Research Center

This monthly report on Vietnam steel production is intended to track the developments in the steel market. Sept 2021 Vietnam steel production declined 4.2% mom (2.2mn tonnes), bringing 9M21 growth to 24.3% yoy (22.9mn tonnes). During Sept 21, we observe that only export saw positive sale volume growth of 13.1% mom. The local demand was sluggish (-10.7% mom).

This quarterly earnings report on Vietnam steel production is intended to track the earning growth trend in the steel market. We think the splendid growth record in 2Q21 could sustain in 3Q21 of which net profit of HPG, HSG, NKG and TLH are widely rumored to record around VND9.5tn, VND950bn, VND650bn, and VND105bn, + 2.5x/2.1x/6.8x/8.5x yoy backed by 1) Buoyant demand from the U.S. and EU 2) expanding gross margin.

On Aug 31st 2021, Ministry of Planning and Investment (MPI) offically updated “detailed requirement for market access” towards industries with conditional market access to foreign investors, including insurance industry. With new update from MPI, Requirement clearly stated that “Not limited” for Foreign ownership at insurance companies. It will untie knots for foreign capital flowing more into domestic foreign industry.

This monthly report on Vietnam steel production is intended to track the developments in the steel market. Aug 2021 Vietnam steel production declined 1.9% mom (2.3mn tonnes), bringing 8M21 growth to 28.8% yoy (20.7mn tonnes). During Aug 21, we observe that only export saw positive sale volume growth of 2.8% mom. The local demand was sluggish (-16.3% mom).

SBV has sent document to credit institutions warning on 10 signs of potential risk appeared in the sector in 2020 and asked them to strictly follow Directive 01/CT-NHNN on banking key tasks in 2021. These are official messages for banking operation in 2021 in order to maintain system stability amid unpredictable COVID-19 situation. However, we don’t expect these may tamp down credit growth in coming quarters given favorable interest rate environment and dynamic local economy.

Despite the deep challenges facing aviation because of the pandemic, we believe aviation is an attractive long-term investment. The main reasons are 1) The world is getting steadily richer—about half the world is now middle class or richer so tourism demand continues to rise, 2) A tech revolution in the aviation industry make air travel safer before the pandemic and 3) Ancillary revenue has taken off, promote greater cash flow.

The country credit growth was 1.47% ytd as of 19 March 2021, doubling the same period last year but is relatively low as compared to previous years. However, we believe this is not a sign of bank tightening credit to the economy as the industry is often busy at the quarter-end. Besides, from banks’ guidance for upcoming annual general meetings (AGM) we see that bankers seem quite positive on 2021’s outlook.

Vietnam has a promising insurance market from its low penetration rate of 2.65% compared to 9.6% in advanced markets. Insurance density was USD72 compared to USD4,664 of the advanced markets. Total population possessed life insurance products was just ~8.5%. Those imply a potential field for all players in the sectors.

We could see a better quarter on quarter in 4Q20F new supply as the developers are under pressure to ramp up sales to meet the full-year target. However, the accelerating launches in 4Q20F still suffer a drop by 10-30% yoy as the second COVID wave in Aug discouraged the marketing plan which were kicked off to bolster sale events in 4Q20F. Despite the new supply slumps on yoy base in 4Q20F, we are upbeat on 4Q20F earning growth of 35-40% yoy leading by VHM, DXG thanks to tens of thousands of units delivered in 4Q20F.