The shocker this week has been about the Turkey crisis, which sent ripples through the global market and reached Vietnam bringing the market down -1.73% on Wednesday, August 15th. The market had not dipped under -1% since July 20 (-1.12%). A combination of factors have led to fears the country is sliding into an economic crisis.
For investors who have invested in Emerging / Developing markets this scenario will bring back horrid memories of the Asian Financial crisis in 2006.
A few fear that have started the nosedrive of the Turkish Lira vs the US Dollar is outlined below:
1) Turkish companies that borrowed heavily to profit from a construction boom may struggle to repay loans in dollars and euros, as the weakened lira means there is now more to pay back.
2) Turkey’s worsening relations with the US.
3) Mr Trump said he had approved the doubling of tariffs on Turkish steel and aluminium.
This week the VN Index closed out at 968.88, +0.48% for the day and +0.06% WoW. The VN Index started the week strong +0.99% on Monday but gave back all its gains on Wednesday. The 50dma has come down to 954.71 from 960.58 last week so we see the shorter term trend of the market continue to weaken this week. The mid-term trend has also fallen to 1015.11 from 1024.96 last week and is coming close to kissing the 200dma at 1012.43. However, the 200dma has increase from 1008.83 last week so we are seeing the longer term trend continue to rise. Thus, technically we expect the 100dma to cross the 200dma next week and we believe the market will continue to have a negative sentiment weighing on the market. The bears are still dominating the bulls.
This week’s liquidity has been slightly higher VND3.7bn (USD160mn) than last week’s VND3.4tn (USD147mn), and higher than MTD average so far of VND3.6tn (USD156mn), however still below the YTD average of VND4.9tn (USD210mn) with total liquidity reaching VND18.6tn (USD800mn), 86.51% of total trading value. Put-through value was VND2.9tn (USD125mn), 13.49% of total trading value. Total trading value reached VND21.6tn (USD925mn).
In the derivatives market this week 457,549 contracts changed hands at a total value of VND43.48tn (USD1.87bn). MTD 1,140,012 contracts traded worth VND107.5tn (USD4.6bn). At this pace, the volume should come close to 2.3mn contracts by the end of this month vs. 2.8mn in July. About a -18% decrease in total estimated volume.
Again Foreigners continued to be net sellers this week. Buying VND2.5tn (USD109mn) about 11.98% of the entire market value VND21.3 (USD913mn) including put throughs, while selling is VND2.8tn (USD120mn) about 13.16% of the total market value leading to a net selling of VND-251.2bn (USD10.8mn).
Mobile World Investment Corporation (HoSE: MWG): Update on 1H 2018’s result – Strengthening confidence in Bachhoaxanh
In 1H18, MWG posted an impressive growth of 43% in net revenue and 44% in net profit YoY. Moreover, even though it still has to make a profit, Bachhoaxanh is constantly improving and getting very close the break-even point.
Undisputedly domination in both sectors: mobile phone and consumer electronics
It is safe to say that the mobile phone market has entered a mature period with sales growth of only 4% in 1H2018 YoY
Consumer electronics grew 28% in 1H18 YoY while Dienmayxanh posted a growth of 90% in the same period to become the main driver of MWG (contributes 56% of revenue).
Strengthening confidence in Bachhoaxanh
In the previous MWG’s investor meetings, all eyes were on the company’s new business – Bachhoaxanh. Average monthly revenue per store has been increasing constantly.
Bachhoaxanh can be categorized into three main tiers:
Large store (from 200 to 300 sq meter): Established in high population-density areas and near traditional markets.
Standard store (from 160 to 200 sq meter): Also established in high population-density areas and on main routes that have high traffic.
Mini store (from 100 to 150 sq meter): These are the least effective stores of the chain with only limited amount of fresh foods being offered.
Binh Minh Plastics JSC (HoSE: BMP): Update on 1H 2018’s result
As of the end of 1H18, BMP had almost no growth YoY in most of the key indicators such as output, sales and EAT, completing over 40% of the year guidance.
BMP maintained a gross margin of 24% YoY, a plastic pipe manufacturer with a higher PPR and HDPE proportions, recorded a 1H18 gross margin decline YoY.
In terms of sales, BMP is currently selling through two main channels. More than 80% of BMP’s production is consumed by over 1,600 dealers, with the remainder directly supplied to infrastructure projects.
We expect BMP to boost its steel pipe sales a bit after the rainy season ends and complete the business plan of 100,000 tons of products, VND4.3tn of revenue and VND600bn of PBT. BMP will record an EPS of VND 5,843.
Marc Djandji, CFA
Head of Institutional Sales
Rong Viet Securities Corporation (VDSC)