[BSC Vietnam] Ocean’s Twelve (GEX) 22.09.2017 (DELAYED)

|Includes: Vietnam Holdings, Ltd. (VNMHF)

Summary

Ocean’s twelve. The bank tycoon trial which began on Aug 20th  only slightly affected the bank stock in the last 3 weeks. VN-Index +0.40%, 232.24 USD mil

GEX ( VND23,300 per share, +1.3%,  Mkt Cap $275 mil) leading stocks with low valuation (P/E forward = 8x, P/B FW 1.15) with Longterm demand, Highvalued asset and improving margin.

Macro flash: The Ministry of Industry and Trade (MoIT) has decided to cut down 675 business and investment conditions, equivalent to 55.5% of the total conditions which is quite good

Investment topics related to “divesting or FOL raised” is one of our key investment theme this year. Lately, FCN and BMP were announced to raise the FOL.

Dear Valued Clients and Partners

  • Ocean’s twelve. The bank tycoon trial which began on Aug 20th (are ending in coming days), only slightly affected the bank stock in the last 3 weeks. In Asia the sell-off coming after a North Korean hydrogen bomb test threat, seem forgot Vietnam today. Industries (+1.31%) and consumer discretionary (+1.29%) led the gain of Vnindex while health care (-0.91%) and energy (-0.8%) moved to the opposite way. Among big stocks, MSN announced that the Board of Directors has approved the buyback of up to 10% of number of total issued shares of the Company

Today’s Markets:

•        Indexes, VN-Index +0.40%, HNX-Index +0.72%,  Upcom +0.11%

•        Active: HOSE: ROS, VJC, HPG, HSG, NVL.   HNX: KLF, ACB, SHB, PVS, VCS.

•        Foreigner, Buy: CTG, DXG, HPG, VCI, CII.  Sell: HSG, MSN, DRC, VNM, KBC.

•        Notice stocks: ROS, VJC, DXG, MWG, KLF, ACB, PVX -> ROS and VJC closed limited up.

•        Trading volume: ~286.35 million shares

•        Trading value: VND 5271.86~ 232.24 USD mil

•        Foreigner transaction Net: -0.1 mil USD Sell 14.92 USD million and Buy 14.82 USD million

Corporate update:

 

·         GEX ( VND23,300 per share, +1.3%,  Mkt Cap $275 mil) is a leading stocks with low valuation (P/E forward = 8x, P/B FW 1.15). The stock is in our Q32017 top pick stocks (link). GELEX hold ownership in many large companies in the electricity equipment sectors, including CADIVI (74.73%); THIBIDI (70.79%); HEM (65.88%). The government’s increasing investment ensures output demand for GELEX’s subsidiaries. We expect output growth ranges 10 – 15% among the subsidiaries.

 

Longterm demand and improving margin. Total investment capital for electricity networks is VND 858 trillion for 2016 -2020 ( 2.7 times higher than the amount for the period 2011-2015).  Improving margins in all subsidiaries since state divestment of GELEX in 2015. Net margins increase for CAV (from 3.8% to 5.5%); THIBIDI (from 8% to 8.5%)

 

High valued asset – the company has land blocks, at prime position and low book value, including (1) Tran Nguyen Han (2) Number 52 Lê Đại Hành (3) 70-72 Nam Kỳ Khởi Nghĩa (under CAV) and Melia (35% owned by HEM). Book value of land ownership of GELEX is only VND 46 Bil.

 

Comments:                                                         

 

·         Macro flash: The Ministry of Industry and Trade (MoIT) has decided to cut down 675 business and investment conditions, equivalent to 55.5% of the total conditions which is quite a good news. CPI is likely to pick up due to the rise of petroleum products and education fee this Sept. ACB, BIDV (BID), Vietinbank (CTG), Sacombank  (STB), Agribank and Techcombank are choised to be the first bank to apply 42/2017/QH14 (NPLs Resolution).

·         Investment topics related to “divesting or FOL raised” is one of our key investment theme this year (link). From what happened to pharmaceutical industry (DHG, DMC), we should not underestimate the demand from foreign investors in attractive sectors when the foreign ownership room was loosened. Lately, FCN and BMP were announced to raise the FOL.

https://seekingalpha.com/instablog/13489352-long-tran-thang/5047246-bsc-vietnam-oceans-twelve-gex-22_09-2017-delayed

Have a nice weekend

Cheers

 

Long Tran

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