Research Center

The reopening of all industries led oil & gas consumption to grow in 1Q22. Based on our collection, the 1Q22 aggregate earnings growth edged up 35.1% yoy in 1Q22 vs 31.7% yoy growth in 4Q21. Otherwise, the revenue growth rate in 1Q22 was still brisk at around 66.7% yoy thanks to the higher oil prices. Average selling prices were the biggest impact on revenue growth engines, in our view. The high global oil prices will lead earnings of midstream and downstream such as GAS, and BSR to grow strongly in 2Q22F.

This monthly report on Vietnam steel production is intended to track the developments in the steel market. During Apr 22, we observed the domestic revival pause caused by high steel prices. We also expect the temporary price retreat will end soon after COVID-19 restrictions ease in China.

Food and beverage consumption recovered continually in 1Q22, albeit to a different level in each sector. Gross margin (GM) of the dairy sector narrowed in 4Q21 due to weak growth of the selling price could not offset the strong rise of input material prices. The dairy sector’s GM subdued by 2.8%p yoy while VNM’s GM plunged strongly by 3.1%p yoy in 1Q22 due to imported milk powder prices raised sharply by 30-40% yoy in 1Q22. On the other hand, the beer sector gross margin expanded by 1.7%p yoy to 27% in 1Q22. SAB’s GM improved by 0.6%p yoy in 1Q22 due to high APS although raw material prices such as aluminum and malting barley hiked. Reopening fully all industries to prompt household incomes to continue to grow in 2Q22F, thus, F&B companies could increase selling prices more easily to offset the spike in raw materials. Therefore, we expect an expanding gross margin in 2Q22F for dairy and brewing listed companies due to cooling commodity prices and fully benefit from higher selling prices.

Total consumption volume edged up 4.9% yoy to 63.03bn kWh thanks to economy recovery. 1Q22 aggregate revenue of 38 listed power makers jumped 16.3% yoy, while NPAT post-MI hiked 69.9% in which hydropower was bright star. Input material such as Newcastle coal & Singapore fuel oil prices spiked 187% yoy and 49% yoy. Many coal-fired power operated under their capacities when the ability of Vinacomin to supply enough coal for power plants in 2Q22F is still unknown. Thus, we believe hydropower makers will be the biggest beneficiaries in 2Q22F.

According to Insurance Association of Viet Nam (IAV) published 3M22 market firgures on May 16th 2022. Total insurance premium accumulated in 1Q22 was pegged VND58,485bn (+14.6% yoy). In which, life insurance premium increased by 14.7% to VND 17,082bn; non-life insurance premium also surged by 14.6% to VND38,403bn.

In Apr 2022, electricity production was 22.6bn kWh (-3.5% mom, +1.9% yoy). Hydropower is the biggest beneficiary (+26.7% yoy) in the context of rising fuel oil and coal prices, coupled with tight coal supplies when coal and gas thermal power output sharply plunged. Vinacomin pledged to compensate the not-yet-delivered 1Q22 contracted coal volume in the remaining quarters, equivalent to 0.8mn tonnes. It promised to supply enough coal in 2Q22 to EVN’s power plants while the total value of imported coal reached its peak.

This quarterly earnings report on Vietnam steel production is intended to track the earning growth trend in the steel market. In 1Q22, we saw aggregated revenue growth persisted with double digits while NPATMI growth was muted due to the higher base seen in 1Q21 and thinner yoy gross margin marred by input cost inflation. In 2Q22, we expect to see a slower pace in domestic demand revival in 2Q22F due to the sharp steel price rise in 4M22. The temporary global economic weakness caused by COVID-19 restrictions in China eased the prices of steel products and some input materials. Therefore, companies, especially flat steel exporters, can consider the temporary decline as an opportunity for lower-cost inventories.

Based on our estimate, 1Q22 aggregated revenue of 24 listed fertilizer producers jumped 71.2% yoy (VND30.9tn), while aggregated NPATMI climbed 7.9x yoy (VND6.8tn). In 1Q22, total consumption volume sustained but export skyrocketed with 510,000 tonnes, +47% yoy/+31% qoq, equivalent to 44%/40% of the total export in 2020-21. We view the proposal to impose an export tax of 5% from the Ministry of Finance could weigh down some exporters. However, 5% is an insignificant threshold to loom the export where exporters could gain a lucrative gap between the export and domestic prices. Furthermore, when the Summer-Autumn crop comes, the domestic demand could bounce to offset the loss from export constrain if any.

In Apr 2022, prelim seafood export value recorded USD1,056mn (+41% yoy and + 4% mom), driven by shrimp product with USD406mn (+35% yoy and +2% mom), pangasius product with USD297mn (+105% yoy a nd +11% mom).Vietnam’s prelim seafood export to US market increased to USD266mn (+79% yoy. +16% mom), China market also surged by 108% yoy and 12% mom to USD216mn in Apr.