[BSC Vietnam] Feng Shui For Earth Dog 2018 (POW) 28.02.2018 (Delayed)

Summary

  • DJ dropped following new Fed Chairman Powells first Capitol Hill testimony while VNindex had a slight gain. There is a rumor that MSCI ishare ETF review was blamed for thèfluctuationinVietnamMarket.
  • POW PVPower (Market cap VND 33,723 bil – listing price VND 14,900/share) In 2018, we forecast that PVPower will record revenue of VND 29,793 billion and PAT VND 2,384 billion.
  • The listing process to Upcom Index are speedup in Vietnam this year. Before 2018, some public companies delayed their listing years (some even 10 years), now is 18-25 days.
  • A lite bit of Feng shui for earth dog. Asia people love Feng Shui, especially during their new year. For 2018, they predict their index up for the begin, down in the middle of the year and end 2018 in great Q3 and Q4.
  • Among 5 elements, the report mention that (1) Wood (consumer staple, Discretionary, health care) strong at year end and year beginning; (2) Fire (tech, IT, utilities) and (3) Earth (property, resource) and (4) Metal (Finance, autos) strong at mid-year; last but not least (5) Water (logistic) strong at year end.

Dear Value Clients and partners;

· DJ dropped following new Fed Chairman Powells first Capitol Hill testimony while VNindex had a slight gain. Sectors were spitted to 2 sides today. The winning side has Energy (+2.76%), Finance (+2.1%), real estate (+1.34%) and Material (+2%). The loser side has consumer staple (-1.94%) and Industry (-1.48%). There is a rumor that MSCI ishare ETF review was blamed for the fluctuation today. iShares MSCI Frontier 100 ETF has 16 vietnam Stocks (VNM, VIC, MSN, HPG, VCB, ROS, NVL, SSI, STB, SAB, PVS, SBT, HSG, DPM, TCH, KBC)

Today’s Markets:

· Indexes : VN-Index 0.17%, HNX-Index 0.6%, Upcom 0.03%

· Active : HOSE: HPG, CTG, MBB, SSI, NVL. HNX: SHB, ACB, PVS, SHS.

· Index movers : Leader: CTG, VIC, BID, MBB, HPG Laggard: VNM, SAB, ROS, MSN, VRE

· Foreigner, Buy : VIC, PLX, DXG, GEX, DC. Sell: HPG, VNM, BID, HCM, VJC.

· Notice stocks : HVN, HPG, CTG, MBB, NVL, VRE, SHS, HUT, PVX, LPB, VIB.

· Trading volume : ~ 311.11 million shares

· Trading value : VND 9249 bil ~ 407.44 USD mil

· Foreigner transaction Net: -20.3 mil USD Sell 83.5 USD million and Buy 63.2 USD million

· Derivative market: Trading value: ~ USD 137.9 million; VN30F1802 @ 1105.00; VN30F1803 @ 1112.00; VN30F1806 @ 1122.90; VN30F1809 @ 1166.00

Corporate update:

· POW PVPower (Market cap VND 33,723 bil – listing price VND 14,900/share) In 2018, we forecast that PVPower will record revenue of VND 29,793 billion and profit after tax of VND 2,384 billion (approx. to those of 2017) and EBITDA of VND 8,411 billion. Our POW report will be available tomorrow.

PVPower is the second largest electricity generating company in the country with a huge advantage thanks to the highest gas generating capacity in the country. PVPower possess a diversified portfolio of power management including coal, gas and hydro power.

Financial situation are better than peers. In the last four years, the ROE have been always above 5%. Especially in 2017, thanks to Vung Ang 1 plant, stable operation and USDVND exchange rate did not have much change, which helped ROE to reach approximately 10%. Leverage down:The proportion of long-term debt / TTS declined from 53% in 2013 to 36% in 2017

Main investment point and risk: (1) Power demand (+22.6% 2015-2020) is still higher than supply in the future, especially in the South (location of PVpower gas plants). This area is estimated to consume approximately 113 million kWh by 2020, corresponding to a CAGR of 22.6% for the period 2015-2020, while electricity supply is only 15.3% (2) Vung Ang 1 factory has been in stable operation after 3 years under PVPower management. At the same time, VA1 has a fastly and timely repayment schedule. We note that in 2018, VA1 will incur high maintenance cost (up 5 times compared to that of 2017), which may hurt its margin in 2018 (from about 21% to estimated 17%); (3) Ca Mau 1 & 2 will be fully depreciated by 2020, while price on PPA will remain unchanged until 2029. Estimated depreciation expense in 2018 is VND 1.065 billion, down to VND 927 billion in 2019 and disappear in 2020; (4) NT1, NT2 and hydropower plants continue to operate stably. We note that from 2022 onward, input prices for these two plants may increase sharply due to the purchase of gas at mines with high operating costs.

Comments:

· New kids on the Block. The listing process to Upcom Index are speedup in Vietnam this year. Before 2018, some public companies delayed their listing years (some even 10 years) since the IPOs Date. Now, within 18-25 days from IPO (much faster than the market expect), BSR (Binh Son Refinery), OIL (PVOIL) and POW (PVPower) are ready to be on board. The listing date at Upcom: BSR 01st March, POW 06th Mar and OIL 09thMar.

· A lite bit of Feng shui for earth dog. Asia people love Feng Shui, especially during their new year. I am no feng shui master (or student :D) but it quite fun to read the CLSA Feng Shui Index. I found that their prediction of Hangsheng & sector did fit very well with Vnindex & sectors in 2014, 2015 and 2016; not so much for 2017. For 2018, they predict their index up for the begin, down in the middle of the year and end 2018 in great Q3 and Q4. Among 5 elements, the report mention that (1) Wood (consumer staple, Discretionary, health care) strong at year end and year beginning; (2) Fire (tech, IT, utilities) and (3) Earth (property, resource) and (4) Metal (Finance, autos) strong at mid-year; last but not least (5) Water (logistic) strong at year end. I am not a fan but if you are, it is fun to take a look at it here

Picture of the day 28th Feb 2018: CLSA Feng shui index 2018 Earth Dog

Source: CLSA 2018

Cheers

Long Tran

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s