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We initiate Neutral rating on Cement industry. In 2023F, despite the reverse of 2022 negative factors, we still see some challenges for the industry amid high-borrowing rate environment and issues related to real estate developers and bond markets. Besides, the demand of global and main export markets are forecasted to be flat in 2023F. Along with it, the new tax rate on clinker export would hinder the revival of export channel. China re-opening is supposed to be a good catalyst for Vietnam cement producers, however, we still have HOLD ratings on HT1 and BCC as we see the market prices are fully reflected the revival outlook of these companies.

HSG’ revenue decreased significantly 44.8% yoy to VND6,980bn in 2QFY23 driven mainly by the weak global demand. HSG made a reversal of inventory provision of about VND530bn in 2QFY23. It seems that the impact of high-cost inventories from last quarters was over. The company would continue to have positive margins in 3QFY23.

DPM released 1Q23 business results with a VND3,264bn revenue (-44% yoy, -17% qoq). Despite financial income splendidly rising VND70.2bn (+50% yoy), net profit merely posted VND262bn (-88% yoy, -77% qoq), substantially under our estimate of VND1,131bn. Even anticipating sluggish export growth, we think the 2Q23 business results may not be as worse as seen in 1Q23 thanks to the peak season of the plantation. We maintain a HOLD rating on DPM stock as we see the outlook for the industry is not so bright, DPM’s earnings are under review

HPG’ revenue decreased 39.6% yoy to VND26,588bn in 1Q23 while the NPAT-MI posted VND397.4bn (-95%yoy) driven mainly by steel and real estate segments. HPG made an inventory provision reversal of about VND954bn in 1Q23. If excluded the reversal, we still see the positive gross profit. We suppose that the high-cost inventories from last quarters were cleared out. However, HPG will have the thin margin over next quarter due to lower selling prices in our view.

NKG’ revenue decreased 38.8% yoy to VND4,374.8bn in 1Q22 driven mainly by the weak global demand. The 1Q23 NPAT-MI posted a loss of VND49.2bn whilst the gross profit turned to positive at VND137.7bn. The gross margin is thin at only 3.1%. thanks to Inventory provision reversal.

DCM released their 1Q23 financial statements. In particular, revenue was down 33.8% yoy to VND2,829bn due to 1) Export activities strongly declined by 80% yoy to VND884bn; 2) Urea average selling price in 1Q23 plunged (Revenue from urea accounted for 81% of total revenue in 1Q23, posted VND2,290bn). Because of this, gross profit plummeted at -71% yoy to VND568.728bn.

PAN reached the net revenue of VND13.7tn in 2022, sharply rose by 48% yoy, met 95% of 2022 guidance. The revenue surge was attributed to full-year consideration of VFG’s business results. PAN expected revenue and profit to grow by 8-9% yoy in 2023.

In 1Q23, Sao Ta Foods posted VND1,008bn revenue (-24% yoy), which was mainly dragged down by -28.4% yoy of shrimp export segment. Meanwhile, NPAT increased by 15.1% yoy due to low SG&A expenses. Despite the uncertainties of industry outlook, We believe that the export to Japan and EU market could be the spotlight to support FMC earnings in 2023. We maintain BUY recommendations for FMC shares with a target price of VND49,100.

We tuned in to VIC’s analyst meeting on Apr 25 which featured the strategical visibility on Vinfast and shed some light on its 1Q23 operational updates. The heightened debt is raising concerns about its refinancing capacity amid the increasingly costlier borrowing rate (57.5% of total debt is a floating interest rate).VinFast is signaling an aggressive plan of investment outlay. However, the company has yet to announce the capex demand in 2023F.

We attended VRE’s AM session held on Apr 24th. The company articulates the business plan, coming out with optimistic guidance with (1) base case: VND10,350bn revenue (+40% yoy) and VND4,680bn (+68% yoy), and (2) optimistic case: VND11,500bn revenue (+57% yoy) and VND5,200 NPAT (+87% yoy).