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[Long's View] One Man's Ceiling Is Another Man's Floor (CRE) 06.07.2018 (DELAYED)

Summary

US, EU and Asian stocks rose in thin trading following US’s tariffs on $34B worth of Chinese goods and similar retaliation from China.Finance (+6.36%) led the gain.

CRE –Cenland JSC. New kid on the block. Listing in 3Q2018 (Ticker: CRE) with the price of 50,000 VND - 60,000 VND/share. Total shares: 50 million shares.

One man's ceiling is another man's floor. Like in other Asian Emerging and frontier markets, Vietnam is suffering from a combination of Fed tightening which squeezes liquidity, increases interest rates.

state securities (SSC) might consider some restriction on future trading which has been receiving bigger and bigger inflow (3 times higher than equity liquidity today). Early this week, the state bank (SBV) announced their plan to sell USD at 23,050 which cool down the market quickly.

Lately the correlation coefficient between Shanghai CSI 300 and VNindex since Feb 2018 is as high as 0.64 (weekly).

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  • US, EU and Asian stocks rose in thin trading following US’s tariffs on $34B worth of Chinese goods and similar retaliation from China. Finance (+6.36%) led the gain as most banking stocks closed limited up, follow by Consumer discretionary (+4.41%) and utilities (+3.47%). The only declined sector is the most defensive one, healthcare closed -0.7% down. Trading in derivative market are triple that of Equity trading today.

Today’s Markets

  • Indexes : VN-Index +2.01%, HNX-Index +4.47%, Upcom +0.8%
  • Active : HOSE: SSI, HPG, VCB, CTG, VIC HNX: ACB, SHB, VGC, PVS, SHS
  • Index movers : Leader: VCB, GAS, CTG, BID, BVH, Laggard: VHM, VRE, BHN, VIC, YEG
  • Foreigner, Buy: VIS, GAS, DXG, PLX, CTG Sell: VIC, HPG, MSN, HDB, VCB
  • Notice stocks : SSI, VCB, CTG, BID, HDB, STB, HCM, DGW, ACB, SHB
  • Trading volume : ~ 221.8 million shares
  • Trading value : VND 4,633.1 bil ~ 203.2 USD mil
  • Foreigner transaction Net: -16.1 mil USD 40.7 USD million and Buy 24.6 USD million
  • Derivative market: Total contracts: 164,872 contracts, Trading value ~ USD 636.2 million,
  • VN30F1807@ 895; VN30F1808@ 896.4; VN30F1809@ 896.9; VN30F1812@ 918

Corporate update:

  • CRE –Cenland JSC. New kid on the block. Listing in 3Q2018 (Ticker: CRE) with the price of 50,000 VND - 60,000 VND/share. Total shares: 50 million shares. Plan in 2018 Revenue = 1,676 billion (50.3% YoY), NPAT = 320 billion (+ 26.5% YoY). Cenland is a real estate brokerage firm in Vietnam with a wide network in Vietnam. Revenue and profit in 2017 reached VND 1,115 billion (+ 84.3% YoY) and VND 253 billion (+ 87% YoY) respectively.

Real estate brokerage. Cenland has a large customer database (1,220,000 customers in Vietnam) and cumulative 56,000 successful transactions in 16 years of operation. In 2017, the number of successful transactions in Cenland is 11,555 transactions, growing at an average CAGR of 43% between 2013 and 2017, accounting for 40% of the Hanoi market share and 20% of the national market share. In FY2017, revenue from real estate brokerage reached VND 1,088 billion (97.6% of revenue).

Secondary investment - the main growth driver of Cenland in the future cooperating with real estate investors, positioning the product, selling product to customers. It is expected to account for 80% of the total revenue and profit of Cenland in the future.Marketing Research and Consulting (via RSM subsidiary) holds a total of more than 500 sales events for partners in 2017.

Comments:

  • One man's ceiling is another man's floor. Like in other Asian Emerging and frontier markets, Vietnam is suffering from a combination of Fed tightening which squeezes liquidity, increases interest rates, and puts upward pressure on the dollar. The Chinese economy is vulnerable at the moment, plagued by large debts which authorities are attempting to reign in and a worsening emerging market climate. Lately the correlation coefficient between Shanghai CSI 300 and VNindex since Feb 2018 is as high as 0.64 (weekly).
  • There is a rumor that the state securities (SSC) might consider some restriction on future trading which has been receiving bigger and bigger inflow (3 times higher than equity liquidity today). Early this week, the state bank (SBV) announced their plan to sell USD at 23,050 which cool down the market quickly. Stocks have been falling sharply regardless of attractive valuation and strong macro economy in Vietnam. People now are both greedy and fearful, you can smell it in the air.

Graph of the day: VNindex vs Shanghai CSI 300 Correlation Coefficient 0.64 (weekly)

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Source: Bloomberg

Cheers

Tran Thang Long (Mr.)

Head of Research and Institutional Clients-----------------------------------------------BIDV Securities Company (BSC)