The document provides an outlook and analysis of the Vietnam stock market and economy for 2017. It identifies several key themes and questions: 1) State divestment and new listings could divert cash flow from listed stocks and cause short-term market fluctuations but are unlikely to sink the market long-term. 2) FDI inflows may slow due to TPP and political changes abroad but remain stable from Japan, Korea, and Singapore and benefit manufacturing. 3) Bottom fishing for undervalued stocks in sectors impacted by TPP failures like textiles presents opportunities. 4) Inflation could rise above 4.5-6% due to commodity prices and rate hikes, pressuring the government's spending adjustment

1. Vietnam Outlook 2017
Long Tran Head of research
Please feel free to contact me at
E Longtt@bsc.com.vn
P +84 4 39352722 (118)
M +84 906 959 034
S rongbeo
BSC

2. Content List
• Top pick: IPO/OTC/Listed 03
• Investment themes (5) 06
• Top Questions in 2017 (7) 08
• Stock market outlook 19

3. Top stocks pick: Listed stocks
• FPT: Cheap valuation, defensive; Catalyst: FOX listed on Jan 2017 (VND 580 billion @ book
value ~ Market Value VND 3000 billion ~ 15% FPT’s current market capital)
• VNS: out of favor, overreacted about Uber & Grab, cheap Valuation (PER 6.95x), Catalyst:
Uber & Grab fall
• PVI: hedged with rising rate, cheap valuation (P/B), demand recovery from oil & gas
company, Catalyst: divest Pvi sunlife and PVI tower and issue share for strategic partner.
• REE: Defensive, cheap valuation, out of favor; Catalyst: PPC and JPY/VND
• BCC: cheap valuation (EV/ebitda: 5x), EURO loan pay back (early 2018); catalyst EURO/VND
fall and Vicem IPO (mother company)
• CTI: Cheap valuation, growth in toll; Catalyst: Long Thanh and the quarry mines (2mill/year)
• PVS: Defensive with diversified activates, cheap valuation; Catalyst: oil Price
• MWG: cheap valuation, high growth, retail sector;

4. Top stocks pick: IPO/new listing/OTC
• BSR: Huge market cap, improving business result, good hedge for rising newlisting
• SaWaCo: defensive, Catalyst: water price, water shortage
• VEAM: longterm demand, cheap compare to their subsidiaries' value, Catalyst:
automobile sale rise.
• ACV: longterm demand growth, infrastructure & defensive ; Catalyst: fee raise
• PLX: cheap valuation, longterm demand growth; catalyst: listing
• HVN: longterm demand growth, ; Catalyst: B777 sale and A350 sale & lease back
(similar stocks: VietJet)
• PC1: longterm demand growth, cheap valuation;
• SAB: longterm demand growth, fair valuation to peer ; Catalyst: State divestment

5. Top stocks pick: Bottom Fishing
• VGT: TPP fails, textile export decrease, cheap P/B adjusted; Catalyst: export, divestment
& listing new subsidiaries. (similar stocks: TCM, EVE)
• VSC: TPP fails, export slowdown, cheap valuation again, longterm growth still attractive
(similar stocks: GMD, PHP, CDN) catalyst RCEP
• LAS: cheap valuation, out of favor due to fertilizer price down, Elnino and china export;
catalyst VAT 0% and demand increase thanks to vegetable rise (similar stocks: BFC)
• VNM: longterm demand growth, valuation getting cheaper; Catalyst: milk powder top
Increasing challenges sectors:
• Bank: anti corruption, NPL, dilution ; catalyst: FOL rise
• Tire: natural rubber & oil price rise faster than demand
• Cable/plastic: plastic & copper rise

6. Investment themes
6
New Kids on
the block
hunting for
bargain in
OTC & IPO
Divestment &
FOL will
dominate in
2016 – 2017
No country for
old man,
Bottom fishing
TPP sectors &
old undervalue
stocks
Raw material
rise Buy Oil &
Gas and
material stocks
Local grow
oriented.
Low Beta
and organic
growth
1 2 3 4 5

7. You don’t want to be any where else
Source: BSC, Blackrock
Emerging economies
• China Slowdown
• ASEAN election year
• Commodities price recovery
Developed economies
• FED hike and Mr Trump
• Election year in EU
• Brexit
Geopolitical risks
• Conflict and violence
(Russia, East Sea, IS)
• Cyber Security
Vietnam
• USD/VND
• Fiscal Policies
• FTA & investment (TPP)
BSC’s relevant reports: Brexit before & after, Lanina, Oil, commodity

8. Top Question for 2017
“Global, macro and market”
8

9. 1. Could divestment & new listing sink the market?
Divestment on state-owned enterprises and
listing tided to IPO have strong influent to the
stock market 2016.
• Divestment in Sabeco, Habeco, FPT, FPT
telecom, VNR, BMI, BMP, NTP, HGM, SGC,
VIID in 2016 – 2017
• Number of state own companies to be IPO
and divest is around 1100 (2016 to 2020)
Long term potential:
• Stock market capitalization of Vietnam will
probably exceed $ 100 billion in 2017 and
target $ 200 billion in 2020.
• Greater stocks help attracting large
investments, upgrading emerging markets.
109
180
0
100
200
300
400
500
600
700
800
900
DNNN CPH

10. Short term effect:
• OTC and IPO divert the cash flow for listed
stock market.
• Not all new listing are hidden gems, OTC
rush have side effect.
• Market structure unstable every time new
stock listing (top 10, 20 will heavily
changed)
2016:
Divestment and new listing might not sink
the market but it will create big fluctuation ->
Hedge by choosing the right cubs and not
forget to bottom fishing if old tigers be lower
than their value (theme 1 &2)
1. Could divestment sink the market in 2017?
No Name Mkt Cap
1Mobifone 3.662
2HVN 2.716
3Thaco 2.273
4PLX 2.124
5Masan con 1.965
6Viejet 1.571
7BSR 1.540
8PV Power 1.188
9Veam 980
10TCB 772
11PV Oil 479
12VPbank 424
13VIB 422
14VGT 347
15FOX 302
Sum 20.766
No Ticker Mkt Cap Weight
1VNM 8.01B 12,58%
2VCB 5.6B 8,59%
3SAB 5.57B 8,51%
4GAS 5.09B 7,70%
5VIC 4.87B 7,45%
ACV 2.5B
6CTG 2.46B 3,76%
7BID 2.13B 3,29%
8ROS 2.17B 3,29%
9MSN 2.16B 3,26%
10BVH 1.74B 2,69%
11HPG 1.6B 2,45%
12NVL 1.56B 2,39%
BHN 1.25B
13MWG 1.05B 1,57%

11. 2. Could FDI inflows slow down?
The market over reacted with TPP, Trump…
leave “FTA” stock be in attractive valuation
again -> time for bottom fishing (theme 3)
2012 2013 2014 2015 2016E
Manufacturing (%) 69.8 77.2 75.9 64 69
Real Estates (%) 15.1 13 7.3 11.5 9.7
Others (%) 15.1 9.8 16.8 24.5 21.3
FDI disbursed (USD bil.) 10.5 11.5 12.4 14.5 16
FDI registered (USD bil.) 13 21.6 20.2 22.7 19.1
• FDI is expected to flow stably into Vietnam
thanks to
• Solid FDI flows from Japan, Singapore
and Korea (53% of total weight)
• JPY and KRW potential further
depreciation
• FDI flows strongly to manufacturing
than to real estates
• Chance of switching FDI from China to
Vietnam
• New trade agreements such as RCEP,
FTAs with EU
• Affected industries: direct (textile,
aquaculture, agriculture), indirect (logistic,
seaport, industrial real estates)

12. 3. Could Real Estate Bubble in 2017?
• Low chance of real estate bubble in
2017 because:
• Credit growth slowdown
• Higher lending criteria due to Sbv
restriction
• Growth of low-medium cost
housing supply
• Stable lending rates
• Affected industries: further divergent
performance of Real Estate firms
while many face challenges in 2017
2013 2014 2015 2016E
Credit growth (%) 12.51 14.16 17.29 18
Credit growth for real
estates (%) 15.4 19.3 26 9
Short-term deposit
over mid-long term
loan ratio (%) 43.1 45.4 31 33
GDP (%) 5.42 5.98 6.68 6.2
More positive with material firm than real
estate firm -> reduce real estate holding,
increase material holding (Cement)

13. 4. Could inflation out of Government control?
• Inflation is under pressure in 2017 due
to
• Commodity price rebound
• Higher USD and Fed rate hikes
• Domestic pressure from education,
healthcare expense adjustment
• Potential higher electricity, fuel and
building material price
• Potential higher inflation at 4.5%-6%
can affect rates. Government may
think twice about education,
healthcare expense adjustment plan.
70
72
74
76
78
80
82
84
86
88
90
Commodity price rebound in 2016
BCOM…
High inflation can lead to higher rate, raw
material can go up -> hedge by buying energy
stocks& insurance stocks (theme 3 & 4)

14. 5. Political black swan?
2016 full of Black swans, how about
2017:
• Important elections in EU (German,
France and Netherlands), China and
Asean countries.
• Possibility of political power shift,
stronger protectionism and populism
• Affected industries: export-oriented
industries to USA and EU
0 20 40 60 80
Public finance
Economic issues
Terrorism
Immigration issues
Most importing issues in EU public (%)
Ending 2015 Beginning 2015
Keep your eye on the political events in 2017,
and be more caution with export sectors ->
focus on the local oriented sector (theme 5)

15. 6. Fed hike and foreign investment ?
Foreigner cash flow has led the market in
recent years, and will it also be the
mainstream in 2017.
• Fed raising interest rates makes foreign
capital outflow from the frontier market
• The groups immediately affected such
as ETF, Pnotes.
Country M12(M USD) Q IV (M USD) 2016
India (875) (4,232) 3,277
Indonesia (264) (1,357) 1,268
Japan 5,939 23,843 (39,535)
Phillipine (196) (674) 78
Korea 1,017 838 10,252
Taiwan 173 -3,479 10,782
Thailand (219) (1,777) 2,009
Pakistan (132) (243) (322)
Vietnam (70) (134) (380)
Foreigner can keep net sell so keep your
eye on hot money including ETF and
Pnote. This can be net off with State
divestment -> wait for bottom fishing
(theme 3)

16. 7. Could speculative stocks sink the market?
Stock exchange start have huge speculative
cases in 2016. These shares have low
floating and climb high before free fall (up
to 90%). Including:
(1) Problems of management/fault: TTF,
HHS, TMT
(2) New shares to raise capital 3x 8x for
listed: ROS
Call margin could affect the market
especially during sensitive time (ETF) -> be
more selective with new stocks

17. How news and macro policies affect sectors
Sectors
Marine
transport
Realestate
Constructio
n
Cement
Textile
Electricity
Pharmaceut
ical
Plastic
Tire
Bank
Steel
Aquaculture
Sugar
Oil&gas
Fertilizer
Rubber
Ceramic
tiles
IT
Seaport
Automobile
Insurance
Milk
Material
recovery
(+) (-) (-) (-) (-) (+) (+) (+) (+) (-) (-)
Fed hikes (+) (+) (-)
USD/VND (-) (+) (-) (-) (+) (-) (+) (-) (+)
Euro / Brexit (+) (-) (+) (-) (-)
Japan/ JPY (-) (+) (-) (-)
China / RMB (-) (-) (-) (-) (-) (-) (-) (-) (+)
Interest rate (-) (-) (-) (+) (-) (-) (+)
TPP Risk (-) (+) (-) (-) (+) (-) (+) (+) (-) (-)

18. Key take away points
• Inflation can rise -> interest rate, hedge by buying insurance stocks
• The market over reacted with TPP, Trump, FDI… leave “FTA” stock be in
attractive valuation zone again -> time for bottom fishing
• Real estate bubble ? Not yet but More positive with material firm than real
estate firm -> reduce real estate holding, increase material holding
• Political black swan? Possible then keep your eye on EU, China
• Divestment and new listing sink the market ? Not really but they will inflate
the market to USD 100 bil and can lead to short term mismatch demand
vs supply
• FED hike and foreign net sell? Can continuous then keep your eye on hot
money (ETF and Pnote)

19. Stock market Outlook
Alpha seeking rather than Beta
19

20. What happened last year ?
Source: Bloomberg, BSC Research
85
90
95
100
105
110
115
120
125
130
01/16 04/16 07/16 10/16
BCs Index LargeCap Index
MidCap Index SmallCap Index
Penny Index
Macro: GDP short, CPI met target, rate down, USD
up 1.2%; TPP fail. How's about the market ?
• Vnindex up 14.7% but 7.5% thanks to SAB, ROS
• Large Cap and Mid cap out perform Blue chip
while penny free fall
• VN Market cap rise 28% to USD 80 billion. Upcom
market cap 5x
• Liquidity only rise 18% to USD 125 mil daily
• Foreigner net sell USD 380 mil (~ USD 300 mil
VIC USD 100 Mil VNM). ETF net sell USD 150 mil
• P/E & P/B rising & Margin lending rise too

21. Key take away points
• New PM want to support growth and push privatization, prove that he is more
Pro-business. Party leader carry anti corruption campaign.
• Vietnam is look a lot like a turnaround stock with new leaders, restructuring plan
and receiving huge foreign investment (start slow but improve fast)
• Valuation multiples at 5 year high and still in a correction to the mean. Market
earning can rise faster than 2016 thanks to recovery of oil price and agriculture.
• Liquidity can slightly down due to foreign net sell, the possibility of inflation and
rate hike and margin lending not as abundant as 2016.
• In medium term, Stock market will have new kids on the block thanks to IPO,
divestment and listing process is pushed;
• In short term, Q1 should be slow due to early Tet holliday, Q42016 result is not
very impressive

22. 15,60
12,37
14,33
8
13
18
Vnindex P/E Avg -1.65Sdtv Avg +1.65Sdtv
Avg Avg -1Sdtv Avg +1Sdtv
Fearless forecast 2016 -2018: Valuation
• PE index broke the downtrend since 2014
and above the +1.65 SD and tend to
correct to +1.28 SD
• Short term correction or accumulation
are likely to continuous.
• Earning 2017 can rise 10% - 15%
• Long term view, Vietnam market is still
deeply discounted compare to peers in
Asean.
• 2017:
• Bull case: P/E 15.6 (+1.65 SD) ~ 750
• Base case: P/E 14.33 (+1.28 SD) ~ 658
• 5 years average : P/E 12.37
Source: BSC

23. 752,03
621,88
699,31
880,58
400
500
600
700
800
900
1000
1100
1200
01/15 07/15 01/16 07/16 01/17 07/17 01/18 07/18
Bear Bull Average
Fearless forecast 2017 -2018
• Vnindex is the biggest loser compare to
Asean stock markets. Vnindex broke 8
year high of 680 points.
• Since 2009, Asean stock market
passed 2007’s top by a huge
percentage.
• Indonesian index has increased the
most, while Singapore performed
the least.
• What if Vnindex can recover at the
same speed as Asean indexes 2009
- 2012
• Let your imagination go wild:
• Vnindex 752 to 880 at the end of
2017Source: BSC

24. The mega trends of Vietnam
• People getting richer. GDP maintain recovery rate of 6.5% from bottom
average period 2011 – 2015 of 5.88%. GDP per Capital is expected to
reach to USD 3,200-3,500 in 2020. Middle class will be double in 4 years
• Over 100 million people. The next 10 year we will have great demographic
structure. Currently, Average age 30.8 years, the urbanization rate of 35%,
workforce 52.84 million (56.5%).
• Over $ 200 billion market cap. The market capitalization is targeted to
reach 80% GDP in 2020 from currently 42% GDP (USD 80 billion).
• The rise of Private sectors. More than 500,000 enterprises (90% total
enterprises) contributed 40% of GDP, 30% industrial output, 80% turnover
of retail goods and services. Boosting administrative reform and state
divestment are key for new PM’s cabinet.

25. Cases to consider
Blue Chips: FPT, MBB, GMD, REE, BMP, MWG, ACV
Blue Chips for bottom
fishing:
HPG, HSG, PVS, VCG, SCR, VNM
Mid Caps: VSC, KDH, HBC, CMG, ITD, BFC, NT2, VNR, VGC,
VGG, CTI, DGC, DGL, RAL, BMI, NTP, VNS,
Mid Caps for bottom
fishing:
LCG, PVG, BCC, SAM, PPC, PTI, TNG, PVT, BHS,
NCS, TCM, LAS, DXG,
Small Caps: HDC, LIX, NET, CHP, SJD, VIP, PGS, ITC, CSV, PGC,
C32, SMC, BTP, PET, HAH, SHP
Caution: HAG, HNG, FLC, HVG, DRH, ROS, TCH
• 2016: Most stocks on our
list is outperformed
Vnindex.
• Out of favor stocks: REE,
PPC, BCC, TRC, LAS,
VGG, VNS, SHP can be
interesting
• Low beta: PTI, PGI, BHS,
BFC, CSV,
• Divestment: VNM, FPT,
VNR, BMI, NTP, BMP, VCG
• New kids on the block:
Sabeco, ACV, Habeco,
VEAM, Vinatex, Vietnam
Airlines…

26. Sector rating 2017
No Sector Rating 2016 Buy Hold/tracking
1 Steel Outperform HSG, HPG, NKG VIS, SMC
2 Construction Outperform CTI, PC1 CTD, HBC, FCN,
3 Oil & Gas Outperform PGS, PGC CNG, PXS, PVD, GAS
4 Technology Outperform FPT, CMG, ITD ELC
5 Sea Port Outperform HAH, VSC GMD, PHP
6 Power Outperform SJD, CHP NT2, BTP, PPC
7 Insurance Outperform BMI, PVI PGI, VNR
8 Tiles Market perform VGC VIT, CVT, TLT, TTC
9 Real Estate Market perform DXG, ITC KDH, SCR, VIC,
10 Beverage Market perform SAB VNM, HNM, VLC
11 Textile Market perform TNG, VGG, VGT TCM, EVE
12 Fertilizer Market perform LAS BFC, DPM
13 Cement Market perform BCC HT1, BTS
14 Automobile Market perform SVC, HTL, TMT
15 Plastic Market perform NTP BMP, AAA
16 Sugar Market perform BHS SBT, LSS, SLS, KTS
17 Tire Market perform DRC, CSM
18 Banking Market perform MBB VCB, ACB
19 Pharmacy Market perform DHG, IMP, DMC, DP3
20 Rubber Market perform TRC DPR, PHR
21 Marine Transport Market perform VTO, PVT GSP, VIP
22 Aquaculture Underperform VHC, HVG, FMC
• OUTPERFORM: Construction,
Building materials (tiles, plastic,
cable), Technology, Sea Ports,
Textile, Electric power, Steel and
Oil & Gas
• MARKET PERFORM: Real Estate,
Plastic, Sugar, Tires, Cement,
Automotive, Insurance, Banking,
Pharmacy, Natural Rubber,
Fertilizer, Dairy and Marine
Transportation
• UNDERPERFORM: Aquaculture

27. Thanks for your supports
and confidence in us
Long Tran Head of research
Please feel free to contact me at
E Longtt@bsc.com.vn
P +84 4 39352722 (118)
M +84 906 959 034
S rongbeo
BSC