Vietnamese Corporate Earnings Quality amidst the Covid-19 ...

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Vietnamese Corporate Earnings Quality amidst the Covid-19 Pandemic

FiinPro Digest I Issue #5 I 28 August 2020:

Prepared by: FiinGroup’s Data Analytics Team

@ 2020 FiinGroup Joint Stock Company All rights reserved. All information contained in this publication is copyrighted in the name of FiinGroup, and as such no part of this publication may be reproduced, repackaged, redistributed, resold in whole or in any part, or used in any form or by any means graphic, electronic or mechanical, including photocopying, recording, taping, or by information storage or retrieval, or by any other means, without the express written consent of the publisher.

Data Driven Analysis for 1H2020 and 2020 Outlook



Table of Content

Content Page

Preface 3

Executive Summary 4 – 6

Part 1: 1H2020 Performance of Non-Bank Companies 7

1.1. Earnings Growth and Quality of Growth 8 – 11

1.2. Debts and Interest Coverage 12 – 13

1.3. Cash Flow Quality 14

Part 2: 1H2020 Performance of Banks 15

2.1. Credit Growth and NIM 16 – 17

2.2. Changes in Income Structure 18 – 19

2.3. Profit after tax and Operating Expenses 20

2.4. Asset Quality amidst Covid-19 21

2.5. Capital Structure and Liquidity 22 – 23

Part 3: 2020 Earnings Outlook 24

3.1. Non-bank Companies – Earnings Outlook 2020 25 – 27

3.2. Commercial Banks – Earnings Outlook 2020 28 – 29

Content Page

Appendices 30

Appendix 1: Vietnam Stock Market Valuation 31

Appendix 2: Net Revenue Growth by Sector 32

Appendix 3: Profit after tax Growth by Sector 33

Appendix 4: EBIT Growth by Sector 34

Appendix 5: EBITDA Growth by Sector 35

Appendix 6: Debt to Owner’s Equity by Sector 36

Appendix 7: Profit after tax Margin by Sector 37

Appendix 8: EBIT Margin by Sector 38

Appendix 9: EBITDA Margin by Sector 39

Methodology and important notes 40

About FiinGroup 41 – 51



Preface

Dear valued customers:

We are pleased to present FiinPro Digest #5 prepared by FiinGroup primarily for subscribers of FiinGroup’s financial information and data platforms.

As part of “FiinPro Digest” series, this Report aims to provide an updated and insightful analysis on earnings quality of listed companies in the first half of 2020 as well as their growth outlook for the whole year.

Corporate earnings quality in Q2-2020 and outlook for the year amidst the recurrence of Covid-19 pandemic are among major market concerns. This is the motivation and purpose for us to conduct FiinPro Digest #5 to shed light on corporate financial issues from data-driven perspective.

While the previous issue “FiinPro Digest #4” focused on earnings updates based on a proportion of filing progress, “FiinPro Digest #5” focuses on analyzing corporate financial strength and their growth prospects with specific data updated as of August 18, 2020 when almost all listed companies have already disclosed their Q2-2020 earnings reports.

We hope that this Report will support not only analysts at investment institutions and individual investors but also banks and relevant agencies in working out measures or policies to lessen the Covid-19 impact on different sectors.

Data in this report was mainly extracted from our FiinPro Platform which is currently used by our subscribers and this is made as a value-added service to our clients.

We would like to note that data from financial reports have been adjusted for the purpose of assessing corporate growth quality as well as prospects. We also adjusted calculation formulas for various indicators such as EPS, EBIT and EBITDA growth with serious and specific interpretation. We highly recommend you carefully read all data notes for every charts and methodology as annexed to this Report.

We are looking forward to receiving your comments and feedback on this report. If you would like more information, please contact our service contact or email [email protected]

Happy and Successful Investing!

Truong Minh TrangSenior Managing Director Financial Information Division


The Powerful Product Suite of FiinGroup• However, QoQ earnings growth is improved in Q2-2020 thanks to

lower interest expenses, cost reduction and especially higher financial income:

On quarterly basis, net revenue fell by 0.3% QoQ in Q2-2020 while profit after tax jumped 41.4%. If Travel & Leisure was excluded, revenue and profit after tax of 17/18 sectors grew 2.7% and 36.7% QoQ.

The improvement came as non-banks companies (i) proactively diversified income sources or had reversal of inventory write-downs to offset revenue shortfalls amidst Covid-19 impacts; and (ii) cut operating costs, with interest expense lowered thanks to the government’s supporting policy, to stay afloat.

Our data shows that financial income (which accounted for 20% of profit after tax in Q2-2020) grew 2 times YoY and 9.6% QoQ. In which, liquidating of investments (VIC), divestment from subsidiaries (NVL) or unrealized exchange rate difference (VJC, HVN) contributed nearly 80% or VND 7.5 trillion (up 572% YoY).

Given the improved earnings, cash flow from operating activities of non-bank companies turned positive and neared the pre-pandemic level (Q4-2019). This is the most positive development in the Q2-2020 corporate earnings picture, but it is difficult for these companies to reiterate such non-operating income in the following quarters.

Executive Summary

About the input data:The data is updated as of August 18, 2020, three weeks after our release the second update of FiinPro Digest #4. As many as 1032/1723 listed non-bank companies, accounting for 97.0% total market capitalization of all non-bank companies on HOSE, HNX, and UPCoM, have disclosed their business reports in Q2-2020.

• The earnings growth of non-bank companies continued to deteriorate in Q2-2020 on negative impacts of Covid-19 pandemic:

Net revenue decreased by 18.8% YoY while profit after tax fell by 30.6% due to social distancing to curb the spread of Covid-19 in April.

For 1H2020, net revenue and profit after tax of non-bank companies dropped by 13.2% YoY and 43.1% YoY, respectively.

9/18 sectors saw lower earnings growth while Oil & Gas and Travel & Leisure booked huge losses, eating into equity of non-bank group (down 1.3%). Given the increase of 2.7% in corporate borrowings from banks and via bond issuance, financial leverage ratio rose further while interest coverage ratio maintained as low as 2x.

Furthermore, two-digit declines in revenue and profit made earnings quality (on downtrend since Q2-2019) worsening. Notably, EBIT growth is negative 47.4% YoY and Interest Coverage Ratio keeps its low level (2x). This means that interest expenses account for about 50% of EBIT in Q2-2020, much higher than ratios in the pre-pandemic period (i.e. 25% in Q2-2019).

1 2

1.96

2.02

(13.0)

(10.0)

(7.0)

(4.0)

(1.0)

2.0

5.0

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2

2015 2016 2017 2018 2019 2020

Inte

rest

Cove

rage R

atio

+/-

EB

IT (

trill

ion V

ND

)

+/- EBIT (YoY) Interest Coverage Ratio

-30.6%

-47.4%

-80.0%

-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2015 2016 2017 2018 2019 2020

PAT growth (YoY) EBIT growth (YoY)

EBIT Change and Interest Coverage Ratio

Quarterly PAT & EBIT growth (YoY)



Executive Summary (continued)

• Nevertheless, the earnings quality has been in the downtrend since Q2-2019 as we pointed out in previous issues:

• The decline in profit after tax of non-bank companies could be steeper at 54.9% in Q2-2020, little changed from 58.5% fall in Q1-2020, if excluding non-operating income (i.e. financial income or reversal of inventory write-downs)

• EBIT and EBITDA, two main indicators commonly used to assess corporate earnings quality, decreased by 47.4% and 29.3% YoY, respectively, in Q2-2020. This marked the fourth consecutive quarter of decline for EBIT and the second for EBITDA.

• Only 4/16 non-financial sectors recorded EBIT growth, including Automobiles & Parts (+22.5%), Telecommunication (+22.7%), Basic Resources (+1.4%) and Construction & Materials (+1.7%).

• The impact of the Covid-19 on corporate financial performance is well reflected in 2020 earnings guidance by management:

Non-bank companies forecast an on-year decline of 4.3% in revenue in 2020 while their profit after tax is projected to fall 20.3%, much deeper than the estimated number in FiinPro Digest #4 Update 2 (released on July 21, 2020).

The data is updated as of August 15, 2020, with 1682/1723 non-bank companies (accounting for 99.7% of market capitalization of the non-bank group on the three exchanges) releasing their 2020 earnings guidance for 2020.

These conservative plans, mostly disclosed after mid-May when the economy was entering the “new normal” status, came under fears of supply and demand disruption, both domestically and internationally, due to negative impacts of Covid-19 pandemic. Given the YoY decrease of 13.2% in revenue and 43.1% in profit after tax in 1H2020, these plans are likely to be achieved on anticipation of the fact that Covid-19 pandemic is under control. It is necessary to keep an eye on performance of sectors resilient or exposed to the pandemic impact in the following quarters.

4

3

3.7%

-4.3%

1H2020: -13.2%-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

Revenue growth (YoY) Revenue growth 1H2020 (YoY)

About the input data:The data is updated as of August 18, 2020, three weeks after our release the second update of FiinPro Digest #4. As many as 1032/1723 listed non-bank companies, accounting for 97.0% total market capitalization of all non-bank companies on HOSE, HNX, and UPCoM, have disclosed their business reports in Q2-2020.

-16.8% -16.6%

5.7%

-20.5%

1H2020: -43.1%-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%PAT growth (YoY) PAT growth 1H2020 (YoY)

Revenue Growth Outlook of non-bank companies

PAT Growth Outlook of non-bank companies



Executive Summary (continued)

• In a contrast situation, banks continued to post a high growing earnings result where Q2-2020 profit after tax of 19 listed banks rose 16.2% QoQ and 22.5% YoY. However, it should be noted that this growth rate is on the low base of Q1-2020 and Q2-2019. In 1H2020, total profit after tax grew by 12.8% YoY, down from 53.5% in 1H2018 and 18.5% in 1H2019.

• Notably, reduction in operating expenses by banks significantly contributed to profit growth in Q2-2020. Total operating income fell 4.5% while operating costs dropped 12%, continuing the trend from Q1-2020 with total operating income down 5.9% while operating expenses down 14.2%. CIR in Q2-2020 dropped to 36.7%, the lowest level since Q1-2017.

• In Q2-2020, credit risk provisioning expenses of 19 listed banks shrank by 19.4% compared to Q1-2020, contributing to profit growth. However, due to Circular 01, this growth rate does not fully reflect the impact of Covid-19 on banking profits.

• After declining by 3.2 basis points in Q1-2020, NIM of 19 listed banks continued to drop by 8.8 basis points in Q2-2020. This clearly reflected the impact of the policy on interest waiver or reduction for customers affected by Covid-19.

• Concurrently, businesses as banks’ borrowers benefited from this policy. Interest expense/Outstanding debts (annualized) fell from 6.4% in Q4-2019 to 5.9% in Q2-2020 although the outstanding debts of non-financial group has continuously risen since Q4-2019.

• Customer loans at the end of Q2-2020 of 19 listed banks grew only 3.4%, much lower than that in the same period two years ago (9.2% in 2018, 8.2% in 2019) but still significantly higher than the 1% growth rate by the end of Q1-2020. Customer loan growth at the end of Q2-2020 was lower than customer deposit growth (4.2%).

• Individual loan growth at some banks tended to slow down in 1H2020 and thus affected net interest income and NIM of banks.

5

6

• Banks still bet on income from investment activities while net gains from securities remained high at 29.1% of total income . The income from investments slipped by 12.9% QoQ but increased more than 3 times by 323.9% YoY. For 1H2020, net gains from securities soared by 268.1% YoY.

• Compared to the end of Q1-2020, the value of securities portfolio of 19 listed banks slightly dropped by 4.7% to VND 1,037 trillion (US$45bn) for selected banks in the context of government bond yields falling to a very low level.

• In our opinion, the increase in proportion of net gains from securities can only partially offset the decline in NIM and net interest income, so it is very challenging for banks to fulfil their 2020 earnings target.

• The NPL ratio of 17 listed banks continued its uptrend from 1.44% at the end of Q4-2019 to 1.71% at the end of Q2-2020. NPL formation rate, after having risen to 0.22% in Q1-2020, was at 0.1% in Q2-2020, higher than the same period in 2018 and 2019.Without loan restructuring in accordance with Circular 01/2020/TT-NHNN, the NPL ratio and NPL formation rate in 2020 would be at higher levels. However, this also affects the decline in NIM as indicated as banks also don’t record accrued interest from these restructured loans.

7

8

About the input data:This section reflects figures of Banking sector, which includes all 19 listed banks, accounting for 63.3% of the system's total outstanding loans. For Banking, besides comparing with the same period last year (YoY) as done with non-financial companies, we also compared with the adjacent quarter (QoQ), due to the less seasonal characteristics of banking business.

(2.3)(1.3)

0.9

(5.3)

9.8

0.8 1.4 0.8

(3.2)

(8.8)

0.80%

0.8…

0.76%

-10.0

-5.0

0.0

5.0

10.0

15.0

0.65%

0.70%

0.75%

0.80%

0.85%

0.90%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2018 2019 2020

NIM change (bps) NIM

Net interest margin (NIM) and NIM Change (QoQ)



Part 1: 1H2020 Performance of Non-Bank Companies

This section analyzes data on companies which are listed on HOSE, HNX and UPCoM and operating in non-bank sectors (including Insurance and Financial Services). None of listed banks are covered in this Section.

The data was updated as of August 18, 2020. Accordingly, 1,032/1,723 non-bank listed companies disclosed their financial statements for the second quarter of 2020 and these companies represent a combined 97.0% of market capitalization of the non-bank group on the three bourses.

In order to ensure the consistence of data coverage, only listed companies were covered in this report. Our FiinPro Platform currently provides data on both listed and unlisted companies. Please trial our FiinPro Platform for better experience or contact our Customers Support to have further updated data.



-18.8%

-30.6%

-80.0%

-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

2015 2016 2017 2018 2019 2020

Net revenue growth (YoY) PAT growth (YoY)

In Q2-2020, net revenue of non-bank listed companies plunged 18.8% YoY, however, profit after tax decline slowed down to 36% YoY thanks to an upsurge in non-operating income

1.1. Earnings Growth and Quality of Growth

Source: FiinPro PlatformNote: Data is updated from financial statements of 1032/1723 non-bank listed companies (representing 97.0% marcap) and does not include listed subsidiaries which are consolidated into FS of listed parent companies

Net revenue plunged 18.8% YoY in Q2-2020 due to negative impacts of social distancing measures that aimed to prevent the spreading of Covid-19 pandemic and came into effect in one-fifths of the second quarter. This is the first time net revenue of the non-bank group has fallen for two quarters in a row. Revenue growth started its downtrend in Q3-2019. The revenue decline was seen at 13/18 non-bank sectors. It is noteworthy that some sectors supposedly resilient to Covid-19 pandemic, i.e. Pharmaceuticals and Technology, have failed to retain solid growth momentum as recorded in Q1-2020.

An upsurge in non-operating income hampered the profit after tax (PAT) decline of non-bank companies. PAT dropped 30.6% YoY in Q2-2020, marking the first PAT contraction in two consecutive quarters since 2016; however, despite the social distancing measures, this was much lower than first-quarter earnings drop (-58.5%). Our data shows that the PAT improvement was thanks to the incredible growth rate (+2 times YoY) of non-operating income that contributed 20% of total PAT of non-banking group in Q2. Travel & Leisure (VJC and HVN) and Real estate (investment liquidation of VIC and divestment of NVL) accounted for a combined 80% or nearly VND7.5 trillion of (+572% YoY) of non-operating income in Q2.

For clearer view on corporate earnings in Q2-2020, we have written off (i) financial income (worth above VND100 bn) of non-financial companies, (ii) reversal of inventory write-downs at PLX and BSR, (iii) sale & lease back gains of VJC and the key finding is that PAT in Q2-2020 fell almost as steeply as in Q1-2020 (-54.9% vs -58.5%). (see Figure 2). This indicates that the PAT improvement in Q2-2020 did not come from core business activities or recurring income.

In 1H2020, net revenue and PAT of non-bank companies fell 13.2% and 43.1% YoY, respectively.

Figure 2: Quarterly PAT growth (adjusted) (YoY)

-58.5%

-30.6%

-54.9%

Q1-2020 Q2-2020 Q2-2020*

Q2-2020 PAT -54,9% (YoY) removing:- Financial income >

VND100 bn- Reversal of inventory write-

downs at PLX and BSR - Sale & lease back gains of

VJC

Figure 1: Quarterly net revenue, PAT growth (YoY)



Despite the uptick in PAT growth in Q2-2020, earnings quality of non-bank listed companies is still going down



Earnings quality continued to deteriorate in Q2-2020 after negative impacts of Covid-19 were factored in:

‒ Earnings before interest and taxes (EBIT) and Earnings before interest, taxes, depreciation, and amortization (EBITDA), two mainindicators commonly used to assess corporate earnings quality, decreased by 47.4% and 29.3% YoY, respectively, in Q2-2020. This marked the 4th consecutive quarter of decline for EBIT and 2nd for EBITDA. As we indicated in FiinPro Digest #2 and #3, EBIT andEBITDA have been in downtrend since Q2-2019 (almost three quarters prior to the spreading of Covid-19).

‒ 13/16 non-financial sectors (excluding Insurance and Financial Services) posted decline in EBIT, with Travel & Leisure contracting the most (-481.2%) as the result of the temporary suspension of international flights since March 21, 2020 to curb the spreading of Covid-19. Other 4 sectors (Automobiles & Parts, Basic Resources, Construction & Materials and Telecom) had EBIT growth between 1.4% and22.7% YoY. However, Automobiles & Parts is the only sector recording EBIT improvement against Q1-2020 (22.5% vs. 16.8%) as its affiliate income, mostly at Hoang Huy Investment Services JSC (HHS), tripled in Q2-2020.

‒ EBIT and EBITDA deterioration has worsened the ability of non-financial companies in paying interest/debt. Interest coverage ratio was 2.02x in Q2-2020, much lower than 3.96x in Q2-2019 and 3.47x in Q4-2019.

-29.3%

-40.0%

-20.0%

0.0%

20.0%

40.0%

Q1Q2 Q3Q4 Q1Q2Q3 Q4Q1 Q2Q3 Q4Q1 Q2Q3Q4 Q1Q2 Q3Q4 Q1Q2

2015 2016 2017 2018 2019 2020

EBITDA growth (YoY)

-30.6%

-47.4%

-80.0%

-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2

2015 2016 2017 2018 2019 2020

PAT growth (YoY) EBIT growth (YoY)

Figure 3: Quarterly PAT & EBIT growth (YoY) Figure 4: Quarterly EBITDA growth (YoY)

Note: EBIT = Gross profit - Selling expenses - General and administrative expenses + Profits/losses from affiliated companies is an indicator reflecting the core business situation of the company. Therefore financial income including transfer of shares is not reflected in this ratio. See also the Methodology (page 40).



However, positive development is that 4/18 sectors, considerably resilient to Covid-19, post revenue and profit growth in Q2-2020


Four out of 18 sectors, which are considerably resilient to Covid-19, posted revenue and profit growth in Q2-2020:

‒ Financial Services (including 74 listed and unlisted securities companies): PAT rose 156.2% YoY and 563.5% QoQ thanks to strong stock market liquidity. It was the bottom-fishing cash flow from new generation of traders (called F0 investors) against the net selling pressure from foreign investors in April and May.

‒ Insurance: Profit after tax rose 61.1% YoY despite a moderate growth of 2.2% in net premiums. It is thanks to a 74% surge in financial income, mainly from interest on deposits and stock trading.

‒ Basic Resources: PAT growth slowed to 11.1% YoY in second quarter or halving from Q1-2020, mostly driven by HPG and HSG. As for HPG, 13% of its profit after tax in Q2-2020 came from agriculture, much higher than the ratio of 0.8% in Q2-2019.

‒ Food and Beverage: Revenue and PAT rose 10.5% and 8.9% YoY, respectively, but growth did not come from local rising consumption. As indicated in FiinPro Digest #3, the growth of Food and Beverage sector has been slowing down as consumption of some key products is nearing market saturation. MSN and VNM contributed a combined 40% of net revenue and PAT of the sector in Q2-2020. However, MSN's 92.1% revenue growth comes from VinCommerce consolidation while the acquisition of GTN helped VNM’s revenue up 6.1%. In addition, VNM’s profit growth is thank to higher deposit interest and GTN's profit consolidation.

10/18 sectors saw their profit after tax decline due to supply-demand disruption amid the Covid-19 pandemic. Travel & Leisure was the worst-hit sector with respective YoY declines of 67.2% and 376.8% in net revenue and PAT and the PAT contraction was even higher at 494.4% if VJC’s income from sales and leaseback was excluded. Oil & Gas followed with a 130.1% fall in profit after tax as listed oil and gas companies were double hit by weaker demand and oil price tumble.

The remaining 4 sectors record profit after tax growth despite lower revenue. In particular, Automobiles & Parts saw 65.4% YoY increase in profit after tax as its affiliate income (mainly at HHS) tripled and financial income (mostly at TCH) rose 134%. Affiliate and financial income accounted for nearly 40% of PAT of Automobiles & Parts in Q2-2020. Chemicals was highlighted by fertilizer manufacturers (DCM, DPM) whose profit after tax surged 286% YoY on lower natural gas prices and contributed 30% of total PAT of the sector.

156.2%

71.3%

65.4%

61.5%

11.1%

10.7%

8.9%

6.6%

2.5%

-5.5%

-11.4%

-31.1%

-42.8%

-48.7%

-52.1%

-73.4%

-130.1%

-200.0%

PAT decline: -30.6%

Financial Services

Insurance

Automobiles & Parts

Media

Basic Resources

Technology

Food & Beverage

Chemicals

Construction & Materials

Pharmaceuticals

Utilities

Retail

Personal & Household Goods

Industrial Goods & Services

Real estate

Telecommunications

Oil & Gas

Travel & Leisure

Source: FiinPro PlatformNote: Data is updated from financial statements of 1032/1723 non-bank listed companies (representing 97.0% marcap) and does not include listed subsidiaries which are consolidated into FS of listed parent companies in same sector

Figure 5: Q2-2020 Profit after tax growth by sector (YoY)



EBIT of non-financial sectors continued to plunge except for Telecommunications, Basic Resources, Construction & Materials and Automobiles & Parts


Figure 6: Q2-2020 EBIT growth by sectors (YoY)

4/16 sectors recorded EBIT growth in Q2-2020 although EBIT of entire non-financial group continued to decline, in which:

‒ Telecommunications can be considered the bright spot of the market as the sector recorded 22.7% YoY growth in EBIT while its EBITDA increased 17.3% (mainly from VGI with affiliate revenue and profit growing 6.17% and 782% YoY, respectively).

‒ Basic resources had EBIT growth of 1.4% in Q2-2020, mostly driven by HPG and HSG, but this is a slower pace as compared to that of Q1-2020 (31.9%).

‒ Construction & Materials saw a YoY growth of 1.7% in Q2-2020, reversing from a 22.5% decline in Q1-2020 (driven by CTD with gross profit increase of 32% YoY and administration expense cut of 25.7% and VCG with VND287 billion worth of reversal of allowance for doubtful accounts.

‒ Automobiles & Parts is the only sector recording EBIT improvement against Q1-2020 (22.5% vs. 16.8%) as its affiliate income, mostly at Hoang Huy Investment Services JSC (HHS), tripled in Q2-2020.

5/16 non-financial sectors saw EBIT decline but at slower pace than that of Q1-2020, in particular:

‒ Real estate: EBIT dropped 80.7% YoY in Q2-2020 but it slowed from 121.7% fall in Q1-2020. Accordingly, the interest coverage ratio of real estate companies has improved (+0.5 vs. -0.2).

‒ Food & Beverage, Chemicals, Media and Oil & Gas: EBIT was still in the downtrend, but at a slower pace.

7/16 sectors saw steep decline in EBIT, with Travel & Leisure being the hardest-hit sector and having EBIT contraction of -481.2% as the result of the temporary suspension of international flights since March 21, 2020 while domestic mobility demand has not yet recovered amid the spreading of Covid-19.


Note: EBIT = Gross profit - Selling expenses - General and administrative expenses + Profits/losses from affiliated companies is an indicator reflecting the core business situation of the company. Therefore financial income including transfer of shares is not reflected in this ratio. See also the Methodology (page 40).

22.7%

22.5%

1.7%

1.4%

-1.4%

-7.0%

-7.1%

-8.6%

-19.7%

-37.7%

-44.0%

-57.4%

-80.7%

-133.6%

-481.2%

EBIT fell -47.4%

Telecommunications

Automobiles & Parts


Basic Resources

Chemicals

Food & Beverage

Pharmaceuticals

Technology

Retail

Utilities



Real estate

Oil & Gas

Travel & Leisure



Financial leverage ratio is on uptrend amidst soaring borrowings and declining equity (caused by accumulated losses)

1.2. Debts and Financial Leverage

Debt-to-equity ratio (D/E) of non-financial group (excluding Insurance and Financial Services) increased from 0.66 at the end of 2019 to 0.70 at the end of Q2- 2020 after continuously decreasing from Q2-2017 to Q3-2019. Our data shows that the financial leverage ratio is on the uptrend as non-financial companies boosted borrowings from banks as well as via the issuance of corporate bonds while losses in 1H2020 worn out the retained earnings and thus causing their owners’ equity to decrease.

Owners’ equity of non-financial companies was VND1,450 trillion at end-June, down VND19 trillion or 1.3% from end-March. Food & Beverage saw the biggest decline, mainly from MSN due to a loss of VND19.6 trillion from its subsidiaries. Tourism & Leisure and Oil & Gas followed with respective decreases of VND4.4 trillion and VND1.7 trillion.

Three sectors having the highest D/E ratio are Tourism & Leisure (1.19), Basic Resources (1.02) and Construction & Materials (0.98).

Real estate: The financial leverage ratio hit 0.84, the highest level since Q2-2014. In our opinion, the decline in cash flow from operating activities (CFO) and very low interest coverage ratio (0.5) have prompted real estate companies to increase borrowings from banks or issuance of corporate bonds with longer maturities to stay afloat. In Q2-2020, VIC's outstanding debt grew VND12.2 trillion, accounting for nearly 72% of the outstanding debt increase of the sector.

0.85

0.76

0.85

0.79

0.71

0.66

0.68

0.70

0.60

0.65

0.70

0.75

0.80

0.85

0.90


2015 2016 2017 2018 2019 2020

2.7%

-1.3%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%


2015 2016 2017 2018 2019 2020

+/-Outstanding debt (QoQ) +/-Owners' equity (QoQ)


Figure 7: Debt/Equity Ratio (Quarterly) Figure 8: Change in Outstanding Debt, Equity (QoQ)



The weakening earnings quality dampened the ability to serve loans by banks and bondholders

1.2. Debts and Interest Coverage

Ability to pay interest expenses yet to improve: As EBIT growth is still in the downtrend, the Interest Coverage Ratio (ICR) of non-financial group remained low at 2.02 in Q2-2020, much lower than 3.96 in Q2-2019. This means that interest expenses accounted for about 50% of earnings before interest and taxes in Q2-2020, much higher than ratios in the pre-pandemic period (i.e. 25% in Q2-2019).

The ICR of Real estate, Construction & Materials, Chemicals, Food & Beverage, Telecommunications, Automobiles & Parts and Media improved while the remaining 11 sectors saw ICR declines.

The decrease in interest expenses came after the State Bank of Vietnam conducted measures to help domestic companies address impacts of Covid-19 pandemic, including (i) interest rate cuts and (ii) debt repayment restructuring.

Interest expenses/outstanding debt ratio (annualized) fell to 5.9% in Q2-2020 from 6.4% in Q4-2019 even though the outstanding debt of the non-financial group has kept rising since Q4-2019 (see Figure 8). It is obvious that the government's efforts to support businesses through cutting interest rates and re-structuring debts have positive impacts on corporate performance during the Covid-19-hit period.

6.4%5.9%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

(3.0)

(2.5)

(2.0)

(1.5)

(1.0)

(0.5)

-

0.5

1.0

1.5

2.0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2015 2016 2017 2018 2019 2020

Inte

rest

exp

en

se

s/O

uts

tan

din

g d

eb

t

+/-

Inte

rest

exp

en

se

s

(trilli

on

VN

Đ)

+/- Interest expenses (QoQ) Interest expenses/Outstanding debt (annualized)

1.96

2.02

(13.0)

(10.0)

(7.0)

(4.0)

(1.0)

2.0

5.0

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0


2015 2016 2017 2018 2019 2020

Inte

rest

Covera

ge R

atio

+/-

EB

IT (

trill

ion V

ND

)

+/- EBIT (YoY) Interest Coverage Ratio


Figure 9: EBIT Change and Interest Coverage Ratio Figure 10: Interest Expenses and Outstanding Debts (Quarter)



-1.2

0.0

0.3

0.9

0.9

0.9

2.8

3.1

3.5

4.1

4.2

5.0

6.0

7.6

7.5

8.4

8.8

10.7

Travel &Tourism

Media

Pharmaceuticals

Financial services

Automobile & Parts


Technology

Telecommunications

Insurance

Chemicals


Retail


Utilities

Oil & Gas

Basic resources

Real estate

Food & Beverage

A bright spot in the earnings picture of non-bank companies is that cash flow from operating activities (CFO) rebounds to near pre-Covid-19 level for 17/18 non-bank sectors

1.3. Cash Flow Quality

Figure 11: CFO of non-bank companies (Quarter)(Unit: Trillion VND)

CFO of non-bank companies turned from negative in the first quarter to positive at VND73.4 trillion in Q2-2020, nearing the level in Q4-2020 (before the Covid-19 pandemic broke out).

The CFO improvement is contributed by a QoQ growth of 2.7% in net revenue at 17/18 non-bank sectors (excluding Travel & Leisure) as well as a 100% increase in payment deferrals to suppliers.

7/18 sectors saw positive CFO in Q2-2020, led by Food & Beverage thanks to the revenue growth of 65% at Brewers (BHN, SAB) and 11.2% at Dairy producers (VNM, QNS). Real estate followed with strong increase in net revenue (PDR, HDG), payment deferrals to suppliers (VIC, FLC) and non-operating income (NVL).

CFO of Oil & Gas was positive at VND7.5 trillion in Q2-2020, reversing from negative VND7.2 trillion in Q1-2020 thanks to the upsurge in payment deferrals to suppliers (mostly short-term payables at PLX).

Cash flow from financial activities (CFF) and investing activities (CFI) kept falling. This is a sign that non-bank listed companies are scaling down its investments, but they have to secure new loans to maintain cash flow for operating activities amidst the ongoing spreading of Covid-19 epidemic.

Figure 12: 17/18 sectors posting positive CFO in Q2-2020(Unit: Trillion VND)

(150.00)

(100.00)

(50.00)

-

50.00

100.00

150.00


2015 2016 2017 2018 2019 2020

CFO CFI CFF




Part 2: 1H2020 Performance of Banks

This section reflects figures of Banking sector, which includes all 19 listed banks, accounting for 63.3% of the system's total outstanding loans. For Banking, besides comparing with the same period last year (YoY) as done with non-financial companies, we also compared with the adjacent quarter (QoQ), due to the less seasonal characteristics of banking business.

We would like to note that Circular 01 of the State Bank of Vietnam (SBV) allows banks to restructure loans affected by Covid-19. They will still be recorded as performing loans and thus no provision is required. Therefore, when this policy changes, the impact of Covid-19 on credit quality and fulfillment of bank’s profit targets in 2020 will be more evident.

In order to ensure data coverage consistency, only listed companies were covered in this report. Our FiinPro Platform provides data on both listed and unlisted companies. Please trial FiinPro Platform for better experience or contact our Customer Support for further updated data.



2.1 Credit Growth and NIM

NIM continued to decline in Q2-2020, clearly reflecting the impact of banks’ interest waiver and reduction for customers affected by Covid-19 pandemic on banks’ profits.

Figure 14: Growth in customer loans and customer deposits

Source: FiinPro PlatformNote: Calculated from data of 19 listed banks with total outstanding loans of VND5,377 trillion, accounting for 63.3% of the system’s outstanding loans

Figure 13: Net interest margin (NIM) and NIM Change (QoQ)

Source: FiinPro PlatformNote: Calculated from data of 19 listed banks with total outstanding loans of VND5,377 trillion, accounting for 63.3% of the outstanding system’s outstanding loans

NIM of 19 listed banks dropped by 8.8 basis points (bps) compared to Q1-2020 to 0.76%. This was the lowest NIM level compared to Q2-2018 and Q2-2019, and also the largest decline since Q1-2018.

The NIM of banks in Q2-2020 clearly reflected the impact of interest waiver or reduction for customers affected by Covid-19 pandemic. According to the State Bank of Vietnam (SBV), as of June 8, 2020, banks waived, reduced or lowered interest rates for more than 403,000 customers with outstanding loans of VND1,227,349 billion. Accumulated new loans with preferential interest rates since January 23 reached VND978,529 billion, with interest rates lower from 0.5 to 2.5% compared to those before the pandemic.

Customer loans at the end of Q2-2020 of 19 listed banks grew only 3.4%, much lower than that in the same period two years ago (9.2% in 2018, 8.2% in 2019) but still significantly higher than the 1% growth rate by the end of Q1-2020. This is also lower than the system’s growth rate in 6M2020 (3.65%).

Customer loan growth at the end of Q2-2020 was lower than customer deposit growth (4.2%). This is different from the trend in recent years where customer loan growth outpaced customer deposit growth.

(2.3)(1.3)

0.9

(5.3)

9.8

0.8 1.4 0.8

(3.2)

(8.8)

0.80%

0.8…

0.76%

-10.0

-5.0

0.0

5.0

10.0

15.0

0.65%

0.70%

0.75%

0.80%

0.85%

0.90%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2018 2019 2020

NIM change (bps) NIM

20.0%

13.5%

15.6%

3.4%

15.0%

12.3%13.7%

4.2%

0%

5%

10%

15%

20%

25%

2017 2018 2019 6T2020

Customer loans Customer deposits



2.1 Credit Growth and NIM

The sharp decline in personal credit also affected profit, especially in banks with a high personal credit proportion.

Figure 15: Customer loan growth structure

In 2019, although still the main driver, personal loan growth continued to decelerate to 22.6% from 23.7% in 2018 while corporate loans surged again to 11% from 7.6% in 2018, data of 16 listed bank shows.

Data on corporate and personal loan breakdown was not fully disclosed by banks in Q2-2020. However, 5 banks with disclosure in their financial statements (VPB, VIB, MBB, SHB, and KLB, accounting for 19% of the system’s total outstanding loans) showed that corporate loans were the main driver for credit growth in 1H2020. Moreover, VPB, VIB, MBB, and KLB are banks with high personal credit contribution. Therefore, the fact that their personal loans only grew by 2% while corporate loans rose by 9.6% shows that personal credit are more affected by Covid-19 pandemic as well as the trend in tightening personal credit of banks.

The deceleration of personal credit affects net interest income and NIM of banks, as these are loans with high interest rates and large net interest margin.

Source: FiinPro PlatformNote: Calculated from 16 listed banks (excluding NVB, BAB, BVB due lack of disclosure in the financial statements of these banks)

Figure 16: Customer loan growth in 5 banks

Source: FiinPro PlatformNote: Calculated from 5 listed banks (VPB, VIB, MBB, SHB, KLB).

32.5%

23.7%22.6%

13.7%

7.6%

11.0%

20.0%

13.5%15.6%

3.4%

0%

5%

10%

15%

20%

25%

30%

35%

2017 2018 2019 6T2020

Personal loans Corporate loans Total outstanding loans

37.1%

25.1% 25.5%

2.0%

16.7%

9.9%

15.4%9.6%

24.5%

16.4%

20.0%

5.9%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2017 2018 2019 6T2020

Personal loans Corporate loans Total outstanding loans



-7.5%

0.1%

6.9%

11.1%

6.1%

9.6%

2.6%

18.3%

25.2%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

Q2-QoQ Q2-YoY 6T-YoY

Net interest income Net fee and commision income

Net income from remaining activities

2.2 Changes in Income Structure

Net interest income (minus provision expenses) still accounted for 68.6% in the income structure of banks, but the proportion decreased compared to Q1-2020.

In Q2-2020, net interest income minus credit risk provision expenses accounted for 68.6% of total operating income minus provision expenses, down from 70.2%; while net fee and commission income and net income from remaining activities accounted for 14.6% and 16.8% respectively, up from 13.2% and 16.5% in Q1-2020. (The remaining activities include net income from foreign currency trading, trading securities, investment securities, capital contribution/equity investment and other activities.)

With low credit growth and a sharp decline in NIM, net interest income (not minus provision expenses) of 19 listed banks dropped by 7.5% QoQ and grew only 0.1% YoY. In 1H2020, net interest income of banks grew by 6.9% YoY.

Net fee and commission income grew by 11.1% QoQ and 6.1% YoY. In 1H2020, net fee and commission income increased 9.6% YoY. Net income from remaining activities rose by 2.6% QoQ and 18.3% YoY. In 1H2020, net income from remaining activities jumped by 25.2% YoY.

The proportion of net fee and commission income after dropping to a low level in Q1-2020 rebounded significantly, reaching 14.6%. Along with net income from remaining activities, net fee and commission income became an important growth driver for banks in Q2-2020 in the context that net interest income edged up only 0.1% YoY and dropped 7.5% QoQ.

With such income growth, especially the reduction of NIM and net interest income, in our opinions, it is very challenging for banks to fulfill their 2020 business plans.

Figure 17: Banking Income Structure


Figure 18: Income Growth Breakdown

73.3% 70.2% 70.3% 66.5% 70.2% 68.6%

13.1% 14.7% 13.5% 14.6% 13.2% 14.6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1 Q2 Q3 Q4 Q1 Q2

2019 2020

Net interest income (- provision expenses) Fee & commission

Forex & gold Securities

Other activities Capital contribution, equity investment



28.3% 26.4% 23.4% 18.5%26.0% 27.9%

13.8%8.1%

23.1%20.1%

34.3% 29.1%

55.2%58.0%

51.0%59.7%

37.6%37.2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1 Q2 Q3 Q4 Q1 Q2

2019 2020

Forex & gold Securities

Other activities Capital contribution, equity investment

2.2 Changes in Income Structure

In Q2-2020, the proportion of income from securities decreased significantly compared to Q1-2020 in the context that government bond yields were maintained at a very low level.

Among remaining activities, the proportion of net gains from securities (including trading securities and investment securities) fell after a sudden jump in Q1-2020 but remained high at 29.1%. In terms of growth rate, net gains from securities slipped by 12.9% QoQ but skyrocketed by 323.9% YoY. In 1H2020, net gains from securities soared by 268.1% YoY, accounting for 5.3% of total operating income minus provision expenses compared to 1.55% in 1H2019.

5 banks with the highest net gains from securities in 1H2020 were: BID (VND1,089 billion, 9.2%), TCB (VND958 billion, 9.1%), VPB (VND852 billion, 6.9%), ACB (VND748 billion, 9.4%), MBB (VND715 billion, 7.4%). In terms of contribution, the banks with the highest proportion of net gains from securities over total operating income minus provision expenses were mainly small banks: VBB (49.6%), BVB (19%), NVB (18.4%), TPB (12.3%). Therefore, in our opinion, the increase in proportion of net gains from securities can only partially offset the decline in NIM and net interest income.

Compared to the end of Q1-2020, the value of securities portfolio (excluding provisions) of 19 listed banks shrank by 4.7% to VND 1,037 trillion in the context of government bond yields falling to a very low level. At the end of Q2-2020, the total value of bond portfolio of 17 banks was 4.5% lower compared to the previous quarter to VND975 trillion, of which government bond portfolio dropped 8.4% to VND556 trillion. However, the portfolio of other economic organization bonds declined only 0.8% to VND180 trillion and the portfolio of economic organization bonds edged up by 2.7% to VND238 trillion.


Figure 19: Structure of Net income from Remaining Activities Figure 20: Value of Investment Portfolio and Bond Yield

1,088

1,037

0.0%

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3.5%

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4.5%

5.0%

850

900

950

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1050

1100

VN

D trilli

on

Securities portfolio (VND trillion) 1-year government bond yield



Profit after tax in Q2-2020 still grew of 22.5% YoY and 16.2% QoQ thanks to cost reduction, reflecting in significantly improved cost-to-income ratio (CIR).

2.3 Profit after tax and Operating Expenses

Figure 21: Profit after tax (PAT) growth


Decreased after 3 quarters with high growth at 25.7%, 16% and 17.9%; grew 49.2% YoY

In Q2-2020, profit after tax of 19 listed banks rose 16.2% QoQ and 22.5% YoY. However, it should be noted that this growth rate is on the low base of Q1-2020 and Q2-2019. In 1H2020, total profit after tax grew by 12.8% YoY, down from 53.5% in 1H2018 and 18.5% in 1H2019.

Notably, reduction in operating expenses significantly contributed to profit growth in Q2-2020. CIR in Q2-2020 dropped to 36.7%, the lowest level since Q1-2017 (when data of all 19 banks available). Total operating income fell 4.5% while operating costs dropped 12%, continuing the trend from Q1-2020 with total operating income down 5.9% while operating expenses down 14.2%. This is different from the previous years when operating expenses tended to decrease in Q1 and then rise again in Q2.

In 17 banks (excluding BVB and NVB), employee expenses, which accounted for the largest share of operating expenses, decreased by 8% in Q2-2020 and 13.6% in Q1-2020. The next big one, public administration expenses, tumbled by 33.9% in Q2-2020 and 12.6% in Q1-2020, while asset expenses up by 3.3% in Q2-2020 after down 23.7% in Q1-2020.

In Q2-2020, credit risk provisioning expenses of 19 listed banks shrank by 19.4% compared to Q1-2020, contributing to profit growth. However, due to Circular 01, this growth rate does not fully reflect the impact of Covid-19 on banks' profits. According to the State Bank of Vietnam (SBV), as of June 8, 2020, banks rescheduled the repayment period for more than 249,000 customers with outstanding loans of VND172.365 trillion, and only had to make provisions in accordance with the restructured loan group.


Figure 22: Operating income & operating expenses growth (QoQ)

-13.2% -1.8%

16.2%

49.2%

26.4% 22.5%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2018 2019 2020

PAT Growth (QoQ) PAT Growth (YoY)

-4.5%

6.4%

9.9%

-14.2%-12.0%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2018 2019 2020

Total operating income growth Operating expenses growth



2.4 Asset Quality amidst Covid-19

NPL ratio continued to edged up from the end of 2019 but not yet reflected the impact of Covid-19 due to the new regulations of the State Bank of Vietnam (SBV).

Figure 23: Non-performing loan (NPL) ratio

Source: FiinPro PlatformNote: NPL is equal to the total of loans Group 3–5 over loans to customers. Calculated from data of 17 listed banks (excluding NVB, BVB due to lack disclosure of full data)

Figure 24: NPL formation rate (QoQ)

Source: FiinPro PlatformNote: Calculated from data of 17 listed banks (excluding NVB, BVB due to lack disclosure of full data)

The NPL ratio of 17 listed banks continued its uptrend from 1.44% at the end of Q4-2019 to 1.71% at the end of Q2-2020, .

Among 6 listed banks that announced the notes on VAMC bonds at the end of Q1-2020 (BAB, EIB, HDB, LPB, VBB, VIB) with total outstanding debts of more than VND4,854 billion, only 2 banks still had outstanding debts at the end of Q2-2020: BAB (VND473 billion), VIB (VND42 billion). In addition, banks with outstanding debts at the end of 2019 include STB (VND33.647 trillion), BID (VND9.312 trillion), CTG (VND12.781 trillion), and SHB (VND4.504 trillion). However, according to announcement not on the financial statements, BID has cleared VAMC debts, while CTG handled VND6 billion in 1H2020.

NPL formation rate is calculated by change in outstanding loans of Group 3-5 in the quarter divided by the average total outstanding loans in the quarter. After having risen to 0.22% in Q1-2020, it was at 0.1% in Q2-2020, higher than the same period in 2018 and 2019.

According to Circular 01/2020/TT-NHNN, banks can decide to restructure the repayment term and keep same loan classification for customers affected by Covid-19. As of June 8, 2020, banks rescheduled the repayment period with VND72.365 trillion of outstanding loans. Thus, without this restructuring, the NPL ratio and NPL formation rate in 2020 would be at higher levels.

1.44%

1.65%

1.71%

1.2%

1.3%

1.4%

1.5%

1.6%

1.7%

1.8%

1.9%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2018 2019 2020

NPL

0.22%

0.03%

0.14%

-0.13%

0.14%

0.06%

0.10%

-0.25%

0.22%

0.10%

-0.3%

-0.2%

-0.1%

0.0%

0.1%

0.2%

0.3%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2018 2019 2020



2.5 Capital Structure and Liquidity

Figure 25: Loan-to-deposit ratio (LDR)

Source: FiinPro PlatformNote: LDR is calculated by Customer loans/Customer depositsCalculated from data of 19 listed banks with total outstanding loans of VND5,377 trillion, accounting for 63.3% of the system’s outstanding loans

Figure 26: Average interbank rates

Loan-to-Deposit Ratio (LDR) declined in Q2-2020 while average interbank interest rate dropped sharply.

At the end of Q2-2020, LDR of 19 listed banks was at 93.9%, down after a continuous uptrend from Q1-2019.

The reason is that customer loans grew 3.4% and customer deposits rose 4.2% in 2Q2020, contrasting to Q1-2020 when customer loans increased 1% but customer deposits slid 0.1%.

According to Circular 22/2019/TT-NHNN, from January 1, 2020, the maximum LDR is 85%. The LDR here is different from LDR calculated in accordance with Circular 22, but its decrease showed less capital structure stress as customer deposits outpaced customer loans.

Since the beginning of 2019, the average interbank interest rate tended to decline, showing low liquidity pressure.

In 2020, except for the time of sudden increase in early April, average interbank rates tended to fall. Since May, interbank rates dropped sharply. This is understandable when according to the official data of the State Bank of Vietnam, by the end of May, the system’s credit growth was only 2%, while the total means of payment rose by 3.36%. Deposits of residents grew by 4% and deposits of economic entities edged up by 0.26%, or 2.26% for both groups.

Source: FiinPro Platform

91.5%91.3%

93.5%93.2%

93.6%93.9% 93.9%

94.7%

95.7%

93.9%

89%

90%

91%

92%

93%

94%

95%

96%

97%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2018 2019 2020

0%

1%

2%

3%

4%

5%

6%

Overnight interbank rate 1-week interbank rate



49.7% 51.3% 52.4% 53.9% 50.8% 50.6%

30.4% 31.3% 33.3% 31.9% 34.9% 34.8%

15.1% 12.5% 9.6% 9.3% 9.6% 9.8%

4.8% 4.8% 4.7% 4.8% 4.6% 4.9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1 Q2 Q3 Q4 Q1 Q2

2019 2020

< 3 months 3 months - 1 year 1 - 5 years > 5 years

2.5 Capital Structure and Liquidity

In 2019 and Q1-2020, the issue of using short-term capital for medium- and long-term loans still persisted when the ratio of medium- and long-term loans was at 48.7%-49.1% of total outstanding loans while short-term capital (less than one year) accounted for 80.1%-85.8% of the total mobilization structure.

At the end of Q2-2020, the lending structure of 17 listed banks did not change significantly compared to Q1-2020, with medium- and long-term loans accounting for 49% of total outstanding loans. The ratio of short-term capital sources in 14 listed banks fell slightly from 85.8% to 85.4%. The proportion of less-than-3-month capital sources decreased while 3-month- to-1-year capital sources increased. Therefore, the use of short-term capital for medium and long-term loans was reduced.

At the end of Q2-2020, customer deposits of 19 listed banks rose by 4.2% while those of the 14 banks in Figure 28 grew by 4.4%. These numbers changed significantly from the end of Q1-2020 when customer deposits of 19 listed banks shrank by 0.1% while the 14 banks in Figure 28 declined by 0.03%. Abundant liquidity with low credit growth is the reason why many banks cut deposit rates from the beginning of July 2020, in addition to contributing to reduce lending rates, supporting the economy according to the direction of the Government and the State Bank.

Figure 27: Lending structure by terms

Source: FiinPro PlatformNote: Calculated from data 17 listed banks (excluding NVB, BVB due to non-disclosure of full data)

Figure 28: Capital structure by terms

Source: FiinPro PlatformNote: Calculated from data 14 listed banks (excluding EIB, KLB, SHB, NVB, BVB due to non-disclosure of Q1-2020 data)

Lending structure was almost unchanged from end-2019; however, the proportion of less-than-3-month capital sources slightly decreased

85.4%51.3% 51.3% 50.9% 51.0% 51.0% 51.0%

14.4% 14.1% 13.9% 13.9% 14.0% 13.9%

34.3% 34.6% 35.1% 35.1% 35.0% 35.2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1 Q2 Q3 Q4 Q1 Q2

2019 2020

Short-term loans Medium-term loans Long-term loans



Part 3: 2020 Earnings Growth Outlook

3.1. Non-bank Companies

3.2. Commercial Banks

This section aims to update the 2020 growth outlook for non-bank companies which are being listed on HOSE, HNX and UPCOM by analyzing their earnings guidance by sectors.

Earnings guidance of non-bank companies were updated as of August 15, 2020. Accordingly, 1,682/1,723 non-bank companies have disclosed their earnings guidance for 2020 and these companies represent a combined 99.7% of market capitalization of the non-bank group on the three bourses.




Earnings guidance for 2020 shows non-bank listed companies expect 4.3% decline in revenue and 20.3%

fall in profit after tax amidst Covid-19 pandemic

3.1 Non-bank companies – Earnings Growth Outlook 2020

As of August 15, 2020, 1,682 out of 1,723 non-Bank companies (99.7% marcap) released earnings guidance for 2020, with revenue and profit after tax forecast to decline 4.3% in revenue and 20.3% in profit after tax which is steeper than previous forecast (-13.0%) in the second update of FiinPro Digest #4 issued on July 21, 2020.

Sector (ICB-2)

+/- Revenue (YoY) +/- PBT (YoY) +/- PAT (YoY)

2019 2020F 2019 2020F 2019 2020F

Real Estate 8.7% 15.6% 23.0% -8.4% 31.0% -2.5%

Food & Beverage 2.1% 13.6% 1.1% -2.1% -1.0% -4.3%

Industrial Goods & Services 2.4% -0.5% 1.4% -23.8% 1.7% -29.7%

Utilities 3.9% -4.4% 12.3% -28.8% 13.5% -30.6%

Construction & Materials 1.4% -1.8% 6.1% 2.1% 9.4% 0.9%

Basic Resources 5.1% 5.0% -21.4% 23.4% -27.7% 25.6%

Travel & Leisure -0.3% -45.9% -11.7% -258.8% -18.1% -301.0%

Chemicals -4.2% 5.2% -22.1% 11.4% -24.3% 8.9%

Telecommunication 11.4% 7.6% 37.3% 7.3% 350.4% 59.6%

Oil & Gas 2.2% -29.5% -2.4% -57.7% 1.2% -59.2%

Financial Services -6.7% 7.7% -19.5% -5.0% -20.9% -4.8%

Insurance 13.7% -28.0% 15.7% -5.6% 16.5% -7.1%

Retail 9.2% -3.6% 24.9% -16.4% 23.4% -12.3%

Personal & Household Goods 0.5% -16.0% -1.6% -29.3% -2.3% -31.1%

Technology 8.6% 11.1% 12.0% 17.0% 12.0% 13.2%

Health Care 6.1% 1.2% 2.2% -1.7% 1.8% -4.4%

Media 4.0% -7.6% -59.4% 126.6% -68.5% 205.4%

Automobiles & Parts 21.8% -3.0% 34.6% 6.0% 31.8% 5.3%

Total 3.7% -4.3% 5.2% -18.8% 5.7% -20.5%

Source: FiinPro PlatformNotes: Data is updated from AGM documents/resolutions of 1,682/1723 non-bank listed companies

Table 1: Updated growth outlook on revenue, profit after tax of non-bank companies




Figure 30: PAT Growth Outlook of non-bank companies

Non-bank listed companies forecast a fall in both revenue and profit after tax in 2020 for the first time

Figure 29: Revenue Growth Outlook of non-bank companies

3.7%

-4.3%

1H2020: -13.2%-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

Revenue growth (YoY) Revenue growth 1H2020 (YoY)

-16.8%-16.6%

5.7%

-20.5%

1H2020: -43.1%-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

PAT growth (YoY) PAT growth 1H2020 (YoY)

Revenue of non-Bank companies is expected to drop by 4.3% YoY in 2020, deeper than our estimate (-2.4%) in the second update of FiinPro Digest #4 issued on July 21, 2020. This is the sharpest decline in revenue since 2008 (the first year of the 2008-2012 crisis).

Profit after tax of non-bank companies is forecast to shrink 20.3% YoY in 2020, marking the strongest plunge since 2012 (the last year of the 2008-2012 crisis).

These conservative plans, mostly disclosed from mid-May when the economy was entering the “new normal” status, came under fears of supply and demand disruption, both domestically and internationally, due to negative impacts of Covid-19 pandemic. Given the YoY decrease of 13.2% in revenue and 43.1% in profit after tax in 1H2020 (see Figure 29 and 30), these plans seem to be rather positive.





Figure 31: 2020 Revenue growth outlook by sector

There are no remarkable changes in the 2020 growth outlook of non-bank listed companies when more earnings guidance is updated:

Basic Resources, Technology, Chemicals, and Telecommunications maintain positive growth outlook for both revenue and profit after tax thanks to significant growth in Steel makers (HPG and HSG), Chemicals producers (DGC), Rubber manufacturers (GVR, PHR) and Telecommunication providers (VGI). It is noteworthy that fertilizer producers projected a loss of VND338.4 billion in 2020 (-153% YoY), but their profit after tax was high at VND142.6 billion in H12020, mostly from DCM and DPM, while the six-month revenue fulfilled 40% of the whole-year target.

Insurance companies forecast their revenue and profit after tax to fall 28% and 7.1%, respectively, but they have completed more than 60% of their 2020 target in the first half while their revenue and profit after tax grew 0.5% YoY. In Q2-2020, profit after tax of insurance companies jumped 61.1% YoY as financial income (mostly from savings interests, stock trading and investment) advanced 74%.

Real estate and Food & Beverage still take the lead among sectors in terms of revenue growth prospects, with respective revenue growth of 15.6% and 13.6% YoY, but profit after tax of the two sectors are expected to plummet 2.5% and 4.3%, respectively, as a result of weaker demand and the market saturation in some main products (including foodstuff) as indicated in FiinPro Digest #3.

Covid-19 resilient sectors still have a promising growth outlook

Figure 32: 2020 PAT growth outlook by sector

15.6%

13.6%

11.1%

7.7%

7.6%

5.2%

5.0%

1.2%

-0.5%

-1.8%

-3.0%

-3.6%

-4.4%

-7.6%

-16.0%

-28.0%

-29.5%

-45.9%

Real estate

Food & Beverage

Technology

Financial Services

Telecommunications

Chemicals

Basic Resources

Pharmaceutials



Automobiles & Parts

Retail

Utilities

Media


Insurance

Oil & Gas

Travel &Tourism

205.4%

59.6%

25.6%

13.2%

8.9%

5.3%

0.9%

-2.5%

-4.3%

-4.4%

-4.8%

-7.1%

-12.3%

-29.7%

-30.6%

-31.1%

-59.2%

-301.0%

Media

Telecommunications

Basic Resources

Technology

Chemicals

Automobiles & Parts


Real estate

Food & Beverage

Pharmaceutials

Financial Services

Insurance

Retail


Utilities


Oil & Gas

Travel &Tourism




This Section reflects growth outlook of the Banking sector by conducting data analysis on their earnings guidance of 18/19 banks being listed on HOSE, HNX and UPCoM. These 18 listed banks accounted for 52.2% of the system's total outstanding loans and 90.4% market capitalization of the banking sector on the three bourses.


Part 3: 2020 Growth Outlook

3.1. Non-bank Companies

3.2. Commercial Banks



3.2 Commercial banks – Earnings Growth Outlook 2020

Source: FiinPro Platform Notes: Data is updated from 18/19 listed banks

Profit after tax of listed banks is expected to rise 4.9% in 2020, supported by regulatory changes in debt

restructuring and credit risk provisions and non-credit income such as securities investments

In contrast to negative earnings outlook of non-bank companies, profit after tax of 18/19 listed banks is expected to rise 4.9% YoY in 2020. VietinBank (CTG) is not included in our data analysis as the bank did not disclose its detailed earnings guidance for 2020. For VCB, we use the lender’s initial target of 10% profit after tax growth in 2020.

The forecast is conservative as compared to an actual growth of 12.9% in profit after tax of 19/19 listed lenders in 1H2020.

As indicated in FiinPro Digest #3, the earnings growth of 19 listed banks is mostly thanks to the temporary regulatory changes in debt restructuring and credit risk provisions under Circular No. 01/2020/TT-NHNN of the State Bank of Vietnam. Accordingly, restructured loans are recorded as performing loans which does not require provisions. Therefore, once these temporary regulatory changes expire, negative impacts of Covid-19 pandemic will be factored in credit quality as well as profit after tax of banks.

Figure 33: Earnings growth outlook of listed banks in 2020(Earnings guidance)

43.0%

30.9%29.4%

4.9%

-15%

-5%

5%

15%

25%

35%

45%

2017 2018 2019 2020F



AppendicesAppendix 1: Vietnam Stock Market Valuation

Appendix 2: Net Revenue Growth by Sector

Appendix 3: Profit after tax Growth by Sector

Appendix 4: EBIT Growth by Sector

Appendix 5: EBITDA Growth by Sector

Appendix 6: Debt to Owner’s Equity by Sector

Appendix 7: Profit after tax Margin by Sector

Appendix 8: EBIT Margin by Sector

Appendix 9: EBITDA Margin by Sector



851.21

878.06

14.12

8

12

16

20

200

400

600

800

1,000

1,200

P/E

VN

IND

EX

VNIndex MA200 P/E

Temporary bottom24/3/2020: 659,21

Source: FiinPro Platform

Vietnam Stock Market Valuation inches up but still at the low level during last 3 years

Appendix 1: Vietnam Stock Market Valuation

850.74

878.06

1.64

1.00

1.50

2.00

2.50

3.00

3.50

500

600

700

800

900

1,000

1,100

1,200

1,300

P/B

VN

IND

EX

VNIndex MA200 P/B

Temporary bottom24/3/2020: 659,21



Appendix 2: Net Revenue Growth by Sector

QUARTERLY NET REVENUE GROWTH (YoY)Sector No. of

companies

Mar Cap % Mar cap 2017 2018 2019 2020

(17/08/2020) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

C2 ICB Trn VND % % % % % % % % % % % % % % %

Banks 19/19 905.0 100.0% 24.3% 33.0% 30.4% 33.7% 33.8% 20.3% 17.3% 4.0% 9.9% 21.5% 22.6% 29.3% 15.6% 2.8%

Insurance 12/12 53.5 100.0% 15.2% 17.6% 13.3% 17.9% 18.1% 16.1% 13.2% 10.0% 11.3% 13.0% 15.9% 15.0% 11.2% 2.2%

Financial Services 39/49 42.0 80.0% 27.6% 30.9% 24.3% 37.4% 80.1% 27.8% 10.8% -5.9% -28.8% -8.6% 1.1% 6.5% 16.9% 27.3%

Real Estate 85/118 521.7 99.5% 9.2% 46.2% 49.9% 48.0% 52.4% 48.7% 12.7% 13.6% -2.5% 21.4% 23.6% -5.2% -22.5% -35.7%

Food & Beverage 68/133 526.9 97.1% 4.2% 8.2% 5.5% 5.4% 9.8% 7.9% 10.8% 8.5% 9.6% 1.5% 1.8% 1.4% 9.6% 10.5%

Industrial Goods & Services 153/303 299.3 91.8% 9.3% 6.3% 13.3% 21.4% 22.9% 17.0% 6.5% 2.9% 1.1% 12.8% 0.0% -3.6% -5.7% -14.3%

Utilities 102/142 280.0 97.9% 16.7% 8.4% 8.4% 6.7% 11.3% 17.2% 13.0% 7.2% 1.0% 5.5% 7.9% 3.8% -1.0% -18.4%

Construction & Materials 203/379 133.8 91.8% 2.0% 3.4% 7.0% 13.6% 2.9% 9.7% 6.9% -3.3% 8.4% 3.0% -2.0% -0.7% -10.8% -12.2%

Travel & Leisure 34/61 107.6 98.6% 5.3% 29.8% 7.8% 55.8% 35.0% 4.4% 32.1% 3.2% 5.5% 8.7% 3.3% -10.6% -30.7% -67.2%

Basic Resources 72/120 142.5 98.1% 19.4% 23.4% 33.0% 16.2% 21.2% 31.7% 12.0% 11.3% 6.3% -4.0% -2.3% 3.6% 3.3% 3.5%

Chemicals 51/69 92.3 98.5% 7.1% 6.0% 13.3% 3.2% 1.8% 14.4% 11.5% 24.1% 6.5% -2.7% -0.6% -9.6% -13.1% -14.2%

Oil & Gas 9/11 91.2 99.8% 25.7% 16.0% 19.8% 21.8% 25.3% 28.2% 31.5% 7.2% 0.4% 0.9% 12.7% 7.1% -8.5% -42.8%

Retail 21/35 48.2 98.5% 31.4% 25.2% 27.5% 21.2% 30.4% 26.5% 19.6% 6.7% 5.6% 16.5% 12.3% 12.1% 16.0% -2.7%

Technology 21/32 45.8 99.1% 2.1% 5.3% 13.9% -18.7% -17.2% -11.2% -16.3% -6.5% 15.1% 5.5% -1.3% 13.4% 6.3% -3.9%

Personal & Household Goods 46/95 40.4 88.3% 13.2% 8.6% 10.8% 11.8% 12.2% 16.7% 14.1% 4.3% 0.9% -6.6% -3.1% 3.1% -4.1% -18.4%

Health Care 35/59 39.3 88.1% 11.4% 11.8% 8.5% 11.5% 1.6% -3.4% 4.9% -5.3% 7.2% 9.3% 1.4% 9.9% 9.8% -14.9%

Media 29/45 32.9 94.4% 12.2% 5.0% 14.4% 20.2% 55.7% 14.0% 14.2% 21.2% -7.3% 19.6% -5.8% -11.0% -18.2% -27.3%

Automobiles & Parts 12/15 16.0 99.7% 7.1% 9.8% 9.9% -5.8% -4.4% -14.2% -5.8% 19.9% 25.9% 27.9% 28.1% 11.2% -11.1% -10.6%

Telecommunication 4/8 92.8 99.6% 23.8% 11.9% -37.7% 3.9% -21.4% -20.1% 4.7% -14.7% 5.3% 8.5% 14.8% 16.9% 22.8% 16.2%

Total 1051/1742 3,875.6 97.7% 14.4% 16.5% 17.1% 19.2% 19.3% 17.5% 14.2% 6.4% 5.1% 7.3% 7.7% 3.9% -2.2% -16.7%

Banks 19/19 905.0 100.0% 24.3% 33.0% 30.4% 33.7% 33.8% 20.3% 17.3% 4.0% 9.9% 21.5% 22.6% 29.3% 15.6% 2.8%

Non-banks companies 1032/1723 2970.6 97.0% 13.5% 14.9% 15.8% 17.8% 17.8% 17.2% 13.8% 6.6% 4.5% 5.9% 6.1% 1.6% -4.2% -18.8%

Source: FiinPro PlatformNote: Data is updated from financial statements of 1032/1723 non-bank listed companies (representing 97.0% marcap) and does not include listed subsidiaries which are consolidated into FS of listed parent companies. “Total operating income” is revenue for banks and “Net premiums” is revenue for Insurance companies



Appendix 3: Profit after tax Growth by Sector

QUARTERLY PROFIT AFTER TAX GROWTHSector No. of

companies

Mar Cap % Mar cap 2017 2018 2019 2020

(17/08/2020) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

C2 ICB Trn VND % % % % % % % % % % % % % % %

Banks 19/19 905.0 100.0% 30.1% 54.7% 35.1% 53.0% 56.6% 49.2% 17.1% 10.5% 11.7% 26.4% 44.3% 39.5% 3.5% 22.4%

Insurance 12/12 53.5 100.0% 2.3% 62.2% -5.3% -27.3% 20.6% -36.7% -4.9% -12.3% 15.5% 12.6% 43.2% 3.2% -49.8% 71.3%

Financial Services 39/49 42.0 80.0% 88.0% 695.2% 13.0% 720.0% 82.2% -3.0% 41.9% -18.5% -45.1% -12.7% -20.4% 13.3% -100.9% 156.2%

Real Estate 85/118 521.7 99.5% -3.1% -31.4% 139.8% 91.3% 31.9% -3.4% 41.5% 58.6% 7.1% 57.9% -15.2% 7.0% -81.3% -52.1%

Food & Beverage 68/133 526.9 97.1% 16.0% 55.2% -1.3% 21.9% 33.1% 14.5% 6.4% -12.7% 4.4% -26.1% -2.1% 19.5% -32.4% 8.9%

Industrial Goods & Services 153/303 299.3 91.8% -1.5% 18.6% 27.9% -15.4% 10.2% 80.0% 29.7% 26.7% 0.4% -0.8% 3.7% -0.1% -18.6% -48.7%

Utilities 102/142 280.0 97.9% 44.4% 51.4% 76.0% 2.6% 34.6% 37.1% -6.2% -18.1% 3.9% -2.8% 25.1% 25.4% -40.7% -11.4%

Construction & Materials 203/379 133.8 91.8% 49.6% 32.6% -6.6% 49.2% -40.2% -16.5% -8.4% -23.4% 4.1% 2.7% 8.2% 7.1% -19.4% 2.5%

Travel & Leisure 34/61 107.6 98.6% -29.5% 27.4% 45.6% 1183.2% 87.8% -24.6% -12.8% 1.8% 3.2% -18.3% 33.3% -71.8% -211.4% -376.8%

Basic Resources 72/120 142.5 98.1% 111.1% -15.9% 38.6% 29.5% 1.1% 10.8% -21.4% -51.5% -50.2% -13.4% -22.1% -11.0% 24.9% 11.1%

Chemicals 51/69 92.3 98.5% 9.4% 29.8% 14.0% -4.0% 45.6% -11.0% 30.5% -1.7% -42.4% -26.7% 25.7% -33.9% -37.8% 6.6%

Oil & Gas 9/11 91.2 99.8% 69.3% -22.4% -8.7% -27.1% -17.9% 12.7% -14.6% -91.8% 42.5% 18.7% -21.6% 783.9% -303.4% -130.1%

Retail 21/35 48.2 98.5% 31.4% 7.8% 33.8% 33.7% 32.1% 37.3% 7.9% 37.0% 20.4% 35.8% 19.2% 14.4% 1.2% -31.1%

Technology 21/32 45.8 99.1% 34.4% 1.3% 15.7% 62.8% 14.9% 19.2% 25.6% -27.4% 21.8% 14.1% 19.5% -0.2% 13.7% 10.7%

Personal & Household Goods 46/95 40.4 88.3% 21.8% -11.3% 13.0% 8.6% 17.6% 22.1% 18.8% 8.0% 4.0% -8.4% -7.9% 6.6% -16.5% -42.8%

Health Care 35/59 39.3 88.1% 399.9% 21.5% 19.3% -4.2% -7.0% -8.9% 7.1% 15.1% 0.7% -0.2% -7.2% 10.9% 10.2% -5.5%

Media 29/45 32.9 94.4% 9.5% -9.1% 17.2% -25.9% 83.5% 29.6% 107.5% 101.1% -7.9% -60.2% -97.1% -113.2% -38.5% 61.5%

Automobiles & Parts 12/15 16.0 99.7% -14.1% -48.3% -36.2% -28.7% -35.6% 6.4% 30.9% -4.3% 42.0% -6.7% 14.7% 76.0% 12.0% 65.4%

Telecommunication 4/8 92.8 99.6% 105.2% 239.2% -9.6% -103.0% 313.1% -96.0% -160.2% 170.9% 118.4% 2618.5% 553.4% 140.8% 226.3% -73.4%

Total 1051/1742 3,875.6 97.7% 30.7% 32.7% 25.7% 34.4% 28.2% 18.6% 9.0% -2.1% 1.7% 7.6% 13.8% 17.7% -36.5% -13.9%

Banks 19/19 905.0 100.0% 30.1% 54.7% 35.1% 53.0% 56.6% 49.2% 17.1% 10.5% 11.7% 26.4% 44.3% 39.5% 3.5% 22.4%

Non-banks companies 1032/1723 2970.6 97.0% 33.5% 26.9% 22.3% 28.6% 19.7% 9.9% 6.2% -6.2% -2.7% 0.5% 2.7% 9.8% -58.5% -30.6%

Source: FiinPro PlatformNote: Data is updated from financial statements of 1032/1723 non-bank listed companies (representing 97.0% marcap) and does not include listed subsidiaries which are consolidated into FS of listed parent companies. “Total operating income” is revenue for banks and “Net premiums” is revenue for Insurance companies



Appendix 4: EBIT Growth by Sector

QUARTERLY EBIT GROWTH (YoY)Sector No. of

companies

MarCap % Marcap 2017 2018 2019 2020

(17/08/2020) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

C2 ICB Trn VND % % % % % % % % % % % % % % %

Real Estate 85/118 521.7 99.5% -13.3% 47.7% 106.1% 95.3% 56.8% 52.0% 8.7% 15.0% -41.9% 30.2% 28.7% -50.0% -121.0% -80.7%

Food & Beverage 68/133 526.9 97.1% 10.6% -0.4% 5.6% 8.8% 26.4% 22.2% 13.7% -6.1% 0.2% -7.6% -17.4% 13.4% -18.5% -7.0%


Utilities 102/142 280.0 97.9% 44.6% 5.3% 83.7% 14.2% 15.1% 35.2% -2.2% 5.8% -3.8% -1.9% 6.0% 1.5% -19.7% -37.7%

Construction & Materials 203/379 133.8 91.8% -1.6% 1.4% 6.7% 8.1% -13.8% -0.5% 3.5% 2.2% 12.7% 0.9% -4.7% -1.3% -22.5% 1.7%

Travel & Leisure 34/61 107.6 98.6% -13.4% 32.4% 46.1% 40.1% 53.5% -5.0% -3.4% 114.2% 12.7% -37.2% 8.3% -77.0% -172.2% -481.2%

Basic Resources 72/120 142.5 98.1% 78.3% -9.6% 34.4% 25.6% 4.4% 15.4% -12.1% -41.5% -33.6% -7.6% -32.5% 2.6% 31.9% 1.4%

Chemicals 51/69 92.3 98.5% 2.8% 14.7% 17.5% -22.8% -7.5% -9.2% 34.9% 14.4% -3.6% -11.0% -10.4% -10.8% -39.2% -1.4%

Oil & Gas 9/11 91.2 99.8% 55.7% -30.7% -33.1% -55.0% -8.6% 44.9% 11.9% -81.5% 31.8% 10.0% -42.3% 350.7% -264.0% -133.6%

Retail 21/35 48.2 98.5% 27.6% 13.4% 23.5% 24.9% 40.1% 44.7% 16.2% 52.9% 20.3% 30.9% 16.8% 4.9% 13.6% -19.7%

Technology 21/32 45.8 99.1% 27.2% 0.0% 10.0% -18.6% 11.2% 24.2% 22.6% 38.6% 26.7% 16.9% 15.0% 1.5% 14.6% -8.6%

Personal & Household Goods 46/95 40.4 88.3% 14.7% 1.6% 4.0% 0.7% 18.2% 27.4% 45.5% 13.9% 4.3% -6.5% -14.2% 22.3% -7.5% -44.0%

Health Care 35/59 39.3 88.1% 5088.3% 17.0% 11.6% 12.0% 2.0% -4.9% 10.5% 2.3% -1.6% -1.1% -17.4% 8.8% 17.3% -7.1%

Media 29/45 32.9 94.4% 113.7% -2.2% 25.5% 91.3% 69.1% 31.2% 15.8% 3.2% -63.4% -69.6% -88.4% -148.0% -29.4% -18.2%

Automobiles & Parts 12/15 16.0 99.7% -20.8% -45.2% -8.4% -37.5% -22.2% 10.2% 29.9% 11.0% 28.6% -3.2% 22.2% 44.8% 16.8% 22.5%

Telecommunication 4/8 92.8 99.6% 315.6% -10.6% -14.9% -48.4% 48.7% -12.3% -109.5% 88.1% 155.1% 155.7% 1978.2% 40.0% 42.9% 22.7%

Total 981/1662 2,875.1 97.2% 22.0% 4.3% 26.4% 18.3% 18.3% 23.4% 6.9% 0.5% -3.6% 3.8% -1.7% -7.9% -44.5% -47.4%

Source: FiinPro PlatformNote: Data is updated from financial statements of 1032/1723 non-bank listed companies (representing 97.0% marcap) and does not include listed subsidiaries which are consolidated into FS of listed parent companies.



Appendix 5: EBITDA Growth by Sector

QUARTERLY EBITDA GROWTH (YoY)Sector No. of

companies

MarCap % Marcap 2017 2018 2019 2020

(17/08/2020) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

C2 ICB Trn VND % % % % % % % % % % % % % % %

Real Estate 85/118 521.7 99.5% -3.4% 56.3% 85.8% 103.1% 37.9% 41.3% 12.5% 1.4% -25.2% 17.8% 34.7% -14.0% -58.1% -56.1%

Food & Beverage 68/133 526.9 97.1% 11.5% 5.5% 5.4% 6.9% 24.1% 18.2% 11.1% -3.0% 2.6% -5.0% -13.0% 9.6% -9.0% -6.0%


Utilities 102/142 280.0 97.9% 25.0% 9.2% 30.6% 7.7% 8.2% 16.2% -5.2% 3.5% -5.4% -1.2% 4.8% -1.3% -11.7% -23.4%

Construction & Materials 203/379 133.8 91.8% -3.6% 7.9% 18.1% 21.3% -2.8% -0.8% -1.8% -11.3% 10.0% 2.4% -2.6% 5.7% -13.8% 1.8%

Travel & Leisure 34/61 107.6 98.6% -3.6% 19.5% 28.7% 6.5% 29.8% -3.9% 2.4% 57.4% 3.2% -11.4% 2.0% -51.8% -124.5% -220.3%

Basic Resources 72/120 142.5 98.1% 56.3% -0.2% 22.6% 19.3% 5.9% 11.4% -5.9% -23.6% -23.2% -3.4% -19.5% 0.0% 27.2% 7.0%

Chemicals 51/69 92.3 98.5% 11.1% 11.3% 4.8% -22.2% -9.5% -3.5% 27.8% 31.8% 6.0% -7.9% -21.0% -17.7% -17.2% 41.7%

Oil & Gas 9/11 91.2 99.8% -6.7% -19.2% -22.4% -38.4% -4.7% 22.2% 7.1% -61.5% 14.3% 2.3% -29.8% 119.6% -162.3% -78.8%

Retail 21/35 48.2 98.5% 29.3% 18.4% 31.3% 39.9% 49.5% 49.3% 22.1% 49.5% 16.2% 27.1% 15.7% 9.0% 19.2% -7.1%

Technology 21/32 45.8 99.1% 21.1% 4.5% 6.8% -16.4% 14.3% 21.3% 21.3% 26.7% 22.6% 15.4% 15.3% 2.2% 15.1% -5.0%

Personal & Household Goods 46/95 40.4 88.3% 19.3% 64.1% 6.2% -12.7% 42.9% -16.4% 32.4% 5.9% -12.8% -9.7% -4.9% 8.4% -6.9% -23.5%

Health Care 35/59 39.3 88.1% 432.1% 18.1% 14.4% 11.3% 2.2% -1.8% 9.3% -1.7% -0.9% -1.0% -16.3% 10.0% 15.0% -7.9%

Media 29/45 32.9 94.4% 137.1% 5.0% 49.1% 78.9% 22.2% 15.6% -2.1% -14.5% -49.3% -63.7% -62.4% -92.7% -21.1% -41.6%

Automobiles & Parts 12/15 16.0 99.7% -12.7% -32.6% 0.5% -26.6% -15.2% 10.2% 15.6% 3.6% 20.2% -26.8% 16.1% 76.7% 15.6% 71.2%

Telecommunication 4/8 92.8 99.6% 63.6% 15.3% -9.3% 9.9% 27.7% -7.8% -36.1% 35.5% 28.7% 39.3% 112.3% 24.1% 25.9% 17.3%

Total 981/1662 2,875.1 97.2% 14.6% 10.5% 19.7% 16.4% 16.2% 15.5% 4.7% 0.2% -1.4% 2.0% 0.3% 0.0% -26.0% -29.3%




Appendix 6: D/E Ratio by Sector

DEBT/EQUITYSector No. of

companies

MarCap % Marcap 2017 2018 2019 2020

(17/08/2020) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

C2 ICB Trn VND % % % % % % % % % % % % % % %

Real Estate 85/118 521.7 99.5% 0.63 0.64 0.62 0.60 0.69 0.58 0.63 0.71 0.70 0.66 0.66 0.73 0.75 0.84

Food & Beverage 68/133 526.9 97.1% 0.83 0.76 0.73 0.76 0.77 0.76 0.74 0.62 0.62 0.58 0.54 0.52 0.58 0.74

Industrial Goods & Services 153/303 299.3 91.8% 0.63 0.74 0.64 0.67 0.53 0.59 0.57 0.52 0.54 0.53 0.50 0.49 0.50 0.52

Utilities 102/142 280.0 97.9% 0.71 1.12 1.08 1.02 0.95 0.96 0.92 0.85 0.83 0.82 0.78 0.74 0.72 0.68

Construction & Materials 203/379 133.8 91.8% 1.04 1.02 0.95 0.95 0.97 0.99 0.95 0.95 0.96 0.96 1.05 1.00 0.99 0.98

Travel & Leisure 34/61 107.6 98.6% 1.81 1.73 1.59 1.38 1.26 1.27 1.21 1.06 1.01 1.05 1.03 1.02 1.11 1.19

Basic Resources 72/120 142.5 98.1% 1.04 1.02 0.92 0.95 0.92 0.94 0.97 0.96 0.99 1.04 1.02 0.98 1.04 1.02

Chemicals 51/69 92.3 98.5% 0.52 0.41 0.69 0.68 0.67 0.48 0.47 0.47 0.47 0.46 0.43 0.41 0.41 0.34

Oil & Gas 9/11 91.2 99.8% 0.41 0.35 0.37 0.43 0.47 0.42 0.41 0.36 0.34 0.35 0.28 0.32 0.36 0.37

Retail 21/35 48.2 98.5% 1.11 1.09 1.10 1.15 1.23 1.17 1.04 0.93 0.94 0.96 0.89 1.10 0.97 0.92

Technology 21/32 45.8 99.1% 0.64 0.61 0.62 0.45 0.46 0.49 0.52 0.48 0.47 0.48 0.47 0.44 0.50 0.49

Personal & Household Goods 46/95 40.4 88.3% 1.05 1.12 1.00 0.94 0.97 1.02 0.99 0.93 0.86 0.89 0.84 0.78 0.75 0.77

Health Care 35/59 39.3 88.1% 0.24 0.31 0.36 0.36 0.38 0.34 0.33 0.28 0.29 0.32 0.30 0.30 0.27 0.31

Media 29/45 32.9 94.4% 0.08 0.07 0.06 0.08 0.10 0.08 0.15 0.13 0.17 0.14 0.13 0.12 0.11 0.10

Automobiles & Parts 12/15 16.0 99.7% 0.48 0.55 0.63 0.61 0.59 0.59 0.60 0.59 0.54 0.55 0.58 0.55 0.58 0.52

Telecommunication 4/8 92.8 99.6% 1.07 0.99 0.98 0.94 0.97 1.03 0.82 0.78 0.77 0.75 0.74 0.77 0.65 0.61

Total 981/1662 2,875.1 97.2% 0.75 0.79 0.77 0.76 0.76 0.72 0.71 0.69 0.68 0.68 0.66 0.66 0.68 0.70




Appendix 7: Profit after Tax Margin by Sector

PROFIT AFTER TAX MARGINSector No. of

companies

MarCap % Marcap 2017 2018 2019 2020

(17/08/2020) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

C2 ICB Trn VND % % % % % % % % % % % % % % %

Real Estate 85/118 521.7 99.5% 7.7% 9.6% 9.5% 10.1% 8.0% 7.3% 12.3% 14.8% 8.2% 9.3% 8.0% 16.4% 2.0% 6.9%

Food & Beverage 68/133 526.9 97.1% 10.4% 12.9% 11.8% 10.5% 12.6% 13.7% 11.2% 8.4% 11.3% 9.6% 10.2% 10.1% 7.4% 9.7%

Industrial Goods & Services 153/303 299.3 91.8% 14.9% 10.2% 10.5% 9.9% 12.4% 15.8% 12.7% 12.2% 11.7% 12.0% 13.3% 11.7% 10.0% 8.2%

Utilities 102/142 280.0 97.9% 8.0% 8.2% 9.8% 11.6% 9.7% 9.7% 8.3% 8.9% 9.8% 8.9% 9.5% 10.6% 5.9% 9.8%

Construction & Materials 203/379 133.8 91.8% 8.3% 6.6% 6.3% 6.3% 4.5% 5.0% 5.3% 5.1% 4.4% 5.1% 5.9% 5.3% 4.0% 6.5%

Travel & Leisure 34/61 107.6 98.6% 5.0% 5.2% 8.3% 4.7% 6.8% 3.6% 5.1% 4.6% 6.5% 2.7% 6.7% 1.5% -10.6% -23.6%

Basic Resources 72/120 142.5 98.1% 7.7% 5.0% 5.8% 7.4% 6.5% 4.2% 4.2% 3.3% 3.0% 3.8% 3.4% 2.8% 3.6% 4.1%

Chemicals 51/69 92.3 98.5% 7.2% 7.8% 4.3% 5.2% 9.4% 5.6% 5.9% 8.4% 5.7% 6.1% 7.4% 6.2% 4.0% 7.5%

Oil & Gas 9/11 91.2 99.8% 5.1% 4.6% 4.6% 4.7% 1.8% 2.0% 2.7% 0.3% 2.5% 1.8% 1.9% 2.8% -5.6% -1.0%

Retail 21/35 48.2 98.5% 2.8% 2.5% 2.7% 2.1% 2.8% 2.8% 2.4% 2.6% 3.2% 3.2% 2.6% 2.7% 2.7% 2.1%

Technology 21/32 45.8 99.1% 6.7% 6.7% 6.6% 12.0% 9.2% 9.0% 10.0% 9.5% 9.6% 9.8% 12.1% 8.1% 10.5% 11.5%

Personal & Household Goods 46/95 40.4 88.3% 4.7% 4.9% 4.9% 4.0% 4.9% 5.2% 5.0% 4.0% 5.1% 5.1% 4.8% 4.1% 4.4% 3.7%

Health Care 35/59 39.3 88.1% 6.7% 6.6% 5.4% 4.8% 5.8% 6.0% 5.6% 6.2% 5.7% 5.5% 5.3% 6.2% 5.8% 6.4%

Media 29/45 32.9 94.4% 8.3% 9.7% 8.2% 7.0% 9.7% 11.0% 12.2% 10.1% 7.3% 3.2% 0.4% -1.4% 5.7% 7.2%

Automobiles & Parts 12/15 16.0 99.7% 3.7% 2.8% 2.6% 3.3% 2.5% 3.5% 3.7% 2.6% 2.8% 2.5% 3.3% 4.1% 3.6% 4.7%

Telecommunication 4/8 92.8 99.6% 0.5% 13.8% 3.0% -5.7% 2.9% 0.7% -1.7% 4.7% 6.0% 16.0% 6.8% 9.7% 15.8% 3.7%

Total 1032/1723 2,970.6 96.5% 7.6% 7.6% 7.5% 7.4% 7.4% 7.0% 6.9% 6.7% 6.6% 6.3% 6.7% 7.1% 3.1% 5.7%




Appendix 8: EBIT Margin by Sector

EBIT MARGINSector No. of

companies

MarCap % Marcap 2017 2018 2019 2020

(17/08/2020) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

C2 ICB Trn VND % % % % % % % % % % % % % % %

Real Estate 85/118 521.7 99.5% 12.3% 13.1% 14.1% 14.3% 13.5% 14.5% 14.3% 15.5% 7.6% 14.9% 14.1% 8.0% -2.0% 4.4%

Food & Beverage 68/133 526.9 97.1% 13.3% 13.5% 14.7% 12.9% 15.3% 15.3% 15.0% 11.1% 13.2% 13.5% 11.6% 12.5% 10.4% 11.6%


Utilities 102/142 280.0 97.9% 14.2% 12.5% 15.9% 15.0% 14.8% 13.9% 14.1% 14.1% 13.4% 13.1% 13.5% 13.8% 11.0% 10.4%


Travel & Leisure 34/61 107.6 98.6% 8.3% 6.8% 11.0% 2.7% 9.0% 6.1% 7.6% 5.7% 9.4% 3.4% 8.0% 1.5% -9.8% -40.1%

Basic Resources 72/120 142.5 98.1% 11.0% 7.3% 8.8% 10.4% 9.4% 6.5% 7.1% 5.6% 5.9% 6.3% 4.9% 5.4% 7.4% 6.0%

Chemicals 51/69 92.3 98.5% 8.6% 8.5% 6.1% 5.8% 7.9% 6.7% 7.8% 7.1% 7.1% 6.7% 7.4% 7.0% 5.2% 7.7%

Oil & Gas 9/11 91.2 99.8% 6.1% 4.4% 4.6% 4.2% 2.3% 2.7% 3.6% 0.6% 2.9% 2.3% 1.8% 2.7% -5.2% -1.2%

Retail 21/35 48.2 98.5% 3.5% 3.3% 3.5% 2.6% 3.8% 3.8% 3.3% 3.5% 4.2% 4.2% 3.4% 3.3% 4.0% 3.3%

Technology 21/32 45.8 99.1% 7.9% 8.0% 8.0% 7.4% 10.5% 11.1% 11.8% 10.5% 11.3% 12.4% 13.7% 9.2% 12.5% 12.0%


Health Care 35/59 39.3 88.1% 7.9% 8.4% 7.1% 6.3% 7.5% 7.5% 7.5% 7.1% 7.0% 7.0% 6.2% 6.9% 7.7% 8.0%

Media 29/45 32.9 94.4% 8.2% 10.3% 8.5% 8.3% 8.9% 11.8% 8.1% 7.9% 4.1% 3.4% 1.0% -4.1% 3.6% 3.8%


Telecommunication 4/8 92.8 99.6% 3.4% 5.8% 10.0% 4.9% 6.5% 6.3% -0.9% 10.9% 15.6% 14.8% 14.8% 13.0% 18.3% 15.7%

Total 981/1662 2,875.1 97.2% 9.9% 9.0% 9.8% 8.8% 9.6% 9.3% 9.2% 8.2% 8.4% 8.7% 8.5% 7.6% 5.1% 5.9%




Appendix 9: EBITDA Margin by Sector

EBITDA MARGINSector No. of

companies

MarCap % Marcap 2017 2018 2019 2020

(17/08/2020) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

C2 ICB Trn VND % % % % % % % % % % % % % % %

Real Estate 85/118 521.7 99.5% 17.5% 18.0% 17.2% 18.9% 16.5% 18.6% 17.9% 18.0% 12.0% 17.6% 18.6% 12.8% 6.6% 11.9%

Food & Beverage 68/133 526.9 97.1% 17.8% 17.8% 18.5% 16.7% 20.1% 19.5% 18.4% 14.9% 17.9% 17.9% 15.0% 16.1% 15.6% 15.4%


Utilities 102/142 280.0 97.9% 23.8% 22.0% 26.1% 24.0% 23.1% 22.1% 23.0% 23.0% 21.5% 20.5% 22.1% 21.9% 19.2% 19.5%


Travel & Leisure 34/61 107.6 98.6% 14.0% 12.1% 16.5% 6.2% 13.1% 10.6% 11.7% 9.2% 12.5% 8.4% 11.7% 5.0% -4.4% -30.6%

Basic Resources 72/120 142.5 98.1% 14.9% 11.5% 12.4% 14.2% 13.2% 9.8% 10.6% 9.7% 9.5% 9.8% 8.7% 9.2% 11.7% 10.2%

Chemicals 51/69 92.3 98.5% 12.6% 12.1% 9.6% 9.8% 11.7% 10.6% 13.4% 13.1% 13.4% 11.4% 12.7% 12.5% 12.9% 18.9%

Oil & Gas 9/11 91.2 99.8% 8.5% 7.0% 7.3% 6.2% 3.8% 5.7% 5.4% 2.0% 4.6% 3.8% 3.3% 4.1% -3.2% 1.4%

Retail 21/35 48.2 98.5% 4.1% 4.0% 4.3% 3.4% 4.7% 4.7% 4.4% 4.6% 5.1% 5.1% 4.5% 4.5% 5.2% 4.7%

Technology 21/32 45.8 99.1% 10.8% 11.0% 10.5% 9.9% 14.8% 14.9% 15.3% 13.4% 15.7% 16.5% 17.8% 11.6% 17.2% 16.6%


Health Care 35/59 39.3 88.1% 9.4% 9.9% 8.8% 7.6% 9.0% 9.1% 9.1% 8.5% 8.6% 8.7% 7.7% 8.2% 9.2% 10.0%

Media 29/45 32.9 94.4% 13.6% 12.8% 11.7% 13.2% 10.7% 13.0% 12.1% 13.3% 9.9% 6.4% 4.9% 2.3% 9.9% 5.3%


Telecommunication 4/8 92.8 99.6% 15.5% 19.7% 24.4% 17.0% 25.2% 22.7% 14.9% 26.9% 30.6% 29.2% 27.5% 28.6% 31.6% 29.5%

Total 981/1662 2,875.1 97.2% 14.5% 14.2% 14.5% 12.9% 14.0% 13.7% 13.3% 12.1% 12.8% 12.7% 12.7% 11.6% 10.2% 11.3%




Methodology and important notes!

Data updating time:

All numbers in this report are updated as of August 18, 2020. FiinGroup updates and calculates data continuously or daily.

Data coverage:

Our data covers 1051/1742 listed companies , which include 1051/1742 non-bank businesses (including Insurance and Financial Services), 19/19 banks.

The total capitalization of these businesses as of August 18, 2020 was about VND3,604 trillion, or USD154 billion, accounting for about 97.4% of the total capitalization of HOSE, HNX and UPCoM.

Representativeness of analyzed data:

The total revenue of non-bank businesses alone was VND627.8 trillion in Q2-2020, accounting for 70.7% of Vietnam’s GDP (at constant 2010 prices) in Q2-2020.

Total debt (short- and long-term) accounts for 14.4% of the total outstanding loans of the whole banking system (Total outstanding loans of the whole banking sector as announced by the State Bank was VND8,495 trillion at by the end of June 2020).

Although the data doesn’t cover all private businesses and many unlisted public companies, we think this is a large enough sample for review and analysis with implications in assessing the health of the corporate sector and thereby making necessary decisions in stock investment, fund management, lending orientation or any other important financial decisions for 2020 and beyond.

Separating non-financial and financial groups

We separate these two groups for more accurate assessment because of different business models.

Accordingly, we define Banking group which includes 19/19 listed banks on 3 exchanges. Non-bank group covers all remaining sectors, including Real Estate, Insurance and Financial Services.

This report should be read and understood with the following background information and important concepts.

EBIT and EBITDA Calculation:

EBIT = Earnings Before Interest and Taxes while EBITDA = Earnings before Interest, Taxes and Depreciation. However, there are many ways to calculate among analysts in Vietnam. In FiinGroup, we use the following formula:

- EBIT = Gross Profit – Sales expenses– Administrative expenses + Profit/loss from affiliated companies (we do not take into account other gains or losses from financial activities).

- EBITDA = EBIT + Depreciation

Key abbreviations:

YoY = comparing year on year results whether they are Year, Quarter or Monthly figures.

QoQ = comparing this quarter with the previous quarter.

MoM = comparing this month with the previous month.

Data adjustment:

In order to eliminate the effect of consolidation of financial statements among companies in calculating growth (Revenue, profit, EBIT, EBITDA), we adjust by removing subsidiaries from the data if they are listed and consolidated into parent companies. With the following group of companies, when calculating growth of the sector or the whole market, we use only the parent companies’ figures, for example:

VIC: VHM, VRE, VEF, VNBFLC: AMD, ART, HAI, KLF, ROSKDC: KDF, TAC, VOCMSN: MSR, MCH, MMLFPT: FRT (before 2017)SAB: WSB, BSD, BSHAnd many other codes

The same applies for sector growth, if two stock of the parent company and its subsidiary are in the same sector, we remove the subsidiary and only calculate the growth based on the parent company's data.

You can exploit this data on our FiinPro Platform, together with many other data about nearly 3,000 public companies and various outstanding features!

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Pharmaceuticals

Information & Communication Technology

Automobiles & Auto Parts

Industry Report

Our team covers main key sectors in Vietnam


A selection of sectors we cover:

Financial Services

Investment target screening

Head Office10th Floor, Peakview Tower, 36 Hoang Cau, O Cho Dua, Dong Da, Hanoi, VietnamTel: (84-24) 3562 6962Email: [email protected]

Ho Chi Minh City Branch3rd Floor, Profomilk Plaza Building, 51-53 Vo Van Tan, Ward 6, District 3, Ho Chi Minh, VietnamTel: (84-28) 3933 3586Email: [email protected]

Vietnamese Corporate Earnings Quality amidst the Covid-19 ...

Documents

Transcript of Vietnamese Corporate Earnings Quality amidst the Covid-19 ...