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Vietnam Today 23 March 2012

Daily Market Commentary

Got Milk? Markets gain as investors rush for Vinamilk

Domestic shares jumped on high market excitement – Despite global markets slump on fears of China and Eurozone’s slowdown, domestic shares ended the week in positive territory. The indices saw strong jump in the afternoon session following supports from blue-chips, in which VNM contributed close to 25% of today’s market gains as it announced it would raise its cash dividend payment. The stock quickly hit its ceiling after the news came out, while most of other stocks moved in sync to boost the index.

VNM’s AGM spurs confidence – The company reported VND22,070bn in revenue (+37% Y-o-Y) and VND4,218bn in net profit (+17% Y-o-Y). If we exclude the extraordinary income from the sales of the instant coffee factory in 2010, net profit grew 28% in 2011. At FY2011 EPS of VND7,717, VNM is trading at a trailing PER of 12.4x. VNM’s management is guiding for a 20% top-line growth and 11.2% bottom-line growth in 2012. That translates to 2012 EPS of VND8,436 and PER FY2012F of 11.4x. We think VNM has set a prudent target for 2012, as in the first two months of the year, which is typically low season; the company has been able to record 30% growth in revenue and 20% growth in net profit.

At the AGM, the board of directors approved to increase the 2011 cash dividend from 30% to 40%. The ex-right date for the second dividend payment of VND2,000/share is April 10, 2012. Also, Madame Mai Kieu Lien is re-elected as the Chairwoman of VNM in the next five years, which put to rest concerns that she was going to retire.

VNM continues to lead the condensed milk and yogurt markets with more than 80% market shares. Liquid milk shows strong growth as market share has increased to 47% from 43% in 2010, while second player Dutch Lady has c.30% of the market. Powdered milk has also gained an impressive 30% market share from 23% in 2010 and become a more comparable substitute to other foreign brands like Abbott and Mead Johnson. We think the growth story of VNM would continue especially in the liquid and powdered milk segments. The Vietnam factory is expected to come online in FY13 and double the current liquid milk production, while the Dielac II factory will start operation in 1Q2013 and increase powdered milk capacity by four times. We are positive that VNM can continue to gain market share across its product portfolios on back of its established brand name and extensive distribution network. In 2011, VNM expanded its distribution reach to 178,000 PoS, one of the largest distributions in the nation.

Marc Djandji CFA Head of Research [email protected] +84 8 3914 3588, ext 116

VN30 Activity

VN30 Index 512.8 +1.4%

Volume (mn) 26.1 +5.7%

Value (VND bn) 538.4 +17.0%

HSX Activity

VN Index 454.1 +1.9%

Volume (mn) 88.1 +8.0%

Value (VND bn) 1212 +4.8%

HNX Activity

HN Index 77,6 +1,9%

Volume (mn) 117,6 +12,2%

Value (VND bn) 1182,3 +16,3%

Foreign Activity

HSX net buy – sell VND bn

+93.4

HNX net buy – sell VND bn -5.4 Prop Desk Activity

HSX net buy – sell VND bn +0.2

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The SBV announced five measures to manage monetary policies – The SBV has revealed five measures to manage monetary policies and banking operation. According to Governor Nguyen Van Binh, what the central bank and domestic credit institutions had done in the first 3 months was fully consistent with the orientation the SBV set up. The central bank aims to manage monetary policy tools, ensure the liquidity of credit institutions, control domestic money supply, reduce interest rates to suitable levels and govern the exchange rates in line with market signals.

The SBV requests 5 state-run banks to cut lending rates – As a part of its new measures, the SBV is asking five state-run commercial banks (Agribank, VietinBank, Vietcombank, BIDV, and MHB) to lower lending rates, reduce operational costs and improve their business performance. They must also provide measures to reduce costs to the central bank and the Ministry of Finance prior to April 10, 2012 and will have to report to both the SBV and the MOF at the yearend as one criterion to assess the accomplishment level of their management. This greater control and attention from the SBV should help maintain liquidity and confidence in the banking system.

Ups and down

The week ended with a rebound in market sentiment and strong jump in the indices in the afternoon session. The VNIndex shot up above the 450 level with a 8.43-point gain, closing at 454.1, up 1.89% with advancers outstripping laggards threefold, 194:59, of which half went limit-up. BVH, VIC, VNM together contributed 5.33 points to the index. VNM quickly hit its ceiling price in the afternoon session after announcing the plan to raise 2011 cash dividend to 40%, with the proposed record day on April 10, in its AGM today. The VN30 enjoyed 7.3 points to 512.84 (1.44%) with about two-third staying in the green. High market excitement helped the HNX notch another win of 1.45 points to 77.56 (+1.91%) with advancers outnumbering laggards 5-to-1, with a half hitting limit-up.

Having maintained steadily high above VND900bn for a recent month, liquidity on the HSX rose 8% in volume and 4.8% in value to 88.1mn shares traded worth VND1,212bn, mostly from matching orders. The index’s rally in the afternoon pushed its liquidity contribution to VND450bn, representing 37% of the total value. Turnover on the HNX increased 12% in volume and 16% in value to VND1182bn traded on volume of 117.5mn shares.

MBB and SAM were the top movers in terms of volume on the HSX with 6.8mn shares and 4mn shares traded respectively while MBB and SSI were leaders in terms of value with VND110bn and VND53.3bn respectively. On the HNX, HBB and PVX impressed the market with 19.5mn shares and 11.6mn shares exchanged respectively worth VND147.5bn and VND138.8bn.

Foreigners extend their net buying streak on the HSX throughout this week with VND93.4bn while turning to offloading for the first time in the week with VND5.4bn. On the HSX, they focused most of their investment in banking stocks today including MBB (VND34bn), STB (VND15.7bn), CTG (VND10.6bn) and VCB (VND9bn) while selling put VND6.3bn of VIC. On the HNX, they divested mainly HBB (VND11.5bn).

Notable Corporate Actions (events-26 March 2012): TAC: ex-right date of dividend payment of 2011 in cash, ratio 17%.

SAP: ex-right date of second dividend advance of 2011 in cash, ratio 10% and 8%.

CSM: ex-right date of new share issues (4.225:1 at price 10,000VND/share) for existing shareholders.

News Highlights:




Vietnam Vinamilk Posts 22% Profit Growth in Jan-Feb Vietnam Dairy Products Corporation (VNM) or Vinamilk, the leading dairy product maker in Vietnam, said its pretax profit rose 22% on year in the first two month of this year. Its revenues increased 30% on year during Jan-Feb, local financial website Cafef.vn reported, citing VNM’s Chairwoman Mai Kieu Lien, giving no specific figures. VNM targets a net profit of VND4.69 trillion ($223.33 million) on revenues of VND26.48 trillion this year, rising 11.1% and 20% on year, respectively. It targets an annual 10% net profit growth and 20% revenues growth in the period of 2012-2016. The figures are expected to reach VND6.87 trillion and VND54.9 trillion, respectively, in 2016.

Vietnam REE Targets Net Profit of VND592B in 2012 Refrigeration Electrical Engineering Corporation (REE), targets a net profit of VND592 billion ($28.19 million) this year, rising 15.3% from a year earlier. Its revenues are set to increase 26.1% on year to VND2.28 trillion in 2012. REE plans to issue VND557.85 billion ($26.56 million) worth of bonds to strategic partners in the second quarter, aiming to raise its registered capital to VND2.7 trillion from current VND2.45 trillion. At end-2011, its total assets were VND5.3 trillion, including equity of VND3.87 trillion.

Vietnam Builder PVX to Issue 137.49M Shares to Strategic Partners PetroVietnam Construction Joint Stock Corporation (PVX), an affiliate of Vietnam Oil and Gas Group, has approved a plan to issue 137.49 million new shares to four strategic partners at VND10,000 each. Of the amount, PVX will offer 110 million shares to Vietnam National Oil and Gas Group or PetroVietnam, 15 million shares to Dong Thanh Import Export Construction Co., 8.4 million shares to PVV Investment and Material JSC, and 4.09 million shares to Ocean Commercial Bank (OceanBank). PVX made a consolidated net profit of VND302.92 billion on revenues of VND9.48 trillion last year, down 48.4% and up 30% on year, respectively.

Vinaconex Offshoot VCS to Issue 2.64M New Shares Vinaconex Advance Compound Stone JSC (VCS) plans to offer 2.64 million new shares to its staff. VCS also expects to sell between 5% and 10% stake to strategic partners, with total minimum value of between VND26.4 billion and VND53 billion. The shares will be offered to the staff and strategic partners at not below VND10,000 each. VCS targets a pretax profit of VND150 billion ($7.14 million) on revenues of VND1.15 trillion this year, rising 14.1% and 19.5% on year, respectively. At end-2011, its total assets were VND2.7 trillion, including equity of VND1.04 trillion.

Vietnam Trading Firm SDP Targets Profit of VND18.94B in 2012 Song Da Trading & Transport Joint Stock Company (SDP) targets a consolidated pretax profit of VND18.94 billion ($902,000), and a dividend payout equivalent to VND1,000/share this year. Revenues are expected to reach VND785.21 billion in 2012, SDP said on its website. In 2011, the company made a consolidated net profit of VND5.7 billion on revenues of VND874.69 billion, down 51.1% and 8.3% on year, respectively.

Vietnam Becamex IJC Mobilizes VND2.2T via Share Sales Becamex Infrastructure Development JSC (IJC) mobilized VND2.2 trillion ($104.76 million) from selling 219.36 million new shares to existing shareholders. The proceeds were used to invest in IJC urban project in the southern province of Binh Duong, the company said in a statement sent to the bourse. IJC made a net profit of VND314 billion ($14.95 million) on revenues of VND1.32 trillion last year, up 48% and 3.8 folds on year, respectively. At end-2011, its total assets were VND4.38 trillion, including equity of VND3.14 trillion.




Vietnam Material Supplier PHT Targets 2012 Profit at VND35B Phuc Tien Trade Manufacture JSC (PHT) targets a pretax profit of VND35 billion ($1.67 million) this year. Its revenues are set to reach VND1.8 trillion in 2012. PHT made a consolidated net profit of VND28.44 billion on revenues of VND1.45 trillion last year, down 32.4% and 6.5% on year, respectively. Its total assets fell 10.8% from end-2010 to VND577.33 billion, including equity of VND306.59 billion at end-2011.

Vietnam Trading Firm TMC Nets Profit of VND260M in Jan-Feb Thu Duc Trading and Import-Export JSC (TMC) posted a net profit of VND260 million ($12,400) in the first two months of this year. Its revenues were VND326 billion, meeting 15.5% of the whole-year plan, local financial website Cafef.vn reported on March 23. In February, the company suffered a loss of VND330 million while revenues increased 11% on month. TMC made an audited net profit of VND19.98 billion on revenues of VND2.07 trillion last year, down 4.7% and up 25.5% on year, respectively.

Vietnam Trading Firm TNA Targets Profit of VND50B in 2012 Thien Nam Trading Import Export JSC (TNA) targets a pretax profit of VND50 billion ($2.38 million) this year. Revenues are set to reach VND1 trillion in 2012, TNA said in a statement posted on its website. The trading company plans to pay a dividend equivalent to between VND2,000/share and VND2,500/share for 2012. In 2011, TNA earned an audited net profit of VND40.13 billion on revenues of VND1.06 trillion, falling 42.2% and rising 24% on year, respectively.

Vietnam Tobacco Firm NST Targets 12.8% Profit Growth in 2012 Ngan Son Joint Stock Company (NST), a subsidiary of Vietnam National Tobacco Corporation, targets a net profit of VND28 billion ($1.33 million) this year, rising 12.8% from a year earlier. The company expects to have revenues of VND690 billion, an on-year growth of 10.9%, NST said in a statement posted on its website. NST plans a dividend payout equivalent to VND1,800/share for 2012. The tobacco manufacturer made an audited net profit of VND18.58 billion on revenues of VND622.31 billion last year, up 20% and 18.3% on year, respectively.

Vietnam Container Firm HDO Targets 2012 Profit of VND16B Hung Dao Container JSC (HDO) targets a net profit of VND16 billion ($762,000) this year. Revenues are set to reach VND215 billion in 2012, HDO said in a statement sent to the bourse, without giving comparative figures. HDO also plans to pay a dividend equal to VND1,500/share for 2012.

Vietnam Insurer PGI to Pay Dividend of VND1,300/share Apr 27 Petrolimex Insurance Joint Stock Co. (PGI) will pay a cash dividend of VND1,300/share for 2011 on record as of April 05. The company will make the payment on April 27, said Vietnam Securities Depository. PGI made an audited net profit of VND103.54 billion ($4.93 million) on revenues of VND1.49 trillion last year, soaring 63.9% and 18.3% on year, respectively.

Vietnam Realty Developer NBB to Pay Dividend of VND1,600/share Apr 26 NBB Investment Corp. (NBB) will pay a cash dividend of VND1,600/share for 2011 on record as of April 03. The company will make the payment on April 26, NBB said on its website. NBB made a consolidated net profit of VND69.6 billion ($3.31 million) on revenues of VND412.78 billion last year, falling 40% and 14.8% on year, respectively.




Vietnam Reinsurer VNR to Pay Dividend of VND500/share May 23 Vietnam National Reinsurance or VINARE (VNR) will make a second cash dividend equivalent to VND500/share for 2011 on record as of April 04. The reinsurer will make the payment on May 23. VNR made a consolidated net profit of VND294.5 billion ($14.02 million) on revenues of VND657.63 billion last year, up 26.2% and 18.3% on year, respectively.

Vietnam Insurer BIC to Pay Dividend of VND1,000/share Apr 26 BIDV Insurance JS Company (BIC) will pay a cash dividend of VND1,000/share on record as of April 05. The company will make the payment on April 26, said Vietnam Securities Depository. The insurer targets a pretax profit of VND106 billion and total premiums of VND850 billion this year, rising 5.5% and 23.3% on year, respectively. The insurer netted a profit of VND78.99 billion ($3.76 million) on revenues of VND461.78 billion last year.




MARKET SUMMARY HSX Change % Change HNX Change % Change

VN Index 454.1 +8.43 +1.9% HNX Index 77.6 +1.45 +1.9%

Volume (mn) 88.1 +6.5 +8.0% Volume (mn) 117.6 +12.8 +12.2%

Value (VND bn) 1212 +55.8 +4.8% Value (VND bn) 1182.3 +165.3 +16.3%

Market breadth Gainers Laggards Unchanged Market breadth Gainers Laggards Unchanged

Total 194 59 57 Total 258 48 90

Limit up / down 95 10 Limit up / down 124 15

HSX – 10-Day Index Price (LHS) and Volume (RHS, mn shares) HNX – 10-Day Index Price (LHS) and Volume (RHS, mn shares)

HSX – Order-matching volume HNX – Order-matching volume

Total volume mn shares Unmatched mn shares Total volume mn shares Unmatched mn shares

Bid volume 185.1 Bid volume 99.8 Bid volume 175.0 Bid volume 61.0

Ask volume 138.8 Ask volume 53.4 Ask volume 139.5 Ask volume 25.5

Bid – Ask 46.4 Bid – Ask 46.4 Bid – Ask 35.5 Bid – Ask 35.5 HSX – Top Movers HNX – Top Movers

Ticker Volume

Ticker Traded value

(VND bn)

Ticker Volume

Ticker Traded value

(VND bn)

MBB 6,886,300 MBB 110.1 HBB 19,491,200 HBB 148.5

SAM 4,034,130 SSI 53.3 PVX 11,650,700 PVX 138.8

SSI 2,609,850 EIB 38.7 KLS 7,151,700 KLS 94.0

NVT 2,596,050 HAG 33.9 VND 6,964,400 VND 85.6

IJC 2,590,130 CTG 33.2 SHB 3,705,300 PVS 44.0 HSX – Top Foreign Volume HNX – Top Foreign Volume

Ticker Net Buy Ticker Net Sell Ticker Net Buy Ticker Net Sell

MBB 2,134,630 IJC 491,560 VCG 179,600 HBB 1,504,800

STB 669,100 KMR 158,000 PVS 172,100 THV 500,000

ITA 475,150 ABT 126,540 PSG 100,000 TCS 85,300

CTG 408,710 LCG 73,950 DBC 80,000 PVX 47,100

VSH 325,110 PHR 69,080 CVN 50,000 KHB 40,000

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MARKET SUMMARY HSX – Foreign Activity HNX – Foreign Activity

Volume % of HSX Value (bn) % of HSX Volume % of HNX Value (bn) % of HNX

Bid 9,113,970 10.3% 184.3 15.2% Bid 1,175,100 1.0% 16.2 1.4%

Ask 3,878,940 4.4% 90.9 7.5% Ask 2,640,900 2.3% 21.6 1.8%

Bid – Ask 5,235,030 5.9% 93.4 7.7% Bid – Ask -1,465,800 -1.3% -5.4 -0.4% HSX – Foreign Activity in Last 10 Days (VND bn) HNX – Foreign Activity in Last 10 Days (VND bn)

Vietnam Bond Market Activity Last 10 days (VND bn) VN Government Bond Yield %

43.0

-23.9

172.6

461.5

-48.3

93.2 97.4 75.4 39.193.4

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-16.3

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3.3 3.8 14.1 6.8

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13.0%

13.5%

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Contacts Head office 67 Ham Nghi, District 1, HCMC +84 8 3914 3588 Transaction office 136 Ham Nghi, District 1, HCMC +84 8 3914 3588

Hanoi branch 109 Tran Hung Dao St, Hoan Kiem District, Hanoi +84 4 6262 6999 Transaction office 236 - 238 Nguyen Cong Tru, District 1, HCMC +84 8 3914 3588

Research Head of Research Marc Djandji, M.Sc., CFA, ext 116 [email protected] Senior Manager, Mr. Tu Vu, ext 105 Senior Economist, Ms. Hoai Doan, ext 139 Senior Analyst, Ms. Hoa Dinh, ext 140 Senior Analyst, Ms. Phuong Ton, ext 146 Senior Analyst, Ms. Giang Hoang, ext 142

Research Team +84 8 3914 3588 [email protected] Analyst, Ms. Ly Vu, ext 147 Analyst, Mr. Viet Vu, ext 143 Analyst, Mr. Phong Nguyen, ext 120 Analyst, Ms. Duong Pham, ext 130 Analyst, Ms. Chi Luong, ext 145

Institutional Sales & Brokerage & Foreign Individuals Head of Institutional Sales Michel Tosto, M.Sc. +84 8 3914 3588, ext 102 [email protected]

Vietnamese Sales Nguyen Quoc Dung +84 8 3914 3588, ext 136 [email protected]

Japanese Sales Tran Minh Hue +84 8 3914 3588, ext 122 [email protected]

Retail & Corporate Sales & Brokerage Ho Chi Minh City Quynh Chau +84 8 3914 3588, ext 222 [email protected]

Hanoi Quang Nguyen +84 4 6262 6999, ext 312 [email protected]




Disclaimer Copyright 2011 Viet Capital Securities Company. All rights reserved. This report has been prepared on the basis of information believed to be reliable at the time of publication. VCSC makes no representation or warranty regarding the completeness and accuracy of such information. Opinions, estimates and projection expressed in this report represent the current views of the author at the date of publication only. They do not necessarily reflect the opinions of VCSC and are subject to change without notice. This report is provided, for information purposes only, to institutional investor and retail clients of VCSC, and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction. Investors must make their investment decisions based upon independent advice subject to their particular financial situation and investment objectives. This report may not be copied, reproduced, published or redistributed by any person for any purpose without the written permission of an authorized representative of VCSC. Please cite sources when quoting.

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