[BSC Vietnam] The hot topic of the heat (MSR) 05.06.2017 (REUP)

Dear Value clients and partners,

  • Hanoi recorded the highest temperature for 46 years at 42.4 C (108 F) last week. Vietnam electricity also recorded the highest jump in power consumption last week. Today, the finance sector (+0.45%) and consumer staple (1.30%) outperformed market (as bank stocks and VNM increased), but energy (-0.95%) fared worst of all as early last week, crude oil tumbled 1.5% to $47.62/bbl. Again we noted that top liquidity real estate stocks (SCR, DXG) show weakness in movement, even when the sector was only -0.2% down.

Today’s Markets:

  • Indexes, VN-Index +0.63%, Hnx-Index +0.60%, Upcom  +0.25%
  • Active, HOSE: ROS, HPG, VNM, CII, HAG.   HNX: SHB, VCG, ACB, PVS, SHS
  • Foreigner, Buy:  VCB, HPG, KDC, VNM, PHR. Sell: HAG, CII, ROS, DPM, SSI.
  • Notice stocks: VNM, HAG, DCM, VCB, BID, PHR, HNG, DXG => HAG closed limited low
  • Trading volume: ~ 290 million shares
  • Trading value: VND  5.900 ~ 259 USD mil
  • Foreigner transaction Net: -1.1 mil USD.

 

Corporate update:

 

  • MSR Masan resources (VND 16,000/share, +7.4% , $469M). Masan Resource is the company that owns Nui Phao mine, the open pit mine located in Thai Nguyen province containing mineral deposits of tungsten, flourspar, bismuth and copper. Nui Phao is globally the biggest tungsten mine outside of China. The company boosted up its production in 2016 by 26% output growth, and reached 95% total capacity. The boost up in production output helped revenue grow by 52%, and EBITDA increased by 66%, despite the deep decline in average price in all product type.

2017 prospects mainly come from price recovery, since the operation has come to its full capacity. Thanks to price recovery throughout 2016, MSRcurrently in negotiation to have ASP grew by 20% yoy. Along with enhancement in recovery rate, the company set out plans to minimally record VND 5,380 Bil of revenue (+33% yoy) and VND 150 Bill of PAT (+36% yoy). Our analyst noted that in 2016, MSR only meet 52% the target number, but still equivalent to 37% growth. Accordingly, target EPS 2017 = VND 200, equivalent with P/E forward = 80x.

Comments:                                                         

                                

  • The hot topic of the heat (it is the only word I heard at home and on the street) which make people think about drinks, power plant, automobile, taxis, electric devices and Electrical Engineering sectors (I can’t think of any more sectors, you name it). It is also an eventful day for stocks market. FTSE Vietnam ETF announced the exclusive of HAG last week. In the afternoon, STB announced their restructuring plan and the number of new foreign account reach a record high this May (232/total 21,230 accounts).
  • Vietnam Government keep target 6.7% GDP in 2016.  The message was delivered again on May’s cabinet meeting which was live on facebook over the weekend. Officers from the Ministry of Industry and Trade said that they will push the mining sectors (oil & gas, titanium, limestone…). For oil & gas, they want to increase the amount of crude oil this year by 8 percent to 13.28 million tons and gas by 10.4 percent to 10.6 billion cubic meters.

Although mining stocks (MSR, BMC and even KSA…) start climbing today, the news should only be consider a short term catalyst as mining is hard to chew sector.

Cheers

Long Tran

     Trần Thăng Long (Mr.) /      Head of Reseach and Institutional Client
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