DIG, NHS, VNS, TDH, PPC, PET, SBT, KSA

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1 Vietnam macroeconomics and the stock market Contents Market Commentary The macro factors are supporting the stock market, but due to the market decline in the long time it was unable to regain the trust back. Therefore, a new wave may not come soon but the investors can gradually accumulate stocks at the present and wait for the coming opportunities. Technical analysis According to current signals, we suppose that VN-Index will likely change largely in the early sessions of this week and overcome the MA(5) line. The speculators can still accumulate more stocks at this time. Technically recommended codes for the week: Buy PPC, HSG, PVC; Sell PGS Stock of the week Tay Ninh Cable Car Tour Joint Stock Company - TCT High profitable company; the major business of the company attaches with the ritual activity at Ba Den mountain; providing monopoly service, the company can partly pass on inflation to passengers. Business highlights DIG, NHS, VNS, TDH, PPC, PET, SBT, KSA Macroeconomic news Vietnam Economy Grows 5.14% On-Year in Jan-Sept: GSO Vietnam s CPI to Rise.6% On-month in Oct: Trade Ministry Vietnam Economy Rebounds, Things To Solve To Boost Growth Reference data Page 1 of 1

2 Market Commentary CPI hiked 1.6 % month-on-month in September, and increased 4.63 % YTD. This was a quite high monthly increase since March. The main reason for such the quite high increase in CPI of September was due to the increase in tuition fees in the school year season, so the next month CPI will be more likely to be reduced because the market demand essentially has no more signs of improvement. The significant increase in September CPI was due to the administrative decisions rather than by market supply and demand. Although CPI was published monthly increase but did not significantly affect the stock market movement in the last week. The decision to resist tempering QE3 by Fed helped foreign capital return the Asian market after a quarter of continuous withdrawal of capital in the region. This week, foreign investors kept buying net VND93 billion on HOSE, and this demand was mainly resulted from VNM ETF. Investors also began pouring money back into the VNM ETFs when last week net assets of this exchange trade fund increased $6.3 million, with added 15, outstanding units. The stock market in third-quarter was affected by heavy selling from foreign investors had not been able to make the breakthrough. The return of foreign investors with net buying position will positively impact not only the general purchasing power but also domestic sentiment. Currently, the other investing channels in Vietnam are rather unfavorable, only the stock market yields the attractiveness, especially after a longtime decline. Although GDP rose only 5.14 % in the nine months through September compared to the same period in 212, the other macroeconomic indicators are still stable. Such the stability goes along with higher cash flow expectation in fourthquarter via the debt management company VAMC will be a strong platform for the confidence of the domestic money flow return. Last week VN-Index rose 1.97 % to points, the HNX- Index rose 2.8 % to 6.4 points. Trading volume on the HOSE matched up 18.5 %, but decreased 31.9 % on the HNX. Last week the market flourished mainly because of the speculative stocks, while the Blue-chips are fairly quiet, and as close to the end of the week, the demand became weaker and liquidity began to decline gradually. The macro factors are supporting the stock market, but due to the market decline in the long time it was unable to regain the trust back. Therefore, a new wave may not come soon but the investors can gradually accumulate stocks at the present and wait for the coming opportunities. Page 2 of 1

3 Technical analysis Last week, VN-Index has broken the sideways moving tendency after this index overcame the 48-point level. In addition. VN-Index also stayed stably above the 485-point level in the end-session of last week and established the upward trend in short-term. Most of technical indicators began going up from the oversold zone; these are the positive signs to consolidate for the upward trend. Currently, VN-Index is facing with the resistance of 489-point level, equivalent to the MA(2). In the endsession of last week, VN-Index rose to points with 43.5 million units matched. Although the matching volume declined slightly compared to the previous session, it was still higher than average volume in the lasted 2 months. Also MACD continued moving up to -.86 level and approached the zero line; if MACD crosses up this line, the upward trend will continue to be consolidated. According to current signals, we suppose that VN-Index will likely change largely in the early sessions of this week and overcome the MA(5) line. The speculators can still accumulate more stocks at this time. Resistance 1: 489 Resistance 2: 513 Support 1: 48 Support 2: 46 Technically recommended codes for the week: Code Exchange Recommended position Bid/ask price Target price Cut loss Notes PPC HOSE BUY HSG HOSE BUY PGS HNX SELL SELL T+ PVC HNX BUY Unit: 1, VND Page 3 of 1

4 Stock of the week: Tay Ninh Cable Car Tour Joint Stock Company - TCT Overview In 1996, Tay Ninh Tourist Company launched a project to transport passengers from Tay Ninh Ba Den mountain foot to Ba Den pagoda by a ropeway system. In 1998, the project came into operation and operated as a branch of Tay Ninh Tourist Company. After 3 years of operation, in 21 Tay Ninh People Committee decided to turn it into Tay Ninh Cable Car tour Company with registered capital of VND billion, in which 51% was state-owned share managed by Tay Ninh Tourist Company. In 22, the company opened a slideway system and this soon became an important operation after ropeway system. Operating results H-213 Assets (VND bn.) Revenue (VND bn.) Net profit (VND bn.) Long-term liabilities/assets (%) Current ratio Profit margin (%) ROE (%) ROA (%) Dividend (VND) 7, 2, 2, 4, 7, 8,* EPS (VND) 14,246 8,269 9,572 15,54 16,723 13, revenue structure 14% 5% 81% Ropeway & slideway Interest Others Decreasing over time in the period of , revenue from ropeway and slideway systems still accounts for almost 8% of total revenue. Financial revenue, which is deposit interest, gradually increases in accordance with larger earnings retention. A large part of company s annual revenue, over 55%, is recorded in quarter 1 which coincides with the major festival of the year in Ba Den pagoda. ] Income from interest has declined when interest rate level went down and more capital was needed for expansion. In 213, a new ropeway system has been put into operation. In addition, ticket price has increased. Therefore, revenue and profit in 213 will surge. This is one of rare companies can be profitable even in economic downturn. Under such a circumstance, there may be more followers arriving Ba Den pagoda. With abundant cash and no major investment demand, the company possesses a very healthy balance sheet, even after it invested considerably in a new system in Like others who hold much cash, TCT used to try to invest in other companies. But it was a bitter fruit. Fortunately, it was small scale and TCT seemed not to expand this kind of activity. Page 4 of 1

5 Business highlights DIG NHS VNS TDH PPC PET SBT KSA Development Investment Construction JS Corporation (DIG), listed on the Hochiminh Stock Exchange (HOSE), has approved a plan to sell its entire 35% stake in its affiliate Phuoc An Construction Development Investment JSC. The shares are expected to be sold at a minimum price of VND1, each, DIG said in a statement sent to the bourse. Phuoc An has a registered capital of VND15 billion ($77,5) in which DIG had VND5.25 billion worth of capital contribution in the affiliate Ninh Hoa Sugar JSC (NHS), listed on the Hochiminh Stock Exchange, has decided to set up a new unit namely Ninh Hoa Thermoelectricity Company. Ninh Hoa Thermoelectricity, located in the central province of Khanh Hoa, will have a registered capital of VND3 billion ($14.15 million) and focus on manufacturing, trading and installing power systems. Vietnam Sun Corporation (VNS), listed on the Hochiminh Stock Exchange, estimated its net profit at between VND166 billion ($7.83 million) and VND167 billion in the first nine months of this year, excluding profit of its affiliates. The figure fulfilled 95% of its full-year target, the Dau Tu Chung Khoan newspaper cited the company s Deputy General Director Tran Anh Minh as saying, giving no comparative or revenue figures. This year, VNS plans to issue a maximum three million new shares in a private placement at a minimum price of VND44, each, in a move to buy more vehicles and expand its coverage. Thu Duc Housing Development Corporation (TDH), listed on the Hochiminh Stock Exchange, said it made an audited consolidated loss of VND7.34 billion ($346,4) in the first six months of this year, compared to a net profit of VND11.11 billion in H1/212. The company earlier reported a consolidated net profit of VND2.33 billion, which was unaudited. Audited revenue rose by 24.9% on year to VND19.64 billion during the period, TDH said in its audited consolidated quarterly financial report. A 2.5% increase in financial cost to VND28.13 billion contributed to the company s poor result. U.S.-based Market Vectors ETF Trust Market Vectors Vietnam ETF, run by Van Eck Global, sold 6.33 million shares of Pha Lai Thermal Power Joint Stock Company (PPC) as of Sep 25. As a result, Market Vectors cut its holding in PPC to 3.23%, equal to 1.27 million shares, from the earlier 5.22%. Halley Sicav-Halley Asian Property Fund, a Luxembourg open-ended investment fund, bought 983,53 shares of PetroVietnam General Services Corp. (Petrosetco- PET) between September 11 and 23. As a result, Halley Sicav raised its holding in PET to 8.98%, equal to 6.27 million shares, from the earlier 7.57%. Bourbon Tay Ninh JSC (SBT), listed on the Hochiminh Stock Exchange, has approved a plan to sell 4.5 million treasury shares at not below VND12, each between October 7 and November 5. As a result, SBT expects to cut its holding of treasury shares to four million shares. The proceeds will be used to supplement its working capital. Nguyen Thi Mai, a relative of Nguyen Van Dung, chairman of Binh Thuan Hamico Mineral JSC (KSA), plans to sell her entire 58,176 shares of the firm between October 1 and 25. As a result, Mai expects to cut her holding in KSA to zero from the current 3.76%. Meanwhile, Chairman Nguyen Van Dung expects to buy two million shares of the firm in the same period, raising his holding in KSA to 19.56%, equal to 3.2 million shares, from the current 6.6%. Page 5 of 1

6 Macroeconomic news Vietnam Economy Grows 5.14% On-Year in Jan-Sept: GSO Vietnam s gross domestic product (GDP) is estimated to have grown at an annual pace of 5.14% in the first nine months of 213, compared to a 5.1% expansion in the same period last year, the General Statistics Office (GSO) said in a report. The nine-month real GDP value was nearly VND2,421 trillion ($115.3 billion), with 44.29% contributed by the service sector, which registered an on-year growth of 6.25% during the period. The manufacturing and construction sector, which grew by 5.2% between January and September, followed with a lower percentage of 37.86% while the agricultural, forestry and fisheries sector took the rest and expanded by 2.39%. The country s economic growth rate was 5.54% in the third quarter, accelerating from 5% in Q2 and 4.76% in Q1, the report showed. Given slow economic expansion in the first months of this year, the government has revised its full-year GDP target down to 5.2%-5.3% from the earlier 5.5%. The local economy expanded by 5.3% last year, hitting the 13-year bottom. (GSO Sept 27) Vietnam s CPI to Rise.6% On-month in Oct: Trade Ministry Vietnam s consumer price index (CPI) will likely increase by.5%-.6% on-month in October, easing from a rise of 1.6% in September, said the Domestic Market Management Team under the Ministry of Industry and Trade. The team expects no remarkable increase in local consumer prices in the remaining months of this year, citing low domestic demand as a major reason. In September, 9 out of the 11 groups of goods and services have experienced price increases with education registering the strongest rise of 9.38% compared to August, pushing the CPI up strongly. The index rose by 6.3% in September from a year earlier and 4.63% from the end of 212, compared to the full-year target of 7%. (Cong Thuong Sept 27 p2) : Vietnam Economy Rebounds, Things To Solve To Boost Growth Vietnam s economy has shown signs of recovery with many foreign investors betting on the improvement of the property market after the government became more determined to revamp the banking system, public investment and state-owned enterprises. According to the government data, the gross domestic product growth picked up to 5.14% in the first nine months, up from 4.73% from a year ago, mainly driven by retail sales thanks to the strong demand of the country s 9 million people, while the property sector is said to be bottoming out with government support. The economic growth dropped to a 13-year low last year after the government cut public spending and investments to tame high inflation and restore macroeconomic balance. After having learned a big lesson from macroeconomic instability caused by loosening of monetary and fiscal policies since 27, the government is seeking ways to restart the growth engine. Earlier last year the government launched comprehensive restructuring efforts in three major sectors namely the banking sector, public investment, and state-owned sector. Even though the reform has progressed slowly, the government is moving in the right direction. Many domestic economists call this reform a second Doi Moi (Renovation), which was initiated thirty years ago when the economy, on the brink of a collapse, was liberalized from the former Page 6 of 1

7 Soviet-style centrally-planned one. Since November 211 the central bank has also done its job very well to support the Vietnam dong and strongly intervened into the domestic gold market, the main culprit for strong volatilities in the previous years. The central bank added up to nearly $4 billion to the country s reserves in the first quarter this year and an equivalent sum in the second while helping restore confidence in the Vietnam dong. Dong interest rates also have dropped to as low as in 26 and 27 though lending by banks in the first eight months stood as low as 6.45% from the end of 212, according to the central bank data. The slow lending was blamed on weak demand among local businesses and consumers who have been suffering from high inflation for a long time. Between January and September, more than 42, local companies have been shut down or suspended operations while most Vietnamese people are tightening their belt. The slow credit growth is also hindered by bad debts in the banking system. However, so far the central bank has restructured eight of a total nine ailing banks and it also set up the Vietnam Asset Management Co, a bad debt bank, to clear the debt in the period. This year it expects to settle about VND35 trillion of the bad debts, out of VND142.3 trillion. The government also adopts bold measures to revitalize the domestic property market, the backbone of the country s economy after a recent bubble burst. The measures include a $1.4 billion package for social housing buyers. The Construction Ministry has proposed amending the Law on Housing by possibly raising housing ownership time to 7 years while shifting property projects to low-cost housing segments. A rising number of foreign investors including those from the U.S. have bet on positive outlook of the industry. In May, a consortium led by U.S.-based Warburg Pincus, an affiliate of Warburg Pincus LLC, signed an agreement to buy a 2% stake of Vincom Retail Company, a unit of Vingroup, for $2 million. One of the U.S. s most viewed CNBC channel also ran an analysis on Vietnam s property market on Sept 25. CNBC quoted investors as recommending that now is the time to jump back in after the long, grinding downturn. Vietnam s listed real-estate companies have bottomed out, it noted. Amid the dark sides, the Southeast Asian country s economy saw bright aspects of solid growth in exports and foreign direct investment in the first nine months of this year. Real FDI inflows rose 6.4% to an estimated $8.62 billion. However, local economists voiced their worries about the slow progress of the ongoing reforms at the 213 Fall Economic Forum and low economic growth. (Government data, Toan Viet Sources Sept 27) Reference data Page 7 of 1

8 Foreign Sentiment HOSE (Mill. shares) /23/213 9/24/213 9/25/213 9/26/213 9/27/ Foreign Sentiment HNX (Mill. shares) /23/213 9/24/213 9/25/213 9/26/213 9/27/ Buy Sell Total market volume Buy Sell Total market volume Sector P/E Comparison Sector P/B Comparison Current Ratio (Current assets/current liabilities) Financial leverage (Total liabilities/ O.E.) Page 8 of 1

9 Gross profit margin Net profit margin 6.% 5.% 4.% 3.% 2.% 1.% 51.1% 5.3% 43.4% 32.8% 34.5% 27.1% 23.% 2.4% 27.% 24.7% 22.7% 14.9% 16.5% 1.4% 13.3% 13.8% 16.4% 3.5% 9.8% 9.8% 5.1% 4.5% 22.8% 19.9% 38.4% 19.4%.% -1.% Technology Industrials Oil and Gas Consumer Services Health Care Consumer goods Banking Basic Materials Financial +Real estate.3% Utilities Telecom HOSE HNX HO&HA -1.3% -2.% 45.% 4.% ROA ROE 38% 35.% 3.% 25.% 2.% 15.% 1.% 5.%.% 2.4% 9.3% 12% 19.3% 8% 6.9% 15% Technology Industrials Oil and Gas Consumer Services 6% 25.5% 26% 16.2% Health Care 2% Consumer goods 11.6% 1.% Banking 18% 12% 16.7% 4.1% Basic Materials Financial +Real estate 23% 23.3% 21.6% 12.6% 11.7% 7.5% 3.1% 4.1% 1.6% Utilities Telecom HOSE HNX HO&HA No. of Company MarCap ,937 25, , ,448 2, 2 157,145 15, ,72 64, , Technology Industrials Oil and Gas Consumer services 18 12,583 14,384 Health Care 89 Consumer goods ,22 13 Banking Basic Materials Finance and Real Estate 3 Utilities 1, 5, 49 Telecom Page 9 of 1

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