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External broker reports(aggregated public sources)

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Thematic (Sector/Industry)

2018 marks the third year of the 2016-2020 Socio-Economic Development Plan which concentrates on institutional reforms and business environment improvement. Throughout the special period, the stock market, seen as the barometer of the economy, will play the leading role and reflect the above positive movement. Investor sentiment strengthens because of the government’s effort in fulfilling its commitment and macroeconomic indicators’ advances. Business environment is still the key point as the government and departments have been reducing the policy burdens. In details, the Circular No.08/2018/ND-CP illustrates that the ministery of industry and trade (MOIT) intends to remove 600 out of 1,200 business rules. The ministry of agriculture and rural development is willing to ease 34% of total business rules and simplize the others. The ministry of construction said about elimination of business rules and the number of conditional business sectors. Regarding of Vietnam’s economic growth in 2018, RongViet Research forecast an annual pace of 6.7% in a basic case and 7% in a positive case. The supporters incclude: 1) The recovery of agriculture, forestry and fishing gets stronger, 2) The manufacturing sector’s growth is estimated at 12% YoY thanks to FDI companies such as SamSung, Formosa,etc and 3) The service sector (consisting of whole and retail sales; financials; insurances; transports, etc) still contributes over 50% to the GDP growth. An enviroment of low interest rate and stable foreign exchanges have been making high-return channels like stocks and real estate more attractive. The official pursuits of lower lending rates, proved by a reduce of 25 bps of OMO rate. In addition to a large amount of deposit steaming from the ministry of finance (MOF) and an encouraging inflation, whose forecasted growth is around 3.8-4% YoY in 2018, we believe that there are no diffenrent changes in interest rates in most time of 2018. Besides, the state bank of Vietnam (SBV) can actively intervene in the FX market’s movements and keep the maximum depreciation of the dong around 1-2% because of the expected third year of trade surpuls and larger foreign reserves of USD 54.5 billion recorded at the mid of January 2018. In compared with the real estate market which faces some obstacles of huge investment and limited liquidity, the stock market is expected to attract residents’ saving well. The race to upgrade the Vietnam stock market to the emerging group creates chances of high-level transparency and quality of stocks, which supports investors’ decisions. Although we don’t appreciate the possibility of that in 2018 due to quantitative factors, there are significant efforts, including 1) Adding derivative goods in 2017 and covered warrant in 2018, 2) Researches of applying T+0 rules, open-ended funds’ services and pension funds. All of them is good for the stock market of Vietnam. Based on the above agruments, 2018 is likely a good year of the stock market. Beside foreign inflow, the stock market is absorbing a large amount of saving after a 48% surge of 2017. That will be served for a bigger supply which climbs up due to SOEs’ IPO, newly listed companies and additional issuances. To be careful with money flows of open ended fund and ETFs. Indirect foreign investment keeps rising via open ended fund and ETFs from the end of 2017 to the beginning of 2018. That results in a higher participation rates of foreign investors rising from 10-11% to 15% at the end of 2017. In the January of 2018, foreign investors bought VND 8,000 billion, equivalent to 35% of total net-inflow in 2017 (excluding SAB’s divested amount). Because ETFs and open-ended funds allocate to large-cap shares of the VN30 basket, those PE surged at the beginning of 2018. At the end of January 2018, the VN30’s PE reached 19.4 times, 56% higher than mid-cap group’s PE. Due to the attractiveness, asset reallocation to large-scale stocks is likely to produce a high return in 2018. Howeve, we warns of serious risk in the case of high PE. Insteadedly, investors should be willing to filter and invest in mid-cap shares which own an encouraging PE and a bright prospect in the mid and long term. RongViet Research expects that the earning-after-tax amount of 46 non-bank companies will grow at an annal pace of 17%. Looking at 16 mid-cap shares whose market cap reaches VND 77 trillion, equivalent to 50% of total market cap of the mid-cap group, the earning-after-tax amount’s growth is estimated at 23% YoY in 2018, well above 2017’s 19% YoY growth.

2018 marks the third year of the 2016-2020 Socio-Economic Development Plan which concentrates on institutional reforms and business environment improvement. Throughout the special period, the stock market, seen as the barometer of the economy, will play the leading role and reflect the above positive movement. Investor sentiment strengthens because of the government’s effort in fulfilling its commitment and macroeconomic indicators’ advances. Business environment is still the key point as the government and departments have been reducing the policy burdens. In details, the Circular No.08/2018/ND-CP illustrates that the ministery of industry and trade (MOIT) intends to remove 600 out of 1,200 business rules. The ministry of agriculture and rural development is willing to ease 34% of total business rules and simplize the others. The ministry of construction said about elimination of business rules and the number of conditional business sectors. Regarding of Vietnam’s economic growth in 2018, RongViet Research forecast an annual pace of 6.7% in a basic case and 7% in a positive case. The supporters incclude: 1) The recovery of agriculture, forestry and fishing gets stronger, 2) The manufacturing sector’s growth is estimated at 12% YoY thanks to FDI companies such as SamSung, Formosa,etc and 3) The service sector (consisting of whole and retail sales; financials; insurances; transports, etc) still contributes over 50% to the GDP growth. An enviroment of low interest rate and stable foreign exchanges have been making high-return channels like stocks and real estate more attractive. The official pursuits of lower lending rates, proved by a reduce of 25 bps of OMO rate. In addition to a large amount of deposit steaming from the ministry of finance (MOF) and an encouraging inflation, whose forecasted growth is around 3.8-4% YoY in 2018, we believe that there are no diffenrent changes in interest rates in most time of 2018. Besides, the state bank of Vietnam (SBV) can actively intervene in the FX market’s movements and keep the maximum depreciation of the dong around 1-2% because of the expected third year of trade surpuls and larger foreign reserves of USD 54.5 billion recorded at the mid of January 2018. In compared with the real estate market which faces some obstacles of huge investment and limited liquidity, the stock market is expected to attract residents’ saving well. The race to upgrade the Vietnam stock market to the emerging group creates chances of high-level transparency and quality of stocks, which supports investors’ decisions. Although we don’t appreciate the possibility of that in 2018 due to quantitative factors, there are significant efforts, including 1) Adding derivative goods in 2017 and covered warrant in 2018, 2) Researches of applying T+0 rules, open-ended funds’ services and pension funds. All of them is good for the stock market of Vietnam. Based on the above agruments, 2018 is likely a good year of the stock market. Beside foreign inflow, the stock market is absorbing a large amount of saving after a 48% surge of 2017. That will be served for a bigger supply which climbs up due to SOEs’ IPO, newly listed companies and additional issuances. To be careful with money flows of open ended fund and ETFs. Indirect foreign investment keeps rising via open ended fund and ETFs from the end of 2017 to the beginning of 2018. That results in a higher participation rates of foreign investors rising from 10-11% to 15% at the end of 2017. In the January of 2018, foreign investors bought VND 8,000 billion, equivalent to 35% of total net-inflow in 2017 (excluding SAB’s divested amount). Because ETFs and open-ended funds allocate to large-cap shares of the VN30 basket, those PE surged at the beginning of 2018. At the end of January 2018, the VN30’s PE reached 19.4 times, 56% higher than mid-cap group’s PE. Due to the attractiveness, asset reallocation to large-scale stocks is likely to produce a high return in 2018. Howeve, we warns of serious risk in the case of high PE. Insteadedly, investors should be willing to filter and invest in mid-cap shares which own an encouraging PE and a bright prospect in the mid and long term. RongViet Research expects that the earning-after-tax amount of 46 non-bank companies will grow at an annal pace of 17%. Looking at 16 mid-cap shares whose market cap reaches VND 77 trillion, equivalent to 50% of total market cap of the mid-cap group, the earning-after-tax amount’s growth is estimated at 23% YoY in 2018, well above 2017’s 19% YoY growth.

2018 Strategy Report: "Confront the Big Waves"

Vietnam

Hatay Pharmaceutical JSC produces and trades in pharmaceutical products.

Traphaco JSC is a pharmaceutical manufacturing company. The Company primarily manufactures, trades, imports and exports pharmaceuticals products, cosmetics, materials, medical equipment, medicinal foods and wine, among others. Traphaco also trades, plants and processes medicinal herbs, as well as offers technology consultation services in the medicinal and pharmaceutical sector.

Domesco Medical Import Export JSC produces, trades, imports and exports medicine, material additive, pharmaceutical products, processed food, and purified  water.

Domesco Medical Import Export Jsc (DMC VN)

Cuu Long Pharmaceutical Joint-Stock Corporation manufactures and sells pharmaceutical products primarily in Vietnam. It provides cardiovascular, blood pressure, coronary, liver, bile, kidney, and anti-inflammatory corticosteroid pharmaceutical products, as well as antibiotics, vitamins, and steroids. The company also offers drugs for the treatment of analgesic, intestinal infection, antifungal, peptic ulcer, nervous and respiratory system, erectile dysfunction, and resistance diseases, as well as for diabetes; and other drugs. In addition, it provides medical instruments; and empty hard capsules. The company is headquartered in Vinh Long, Vietnam.

OPC Pharmaceutical JSC  manufactures and trades in herbal medicines.

Pharmedic Pharmaceutical Medicinal JSC manufactures medicines.

Ben Tre Pharmaceutical JSC manufactures a wide range of pharmacueticals.

Phong Phu Pharmaceutical JSC is a pharmaceutical company. The Company manufactures medical drugs, tea products, dairy products and trades cosmetics and provides healthcare services.

DHG Pharmaceutical JSC is a pharmaceutical company. The Company manufactures and trades a wide range of pharmaceutical products and herbal teas.

Mayne Pharma Group Ltd. develops and manufactures oral pharmaceuticals.  The Company produces branded generics, specialty generics, and active pharmaceutical ingredients.

Hainan Shuangcheng Pharmaceuticals Company Limited develops, manufactures and sells chemical synthesized peptide drugs. The Company's main products include thymalfasin, somatostatin, and thymopentin for injection.

Hainan Shuangcheng Phrmcutcls (002693 CH)

Jilin Jian Yisheng Pharmaceutical Company Limited develops, produces and sells Chinese patent medicines.  The Company's main products include Zhenyuan capsules, Xin Yue capsules, Qingkailing injection fluids and Guifudihuang capsules.

Jilin Jian Yisheng Pharmaceutical (002566 CH)

TTK Healthcare Limited is a diversified healthcare company.  The Company manufactures a variety of over-the-counter healthcare products, including condoms, hair creams, cosmetics, herbal tonics, anti-cold and allergy syrups, and shoe care products.  The Group also produces heart valve devices, surgical products and devices, as well as prints maps and packaging materials.

Humedix Co., Ltd. produces pharmaceutical products for arthritis and other generic drugs.  The Company also manufactures injectable fillers and cosmetic products.

Korea United Pharm., Inc. manufactures pharmaceuticals, health and beauty care products, home care goods, and special nutrition and ginseng products.  The Company's products include antibiotics, vitamins and nutritional agents, and medicine for cancers.

Daito Pharmaceutical Co Ltd. is a pharmaceutical company. The Company manufactures generic formulations as well as supplies APIs for generic products to generic marketers. Daito serves a broad range of clients including generic medicine suppliers, ethical prescription pharmaceutical companies, healthcare products companies and home delivery medicines groups.

Il Dong Pharmaceutical Co., Ltd. develops and manufactures pharmaceuticals. The Company produces over-the-counter drugs such as vitamins, antibiotics, and other related products. The Company also produces air fresheners, detergents, and water antiseptic solutions.

Ildong Pharmaceutical Co, Ltd. (249420 KS)

Kimia Farma (Persero) Tbk manufactures, distributes, and sells pharmaceutical, chemical, biological, and other materials for use of manufacturing of contraceptives, cosmetics, medical equipment, medicines, and food and beverages. The Company also produces packing material, machinery, equipment, and supporting facilities related to pharmaceuticals as well as operates pharmacies.

Beijing Beilu Pharmaceutical Co., Ltd manufactures and distributes medicines. The Company's products include contrast-medium and, hypoglycemic agents.

Imexpharm Pharmaceutical JSC is a pharmaceutical Company. The Company manufactures pharmaceutical products, traditional medicines as well as trades drugs, raw materials for medicine production, and medical equipment. Imexpharm also offers rental services of warehouse for medicine storage and produces and trades nutritious foods.

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Imexpharm Pharmaceutical Jsc (IMP VN)

2018 Strategy Report: "Confront the Big Waves"

2018 marks the third year of the 2016-2020 Socio-Economic Development Plan which concentrates on institutional reforms and business environment...

Rong Viet Securities

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