Market commentary: The VN-INDEX inched up by 0.2%, led by TCB, VNM and MSN.

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1 Market commentary: The VN-INDEX inched up by 0.2%, led by TCB, VNM and MSN. The VN-INDEX managed to stay in the green today despite strong profit-taking activities on large caps; the HNX-INDEX retreated. Continuing the positive sentiment from yesterday, the market opened in the green, driven by some heavy-weighted stocks such as TCB, VHM, VIC and VNM. TCB ended a 3-day losing streak to record gain and successfully closed at the ceiling price with huge demand surplus, alone adding 2.4pts to the index s gain. Other Financials stocks saw a great divergence with HDB and MBB surging by 3.2% and 1.1%, respectively, while BID, CTG and VCB suffered losses. Some Food and Beverages stocks outperformed today, notably MSN (+2.1%) and VNM (+1.3%), thanks to strong netbuying value from foreign investors. Other blue-chips also joined the rally, including VJC, NVL, HPG and BVH. However, stronger selling pressure towards the end of the afternoon session slowed the existing upward momentum. Oil & Gas and IT sectors had a disappointing trading day with GAS, PLX and FPT among today s laggards. At the end of the trading day, the VN-INDEX slightly increased by 0.2% to land at 1,037pts with 142 gainers, 138 losers and 77 unchanged. On the other hand, the HNX-INDEX gradually lost steam throughout the entire trading day and ended at 119.0pts (-1.2%) with 88 advancers, 78 decliners and 218 unchanged. Materials (+1.7%), Healthcare (+1.6%) and Consumer Staples (+1.0%) sectors outperformed today while Utilities (-2.6%), IT (-1.4%) and Financials (-0.6%) dropped. Top index movers included TCB (+7.0%), VNM (+1.3%), MSN (+2.1%), VJC (+2.5%) and NVL (+4.4%). Top index laggards consisted of GAS (-3.2%), CTG (-2.1%), BID (-1.9%), VCB (- 0.7%) and MWG (-1.8%). Top 3 major block trades were NVL with 3.1mn shares (VND157.3bn), HPG with 1.0mn shares (VND57.8bn) and SBT with 3.6mn shares (VND57.1bn). Foreigners net bought on both exchanges, worth VND260.2bn. They mainly bought HPG (VND166.8bn), VIC (VND120.7bn) and VNM (VND77.3bn) and sold VHM (VND90.0bn), VIC (VND88.7bn) and HPG (VND79.0bn). Snapshot HOSE HNX Close (pts) 1, Day change (%) Volume (mn shs) Value (US$mn) Gainers Losers Unchanged Commodities & Currencies Close %chg Gold(USD/Oz) 1, WTI Oil ($/B) 1Mth Brent Oil ($/B) 1Mth USDVND 22, EURVND 26, , , , , , , , VN-INDEX HNX-INDEX Source: Bloomberg Sectors Index P/E P/B Country Close 1D chg P/E P/BMarket cap (VNIndex) Wgt (%) 1D chg x x Peering Points % x x US$bn Consumer Discretionary % China 3, % ,439 Consumer Staples % India 10, % ,153 Energy % Indonesia 6, % Financials % Laos % Health Care % Malaysia 1, % Industrials % Philippines 7, % IT % Taiwan 11, % ,122 Materials % Thailand 1, % Real Estate % Utilities % Vietnam 1, % Source: Bloomberg Source: Bloomberg 7-Jun

2 Market News Oil traded near US$65 a barrel as investors searched for clues about OPEC s next move on its supply curb agreement. Futures gained 0.7% in New York after falling 1.2% on Wednesday following a surprise gain in U.S. crude stockpiles last week. The OPEC and its allies may fail to reach a consensus when they meet later this month as some producers push to revive supply and others oppose it, according to Sanford C. Bernstein & Co. Saudi Arabia and Russia have signaled they are ready to raise production later this year to make up for lost supply from Iran and Venezuela. They would have to convince others in the 24-country alliance, some of whom prefer the benefits of higher prices. They will also have to gauge the of U.S. output rising to new records and the pipeline crunch that is limiting the American industry s ability to take full advantage of demand from abroad. Oil prices have come under pressure on expectations that OPEC and its allies may relax production curbs, said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. We think this will prove insufficient in offsetting losses of Venezuelan and Iranian oil production. The oil market remains in deficit. (Bloomberg) Vietnam s GDP is forecast to grow by 6.6% in 2018, according to the Institute of Chartered Accountants in England and Wales (ICAEW). Growth in the region is forecast to come in at 4.9% vs. 5.3% last year, as a result of moderate export growth across the region from the sharp acceleration last year. Unlike the US and Europe, Asia had a promising start this year, with Southeast Asia economies expanding 5.2% YoY, slightly softer than the 5.3% in the previous quarter. In Vietnam, economic growth eased in the first quarter to 7.4% YoY following a stellar end last year. However, the quarterly result was still the strongest Q1 outcome in a decade, driven by ongoing strength in the manufacturing sector, solid service sector activity and improving agriculture output. Mark Billington, ICAEW regional director for Southeast Asian, said: Although for Vietnam external demand is expected to moderate, domestic demand is forecast to strengthen in 2018, driven by solid foreign direct investment inflows, buoyant consumer spending and expansionary monetary policy conditions. In , we expect growth to ease back slightly to around 6.3% from our forecast of 6.6% this year amid a less expansionary monetary policy and a maturing of the global trade cycle. Commenting generally on the region, Sian Fenner, ICAEW Economic Advisor and Oxford Economics Lead Asia Economist, said: Manufacturing Purchasing Managers Index (PMI) and recent trade data all point to a more moderate growth in the region going forward. This is consistent with our view that export growth across the region will ease from 2017 s performance, reflecting softer Chinese import demand and normalisation in the global electronics cycle. ICAEW forecasts moderate easing in Southeast Asia s GDP growth to 4.9% in The slowdown is expected to be broad-based, with only Indonesia growing faster than (En.vietnamnet.vn) Coverage Universe Update Vietnam Prosperity Joint Stock Commercial Bank (VPB VN) Update ADD (Upside +20.2%) Decent topline growth. VPB s 1QFY18 NII grew 24.8% yoy, driven by 24.1% yoy loan growth and an impressive 14bp yoy increase in NIM. Non-II surged by 183.1% yoy, driven by a 3.1% fee income growth, 159.4% growth in income from investments and a four-fold increase in Other Income. The latter stemmed from the bancassurance business which was mostly contributed by AIA s upfront payment of VND850bn to VPB. Operating revenue grew 41.7% yoy, in line with expectation, forming 24.2% of our FY18F forecast. Modest loan growth, strong deposit growth, improving LDR. Modest YTD credit growth in 1QFY18 of 3.5% (versus 5.2% ytd growth in 1QFY17) was roughly in line with the FY18 guidance of 23.0% but slower than the 26.3% growth seen last year. The standalone bank s and FE Credit s loan balance grew by 3.4% YTD and 4.1% YTD, respectively. On the other hand, customer deposits surged by 7.2% YTD, mainly stemming from rising term deposits (+10.6% YTD). We estimate that the pure LDR decreased to 129.7% by end-1q18 from 134.4% at end-fy17.

3 Asset quality deteriorated but this is not a surprise. The end-1q18 NPL ratio rose 70bp from 3.4% at end-fy17 and even higher than the 3.5% level seen in 1Q17. We estimated that end-1q18 NPL ratio of standalone bank and FE Credit were 3.6% and 5.9%, respectively, up 70bp and 90bp versus last year end, respectively, as the bank aggressively pushed into unsecured loans, including household and micro SME banking. Provision expenses rose 57.4% yoy, causing annualised credit costs to rise to 5.6%, from the 4.3% level seen in 1Q17. The of investigation into FE Credit is a short-term headwind. SBV will launch an inspection of FE Credit this year, for allegedly harassing clients after multiple complaints that the firm had been used threats to collect overdue debts. In our view, the potential public relations fallout could damage FE Credit s brand name and potentially hurt near-term credit growth. Thus, we lower our FY18F FE Credit loan growth forecast to 25%, from 30% previously, but maintain 30% for FY19-20F. As a result, our pretax profit forecasts are cut by 2.1% and 3.5% for FY18F and FY19F, respectively. Buy on dips. Concerns over the SBV investigation has dragged VPB s share price down by 22%, outpacing the sharp 16% correction in banking sector stocks seen in May due to profit-taking. We believe that the of the investigation will be contained and the recent correction is a knee-jerk reaction by investors to the news; the bank remains well positioned to tap into the promising retail lending opportunity in Vietnam. We upgrade our rating to Add from Hold with a lower TP of VND59,500 (RI approach, COE:13.3%, LTG:4%). Downside risk is lower-than-expected loan growth. Read the full report: HERE Notable Corporate Event Vietnam Prosperity Joint Stock Commercial Bank (VPB VN) - share repurchase: VPB announced to repurchase 73.2mn dividend preferential shares, equivalent to 4.66% of its outstanding shares, at VND33,996.8/share, citing the information from the bank s website. The share repurchase is expected to be completed by Jul 09. (Bloomberg) <to be continued>

4 COVERAGE SUMMARY Ticker Close price Adjusted target price Upside Recomendation PC1 32,000 40, % ADD LPB 12,800 19, % ADD VJC 179, , % REDUCE NLG 31,700 38, % ADD ACV 88, , % ADD DPM 19,000 15, % REDUCE QNS 39,800 65, % ADD LTG 35,100 66, % ADD VCB 58,700 79, % ADD MBB 30,900 38, % ADD VSC 34,800 53, % ADD Investment thesis summary/update Positive outlook for 2018 with surge in revenue thanks to: (1) New contribution from My Dinh Plaza II and (2) commissioning of two new hydropower plants in Q4, (3) Back log of VND2,040bn at end of Unique distribution advantage with more than 1000 PTOs across country. Will be able to maintain strong credit growth thanks to good capital buffer (CAR ~13%) and strong liquidity (LDR ~80%). 2. FY18 YE P/B cheap relative to peers. 1. 1Q18 transport revenue reached VND6,035bn (+51.9% yoy) 2. In 2018, VJC will continue to expand its international network 3. VJC may not be able to pass on fuel costs if oil price continues to rise. Moreover VJC appears to be overvalued compared to global peers which are seeing multiple contraction due to rising fuel prices and looming overcapacity in the APAC region 1. NLG is well aligned with the new property market orientation. NLG focuses on durable-demand products (affordable and social apartments and landed properties). 2. FY2017 net revenue is forecasted at VND3,454 billion (+36.3% yoy) and NPATMI at VND544 billion (+58% yoy). For 2018, revaluation of Hoang Nam project will secure strong EAT growth. However, the share price is reasonable this year. 3. Upside for the stock will come in 2018 as major projects are going to be executed. 1. Passenger throughput could grow at more than 15% in the next few years 2. Domestic passenger fees will increase by 22.7% yoy in 2018, FY18 EAT to touch VND5,072b (+46.5%) EV/EBITDA 11.9x, below peers average of 15x 1. High exposure to oil prices (forecasted to average US$70/bbl in 2018) implies potential further contraction in margins. 2. High depreciation burden leads to expected losses for the NPK - NH3 expansion project in This project will only contribute to profits from 2020 onwards as the plants reach full capacity. 3. Short to medium term catalysts include a pending change in VAT policy (which would improve gross margin by 3-4% pts) and the acceleration of PVN's divestment process in Soymilk segment is the main growth driver and expected to regain momentum in 2018 with new products. 2. Sugarcane prices should temper this year, cushioning some of the of falling sugar price. This should protect sugar segment's GPM to further squeeze. 3. We recommends an ADD rating for QNS as the increasing profitability contribution from soymilk segment should help QNS close its valuation gap with pure-play consumer stocks. 1. Booming rice exports to China and Philippines should boost Agrifood sales. 2. For 2018, we expect a 7.1% growth in top line to touch VND8,781bn and a 18.4% growth in bottom line to touch VND517bn. 1. VCB is a well-regarded state-owned commercial bank (SOCB) with an extensive network, a critical role in Vietnam s national payment system and leading card issuer. 2. Its strong deposit franchise and large client base would support a gradual shift in loan mix to higher-yield segments such as personal lending, in our view. 3. Its asset quality is best in class, with well-controlled NPLs and a high provisioning buffer (NPL of 1.1%, loan loss reserve ratio, LLR, of 131% at end-fy17). 4. We project an enviable net profit CAGR of 17.7% over FY18-20F, with ROE improving to 20.1% by end-fy20f. 1. MBB is looking to push fee income through bancassurance and internet/mobile banking. 2. High loan growth to be supported by sufficient capital and funding. 3. MBB still trades at a discount to peers. 1. VSC will boost VGP capacity by a third to 800,000 TEU by 2019 through the additional of a new quay crane and a back-end logistics center which is 75% complete at the moment net profit expected to soar to VND360bn (+34.8% YoY). 3. Valuation is attractive due to the foreign investors sell off over the last few weeks. VSC is currently trading at 12M EV/EBITDA 5.6x, well below the peer average of 6.7x. Latest report

5 Ticker Close price Adjusted target price Upside Recomendation VPB 49,500 59, % ADD TCM 22,000 30, % ADD HPG 61,900 77, % ADD PVT 17,250 29, % ADD PPC 17,900 22, % ADD STK 16,200 26, % ADD Investment thesis summary/update 1. VPB delivered ROA of 1.9% and ROE of 24.8% in FY16, the highest returns-on-capital among local peers and impressive even in a regional context. 2. FY16 NIM of 7.7% was driven by a shift in loan mix towards higher yielding segments, such as consumer finance, retail, household and micro- SME loans. 3. Strong topline growth in FY14-16, complemented by an improvement in operational efficiency on continued investments into technology. 4. We expect strong earnings growth in FY17-20F with forecasted net profit CAGR of 25.6% and sustained high average ROE of 22.7%. 1. High property value offsets the lack of foreign room. 2. Core segments to perform moderately well in We expect that FY18 core-earnings to grow by a robust 45%. 1. Expect higher construction steel consumption across Vietnam in 2018F 2. Ability to sustain and even consolidate its leading market position 3. Margin expansion from rising steel prices & soft raw material prices 4. HPG s long-steel capacity to double over the next 12 months 1. PVT has a chartering profile skewed towards fixed rates, which offers protection against the current low-rate environment, while providing potential upside for recovery. 2. PVT has the largest tanker fleet and LPG fleet among Vietnam carriers, and is able to ride on growing demand for fossil fuels and LPG from the civil and industrial sectors. 3. The company plans to upsize and rejuvenate its fleet over the next few years to respond to Vietnam s increasing refinery capacity and growing demand for LPG. 1. Prepayment of borrowings in JPY has proved to be beneficial to the company as PPC s performance has become more stable compared to the past. 2. We maintain our target price but re-rate the stock to ADD because of the recent slide in the company s share price in line with the overall market even as fundamentals look stronger due to less forex risk. 1. STK is currently the Vietnam s 2nd largest polyester yarn manufacturer, accounting for 28% of the country s total polyester yarn exports. 2. Unmet domestic demand and growing demand from export markets, driven by recent trade agreements. 3. However, fierce competition from Chinese yarn, as well as input price volatility present downside risks. Latest report

6 MARKET MOVEMENTS HOSE Top gainers VND Top gainers VND BTT 34,550 2, VE9 4, , TCB 98,400 6, MLN CTB 32,900 2, ITA 2, MLN PSW 8, LGC 20,100 1, TPP 10, AGM 8, , QNC 4, MLN HNX Top losers VND Top losers VND FDC 18,600-1, HHC 89,100-9, HOT 44,450-3, MLS 6, , MCG 2, PPP 8, SVT 5, VNC 45,900-5, CLW 16,350-1, SSM 13,600-1, Top index movers VND Top index movers VND TCB 98,400 6, MLN VPI 44,600 1, , VNM 177,300 2, , PGS 33,000 2, , MSN 87,300 1, MLN DBC 21, , VJC 179,000 4, , CEO 17, MLN NVL 54,500 2, MLN LAS 12, , Top index laggers VND Top index laggers VND GAS 99,600-3, MLN ACB 42, MLN CTG 28, MLN SHB 9, MLN BID 31, MLN PVS 17, MLN VCB 58, MLN NVB 8, , MWG 116,400-2, , HUT 6, MLN Top active volume VND Top active volume VND MBB 30, MLN SHB 9, MLN STB 13, MLN ACB 42, MLN CTG 28, MLN PVS 17, MLN HPG 61,900 1, MLN KLF 2, MLN SSI 33, MLN QNC 4, MLN Source: Bloomberg 7-Jun

7 FOREIGN ACTIVITIES Volume (Mn'shs) HOSE d/d HNX d/d Value (VND'bn) HOSE d/d HNX d/d BUY % % BUY % % % of market 8.7% 10.1% % of market 19.3% 7.6% SELL % % SELL % % % of market 6.8% 3.8% % of market 14.4% 5.3% NET BUY (SELL) NET BUY (SELL) Source: HSX, HNX 30,000 25,000 20,000 15,000 10,000 5,000 0 (5,000) Foreign net buy/sell (30 days) in VND'bn HOSE HNX 2018 ACCUMULATION Volume (Mln'shs) HOSE % of 2017 HNX % of 2017 Value (VND'bn) HOSE % of 2017 HNX % of 2017 BUY 2, % % BUY 151, % 5, % % of market 10.9% 3.9% % of market 20.9% 3.0% SELL 2, % % SELL 117, % 5, % % of market 9.2% 4.2% % of market 16.2% 3.4% NET BUY (SELL) (24.6) NET BUY (SELL) 34,109 (706.4) Source: HSX, HNX

8 FOREIGN ACTIVITIES HOSE HNX Top buy by foreigners (value) VND'bn Top buy by foreigners (value) VND'bn HPG 61,900 1, CEO 15, VIC 124, QNC 4, VNM 177,300 2, VGC 24, VJC 179,000 4, PVS 17, VHM 120, SHS 16, Top sell by foreigners (value) VND'bn Top sell by foreigners (value) VND'bn VHM 120, VGC 24, VIC 124, PVS 17, HPG 61,900 1, CEO 15, VJC 179,000 4, VCS 102,500-2, VRE 45, PLC 18, Top net buy by foreigners (value) VND'bn Top net buy by foreigners (value) VND'bn HPG 61,900 1, CEO 15, VCB 58, QNC 4, VNM 177,300 2, PVS 17, HDB 44,600 1, SHS 16, VIC 124, VCG 18, Top net sell by foreigners (value) VND'bn Top net sell by foreigners (value) VND'bn GAS 99,600-3, VGC 24, VHM 120, PLC 18, NVL 54,500 2, NVB 8, VRE 45, VCS 102,500-2, DHG 110, NTP 51, Jun-18 Source: Bloomberg, HOSE, HNX

9 TOP 60 MARKET CAP STOCKS SNAPSHOT ON HOSE No. Ticker change (%) Mkt. Cap Outs. Vol. Float ratio Avail. FII Ave. daily vol. P/E P/B ROE ROA VND 1M 3M 6M US$mln Mln'shs % % (30 days-shs) x x % % 1 VIC VM 124, ,369 2, ,828, VHM VM 120,000 N/A N/A N/A 14,103 2, N/A N/A N/A 3 VNM VM 177, ,285 1, , VCB VM 58, ,263 3, ,167, GAS VM 99, ,361 1, , SAB VM 248, , , TCB VM 98,400 N/A N/A N/A 5,030 1, N/A BID VM 31, ,678 3, ,580, CTG VM 28, ,630 3, ,873, HPG VM 61, ,119 1, ,397, MSN VM 87, ,011 1, ,020, VRE VM 45, ,752 1, ,153, VJC VM 179, , , PLX VM 66, ,400 1, , VPB VM 49, ,251 1, ,574, BVH VM 95, , , MBB VM 30, ,460 1, ,047, NVL VM 54, , ,830, HDB VM 44, N/A 1, ,871, MWG VM 116, , , ROS VM 61, , , FPT VM 47, , ,471, BHN VM 110, , , STB VM 13, ,028 1, ,351, PNJ VM 183, , EIB VM 15, , , SSI VM 33, ,268, TPB VM 28, N/A N/A , DHG VM 110, , KDH VM 33, , CTD VM 159, , DXG VM 33, ,211, VCI VM 92, , REE VM 34, , TCH VM 27, ,240, GEX VM 34, N/A , HCM VM 68, , PDR VM 32, , NT2 VM 29, , GMD VM 29, , SBT VM 15, ,278, HNG VM 8, , PAN VM 63, , DPM VM 19, , KDC VM 34, , CII VM 29, , NLG VM 31, , DCM VM 11, , FRT VM 90, N/A N/A N/A KBC VM 13, ,817, VHC VM 64, , PPC VM 17, , PVD VM 14, ,168,571 N/A PME VM 75, , HBC VM 26, ,353, BMP VM 63, , VCF VM 185, , DIG VM 20, ,235, PVT VM 17, , TLG VM 96, Source: Bloomberg 7-Jun

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