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Vn-Index on track to reach 1,800 points: Pyn Elite Fund

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The Vietnamese stock market can surprise investors with a “big year” returns during the 2020-24 period.

Vietnam’s benchmark Vn-Index is on track to reach 1,800 points, taking into account the companies’ earnings growth forecasts, the strong outlook of the Vietnamese economy and the opportunities presented by the modernization of the stock market, according to Pyn Elite Fund, an independent Finish fund manager.

At the close last Friday, Vn-Index stood at 1,067.46 points, a 1.49% increase against the previous trading session and 2.06% during last week. The point is around 9% below its all-time high (1,204 points), which it reached in April 2018.

“The index target would be achieved with a gain of 80%,” stated the fund in its latest report.

If the earnings grow as expected, the stock market’s P/E ratio would be in the range of 15–16 to equal index level of 1,800 points. Even thereafter, Vietnam’s economic growth will surely support even higher valuations and index levels, it added.

“The surge seen in the late autumn has pushed the index higher, but listed companies are expected to achieve significant increase in earnings in 2021,”, adding this stems from a plunge in enterprises’ revenue in 2020 as a result of the Covid-19 crisis.

In light of P/E ratios in 2021, the Vietnamese stock market looks cheap compared to its historical valuations and other Asian markets. The Vn-Index is trading at a forward P/E of 13.3.

In a scenario of sideways movement in the next few years, Pyn Elite Fund’s estimated earnings growth would see the market’s P/E ratio decrease year by year as follows: 13.3 (2021), 11.5 (2022), 9.7 (2023), and 8.2 (2024).

The fund believed that the Vietnamese stock market can surprise investors with a “big year” returns during the 2020–24-time frame.

Investors remain net sellers

The net-sell trend from foreign investors, the report noted, came from the uncertainties surrounding the Covid-19 pandemic.

Back in January 2020, it looked like the year would be completely different as foreign investors were busy building their Vietnamese positions, “but that wasn’t to be,” stated the fund. In January, net foreign investment flows were US$84 million, but net flows since then have amounted to $557 million.

In the summer, foreign investors started buying back shares, but the net foreign investment flows subsequently turned negative again in the autumn. Local investors have been active in the autumn and pushed the index up. I

In November and early December, the situation with foreign investors has been balanced in terms of their buying and selling, meaning that their impact on the Vietnamese stock market has been neutral.

“PYN Elite has taken a different approach this year, with the net increase in our investments in Vietnam amounting to US$110 million,” it noted.

Things will get interesting when foreign investment flows turn back towards Vietnam. The country’s economic outlook for the next few years, the earnings growth of Vietnamese companies and the current valuation levels in the Vietnamese stock market will undoubtedly attract foreign investors back to Vietnam, the fund stressed.

Local investors act differently this time

In previous periods, Vietnamese investors often follow the moves made by their foreign peers. But this time it was different.

According to Pyn Elite Fund, this was due to the fact that the interest rates on Vietnamese sovereign bonds have declined sharply, from 5% to 2.5%, over the past two years.

In spite of this, local investors in Vietnam were cautious about putting their money in the stock market in 2018-19 due to the weak sentiment in the stock market and interest rates still being high enough to generate returns. The additional incomes they accumulated were put into deposits and the fixed income market.

Shares are now starting to look attractively priced, especially in relation to fixed income investments. Going forward, this ratio will support local money moving from deposits to the stock market.

Vietnamese investors have opened 270,400 new accounts to invest in equities during the past 11 months, bringing the total to  2.7 million, with more than 300,000 accounts set to be opened this year.

Interest in equity investments among local investors is seeing robust growth, stated the fund.

The 41,200 new accounts opened in November was the highest monthly figure ever. Of this total, 123 accounts were opened for local institutions and the rest for retail investors. Hanoitimes

Ngoc Thuy

Source: https://vietnamnet.vn/en/business/vn-index-on-track-to-reach-1-800-points-pyn-elite-fund-700080.html

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UK investors eye renewable energy in Vietnam

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Investors from the UK were showing significant interest in investing in renewable energy projects in Vietnam, especially wind power, 

expecting the Vietnamese Government to introduce long-term support policies as well as simplification of procedures for project implementation.

UK investors eye renewable energy in Vietnam hinh anh 1

A wind farm in Binh Thuan province (Photo: VNA)

British Ambassador to Vietnam Gareth Ward said at the UK – Vietnam Renewable Energy Dialogue on Wednesday that clean energy was becoming a global trend, adding that every 1 investment USD in clean energy would help generate from 3-8 USD.

The Vietnamese Government in 2015 approved the renewable energy development strategy to 2030 with a vision to 2050 which aimed to increase the percentage of renewable power from 35 percent in 2015 to 38 percent in 2020 and 43 percent in 2050.

The Government also introduced incentive policies to encourage the development of wind power, biomass energy, energy from waste and solar power.

Hoang Tien Dung, Director of the Ministry of Industry and Trade’s Electricity and Renewable Energy Authority, said developing renewable energy was important in the context that sources for hydropower were being exhausted, thermopower was limited due to commitments to global climate change and gas-fired power had high production costs.

According to the draft national power development planning for 2021-30 period with a vision to 2045, Vietnam had large potential for renewable energy development which was estimated to amount up to 855GW, mostly solar power (434GW), and wind power (375GW). The potential for off-shore wind power was estimated at 158GW.

Off-shore power was attracting increasing interest from foreign organisations and investors, Nguyen Ninh Hai, Head of the Renewable Energy Department under the Electricity and Renewable Energy Authority, said.

Hai said that as off-shore wind power was a new thing to Vietnam, the Ministry of Industry and Trade was cooperating with some research organisations to have a comprehensive evaluation about the off-shore wind power development potential in the country.

Bui Vinh Thang, Director of Mainstream Renewable Power Vietnam, said that the Government’s planning and policies played a very important role for renewable energy investors, especially in wind power and off-shore wind power.

Benjamin Dubas, a representative from Lightsource BP, said that renewable energy investors expected the transparency and stability of policies in the long term to invest in Vietnam, especially feed-in tariffs (FIT).

According to Dung, FIT pricing was applied to accelerate investment in renewable energy in the first stage in Vietnam but this mechanism would not be maintained for a long period and be replaced by competitive bidding when the technology development helped push down prices of solar and wind power.

He added that the national power development planning which was being completed would give priority to renewable energy on the basis of ensuring balance of power sources and the power transmission between regions.

The ministry expected to continue receiving support from the UK in renewable energy, especially off-shore wind power which the UK had experience in and Vietnam had large potential.

By the end of 2020, the total renewable energy output accounted for around 25 percent of the total output worth 69,000MW of the Vietnam’s power system. There were 148 solar power projects with a total capacity of more than 8,800MW, 100,000 rooftop solar power projects with a total capacity of 9,300MW, and 11 wind power projects with a total capacity of 511MW./.VNS

Source: https://vietnamnet.vn/en/business/uk-investors-eye-renewable-energy-in-vietnam-715833.html

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Mitsubishi pulls out of central Vietnam coal plant

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Mitsubishi pulls out of central Vietnam coal plant

The logo of Mitsubishi Corporation is displayed at the entrance of the company headquarters building in Tokyo, Japan, April 26, 2016. Photo by Reuters/Issei Kato.


Japan’s Mitsubishi Corp has decided to pull out of a coal-fired power plant in central Vietnam amid growing international concern about environmental impacts.

The Japanese trading house will pull out of the 2-gigawatt Vinh Tan 3 project, planned to be located in the southern province of Binh Thuan, because of climate change targets, Reuters reported, citing two anonymous sources.

Without mentioning Vinh Tan 3 specifically, Mitsubishi said in a statement that it was committed to reducing its investment in coal power in line with international climate goals.

The 2-gigawatt plant was originally scheduled to come online in 2024.

OneEnergy, a joint venture of Mitsubishi and Hong Kong’s CLP group, holds a 49 percent interest in the $2 billion project. State-owned utility Vietnam Electricity owns another 29 percent. Chinese companies are handling materials procurement, construction and equipment delivery.

This marks Mitsubishi’s first withdrawal from a coal plant project. The trading house has said it will not build any new facilities of this type after Vung Ang 2, a Nikkei report said.

Mitsubishi still has a stake in the Vung Ang 2 coal power plant being built in the central province of Ha Tinh, which is more widely known after being subject to critical scrutiny by environmental and other groups as well as investors.

Source: https://e.vnexpress.net/news/business/companies/mitsubishi-pulls-out-of-central-vietnam-coal-plant-4240625.html

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Unable to cover expenses during Covid-19, owners sell hotels at cheap prices

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Many offers to sell coastal hotels in Da Nang have appeared on real estate forums these days. Most of them are located in districts Son Tra and Ngu Hanh Son.

Unable to cover expenses during Covid-19, owners sell hotels at cheap prices

A hotel put up on sale

On just one real estate website on February 22 many ads were listed.

A 4-star hotel on Vo Nguyen Giap street, 600 square meters, with 19 stories, 125 rooms and 2 conference rooms is offered at VND440 billion.

Hotels on the major streets of Ha Bong, Tran Bach Dang, Ho Nghinh, Vo Nguyen Giap and Ho Xuan Huong are offered at tens or hundreds of billions of dong.

Hoang Lam, the owner of a hotel on Tran Bach Dang street, said accommodation service providers have been hit hard by Covid-19.

“We have been struggling to survive by cutting costs. However, as capital is getting exhausted, hotel owners have to liquidate assets to pay bank debts,” he said.

“Selling hotels is unavoidable as there is no source of revenue, and the operation cost is high,” he said.

Do Van Hien from Dana Hotel, a broker, said a lot of hotels in Da Nang have been put up for sale since the second Covid-19 outbreak.

“The hotels for sale are 2-4-star. The prices have fallen by 20 percent and buyers are mostly from northern provinces,” Hien said.

According to Hien, 3-star hotels are priced at VND20-100 billion, while 4-star hotels are at least VND280 billion. The value of hotels depends on the locations, area, quality, numbers of rooms and brands.

The transactions of 4-5-star hotels, which have strong brands, are confidential. Hotel owners only work with prestigious brokers, and buyers have to prove their financial capability.

Hien said no one wanted to sell hotels in 2016-2019 because they could make a high profit from the business. But since 2020, guests are coming in dribs and drabs, and operation costs and loan interest rates are high.

Cao Tri Dung, chair of the Da Nang Tourism Association, admitted that tourism services have become nearly frozen and many hotels have been put up on sale.

“The pandemic resurgence before Tet blocked sources of guests. Ninety percent of clients cancelled or postponed plans to come to Da Nang,” he said.

He said this is common in a market economy, and that it is time to restructure the accommodation segment.

According to Da Nang People’s Committee, the total number of guests staying at accommodation facilities in the city in January 2021 was 251,094, a 65.6 percent decrease compared with the same period last year. 

Ho Giap

Source: https://vietnamnet.vn/en/business/unable-to-cover-expenses-during-covid-19-owners-sell-hotels-at-cheap-prices-715493.html

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