[BSC Vietnam] Steel And SCIC, Hot And Cold News (HPG) 30.11.2017 (DELAYED)

|Includes: VanEck Vectors Vietnam ETF (VNM)

Summary

  • Ishare MSCI Vietnam ETF (which is managed by BlackRock) had a balance portfolio. That might explained that Indexes, VN-Index -0.23%, HNX-Index +0.68%.
  • HPG (VND 41,200, +5%, market cap VND 59,614 billion). We maintain our Buy Recommendation in medium and long-term with HPG stock, a target price of VND 46,945.
  • SCIC announced update on divestment process that they plan to continue VCG, DMC’s divestment in time while FPT, NTP, BMP for further document preparation in Dec 2017.
  • What is going on with the Steel and base metal? Enough with cold thing, let turn to something hot. Remember the August Commodity Rush in our email about GAS and HPG on 07th Aug 2017 (and stressed again on 06th Nov 2017).

Dear Valued Clients and Partners

·         Ishare MSCI Vietnam ETF (which is managed by BlackRock) had a balance portfolio today. That might explained the strong sale of MSN, VIC at ATC which some clients ask us about. Ishare action together with SCIC announcement help cool down the market. In term of sectors, Material (+3%), health care (+1.18%) and consumer discretionary (+0.76%) led the index VS the pull back of IT (-1.36%) and real estate (-1.33%).

Today’s Markets:

·         Indexes, VN-Index -0.23%, HNX-Index +0.68%,  Upcom +0.37%

·         Active: HOSE: FLC, HPG, MBB, HQC, STB.   HNX:  SHB, KLF, PVS, HUT, ACB.

·         Foreigner, Buy: HPG, VCI, VJC, SSI, HCM.   Sell: VIC, MSN, NVL, VNM, GAS.

·         Notice stocks:  HPG, FLC, VNM, VPB, CTG, BMP, SHB, ACB, VGC

·         Trading volume: ~ 324.18  million shares

·         Trading value: VND 7,575.4 bil ~ 337.69 USD mil

·         Foreigner transaction Net: -1.49 mil USD Sell 48.91 USD million and Buy 47.42  USD million

·         Derivative market: Trading value: VND 1,099 billion ~ USD 48.99 million. VN30F1712 at 958; VN30F1801 at 971; VN30F1803 at 977.1; VN30F1806 at 996

Corporate update:

 

 

·         HPG (VND 41,200, +5%, market cap VND 59,614 billion). After favorable developments in Q3/2017, the price of iron ore 62% Fe went down from September 13 (USD 75.56/ton) to short-term bottom of USD 58.52 USD/ton on 31/10/2017. Then, iron ore prices are returning to a short-term uptrend, at USD 67.92 per ton, a positive signal for steel sector. With steel products, china domestic steel rebar price surged from CNY 4,144/ton (30 Oct 2017) to CNY 4,822/ton (Nov 30, 2017), +16%.

The upward trend in iron ore prices and finished product prices are supported by production cut policies from China to head off choking winter pollution and further consolidate a fractious industry. The government production cuts will halve the rate of steel production in Tangshan – the largest steel producing city in China (about 20 million tons of steel, equivalent of about 7.5% national annual production). Besides, China government also announced to cut production in other three key steel-producing cities (Shijiazhuang, Anyang, and Handan).

We estimate NI 2017 of HPG will be VND 7,671 billion (+16%yoy), EPS 2017 = VND 5,513. In the year 2018, BSC estimate Rev of HPG will be VND 55,513 billion and NI of VND 8,070 billion, EPS 2018 forecasted at VND 5,317. On 30 Nov 2017, HPG was traded at VND 41,200, PE FW 2018 = 7.75x. We maintain our Buy Recommendation in medium and long-term with HPG stock, a target price of VND 46,945 as in the Q4 Sector Outlook report.

Comments:   

 

·         SCIC announced update on divestment process that they plan to continue VCG, DMC’s divestment in time while FPT, NTP, BMP for further document preparation in Dec 2017 (link vs plan). My best guess is that they need more time while the market need something cold to cool down. Let take a look at what happen with SAB since the first time they announced divestment idea, it is more than doubled (but it take time of cause).

·         What is going on with the Steel and base metal? Enough with cold thing, let turn to something hot. Remember the August Commodity Rush in our email about GAS and HPG on 07th Aug 2017 (and stressed again on 06th Nov 2017). Yesterday, steel increased 145 Yuan/MT or 3.53% to 4,250, approaching all time high of 4440 in September of 2017, driven by strength in the China domestic market and the winter slowdown production. Furthermore, Indian steel mills have now emerged as keen buyers as inventories hit low levels. This positive sentiment has spread to iron ore markets and hard coking coal. I don’t have to mention the stock right?

Picture of the day:  Steel price yuan/MT (29th Nov 2017)

Source: Steel | 2016-2017 | Data | Chart | Calendar | Forecast | News

Cheers

 

Long Tran

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