Data Digest #9: Vietnam Stock Market: Embracing New Normal amidst COVID!

Financial Information • Business Information • Market Research • Credit Ratings
1

Vietnam Stock Market: Embracing New Normal amidst COVID!
FiinPro Digest #9:
Issue date: 14 September 2021
Prepared by: Data Analytics Team
Financial Information Service, FiinGroup
Supply and Demand Driving Factors, Corporate Earnings and Key Sectors Outlook

2
Contact
Do Thi Hong Van
Senior Analyst
Financial Information Service
Email: van.do@fiingroup.vn
Do Thi Quynh Lien
Analyst, Financial Institutions
Email: lien.do@fiingroup.vn
Nguyen Huu Quy
Analyst, Corporates
Email: quy.nguyen@fiingroup.vn
Nguyen Quang Thuan, FCCA
CEO, Head of Data Analytics
Email: thuan.nguyen@fiingroup.vn
Truong Minh Trang
Senior Managing Director
Email: trang.truong@fiingroup.vn
Analytical Team Quality Control
@ 2021 FiinGroup Joint Stock Company
All rights reserved. All information contained in this publication is copyrighted in the name of FiinGroup, and as such no part of this publication may be reproduced, repackaged,
redistributed, resold in whole or in any part, or used in any form or by any means graphic, electronic or mechanical, including photocopying, recording, taping, or by information storage or
retrieval, or by any other means, without the express written consent of the publisher.
Le Nguyen Mai Trang
Associate, Sales & RM
M: +84 936 919 885
T: +84 24 3562 6962 (ext.: 103)
Email: trang.lenguyen@fiingroup.vn
Customer Service

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Table of Content
Content Page
Preface 4 - 5
Part 1: Factors driving the Demand 6 - 13
Part 2: Factors driving the Supply 14 - 18
Part 3: Which sectors to watch? 19
Rationales 20 - 22
3.1. Food 23
3.2. Retail 24
3.3. Chemicals 25
3.4. Steel 26
3.5. Real Estate 27
3.6. Construction & Materials 28
Content Page
Part 4: Financial Sector 29
4.1. Banks 30 - 42
4.2. Insurance 43 - 47
4.3. Securities Stocks 48 - 49
Appendices 50
Appendix 1: Sales, Earnings Growth by Sector in Q2-2021 51 - 52
Appendix 2: Analysis of Corporate Earnings Growth Quality 53 - 54
Appendix 3: List of certain stocks in the Report 55
Methodology and Important Notes 56
Previous FiinPro Digest Report Series 57
About FiinGroup 58 - 62
Disclaimer 63

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Preface
 This Report has been prepared primarily for individual investors who are subscribers of our data and financial information platforms
namely FiinPro and FiinTrade.
 Stock market, like any commodity market, is a place where share prices are ultimately determined by two factors: DEMAND and
SUPPLY. We refer DEMAND to factors driving money flow and investor sentiment while SUPPLY is driven by those changing the volume
of tradable shares in the market.
 In normal condition, stock market reflects correlation between Price and Value, which is agreed upon by DEMAND and SUPPLY. The
Price measures underlying value of a stock and the Value, so-called intrinsic value, driven by corporate fundamentals, including operating
and macro environmental factors.
 COVID-related impacts on the Value could be somehow predictable. In this Report, we conduct an in-depth analysis on factors
determining SUPPLY in correlation with DEMAND, instead of purely analyzing corporate fundamentals like before. Under the current
circumstance, factors determining DEMAND or affecting money flow and investor sentiment, in our view, are the most important and need
taking into serious consideration.
 We have no intention of working out scenarios of COVID impacts because this is a very challenging task. Instead, we are trying to make a
plenty of data-driven comparisons on impacts of different COVID waves (the first in Q1-2020 and the fourth now) to support you in having
assessments on your own. Accordingly, this Report aims to give in-depth analysis and data-driven findings on which sectors or companies
could be beneficiaries from the pandemic, especially once the “Embracing the Covid-19” strategy is confirmed.

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Preface
Factors driving the DEMAND Factors driving the SUPPLY
WHICH SECTORS TO WATCH?
INVESTMENT STRATEGY
1. Key macroeconomic factors
2. Interest rates
3. Money flows among groups of investors
4. Alternative investment channels
1. Share supply from initial listings, new share
issuances and insiders’ trading activities
2. Quality of stocks: corporate performance and
earnings prospects
3. Market valuation

Part 1:
Factors driving the DEMAND

7
3.68%
0.39%
2.69%
4.48%
4.48%
6.61%
T4/2020: 32.7
45.1
40.2
-
20.0
40.0
60.0
0%
2%
4%
6%
8%
10%
Mar June Sept Dec Mar June Aug
2020 2021
PMI
GDP
growth
(YoY)
GDP growth by quarter (YoY) PMI
Vietnam’s economy faces short-term headwind. Why?
Figure 1: PMI and GDP from the first COVID outbreak in 2020
Figure 2: Total retail sales & GDP from the first COVID outbreak in 2020
 PMI is a leading indicator which predicts the strength of future economic activities
while GDP is a lagging indicator telling the “past”. Looking back 2020 when
Vietnam’s Covid-19 virus first broke out, PMI dropped to 32.7 points in April and
then GDP in Q2-2020 grew only 0.39%YoY. This means time gap between the
two indicators is about two months.
 PMI has fallen below 50 points since June 2021 and reached 40.2 points in
August. It is very likely that PMI will drop sharply in September and even lower
than April 2020 level. Therefore, we forecast that GDP growth (YoY) in Q3 may be
negative given current GDP calculation and publication in Vietnam. Of course, it is
probably not controversial that GDP will decline (QoQ negative growth) in
Q3/2021.
 This is also evidenced in August’s total retail sales of goods and services, which
fell for the third consecutive month, showing that domestic consumption,
considered a measure of the economy's demand, fell further by 33.8%, 1.5 times
deeper than 26.5% decline in the first COVID wave in April 2020.
 These headwinds, in our opinion, are only short-term because production and
business activities will be aggressively restored due to the pressure of economic
development and social security. The COVID battling strategy has changed and
moved towards partial reopening and regional lockdown is expected to be
implemented in late September or early October.
 For whole 2021, many organizations forecast GDP growth at 5-6%. For example,
World Bank cuts GDP growth forecast in 2021 to 4.8% while ADB lowers its
forecast to 5.8%, depending on the scenarios of reopening the economy.
Source: FiiinPro Platform
3.68%
0.39%
2.69%
4.48%
4.48%
6.61%
Apr, -26.5%
-33.8%
-80%
-55%
-30%
-5%
20%
45%
70%
0%
2%
4%
6%
8%
10%
2020 2021
Total
retail
sales
growth
GDP
growth
GDP growth by quarter (YoY) Total retail sales growth by month (YoY)

8
3.68%
0.39%
2.69%
4.48%
4.48%
6.61%
-7.0%
0.5%
-40%
-20%
0%
20%
40%
0%
2%
4%
6%
8%
10%
2020 2021
Electricity
output
growth
GDP
growth
GDP growth by quarter (YoY) Electricity output growth by month (YoY)
6.5%
-5.2%
-19.3%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
T3 T6 T9 T12 T3 T6 T8
2020 2021
Im-export turnover (Local & FDI) Im-export turnover (Local)
GDP growth likely to be negative in Q3. Investors should not be surprised
when the number comes out
Figure 4: Import-Export Monthly Growth (YoY)
Figure 3: Electricity consumption and GDP growth
 Change in the import-export turnover implies the contribution to not only economic
growth in general, but also many major Vietnam exports and a number of key
businesses of listed companies.
 Contributing 70% to Vietnam's total import-export turnover, FDI enterprises
continued to lead import-export growth in August with an increase of 24% YoY.
 In contrast, the total import-export turnover of domestic enterprises in August
2021 decreased by 19.3%YoY. Export of Seafood and Wood & Wood products
suddenly fell while Export of Chemicals, Iron and Steel, Rubber continued to
increase sharply.
 Electricity consumption, in our opinion, is also an important leading indicator to
forecast economic growth. Electricity consumption reflects the operation condition
of enterprises amid current Covid-19 outbreak, household electricity consumption
accounting for about 39% of the total consumption structure rose due to
lockdown.
 Electricity consumption in August increased by 0.5% YoY but decreased by 5.1%
compared to July. Business electricity consumption accounts for 61% of total
electricity consumption, therefore , if residential electricity increased by 5% during
the lockdown, business electricity consumption decreased by at least 9.1% in
August.

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Low-interest rate environment and easing monetary policy are expected to boost
economic recovery
Figure 6: Effective deposit and lending interest rates
 Our calculation shows that deposit interest rates in the banking system have fallen
sharply in the past year. Effective interest rate (calculated by annualized quarterly
interest revenue divided by the average quarterly deposit balance) of the banking
system has decreased from more than 6% prior to Q2-2020 to 4.4% in H1-2021.
 Although banks’ published numbers are quite stable and in a downtrend under the
pressure from the SBV to support borrowers amid COVID-19 outbreak; however,
our data shows that, lending yield has not decreased and even increased slightly
from 8.5% to 8.7% in Q2-2021. Many argue that this could be due to credit
restructure towards longer terms or into products with higher interest rates, but our
data on balance structure by terms does not confirm it.
 So, when will interest rates rise? This is a very difficult question to have an exact
answer, but our observation amid easing policy needed to support economic
growth shows that signs of recovery after COVID are more important risk factors
to watch even though inflation tended to rise again in August. The reason is, in
our opinion, inflation is the result of temporary disruptions in supply chains, not
money supply factors or overheating of the price of most goods.
Note: Data is calculated from 25 listed banks (except for BVB and VAB due to non-disclosure or incomplete disclosure of data);
Effective lending interest rate is calculated based on Customer loan interest revenue divided by average customer loan balance;
Deposit interest rate is calculated based on interest expense on deposit divided by average customer deposit balance.
Figure 5: Deposit interest rates by terms
6.0%
6.8%
3.8%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Mar June Sept Dec Mar June Sept Dec Mar May
2019 2020 2021
Avg medium-term deposit rate Avg long-term deposit rate Avg short-term deposit rate
6.1% 6.4% 6.4% 6.4% 6.3% 6.1%
5.7%
5.0%
4.4% 4.4%
9.1% 9.3% 9.5% 9.6% 9.5%
8.9% 9.1% 9.0%
8.5% 8.7%
4%
5%
6%
7%
8%
9%
10%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021
Effective deposit rate Effective lending rate

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 In this low interest rate environment, money flow into stock market also comes
from margin provided by securities companies which are shown in their financial
statements as well as other structured transactions such as repos or mortgage
pledged by stocks which have taken place recently.
 Outstanding margin loans reached over VND126.3 trillion at the end of Q2-2021.
Outstanding margin loan currently accounts for a small ratio of market liquidity,
however, its steady increase since Q2-2020 has confirmed market positive
sentiment and market-makers’ confidence in the stock market's prospect.
 The trend of expanding margin loan, in our opinion, will continue after many
securities companies have and will increase charter capital to ensure lending to
charter capital ratio requested by the regulations of the Securities Commission.
According to our estimates, the total equity capital is expected to increase by
VND18.8 trillion in 2021 of which VND12 trillion have completed YTD . This will
allow securities companies to increase margin lending size by up to VND24 trillion
which could improve their earnings.
Securities companies have raised capital base by VND12 trillion YTD, allowing a
further margin lending
 Low interest rates in the past 5 years in Vietnam and in the world in general have
greatly supported the cash flow into stock market. This has been evidenced in the
number of newly opened securities trading accounts, stronger market liquidity and
investors' deposit balances at securities companies.
 Our data shows that investors' cash balance at securities companies reached
VND70 trillion at the end of June, up 24.2% from the end of March. The cash
balance at end-August is unofficially estimated at VND90 trillion, waiting for good
opportunity to enter the market.
126.3
12.2
16.5
22.5
5.5
0
5
10
15
20
25
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2017 2018 2019 2020 2021
(x)
(Trn
VND)
Dư nợ cho vay ký quỹ Dư nợ margin/GTGD trung bình (lần)
Figure 8: Margin lending continues to rise
20.3
70.2
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Q1 Q2 Q3 Q4 Q1 Q2
2020 2021
(Trn
VND)
Số dư tiền gửi của NĐT tại CTCK
Figure 7: Investors’ cash balance at securities companies continue to rise
600
800
1,000
1,200
1,400
1,600
VN-Index
VN-Index
Investors’ cash balance
Margin lending Margin lending/Daily avg trading val (x)

11
Demand from retail investors continues to keep stock market momentum,
however, money inflow into midcaps is weakening
Figure 9: Money flow (accumulated) by Groups of Investors since 1/7/2021
 The demand for stocks mainly comes from retail investors whose money flow
continues to rise sharply, especially during the market sideway period [from the
beginning of August onwards] while foreign investors maintain a strong net-sell
position and domestic organizations also tend to net sell in the period.
 Retail investors net bought nearly VND16.7 trillion since the beginning of August,
up 7 times from the previous month. Their net buying from the beginning of July
reached VND 19.1 trillion (see Figure 9).
 Foreign investors net-sold heavily Real Estate, Food and Fund certificates from
the beginning of August. As we shared in FiinTrade Talk 3, the main sellers are
ETFs including Fubon FTSE Vietnam ETF and xtrackers FTSE Vietnam Swap
ETF which often enters or exits the market quickly.
 Trading value by market capitalization on HOSE shows that cash flow into small-
cap stocks (VNSML) is rising thanks to active trading of stocks in Steel sector
(NKG, TLH), Retail sector (DGW, PET) and Construction & Materials (LCG, TCD,
DPG).
 Meanwhile, cash flow into large-cap stocks (VN30) and mid-cap stocks (VNMID)
showed signs of cooling down. This is partly because banking stocks such as
TCB, VPB and some large caps such as VIC and HPG have been less active
recently.
43.7%
30.8%
16.5%
1,000
1,100
1,200
1,300
1,400
1,500
0%
20%
40%
60%
80%
4 15 1 17 1 15 1 15 4 14 1 15 1 15 2 16 1 10
T1 T2 T3 T4 T5 T6 T7 T8 T9
VN-Index
%
total
trading
value
VN-Index Tỷ trọng GTGD VN30 Tỷ trọng GTGD VNMID Tỷ trọng GTGD VNSML
Figure 10: Money Inflow into Midcaps shows signs of weakening
Source: FiiinPro Platform, order-matching data only
Source: FiiinPro Platform, order-matching data only
VN30 VNMID VNSML
19.1
(11.9)
(7.2)
1200
1250
1300
1350
1400
1450
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
7 14 21 28 4 11 18 25 1 10
Jul Aug Sept
VN-Index
Cum.
trading
value
(Trn
VND)
VN-Index Retail investors Institutions Foreign investors

12
Demand for most active stocks: banks, securities, steel and real estate
Figure 11: Real estate attracts net inflows from Retail investors (1/7-10/9/2021)
 As cash flow does not enter VN30 stocks, we see that retail investors boosted net
buying of shares of industrial developers, Fertilizers and net buy slightly shares of
Petroleum Distributors.
 These are small and medium cap companies with positive earnings prospects
supported by their own stories which are analyzed in detail in Part 2 of this report.
Figure 12: Retail net inflows seen in Fertilizer, Petrol distributors, and
Industrial Property (1/7-10/9/2021)
 The data shows that in the 4 groups of stocks Banks, Securities, Steel and Real
estate have "rocked" the market, the cash flow from retail investors into Steel and
Securities stocks decreased slightly and into Bank stocks remains stable.
 The residential real estate stocks attracted strong cash flow from retail investors
with the accumulated net buying value of VND 14.3 trillion since July 1, 2021 (see
Figure 11), of which 90% flows into VIC, VHM and NVL shares to support their
price rather than a real demand. Other real estate stocks net bought by retail
investors included DIG, KDH, HDC and NLG, but in smaller scales.
2.8
14.3
(0.9)
(2.0)
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
7 14 21 28 4 11 18 25 1 10
Jul Aug Sept
Cum.
net
inflows
(Trn
VND)
Banks Real estate Securities Brokerage Steel
294.1
322.9
727.3
(400.0)
(200.0)
-
200.0
400.0
600.0
800.0
7 14 21 28 4 11 18 25 1 10
Jul Aug Sept
Cum.
net
inflows
(Bn
VND)
Industrial Property Petrol Distributors Fertilizers

13
Alternative investment channels are less attractive than stocks
Gold and USD, in our opinion, are no longer investment priorities for generation of
young Vietnamese investors. These investors have investment knowledge and have
accumulated a lot of experience in stock investment over the years. We also believe
that the above-mentioned cash flows (including cash flow from selling securities) are
expected to stay in the stock market until at least the end of Q1-2022 when production
and business activities are restored to 50-60% pre-pandemic level:
 Deposits: The current effective deposit interest rate is only 4.4% (average for all terms).
This is clearly not an attractive level compared to any other investment channels.
 Corporate bonds: According to our data, the coupon interest rate of corporate bonds
(mainly real estate) has decreased to about 9% on average for 3-year term from the
beginning of 2021. This level is very high compared to deposit interest rate as mentioned
above. However, the problem of this investment channel is the risk of default of the
issuer if the bond selection is not carefully evaluated through independent appraisal or
credit rating. Because in the context of COVID-19 outbreak and bank financing real
estate is tightened under recent policy of the State Bank, the "restructuring" from bond
debt to bank credit will be more difficult which increases the risk of investing in corporate
bonds.
 Real estate: Still in a quiet period due to strict lockdown conditions. Yield from real
estate leasing is very low because the demand for retail, business and residential
premises all dropped sharply after 4 Covid-19 lockdowns while property prices are still
anchored at a high level.
 Gold: The domestic gold price premium is at a record level of 9-10 million VND/tael
compared to international market price, putting physical gold investors at great risk.
 USD: current 0% interest rate on USD deposit, abundant foreign currency supply as well
as low likelihood of VND devaluation in the context of Vietnam's strong foreign exchange
reserves make USD holding no longer profitable but only a "reserve".
Figure 13: Deposit growth from individuals at very low level in 2021
Notes: Cumulative monthly growth rate (YTD)
8.0%
5.1%
2.9%
-2%
0%
2%
4%
6%
8%
10%
12%
Feb Apr June Aug Oct Dec
2019 2020 2021

Part 2:
Factors driving the SUPPLY

15
21.5
32.8 34.1
73.1
19.9
38.7
67.3
2016 2017 2018 2019 2020 2021
Share
issue
value
(Trn
VND))
Share issue value (Completed) Share issue value (Planned)
On supply side, new share issue and insiders trading keep rising
Figure 14: New share issue expected to hit record high in 2021
Figure 15: Internal & major shareholders plan to boost selling
 Listed companies plan to issue 6.3 billion new shares to raise VND67.3 trillion
(nearly US$3 billion) by the end of 2021. The share issuance is equivalent to 2.6%
free-float market capitalization by value and 6.3 times higher than average daily
trading value by volume.
 Most of the planned share issuance is taken by Banks (VCB, BID, LPB, TPB), Real
estate (FLC, IDC, DIG, EIN), Securities Brokerage (HCM, SSI, BSI) and Basic
Resources (MSR). If successfully conducted, the year of 2021 is set to mark a
record high for new share issuance by listed companies so far. Year to date, new
share issuance has reached VND38.7 trillion.
 New share issue will increase the amount of tradable shares in the market and this
is believed to ultimately support the stock price in the short term [as seen among
certain stock prices of listed securities companies earlier this year]
 In addition, the market supply is also contributed by initial listings. In the year to
mid-September, 3.4 billion new shares worth VND103.9 billion (free-float market
cap) were debut on local three bourses.
 Directors as well as major shareholders of listed companies plan to sell 198.7
million shares until the end of October 2021 while the purchase volume is planned
at 71.7 million units, resulting in a net sell volume of 95 million units, worth VND3.6
trillion.
 The sell/buy value by management board members and major shareholders is
quite small compared to the average daily trading value [estimated at VND27.4
trillion], but it could have impact on price movement of some certain stocks.
Notes: Updated as of Sept 10, 2021
Source: FiiinPro Platform. Notes: Updated as of Sept 13, 2021
1,420.3
1,243.5
1,345.3
VN-Index
(804) (1,499) (1,645)
800
(814)
(4,967)
4,180
(318) (10,731)
(4,295)
700
Jan Feb Mar Apr May June Jul Aug Sept Oct
2021
Net value (Completed) Net value (planned)

16
30.0%
-46.9%
134.5%
83.5%
-60%
-10%
40%
90%
140%
190%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2018 2019 2020 2021
Tăng trưởng Doanh thu thuần (YoY) Tăng trưởng LNST (YoY)
How is the quality of stocks? Listed companies reported solid earnings growth
and quality prior to the fourth COVID wave
Corporate earnings heightened the continuing recovery in Q2-2021 but the year-
on-year growth rate slowed from the first-quarter peak:
 Corporate earnings grew 83.5% against the same period last year, driven by a
strong YoY growth of 30% in sales as well as the improvement of profit margins.
Corporate sales and earnings increased 17.3% and 29.6%, respectively, from Q1-
2021.
 Year-on-year earnings growth was largely driven by (i) cyclicals (Basic
Resources, Oil & Gas) and Industrial Goods & Services thanks to short-term
benefits from global supply chain disruption and (ii) demand revival after the third
COVID wave, including Retail and Personal & Household Goods.
Strong growth in Q2-2021 accounting profits was mostly contributed by core
earnings:
 Earnings before interest and taxes (EBIT) and Earnings before interest, taxes,
depreciation, and amortization (EBITDA) rose 96.5% and 72.3% YoY in Q2-2021,
respectively. Compared to Q1-2021, EBIT and EBITDA grew 17.5% and 40.8%.
 The expansion of EBIT margin, by 3.2 percentage points YoY and 1.5 pp QoQ in
the second quarter, is attributed to the core earnings improvement.
 Financial incomes were modest in the second quarter, accounting for 3% of
aggregated earnings and sliding 61% from a year earlier.
 Cash flow from operating activities were positive in Q2-2021, reverting from
negative VND25 trillion in the first quarter, while debt servicing capacity keeps
improving. This is a positive signal for listed companies in bracing for headwinds
in the fourth COVID wave.
Figure 16: Corporate sales & earnings growth (YoY)
Figure 17: EBIT & EBITDA growth (YoY)
96.5%
72.3%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2018 2019 2020 2021
Tăng trưởng EBIT (YoY) Tăng trưởng EBITDA (YoY)
Notes: Data covers 1007/1649 non-financials, accounting for 70.8% of the total market cap
Net sales growth (YoY) Net earnings growth (YoY)
EBIT growth (YoY) EBITDA growth (YoY)

17
8.0%
43.7%
-20%
-10%
0%
10%
20%
30%
40%
50%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2018 2019 2020 2021
Operating income growth (QoQ) Operating income growth (YoY)
The banking sector, accounting for 26% of total marcap, still maintained strong growth till Q2-2021
despite data showing earnings peaked in Q1-2021.
Source: FiinPro Platform. Note: Data from 27 listed banks with total outstanding loans and
corporate bonds of VND7,43 trillion, accounting for 76% of the system's credit.
Total operating income still grew; profit after tax decreased compared to the
previous quarter, but still increased strongly compared to the same period:
 In Q2-2021, total operating income of 27 listed banks grew by 8% QoQ and 43.7%
YoY. In H1-2021, their total operating income rose by 35.9% YoY.
 However, provision expenses jumped by 56.3% QoQ and 80.4% YoY. Operating
expenses rose only 5.4% QoQ and 24% YoY.
 Therefore, profit after tax fell by 10.8% QoQ and rose by 41% YoY. In H1-2021,
profit after tax of banks climbed by 58.1% YoY.
Figure 18: Total operating income growth
The impact of new policies:
 As we have analyzed in previous editions, due to Circular 01/2020/TT-NHNN,
provision expenses have not yet fully reflected the impact of Covid-19 on profits,
as banks can maintain the same loan classification for loans affected by Covid-19.
 With Circular 03/2021/TT-NHNN amending Circular 01 applying a 3-year
provisioning schedule, the pressure on banks is reduced. However, we still
believe that banks will balance profit and provision expenses; this is shown in the
analysis of non-performing loan coverage ratio on Page 43.
 Circular 14/2021/TT-NHNN amending Circular 01 allows banks to extend the debt
restructuring period by 6 months compared to the old regulation, until June 30,
2022. However, Circular 14 does not adjust the provisioning schedule, meaning
that banks will continue to make additional deductions for the difference according
to the old schedule. Thus, Circular 14 is more about supporting customers than
banks. However, for some banks, Circular 14 will help reduce non-performing loan
ratio and provision pressure in 2021.
Figure 19: Profit after tax (PAT) growth
-10.8%
41.0%
-40%
-20%
0%
20%
40%
60%
80%
100%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2018 2019 2020 2021
PAT growth (QoQ) PAT growth (YoY)

18
2.6
2.5
1,334.7
300
500
700
900
1,100
1,300
1,500
1.0
2.0
3.0
4.0
VN-Index
P/B
(x)
P/B +/-1 Stdev
16.1
17.4
1,334.7
300
500
700
900
1,100
1,300
1,500
5.0
10.0
15.0
20.0
25.0
VN-Index
P/E
(x)
P/E +/-1 Stdev
So, the stock market is cheap or relatively expensive?
Figure 20: Trailing P/E of VN-Index in 10 years, 2011 - 2021
 VN-Index is trading at the trailing P/E of 16.3x, below the 10-year average plus one
standard deviation (17.4x) and equivalent to the pre-COVID 1-year average. So, is
this cheap or relatively expensive?
 The current valuation looks rather cheap relative to earnings forecast of FY2021, or
even FY2022. If 2H2021 earnings are equal to that of the same period last year,
FY2021 earnings growth could be 31.5%, translating into a forward P/E (2021) of
16x. Based on our earlier forecast on FY 2021 earnings growth (+27%), the forward
P/E (2022) is 13.2x.
 Some believed that such the forecast are difficult to be achieved because of Covid-
19 pandemic. Except for Travel & Leisure that is seriously hurt by COVID, we see
there are plenty of opportunities for leading companies with strong financial base to
expand market share and improve operation efficiency in the post-COVID era.
Masan Group (MSN), in our view, is a prominent example.
 What does this imply for Vietnam’s stock market? Most importantly, under the
current circumstance, “expensive” valuation does not imply the market correction but
depends mainly on “DEMAND” which could be evidenced in new cash flow and
investor sentiment, instead of purely on corporate fundamentals and earnings
prospects. For example, after the “deadly” period in May, Indian stock markets
entered strong rallies, prompting the P/E ratio of the Sensex Index to double the
valuation multiple of the VN-Index, thanks to strong money inflows of retail investors
amidst low interest rate regime. On the other hand, “cheap” valuation does not hint
at further market uptrend if there is absence of money inflows or weak investor
sentiment.
Figure 21: Trailing P/B of VN-Index in 10 years, 2011 - 2021

Part 3:
Which sectors to watch?
Rationale
3.1. Food
3.2. Retail
3.3. Chemicals
3.4. Steel
3.5. Real Estate
3.6. Construction and Materials

20
Rationale
 With the ongoing negative impact of fourth COVID wave, we expect a year-on-year
decline in third-quarter GDP growth, causing the economy to grow at a slower-
than-targeted pace in 2021. Leading indicators in July and August 2021 were
supporting our expectations. The bright spot is that key fundamentals of listed
companies remain stable, including the ample liquidity of the banking system and
strong financial strengths of real estate companies.
 It appears that the impact of fourth COVID wave on quality and prospects of
corporate earnings could not be hardly anticipated. Corporate earnings growth in
the second half of 2021 are about to slow from 1H2021. Yet the impressive
earnings in 1H2021 (+68.5% YoY) could help secure the full-year growth rate at
31.5% even if 2H2021 earnings are unchanged from a year earlier or 13% if
2H2021 earnings are equal to just 70% of the same period last year. In FiinPro
Digest #8 issued on June 10 (or 1.5 months prior to the peak of fourth COVID
wave), we projected corporate earnings growth to accelerate to 20.7% in 2021.
 We have seen a strong money flow rotation among sectors and stocks in the
market. Over the past three months, money flowed into midcaps and pennies,
instead of bluechips as seen earlier. Despite being broadly considered speculative,
this could indeed be “smart” money. Looking back to the first half of 2020 when
Covid-19 first broke out, companies having market cap of VND10 trillion and above
saw their aggregate earnings to dip 36% YoY while smaller ones posted a slower
decline of 26% with faster post-COVID revival.
 In danger lies opportunities! Except for Travel & Leisure that is seriously hurt by
COVID, there are plenty of opportunities for leading companies with strong financial
base to expand market share and improve operation efficiency in the post-COVID
era. Masan Group (MSN), in our view, is a prominent example.
 Given underlying fundamentals, short-term growth outlook and market supply-
demand circumstances, we are positive that there are a lot of sectors which would
do well to become bright spots on the horizon.
 Sectors supported by rising exports: Steel, Chemicals, Industrial Goods
& Services
 Sectors supported by booming demand during social-distancing period:
Food Products
 Sectors poised to stage robust revival if partial reopening is applied for
cities and provinces which are now under full social distancing: Retail and
Real Estate
 Sectors expected to benefit from the government’s efforts to ramp up
disbursement of public investment: Construction & Materials
 Banks, Insurance and Securities Brokerage are also covered in the report
thanks to their large contribution to total market capitalization as well as
their impacts on stock market movements.
 In addition, we remain constructive on a variety of sectors which were previously
covered in our publications: Technology Hardware & Equipment, Utilities (Water,
Electricity), Packaging and Logistics.

21
We’ve seen that certain sectors have more room to grow in second half of 2021
despite negative impacts of fourth COVID wave
Figure 22: Fulfilment of 2021 earnings plans by sector (%)
 In first half of 2021, 13/16 non-financial sectors completed above 40% of FY2021 management estimates which were approved by shareholders earlier this year. Travel & Leisure is
an exception with full-year aggregated loss projected at VND14.4 trillion due to poor performance of airliners (HVN, VJC) and travel companies.
 Real estate: The first-half earnings was equal to just 39% of FY2021 management estimates, but the 2021 growth forecast at 14% could be reached thanks to (i) bulk sales at
Vinhomes (VHM) and (ii) profit bookings in third and fourth quarters.
 Food & Beverage: Apart from booming demand for food products given social distancing and temporary supply chain disruption, earnings growth of Food & Beverage in 2021 could
be heightened by EBITDA margin improvement at MSN.
144%
99%
68% 66% 64% 62% 57% 49% 49% 47% 46% 44% 44% 39%
17%
65%
Dầu khí Tài
nguyên
Cơ bản
Tiện ích Hàng &
Dịch vụ
công
nghiệp
Hóa chất Hàng cá
nhân &
Gia dụng
Bán lẻ Viễn
thông
Dược
phẩm
Xây dựng
và Vật
liệu
Thực
phẩm và
đồ uống
Ô tô và
phụ tùng
Công
nghệ
Thông tin
Bất động
sản
Truyền
thông
Du lịch và
Giải trí
% hoàn thành KH 2021 Tăng trưởng LNST 1H2021 (YoY)
% of 2021 mgt estimate 1H2021 earings growth (YoY)
Pharma
Basic
Resour
ces
Auto &
parts
Utilities Construct
ion &
materials
Oil &
gas
Retail Real
estate
Chem
icals
IT Media Travel &
leisure
Telcoms
Personal &
household
s goods
Industrial
Goods &
services
Food &
beverage
Pharma

22
12.6 14.2 10.4 14.0 12.8 15.0 14.1 13.9 23.6 15.0 16.2 20.3 12.8 60.7 79.9 17.2
9.4
11.1 12.7
15.3 15.7
16.6 17.2
18.6
19.9 20.4
22.0 22.2 22.5
-
-
5.0
10.0
15.0
20.0
25.0
30.0
Tài
nguyên
Cơ bản
Ô tô và
phụ tùng
Hàng cá
nhân &
Gia dụng
Tiện ích Xây dựng
và Vật
liệu
Dầu khí Dược
phẩm
Bán lẻ Bất động
sản
Hóa chất Hàng &
Dịch vụ
công
nghiệp
Thực
phẩm và
đồ uống
Công
nghệ
Thông tin
Truyền
thông
Viễn
thông
Du lịch
và Giải trí
P/E (tr.bình 3 năm) PE (TTM)
Basic
Resour
ces
Auto
&
parts
Utiliti
es
Construct
ion &
materials
Oil
&
gas
Pharma Retail Real
estate
Chem
icals
IT Media Travel &
leisure
Telcoms
Person
al &
househ
olds
goods
Industrial
Goods &
services
Food &
beverag
e
1.9 2.1
1.4
2.3
1.6
2.7
Ngân hàng Bảo hiểm Dịch vụ tài
chính
P/B (tr.bình 3 năm) PB (TTM)
P/E (3-yr avg)
Banks Insurance Financial
services
P/B (3-yr avg)
Almost all sectors look to be at expensive compared to 3-year average, but some have
chance to be re-rated thanks to positive earnings growth prospect
Figure 23: Which sectors have chance to be re-rated in coming months?
 Almost all sectors look to be at expensive levels in comparison with their own 3-year average. Yet in our view, there are some sectors poised to have brighter earnings growth outlook
or strong revival in post-COVID era, enabling their valuation multiples to be re-rated: Food Products, Retail, Chemicals, Construction & Materials.
 From valuation perspective, RE shares trade at an attractive forward P/E ratio of 15.2x for 2021. The current trailing P/E is 19.3x, marginally close to the 3-year avg minus 1 SD.

23
Food producers posted slight increase in Q2-2021 net sales but improvement of EBITDA
margin is a key to strong earnings growth:
 Sales growth is fueled by booming demand for food products and shopping at
supermarkets and minimarts in major cities and provinces (Hanoi, HCM City, Binh Duong
province) once wet markets are temporarily closed during social distancing period.
 First-half earnings of food producers rose 31% YoY and fulfilled 48% of FY2021
management estimates. In 2021, food producers are projected to post a 24.5% earnings
growth and we think that the projection is within reach thanks to the improving EBITDA
margin.
Local investors boosted net buying of food stocks since early July 2021:
 Food stocks are among few sectors attracting net money inflow of local retail and
institutional investors while being net sold by foreign investors.
 Food stocks have risen 6.6% since the beginning of July 2021 as soon as the fourth
COVID wave became worse with surging number of infections. Food stocks
underperformed market, with year-to-date modest increase of 11% (vs. VN-Index +22.6%).
 Food stocks are trading at a reasonable price relative to earnings growth [22.2x] which
could be re-rated to 3-year average (20.3x) in the wake of positive earnings growth in the
back half of 2021.
Stocks to watch:
 MSN and subsidiaries (MML, MCH): MSN expects Q3-2021 earnings to reach VND1.2
trillion [vs. VND29 billion loss in Q3-2020] because EBITDA margin at Vincommerce
(VCM), the operator of VinMart supermarkets and minimarts, keeps improving. The margin
was at 2.1% in 1H2021 vs. negative 8.4% in 1H2020. Stronger sales of MSN’s food
products, especially instant noodles, are also driven by recent news on the presence of
banned substances in certain batches of Acecook instant noodle products.
 Quang Ngai Sugar JSC (QNS): We remain positive on business result of QNS in the
second half of 2021, expecting the HOSE-listed sugar producer not to be hurt by higher
input cost (materials and freight) which could be transferred to end users (consumers).
Food producers: benefited from temporary disruption in domestic supply chain;
local investors boosted net buying since early July 2021
Figure 24: Net sales and EBITDA growth of Food Products (YoY)
Figure 25: Net inflows by group of investors in Food Stocks since July 1
Source: FiiinPro Platform, order-matching on HOSE only
(4.18)
1.76
14.0%
27.5%
-2.0
0.0
2.0
4.0
6.0
8.0
-10%
0%
10%
20%
30%
40%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021
+/-
Margin
(%
point)
Growth
(%)
Thay đổi biên EBITDA (YoY) Tăng trưởng Doanh thu thuần (YoY) Tăng trưởng EBITDA (YoY)
3.1. Food Stocks
343.9
(1,327.3)
983.4
620
640
660
680
700
720
740
760
780
(1,500.0)
(1,000.0)
(500.0)
-
500.0
1,000.0
1,500.0
7 14 21 28 4 11 18 25 1 10
Jul Aug Sept
Sector
price
index
Cum.
net
inflow
(bn
VND)
Sector price index Retail investors Foreigners Local institutions
+/- EBITDA margin (YoY) Net sales growth (YoY) Net EBITDA growth (YoY)

24
The fourth wave of Covid-19 is considered short-term and temporary headwind for
Retailers which are expected to stage a strong recovery upon gradual reopening in
affected cities and provinces:
 Leading retailer Mobile World (MWG) reported its July sales dropping 10.9% from June,
but edging up 9.6% YoY thanks to higher sales at Bach Hoa Xanh grocery retail chain.
Earnings, however, declined 29% YoY because profit margin narrowed due to higher input
costs (including freight). This is seen as a negative signal for MWG’s third-quarter
earnings growth, but the situation could be reversed if Covid-19 is soon put under control.
 Other retailers (including DGW, FRT, PET) were less impacted by the pandemic thanks to
strong sales of IT products (laptops, smartphones, tablets) and office equipment and larger
market shares because small shops were forced to close during social distancing period.
 Looking ahead to 2022 and beyond, possible launch of the first made-in-Vietnam vaccine
against Covid-19 virus and rising demand for 5G devices are the two major catalysts for
earnings growth of Retailers.
Retail stocks, however, have outperformed the market despite COVID impacts:
 Retail stocks surged 54.3% year-to-date, sending their price-to-earning valuation to far
beyond the 3-year average (18.6x vs. 13.9x). Compared to July 1 as soon as the number
of Covid-19 infections started surging in HCM City, retail stocks increased 19.3%, led by
DGW (+58.1%), PSD (+55.1%), FRT (+48%) and PET (+23.9%).
 MWG shares had smaller gains (+18.4%) as its earnings in July declined 29% YoY as a
result of temporary closure of 2,000 shops of Dien May Xanh and The Gioi Di Dong chains
during social distancing period. Online channel contributed as low as 11% of MWG’s total
sales while Bach Hoa Xanh grocery retail chain, which accounted for 44% of total sales,
still faced loss in the previous month.
Retailers: Fourth COVID wave seen as temporary headwind, 2022 outlook positive
Figure 26: Net sales & earnings growth of Retail (YoY)
26.2%
88.0%
-40%
-20%
0%
20%
40%
60%
80%
100%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021
Tăng trưởng Doanh thu thuần (YoY) Tăng trưởng LNST (YoY)
Figure 27: EBITDA growth & margin change of Retail (YoY)
0.75
0.47 0.57
41.1%
-0.5
0.0
0.5
1.0
1.5
2.0
-10%
0%
10%
20%
30%
40%
50%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021
+/-margin
(percentage
point)
Growth
(%)
Thay đổi biên EBITDA (YoY) Tăng trưởng EBITDA (YoY)
3.2. Retail Stocks
Net sales growth (YoY) Earnings growth (YoY)
+/- EBITDA margin (YoY) EBITDA growth (YoY)

25
Chemicals ranked among few sectors having exports strongly buoyed by COVID-related
disruption on global supply chain:
 Following robust 1H2021 earnings results, fertilizer manufacturers (DPM, BFC, DCM, LAS,
DDV) continue to benefit from strong increases [by 20% in August] in selling prices
because disruption on global supply chain has not yet been improved. Rising input costs
[weighed down by coal and gas] were reverted to end users. Ongoing disruption on apatite
ore supply from Apatite Vietnam Co., meanwhile, could hurt phosphate fertilizer makers
(LAS, DDV).
 Rubber and other chemicals: Rising exports in July and August are considered the most
important earnings growth driver in third quarter.
Solid growth prospect could support the re-rating of Chemicals stocks:
 Chemicals stocks have risen 13% since early July, bringing their P/E valuation multiple to
23.2x, higher than the 3-year average (21.8x).
 Consider low liquidity and market cap size, chemicals stocks look attractive to speculative
investors. Retail investors boosted net buying Fertilizers while being net sellers of shares
of Rubber and other Chemicals (including DGC).
We are positive on DGC and PLC thanks to their strong growth prospects:
 DGC: 1H2021 earnings grew 33.2% YoY, sending its shares to up 142.8% YTD. DGC
shares are trading at the trailing price-to-earnings (P/E) ratio of 18.4x, but the forward
earnings multiple of 12.9x is making the stock quite attractive. DGC has released Q3-2021
guidance with VND2.3 trn in revenue (+45.2% YoY) and VND400 bn in earnings (+69.9%).
The company also surprised the market by raising its 2021 earnings estimate by 36.4%, at
VND1.5 trn, citing high demand for P4 (used in electronic industry) and wet phosphoric
acid (used in fertilizer manufacturing) in the wake of China’s supply disruptions. Given the
operation of new mining site No. 25, DGC’s profit margins are expected to improve thanks
to cost savings.
 PLC: In 1H2021, the lubricants and asphalt supplier completed 83% of management
estimate. The government’s effort to accelerate public investment is considered a strong
catalyst for future growth of PLC, enabling its shares to be re-rated to attractive level.
Chemical manufacturers: Export remains the most important growth driver
Figure 28: Net sales growth of sub-sectors in Chemicals (YoY)
Figure 29: Net money flow of retail investors by sector (1/7-10/9/2021)
Source: FiiinPro Platform, only order-matching session on HOSE
3.3. Chemicals Stocks
(514.1)
727.3
(168.8)
(600.0)
(400.0)
(200.0)
-
200.0
400.0
600.0
800.0
7 14 21 28 4 11 18 25 1 10
Jul Aug Sept
Bn
VND
Chemicals Fertilizers Rubber
36.8%
32.0%
71.1%
-40%
-20%
0%
20%
40%
60%
80%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021
Fertilizers Chemicals Rubber

26
Steel sector is relying on exports because domestic sales of construction steels hit
stagnancy during fourth COVID wave:
 Hoa Phat Group (HPG) reported 73% year-on-year growth in steel sales in August, mostly
thanks to the consumption of HRC (hot-rolled coil) while domestic construction steel sales
dropped 17% YoY. Galvanized steel companies (HSG and NKG) saw exports up 75% and
62% YoY in July, respectively, but their domestic sales declined 15.7% and 23%.
 Strong export activity is a major driving force for short-term earnings growth of galvanized
steel makers (HSG, NKG), but it is not enough to generate a spike in HPG’s earnings in
Q3-2021. We think that HPG is hard to maintain its third-quarter EBITDA margin at as high
as 35% (as seen in Q2-2021). Selling prices hovered at May-to-date lows in recent weeks
while HRC prices, one of key products of HPG, have edged up slightly (<10%) since early
July. Coking coal became the most expensive raw material input for steel makers, with
coking coal FOB (Australia) price for October contracts rising by 112% since early July.
 Vietnam’s steel exports to Europe and the U.S., two of key overseas markets of NKG and
HSG, witnessed steady growth in both volume and value in July and are likely to continue
upsurge in coming months thanks to tight supply from China, which manufactures 57% of
the world’s steel. Lower-than-expected demand in China, the biggest buyer of HPG’s raw
steel, caused Vietnam’s July steel exports to that market down 67% YoY in volume and
46.7% in value. In order to lessen its reliance on China and domestic market, HPG is
seeking to boost HRC exports to the U.S., with the first delivery scheduled for Nov 2021.
Steel shares surged on “hot” money inflow:
 Despite strong correction in July, steel shares climbed 80% YTD. Speculative money
rushed into certain steel stocks (NKG, KVC, TLH, TTS), prompting the price index of the
sector to outperform the market with a 10.3% rise in a week vs. VN-Index +2.3%.
 Retail investors are net sellers of steel shares, with net selling value of VND677 billion in
nine consecutive sessions from August 27. Local institutions are in net buying position.
Are steel shares trading at reasonable valuation?
 Steel shares are trading at the trailing P/E of 8.6x, marginally near 10-year average minus
1 SD (6.16x) and below 3-year avg (10.7x). For such a cyclical sector like steel, we think
that the current valuation looks quite reasonable in anticipation that short-term growth of
HPG, Vietnam’s top listed steel maker, could be negatively impacted by domestic
stagnant sales.
Steel makers: Short-term growth is buoyed by rising exports in the wake of domestic
stagnant sales
Source: FiinPro Platform
Figure 30: Net sales & earnings of Steel (YoY)
8.6
0
200
400
600
800
1,000
1,200
-
5.0
10.0
15.0
20.0
25.0
30.0
Price
index
P/E
P/E +/-1 Stdev Chỉ số giá
Figure 31: Trailing P/E of Steel stocks in 10 years (2011-2021)
3.4. Steel Stocks
Sector price index
8.15
64.6%
319.1%
(5.1)
(0.1)
4.9
9.9
14.9
-100%
-50%
0%
50%
100%
150%
200%
250%
300%
350%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021
+/-
margin
(ppt)
Growth
+/-EBITDA margin (YoY) Net sales growth (YoY) Earnings growth (YoY)

27
A very huge plan on new share issue is expected to fuel the rally of real estate (RE) shares in the
rest of 2021:
 In the context of restricted credit from banks or via corporate bonds, 20/124 listed RE companies,
mostly residential RE developers, plan to raise VND13.1 trillion by issuing 952 million shares from
now till end-2021. The new issues will be 3.3x average daily trading value and 10x average daily
trading volume of RE stocks over a month.
 RE shares have dropped 6% since early July as soon as the number of Covid-19 cases started to
escalate. New share issues increase supply of shares in the market and, in our view, could hint at an
uptrend momentum for certain RE stocks in the near term, as experienced with shares of brokerage
houses earlier this year. IDJ is an example as its recent strong rally was supposedly linked to the
company’s “new share issue” game.
Valuation and earnings growth prospects of RE sector:
 From valuation perspective, RE shares are trading at an attractive forward P/E ratio of 15.2x for 2021.
The current trailing P/E is 19.3x, marginally close to the 3-year avg minus 1 SD.
 Residential property developers: Net sales and earnings rose 53% and 255% YoY in 1H2021,
respectively, mostly thanks to bulk sales worth nearly VND12.8 trillion by Vinhomes (VHM). VHM,
however, completed as low as 36% of FY2021 earnings estimates. Residential property developers
earlier targeted 30% earnings growth in 2021. We believe that bulk sale transactions by VHM could
continue to contribute mostly to the second-half growth of listed housing developers.
 Industrial property developers: Net sales and earnings increased 21.4% and 102.1% YoY in
1H2021, respectively. Southern industrial parks were severely hit by the fourth COVID wave while
there is a positive sign for industrial property segment in the north. Listed industrial property
developers expect earnings to grow 41.5% in 2021. Small room to hike rents and higher land clearing
costs are among our most concerns for industrial property stocks in 2022.
Stocks to watch:
 Nam Long Group (NLG) and Kinh Bac City Development (KBC) are on our watchlist. We are
impressed by NLG’s project portfolio which recorded strong pre-sales while industrial property
developer KBC is gearing up to be back on right track with gross leasable area of around 1,400ha.
Debt-to-equity ratio of NLG and KBC are below 1x.
Real estate developers: Shares trading at attractive forward P/E while new share
issue could imply an uptrend momentum in near term.
Figure 32: RE developers plan VND13.1 tn new share issue by end-
2021
Figure 33: Trailing P/E of RE stocks in 3 years (2018-2021)
3.5. Real Estate Stocks
5.4 5.5
17.1
21.1
2.6
10.2
13.1
-
5.0
10.0
15.0
20.0
25.0
2016 2017 2018 2019 2020 2021
Trn
VND
Share issue value (Completed) Share issue value (Planned)
19.3
-
100.0
200.0
300.0
400.0
500.0
600.0
-
10.0
20.0
30.0
40.0
50.0
2018 2019 2020 2021
Price
index
P/E
P/E +/-1 Stdev Sector price index

28
Contractors & Material suppliers: witnessed contrasting performance. Materials
shares heat up thanks to tremendous plan on public investment
Figure 34: Net sales & earnings growth of Construction (YoY)
Growth prospects of Construction & Materials companies heavily rely on the
government’s effort to accelerate public investment disbursement:
 Construction: In short term, earnings growth could be stalled by rising prices of
building materials. Second-quarter earnings of listed contractors grew 12.1% YoY but
their earnings dropped 10.5% . Escalating prices of steel and some other building
materials caused their average gross profit margin narrowing to 13%.
 Building materials: In contrast, building materials companies saw Q2-2021 net sales
surging 29.5% YoY while earnings rose 17%. Sharp increases in prices of building
materials enabled their EBITDA margin to expand 4.9 percentage points. Public
investment is a strong catalyst for future growth of Building materials companies.
Shares heat up on the government's five-year plan on public investment:
 Construction and Materials shares have outperformed the market with respective rises
of 6% and 20%, driven by inflows of speculative money from retail investors since mid-
July as soon as the Government submitted for approval a plan on public investment in
the 2021-2025, with to-be-disbursed funds up 1.43 times against the preceding
period.
 Retail investors net bought VND237.4 bn worth of shares of Building materials since
mid-July, doubling the net purchase in the year to July 14, 2021, though there is
unclear signal on the disbursement of public investment now.
Stocks to watch:
 In the gloomy earnings picture of Construction, there were still contractors who “swam
against the tide”. Those are FCN, PC1, DPG, TTA and HHV, which are mostly
engaging in infrastructure construction. Negative cash flow from operating activities
and high leverage are two major concerns for these companies.
 The government’s move to boost disbursement of public investment is a strong
catalyst for earnings growth of Building materials suppliers and we are positive that
DHA, C32 and VLB are among the most beneficiaries.
Figure 35: Net sales & earnings growth of Building materials (YoY)
3.6. Construction & Materials Stocks
(2.08)
12.1%
-10.5%
(3.0)
(1.0)
1.0
3.0
5.0
7.0
9.0
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021
+/-
margin
(pp)
Growth
4.8
16.2%
29.0%
(3.7)
(1.7)
0.3
2.3
4.3
6.3
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021
+/-
margin
(pp)
Growth

Part 4:
Financial Sector
4.1. Banks
4.2. Insurance
4.3. Securities Stocks

30
Banking: Peaking in Q1-2021, earnings are forecast to decline till end-2021 due to a sharp
drop in corporate and retail loan demand
Profit outlook for H2-2021:
 Our data has shown that banking sector’s profits peaked in 1Q2021. The outlook for the last two
quarters of 2021 in our opinion will continue the downtrend due to:
̶ Demand for loans decrease from both corporate credit and personal credit. The data of 10
banks we have shows this trend from Q2-2021 when personal loans declined by 1.2% although
corporate loans still grew by 16% over the same period. However, due to business interruption
in the third quarter, this will greatly affect the growth of outstanding loans.
̶ Policy orientation of the State Bank in reducing lending interest rates to support customers in
the context of the epidemic. Since the effective deposit interest rate is already low (4.4%), the
reduction in lending interest rates will affect banks’ NIM.
̶ Circular 14 will help reduce the pressure of provisioning in 2021 in some banks, while some
banks have proactively increased provisioning in advance.
 Banks achieved a growth of 41% YoY in H1-2021, completing 52.2% of their profit target in 2021.
However, the plans were set by banks at the beginning of the year before Covid-19 forth wave,
hence no longer makes much sense in the current context.
 In our opinion, bad debts will increase sharply due to the pandemic’s impact, which will gradually be
reflected in the business results in the coming quarters and in asset quality. The level of reflection
will depend on each bank's profit model, balance sheet characteristics, and structure of credit by
terms, including corporate bonds.
Cash flow into banking stocks has weakened and valuation has also been lower:
 The market has also partly reflected when in the past 2 months, as banking stock index has dropped
13.7% from the most recent peak while the VN-Index has dropped 4.7%. In fact, cash flow from
individual investors has decreased quite sharply as we have shown in the previous sections. This
has caused banking stock to fall in valuation. The average P/B of the banking sector has decreased
from 2.6x in June 2021 to the current level of 2.2x.
 We think that, if you do not own banking stocks, you should monitor more about the impact of the
pandemic on asset quality as well as the effects of the policies that the State Bank is implementing
to support businesses. However, the signal of the return of cash flow will be an important factor to
watch for investors with T+ trading.
Figure 36: Profits of banks peaked in Q1-2021
Figure 37: Trailing P/B of Bank stocks getting lower in past 2 months
4.1. Banking Stocks
-10.8%
41.0%
-40%
-20%
0%
20%
40%
60%
80%
100%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2018 2019 2020 2021
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
500.0
550.0
1.0
2.0
3.0
4.0
2018 2019 2020 2021
Price
index
P/B
P/B +/-1 Stdev Sector price index

31
Bank's NIM improved in Q2-2021
Figure 38: Net interest margin (NIM) and NIM change (QoQ)
Net interest margin (NIM) of banks improved significantly in Q2-2021̉:
 After a slight decrease in Q1-2021, NIM of 27 banks continued to increase by 6.4 basis
points (bps) in Q2-2021 to 1%, equivalent to annualized NIM of 4%.
 NIM increased as interest income rose while interest expense declined. Interest and
similar income and grew by 3.9%, while interest and similar expenses dropped by 2.3%.
 Data from 22 banks with notes (except ABB, BAB, SGB, SHB, VAB) shows that interest
income from customer loans rose by 5.1% and accounted for 88.1% of total interest
income while interest income debt securities slipped by 1% and accounted for 10.4% of
total interest income.
 Leading banks in terms of quarterly NIM in Q2 included VPB (2.27%), TCB (1.51%), MBB
(1.38%), TPB (1.21%), and HDB (1.17%), equivalent to annuals NIM: VPB (9.09%), TCB
(6.02%), MBB (5.52%), TPB (4.84%), and HDB (4.67%). These are very high NIM levels.
Source: FiinPro Platform.
Note: Data is calculated from 25 listed banks (except BVB and VAB due to non-disclosure or incomplete
disclosure of data). Effective lending interest rate is calculated based on customer loan interest collection
divided by average customer loan balance; effective deposit interest rate is calculated based on deposit interest
expense divided by average customer deposit balance.
Effective lending rate edged up slightly while effective deposit rate remained stable at a
low level. This helped banks improve NIM in Q2-2021:
 Calculating average effective deposit and lending rates shows that interest rate spread in
pre-Covid-19 period was usually around 3%.
 However, from Q3-2020, this gap tends to widen gradually and from Q4-2020 it has
always been at 4% or more.
 It can be seen that effect lending rate tends to decrease slightly, but there is still a gap
between the reduction in lending rates and the reduction in deposit rates.
 This explains why banks' NIM tends to expand from Q3-2020.
Figure 39: Effective deposit/lending interest rate and annualized NIM
4.1. Banking Stocks
(3.1)
0.5 0.3
(4.4)
8.0
1.8 1.4
(0.7)
(1.8)
(5.9)
9.4
7.3
(2.0)
6.4
1.00%
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
0.60%
0.65%
0.70%
0.75%
0.80%
0.85%
0.90%
0.95%
1.00%
1.05%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2018 2019 2020 2021
NIM change (bps) NIM (not annualized)
6.1% 6.4% 6.4% 6.4% 6.3% 6.1% 5.7%
5.0% 4.4% 4.4%
9.1% 9.3% 9.5% 9.6% 9.5% 8.9% 9.1% 9.0% 8.5% 8.7%
3.4% 3.4% 3.5% 3.5% 3.4% 3.1% 3.5% 3.8% 3.7% 4.0%
0%
2%
4%
6%
8%
10%
12%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021
Effective deposit rate Effective lending rate NIM (annualized)

32
 Compared to the previous quarter, net interest income and net fee and commission
income rose by 10.1% and 7.2% respectively while net income from remaining
activities fell by 3.6%.
 However, compared to the same period last year, net fee and commission income
jumped by 52.9% while net interest income and net interest from remaining
activities grew by 46.6% and 11.1% respectively.
 In H1-2021, net interest income, net fee and commission income and net profit from
remaining activities increased by 35.3%, 57.4% and 22.9%, respectively.
Figure 41: Income structure
Source: FiinPro Platform. Note: Data from 27 listed banks with total outstanding loans and corporate
bonds of VND7,43 trillion, accounting for 76% of the system's credit.
Figure 40: Income growth of major segments in Q2-2021
 Compared to Q1-2021, the proportion net interest income (excluding provision
expenses) slid by 2 percentage points from 68.9% to 66.9% due to an increase in
provision expenses.
 This is similar to previous years when the proportion of net interest income
increased in the first quarter of the year and tended to decrease during the year.
 However, if not excluding provision expenses, the proportion of net interest income
rose from 75% to 76.4%, while the proportions of net fee and commission income
and net income from remaining activities slipped from 12% and 12.9% to 11.9% and
11.7%, respectively.
Note: Data from 27 listed banks with total outstanding loans and corporate bonds of VND7,43 trillion,
accounting for 76% of the system's credit; DPRR = Chi phí dự phòng rủi ro
Net fee and commission income still grew strongly YoY but decelerated QoQ
4.1. Banking Stocks
10.0% 7.2%
-3.6%
46.6%
52.9%
11.1%
-10%
0%
10%
20%
30%
40%
50%
60%
Net interest income Net fee and commission
income
Net income from remaining
activities
QoQ YoY
73.6% 70.2% 69.8% 63.9% 69.6% 67.5% 68.3% 64.6% 68.9% 66.9%
12.6% 14.0% 13.0%
13.9%
12.7% 14.5% 15.8% 15.9% 15.0% 16.7%
7.3% 8.8% 8.6% 13.6% 6.2% 6.9% 7.9% 9.0% 7.5% 7.5%
0%
20%
40%
60%
80%
100%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021
Net interest inc. (- provisions) Fee & commission Forex & gold
Securities Other activities Capital/equity investment

33
Contribution of bancassurance income dropped sharply
 Data from 14 banks shows that the contribution of bancassurance income in net fee and
commission income in Q2-2021 tumbled from 47.9% to 26.9%. Net income from bancassurance
dropped by 12.7% QoQ and 2.5% YoY. This continued the trend from Q1-2021 when net income
from bancassurance fell by 13.7% QoQ.
 This shows that it is difficult for bancassurance business to grow after the State Bank bans banks
from forcing borrowers to buy insurance. Moreover, personal credit’s decline in Q2-2021 (See
Page 34) also affected banks’ access to customers.
 Net income from payments of 14 banks rose by 24.2% QoQ and 70.4% YoY. However, the
proportion of net income from payments fell from 29.2% to 23.3% due to strong growth of other
service activities.
 Other service activities (including treasury, brokerage, guarantee, entrustment and agency, and
other income) soared by 238% QoQ and 322.1% YoY. The main reason is net income from
entrustment and agency skyrocketed by 619.4% QoQ and 787.1% YoY.
Source: FiinPro Platform. Note: Data from 14 listed banks accounting for 50.9% of net fee and
commision income of listed banks.
Figure 42: Structure of net fee and commission income
The proportion of securities income also decreased slightly:
 Net Income from securities fell by 11.2% QoQ and rose by 7.7% YoY. In H1-2021, securities
income only edged up by 1.2% YoY.
 Top 5 banks with the highest securities income in H1-2021: VPB (VND1.645 trillion), TCB
(VND1.323 trillion), MBB (VND1.02 trillion), OCB (VND827 billion), TPB (VND549 billion).
 Banks with a high ratio of securities income to total operating income were mainly small banks:
VBB (37.2%), OCB (19.5%), PGB (9.6%), TPB (8.8%), BVB (8.7%). This is the income recognized
when banks sell part of their portfolios and realize profits.
 Net Income from other activities, although slightly decreased, still accounted for the highest
proportion in remaining activities. This income declined by 4% QoQ but jumped by 43.3% YoY.
Source: FiinPro Platform. Note: Data from 27 listed banks with total outstanding loans and corporate bonds
of VND7,43 trillion, accounting for 76% of the system's credit.
Figure 43: Income structure of remaining activities
Net income from entrustment and agency spiked in Q2-2021 while securities income declined slightly
4.1. Banking Stocks
33.3% 25.8% 22.3% 26.8% 29.2% 23.3%
52.1%
52.0%
47.7%
51.2% 47.9%
26.9%
14.7% 22.3% 30.0% 22.0% 22.9%
49.8%
0%
20%
40%
60%
80%
100%
Q1 Q2 Q3 Q4 Q1 Q2
2020 2021
Payment Bancassurance Remaining services
27.1% 25.1% 21.7% 15.4%
24.4% 25.7% 27.2% 19.1% 21.7% 25.3%
17.5%
11.6% 26.1%
21.7%
39.2% 30.7% 21.0% 33.0% 30.1% 27.4%
52.9%
56.1%
49.8%
61.3%
34.7%
38.5% 49.6% 46.2% 46.4% 45.5%
0%
20%
40%
60%
80%
100%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021
Forex Securities Other activities Capital contribution/equity investment

34
Figure 45: Customer loan growth, 2017-2020
However, looking back, personal credit has decelerated over the years:
 From 2018 to 2019, personal credit growth kept decreasing.
 In 2020, across 23 listed banks, personal credit growth dropped sharply to 11%
from 22.8% in 2019 while corporate credit continued to increase strongly again at
15.4%.
 In 2020, the majority of credit growth was in Quarter 4.
Source: FiinPro Platform. Note: Data from 23 listed bank (excluding BAB, BVB, NVB, VAB)
Figure 44: Customer loan growth at 10 banks
Source: FiinPro Platform. Note: Data from 10 listed banks accounting for 22.8% of total customer loans of
27 listed banks.
 The data on corporate and personal outstanding loans was not fully disclosed by
banks in Q2-2021. However, data from 10 banks with notes in their financial
statements (KLB, MBB, MSB, PGB, SGB, SHB, SSB, TPB, VIB, VPB) shows that
corporate credit was the main driver with growth of 16.1%, while personal credit
fell by 1.2%.
 Personal credit are loans with higher interest rates and large net interest margin.
The fact that banks still increase their net interest income and NIM in the context
of personal credit decline shows that the difference between deposit rates and
lending rates for corporate customers tended to increase by the end of Q2-2021.
Personal credit is still in decelerating trend and even declined in some banks
4.1. Banking Stocks
27.9% 26.4% 26.5%
16.4%
-1.2%
20.8%
10.8%
15.4%
18.6%
16.1%
23.5%
17.1%
20.2%
17.6%
8.3%
-5%
0%
5%
10%
15%
20%
25%
30%
2017 2018 2019 2020 6T-2021
Personal loans Corporate loans Total loans
31.6%
23.6% 22.8%
11.0%
14.3%
8.4%
11.6%
15.4%
20.0%
13.9%
16.0%
13.6%
0%
5%
10%
15%
20%
25%
30%
35%
2017 2018 2019 2020
Personal loans Corporate loans Total loans

35
Figure 46: NPL ratio and SML ratio
Note: NPL is equal to the total of loans Group 3–5 over loans to customers. Data from 25 listed banks (excluding BVB and
VAB due to lack disclosure of all quarters)
Figure 47: NPL formation rate (QoQ)
 At the end of Q2-2021, NPL ratio of 25 listed banks fell slightly from 1.41% to
1.4% after increasing in the previous quarter. Group 3 and Group 5 loans rose by
3.3% and 10.4% respectively, while Group 4 loans dropped by 15.7% from the
end of Q1-2021.
 The proportion of Group 3 and Group 4 loans at the end of Q2-2021 was at 23.4%
and 15.1% of the total bad debts respectively, while Group 5 loans accounted for
a very high proportion at 61.5%.
 At the end of Q2-2021, the ratio of Group 2 (special-mentioned loans or SML) of
banks also slid from 1.12% to 1.06% after rising in the previous quarter.
 NPL formation rate (defined as Change in outstanding loans of Group 3-5 loans in
the quarter divided by Average total outstanding loans in the quarter) continued to
be positive. This trend is similar to previous years, but the increase in Q2-2021
was smaller than those of the same periods.
 Circular 03 still allow banks to restructure the repayment term and keep the same
classification for loans of customers affected by Covid-19. Therefore, the current
NPL ratio and the NPL formation rate don’t fully reflect the debt quality of banks.
1.41% 1.40%
1.12%
1.06%
1.0%
1.1%
1.2%
1.3%
1.4%
1.5%
1.6%
1.7%
1.8%
1.9%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021
NPL SML
0.07%
0.11%
-0.24%
0.22%
0.11% 0.12%
-0.35%
0.07% 0.05%
-0.4%
-0.3%
-0.2%
-0.1%
0.0%
0.1%
0.2%
0.3%
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021
Reported non-performing loan (NPL) ratio and special-mentioned loan (SML) ratio fell slightly
4.1. Banking Stocks

36
Note: Data from 25 listed banks (excluding BVB and VAB due to lack disclosure of all quarters
 Provisions/NPLs continued to rise strongly to 121.5% after staying above 100%
for two consecutive quarters, while in previous quarters it was usually above 80%.
 Provisions/(NPLs+SMLs) continued to increase to 69.1% after rising in 4
consecutive quarters to over 60%, while in previous quarters it was usually above
40%.
 Circular 03 allows banks to extend the schedule of provisioning loans affected by
Covid-19 to 3 years. However, with a sharp increase in coverage ratio, it can be
seen that banks have been more aggressive in provisioning to prepare larger
buffers for possible risks, including restructured loans due to Covid-19.
 On the other hand, part of the provisions can be reversed, contributing to future
profits. In other words, banks have made certain choices in balancing between
provisioning and current profit recognition, as we have mentioned in previous
editions. The sharp increase in provisioning this quarter shows that banks have
given priority to risk provisions.
 Recently, the Banking Association proposed to the State Bank of Vietnam to
extend the time for additional provisioning to more than 3 years (maybe up to 5
years) for restructuring loans according to Circular 01 and Circular 03. However,
Circular 14 shows that the State Bank still wants to tighten risk provisioning and
only extends the loan restructuring time to June 30, 2022 instead of December
31, 2021.
Figure 48: NPL and NPL/SML coverage ratio
Banks have been more aggressive in provisioning to prepare larger buffers for possible risks
4.1. Banking Stocks
82.5% 80.4%
86.3% 85.5% 82.4% 82.3% 83.2%
102.2%
108.7%
121.5%
43.2% 43.1% 46.5% 45.8% 42.6% 45.1% 47.8%
58.7% 60.6%
69.1%
0%
20%
40%
60%
80%
100%
120%
140%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021
NPL coverage ratio NPL/SML coverage ratio

37
40
44
84
179
278
292
529
1039
1181
1197
1440
Education & training - 0.6%
Financial services - 0.7%
Hotel & restaurant - 1.3%
Storage, transportation, telecom - 2.8%
Agriculture & forestry - 4.4%
Real estate & consulting - 4.6%
Construction - 8.4%
Other industries - 16.5%
Manufacturing - 18.7%
Commerce - 19%
Personal & community services - 22.8%
Figure 49: Loan structure by sector of some banks, Q2-2021
Figure 50: Loan structure by sector, 2020
Source: FiinPro Platform Note: Data from 11 listed banks (BVB, KLB, MBB, MSB, PGB, SGB, SHB, TPB, VAB,
VIB, VPB)
Source: FiinPro Platform Note: Data from 26 listed banks (excluding BAB)
Although banks’ profits grew well despite Covid-19, it is said that the banking sector
has potential risks as profits and debt quality have not been reflected properly due to
Circular No. 01 and then Circular 03 amending Circular 01.
However, besides the increase in non-performing loan coverage ratio, we assess that
the risk not too worrying for two main reasons:
 Outstanding personal loans of banks account for a large proportion, at around 23%
as shown in the Figures 49-50 and thus credit risk is dispersed, although the
pandemic may affect income of a certain segment of customers.
 The industries that were heavily affected by Covid-19 made up a very small
proportion in the total structure of outstanding loans by industry. For example,
Hotel & Restaurant industry accounted for only 1.7% of the total outstanding loans
of 11 banks as shown in Figure 49.
 In 2019, the four sectors with the largest outstanding loans include Community
and Personal Services (22.8%), Commerce (19%), Manufacturing (18.7%), and
Other Industries (16.5%).
VND trilliion
VND trillion
Covid-hit sectors accounted for low proportion in banks’ outstanding loans as reported
4.1. Banking Stocks
6
25
31
39
77
99
120
219
234
280
398
Education & training - 0.4%
Hotel & restaurant - 1.7%
Financial services - 2%
Storage, transportation, telecom - 2.6%
Agriculture & forestry - 5%
Real estate & consulting - 6.5%
Construction - 7.9%
Manufacturing - 14.3%
Other industries - 15.3%
Commerce - 18.3%
Personal & community services - 26%

38
 At the end of Q2-2021, the value of securities portfolios of 27 listed banks rose by
3% from the end of Q1-2021 to VND 1,332 trillion in the context that government
bond yields edged up but still remained very low.
Source: FiinPro Platform. Note: Data from 27 listed banks with total outstanding loans and corporate bonds
of VND7,43 trillion, accounting for 76% of the system’s credit.
Figure 51: Value of securities portfolios
Figure 52: Value of bond portfolios of SOCBs and JSCBs
 The increase in the portfolio of 25 listed banks was mainly from bonds of other
credit institutions (+VND43 trillion), while corporate bonds dropped (-VND25
trillion) and government bonds only decreased slightly (-VND3 trillion).
 SOCBs (state-owned joint stock commercial banks, including VCB, BID, CTG)
increased their holdings of government bonds (+VND27 trillion) and bonds of
other credit institutions (+VND20 trillion), while slightly trimming their portfolio of
corporate bonds (-VND1 trillion).
 On the contrary, JSCBs (joint stock commercial banks) decreased their holdings
of government bonds (-VND30 trillion) and corporate bonds (-VND24 trillion) while
adding bonds of other credit institutions (+VND24 trillion).
Source: FiinPro Platform. Note Data from 25 listed banks (excluding EIB, VAB due to non-disclosure)
Investment portfolio of banks increased, mainly in "bank bonds"
4.1. Banking Stocks
1293
1332
0%
1%
2%
3%
4%
5%
850
950
1,050
1,150
1,250
1,350
VND
trillion
Securities portfolio value 1-year G-bond yield
268 268 295
475 464 434
129 117 137
182 183 207
18 16
15
191 207 183
0
200
400
600
800
1000
Q4-2020 Q1-2021 Q2-2021 Q4-2020 Q1-2021 Q2-2021
SOCBs JSCBs
VND
trillion
G-bonds Credit institutions bonds Economic organization bonds

39
Figure 53: Cost-to-income ratio (CIR) by quarter
 Banks are still on the trend of improving operational efficiency. CIR was in strong
downward trend over the past 5 years, of which SOCBs had significantly lower CIR
than that of JSCBs.
 The operating cost structure includes mainly personnel expenses, expenses for
management activities and expenses on assets.
Figure 54: Cost-to-income ratio (CIR) by year
 In Q2-2021, cost-to-income ratio (CIR) of 27 listed banks continued to drop to a
record low of 32% after falling to 32.8% in Q1-2021.
 The biggest operating expense is staff expenses (accounting for 58.7% of total
operating expenses in Q2-2021) rose 7.2% compared to Q1-2021.
 Asset expenses (accounting for 16.4%) also increased by 7.2% while administration
expenses (accounting for 19.6%) rose by 12.5%.
 In Q2-2021, banks with CIR below 30% included VPB (23.4%), BID (23.9%), SHB
(25.3%), ACB (25.6%), OCB (27.8%), TCB (28.1%), and CTG (29.7%).
41.0% 40.8%
38.9%
43.5%
40.7%
37.0% 38.2% 38.8%
32.8% 32.0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021
Banks' operating efficiency continued to improve in Q2-2021 as expenses growth was lower than
total operating income growth.
4.1. Banking Stocks
48.8%
45.3%
43.4%
41.1%
38.7%
44.4%
42.0%
39.0%
36.3%
34.5%
52.5%
48.0%
46.5%
44.4%
41.4%
30%
35%
40%
45%
50%
55%
2016 2017 2018 2019 2020
Listed banks SOCBs JSCBs

40
Figure 55: Customer loan growth and customer deposit growth
 As usual, credit growth and deposit growth are calculated as the growth rate
compared to the end of the previous year.
 In 2020, customer deposit growth of 27 listed banks was greater than customer
loan growth by 2%. This is different from previous years when customer loan
growth was always higher than customer deposit growth, even when the gap was
very narrow in 2018 and 2019.
 By the end of Q1-2021, customer loans grew by 3.2%, significantly higher than
customer deposit growth (1.4%). At the end of Q2, this gap widened as customer
loans increased by 7.7% while customer deposits rose by only 4.9%.
Figure 56: Loan-to-deposit ratio (LDR)
93.5%
93.9% 93.8%
94.5%
95.4%
93.7%
93.2%
94.4%
96.2%
97.5%
90%
91%
92%
93%
94%
95%
96%
97%
98%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021
Source: FiinPro Platform. Note: LDR = Customer loans/Customer deposits. Data from 27 listed banks with total
outstanding loans and corporate bonds of VND7,43 trillion, accounting for 76% of the system's credit.
 At the end of Q2-2021, the loan-to deposit ratio (LDR) of 27 listed banks continued
to increase to 97.5% after a strong rise in Q1-2021. The main reason is due to
stronger credit demand while customer deposits grew more slowly. According to
the State Bank, by the end of Q2-2021, credit growth of the economy was 6.44%
while the total means of payment increased by 4.43% (in which deposits of
economic organizations rose by 4.78% and deposits of individuals grew by 2.94%).
 According to Circular 22/2019/TT-NHNN, from January 1, 2020, the maximum LDR
is 85%. The LDR here is different from LDR calculated in accordance with Circular
22, however the rising of LDR in Q2-2021 indicated higher liquidity demand.
Loan-to-deposit ratio (LDR) hit a record high level as credit growth was significantly higher
than deposit growth
4.1. Banking Stocks
20.0%
13.9%
15.9%
13.5%
7.7%
8.7%
14.1%
15.7%
15.5%
4.9%
0%
5%
10%
15%
20%
25%
2017 2018 2019 2020 H1-2021
Customer loan growth Customer deposit growth

41
Figure 57: Average interbank turnover
Figure 58: Average interbank rates
 Increased demand for liquidity is evident in the change in interbank transaction
volume and average interbank interest rate. Compared to 2020, 1-week interbank
turnover in 2021 remained at the same level while overnight interbank turnover rose
sharply, but tended to decrease from the peak at the end of July 2021.
 In 2020, from May, interbank rates dropped sharply. The average overnight
interbank rate in Q4-2020 continued to remain close to 0% (0.1%-0.11%) and only
increased slightly to 0.12%-0.15% in the last 5 days of the year.
 This trend started to change from the end of January 2021 when interbank rates
climbed up again, especially spiked in February (due to the Tet holiday) before
falling and then gradually rising to above 1% from the end of April (1.1-1.54%).
 This trend started to change from the end of January 2021 when interbank rates
climbed up again, especially spiked in February (due to the Tet holiday) before
falling and then gradually rising to the highest level around the end of June (about
1.5%) then tends to decrease. Although the interbank interest rate is significantly
higher than the low level in 2020, it is not too high, especially compared to the
interest rate right before Covid-19; and it is also on a downward trend from the end
of May 2021.
 Thus, it can be seen that although the liquidity demand has increased compared to
2020, in general, the liquidity of banks is still stable. Another factor that shows that
banks have not been under too much liquidity pressure is that deposit interest rates
are still low, and a series of banks continue to cut deposit rates from the beginning
of September 2021.
However, interbank liquidity remained stable
4.1. Banking Stocks
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
Overnight interbank rate 1-week interbank rate
-
20
40
60
80
100
120
140
160
180
VND
trillion
Overnight interbank turnover 1-week interbank turnover

42
After falling in Q1-2021, CASA rebounded slightly in Q2-2021
 In 2020, along with the strong digital transformation process, CASA of 26 listed
banks increased gradually over quarters, in which the CASA of SOCBs was
significantly higher than that of JSCBs.
 However, at the end of Q1-2021, the CASA of both groups decreased. CASA
rebounded slightly at the end of Q2-2021, but still at a lower level than at the end of
Q4-2020.
 The leading banks in terms of CASA are TCB (46.1%), MBB (39.8%), VCB (33.2%),
MSB (28.2%), ACB (22.1%).
Figure 59: CASA
Figure 60: Capital structure by terms
Source: FiinPro Platform. Note: Data from 26 listed banks (excluding VAB due to non-disclosure except Q2-2021)
Source: FiinPro Platform. Note: Data from 26 listed banks (excluding NVB, SHB, VAB VAB due to non-disclosure )
 At the end of Q2-2021, the lending structure of 27 listed banks changed only slightly
compared the end of Q1-2021 with short-term loan proportion edged up from 51.5%
to 51.7% while medium- and long-term loans did not change significantly.
 In terms of long-term capital, in 24 listed banks, funds from one to 5 years had the
highest growth (8.4%) and increased slightly in proportion, while funds over 5 years
had the lowest growth (1.2%).
 Short-term capital ratio did not change significantly. In terms of growth, funds from 3
months to 1 year increased by 5.9% while funds less than 3 months rose by 5.6%
from the end of Q1-2021, leading to a slight increase of CASA as above.
CASA rebounded slightly at the end of Q2-2021, but still at a lower level than at the end of Q4-2020
4.1. Banking Stocks
17.2%
18.1%
19.2%
21.4%
20.7% 21.1%
19.6%
20.2%
21.8%
23.4% 23.0% 23.2%
15.0%
16.0%
16.9%
19.5%
18.7%
19.3%
12%
14%
16%
18%
20%
22%
24%
Q1 Q2 Q3 Q4 Q1 Q2
2020 2021
Listed banks SOCBs JSCBs
50.82% 50.89% 50.91% 54.66% 51.95% 51.86%
35.17% 34.89% 34.82% 31.48% 34.21% 34.25%
9.81% 9.77% 10.16% 9.57% 9.52% 9.75%
0%
20%
40%
60%
80%
100%
Q1 Q2 Q3 Q4 Q1 Q2
2020 2021
< 3 months 3 months - 1 year 1 - 5 years >5 years

43
Insurance stocks: are valued at a very low level compared to historical data because low
interest environment negatively affected return on government bonds and deposits
Earning prospect in H2-2021 of insurance sector:
 Income of insurance companies comes from 2 sources: (i) premiums, including reinsurance
commission, and (ii) financial investment, mostly from deposits and government bonds. In Q2-
2021, revenue of 12 listed insurance companies increased 3.8% QoQ and 9% YoY. However,
insurance activities of these companies recorded a loss of 1,201 billion in Q2-2021. This loss
increased 12.7% QoQ and decreased 28.8% YoY.
 Meanwhile, income from financial investment activities grew slowly due to low interest rates
on deposits and government bond yields as we have pointed out.
Price movement and valuation of insurance stocks:
 These two factors have made earnings of insurance sector not attractive and the total profit
after tax has decreased 15.7% YoY in Q2-2021 despite the high growth of new premiums of
this sector.
 However, in 1H2021, insurance companies completed 71.4% of the FY2021 management
estimates. Price of the non-life insurance stocks (except BVH, VNR, PRE) increased 19.7%
YTD and 9.9% from the beginning of July 2021 when the VN-Index increased 25.7% and
decreased 4.5%, respectively. Insurance stocks are valued at P/B of 1.7x – much lower than
banks and securities stocks despite also operating in the financial sector.
Insurance stocks that should be concerned:
 Unlike banks and securities companies, which are benefit from low interest rate, financial
income of insurance companies is negatively affected by low interest rate of deposit and
government bond yields. Moreover, the absence of internal shareholders transactions has
made insurance stocks less active and explains the low valuation.
 In 2021, many companies plan to partly divest such as BMI, PTI, BVH, and MIG. This will be a
short-term bullish driver for stocks in the stock market. In addition, BVH is still the leading
stock in the insurance sector and an attractive choice. In 1H2021, BVH achieved a
consolidated NPAT of 942 billion VND, +45.1% YoY, completing 71.4% FY2021 plan. We
expect BVH to exceed its 2021 earnings target. BVH share price has dropped 20.9% YTD
while other insurance stocks (except PRE) have all increased significantly (from 11.8% to
50.6%).
Notes: Data from 11 listed insurance companies (excluding PRE as data is only available from Q1-2020)
1.7
100.0
150.0
200.0
250.0
300.0
350.0
1.0
2.0
3.0
4.0
5.0
2018 2019 2020 2021
Price
index
P/B
P/B +/-1 Stdev Chỉ số giá
Sector price index
Figure 62: Trailing P/B of insurance stocks in
4.2. Insurance stocks
1.5%
-15.7%
-100%
-50%
0%
50%
100%
150%
200%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2018 2019 2020 2021

44
Earnings performance of insurance sector
Total revenue increased slightly YoY and QoQ:
 The revenue of insurance companies includes premium revenue, reinsurance
commissions and income from other activities.
 In Q2-2021, revenue of 12 listed insurance companies increased 3.8% QoQ and 9% YoY.
(Numbers in Figure 63 exclude PRE: +4.3% QoQ and +9% YoY.)
 Excluding BVH, the revenue of the remaining 11 companies in Q2-2021 decreased 0.9%
QoQ and increased 7% YoY.
 In H1-2021, revenue of listed insurance companies increased 8.6% YoY including BVH
and 7.8% YoY excluding BVH.
Profit after tax grew at a lower rate than revenue:
 In Q2-2021, profit after tax of 12 listed insurance companies (excluding PRE) only
increased 1.5% QoQ and decreased 15.6% YoY. (Numbers in Figure 64 exclude PRE:
+1.5% QoQ and -15.7% YoY.)
 Excluding BVH, profit after tax in Q2-2021 of the remaining companies increased 9.7%
QoQ and decreased 14.2% YoY.
 In 1H2021, profit after tax of listed insurance companies increased 23.6% YoY including
BVH and 13.7% YoY excluding BVH.
Figure 63: Revenue growth
1.5%
-15.7%
-100%
-50%
0%
50%
100%
150%
200%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2018 2019 2020 2021
4.3%
9.0%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2018 2019 2020 2021
Revenue growth (QoQ) Revenue growth (YoY)

45
Revenue from premiums still increased strongly but did not make profit
Notes: Data from 11 listed insurance companies (exclude PRE because data is only available from Q1-2020)
Net premium revenue increased QoQ and YoY:
 In Q2-2021, net premiums revenue of 12 listed insurance companies increased 7.6% QoQ
and 12.4% YoY. (Numbers in Figure 65 exclude PRE: +7.9% QoQ and +12.4% YoY.)
 Excluding BVH, the net premiums revenue of the remaining 11 companies in Q2-2021
increased by 5.5% QoQ and 8.2% YoY.
 In 1H2021, net premiums revenue increased 9.9% including BVH and 7.5% excluding
BVH.
Excluding the loss of BVH, the remaining companies witnessed a significant growth in
net insurance income:
 In Q2-2021, net insurance income of listed insurance companies was -1,201 billion VND.
This loss increased 12.7% QoQ and decreased 28.8% YoY. (Numbers in Figure 66
exclude PRE: -12.7% QoQ (higher loss) and +28.7% YoY (lower loss).)
 However, excluding BVH, the net insurance income in Q2-2021 of the remaining
companies was at VND444 billion, +65.5% QoQ and +43.6% yoy.
 In 1H2021, net insurance income of listed insurance companies was -2,233 billion VND,
reduced 11.1% of losses over the same period. Excluding BVH, net insurance income of
the remaining companies was VND712 billion, +14.6% YoY.
Figure 65: Net premium growth
Figure 66: Net insurance income growth
Notes: Data from 11 listed insurance companies (exclude PRE because data is only available from Q1-2020)
7.9%
12.4%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2018 2019 2020 2021
Net premium growth (QoQ) Net premium growth (YoY)
-12.7%
28.7%
-1200%
-1000%
-800%
-600%
-400%
-200%
0%
200%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2018 2019 2020 2021
Net insurance income growth (QoQ) Net insurance income growth (YoY)

46
Financial income reduced significantly over the same period because of low deposit
interest rates and government bond yield
Financial revenue rose slightly QoQ but decreased YoY:
 In Q2-2021, financial revenue of 12 listed insurance companies increased 2.6% QoQ and
decreased 12.9% YoY. (Numbers in Figure 67 exclude PRE: +2.9% QoQ and -12.8%
YoY.)
 Excluding BVH, financial revenue in Q2-2021 of the remaining 11 companies decreased
11.85% QoQ and increased 1.4% YoY.
 In 1H-2021, financial revenue decreased 3.2% including BVH and increased 11%
excluding BVH.
Excluding BVH, the remaining companies witnessed a significant decline in financial
income:
 In Q2-2021, listed insurance companies earned 2,647 billion VND in financial income,
+2.5% QoQ and -22.2% YoY. (Numbers in Figure 68 exclude PRE: +2.6% QoQ and -
22.3% YoY.)
 However, excluding BVH, the financial income of remaining companies in Q2-2021 was
only VND546 billion, -16.3% QoQ and -33.7% YoY.
 In 1H-2021, listed insurance companies earned 5,226 billion VND in financial income,
+6.3% YoY. Excluding BVH, the remaining companies earned VND1,199 billion, +12.7%
YoY.
Figure 67: Financial revenue growth
Figure 68: Financial income growth
2.9%
-12.8%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2018 2019 2020 2021
Financial revenue growth (QoQ) Financial revenue growth (YoY)
2.6%
-22.3%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
140%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2018 2019 2020 2021
Financial income growth (QoQ) Financial income growth (YoY)

47
Insurance companies reduced short-term and increased long-term investment
Source FiinPro Platform. Notes: Data from 12 listed insurance companies
Insurance companies reduced short-term and increased long-term investment:
 At the end of Q2-2021, the portfolio of 12 listed insurance companies was VND168.1
trillion, increasing VND3.6 trillion(+2.2% QoQ).
 Short-term hold-to-maturity (HTM), took the largest proportion of investment portfolio,
reducing VND6.6 trillion(-6,4% QoQ).
 In contrast, long-term HTM investment increased VND8.9 trillion(+ 18.4% QoQ).
 Besides, smaller investments such as short-term investments and other long-term
investments increasing VND0.8 trillion(+8.5% QoQ) and VND0.5 trillion(+9.9% QoQ),
respectively.
Excluding BVH, other companies slightly decreased their portfolio:
 At the end of Q2-2021, the total portfolio of 11 listed insurance companies (exclude BVH)
was VND38.8 trillion, decreasing VND0.3 trillion(-0.8% QoQ).
 Short-term HTM, took the largest proportion of investment portfolio, reduced 1.4 trillion
VND (-5,7% QoQ). Short-term investment increased VND0.7 trillion(+10.2% QoQ). This
investment tends to increase over quarters.
 In contrast, insurance companies reduced their long-term HTM investments VND0.1
trillion(-2.9% QoQ). This investment tends to decrease over quarters..
 Besides, other long-term investment increased VND0.5 trillion (+12.7%QoQ).
Figurer 69: Total investment portfolio (including BVH)
Figure 70: Total investment portfolio (excluding BVH)
Source FiinPro Platform. Notes: Data from 11 listed insurance companies (excluding BVH)
3.7 3.6 5.0 6.8 7.2 7.9
24.1 24.3 22.8 20.6
24.2 22.9
5.9 6.3 6.4 6.9
4.1 4.0
2.5 1.9 2.7 2.8 3.6 4.0
0
5
10
15
20
25
30
35
40
45
Q1 Q2 Q3 Q4 Q1 Q2
2020 2021
VND
trillion
Short-term investment HTM investment (Short-term)
HTM investment (Long-term) Other long-term investment
95.3 103.8 105.9 92.1 102.4 95.8
44.1 42.3 45.1 54.9 48.3 57.2
0
20
40
60
80
100
120
140
160
180
Q1 Q2 Q3 Q4 Q1 Q2
2020 2021
VND
trillion
Short-term investment HTM investment (Short-term)
HTM investment (Long-term) Other long-term investment

48
Brokerage stocks: earnings from brokerage and margin lending improved thanks to higher market
liquidity
Figure 71: Q3-2021 earnings forecast to decline 30.2% QoQ
Notes: Data of Top 10 listed securities companies, accounting for 53.3% of the brokerage market
share. Column E is our forecast number.
Figure 72: Q2-2021 earnings by major segments, actual vs. forecast
Earnings of securities companies in 1H2021:
 Earnings were mostly contributed by three segments: brokerage, margin lending
and proprietary trading. Among those, prop trading activities contributed the most
while earnings from advisory services reportedly kept rising.
 Some securities companies reduced brokerage fee to attract more clients,
causing gross profit of brokerage fees to grow at a slower pace than the market
trading value. In Q2-2021, brokerage segment recorded 31.4% QoQ increase in
gross profit thanks to a 50.2% surge in trading value of the stock market.
 The contribution of brokerage services in gross profit structure has kept rising
over the past four quarters, from 13.6% in Q3-2020 to 23.8% in Q2-2021, but
proprietary trading still contributed the most, above 50%. This means that
earnings growth of securities companies heavily rely on market performance.
Notes: Data of Top 10 listed securities companies, accounting for 53.3% of the brokerage market
share. Column E is our forecast number.
4.3. Brokerage stocks
-26.9%
50.0%
24.1%
17.6%
21.3%
-30.2% -40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
(2,000.0)
(1,000.0)
-
1,000.0
2,000.0
3,000.0
4,000.0
Q3-20 Q4-20 Q1-21 Q2-21 Q2-21E Q3-21E
FiinGroup
forecast
64.5% 65.4% 59.7%
51.2% 54.1%
21.9% 19.0%
20.2%
25.1% 22.2%
13.6% 15.6% 20.0% 23.8% 23.7%
0%
20%
40%
60%
80%
100%
Q3-20 Q4-20 Q1-21 Q2-21 Q2-21E
Investment Margin lending Brokerage FiinGroup
forecast
Our forecast earnings of Top 10 listed securities companies in Q2-2021 are only
3.2% higher than reported number:
 Q2-2021 earnings forecast of Top 10 securities companies that we showed in
FiinTrade Talk #3 are only 3.2% higher than their officially-reported figures. In
addition, the forecast gross income structure is quite close to the actual number.
 Our forecast is based on these assumptions: (i) brokerage fee/trading value ratio
is equivalent to the average of the last 3 quarters, (ii) margin loans will grow at the
rate that keep margin loan/equity ratio remains at the average level of the last 3
quarters, (iii) net interest margin is equal to the average of the last 3 quarters and
(iv) investment income will depend on changes in VNINDEX and/or stocks in the
proprietary investment portfolio.

Data Digest #9: Vietnam Stock Market: Embracing New Normal amidst COVID!

Data Digest #9: Vietnam Stock Market: Embracing New Normal amidst COVID!

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