DAILY MARKET RECAP - VNDIRECT DAILY MARKET RECAP 9 November 2017 Bloomberg: VNDS CPC...
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DAILY MARKET RECAP 9 November 2017
Market commentary: VN-INDEX managed to close above the 860-pt level despite strong profit-taking, VIC played the hero, once again. Vietnam’s stock market rallied on the back of bullish large caps. After experiencing fluctuations throughout the first half hour, VN- INDEX began showing positive signals and gradually increased to the intraday peak of 864.2pts (+0.5%). Rather unexpectedly, profit- taking activities suddenly overwhelmed in the afternoon session, thus pulling the VN-INDEX down towards its intraday low. However, the advance of some large caps, especially VIC and VNM, helped the market stay in the green. Real Estate and Energy drove today’s rise. Specifically, VIC recorded a 10-day winning streak despite strong net-selling by foreign investors and alone added 3.1pts to the index’s overall gain. Food and Beverage stocks saw dispersion with VNM attracting huge attention from foreigners and rising by a dramatic 1.4%, followed by BHN while SAB dropped. The upward momentum of the index was further consolidated by the positive performance of some other blue-chips, including GAS, MWG, PLX, REE and VJC. On the other hand, some market pillars suffered losses with ROS, SAB and VCB ranking as the worst performers. At the end, despite an overwhelming number of decliners, the VN-INDEX closed up at 860.4pts (+0.1%). The HNX-INDEX successfully reversed in late trading to land at 105.9pts (+0.1%) with 79 gainers, 90 losers and 209 unchanged.
Real Estate (+2.3%), Energy (+1.9%) and Utilities (+0.6%) increased significantly while Industrials (-1.9%), Financials (-0.9%) and IT (- 0.4%) dropped. The top index movers included VIC (+4.7%), VNM (+1.4%), PLX (+2.3%), BHN (+3.5%) and VJC (+0.9%). Top index laggards consisted of ROS (-6.8%), SAB (-1.2%), VCB (-1.2%), BID (- 1.3%) and CTG (-1.0%). Top 3 block trades were MSN with 5.7mn shares (VND342.8bn), NVL with 1.4mn shares (VND84.3bn) and VNM with 0.5mn shares (VND79.9bn).
Foreigners net bought on both exchanges worth VND413.5bn. They mainly bought VNM (VND349.2bn), VJC (VND53.0bn) and VCI (VND41.1bn) and sold VNM (VND71.2bn), CII (VND45.4bn) and HPG (VND44.4bn).
Snapshot HOSE HNX
Close (pts) 860.4 105.9
1 Day change (%) 0.08 0.12
Volume (mn shs) 164.4 32.9
Value (US$mn) 203.7 19.5
Gainers 131 79
Losers 143 90
Unchanged 68 209
Commodities & Currencies Close %chg
Gold(USD/Oz) 1,285 0.06
WTI Oil ($/B) 1Mth 56.80 -0.02
Brent Oil ($/B) 1Mth 63.37 -0.19
USDVND 22,717 -0.01
EURVND 26,496 -0.09
Sectors Price Index P/E P/B Country Close 1D chg P/E P/B Market cap
(VNIndex) 1D chg Wgt x x Peering Points % x x US$bn
Consumer Discretionary 0.51% 0.99 20.44 5.25 China 4,075.9 0.69% 16.86 2.06 4,422
Consumer Staples 0.25% 7.11 31.15 8.64 India 10,321.7 0.18% 23.74 3.09 1,150
Energy 1.91% 2.82 14.91 3.01 Indonesia 6,042.5 -0.11% 22.11 2.51 497
Financials -0.90% 3.56 17.02 2.05 Laos 1,033.6 -0.22% 13.14 0.88 1
Health Care 0.58% 0.33 20.21 3.79 Malaysia 1,746.8 0.15% 16.30 1.80 251
Industrials -1.92% 1.68 62.64 8.26 Philippines 8,519.8 0.13% 23.44 2.54 201
IT -0.44% 1.08 12.6 2.48 Taiwan 10,743.3 -0.70% 16.17 1.82 1,064
Materials -0.22% 1.18 8.79 1.67 Thailand 1,703.0 -0.68% 17.97 2.05 511
Real Estate 2.31% 4.89 38.03 4.47
Utilities 0.60% 5.01 15.55 3.24 Vietnam 860.4 0.08% 16.91 2.47 100
9-NovSource: Bloomberg Source: Bloomberg
DAILY MARKET RECAP 9 November 2017
Oil steadied near US$57 a barrel in New York as data showing U.S. crude output at the highest
level in at least three decades countered concerns sparked by a political purge in top exporter
Saudi Arabia. U.S. output expanded for a third week to 9.62mn barrels a day, the highest in
weekly Energy Information Administration data going back to 1983. Crude inventories rose
2.24mn barrels last week, compared with a 2.45-million drop forecasted in a Bloomberg survey.
Oil has advanced about 20% since the start of September on signs the Organization of Petroleum
Exporting Countries (OPEC) and its allies will extend output cuts past March. The arrest of more
than 10 princes as well as dozens of officials and businessmen in an anti-corruption probe in
Saudi Arabia, OPEC’s de-facto leader, has added to price gains. (Bloomberg)
Banking system-wide credit, including corporate bonds, was seen rising 13.5% through end-
Oct. vs. end-2016, according to the National Financial Supervisory Commission. Liquidity in the
banking system remains healthy. Total funding was seen rising 12% while total deposits rose by
11.5% and valuable papers issued rose by 24.4% vs. end-2016. (Bloomberg)
Talks aimed at salvaging a Pacific Rim trade pact rejected by President Donald Trump resumed
Thursday on the sidelines of the annual summit of the Asia-Pacific Economic Cooperation
forum. Trade and foreign ministers of 11 members of the original Trans-Pacific Partnership pact
were seeking to agree in principle on how to proceed without U.S. involvement after Trump
pulled out from the formerly U.S.-led initiative earlier this year. Trump and other leaders are
heading to Vietnam for the 21-member APEC summit, which begins Friday in the coastal resort
city of Danang. Japan and Australia have shown strong enthusiasm for reaching a framework
agreement that drops a requirement in the original accord that it be ratified by at least six
member countries with a combined GDP equal to 85% of the combined GDP of all members.
Coverage Universe Updates
Loc Troi Group (LTG VN): On track for a recovery - ADD (Upside +41.0%)
Our prediction for a recovery in LTG’s earnings remains unchanged despite the current
slowdown in 3Q net profit growth, which was mainly caused by abnormal weather conditions.
However, we lower our target price by 8.7% to VND66,270 to reflect a corresponding fall in our
2017 earnings forecast (unchanged target TTM P/E of 12x), but maintain our ADD
recommendation with a view that the recent sharp share price correction has created an
attractive entry point.
All segments apart from CPC grew in 3Q. The Agrifood segments saw a standout
performance in 3Q, after completing clearance of old rice stockpiles in 2Q17 at fire-sale
prices. The segment’s net sales touched VND541bn (+17% YoY) while gross margin expanded
to 10.5% from 1.2% in 1H17. The Seed segment’s performance was in line with our forecast
with net sales growing 20.5% YoY and gross margin staying at 1H level of 22.4%. Overall, 3Q
net profit growth dropped from 23% YoY in 2Q to 5% YoY but still helped clock 17.3% YoY in
DAILY MARKET RECAP 9 November 2017
CPC segment’s 22% YoY drop in sales 3Q was an aberration. Heavy rainfall and early season
flooding over the period reduced total rice paddy acreage in the Mekong Delta (major CPC
market for LTG), by 3% from 3Q2016 levels. In addition, farmers started the Summer-Fall
crop earlier this year (a large part of the area saw planting starting in 2Q instead of 3Q)
which also caused a 16% decrease in the average area with mature crop during 3Q. 4Q
prospects for CPC sales are positive in 4Q as the Winter-Spring crop will start growing and
the weather is expected to be better.
Booming rice exports to China and Philippines should boost Agrifood sales. The Agrifood
Segment enjoyed favourable industry conditions as Vietnam’s 3Q rice export volume grew
by 52% YoY, with China and Philippines being the highest-growth export markets. (Source:
Ministry of Agriculture and Rural Development – MARD). Details of LTG’s rice volume and
average sale price were not disclosed, but 60% of LTG’s Agrifood sale comes from exporting
with the main markets being China, Taiwan and the Philippines. China is now the largest
destination for Vietnamese rice exports with over 39.3% share, followed by Philippines with
9.6% market share.
We forecast FY17 net sales of VND8,198bn (+5.3% YoY) and net profit of VND436bn (+25.8%
YoY). LTG’s FY17 earnings may not meet either its 2017 goal or our latest forecasts. For 2018,
we expect a 7.1% increase in top line and an 18.4% growth in the bottom line.
Read the full report: HERE
Notable Corporate Events
Hoa Binh Construction Group JSC (HBC VN) – business activity: HBC was approved by Ho Chi
Minh City People’s Committee to convert a part of the Hoa Binh Residential Project into
commercial housing. Accordingly, HBC is allowed to convert 902 social housing apartments into