20171206_BSC_Vietnam Company Visit Note_EN_CSV_ICB1350

On 05, Dec, 2017, CSV shares were trading at VND 34,400/share, equivalent to P/E FW of 7.28x.

Business results in 9M2017. Accumulated 9M2017, the company's total revenue and NPAT were VND 1,067 billion (-11% YoY) and VND 178 billion (+ 38% YoY) respectively. (1) Profit margin from finished products increased sharply from 24% in 9M2016 to 28% in 9M2017 thanks to an 11% increase in the price of Natri Hydroxide (NaOH). (2) Management expense decreased by 54% to VND 37 billion as the company no longer had to allocate goodwill (VND 14 billion in 9M2016) and reversed provision expenses of VND 451 million (In 9M2016, the company made 26 billion dongs as provision expenses).
Parent company profit plan. CSV estimates pretax profit of the parent company is about VND 270-280 billion in 2017 and VND 280-290 billion in 2018. Then, 2018 EPS 2018 will be 4,725 VND/share The increase of NPAT in 2018 is due to the reduction of management expenses and other income from the recovery of bad debts and a decrease of about VND 10 billion in depreciation. By 2018, electricity costs will increase by about 6%, which will increase the cost of the business.

Price and demand of NaOH continue to increase. Due to the high demand of NaOH, the price of Natri Hydroxide increased by 11% in 9M2017, to VND3.4 million/tonne. CSV expects to increase selling prices in the near future. Cl2 and HCl are concurrent outputs with the production of NaOH.

Expansion of production capacity along with the relocation of the plant. At present, CSV has basically completed the procedures of leasing land and infrastructure and applied for permission to relocate the factory to Nhon Trach 6 Industrial Park.

Divestment plan of Vietnam Phosphorus JSC. CSV plans to withdraw all of 65.05% at Vietnam Phosphorus JSC, which can be done through auction.
Vinachem plans to divest from CSV. Vinachem holds 65% of CSV and plans to divest its capital at CSV, which could fall to 51%.

Dividend. In 2017, the company plans to pay 20% dividend (higher than the target of 14%).