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This monthly report on Vietnam steel production is intended to track the developments in the steel market. During September 23, we observed the total sale volume also fell slightly increased by 4.7% mom, 9.8% yoy to 2mn tonnes. Total production was at 2.2mn tonnes (+4 mom, -2.7 yoy)

At the end of the third quarter of 2023, the VNIndex established a shorterm downtrend, targeting a range of 1,050 1,070 points, influenced by the double top pattern. We predict economic activities to accelerate in 4Q23 with a growth rate of 7.5% YoY, resulting in an increase of 5.18% YoY for 2023. of 7.5% YoY, resulting in an increase of 5.18% YoY for 2023. On the upside, we expect an impressive turnaround in exports due to the increasing demand from the U.S. and China, especially the inventories of U.S. wholesalers and retailers becoming leaner. The Banking industry could sustain in 3Q23 but we are not confident about 4Q23 given the sluggish credit growth and slower than expected NIM recovery

Long-term, fast growth in demand for electricity opens up a lot of opportunities for industries in the power system. Regarding the power generation activity, especially, we highly evaluate the growth potential of the two sources of gas turbiness and wind power in the mid- and long-term based on analyzing the two fundamental characteristics of the power system in terms of (1) stability and (2) economic efficiency. we rate BUY on NT2 (TP: VND29,400, upside: +20%), QTP (VND23,400, upside: +54%), and HOLD on GEG (VND13,000). In addition, we positively value POW's growth potential after 2024, when NT3 and NT4 plants begin commercial operation.

Economic activities accelerated further in 3Q23 mainly thanks to the impressive improvement in export activities and the solid investment from foreign and government sectors. On the upside, it seems the negative impact of external factors on Vietnam's economy has become less severe when the end of the global trajectory of rate hikes was counting down. Export turnover recorded a much softer decline, and FDI disbursement preserved its acceleration. However, domestic consumption continued decelerating due to a slowing recovery in foreign tourism, the lingering hardship of employees in the manufacturing sector, and the limited impact of fiscal measures. For future developments, we expect the export activities to recover and overwhelmingly drive the economy to accelerate in the next quarter.

The S&P Global Vietnam Manufacturing Purchasing Managers' Index (PMI) rose to 50.5 in August 2023 from 48.7 in the prior month. This was the first increase in factory activity since February, as output, new orders, and foreign sales all returned to expansion. Overall, the PMI's return to growth in August is a welcome development for the Vietnamese economy. It suggests that the manufacturing sector is recovering and is well-positioned to contribute to the country's economic growth in the coming months.

We expect the stock market to maintain its uptrend with a target range of 1,260 to 1,340 points for late 2023 thanks to macro factors such as (1) Improvement in Foreign Direct Investment and (2) The easy money policy.

Despite a flattish 2Q23 revenue growth of -4.5%yoy (VND39.3tn), earnings growth rattled by 42.1% yoy due to the interest burden coupled with an unfavorable comparison base. Gross profit reduced to VND4.6tn (-17.1%yoy). Costly material thinned industry gross margins, particularly for residential contractors. In contrast, infrastructure builders with BOT projects sustained healthier gross margins. Contractors were weighted by surging interest expense including C4G (+95 % yoy interest expense growth in 2Q23), PC1 (+59% yoy), TCD (+67% yoy).

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.

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.