YTD in 2021, slightly underperforming the VN Index YTD by 9%. For an overview in detail, pharma company stocks increased 19% YTD, while hospital operators stocks rose by 51% YTD. Best performer: TNH, a newly listed hospital, saw its share price increase by 89% YTD. The company’s net profit is estimated to increase by 40% YoY in 2021, following the recent launch of two new hospital facilities.
18/01/2022
DownloadOil has always reacted swiftly to headlines of new Covid-19 variants. As such, there is still lingering pandemic risk. One catalyst to support oil prices is rising demand, especially from the aviation sector (which also means re-openings and/or recovery of various countries). Of course, any matters related to geopolitical tension could be the canary in the coal mine, and drive-up oil prices over the short-term. According to OPEC, total active rigs in 2021 have surpassed the number of rigs in 2020 but remain behind 2019. Due to the switch of capex to green energy, investment in fossil fuels has been lower in recent years. Therefore, excess supply is unlikely near-term which will in turn will be supportive to oil prices.
17/01/2022
DownloadConstruction sector valuations increased 58% during 2021. Best performers: ROS (+390%); HUT (+352%); HBC (+86%); DPG (+220%); and FCN (+122%). Laggards included: CTD (+26%) and LGC (-24%). Excluding outliers (ROS and HUT), the construction sector’s 2021 YoY performance was markedly lower at 28%. Sector outperformance in 2021 partially priced in the expectation of earnings rebound during 2022.
14/01/2022
DownloadInsurance sector valuations increased 10.5% in 2021, underperforming the VN Index 23%. Underperformance was solely due to BVH, whose price declined -14% YTD. Meanwhile, remainder of listed insurers had a successful year due to the state divestment catalyst.
Best performers include: PTI (+168% YTD); VNR (+94% YTD); and BMI (+85% YTD).
13/01/2022
DownloadThe F&B sector underperformed the VNIndex in 2021. Total market capitalization of the F&B sector increased just 12%, while the VN Index returned +34% in 2021 (data as of 24th December 2021). MSN was the best performer in the sector, soaring 94%, while VNM and SAB were the worst performers - dropping -18% and -24%, respectively. MSN and MCH and MML posted impressive returns of 94%, 27% and 64%, on the back of both strong revenue and earnings growth. Their products are deemed essential, and had strong demand during the pandemic. As MSN owns the largest modern trade chain, its consumer business was a key beneficiary. The VNM family (also including subsidiaries GTN and MCM) performed poorly, as sales and profits were hit by the double whammy of weak dairy consumption and a strong rise in raw milk costs. The KDC family (also including VOC and TAC) performed well, increasing by 64%, 65% an 62% YoY respectively. Demand for cooking oil held up well although the margin was impacted by a palm oil price hike. Sugar names performed well: SLS (+119%); LSS (109%); and QNS (+30%). Performance was due to upcycle of global sugar prices since the beginning of 2021, as well as local protective measures (anti-dumping and anti-subsidy tariffs on Thai sugar). Beer companies were hit the hardest by the pandemic, as strict lockdowns meant no on-premise sales (which previously accounted for 50% of beer sales pre-Covid).
13/01/2022
DownloadAutomobile company stocks increased by only 7.4% in 2021, underperforming the VN Index YTD by -26%. Top performers: HAX, with its share price increase 105% YTD. Although the company’s net profit in 2021 is estimated to decline by -24% YoY due to the impact of the strict lockdown period in 2Q and 3Q21, the company still posted strong recovery in 4Q21 and expect positive annual sales growth. Another top performer is SVC, with its stock price having increased 93% YTD. SVC has also suffered from the impact of 3Q21 lockdown but managed to cut off significant operating costs. Thus, it could maintain net profit growth of 13% YoY in 2021.Despite HAX and SVC strong share price performance, the biggest listed automobile company VEA posted only 2% YTD growth in its share price, as VEA suffered from both a decline in automobile and motorcycle sales, while facing unresolved corporate governance issues during 2021.
10/01/2022
DownloadValuation of the seaport & logistics sector increased by 94% YTD in 2021, outperforming the VN Index by 60%. Best performers include shipping names: HAH (+295%); VOS (+722%); VNA (+673%); and MVN (+205%). Most other key names delivered strong performance as well - GMD (+44%); VSC (+45%); SGP (+183%); PHP (+72%); and TMS (+142%). VTP was the only underperformer. Sector performance was strong over the first seven months, and slowed in 2H21 when Vietnam was hit hard by the fourth Covid-19 wave.
06/01/2022
DownloadValuations of the Vietnam fisheries sector increased 54.3% YTD on average in 2021, outperforming the VN Index by 20.5% YTD. Best performers include IDI (+98% YTD); FMC (+58% YTD); VHC (+56% YTD); MPC (+53% YTD); ANV (+41% YTD); and CMX (+22% YTD). Both shrimp and pangasius exporters alike have been posting encouraging results since Q2’21, and exhibiting strong turnaround signals (in terms of price recovery into 2022) in Q3’21 when most shares were re-rated.
05/01/2022
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