- World equities were falling for a week due to the heated rhetoric between the U.S. and North Korea. Today the market have a quick recovery with light volume. Among stock sectors, Vnindex’s most influential groups - Financials (+1.75%), industry (+1.02%) and material (-2.45%) - battled each other to be top of the leaderboard. But the true winner of today is health care again with 2.86% gain. Last week our updates on Aug Material Rush turnout quite nicely for Steel stocks today, our steel analyst are bullish on all top 3 including HPG (BUY TP 39,200), HSG and NKG
· Indexes, VN-Index +0.53%, HNX-Index +0.64%, Upcom -0.61%
· Active: HOSE: TSC, OGC, FIT, HQC, and HPG. HNX: KLF, SHB, PVX, SHN, VE9.
· Foreigner, Buy: HPG, DHG, VNM, VCI, CII. Sell: SSI, ITC, NVL, CTG, and FIT.
· Notice stocks: HPG, VNM, FIT, TSC, VE9, SHN, LAS
· Trading volume: ~239.12 million shares
· Trading value: VND 3938.09 ~ 175.49 USD mil
· Foreigner transaction Net: 2.43 mil USD Sell 9.86 USD million and Buy 12.29 USD million
· DQC (VND 40,200, +2.4%, market cap USD 50 million). The leading light bulb producers has been going through a hard time while their former CEO/Chairwoman (Deputy Minister of Industry and trade) has submitted a letter of resignation to the Gov. In 6M2017, net Revenue was VND 418.36 billion (-6.61%yoy). PAT in 6M2017 reached VND 50.41 billion, while it was VND 106.84 billion in 6M2016. The main reasons are (1) Average selling price went down 7%, (2) Gross margin 6M2017 of 25.24% (6M2016 gross margin of 27.85%), DQC will keep this margin stable around 25% because of high competition; (3) Lower financial income due to in 6M2016 DQC had deferred sales interest of VND 33 billion, in 2017 it was 0 and (4) SG&A expense in 6M2017 accounted 18.05% net Revenue, higher than the rate of the same period 2016 which was 11.73%;
In 6M2017, DQC booked ½ bonus of the year (last year they only booked at the end of year) and increased marketing expenses for competition. Now the chip led is accounting for 35% of DQC’s total revenue, and it was doublecompared to the same period 2016. DQC will introduce the smart home technology products in September, and they will be the unique producer in Vietnam until now. Because of high competition, the company expects the PAT 2017 of VND 100 – 120 billion (while PAT 2016 = VND 204 billion). EPS 6M2017 = VND 1,412; BVPS 30/06/2017 = VND 34,447.
· The PM pressed for 6.7% GDP growth (link). To achieve that growth goal, the economy needs to expand 7.42% in the second half which is higher than BSC’s forecasted number (6.7% for second half and 6.4% for 2017). The Governor of the State Bank of Viet Nam is assigned to develop a plan to increase credit growth to around 21 – 22% and lower the interest rate. The PM also pressed again on “state divestment” and IPO process (which we mentioned last week).
· How big is 22% growth in credit? Even when the credit growth can be pushed to 21-22% this year, the full impact to Vietnam GDP could be delayed to the first half of 2018 due to lagging effect. In the meantime, Credit growth in first 7 months reached 9.3% which mean that the rest of the year the increased credit can rise close to VND 700,000 billion (~ over USD 3 billion) to meet the new 22% target. We count the number, you count the banking stocks. For the latest update here: VCB, CTG, ACB, MBB, and EIB.
· The megatrend. Furthermore, there is a correlation between credit growth and stock market performance. As long as the rate stay low and the liquidity is abundance, the stocks Mega trend is fine.
P/S: This is a friendly remind about The Asiamoney’s Brokers Poll 2017 will conclude this week. If you have not voted yet, please vote for BSC here link. Thanks for your support, it means a lot to me and our team at BSC.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.