In this report, we look at Vietnam’s fixed broadband sector — particularly its growth opportunities and threats as well as its competitive landscape. This report features two of our covered stocks: FPT and CTR. We currently have OUTPERFORM recommendations for both stocks. Broadband household penetration to rise further thanks to at-home entertainment demand. Based on the Ministry of Information and Communication’s (MIC) data, we estimate Vietnam’s household penetration of fixed broadband
Improving economy is driving decline in absolute value of Cir01/2020(*) loans across all banks for which we have updated information in Q1 2021. We have contacted the banks under our coverage in the last few days to inquire on Cir01 loan movements. Given the proximity to Q1 2021 reporting, most banks were unable to provide a specific update on Cir01 loan levels but instead gave directional descriptions. All banks either reported drops in the absolute value of Cir01 loan levels in the early month
Continued OPEC production cuts, reduced US supply due to big freeze boosted oil prices. Brent crude averaged ~USD61/bbl in Q1 2021 — higher than our previous forecast of USD50/bbl for full-year 2021. Given a higher possibility of OPEC+ continuing restraints on production amid the ongoing demand recovery with rising vaccinations, we raise our 2021 average oil price by 20% to USD60/bbl. We also increase our 2022-2025F oil price assumption by ~10% to USD60/bbl due to a higher possibility of a tight
NPAT up 11.1% YoY in 9M 2020; private banks outperformed SOE banks on bottom-line and share price performance. Vietnamese listed banks’ share prices in aggregate have outperformed the benchmark VN-INDEX YTD by 16 ppts as 2020 is shaping up to be the first year since 2017 in which private banks will outperform SOE banks (as predicted in our mid-year 2020 strategy report). We believe this outperformance is driven by superior bottom-line performance of private banks vis-à-vis SOE banks for 9M 2020.
Industrial parks (IPs) are a direct beneficiary of a structural shift in manufacturing to Vietnam. Vietnam has been in the spotlight as a new manufacturing destination for multinationals seeking to partially or fully move production out of China. Initially cost-driven, this structural shift has been accelerated by China-US trade tensions over recent years. Vietnam’s competitive advantages in attracting manufacturers include: (1) relatively low labor and land costs; (2) support from local
Since the 1980s, India's IT outsourcing (ITO) industry has been a well-known miracle growth story among developing countries. Following the opening of its economy, Vietnam chartered its own ITO story in the late 1990s. After two decades, ITO is now one of the fastest-growing sectors in Vietnam. In this thought piece, we look at the industry’s outlook, challenges and competitive landscape. In terms of listed investment opportunities, FPT (BUY, TP VND58,400/share) — via its wholly-owned subsidiary
We raise our oil price base case forecast for 2020F but lower our forecasts for 2021-2025F due to a weaker global demand outlook. We raise our 2020F average Brent crude oil price forecast by ~23% from USD35/bbl to USD43/bbl — in line with the average YTD price. However, we cut our average oil price assumptions for 2021F by ~17% from USD60/bbl to USD50/bbl and for 2022-2025F by ~8% from USD60/bbl to USD55/bbl due to a softer crude demand outlook as a result of the prolonged impact of COVID-19.
Oversupply in the North but not in the South of Vietnam. Most of Vietnam’s limestone mines are located in northern and northern-central Vietnam, thus many cement production plants are concentrated in these areas. To ease this oversupply, northern cement producers either export or transport surplus cement to the southern market to meet the shortage there. In some instances when export demand is weak, the pressure from northern cement volume being transported to the southern market can temporarily
State-owned (SOE) banks currently trade at premium P/B valuations to private banks in Vietnam based on a conventional P/B vs ROE scan. In our fundamental research, we value banks using both residual income and target P/B methodologies. Among the 11 banks under our coverage, the three SOE banks are the only banks for which our residual income valuations are lower than our target P/B valuations. In this report, we apply statistical models to recent historical data to investigate the relationship
COVID-19 hurt both power demand and CGM prices in 7M 2020. Due to suspended manufacturing activities caused by Vietnam’s social distancing efforts, Vietnam’s electricity consumption contracted YoY in April and May 2020. Consequently, total electricity consumption growth decelerated to 2% YoY in 7M 2020 from 7% YoY in Q1 2020 and 9% in 2019. Lower power demand also resulted in the average competitive generation market (CGM) price declining to VND1,046/kWh in 7M 2020 vs VND1,185/kWh in 7M 2019.