J.P. 摩根-亚太地区-股票策略-越南101：2019年国家手册-2019.3.27-32页.pdf

Vietnam 101The 2019 Country HandbookSoutheast Asia and Emerging Markets Equity StrategistRajiv Batra AC(91-22)6157-3568RBloomberg JPMA BATRA J.P.Morgan India Private LimitedSee the end pages of this presentation for analyst certification and important disclosures,including non-US analyst disclosures.J.P.Morgan does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.Asia Pacific Equity Research27 March 20192Country overviewKey facts and our viewEquity marketsSector snapshotAppendices3Country OverviewVietnam is located in the center of the South East Asia region,and borders the Gulf of Thailand,Gulf of Tonkin,and Pacific Ocean,along with its neighbors China,Laos,and Cambodia.With total area of 331,212 square km,the country ranks as the third largest country in ASEAN and 65thglobally.Vietnam is home to 94.7 million people,third largest population in ASEAN and 15thglobally.Avg2012-1620172018f2019fReal GDP,%change5.96.87.16.3Consumption*4.74.44.34.7Fixed investment*1.60.91.41.4Net trade*-0.31.51.40.1Consumer prices,%oya4.63.53.51.8%Dec/Dec4.02.63.02.0Government balance,%of GDP-5.3-5.8-3.7-3.6Merchandise trade balance($bil.)0.32.16.83.1Exports147.1215.1243.5247.8Imports146.8213.0236.7244.7Current account balance5.23.69.74.1%of GDP3.11.63.91.5International reserves,($bil.)30.040.559.261.8Vietnam main regionsVietnam Key Macro forecasts Source:J.P.Morgan ResearchSource:National Statistics Office,J.P.Morgan estimates4Country Overview:10 things to knowVietnam is the fifth fastest growing economy in the world,with five year average GDP growth at 6.5%p.a.There are 63 administrative units including five municipalities and 58 provinces in Vietnam,which individually have a high degree of fiscal decentralization.The country has a sizeable young labor force(55mn in working age,average age 31 years),which is transforming into a middle-income consumer crowd.Macro-economic stability prioritized by the central bank regime,the State Bank of Vietnam has adopted and maintained an inflation-targeting monetary policy since 2011.Vietnams external balances are positive with trade surpluses and ongoing trend of foreign investment inflows.This is further supported by Vietnam being a beneficiary of the U.S.-China trade tension.On the flipside,limited space for fiscal stimulus is an issue.The government has been running a budget deficit whilst its public debt/GDP is approaching the 65%cap imposed by the National Assembly.Vietnam is a reasonably geared economy;with credit/GDP exceeding 130%in 2018.The main stock exchange of Vietnam(HOSE)had a total market capitalization of US$124bn(52%GDP)at the end of 2018.The VN-Index was based on all listed stocks on HOSE,with an average daily traded value at US$185mm in 2018.The VN-Index has delivered an average return of 18%p.a.since 2006.Historical outperformers:Real Estate,Consumer Staples and Discretionary,while IT,Energy and Financials lagged market performance most of the time.The stock market of Vietnam is still on its way to being reclassified from Frontier to Emerging market.5Country overviewKey facts and our viewEquity marketsSector snapshotAppendices6Outstanding economic growthVietnam is the fifth fastest growing economy in the world(6.5%growth p.a.over the last 30 years),and we believe that it will continue to outgrow most of EM peers over the next five years.2019-2020E GDP growth should average 6.3%,vs.EMs 4.5%and EM Asias 5.7%in the period.Growth will be led by manufacturing and services sectors,which possess several long-term drivers in our view.Vietnam GDP Growth 1986-2018Vietnam GDP by sectorsVietnam GDP by expenditureSource:National Statistics OfficeSource:National Statistics OfficeSource:National Statistics Office7Young labor force transforming into middle-income consumersVietnam is home to a sizeable young labor force,which is transforming into a middle-income consumer crowd.55 million people in the working age(average 31 years).6.7 million households(24%of total)with average income range of US$7,000 p.a.and above in 2017Vietnam population pyramid Vietnam wage&population by age groupVietnam income distributionSource:National Statistics OfficeSource:Euromonitor,National statisticsSource:Euromonitor,National statistics8Macro-economic stability prioritized by the central bank regimeThe State Bank of Vietnam(SBV)has adopted an inflation-targeting monetary policy since 2011.Main priorities of SBV are to maintain a stable economic environment in which inflation is controlled at sub-4%p.a.and the local currency is pegged to USD with 2-3%depreciation every year.We expect CPI inflation to remain close to 2%oya through 1H19.Vietnam interbank ON rates&policy ratesVietnam CPIUSD/VND exchange rate Source:SBV,BloombergSource:SBV,BloombergSource:National Statistics Office9Strong external trade and investment inflowsVietnam has transitioned to a highly open economy with trade-to-GDP reaching 200%in 2018.The countrys current account balance went from deficit of-10%of GDP in 2008 to a period of consistent surplus from 2011-now.Vietnam has maintained strong and sustained FDI inflows.Annual value of FDI registration in Vietnam almost doubled over the last five years and FDI disbursement maintained stable growth of 8-10%every year.Vietnam imports/exports and trade balanceVietnam trade balance by countryVietnam FDI flows 1992-2018Source:Vietnam CustomsSource:Vietnam CustomsSource:Ministry of Planning&Investment10Winner of the shifting supply chain amid US-China trade tensionsVietnam is considered one of the biggest beneficiaries of the U.S.-China trade tension.The country attracts numerous global manufacturers and holds various advantages to become a new manufacturing hub in ASEAN.Key advantages:1)Young labor force with low cost(one third of China)2)Low electricity cost3)Connectivity to current supply chain/logistic hubs(Guangdong,Singapore)4)Entered 16 FTAs such as VKFTA,CP-TPP,EU-VN FTAs etc.5)Tax incentives and 6)Large land bank available for developing industrial parks.Key concerns:1)Low labor skills in high-end manufacturing2)Under-developed infrastructure3)FDI policy turns to be more selective(against low value added,high-pollution industries)4)Tedious processes with local governmentExports to USA(U$Bn)2M19 2M18Y/yNotesApparels&Clothings2.141.95+10%Footwear0.920.80+15%Mobile phones and parts1.400.43+227%Wood&wood products 0.640.48+34%Machineries&parts0.620.36+73%Computer electronics and parts 0.510.37+39%Aquaculture products0.180.16+9%Steel&steel products0.080.10-23%Others1.711.38+24%Total8.206.03+36%US imposed tariffs on China goodsNo.of FDI project registrations in Vietnam(12M trailing,%change y/y)Vietnam exports to USA in 2M19 vs 2M18 Source:Ministry of Planning&InvestmentSource:Vietnam Customs11Challenges:Limited fiscal policyThe Vietnamese government has been running a budget deficit with 3.7%budgeted deficit/GDP ratio in 2018(4.4%-6.6%in 2011-2016).Current position of Vietnam governments balance sheet leaves little room for fiscal stimulus and public infrastructure investment.At 62%of GDP in 2017,Vietnams public debt has gradually approached the cap of 65%of GDP(imposed by the National Assembly)as does external debt(48.4%vs 50%cap).The government has adopted multiple initiatives to resolve fiscal issues1)Improving debt profile:better credit rating,longer bond maturity2)Raising revenue from taxes and fees3)Limiting growth of recurring expenses4)Divesting SOEs Vietnam government budget 2005-2017Vietnam public debt&external debtMoodysS&PFitchThailandBaa1BBB+BBB+PhilippinesBaa2BBBBBBIndonesiaBaa3BBBBBBBa1BB+BB+Ba2BBBBVietnamBa3BBBBB1B+B+Vietnam sovereign credit rating 2018Source:Ministry of FinanceSource:Ministry of FinanceSource:Moodys,S&P,Fitch12Challenges:Dependence on credit financingBanks form the largest part of Vietnams financial system.Majority of businesses primarily use loans as their main source of financing other than equity.It is a reasonably geared economy;Vietnam has a relatively large credit gap with credit/GDP exceeding 130%in 2018.Credit growth of the banking system is controlled by the State Bank of Vietnam.Vietnam credit&deposit growth vs nominal GDPVietnam Credit/GDP and M2/GDPVietnam credit by industrySource:SBV,BloombergSource:SBV,National StatisticsSource:SBV,National Statistics13Political system:Single-party framework and decentralizationVietnams political system follows a single-party framework,where the Communist Party of Vietnam(CPV)assumes the leading position.Governing powers were separated into legislative,executive and judiciary power,which is held by the National Assembly,the Government and the Supreme Peoples Court respectively.Local authority consists of two main organizations:the Peoples Council and the Peoples Committee.The local authority might act with a degree of autonomy in deciding its budget,expenditure projects and approval of FDI projects.As reported by the World Bank in 2015,local authorities are responsible for 55%of general spending and 75%of capital spending.Vietnam political systemSource:Vietnam government14Country overviewKey facts and our viewEquity marketsSector snapshotAppendices15Equity market:History and developmentThe Ho Chi Minh Stock exchange(HOSE)was established in early 2000 and has since grown to 363 listed stocks total market capitalization of US$124bn(52%GDP)by the end of 2018.The VN-Index was based on all listed stocks on the HOSE,which averaged daily traded value at US$185mm in 2018.There are also two other exchanges:Ha Noi(HNX)and Ha Noi UpCOM(UpCOM)with total market cap of US$50bn.VN-Index 2000-2018 and trading volumeSource:Stock Exchange,Bloomberg16Equity market:What works in VietnamVietnam equities experienced a chaotic period of boom and bust for nearly two decades.The VN-Index delivered an average return of 18%p.a.Historical outperformers:Real Estate,Consumer Staples and Discretionary.While IT,Energy and Financials lagged the market most of the time.With growing urbanization and rising income,industries such as education,retail,FMCG and e-commerce are expected to grow steadily.Recent stock offerings remain to be a question mark in terms of performance.Sector/YearCons.DiscCons.StaplesEnergy Financial Health CareIndustrialITMaterialsReal EstateUtilitiesVN-Index2006+77+142+21+11-17+26+1+80+390+42+1432007+22+38+30+69+79+50-26+41+70-3+242008-74-60-42-75-61-79-66-59-55-61-662009+165+92+9+41+45+117+52+47+124-15+652010-15+29-26+8-14-24-6-4+7-28-62011-32+1-42-27-9-47-26-46-29-28-282012+30+36+21+23+34+25-6+49-2+43+202013+39+19+90+5+61+49+29+41+19+79+212014+63+3+21+9+14+25+32+19+11+15+82015+15+22-42+36-23+15+21-1+12+37+62016+29+18-2-6+61+52+8+37+14+61+172017+49+48+51+55+55+52+51+38+61+60+482018-4-12-26-7-26-30-11-16+17-6-11Avg.+28+29+5+11+15+18+4+17+49+15+18Median+29+22+9+9+14+25+1+37+14+15+17VN-Index and sectors performance 2008-2019Vietnam stock market composition0%10%20%30%40%50%60%70%80%90%100%2006200720082009201020112012201320142015201620172018ConsumerDiscretionaryConsumerStaplesEnergyFinancialsHealth CareIndustrialsInformationTechnologyMaterialsNot classifiedReal EstateUtilitiesVietnam stock offerings performance 2017-18Source:Stock Exchange,Bloomberg.Note:Past performance is not indicative of future results.Source:Stock Exchange,BloombergSource:Stock Exchange,Bloomberg17Equity market:ValuationThe forward P/E peak was 22x in 2017.The normal post GFC valuation range is 10 x to 15x.The peak price to book level was 3.8x in 2009.The trough price to book level was 1.1 in 2011.VN-Index 12M Fwd P/E 2008-2018VN-Index 12M Fwd P/B 2009-2018VN-Index diviidend yield 2008-2018Source:BloombergSource:BloombergSource:Bloomberg18Equity market:Fund flows and foreign ownershipForeign investors capital inflows to Vietnam have been positive every year since 2009 with the exception of 2016.By the end of 2018,total portfolio value of stock held by overseas investors amounted to US$35.3bn,equivalent to 28%of HOSEs market capitalization.The participation rate of foreign investors has ranged from 10 to 20%of daily traded value.In order to control foreign ownership,a company might have a foreign ownership limit(FOL)imposed on its shares,ranging from 0%to 100%.The limit is set by the companys charter,except for restricted sectors where the ownership limit is controlled by law.In case the FOL is reached,foreign investors who want to increase their stakes can only buy from other foreign investors via put-through or off-market crossings.0%5%10%15%20%25%30%35%(200)-200 400 600 800 1,000 1,2002009201020112012201320142015201620172018Monthly foreign flows(USD millions-LHS)Foreign Particiption(%-RHS)YearForeign inflows(US$mm)Index return(%LCL)2009182.6 65%2010793.9-6%201159.4-28%2012159.7 20%2013264.1 21%2014135.3 8%201585.6 6%2016(349.8)17%20171,071.548%20181,900.0-10%HOSE foreign flows and participationHOSE foreign flows by year Source:Stock ExchangeSource:Stock Exchange19Equity market:Capital raising activitiesCapital raising activities strongly correlated with broad market performance,which peaked in 2007 and 2017-18;a majority of which were banks and real estate developers,which account for almost half of the total deal size.Book-building method was the most picked by private-sector companies IPOs.In contrast,the State usually chose to publicly auction their stakes on the exchange.YearTickerCompany nameSectorOffer Size(US$mm)Market Cap(US$Bn)2018VHM VNVinhomesJSCReal Estate1,397.2 13.52018TCB VNTechcombank Financials922.3 4.12017VRE VNVincom Retail JSCReal Estate708.0 3.62007VCB VNVietcombankFinancials655.5 10.82007DPM VNPetrovietnamFertilizer&ChemMaterials436.7 0.32008SAB VNSABECOConsumer Staples343.0 6.92017POW VNPetroVietnam Power CorpUtilities308.5 1.62017VPB VNVietnam Prosperity JSC BankFinancials280.0 2.32007BVH VNBao Viet HoldingsFinancials273.0 2.9Vietnam largest IPOsCapital raising activities 2005-2018Capital raising by industySource:BloombergSource:BloombergSource:Bloomberg20Equity market:Frontier but under emerging watch listFTSE Quality of Markets RatingFormal stock market regulatory authorities actively monitor marketPassFair and non-prejudicial treatment of minority shareholdersRestrictedNo or selective incidence of foreign ownership restrictionsRestrictedNo objection to or significant restrictions or penalties applied to the investment of capital or the repatriation of capital and incomePassFree and well-developed equity marketRestrictedFree and well-developed foreign exchange marketRestrictedNo or simple registration process for foreign investorsRestrictedCustody&SettlementSettlement-Rare incidence of failed tradesPassCustody-Sufficient competition to ensure high quality custodian servicesPassClearing&Settlement-T+2/T+3T+2Settlement-Free delivery availableNot MetCustody-Omnibus and segregated account fa