BUSINESS IN BRIEF 7/2
Thousands of cheap apartments in Ho Chi Minh City to be launched in 2017
Following the development of cheap apartment projects in 2016, investors plan to bring thousands of cheap apartments to Ho Chi Minh City in 2017.
Numerous developers have already started building affordable apartment projects.
After starting sales of 300 apartments in block A under the Him Lam project (District no.9, Ho Chi Minh City), Him Lam Land announced that they will start selling nearly three blocks of apartments totaling almost a thousand in 2017.
“Developing cheap apartment projects has been a strategy of Him Lam Land since 2016,” according to Mr. Ngo Quang Phuc, Deputy General Director of Him Lam Land. “We will bring supportive policies to customers such as offering 72-month deferred payments and giving free furniture.”
Vingroup has developed land resources in Ho Chi Minh City with plans to build 200,000 cheap apartments. In district 9, Vingroup has completed the leveling out of more than 200 hectares of land to implement the project.
Hung Thinh Corporation launched four projects with apartment prices under VND 1.7 billion ($75,100) in 2016. In 2017, they announced that they would start apartment sales for the Richmond City project on Nguyen Xi Street, Binh Thanh district. The total number of apartments in this project is 880 and they cost under VND1.8 billion ($79,558) per apartment.
Vietcomreal announced that they would focus on projects for affordable housing. They plan to develop the Venus project (district 8), the Ventosa project (district 5), and Viva Riverside (district 6).
Dat Xanh Group and Nam Long Company too, will launch a thousand cheap apartments during the first six months of 2017.
In 2016, expensive apartments in Ho Chi Minh City comprised of 31 per cent of all apartments while medium and cheap apartments were 49 per cent and 20 per cent respectively, according to HoREA.
Real estate companies will focus on land and villas. The Cat Tuong Group will continue to sell the rest of their land under the Cat Tuong Phu Sinh project at VND 500 million ($22,100) per portion.
The Tran Anh Long An Real Estate Joint Stock Company will launch Bella Villa, a villa project that goes for just VND1.5 billion ($66,298) per unit. This project spans an area of more than 92,000 m2 with 422 townhouses and villas northwest of Ho Chi Minh City.
According to Mr. Nguyen Huy Vu of BANVIETLAND, 2017 will witness various medium price projects in Ho Chi Minh City. Investors will go to the suburbs to develop projects.
“In my opinion, in the first six months of 2017, the eastern areas - namely district 9, Thu Duc district, district 2 - and the western areas (including district 8, district 7, and Binh Chanh district) will be the focus of investment for medium projects,” he said.
ACV makes bank on yen fluctuations
Airports Corporation of Vietnam (AVC) recorded VND2.049 trillion ($90.4 million) of after-tax profit in the fourth quarter of 2016, mostly thanks to the depreciation of the Japanese Yen.
According to ACV’s consolidated financial report for the fourth quarter of 2016, the revenue was VND4.044 trillion ($178 million). The cost of goods sold in this quarter was VND3.171 trillion ($140 million), therefore, the gross profit only amounted to VND873 billion (over $38 million), equivalent to a gross profit margin of 22 per cent.
However, income from financial activities was VND2.319 trillion ($102.4 million), mostly thanks to an unrealised exchange rate difference gain of VND1.646 trillion ($72.82 million), a realised exchange rate difference gain of VND236 billion ($10.42 million), and the VND223 billion ($9.85 million) gained from interests on deposits.
By the end of 2016, ACV’s total liabilities stood at ¥72 billion (VND14.227 trillion/$630 million), make up 31 per cent of its total funds. Thus, the fluctuations of the Japanese Yen significantly affect the company’s profit. During the second quarter of 2016, ACV had a loss of VND63 billion ($2.8 million), but in the next quarter, it gained a profit of VND757 billion ($33 million) due to exchange rate differences.
ACV has a monopoly over the administration and exploitation of twenty two commercial airports in Vietnam. According to Rong Viet Securities, ACV has long-term opportunities to grow because (1) Vietnamese income is at a low level but is rapidly rising, (2) airport services (land leasing, advertising, and selling goods) are very profitable but are limited and rudimentary in Vietnam in comparison with other countries, and (3) Important projects will be implemented more efficiently and effectively with enhanced private sector involvement. Perhaps the crowning jewel of these projects will be Long Thanh Airport, awaiting development at the hands of ACV.
Garco 10 expects revenue growth despite unravelling TPP
Garment 10 Corporation-Joint Stock Company (Garco 10) set the goal of VND3.1 trillion ($137 million) in revenue this year, up 6.3 per cent on-year, despite the more opaque prospects of the Trans-Pacific Partnership Agreement (TPP).
According to Nguyen Thi Thanh Huyen, General Director of Garco 10, in spite of the slowing or straight out faltering demand for textile exports in 2017, Garco 10 expects a profit of VND62.5 billion ($2.7 million) and will pay a 15 per cent dividend.
Huyen added that in 2017, along with the expansion of investment activities, the Garco 10 and its unit members will try to reduce production costs so that they can increase the competitiveness. For instance, they will invest in modern technology, improve organization and improve the workers’ skills so as to improve the productivity, which might offset the increase in minimum wage.
In 2016 Garco 10 earned VND2.9 trillion ($129 million) in revenue, rising 6.42 per cent compared to 2015.
The contribution of Garco 10 to the government budget was VND58.75 billion ($2.6 million), 24.18 per cent greater than in 2015. In addition, the average income of the company’s workers reaches VND7 million ($310) per person per month, an increase of 4.33 per cent compared to 2015. Also, labour productivity reaches $21.43 a person per day, 4.87 per cent higher than in 2015.
Garco 10 operates 18 factories and has 12,000 employees, spanning 8 provinces and cities.
Sabeco reports all-time record profit
Saigon Beer-Alcohol-Beverage JSC (Sabeco)’s 2016 after-tax profit reached VND 4.655 trillion (over $205 million), increasing 33 per cent on-year, a company record since its establishment.
The figure was reported in Sabeco’s recently released consolidated financial report for the fourth quarter of 2016. Revenue was VND30.66 trillion ($1.35 billion), up 12.9 per cent on-year. Earnings per share (EPS) in 2016 was VND6,978 (about 30 US cent). At the end of the trading session on February 2, 2017, the stock reached VND219 thousand ($9.66), which was equivalent to the price-earnings ratio of 31.
Numbers released at the company’s conference to review its performance in 2016 showed that the output was 1.603 million litres, of which 1.584 million litres were sold. The company submitted VND16.5 trillion ($730 million) to the state budget in tax.
In the fourth quarter of 2016, Sabeco earned a revenue of VND8.834 trillion (over $390 million), up 80 per cent on year. Although gross profit declined due to growing prices, it still rose by 11 per cent compared to the fourth quarter of 2015.
Income from financial activities rose by 48 per cent in this quarter to VND172 billion (nearly $7.6 million), while financial expenses were reduced to VND31 billion (about $1.37 million). Some other expenses, such as general, administrative, and sales expenses remained nearly unchanged.
As a result, Sabeco recorded VND997 billion (nearly $44 million) in after-tax profit, a 16 per cent growth in the fourth quarter of 2016.
Toyota reign showing cracks
Though the Toyota Vios model still ranked first in terms of sales in 2016, other Toyota cars that topped the charts in 2015 were bumped down and some disappeared from the top 10 best selling cars in Vietnam in 2016.
The Toyota Innova and Fortuner, though still making it into the list of the best-selling cars in Vietnam in 2016, dropped from their second and third spots to make place for the Kia Morning and the Ford Ranger.
The Altis and the Camry, meanwhile, did not make the cut.
According to data realeased by the Vietnam Automobile Manufacturers’ Association, in 2016, Vietnamese customers bought a total 304,427 units, up 24 per cent against last year. Of the volume, passenger car sales was up 27 per cent, commercial vehicle sales 25 per cent, and special-purpose vehicle sales 33 per cent versus last year.
Sales of completely knocked down cars was up 32 per cent and completely built up cars 5 per cent.
VAMA forecast that 2017 sales volumes would be about 10 per cent higher than in 2016.
Below is the graph of the 10 best-selling cars of 2016 with their total sales figures.
State-owned banks lead in employee efficiency
Four big state-owned banks, namely Vietcombank, VietinBank, BIDV and Agribank, produce the highest profit per employee in the Vietnamese banking system.
Nghiem Xuan Thanh, chairman of Vietcombank, claimed a consolidated after-tax profit of VND8.5 trillion ($375 million). Of all state-owned commercial banks, the number of staff in Vietcombank is the lowest (barely over 14,000) and the most efficient in turning profit: each individual make VND600 million ($26,514) on average in a year, which means VND50 million ($2,210) every month. This is also the reason why Vietcombank staff gets the most satisfying wages and benefit packages in the current banking sector.
With the profit of VND8.25 trillion ($365 million), VietinBank goes virtually head-to-head with Vietcombank, however, breaking it down amongst the 21,000 employees, Vietinbank’s profit per employee averages VND474 million ($21,000) a year and nearly VND40 million ($1,700) a month, .
Ranking third is BIDV. Thanks to its 24,000 employees, the bank turned VND7.5 trillion ($331 million) in profit in 2016, which means a contribution of VND312 million ($14,000) per employee throughout the year, or VND26 million ($1,150) per month.
The last one is Agribank, whose profit is over VND4 trillion ($17 million) made by a staff of 40,000, meaning that each worker makes VND100 million ($4,400) in profit a year, or VND8.3 million ($366) a month.
In the joint-stock commercial banking sector, many banks have yet to announce their profit, but the few figures announced so far show uneven productivity.
Up to this point, the highest profit was made by Military Commercial Joint Stock Bank (MB). In 2016, the bank’s pre-tax profit was VND3.711 trillion ($164 million), which means each employee made VND510 million ($22,536), or nearly VND43 million ($1,900) per month. VIB employees made VND14.6 million ($645) and VPBank about VND15 million ($662) per month.
At some banks currently undergoing restructuring, each employee only made a profit of VND2-3 million ($88-$132) per month. Overall, there are more than a dozen banks whose profit per employee is below VND10 million ($441) a month.
Of course, this figure is not an accurate depiction of the productivity of each specific employee in each bank, because these numbers summarise a lot of factors, especially the allowances for bad debt expenses, risk provisions, operating costs, etc. Not to mention some of these profit figures are unreliable. Many banks report high profit figures, but indeed, interest accruals are included and bad debts in the off-balance sheet are not counted yet.
Looking at the bad debts and the banks’ profits, it is clear that the most transparent data in the current banking system is provided by Vietcombank. By the end of 2016, this bank has bought up itsbad debts from Vietnam Asset Management Company (VAMC), putting all bad debt items in one ledger, no longer having liabilities in or off the balance sheet like other banks. The bank’s provisions for credit losses are also very high, up to 121 per cent of the bad debt volume.
In almost all other banks, although bad debts are now lower than three per cent (slightly over one per cent at some), there still exist thousands of billions of dong in bad debts that have not been handled (being at VAMC). In the years to come, when bad debts will be required to be calculated correctly and fully, including the balance sheet and off-balance sheet liabilities, then trillions of VND of banks’ profits will be spent on risk provision for bad debts.
The good news is from 2017 the government will implement a range of practical solutions in order to facilitate dealing with bad debts. Together with the improving business environment, this will increase banks’ profits and make bank employees’ performance more effective and efficient.
Consumption of beer in January 2017 rose 20 per cent compared to the same period of 2016 in Vietnam
Consumption of beer in January 2017 rose 20 per cent compared to January 2016.
Vietnam sold nearly 322 million liters of beer during the Lunar New Year month, up more than 9 per cent compared to the same period in 2016 This is according to the Economic - Social Report in January 2017 generated by the General Statistics Office of Vietnam.
In particular, bottled beer and draft beer were the two most consumed product lines having reached sales of 6.7 million, and 154.4 million liters respectively. That’s an increase of 20.6 per cent and 23.3 per cent respectively compared to the same period in 2016.
Canned beer consumption decreased by 2 per cent, reaching nearly 159 million liters, while other beer products reached only 1.6 million liters, an increase of 6.9 per cent compared to same period last year.
Other consumer products such as cigarettes, milk, and processed seafood increased compared to January 2016. Cigarette consumption reached nearly 419 million, up 0.6 per cent compared to the same period.
Electrical appliances and transport also recorded an increase for the Lunar New Year.
In electronics, televisions were the most sought after in January 2017 with 670,600 units sold, up 35.2 per cent compared to January 2016. Cars and motorcycles increased significantly, reaching 19,400 and 342,000 units respectively.
According to reports of the Ministry of Industry and Trade, the volume of beer sold in 2016 was 3.788 billion liters meaning each person in Vietnam drank 42 liters of beer. That shows an increase of approximately 4 liters each compared to the previous year.
In 2016 cars and motorcycles saw record sales with 3.12 million cars and more than 300,000 motorcycles having been sold. That’s an increase of 24 per cent and 9.5 per cent respectively over the same period in 2015.
Numerous enterprises established in the first month of the new year
During the first month of the new year 8,900 enterprises were established with a total registered capital of over VND90 trillion ($3.96 billion). That’s an increase of 8.1 per cent in number and 52.3 per cent in registered capital, according to the latest Socio-economic report from the General Statistics Office.
These newly established enterprises are expected to create 104,100 jobs. That figure is 83.9 per cent more compared to the same period of 2016.
Notably, the number of businesses resuming operations after being temporarily suspended reached 5,564, up 14.2 per cent per cent compared to the same period of 2016.
Arts and entertainment is the most attractive sector with newly established enterprises up 2.4 per cent in number and 658 per cent in registered capital. The next is health and social assistance activities with an increase of 57.6 per cent in number and 455.5 per cent in registered capital.
Although the manufacturing index of the mining sector fell to 13.9 per cent, the number of newly established enterprises rose by 3.4 per cent and registered capital rose by 401.2 per cent.
Meanwhile, the number of enterprises ceasing operations was 1,583, up 18.3 per cent compared to the same period last year, and were mainly small-scale enterprises with capital less than VND10 billion ($440,000).
The number of enterprises temporarily ceasing operations was quite high with 13,289, up 6.7 per cent year-on-year.
Vietnam targets to have at least 1 million by 2020 and the private sector would account for 48-49 per cent of the country’s GDP, according to the Government Resolution No. 35 to support and develop enterprises.
Vietnam embarked on a thorough process of improving its business climate and national competitiveness in 2014, with the issuance of Government Resolution No. 19.
The government is also promoting an entrepreneurial spirit and making Vietnam conducive to establishing startups as part of efforts to develop the private sector, which has been defined as the driver of socio-economic growth.
A law on supporting small and medium-sized enterprises (SMEs) is being drafted. There are now more than 500,000 enterprises in Vietnam, of which approximately 97 per cent are SMEs.
Hoa Phat sees profit up 89 per cent in 2016
Vietnam’s steel giant Hoa Phat Group (coded: HPG) has announced its revenue for 2016 at $1.5 billion and profit after tax at about $292 million. Those figures show an increase of 34 per cent and 89 per cent compared to the previous year. This is the highest profit and revenue Hoa Phat has ever seen since its foundation.
This is the first time that the company has reached the leading position in the domestic market share of construction steel consumption. It had a total output of 1.8 million tons per year. Consuming nearly 500,000 tons of different kinds of steel pipe, Hoa Phat continues to lead in consumption volume, accounting for 26 per cent of the market share in the country.
In the real estate sector, apart from Pho Noi A Industrial Park in the Hung Yen province and Hoa Mac Industrial Park (IP) in Ha Nam province, Hoa Phat is going to construct two big projects in 2017 including Yen My IP covering 200 ha and Pho Noi New Urban Area covering 260 ha in Hung Yen province. Those projects will significantly contribute to meet the very high demand on housing for residents in industrial zones and the areas surrounding Hanoi.
For the agricultural sector, Hoa Phat said its array of animal feed production has already been put into operation and has been preparing to complete its second factory in Long Khanh IZ in Dong Nai province. It will have a capacity of 300,000 tons per year.
Hoa Phat this year continues to implement construction of its third plant, with a similar capacity, in Phu Tho province to serve the northwestern region.
In recent news, the government has agreed on the investment policy of Hoa Phat’s iron and steel complex in Dung Quat EC in Quang Ngai province.
For a long time now the Hoa Phat Group has been seeking permission from local authorities to take over the the Guang Lian Dung Quat steel mill project in Quang Ngai province, which has been delayed for ten years.
The Hoa Phat Group plans to build a $3 billion iron and steel complex at the Dung Quat Economic Zone (EC) with a capacity of 4 million tons a year which will be divided into two phases and have an operational duration of 70 years.
In early September, the Quang Ngai People’s Committee decided to revoke 337 hectares of land from the Guang Lian Dung Quat steel factory, due to its long delay in construction and for violating the Land Law.
FDI disbursement up 6.3 per cent y-o-y
Total disbursement of foreign direct investment as of January 20 this year stood at $850 million, up 6.3 per cent year-on-year, according to the latest report from the Ministry of Planning and Investment (MPI).
New and additional FDI capital totaled $1.42 billion, up 6.6 per cent compared to the same period in 2016.
As of January 20, 175 new projects had been granted investment licenses with a total registered capital of $1.243 billion, up 37.8 per cent in terms of projects and 23 per cent in terms of capital compared to the figures in the same period last year. In addition, 76 existing projects added $179.2 million in capital.
The manufacturing and processing sectors attracted FDI the most, with a total capital of $834.9 million, accounting for 67.1 per cent of the total registered capital in January.
Real estate was second, with a total capital of $297.4 million or 23.9 per cent of the total. The remaining sectors accounted for $111.5 million, or 9 per cent.
Twenty-six cities and provinces received investment, led by Binh Duong province with a new total capital of $666.2 million, or 53.6 per cent. Bac Giang province was second, with $159.5 million, or 12.8 per cent, followed by Ba Ria-Vung Tau province, Ho Chi Minh City, Hai Duong, Tay Ninh, Hanoi, with $108.7 million, $75.2 million, $61.8 million, $32 million and $30 million, respectively.
Foreign investment came from 31 countries and territories, led by Singapore, with an investment of $416.7 million, or 33.5 per cent of the total. South Korea followed, with $347.8 million, or 28 per cent; China with $310.1 million, or 24.9 per cent; Japan with $56.8 million, or 4.6 per cent; Malaysia with $44.1 million, or 3.5 per cent and Samoa with $20 million, or 1.6 per cent of the total.
ACV records profits over VND2 trillion
The Airports Corporation of Vietnam (ACV) has announced its consolidated financial report for the last quarter of 2016 with net revenue of over VND4 trillion ($176 million).
Cost of sales in the fourth quarter accounted for over VND3.1 trillion ($136.4 million) making gross profits decrease to VND873 billion ($38.4 million) equivalent to a gross profit margin of 22 per cent.
In the fourth quarter, ACV’s financial revenue stood at VND2.3 trillion ($101.2 million), mainly thanks to the revert of the exchange rate differences of VND1.64 trillion ($72.1 million), exchange rate differences interest of VND236 billion ($10.3 billion) and interest on deposits of VND223 billion ($9.8 million).
By the end of 2016, the corporation’s loan balance amounted to 72 billion Japanese yen ($636.6 million) and accounted for 31 per cent of the total company capital. The fluctuations of the Japanese yen, therefore, have made a significant impact on the ACV’s profitability.
ACV recorded over VND2 trillion ($88 million) after-tax profit in the fourth quarter of which the profit after tax of the parent company reached VND1.9 trillion ($83.6 million).
In November 2016, ACV was given permission to trade on the Unlisted Public Company (UPCoM) market under the code ACV, with a total of 2.18 billion shares and a registered stock value of more than VND21.7 trillion ($976.5 million).
ACV is a joint stock company operating under the form of the parent-subsidiary company, with the State holding a majority stake. In October 2015 the government approved its equalization plan, with State ownership to fall to 75 per cent. In March 2016 it held its first shareholders meeting.
ACV will become the largest enterprise by charter capital on UPCoM. It manages 22 airports throughout Vietnam, of which seven are international and 15 are domestic with 21 being directly managed by the corporation. It also has a range of joint ventures with other companies.
From 2012-2014 it served 132.6 million passengers at a growth rate of 16 per cent per year, and handled over 2.28 billion tons of cargo with growth of 15.29 per cent per year.
After officially becoming a joint stock company in March, 2016, ACV now has a charter capital of over VND21 trillion ($940 million), equal to 2.177 billion shares at a price of VND10,000 ($0.44) each. The government still holds 95.4 per cent.
Its targets for 2016 include welcoming 73 million passengers, a 12.4 per cent increase against 2015, 53 million of which are domestic, and to cater to 516,000 commercial flights. Revenue is targeted at almost VND12.1 trillion ($541.9 million) and pre-tax profit at over VND2 trillion ($89.5 million).
It recently recorded its first-ever losses for the second quarter of 2016. It was VND124 billion ($5.58 million).
A number of State enterprises are also listed, such as the Hanoi Alcohol Beer & Beverages Corp. (Habeco), the Hanoi Construction Corporation (Hancorp), and Vinacomin Viet Bac.
Truong Thanh Furniture faces delisting for heavy losses
After a dismal business performance in 2016’s fourth quarter, the final decision to delist Truong Thanh Furniture’s (TTF) shares now lies in its audited financial statement.
The company’s consolidated financial statement for 2016’s fourth quarter showed a total loss of VND145 billion ($6.4 million) bringing its full year’s loss to VND1.63 trillion ($72 million) of which its cumulative losses amounted to VND1.768 trillion ($7.8 million). Moreover, the wood company has had a negative owner’s equity of more than VND195 billion ($8.6 million) as of December 31, 2016.
From September-December gross loss stood at nearly VND27 billion ($1.2 million), financial costs surged as high as VND65 billion ($2.9 million), and administrative costs were VND34 billion ($1.5 million). TTF’s shares are currently being put under a special control list by the Ho Chi Minh Stock Exchange (HoSE) and its shares are fluctuating around the VND5,000 ($0.22) price range. In just four months TTF’s shares fell dramatically from VND43,700 ($1.92) on July 19 to VND4,000 ($0.18) on November 18.
As VET had earlier reported, there are only two options for TTF to avoid delisting - have a profit of VND160 billion ($7 million) in the fourth quarter last year to balance cumulative losses vs. charter capital, or request that Tan Lien Phat go ahead with its loan.
Tan Lien Phat became a major TTF shareholder in May last year after acquiring 72 million shares for VND25,000 ($1.1) per share TTF then saw some instability in its senior personnel. On August 12, founder Mr. Vo Truong Thanh was dismissed from his duties as Chairman of the Board of Management after not taking sufficient responsibility as Chairman during TTF’s tough times. He was replaced by Vingroup’s Deputy Managing Director Ms. Vu Tuyet Hang.
TTF’s shares fell dramatically after the Tan Lien Phat Company, a subsidiary of Vingroup, suddenly announced in mid-July the suspension of its loan of VND1.2 trillion ($53.8 million) to TTF in exchange for 69 million of TTF’s shares after finding serious discrepancies in data relating to inventories as well as questionable debts.
Since Tan Lien Phat has announced plans to offload its holdings in TTF from 49.9 per cent to 29.9 per cent, the second option is off the table. Current policy regulates that an enterprise will be delisted if its cumulative losses surpass its charter capital based on audited financial statements. With the recent announcement of its business performance in the fourth quarter, the final decision for its delisting will lie in its audited financial statement.
But despite its difficulties, the company continued to increase its borrowing last year. Liabilities increased by another VND568 billion ($25.1 million) during the year of which short-term loans accounted for VND2.6 trillion ($115 million) and long-term loans VND30 billion ($1.3 million). For short-term loans, Viet A Bank has the largest outstanding loan of VND653 billion ($29 million), Dong A Bank with VND124 billion ($5.5 million), SHB with VND56.5 billion ($2.5 million) ,and Kien Long Bank with nearly VND60 billion ($2.65 million).
According to TTF, all those loans were taken to increase the mobilizing capital to meet the business needs, including payment for wood materials and other costs. As of December 31, 2016, interest rates of those loans varied from 10.25 per cent to 11 per cent for VND loans and 5 per cent to 6.9 per cent for foreign currency loans. For long-term loans, TTF owes VND36 billion ($1.6 million) to Kien Long Bank and VND3 million ($132,600) to Agribank.
ACB hit VND73.7 million in 2016's pre-tax profit
ACB’s pre-tax profit in 2016’s fourth quarter reached VND422 billion ($18.6 million), up 89 per cent year-on-year. The full year figure was VND1.667 trillion ($73.7 million), up 26.8 per cent year-on-year. This is according to the bank’s consolidated financial statement for 2016’s fourth quarter.
During the fourth quarter, ACB recorded a net interest income of VND1.946 trillion ($86 million), up 17.6 per cent year-on-year, giving the full year net interest income an increase of 17 per cent year-on-year, at VND6.9 trillion ($305 million).
Other activities of the bank continued to rise from September-December. Services brought a net income of VND283 billion ($12.5 million), up 35 per cent year-on-year, foreign currencies trading had a net income of VND79 billion ($3.5 million), up 23 per cent year-on-year, and securities trading had a net income of VND74 billion ($3.3 million), up 14 times year-on-year.
Notably, operating costs surged by 62.5 per cent to VND1.2 trillion ($53 million) during the quarter. But thanks to its business performance, net operating income was up 3.7 per cent times year-on-year and stood at VND1.07 trillion ($47.3 million). The bank has set aside VND654 billion ($28.9 million) for risk provision cost which is 10 times higher year-on-year. For the quarter, ACB recorded VND422 billion ($18.6 million) in pre-tax profit, up 89 per cent year-on-year.
For the full year, it posted VND1.667 trillion (73.7 million) in pre-tax profit, up 26.8 per cent with after-tax profit VND1.325 trillion ($58.5 million), up 29 per cent year-on-year. As of December 31, 2016, the bank’s total assets stood at VND233 trillion ($10.3 billion), up 16 per cent compared to the start of the year.
Customer lending reached VND163 trillion ($7.2 billion), up 20.7 per cent year-on-year and customer deposits reached VND207 trillion ($9.15 billion), up 18.3 per cent year-on-year. Total bad debts as of the end of the year stood at VND1.42 trillion ($62.7 million), down 20 per cent year-on-year. Its bad debt rate had fallen from 1.31 per cent to 0.87 per cent as of December 31,2016.
The bank’s management report issued last month indicated that ACB’s management board has shown interest in acquiring Posts and Telecommunications Finance Ltd (PTFinance). Founded in 1998, PTFinance has a charter capital of VND500 billion ($22.1 million) and is 100 per cent owned by the State-run telecom provider VNPT.
PTFinance posted a rather modest profit of VND2.8 billion ($123,760) during 2016’s first half. Its total assets stood at VND384 billion ($17 million) by the end of 2016’s second quarter, in which short-term investments took up a huge portion with VND260.4 billion ($11.5 million).
Mergers and acquisitions (M&A) between banks and financial companies has been a trend for the last few years. SHB finished the M&A deal with Vinaconex-Viettel Finance (VFF) after two years of negotiating. With the acquisition of a financial company, banks can participate in the unsecured lending sector, which incurs high risks but even higher returns than other ordinary loans.
In an interview with Forbes last month, ACB’s Chairman Mr. Tran Hung Huy revealed that the bank has been conducting research to acquire a financial company in order to develop unsecured lending products. However, Mr. Huy affirmed that ACB has no plan to grab a piece of this fruitful activity yet due to a fear of deriving bad debts.
ACB's shares price closed as high as VND24,200 ($1.07) after the trading session on February 3. The bank's share value has gone up by 36 per cent since the trading session on January 2 when it closed at VND17,790 ($0.79) per share.
Sacombank saw a business downturn in 2016
Sacombank recorded a total loss of VND18.5 billion ($817,145) during the fourth quarter of 2016. This confirms the pre-tax profit for the whole year 2016 of only VND531 billion ($23.4 million), down 64 per cent year-on-year, the bank’s consolidated financial statement for 2016’s fourth quarter showed.
As of December 31, 2016, the bank’s total assets stood at VND333.3 trillion ($14.7 billion), up 14 per cent from the start of the year. Customers lending was recorded at VND198.8 trillion ($8.8 billion), up 6.9 per cent year-on-year while customer deposits reached VND291 trillion ($12.85 billion), up 11 per cent year-on-year.
During 2016’s fourth quarter, net interest income reached VND1.4 trillion ($61.8 million), up 54 per cent year-on-year but the full year figure went down by 22 per cent year-on-year and stood at VND5.12 trillion ($226.1 million). Most of the bank’s activities during the September-December period were less than satisfactory except services which brought a net income of VND418 billion ($18.5 million), up 19 per cent year-on-year.
Foreign currencies trading saw a heavy loss of VND275.2 billion ($12.1 million) even though loss of this activity in 2015’s fourth quarter was only VND29 billion ($1.3 million). Against a profit of VND16 billion ($706,720) in 2015’s fourth quarter, securities trading recorded a loss of VND2.6 billion ($114,842) in 2016’s fourth quarter. Net loss from investment securities was recorded at VND37.4 billion ($1.6 million) for the quarter.
During the fourth quarter, operating costs surged by 29 per cent to VND1.58 trillion ($69.8 million). But the total loss of the quarter, despite being recorded at VND18.5 billion ($817,145), was only “secured” because Sacombank had cut down its credit risk provision from VND1.13 trillion ($50 million) in 2015’s fourth quarter to VND23.5 billion ($1.04 million) in 2016’s fourth quarter. Its net operating revenue during the period stood as low as VND5 billion ($220,850), down 91 per cent year-on-year.
The bank revealed its full year’s pre-tax profit of VND531 billion ($23.4 million), down 64 per cent year-on-year, and an after-tax profit of VND372 billion ($16.4 million). Its charter capital remained at VND18.85 trillion ($832.6 million) as of December 31, 2016.
Last month, Sacombank was named one of the top five banks to undergo restructuring in 2017, together with the three zero dong banks that the central bank acquired for the price of zero dong in 2015: the VNCB, PG Bank, Ocean Bank and Dong A Bank. It became the fifth-largest lender in the local banking sector in 2015 after the voluntary merger with Southern Bank.
But while the State Bank of Vietnam (SBV) has praised the joint entity, saying it had synergy that brought greater benefits to shareholders and customers, Moody’s confirmed the merger resulted in high solvency and liquidity risks for Sacombank. In its October 2016 report, it changed the bank’s outlook to negative because its problem assets had been increasing substantially since the pre-merger period and its credit provisions were slim by the end of June.
That’s not the only thing working against Sacombank, as related risks include its corporate behavior, opacity and complexity. The corporate behavior risks originate from the situation where the majority of Sacombank’s shares are managed by the SBV, which creates uncertainty around the financial health and future development of the bank.
Opacity risks stem from the fact that the bank has not yet published its audited financial report for 2015, which raises the possibility they may be restated. “The negative outlook for Sacombank reflects the uncertainty around the strategic direction of the bank, its unclear ownership structure, and the true scope of asset quality challenges,” wrote Moody’s.
In its latest response, Sacombank Chairman Mr. Kieu Huu Dung declared that Sacombank is not a weak bank, pointing out that it still leads the commercial group. He also revealed that many potential investors are keen to lend a hand to address the consequences of the Southern Bank merger, and, in the meantime, the bank’s restructuring plan is to be submitted to the central bank. “We are determined to start the process as soon as the plan is approved,” he added.
ASIA DMC has new group managing director
ASIA DMC, one of the leading regional tour operators, is setting its sights on accelerated growth this year with the hiring of dynamic travel professional Mr. Linh Le in the role of Group Managing Director as it charts an expansion course across the region.
The move follows the rebranding of the Hanoi-headquartered company at the World Travel Market in London last year after 20 years of operating under HG Travel. This was done in order to set the stage for growth in Southeast Asia and enable the company to offer exceptional tailor-made travel experiences to upscale travellers from around the world.
Mr. Le joined ASIA DMC following a six-year tenure with boutique luxury tour operator Trails of Indochina and is now tasked with consolidating ASIA DMC’s position in Vietnam, Thailand, Myanmar, Cambodia and Laos where it has offices. He is also expected to expand into Sri Lanka, China, India, and the Philippines this year.
“We are delighted to welcome such a motivated and modern leader to our team,” said HG Holdings CEO Tran Thanh Nam. “Mr. Linh’s knowledge of luxury travel experiences around the region is second to none and his ethics and relationships stand out making him the ideal ambassador for ASIA DMC as we grow.”
Mr.Nam will stand down from his existing position as CEO of ASIA DMC to focus on developing the hospitality arm of HG Holdings which is the owning company of ASIA DMC.
During his 14-year career in tour operations, Mr. Le has been internationally recognized, and awarded for his holistic knowledge of the worldwide travel industry. He also received the 2016 Highest Growth Award from Virtuoso Asia Pacific whilst acting as Global Director of Trails of Indochina.
"It’s a privilege to be aligned with a company of such great quality, vision – particularly in terms of social responsibility which is the cornerstone of all plans and strategies – and indeed growth potential,” said Mr. Le.
Following its rebranding in November, ASIA DMC quickly moved to fulfill its mission to provide unique, tailor-made journeys and engaging activities for travellers seeking a more fulfilling travel experience.
With the company’s commitment to social and environmental responsibility, an innovative approach to destination management, and motivated leadership, ASIA DMC is now looking confidently to the future.
Coffee and rice exports decline sharply in January 2017
Vietnam’s coffee and rice exports in the first month of 2017 decreased sharply regarding both volume and value compared to the same period of last year.
Specifically, Vietnam shipped an estimated 127,000 tonnes of coffee abroard in January and brought in approximately US$287 million in revenue, down 26.5% in volume and 3.6% in value year on year.
The average coffee export price in 2016 was US$1,872 per tonne, representing a 6% fall against 2015.
Germany and the United States remained the two largest consuming markets of Vietnamese coffee last year with respective market shares of 14.8% and 13.5%.
Vietnam’s 2016 coffee export turnover surged in most of the country’s major markets, including Algeria (up 64.5% year on year), the Philippines (up 63.6%), China (up 45%), the US (up 43.6%), Germany (up 37.6%), Belgium (up 33.1%), Italia (up 23.6%), Japan (up 17.7%) and Russia (up 14%). Spain was the only market to see a decline (down 8.3%).
Meanwhile, rice exports over the past month were estimated at 325,000 tonnes worth US$136 million, down 32% in volume and 35.1% in value compared to the same period of 2016.
The average rice export price in 2016 was US$449 per tonne, up 6.2% against 2015.
China remained the largest importer of Vietnamese rice last year with a market share of 36%, with Vietnam earning approximately US$782.3 million from shipping 1.74 million tonnes to the market – down 17.5% in volume and 8.6% in value.
Ghana followed in second place with a market share of 11.5%. Vietnam exported 503,700 tonnes of rice to the market (up 38.9%) and brought in US$248.9 million (up 34.5%).
U.S., EU major importers of Vietnamese-made phones
Vietnam fetched US$34.3 billion from exports of phones and phone components in 2016 with the U.S. and the European Union (EU) emerging as key importers.
A General Department of Customs report says phones and phone components became the biggest export earner last year with their export revenues rising by 13.8% versus 2015. Apparel came second by revenue with nearly US$24 billion, followed by computers, electronics and components with around US$19 billion.
Last year saw the country obtaining export revenue of over US$34 billion for a single item for the first time despite Samsung’s suspension of Galaxy Note 7 smartphone production over battery fire incidents. Samsung’s two production plants in the northern provinces of Bac Ninh and Thai Nguyen make around 35% of the firm’s mobile phones for world markets.
Phones and phone parts remained the biggest export earner with their revenues accounting for 27.1% of the country’s total exports in 2016.
According to the General Department of Customs, Vietnam’s phones and phone components were shipped to many foreign countries last year. Notably, sales to the EU neared US$11.24 billion, up 11.1% from a year earlier, and those to the U.S. exceeded US$4.3 billion, up 55.5%, the United Arab Emirates US$3.83 billion and ASEAN nations some US$2.27 billion.
Given increasing investments by phone producers and phone component suppliers, analysts have forecast phones and phone components would continue to be the biggest contributor to Vietnam’s export turnover this year as their outbound sales are projected to climb to US$39 billion.
Data of the General Department of Customs shows Vietnam’s 2016 import-export turnover grew 7.1% against 2015 to US$350.74 billion. Of which, exports reached US$176.63 billion, up 9%, and imports totaled US$174.11 billion, a 5.2% increase, leaving a trade surplus of over US$2.52 billion.
The top 10 export earners brought nearly US$126.85 billion, making up 71.8% of the total.
The Ministry of Industry and Trade has predicted import-export turnover would keep rising this year, backed by a number of free trade agreements to which Vietnam is a signatory. In addition, foreign direct investment (FDI) is expected to flow from other regional nations, including China, to Vietnam.
The ministry noted that despite opportunities brought by the ASEAN Economic Community (AEC) and other trade deals, challenges will exist, especially in terms of market development and competitiveness on home and overseas markets.
Minister: Multiple challenges still weigh on local economy
Minister of Planning and Investment Nguyen Chi Dung has said Vietnam will continue coping with a host of challenges this year given lingering domestic weaknesses and considerable uncertainty for the global economy.
Many weaknesses remain in the economy of the nation related to low growth quality, labor productivity and competitiveness, Dung said. Institutional and legal reform and new pro-growth policies have not produced as many positive results as expected, especially for enterprises.
Dung said in an interview with the Government’s news website on the occasion of the Lunar New Year that a large number of enterprises have been established but they will have to face a rough ride.
Difficult access to finances and land, and cumbersome administrative procedures are still major barriers to business operations, Dung pointed out.
These make it hard for domestic firms to survive, grow and compete on par with global rivals.
However, Dung noted that challenge would come along with opportunities and that enterprises should be active in cashing in on such opportunities. Notably, Vietnam’s business environment has steadily improved, according to foreign and domestic business leaders at the Vietnam Business Forum last December.
In spite of the improvement, Vietnam is now ranked fifth in the 10-member ASEAN. Vietnam still finds it hard to move higher in the regional grouping and is likely to be left behind as other countries in the lower positions are striving for higher places while those in the upper rankings will not let Vietnam catch up.
Ministries and agencies have made greater efforts to better institutions, governance and policies and lessen state intervention in economic activity. But Dung emphasized the importance of eliminating interest groups to enhance law and discipline enforcement.
He said the ministry participated in building a number of medium-term development plans. As an agency responsible for State management of public investment, the ministry helped the Government and the Prime Minister draw up a public investment plan for 2016-2020.
The public investment plan is aimed at restructuring and improving public investment in support of the country’s five-year socio-economic development plan at a time of rising financial constraints for public investment projects and programs.
The public investment plan was built to ensure mobilization of sufficient capital for major infrastructure projects designed to fuel growth, including the north-south expressway project, and at the same time for social welfare, environmental protection and climate change adaptation schemes.
The ministry will closely cooperate with other ministries and agencies in effectively allocating available funds to contribute to the successful implementation of the five-year socio-economic development plan and the economic restructuring plan for 2016-2020. Dung added that the National Assembly approved the economic restructuring plan.
To reach the targets envisaged in the plans, there are many tasks to complete, Dung noted.
Tourism growth strong in Jan
The nation’s tourism sector has got off to a good start this year, with more than one million international visitor arrivals reported in January, up a staggering 23.6% year-on-year, according to the Vietnam National Administration of Tourism (VNAT).
More than 247,000 Chinese visited the country last month, surging 67.9% over the same period last year and representing one-fourth of all international tourists to the country in the first month.
Other major source markets for the tourism sector are South Korea and Japan. Around 172,000 Koreans came to Vietnam, a 155% year-on-year increase, and Japanese visitors numbered 66,000, up 4%.
Russian tourist arrivals showed strong growth last month, with nearly 59,000 Russians coming, up 36.5% compared to the same period last year.
According to VNAT, the country will continue seeing robust tourism growth this year, with forecasts putting international arrivals at 11.5 million and domestic visitors at 66 million. Tourism revenue is projected to amount to VND460 trillion (US$20.3 billion).
Last year the country had more than 10 million international visitors, a 26% increase against the previous year, and 62 million domestic tourists, up 9%. Tourism revenue was put at VND400 trillion, surging 19% from a year earlier.
There are 21,000 lodging facilities with over 420,000 guest rooms nationwide.
Thua Thien-Hue aims to attract 6 trillion VND of investment in 2017
The central province of Thua Thien-Hue has set a target of luring 20 projects to its economic zones and industrial parks with a total investment of about 6 trillion VND (272 million USD).
To this end, the province’s Economic Zone and Industrial Park Management Board will launch investment promotion programmes with focus on fostering partnership with investors in infrastructure as well as financially strong firms, said Nguyen Que, deputy head of the Board.
Que revealed that currently, the board is working with major domestic firms including FLC Group, VinGroup, Bitexco and Viglacera, and strengthening coordination with foreign partners including JICA, KOICA and JETRO in investment promotion.
For projects being implemented in Chan May-Lang Co Economic Zone, including the second phase of the Lang Co Laguna, Minh Vien Lang Co resort and Wharf 3 in Chan May Port, the provincial authorities have been assisting in construction process and capital disbursement.
According to Chairman of the Thua Thien-Hue People’s Committee Nguyen Van Cao, the province has applied a number of measures to call for more investment, including improving investment and business environment and fixing the consequences of the sea environment incident that happened last year.
In the coming time, Thua Thien-Hue will also enhance the quality of business associations and trade organizations to better the connectivity among enterprises. The province will invest over 2 trillion VND in socio-economic infrastructure and industry development programmes in 2017.
At the same time, Thua Thien-Hue will also restructure its vocational training system and step up administrative reform, striving to conduct over 50 percent of administrative procedures online and apply the one-stop shop model at the provincial and district administration centres, thus raising the satisfaction rate among local residents and businesses to over 80 percent, said Cao.
Last year, local economic zones and industrial parks attracted 14 projects with total investment of nearly 4.9 trillion VND, bringing the total number of projects located in their facilities to 140 worth over 63.7 trillion VND. Of the projects, 36 are run by foreign investors with registered capital almost reaching 31 trillion VND (approximately 1.4 billion USD).
Vietnam’s stocks to rise on lunar year optimism
Shares may continue rising this week as investor confidence increases at the beginning of the lunar year, analysts say.
Banking stocks are expected to take the lead with investors expecting improvements in the sector, they add.
The benchmark VN Index on the HCM Stock Exchange on February 3 fell 0.4 percent to end last week at 700.35 points, after rallying 3 percent in the previous five sessions to reach a nine-year high of 703.18 points on the previous day.
At the Hanoi Stock Exchange, the HNX Index rallied for a fourth day, increasing 0.5 percent to end at 85.03 points. The northern market index has moved up 2.4 percent in the last four sessions.
Investor sentiment is often high at the beginning of the lunar year, and this will be an important factor that could lift the market, as seen in the five consecutive days ending on February 3.
“Positive investor sentiment at the beginning of the lunar year will help increase investment in the stock market, especially when the resistance range of 690-700 points has been surpassed for the first time since September 2016,” said Phan Dung Khanh, head of the investment consultancy at Maybank Kim Eng Securities Co Ltd.
Before the Tet (Lunar New Year) holiday, the VN Index had crossed the 690 point level, and the nine-year high was reached after the market returned from a one-week break.
This caused both regret and excitement among investors because they had pulled out of the stock market during the pre-Tet holiday period, missing the opportunity to participate in the market’s improvement, Khanh said.
The stock market will also be lifted by investor expectations of Government policies to support the economy and businesses, along with the release of companies’ earnings reports, and by large-cap groups that are preparing to be traded on the stock market, he added.
The VN Index corrected itself on February 3 after a five-day rally.
According to Vu Minh Duc, head of individual customer analysis at the Viet Capital Securities Company, the correction on February 3 was a must-decline session so that the VN Index can continue increasing in the near future.
More specifically, the benchmark index might decline during some of the first trading days this week to test the support range of 695-700 points, then increase to the middle-term resistance level of 740-750 points within months, he said.
Banks will lead the market in the coming week, and this year, as investors are counting on the restructuring plan for the entire banking system, as well as on the possibility of a policy that allows banks to lift the bar for foreign investment this year, as Prime Minister Nguyen Xuan Phuc told Bloomberg TV in January, Duc said.
Bank stocks, such as Vietcombank (VCB), BIDV (BID) and Vietinbank (CTG), weigh heavily on the market, as do other blue chip firms including dairy producer Vinamilk (VNM) and brewer Sabeco (SAB). While the price-to-earnings ratios of the large-cap bank stocks are lower than that of the latter, it also means the potential for bank stocks to grow is quite high, Duc said.
Investors may also take earnings reports of listed companies into account this week, according to Nguyen Ngoc Lan, head of the broker division at Agribank Securities Company.
Companies that saw yearly increases in their earnings for 2016 include dairy producer Vinamilk, steelmaker Hoa Phat Group (HPG), real estate group FLC (FLC) and Faros Construction Corp (ROS).
PM tours shrimp processing corporation in Ca Mau
Prime Minister Nguyen Xuan Phuc inspected the operation at the Minh Phu Seafood Corporation in the southernmost province of Ca Mau on February 5, one day ahead of a national conference on developing shrimp sector.
Minh Phu is Vietnam’s leading shrimp exporter, shipping products to more than 50 foreign markets. Shrimp export alone earns the corporation 535 million USD in 2016, according to its management. The corporation is employing 12,000 workers.
The PM hailed the company’s research into various models for shrimp farming, noting that any model should ensure the protection of the environment.
He expressed his hope that Minh Phu will earn two billion USD from exports by 2021, contributing to realising the national target of 10 billion USD in shrimp export value.
The company reported to the Government leader that it is developing a chain of shrimp farmers to ensure supply of clean raw materials meeting the quality requirements of strict markets and the easy verification of product origin.
It proposed a mangrove-based shrimp farming model, which could be an effective way for Ca Mau to reduce poverty and develop the local economy, considering the fact that the province currently has 100,000 hectares of mangrove forest.
Interest rate under pressure to stay steady
The State Bank of Vietnam has targeted keeping interest rate stable in 2017, however, the market’s developments in the first half of January 2017 show that lending rates are suffering from many pressures.
Analysts say the goal to stabilise interest rates this year may face many challenges, such as the recovery trend of commodity prices in the world market, including petroleum; the price adjustment of essential commodities of electricity, health service and education; and the risks of climate change and natural disaster.
Besides this, economist Bui Quang Tin said the exchange rate would also put pressure on interest rates in 2017.
Tin said the US dollar was forecast to continue strengthening due to the expectation that Fed would continue increasing interest rates this year and in 2018 and 2019. This trend would make it difficult for local commercial banks to reduce interest rates because at that time, the exchange rate between the US dollar and other currencies, including the VND, would hike.
"If Vietnam lowers interest rates, it will make the US dollar/VN dong exchange rate increase, resulting in imported goods becoming expensive and making it difficult for businesses," he said.
In addition, the central bank’s regulation on reducing the ratio of using short-term capital for medium and long-term loans from 60 percent to 50 percent from January 1, 2017, would also affect deposit rates, especially terms that are more than 12 months.
Prime Minister Nguyen Xuan Phuc also admitted interest rate was a serious problem for the central bank in 2017, especially in the context that inflation must be curbed and the macro economy must be stabilised. The country this year is targeting a GDP growth of 6.7 percent and inflation at some four percent.
In a bid to stabilise interest rate and control inflation, Tin suggested the central bank adjust inter-bank rates reasonably through the open market operation (OMO). Commercial banks can borrow capital from the OMO market to stabilise liquidity and deposit interest rates.
Besides preparation to cope with the US’s Fed policy on increasing interest rates, measures to support commercial banks enhancing medium- and long-term capital sources must be also taken, Tin said.
Economist Ngo Tri Long recommended the government continuously regulate prices of petroleum, electricity and public services according to the market mechanism with the State’s management.
Any changes in the prices of such commodities and services must be considered carefully and taken at a suitable time to avoid strong negative impact on the price level, Long said.