Vietnam: A Tiger in the Making Yuanta Securities Vietnam Matthew Smith, CFA – Head of Research (84 828 582451) Huy Nguyen – Head of Sales (+84 908 647668) F e b r u a r y 2 0 1 9
Contents • 3) Team Intro • 4) Top-down outlook: Vietnam: A tiger in the making • 11) S/T strategy: Stay defensive in 1H19 • 15) STB VN: A Turnaround Story for the Long Haul • 23) MSN VN: Earnings to rebound in 2019 • 29) DGW VN: Surfing the Xiaomi Wave • 36) NLG VN: Resilient through the property market down-cycle • 44) Vietnam Brokers: We’ve only just begun Yuanta Securities Vietnam – Institutional Research 2
Yuanta Vietnam Team I n s t it ut ion al Re s earch Matthew Smith, CFA Tanh Tran Head of Research Analyst (Banks) Tel: +84 28 3622 6868 (ext. 3815) Tel: +84 28 3622 6868 (3874) matthew.smith@yuanta.com.vn tanh.tran@yuanta.com.vn Quang Vo Tam Nguyen Analyst (Consumer) Analyst (Property) Tel: +84 28 3622 6868 (ext. 3872) Tel: +84 28 3622 6868 (ext. 3874) quang.vo@yuanta.com.vn tam.nguyen@yuanta.com.vn I n s t it ut ion al S a le s Huy Nguyen Duyen Nguyen Head of Institutional sales Sales Trader Tel: +84 28 3622 6868 (3808) Tel: +84 28 3622 6868 (ext. 3890) Huy.nguyen@yuanta.com.vn duyen.nguyen@yuanta.com.vn Yuanta Securities Vietnam – Institutional Research
Vietnam is a tiger in the making Un d erly in g tren d s are comp ellin g : Lon g -term ou tlook is b rig ht 1 ) B oomin g F DI – V ietn am as th e n ext man u fac tu rin g exp ort p owerh ou se. 2 ) Demograp h ic d ivid en d to p ay off over th e n ext two d ecad es. 3 ) R ap id g rowth of th e mid d le c lass imp lies solid ou tlook for d omestic d eman d . 4 ) MS CI E mergin g Markets In d ex in clu sion ( b u t n ot th is year) 5 ) R isks – Growth con straints an d p olic y fric tion s. Yuanta Securities Vietnam – Institutional Research 4
Vietnam: A tiger in the making We b elieve th at th e cou ntr y h as th e p otential to b e an oth er ( th e last?) of A sia’s tiger econ omies. Steady GDP Growth (per capita) GDP Per Capita 8.0% 8,000 7,000 6.0% 6,000 4.0% 5,000 4,000 2.0% 3,000 2,000 0.0% 1,000 -2.0% - 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 -4.0% Thailand Malaysia Indonesia Philippines Vietnam China Thailand Indonesia Philippines Vietnam G D P p e r c a p i t a ( U S D ) i s b e l o w … B u t g r o w t h i s s t r o n g e r a n d i t s A S EA N p e e r g ro u p … s t e a d i e r t h a n i n t h e o t h e r t i g e r e c o n o m i e s i n t h e r e g i o n . Source: World Bank, Bloomberg, Yuanta Research Yuanta Securities Vietnam – Institutional Research 5
Vietnam: A tiger in the making S u rg in g Foreig n Direc t Investment ( F DI) is set to contin u e Surging Net FDI Inflows • Trade war beneficiary, for the most 16.0 12.0% part 14.0 10.0% • Attractive geographic location 12.0 8.0% 10.0 • Labor costs are cheap 8.0 6.0% • Trade deals with key buyer nations 6.0 4.0% 4.0 • Textiles largely done, moving into 2.0% 2.0 higher value added electronics - 0.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 manufacturing Net FDI (USD bn, LHS) % of GDP (RHS) Source: World Bank, Bloomberg, Yuanta Research Yuanta Securities Vietnam – Institutional Research 6
Vietnam: A tiger in the making Demog rap h ic d ivid en d to p ay off for th e n ext 2 0 years • Population is now 94 million, V i e t n a m P o p u l a t i o n P y r a m i d ( 2 0 1 7 ) growing at 1% per year • 93% literacy rate • Roughly 60% of Vietnamese are under 35 • Dependency ratio (i.e., elderly to working age) is c. 44% but set to start rising. • Children (0-4) bottomed out at 8% of the population Source: GSO, World Bank, Boston Consulting Group, Yuanta Securities Vietnam – Institutional Research 7 Yuanta Research
Vietnam: A tiger in the making Demog rap h ic d ivid en d to p ay off over th e n ext 2 0 years • Middle class is c. 15 million now, and P r o j e c t e d m i d d l e c l a s s p o p u l a t i o n growing at c. 10% annually. ( 1 0 0 0 p e r s o n s , L H S ) • Middle class as a percentage of total population is thus set to go parabolic. 80,000 70% 70,000 60% • Emerging wealth driven by plentiful job 60,000 50% opportunities and urbanization 50,000 40% 40,000 (improved education / smaller families). 30% 30,000 20% • Outlook for domestic demand is 20,000 10% 10,000 therefore very bright. - 0% 2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018A 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E • Sector beneficiaries: Consumer products, retail, financial ser vices, affordable property, health care, %ge of total population (RHS) Source: Yuanta Research, based on estimates from the education. GSO, World Bank, Boston Consulting Group, and Brookings 8 Yuanta Securities Vietnam – Institutional Research
Vietnam: A tiger in the making Next step: MSCI inclusion • Foreig n own ersh ip limitation s, an d in con sistent ap p lication of th e ru les, are th e main h u rd le. • Information d isc losu re ( in E n g lish ) is also a con c ern . • M S CI h as n oted some imp rovements in market ac c ess, b u t V ietn am remain s off th e watc h -list. • We d on ’ t exp ect an u p g rad e to watch -list statu s th is year, alth ou g h th e fin alized sec u rities law ( release: A p ril or M ay ?) cou ld su rp rise. • Regard less, sc h ed u le for E / M in d ex entr y wou ld req u ire two fu ll years ( Up grad e to watch list at Year -0, an n ou n cement of in d ex in c lu sion at Y+1 , ac tu al in c lu sion at Y+2 ) . Yuanta Securities Vietnam – Retail 9 Research
Risks to the positive story Will the cub grow up to be a paper tiger? • Demograp h ics d on ’ t ch an ge with market sentiment. Pop u lation tren d s are n ot a con c ern for n ow ( b u t will b e in 2 0 years – an d th is req u ires fin an c ial reform n ow ) . • Hu man resou rc e con straints cou ld h in d er efforts to move u p th e valu e ch ain in man u factu rin g an d ser vices. • “ Little Ch in a” statu s is n ot a on e - way street. V ietn am’s trad e su rp lu s with th e US was 5 t h largest in th e world in 2 0 1 8 • S tru c tu ral p olic y fric tion s cou ld d elay E merg in g M arkets statu s. Th e p ersisten c e of Foreig n O wn ersh ip Limitation s an d th eir in con sistent ap p lication mean s M S CI is n ot likely to move th is year. Yuanta Securities Vietnam – Institutional Research 10
Vietnam 1H19 Market Strategy Macro story looks good… F DI to re ma in so lid , su p p o rtin g e mp loy me nt, co n su mptio n , a n d th e V ND VND has been stable vs peers Inflation looks to be under control 7% 6% 4% 6% 2% 5% 0% 4% -2% -4% 3% -6% 2% -8% 1% -10% 0% -12% Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 VND CNY MYR THB SGD IDR PHP CPI Core CPI Source: Bloomberg Source: Bloomberg Yuanta Securities Vietnam – Institutional Research 11 STRATE TEGY GY
Vietnam 1H19 Market Strategy …But markets may continue to lag in the short term. • Ou r ca u tio u s view is la rg e ly d rive n by e n d o g eno us fa cto rs – mo stly th e exte rn a l liq u id ity e nviro n me nt, wh ich is a fu n ctio n o f g lo b a l ce ntra l b a n k p o licy. • S OE p riva tiza tio n , M S CI in clu sio n , a n d a re b o u n d o f fo re ig n in stitu tio n a l b u y in g d o n o t a p p e a r immin e nt. Market ADT leveling off Foreign Turnover (USDm)* 2-year CDS vs VN Index 90 1050 15.0 200 80 1000 150 10.0 100 70 950 50 60 900 5.0 0 50 850 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 -50 0.0 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 -100 VIETNM CDS USD SR 2Y D14 Corp (LHS) Daily turnover (VND tn) 3 Month ADT (VND tn) VNINDEX Index (RHS) Net bought/sold (RHS) Source: FiinPro, Bloomberg Source: Bloomberg Source: Bloomberg Yuanta Securities Vietnam – Institutional Research 12 STRATE TEGY GY
1H19 Strategy: Risks The downside risks are largely exogenous … 1) 1) Tighter er than ex expected global l liquidity ity. Mixed signals from the Powell Fed. 2) Significant VND devaluation , most likely driven by China. 3) Expansion of “trade war” nations to include Vietnam ? The shift in US trade policy is not just about Trump – and Vietnam could eventually be at risk of “little China” status. US trade deficit, Jan-Oct 2018 (USD bn) 400 344 350 300 250 200 150 100 67 56 56 33 50 22 19 18 16 15 13 13 11 3 -5 0 China Mexico Germany Japan Vietnam Malaysia India Canada Thailand South France Taiwan Indonesia Philippines UK -50 Korea Source: US Census Bureau Yuanta Securities Vietnam – Institutional Research 13 STRATE TEGY GY
Recommend
More recommend
