vietnam’s consumer sector sector_vad... · rising incomes and consumer confidence buoy...
TRANSCRIPT
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Vietnam’s Consumer Sector Capitalizing on Vietnam’s middle-affluent class
SEPTEMBER 2019 Viet Capital Research
Content
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● Upbeat sector outlook ○ Accelerating household consumption
○ Strong consumer optimism
○ Fast-growing middle-affluent class
● Key secular, investable consumer trends ○ Modern trade, e-commerce taking off
○ Vibrant indulgent consumption
○ Consumer up-trade
● Stock recommendations o Top consumer picks: MWG, PNJ, VEA, SAB, MSN
o Other BUYs: FPT, PTB, VHC
o Other notable stocks: VTP, VNM, QNS, FRT
Content
3
Upbeat sector outlook
• Accelerating household consumption
• High consumer confidence
• Rapidly expanding middle-affluent class
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GDP/cap (PPP,USD) - LHS
GDP/cap (current USD) - LHS
Household consumption (current USD, bn) - RHS
Vietnam is at an inflection point of accelerating household consumption
4
Source: World Bank, Statista, VCSC
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5,000
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Thailand 2001
GDP/cap (current USD): USD1,900
GDP/cap (PPP, USD): USD7,600
Median age: 30.5
China 2007
GDP/cap (current USD): USD2,700
GDP/cap (PPP, USD): USD6,900
Median age: 33.0
Vietnam 2018
GDP/cap (current USD): USD2,500
GDP/cap (PPP, USD): USD7,000
Median age: 31.0
Consumer optimism is spurring spending
5
Source: General Statistics Office of Vietnam, Nielsen
Vietnam’s retail sales growth and consumer confidence
80
90
100
110
120
130
140
0%
4%
8%
12%
16%
Ju
l-1
3
Ja
n-1
4
Ju
l-1
4
Ja
n-1
5
Ju
l-1
5
Ja
n-1
6
Ju
l-1
6
Ja
n-1
7
Ju
l-1
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n-1
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Ju
l-1
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Ja
n-1
9
Ju
l-1
9
Price growth
Real growth
Nielsen's Consumer confidence index
7M 2019 Real 8.7%
7M 2019 Nominal 11.6%
Vietnam boasts one of the fastest-growing middle-affluent classes in the region
6
Source: Boston Consulting Group
25%
34%
44%
60%
78%
Vietnam The Philippines Indonesia Thailand Malaysia
5.5% 5.5%5.2%
2.2%
2.9%
Vietnam ThePhilippines
Indonesia Thailand Malaysia
Middle-Affluent Consumers (MAC) as % of population, 20172017-2030 CAGR forecast for MACs
239
17
10
29
37
1931
517
2017 2030
Affluent
Established middle class
Emerging middle class
Aspirant
Poor
+11%
+4%
+2%
-4%
-7%
CAGR ✓ Definition of MACs for Vietnam: monthly household
income of at least USD660, encompassing Affluent and
Established Middle Class.
✓ MACs to account for 45% of population in 2030 vs 25%
in 2017.
✓ Affluent consumers as % of population to widen from 5%
in 2017 to 16% in 2030.
Vietnam’s consumer class breakdown (mn people)
Booming MACs propel premiumization of products/services, indulgent consumption
7Source: Boston Consulting Group
✓ Embracing premiumization: more expensive products
in same categories, more indulgent consumption
✓ Searching for quality and value: luxury brands need
worthy quality; consumers searching for proof of value
(e.g. craftsmanship, advanced tech, special/quality
ingredients).
✓ Seeking exclusivity: products as a means to
differentiate oneself.
Six common behaviors of the Mass Affluent
✓ Relishing immersive experiences: in-store
experience, omnichannel, special in-store events.
✓ Using digital media: pre-purchase research, online
shopping, commerce on social media.
✓ Travel frequently: strong propensity to spend
while traveling.
Premiumization follows distinct patterns for various products
Stable with income Maturing with income Continuous growth Inflection points
• Toothpaste
• Instant noodles
• Fresh food
• Refrigerators, TVs
• Smartphones
• Quick-service restaurants
• Cosmetics and skin care
• Beer
• Baby gear
• Cars
• Travel and vacation
• Spirits
Poor Aspirant Emerging middle class Middle class Affluent
Key consumer trend
8
Modern trade, e-commerce taking off Beneficiaries: branded modern retailers, e-commerce players
Stocks: MWG, VTP
Modern retail is thriving as consumers seek convenience & better shopping quality
9
Source: Kantar Worldpanel (Q1 2019), VCSC
Currently in Vietnam:
9,000 wet markets vs <500 supermarkets
1.5 million mom-and-pop shops vs ~4,000 mini-stores
Modern retail is almost non-existent in rural areas
FMCG consumption by retail channel (Q1 2019)
Medium-sized street shops
24%
Small street shops40%
Wet market12%
Specialty stores5%
Hyper/Supermarkets9%
Minimarts/CVS3%
Online1%
Others6%
10% in 2017
The shift to modern retail is only beginning in Vietnam
10
China Taiwan
Korea
India
Indonesia
Malaysia
ThailandPhilippines
Vietnam
0%
20%
40%
60%
80%
100%
- 5,000 10,000 15,000 20,000 25,000 30,000 35,000
2017 GDP per capita (USD)
Modern trade penetration in FMCG across Asian countries as of Q2 2018
Source: Kantar Worldpanel, World Bank, VCSC
Busier lifestyles, shrinking family size point to future prosperity of mini format
11
Source: Nielsen, VCSC
I’m on the move
Smaller household
size
More white-collar labor force
Large school-aged
population
Modern retails &
food chains
Fresh & just-in-time
food
Ease of access, nearby location
All-in-one shopping
Healthy shopping/
eating
Easy browsing,
quick billing
Long opening hours
Small formats are spearheading the emergence of modern trade
12
Average monthly shopping frequency of Vietnamese consumers across channels
Source: Nielsen
FMCG YoY growth by retail channel in top four urban cities in Vietnam
Source: Kantar Worldpanel (Q1 2019)
8%
-1%
7%
7%
14%
32%
Medium-sized street shops
Small street shops
Wet markets
Specialty stores
Hyper/Supermarkets
Minimarts/CVS
25.2
8.8
1.20.0
3.3
18.9
9.5
4.52.2 2.5
18.7
7.04.2 3.7
2.3
Wet market Traditional grocerystores
Convenience stores Minimarts Supermarkets
2010 2018 Q1 2019
Minimart is outgrowing convenience store
13
Source: VCSC compilations
Store count of major CVS chains in Vietnam
168
108
59
0
300
160
118
24
337
147
118
32
Circle K Family Mart Aeon Ministop 7-Eleven
Sep-16 Dec-18 Jun-19
Store count of major minimart chains in Vietnam
1,700
408
233 215
1,800
600
353
226
Vinmart+ Bach Hoa Xanh Coop Foods Satra Foods
Dec-18 Jun-19
E-commerce expected to grow the fastest in Vietnam among top ASEAN countries
14
SEA e-commerce market size (GMV, USD bn)
Source: Google, Temasek (2018)
2 1 1 1 1 0.4
12
2 2 23 3
7
5 5
13
15
Indonesia Malaysia Philippines Singapore Thailand Vietnam
2015 2018 2025
53
87%
27%
22%
16% 49%
23%
42%
19%
27%
CAGR = 23%
94%
20%
Vietnamese are well-connected
15
Source: We Are Social (January 2019), Internet World Stats, VCSC
Active internet users
64 million
or
66% of population
Unchanged vs Jan 2018
143 million mobile
subscriptions
vs population of 97
million
Smartphone
penetration
>70%
65 million 3G & 4G
subscriptions
vs population of 97 million
Key consumer trend
16
Vibrant indulgent consumption
Beneficiaries: discretionary & luxury goods
Stocks: PNJ, VEA
Rising incomes and consumer confidence buoy discretionary spending
17
Source: Nielsen (percentages represent the % of survey respondents selecting a choice)
What Vietnamese consumers will spend on after covering necessities
76%
35%33%
30%27% 26%
72%
48%
53%
47% 48%46%
Saving Travel Clothing Tech devices Homedecoration
Entertainment
Q4 2016 Q3 2018
+28% YoY
+35% YoY
-
50,000
100,000
150,000
200,000
250,000
2013 2014 2015 2016 2017 2018 7M 2019
Soaring car ownership a reflection of Vietnamese’s new wealth
18
Source: VAMA
Number of passenger cars sold in Vietnam
Consumers delayed purchases in 2017 in
anticipation of a steep reduction in tariffs on cars
imported from ASEAN. Sales got back on a
growth track in 2018.
38%
CAGR
Key consumer trend
19
Product premiumization
Beneficiaries: FMCG companies with superior product innovation
and brand-building capabilities
Stocks: SAB, MSN
Broad-based premiumization
20
Premium + semi-premium beer
Market share ballooned from <20% in 2011 to >30% currently.
Vinamilk Organic Milk
Launch: December 2016
Features: 100% organic fresh milk, 1.8x price of mainstream
Supply inefficient to meet demand
Premium fish sauce
Household penetration broadened by ~7 ppts YoY in 12 months
ending September 10, 2018 (to 57% in urban and 39% in rural)
Source: Kantar Worldpanel, Heineken, VCSC
Those who don’t innovate are bound to lose (1)
21
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2010 2011 2012 2013 2014 2015 2016 2017 2018
CAGR of
44%
Lackluster product innovation and
brand building
QNS’s historical soymilk revenue (VND bn) during 2010-2018
Source: QNS
SKUInception
yearSKU
Inception
year
Fami 1997Fami
Kid2014
Vinasoy 2012Soy
Men 2015
Vinasoy
sesame2012
Fami
Go2018
Fami
canxi2013
QNS’s key soymilk SKUs and their inception years
Source: VCSC compilations
Laggard - QNS
Those who don’t innovate are bound to lose (2)
22
Outperformer - VNM
VNM’s new products during 2018-2019
2018
2014 2015 2016 2017 2018
Liquid milk 51% 53% 56% 58% 59%
Condensed milk 80% 80% 80% 80% 79%
Spoon yogurt 85% 85% 85% 83% 83%
Powdered milk (volume) NA NA 41% 42% 42%
VNM’s historical market share by category
Source: VNM
Source: VNM, VCSC compilations
2019
Consumer sector: key data
23
Code Rating
Market
cap,
USD
mn
State
O'ship
%
Foreign
limit %
Foreign
avail,
USD
mn
ADTV
30D,
USD
mn
Share
price,
VND ps
Target
price,
VND ps
Target
price,
updated
Upside
%
Div.
yield
%
12M
TSR %
MWG BUY 2,212 0.0% 49.0% 0.0 4.2 116,900 215,000 12/08/2019 83.9% 1.3% 85.2%
VHC BUY 318 0.0% 100.0% 207.1 0.6 80,200 108,700 05/08/2019 35.5% 5.0% 40.5%
FPT BUY 1,539 6.0% 49.0% 0.0 3.7 53,100 69,300 22/08/2019 30.5% 3.8% 34.3%
MSN BUY 3,767 0.0% 49.0% 325.0 1.5 75,400 95,900 30/08/2019 27.2% 0.0% 27.2%
FRT O-PF 161 0.0% 49.0% 0.1 0.3 44,000 54,000 29/07/2019 22.7% 2.3% 25.0%
PNJ BUY 786 0.0% 49.0% 0.0 1.2 82,200 95,000 01/08/2019 15.6% 2.2% 17.8%
PTB O-PF 140 0.0% 49.0% 41.1 0.4 69,000 80,200 07/08/2019 16.2% 1.4% 17.7%
SAB O-PF 7,514 36.0% 100.0% 2,739.6 0.4 273,000 310,500 16/08/2019 13.7% 1.8% 15.6%
VEA BUY 3,148 88.5% 49.0% 1,367.0 1.2 55,200 59,800 15/08/2019 8.3% 7.1% 15.4%
VNM M-PF 9,155 36.0% 100.0% 3,800.0 4.0 123,000 124,600 23/08/2019 1.3% 3.7% 5.0%
QNS O-PF 396 0.0% 49.0% 135.5 0.4 30,600 29,800 26/08/2019 -2.6% 4.9% 2.3%
VTP N/A 342 68.1% 49.0% 106.0 0.3 136,200 N/A N/A N/A N/A N/A
Source: VCSC, share prices as of August 30, 2019
Consumer sector: summary valuations
24
Code
Share
price,
VND ps
EPS g
2019F
%
EPS g
2020F
%
EPS g
2021F
%
P/E
TTM x
P/E
2019F x
P/E
2020F x
P/E
2021F x
EV
/EBITDA
2019F x
ROE
2019F
P/B LQ
x
Net D/E
LQ x
MWG 116,900 34.6% 34.8% 21.7% 14.8 13.0 9.6 7.9 8.0 37.3% 5.0 0.1
VHC 80,200 10.8% 6.7% 10.6% 4.4 4.7 4.4 4.0 3.7 34.6% 1.6 0.0
FPT* 53,100 27.3% 21.2% 20.8% 13.4 11.8 9.7 8.0 6.8 24.8% 2.7 -0.1
MSN* 75,400 7.8% 24.3% 33.7% 22.2 21.7 17.4 13.0 10.8 12.9% 3.0 0.5
FRT 44,000 14.9% 15.3% 9.5% 10.0 9.7 8.4 7.6 7.9 30.3% 3.1 1.0
PNJ 82,200 20.8% 20.3% 23.3% 20.1 16.7 13.9 11.2 11.7 28.7% 4.7 0.3
PTB 69,000 12.7% 22.9% 36.2% 8.5 7.9 6.4 4.7 5.8 25.3% 2.0 0.9
SAB 273,000 25.3% 22.5% 17.4% 40.8 35.2 28.7 24.5 24.9 32.9% 10.0 -0.8
VEA 55,200 6.6% 15.9% 10.4% 10.4 9.7 8.4 7.6 N/A 29.2% 2.8 -0.4
VNM 123,000 4.6% 7.0% 6.3% 22.6 22.2 20.8 19.6 14.7 40.2% 7.6 -0.3
QNS 30,600 -11.7% 17.9% 9.9% 7.3 8.3 7.0 6.4 4.6 19.4% 1.6 -0.1
VTP** 136,200 36.0% 36.0% 28.0% 28.4 24.4 18.0 14.0 N/A N/A 10.6 -0.9
Source: VCSC; share prices as of August 30, 2019
* Earnings-related metrics are based on recurring earnings
** Based on company guidance
Content
25
Top consumer stock picks
MWG, PNJ, VEA, SAB, MSN
Mobile World Investment Corp (HSX: MWG)
Title of presentation
26Copyright © Viet Capital Securities
Mobile World Corp (HSX: MWG)
The crown jewel of Vietnam’s modern retail sector
September 2019
Investment thesis 1: Top diversified retailer in Vietnam
27
• #1 mobile retailer
• 45% market share at YE2018
• 1,011 stores as of June 2019
• Focus on SSSG
• #1 electronics retailer
• 35% market share at YE2018
• 838 stores as of Jun-19
• Medium-term profit driver
• #1 minimart chain
• 600 stores as of June 2019
• Key long-term profit driver
Source: VCSC compilations
Investment thesis 2: Dominant omnichannel (online/offline) + best execution
28
Source: MWG, VCSC
MWG’s online sales contribution to mobile
phone and electronics revenues
Roll-out of new products such as watches, small home appliances and kitchenware is boosting same-store sales
0
500
1,000
1,500
2,000
2,500
3,000
2015 2016 2017 2018 H1 2019
TGDD (mobile phones) DMX (consumer electronics) BHX (minimart)
MWG’s historical store count by chain
8%9%
15%
17%
18%
2016 2017 2018 2019F 2020F
Investment thesis 3: Modern retail sector has extensive growth headroom in Vietnam
29
Modern retail formats are growing rapidly but their penetration remains low in Vietnam compared to other countries
China Taiwan
Korea
India
Indonesia
Malaysia
Thailand
Philippines
Vietnam
0%
20%
40%
60%
80%
100%
- 5,000 10,000 15,000 20,000 25,000 30,000 35,000
2017 GDP per capita (USD)
Modern trade penetration in FMCG across Asian countries
as of Q2 2018
Source: VCSC compilations, Kantar Worldpanel
8%
-1%
7%
7%
14%
32%
Medium-sized street shops
Small street shops
Wet markets
Specialty stores
Hyper/Supermarkets
Minimarts/CVS
FMCG YoY growth by retail channel in top four urban cities
in Vietnam (Q1 2019)
Investment thesis 4: Electronics, grocery to drive strong medium/long-term growth
30
Revenue forecasts by chain (VND bn)
Source: MWG, VCSC forecasts
NPAT forecasts by chain (VND bn)
2018 2019F 2020F 2021F 2022F 2023F
TGDD (mobile) DMX (electronics) BHX (minimart)
23% CAGR 29% CAGR
750
1,000
1,150
1,300
1,450 1,500
2018 2019F 2020F 2021F 2022F 2023F
DMX store count projections
405
950
1,800
2,800
3,800
4,800
2018 2019F 2020F 2021F 2022F 2023F
BHX store count projections
2018 2019F 2020F 2021F 2022F 2023F
TGDD + DMX BHX
Mobile World Investment Corp (HSX: MWG)
Title of presentation
31Copyright © Viet Capital Securities
Phu Nhuan Jewelry (HSX: PNJ)
The queen of Vietnam’s fashion gold jewelry
September 2019
Investment thesis 1: The unquestioned leader in gold fashion jewelry market
32
Source: VCSC compilations
PNJ’s store count vs competitors
324
4853
19
101
0
50
100
150
200
250
300
350
2014 2015 2016 2017 2018
Num
be
r o
f sto
res
PNJ SJC
DOJI PRECITA
TheGioiKimCuong
PNJ
DOJI
PRECITA TheGioiKimCuong
Investment thesis 2.1: Extensive headroom for store expansion
33
10.6
10.8
4.8
2.6
1.3
HCMC
Da Nang
Can Tho
Hanoi
Hai Phong
Number of PNJ gold stores per million people in
Vietnam’s tier-1 cities.
Source: PNJ, General Statistics Office Of Vietnam
(as of YE2018), VCSC estimates
Source: VCSC compilations
(as of YE2018; inclusive of silver standalone stores)
PNJ’s store network
The South
202 stores
64% of PNJ store count
Highlands
25 stores
8% of PNJ store count
Central
32 stores
10% of PNJ store count
North
61 stores
18% of PNJ store count
Investment thesis 2.2: Headroom for footprint expansion even in HCMC
34
Source: VCSC compilations (as of end-Q2 2019)
PNJ’s store network in HCMC
Investment thesis 3: Large headroom for further increase in sales/store
35
Source: VCSC compilations (CTF, CSS and LF’s financial year ends March 31)
PNJ’s gold jewelry retail sales/stores compared to those of Chow Tai Fook (CTF), Chow Sang Sang
(CSS) and Luk Fook (LF) in Mainland China in FY2018
1.3
2.62.4
1.8
FY2018
US
Dm
n
PNJ's sales/store/year
CTF's Mainland China sales/store/year
CSS's Mainland China sales/store/year
LF's Mainland China sales/store/year
Given similarities in gold consumption habits between Vietnam and China, we expect PNJ’s sales/store to
gradually catch up with the current level of Chinese peers as income rises in Vietnam. Currently, China’s GDP per
capita is nearly 4x that of Vietnam.
Investment thesis 4: Attractive valuation/growth profile
36
Source: Bloomberg consensus for peers, VCSC forecasts for PNJ (data as of August 30, 2019)
23.9%20.2%
12.2% 11.2%
7.2% 8.3%
21.5%
Titan Tiffany & Co Chow TaiFook
Lao FengXiang
Luk FookHoldings
Chow SangSang
PNJ
2018-2021F EPS CAGR
3.3
1.5 1.5 1.3 1.4
0.9 0.9
Titan Tiffany & Co Chow TaiFook
Lao FengXiang
Luk FookHoldings
Chow SangSang
PNJ
3y-PEG (2018 PER / 2018-2021F EPS CAGR)
Investment thesis 5: Bright earnings prospects
37
EPS projections (VND)
Store count projections
Gold jewelry retail SSSG projections
Revenue projections (VND bn)
21%
CAGR
Source: PNJ, VCSC forecasts
56% 57%58%
60%
0%0%
0%1%14,573
16,855
20,265
23,565
2018 2019F 2020F 2021F
Jewelry retail revenue Watch retail revenue Others
324364
404444
14 3467
110
2018 2019F 2020F 2021F
Jewelry store count Watch POS count
4,083
4,932
5,932
7,314
2018 2019F 2020F 2021F
20%
5%
13%12%
2018 2019F 2020F 2021F
Gold Jewelry retail SSSG
Mobile World Investment Corp (HSX: MWG)
Title of presentation
38Copyright © Viet Capital Securities
VEAM Corp (UPCoM: VEA)
Gateway to Vietnam’s motorization
September 2019
39
30%
VEA’s ownership in Honda
25%
VEA’s ownership in Ford
20%
VEA’s ownership in Toyota
VEA provides exposure to Vietnam’s
booming car and extensive motorbike
markets thanks to its 20%-30% stakes
in Honda, Toyota and Ford Vietnam.
VEA’s associates commanded a
combined ~40% market share in
passenger cars (PC) and 76% in
motorbikes in 2018.
Toyota26%
Honda11%
Ford4%
PC market share (2018)
Honda
76%
Motorbike market share (2018)
480 392
325
119 114 99 52 33 21 17
Jap
an
Ma
laysia
Ko
rea
,R
ep
.
Th
aila
nd
Sin
ga
pore
Ch
ina
Ind
on
esia
Ph
ilip
pin
es
Vie
tna
m
Ind
ia
Number of PCs
per 1,000 Car consumption is poised to take off in
Vietnam on the back of Vietnam’s low
penetration and rising incomes.
Source: VEA, VAMA, VCSC compilations
Investment thesis 1.1: Exposure to booming car and extensive motorbike markets
Investment thesis 1.2: VEA’s associates are poised to acquire more market share
40
Source: VEA, VCSC
Drivers for market share expansion: strong brand equity; new model/facelift launches; better flexibility to diversify
products thanks to a healthy mix of locally assembled and imported cars
26.2%
11.0%
4.1%
25.7%
14.2%
4.8%
Vietnam’s passenger car market share in 2018 (inside) and 2021F (outside)
Toyota Honda Ford Thaco Huyndai Others
2018:75.9%
2021F:82.0%
We expect Honda to continue gaining market share in motorbikes
Honda Others
Investment thesis 2: Attractive valuation and dividend yields
41
VEA’s PER vs regional peers We forecast robust EPS growth and dividend yields
9.7x
14.6x
12.8x
VEA's 2019F PER Asian EM carpeers' TTM PER
media
Asian motorbikepeers' TTM PER
median
Source: VEA, VCSC forecasts, Bloomberg (data as of August 30, 2019)
VEA is trading at a discount of 27% to the TTM PER of regional peers, which is attractive in our view despite VEA’s lack
of control over its automobile associates
5,321 5,6706,572
7,257
7.1%9.2%
10.3%11.6%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2018A 2019F 2020F 2021F
EPS (VND) Dividend yield @VND55,200/share
Mobile World Investment Corp (HSX: MWG)
Title of presentation
42Copyright © Viet Capital Securities
Sabeco (HSX: SAB)
Extensive earnings upside from restructuring under ThaiBev
September 2019
Investment thesis 1.1: Extensive headroom for margin expansion
43
Source: SAB, VCSC
Source: company disclosures, VCSC
(1) Based on SAB’s reported numbers, whereby revenue and COGS include excise tax attributed to volume sourced from
associate breweries (i.e., SAB holds minority stakes in these breweries). We further attribute all of SAB’s reported SG&A to
its beer segment.
(2) We strip out excise tax attributed to volume sourced from associate breweries from SAB’s reported revenue and COGS,
using our own estimates.
(3) For an apples-to-apples comparison with SAB, we strip out excise tax and other tax items inclusive in these companies’
reported revenue and COGS.
Profit margins across leading beer companies in Asia (FY2018)(3)
67%64%
58%
26%34% 35%
39%33%
26%
14%18%
9%
30%+27%
20%
0%
10%
20%
30%
40%
50%
60%
70%
80%
HeinekenMalaysia
CarlsbergMalaysia
AB InBevAsia
Sabeco'sbeer
segment,reported (1)
Sabeco'sbeer
segment,underlying
(2)
ChinaResources
HeinekenVietnam
HeinekenAsia Pacific
CarlsbergAsia
GPM EBIT margin
Investment thesis 1.2: Extensive headroom for margin expansion
44
Source: SAB, VCSC
Based on SAB’s reported numbers, whereby revenue and
COGS include excise tax attributed to volume sourced from
associate breweries (i.e., SAB holds minority stakes in these
breweries). We further attribute all of SAB’s reported SG&A to its
beer segment.
2018 and 2021F beer GPM and EBIT/beer revenue %
26.1%
14.4%
34.3%
21.4%
Reported beer GPM EBIT/beer revenue
2018 2021F
Margin enhancement initiatives
✓ ASP/mix: larger contribution from the high-margin Saigon Special
brand and price hikes on the back of strengthening brand equity.
✓ Joint procurement of raw materials and advertising services with
ThaiBev.
✓ Packaging reformulation and more efficient use and management
of packaging materials.
✓ Improved efficiency at breweries: larger scale and application of
new production standards and efficiency programs.
✓ Reduced sourcing from non-controlling breweries.
✓ Easing transportation costs thanks to competitive bidding and
route optimization.
✓ Distribution optimization: fewer but bigger distributors.
✓ Other initiatives: closing excessive offices and warehouses;
digitalizing operational processes.
Investment thesis 2: We forecast SAB to gain market share going forward
45
Source: company disclosures, VBA, VCSC
~40%
25%+
15%
8%
Sabeco Heineken Habeco Carlsberg Others
Volume market share structure of Vietnam’s beer industry (2018)
Drivers for market share expansion: better product freshness, effective marketing, improved sales
and distribution capabilities, stepped up presence in big cities
VCSC’s forecast for future market shares
Investment thesis 3: Market volume expected to grow 5% annually through 2022
46
Source: VBA, Euromonitor, VCSC
Vietnam’s historical total beer consumption (million liters) and per capita (liters)
2,4202,622
2,9783,190 3,247
3,400
3,7864,006
4,206
27 2933 34 35 36
40 42 43
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2010 2011 2012 2013 2014 2015 2016 2017 2018
Total market volume PCC
Total beer consumption posted a 5.7% CAGR over the last five years on the back of a 4.7% CAGR in per capita
consumption
Drivers for future growth: one million people reaching the legal drinking age per year; increasing urbanization and
rising income; upbeat consumer sentiment
Investment thesis 4: Highly capable management team
47
Source: SAB, VCSC
Key changes/additions to board of directors following ThaiBev’s acquisition
Members Working experience
Mr. Koh Poh Tiong - Chairman
CEO of Asia Pacific Breweries from 1993 to 2008.
CEO of Fraser & Neave (F&B division) from 2008 to 2011.
Undertaking board directorships at several leading corporations in Asia.
Ms. Tran Kim Nga – Board
member Played an instrumental role in the business expansion of Berli Jucker in Vietnam.
Mr. Michael Chye Hin Fah –
Board member
Group CFO – International Beverage Holdings Ltd (January 2017- Present).
Executive Vice President, Brand Investment Management – Thai Beverage (February 2017 – Present).
Mr. Phornprapha – Board
member Worked at the Boston Consulting Group from 1994 to 2014 (Managing Director from 2001 to 2014).
Current board of management
Members Working experience
Mr. Bennett Neo - Chairman
CEO of Fraser & Neave (food division) prior to joining SAB.
2005-2014: senior positions in Asia Pacific Breweries, including his last role of Regional Director,
covering Indochina, Singapore, Heineken-Kirin Japan, Heineken Taiwan, Tiger Global Exports and
Heineken Asia Pacific Exports.
Mr. Teo Hong Keng - CFO Spent 17 years with Asia Pacific Breweries, including being the CFO of Heineken Malaysia, Finance
Director of APB Singapore, Head of Finance of Cambodia Brewery Ltd and Tiger Export Pte Ltd.
Mr. Hoang Dao Hiep – Deputy
CEO, Marketing
Managing Director of Saatchi & Saatchi Vietnam prior to joining SAB. Before that, he was Regional
Marketing Director of Carlsberg in Southeast Asia.
Mr. Nguyen Hoang Giang –
Deputy CEO, Supply Chain
CEO of Vinafco JSC, one of the leading logistics companies in Vietnam, prior to joining SAB. Before
that, he was Head of Logistics in Southeast Asia for IKEA Trading.
Mr. Lam Du An – Deputy CEO,
ProductionHas been with SAB since the early 1990s.
Melvyn Ng Kuan Ngee – Deputy
CEO, Sales Spent 15 years at Asia Pacific Breweries.
Investment thesis 5: Superior earnings growth outlook vs international peers
48
Source: Bloomberg, VCSC (as of August 15, 2019)
Company name
Market
cap
(USDmn)
ROE ROA D/E2018
PER
2019F
PER
2018-
2021F
EPS
CAGR
2019-
2022F
EPS
CAGR
2018
three-
year PEG
2019
three-
year PEG
2018
EV/EBITDA
2019F
EV/EBITDA
2018-
2021F
EBITD
A
CAGR
2019-
2022F
EBITD
A
CAGR
ANHEUSER-
BUSCH I189,453 10.8% 3.1% 152.9% 38.1 17.4 34.8% 7.9% 1.1 2.2 14.1 13.0 6.2% 6.8%
HEINEKEN NV 59,537 13.1% 4.3% 96.4% 27.8 21.0 15.5% 10.4% 1.8 2.0 14.6 12.4 9.0% 6.5%
ASAHI GROUP
HOLD21,840 13.5% 4.9% 91.1% 14.5 14.3 4.6% 6.3% 3.2 2.3 10.2 10.0 4.1% 3.9%
CARLSBERG-B 21,437 11.5% 4.6% 50.1% 27.3 24.2 11.2% 11.7% 2.4 2.1 12.5 11.4 5.9% 5.1%
KIRIN HOLDINGS 18,245 7.7% 3.1% 39.8% 11.5 21.7 -1.8% 20.2% NA 1.1 9.2 11.1 1.0% 8.2%
CHINA
RESOURCES14,819 5.2% 2.4% 3.8% 119.3 58.3 55.4% NA 2.2 NA 33.1 22.2 29.5% 15.7%
MOLSON
COORS-B11,069 6.5% 3.0% 76.4% 9.7 11.3 -3.3% 8.9% NA 1.3 8.3 8.9 -2.7% NA
TSINGTAO
BREW-A8,574 8.5% 4.6% 3.3% 44.0 35.6 18.7% 4.6% 2.4 7.7 15.3 16.1 6.9% NA
BEIJING YAN-A 2,309 1.4% 1.0% 0.4% 90.0 60.0 26.6% NA NA NA 13.1 13.6 8.9% NA
SAPPORO
HOLDINGS1,824 6.4% 1.6% 157.6% 22.4 22.2 7.1% 3.6% 3.2 6.2 11.5 10.8 5.0% 4.0%
CARLSBERG
BREWER1,764 NA NA 41.4% 26.5 24.4 8.0% NA 3.3 NA 19.1 17.3 8.5% NA
HEINEKEN
MALAYSIA1,628 68.8% 34.3% 28.3% 24.2 22.4 7.2% NA 3.4 NA 14.2 14.9 2.7% NA
Average 29,375 14.0% 6.1% 61.8% 37.9 27.7 15.3% 9.2% 2.5 3.1 14.6 13.5 7.1% 7.2%
Median 12,944 8.5% 3.1% 45.8% 26.9 22.3 9.6% 8.4% 2.4 2.1 13.6 12.7 6.0% 6.5%
SABECO 7,596 27.1% 19.5% 1.9% 44.6 35.6 21.7% 18.8% 2.1 1.9 32.3 25.2 22.9% 18.8%
Mobile World Investment Corp (HSX: MWG)
Title of presentation
49Copyright © Viet Capital Securities
Masan Group (HSX: MSN)
Leading packaged F&B player
September 2019
Investment thesis 1: Well positioned to ride on Vietnam’s consumption story
50
Seasonings
65%+ market share
Growth drivers: premiumization; expansion to adjacent categories
(granule, oyster sauce); launch of ready-to-cook seasonings
Convenience foods
20%+ market share
Growth drivers: premiumization; expanding meal-solution portfolio;
ramp up of presence in the mainstream segment
Coffee
~30% volume market share in instant coffee
Growth driver: potential entry into the roasted and ground coffee
segment
Beverages
~7% market share in energy drinks
Growth drivers: expanding distribution; widening product offerings
180,000
Food
POS
160,000
Beverage
POS
Investment thesis 2: Extensive meat opportunity
51
Chilled fresh pork
“MEATDeli” brand,
sold through own
showrooms, modern
trade and agent
shops
Current capacity of
230,000-250,000
porkersFarm
Feed
Cyclical; limited
long-term growth
due to farming
sector consolidation
Recruiting
contracted farmers
to scale up supply
Will serve Masan’s
own farms and
contracted farmers
in the future
~USD10bn market;
increasing demand
for safe and hygienic
meat
Processed meat
Partner with Jinju
Ham, a processed
meat player in
South Korea
Processed meat =
1%-2% of total meat
consumption in
Vietnam, compared
to >10% in China
Investment thesis 3: Robust earnings outlook
52
Source: VCSC
-6,000
-4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
2018 2019F 2020F 2021F
EBIT TCB Net financial exp. Others Tax & MI
EBIT: 12% CAGR
Including F&B EBIT CAGR of 11%
Techcombank’s contribution: 10% CAGR
Net financial exp: -16% CAGR
NPAT-MI: 25% CAGR
2018-2021F recurring NPAT-MI breakdown (VND bn)
Content
53
Other BUYs
FPT, PTB, VHC
Mobile World Investment Corp (HSX: MWG)
Title of presentation
54Copyright © Viet Capital Securities
FPT Corp (HSX: FPT)
Vietnam’s Software/Telecom powerhouse
September 2019
Investment thesis 1.1: Fast-growing software outsourcing player riding on cost advantage
55
Median annual salary (USD) of an experienced
software engineer in Vietnam vs China and India
19,581
14,866
32,190
India Vietnam China
>24% <54%
Source: VCSC compilations, Payscale, Glassdoor
~16,000
software engineers
~2,400
software engineers
~2,500
software engineers
FPT Software has the largest engineer pool in Vietnam
Investment thesis 1.2: Moving up the software value chain
56
Typical software development life cycle
Source: VCSC compilations
Investment thesis 2: FPT Telecom – Superior services with competitive pricing
57
FPT Viettel VNPT
HCM
Package
Speed
(Mbps) VND000/mth
VND000
/Mbps Package
Speed
(Mbps) VND000/mth
VND000
/Mbps Package
Speed
(Mbps) VND000/mth
VND000
/Mbps
Super 35 35 225 6.4 Net1 Plus 30 185 6.2 Home 1 30 189 6.3
Super 50 50 275 5.5 Net2 Plus 40 220 5.5 Home 2 40 219 5.5
Super 65 65 340 5.2 Net4 plus 70 300 4.3 Home 3 50 259 5.2
Hà Nội
Package
Speed
(Mbps) VND000/mth
VND000
/Mbps Package
Speed
(Mbps) VND000/mth
VND000
/Mbps Package
Speed
(Mbps) VND000/mth
VND000
/Mbps
Super 35 35 225 6.4 Net1 Plus 30 185 6.2 Home 1 30 189 6.3
Super 50 50 310 6.2 Net2 Plus 40 220 5.5 Home 2 40 219 5.5
Super 65 65 440 6.8 Net4 plus 70 300 4.3 Home 3 50 259 5.2
Đà Nẵng
Package
Speed
(Mbps) VND000/mth
VND000
/Mbps Package
Speed
(Mbps) VND000/mth
VND000
/Mbps Package
Speed
(Mbps) VND000/mth
VND000
/Mbps
Super 22 22 200 9.1 Net1 Plus 30 165 5.5 Home 1 30 189 6.3
Super 35 35 230 6.6 Net2 Plus 40 180 4.5 Home 2 40 219 5.5
Super 50 50 290 5.8 Net3 Plus 55 210 3.8 Home 3 50 259 5.2
Super 65 65 400 6.2 Net5 Plus 150 400 2.7
Source: VCSC compilations (as of September 2019)
Internet package comparison between main telcos
Investment thesis 3: FPT University’s rising reputation fuels vibrant new enrollments
58
FPT Education’s total number of students FPT Education’s new enrollments
Source: FPT Source: FPT
19,501
24,732
36,635
YE2016 YE2017 YE2018
8,195
12,517
19,381
YE2016 YE2017 YE2018
CAGR of
37%CAGR of
54%
59
Mobile World Investment Corp (HSX: MWG)
Title of presentation
Copyright © Viet Capital Securities
Phu Tai JSC (HSX: PTB)
Small-cap name with robust growth outlook
September 2019
Investment thesis 1: Leading player in domestic stone market
60
• PTB operates three main businesses: stone, wooden furniture exports and an automobile dealership.
• In paving stone, PTB’s strong position is premised on its large reserve of 53 million m3 that could operate for at least
another two decades, per management, and its superior know-how evidenced by having successfully turned around
stone mines acquired from smaller companies.
0
200
400
600
800
1,000
1,200
Vietnam(2018)
China(2016)
Taiwan(2016)
World(2016)
Paving/dimension stone consumption per capita of select
countries (sqm)
PTB, 28%
PTB’s domestic stone* market share in 2018
Source: PTB, Ministry of Construction, Rapporto 2017, VCSC
*Only counting paving and dimension stones
Investment thesis 2: At forefront of Vietnam’s growing wooden furniture exports
61
Source: International Trade Center, Japan External Trade Organization, VCSC
Global wooden furniture export market shares of
Vietnam and China during 2018-2018
0%
5%
10%
15%
20%
25%
30%
35%
40%
0%
2%
4%
6%
8%
10%
12%
Vietnam (LHS) China (RHS)
-
2,000
4,000
6,000
8,000
10,000
12,000
Total cost of a manufacturing worker in Asia-Pacific in
2018 (USD per year)
• PTB is at the forefront of the wooden furniture export industry thanks to its scale and track record in product quality and
wood origin. In 2018, PTB accounted for nearly 1% of Vietnam’s furniture exports, per our estimate, and was listed as
one of Vietnam’s most trustworthy wood exporters in 2017 by the Ministry of Industry and Trade.
Investment thesis 3: Riding on Vietnam’s fast-growing car consumption
62
Source: PTB, VAMA, VCSC
Toyota Vietnam’s sales volume by region and
PTB’s share in 2018
PTB’s auto revenue and Toyota’s sales volume in
central Vietnam (2014-2018)
• PTB currently owns two Toyota showrooms in Binh Dinh and Da Nang (central Vietnam).
• We currently expect passenger car sales in Vietnam will grow more than 20% per annum through 2021.
• Toyota is the top car brand in Vietnam, premised on its brand equity, wide range of models and extensive distribution
network.
3%9%
38%
50%
PTB
Others in Central
North
South
0
2,000
4,000
6,000
8,000
10,000
0
300
600
900
1,200
1,500
1,800
2014 2015 2016 2017 2018
PTB's auto revenue (LHS)Toyota's sales volume (RHS)
VND bn unit
Investment thesis 4: Attractive valuation against 2018-2021F EPS CAGR of 23%
63
PTB’s TTM PER during 2015-2019VCCS’s forecasts for PTB’s gross profit during 2019-2021F
(VND bn)
• PTB is planning a foray into real estate in H2 2019. We estimate PTB’s first residential project will contribute 14% to our
2021F NPAT-MI forecast, but there are potential cyclicality and execution risks.
• Downside risks to our positive view on PTB: slowdown in domestic construction activity; potential tariffs on Vietnamese
wooden furniture, especially by the US; sluggish real estate execution.
Source: PTB, Bloomberg, VCSC
Gross profit
CAGR
–
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2018 2019F 2020F 2021F
Stone Wooden furniture
Auto dealership Real estate
23% EPS CAGR
30%
14%
15%
8.1
8.5
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
Jan 15 Jan 16 Jan 17 Jan 18 Jan 19
TTM PER Five-year average
Five-year weighted-
average peer TTM
PER: 10.7
2019F PER: 7.9x
Mobile World Investment Corp (HSX: MWG)
Title of presentation
Copyright © Viet Capital Securities
Vinh Hoan Corp (HSX: VHC)
World’s leading pangasius fish exporter
September 2019
64
Investment thesis 1: Best of breed in Vietnam’s monopoly pangasius export market
65
• VHC is the world’s largest pangasius
(Vietnamese catfish) exporter with a
global market share of ~17% in 2018.
• It has a long track record in product
quality, traceability and regulatory
compliance, which is demonstrated by its
~50% market share in the US.
• The company is riding on rising
pangasius demand amid limited wild-
caught whitefish and consolidation of the
pangasius value chain.
• New free trade agreements (especially
the upcoming VN-EU FTA), a potential
pork shortage following ASF outbreaks in
China and the US’s new tariffs on
Chinese whitefish are potential boons to
pangasius demand and VHC.
Global pangasius export
market share (2018)
Vietnam, 94%
Global pangasius exports by
country (2018)
Global seafood production by
capture and aquaculture (mn tonnes)
89.5 90.4 93.2
66.4 83.6 93.6
0
50
100
150
200
2012 2017 2030F
Capture Aquaculture
0.32
0.16 0.14
0.0
0.1
0.2
0.3
0.4
0.5
US EU China
2010 2017
Pangasius consumption per capita in
2010-2017 (kg)
Source: Worldbank, FAO, ITC, VASEP,
Agromonitor, NOAA, VCSC estimates
VHC17%
TTM 4.4x
8.0x
3
6
9
12
15
18
TTM PER 5-year average
Investment thesis 2: Solid earnings outlook and attractive valuations
66
We forecast a 9% EPS CAGR over 2018-2021F driven by a 10%
volume CAGRCheap valuation compared to historical average
2019F PER: 4.7x
Source: VHC, Bloomberg, VCSC
VND
20.0%
20.5%
21.0%
21.5%
22.0%
22.5%
0
5,000
10,000
15,000
20,000
25,000
2018 2019F 2020F 2021F
VHC's reported EPS (LHS) VHC's GPM (RHS)
Content
67
Other notable stocks
VTP, VNM, QNS, FRT
68
Mobile World Investment Corp (HSX: MWG)
Title of presentation
Copyright © Viet Capital Securities
Viettel Post (UpCOM: VTP)
Riding on Vietnam’s e-commerce boom
September 2019
Investment thesis 1: 2nd leading postal company with large e-commerce exposure
69Source: VTP, Ministry of Information and Communication, VCSC
VN Post, 31.9%
Viettel Post, 23.0%
DHL-VNPT, 10.3%
EMS, 7.5%
Lazada Express,
6.6%
Others, 20.7%
E-commerce-related delivery
57%
Non-E-commerce
delivery and other services
31%
Trading12%
VTP’s 2018 revenue by segmentVietnam’s postal market shares in 2017
• VTP is the 2nd largest postal company in Vietnam with a market share of 23% in 2017, per the Ministry of Information and
Communication.
• VTP has one of the most extensive postal outlet networks in Vietnam with 1,300 post offices and 6,000 drop-off points, only
behind Vietnam’s national postal company – VN Post.
• As a subsidiary of Viettel Group, which is the largest telco in Vietnam with 2018 revenue of USD10bn, VTP receives strong
support from its parent company regarding manpower, facilities and technology.
Investment thesis 2: E-commerce has ample growth headroom in Vietnam
70Source: National Bureau of Statistics of China, Google & Temasek, GSO, Nielsen, U.S. Census Bureau, VCSC
Share of e-commerce in retail sales in China during 2007-2018
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Emerging stage
Share: < 1%
Growth: >50%
Developing stage
Share: <10%
Growth: 20-30%
Developed stage
Share >10%
Growth: <20%
Vietnam’s current
level: ~2%
• According to Google and Temasek, Vietnam’s B2C e-commerce GMV amounted to USD2.8bn in 2018 and is expected to
record a 27% CAGR to reach USD25bn by 2025.
• Per our estimate, e-commerce accounted for just 2.0% of Vietnam’s total retail sales in 2018, compared to China’s 18.4%
and the USA’s 9.9%.
Investment thesis 3: Positive management guidance for 2018-2024
71
VTP’s profit before tax during 2016-2024G based on company guidance
Source: VTP, VCSC
78% 45% 64% 36% 36% 28% 24% 19% 14%
0
200
400
600
800
1,000
1,200
1,400
1,600
2016 2017 2018 2019G 2020G 2021G 2022G 2023G 2024G
PBT growth
PBT(VND bn)
Continual investments in technology to bolster growth
• In July 2019, VTP rolled out a new on-demand delivery app called MyGo to outsource a portion of its last-mile operation.
• Also in July 2019, VTP launched an ecommerce platform named Voso.vn, which is aimed to support its merchant clients
that are doing business on Facebook.
• VTP is upgrading its sorting centers by applying automation. The current sorting capacity of VTP’s automatic conveyor belts
amounts to ~36,000 parcels per hour per line, which is the highest in Vietnam, per VTP.
Mobile World Investment Corp (HSX: MWG)
Title of presentation
72Copyright © Viet Capital Securities
Vinamilk (HSX: VNM)
Dominant dairy player but valuation looks full against moderate growth
September 2019
Investment thesis 1: Market volume to grow 3.5%-4% p.a. over the next ten years
73
21 22 28 33
74 76
Vietnam Malaysia Thailand China Japan Korea
Dairy consumption per capita in Vietnam vs Asian peers in 2017 (kg)
2005: 21 kg 2005: 22 kg
We expect Vietnam’s dairy market to post annual volume growth of 3.5%-4.0% over the next ten years
✓ Dairy consumption per capita in China and Thailand grew 2.5%-3.5%/year from 2005-2017
✓ Vietnam has population growth of 0.5%-1%/year
Source: EMI, VCSC estimates and compilations
Investment thesis 2: VNM is the prime beneficiary of Vietnam’s dairy consumption
74
51%
80%85%
40%
22%
59%
42%36%
81% 83%
Liquid milk Infant formula(volume)
RTD infantformula (volume)
Condensed milk Spoon yogurt
2014
2015
2016
2017
2018
VNM’s market share across categories
Drivers for market share gain
✓ Active new product launches; pioneer in bringing higher-quality products to consumers (e.g., organic milk & A2 milk)
✓ Top-of-mind brand name
✓ Extensive nationwide distribution network that spans 270,000 POS
✓ Significant scale advantage, enabling VNM to overwhelm smaller competitors with strong marketing activities
Source: VNM
Investment thesis 3: Valuation looks full vs growth outlook
75
Comparable peers
Source: Bloomberg (data as of August 20, 2019)
(USD mn)
CompanyTicker Mkt cap
TTM Net
Sales
Y-o-Y
%
TTM
NPAT
Y-o-Y
%
Debt/
Equity %ROE % ROA%
TTM
P/ELQ P/B
China Mengniu Dairy 2319 HK 16,423.2 10,435.7 14.7 460.4 48.6 48.3 12.7 4.9 37.9 4.6
Inner Mongolia Yili
Industrial Group 600887 CH 24,629.6 12,302.0 15.5 985.9 3.9 5.8 24.7 13.0 26.4 6.6
MEIJI Holdings 2269 JP 10,581.7 11,315.8 1.7 533.7 -3.4 21.0 11.6 6.1 18.1 2.0
Bright Dairy & Food 600597 CH 1,885.2 3,169.9 -2.0 52.1 -38.6 69.4 6.3 2.0 38.2 2.4
PT. Ultrajaya Milk
Industry & Trading ULTJ IJ 1,220.6 403.0 N/A 58.7 N/A 2.2 18.1 14.6 20.4 3.4
Dutch Lady Milk
Industries BerhadDLM MK 982.2 256.9 -3.1 31.7 7.6 14.4 93.0 30.4 31.9 29.5
Henan Kedi Dairy 002770 CH 388.2 192.6 1.4 20.2 6.4 67.9 7.8 4.3 19.8 1.5
Median 1,885.2 3,169.9 1.5 58.7 5.2 21.0 12.7 6.1 26.4 3.4
Average 8,015.8 5,439.4 4.7 306.1 4.1 32.7 24.9 10.8 27.5 7.2
Vinamilk VNM VN 9,230.7 2,344.4 5.9 453.6 7.6 4.9 38.8 27.6 22.6 7.6
We project VNM’s EPS CAGR over 2018-2021F to slow down to 6% vs 10% during 2015-2018
Mobile World Investment Corp (HSX: MWG)
Title of presentation
76Copyright © Viet Capital Securities
Quang Ngai Sugar (UPCoM: QNS)
Management selling pours cold water on re-rating hopes
September 2019
77
Soymilk & other
F&B businesses(1)
Sugar & biomass
7081,291
2,0653,295
4,7055,732
6,9708,084
-484-1,258 -1,569
-2,467
-4,565-5,433-5,998
-7,031
2012 2013 2014 2015 2016 2017 2018 2019F
Accumulated since 2012Unit: VND bn
Accumulated NPAT Accumulated capex
Contributed 80%-95% to
QNS’s NPAT between 2014 and 2019F
Responsible for the majority of capex
between 2014 and 2019F
Source: QNS, VCSC, (1) includes beer, confectionary, mineral water
Investment thesis 1.1: Ineffective capital allocation
78
1,881 2,1153,020
3,783 3,683 3,899 3,863
40.3% 39.6% 40.5% 40.0% 40.2% 39.6%
43.6%
25.0%
30.0%
35.0%
40.0%
45.0%
01,0002,0003,0004,0005,0006,0007,0008,000
2012 2013 2014 2015 2016 2017 2018
Soymilk revenue (VND bn) Soymilk GPM
1,525 1,828 1,6532,387
1,4661,867
2,422
11.3% 12.6%9.8%
13.8%19.1%
2.7%
12.8%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2012 2013 2014 2015 2016 2017 2018
Sugar revenue (VND bn) Sugar GPM
Soymilk✓ Consumer staple product that generates high profit margins.
✓ 84% market share in the branded soymilk market in 2018.
✓ Strong cash generation.
✓ Reactivated product launching and modernized marketing
campaigns since late 2018 should bolster top-line growth.
Sugar✓ Volatile, low-margin commodity business.
✓ Upcoming tariff removal (starting 2020) under the ATIGA
could further expose Vietnam’s sugar industry to
international competition.
✓ Capital intensive.
Source: QNS, VCSC
Ineffective capital
allocation
35.2%
20.0%
23.8%
32.8%
29.4%
18.1% 18.9%
15.1%
2012 2013 2014 2015 2016 2017 2018 2019F
QNS's ROIC
Investment thesis 1.2: Ineffective capital allocation
79
6
7
8
9
10
11
12
13
Jan-1
8
Feb
-18
Ma
r-18
Apr-1
8
Ma
y-1
8
Jun-1
8
Jul-1
8
Aug-1
8
Sep-1
8
Oct-1
8
No
v-1
8
De
c-1
8
Jan-1
9
Feb
-19
Ma
r-19
Apr-1
9
Ma
y-1
9
Jun-1
9
Jul-1
9
Aug-1
9
QNS’s historical TTM PER
20,000
25,000
30,000
35,000
40,000
45,000
Jan-1
8
Feb
-18
Ma
r-18
Apr-1
8
Ma
y-1
8
Jun-1
8
Jul-1
8
Aug-1
8
Sep-1
8
Oct-1
8
No
v-1
8
De
c-1
8
Jan-1
9
Feb
-19
Ma
r-19
Apr-1
9
Ma
y-1
9
Jun-1
9
Jul-1
9
Aug-1
9
QNS’s historical stock price (VND)
Source: Bloomberg, VCSC compilation,
Investment thesis 2: Management selling pours cold water on re-rating hopes
-0.7
-1.1
-0.5
-0.6
-3.7-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
Se
p-1
9E
Au
g-1
9
Ju
l-19
Ju
n-1
9
Ma
y-1
9
Ap
r-19
Ma
r-19
Feb-1
9
Ja
n-1
9
De
c-1
8
No
v-1
8
Oct-1
8
Se
p-1
8
Au
g-1
8
Ju
l-18
Ju
n-1
8
Ma
y-1
8
Ap
r-18
Ma
r-18
Feb-1
8
Ja
n-1
8
Monthly and accumulated insider buying/selling since 2018 (unit: million shares)
Monthly insider buying (selling)
Accumulated insider buying (selling) since Jan 2018
VCSC’s 2018-2021F NPAT forecasts
80
Projected NPAT breakdown by segment between 2018-2021F
69% 82%76%
78%
12%
10%
9%19%
18%
14%
13%
0
200
400
600
800
1,000
1,200
1,400
1,600
2018 2019F 2020F 2021F
Soymilk Sugar & biomass Others F&B businesses
VND bn
+10% CAGR
-7% CAGR
-3% CAGR
Source: VCSC
81Copyright © Viet Capital Securities
FPT Retail (HSX: FRT)
Capable retailer trying to build its next leg of growth
September 2019
Investment thesis 1: A young but proven retailer
82
FRT is the youngest company among the leading mobile phone retailers in Vietnam and it has quickly risen to
the second position
Number of mobile shops among key retailers in
Vietnam as of June 2019
Source: FRT Source: VCSC
50
100
163
252
385
473
533
2012 2013 2014 2015 2016 2017 2018
FRT’s year-end store count since inception
1,849
558
298184
MWG FRT Viettel VienThongA
Investment thesis 2: Potential long-term growth from pharmacy
83
Store count of major pharmacy chains in Vietnam as of
June 2019
Nationwide
>50,000
Monthly sales/store by pharmacy chain (USD thousand)
FRT scores a good head-start in pharmacy with acquisition of Long Chau
✓ Long Chau is a top-of-mind pharmacy chain in HCMC when it comes to prescription drugs
✓Extensive product assortment (>5,000 SKUs), which makes Long Chau a one-stop shop for customers
Source: VCSC compilations Source: FRT, VCSC estimates
200
5934
12 10 9
Pharmacity Phano Long Chau An Khang ECO Minh Chau
74
28 27 25
18
Long Chau Pharmacity An Khang ECO Phano
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