BSC Vietnam Sector Outlook 2017 Update (DELAYED)

Aug. 4, 2017 5:15 AM ET|Includes: VanEck Vectors Vietnam ETF (VNM)

Summary

The main index – Vnindex rised 16.8% with market cap climb to USD 110 billion and over USD170 million daily turnover.

BSC had provided quite accurate outlook of the banking sector for 2Q2017; credit yielded the highest growth rate since 2012.

Investment topics: “listing OTC stocks”, “divesting or no room stocks”, “retail, leading stocks, high dividends” and “Free Trade Agreements”

We maintain Outperform assessment for Real Estate, Construction, Technology, Port, Power, Rubber, Fertilizer, Insurance and Banking…

Dear value clients and partners,

Please find the English version of BSC Sector outlook update for the second half of 2017 in the link. Have a nice weekend.


The first half of 2017 review

As the main index – Vnindex rised 16.8% with market cap climb to USD 110 billion and over USD170 million daily turnover. in term of sectors, only 8 over 15 monitored sectors had outperformed VN-index, namely banking, real estate, sugarcane, textile, steel, pharmaceutical, construction and information technology sectors. These sectors benefited from supportive information such as lifting foreign ownership limit of banking and pharmaceutical; strong profit for real estate, construction and sugar cane sector; and antitrust tax for steel along with the rebound of textile sector.

BSC had provided quite accurate outlook of the banking sector for 2Q2017; credit yielded the highest growth rate since 2012. 1Q business report and 2Q’s expected results are quite positive, recommended stocks reached our targeted prices (MBB, ACB, VCB). However, our forecast of the Oil & Gas sector was incorrect due to significant oil price fluctuation, and currently, it is traded a lower level compared to our original forecast.

Notable investment topics

Investment topics related to “listing OTC stocks” (Viettel Post, Viettel Global, Viettel Construction, KDF, VCI, HD Bank, May Viet Thang, Phong Phu Garment …), and “Equitized state-owned enterprise” (Binh Son refinery) will continue to be the story of market attention, and will become stronger as the equitizing and listing process accelerates in the end of Q3 and beginning of Q4 2017.

Investment topics related to “divesting or no room stocks” are FPT, NTP, BMP, DIG, SAB, PVI, DHG, DMC. Though the timing has yet determined but stocks prices would have many changes when the related information gradually published. From what happened to pharmaceutical industry, we should not underestimate the demand from foreign investors in attractive sectors when the foreign ownership room was loosened.

The topic of “retail, leading stocks, high dividends”, when 2Q business results are gradually released, the stocks with strong growth will continue to raise. Leading stocks such as lightning bulb (RAL), radiation (APC), Insurance (PVI), pharmaceutical (DHG), jewelry (PNJ), beverage (VNM) and so on are expected to have good growth thanks to strong demand in the domestic market.

Investment theme “Free Trade Agreements”, although the TPP agreement was not passed, what happened in textile stocks showed the influence of foreigners investments and strong demand growth from export markets will have a strong impact on related sectors (such as fruit). Except for textiles stocks prices that have risen sharply, stocks related to free trade agreements, such as Seaports, Infrastructures – Industrial zones, and Logistic, could be considered in 2H2017.

2H2017 sector outlook

·         We maintain Outperform assessment for Real Estate, Construction, Technology, Port, Power, Rubber, Fertilizer, Insurance and Banking…

·         We assess NEUTRAL at sectors: Steel, Beverage, Cement, Tiles, Plastics, Sugar, Tires, Pharmaceuticals, Textiles, Shipping. We lowered the prospects for the Oil & Gas sector from Outperform to Neutral due to the unfavorable movements in oil prices. Among the neutral sectors we expect the transition will come from Tiles. The overall prospects of this group are mixed well and badly, so the opportunity, if any, will not come to the whole of the stock in this sector.

·        Regarding to UNDERPERFORM sector, we believe that the Fisheriessector will still face many difficulties in 2017. We are not pessimistic but think that investors who are interested in this industry should probably wait patiently and we will update the view when new signals appear.

https://seekingalpha.com/submission/content/5022296

Cheers,

Long Tran

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

 

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