[BSC Vietnam] To VAT Or Not To VAT (CSM) 27.12.2017 (DELAYED)

Dear Value Clients and partners;

  • Vnindex closed slightly in the green despite an anti-corruption news released. The winners again were energy (+1.88%) and material (+2.1%), followed by finance (+0.93%). The index was led by blue chip such as ACB, HPG, GAS …  Industry, Consumer Discretionary, health care and IT had a small pull back.

Today’s Markets:

  • Indexes : VN-Index 0.26%, HNX-Index 1.33%,  Upcom -0.32%

  • Active : HOSE: HBC, STB, HPG, MBB, VIC.   HNX: ACB, TTC, GKM, PVS.

  • Foreigner, Buy : HPG, ETFVN30, HAG, VIC, VRE.  Sell: PAN, HBC, DXG, DHG, KDC.

  • Notice stocks : HVN, PXS, PVS, HPG, HBC, STB, VIC, MBB, HAG, CTG, LDG, ACB.

  • Trading volume : ~ 308.8 million shares

  • Trading value : VND 7402.9 bil ~ 326.12 USD mil

  • Foreigner transaction Net: 16.4 mil USD Sell 19.4 USD million and Buy 54.8 USD million

  • Derivative market: Total contracts: 15,723; VN30F1801 @  966 ; VN30F1802 @  977.9; VN30F1803 @990  and VN30F1806 @  1008.8

Corporate update:


·         CSM (VND 15,750 /share, -0.6%, market cap of USD 73 million). The stock was traded at P/E FW ad P/B of 30x and 1.33x, respectively.

Operating results reduced sharply due to fiercer competition and higher rubber price. Accumulated 9M2017, CSM recorded EBT of VND 59 billion, down 62% yoy. The firm estimates that whole year of 2017, EBT will be VND 68 billion (-80% yoy), then EPS 2017 will be VND 525 per share. (1) Domestic consumption decreased sharply while export improved in 9M2017. Total consumption of bias tires up 4% yoy to 596 thousand units thanks to an increase 21% of export. Semi Radial tires grow strongly from 10.7 thousand to 104.7 thousand units, most of them was exported to US (but the output was much lower than 2017 plan of 250 thousand units).

Radial output was low, at 65 thousand units compared to 68 thousand units in the same period 2016 and capacity of 350 thousand units. (2) Rubber price went up. Average price of RSS3 up by 38%, which made gross profit downed from 22% in 9M2016 to 12% in 9M2017. In the fourth quarter 2017, rubber price reduced by 25% compared to 9M2017.



·         A Storm name Tembin, which means Libra in Japanese, skipped Vietnam early this week. People born under the sign of Libra (22nd Sep to 23th Oct) are peaceful, fair, and they hate being alone. The market was hit by a storm of raw material rising.

It is not the first time, we have mentioned about commodity rush ( I named it “August rush with commodities”) since Aug 07th 2017 (HPG, GAS); 26th Sep 2017 (PVS); 6th Dec 2017 (HPG) and yes (MSR) back to 06th Jun 2017. Since then, the commodities keep heading north, and so as the above stocks that we mentioned and reported (link search the tickers).

·         To VAT or not VAT. At year beginning, we expect the Gov will consider to move the fertilizer from the VAT exemption to under tax rate of 0%. That move if possible can push the PAT of fertilizers stocks (DPM, LAS, DDV…) which we mentioned here on 16th August 2017. But sadly, the draft could not make it to the National Assembly Nov 2017. The fertilizer VAT is included in the VAT reform draft (in which Ministry of Finance (MoF) announced a proposal to raise the country’s Value Added Tax (VAT) from the current 10% to 12%). Clearly the draft was strongly offended by the public (on that day we send you an email name “Hanoi khong voi duoc dau” in English “Hanoi is not in a hurry”).  Hence, the fertilizers shareholder have to wait and should not rush.

Later last week, the Gov announced Decree 146/2017/NĐ-CP emption of input VAT for export raw material. The market believe will push the PAT of exporting Raw Material Company Such As MSR which we have published a BUY report on Sep 2017 (here). Their main products also enjoyed a rise in price ytd, including tungsten, Bismuth and copper.



Long Tran

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