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Vietnam – Daily Market Recap Oct 28 – SCS

Daily Market Recap 28/10/2020    396


Dear Valued Clients,

We would like to send you our Daily Market Recap for today

Market Commentary: The VN-INDEX drop 2.7% following global market’s sell-off

The VN-INDEX fell 2.7%, the biggest drop since Jul 24 , as most large caps lost ground today. Global stock markets fell on Tuesday’s session in reaction to the return of COVID-19 pandemic with a record number of new cases in the U.S. and the upcoming election day next week. The VN-INDEX dropped at the opening bell amid the selling pressure spread across the market and extended the loss to 0.8% before the day break. The sell-off became stronger in the afternoon, pushing the index to close at the intraday low of 921.5pts. the All market pillars made steep falls, especially large caps from the Financial and Real Estate sectors, led by VIC (-5.2%), VHM (-2.6%), VCB (-2.1%), BID (-3.4%), CTG (-2.8%), TCB (-3.9%) and VPB (-4.7%), eroding 13.1pts of the index. At the end of the session, the VN-INDEX closed down 2.7%, the biggest fall since Jul 24 when it lost 3.2% at 829.2pts. In HOSE, 366 stocks closed in red while only 66 stocks increased today. The HNX-INDEX also lost 2.3% to land at 134pts.

All sectors lost ground today, led by Consumer Discretionary (-3.9%), Energy (-3.3%), and Real Estate (-3.3%). Top index movers included PDR (+2.8%), FLC (+6.7%), BHN (+1.0%), BCM (+0.4%), and SVC (+5.6%). Top index laggards consisted of VIC (-5.2%), VHM (-2.6%), VCB (-2.1%), BID (-3.4%), and VNM (-2.0%).

Foreigners net sold on HOSE to the amount of VND497.6bn, and also net sold on HNX to the amount of VND1.2bn.

Market News

Oil slumps with equities as concerns rise over inventories

Oil fell sharply as an industry report showed a rise in U.S. crude stockpiles and stock markets in Europe came under pressure. Crude futures in New York fell 3.9%, while those in London retreated beneath US$40/barrel, the lowest since Oct. 5. European and U.S. equity markets also declined, while the dollar was stronger, souring oil sentiment on Wednesday. That came after the American Petroleum Institute reported crude inventories expanded by 4.58m barrels last week, while gasoline stockpiles rose for a second straight week, according to people familiar with the data. Official government figures are due later on Wednesday. (Bloomberg)

Vietnam’s mobile ad market expected to hit US$211m in 2020

The mobile advertising market in Vietnam is expected to reach US$211m by the end of this year, according to the “Vietnam Mobile & Smartphone Application Report in the first half of 2020” released by Appota Group. Under the pandemic, the general advertising trend has become digital-focused as digital consumption skyrocketed. Average downloads per app in Vietnam reached 256,290, which was significantly higher than the global average of 154,794 downloads per app. In Vietnam, the cost-per-install (CPI) rate is relatively inexpensive and has shown a declining trend. Even with the effects of COVID-19, app usage and downloads have still been rising sharply.

The report also revealed that the number of visits to news sites increased dramatically in 1Q20, because Vietnamese people are regularly updated with news related to COVID-19 at the time of the pandemic. Specifically, general news sites traffic in 1Q20 increased to 44% from 28% in 4Q19, and financial enterprise news sites traffic also increased by 39% in the same period. Thanks to the increase in traffic, news sites have become frequently visited addresses and an effective advertising channel. (

Coverage Universe Update

Saigon Cargo Service Corp (SCS) – Initiation – ADD (+28.0%)

An opportunity in turbulent times

Vietnam’s air freight market to stay buoyant

We expect Vietnam’s total air cargo volume throughput to rise 10.5% p.a. in FY21F-30F, driven by sustainable import-export growth and the combined benefits of FTAs and the relocation of supply chains from China to Vietnam. TIA in Ho Chi Minh City is the fastest-growing hub in the country; its Terminal 3 expansion project should lend a further boost.

Equipped to be the country’s leading air cargo services provider

We believe SCS’s air cargo volume market share in TIA should grow to 55% over FY21-30F period, transforming it into Vietnam’s leading air cargo services provider, premised on its state-of-the-art terminal and it being the only provider capable of expanding capacity at TIA. We expect SCS’s performance to remain robust given its efficient cost control, strong balance sheet with zero debt and a preferential 10% tax rate until FY23F.

SCS’s net profit to dip 5.8% yoy in FY20F due to the pandemic

SCS’s business would start to recover in Dec 2020F, when we believe a vaccine could become available according to World Health Organization (WHO) and the pandemic could be brought under control. We expect revenue/NP to dip 6.3%/5.8% yoy in FY20F.

Capacity expansion to spearhead growth story beyond FY20F

While its sole rival Tan Son Nhat Cargo Services JSC (TCS, Unlisted) faces a capacity shortage, we believe SCS will be able to capitalise on TIA’s growth with 75% expansion of SCS’s current capacity by 2023F. We expect SCS’s international cargo volume to rise by an average of 10.6% p.a. in FY21-24F. We forecast 14.6% revenue CAGR and 11% net profit CAGR in FY21-24F.

Initiate coverage with Add and target price of VND144,500

SCS now trades at 11.9x FY21F P/E, far below its historical three-year average P/E of 14.1x. Our FY21-22F NP forecast is 14%/11% higher than consensus due to our higher expectations in the recovery of SCS’s international cargo volumes based on its technology competitive edge and its competitor’s capacity shortage in TIA.

Downside risks and re-rating catalysts

Downside risks include lower-than-expected cargo volume and price due to prolonged global pandemic which can dampen global trade. Re-rating catalysts include higher-than-expected cargo volume, announcements of capacity expansion and the M&A plan.

Read the full report: HERE

Notable Corporate Events

Minh Phu Seafood Corporation (MPC VN, HOSE) – Dividend payment: MPC has set 10 Nov to be the record date for paying the cash dividend of VND1,500/share. The payment will be made on 26 Nov. (

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