In the share recommendation report released on December 16, Saigon Securities Inc. (SSI) listed 20 shares in Hose and seven shares in HNX, which had strong basic factors and good long-term growth potential and proper current price appraisals.
The report was issued for reference only but not for recommendation about trading any share.
Twenty share codes in hose included DPM, HPG, HAG, FPT, NSC, PHR, DPR, TRC, HRC, BMP; VST, ABT, HVG, BBC, PAC, BVH, STB, VCB, CTG, EIB.
Seven share codes in HNX were NTP, VHL, BHV, HOM, VCS, DBC and ACB.
SSI said such sectors as basic materials, construction materials, sea transport, consumer goods, finance and technology are having many support factors and more optimistic business prospects compared with other sectors.
Regarding the basic material sector, DPM (Nitrogenous fertiliser), HPG (steel) is expected to post EPS at 4.7 trillion dong and 5098 dong per share in 2010.
With the prices of 33,000 dong for DPM and 53,000 dong for HPG on December 16, PE of the two shares stayed at some seven times, which was relatively proper to consider investment.
Given TRC, HRC, DPR, PHR (natural rubber), and the world’s rubber price increased while productivity in the fourth quarter sharply grew. Those companies would benefit from revenue in foreign currency. The business results in the fourth quarter would be likely to exceed total profits of the first three quarters. The sharp reduction of the market brought prices of those shares to low levels. Their PE in 2010 was expected to fluctuate around 6- 8.5 times.
As for the construction material sector, SSI estimated that PE for the two shares, NTP, BMP (plastic pipes) in 2010 based on the prices on December 16 would fluctuate around 6.5 – 7 times; [HOM] (cement) on December 16 was traded at the 2010 P/E of 5.4 times; VSC (devitrified stone) was traded at the 2010 PE of 6.7 times – the revenue and profit growth rates of VSC in 2010 against 2009 were 25 percent (597 billion dong) and 35 percent (125 billion dong) respectively, which come from profit of Style Stone joint venture.
As for ABT, HVG (seafood), the seafood sector continues benefiting much from state policies regarding capital, industry planning as well as support of import market penetration.
Additionally, seafood companies are entitled to interest from difference in the forex rate when dong price depreciates by up to 5.4 percent against the US dollar. Currently, the average PE of seafood companies in 2009 has fallen to only 7.5 times. (As for ABT, ACL, CAD, IFS, MPC, HVG, TS4, VHC only).
With the current prices, the 2010 PE of ABT and HVG are estimated at 5.8 – 5.9 times. As for HVG, in addition to common favourable conditions of the seafood industry, the company has great growth potential from real estate projects in cooperation with Quoc Cuong Gia Lai, as well as the refrigerated warehouse with many favourable conditions because of cheap rental.
ABT: the key export items of ABT are catfish and clams. ABT is the biggest clam exporter in Vietnam. According to SSI, 2010 EPS of ABT is expected to reach at least 8100 dong and with the current price, its PE in 2010 would be 5.8 times.
NSC is expected to report after-tax profit of some 48 billion dong in 2010, rising by 20 percent in 2009 thanks to distribution of maize breeding to the southern area and neighbouring countries such as Laos and Cambodia. In addition, the company will also be able to gain irregular income from selling land plot of 13,200 square meters in Ha Nam province.
DBC (animal food): SSI estimated that DBC’s revenue and profit in 2010 will be 2.7 trillion dong and 115 billion dong respectively, equivalent to the increase of 42 percent in revenue and 42 percent in after-tax profit against 2009.
At the price of 29,500 dong, DBC is being traded at 2010 P/E of 5.9 times. The main risk of the company is poultry diseases and import of input materials makes the company face up the forex risks.
BVH (insurance): BVH has continuously fallen since its listing to 26,000 dong from the initial price of 46,000 dong. With the current price, PE of BVH is staying at an attractive level, 1.8 times.
ACB, STB, VCB, CTG, EIB (banking): In early months of 2010, there will remain difficulties transferred from 2009 but there will contain potential support factors for the growth of banks. The world and Vietnam’s economic recovery momentum will be confirmed more clearly in the first half of 2010 and when there are signs confirming such recovery, the banking industry as the backbone of economies will have a good foundation for development.
FPT (information technology): at the price of 72,000 dong on December 16, SSI estimated FPT’s 2009 PE at 10 times and 2010 PE 8.7 times. FPT is still the biggest IT company in Vietnam with healthy financial situation and sustainable business growth in the upcoming time.
HAG (real estate management): HAG’s 2010 business plans are based on projects that were developed, are being developed and are going to be developed. Currently, with the cash amount of over 1.8 trillion dong mostly from recent issue of bonds, HAG has enough capital to continue developing its projects. The price of convertible bonds in October 2010 is 65,743 dong a share and this will be a strong support level for this share in 2010.
Trading movements of SSI and funds in the fourth quarter:
On November 25, SSI Vision Fund bought 19,000 VST shares; bringing total VST shares that SSI holds to 2,004,180 shares, accounting for 5.01 percent chartered capital of VST.
On November 23, SSI and SSIAM bought additional 2.5 million DBC shares in a separate issuance to strategic partners. Total DBC shares that SSI holds is 1,445,900 shares, making up 5.68 percent of DBC’s chartered capital.
On November 18, SSI bought 2,270,000 LCG shares of Licogi 16, accounting for 9.08 percent of LCG’s chartered capital.
From October 02 to October 09, SSI Vision Fund reported net selling of 125,000 NSC shares, reducing the number of its ownership at NSC to 636,800 shares, accounting for 11.04 percent.
Furthermore, during this time, SSI Vision Fund posted net selling of 277,420 SSC shares and sold 342,000 TTP shares.
By the end of August and early September, SSI bought 1,138,415 HAG shares.