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QNS is the domination of the soymilk market and also holds the second-largest sugar factory in Vietnam. With dominant market share, soymilk segment supplies a cash cow, while we anticipate that QNS's sugar production will be maintained at a high level, ensuring good selling prices and strong profit margins for QNS in the years ahead due to anti-dumping duties. We initiate our coverage on Quang Ngai Sugar (QNS VN) with a BUY rating and target price of VND65,900, implying a 33.0% upside by using a DCF (50%) and PE (50%) methodology.

According to the GSO estimate, in Aug, the total agriculture export value slightly increased to USD2bn (-4% mom, +24% yoy). Rice export value surged by 79% mom and 89% yoy to USD583mn. Rice export volume sharply increased by 67% mom and 54% yoy to 1mn tonnes. Vegetable export value was USD410mn (-25% mom, +69% yoy), and it accounted for 21% of total agriculture export turnover (+5.5%p yoy).

August’s data shows an opposite tendency between internal and external factors. On one hand, the impact of recent fiscal measures, such as the VAT reduction and the increase in the base salary, on consumer confidence seems to be effective. Domestic consumption has renewed its acceleration this month alongside hotter inflation steaming from food and traffic indices. On the other hand, export turnover declined at a more significant pace in August. It is worth noting that the export value of August last year was a historic high, mainly originating from the explosive U.S. and EU consumption after a long period of pandemic. The situation has changed significantly from the peak when retailers and wholesalers fell into overstocking, resulting in fewer new orders to manufacturing hubs, including Vietnam. Hence, we believe that it will take more time for Vietnam’s economy to rely its growth engine on external factors.

We initiate our coverage on TCB with a BUY rating and a target price of VND43,700, implying a 30% upside buy using a residual approach (50%) and P/B method (50%). TTM PB is at trough of 0.7x and we believe it is worth of trading at 1.1x PB driven by earnings turnaround in 2024-25F. TCB growth is taking a breath, made worse by the corporate bond crisis and real estate market stagnation. Against the odds, we believe it is just a temporary period of trouble.

To fulfill the urge of the Prime Minister in minister meetings, the SBV rewards the attendees with the amendment cited in Circular 10/2023 on late 23 Aug. By suspending three sub-articles 8,9,10, the SBV removes the metaphorical meaning and exposes the lenders to more discretion in setting the disbursement terms and conditions. We expect Circular 10 could facilitate the loan growth to real estate sectors and benefit the developers and homebuyers.

2Q23 PBT surged +75%yoy (to VND1,577bn) thanks to strong income growth from non-NII (+331%yoy), low OPEX (-15.3%yoy) and a constant provision expense (+1%yoy). Meanwhile, NII kept a moderate growth rate of 7% with stable NIM. 2Q23 NPL (2-5 group) and NPL (3-5 group) fell to 6.2% (vs. 1Q23’s 7.4% and 4Q22’s 4.8%) and 3.2% (vs. 1Q23’s 3.3% and 4Q22’s 2.2%) respectively.

On Aug 11th, we tuned in to MWG’s AM presenting the 1H23 performance. In 1H23, MWG reported net revenue of VND56.6tn (-20.1% yoy) and NPAT of VND38.7bn (-98% yoy), fulfilling 42%/1% of the year guidance. TGDD’s revenue slid to VND13.3tn (-29.4% yoy), while DMX’s revenue also fell to VND28.2tn (-25.9% yoy). BHX’s revenue thrived to VND7.3tn (+7.85% yoy, +14.5% qoq) in 2Q23, accumulating to 1H23 VND13.7tn (+6.8% yoy).

PVD posted its 2Q23 results with revenue of VND1.4tn (-6.7% yoy) due to lower revenue from well-related services and no revenue from leased rigs. While NPAT-MI turned green to VND161bn in 2Q23 vs a net loss of VND60bn in 2Q22 since PVD’s average jack-up (JU) day rate (USD75,000/day), utilization rate rose strongly yoy and booking a compensation of VND70bn for ending drilling contract with Valeura - Thailand.

2Q23 PBT was up 9.8% yoy (to VND2,022bn) thanks to a strong growth of TOI. 2Q23 high provision expense (+534%yoy) was the key dampening factor to the profit growth. 2Q23 LC and LMC loan (+28.09%YTD, +4.7%qoq) was the driver of the total consumer loan (+13.22%YTD, -0.16%qoq). 2Q23 NIM (TTM) inched down to 4.3% (vs. 4.4% in 1Q23 and 4.1% in 2Q22) due to lower asset yield. NFI went up 85.3%yoy (to VND1,317bn) in 2Q23. The CIR ratio declined from 2Q22’s 38% to 2Q23’s 29%. 2Q23 NPL (2-5 group) and NPL (3-5 group) climbed to 6.0% (vs. 1Q23’s 5.2%) and 2.6% (vs. 1Q23’s 2.0%) respectively.

This quarterly earnings report on the Vietnam cement industry is intended to track the earning growth trend in the cement market. We witnessed earnings were back to positive in 2Q23 . The lower cost of input material was the main driver for the NPAT improvement in 2Q23. Earnings results varied among companies depending on their main markets, its input prices whilst companies have been under the impact of intense competition and weak market demand. Companies completed annual guidance at low level, especially profit’s one, despite that companies already set the cautious profit guidance for 2023F.