Vietnam Daily Market Recap Dec 10 – POW
Daily Market Recap 10/12/2020 287
Dear Valued Clients,
We would like to send you our Daily Market Recap for today
Market Commentary: The VN-INDEX lost 0.8% to close at 1,030.9pts
The VN-INDEX lost 0.8% to land at 1,030.9pts due to strong profit taking activities in late trading. After the opening bell, the VN-INDEX followed yesterday’s positive sentiment to quickly rise to its intraday high of 1,044.1pts (+0.4%), backed by the support from Consumer Staples and Real Estate large caps, including VNM (+2.1%), BCM (+2.6%), NVL (+1.8%) and KDH (+1.4%). The index stayed in the green throughout the morning session, yet closed at today’s intraday low of 1,030.9pts (-0.8%) due to profit taking activities. Notably, VHM and VIC were today’s biggest laggards, dropping 1.6% and 1.0%, respectively, together eroded 2.2pts of the index. Other large caps also joined the rally, including GAS (-2.0%), HPG (-2.3%) and GVR (-2.4%). At the end of the session, the VN-INDEX edged down 0.8% to 1,030.9pts, while the HNX-INDEX edged up 0.4% to 159.3pts.
Only Consumer Staples (+0.2%) rose, while Materials (-1.8%), Utilities (-1.6%), and Consumer Discretionary (-1.6%) lost ground today. Top index movers included VNM (+2.1%), VCB (+0.7%), BCM (+2.6%), NVL (+1.8%), and HNG (+4.4%). Top index laggards consisted of VHM (-1.7%), VIC (-1.0%), GAS (-2.0%), HPG (-2.3%), and GVR (-2.4%). Top three major put-through transactions were HPG with 12.4m shares (VND448.1bn), DIG with 10m shares (VND276bn), and HNG with 9m shares (VND120.8bn).
Foreigners net bought on HOSE to the amount of VND97.7bn, while net sold on HNX to the amount of VND1.5bn. They mainly bought HPG (VND451.1bn), VNM (VND156.4bn), and FUEVFVND (VND119.1bn); and mainly sold GMD (VND204.7bn), HPG (VND102.1bn), and FPT (VND93.7bn).
Oil shrugs off U.S. stockpile build to rise on vaccine optimism
Oil rose toward US$46/barrel after shrugging off a massive increase in U.S. crude stockpiles on optimism that vaccine rollouts will lead to a swift improvement in global energy demand next year. The Energy Information Administration reported a 15.2m barrel jump in American oil inventories, the second-biggest on record. While prices dropped on the data, they retraced most of their losses with some support from a falling dollar to close down just 0.2% on Wednesday. A militant attack on the Khabbaz field in Iraq had aided crude earlier in the session. (Bloomberg)
Vietnam wants to cut logistics cost to improve goods competitiveness
The government wants its agencies and businesses to reduce logistics cost to enhance the competitiveness of the country’s goods. According to experts, the cost for logistics remains high, leading to higher product costs and lower competitive advantages for Vietnamese goods and its economy. The goal is to double logistics services’ share of GDP to 8-10% and total logistics costs to 16-20% of GDP. To achieve the targets, unnecessary procedures need to be immediately eliminated. It is necessary to promote the use of digital transformation in logistics via integrating blockchain and artificial intelligence technologies to existing digital platforms for transport and port and warehouse management. The cost of logistics services in Vietnam in early 2019 accounted for 25% of the country’s GDP, while the rate was just 9.5% in the U.S, 11% in Japan, and 16% in the RoK , according to the Vietnam Chamber of Commerce and Industry. There are around 30,000 logistics companies in the country, including 4,000 international ones. The industry has been growing at 12-14% annually and is now worth US$40-42bn. (Vietnamnet.vn)
Coverage Universe Update
PetroVietnam Power Corporation (POW) – Update – ADD (20.4%)
On track for recovery
10M20 revenue within expectations
PVPower (POW) reported a 10M20 sales volume of 16.1bn kWh, down 13.5% yoy mainly due to weak mobilisation at Nhon Trach 1 plant, the 36-day medium maintenance at Nhon Trach 2 plant and slightly lower hydropower volumes due to water shortage at the beginning of 2020. Net revenue declined 15.8% yoy as selling prices on the competitive generation market (CGM) continued its downward trend, -76% mom in Oct and -24.2% yoy in 10M due to a sharp recovery in the low-priced hydropower source. 10M net revenue completed 80.3% of our FY20F forecast, which we deem in-line, as we expect Nhon Trach 2 and POW’s hydropower plants to be highly utilised in Nov and Dec.
FY21F outlook: earnings to recover on volume and ASP recovery
We estimate the company’s sales volumes in 2021F to increase 10.8% yoy, thanks to a rebound in electricity demand post Covid-19. There could be a sharp increase in hydropower volumes (+27.4% yoy), while thermal power mobilisation from EVN should decline as the low-priced hydropower source is prioritised. ASP is forecast to improve 4.7% yoy on the back of higher gas and coal input prices (which should be passed through to selling prices of contracted volumes) and a soft rebound in CGM prices (+3-5% yoy). We expect net profit to grow 16.4% yoy in FY21F.
No official news on divestment progress at PVMachino
POW’s share price has risen c.12% in the past 2 weeks on market news of a possible divestment of its unit PVMachino (PVM VN, Not rated) after reports that another shareholder of PVM had successfully divested its 17.1% stake in Nov. POW currently holds 19.9m shares in PVM worth VND189bn. If POW divests its entire stake in PVM at the current price, the company could book a financial gain of about VND187bn, in our estimates. However, we make no changes to our numbers as there has been no official announcement from POW on the progress of the divestment so far.
Reiterate Add at a higher TP of VND13,300
Our TP is based on an equal weighting of DCF and target FY21-22F EV/EBITDA of 6.7x. We raise our target EV/EBITDA from 5.5x to 6.7x to be in line with domestic peer average. A re-rating catalyst is recovery in sales volume and ASP in FY21F. Downside risks: complications involving the PPA renegotiation and unexpected provisions.
Read the full report: HERE
Notable Corporate Events
Viet Capital Securities JSC (VCI VN, HOSE) – Dividend payment: VCI has set 23 Dec to be the record date for paying the 2020 cash dividend of VND1,000/share, a company statement said. The payment will be made on 31 Dec. (Ndh.vn)
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