Bond Market overview - VCBS

BÁO CÁO TRIỂN VỌNG 2020

VCBS RESEARCH DEPARTMENT

Nov.2020

OUTLOOK 2021

MACROECONOMY

FIXED INCOME MARKET

EQUITY MARKET

INDUSTRY AND STOCK PICKS

MACROECONOMY EQUITY MARKET INDUSTRY & STOCK PICKS FIXED INCOME

WORLD SITUATION- CORRUPTION GROWTH DUE TO THE PANDEMIC

3

Estimated GDP growth in 2020

>6%

3 – 6%

0 – 3%

-3 – 0%

< -3%

Không có dữ liệu GDP Growth in 2019

Source: IMF, VCBS compile


The successive wave of epidemics in many countries, where the

epidemic was contained previously, harms prospects of future recovery.

China is a bright spot for economic recovery after the epidemic.

Pandemic shock reduces global potential growth.

However, the bright spot is that resistance to uncertainty has increased

significantly. Psychological readiness to respond, to live with

translation in a new normal scenario. Countries quite agree on the need

for unprecedented assistance packages.

In 2020, we observe the trend of central banks’ loosening monetary

policy, which increases massively in volume and time horizon. This

fact refers to an upward trend in asset price.

Financial markets benefit from the enormous inflow of capital, with

frontier and emerging markets no exception.

The year 2020 recorded a significant change in the relative strength of

currencies when the USD weakened while many other currencies such

as CNY or EUR tended to strengthen.

Global trade fell sharply due to the impact of the disease, and

commercial defense continued to take place on a global scale.

So far, thank to the successful effort to contain the pandemic, Vietnam

continues to be one of the attractive destinations for foreign investment

WORLD SITUATION- EXPANSIONARY MONETARY POLICY

4

Source: WB, VCBS compile

Global economy colapse due to the pandemic. State banks utilize expansionary monetary policy

0

100

200

300

400

500

600

700

0

1

2

3

4

5

6

01/1

2/0

1

01/1

1/0

2

01/1

0/0

3

01/0

9/0

4

01/0

8/0

5

01/0

7/0

6

01/0

6/0

7

01/0

5/0

8

01/0

4/0

9

01/0

3/1

0

01/0

2/1

1

01/0

1/1

2

01/1

2/1

2

01/1

1/1

3

01/1

0/1

4

01/0

9/1

5

01/0

8/1

6

01/0

7/1

7

01/0

6/1

8

01/0

5/1

9

01/0

4/2

0

Tiền cơ sở tại một số quốc gia

US, $bn billion EUR Japan, ¥ trillions


Growth in Q4 is forecast to reach 4% - 5% due to gradual growth drivers with a post-epidemic recovery. GDP growth in 2020 is expected

to reach 2.73% - 3.06%.

In 2020, GDP in 2021 shall increase by about 6.5% -7.0% based on the contributions of the following components:

We expect consumer demand to grow significantly from the low level of 2020. Retail sales of goods will continue to recover after

disease control efforts have proven effective, with the "new normal" regime, which helps consumer demand rebound even demand

in non-essential consumer goods.

The processing and manufacturing industry remains an important indicator of the health of the manufacturing industry, which

contributes a lot to GDP, showing signs of a positive recovery after the epidemic has been contained.

Along with that, the successful maintenance of macroeconomic stability and the consistent policy of the government in attracting the

influx of capital flows from China, contributing to promoting investment from both public sectors. private. In particular, we draw

attention to infrastructure investment activities not only in traditional economic centers but also in many surrounding satellite cities

such as Long An, Vung Tau, Dong Nai,… in the South or Hai Phong, Quang Ninh, Thanh Hoa… in the North. These are considered

to promote private investment, creating the foundation for sustainable growth of the economy.

ECONOMIC STATUS QUO 2020- OUTLOOK 2021

5

Source: CEIC, GSO, VCBS compile

GDP growth in 2021 shall reach 6,5% - 7,0%

2,8%-3,1%

6,50%-7%

0%

1%

2%

3%

4%

5%

6%

7%

8%

2013 2014 2015 2016 2017 2018 2019 E2020 E2021

GDP growth

Inflation 3,1% -

3,4%

Deposit rates tick down

50 bps

GDP growth

6,5%-7,0%

Exchange rate ±0.5%

CPI


OUTLOOK 2021: ADAPT TO DEVELOP

6

Governments shows consistence in policies to create favorable conditions to attract in inflows.

Preparation means of production: chuẩn bị

về tư liệu sản xuất cơ bản: soil, water,

electricity, infrastructure.

Human resource: especially the quality of

higher education, college and vocational

training

Invest in infrastructure in a number of key

areas, including cities in critical economic

regions in the Southern and Northern

regions.

Prerequisite for development: disease is

contained; smooth coordination of fiscal

and monetary policy; Utilize public

investment to promote private investment.

=> FDI inflows continue to be expected to

be an important source to promote

economic growth in the coming years.

0

5

10

15

20

25

2015 2016 2017 2018 2019 10T.2020

Vốn đầu tư trực tiếp FDI (tỷ USD)

FDI đăng ký (ytd) FDI giải ngân (ytd)


STABILITY - INFLATION

7

Source: CEIC, GSO, VCBS compile

Favorable movements will be maintained in 2021.

-2%

0%

2%

4%

6%

8%

-0.5%

0.0%

0.5%

1.0%

1.5%

01

/15

04

/15

07

/15

10

/15

01

/16

04

/16

07

/16

10

/16

01

/17

04

/17

07

/17

10

/17

01

/18

04

/18

07

/18

10

/18

01

/19

04

/19

07

/19

10

/19

01

/20

04

/20

07

/20

10

/20

01

/21

04

/21

07

/21

10

/21

CPI

CPI (mom) CPI (yoy)

VCBS assesses that 2021 will recognize many favorable factors:

The government will not increase the base salary for 2021.

Although consumer demand is still recovering well, but not strong

enough to create upward pressure on inflation.

Food and foodstuff groups: the price movements of rice and pork:

Vietnam, with the strength of agriculture, can be completely proactive

and control the supply. In addition, the re-herds and import of pig

breeds are also promoted.

Monetary policy is operated flexibly, minimizing impacts.

Prices of public goods, electricity, water under the Government's

control.

However, there are certain factors that put upward pressure on inflation:

Domestic consumption demand recorded a significant improvement in

the non-essential consumption group.

Oil prices depended on the world oil prices; however, oil prices are

unlikely to rise sharply amid global supply chain disruption.

Due to negative impacts from natural disasters, the demand for civil

and repair materials may increase.

The medical group can also record increased pressure according to

global needs, increasing need for treatment due to prevention.

The inflation rate in 2021 is forecasted to be less than 4%. Specifically,

VCBS forecast that inflation will increase by 3.1% - 3.4%.

Foodstuff

Grains

Outdoor

eating

Housing, water,

eletricity, gas

and other fuels

Transport Furniture,

household

equipment and maintenance

Clothing and

footwear

Education

Health

Entertainment

Beverage and

tobacco

Miscellanous

goods and

services

Communication


Exchange rates are expected to have stable movements:

The supply of foreign currency is quite abundant in the context of: (1) Capital

flows of direct and indirect investment and remittances are quite positive; (2)

Trade balance is forecasted to continue a large surplus.

The trend of loosening monetary policy of central banks in the world, cash flow

still looks to bright macroeconomic stability like Vietnam.

Uncertainty is still happening around the world, but investors have become

accustomed to the fact that uncertainties always exist and adapt to these events.

The State Bank still shows a flexible and consistent policy to support and

stabilize the macro-economy in general and exchange rates in particular.

Uncertainty as well as world movements are still a big question mark for the

market, thus, exchange rates may be under certain pressure around volatile events.

The exchange rate will fluctuate in a tight band of 0.5% for the whole year

2021.

STABILITY – EXCHANGE RATES

8

Source: CEIC, Bloomberg, SBV, VCBS compile

Exchange rates will remain stable in 2021.

0

20

40

60

80

100

120

2012 2013 2014 2015 2016 2017 2018 2019 2020E

Exchange reserve (USDbn)

85

87

89

91

93

95

97

99

101

103

105

01/18 04/18 07/18 10/18 01/19 04/19 07/19 10/19 01/20 04/20 07/20 10/20

DXY

20,000

20,400

20,800

21,200

21,600

22,000

22,400

22,800

23,200

23,600

24,000

24,400

03/15 11/15 07/16 03/17 11/17 07/18 03/19 11/19 07/20

Exchange rate USD/VND

Reference exchange rate Ceiling exchange rate

Floor exchange rate VCB spot bid exchange rate

VCB spot offer exchange rate


STABILITY – DEPOSIT AND LENDING RATES

9

Source: GSO, VCBS compile

Credit growth

The orientation of the State Bank towards commercial banks will continue to be

remained, focusing on quality instead of increasing outstanding loans.

Therefore, credit growth is expected to increase lower than 2016-2017, and

nearly equivalent to 2018-2019.

Accordingly, credit will focus on credit institutions with good asset, and will be

less for credit institutions that have not finished handling outstanding debts.

Deposit rates

We expect deposit rates may decrease further, then stabilize at the low levels:

Central banks over the world are expected to maintain loosening monetary

policy for a long time.

The central bank's direction is to reduce interest rates and spend resources to

deal with bad debts. Accordingly, VCBS will observe management actions,

especially the Circular amending Circular 01.

The increasing trend of deposit rates in the previous years mainly came from

mobilizing to adapt safety ratios, attracting customers, and having sources for

credit loans. By 2021, under the management of the State Bank, with credit will

focus on quality, thus, the trend of increasing interest rates is unlikely to return.

Risks: Upward pressure on deposit rates may appear at the end of the year,

when banks promote lending activities, as well as businesses and residents tend

to withdraw money from the system. However, VCBS believes that this

pressure, if any, will not be large, credit for the whole year is forecast to

increase by 11-12%, lower than the 2016-2017 period.

Lending rates

The target of reducing lending interest rates (for the whole year) to support growth

can be achieved thanks to the following factors:

Foreign investment cash flow creates favorable conditions for liquidity

The decreasing deposit rates is basic for the downward trend on lending rates.

Deposit rates are forecasted to decrease by 50 points and then stabilize on the

low levels. Lending rates may decrease by 30-50 points.

4%

9%

14%

19%

24%

29%

34%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 E2020 E2021

Credit growth

3.00

3.50

4.00

4.50

5.00

5.50

6.00

6.50

7.00

7.50

8.00

Deposit rates (Unit: %)

HĐ 1 tháng HĐ 3 tháng HĐ 6 tháng HĐ trên 12 tháng

MACROECONOMY

FIXED INCOME MARKET

EQUITY MARKET



GOVERNMENT BOND MARKET- STATUS QUO 2020

11

Source: HNX, VCBS compile

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

Oct

07

- O

ct 1

1

Oct

21

- O

ct 2

5

Oct

28

- N

ov

01

No

v 1

1 -

No

v 1

5

No

v 2

5 -

No

v 2

9

Dec

09

- D

ec 1

3

Jan

06

- J

an 1

0

Jan

20

- J

an 2

4

Feb

10

- F

eb 1

4

Feb

24

- F

eb 2

8

Mar

09

- M

ar 1

3

Mar

23

- M

ar 2

7

Ap

r 0

6 -

Ap

r 1

0

Ap

r 2

0 -

Ap

r 2

4

May

04

- M

ay 0

8

May

18

- M

ay 2

2

Jun

01

- J

un

05

Jun

15

- J

un

19

Jun

29

- J

ul

03

Jul

13

- J

ul

17

Jul

27

- J

ul

31

Au

g 1

0 -

Au

g 1

4

Au

g 2

4 -

Au

g 2

8

Sep

07

-

Sep

11

Sep

21

-

Sep

25

Oct

05

-

Oct

09

Oct

19

-

Oct

23

No

v 0

2 -

No

v 0

6

Volume (VND bn) Winning rates Auction results

Volume 5Y 7Y 10Y 15Y 20Y 30Y

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

01

/19

02

/19

03

/19

04

/19

05

/19

06

/19

07

/19

08

/19

09

/19

10

/19

11

/19

12

/19

01

/20

02

/20

03

/20

04

/20

05

/20

06

/20

07

/20

08

/20

09

/20

10

/20

Primary market

KBNN NHCSXH NHPT

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

01

/16

04

/16

07

/16

10

/16

01

/17

04

/17

07

/17

10

/17

01

/18

04

/18

07

/18

10

/18

01

/19

04

/19

07

/19

10

/19

01

/20

04

/20

07

/20

10

/20

Bond yields

2Y 3Y 5Y 7Y 10Y 15Y

After being under strong and rapidly increasing pressure at the end of Q1.2020, the

downtrend dominated the Government bond market.

The reasons for the increase in bond yields at the end of Q1: (1) Exchange rate

was under pressure; Along with that, (2) Interbank interest rates slightly increased

and (3) Market members were more cautious in the context of complicated Covid-

19 translation, affecting most of the manufacturing and business sectors.

The reasons explain the downward trend in bond yields later on: (1) Interbank

interest rates maintained at a record low level, indicating a surplus of liquidity in

the banking system, (2) Demand for investment in Risk-free assets continue to

increase in the context of existing uncertainties (3) Psychology of market

members is getting more confident as the Government's measures in the

implementation of dual goals are drastic and effective. (4) Recent legal

documents and draft sub-law documents refer to a closer inspection, which aims

at more sustainable development of other fixed-income product, recently

considered to be a replacement product to government bond.


In 2020, SBV cut rates three times. In the context of abundant liquidity due to slow credit growth, interbank record a downward force and

even reach a record-breaking low level.

OUTLOOK FOR INTERBANK MARKET

12

Source: NHNN. Bloomberg, VCBS compile

In the context of (1) ample liquidity, (2) stable exchange rates, (3) direct and indirect investment flows that continue to rush to the

Vietnamese market, we expect interbank interest rates to stabilize on the current low threshold.

However, interest rates may slightly tick up for some times due to: (1) seasonal factors, (2) credit growth rebounds, (3) deposits of the

State Treasury in the system Commercial banks as well as the progress of disbursement of public investment capital.

Besides, the interbank interest rate depends heavily on the management as well as the direction of the State Bank in the open market

through repo and treasury bills, which should be considered to be a factor.

Thus, market factors supporting the interbank interest rate level can remain at a low level, but still under upward pressure around

certain times.

Interbank rate settle at a record-breaking low level.

0.0%

2.0%

4.0%

6.0%

01

/16

03

/16

05

/16

07

/16

09

/16

11

/16

01

/17

03

/17

05

/17

07

/17

09

/17

11

/17

01

/18

03

/18

05

/18

07

/18

09

/18

11

/18

01

/19

03

/19

05

/19

07

/19

09

/19

11

/19

01

/20

03

/20

05

/20

07

/20

09

/20

11

/20

ON 1W 2W 1M

Interbank market Trước 16/3 12/5 1/10

Refinancing rate 6,00% 5,00% 4,50% 4,00%

Rediscounting rate 4,00% 3,50% 3,00% 2,50%

OMO rates 4,00% 3,50% 3,00% 2,50%

Ceiling rates time deposits < 1M 0,80% 0,50% 0,20% 0,20%

Ceiling rates time deposits 1-6M 5,00% 4,75% 4,25% 4,00%

Ceiling rates for short-term loan in prioity sector 6,00% 5,50% 5,00% 4,50%


GOVERNMENT BOND MARKET-– OUTLOOK 2021

13

Demand for bond issuance increases, issue plan is forecasted

about 300-330 trillion (8% -10% compared to 2020).

On the demand side, the demand for investment in government

bonds can balance the demand for the amount of issuance.

The supply of foreign currency is relatively good. Liquidity of

the banking system is abundant.

The amount of matured government bonds increased compared

to 2020, but it is expected to be reinvested in government bonds

when credit demand does not increase dramatically.

Yield fluctuation trend: It is expected that the bond yields have

room to decrease further, but the degree and volatility will not

be as large as in 2020 because the market is quite consensus.

There may be short-term uptrends following the fluctuations in

world markets.

We forecast 10Y should fluctuate around 2% -2.85%.

The highest liquidity based on tenor should be 7-10Y and even

move to longer tenors (over 10Y) due to better yields than cost

of capital.

Source: HNX, VCBS Research

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

01

/21

02

/21

03

/21

04

/21

05

/21

06

/21

07

/21

08

/21

09

/21

10

/21

11

/21

12

/21

VND bn Bond matured in 2021

KBNN NHPT VBS Khác

300-330

0

50

100

150

200

250

300

350

2017 2018 2019 2020E 2021E

x 1

,00

0 V

ND

bn

Government bond issued

Bond Matured Bond issued

Risks

Stricter regulations on government bond replacement products such as bonds of credit institutions and enterprises; Orientation on

completing the legal framework for market management and management in stable market conditions.

An unexpected factor appeared in the market, causing tighten liquidity of the banking system, especially related to fluctuations in

world markets and exchange rates, if any.

MACROECONOMY EQUITY MARKET NGÀNH VÀ DOANH NGHIỆP TRIỂN VỌNG FIXED INCOME

BOND MARKET –2020

14

DIVERSIFICATION INTO CORPORATE BONDS

Source: HNX, VCBS

80,254

141,340 181,093

248,024 256,223

312,205

244,221

157,547

197,769 228,699

25,000

28,707

34,412

48,047

42,769

97,413

115,416

146,039

296,713 303,800

0

100,000

200,000

300,000

400,000

500,000

600,000Issued bond

Gov Bond Gov-Backed Bond Muni Bond Corp Bond

8.0% 9.7%

12.2% 14.3%

16.2%

27.3% 27.6% 27.9% 26.9% 27.9% 3.3% 2.0%

2.7% 2.5%

3.4%

5.3% 6.2% 7.9% 11.3%

14.4%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%Outstanding bond/GDP



BOND MARKET – Primary market

15

Source: HNX, VCBS

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Jan 1

9

Feb

19

Mar

19

Apr

19

May

19

Jun

19

Jul

19

Aug

19

Sep

19

Oct

19

Nov

19

Dec

19

Jan 2

0

Feb

20

Mar

20

Apr

20

May

20

Jun

20

Jul

20

Aug

20

Sep

20

Oct

20

Primary market

ST VBSP VDB

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

Oct

07

- O

ct 1

1

Oct

21

- O

ct 2

5

Oct

28

- N

ov

01

No

v 1

1 -

No

v 1

5

No

v 2

5 -

No

v 2

9

Dec

09

- D

ec 1

3

Jan

06

- J

an 1

0

Jan

20

- J

an 2

4

Feb

10

- F

eb 1

4

Feb

24

- F

eb 2

8

Mar

09

- M

ar 1

3

Mar

23

- M

ar 2

7

Ap

r 0

6 -

Ap

r 1

0

Ap

r 2

0 -

Ap

r 2

4

May

04

- M

ay 0

8

May

18

- M

ay 2

2

Jun

01

- J

un

05

Jun

15

- J

un

19

Jun

29

- J

ul

03

Jul

13

- J

ul

17

Jul

27

- J

ul

31

Au

g 1

0 -

Au

g 1

4

Au

g 2

4 -

Au

g 2

8

Sep

07

-

Sep

11

Sep

21

-

Sep

25

Oct

05

-

Oct

09

Oct

19

-

Oct

23

No

v 0

2 -

No

v 0

6

Vol (VND bn) Wininng rates GB Auction results

Volume 5Y 7Y 10Y

15Y 20Y 30Y

5.05 5.75

8.7

13.03 12.41

13.45 13.67

3

5

7

9

11

13

15

Average issued tenors

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-

20000.0

40000.0

60000.0

80000.0

100000.0

120000.0

140000.0

160000.0

5Y 7Y 10Y 15Y 20Y 30Y

Goverment bond issuance 10M.2020

Offering volume Winning volume

Winning-to-offering ratio Issuing plan

Banks Other

financial

institutions

Government bond‟s holders


BOND MARKET – Secondary market

16

Source: HNX, Bloomberg, VCBS

DOWANWARD FORCE IS EXPECTED TO DOMINATE BOND MARKET

0.0%

2.0%

4.0%

6.0%

01

/16

03

/16

05

/16

07

/16

09

/16

11

/16

01

/17

03

/17

05

/17

07

/17

09

/17

11

/17

01

/18

03

/18

05

/18

07

/18

09

/18

11

/18

01

/19

03

/19

05

/19

07

/19

09

/19

11

/19

01

/20

03

/20

05

/20

07

/20

09

/20

11

/20

ON 1W 2W 1M

Interbank rates

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

01

/16

04

/16

07

/16

10

/16

01

/17

04

/17

07

/17

10

/17

01

/18

04

/18

07

/18

10

/18

01

/19

04

/19

07

/19

10

/19

01

/20

04

/20

07

/20

10

/20

Bond Yields

2Y 3Y 5Y 7Y 10Y 15Y

0.0

1.0

2.0

3.0

4.0

1Y 2Y 3Y 5Y 7Y 10Y 15Y

Yield Curve

6/30/2020 9/30/2020

10/30/2020

1,429

789 270 422

-222

1,681

-275 -465

624

-655

1,209 963

2,121

1,445

2,933

48 720

2,870

1,721

907

2,240

-553 -672 37

938

-1,712 -1,880

1,254 1,768

2,269

43

-485

1,177

255

01

/18

04

/18

07

/18

10

/18

01

/19

04

/19

07

/19

10

/19

01

/20

04

/20

07

/20

10

/20

Foreign investors in the secondary market

Net position (Unit: bn.VND)0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Outright

<3 3-5 5-7 7-10 > 10Y

1,668

3,642 3,655

6,354

8,962

8,756 7,977 7,861

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

0

300

600

900

1,200

1,500

1,800

2,100

2,400

VN

D b

n

x1

,00

0 V

ND

bn

Total volume (left side) Average daily volume (right side)


GOVERNMENT BOND MARKET – 2021 OUTLOOK

17

Volume of bond issuance is forecasted about VND 300-

330 trillion (+8%-10% yoy).

The investment demand for Government bonds can

completely balance the amount of forecasted bond

issuance.

Liquidity of the banking system, if seasonal effects are

excluded, is likely to be abundant.

Bond yields have room to decrease, however, the

volatility may appear more in 2021.

The highest liquidity based on tenors should be 7-10Y

tenors (and >10Y tenor).

Risks: An unexpected factor appeared in the market,

causing the operator to tighten the liquidity of the

banking system.

KEY FACTORS

Liquidity on interbank market.

SBV’s regulating policy

Disbursement for infrastructure speed up

Trend of higher asset prices in the world.

Sentiment over macro-economics foundation.

Source: HNX, VCBS Research

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Jan-2

1

Feb

-21

Mar

-21

Apr-

21

May

-21

Jun

-21

Jul-

21

Aug

-21

Sep

-21

Oct

-21

Nov

-21

Dec

-21

VND Billion Matured Bonds in 2021

ST VDB VBSP Other


CORPORATE BOND MARKET – 3Q. 2020 RECAP

18

Real estate

Banks

Electricity,

Water

Securities

Construction

Other

financial

instutions Others

Issued bonds by industry

25,000

28,707

34,412

48,047

42,769

97,413

115,416

146,039

296,713 303,800

0

100,000

200,000

300,000

400,000

500,000

600,000

2011 2012 2013 2014 2015 2016 2017 2018 2019 9M.2020

Issued bond


Decree 81/2020 / ND-CP effect from September 2020 has significantly reduced the amount of issued bonds issued in the last month

of the third quarter. However, the previous period saw the large amount of issued bonds.

On July 28, HNX issued Document No. 384/QD-SGDHN on the Regulation on operation of the Website corporate bond

information.

The SBV is drafting a Circular on purchase and sale of notes, treasury bills, certificates of deposit, bonds issued by other credit

institutions, foreign bank branches. In which, valuable papers can be purchased with tenor less than 12 months in secondary

market.

Source: Fiinpro, HNX, VCBS compiles


CORPORATE BOND MARKET – 3Q. 2020 RECAP

Volume

(VNDbn)

Average

tenors

Average

yields

HDBank 19,527 8.5 7.5%

Sovico 18.000 3 10.5%

Masan 14,085 3 9.5%

VIB 13.500 3 5.7%

Vinhomes 12.000 2.5 9.5%

Volume

(VNDbn)

Average

tenors

Average

yields

Phat Dat Corporation 510 1 13.0%

Centre of international

relation & investment 50 1 13.0%

IDJ 229 3 13.0%

Nam La Hydro power 100 3.5 13.0%

Trinh Gia Nguyen

Telecommunications 1,400 1 12.5%

0

1

2

3

4

5

6

7

8

Electricity,

Water

Banks Real estate Construction Securities Other

financialinstutions

Others

Average tenors

Average

0%

2%

4%

6%

8%

10%

12%

14%

Other

financialinstutions

Construction Real estate Electricity,

Water

Others Securities Banks

Average yields

Average

Table. Top 5 companies issue the largest volume of bonds Table. Top 5 companies issue the highest yield of bonds

Source: Fiinpro, HNX, VCBS compiles

MACROECONOMY

FIXED INCOME MARKET

EQUITY MARKET



STOCK MARKET HIGHLIGHTS IN 2020

21

Source: Bloomberg, VCBS

80

88

96

104

112

120

128

136

144

400

450

500

550

600

650

700

750

800

850

900

950

1,000

1,050

1,100

1,150

VN Index HNX Index

VN Index -4,6% HNX Index +31,4%

GDP Q1.2020

+3,82% yoy

The US - China

signed trade

agreement

Phase 1 China imposed

lockdown 3 cities in

Hubei province

Oil prices

plummeted

because Russia

and OPEC did not

reach an

agreement

WTI crude oil prices

delivered in May closed

at negative prices

The WHO declares Covid-

19 as a global pandemic

Vietnam airlines are

allowed to increase

their domestic flight

frequency by 2.5 times

SBV lowered the

executive interest

rate for the second

time this year

The Chinese

National Assembly

passed the National

Security Law in

Hong Kong

New developments

appeared in the US-

China trade war

GDP Q2.2020

+0,36% yoy

FED announced new

inflation approach

EVFTA is in

effect

SBV lowered the

executive interest rate

for the third time this

year

GDP Q3.2020

+2,62% yoy


STOCK MARKET HIGHLIGHTS IN 2020

Source: Fiinpro, Bloomberg, VCBS

Q1.2020 witnessed the largest drop of VN Index since

August 2001 as Covid-19 became a pandemic. Due to the

decrease of the majority of sectors, the benchmark index

declined by 24.9%, with the most affected sectors

including aviation, travel & entertainment. However,

thanks to the success in disease control and the timely

social distancing period, the uptrend dominated during Q2

and Q3. Bullish index along with improving liquidity

indicated the optimism of investors about the long-term

economic outlook. As most of the world has not been able

to effectively contain the pandemic, many developed

countries have to face shutdowns, Vietnam’s market

occupied the spotlight as an outperforming economy.

In the last quarter, VN Index suddenly surpassed 970

points, erasing the decline in first half of 2020 during the

announcement of listed companies’ Q3 business results in

October 2020. The gain was led by the banking sector and

several other large-cap stocks such as VNM, HPG, MSN,

etc. However, at the beginning of November, the lack of

supportive information and profit-realizing pressure

caused VN Index to fluctuate around 940 points.

4

0

100

200

300

400

500

600

700

800

400

500

600

700

800

900

1,000

1,100

Volume VN Index

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

MSN HPG CTG VNM GVR SAB BID VHM VIC GAS

Top contribution to VN Index in 2020


RELATIVE VALUATIONS OF VIETNAM’S STOCK MARKET IN 2020


0

5

10

15

20

25

30

35

40

45 Sectors‟ P/E in Vietnam

15.95

11.07

28.88

23.05 20.71

2.05 1.74 1.39 1.43 1.43

0

5

10

15

20

25

30

35

VN Index IDX Composite Index FTSE Bursa Malaysia

EMAS Index

PSE All shares Index SET Index

Vietnam Indonesia Malaysia Phillipines Thailand

Average P/E & P/B in ASEAN markets

P/E

P/B

5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Sectors' P/B in Vietnam

2019

2020


-40,000

-30,000

-20,000

-10,000

0

10,000

20,000

30,000

40,000

Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20

Foreign sector transaction volume (HSX, HNX & Upcom) (VND thousand billion)

Giá trị mua

Giá trị bán

Giá trị ròng

FOREIGN INVESTORS’ HIGHLIGHTS IN 2020

24

Source: Fiinpro

-4,000,000

-2,000,000

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

VHM PLX PGD MWG PHR VJC VRE VIC HPG MSN

Foreign sector net buy/(sell) (VND million) Due to the impact of economic distress from the

Covid-19 pandemic, foreign investors net sold

since February 2020, among which the most

aggressive selling periods were Q1, August and

October. Up until Nov 10th, net selling value of

foreign investors was VND 11,554 billion in all

three exchanges (namely HSX, HNX and

UpCom).

The most noticeable put-through transaction in

2020 belongs to the deal of VHM’s shares in

June with total value reaching VND 15,000

billion. On the other hand, VRE, VIC, MSN and

HPG were the most net-sold shares.

BRENT CRUDE OIL

25

Daily Weekly Monthly Quaterly Yearly YTD

-1.29% 7.85% -3.79% -4.60% -35.14% -38.79%

Price changes (as at November 06th, 2020)

• In 2020, Brent crude oil’s price fell below USD 20 per

barrel at times.

• The movement of global oil prices in 2020 is relatively

unstable, and we have seen many factors affecting oil

prices, from geopolitical fluctuations, advances in

science and technology or policy shifting of countries in

the world, especially crude oil producing countries. But

the strongest impact on oil price movements is still the

Covid-19 epidemic.

• Prestigious financial institutions in the world have

released many different forecasts for oil prices.

Specifically, International Monetary Fund predicts that

global oil price in 2021 will be in the range of USD 40-

50 per barrel, equivalent to half of the USD 80 per

barrel price that Saudi Arabia needs to achieve the

balance of its state budget.

• Meanwhile, the bank of Morgan Stanley forecasts that

Brent oil price will reach USD 50.00 per barrel in

1H.2021 thanks to a weak dollar and accelerating

inflation, while WTI oil prices will reach USD 47.50

per barrel in Q3.2021.

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

US

D/b

arr

el

Oil prices 2020


NATURAL RUBBER

26


-2.29% -2.17% 10.11% 29.65% 13.12% 5.79%


• In 2020, natural rubber price witnessed a new record:

Price reached the highest level in years on October 29th,

2020 after a Reuters poll showed that China's economy

in 2021 would recover strongly from the recession

caused by the Covid-19 pandemic.

• According to the Association of Natural Rubber

Producing Countries (ANRPC), in 2020, natural rubber

production will face difficulties due to epidemics,

which will limit labor force in the industry and make

transportation more difficult. The world’s natural rubber

production has decreased by 8.70% in the first 8 months

of 2020, reaching 7.778 million tons, and is expected to

decrease by 3.00% more in the remaining 4 months of

2020 and Q1.2021.

• However, ANRPC forecasts that the trend of rising

rubber prices will continue to exist in the coming

months, mainly due to the recovery of China's

manufacturing sector, amid an increase in car sales in

India and the prospect of a new economic stimulus

program in the U.S.. September was the first month the

automobile industry recovered almost globally, after a

long period of decline caused by the Covid-19

epidemic.

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

180.00

200.00

US

D/k

g

Rubber prices 2020


STEEL

27


0.00% 3.33% 7.86% 10.49% 2.97% 4.42%


• China’s spot steel prices have recovered towards the

end of 2020. In 2020, steel prices have fallen below

CNY 520.00 per ton at times due to the impact of trade

war tensions as well as signals of China’s decelerating

economic growth due to the effects of Covid-19

pandemic.

• Sales volume recovered in Q2.2020, due to higher

demand from real estate sector. Compared with the 14%

decrease over the same period in Q1.2020, 1 percentage

point lower than the same period in Q2.2020 can be

considered an impressive sign of recovery.

• Meanwhile, iron ore prices in 2020 and the following

years are forecast to decline due to more abundant

supply but lower demand.

• The World Steel Association (Worldsteel) forecasts that

global steel demand will decrease by 6.40% in 2020 due

to the negative impact of the Covid-19 epidemic, but

will gradually recover in 2021.

• According to Worldsteel’s experts, there is a possibility

that the decline in steel demand in most countries will

not be as serious as the situation of the global economy,

as Covid-19 has more serious effects on industries with

less usage steel, like consumption and services.

However, in many developed economies, steel demand

has not fully recovered since the 2008 financial crisis

and still remained low.

480.00

500.00

520.00

540.00

560.00

580.00

600.00

CN

Y/T

on

Chinese steel spot price 2020



MSCI FRONTIER MARKET 100 INDEX RAISING VIETNAMESE

STOCKS’ WEIGHT

28


As Kuwait has been upgraded to Emerging Market since

November 2020, MSCI also announced the new weight of the

constituents in MSCI Frontier Market 100. In particular, MSCI

Frontier Market 100 index will be restructured in 5 stages to

exclude Kuwait’s stocks from the index, from November 2020 to

November 2021.

After the first restructuring phase in November 2020, the weight of

Vietnamese stocks in MSCI Frontier Market 100 Index will

increase to 15.76% from the current 12.65%. We estimates that the

ETF Ishare MSCI Frontier Market 100 ETF will net buy about

VND 280 billion after the restructuring phase in November 2020

allocated to 28 Vietnamese stocks, with PDR and KDC being

newly added stocks.

Source: MSCI

Ticker

Current

Weight

(%)

Expected

Weight post-

phase 1 (%)

Expected

Value post-

phase 1

(USD)

Expected Net

Buy post-phase 1

(USD)

Expected Net Buy

post-phase 1

(VND)

1 VRE 0.47 0.58 2,274,680 421,272 9,794,567,424

2 VNM 2.06 2.55 10,033,295 1,911,947 44,452,758,336

3 VJC 0.45 0.55 2,177,885 403,107 9,372,230,266

4 VIC 2.1 2.55 10,033,295 1,777,391 41,324,345,751

5 VHM 1.45 1.78 7,017,630 1,312,620 30,518,421,498

6 VHC 0.1 0.12 483,974 76,353 1,775,206,904

7 VGC 0.16 0.20 774,359 154,201 3,585,173,534

8 VCB 0.83 1.02 4,016,988 736,366 17,120,502,517

9 TCH 0.1 0.12 483,974 102,596 2,385,367,814

10 STB 0.17 0.21 822,757 165,881 3,856,738,638

11 SSI 0.18 0.22 871,154 178,665 4,153,950,119

12 SHB 0.19 0.23 919,552 172,643 4,013,955,580

13 SBT 0.11 0.15 590,194 163,805 3,808,473,533

14 SAB 0.31 0.38 1,500,321 273,226 6,352,502,290

15 PVS 0.09 0.11 435,577 80,261 1,866,077,681

16 POW 0.12 0.15 580,769 100,996 2,348,156,167

17 PLX 0.14 0.17 677,564 120,467 2,800,867,124

18 NVL 0.39 0.48 1,887,501 371,421 8,635,533,392

19 MSN 1.07 1.32 5,178,527 984,823 22,897,132,843

20 KBC 0.08 0.10 387,180 62,804 1,460,188,957

21 HPG 1.29 1.59 6,243,271 1,165,985 27,109,151,419

22 HDB 0.26 0.32 1,258,334 217,097 5,047,507,979

23 GEX 0.15 0.18 725,962 154,940 3,602,362,968

24 GAS 0.13 0.16 629,167 115,805 2,692,457,036

25 BVH 0.08 0.10 387,180 72,216 1,679,015,865

26 BID 0.17 0.21 822,757 143,946 3,346,735,240

27 PDR 0 0.10 393,463 393,463 9,148,004,415

28 KDC 0 0.10 393,463 393,463 9,148,004,415


DERIVATIVE MARKET HIGHLIGHTS IN 2020

29


• After the sell-off in March, VN30 Index had an impressive recovery momentum, by the end of October 2020, the index had

increased by 54.00% compared to the lowest point of 600. During the highly volatile period in Q2 and Q3, the derivative

market was driven by speculators. However, from the end of Q3 until now, VN30 recovered strongly to 900 points with

positive cash flow returning to the underlying stock market and liquidity in the derivative market shrinking.

• As of now, the underlying index has increased 1.80% YTD while VN30F1M has increased by 2.50%. Market liquidity also

improved significantly compared to 2019’s, namely the average total trading volume per session reached more than 161,600

contracts (up by 90% compared to that in 2019) and the total average transaction by session reached VND12,700 billion

(67% higher than that in 2019). The average number of open interests (OI) per session also reached more than 23,500

contracts, which was an increase of 17.50% compared to that in 2019.

• Besides VN30 futures, Covered Warrants (CW) market also recorded many impressive milestones. The total number of CWs

on the market currently is 107, based on 21 underlying stocks. However, CW market is still one-way long market, only

allowing call options to be listed.

400.00

500.00

600.00

700.00

800.00

900.00

1,000.00

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

01/08/2020 02/08/2020 03/08/2020 04/08/2020 05/08/2020 06/08/2020 07/08/2020 08/08/2020 09/08/2020 10/08/2020

Khối lượng GD Vị thế mở VN30 VN30F1M

VIETNAM‟S

STOCK MARKET

OUTLOOK IN 2021


In 2021, we expect the Vietnam’s stock market outlook and market

size to achieve a certain growth compared to 2020’s but the growth

rate will somewhat be limited, due to the fact that most supportive

factors in 2020 are forecast to not improve but even weaken in

2021. Some key takeaways are as follows:

The peaks of benchmark indices in 2021 are projected to

increase by about 8-15% compared to those at the end of

2020, and will be greatly affected by the recovery rate of the

Vietnam’s economy in the context of the "new normal” in

Vietnam and the development of the Covid-19 pandemic

globally.

VN Index tends to move around a higher "base", but the

fluctuation range (the difference between the year's highest

and lowest) will be around 120-150 points and not as large as

in 2020, while HNX Index is projected to fluctuate in a

range of ~ 20 points.

Average trading volume in 2021 continued to improve

compared to that in 2020, reaching an average of 400-410

million shares per session on all three exchanges,

equivalent to an increase of about 5% yoy.

Trading value is expected to increase by about 8.00%

corresponding to an average trading value per session of

about VND 6,900-7,000 billion on all three exchanges.

STOCK MARKET’S OUTLOOK IN 2021

31

PROJECTIONS OF BENCHMARK INDICES

Source: Fireant, VCBS


PUBLIC INVESTMENT PLAN AND DISBURSEMENT IN 2021

15

Investing in new projects in 2021 will not be easy

Limited resources: Public investment in 2021 will slightly increase compared to the disbursement plan in 2020, at VND

477,300 billion (+ 1.4% yoy). However, according to the statistics of the Ministry of Planning and Investment, the capital

demands from ministries and provinces are 682,000 billion VND.

The gap time between submitting and approving mid-term public investment plans for the period 2021-2025 is

interpolated with 2021’s investment plan. 2021 is the first year of the five-year socio-economic development plan as well

as the first year of the mid-term public investment plan for the period of 2021-2025, but it is only until July 2021 that the

mid-term plan is officially approved.

With (1) limited funding and (2) late approval of the investment plan, highly prioritized investments for 2021 will be

transitional projects and those completing in 2021, focusing on projects that have been approved between 2016 and 2020,

major infrastructure projects, etc. Newly submitted projects will be delayed in the context of unapproved 2021-2025

public investment plan and the negative effects of Covid-19 on the economy.

No. Project Total Investment

(bil VND) Contractors

1 Nha Trang - Cam Lam 7,615 Bidding in progress.

2 Cam Lam - Vinh Hao 13,600 Bidding in progress.

3 Mai Son – Route 45 12,111 Bidding in progress.

4 Vinh Hao – Phan Thiet 11,183 Bidding in progress.

5 Phan Thiet – Dau Giay 14,356 Bidding in progress.

Transitional projects to be implemented in 2021*

Long Thanh Airport Phase 1

Total Investment (bil VND) 109,200

Expected completion 2025

Cost structure (bil VND) Clearance: 18.500

Construction: 90.700

Progress Clearance: 2,500 ha

Key project 2021*

*Source: VCBS


EVFTA – TARIFF CUT COMMITMENTS BETWEEN EU & VN

33

(Source: VCCI, VCBS)

Product Instant Effect Guideline

Machinery and

equipment 61% of tariff remove to 0% Remaining tariff remove to

Car and

Automobile

equipment

- Cars (over 2500 cm3 running diesel,

over 3000 cm3 running in cylinders)

will reduce tax to 0% after 9 years

- Other types of cars are subject to a 10-

year tax reduction commitment

- Auto spare parts are removed tax

import after 7 years

- Regular computers and computers

over 150 cm3 have import tax of 0%

after 10 years and 7 years

Alcohol beverage

- Wine and spirits will be exempt from

import tax after 7 years

- The schedule for tax elimination for

beer is 10 years

Fresh/Frozen

Meat

- Import tax on frozen pork will be 0%

after 7 years; Import duties on other

types of pork will be 0% after 9 years

- Chicken will be exempt from import

tax after 10 years

- Beef will be exempted from import tax

after 3 years

Medical drugs 71% of tariff remove to 0% The rest will be eliminated from tariffs

on a 5 to 7 year schedule

Chemical 70% of tariff remove to 0% The rest will be eliminated tariffs on a

maximum 7-year schedule

Texile and shoe

material 80% of tariff remove to 0%

The rest will be eliminated tariffs on a 3

to 5 year schedule

Milk and milk

product

44% of tariff is remove to

0%, some would take up to

3 years

The rest will be eliminated tariffs on a

5-year schedule

Oil and Gasoline Import duties will be cleared after 10

years

Product Instant Effect Guideline

Texiles 42.5% of tariff remove to

0% 3 - 7 years

Shoe Some tariff is remove to

0% 4 – 8 years

Yarn

Some industrial and

garment yarn remove to

0%

Remove to 0% within 4 years

Catfish/Seafood Tariff on seafood reduce to

0%

Catfish tariff reduce from 9% to 0%

in 3 years

Drugs and

Medical

Equipment

All Tariff remove to 0%

Electronic device

and equipment 74% of tariff remove to 0%

Other tariff reduce to 0% within 6

years

Agriculture

product

Raw agriculture product

tariff remove to 0%, apply

quota on rice export

Processed product tariff is reduce to

0% within 4 to 8 years

Processed food

and Frozen meat Most tariff remove to 0%

Poultry fillet, exotic organs remove

to 0% in 8 years

Car

Industrial, Specialized

vehicles tariff remove to

0%

Tariff remove from 10% to 0%

within 4 – 8 years, depend on engine

capacity

Motorbike Tariff on motorbike < 250

cm3 remove to 0%

Tariff on motorbike >250 cm3,

electrical bike remove to 0% within

4 to 6 years

Chemical and

material

Most tariff is remove to

0%

Remaining tariff remove 0% to 4

years

Woods and

Wooden product 74% of tariff remove to 0%

Remaining tariff remove to 0% after

4 years

EU TARIFF CUT COMMITMENTS VIETNAM TARIFF CUT COMMITMENTS


In the context of similar level of risk vs. opportunity, we believe that investment opportunities in 2021 will lean to basic industries

serving as essential inputs for the economic growth in Vietnam ("back to basics") for the time to come:

The shift of global supply chains, the industrialization (and digitization) of the domestic economy and the urbanization process in

Vietnam will all require essential inputs such as Electricity (both electricity transmitting and producing); Basic construction

materials (cement, steel, wood, stone); and Agricultural products. These sectors also benefit from the government's public

investment in building new infrastructure projects and upgrading existent infrastructures, as well as the overall recovery of the

domestic demand.

Another noteworthy group is companies that support the increase of trade between Vietnam and other partners thanks to the free

trade agreements signed recently and in the near future, typically seaport & logistics sectors. These companies also supports the

shift of manufacturing chains from China to other countries with more competitive labor costs, which includes Vietnam.

Although it seems contrary to the investment opinion that we outline above, we also want to emphasize on companies which

introduce and apply new technologies to its day-to-day business operations. The application of advanced technologies in

business, including the "digitization" of Vietnam’s economy, is inevitable and irreversible. Therefore, even though changes from

old to new always bring about risks, the potential positive outcomes, which are the improvements of productivity, business

performance and resource usage efficiency, still outweigh the risks caused by the transition process.

And lastly, we also want to include companies with their “specific catalysts“, i.e. seeking foreign strategic partners,

conducting M&A, IPOs, listing new shares and moving listed shares to other stock exchanges, etc.

SOME NOTEWORTHY INVESTMENT HINTS IN 2021

34

“A BIRD IN THE HAND IS WORTH TWO IN THE BUSH” So far, 2020 has witnessed many ups and downs of the global economy as well as major

stock markets in the world due to the impacts of Covid-19 pandemic. We believe that

what happened in the world in 2020 still potentially leaves over many negative

consequences and risks in 2021.

On the other hand, Vietnam's macro-economy remained stable, highlighted by

optimistic economic growth and inflation and exchange rates under control. Moreover,

low interest rates globally, with Vietnam being no exception, open up many

investment opportunities in industry-leading companies which are also the main

driving force behind the growth of Vietnam's stock market in the long run.

MACROECONOMY

FIXED INCOME MARKET

EQUITY MARKET


STOCK PICKS

36

• ACB MBB TPB BANKS

• VHM REAL ESTATE

• ACV GMD AVIATION -

SEAPORTS

• HPG PTB CONSTRUCTION MATERIALS

• PC1 ENERGY

• MWG PNJ RETAIL

• DCM FERTILIZERS

• STK TEXTILES

• DGC PLC FPT BWE OTHERS

BANKING

SECTOR

MACROECONOMY EQUITY MARKET INDUSTRY & STOCK PICKS FIXED INCOME Back

BANKING SECTOR – UPDATE

38

Source: SBV, Banks, VCBS sumary

Credit growth is slower than previous years but showing signs of

speeding again:

- Expected to be less than 10% for the whole of 2020.

- 9M.2020: credit growth from corporate bonds contributed 25% of

growth and credit growth from large corporate customers contributed

about 60% of the growth.

SBV has loosened “room” for credit growth for many banks:

- With the purpose of stimulating credit growth to support economic

growth, SBV has loosened the credit growth room for banks that meet

2 factors: (1) financial health, (2) capability of growth.

- Banks are given higher rooms: TCB, HDB, VPB, TPB, VIB, MBB

Credit growth is expected to recover and reach about 11-12% in

2021.

6.09%

0.0%

5.0%

10.0%

15.0%

20.0%

T1 T2 T3 T4 T5 T6 T7 T8 T9 T10 T11 T12

Credit growth ytd

2015 2016 20172018 2019 2020

-11% -1% 9% 19%

EIB

CTG

BID

STB

VCB

TCB

ACB

MBB

LPB

VIB

HDB

VPB

SHB

TPB

9M.2020 Credit growth

Customer loans Corporate bonds



39

Retail credit was slower in 9M.2020, however, it is still the segment many banks prioritize:

‐ Retail loans has low Weighted Risk when calculating CAR (depending on collateral or 80% if no real estate collateral)

‐ Retail loans improve loan yield and reduce concentration risk.

‐ Potential to increase retail credit proportion remains as Vietnam's proportion of retail loans is still lower than that of developed countries

and people's lifestyles are changing towards more debt acceptance. However, this segment will face a higher level of competition as more

and more banks switch focus to retail.

22.8%

25.7%

34.7%

39.7%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

Propotion of Retail credit

40% 40%

44%

48%

36%

38%

40%

42%

44%

46%

48%

50%

Viet Nam ASEAN-3 China US

Proportion of retail banking loans in 2019

Source: SBV, Banks, Bloomberg, VCBS sumary



40

Deposit from customers increased by 6.1% in 8M.2020. The average listed

deposit rate has decreased by 100 - 120 bps from the beginning of 2019

depending on the term.

Banks' cost of funds recorded a rapid decline in Q3.2020.

There has not been enough pressure to make deposit rates rise again:

- There has been no liquidity risk coming from bad debt.

- Less pressure on indicators: (1) credit growth partly based on corporate bonds

reduces the pressure on LDR as the numerator only takes into account loans to

customers; (2) not paying cash dividend according to SBV’s directive causing

CAR to increase; (3) pressure on the ratio of short-term capital for medium and

long-term loans was reduced slightly when SBV delayed the deadline of lowering

the ceiling rate.

- Liquidity pressure from credit growth is not expected to appear in 2020 and may

not appear until the end of 2021.

Lending rate is adjusted to decrease but at a slower pace than listed deposit

interest rate:

- Banks balance the impact of lowering deposit rates and lending rates on NIM.

- Corporate customers enjoy more preferences on lending rate reduction and debt

structure than individuals. In addition, new loans will have lower interest rates

than current outstanding loans.

NIM is expected to remain at 2020 level in 2021.

3.00

4.00

5.00

6.00

7.00

8.00

Average deposit rates (Unit: %)

D.R (1 month) D.R (3 months)

D.R (6 months) D.R (above 12 months)

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

VC

B

TC

B

MB

B

CT

G

TP

B

VIB

AC

B

BID

ST

B

HD

B

EIB

LP

B

VP

B

SG

B

KL

B

NA

B

VB

B

BV

B

SH

B

NV

B

BA

B

CASA ratio and Cost of funds

CASA 2019 CASA Q3.2020 Cost of fund Q3.2020



7.50%

8.00%

8.50%

9.00%

9.50%

10.00%

10.50%

11.00%

Loans to customers's yield recorded on financial

statement

Banking system Banks listed on HOSE and HNX

Group of dynamic banks*


41

Note: banks can use different methods of statistic when announcing the amount

of restructured loans

NPLs and risk assets ratio increased from above 3% at the end of 2019 to 4.5% in Q3.2020 according to SBV data.

Many banks recorded recovery of restructured loans:

- Many banks recorded no increase in restructured loans in Q3.2020. In addition, yields recorded on customer loans recovered strongly in

some banks with good asset quality. The main reason comes from the fact that part of the restructured customers now has cash flows to

pay interests and even principals.

- With many customers recovering their production and business activities, the expected amount of restructured loans turning into bad

debts when Circular 01 expires is low.

*: ACB, MBB, HDB, TCB, TPB, VIB, VPB

NPL ratio

2019

NPL ratio

Q3.2020

Restructured loans

Under Cir.01/

Customer loans

Update time

ACB 0,54% 0,83% 3,20% 2020 Sep

CTG 1,16% 1,87% 0,90% 2020 Sep

EIB 1,17% 2,46% 6,00% 2020 May

HDB 1,36% 1,83% 4,50% 2020 Sep

MBB 1,16% 1,50% 3,20% 2020 Sep

TCB 1,33% 0,60% 3,07% 2020 Sep

TPB 1,29% 1,79% 7,40% 2020 Sep

VCB 0,79% 1,01% 1,34% 2020 Sep

VIB 1,96% 2,14% 0,40% 2020 June

VPB 3,42% 3,65% 10,50% 2020 Sep

Banking system 2,00% T7.2020

Banking system 3,90% 2020 Sep




42

Free transfers have gradually become the trend among the group of

dynamic banks: Increasing transaction fees can help banks increase their

Non interest income, however the fee exemption combined with other

forms of customer experience enhancement helps banks attract regular

customers, thus reducing capital costs as CASA increases and gaining

deposits. In addition, attracting individual customers is also helpful for

increasing credit when this is the target customer group of many banks.

Decree 81/2020/ND-CP affects the bond retail-distribution activities of

some banks:

- Private placement: bond is locked for 1 year and now requires at least 6

months between 2 consecutive bond issuances. In addition, open-ended

bond investment funds are not allowed to buy bonds issued from private

placement.

- Public offering: higher requirement on issuers and the underwriter

cannot control demand.


0%

50%

100%

150%

200%

0

500

1,000

1,500

2,000

2,500

2016 2017 2018 2019 9T.2020

Mil

lio

n t

ran

sact

ion

s

Number of money transfer transaction

Number of transaction yoy growth

0%

20%

40%

60%

80%

100%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2016 2017 2018 2019 9T.2020

VN

D t

rill

ion

Money transfer transaction value

Transaction value yoy growth


BANKING SECTOR – 2021 FORECAST

43

8%

9%

10%

11%

12%

13%

14%

15%

16%

TCB EIB HDB VPB ACB TPB MBB VIB VCB CTG BID LPB

Capital adequacy ratio - CAR 2019

Bank groups:

- Large banks (AGR, VCB, BID, CTG): continue to be under pressure to reduce lending rates when SBV doesn’t changed their monetary

policy.

- Dynamic banks (ACB, MBB, TCB, VPB, VIB, TPB): has higher credit growth due to better sources of capital (higher equity source from

retain earning) and smaller scale. In addition, the pressure to lower deposit rate is lower than the large banks, leading to a positive growth

in total income.

Circular 01 expected to expire in 2021, when Covid-19 pandemic ends since many countries can mass produce preventive vaccines.

- With good signs of recovery in restructured loans, an increase in bad debt coming from restructured customers is expected to account for

0.5 - 1% of total loan balance and there will be a strong variation between banks depending on asset quality.

- Impact on provision expense will spread gradually in 2021 and 2022 because outstanding loan still has a 360-day deferred payment process

from the new repayment term to switch from group 1 debt to group 5 debt.


9.2% 9.2% 9.8% 9.6% 9.5%

10.4% 10.6% 10.7% 10.7% 10.7%

08%

09%

10%

11%

12%

CAR ratio of the group of banks that applies

Circular 41 (Basel II)

State owned banks Joint stock commercial Banks


2020 BANKING STOCKS RECOMENDATION

44

9T.2020

indicators Total Asset Total Equity EBT NIM ROE NPL LLCR Asset quality Earning outlook Recommendation

Unit VND billion VND billion VND billion % % % %

ACB 418,748 32,919 6,411 3.54% 22.11% 0.83% 117% High Increasing Buy

BAB 112,042 8,194 522.087 1.95% 8.14% 0.81% 124% No rating No forecast No recommendation

BID 1,467,806 81,441 7,062 2.45% 10.68% 1.97% 87% Average Increasing Outperform

BVB 54,561 3,840 138 2.10% 4.46% 2.98% 48% No rating No forecast No recommendation

CTG 1,261,204 83,322 10,364 2.84% 13.70% 1.87% 84% Average Stable Outperform

EIB 151,274 16,597 1103.612 2.20% 5.29% 2.46% 50% Low Stable No recommendation

HDB 273,290 23,885 4,381 5.10% 19.52% 1.83% 64% Average Increasing Outperform

KLB 55,592 3,907 144.573 1.82% -0.12% 6.63% 17% No rating No forecast No recommendation

LPB 211,978 13,765 1741.441 3.18% 12.81% 1.64% 73% No rating Stable Hold

MBB 427,175 48,254 8,134 4.93% 18.44% 1.50% 119% Average Increasing Buy

NAB 119,474 6,113 388 2.46% 11.04% 2.28% 38% No rating No forecast No recommendation

NVB 74,335 4,283 29 2.14% 1.05% 1.80% 65% Low No forecast Underperform

SGB 22,700 3,672 177 3.28% 2.55% 2.14% 40% No rating Stable No recommendation

SHB 401,926 23,876 2607.122 2.64% 12.93% 2.47% 57% Low Increasing Hold

STB 485,213 28,205 2325.693 2.47% 8.65% 2.14% 74% No rating No forecast No recommendation

TCB 401,462 70,608 10,711 4.85% 17.23% 0.60% 148% Average Increasing Outperform

TPB 193,461 15,438 3,024 4.02% 25.26% 1.79% 92% Average Increasing Buy

VBB 82,270 5,303 374 0.99% 7.98% 2.03% 54% No rating No forecast No recommendation

VCB 1,188,572 93,576 15,965 2.99% 19.41% 1.01% 215% High Increasing Outperform

VIB 213,086 16,552 4,025 3.95% 27.93% 2.14% 48% High Increasing Hold

VPB 413,892 49,726 9,398 8.57% 21.81% 3.65% 48% Low Stable Hold



ASIA COMMERCIAL BANK (ACB) – OVERVIEW

45

Main business activities:

ACB is a joint stock commercial bank with a dynamic business model and

high risk management capabilities. The bank focuses most of its business

activities in the retail customer segment, with real estate collateral for

loans mainly. ACB's asset quality is well controlled with low NPLs ratio.

Shareholder structure:

Including 30% owned by foreign funds, 7% owned by Tran Hung Huy

(Chairman of the Board of Directors) and family members, the rest are

other shareholders.

Business results:

In 9M.2020, ACB recorded EBT of VND 6,411 billion (+15.3% yoy).

Positive growth rate was achieved thanks to good growth in net interest

income as well as non-interest income.

7% 6%

4%

5%

5%

3%

7% 63%

Share holder structure

Dragon Financial Holdings Limited

Vietnam Enterprise Investments Limited

First Burns Investments Limited

Sather Gate Investments Limited

Whistler Investments Limited

Asia Reach Investments Limited

Tran Hung Huy and familiy members

Others

Subsidiary Sector Charter capital

Ownership 2019 EBT

(VND billion) (VND billion)

ACBS Securities 1500 100% Na

ACBA Asset management 340 100% 7

ACBL Finance lease 300 100% 12

ACBC Fund management 50 100% 1

7,563

11,439

14,033

16,097

12,966

1,667 2,656

6,389 7,516

6,411

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2016 2017 2018 2019 Q3.2020V

ND

bil

lio

n

TOI and EBT

TOI EBT

Source: SBV, ACB, VCBS sumary

MACROECONOMY EQUITY MARKET INDUSTRY & STOCK PICKS FIXED INCOME Back 46

INVESTMENT CATALYSTS

Credit growth of 10.7% after 9M.2020: in 2019 ACB has CAR of 11.7%, belonging to the group with optimal capital adequacy ratio to keep

balance between credit growth and target profit. We expect ACB will continue to be assigned a higher credit growth target than the industry

average in the coming years.

Potential for good growth in non-interest income:

⁃ ACB owns a portfolio of government bonds of VND 61,632 billion, bond yield recorded at 5.0% in Q3.2020. The recorded yield was much

higher than the government bond interest rate in the market at 1-2%. Thus, ACB can record an abnormal profit from investment securities if the

bank sells some of these government bonds.

⁃ According to the bank's expectation, ACB could sign an exclusive Bancassurance contract in 2020. With its position as one of the banks with the

highest insurance sales in the system and the negotiation process took place very thoroughly, we expect that ACB could get a higher upfront fee

than peer average.

ASIA COMMERCIAL BANK (ACB)

0

50

100

150

200

250

300

350

400

2017 2018 2019 Q3.2020

VN

D t

rill

ion

Loans and deposit

Net loan Customer deposit & valuable paper

3.6% 3.6% 3.6% 3.8% 3.7% 3.3%

3.7%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

NIM

NIM Int earning asset yield Cost of fund

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Q1.2019 Q3.2019 Q1.2020 Q3.2020

VN

D b

illi

on

ACB's government bond outstanding

Government bond outstanding

Yield recorded




Good asset quality with high quality assets:

⁃ ACB focuses on lending to high-income individual customers. The bank recorded the

lowest Credit cost / Outstanding balance ratio in the industry.

⁃ The collaterals for ACB's loans are mainly real estate with clear legal status and stable

market value in the long term. In case customers cannot pay their debts, the debt

recovery process of ACB is relatively favorable with recovery rate among the highest in

the industry.

Stable profitability helps BVPS continue to grow at an expected rate of 25% in 2020

and 26% in 2021.

High possibility of entering the VN-30 index basket in the restructuring period of

July 2021 after listing in HOSE.


23.2%

45.5%

46.7%

49.4%

0% 20% 40% 60% 80% 100%

2017

2018

2019

9T.2020

Total income structure

Operating expense Provision expense EBT

0.7% 0.7% 0.7%

0.5% 0.7% 0.7%

0.8%

0.3%

0.5%

0.7%

0.9%

1.1%

1.3%

NPL

Net NPL ratio Overdue loan ratio

52 148 79

369

1,765

1,428

0

500

1,000

1,500

2,000

2014 2015 2016 2017 2018 2019

VN

D b

illi

on

Recovery of loans previously

written-off

Bad debt write off

Recovery of loans previously written-off

2%

52%

102%

152%

202%

0

500

1000

1500

2000

2500

3000

2016 2017 2018 2019 9T.2020

VN

D b

illi

on

Provision expense

Provision expense LLCR



P/B Multiple 29,393

Residual Income 32,658

FORECAST

VALUATION

31,022 VND

TARGET PRICE

+15% UPSIDE


10,00012,00014,00016,00018,00020,00022,00024,00026,00028,000

STOCK PRICE

ACB Relative VN-Index Estimated profit in 2021 includes VND 2,000 billion Upfront fee from exclusive Bancassurance

contract

VND Billion 2019 2020F 2021F

Total operating income 16,097 18,207 21,805

+/- yoy (%) 14.7% 13.1% 19.8%

Earning before tax 7,516 8,817 11,173

+/- % 17.6% 17.3% 26.7%

BVPS (VND/share) 16,699 16,043 19,595

Source: VCBS forecast


MILITARY COMMERCIAL JOINT STOCK BANK (MBB)

49

Main business activities

MBB is a joint stock commercial bank with a dynamic business

model, including many subsidiaries operating in the banking and

finance sector. MBB has special advantages thanks to standing in

the Army group.

Shareholder structure

Including 14% owned by Viettel, 9% owned by SCIC, 23% foreign

owned, the rest are other shareholders.

Business results

In 9M.2020, MBB recorded EBT of VND 8,134 billion (+ 6.8%

yoy). The Bank recorded positive growth in total income and has

made a conservative provision for outstanding loans affected by

Covid-19 since Q1.2020.

14%

9%

7%

7%

4% 3%

54%


Viettel

SCIC

Vietnam Helicopter

Corporation

Saigon New Port

Vietcombank

Maritime Bank

Others

4%

36%

11%

48%


M-Credit

Individual

State owned

companies

Other companies and

institution0

5,000

10,000

15,000

20,000

25,000

30,000

2017 2018 2019 Q3.2020

VN

D b

illi

on

TOI and EBT

TOI EBT

Source: SBV, MBB, VCBS sumary



50


Credit growth of 11.8% in 9M.2020: CAR in 2019 reached 10.68%, belonging to the group of banks with optimal capital adequacy ratio to

balance the target of credit growth. We expect MBB will continue to be assigned a higher credit growth target than the industry average in the

coming years.

CASA is more sustainable thanks to the individual customer base: after the decline in Q1.2020 due to the group of corporate customers

affected by Covid-19, in Q3.2020 CASA grew again to 33.5% thanks to individual customer groups. The proportion of deposits of individual

customers increased to about 30% as the bank applied free money transfer program and launched many programs to attract customers.

0

50

100

150

200

250

300

350

2017 2018 2019 Q3.2020

VN

D t

rill

ion

Loans and deposit

Net loan Customer deposit & valuable paper

4.7% 4.8% 4.9% 5.1%

4.9% 4.8% 5.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

NIM

NIMInt generating asset yieldCost of fund

2.0%

7.0%

12.0%

17.0%

22.0%

27.0%

32.0%

37.0%

42.0%

47.0%

0

2,000

4,000

6,000

8,000

10,000

12,000

2017 2018 2019 9T.2020

Operating expense

Operating expense CIR




51


Good asset quality: MBB's NPL ratio increased from 1.16% to 1.50%

in Q3.2020 and the bank made high provisions from Q1.2020 for NPL

which may rise due to Covid-19. Therefore, we expect MBB to incur

less increased provisioning expenses in the post-pandemic phase.

Maintaining a good profitability index helps book value continue to

grow: MBB's ROE is forecast to reach 22.5% for 2020 and 19% for

2021, BVPS forward 2021 at VND 19,884/share and P/B forward is at

0.97 times.

0% 20% 40% 60% 80% 100%

2017

2018

2019

9T.2020

Total operating expense structure


0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

NPL

Net NPL ratio Overdue loan ratio

2%

22%

42%

62%

82%

102%

122%

142%

0

1000

2000

3000

4000

5000

6000

2016 2017 2018 2019 9T.2020

VN

D b

illi

on

Provision expense





52

P/B Multiple 26,608


FORECAST

VALUATION

24,660 VND

TARGET PRICE

+21% UPSIDE



+/- yoy (%) 26.2% 8.0% 10.1%


+/- % 29.2% 6.6% 6.0%

BVPS (VND/share) 16,014 16,989 19,884

10,000

12,000

14,000

16,000

18,000

20,000

22,000

STOCK PRICE

MBB Relative VN-Index



TIENPHONG COMMERCIAL JOINT STOCK BANK (TPB)

53

Main business activities:

TPB is a bank with rapid growth in asset size and profitability on a

smaller scale. The bank also focuses on digital development to

increase customer experience.

Shareholder‟s structure:

Including 18% owned by Do Minh Phu, family and related entities;

10% belongs to FPT and former FPT's Vice Chairman Le Quang

Tien; 4% of the national reinsurance corporation, 30% foreign

ownership, the rest are other domestic shareholders.

Business results:

In 9M.2020, TPB recorded EBT of VND 3,024 billion (+ 25.8%

yoy). Positive growth comes from both net interest income and

non-interest income.

18%

6%

4%

5%

30%

37%


Do Minh Phu, Families

and Related copanies

FPT

Le Quang Tien

Vinare

Foreign ownership

Other

9%

37%

22%

18%

14%

Loan structure

Big Corp

SME

Individual - Mortgage

Individual - Car loan

Individual - Other

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2016 2017 2018 2019 9T.2020

VN

D b

illi

on

TOI and EBT

TOI EBT

Source: SBV, TPB, VCBS sumary



54


Gradually improving cost of fund: The customer base increases rapidly as TPB is one of the pioneering banks that apply technology to

improve customer experience and launch marketing campaign including reducing service fee. In 9M.2020, TPB's CASA increased by 21% and

the ratio reach 16%. In addition, TPB maintains a high rate of mobilization from the interbank market with net borrowing equivalent to 22.5%

of customer deposits. With current abundant liquidity environment, raising more from the interbank market is less risky and helps TPB reduce

cost of fund.

Credit growth reached 23% after 9M.2020 and high growth rates can be maintained in the future: with the advantage of small-sized

bank, good data source and rapidly increasing individual customer base thanks to effective marketing campaign, TPB has the highest credit

growth in the industry. We expect TPB will be given higher credit room than the industry average in the coming years when the bank has

abundant capital from retained earnings

Car loans: although car loans incur more NPLs than home loans, the profit earned is still high when the bank requires higher lending rates to

offset incurred provision expense. Cars as collaterals are also easily to recall and sell when customers need the bank's confirmation for annual

registration.

9.0%

9.5%

10.0%

10.5%

11.0%

11.5%

0

20,000

40,000

60,000

80,000

100,000

120,000

Loans to customers

Loans to customers Yield on customer loans

4.1% 4.3% 4.2% 4.2% 4.4% 4.3% 3.9%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

NIM

NIM Int earning asset yield

Cost of fund

2%

12%

22%

32%

42%

52%

62%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2016 2017 2018 2019 9T.2020

Operating expense

Operating expenses CIR




55


The rebound in recorded yield of customer loan portfolio is a sign showing

that restructured customers are recovering well:

- TPB has VND 8,000 billion restructured loans (7.4% of customer loans), of which

about VND 5,000 billion have principal repayment extended and 3,000 VND

billion have both interest and principal repayment extended.

- The yield recorded on customer loan portfolio was 10.9% in Q3.2020, going up

from Q2 and not much lower than the yield of 11.0% in Q1.2020 as a large

portion of restructuring customers returned to pay interest as normal.

High growth rate of interest earning assets coupled with efficient

operations help sustain growth in profits and equity in the long run.

0% 20% 40% 60% 80% 100%

2017

2018

2019

9T.2020

Total income structure


0.00%

1.00%

2.00%

3.00%

4.00%

NPL

Gross NPL ratio Overdue loan ratio

2%

22%

42%

62%

82%

102%

122%

142%

0

200

400

600

800

1000

1200

1400

2016 2017 2018 2019 9T.2020

VN

D b

illi

on

Provision expense





56

P/B Multiple 27,813


FORCAST

VALUATION

26,898 VND

TARGET PRICE

+21% UPSIDE



+/- yoy (%) 50.5% 12.5% 14.0%


+/- % 71.3% 4.8% 15.6%

BVPS (VND/share) 15,264 18,881 23,062


10,000

12,000

14,000

16,000

18,000

20,000

22,000

STOCK PRICE

TPB Relative VN-Index

REAL ESTATE


Sources: Ministry of Construction, VCBS

OVERVIEW

Overview

• Despite experiencing two waves of Covid-19, the real estate market is

gradually recovering thanks to Vietnam's good disease control and

applications of new market support policies & legal documents.

• Demand for houses, production facilities is still very large, the price level

remains high. Public spending has been strongly disbursed into

infrastructure development, making real estate near big cities become more

appealing.

Sharp increase in commercial real estate & investment credit

• Outstanding debt for the real estate sector is currently VND 1.6 million

billion, accounting for more than 19% of the total credit balance of the

whole economy.

• While demand for housing credit decreased slightly, commercial real estate

& investment returned to a strong growth, estimated at +17.5% compared to

the beginning of 2020.

Outstanding new policies impacting the market:

Construction Law (amendment) 2020 Investment Law (amendment) 2020

Public Investment Law 2019 PPP Investment Law 2020

Directive No. 11/CT-TTg Decree No. 41/2020/ND-CP

Decree No. 81/2020/ND-CP

-

50,000

100,000

150,000

200,000

250,000

300,000

Căn hộ được

cấp phép

Căn hộ đang xây

dựng

Căn hộ hoàn

thành

Căn hộ đủ điều

kiện bán nhà ở

hình thành trong

tương lai

Giao dịch BĐS

thành công

Thị trường BĐS 9T.2020

Q1.2020 Q2.2020 Q3.2020

58

0

50000

100000

150000

200000

250000

300000

Licensed

apartments

Under construction

apartments

Completed

apartments

Successful

transactions

Real estate market 9M.2020 (units)

Q1.2020 Q2.2020 Q3.2020

17% 18% 19% 19%

46%

35% 33%

38%

0%

10%

20%

30%

40%

50%

0

500

1000

1500

2000

2017 2018 2019 Q3.2020E

Outstanding debt in the real estate sector (VND trn)

Outstanding debt for the real estate sector (trillion VND)

Outstanding debt for the real estate sector / whole economy (%)

Real estate investment & business credit / real estate sector (%)


0

2000

4000

6000

8000

10000

12000

14000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2018 2019 2020

Sold units, HCMC Condominium

Affordable Mid-end High-end Luxury

Sources: Ministry of Construction, CBRE, VCBS

CONDOMINIUM

HANOI

• The limited number of new apartments for sale in the first 3

quarters of 2020 helps maintain price level. However, the selling

price is still significantly lower than Ho Chi Minh City, big real

estate companies in the South are expected to develop new projects

in the North in the future.

• The Covid-19 pandemic makes real estate companies restructure

their products. Newly launched projects are mainly in mid-

end/affordable segments and located in the area outside the ring

road 3.

HCMC

• Projects in the “East City” area (especially with contributions from

Vinhomes Grand Park) led in both supply and sales, accounting for

97% and 89% of the total market, respectively.

• The absorption rate is maintained positively due to the limited

supply. The selling price in all segments is 3% -5% higher than

2019. Completion of legal procedures is expected to improve from

the beginning of 2021.

59

0

2000

4000

6000

8000

10000

12000

14000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2018 2019 2020

Sold units, Hanoi Condominium

Affordable Mid-end High-end Luxury


Sources: Ministry of Construction, CBRE, VCBS

LANDED PROPERTIES

HANOI

• Similar to the condominium market, the number of newly launched

landed houses in 9M.2020 plummeted to only 326 units (-92%

yoy). Sales results remained positive, nearly 30% higher than new

launches.

• Demand for housing in the CBD area has not decreased, causing

prices in the secondary market to increase in some inner districts.

Vinhomes' mega projects will lead the development of the housing

market in new areas such as Hoai Duc, Dan Phuong, Dong Anh,

Van Giang (Hung Yen).

HCMC

• New projects are mainly located in District 2, 9, Thu Duc, Go Vap,

Nha Be with high absorption rate. High selling price is the main

barrier for the majority of buyers, particularly the townhouse

segment has increased by 5% -10% over the same period.

• The system of highways, airports and seaports in the South has

been improved by the Government in recent years, enhancing sales

potential for real estate projects in areas near Ho Chi Minh City

such as Long An, Dong Nai, Binh Duong.

60

0

1000

2000

3000

4000

5000

2018 2019 9M.2020

Sold units, Hanoi Villa and Townhouse

New launch Sold units

0

1000

2000

3000

4000

5000

2018 2019 9M.2020

Sold units, HCMC Villa and Townhouse

New launch Sold units


Office: Hanoi (A class) Hanoi (B class) HCM (A class) HCM (B class)

Supply NLA (m2) 530,000 m2

(21 projects)

~940,930 m2

(70 projects)

445,313 m2

(17 projects)

925,501 m2

(67 projects)

Rate (USD/m2/month) 26.7 (▲1,3%) 13.8 (▼3,0%) 44.3 (▼5,0%) 25.3 (▲3,0%)

Vacancy (%) 24.1% (▲16,2%) 11.5% (▲2,4%) 11.5% (▲3,3%) 6.1% (▲1,3%)

• Capital Place (~93.000 m2 NLA A-class) – The

largest office building in Hanoi was put into

operation in Q3.2020.

• In 2021, high vacancy rate can cause rents to move

sideways or slightly decrease in both segments.

• Manufacturer, ICT, and e-commerce enterprises

prefer the non-CBD area, especially the east of the

city. There will be more new projects in this area

and attract more tenants.

• A-class rents are expected to decline slightly and

B-class will remain stable in 2021.

Sources: CBRE, VCBS

OFFICE/RETAIL

Retail: Hanoi

(CBD)

Hanoi

(Non-CBD)

HCM

(CBD)

HCM

(Non-CBD)

Supply NLA (m2) ~52,000 m2

(12 projects)

~950,000 m2

(41 projects)

103,453 m2

(11 projects)

942,575 m2

(47 projects)

Rate (USD/m2/month) 98.6 (▲0,5%) 24.5 (▼1,5%) 135.4 (►0,0%) 35.8 (▲0,2%)

Vacancy (%) 11,1% (▲9,7%) 11,2% (▲2,9%) 1,65% (▼0,6%) 13,1% (▲4,3%)

• The vacancy rate increased sharply despite no new

supply.

• New projects are being developed in the non-CBD

areas.

• Limited supply makes vacancy rate recover

slowly.

• Development towards the Eastern part of the city

and the impact of the Metro Line.

61


INDUSTRIAL PARK

Increasing scale of industrial parks

By the end of 10/2020, 280/369 industrial parks are in operation

with a total industrial land area of ~ 56.6 thousand ha, occupancy

rate is 70.1%.

Improve the quality & efficiency of investment attraction

The logistics, manufacturing and electronic technology industries

continue to expand their operations vigorously.

Land rental rates have risen sharply in areas with high demand and good infrastructure

Operating industrial parks in Hai Phong, Bac Ninh, Hai Duong, Ho Chi Minh City, Dong Nai, and Long An increased their rents by 20-30%.

62

68%

70%

72%

74%

76%

0

100

200

300

400

500

2018 2019 2020F 2021F

Number of Industrial Parks

Established Operating Occupancy rate (%)

19.2%

6.8%

5.5%

Industrial leasing enquiry by industry,

Q3.2020

Logistic

Electronic

Automotive

Plastic

Trading

Garment

0

100

200

300

0%

20%

40%

60%

80%

100%

Hanoi Hai Phong Bac Ninh Hai Duong Hung Yen

US

D/m

2/ter

m

Northern Industrial Region

Occupancy rate (%) Minimum asking rent Maximum asking rent

Sources: Ministry of Planning and Investment, Ministry of Construction, CBRE, VCBS

0

100

200

300

0%

20%

40%

60%

80%

100%

HCMC Long An Binh Duong Dong Nai BR-VT

US

D/m

2/ter

m

Southern Industrial Region

Occupancy rate (%) Minimum asking rent Maximum asking rent


2021 DEVELOPMENT TRENDS

Industrial real estate continues to be the catalyst to attract FDI Improve infrastructure investment

Enhance real estate potential in the suburbs

2021 Projects Investment

(VND bn)

5 component projects (under the North-South Expressway) 49,353

My Thuan – Can Tho Express Way 4,827

Long Thành Airport – Phase 1 109,112

Development trend toward the East

North of Vietnam: Improve connections between the three largest cities:

Hanoi - Hai Phong - Quang Ninh.

South of Vietnam: New project in Ho Chi Minh City developed along metro

line 1 & 2, towards the "Eastern City"; housing market in neighboring

provinces grew according to the construction progress of Long Thanh airport.

63

Source: VCBS


2021 POTENTIAL REAL ESTATE COMPANIES

Company MK Cap

(VND bn)

Total Asset

(VND bn)

Equity

(VND bn)

Gross Profit

Margin (%) ROA (%) ROE (%) P/E P/B

Residential

VHM 258,227 220,509 78,778 44.8% 10.6% 30.6% 11.6 3.4

NVL 60,744 129,389 31,200 35.6% 5.5% 21.5% 10.5 2.4

KDH 14,780 14,718 7,775 44.9% 8.4% 15.2% 12.7 1.9

NLG 7,832 11,803 6,224 35.8% 6.7% 12.1% 10.1 1.5

DXG 7,386 22,227 9,083 59.3% -0.4% -0.9% -94.4 1.1

DIG 6,487 7,980 4,094 27.8% 5.8% 11.7% 14.0 1.6

HDC 1,713 2,568 1,018 35.0% 7.4% 16.8% 9.0 1.7

CKG 570 4,878 715 25.2% 2.2% 15.9% 5.4 0.9

Industrial Parks

IDC 8,250 14,283 4,341 17.6% 2.1% 7.1% 27.2 2.3

KBC 7,281 19,361 10,430 65.4% 1.9% 3.3% 17.3 0.8

SZC 2,820 3,831 1,240 58.0% 5.4% 15.3% 15.4 2.3

LHG 1,440 2,419 1,219 35.7% 7.0% 14.0% 8.5 1.2

SZL 946 1,656 518 33.3% 6.2% 16.7% 9.2 1.8

TIP 824 843 573 64.0% 10.9% 16.4% 9.2 1.5

Retail

VRE 62,830 40,079 28,361 46.4% 6.0% 8.3% 27.6 2.2

Brokerage

CRE 2,328 2,968 2,071 32.2% 11.1% 15.5% 7.6 1.2

64

Source: VCBS


OVERVIEW

• Vinhomes is the largest developer of residential real estate in

Vietnam with a huge land bank of 164 million square meters,

outstanding quality and the ability to develop large-scale and

highly efficient projects.

• VHM also owns 29 million m2 of industrial real estate and

operates 120,000 m2 of office space for lease.

• As a subsidiary of Vingroup, VHM has great advantages from

the Group ecosystem in the long term.

9M.2020 PERFORMANCE

• Net revenue grew strongly +31.2% yoy to VND 49,378 billion,

mainly came from 3 major projects Vinhomes Ocean Park,

Grand Park and Smart City.

• Financial revenue reached VND 10,543 billion (+37.7%) with

about VND 7.6 trillion coming from the transfer of 80% stake

in Grand Park phase 2 to Mitsubishi and Nomura.

• Profit after tax reached VND 17,208 billion (-0.8%, 55.5% of

annual target).

VINHOMES JSC (VHM)

Sources: VHM, VCBS

65

22%

4%

2% 2%

2% 68%

Vietnam residential market share 2016 – 2019

Vinhomes

Hung Thinh

Dat Xanh

Ecopark

Novaland

Others

0%

10%

20%

30%

40%

50%

60%

0

10,000

20,000

30,000

40,000

50,000

60,000

2016 2017 2018 2019 9T.2020

Financial Results 2016 - 9M.2020 (VND bn)

Net Revenue Gross profit NPAT GPM (%) NPM (%)


Enhance wholesale strategy, sales progress and handover remain

positive: At the end of Q3.2020, VHM has handed over ~20,000 apartments,

sales that have yet been recorded remains positive, reaching VND 82 trillion

(+1% yoy). The company plans to continue handing over ~11,000 apartments

and recording a large number of wholesale transactions in Q4.2020.

Expanding industrial real estate investment: In the period of 2020 - 2021,

VHM plans to invest ~VND 3 trillion in industrial projects. Accordingly, 2

new industrial parks in Hai Phong with total NLA of 348 ha will contribute

to the revenue from 2022.

VINHOMES JSC (VHM) – OUTLOOK

Projects Ocean Park Smart City Grand Park Others

Floor area for sale („000 m2) 3,500 2,601 3,241 4,160

Total products 47,300 47,000 45,500 30,300

Number of products sold and

delivered 19,400 (41%) 13,900 (30%) 17,600 (39%) 27,400 (90%)

Number of products sold and

not-delivered 10,700 (23%) 10,800 (23%) 21,100 (46%)

1,500

(5%)

Un-earned revenue (VND bn) 23,040 16,810 36,470 6,440

Construction progress (%) 51% 37% 50%

Outstanding land bank, strategic location and

continuous expansion: Vinhomes dominates the real

estate market with a land bank of 164 million m2

GFA (146 million m2 NSA). In Q2.2020, VHM

bought Dai An project (~300 ha) at the cost of ~

VND 3.4 trillion. Legal procedures for Green Ha

Long (~4,110 ha) and Long Beach Can Gio (2,870

ha) are also being actively completed.

Ongoing housing projects by the end of 30/09/2020

Sources: VHM, VCBS

66

32%

26%

8%

19%

14%

Total Gross Development Value

(up to 2025)

Hanoi HCMC Quang Ninh Hung Yen Others

USD 48.2 bn


(VND bn) 2019 2020F 2021F

Revenue 51,627 74,437 86,857

+/- yoy (%) +33.5% +44.2% +16.7%

NPAT 24,319 25,329 28,674

+/- % +64.6% +4,2% +13.2%

EPS (VND/share) 6,502 6,762 7,655

FORECAST HISTORICAL PRICE

94,949 VND

TARGET PRICE

+15.0% UPSIDE

VINHOMES JSC (VHM) – PRICING

RNAV method 95,864

P/E method 91,292

VALUATION

67

0

20,000

40,000

60,000

80,000

100,000

120,000

VN

D

VHM Relative VN Index

AVIATION -

SEAPORTS


Source: CAA, GSO, Vietnam Tourism, VCBS

AVIATION: THE PRESSURE FROM COVID-19 REMAINS

1H.2020: After the period of social distancing, the number of

domestic passengers recorded a positive recovery due to :

Growth of flight number compared to the same period

of Vietnamese airlines in 2020

2H.2020: the second wave of Covid had impact on the recovery

trend of domestic passengers traffic in H2.2020, in particular :

Well-controlled pandemic situation in Vietnam.

Policies to stimulate domestic tourism demand.

Domestic airlines opened new flight routes and decreased ticket

price.

Flight ban order in Da Nang and increasing disease control

measures in many tourism destinations.

Domestic tourism market lost the final month of peak summer

season.

Domestic aviation market went into low season of the year.

In Q4.2020, a number of commercial international flight routes was

reopened but contributed minimally to the total volume due to: (1)

Low flight frequency; (2) Post-entry quarantine measures remains.

Sản lượng khách du lịch quốc tế đến Việt Nam (đv: lượt

khách)

-10%

-34%

-92%

-70%

-38%

-18%

-46%

-71%

-39%

-100%

-80%

-60%

-40%

-20%

0%

Feb Mar Apr May Jun Jul Aug Sep Oct

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct

2019 2020


Source: CAA, ACV, VCBS

AVIATION: POTENTIAL OF RECOVERY FROM 2021

In 2021, passengers traffic is expected to recover due to:

The number of passengers through airports

(unit: million passengers)

In the long-term, Vietnam aviation market retains strong growth

potential with main drivers :

The domestic passengers traffic possessed abundant room for

growth as: (1) Air travel frequency per capita is still low; (2)

Average income and middle-class population size increase

dramatically; (3) Vietnam’s long and divided topography brings

huge advantage to air travel; (4) Expansion in scale of low-cost

airlines.

The number of international passengers benefits from the

increasing global integration of Vietnam’s economy and

international tourism attraction policies are promoted.

Well-controlled pandemic situation in Vietnam.

The procedure of post-entry disease control and quarantine applied

to international commercial flights will soon be implemented.

The vaccine development process witnessed positive signals.

Many aviation infrastructure projects are being strongly invested in

2020, expected to ease the capacity constraint situation in many key

airports and bring about growth potential in the coming years.

30.3

36.7

41.8

11.7

25.6

40.3

0

5

10

15

20

25

30

35

40

45

2017 2018 2019 2020F 2021F 2022F

Important aviation infrastructure projects are being deployed


Source: Financial statements, VCBS

AVIATION: INVESTMENT OPPORTUNITY FOR LONG-TERM HORIZON

Air transportation companies are the most heavily damaged,

which requires a number of years to offset the lost recognized in

2020 and recover financially, due to:

Profit after tax of HVN & VJC (unit: billion VND)

Long-term investment opportunity for service providers in

airports that:

Low profit margin characteristic.

Recurring fixed costs such as aircraft rental, regular maintenance

and airport services putting great pressure on cash flows.

Have business performance and financial health not severely

affected by the pandemic.

Possess high competitive advantages and abundant room for

business scale expansion to capture \industry growth.

-5,000

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

Q1.2019 Q2.2019 Q3.2019 Q1.2020 Q2.2020 Q3.2020

HVN

VJC

-40%

-20%

0%

20%

40%

60%

80%

2016 2017 2018 2019 9T.2020

HVN VJC ACV SCS NCT SGN AST

NPAT margins trend of aviation companies


Source: Vinamarine, Finpro, VCBS

SEAPORTS: BENEFIT FROM THE PRODUCTION RELOCATION WAVE

Accumulated volume of goods through

seaports (unit: thousand tons)

The goods output through seaports in 10M.2020 slightly

increased compared to the same period despite the impact of

Covid-19, thanks to :

Business performance of seaport operators in the coming

years will benefit strongly from:

Marine transportation was less interrupted by the pandemic.

The export-import turnover of Vietnam still witnessed positive

growth during the period.

The manufacturing facilities relocation wave from China.

Trade agreements (CPTPP, EVFTA, RCEP,…) benefiting

many key export products of Vietnam.

The strong promotion of road infrastructures and deep-water

seaports projects, which will reinforce the connection between

key industrial areas, consumption markets and important ports

system.

The growth in traffic of ultra large containerships.

6.6%

10.5% 10.0%

5.1%

5.9%

-8.4%

7.0%

-10%

-5%

0%

5%

10%

15%

Q1.2019 Q2.2019 Q3.2019 Q4.2019 Q1.2020 Q2.2020 Q3.2020

The growth of export-import turnover compared

to the same period

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

4M 5M 6M 7M 8M 9M 10M

2019 2020


Source: Vinamarine, VPA, CEIC, VCBS

SEAPORTS: DRIVERS FOR DEEP-WATER SEAPORTS

The dramatically growth in export-import goods volume to US

and EU boost the traffic of ultra large vessels.

The trend of vessel upsizing of many large container carriers.

The improvement in deep-water ports strategic planning and

the support from government:

The volume of container cargo through seaports in Cai Mep (unit: TEU)

Export-Import turnover between Vietnam and US & EU

(unit: million USD)

The construction progress of seaports.

Connection infrastructures.

The promotion in ports relocation from Ho Chi

Minh city.

Decrease in competition pressure in Cai Mep – Thi Vai area.

Lach Huyen seaport will still bear considerable pressure in

attracting cargos.

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2015 2016 2017 2018 2019

TCIT - TCCT CMIT TCTT SSIT

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2014 2015 2016 2017 2018 2019

US

EU


Source: GSO Hai Phong, Financial Statements, VCBS

SEAPORTS: PORTS ON CAM RIVER (IN HAI PHONG)

The ports on the upstream of Cam river (Hai Phong) are likely to

enjoy positive growth in the coming years due to:

The trend of traffic relocation to downstream ports of shipping

companies has basically finished.

Benefit from the growth of cargo volume in the area.

Profit margin expands since many companies no longer have

much depreciation and interest expenses while benefiting from

financial revenue.

Volume of goods through seaports in Hai Phong (unit: million tons)

Depreciation & Interest expense of seaport operators (unit: billion VND)

6%

9%

6%

4%

6% 7%

9%

13%

9%

0%

2%

4%

6%

8%

10%

12%

14%

2017 2018 2019

PHP VSC DVP

Dividend yield of some seaport operators in Hai Phong

0

20

40

60

80

100

120

140

2014 2015 2016 2017 2018 2019 10M.2020

301.7

176.0 188.7

159.8

104.1 106.2

56.8 47.8

0

50

100

150

200

250

300

350

9M.2019 9M.2020

PHP VSC VGR DVP


Source: ACV, VCBS

AIRPORT CORPORATION OF VIETNAM - ACV

ACV is the largest airport operator in Vietnam.

Almost monopoly position with business operation at 21 airports

across the country.

Revenue and profit come from providing aviation and non-

aviation services at airports.

9M.2020 business results of ACV (unit: billion VND) OVERVIEW

9M.2020 BUSINESS RESULTS:

Net revenue of ACV in 9T.2020 was VND 6.124 billion,

decreased 54,7% compared to the same period due to: (1) Impact

from the pandemic and flight limitation order to the volume of

passengers and flights through airports (2) Service fee reduction

policies to support airlines.

NPAT in 9T 2020 was VND 1.332 billion (-77,4% yoy) since

fixed cost accounted for a large percentage in total cost.

The trend of profit margin of ACV

13,517

6,124 6,998

1,255

5,908

1,332

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

9M.2019 9M.2020

Revenue Gross profit NPAT

37% 41%

49% 51%

20% 33% 30%

38%

45%

22%

00%

10%

20%

30%

40%

50%

60%

2016 2017 2018 2019 9M.2020

Gross margin NPAT margin


Large financial revenue, abundant cash reverse and many cost

cutting measures helps ACV maintain profitability and financial

health in 2020.

The number of passengers through airports is expected to

recover positively from 2021.

The almost monopoly position and strong advantage as the

developer of large aviation infrastructure projects :

ACV officially became the developer of T3 Terminal Tan

Son Nhat and T2 Noi Bai Expansion projects.

ACV was chosen as the developer of Class-3 projects of

Long Thanh airpot phase 1.

The runway repair projects at Noi Bai and Tan Son Nhat are

expected to finish by the end of 2020.

The number of passengers through airports

(unit: million passengers) INVESTMENT CATALYSTS:

RISKS:

Difficulty in reoperating international flight routes.

Delay in the progress of infrastructure development projects.

Important infrastructure development

projects of ACV in the coming years


30.3

36.7

41.8

11.7

25.6

40.3

0

5

10

15

20

25

30

35

40

45

2017 2018 2019 2020F 2021F 2022F

Projects

Investment

value

(billion

VND)

Year of

deployment

Capacity

(passengers/

year)

T3 Tan Son Nhat 10.990 2021 20.000.000

T2 Noi Bai

Expansion 4.051 2021 5.000.000

Long Thanh airport

phase 1 99.000 2021 25.000.000

Source: ACV, CAA, VCBS


Unit: billion VND 2019 2020F 2021F

Net revenue 18,329 7,512 13,256

+/- yoy (%) 13.7% -59.0% 76.5%

Profit for common

shareholders 8,201 1,851 4,814

+/- % 32.9% -77.4% 160.0%

EPS (VND/ share) 3,450 765 1,990

P/B Method 90,177

EV/EBITDA Method 75,911

FORECAST

VALUATION

87,324 VND

TARGER PRICE

+14.1% UPSIDE

PRICE FLUCTUATION


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

ACV Relative VN Index


GEMADEPT CORPORATION - GMD

GMD is one of the largest logistics and seaports operators, with

a port system and logistic infrastructures spreading across the

country, concentrating in Hai Phong and Cai Mep areas.

GMD is operating 06 seaports with the total capacity of 1,7

million TEUs/ year: Nam Hai, Nam Hai Dinh Vu, Binh Duong,

Nam Dinh Vu, Dung Quat, Phuoc Long and Nam Hai ICD.

The company is constructing the deep-water seaport Gemalink

in Cai Mep – Thi Vai, which is expected to come into operation

in 2021.

Shareholders structure of GMD (Updated 11/2020)

OVERVIEW

9M.2020 BUSINESS RESULTS:

Net revenue in 9M.2020 was VND 1.901 billion, decreased 4,8%

compared to the same period due to the impact from Covid-19

and the competition pressure in Hai Phong.

NPAT was VND 372 billion (-31,9% yoy), profit margin

declined due to: (1) Rising management cost along with the

progress of Gemalink construction, (2) In 9M.2020, the

company no longer recognized financial revenue from

investment transfers.

9M.2020 business results of GMD (unit: billion VND)

Source: GMD, VCBS

45.50%

3.76%

50.74% Major shareholders

Managers

Other shareholders

1,996 1,901

804 753

547

372

0

500

1,000

1,500

2,000

2,500

9M.2019 9M.2020

Revenue Gross profit NPAT



Competition pressure in Nam Dinh Vu port area is likely to

remain at high level due to :

Pressure in attracting cargos from Lach Huyen port.

A number of new ports nearby come into operation.

Business performance of Nam Hai, Nam Hai Dinh Vu and Binh

Duong ports are expected to accelerated in 2021.

Driver for long-term growth from Gemalink:

Growth trend of goods volume in Cai Mep area.

Benefits from the relocation of ports in HCMC.

Many seaports in the area have been operating above

designed capacity.

Benefit from the cargo volume of CMA-CGM shipping lines.

The volume of container cargo through seaports in Cai

Mep (unit: TEU)

INVESTMENT CATALYSTS:

RISKS:

Lach Huyen seaports continue to attract goods from middle-size

vessels.

The delay in development progress of transportation and

logistic service infrastructures in Cai Mep area.

The growth of export-import turnover compared to

the same period

Source: Fiinpro, VPA, VCBS

6.6%

10.5% 10.0%

5.1%

5.9%

-8.4%

7.0%

-10%

-5%

0%

5%

10%

15%

Q1.2019 Q2.2019 Q3.2019 Q4.2019 Q1.2020 Q2.2020 Q3.2020

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2015 2016 2017 2018 2019

TCIT - TCCT CMIT TCTT SSIT



Unit: billion VND 2019 2020F 2021F

Net revenue 2,641 2,509 2,696

+/- yoy (%) -2.47% -5.06% 7.46%

Profit for common

shareholders 515 410 469

+/- % -67.7% -20.8% 14.5%

EPS (VND/ share) 1,595 1,242 1,421

P/B Method 28,700

FCFF Method 35,935

FORECAST

VALUATION

34,488 VND

TARGET PRICE

+12.2% UPSIDE

PRICE FLUCTUATION

0

5,000

10,000

15,000

20,000

25,000

30,000

GMD Relative VN Index

CONSTRUCTION

MATERIALS


17.3 16.6

20%

43%

28%

21% 21%

6%

-4%

-10%

0%

10%

20%

30%

40%

50%

0

5

10

15

20

25

2013 2014 2015 2016 2017 2018 2019 9M-

2019

9M-

2020

Million tons

Total consumption volume Growth

-2%

-10%

-13% -15%

3%

-19%

0%

-6%

-27%

-3%

-14% -16%

VGC VIT CVT TTC VTA TCR

+/- yoy revenue +/- yoy gross profit

Highlights in 9M/2020: The construction materials industry has faced many difficulties from the Covid-19 and almost

recorded a decline in consumption volume and selling price. However, the level of influence is different among sub-

sectors.

82

Figure 1: Revenue and gross profit of ceramic tile companies

Figure 2: Total consumption of steels

• Steel industry: Total steel consumption volume of the whole industry in

9M.2020 decreased by 4% yoy.

• In the country, the construction market begins to progress slowly from 2019. By

2020, the covid-19 epidemic slowed down the supply recovery and construction

progress of real estate projects.

• Domestic long steel selling price at the end of Q3 / 2020 is estimated to decrease

by 4.5% compared to early 2020. Especially in the Southern market, the selling

price is somewhat more competitive compared to the North when the supply

increases sharply from the factories of Nghi Son, Hoa Phat-Dung Quat, Tue

Minh and Tung Ho.

• In addition, in the segment of flat steel, covid-19 also makes the construction of

export markets and trade and transport between countries difficult. Besides

increasing commercial protection of flat steel segment in exporting countries.

• The ceramic tile industry in 9M/2020 has been heavily

influenced by the construction slowdown lasting from 2019

and the covid-19 epidemic in 2020.

• Most of the listed companies in the industry recorded a

significant decline in revenue and NPAT.

• According to a VCBS survey, the selling price of common

ceramic tiles at the end of Q3 / 2020 has decreased by 5-10%

compared to the beginning of 2020.

Source: Fiinpro Source: VSA


14%

3% 4%

9%

18%

3% 3%

0%

4%

8%

12%

16%

20%

0

20

40

60

80

100

120

Million tons

Domestic consumption Export (cement và clinker) Growth



sectors.

83

Figure 4: Fluctuation of crushed stone prices in the Southern region

• Crushed stone industry: Construction stone business activities in the Southern

region are evaluated positively in the context of the Covid-19 epidemic, specifically:

• The Mines at Bien Hoa, Vinh Cuu, Bac Tan Uyen still recorded growth in the

context of Covid-19 thanks to construction activities at Long Thanh, Kien Giang and

Can Tho areas continued to be positive. As a result, selling prices remained stable or

increased slightly compared to the end of 2019. Listed companies in this area such as

VLB (+ 12% yoy), DHA (+ 21% yoy) still recorded a positive growth in gross profit.

• The mines at Tan Dong Hiep was facing a difficult challenge to stop mining.

However, this pushed up selling prices due to scarcity, besides the positive real estate

projects in Di An and civil & infrastructure projects in HCM City also increased

demand for construction stone in the period. Revenue from some listed companies

represented in this area such as C32 (+ 5%), NNC (+ 11% yoy) recorded a positive

growth

160

180

200

220

240

260

280

300

1.000 VND/m3

Núi Gió Tân Cang 3 Thạnh Phú 2 Tân Đông Hiệp

Source: VCBS research

Figure 3: Total consumption volume of cement and clinker

• Cement industry: In 9M/2020, total consumption volume of the whole

industry reached a slight growth of 3% yoy thanks to a positive clinker

export volume. However, clinker export activities during the year did not

bring much profit for domestic manufacturers when the selling price of

clinker was insignificantly higher than the cost of production.

• Particularly, domestic consumption volume in 9M/2020 reached 45.5

million tons, down 6% yoy, affected by the slowdown in domestic

construction activities.

Source: Vietnam Cement Association


7.0%

12.3%

9.5%

23.5%

17.9%

0%

5%

10%

15%

20%

25%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2016 2017 2018 2019 9M/2019 9M/2020

Million

Furniture +/- yoy



sectors.

84

Figure 5: The export value of Vietnam's furniture

Source: MOIT

Figure 6: TOP 5 countries exporting furniture in the US market

20.8

8.1

4.9 3.9

0.8

16.0

6.8 6.7

3.2 1.4

0

5

10

15

20

25

30

35

40

China Mexico Viet Nam Canada Malaysia

Tỷ USD

2015 2016 2017 2018 2019 LK 9T/2019 LK 9T/2020

Source: U.S. Department of Commerce

-23% yoy -17% yoy

+36% yoy -17% yoy

+61% yoy

• Vietnam's furniture industry in 9M/2020 recorded a positive export growth with a value of US $ 6.4 billion, + 18% yoy.

• Notably, export activities in the US market continued to record strong growth +36% yoy as Vietnam's furniture industry is benefiting when

the US is imposing tariffs (20-25%) on Chinese furniture


85

• Public investment disbursement progress has been significantly improved: In 9M/2020, the total disbursement capital for

development investment from the state budget reached 322 trillion VND, up 40% yoy. Noted that the disbursement amount increased

significantly compared to the average for the 2016-2019 period.

• In which, disbursement activity recorded a sharp increase over the same period from June 2020 onwards. This has partly supported

a recovery in domestic cement and construction steel consumption in Q3 / 2020 (Figure 9 & 10).

PROSPECTS OF RECOVERY FROM BOOSTING PUBLIC INVESTMENT OF THE

GOVERNMENT

Figure 7: Disbursement of investment capital from the state budget, 2016-2020

81%

120%

-12%

27%

16%

52%

147%

3%

54%

140%

-20%

0%

20%

40%

60%

80%

100%

120%

140%

160%

0

10,000

20,000

30,000

40,000

50,000

60,000

T1 T2 T3 T4 T5 T6 T7 T8 T9 T10

Biliion VND

2019 2020 +/- yoy

Figure 8: Disbursement of investment capital from the state budget in 2020

Source: MOIT Source: MOIT

63%

47% 51%

45%

57%

4%

22%

-6%

40%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

0

50

100

150

200

250

300

350

400

450

500

9T/2016 9T/2017 9T/2018 9T/2019 9T/2020

1.000 billion VND

Plan of Government Actual disbursement % Plan +/- yoy


86

FORECAST OF CONSTRUCTION MATERIALS INDUSTRY IN 2021

Figure 9: Total domestic construction steel consumption by quarter, 2019-2020

-16%

-1%

6%

-20%

-15%

-10%

-5%

0%

5%

10%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Q1 Q2 Q3 Q4

Million tons

2019 2020 +/- yoy

-18.0%

-7.4% -6.9%

-20%

-18%

-16%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

0

2

4

6

8

10

12

14

16

18

20

Q1 Q2 Q3 Q4

Million tons

2019 2020 +/- yoy

Source: VSA

Figure 10: Total production of the domestic cement consumption by quarter, 2019-2020

Figure 11: VCBS forecasts the prospects of the construction materials industry in 2021

Source: Vietnam Cement Association

Crushed Stone DHA, VLB

Asphalt PLC

Steel HPG, POM, HSG, NKG

Furniture PTB

Cement HT1

Construction plastic BMP, NTP

Ceramic tile CVT, VGC, TTC

Negative Neutral Positive Outstanding


Steel

84%

Argiculture

12%

Other industries

3%

Real estate

1%

HOA PHAT GROUP (HPG) – Overview

87

Core-business

Core business is steel production and commercial with the revenue

proportion of over 80% - number one position in market share of

long steel (32.6%, 10M/2020, VSA) and steel pipe (31.0%,

10M/2020, VSA).

Performance Updates

In 9M/2020, HPG's business activities showed strong growth:

• Revenue and NPAT of HPG reached VND 64,340 billion (+

41% yoy), and VND 8,845 billion (+ 56% yoy) respectively .

• Revenue and NPAT of the core business - steel products still

achieved outstanding growth, respectively 51% yoy and 48%

yoy in the context of the industry facing many difficulties

after putting the furnace No. 1 & 2 at Dung Quat factory into

operation.

• HPG's agricultural segment also recorded a sudden growth in

NPAT +573% yoy thanks to the increase in prices of

Australian pork and beef in this year.

Figure 12: Shareholder structure Figure 13: Revenue structure in 9M/2020

Figure 14: Revenue – NPAT – EPS, 2018- 2021F

Source: HPG

Source: HPG

46,162

55,836

63,658

81,968

8,015 8,601 7,578

8,960

5,895 4,037 2,742 3,245

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

2017 2018 2019 2020F

Billion VND

Revenue NPAT EPS Net margin

Trần Đình Long &

relative, 32.69%

Dragon Capital,

5.01%

VOF, 3.70%

PENM Germany,

3.49%

The others,

55.04%


-10%

-5%

0%

5%

10%

15%

20%

25%

2018 2019 9M/2020

HPG POM TDS TNB VCA DNS VIS

9.1

10.3 10.2 10.9 10.9 10.8

10.2

HPG-BOF The

average

domestic

selling

price of

billet in

2019

CBI VCA TDS DNS EAF 120

tons/batch

Billion VND/ton

HPG – Outlook

88

STEEL

Great competitive advantage in low production costs: HPG's profit margin was 17.4% in 9M/2020 compared to EAF

furnace companies which only reached less than 3%. Steel capacity in the South and Central in 9M/2020 reached 935

thousand tons (+ 60% yoy in sales volume in the region thanks to good competitive selling prices).

Figure 16: Operating margin of some construction steel companies Figure 15: Production cost of 1 ton of billet in some companies in 2019

Source: Fiinpro Source: VCB research


HPG – Outlook

89

REAL ESTATE

Large land bank.

STEEL

The 3-year safeguard tax extension helps strengthen HPG's leadership position.

Public investment boost in the second half of the year could support steel demand.

Domestic demand for HRC steel is large relative to the domestic supply.

Long-term growth prospects for Vietnam's construction industry.

RISKS

In 2020, domestic construction industry might slow down.

In the medium term after 2021, there is a risk of a sharp increase in billet supply in Southeast Asia from large-scale steel projects

in Indonesia and Malaysia.

In the long term, HPG faces competition pressure if safeguard tax expires.


HPG – Valuation

90

FORECAST

VND

39,200/share

TARGET PRICE

+10.4% UPSIDE

CHANGE IN STOCK PRICE

DCF Method: VND 39,200/share

Valuation

Unit: VND bn 2019 2020F 2021F

Net revenue 63,658 90,292 103,617

+/- yoy (%) 14.0% 41.8% 14.8%

NPAT 7,570 12,708 14,904

+/- % -12.0% 67.7% 17.3%

EPS (VND 000/share) 2,742 3,835 4,498

600

650

700

750

800

850

900

950

1,000

1,050

10,000

15,000

20,000

25,000

30,000

35,000

40,000

12

/11

/20

18

1/1

1/2

01

9

2/1

1/2

01

9

3/1

1/2

01

9

4/1

1/2

01

9

5/1

1/2

01

9

6/1

1/2

01

9

7/1

1/2

01

9

8/1

1/2

01

9

9/1

1/2

01

9

10

/11

/20

19

11

/11

/20

19

12

/11

/20

19

1/1

1/2

02

0

2/1

1/2

02

0

3/1

1/2

02

0

4/1

1/2

02

0

5/1

1/2

02

0

6/1

1/2

02

0

7/1

1/2

02

0

8/1

1/2

02

0

9/1

1/2

02

0

10

/11

/20

20

11

/11

/20

20

VN-Index HPG

HPG

VN_INDEX


4,719

5,552 5,656

6,862

400 457 371 541

8,389

9,130

8,047

11,746

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2018 2019 2020F 2021F

Billion VND

Revenue NPAT EPS (VND) Net margin

PHU TAI JSC (PTB) – Overview

91

Core business

PTB operates mainly in three areas: (1) exploiting and processing paving

stone, (2) manufacturing interior-exterior wood products and (3) Toyota

car sales.

Business performance

In 9M.2020, PTB's business activities were affected by the covid-19

epidemic as:

Although revenue recorded a slight increase of + 3.4% yoy, NPAT

recorded a decrease of 19% yoy. Inside:

• The paving stone segment recorded a slight growth of +9% yoy in

revenue thanks to the increase in capacity at factories (Dak Nong,

Binh Dinh Phu Cat, Thanh Chau Phu Yen) and an increase in

export orders. However, profit before tax decreased by 33% yoy,

mainly from lower selling prices during the period.

• The wood products manufacturing segment recorded outstanding

growth in both revenue and EBT, respectively +51% yoy and

+73% yoy from an increase in orders as US imposes a relatively

high tax of 20-25% on Chinese interior-exterior wood production

enterprises.

• Toyota sales segment recorded a negative EBT of VND 7.4 billion

– mainly due to reduced demand and intense competition in Da

Nang from a second Toyota distributor in this area.

.

Source: PTB

Source: PTB, VCBS forecast

Figure 17: Shareholder structure Figure 18: Revenue structure in 9M/2020

Figure 19: Revenue – NPAT – EPS, 2018- 2021F

Furniture

58%

Toyota trading

1%

Stone slab

39%

The other

commodities

0%

Services

2%

Board members

group, 43.8%

The others,

56.2%


PTB – Outlook

92

Construction stone has great advantage in quantity and reserve of quarries: Currently PTB owns 17 paving stone quarries and

01 construction quarry with a total reserve of 59.3 million m3, remaining mining time is 20-30 years on average.

Wood segment benefits from the US tax on Chinese interior/exterior wood products

Currently, China does not have many advantages in interior/exterior wood products compared to Vietnam as there is

similarity in technology, besides the labor costs of China is relatively high. Therefore, high taxes from US on China has

helped Vietnamese businesses to benefit.

This is partly reflected in the Q3.2020 financial statements of PTB when there are many new customers from the US, EU and

Japan countries. In addition, the two factories to expand capacity by the end of 2019, Phu Tai Dong Nai Plant (+67%

capacity) and Thang Loi Plant (+100% capacity), operated impressively in 2020 with capacity up to 90%.

Figure 20: Labor costs in some Asian countries Figure 21: TOP 5 countries exporting furniture in the US market

20.8

8.1

4.9 3.9

0.8

16.0

6.8 6.7

3.2 1.4

0

5

10

15

20

25

30

35

40

China Mexico Viet Nam Canada Malaysia

Tỷ USD

2015 2016 2017 2018 2019 LK 9T/2019 LK 9T/2020

-

1.0

2.0

3.0

4.0

5.0

2010 2011 2012 2013 2014 2015 2016 2017

USD/ giờ

Indonesia Việt Nam Thái Lan

Philippines Trung Quốc Malaysia

-23% yoy -17% yoy

+36% yoy

-17% yoy

+61% yoy

Source: U.S. Department of Commerce Source: IMA Asia


PTB – Outlook

93

In 2021, PTB's Revenue - NPAT – ROIC are expected to grow significantly as:

• The paving stone segment is expected to grow when Artificial Quartz Stone Factory starts to operate from Q4.2020.

• Wood segment is expected to continue to grow based on the number of existing orders. Also, the operation of Binh

Dinh plant phase 1 from the end of H1/2021 would increase PTB's total wood processing capacity by 15%.

• Hand-over of Phu Tai Residence project is expected to bring in VND 250 billion of EAT, which is expected to

start booking from Q3.2021 until 2022.

RISKS

In 2021, domestic construction industry might continue to progress slowly.

In the medium term after 2021, US might no longer impose tariffs on Chinese wooden products for interior and exterior from

China.


PTB – Valuation

94

FORECAST

VND

81,000/share

TARGET PRICE

+39.4% UPSIDE

DCF METHOD: VND 81,000 /share

Valuation

Unit: VND bn 2019 2020F 2021F

Net revenue 5,552 5,656 6,862

+/- yoy (%) 17.6% 1.9% 21.3%

NPAT 457 371 541

+/- % 8.8% -11.9% 46.0%

EPS (VND 000/share) 9,130 8,047 11,746

600

650

700

750

800

850

900

950

1,000

1,050

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

12/1

1/2

01

8

1/1

1/2

01

9

2/1

1/2

01

9

3/1

1/2

01

9

4/1

1/2

01

9

5/1

1/2

01

9

6/1

1/2

01

9

7/1

1/2

01

9

8/1

1/2

01

9

9/1

1/2

01

9

10/1

1/2

01

9

11/1

1/2

01

9

12/1

1/2

01

9

1/1

1/2

02

0

2/1

1/2

02

0

3/1

1/2

02

0

4/1

1/2

02

0

5/1

1/2

02

0

6/1

1/2

02

0

7/1

1/2

02

0

8/1

1/2

02

0

9/1

1/2

02

0

10/1

1/2

02

0

11/1

1/2

02

0

VN-Index PTB

PTB

VN_INDEX

STOCK PRICE FLUCTUATION

ENERGY SECTOR


Energy with Covid 19 pandemic.

Construction Industry and Consumer electricity Industry consume the most

electricity, account for 90%.

Economic and consumption activities were strongly influenced by Covid 19

which appeared at the beginning of the year and peaked at the social distancing

in April 2020 and August 2020.

Covid 19 has interrupted the supply of raw materials from the beginning of 2020,

causing a shortage of raw materials for the Vietnamese industry. Then, Covid 19

spread to all over the world, decreasing consumption and shopping demand.

Therefore, domestic industrial production is also affected, resulting in a slightly

growth in electricity demand.

Accumulation of 9M.2020, the industrial production index only increased by

2.7% YoY and GDP increased by only 2.1%, leading to an increase in electricity

consumption across the country by only 2.68% YoY compare to above 10% in

average before.

ENERGY SECTOR - UPDATE

96

Source: EVN

Source: EVN, Fiinpro

0%

2%

4%

6%

8%

10%

12%

14%

16%

2015 2016 2017 2018 2019 5T 6T 7T 8T 9T

Energy Production, GDP and IIP

Eletricity Production IIP GDP

55%

6%

32%

3% 4%

Energy consumption structure

Industrial,

ConstructionCommercial

Comsumer

Agriculture, Forestry

and fishery


El Nino – La Nina: Two facets in a year.

El Nino takes place from the end of 2019 to the first half of 2020, making the

water flowing very low, especially the North, causing the 5M.2020 power

generation output from hydropower to decrease 34% over the same period.

Increase mobilization of coal-fired thermal power in the first half of 2020: Coal

thermal power ran maximum capacity with more than 58% of total electricity

output. Total thermal power output increases 16% yoy due to the fact that the

remaining significant source gas thermal power faces the difficulty in reduction of

gas resources and new exploitation projects have not started to operate.

Hydropower benefits in the second half of 2020: Since June 2020, rain has begun

to appear more in the Northern mountainous region and especially more than 10

storms entering the Central from September until now due to the La Nina.

Full market price (FMP) drop significantly in Oct., because price of Hydropower

is much lower than thermal power price. In October, FMP is at only 328

VND/kWh – lowest in the past 5 years.


97

-2

0

2

4

10/1

1

04/1

2

10/1

2

04/1

3

10/1

3

04/1

4

10/1

4

04/1

5

10/1

5

04/1

6

10/1

6

04/1

7

10/1

7

04/1

8

10/1

8

04/1

9

10/1

9

04/2

0

ONI Index (NOAA)

Soure: NOAA

0%

20%

40%

60%

80%

100%

201

4

201

5

201

6

201

7

201

8

201

9

6T

.202

0

7T

.202

0

8T

.202

0

9T

.202

0

Power generation structure

Hydropower Coal - fired power Gas power

Soure: EVN

0

500

1000

1500

1 2 3 4 5 6 7 8 9 10 11 12

Average FMP

2020 2019

Source: EVNGENCO 3, EVN


Renewable energy

New preferential tariff for solar PV: The selling price of solar PV has decreased to 7.09 cents/kWh compared to 9.35 cents/kWh

within 20 years for projects with commercial operation before 1/1/2021.

Installation costs fell sharply over the years: According to IRENA, the average installation cost for solar power in 2019 was only $

995/kW, a decrease of 78.8% vs 2010. Onshore wind power is only 1,473 USD/kW, down 24% from 2010. PV panel price also

decrease by 20 -30% in 2020 due to increase of capacity factor and productivity. LOCE also has a very strong decrease in Solar PV

and Wind power.

Strengthening the transmission system to release capacity, especially in Ninh Thuan and Binh Thuan areas: In 2020, 113 project have

been released with a total capacity of up to 5,700 MW. There are only 11 projects remain operating before June 30, 2019 (with a

capacity of roughly 360 MW) and a number of new solar power projects put in the planning have not been fully released.

Strong growth in capacity and output: 9M.2020 output reached 8,160 GWh (+160% yoy). The proportion of total generation output is

up to 4.4% compared to less than 1% in 2018 and 2.5% in 2019. Installed capacity is nearly 6,000 MW, accounting for 10% of total

installed capacity.


98

Source: IRENA, VCBS

0

5000

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

Total Installed cost

On-shore WindpowerSolar PVHydropowerOff-shore Windpower

10%

20%

30%

40%

50%

60%

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

Capacity factor

On-shore Windpower

Solar PV

Hydropower

0

0.1

0.2

0.3

0.4

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

LOCE

On-shore WindpowerSolar PVHydropowerOff-shore Windpower

Cents/kW

9.35 9.35 9.35 8.5

9.8

7.69 7.09

8.38

0

2

4

6

8

10

12

Floating

Solar PV

Onshore

Solar PV

Rooftop

Solar PV

Onshore

Wind

power

Offshore

Wind

power

Output price

FIT 1 FIT2

US

cents/kWh


Hydropower will continue growing in the first half of 2021: La Nina will

continue in the second half of 2020 and the beginning of next year. The rain area

will be concentrated in the North Central region and move to the South Central

Coast and the North Central Highlands due to the combination of strong northeast

monsoons this year. Thermal power could be reduce. Solar power in storm-

affected areas also reduces radiation.

Thermal power: Thermal power plants will run more stably when La Nina passes

because these are base plants. Some plants are given high priority to allocate Qc to

assist in repayment period and operate efficiently like HND. However, re-signing

the PPA at a lower price after the repayment period expires will reduce the impact

of the interest rate reduction (HND, NT2)

Installation costs, LOCE continue to sharply decline in renewable energy due to

technology improvement and economic of scale advantage.

Renewable energy development policy: Expect to lengthen the policy of wind

power, solar power with attractive price due to great potential and incomplete

auction mechanism.

Invest in thermal power projects using LNG when domestic gas resources are

gradually exhausted.

Electricity demand continues to increase rapidly in the long term in correlation

with the expectation of rapid economic growth of Vietnam.

Developing power grid due to high demand of capacity clearance

ENERGY SECTOR - OUTLOOK

99

0%

50%

100%

10 11 12 1 2 3 4 5 6

Probability of El Nino, La Nina

according to CPC/IRI

La Niña Neutral El Niño

3%

5%

7%

9%

11%

13%

15%

17%

2009 2012 2015 2018 2026 - 2030

Adjusted

PP 7

Energy consumption and GDP

Source: EVN, revise PP7

Source: EVN, PP 7 Adjusted

2030 planning Unit 2016 - 2020 2021 - 2025 2026 - 2030

500 kV

substation MVA

26,700

26,400

23,550

220 kV

substation MVA

34,966

33,888

32,750

500kV grid line km

2,746

3,592

3,714

220 kV grid line km

7,488

4,076

3,435


Draft of power planning WIII would has some changes

Renewable energy such as wind and solar power will be significantly

increased in capacity. Wind power capacity is 3 times and solar power is

nearly 2 times higher than adjusted Power Master Plan VII. The total installed

capacity will increase by about 30 GW (accounting for 26% - 27% of the total

installed capacity of the whole system in 2030 compared to 9.5% in 2020).

Thermal power: More than 17GW of imported coal thermal power added to

the PMP VII will be passed through after 2030 or removed. Total additional

installed capacity by 2030 of thermal power plant is about 30 GW.

In addition, the new power source planning projects are mainly concentrated

in the South Central Coast, the Central Highlands and the South West - far

from the load, so there will be very high demand in developing the

transmission network. Specifically, it is expected that by 2030, if all registered

investment projects are approved, the South and South Central regions will

have a surplus of 80 GW and 18 GW of the Central Highlands.


10

0

Source: EVN, Adjusted PP VII

0

100

200

300

400

500

600

700

2020 2025 2030

Hydro power Coal - fired thermal Gas thermal

Renewable Import Nuclear power

265

400

572

Billion kWh Energy structure according to

Adjusted PP VII


We believe that the electricity business outlook has the following characteristics

Benefit from La Nina: Companies hold Central and North hydropower plants.

Developers of wind power projects can run commercially before November 1, 2021.

Contractors of energy projects and power transmission networks.

Construction Materials suppliers.

Some typical enterprises in the industry

Source: Fiinpro, VCBS

Based on the above evaluation, we choose PC1 stock due to expectation of hydropower segment to improve significantly when LaNina continue,

investing in wind power projects and grid installation will take advantage of capital flows into wind power field.


101

No. Tiker Market cap

(VND billion) P/E P/B EV/EBITDA

Dividend yield

in 2019 Type of energy

1 POW 23,325.04 14.85 0.83 6.32 3.01% Gas power, Thermal power, Hydropower

2 REE 13,797.27 9.75 1.27 13.76 3.60% Hydropower, Thermal…

3 HND 8,971.00 5.92 1.37 3.19 8.92% Coal - fired

4 NT2 6,707.51 10.6 1.64 5.17 10.73% Gas power

5 VSH 4,093.89 52.86 1.29 55.87 0.00% Hydor power

6 PC1 3,951.22 9.25 1.02 7.76 0.00% Energy contractor, Hydropower, Wind power

7 SBH 3,503.15 11.78 1.68 7.59 7.09% Hydropower

8 CHP 2,894.18 13.38 1.74 15.83 5.08% Hydropower, Solar PV

9 TV2 1,676.50 7.6 1.6 5.58 0.00% Energy contractor, consultant, Solar PV

10 TBC 1,555.75 10.87 1.58 6.38 8.16% Hydropower


Policy risk: The FIT price that is not extended and takes a long time to come up with new policy will delay investment decisions

for projects.

The possibility of releasing capacity for new projects that have been added to the plan is not high: Only 20-23% of RE

capacity has been added to the 2020 that could be released due to insufficient infrastructure, which will reduce capacity

generation, affecting the profitability of those project (in 2021, the clearance plan is 11,000 MW, 2023 will release 11,745 MW but

the remaining of 2,300 MW in 2021 and 1,555 MW 2023.

Input risks: For renewable energy, hydropower will depend heavily on Weather such as rainfall, radiation or wind speed, so we still

depend on the thermal power (coal – fired and gas – fired) . For thermal power projects, domestic coal output does not meet the

demand for coal-fired thermal power generation (it is expected that by 2030 only meets 50% of the required output) and must

depend on imports from Indonesia, Australia…. Gas reserves are declining, the Southeast region needs to subsidize LNG from

2021 - 2022 and import gas from Malaysia.

ENERGY SECTOR - RISKS

102


POWER CONSTRUCTION JSC No.1 (PC1) – Overview

103

Business activities

Four main sectors, the electricity transmission network construction and

installation segment (36% of net revenue), electricity pole structure

production (17% of net revenue), real estate (16% of net revenue), power

source development (13% of net revenue) and other businesses.

Shareholder

The major shareholder is Mr. Nguyen Van Tuan (Chairman) and his family

(20.03%), followed by BEHS, who just joined in early 2020 with 17.76%,

Vietnam Holding Ltd (4.14%), Nguyen Nhat. Tan (3.23%), and other

shareholders.

9M.2020 Result

9M.2020's revenue reached VND 4,170 billion (-2.4% yoy, 59.5% of the year

plan). GPM reached 20%, improved 4.9% over the same period. Profit after

tax for parent company shareholders reached VND 373 billion (+ 24% YoY,

79% of the year plan).

Revenue decreased slightly by 2.4% yoy due to a sharp decline in

commercial trading and other activities (-42% yoy); Construction revenue

decreased due to the same period being the peak of handover of solar power

EPC projects, while 9M.2020, Covid epidemic affected. However, revenue

from energy and industrial production grew very well, especially the

hydropower segment, which has modest revenue but contributes the most to

PC1's gross profit; Real estate segment increases considerably from PCC1

Thanh Xuan project.

Source: PC1, fiinpro, VCBS

Source: PC1, VCBS

20.03%

17.76%

4.14% 3.23%

54.34%

Shareholder portion

Trinh Van

Tuan

HEHS

Vietnam

Holding Ltd

Nguyen Nhat

Tan

Norges Bank

Others

51%

17%

4%

9%

19% 36%

17%

16%

13%

17% Construction

Industrial

production

Real Estate

Power

Commercial

Revenue structure

Insdie: 2019

Outside: 9T.2020

237 467 358 302 372

15.2% 17%

14% 15.1%

19.9%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2017 2018 2019 9T.2019 9T.2020


Total Revenue Gross profits

Profit after Tax Gross Profit margin

VND Bil


PC1 - OUTLOOK

104

CATALYST

Hydropower segment has increased since the return of La Nina in Q2/2020. According to the General Department of Meteorology

and Hydrology, La Nina is likely to extend to the end of the spring causing many storms and air disturbance to increase rain in Northern

region - where PC1's hydropower plants are located. In addition, PC1 ran several hydropower plants in 2020 (Song Nhiem 4, Bao Lac

B, Mong An - a 50% increase in capacity).

Investing in wind power with a total capacity of 144 MW in Quang Tri expected to be completed in Q4.2021 with a selling price of

8.5 cents/kWh will help the power generation segment become the most profitable segment for PC1 activities.

The electrical construction segment will utilize capital inflows to the wind power and Solar PV market in the future.

Construction, industrial production has great benefits from renewable energy incentives and the demand for electricity has steadily

increased over the years.

Prospects of further real estate projects: PCC1 Vinh Hung, Thang Long and potential project will add more value to the business.

Risk

Weather, Account receivable, Wind project’s construction progress can’t meet the deadline of FIT2.

Source: VCBS estimated Source: VCBS estimated

-

2,000

4,000

6,000

8,000

FY 2020E FY 2021E FY 2022E FY 2023E FY 2024E

Revenue estimated

Construction Industrial production Real Estate

Power Commercial

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

FY 2020E FY 2021E FY 2022E FY 2023E FY 2024E

Gross margin structure forecast

Construction Industrial production Real Estate Power Commercial


PC1 – Valuation

105

Logo DN

Unit: VND billion 2019 2020F 2021F

Net revenue 5,845 5,904 6,147

+/- yoy (%) 14.96% 1.00% 4.13%

NPAT 358 570 460

+/- % -23.31% 59.42% -19.34%

EPS (VND) 2,246 3,580 2,888

DCF Model 22,500

FORECAST

VALUATION

VND 22,500/share

TARGET PRICE

+5.0% UPSIDE

5,000

8,000

11,000

14,000

17,000

20,000

23,000


PC1 Relative VNINDEX

RETAIL INDUSTRY


GAINING BACK TO THE GROWTH MOMENTUM WHILE FACING THE

CHALLENGE OF COVID-19

In the recent 5-year period 2015-2020, Vietnam's retail industry has been considered very attractive with a 2-

digit growth rate

Generally in 10M2020, the total retail sales of consumer goods and services reached VND 4,122.96 trillion (+ 1.27%

yoy) although it was the most heavily affected in Q42020 when the country did Social distancing that resulted in a sharp

drop in revenue from accommodation and tourism services, decreasing over 26% yoy. Retail sales of goods in the first 9

months of the year were recorded at 3,263.36 billion VND (+5.44% yoy) because the supply of essential goods is still

ensured by supermarkets and commercial center and customer’s shopping behavior has been shifted to online channels.

Purchasing power is decreased mainly due to: The unemployment rate of first 9 months of 2020 is 2.48%, which is 1.14

times higher than the same period last year. Average monthly income of employed workers in 9 months of 2020 is

proximately 5.5 million VND, 83 thousand VND less than the same period last year. Although the average income in

3Q.2020 has been improved compared to the previous quarter, this is the first year the income of employed workers in

the third quarter decreased compared to the same period last year in the past 5 years.

Source: GSO VCBS compiles

9.4%

1.6%

6.3%

-1.0%

-1.1%

Food

Textile

Household goods

Education

Vehicle

Retail sale growth by categories 10M.2020

Vietnam

Thailand Indonesia

China

Malaysia

Korea

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

Correlation of GDP / person and retail growth (mom) in

the first 9 months of the year of some regional countries

Total retail sale of goods and services in Vietnam

10M.2020

1. Overview

0

100,000

200,000

300,000

400,000

500,000

Total retail sale of goods and services Retail sale of goodsFood TextileHousehold goods Education


Mobile devices, electronics, especially non-essential products such as gold and silver jewelry, are facing difficulties due to the impact of covid-19 on consumers' purchasing

power. In which, MWG closes its affordable phone chain, strongly converts mobile stores to groceries stroers (ĐMX), PNJ closes shop-in-shops in shopping malls,…

Meanwhile the essential product group includes the consumer goods, especially FMCG are prioritized.

22

2019 9M.2020

8

12

5

2 5

FMCG Packaged

foods Personal

care

Beverages Dairy

12

14

12

13

8

12

8

10

5 5

Spend

Per trip

2 2

5

3

FMCG

Spend Transactions Avg.paid

price per

unit

Unit

per trip

Source: Kantar world panel

108

2. The trend varied among products segment under the pandemic effect. FMCG and F&B showed positive performance

Department stores have faced declining margins due to declining customer traffic as well as increasing costs of transportation and input during the epidemic evidenced by

declined market share of grocery stores. traditional markets, the market share of supermarkets and online channels grew after the first 9 months of the year. However, we

highly appreciate the possibility that from 2021 when the epidemic has been controlled, the market share will gradually shift from supermarkets to small department stores

and convenience stores, which have lower cost and better convenience for consumers to have access to.

Due to concerns about recurrence of covid-19 outbreaks, department stores need to prepare e-commerce options and shipping solutions. In addition, the development of e-

commerce can help retailers have better approach to customers. We also note that consumers still prioritize spending on FMCG and spending on luxury products, meals to go,

and entertainment compared to the previous period which had slower recovery.

Online channel shows long-term growth potential as it continues to expand market share in value as well as leads in growth post social-distancing.

54.0% 52.8% 52.7%

8.9% 8.8% 8.8%

8.8% 6.1% 6.2%

14.2% 14.9% 14.4%

5.2% 6.1% 5.9%

5.0% 6.1% 6.6%

FY2019 YTD 9M.2020 Sau giãn cách

XH

Other

Online

Minimarket

Cash & Carry

Hyper & Super

Speciality stores

Wet market

Street shop

% Value share across %yoy Change in FMCG across key metrics and sectors

in urban and rural

INDUSTRY HIGHLIGHTS GAINING BACK TO THE GROWTH MOMENTUM WHILE FACING THE CHALLENGE OF COVID-19


Apr 19 2020

Trial phase

Quickly expand the

number of stores after a

successful trial

Testing and replicating the shop-in-

shop model to open more stores to sell

other products from the existing store)

Adapting phase

Adjust sales

strategy

Focus on

efficiency of

operation/store

Close down

ineffective

stores

2018 2019

Adjust store layout to expland shop-in-shop

At the time of 30/09/2020

Convert TGDĐ stores to shop-in-shop

BHX started implementing a new business model: BHX: "5

billion", Super mini ĐMX in remote areas to increase market

share.

Speed up the development of Long Chau pharmacy chain, start to

produce a number of supplemental products and medical equipment

Close down ineffective store; Continue to expand shop-in-shop

model.

Expanding to tier 2 cities - which are currently

dominated by traditional retail models

Covid 19

109

Omni-channel sales strategy: Cooperate with mobile brands those

are strong in e-commerce such as Xiaomi, Honor, Realme; Partner

with other retailers (such as Nguyen Kim) to provide new product

categories; cross-border shopping (through a partnership with

Fado).

3. Movements of retailers to deal with Covid 19



Y = -0,273 -0,552*I +5,281*G +2,327C

Y: Retail sales and goods services growth rate

I: Average wage growth

G GDP growth rate of Vietnam

C CPI of Vietnam

Forecast of retail sales of consumer goods and services

VCBS forecasts a decrease in consumer purchasing power compared to the previous

year due to concerns about epidemics in the world and the decline in income of a

part of consumers due to covid-19 epidemic has yet to be improved in the short term.

VCBS forecast growth rate of total retail sales of goods and services increased in the

last quarter of the year -4.24% yoy and strongly recovered in the middle of Q2.2021

with the growth rate of 14.49%.

4. Purchasing power is forecasted to decline in short-term

Forecast of total retail sale of goods and services

Source: GSO, VCBS forecast

% yoy Retail sale of goods and services, average salary, GDP and CPI

110


-5%

0%

5%

10%

15%

20%

25%

-30%

-20%

-10%

0%

10%

20%

30%

%yoy average salary

%yoy retail sale of goods and services

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Q1

.20

16

Q2

.20

16

Q3

.20

16

Q4

.20

16

Q1

.20

17

Q2

.20

17

Q3

.20

17

Q4

.20

18

Q1

.20

18

Q2

.20

18

Q3

.20

18

Q4

.20

18

Q1

.20

19

Q2

.20

19

Q3

.20

19

Q4

.20

19

Q1

.20

20

Q2

.20

20

Q3

.20

20

Q4

.20

20

Q1

.20

21

Q2

.20

21

% yoy retail sale of goods and services % yoy average salary GDP


Source: Digital 2020 Vietnam, DataReportal

SECTOR OUTLOOK Still being attractive to foreign investors with long-term growth potential

1. Growth potential of the merchandise differentiation

70 bn USD

5,9 bn USD

7 bn USD

4 bn USD

0,6 bn USD

1 bn USD

0,75 bn USD

Market size Industry outlook Potential growth level

Modern retail channels (supermarkets, convenience stores, shopping centers) only account for 25% - 26% of

the total retail sales. Currently, traditional retail accounts for 74% of the market share, but the growth rate is

only 1% / year, while modern retail channels only account for 26% of the market share but the growth rate is

11.8% / year.

Pharmaceutical industry is still very potential in Vietnam. Revenue from the Vietnamese pharmaceutical

market will reach USD 7.7 billion in 2021 and USD 16.1 billion in 2026 with a growth rate of about 10.6% per

year (from 2012 to 2021) (according to BMI). Spending on pharmaceuticals per capita in Vietnam is about 50

USD / person / year by 2020 with the growth rate of 14% / year. (from IMS Health)

Jewelry consumption per capita remains low compared to other countries in the region.

The 2010-2019 CAGR of the world market reached 0.33%, while in Vietnam it was 2.24%. Looking back on

2019, the consumption of gold bars in the domestic and international markets both recorded a decline. However,

Vietnam only recorded a decrease of 5.32% yoy which is considered positive compared to the sharp decline of

the world of 23.41% yoy.

The eyewear and watches market is very fragmented with market share in the hands of most small-scale

businesses and unidentified imported goods.

Gross profit margin remains 30-40% (depends on different segments). Retailers can combine to implement a

shop-in-shop model, without increasing operating costs for existing stores.

Electronics buying demand has been slowdown as over 70% of Vietnamese households owning basic items

such as refrigerators, washing machines, televisions, personal computers, and rice cookers. About 30% of

households own more advanced items such as air conditioners, microwave ovens, vacuum cleaners ...

The percentage of mobile phone users has reached over 90% of population, but since August 2020, Viettel has

officially turned down 2G network in some areas, and encouraged users to change to use 4G. Boosting demand

of upgrading from featured phones to smartphones (featured phones, despite having 25% market share in

volume, only 4% market share in value.)

111


Currently, MT model is being applied in some big merchandise such as grocery, pharmaceuticals, ICT, etc while GT model which comprises traditional small size stores is

dominating in other product segment. The emergence of MT model has made GT decelerate from double digit rate to about 5% per year.

2. Modern trade retail model is becoming popular

Source:Deloitte, Euromonitor, VCBS

47%

46%

32%

17%

8%

Thailand

Malaysia

Philipines

Indonesia

Vietnam

MT share in grocery market MT market size and CAGR 2018 –

2023F

4 bn

USD 25.8% pa

20 bn

USD 11.1% pa

10 bn

USD 11.2% pa

8 bn

USD 7.0% pa

30 bn

USD 6.4% pa

Penetration rate

% G

row

th

20% 60% 40% 80%

10%

20%

30%

40%

VND bn 2014 2015 2016 2017 2018 2019

CVs

2,65

2,82

2,64

2,82

3,11

3,41

Super market

58,84

38,47

25,72

20,26

18,62

17,07

Modern

grocery

49,71

34,82

26,41

21,98

20,57

18,87

Traditional

grocery

1,27

1,32

1,36

1,42

1,49

1,54

Annual sale per store

CAGR

In volume

CAGR

In value

24,3%

10,6%

8,5%

4,7%

17,9%

41,6%

31,7%

0,8%

Potential of merchandise

112

SECTOR OUTLOOK Still being attractive to foreign investors with long-term growth potential

12% 5% 4%

5% 5% 4%

34% 33%

29% 23%

19% 18%

14% 12% 8% 8% 10% 16%

2014 2015 2016 2017 2018 2019

Number of stores by channel and revenue growth by channel

Traditional grocery Convenient store Supermarket


1. 9M2020 performance

By the end of 9M.2020, net revenue reached VND 81,352.32 billion (+ 5.98% yoy), NI

reached VND 2,977.57 billion VND, (+ 0.05% yoy)

GPM was significantly improved to 21.7% (up 3.3% from 18.4% in 2019, NPM remained

at 3.7% (equal to 2019).

MWG has a total of 3,709 stores (an increase of 670 stores compared to the end of 2019).

113

Source: MWG

2. Company outlook

The “VND 5 billion” BHX model initially recorded positive results after a

3-month testing period.

Continuing focus on improving GPM comes from: (1) improving purchasing

efficiency (2) improving terms of trade with suppliers due to the advantage of

increasing sales scale. Accordingly, BHX's GPM (after cancellation and loss

rate) in 3Q.2020 remained at 25% (increased by nearly 5% compared to 20%

in 3Q.2019).

Continuing to actively adjust the speed of new store opening in parallel with

the increase in the number of “VND 5 billion " BHX models from upgrading

existing stores with high average revenue and aiming to have 100 “VND 5

billion” BHX stores by the end of 2020.

In 3Q.2020, the average revenue per store returned to VND1.2

billion/store/month.

Average area 400-500m2

SKUs 5.500-6.000

approaching 6.000-

8.000 products

Revenue VND 150 million/day

Customer

traffic

1.000 customer/day

Coverage HCM, Dong Nai, Long

An, Bình Dương, Bình

Phước, Bến Tre.

1072

642

283

1032

750

405

1013 1018 1008 962 1124

1623

0

500

1000

1500

2000

TGDĐ ĐMX BHX

Number of stores by chain

2017 2018 2019 9T.2020

0

200

400

600

800

1000

1200

1400

1600

1800

T1 T2 T3 T4 T5 T6 T7 T8 T9 T10 T11 T12

BHX revenue/shop/month

2018 2019 2020

MWG - Mobile world investment corporation – Overview


DMX implemented supermini DMX model (“DMS”) with initial

positive results in the context of saturated mobile phone market. By

the end of September2020, the company had 52 DMS stores (33 new stores

opened in September 2020) in 12 provinces in the West, East and South

Central region, contributing to accumulated revenue nearly VND100

billion, equivalent to the average revenue per store reached more than

VND 1 billion /month. MWG plans to continue speeding up DMS store

expansion to explore this market and increase the consumer electronics

market share in the coming time.

Completed the transformation of Bigphone chain to the Bluetronics

chain (mobile devices and electronics chain), reaching 20 stores by the end

of September in Phnom Penh, Cambodia. MWG is aiming to expand to 50

stores by the end of 2020 to cover other provinces outside Phnom Penh,

including Siem Reap, Sihanoukville, ... In addition, the localization during

operation is shown when MWG uses all staff is Cambodian and sales

culture (store decoration, promotional activities,….)

2. Outlook

114

Large

DMX Mini DMX Super mini DMX

Area 800-

1.000m2

300-250m2 By ½ area of mini DMX: 120-150m2

SKUs By 60-70% SKUs of mini DMX

Capex VND 5 bil VND 3 bil VND600-700 mil

Targets /

customers

Major roads, densely

populated areas

Remote districts, communes/towns with 20

shops / province (distance between stores

from 15 to 20km).

Revenue/store/mo

nth >VND10 bil ~ VND 4 bil

VND 1 billion/store/month, focusing on

items in the segment below VND 1 million

(higher than with installment policy)

GPM The overall GPM of the

whole chain is currently

21.7%.

~23%

Proportion of

household goods

with a high GPM

15% 20%

Advantages

Operating costs are reduced thanks to: (1)

2 employees/shift/day and no need for

additional senior management team, help

staff cost only 1/3 of mini DMX; (2) make

use of existing logistic systems; (3) the rent

cost is as cheap as ¼ compared to the mini

DMX.

MWG - Mobile world investment corporation – Outlook

KINH TẾ VĨ MÔ THỊ TRƯỜNG CỔ PHIẾU NGÀNH VÀ DOANH NGHIỆP TRIỂN VỌNG TRÁI PHIẾU Back

MWG - Mobile world investment corporation – Valuation

115

EV/EBITDA Method: 128.396

FCFF Method: 127.107

FORECAST

VALUATION

VND

127.752/share

TARGET PRICE

+10,1% UPSIDE

VND bil 2019 2020F 2021F

Net revenue 102,174 108,019 131,886

+/- yoy (%) 18.1% 5.7% 22.1%

NI 3,834 3,960 5,093

+/- % 33.19% 3.29% 28.62%

EPS (VND/share) 8,665 8,833 11,128

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

VN

D

MWG

Relative VN Index


3Q.2020's business result decreased with net revenue of VND 3,922 billion (-0.31% yoy) and net income

reached VND 202 billion (-2.84% yoy). In the first 9 months of the year, business results reflect the industry's

leading position in the face of short-term challenges from Covid-19 pandemic with net revenue reached VND

11,668.07 billion (-0.09% yoy), NI reached VND 642.01 billion (-20.34 % yoy).

(1) The retail segment of gold and silver jewelry was heavily influenced when the second wave of covid-19

broke out in Da Nang in early August, 2020. However, in the first 9 months of the year, the retail channel still

recorded a slight increase of 4.09% yoy.

(2) Gold bar business still recorded growth of 19% yoy in 3Q.2020. Accumulated 9M.2020 revenue from gold

bar trading increased by 15.63% yoy due to the hoarding demand for gold bar during the Covid-19 pandemic.

(3) The wholesale segment recorded a decline of 40% yoy in 3Q.2020. Accumulated 9M.2020 wholesale

revenue decreased by 27.17% yoy.

Accumulated 9M.2929 GPM is 19.34% (last year recorded 20.87%), of which, GPM in 3Q.2020 is 18.72%.

During 9 months, PNJ opened 23 new stores and upgraded 8 PNJ Gold stores, closed 30 stores (13 Silver stores

and 17 Gold stores).

296 gold stores

3 CAO stores

38 silver stores

53 watches stores

Number of stores

at the time of

September 2020

Source: PNJ

1. 9M2020 performance

116

154 174

202

258 273

288 296

61 59 63 63 62 54 38

4 4 4 3 4 4 3

12.2016 6.2017 12.2017 12.2018 06.2019 12.2019 T9.2020

Total number of stores

PNJ Gold PNJ Silver CAO Fine

57.20%

57%

54.90%

59.20%

58%

57.20%

19.10%

20.60%

21.40%

15.20%

16.60%

15.60%

21.90%

20.30%

22%

24.10%

23.10%

25%

0% 20% 40% 60% 80% 100%

1Q.2019

6T.2019

9T.2019

1Q.2020

6T.2020

9T.2020

PNJ's revenue structure

Retail Whole sale Gold bar B2B Export

PNJ – Phu Nhuan Jewelry Joint Stock Company- Overview


Vietnam jewelry market compared to other countries in the region shows an encouraging growth in the

context of the Covid-19 pandemic. In the first 9 months of 2020, Vietnam jewelry consumption reached 7.9 tons

(-41.45% yoy) due to the impact of Covid -19 pandemic, same compared to the decrease of the world (41, 02%

yoy) but relatively satisfactory compared to some regional countries

2. Company outlook

PNJ's growth rate was higher than the growth rate of gold and silver jewelry industry. In the 2016-2019

period, while the average growth rates of the jewelry and gold bar markets were 2.8% yoy and -3.8% yoy,

respectively, PNJ achieved impressive revenue growth with 22, 4% yoy.

Focus on improving operational efficiency of existing stores. During the Covid-19 pandemic, PNJ also took

advantage of the opportunity to access premises with convenient locations and reasonable rents to serve stores

opening when the market regains growth momentum after covid-19.

Launching Style by PNJ brand aimed at young customers.

Business result in Q4.2020. PNJ's BOD shared that jewelry retail sales on the occasion of Vietnamese Women's

Day 20/10 recorded a growth of 50% yoy. However, the short-term impact of purchasing power due to the covid-19

pandemic is unavoidable, leading to less positive business results for the whole year compared to 2019. VCBS

forecasts that PNJ's 4Q.2020 revenue is VND 5,263.50 billion (-1.09% yoy).

117

Indonesia

Malaysia

Singapore

Korea

Thailand

Vietnam 0

10000

20000

30000

40000

50000

60000

70000

80000

0.00 0.50 1.00 1.50 2.00 2.50 3.00

US

D/c

ap

ita

Grams/capita

Correlation between gold consumption and jewelry

and GDP/capita in 2019 and 2025F forecast

73.8

87.9

54.2 47.8 42.9 37.4

41 39

10.5 11.8 12.5 15.6 15.4 16.5 18 17

-50%

-40%

-30%

-20%

-10%

00%

10%

20%

30%

0

20

40

60

80

100

2012 2013 2014 2015 2016 2017 2018 2019

Consumption of jewelry and gold bar in Vietnam

(tons)

Gold bar Jewelery

% growth gold bar % growth jewelery

-80%

-60%

-40%

-20%

00%

20%

40%

60%

Q1'1

6

Q2'1

6

Q3'1

6

Q4'1

6

Q1'1

7

Q2'1

7

Q3'1

7

Q4'1

7

Q1'1

8

Q2'1

8

Q3'1

8

Q4'1

8

Q1'1

9

Q2'1

9

Q3'1

9

Q4'1

9

Q1'2

0

Q2'2

0

Q3'2

0

PNJ's revenue growth compared to jewelry and

gold bars industry (% yoy)

%g jewellery %g gold bar % g PNJ's revenue

0

2

4

6

8

10

12

14

Jewelry consumption of some countries in the

region

Japan Indonesia Malaysia

Singapore Korea Thailand

Vietnam

Source: PNJ

PNJ – Phu Nhuan Jewelry Joint Stock Company- Outlook

KINH TẾ VĨ MÔ THỊ TRƯỜNG CỔ PHIẾU NGÀNH VÀ DOANH NGHIỆP TRIỂN VỌNG TRÁI PHIẾU Back

PNJ – Phu Nhuan Jewelry Joint Stock Company- Valuation

118

P/E Method: 78.188

FCFF Method: 85.514

FORECAST

VALUATION

VND

81.851/share

TARGET PRICE

+5,87% UPSIDE

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

VN

D

PNJ

Relative VN Index

VND billion 2019 2020F 2021F

Revenue 17.000 16.932 19.524

+/- yoy (%) 16.7% -0.4% 15.3%

NI 1,193,925 973,95 1.269,993

+/- % 24.38% -18.4% 30.4%

EPS (VND/share) 4,896 4,896 5,209

FERTILIZER

INDUSTRY


Urea: Urea price has gone up by 12% in the third quarter of 2020 thanks to a recovery of urea consumption as well as a turnaround in its material

price in input such as coal, oil, natural gas…

Kali Clorua: Meanwhile Urea price has shown a good performance, KCl price has moved in a contrary direction by dropping 8% in the third

quarter . It has experienced 9 consecutive months of decline since early of 2020.

DAP: Due to the interruption of supply at Chinese market, DAP price has dropped sharply in the third quarter of 2020. Chinese market is known

as the largest supplier in global

FERTILIZER INDUSTRY

120

Source: VCBS compiles

1. Global market highlights

150

200

250

300

350

400

450

201

7

201

8

201

9

202

0

Fertilizer Price Movement

Urea DAP MOP

$/ton

0

10

20

30

40

50

201

42

01

52

01

62

01

72

01

82

01

92

02

0

201

42

01

52

01

62

01

72

01

82

01

92

02

0

201

42

01

52

01

62

01

72

01

82

01

92

02

0

Ure DAP KCL

Fertilizer Production %

0

5

10

15

20

25

30

Chin

a

Un

ited

Sta

tes

Ind

ia

Russ

ia

Ind

ones

ia

Chin

a

Un

ited

Sta

tes

Ind

ia

Russ

ia

Mo

rocc

o

Can

ada

Bel

arus

Russ

ia

Chin

a

Isra

el

Ure Phốt phát Kali

Fertilizer‟s market share %


Supply side: Thanks to the good anti-epidemic measures from the government and the people, no local factories had to shut down, so the

domestic fertilizer supply chain was not interrupted meanwhile the volume and value of fertilizer import in 1H.2020 dumped sharply due to

the disruption of global supply and freight.

Demand side: 2020 is considered a milestone for the fertilizer export activities. As of September 2020, accumulated volume and value

increased by more than 35% year-on-year. Although the overall domestic fertilizer supply in 9M.2020 was still assured at a high level,

domestic fertilizer demand also increased positively.

FERTILIZER INDUSTRY

121


1. Domestic market movement

-45.0%

-30.0%

-15.0%

0.0%

15.0%

30.0%

45.0%

60.0%

75.0%

-300000

-200000

-100000

0

100000

200000

300000

400000

500000

Jan Feb Mar Apr May Jun Jul Aug Sep

Volume of Fertilizer Import – Export

Import Export % YoY Import (Lũy kế) % YoY Import

-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

-60000

-40000

-20000

0

20000

40000

60000

80000

100000

120000

Jan Feb Mar Apr May Jun Jul Aug Sep

Value of Fertilizer Import – Export

Import Export % YoY Import (Lũy kế) % YoY Import


Short term(< 6 month): Regarding sales volume in the second half of 2020, VCBS believes that sales will record high in 4Q.2020 as usual

when the Winter-Spring season comes. Looking at the inventory movements of most large enterprises, inventories of Urea and NPK products

have declined rapidly, reflecting the good demand for consumption.

Long term(> 1 year): ONI has returned to slightly negative, ending 3 consecutive years of drought caused by the El Nino phenomenon. The

cycles of weather usually remain status at least 1-3 years before transitioning to a new climate state. Therefore, 2021 seems to be a La Nina

year. VCBS expects that La Nina should help fertilizer demand grow by 5% in 2021. However, negative movements of Brent and FO prices

will positively affect the gross profit margin of the business, especially in urea manufacturing enterprises.

SECTOR OUTLOOK

122


2. Positive Outlook thanks to favorable weather condition

-1.5

-1

-0.5

0

0.5

1

1.5

2

2.5

3

2011 2012 2013 2014 2015 2016 2017 2018 2019

Weather Condition – ONI‟s movement

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3

DCM DPM LAS BFC

Inventories of fertilizer enterprises


PETROVIETNAM CA MAU FERTILIZER JSC– GENERAL

123

Business Activities

After successfully upgrading the factory, DCM is

currently operating at around 110% of the designed

capacity for the Ca Mau brand granular urea factory.

From Q42020, the DCM plant will put the NPK plant

with a capacity of 360,000 tons of molten urea

technology into operation.

Shareholder Structure

PVN is still a controlling shareholder with over 75%

stake in DCM. PVN still ranks DCM in the list of

divestments in the short term. However, VCBS realizes

DCM's outstanding problem is that the State has not

approved the equitization settlement. Therefore, it will be

difficult for PVN to continue divesting from DCM.

Business Result

9M2020's sale reached VND 5,458 billion (+ 7.7% yoy);

Profit after tax reached 461.9 billion VND (+49.9% yoy)

thanks to favorable movements from low oil prices,

helping to improve gross profit.

Shareholder Structure

PVN PVI Others

80%

Revenue mix

Ure NPK NH3

4,910

5,747

6,689 6,266

619 637 656 426 588

1,171 1,205 1,239 805

1,112

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2016 2017 2018 2019 2020

Business Result

Sales

NPAT

EPS

Gross

Margin

Source: DCM, VCBS compiles


Advantages of NPK Fertilizer Segment

VCBS sees many advantages of DCM in terms of new NPK fertilizer

plant thanks to its low capital expenditure but outstanding quality.

Strong Cashflow

DCM generates ample amount of cash flow from operating activities

each year despite low corporate profit due to fluctuations in the input

gas price mechanism thanks to the high proportion of depreciation in

COGS.

PETROVIETNAM CA MAU FERTILIZER JSC

124

Phu My NPK Viet – Han NPK Ca Mau NPK Binh Dien

NPK

Capex 5,000 bn VND

(included MH3 ) 1,300 bn VND 800 bn VND 120 bn VND

Technology Chemical Blast Furnace Molten Urea Mixing by

Barrel swivel

Capacity 250.000 tons per

year

300.000 tons per

year

300.000 tons

per year

50.000 tons per

year

Investment

rate/ton NPK/

year

20 mn

VND/ton/year

3.6 mn

VND/ton/year

2.9 mn

VND/ton/year

2.4 mn

VND/ton/year


0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Th

ou

san

ds

Asset - Liabilities

Total asset Total debt

(3,000)

(2,000)

(1,000)

0

1,000

2,000

3,000

Th

ou

san

ds

Cash Flow

+/-CF CFO CFI CFF



125

Scenario Analysis

VCBS uses 3 scenarios of oil price from 40 - 50 - 60

USD / barrel and 2 scenarios on VAT to present the

valuation matrix table when changing assumptions in

the model.

Recommendation

Long – term: Buy

2021 2022 ∞ 2023 2024

The first year of debt-

free, cash surplus

increased by 1,200

billion / year

The first year of depreciation - free,

profit increased sharply by more than

1,000 billion / year. Eligible to pay

dividends

b = 90% b = 90% b = 90% b = 85% g = 2% Ke = 12.5%

Giá dầu Brent Oil

VAT

40 USD 50 USD 60 USD

VAT

exempt 17,500 15,900 14,000

5% 20,500 19,200 17,800



126

Unit: bn VND 2019 2020E 2021F

Revenue 7,042 6,266 7,539

+/- yoy (%) 5.3% -11% 20.3%

NPAT 427 591 262

+/- % -35.1% 38.2% -46.3%

EPS (Thousan VND/share) 620 1,112 496

DDM METHOD 15.202

FORECAST

Valuation

15.202/CP

TARGET PRICE

+25 % UPSIDE

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

DCM Relative VN Index

GARMENT AND

TEXTILE

INDUSTRY


In 2019 before the pandemic, the global’s

textile and clothing decreased by 2.4% and

0.4%, respectively. It was due to the

economic slowdown and the escalating trade

tensions, particular the tariff between the US

and China. However, China and Vietnam

remained positive growth.

Textile: In the first time in history, Vietnam

exceeded Taiwan, ranking seventh-largest

textile exporter in 2019 (USD8.8 bn, up

8.3% yoy).

Apparel: Vietnam continued to rank 4th with

an export value of USD 30.6 bn, up to 7.7%

yoy.

INDUSTRY HIGHLIGHTS

128

1. Overview

8.3%

-15%

-10%

-5%

0%

5%

10%

0

20

40

60

80

100

120

140

Billion USD Top 10 Exporters of Textile- 2019

Value of export % yoy

7.7%

-15%

-10%

-5%

0%

5%

10%

0

40

80

120

160

Billion USD Top 10 Exporters of Apparel- 2019

Value of export % yoy

Apparel export:

USD 22.16 bn

(-10.0 % yoy)

In which, FDI companies:

% of total VN: 56%

(-13.7% yoy)

Textile export:

2.57 tỷ USD

(-16.9 % yoy)

In which, FDI companies:

% of total VN: 71%

(-16.1 % yoy)

Textile import:

USD 1.43 bn

(-21.0 % yoy)

In which, FDI companies :

% of total VN: 65%

(-25.2 % yoy)

Fabric import:

USD 8.43 bn

(-13.4 % yoy)

In which, FDI companies :

% of total VN: 54%

(-15.9 % yoy)

Source: Vitas, Customs, VCBS compiles


9M2020: There is not much change in

Vietnam’s textile export compared to

the same period last year. Top 3

importers (the US, Japan and South

Korea) accounted for 70% (in 2019:

69%), of which the US market

registered the highest portion.

Vietnam imported total USD9.73 bn of

fiber, yarn and fabric. And China

remained the top supplier for

Vietnam’s garment.

INDUSTRY HIGHLIGHTS

129

2. Export – Import

48%

12%

10%

10%

5%

15%

Top 5 importers of Vietnam's apparel -

9M.2020

USA

Japan

Korea

EU (27)

China

Others

-6.7%

-13.6%

-11.2%

-14.3%

-16.1%

-2.9%

-10.3%

-16%

-12%

-8%

-4%

0%

USA

EU

(27) Japan Korea China Canada

Impact of Covid-19 on Vietnam's textile

export growth - 9M.2020

Total

39.8%

17.1%

9.5%

4.1%

10.8%

16.4%

-9.4% -10.0%

-20%

-10%

0%

10%

20%

30%

40%

50%

-

5

10

15

20

25

30

35

40

2013 2014 2015 2016 2017 2018 2019 9T.20

Bn USD Value of Vietnam's textile export

FDI Local % yoy

-

200

400

600

800

1,000

1,200

1,400

2016 2017 2018 2019 9T.20

Mn USD Import fibers, yarns of Vietnam

China

Taiwan

Korea

Thailand

Others

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2016 2017 2018 2019 9T.20

Mn USD Import fabric of Vietnam

China

Korea

Taiwan

Japan

Others

Source: Vitas, Customs, VCBS compiles


SECTOR OUTLOOK

130

Source: ITC, VCBS

CPTPP is a proposed FTA among 11 countries in Asia-Pacific region,

including Malaysia, Peru, Australia, Mexico, Canada, Japan, Singapore,

Brunei, Chile, New Zealand and Vietnam. It took effect from 14 Jan 2019.

Currently, Vietnam exports to 10 countries in CPTPP area (excluding

Brunei).

RULE OF ORIGIN

Yarn forward

CPTPP

Fabric forward

EVFTA

3. Raw material plays as the essential key for Vietnam to

enjoy the benefit from FTAs

0%

2%

4%

6%

8%

10%

12%

Japan Tariff Phaseout Schedule for

Textile & Apparel in CPTPP

EIF

B11

0%

4%

8%

12%

16%

20%

Base

yeartariff

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Canda Tariff Phaseout Schedule for

Textile and Apparel in CPTPP

EIF

B4

B6

0

1,000

2,000

3,000

4,000

Mn USD Value of Vietnam‟s textile and apparel

export to 11 countries in CPTPP

Yarn

Garment

0%

4%

8%

12%

16%Market share of Vietnam in total imported

value of 11 countries in CPTPP

Rule of origin of CPTPP is stricter than EVFTA

Will the US rejoin TPP?

16.2%

83.8%

Proportion of 11 countries in

CPTPP of Vietnam‟s total export

CPTPP Others


SECTOR OUTLOOK

131

Source: ITC, FASH455, Vitas, VCBS

Potential market – EU:

Export value to EU reached USD 4bn annually

which is equivalent to 2% EU import turnover and

12% of VN export turnover

When EVFTA takes effect

42.5% of tariffs will be abolished as soon as the

agreement takes effect. The rest will be diminished

in the period of 3-7 years.

In general, 77% of VN export garment and textile

products remain taxed in the next 5 years after

EVFTA takes effect.

Competition pressure

Regarding price: Bangladesh may offer lower price due to their advantage in wage

Regarding quick delivery: Turkey is located near EU. 0%

2%

4%

6%

8%

10%

12%

14%

Year

1

Year

2

Year

3

Year

4

Year

5

Year

6

Year

7

Year

8

EU Tariff Phaseout Schedule for

Apparel in EVFTA

AB3B5

Base

tariff

rate

-

5

10

15

20

25

30

35

40

45

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

Bn USD Value of EU Apparel Imports

China Bangladesh Vietnam Cambodia

-15%

-10%

-5%

0%

5%

10%

15%

0

5

10

15

20

25

30

35

40

2015 2016 2017 2018 2019 9M.20

Bn USD Value of Vietnam's textile &

apparel to EU

EU Total Vietnam's export % yoy

Category

Base

tarrif

rate

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

A 11,4% 0%

B3 11,7% 8,8% 5,8% 2,9% 0%

B5 11,7% 9,7% 7,8% 5,8% 3,9% 1,9% 0%

B7 12,0% 10,5% 9,0% 7,5% 6,0% 4,5% 3,0% 1,5% 0%

A

12% B3

11%

B5

58%

B7

19%

Value of EU Apparel

Imports from VN (2018-

19)


POTENTIAL CHALLENGE

132

Source: Vitas, ITC, Firm FS, VCBS

Challenge: EVFTA may offer larger opportunities for Vietnam’s textile industry, however the

apparel sector will face many challenges:

Rules of origin are difficult to meet: in order to take advantage of EVFTA (tariffs for textiles

and apparel will be reduce to zero), garments will need to use fabrics produced in Vietnam or

the EU.

However, EVFTA allow to cumulate provision, fabrics originating in countries with which the

EU has a FTA in force will be considered the same as originating in Vietnam (Korea is the only

country that has an FTA with Vietnam and the EU)

Vietnam relies heavily on imported yarns and fabrics from China for apparel production.

9M.2020, Vietnam imported 62% fabrics from China and fibers accounted for 56% of total

value import.

3. Challenge from the demand regarding product origin.

-

1,000

2,000

3,000

4,000

5,000

China Taiwan Korea India Japan Others

Import fiber, yarn and fabric of Vietnam's

garment - 9M.20

Fiber, yarn

Fabric

63% 60%

57% 55% 53% 53% 52%

47% 46% 43% 42%

STKEVEGILVGGTNGVGTGMCHTGMSHM10TCM

RAW MATERIAL / SALES 68.6%

29.9% 26.7%

15.7%

4.7%

54.4%

0%

10%

20%

30%

40%

50%

60%

70%

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

Source of Vietnam's Textile Imports

Others

South

Korea

China


LISTED TEXTILE & GARMENT COMPANIES

133

Source: Fiin Pro, VCBS

No. Ticker Company Exchange 9M2020 % yoy 2020 Cash

dividend

ROE

(TTM) P/E P/B

Sale NPAT Sale NPAT

1 EVE Everpia HOSE 596 11 -16,9% -68,8% 5,1% 8,1 0,4

2 GIL Binh Thanh HOSE 2.546 189 45,1% 109,0% 30% 27,4% 3,3 1,0

3 GMC May Sai Gon HOSE 1.114 11 -16,7% -83,8% 5% 7,5% 10,2 0,8

4 HTG Hoa Tho Textile

Garment UpCom 2.465 43 -23,5% -46,2% 15% 16,4% 4,9 0,9

5 M10 May 10 UpCom 2.782 42 13,7% -18,7% 8% 15,4% 9,3 1,5

6 MNB Nha Be Garment UpCom 3.126 27 -13,3% -23,0% 15% 10,4% 12,4 1,5

7 MSH Song Hong

Garment HOSE 2.970 165 -14,1% -53,7% 35% 19,8% 6,4 1,3

8 PPH Phong Phu Corp. UpCom 1.570 251 -38,1% 33,5% 15% 16,9% 4,2 0,7

9 STK Century Synthetic

Fiber HOSE 1.197 75 -27,6% -53,5% 12,2% 9,8 1,2

10 TCM Thanh Cong

Textile Garment HOSE 2.717 201 -2,6% 30,6% 10% 18,0% 5,9 1,0

11 TNG TNG HNX 3.529 129 -1,1% -25,9% 16% 17,2% 5,1 0,8

12 VGG Viet Tien Garment UpCom 5.170 71 -19,4% -75,6% 9,5% 8,8 0,8

13 VGT Vinatex UpCom 10.335 409 -23,3% -23,4% 3,3% 16,4 0,7


Source: Fiin Pro, Vitas, STK, VCBS

Core business

STK is one of the two leading manufacturers of polyester filament yarn in

Vietnam. STK focuses on medium and high-end yarn segments. STK supplies

yarn for garment companies such as: Nike, Adidas, Uniqlo, Decathlon. Puma…


Strategic shareholder - Eland (Korea) hold 36.8% and Huong Viet Invesment

possesses 20,7%.

Business results

Net revenue reached VND1,196.7 bn (-27.6% yoy) and NI plummeted 53.5%

yoy to VND75 bn.

Recycled yarn contributed 38% (in Q3.20 was 43%). Customer orders have

shown improvement since Sept 2020 (the capacity was nearly full).

Sportswear and leisurewear contributed 42% of total revenue.

Century Synthetic Fiber Co. (STK - HOSE)

12%

-39% -31%

1%

212%

191%

40%

-4%

-33% -36%

13%

96%

117%

12%

Korea Thailand Taiwan Japan Local export Pakistan Total

Vietnam Polyester filament yarn export -

9M.2020

2,229

1,665

2,044

214 122 170 195 212

-

500

1,000

1,500

2,000

2019A 2020F 2021F 2022F 2023F

Net revenue & Net income

20.0%

36.8%

43.2%


Huong Viet

Invesment ConsultanJsc

BoD & relatives

Others



135

Source: STK, VCBS

INVESTMENT THESISES

Short term:

‐ The demand of sportswear outperformed other traditional products. Price gap of STK declined not much as compare to

the last year (<5% yoy).

Long term:

‐ High demand for recycled yarn remains main catalyst for long term outlook.

‐ The demand for recycled fiber is still huge potential, while the global supply is in shortage. To adapt the green

consumerism, major fashion brands are increasing the proportion of recycled and sustainable sourcing in their products.

Major global brands such as Nike, Adidas, Puma, Decathlon ... committed to increase the use of recycled materials.

‐ STK's recycled polyester yarn has been granted GRS (Global Recycling Standard) certification, capable of meeting the

stringent quality requirements from international brands.

‐ On the other hand, the current spinning-chip technology helps STK completely switch from virgin yarn (DTY, FDY) to

recycled yarn products.

Risk:

- Customer demand

(global) declined

- Chinese producers

continue to dumping

polyester filament.

- Oil price may

plummet.

35%

39% 39% 41% 42%

2019A 2020F 2021F 2022F 2023F

Proportion of recycled yarn 2025

50%

Begin to use

recycled

resource

2018

19%

2020

80%

2024

100%

2025

100%

2030

100%


Multiple method 19,161

FCFF method 22,473

FORECAST


VALUATION

Unit: Bn VND 2019 2020F 2021F

Net revenue 2,232 1,665 1,948

+/- yoy (%) -7.4% -25.3% 17.0%

NI 214 118 154

+/- % 20.1% -44.7% 29.7%

EPS (VND/share) 3,163 1,738 2,253

Stock price movement

600

650

700

750

800

850

900

950

1,000

1,050

1,100

10,000

14,000

18,000

22,000

STK Relative VN Index

22,100 VND

TARGET PRICE

+9.9% UPSIDE

Others


Duc Giang Chemicals Corp (DGC) – OVERVIEW

138

Business Activities

DGC focus on phosphorus chemical products with a closed chain from

Apatite ore to phosphorus derivatives such as yellow, red phosphorus

(48% Revenue), phosphoric acid (22% Revenue), and fertilizers (DAP,

MAP, DSP, SSP ...) (13% of Revenue), animal feed additive…

Shareholder Structures

The largest shareholder is the chairman's family - Dao Huu Huyen with

more than 27%, the institutional shareholder is Vinachem Group with

nearly 9%, and the others.

Business Results

Accumulated revenue of 9M.2020 reached VND 4,653 billion (+27.7%

yoy, reaching 76% of the year plan). Consolidated EAT is 704.8 billion

VND (+77.5% yoy, 101% of the year plan). Export activities account for

80% of the revenue structure, mainly export to India, Korea, Japan (P4,

H3PO4); Malaysia (fertilizer).

Business results growth very well in most segments due to: (1) India's

demand for P4 and fertilizer increased sharply; (2) Pure phosphorus used

for electronic equipment has increased demand despite Covid 19; (3)

Fertilizer export to ASEAN countries is also good; (4) Thanks to decling

prices of raw materials (apatite, electricity, sulfur).

Source: DGC, VCBS

Source: DGC, VCBS

2,622

626

6,092

5,092

3,642

4653

320 128

873 572 397

705

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2016 2017 2018 2019 9T.2019 9T.2020


Total Revenue Profit after Tax Gross Profit margin

VND bil

27%

9% 64%

Dao Huu

Huyen and

family

Vinachem

Others

DGC‟s Shareholder structure

48%

12%

13%

8%

5% 10%

4% Yellow & Red

phosphorus

Photphoric acid

WPA 50%

MAP, DAP

Animal feed additive

DSP, SSP, FDCP

fertilizer

H3PO4

Other

1H.2020 Revenue structure


DGC - OUTLOOK

139

CATALYST

Demand for P4, Electronic phosphoric acid is expected to increase: P4, Electronic phosphoric acid is in very high

demand for electronic devices and used in transistors, liquid crystal displays, especially, the 5G race must use new chips.

Increase capacity of electronic Phosphoric acid chain (to 50,000 tons – already had a contract of 30,000 tons) to produce

LCD screens.

Continue deep processing Yellow phosphorus: Red phosphorus, P2O5

Geopolitical tensions between India and China have increased demand for P4, DAP, MAP fertilizers for NPK

production.

Potential for EU market expansion due to EVFTA: The proportion of Yellow phosphorus exports to the EU accounts

for 20%, and is expected to increase to over 30% after tax reduction.

Mining Project 25: Start mining from Q2.2020 will help DGC be proactive about 25% - 30% of the input Phosphate

rock, avoid material risks and increase the power to negotiate with supplier.

Duc Giang - Nghi Son project is the driving force for long-term growth and help DGC reach to new heights. Phase I is

expected to start in Q1.2021 with a total capital of about VND 2,400 billion, expected to produce Solid Sodium

hydroxide, chloramine B from Q1/2022. Solid Sodium hydroxide, Chloramine B with good product consumption ability

due to a large customer who plans to open a paper factory next to DGC's factory and high domestic demand but lack of

domestic supply.

Prospects from future real estate projects: Duc Giang apartment building at 18/44 Duc Giang street, Thuong Thanh, Long

Bien, Hanoi - The company's headquarters is currently planned 1:500.

Risk: Competition risk, input


DGC – Valuation

140


Net Revenue 5,092 6,121 6,714

+/- yoy (%) -16.41% 20.22% 9.68%

NPAT 572 902 964

+/- % 57.85% 6.90% 3.33%

EPS (VND) 4,418 6,064 6,483

P/E 49,000

FCFF 46,600

ESTIMATION

VALUATION

VND 47,800/share

TARGET PRICE

+1.6% UPSIDE

12,000

17,000

22,000

27,000

32,000

37,000

42,000

47,000

52,000

HISTORICAL PRICE

DGC Relative VNINDEX


Petrolimex Petrochemical Corp (PLC) – OVERVIEW

141

Business activities

PLC is a popular in lubricants, asphalt and industrial chemical solvents with

9M.2020 revenue ratios of 27%, 47% and 26% respectively. Asphalt product

ranks first in the market with a market share of 30% - 40%, followed by

Adco and Transimex. Lubricant products ranked second in the market after

Castrol with about 10-12%.


The largest shareholder is Vietnam Petroleum Corporation - Petrolimex with

79.07%, the rest are internal shareholders and other shareholders.

9M.2020 Result

Accumulated revenue in 9M.2020 reached 3,914 billion VND (-10% yoy,

61% of the year plan) due to the influence of Covid 19. GPM reached 17.5%

(+ 3.5% compared to 2019) - highest in the past 5 years. Net income reached

124 billion VND (+9.7% yoy, 74% of the year plan).

Business results improved because: (1) Increased asphalt sales (+ 26% yoy in

revenue); (2) More Polymer asphalt portion with higher selling price and GP;

(3) Input prices such as base oil for blending lubricants, as well as raw

asphalt sharply decreased according to oil prices, which reduced input prices,

(4) Inefficiencies in the chemical segment were narrowed due to the

influence of Covid. 19

Source: PLC, VCBS

Source: PLC, VCBS

24%

36%

40%

27%

47%

26%

Revenue structure

Lubricant Asphalt Chemical

Inside: 2018

Outside: 2019

79.07%

20.93%


PLX Others

5,049

6,436 6,160

3,914

171 153 145 124

15.5%

14% 14%

17.5%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2017 2018 2019 9T.2020



VND bil Business performance


PLC - OUTLOOK

142

CATALYST

Prospects of asphalt from Government stimulus, mainly focusing on transport

infrastructure projects. PLC's asphalt is cyclical with high correlate to

Government expenditure.

In 2020 – 2021, there are several projects are going to be groundbreaking such

as the North-South Expressway are expected to need more 500,000 tons of

asphalt in the next 4 years (twice the sales volume / year of PLC) with a value

of more than 5,000 billion. In addition, Trung Luong - My Thuan, Cao Bo -

Mai Son, Cam Lo - La Son highway, 2nd Beltway (HN), 3rd Beltway (HN),

TSN, Noi Bai Airport improvement will increases demand for Polymer

asphalt.

High demand of Polymer asphalt with high GMP (20% - 30%) for

expressways will increase PLC's business efficiency.

Maintain the sale of asphalt for road surface maintenance and repair and other

road projects in the provinces due to PLC’s warehouses throughout the

country.

Construction machinery highway construction also increases the demand for

lubricants. (PLX currently sells mainly to trucks and industrial machinery).

RISK:

• Competition, raw material, receivables

• Government expenditure progess.

2020 2021 2022 2023 2024

Cao Bo - Mai Son

Trung Luong - My Thuan

Cam Lo - La Son

My Thuan 2 bridge

My Thuan - Can Tho

Mai Son – 45 NR

Vinh Hao - Phan Thiet

Phan Thiet - Dau Day

Dien Chau - Bai Vot

Can Lam - Vinh Hao

Nha Trang - Can Lam

QL45 - Nghi Son

Nghi Sơn - Dien Chau

Thick Propotion Tons/m3

Total

weight Antilside

asphalt

concrete 4 cm 6,5 - 6,8% 2,4 - 2,7 79.077

Fine grain

asphalt

concrete 5 cm 5,50% 2,4 - 2,7 94.354

Middle grain 7 cm 4,6% - 5,1% 2,32 - 2,35 101.739

Coarse grain 7 cm 4,6% - 5,1% 2,32 - 2,35 101.739

Emulsion 0,6 - 1,5l/m2 44.930

Total 421.840

Source: VCBS

Source: VCBS


PLC – VALUATION

143


Net Revenue 6,160 5,655 5,721

+/- yoy (%) -4.29% -8.19% 1.15%

NPAT 145 173 186

+/- % -5.12% 19.06% 7.40%

EPS (VND) 1,797 2,139 2,297

P/E Multiple 25,200

FCFF 28,637

FORECAST

VALUATION

VND 26,900/Share

TARGET PRICE

+8.9% UPSIDE

5,000

10,000

15,000

20,000

25,000

30,000


PLC Relative VNINDEX


FPT CORPORATION (FPT)

OVERVIEW

• FPT is a leading IT – Telecommunication enterprise in

Vietnam, especially the export of software is growing rapidly

with global growth strategy. The company is present in 45

countries in Asia, Europe, the Americas and Australia, with

CAGR of global IT services revenue of 24.6% over the past 3

years.

• The company is also among the three enterprises with the

largest share in the broadband Internet market. The education

segment is expected to provided FPT and the whole IT

industry with skilled human resources.

BUSINESS PERFORMANCE

• After 10M.2020, FPT recovered its growth with accumulated

revenue reaching VND 23,635 billion (+7.4% yoy) and net

EBT reaching VND 4,349 billion (+8.9% yoy).

• Business activities of the company were maintained despite

the difficulties from Covid-19. EBT margin improved slightly

to 18.4%, compared with 18.1% of last year.

Sources: FPT, VCBS

144

42%

38%

20%

PBT by sector 2019 – 10M.2020

Technology Telecom Education, Investments, Others

-20%

-10%

0%

10%

20%

30%

40%

50%

0

10000

20000

30000

40000

50000

2016 2017 2018 2019 10T.2020

Financial Results 2016 - 10M.2020 (VND bn)

Net revenue PBT PBT growth (% yoy) PBT margin (%)


FPT CORPORATION (FPT) – OUTLOOK

Sources: FPT, VCBS

INVESTMENT CATALYSTs

• FPT Software will continue to growth strongly in the long term.

Improved deployment capacity, competitive labor cost and recovered global IT

spending have helped the value of newly signed contracts increase strongly. By

continuously winning mega-deals in America and the APAC market recently

(relating to cloud service, AI processing for e-commerce), CAGR of software

export is forecasted to reach 21% for the period of 2020-2024.

Domestic spending for IT services is also expected to increase again in the

beginning of 2021 after the 13th National Congress ends. Products made-by-FPT

such as AkaBot, Akachain, FPT Spro, FPT Smart Cloud… with high quality

continue to serve clients on the market.

• The contribution of the Education segment in the structure of Net profit

before tax is increasing with the growing demand for IT sector.

145

• Profitability in the telecom sector is gradually improving thanks to

economies of scales.

The number of subscribers and services users maintains a stable growth as FPT

continues to penetrate deeper into the tier 2 and 3 provinces. Pay TV and data

center also maintain positive prospects in the “new normal” context with rising

demand for digital content.

RISK

Main risks include: limited supply of highly qualified software engineers; fierce

competition in Telecommunications sector with Viettel and VNPT; the return of

Covid-19 may have a more profound impact on IT spending and slow down

growth in global market.

4693

1817

779 1154

5534

2672

986 1656

4525

2070

734

1450

0

1000

2000

3000

4000

5000

6000

Japan US EU APAC

Global IT Services Revenue (VND billion)

2018 2019 10M.2020

52%

24%

8%

16%

Global IT Services by market 2018 – 10M.2020 (%)

Japan US EU APAC


(VND bn) 2019 2020F 2021F

Revenue 27,717 30,147 35,290

+/- yoy (%) +19.4% +8.8% +17.1%

NPAT 3,135 3,692 4,481

+/- % +19.7% +17.7% +21.4%

EPS (VND/share) 3,670 5,049 5,701

FORECAST HISTORICAL PRICE

63,619 VND

TARGET PRICE

+14.8% UPSIDE

FPT CORPORATION (FPT) – PRICING

FCFF method 64,927

SoTP method 62,311

VALUATION

146

0

10,000

20,000

30,000

40,000

50,000

60,000

VN

D

FPT Relative VN Index


BIWASE– OVERVIEW

147

Business activities

BWE is the water supply company in Binh Duong Province with 09

branches and a total design capacity of up to 518,000 m3/day (operating

at 86,5% design capacity) and is expected to expand to 718,000 m3/day.

BWE also operates in the field of waste treatment, wastewater and

produces Compost fertilizer, road paving bricks from waste.

Shareholder

The biggest shareholder is Thu Dau Mot water supply company with

38.5%, followed by BECAMEX with 25%, foreign institutional

shareholders such as Norges Bank (6.4%) ...

9M.2020 Performance

For 9M 2020 financial results, revenue reached VND 2,165 billion

(+21.9% yoy, 69% of the year plan). Cumulative GPM reached 41%

(+0.5% vs 2019) - due to a 5% yoy increase in water prices. NPAT in

9M.2020 reached VND 389 billion (+23.8% yoy, reaching 83% of the

year plan).

Business results improved due to: (1) The number of connected

customers using water increased by 10.39%, accumulated consumption

volume reached 121.4 million m3. (2) Water price increases by 5%

compared to 2019; (3) Other revenue from construction activities, sales

such as fertilizer, paving stone increased nearly double over the same

period.

Source: Fiinpro, BWE, VCBS

Source: BWE, VCBS

38.50

%

25.00

%

6.40%

23.86

%

Shareholder portion

TDM BECAMEX

TSK corp Nguyen Van Thien

Norges Bank Others

207 325 476

302 372

36%

40%

41% 41% 41%

33%

34%

35%

36%

37%

38%

39%

40%

41%

42%

0

500

1,000

1,500

2,000

2,500

3,000

2017 2018 2019 9T.2019 9T.2020




VND Bil

63%

22%

2% 13%

61% 17%

3%

19%

Water supply Waste treatment

Waste water treatment Others

Revenue structure Inside: 2019

Outside: 9M.2020


Binh Duong Water – Environment JSC

148

CATALYST

100% of water supply market share and accounting for 30-45% market share of waste treatment for Binh Duong.

Growth of water living demand and industrial activities thanks to strong FDI inflows. Binh Duong is one of the largest attractive

places for FDI especially in industrial production, helping to increase the demand for water resources for production and daily life.

Increasing water supply capacity with expansion projects ensures future growth in demand. Currently, KLH and TDM plants have

exceeded their designed capacity due to large demand continue increasing.

The lowest water loss rate in the industry at only 5.3% in 2019 due to a new and modern investment water supply system to increase

the company's efficiency..

Increasing the capacity of the South Binh Duong waste treatment complex (a closed, modern process) to increase the capacity of

waste and wastewater treatment and at the same time double the capacity of organic fertilizer products: Elephant Binh Duong..

RISK:

Water resource quality.

Water supply system.

Source: Annual report of those company

0%

10%

20%

30%

0

50,000

100,000

150,000

200,000

DNW TDW GDW BTW NBW CLW BWE

Ouput and water loss ratio

Water supply output Water loss ratio

'000 m3 Expand project Capacity

Tan Hiep Water plants 100.000 m3/day

Nam Tan Uyen Water plants 30.000 m3/day

Uyen Hung Water plants 30.000 m3/day

Compost fertilizer 840 tons/day (double)

Incinerator 840 kg/h

Solid watse treatment complex 400 ha

65%

70%

75%

80%

85%

90%

-

100

200

300

Water supply capacity (million m3/year)

Current Expand Productivity

Source: BWE, VCBS


BWE – Valuation

149

UNIT: billion VND 2019 2020F 2021F

Net Revenue 2,546 2,984 3,335

+/- yoy (%) 15.86% 17.20% 11.76%

NPAT 476 554 646

+/- % 46.58% 16.25% 16.71%

EPS 3,175 2,953 3,446

P/E 33,700

FCFF 35,000

FORECAST

VALUATION

34,400/Share

TARGET PRICE

+11.0% UPSIDE

10,000

15,000

20,000

25,000

30,000

35,000

HISTORICAL PRICE

BWE Relative VNINDEX


This report is designed to provide updated information on macroeconomics, fixed-income, including

bonds, interest rates, industries, equity outlook and some other related. The VCBS analysts exert

their best efforts to obtain the most accurate and timely information available from various sources,

including information pertaining to market prices, yields and rates. All information stated in the

report has been collected and assessed as carefully as possible.

It must be stressed that all opinions, judgments, estimations and projections in this report represent

independent views of the analyst at the date of publication. Therefore, this report should be best

considered a reference and indicative only. It is not an offer or advice to buy or sell or any actions

related to any assets. VCBS and/or Departments of VCBS as well as any affiliate of VCBS or

affiliate that VCBS belongs to or is related to (thereafter, VCBS), provide no warranty or

undertaking of any kind in respect to the information and materials found on, or linked to the report

and no obligation to update the information after the report was released. VCBS does not bear any

responsibility for the accuracy of the material posted or the information contained therein, or for any

consequences arising from its use, and does not invite or accept reliance being placed on any

materials or information so provided.

This report may not be copied, reproduced, published or redistributed for any purpose without the

written permission of an authorized representative of VCBS. Please cite sources when quoting.

Copyright 2012 Vietcombank Securities Company. All rights reserved.

DISCLAIMER

CONTACT INFORMATION

151

Tran Minh Hoang

Head of Research

[email protected]

Tran Minh Hoang

Head of Research

[email protected]

Ly Hoang Anh Thi

Deputy Head of Research

[email protected]

Mac Dinh Tuan

Research manager

[email protected]

Le Duc Quang

Research manager

[email protected]

Le Thu Ha

Senior analyst

Macro & fixed income

[email protected]

Nguyen Hoang Minh

Market strategist

[email protected]

Luong Van Hoan

Banking

[email protected]

Nguyen Thi Thuy Dung

Fishery, Consumer goods,

[email protected]

Trinh Van Ha

Energy, Chemicals

[email protected]

Hoang Tung Vu

Equity market, commodities

[email protected]

Nguyen Thien Toan

Real estate, Technology

[email protected]

Ngo Duy Tai

Oil & gas, fertilizers

[email protected]

Tran Ky Anh

Construction materials

[email protected]

Dang Khanh Linh

Macro & fixed income

[email protected]

Pham Hong Quan

Aviation & Seaport

[email protected]

Nguyen Thi Thu Hang

Consumer goods, Textile

[email protected]

Nguyen Huu Quang

Equity market, Derivatives

[email protected]

Nguyen Nam Anh

Equity market, Derivatives

[email protected]

mailto:[email protected]



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