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[Long's View] July In A Minute (BSR) 03.08.2018 (Delayed)

Summary

VNindex climb thanks to Oil & Gas stocks. There is also some good rumor about Oil & Gas project.

BSR (VND 17,300/share, +6.8%, market cap of VND 50,848 billion, P/E trailing = 7.3x), BSR announced 1H2018 financial report with positive result than their own estimate.

Our analyst maintains a POSITIVE rating with the Oil and Gas Industry in Q2/2018. Rising oil prices are one of the factors that make oil stocks has recovered, especially upstream.

Macro flash: Good news: PMI stay at 54.9 (2018 average 53.5), FDI + 8.8% (yoy), net import USD 300 million (ytd net export USD 3.7 billion), 7 months export climb 10.7% (yoy);  CPI slow down -0.1% (mom) ~ 4.46% (yoy), Bad news:  interest rate flat, interbank rate climb, USD/VND climb around 2.5% ytd, free market exchange rate climb.

Market flash: Vnindex down -0.46% (mom), -2.88% (ytd) vs Hnxindex -0.1% (mom) -9.16% (ytd), market cap USD 138 billion, Bad news: in July foreigners net sold USD 100 million, daily liquidity drp 20% to USD 188 million, Good news: Earning kick in lead to PE ratio of VNindex drop to 16.9.

Dear Value Clients and partners;

In a more tension day, VNindex climb thanks to Oil & Gas stocks. Utitlities (+2.84%), real estate (+1.41%) led the gain while Industry (-1.92%), consumer Discretionary (-1.02%) suffered. September WTI crude oil gained 1.9% to settle at $68.96/bbl fuel the Oil & Gas stocks despite bad earning in Q2.2018. There is also some good rumor about Oil & Gas project.

Today’s Markets

· Indexes : VN-Index 0.63%, HNX-Index 0.56%, Upcom 0.9%

· Active : VIC, HPG, VNM, VJC, GEX HNX: PVS, ACB, SHB, VGC, TTB

· Index movers : Leader: VIC, GAS, VRE, BVH, BID Laggard: VNM, SAB, HPG, VBC, TCB

· Foreigner, Buy: VIS, GAS, BID, ANV, STB Sell: VIC, VCB, GEX, VHM, PVD

· Notice stocks : VIC, GEX, PVD, CTD, IDI, GTN, HBC, TTB, DTD

· Trading volume : ~ 262.1 million shares

· Trading value : VND 5,735.4 bil ~ 251.6 USD mil

· Foreigner transaction Net: -19.3 mil USD Sell 61.3 USD million and Buy 42 USD million

· Derivative market Total contracts: 75,114 contracts; Trading value ~ USD 310.1 million;

· VN30F1808@ 935; VN30F1809@ 935; VN30F1812@ 938; VN30F1903@ 939.1 Indexes : VN-Index -1.12%, HNX-Index +1.93%, Upcom -0.07%

Corporate update:

· BSR (VND 17,300/share, +6.8%, market cap of VND 50,848 billion, P/E trailing = 7.3x), BSR announced 1H2018 financial report with positive result than their own estimate. We find that BSR raise output of products which have higher crack spreads as A95 (+72% yoy), JA1 (+23% yoy) and DO (+21% yoy) while lower A92 output (-34% yoy).

Total revenue was VND 55,875 billion (+ 45% yoy) thanks to 35% gain of crude oil, and 20% expansion of output (3.6 mil tons). Net profit after tax (NPAT) was VND 3,443 billion higher than VND 2,699 billion released in 2018 AGM. 1H2018 NPAT decreased 7% yoy due to crack spread of A92, A95 decreased sharply from 9.15 USD/bbl to 6 USD/bbl; and from 12.6 USD/bbl to 10 USD/bbl, respectively. While crack spread of DO up from 10.11 USD/bbl to 11.7 USD/bbl, of JA1 rose from 9.3 USD/bbl to 10.07 USD/bbl (from 1H2017 to 1H2018).

7M2018 update. Total output was 4,114 million tons, equal to 66% target of 2018. Total revenue and NPAT was VND 66,488 billion and VND 3,597 billion.

In our prudent view, we assume that crack spread of A92 will be 5 USD/bbl, A95 will be 8.9 USD/bbl, DO will be 11.67 USD/bbl, and JA1 will be 10.97 USD/bbl. Then, revenue and NPAT of BSR will be VND 113,789 billion and VND 5,425 billion, respectively. EPS 2018 will be VND 1,761/share. If crack spread higher than our projection, business result in 2018 will be better.

Comments:

· July in a minute. Macro flash: Good news: PMI stay at 54.9 (2018 average 53.5), FDI + 8.8% (yoy), net import USD 300 million (ytd net export USD 3.7 billion), 7 months export climb 10.7% (yoy); CPI slow down -0.1% (MOM) ~ 4.46% (yoy), Bad news: interest rate flat, interbank rate climb, USD/VND climb around 2.5% ytd, free market exchange rate climb. Market flash: Vnindex down -0.46% (MOM), -2.88% (ytd) vs Hnxindex -0.1% (MOM) -9.16% (ytd), market cap USD 138 billion, Bad news: in July foreigners net sold USD 100 million, daily liquidity drp 20% to USD 188 million, Good news: Earning kick in lead to PE ratio of VNindex drop to 16.9. More on macro and market report here

· Our analyst maintains a POSITIVE rating with the Oil and Gas Industry in Q2/2018. Rising oil prices are one of the factors that make oil stocks has recovered, especially upstream oil companies. PVN continues to explore three major projects in 2018: Nam Con Son Project Phase 2, Su Tu Trang Project, and Block B O Mon Project (which have some good rumor). However, Ca Rong Do Project has been delayed. If those projects are on schedule, upstream oil companies such as PVD, PVS, PXS and GAS will benefit. Our analyst suggest to consider oil stocks in 2018 such as GAS, PVD, PVS, PVB, BSR, PLX, and OIL.

Graph of the day: WTI in huge swing lately

https://static.seekingalpha.com/uploads/2018/7/26/47647448-1532611707338943_origin.png

Source: Catalyst Funds

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Cheers,Tran Thang Long (Mr.)