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[Long's View] Rising Second Quarter Earning (DRC) 30.07.2018 (Delayed)

Summary

Facebook’s market valuation collapsed by about $120 billion in a singer trading day lastweek – roughly the equivalent market capital of Vnindex plus Upcom index.

DRC ( 24,500 VND/share + 2.5% – P/E F = 17.9x – P/B F = 1.75x, market cap USD 230 million) In 2Q2018, revenue and profit of DRC are 965.

These 533 companies have total PBT climb by 34% vs Q2.2017 while only 53% of them have seen higher Profit in Q2.2018 vs Q2.2017.

This week, Investor will keep the eyes and ears on (1) FOMC Meeting 31st Jul and 1st Aug Governing Council of the ECB; (2) PMI numbers for July 2018 and GDP Q2 and of cause earning news which is expected to be positive.

Dear Value Clients and partners;

  • Facebook’s market valuation collapsed by about $120 billion in a singer trading day lastweek – roughly the equivalent market capital of Vnindex plus Upcom index, due to private data scandal, slow growth of users. Back to Vietnam market, futures trading do showing slowdown in value with USD 318 million today. Industries (+2.78%), Finance (+2.45%), Consumer Discretionary (+2.22%) and energy (+2%) led the index recoverd sharply today. At the same time only 1 sector closed in the red which is healthcare the most defensive one (-0.41%)

Today’s Markets

  • Indexes : VN-Index 1.52%, HNX-Index 1.00%, Upcom 0.62%
  • Active : VJC, HPG, FLC, VIC, SSI HNX: ACB, PVS, SHG, VGC, KLF
  • Index movers : Leader: VHM, BID, GAS, VJC, VCB Laggard: TPG, HPG, VNM, YEG, NVL
  • Foreigner, Buy: SSI, BID, HCM, NT2, VCB Sell: VIC, VNM, MSN, GTN, VJC
  • Notice stocks : VJC, FLC, ASM, BID, HSG, REE, GEX, SBT, PHC, TV2
  • Trading volume : ~ 244.9 million shares
  • Trading value : VND 4,459.8 bil ~ 195.6 USD mil
  • Foreigner transaction Net: -2.2 mil USD Sell 19.2 USD million and Buy 16.9 USD million
  • Derivative market: Total contracts: 77,826 contracts; Trading value ~ USD 318.6 million;

VN30F1808@ 937.5; VN30F1809@ 936.1; VN30F1812@ 937.2; VN30F1903@ 940

Corporate update:

  • DRC ( 24,500 VND/share + 2.5% – P/E F = 17.9x – P/B F = 1.75x, market cap USD 230 million) In 2Q2018, revenue and profit of DRC are 965 bil. VND (+26.5% qoq) and 54.4 bil. VND (+56.7% qoq). Profit grew quickly as the price of output increased by 5% and material input prices were reduced. The consumption of automobile tires decreased slightly by 1.32% compared with 2Q2017 (287,083 tires) including: 197,917 bias tires (-1.94% qoq) and 89,166 radial tires (+0.07% qoq). In term of radial consumption, DRC exported 61,493 tires, mainly to Brazil, Malaysia and India (70% of output).

Thanks to the higher prices in 1Q2018 (+5%) and the decrease in material input prices (rubber price down by 0.82%, synthetic rubber price increased 0.79%, chemical material down by 17%) , Gross profit margin of bias tires is stable at 23%, GPM of Radial tires increases to 4.56%.

The second phase of Radial is expected to put into operation in 4Q2018 which helps the depreciation expense/tires reduces around 40%, saving around 160 bill. VND cost of production.

BSC forecasts the revenue and profit of DRC in 2018 would be 4,090 bill. VND (+11.5% yoy) and 169 bill. VND (+2% yoy), equivalent to EPS 2018 of 1,283 VND/share (-10% bonus & wellfare fund).

Comments:

  • Rising second Quarter earning do add more power to the market. Up to now, 533 companies have their Q2.2018 result updated. Close to 86% record profit for the second quarter, led by stronger earning from Bank (VCB, TCB, MBB, VPB, and ACB), MSN and GAS. Laggers of the earning are HVG, AGF, VIS. The good news is that these 533 companies have total PBT climb by 34% vs Q2.2017 while only 53% of them have seen higher Profit in Q2.2018 vs Q2.2017. Which mean that the market’s Profit increase is heavily thanks to blue chips and large cap.
  • This week, Investor will keep the eyes and ears on(1) FOMC Meeting 31st Jul and 1st Aug Governing Council of the ECB; (2) PMI numbers for July 2018 andGDP Q2 and of cause earning news which is expected to be positive.

Graph of the day: Facebook’s slow growth in Q2.2018

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Source: Global Money Trends

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Cheers

Tran Thang Long (Mr.)

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