Rong Viet Securities - Investment Strategy May 2018

In April the VNIndex suffered one of its worst months since 2011. It lost 10.6%, putting an end to a
In April the VNIndex suffered one of its worst months since 2011. It lost 10.6%, putting an end to a 7-
month series of gains and making it one of the worst indices among global markets.
Many stocks that led the market to the all-time high of 1,200 were the ones dragging down the VNIndex
in April. The market was led down by banking, financials and large-cap shares such as VJC, MSN, PLX,
etc. Worries about global trade frictions and US government bond yields hitting 3% also put pressure on
market sentiment. Finally, foreign investors net sold around VND 2,000 billion (excluding the put-
through trading of NVL shares). We assume that such selling forces might come from many hedge funds
as they want to protect their profits against strong volatility and to restructure their portfolio in such a
way as to re-allocate their invested capital to other IPO/new listings.
Investors are concerned about the “Sell in May and go away” phenomenon. There is little information to
support the market in May, after all news on macro and earnings results were already released in March
and April. However, the statistical data over the past 5 years support the scenario “Buy in May” as the
VNIndex increased 4 out of 5 times during that month. Noticeably, the VNIndex corrected in April 2017
but rose in May. This time we think it could be a different case because the market dropped too much.
There was some bottom fishing when the VNIndex lost more than 3% twice in April but this failed to
support the market. Besides, we do not see much supporting news/ events for the market in May.
Therefore, we do not expect the market to recover in a “V” shape.
The optimistic case is that there will not be any severe bad news and that global indices, especially the
US market, will perform well in May. The Vietnamese stock market, therefore, could decline by 1% to 3%
with a support at 1,000. We expect that there will be some periods this month when the market could go
up for a few sessions in a row.
Strategy Board
Bernard Lapointe – Head of Research
bernard.lapointe@vdsc.com.vn
Lam Nguyen
lam.ntp@vdsc.com.vn
Thien Bui
thien.bv@vdsc.com.vn
Hieu Nguyen
hieu.nd@vdsc.com.vn
Quang Vo
quang.vv@vdsc.com.vn
SonTran
son.tt@vdsc.com.vn
Tu Vu
tu.va@vdsc.com.vn
Thuy Nguyen
thuy.nb@vdsc.com.vn
Ha Tran
ha.ttn@vdsc.com.vn
Please see penultimate page for
additional important disclosure
Viet Dragon Securities Corp. (“VDSC”) is a
foreign broker-dealer unregistered in the
USA. VDSC research is prepared by
research analysts who are not registered
in the USA. VDSC research is distributed
in the USA pursuant to Rule 15a-6 of the
Securities Exchange Act of 1934 solely by
Rosenblatt Securities Inc, an SEC
registered and FINRA-member broker-
dealer.
04/05/2018
Investment Strategy May 2018
IS IT THE TIME TO BE GREEDY?

Rong Viet Securities Corporation – Investment Strategy Report May 2018 2
CONTENTS
GLOBAL STOCK MARKETS...................................................................................................................................................................................................................3
 The US Dollar and Emerging Markets Debt.....................................................................................................................................................3
VIETNAM MACRO ...................................................................................................................................................................................................................................4
 Liquidity will be better in Q2 2018......................................................................................................................................................................4
 Key points from the budget’s plan .....................................................................................................................................................................5
VIETNAM’S STOCK MARKET IN APRIL: A DEEP CORRECTION.................................................................................................................................................7
MAY STOCK MARKET OUTLOOK.....................................................................................................................................................................................................12
INVESTMENT STRATEGY: IS IT THE TIME TO BE GREEDY?......................................................................................................................................................13
The VNIndex experienced a sharp correction after reaching a historical high of over 1,200 due to conflictual risks signals, both internal
and external. While the risk of a US - China trade war has raised concerns on long-term growth of the global economy, these other
two factors have a negative impact on the Vietnam stock market in the short-term:
 Vietnam G-bond (yield) has come down lowest level and is equivalent to the US G-bond (yield), which is considered as an
illogical due to Vietnam is a frontier market while US is a developed market. Given that the FED will continue to increase lending
rates for the rest of 2018, Vietnam’s financial markets will experience more volatility in the upcoming months.
 Regulators and related authorities raised their concerns of a potential bubble in financial assets such as real estate or stocks.
Therefore, we think they also acted to cool down financial assets’ prices. The SBV withdraw in the OMO in Q1 2018 and the State
Security Commission (SSC) expressed their opinion to tighten the initial margin lending ratio from early June 2018.
On the one hand, these reasons lead us to a belief that investors should be more cautious about using leverage for securities
investment in the short-term. On the other hand, we think short-term risks should not be a concern for intermediate- and long-term
investment because: (1) We believe that these actions will make financial markets healthier and (2) The SBV has enough financial
capability to support short-term liquidity and the economy. Indeed, as business activity has become busier in Q2 2018 with higher
demand for money, the SBV re-pumped liquidity into the economy in April 2018.
Given that most of the sector indices decreased more than 10 – 20% from their peak in 2018, we believe that May will be the right
time for investors to accumulate stocks at a reasonable price. Many companies have completed the AGM and below is our point of
view on the 2018 outlook for some sectors.
Companies’ business plans announced in the 2018 AGM have shown a positive outlook for sectors such as banking, real estate,
financial services (securities), and F&B. In the meantime, despite the long-term bright outlook due to their direct exposure to
Vietnam’s young population, we are neutral on retail, tourism, and pharmaceutical sectors given slower growth in 2018. For aviation,
despite of its bright long-term outlook, we are neutral on aviation tickers due to its valuation is currently not attractive.
STOCKS HIGHLIGHT.............................................................................................................................................................................................................................16
Analysis of 43 stocks of RongViet Research, discussion with companies and specific evaluation in the “Company Report” or “Analyst
Pinboard”

GLOBAL STOCK MARKETS
• The US Dollar and Emerging Markets Debt
The US Dollar and Emerging Markets Debt
Backtrack about a year ago when the market started speculating that the FED might be a bit
‘behind the curve’ in its handling of monetary policy, the Dollar (as measured by DXY) was at
around 99 – see Figure 1). It fell by 10% to a low of 89 by the first quarter of 2018 then rebounded
in April.
Figure 01: DXY Index since Apr 2017
Source: Bloomberg, RongViet Securities
The BIS’s March Quarterly1
reckons that recent market volatility is the result of ‘protracted dollar
weakness for most of the period starting in November, continued loosening of credit conditions,
and un-daunted risk-taking in most asset classes’. Emerging markets USD debt as surged in the
past few years (Figure 2), notably since 2009.
Figure 02: US Dollar Denominated Credit by Region
Source: BIS
Hence, market participants should watch the behavior of the dollar: too much strength would put
pressure on EM currencies via the debt linkage. Leverage is also an issue for the assets of select
leveraged and inverse volatility ETP2
s. These assets have expanded sharply over recent years,
reaching about USD 4 billion at end-2017 compared to around USD 1 billion in 2011.
We maintain our view that increased volatility is here to stay3
.
1
https://www.bis.org/publ/qtrpdf/r_qt1803.pdf
2
Among the growing users of VIX futures are issuers of volatility exchange-traded products (ETPs). These products allow investors to trade volatility for
hedging or speculative purposes. Issuers of leveraged volatility ETPs take long positions in VIX futures to magnify returns relative to the VIX.
3
https://www.vdsc.com.vn/en/diaryDetail.rv?diaryId=821
88
92
96
100
104
04/17 07/17 10/17 01/18 04/18
0
1
2
3
4
01 03 05 07 09 11 13 15 17
Emerging Europe Africa and Middle East
Latin America and Caribbean Emerging Asia-Pacific
(Trillion USD)

VIETNAM MACRO
• Liquidity will be better in Q2 2018
• Key points from the budget’s plan
Liquidity will be better in Q2 2018
After surging in the last quarter of 2017, credit growth slowed at the beginning of 2018 and stood
at 3.5% ytd, below that of 4.4% in Q1 2017.
Short-term money dropped significantly, especially the deposit amount of Vietnam State Treasury
(VST) at commercial banks. According to the financial statement of Vietcombank, which accounted
for over 60% of total deposits of VST at commercial banks, the amount decreased by 23% ytd to
nearly VND 127 Tn.
Figure 03: Credit growth and VST deposits at Vietcombank Figure 04: ON interest rate in the interbank market
Source: SBV, Vietcombank, RongViet Securities Source: SBV, RongViet Securities
As a result, the trading volume and interest rates in the interbank market were adversely affected.
The overnight interest rate almost doubled in April to 1.54% per year while the daily trading
volume, in April 2018, was 26.7% lower than what was recorded in April 2017.
However, SBV started injecting VND 58 Tn, equivalent to USD 2.5 Bn, into the market in April 2018.
Such a reaction tends to keep interest rates stable at a low level. Therefore, we anticipate that
liquidity will be better in Q2 2018.
Figure 05: OMO market
Source: SBV, RongViet Securities
0
2
4
6
8
0
30
60
90
120
150
180
Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018
VST Deposit LHS
Credit growth RHS
(Trillion VND) (% ytd)
0.6
0.8
1.0
1.2
1.4
1.6
01/03 08/03 15/03 22/03 29/03 05/04 12/04 19/04
ON Interest rate(%/year)
(300)
(200)
(100)
-
100
200
300
04/12 04/13 04/14 04/15 04/16 04/17 04/18
Reverse repo Notes Net flow(Trillion VND)

Key points from the budget’s plan
According to Decision 437/QD-TTg on borrowing and debt repayment plans in 2018, the
government will borrow VND 384 trillion this year, over 40% of which is set aside for paying debt.
Table 01: Government’s debt repayment plan (Billion VND)
2016 2017 2018
Total Government's new debt 452,000 342,060 384,000
Deficit financing 254,000 172,300 195,000
Principal payment 56,650 144,000 146,770
Guarantee 84,739 81,950 73,625
Corporations and financial institutions 72,239 58,093 52,111
Municipal bonds 12,500 23,857 21,514
Limit on foreign loans for enterprises and banks (Million USD) 5,500 5,500 5,000
Source: MOF, RongViet Securities
According to our calculations, the additional debt of the government will be around VND 320
trillion, which pushes the ratio of public debt to GDP to approximately 62.5%, lower than the figure
of 63.9% published by MOF. However, the remarkable point is that the surge of national foreign
debt which is estimated at USD 117 billion, up 17% YoY, with total FX reserves of around USD 61
billion, only covers 3.5 months of imports.
Figure 06: Public debt (% of GDP) Figure 07: IFC’s portfolio
Source: GSO, RongViet Securities Source: GSO, RongViet Securities
There are some key points regarding the public budget:
First, international institutions will play a role in connecting Vietnamese enterprises to global
financial markets. The government reduces the limit on the amount per annum of foreign loans
for enterprises and banks to USD 5 billion to control the ratio of national foreign debt to total
exports, currently at 29% compared with the threshold of 25%.
Recently, the IFC put forward a plan to issue VND-denominated USD-settled bonds, called “Bong
Sen” bonds. The first issuance would be worth USD 100 million. Bond proceeds will be converted
to VND to finance private firms as well as IFC’s projects in Vietnam. Overall we believe that such a
plan can create an offshore domestic-currency bond market and paves the way for potential
domestic corporate issuers to achieve a more diversified funding source without exposure to FX
risk.
Notably, the FX risk is transferred to international investors. Vietnam is benefiting from huge
foreign money inflows, which result in a positive current account and financial account. In 2018,
the Dong is expected to move in a predictive way and will lose 2% against the US Dollar.
35
40
45
50
55
60
65
70
2010 2011 2012 2013 2014 2015 2016 2017E 2018F
Public debt (% of GDP)
National FX debt (% of GDP)
Government debt (% of GDP)
(%)
0
5
10
15
20
2012 2013 2014 2015 2016 2017
Agribusiness Tele&IT Manufacturing
Infrastructure Oil, Gas & Mining Consumer
Financial Markets Funds
(Billion USD)

Table 02: IFC’s investment in Vietnam’s financial market (Million USD)
Investee Investment Total Amount
TPBank
Quasi-equity 18
Trade exposure 30
VPBank
Convertible loan 57
5-year financial package 158
Trade exposure 50
ABBank
Equity 40.5
Trade exposure 16
VietinBank
Equity 182
Trade exposure 120
Subordinated debt 125
VIB 5-year financial package 100
Source: RongViet Securities
Secondly, local governments have been approved to issue government-guaranteed bonds under
the principle of financial autonomy for local governments. The amount of municipal bonds
reached nearly USD 950 million, slightly below the amount of over USD 1 billion in 2017. Although
the Circular No.100/2015/TT-BTC regarding the issuance of municipal bonds, has been launched
since 2015, local governments are silent on the issuing plan because of concerns about surging
debts. We expect the new Decree on managing local governments’ debt, which is likely to take
effect in July 2018, to open the door for more bond issuance. At the beginning of 2018, the
administration of Ho Chi Minh City issued municipal bonds valued at VND 2,000 billion.

VIETNAM’S STOCK MARKET IN APRIL: A DEEP CORRECTION
April was the worst month since the beginning of 2017, as both the VNIndex and HNIndex sunk
deeply (down 10.6% and 7.4%, respectively). The collapse was triggered by political tensions in
Syria as well as other geopolitical issues. Year to date returns of the VNIndex and HNIndex are still
positive but narrowed significantly.
Figure 08: VNIndex movement in April Figure 09: HNXIndex movement in April
Source: RongViet Securities Source: RongViet Securities
Large caps, which had been the main supporters of the 1Q gains, turned to be the heaviest drag
for the market in April. The VN30 ‘led’ with a 10.9% loss, followed by VNMID (-7%) and VNSML (-
3.6%). Outperforming sectors in Q1 such as Banks, Real estate and Financial Services took the
biggest hit.
Figure 10: Sectors performance YTD
Source: FiinPro, RongViet Securities
Liquidity was almost flat, compared to the last two months. Worth-noting is that from April 10th
(when the collapse started) onwards, liquidity was weak when the market recovered, but strong
when sell-off took place. This indicates a lack of confidence by investors that the uptrend is
coming back.
900
950
1,000
1,050
1,100
1,150
1,200
1,250
0
100
200
300
400
500
19/01 02/02 23/02 09/03 23/03 06/04 20/04
Trading Volume (mil. shares) VNINdex (right axis)
110
114
118
122
126
130
134
138
142
0
20
40
60
80
100
120
140
19/01 02/02 23/02 09/03 23/03 06/04 20/04
Trading Volume (mil. shares) HNXIndex (right axis)
70
80
90
100
110
120
130
140
150
01/02/2018 02/02/2018 03/02/2018 04/02/2018
Oil & Gas
Construction & Materials
Basic Resources
Industrial Goods & Services
Automobiles & Parts
Food & Beverage
Health Care
Banks
Real Estate
Financial Services

Figure 11: Vietnamese indices YTD performance Figure 12: 2017-2018 matching trading value
Source: FiinPro, RongViet Securities Source: FiinPro, RongViet Securities
Market breadth was highly negative with 448 losers and 225 gainers. That said, in the first three
months of 2018, even when the market was still in an uptrend, the number of losers also
dominated. Therefore, the large collapse could be explained partly by the heavy dependence on
some stocks (including VIC, GAS, and the banking sector), which made the market more
vulnerable.
Figure 13: Market breadth statistics
After a severe decline, it is a suitable time to review Vietnamese stocks’ comparative valuations.
VNIndex and HNIndex P/E ’s returned to the beginning of the year levels of 18.8x and 14.2x, which
looks more attractive. That said, other markets, on the back of global political tensions and the
rise of US government bond yields, also became cheaper during that time.
90
100
110
120
130
01/2018
02/2018
03/2018
04/2018
VNIndex VN30 VNMID
VNSML HNIndex
0
2
4
6
8
01/2017
03/2017
05/2017
07/2017
09/2017
11/2017
01/2018
03/2018
VNDTn
VN-Index VN30 VNMid
VNSML HNIndex
-
100
200
300
400
500
≤-40%
(-40%,-20%]
(-20%,0%)
0%
(0%,20%]
(20%,40%]
>40%
Numberofstocks
Monthly return
January February March April

Figure 14: Regional indices performance in April Figure 15: P/E comparison
Source: Bloomberg, RongViet Securities Source: Bloomberg, RongViet Securities
Q1 earning season recap (based on 478/765 companies announcing their results)
Financial services and banking stocks showed impressive Q1 result.
Figure 16: Results by sectors in Q1 2018
Source: Fiin Pro, RongViet Securities
Earnings of large caps improved significantly (figure 17) thanks to banking stocks (VCB, MBB, VPB,
HDB, CTG, EIB, and TPB), and MSN. These stocks are the main driver of earnings growth for the VN-
Index in Q1 2018 (+27% YoY)
On the contrary, earnings of HNX-Index declined by 25% due to poor Q1 result of CHP, HUT, VGC,
NTP and SLS.
80
90
100
110
03/30
04/01
04/03
04/05
04/07
04/09
04/11
04/13
04/15
04/17
04/19
04/21
04/23
04/25
04/27
VNIndex HNIndex
SET Index FBMKLCI Index
JCI Index PCOMP Index
10
20
30
12/17 01/18 02/18 03/18
VNIndex HNIndex
SET Index FBMKLCI Index
JCI Index PCOMP Index
-120%
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
Retail
Insurance
RealEstate
Oil&Gas
FinancialServices
Utilities
Travel&Leisure
IndustrialGoods&
Services
Personal&
HouseholdGoods
Chemicals
Banks
Automobiles&
Parts
BasicResources
Food&Beverage
Construction&
Materials
HealthCare
Revenue growth Q1 2018 NPAT growth Q1 2018

Figure 17: Earnings growth of indices in Q1 2018 Figure 18: Earnings growth of stocks in VN30
Source: FiinPro, RongViet Securities Source: FiinPro, RongViet Securities
Foreign investors trading:
Figure 19: Net trading value by foreign Investors
After the last net-sold month, foreign investors were back buying this month. The total net-
bought value was VND 1,671 Bn, of which VND 1,496 was on HOSE and VND 175 Bn on HNX.
However, if we disregard NVL's more than VND 3,500 Bn put-through transaction, April would
have been a quiet month for foreign investors as they have net sold around VND 2,000 Bn. In
general, the less-active foreign trading created a lack of support and was a factor that negatively
affected investor sentiment.
On the HSX, in terms of sectors, 8 out of 18 groups were net sold in April. The largest net selling
was from the travel & leisure, construction & materials and food & beverage sectors. VIC (VND
2,334 Bn), VJC (VND 1,100 Bn), VCB (VND 606 Bn) and MSN (VND 243 Bn) were the largest losers.
On the HNX, net selling was mainly in construction & material. VGC was net sold the most in April.
Foreign investors continued to net sell VND 266 Bn of VGC in April after net selling VND 150 Bn of
the stock in March.
26.2%
15.3%
10.1%
21.1%
1.0%
22.6%
8.1%
-0.4%
26.9%
-25.4%
5.4% 6.3%
-5.5%
6.7% 4.9%
VN30 VNMID VNSML HSX HNX
Revenue growth NPAT growth Price Performance YTD
-100%
0%
100%
200%
300%
0
1000
2000
3000
4000
VCB MBB MSN GAS CTG STB REE VNM NVL
NPAT 2017 YTD (Bn VND - LHS)
NPAT 2018 YTD (Bn VND - LHS)
Growth (RHS)
0
2000
4000
6000
8000
10000
12000
14000
16000
-2000
-1000
0
1000
2000
3000
4000
5000
02/01 20/03
Net bought/sold (LHS, VND Bn) Accumulated Value (RHS, VND Bn)

Table 03: Foreign investor’s net trading by sector in both exchanges
HSX HNX
Sector
Net volume
(million shares)
Net value (VND
Bn)
Net volume
(million shares)
Net value (VND
Bn)
Oil & Gas 2.19 32.11 4.05 85.35
Chemicals 2.04 -3.77 -0.02 -0.29
Basic resources -2.13 30.99 -2.12 -4.67
Construction and building
materials -3.49 -202.64 -16.11 -308.03
Industrial goods & services 5.63 169.65 -0.27 -0.28
Automobile & parts -4.24 -59.44 0.00 0.02
Food & beverage -24.69 -137.08 -0.51 -10.36
Personal & household goods -0.40 -5.32 0.23 1.23
Healthcare 1.94 202.43 -0.03 -0.83
Retail 4.37 659.83 0.02 0.34
Communication 0.00 0.02 -0.17 -2.04
Travel & leisure -6.37 -1,110.91 -3.70 -9.44
Utilities 1.12 -34.70 0.34 2.08
Bank 20.34 614.33 21.2 264.82
Insurance 0.86 96.51 0.06 1.33
Real estate 27.01 917.83 0.32 136.60
Financial services 12.82 352.73 -0.31 18.80
Technology -3.86 -26.92 0.02 0.25

MAY STOCK MARKET OUTLOOK
Slim Chances in May
In April the VNIndex suffered one of its worst months since 2011. It lost 10.6%, putting an end to a
7-month series of gains and making it one of the worst indices among global markets.
Many stocks that led the market to the all-time high of 1,200 were the ones dragging down the
VNIndex in April. The market was led down by banking, financials and large-cap shares such as
VJC, MSN, PLX, etc. Worries about global trade frictions and US government bond yields hitting
3% also put pressure on market sentiment. Finally, foreign investors net sold around VND 2,000
billion (excluding the put-through trading of NVL shares). We assume that such selling forces
might come from many hedge funds as they want to protect their profits against strong volatility
and to restructure their portfolio in such a way as to re-allocate their invested capital to other
IPO/new listings.
Investors are concerned about the “Sell in May and go away” phenomenon. There is little
information to support the market in May, after all news on macro and earnings results were
already released in March and April. However, the statistical data over the past 5 years support the
scenario “Buy in May” as the VNIndex increased 4 out of 5 times during that month. Noticeably,
the VNIndex corrected in April 2017 but rose in May. This time we think it could be a different case
because the market dropped too much.
There was some bottom fishing when the VNIndex lost more than 3% twice in April but this failed
to support the market. Besides, we do not see much supporting news/ events for the market in
May. Therefore, we do not expect the market to recover in a “V” shape.
The optimistic case is that there will not be any severe bad news and that global indices, especially
the US market, will perform well in May. The Vietnamese stock market, therefore, could decline by
1% to 3% with a support at 1,000. We expect that there will be some periods this month when the
market could go up for a few sessions in a row.

INVESTMENT STRATEGY: IS IT THE TIME TO BE GREEDY?
The VNIndex experienced a sharp correction after reaching a historical high of over 1,200 due to
conflictual risks signals, both internal and external. While the risk of a US - China trade war has
raised concerns on long-term growth of the global economy, these other two factors have a
negative impact on the Vietnam stock market in the short-term:
 Vietnam G-bond (yield) has come down lowest level and is equivalent to the US G-bond
(yield), which is considered as an illogical due to Vietnam is a frontier market while US is a
developed market. Given that the FED will continue to increase lending rates for the rest of
2018, Vietnam’s financial markets will experience more volatility in the upcoming months.
 Regulators and related authorities raised their concerns of a potential bubble in financial
assets such as real estate or stocks. Therefore, we think they also acted to cool down financial
assets’ prices. The SBV withdraw in the OMO in Q1 2018 and the State Security Commission
(SSC) expressed their opinion to tighten the initial margin lending ratio from early June 2018.
On the one hand, these reasons lead us to a belief that investors should be more cautious about
using leverage for securities investment in the short-term. On the other hand, we think short-term
risks should not be a concern for intermediate- and long-term investment because: (1) We believe
that these actions will make financial markets healthier and (2) The SBV has enough financial
capability to support short-term liquidity and the economy. Indeed, as business activity has
become busier in Q2 2018 with higher demand for money, the SBV re-pumped liquidity into the
economy in April 2018.
Given that most of the sector indices decreased more than 10 – 20% from their peak in 2018, we
believe that May will be the right time for investors to accumulate stocks at a reasonable price.
Many companies have completed the AGM and below is our point of view on the 2018 outlook
for some sectors.
Companies’ business plans announced in the 2018 AGM have shown a positive outlook for sectors
such as banking, real estate, financial services (securities), and F&B. In the meantime, despite the
long-term bright outlook due to their direct exposure to Vietnam’s young population, we are
neutral on retail, tourism, and pharmaceutical sectors given slower growth in 2018. For aviation,
despite of its bright long-term outlook, we are neutral on aviation tickers due to its valuation is
currently not attractive.
Sectors Our Brief Opinions
Bank Most banks set their target for 2018 with a strong growth outlook in terms of earnings although their credit
growth will be maintained at the equivalent rate of 2017. The brighter outlooks for 2018 may come from (1)
Higher NIM, (2) Higher services income from higher fees and more contribution from bancassurance, and (3)
Higher income from securities trading.
Given their smaller size in terms of total risky assets and less restrictions than State-owned banks (SOCB), the
private joint stock commercial banks may grow faster. Our favorites are ACB, MBB, VIB, HDB and LPB.
F&B The F&B sector continues to exhibit strong growth potential as all the leading companies are quite optimistic
for 2018. It is reflected by their ambitious business plans, with forecasts of double digit growth rate of profit
such as KDC with a PBT growth of +43% and MSN with a sharp increase in NPAT (+55-58%).
Among the leading companies in the F&B sector, we are interested in QNS because of its dominant position in
the soy milk market. In addition, its current valuations are quite attractive with a PER of 11x. However, the drop
of revenues by 12% in soymilk in Q1 2018 makes us worry about the potential growth, as well as the competition
in the nut milk sector. Big rivals such as VNM or TH True Milk have launched new products recently. Although
QNS also is going to launch new products this year, we still need time to see a real impact on its business results.
The valuation for the remaining companies are quite high, but investors may notice VNM after the significant
falling of the stock market in the last sessions of April. The forward PER now is 28x which is lower than the peak
of 31x at the beginning of 2018. Besides, VNM also achieved its market share’s plan in Q1 2018 by gaining an
extra 0.5% to raise it to 58.5%.

Thermal Power Plant While La Nina officially ended in March 2018, there is less hydropower supply in 2018 versus 2017, which results
in high CGM prices. EVN announced in a press release that thermal power plants, especially the ones in the
North, would be mobilized at maximum capacity inthe dry seasonto ensure enoughelectricity for consumption
& manufacturing. These factors should be favorable for thermal power groups (PPC, NT2, and QTP). For the
hydropower group, business results remain flat vs 2017. With more favorable hydrological conditions, some
companies could see strong growth (TMP, TBC, ISH)
Based on total return and 2018 outlook for business results, we are optimistic on REE, PPC and NT2
Retails Vietnamese retailers all posted a positive growth for Q1 2018, in which MWG’s and FRT's revenue growth were
hugely contributed by the stores opened in late 2017. However, although they can record a two digit growth,
most of the companies, especially in case of MWG, plan to grow slower in 2018. In the meanwhile, DGW could
be worth to take a look as it plans to grow 23% YoY and 29% YoY in terms of revenue and NPAT respectively,
mostly thanks to the higher contribution of Xiaomi’s products.
Pharma Input costs of material have surged since the beginning of the year, which puts strong pressure on the margin
of pharmaceutical companies. New circular on drug bidding process in hospitals may be officially released in 2h
2018. Manufacturers with EU-GMP facilities such as PME and IMP seemed to be in good shape. We expect no
sudden changes in stock prices until the latter half of 2018, when more supporting news will be released.
O&G While the oil price continues to increase due to the supply shortage, the O&G companies generally set
conservative business plans for 2018 after a 2017 volatile year. Even though Brent is currently traded at
USD70/barrel, all the 2018 plans of O&G companies are based on a price of USD50-55/barrel. O&G companies
normally set up a cautious plan for their new financial year.
On the back of a positive oil price forecast for 2018, we expect that it will be a remarkable year for this sector
when all the big projects such as Block B, Nam Con Son 2 - Phase 2, White Lion, Blue Whale are in progress.
Currently, the O&G sector is facing a supply issue because the existing oil fields are at the end of their life cycle.
As a result, the implementation of new projects will be quite essential to provide a stable gas input for the
fertilizer and electricity producers, as well as the crude oil exploitation by the government.
There are some companies that benefit from new projects (Ca Tam, Sao Vang – Dai Nguyet project) such as PVB,
PVS, PXS in which, PVB is the shining star. Its profit guideline mainly comes from its core business. We expect
that Block B, Nam Con Son 2 – Phase 2, White Lion and Blue Whale will be the catalysts for the its business
growth in the coming years. GAS is also a special ticker; the business plan for 2018 is forecasted see growth
rising thanks to the rising price of gas following the increase of crude. In the long term, new gas pipeline projects
such as Block B, Nam Con Son 2 – Phase 2, or Blue Whale will enhance the gas transportation capacity.
Meanwhile, we are quite conservative on fertilizer and building materials.
Sectors Our Concerns
Fertilizer The rally in input prices predicts a ‘gloomy’ outlook. DPM could be heavily hit. The company cannot raise its
selling price as fast as crude oil prices rise. Moreover, its new NPK factory, which is expected to record a loss in
the first two years, will start production in Q2 2018. DCM could be less negatively affected by the rally of input
prices because of incentive policies. Moreover, DCM can take some market share from its competitor (DPM).
BFC’s business plan is set at the same level as 2017 results due to (1) Unfavorable weather and (2) Increasing
input prices. It faces difficulties in raising its selling price.
Building materials Most business plans cautious for 2018.
NKG plans to increase volumes and revenues by 17% and 35% respectively, but only 6% for profit after tax.
Meanwhile, NKG has ambitions to expand its scale with a sixth plant with total capacity of 1 million tons per
year. However, it is accompanied by a private placement plan. NKG’s earnings growth might not be enough to
offset the dilution. This may be one of the reasons why NKG shares have fallen sharply.
BMP set an EBT target of just 3%. In addition to fierce competition from new entrants in the plastic pipe sector.
A cautious capacity expansion plan compared to the growth in the demand for building materials results in an
unattractive guidance for BMP. Nevertheless, BMP’s financial health, which has minimal leverage, and offers a
steady cash dividend is a plus for the stock.
HPG plans to achieve net profit growth of less than 1% in 2018. However, this is the first time the company has
positive growth guidance after many years of targeting a lower bottom line than the previous year. HPG is
currently constructing a steel complex in Dung Quat, Quang Ngai, with the aim of tripling its steel capacity by
2020. HPG will manufacture hot rolled coil (HRC), improving the domestic steel industry’s upstream capacity.

We forecast that when HPG operates this steel mill at full capacity, the company will achieve impressive revenue
growth while maintaining the best profitability among Vietnamese steel makers.
Finally, given the good and healthy dividends, we suggest investors accumulate thermal power
stocks.
Table 04: Listed stocks with high dividend yield
Tickers Market Cap (USD Mn)
3M average trading
value (USD Mn)
Dividend yield
Targer Price
(VND)
NT2 393 745 16.1% 37,600
PGI 72 23 13.0% 24,900
PPC 259 187 12.5% 22,000
BFC 80 183 12.5% 40,500
LTG 109 123 12.2% 57,100
DPM 312 831 11.0% 22,400
VGS 18 122 10.8% 15,500
PVT 234 607 10.6% 18,100
DRC 121 583 7.8% 29,500
CTI 86 1,016 7.4% 31,500
PHR 142 534 7.3% 52,600
SHP 93 13 7.1% 25,400
QNS 544 660 7.0% 74,200
Source: RongViet Securities

Ticker Exchange
Market
cap
(USD
mn)
Total
Return
Rating
2017 2018F 2019F
PER
Trailing
(x)
PER
2018F
(x)
PBR Cur.
(x)
Div
Yield
(%)
+/- Price
1y (%)
3-month
avg. daily
turnover
(USD
thousand)
Foreign
remaining
room
(%)
Target price
(VND)
Price @ May
03 (VND)
+/- Rev.
(%)
+/- NPAT
(%)
+/- Rev.
(%)
+/- NPAT
(%)
+/- Rev.
(%)
+/- NPAT
(%)
LTG UPCOM 108.5 57,100 37,000 66.5% Buy 6,042.0 11.6 23.9 7.1 1.4 8.3 5.7 6.7 1.0 12.2 0.0 123.4 4.5
TCM HOSE 44.5 30,500 19,650 60.3% Buy 3,276.0 4.5 67.8 -0.9 -9.1 8.8 5.3 6.2 0.9 5.1 -15.2 514.8 0.0
QNS UPCOM 543.7 74,200 50,300 54.5% Buy 7,365.0 9.6 -27.9 8.8 30.3 6.0 12.6 8.0 2.7 7.0 -45.9 659.4 39.4
VGS HNX 18.3 15,500 11,100 50.5% Buy 2,434.1 31.4 -12.3 27.9 37.8 3.2 5.5 5.0 0.7 10.8 9.0 121.6 42.4
PGI HOSE 72.2 24,900 18,500 47.6% Buy 2,448.0 0.0 24.9 10.7 7.7 11.2 11.8 9.6 1.2 13.0 -14.1 23.0 28.2
GAS HOSE 8,120.3 137,900 96,500 47.0% Buy 6,779.0 9.3 36.4 14.9 14.9 14.2 18.4 17.0 4.2 4.1 82.8 4,070.2 45.5
PME HOSE 238.9 120,000 83,300 46.5% Buy 6,054.0 7.6 19.7 25.1 20.3 17.0 18.6 15.9 3.4 2.4 0.0 118.8 0.0
STK HOSE 39.7 21,500 15,050 46.2% Buy 2,419.0 46.6 242.3 2.0 27.7 7.9 8.0 7.2 1.1 3.3 -6.4 20.9 39.4
DIG HOSE 232.5 32,000 22,200 44.1% Buy 3,440.5 68.4 31.7 88.5 299.2 99.6 47.0 15.4 1.9 0.0 121.7 3,414.4 9.1
ACV UPCOM 8,403.4 124,000 88,200 41.6% Buy 3,207.0 -5.5 -18.1 38.8 58.9 13.4 43.5 30.9 6.8 1.0 80.2 763.5 45.5
REE HOSE 489.4 48,400 35,900 39.3% Buy 5,535.2 36.5 26.0 13.3 23.3 4.6 7.8 6.6 1.4 4.5 25.7 2,199.5 0.0
BFC HOSE 80.4 40,500 32,000 39.1% Buy 6,173.0 6.1 0.2 8.2 10.6 14.7 7.2 6.0 1.8 12.5 -2.4 183.1 35.1
POW UPCOM 268.5 18,400 13,300 38.3% Buy 1,118.7 5.4 82.1 20.0 7.9 7.9 26.4 15.3 1.2 0.0 0.0 2,401.6 -16.1
NT2 HOSE 393.0 37,600 31,050 37.2% Buy 3,412.9 -15.3 -25.3 13.7 21.8 13.9 11.5 9.5 1.7 16.1 13.6 744.9 26.8
VSH HOSE 154.1 22,100 17,000 35.9% Buy 1,505.3 17.5 10.8 3.2 -3.1 112.7 11.1 12.7 1.1 5.9 15.7 34.6 34.7
PHR HOSE 141.5 52,600 41,000 35.6% Buy 8,684.4 40.4 48.5 N/a N/a 13.3 9.2 6.4 1.3 7.3 71.5 533.8 39.7
DRC HOSE 120.6 29,500 23,100 35.5% Buy 2,367.0 9.2 -59.1 3.1 87.7 4.5 24.5 9.8 1.8 7.8 -11.8 582.8 21.1
DPM HOSE 312.3 22,400 18,150 34.4% Buy 2,194.0 0.9 -39.1 35.1 -13.1 7.4 10.9 13.8 0.9 11.0 -15.7 830.9 26.7
PVS HNX 331.9 21,900 16,900 34.3% Buy 2,115.0 -10.5 -22.9 N/a N/a 23.1 9.5 9.8 0.7 4.7 6.7 6,335.9 31.4
CHP HOSE 138.5 31,900 25,000 33.2% Buy 2,518.2 32.5 59.2 -26.1 -38.4 12.1 16.0 13.1 1.9 5.6 18.1 54.0 45.5
DXG HOSE 410.2 40,800 30,800 32.5% Buy 3,559.4 14.9 39.8 56.2 37.7 1.0 10.1 9.0 2.3 0.0 72.8 5,782.9 6.7
PPC HOSE 258.7 22,000 18,350 32.4% Buy 1,916.9 4.3 52.4 4.1 -5.9 1.2 6.6 8.0 1.0 12.5 17.7 186.4 32.4
HPG HOSE 3,621.3 71,900 54,300 32.4% Buy 8,402.3 38.7 21.3 25.5 20.0 33.8 9.4 9.2 2.4 0.0 99.3 16,408.8 9.2
VGC HNX 469.1 30,200 23,800 31.1% Buy 2,682.4 11.4 23.7 14.4 41.8 15.6 17.6 11.3 1.7 4.2 64.7 1,538.5 14.5
IMP HOSE 115.6 77,000 61,200 27.9% Buy 3,507.0 15.4 16.0 20.4 21.6 21.2 21.1 20.9 1.9 2.1 13.6 54.9 0.0
AST HOSE 129.0 97,000 81,500 23.9% Buy 5,619.4 0.0 0.0 28.4 8.6 17.4 19.9 19.2 6.3 4.9 0.0 690.5 26.1
MBB HOSE 2,414.6 36,300 30,250 22.0% Buy 1,609.6 40.7 39.7 3.5 45.0 16.8 13.3 22.4 1.9 2.0 93.1 10,460.4 0.0
SHP HOSE 92.7 25,400 22,500 20.0% Buy 2,128.6 20.3 88.9 -1.9 -7.1 3.0 12.4 12.3 1.8 7.1 20.1 13.2 44.5
VNM HOSE 11,804.1 215,323 185,000 18.0% Accumulate 8,683.0 9.1 10.1 17.0 18.4 15.0 26.7 24.5 10.4 1.6 29.1 11,147.9 40.4
PC1 HOSE 164.0 37,000 32,300 17.6% Accumulate 4,030.2 5.1 -22.1 55.2 130.3 3.3 14.1 8.6 1.4 3.1 12.3 301.1 11.3
FPT HOSE 1,360.5 63,600 58,000 13.1% Accumulate 4,487.5 8.0 47.0 -47.7 -28.7 13.5 10.2 14.9 2.6 3.4 47.9 7,015.2 0.2
CTG HOSE 4,747.4 31,900 29,000 12.4% Accumulate 2,719.3 23.3 9.2 10.5 33.7 13.2 13.8 13.9 1.6 2.4 71.9 12,918.1 0.0
VJC HOSE 3,432.9 191,000 173,000 12.1% Accumulate 11,926.0 54.0 81.0 17.7 26.6 25.8 14.2 N/a 6.8 1.7 95.0 11,647.0 4.8
VRE HOSE 3,869.9 51,200 46,300 10.6% Accumulate 1,712.4 -13.6 -17.2 73.5 44.0 -7.3 43.4 30.3 3.4 0.0 0.0 13,919.6 16.0
NLG HOSE 286.2 37,200 34,500 9.3% Accumulate 5,709.4 24.8 55.0 8.9 47.3 54.7 10.1 8.2 1.8 1.4 51.1 620.7 0.0
CTI HOSE 85.9 31,500 31,000 9.0% Accumulate 1,344.0 7.1 39.2 130.0 208.3 -44.0 13.3 10.8 1.7 7.4 9.9 1,015.1 21.1
DHG HOSE 561.0 102,000 97,600 7.6% Accumulate 5,767.0 7.4 -9.5 15.2 31.8 9.3 19.9 17.2 4.6 3.1 6.6 1,542.3 1.9
PVT HOSE 233.9 18,100 18,900 6.3% Accumulate 1,438.0 -9.0 0.7 9.4 -1.1 4.6 12.0 13.7 1.4 10.6 58.8 606.5 15.2
STOCKS HIGHLIGHT

VCB HOSE 9,427.4 60,000 59,600 2.0% Neutral 2,568.7 18.2 33.0 8.7 17.4 12.0 20.6 25.3 3.8 1.3 71.5 9,311.8 9.6
HDG HOSE 132.5 39,700 39,700 1.3% Neutral 5,825.3 14.1 -16.0 49.6 103.8 -0.2 14.3 8.3 2.4 1.3 40.6 423.8 33.4
ACB HNX 2,074.1 44,000 43,500 1.1% Neutral 3,923.7 81.0 59.8 6.1 74.8 9.6 16.9 12.0 2.6 0.0 101.0 9,538.2 0.0
VIC HOSE 14,264.1 115,000 123,000 -6.5% Reduce 4,097.1 68.4 74.1 39.2 74.7 27.1 75.9 43.7 9.8 0.0 203.7 14,873.1 38.9
PNJ HOSE 808.0 155,000 170,000 -7.8% Reduce 10,874.0 28.2 61.1 31.7 28.6 13.4 22.0 19.7 5.7 1.1 91.4 3,752.2 0.0
(*) Total Return = Stocks’ Upside plus dividend yield

MACRO WATCH IN APRIL
Inflation remains low Key commodity prices are under control
Source: GSO, RongViet Securities Source: GSO, RongViet Securities
FX central rate increased significantly FX debt will surge in 2018
Source: SBV, RongViet Securities Source: MOF, Customs, RongViet Securities
VGB yield bottomed out Auctions were still silent
Source: Bloomberg, RongViet Securities Source: VBMA, RongViet Securities
0%
1%
2%
3%
4%
5%
6%
10/2016
11/2016
12/2016
01/2017
02/2017
03/2017
04/2017
05/2017
06/2017
07/2017
08/2017
09/2017
10/2017
11/2017
12/2017
01/2018
02/2018
03/2018
04/2018
Headline inflation Core inflation
-20%
0%
20%
40%
60%
80% Healthcare Transport Education
(% y/y)
1.5
2.0
2.5
3.0
3.5
4.0
0
20
40
60
80
100
120
140
2013 2014 2015 2016 2017E 2018F
FX debt LHS
FX reserve LHS
No. monthly import RHS
(Billion VND) (Months)
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
01/18 02/18 03/18 04/18 05/18
VGB yield - 10Y
VGB yield - 5Y
VGB yield - 2Y
(%/year)
0
20
40
60
80
100
120
0
10
20
30
40
50
60
70
04/15 04/16 04/17 04/18
VST
VBSP
VDB
Winning-to-Offering ratio (RHS)
(Trillion VND) (%)
22,300
22,400
22,500
22,600
22,700
22,800
22,900
01/2018 02/2018 03/2018 04/2018
FX trading rate FX central rate
(USD/VND)

INDUSTRY INDEX
Level 1 industry movement Level 2 industry movement
Industry PE comparison Industry PB comparison
-6%
-13%
-24%
-13%
-6%
-11%
-14%
-10%
-1%
-13%
-30%
-25%
-20%
-15%
-10%
-5%
0%
Technology
Industrials
Oil&Gas
ConsumerServices
HealthCare
ConsumerGoods
Banks
BasicMaterials
Financials
Utilities
-6%
-5%
0%
-6%
-24%
-9%
-13%
-15%
-2%
-10%
-4%
-14%
4%
-11%
-11%
3%
-18%
-6%
-40% -20% 0% 20%
Retail
Insurance
Real Estate
Technology
Oil & Gas
Financial Services
Utilities
Travel & Leisure
Industrial Goods & Services
Personal & Household Goods
Chemicals
Banks
Automobiles & Parts
Basic Resources
Food & Beverage
Media
Construction & Materials
Health Care
10.4
13.4
20.5
13.4
17.7
22.8
17.7
10.0
21.9
21.0
19.6
13.4
Technology
Industrials
Oil&Gas
ConsumerServices
HealthCare
ConsumerGoods
Banks
BasicMaterials
Financials
Utilities
HSX
HNX
2.3
2.6
3.1
4.4
3.6
6.4
2.6
1.9
5.5
4.7 4.7
1.9
Technology
Industrials
Oil&Gas
ConsumerServices
HealthCare
ConsumerGoods
Banks
BasicMaterials
Financials
Utilities
HSX
HNX

ANALYSIS & INVESTMENT ADVISORY DEPARTMENT
Bernard Lapointe
Head of Research
bernard.lapointe@vdsc.com.vn
+ 84 28 62992006 (1525)
Lam Nguyen
Senior Strategist
lam.ntp@vdsc.com.vn
+ 84 28 6299 2006 (1313)
• Banking
• Conglomerates
Thien Bui
Senior Analyst
thien.bv@vdsc.com.vn
+ 84 28 6299 2006 (1321)
• Market Strategy
• Financial Services
• Personal Goods
Hieu Nguyen
Senior Analyst
hieu.nd@vdsc.com.vn
+ 84 28 6299 2006 (1514)
• Market Strategy
• Pharmaceuticals
• Aviation
Duong Lai
Senior Analyst
duong.ld@vdsc.com.vn
+ 84 28 6299 2006 (1522)
• Real Estate
• Building Materials
Vu Tran
Senior Analyst
vu.thx@vdsc.com.vn
+ 84 28 6299 2006 (1518)
• Oil & Gas
• Food & Beverage
Trinh Nguyen
Analyst
trinh.nh@vdsc.com.vn
+ 84 28 6299 2006 (1331)
• Steel
• Construction
• Technology
Quang Vo
Analyst
quang.vv@vdsc.com.vn
+ 84 28 6299 2006 (1517)
• Market Strategy
• Basic Materials
• Personal Goods
Son Phan
Analyst
son.pnt@vdsc.com.vn
+ 84 28 6299 2006 (1519)
• Utilities
• Natural Rubber
Tu Vu
Analyst
tu.va@vdsc.com.vn
+ 84 28 6299 2006 (1511)
• Macroeconomics
Son Tran
Analyst
son.tt@vdsc.com.vn
+ 84 28 6299 2006 (1527)
• Market Strategy
• Retails
• Consumer chemicals
Thuy Nguyen
Analyst
thuy.nb@vdsc.com.vn
+ 84 28 6299 2006 (1528)
• Macroeconomics
Tung Do
Analyst
tung.dt@vdsc.com.vn
+ 84 28 6299 2006 (1521)
• Logistics
• Aviation
Thu Pham
Analyst
thu.pa@vdsc.com.vn
+ 84 28 6299 2006 (1520)
• Industrial Real Estate
Thao Dang
Analyst
thao.dtp@vdsc.com.vn
+ 84 28 6299 2006 (1529)
• Food & Beverage
Tam Pham
Analyst
tam.ptt@vdsc.com.vn
+ 84 28 6299 2006 (1530)
• Fishery
Anh Nguyen
Analyst
anh2.ntt@vdsc.com.vn
+ 84 28 6299 2006 (1531)
• Banking
Ha Tran
Assistant
ha.ttn@vdsc.com.vn
+ 84 28 6299 2006 (1526)

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Rong Viet Securities - Investment Strategy May 2018

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Rong Viet Securities - Investment Strategy May 2018