[BSC Vietnam] Mid-Year Earning Is On (PNJ, PVT) 06.07.2017

Summary

• Stocks scored a 0.56% win, as the Vnindex was lifted by gains in tech stocks (+2.49% thanks to FPT) while weakness in energy shares
• Our TA have a positive view for Q3 ahead. He believe that in 2017, VN-Index will move within the price range of 740-800 point with USD 180 million in daily turnover.
• Mid-year earning is on. The bank might record a significant PAT increase for the second quarter this year. Our analyst expect that the PAT of BID is flat while MBB, ACB and even EIB,
• Our analysts are bullish with PVT and PNJ (Vietnam leading transportation and jewelry)

Dear Value clients and partners,

• Stocks scored a 0.56% win, as the Vnindex was lifted by gains in tech stocks (+2.49% thanks to FPT) while weakness in energy shares (-0.36%) and consumer Discretionary (-0.43%). Among 8/10 today winner of the sectors, Material (+1.10%) perform strongly thanks to HPG and steel, cement stocks, followed by healthcare (+0.84%) andreal estate (+0.57%).

Today’s Markets:

• Indexes, VN-Index +0.56%, Hnx-Index +0.67%, Upcom +0.14%
• Active, HOSE: ITA, HQC, HAI, DCM, FLC.   HNX: KLF, SHB, HUT, KVC, PVX.
• Foreigner, Buy: VCB, VNM, HPG, HCM, KDC. Sell: PLX, SSI, STB, PPC, HSG.
• Notice stocks:  HPG. SHB. PLX, SSI, DCM, BID, VCB, HBC, SHB, HUT, CEO
• Trading volume: ~341.0 million shares
• Trading value: VND 4903.7 ~ 218.5 USD mil
• Foreigner transaction Net: 5.8 mil USD Sell 17.7 USD million and Buy 23.5 USD million

Corporate update:

• PNJ (VND 99,000 per share / -2.8% / Market Cap USD 432.4 million). PNJ is the leading jewelry producer and retailer in Vietnam. We supposed that the key catalyst of PNJ is a growth of jewelry retailing by expanding its store network.  Our analyst target PNJ at VND 117,000 per share.

“1H17 business result”. PNJ’s revenue reached 5,545 billion VND, up 41% YoY, completing 53% of 2017 business plan. Gross profit was 993 billion (+33% YoY). EBT reached VND 472 billion (+53.7% YoY),completing 62.5% of 2017 business plan. We noticed that, in Q2/2016, PNJ recorded the abnormal earning in asset liquidation. If we exclude its abnormal earning, revenue and EBT’s growth rate in 1H17 was 42% yoy and 78.2% yoy. SSSG in 1H17 reached 28% thanks to the contribution of number of store opening in 2015 and a strong brand. PNJ expected that its SSSG will remain at 28% in 2017.

“YTD PNJ store openings were 23 stores”. This brought the company’s total store count to 242 stores as the end of June 2017.PNJ expected that in the end of 2017, total number of store will reach 263 stores, equivalent 50 of store opening.

• PVT (VND 14.500 per share /-0.7%/Market cap USD 187 mil).PVT is the leading in oil and petrolium velsse in Vietnam which has just announced its 6M2017 result, with revenue reached 2.890 bil (-12%yoy), NPAT stood at VND 235 bil (-3%yoy). This result was quite positive in the context that Dung Quat refinery has been in major maintainance since 5 June 2017, affecting PVT’s crude oil demand transportation.

Our analyst target PVT at VND 16,200/share which is still considered to be very good case to Buy in the long run. Main investment points: (1) Increase in coal transportation demandthanks to Plants invested by mother company PVN, namely Thai Binh 2, Long Hau 1, Song Hau 1 and Quang Trach 1. PVT is planning to take care of about 50% of these plants’ coal needs. (2) Transport about 2.5 mil ton crude oil per year for Nghi Son refinery, planned to be in operation from 2018. In second quarter 2017, PVT has invested USD 12 mil to purchase clean oil tanker in anticipation of increase in demand from 2018.

Comments:                                             

• Technical Analysis look. Our TA have a positive view for Q3 ahead. He believe that in 2017, VN-Index will move within the price range of 740-800 point with USD 180 million in daily turnover. In short term, our TA believe that the Vnindex is heading to 780 zoneand more turbulence are expected. Penny stated attracting retail investors recently but we think that the market will soon be back to FA as Q2 earning start leaking.
• Mid-year earning is on. The bank might record a significant PAT increase for the second quarter this year. Our analyst expect that the PAT of BID is flat while MBB, ACB and even EIB, STB might have good jump in Q2’s PAT compare to 2016Q2. The energy sector is expected to have mix results with gain in GAS, DCM, PVT and bad numbers for PVD, PVS…

Cheers

Long Tran