Industry Report

BSC_Vietnam Sector Outlook_Q32020_EN

Date

27/10/2020
Language

Tiếng Việt
Number of Downloads

880

Detailed report

Over six months with the negative impact of the Covid-19 pandemic on the economy in general and the stock market in particular, with the risk of the "second wave" is showing signs of coming back, the prospects of almost all sectors remain relatively negative as mentioned in our previous report (Link). Therefore, our investment theme will not change too much compared to the preceding quarter, mainly focusing on updating the latest developments of the previously mentioned topics

The disbursement progress of public investment in the first half of 2020 is still relatively slow, the expectation to promote public investment will gradually shift to the second half of 2020 and 2021, which is expected to be further promoted in 2020 thanks to the conversion of 8 projects from PPP to public investment. BSC believes that the aforementioned three projects and a series of other projects will be the main driving force for the support of construction materials industries (Steel - Cement - Asphalt), construction industry and some other industries that benefit indirectly from implemented infrastructure such as Real Estate (VHM, DXG, NVL, DIG, NLG) and Industrial Parks (GVR, D2D, SZL).

Speeding up the disbursement of public investment will solve the bottleneck of transportation costs, thereby helping to attract FDI inflows and the wave of factory relocation from China to Vietnam. Despite the advantage of location and cheap labor costs, government tax incentives, we recognize transportation costs and transportation infrastructure are among the bottlenecks that have yet to meet the current needs of foreign businesses. In the long term, Vietnam will still be an attractive destination for FDI. Industrial real estate continues to maintain its position as a clear sector benefiting from this shift.

The promotion divestment of state-owned enterprises groups. Most recently, SCIC announced auctions of 46 million FPT shares, with an estimated total value over 2,200 billion We believe that accelerating the divestment will give the government more revenue to support the disbursement of public investment projects in the coming period. Some notable stocks on the topic of divestment can be accelerated (Reference link) such as DBD (13.3%), DVN (29%), SAB (36%), VGC (38.6%), PLX (75.9%), HVN (86.2%), IDC (36%)...

Expectations for foreign cash flow in the second half of 2020. Investors can expect the return of foreign cash flow by the end of 2020 when MSCI is about to upgrade Kuwait to an emerging market by November 2020. In addition, Vietnam has a relatively good epidemic control, an attractive investment environment and market valuation which are also the prerequisites that can help attract foreign cash flow in the second half of 2020 and in 2021.