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Executive Summary
From our vantage point, 2025 looks to be a year of catalysts that unfold: would-be growth events that have been pent up after so much waiting and
longing for changes that have created past concerns and doubts about the capability of Vietnam to address the key economic issues at hand. To
that end, the new leadership has been tasked with the challenge of reviving an economic growth supercycle to test their mettle. In an interview on
the last day of 2024, the General Secretary of the CPV To Lam mentioned that the country is now stepping into a new era: the era of the nation’s
rise. The top priority in this new era is to successfully achieve the strategic goals, turning Vietnam into a developing nation with a modern industrial
base and upper middle-income by 2030.

The new era means that we might need to prepare for the Unexpected. The reforms that are being implemented starting from late 2024, including
the Vietnamese government’s comprehensive institutional reform, determination in accelerating public investment in infrastructure, and removing
the painful issues in the property sector, if successfully navigated, are the three domestic variables that can be uncoiled to spring forth growth in
our view. The country is in need of capital for its overarching development plan charted out for the next 5 years, and we believe these are shaping
the foundation for the stock market to spring forth in 2025.

• We believe the current reform targets a better investment environment in Vietnam, envisioning a shortened licensing process and much
more efficient infrastructure. One might see public investment as a worn-out theme from previous years, but there has been new progress
recently to breathe new life into this theme. On the one hand, a number of “large scale” projects are being added to the list of public investment
(please refer to page 15). And to address the funding needs, BT (Build & Transfer – a form of PPP) is being re-introduced in 2025. This is
important to attract private sector participation in infrastructure projects, as private contractors normally are more efficient than the public
sector doing the entirety of the project. A back of the envelope estimate shows that the current institutional reform would at least reduce 20%
of current expenditures, and would translate into roughly a 40% increase in public spending. All of these improvements to optimize the
investment environment should in turn be beneficial for manufacturing, and can certainly help to attract more FDI inflows. On the FII side, new
initiatives such as NPS and KRX re-launch will be the key steps to be granted EM status upgrade, and in turn attract new foreign inflows.

• Also, we expect supportive policies to enable significant supply increase in the property market in 2025, not only in Hanoi or HCMC but
also at second-tier cities. The Vietnamese government at the highest echelon is trying to shorten the licensing process of new projects
nationwide, and address existing projects with legal issues. In our estimates, new condo supply in both HCMC & Hanoi continues to increase
during 2025 with total new supply of around 50,000 units, a 44% increase YoY. The significant recovery of property prices in Hanoi and some
areas of HCMC in 2024 might slowdown liquidity for a while, and is an important factor to watch. In our view, the absorption of new supply
needs to be strong enough in order to make sure that developers can get enough funding, and do not create an additional burden upon the
banking system. Again, policy is accommodative here: (1) we believe interest rates will be kept not to increase too much from here (a difficult
task as SBV also needs to keep potential VND weakening in check) and credit growth will be on aggressive side with the gradual removal of
the credit quota for a given year, targeting 16% as compared with 13.82% in 2024; (2) the acceleration of public investment in infrastructure
projects will support the increase in property prices.

The new era does not mean that everything will automatically turn out to be a happy ending without challenges. In a year when FDI is being
aggressively sought after to support the overarching multiyear development plan of the nation, it is also a year that exports might face higher tariff
risks and currency being under pressure. Meanwhile, the domestic consumption engine, with personal savings being hurt by the unfunctioning
property and corporate bond market, might need additional time for consumers to fully regain confidence and take out their wallets and truly spend
again. This positions Vietnam’s growth in 2025 as coming expectedly from investment and production, but not immediately coming from the
consumer.

Looking further ahead, in order to secure double-digit GDP growth per annum as targeted by the Prime Minister, the public investment
acceleration with a focus on both hard and soft infrastructure upgrade, and the recovery of the property sector will together be the key themes
for 2025. This is the reason why we are more bullish on construction, construction materials, residential property and IT this year, while the
EM upgrade catalyst will give a boost to large cap tickers. The beaten down retail sector, considered to be at its multi-year trough, remains
our favored pick through 2025, though domestic consumption as alluded to above might be more of an eventual recovery, and thus a longer-
term recovery play.

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The 84 companies under our coverage post 16.4% growth in 2025, improving from the 13.2% of 2024. In the past 6 years, we observed VNIndex
valuation to de-rate/be in line with NPATMI growth/re-rate equally, ie. in 2 out of 6 years. With the kick-off of the above-mentioned reforms and EM
upgrade catalyst, we believe that market P/E will not de-rate in the first year of the new era, and for the VNIndex to reach 1,450 pts by Dec 2025.

Following the 2 big themes mentioned above, our Top 10 calls for 2025 include HPG, MWG, FPT, DPR, CTD, NT2, CTG, TCB, ACV and KDH.

Table: VNIndex vs. HOSE listed companies’ NPATMI growth

VNIndex NPATMI growth

2019 7.67% 15.30%
2020 14.87% -0.30%
2021 35.73% 37.72%
2022 -32.78% 3.05%
2023 12.20% -2.82%
2024 12.11% 13.20%

Source: FiinPro. 2024 NPATMI growth is based on SSI Research estimates.

Table: Top 10 calls

Target
Current
% Upside Price NPATMI Growth P/E ROE Dividend Yield (%)
No Ticker Price (VND)
(VND)
in 1yr in 1yr 12/31/2024 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F
1 MWG 26.2% 77,000 61,000 -95.9% 2260.9% 43.5% 372.2 22.5 15.7 0.7% 14.9% 18.0% 1.2% 0.8% 0.8%
2 HPG 25.7% 33,500 26,650 -19.4% 74.1% 28.4% 25.0 14.3 11.2 6.6% 10.4% 11.8% 0.0% 0.0% 0.0%
3 DPR 22.7% 47,600 38,800 -17.2% 39.8% 65.1% 7.6 18.4 11.8 8.3% 8.9% 13.3% 4.7% 5.2% 6.4%
4 ACV 22.7% 153,000 124,734 17.0% 37.0% 21.4% 37.6 26.1 19.4 18.0% 20.8% 20.7% 0.0% 0.0% 0.0%
5 FPT 22.2% 186,300 152,500 21.8% 22.4% 27.2% 20.6 31.1 24.5 28.2% 28.6% 29.2% 2.1% 1.3% 1.3%
6 NT2 17.9% 24,700 20,950 -46.4% -88.9% 644.5% 15.8 120.3 16.2 10.6% 1.3% 9.5% 6.1% 0.0% 0.0%
7 CTG 16.9% 44,200 37,800 17.6% 16.2% 35.4% 9.1 10.9 8.1 15.9% 16.1% 18.6% 0.0% 0.0% 0.0%
8 TCB 16.4% 28,700 24,650 -10.9% 22.0% 15.4% 6.2 7.6 6.6 14.0% 15.1% 15.2% 4.7% 0.0% 0.0%
9 KDH 15.0% 41,500 36,100 -35.1% 35.7% 21.8% 35.1 35.3 31.5 5.3% 5.6% 9.7% 0.0% 0.0% 0.0%
10 CTD 12.2% 77,100 68,700 226.3% 443.3% 39.8% 22.8 10.0 13.8 0.8% 4.4% 5.8% 0.0% 1.5% 1.5%

Source: SSI Research

SSI sector classification Outlook Top pick Trade idea/Watch

Automobile Neutral VEA HAX
Textile & garment Positive MSH TNG
Retail Positive MWG, PNJ, FRT
Fisheries Positive VHC
F&B Neutral MCH SAB
Oil & gas Neutral PVD PLX, BSR
Brokerage Neutral
Banking Positive CTG, TCB, ACB, VCB HDB, VPB, MBB, BID
Pharmaceuticals Positive DBD IMP
Construction Positive CTD
Sea Ports & Logistics Neutral GMD, HAH
Aviation Positive ACV, SCS
IT/Telecom Positive FPT CTR
Steel Positive HPG
Fertilizers Neutral DGC DCM, DPM
Real Estate (Residential Developer) Positive KDH, NLG DXG, TCH
Real Estate (IP Developer) Neutral DPR, KBC, BCM
Electricity Positive NT2, REE, HDG

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Table of Contents
2025 VIETNAM MACRO OUTLOOK: Serpent secret: Uncoiling for Unleashing Growth ................................................................................ 5

2024 macro in review: Ending the year at a good note ........................................................................................................................... 6

2025 Macro outlook: Serpent Secret: Uncoiling for Unleashing growth ................................................................................................ 10

Vision on 5-year cycle (and beyond): Where do we go from here? ....................................................................................................... 12

From politics to policy: Pivot. ............................................................................................................................................................ 12

2025 Risk: The Tariff man ................................................................................................................................................................. 16

From Policy to Implementation: A promising beginning ...................................................................................................................... 18

VIETNAM SECTOR 2025 OUTLOOK ........................................................................................................................................................... 19

Consumer Discretionary - Automobile: Peak performance achieved, now at cruising speed ................................................................ 20

Consumer Discretionary - Retail: Maintaining robust growth .............................................................................................................. 24

Consumer Discretionary - Textile & Garment: Acting on opportunities ................................................................................................ 31

Consumer Staples – F&B: Cautious sentiment limits growth .............................................................................................................. 35

Consumer Staples - Fisheries: Volume drives growth......................................................................................................................... 39

Oil&Gas: Earnings growth divergence to persist despite anticipated lower oil price in 2025 ................................................................. 42

Financials - Banking: A ray of sunshine ............................................................................................................................................. 46

Financials - Brokerage: Winds of change ........................................................................................................................................... 56

Healthcare: Policy changes paving the way for exciting times ahead .................................................................................................. 60

Industrials - Aviation: Back to growth after full recovery ..................................................................................................................... 64

Industrials – Construction: The backbone of GDP growth in 2025 ...................................................................................................... 68

Industrials – Sea port & Logistics: Thriving under uncertainty ............................................................................................................ 74

Technology & Telecom: Entering a new growth cycle ........................................................................................................................ 77

Materials - Fertilizer: VAT rule change to sustain earnings growth ....................................................................................................... 89

Materials - Steel: Domestic channel to be the key driver for earnings growth ...................................................................................... 92

Real Estate - Industrial Parks: Supply improvement amidst demand slowdown in 2025 ..................................................................... 96

Real Estate - Residential Property: Strong pre-sale growth driven by demand recovery and new supply ........................................... 102

Utilities - Power: Hydropower recovery will help reduce the power shortage risk ............................................................................... 113

CONTACT INFORMATION ........................................................................................................................................................................ 127

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2025 VIETNAM MACRO OUTLOOK

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Executive Summary
Vietnam’s preliminary macroeconomic data for 2024 indicates a continued recovery driven by the strong performance of the foreign-invested sector
and pick-up in consumption in 4Q24. That said, 2024 endedon a robust footing to usher in 2025, with a high degree of GDP growth, whilst inflation
printed below 4% YoY. It could bring back some confidence to achieve the 2025 ambitious GDP growth target of 7-8%.

For 2025, it would be an interesting point for Vietnam’s economy whereas it would mark an end for the 5-year term, but at the same time it will be
a whole new year under the new leadership with ambitious plans to structurally reform the economy to achieve the high-income country title by
2045. Risk is still hanging over, i.e slower global economic growth or more uncertainties under Trump’s presidency, and geopolitical tension might
be a head risk as well. However, domestic factors such as public investment, domestic consumption, and the private sector could rebound to
mitigate potential negative impact from external growth drivers. And for 2025, maybe the private sector could deliver a nice surprise as playing out
role of growth engine, as the private sector might be unleashed after untangling of legislation bottlenecks from late 2024. 2025 might give us a
serpent secret that uncoiling would unleash the growth potential for the country, and please enjoy the first thoughts of our macro-outlook for the
year of green snake.

2024 macro in review: Ending the year at a good note

Economic recovery extended supporting by external factors

Vietnam’s 4Q24 real GDP extended its momentum further at 7.55% YoY – the highest Q4 performance since 2019. Together with the revising up
of GDP growth in the past 3 quarters, full-year figure came in strong at 7.1% in 2024, pleasantly above the upper range of the government target
(6.5% - 7.0%). The economy was buoyed by external factors, such as manufacturing (9.83% YoY), better terms of trade (trade surplus of $24.8
bn), and FDI disbursement (10.6% YoY), while services growth improved by 7.4%, supported by wholesale & retail trade (7.96%); transportation &
storage (10.8%) and accommodation (9.76%). Though we note that retail trade saw little in the way of expansion, as real retail sales in 2024
grew by 5.9% YoY vs. 6.8% in 2023 as e-commerce booming sales might not fully reflect in the data. Nominal GDP further expanded to $476 bn,
with a GDP per capita of $4700 – considered to be upper middle-income range according to the World Bank, so the target of reaching this milestone
by 2025 is achievable.

Real GDP growth by key sectors (% YoY) Nominal GDP per capita (USD)

14% 5000

12% 4500
4000
10%
3500
8% 3000
6% 2500
2000
4%
1500
2%
1000
0% 500
2018 2019 2020 2021 2022 2023 2024 0

GDP Manufacturing Services

Source: S&P Global, GSO, SSI Research Source: GSO, SSI Research

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Front-loading of exports highlight of the manufacturing sector in 4Q24

Manufacturing growth eased but remained resilient at +10.0% in 4Q (vs. +11.4% in 3Q), driven by output expansion in traditional export products
such as electronics, garments and footwear, suggesting that the trend of front-loading of exports appears to accelerate. Similarly, industrial
production index in key export sectors showed double-digit growth in 4Q24. Notable increases were seen in furniture (22.5% YoY), clothing (18.1%),
leather (20.2%) while phones exports were sluggish (-9.1%), dragging down electronics IIP growth to only +5.5% YoY.

For FY2024, manufacturing (+9.83%) has been the main driver for Vietnam’s robust performance with better terms of trade ($24.8 bn in trade
surplus). The industrial employment index as of Dec showed stronger growth for both FDI-invested companies (+3.7% YoY) and private firms
(+1.9% YoY). Exports gained to historical highs of $405 bn (+14.3% YoY) and reversing the 4.6% contraction in 2023 thanks to electronics
(+26.6%), machinery (+21%), wooden products (+20.9%). Imports rose 16.7% in 2024 and 2024 posted a second largest trade surplus of $24.8
bn whereas trade with US recorded a historical surplus of $104.6 bn and some has been paired with trade deficit with China ($83.7 bn).

Quarterly exports and imports (%YoY) Industrial employment index (% YoY)

60% 40

50% 30
40%
20
30%
10
20%
10% 0 01/22
03/22
05/22
07/22
09/22
11/22
01/23
03/23
05/23
07/23
09/23
11/23
01/24
03/24
05/24
07/24
09/24
11/24
0% -10

-10% -20
1Q19 3Q19 1Q20 3Q20 1Q21 3Q21 1Q22 3Q22 1Q23 3Q23 1Q24 3Q24
-20%
-30 Manufacturing Wearing Apparels
-30%
Electronics Furniture
Exports Imports Chemical Metals

Source: S&P Global, GSO, SSI Research Source: GSO, SSI Research

Positive signs on domestic consumption

Services growth picked up to +8.2% (vs. +7.5% in 3Q). Wholesale & retail trade (+9.04%); transportation & storage (+10.0%) and
accommodation (10.3%) outperformed, supported by robust trade activities and the continued recovery in international visitor arrivals and locals’
outbound travel.

Retail sales was ticking up slightly in 4Q24 to 5.9% YoY from 5.8% in 9M24 but e-commerce booming sales might not fully reflect in the data as
we saw expansions for consumer goods imports (+20.6% YoY). Our seasonal adjusted retail sales showed that the growth pace though has yet
returned to that of 2019 though there are still hopes for potential recovery for 2025 given the pace coming above the post-Covid sluggish recovery.

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Seasonal adjusted monthly retail sales (2019 average = 100) Monthly tourist arrivals (by million)

140 2500
130 2000
120 1500
110 1000
100 500
90
0
80

May-20

May-21

May-22

May-23

May-24
Sep-20

Sep-21

Sep-22
Jan-22

Sep-23

Sep-24
Jan-20

Jan-21

Jan-23

Jan-24
70
60 Asia Ameria Europe
01/19
05/19
09/19
01/20
05/20
09/20
01/21
05/21
09/21
01/22
05/22
09/22
01/23
05/23
09/23
01/24
05/24
09/24
Oceania 2019 Average

Source: SSI Research Source: GSO, SSI Research

Resilient FDI flows while public investment accelerated on the back of year-end factors

2024 disbursed FDI recorded $25.3 bn (+9.4% YoY) and 81% of that went to manufacturing. Similarly, 2024 FDI registration grew to $33.7 bn
(+20% YoY) with smaller project size forming a trend. In terms of country of origin, no surprise, Singapore ($8.9 bn); Mainland China + Hong
Kong ($6.1 bn in total) and South Korea ($6.9 bn) led FDI inflows to Vietnam. We note that the government with a sense of urgency is embracing
more accommodative policies to attract a new wave of FDI flows, including the implementation of Investment Support Fund (ISF) to mitigate global
minimum tax implementation-related impact, fast approval procedure for FDI projects in priority sectors, and providing more decision-making
powers to local officials regarding industrial park licensing approval.

According to Ministry of Finance, public investment accelerated towards year-end with more than VND 100 tn being disbursed within Dec. With an
ambitious plan set for 2025 (+15% vs. 2024 plan), top discussions are on the 3000km length of expressway plan, the North-South high-speed
train, and also the enhancement of the railway connection with the China-Vietnam border to facilitate a greater volume of cross border trade.
Legislators already set a legal framework reform throughout several laws modified in the 8th NA meeting to delegate more powers to local officials,
simplifying the licensing and approval process, as well as resumption of Build-Transfer projects and the rest will much depend on the government’s
implementation powers.

FDI commitments to Vietnam by partners (USD bn)

10
9
8
7
6
5
4
3
2
1
0
2017 2018 2019 2020 2021 2022 2023 2024

China South Korea Japan Singapore

Source: MPI, SSI Research

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Inflation kept in check while monetary conditions moved towards nominalization under exchange rate pressure

The inflation environment remains favourable throughout 2024 even the government did adjust some administrative prices such as electricity,
healthcare and tuition fee. Inflation came in smooth at 3.6% YoY on average, well below the government target of 4.0%-4.5%. Large drivers for CPI
were food (2.7%), grains (12.2%), and shelter (4.6% YoY).

While inflation kept in check, credit growth was estimated at 15.08% YTD by Dec 31, 2024 (2023: 13.8% YTD), supported by central bank
flexibility in credit growth ceilings. As of Dec 25, M2 (total liquidity) and deposit growth were lower than last year (M2 growth: 9.42% vs. 10.34%
YTD, deposit growth: 9.06% vs. 11.9% YTD), indicating a normalization in monetary policy. By Nov 2024, lending rates fell by about -44 bps
YTD, averaging around 6.7-9.0% p.a while deposit rates bottomed out in Mar/Apr and ticked up by 100 bps since then and stayed at 5.3% - 6.3%
as of Dec 2024.

On the exchange rate, pressure heightened throughout the year given stubborn global USD strength over geopolitical risks, strong US economy; Fed
slower rate cut concerns and Trump victory. The VND lost 5% for the year, marking the highest depreciation since 2025. Intervention was witnessed,
with $9 bn of FX reserves sold to commercial banks. FX reserves currently estimate at around $83 bn (including gold and SDRs), which is below
the 3-month of import rule of thumps. Though we have a large merchandise trade surplus ($24.8 bn), remittances ($16 bn) or FDI disbursement
($25.3 bn), higher service trade deficit (-$12.4 bn), intensified FII outflows and FDI profit repatriation led to the weakening Vietnam’s balance of
payment in 2024.

Headline and core inflation (%YoY) Monthly credit growth (% YTD)

7.00% 20
6.00%
5.00% 15
4.00%
3.00% 10
2.00%
5
1.00%
0.00%
0
01/2019
06/2019
11/2019
04/2020
09/2020
02/2021
07/2021
12/2021
05/2022
10/2022
03/2023
08/2023
01/2024
06/2024
11/2024

-1.00%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
-2.00% -5

Headline CPI Core CPI 2022 2023 2024 2016 - 2019 average

Source: GSO, SSI Research Source: SBV, SSI Research

Interbank interest rates and USDVND (%, VND)

14 26000

12 25500
25000
10
24500
8
24000
6
23500
4
23000
2 22500
0 22000

VND O/N rate USD O/N rate USDVND (RHS)

Source: Bloomberg, SSI Research

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2025 Macro outlook: Serpent Secret: Uncoiling for Unleashing growth

The year 2025 will be an interesting year for the Vietnamese economy. It marks an end for the 5-year term of the current administration, but at the
same time it will be a whole new year under the new administration with lots of ambitious plans to structurally reform the economy to achieve the
upper middle-income country target by 2030. From monetary to fiscal policies, the sweet spot is between the pace of growth and macroeconomic
stability, while supporting measures have been stimulated to more focus on quality, from FDI-related sectors to domestic enterprises and consumer
demand. It should be noted that the discussion over the ‘counter-cyclical’ policy mix (e.g the end of tax-related supporting measures) is not a
mainstream policy in the government, as it did plan for breakthrough growth in 2025.

We list out our assumptions for 2025 and key macro indicators forecast:

• Policy: Flexible monetary policies (credit growth of 16% or above) while maintaining easing fiscal policies (17% growth in public investment)
to focus on growth.

• Exports: The front-loading theme of exports shipped ahead of the usual schedule could remain intact in the first half of the year, while on the
other hand risks might arise after Trump’s policy announcement, possibly on or near January 20th.

• Consumption: Poised for expansion due to an economic recovery, relatively low interest rates, stimulus efforts, and government resizing efforts.

• Investment: Providing incentives to focus on the quality of FDI projects while domestic enterprises might face lesser operational risks, thanks
in part to not only legislation untangling, but also a more pro-growth and business-friendly stance from the government.

• Risks & Challenges: External challenges: Trump’s tariff policies, geoeconomic fragmentation, and recession risk, while ongoing domestic
headwinds on bad debt handling remains.

2025 Key macro indicators forecast:

2021 2022 2023 2024 2025F

GDP growth (%- 2010p) 2.58 8.02 5.05 7.1 7.0-7.5
CPI (average, % YoY) 1.84 3.15 3.25 3.6 3.8
Exports (USDbn) 336.25 371.3 354.7 405 443
Growth (%YoY) 10.4% -4.5% 14.3% 9.5%
Imports (USDbn) 332.25 358.9 326.4 381 420
Growth (%YoY) 8.0% -9.1% 16.7% 10.2%
Nominal retail sales (% YoY) -9.1% 21.7% 6.7% 9.0% 10.5%
Public investment (%YoY) -6.3% 19.9% 9.2% -8.5% 16.7%
Exchange rate (USD/VND, year-end) 22,930 23,780 24,270 25,485 26,000
Current Account Balance (USDbn) -8.1 -1.2 28.2 24.8 23
Foreign reserves (USDbn) 107 87 92 83 90
Credit growth (% YTD) 12.97 14.2 13.7 15.1 15.5
Deposit rate (VND -%, year-end 12 mo.) 5.5 10.5 4.8 5.5 5.8 - 6.0

Source: SSI Research

Given uncertainties over external factors and high base effects, we expect that export growth in 2025 might slow down to 9.5%, from 14.3% in
2024. Therefore, to mitigate short- and medium-term negative impacts, Vietnam should emphasize domestic growth drivers such as consumption
and public investment, while domestic private sector might enjoy more friendly business environment, as we reiterate thanks in part to not only
legislation untangling, but more of a pro-growth stance from the government. The Prime Minister has been aggressively promoting the 8% GDP
target for next year, and we believe that it could be a possible scenario if the business environment for private domestic sectors could improve to
unlock potential growth powers. The resumption of BT-type projects across the country could be a good start to ignite the fire.

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Seasonal adjusted quarterly GDP growth (%)

Real GDP growth Average pre Covid level

15.0%

10.0%

5.0%

0.0%
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24
4Q24
-5.0%

Source: SSI Research

Policy mix (or fiscal-monetary policy coordination) will continue and lay the foundation for economic acceleration, as capital is still the most
important thing for growth here. Monetary policy will remain flexible and moderate in 2025, as the central bank will commit to provide sufficient
liquidity in the system while keeping close eyes for exchange rate volatility. Our exchange rate forecast for 2025 is VND 26,000, though we expect
that exchange rates might move higher at certain times during the year. At the same time, given ambitious growth target, we expect that strong
political wills might keep 12-month deposit rates as low as possible and it might end up at a slight increase, at 5.8-6.0% respectively, while credit
growth is set at 15.5% respectively. Though we are open to a more dovish monetary policy (i.e. deposit rate might maintain at 2024 levels or even
lower) if external factors tilt to more favorable conditions (in the event of faster Fed rate cuts and/or if Trump’s tariff policies are meant as bargaining
tools).

A healthy fiscal position (public debt at 37% of GDP) allows for potential fiscal stimulus. The current push for digital transformation, a slimmer
government, and the government efficiency overhaul from the Party’s Secretary General could optimize savings for infrastructure investment. The
fiscal deficit is set at 3.8% of GDP in 2025 (vs. 3.4% estimate for 2024), indicating that the government will promote economic growth by expanding
fiscal support and stimulate domestic demand. Similarly, development expenditure is set at a 17% YoY growth for 2025, with the completion of
3000 km length of expressways and Long Thanh Airport while some key prioritized projects by 2030 will include the North-South expressway (East
portion), East-West expressway, Ring Roads and metro trains in Hanoi and HCMC, railway upgrade, “Super Port” in Can Gio (HCMC).

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Average deposit and mortgage rate (%) Vietnam public debt vis a vis regional peers (% GDP)

25.00 90
80
20.00 70
60
50
15.00
40
30
10.00
20
10
5.00 0
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028
0.00
Vietnam

ASEAN-5

Mortage rate Deposit rate Emerging Market and Developing Economies

Source: SSI Research Source: IMF, SSI Research

Vision on 5-year cycle (and beyond): Where do we go from here?

From politics to policy: Pivot.
In the previous cycle, Vietnam does have a lot of quick fixes or workaround to boost growth. But extend and pretend should never work forever, and
a more comprehensive reform might be what it needs for the next cycle of “rising era”. Vietnam’s next Party Congress would be around Jan. 2026,
followed by National Assembly member elections in May 2026. However, as we noted earlier, what’s happening in 2024 is similar to early election,
as Vietnam has a slew of new leadership from Q4 2024. Here is the summary of our first thought on what should be expect in 2025, and also the
next five-year cycle:

Big Picture Target: Positive Split to avoid middle-income trap

Termed as “Rising Era”, the new leadership aimed at being “upper middle-income country” by 2030, and being high-income country by 2045, i.e
successfully avoid the middle-income trap. While the 2030 target is within reach (as the bar for GNI per capita might be around $4,900-5000 by
then), the next target is quite challenging (about triple the 2030 income level in 15 years) as keeping up steady growth for a large economy is not
an easy task. That’s why the government might aim at a faster pace right from next year, so that the burden of growth would be lesser when the
economy is close to the high-income level. That “positive split” (like a marathon strategy) might explain the “fast and sustainable” trajectory, and it
will need a more aggressive mindset in structural transformation, starting from now.

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GNI per capita (current $)

30000

25000

20000

15000

10000

5000

Vietnam Thailand SK China

Source: World Bank, SSI Research. South Korea data from 1981, Thailand from 1992 and China from 2006.

We believe that dual-economy issue is the one that Vietnamese politicians want to aim at to unlock growth potential. It means Vietnam will have to
solve its own fragmentation, by providing linkages between those siloed segments. Here are some of the needed linkages for illustrating this concept.

Regional development linkage

Vietnam is not a big country by size. It spans 332,000 km2 (ranked 67th in the world), arranged into 63 provinces (or first-level administrative units).
Into the next phase of development, that fragmentation became a burden of growth, as i) Transportation infrastructure project normally involves a
number of provinces ii) It’s not dual-economy, but kind of a 63-economy model that every province has somewhat similar industries (i.e factories
of steel, cement or beer, cigarettes, or even lottery companies). It’s not the first time that the regional development mindset is mentioned, but
previously (and currently), effort is only on at merging the second-level (district) or mostly third-level (village/ward) administrative units, so the
impact might be not very plausible. This time (possibly from 2026), a more integrated country after merging first-level (province) administrative
units would not only cut current expenditure, but to simplify the administrative procedure, and achieve an economy of scale for doing business or
infrastructure development, not to say make it easier for delegate more power to local officials.

Foreign – Domestic Invested Enterprises linkage:

Lucrative investment incentives in the last three decades brought in foreign direct investment, the key growth driver for Vietnam. However it also
created a dual-economy issue, where foreign-invested enterprises normally led the growth (two-speed growth), as linkages between the two
segments (foreign and locally-owned enterprises) are relatively weak. So in the past, the government took the effort of asking large FDI enterprises
like Samsung to help to build up a network of local suppliers. So, this time, not just to promote local supporting industries, the government might
aim at technological transfer for megaprojects (like express railway) to ensure more resilient domestic sector.

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FDI net flows (% GDP) ASEAN’s global value-added contribution

6.0 1400

5.0 1200

4.0 1000

3.0 800

2.0 600

1.0 400

200
0.0
2016 2017 2018 2019 2020 2021 2022 2023
0
-1.0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
-2.0
Indonesia Malaysia Philippines Singapore
Vietnam Thailand China India Indonesia Thailand Vietnam Other Asean

Source: CEIC, SSI Research Source: IMF, SSI Research

Public – Private sector linkage:

We recognize the flexibility that imparts to Vietnam’s ample fiscal position, and so it’s no-brainer that public investment could be one of the key
drivers of growth, at least next year. However, the rule of thumb is that public investment is only for those projects that private investors did not
want to join (due to low profitability), or ideally, public investment should not crowd out private investment. Public Private Partnership did not work
well in the last 5-year cycle, after the new Law of Public Private Partnership (PPP) terminated the Build-Transfer (BT) project (simply land-for-
infrastructure) in 2020. However, from 2025, when BT projects are re-introduced in the PPP Laws revision, the infrastructure upgrade might be
even accelerated, as private contractors normally try to complete the project much faster than their SOE partners, as funding or bureaucracy are
not real problems.

Capital investment growth (% YoY)

40%

35%

30%

25%

20%

15%

10%

5%

0%
1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24
-5%

SoEs FDI Private Real GDP

Source: GSO, SSI Research

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Structural transformation in action:

The three pillars for structural transformations include i) Institutional reform ii) Infrastructure upgrade and iii) human capital (or simply improved
productivity in the context of demographics shift). We will spend some time for the first two, as for the last one, it’s a bit least to say as the
investment into human capital (immediate examples are to have 10,000 semiconductor engineers) are again not something the country could
complete next year or so. However, more investment into education, with not a little, but big help from the private and international partners, would
do its part as population aging is relatively fast here.

First, on institutional reform, it aims at streamlining the political system at all levels. At central government, ministries will be merged (example:
Ministry of Planning and Investment & Ministry of Finance, Ministry of Transportation & Ministry of Construction, and so on). It is expected that
there will be 13 ministries and 4 ministerial-level agencies – down by 5 and 4 units respectively. They will reduce 12 general departments so there
will be one left and it could be the State Securities Commission. At the local government, it would mimic the changes at central level, and the reform
might be even amplified with the above-mentioned of merging first-level administrative unit (province). And one interesting point is that all large
SOEs would be transferred back to its respective government organizations (the Committee of Managing State Corporation will dissolve).

The basic idea of streamlining is just to remove one or more level of administration (let’s say, no more General Departments – kind of directorate-
level unit) and merging the functions of government bodies together, to ensure the concept of “exclusive competence”, i.e one specific task or
function should be assigned to one government bodies to avoid overlap and confusion.

Again, this would allow reducing not only the level of bureaucracy, but also current expenditure (currently around 61% of the state budget
expenditure) and leave more room for public investment (31% of the state budget expenditure). A back of the envelope estimate shows that it would
at least reduce 20% of current expenditure, and would translate into roughly 40% increase in public spending.

Second, on infrastructure upgrade, it might be an again and again topic, but a developing country could do nothing different as it’s crucial to invite
more investment, cutting logistics cost, and better integrated into the global value chain. Let’s take 3 examples:

i) On transportation infrastructure, not just expressways (from North to South, and also East-West for better connection), or ports (airport: Long
Thanh, seaport: Can Gio in HCMC and South Do Son – in Haiphong), railways would be an interesting one as the country needs to upgrade
its outdated network (not just from narrow gauge to standard one), but expand it to connect to China (and to Europe, and one example is the
Lao Cai – Ha Noi – Hai Phong railway, est $8.7 bn, construction starts by Dec 2025) and even aim for a national express railway.

ii) List of new infrastructure projects during 2024 – 2025 (Public investment and PPP)

Total capital (VND tn) Expected completion time

Can Gio Port 129 2030
Ring Road 4 – HCMC 122.8 2028
HCMC – Moc Bai 19.6 2029
Lao Cai – Hanoi – Hai Phong railway 211.0 2030
Metro 2 Hanoi 35 2031
Huu Nghi - Chi Lang 11.0 2026
Dong Dang - Tra Linh (Phase 1) 14.3 2026
Ninh Binh - Nam Dinh - Thai Binh - Hai Phong 19.8 2027
Moc Chau - Son La 10.0 2028
Tan Phu - Bao Loc 18.1 2026
Bao Loc - Lien Khuong 19.7 2027
HCM - Thu Dau Mot - Chon Thanh 17.4 2026
Gia Nghia - Chon Thanh 25.5 2026

Source: SSI Research

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iii) On digital infrastructure, it should be noted that digital transformation is entering the next phase, especially after the Covid-19 pandemic. Legal
framework is also ready, for the National Database Center to go ahead, and the story might not only about this national database to connect
almost every pieces of data in the country (tax, property, healthcare, education, insurance, investment, and others) but in action, it also plays
a key part in supporting the first pillar of the reform. It would make a slimmer government possible, when a large part of the governance and
daily operations would be done online or automatically.

iv) Financial infrastructure is also a must for the next level of growth, and it’s about financial institutions, payment system, and market
infrastructure. The Vietnamese capital market has not been classified as emerging market, not because of the size of the economy, the stock
market, number of large and investible companies, but because of under-developed financial infrastructure. So while in long-term we might
hear about two international financial centres to be built in HCMC and Danang (as a free trade zone might be situated there), in the next one or
two years a number of “simple but not easy” things (like CCP – central counterparty clearing system for the capital market, or Basel III for
banking system, or a deeper forex market) should be integrated into the current infrastructure to make financial transaction here at least
acceptable to international standard. Next step might include adoption of digital asset, not just to be removed from the Financial Action Task
Force grey list.

2025 Risk: The Tariff man

The second term of President-elect Donald Trump with focus on trade protectionism is expected to become the most important hit to global trade
flows. While he is paying his attention on China, latest announcement on potential tariff for Canada and Mexico also put a concern to Vietnam, as
Vietnam stands out as in the top 3 countries having large trade deficit with the US. Will Trump’s pre-election threats become reality when it comes
to policymaking, or will it turn out to be that tariff talk was meant as a bargaining tool? Or a more direct question, whether Trump will extend high
tariffs to countries which are transshipping Chinese goods with very little domestic value-added? We believe that historical does not repeat but it
rhymes, and in the case here, since Chinese tariffs will be much higher, even tariffs get imposed on the rest of Asia as suggested, Vietnam could
still stand to benefit in the medium and long-term.

First, the concept on transshipment/rerouting from China to US via Vietnam is not as crystal clear as it might appear. We do see operational
expansion by existing manufacturers in Vietnam, and in response it might involve imports of Chinese raw materials, intermediate goods, and
machinery, but it might be more rather than simply relabeling the products before exporting to the US. That is to say, far from mere relabeling, a
material percentage of production of the produced good in question might actually occur in Vietnam. A US testimony paper pointed out that ‘about
20% of Chinese firms and 8% of firms from other countries, who invested in Vietnam after the tariffs, are engaged in importing and exporting
the same product’. We think that number is reasonable, whereas electronics and machinery are among the highest potential for the rerouting, as
electronics and machinery have accounted for more than 45% of Vietnamese exports, surging from 20% in 2011 and the trend has been scaled up
ever further since 2018.

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Changes in Vietnam’s market share in US imports by key products (%)

20.0%
18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Electronics Machinery Furniture Toys Plastics Rubber Steel Textiles Fisheries

2016 2023

Source: US Census, SSI Research

Second, Vietnam’s geographic position suggests for a sustainable diversification trend, as long as policies remain supportive. Vietnam could
maintain its competitiveness given closer border line with China and much shorter delivery time vs. other key ASEAN manufacturing hubs. Further,
as Vietnam approaches the gates of trade negotiation, it possesses the opportunity to pre-emptively cultivate positive sentiment vis a vis US-Vietnam
relations to score a better deal with Trump on the global trade chessboard. President-elect Trump is a deal-maker through and through, and that
means Trump can be dealt with, provided Vietnam sees the challenge pragmatically, and gathers the political will to do so. Realistically, expectations
for a free trade agreement under the Trump administration should be tempered, with a focus on achieving quick wins in deals over specific goods,
products, or investments.

However, it does not mean we can turn a blind eye to the risk from the Tariff Man, as Vietnam is still a country of trade-openness. And even a slower
pace of rate cut in the US might amplify the depreciation risk on the local currency, especially when the Vietnamese government tends to be
aggressive pro-growth in 2025. More flexibility in forex market control would be the key to limit that negative impact, but it’s impossible to emerge
unscratched if DXY on the rise to a new high during 2025.

Transport corriport of the Greater Mekong subregion Delivery times between key ASEAN hubs and China/Hongkong (days)

10
9
8
7
6
5
4
3
2
1
0
Singapore Penang Bangkok HCMC Hanoi

China Hongkong

Source: SSI Research Source: SSI Research

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From Policy to Implementation: A promising beginning

Streamlining the political system: In short, a slimmer government is achievable, as the new leadership is very aggressive on the downsizing goal.
Most of the deadlines will be around Dec 2024 – Jan 2025, and after the Lunar New Year, the National Assembly would hold an extraordinary
meeting to give a final seal for this. including factoring in all of the changes into the current legislation to ensure limited impact in transitional period.
In fact, it’s not a completely new target, as the Party Central Committee issued Resolution 18 on 2017 on this issue, and the pilot run at Ministry of
Public Security from 2018-2019 was a real success. For merging first-level administrative unit, we believe that it might be only can start from 2026,
after completion of the second and third level units.

However, it’s always easier said than done. While downsizing the government is easier in practice, the key concern should be on power control,
when government organizations (and local officials) become more powerful after consolidation.

Infrastructure upgrade: Again, the speed of reform might vary, and digital infrastructure upgrade might be the one that could go ahead, as the
basic foundation has been prepared in the last 5 years. On financial infrastructure, the prospect of an international financial center might be a big
dream as trade-in-goods initiatives like free trade zone in Danang, or a similar version in Haiphong, might be easier in implementation than trade-
in-service ones. But think big, start small, in order to keep the capital market infrastructure up to international standards might be a quick win, plus
the adoption of digital asset or to give the forex market more flexibility. On transportation infrastructure, expressway or ports (airports, seaports)
development might be business as usual (i.e see some sprints from now to 2025), but for railway projects (most of them are tens of billions USD
in size) should see construction start around 2026-2027.

And as the government is well aware of the fact that fast growth should be powered by energy, we can see signals like i)the restart of two nuclear
power projects (in Ninh Thuan) ii) Revision to the 8th Power Development MasterPlan iii) Change PetroVietnam (National Oil and Gas Group) name
to National Energy Industry Group.., to confirm they have been on the right track already. So, it’s energy sector might be the one to fully capture the
potential growth of Vietnam economy in the next cycle.

In conclusion, 2025 when tying it all together looks to be enjoy another high note with growth, as support could come from infrastructure spending
and a more business-friendly environment for private sector to stage a rebound. The reform agenda is very ambitious, but it did get a good start as
most of the political system streamlining and legislation overhaul (similar to an omnibus law) will be all effective from Q1 2025. The concept of
“laying the track while the train is moving” could best describe why this time policy implementation could be much faster than normal. Known risks
are many (on tariff escalation, bad debt in banking system, delay in policy implementation…), but it also means that the country should be well
prepared to address such risk. What makes Vietnam difference from other emerging market would be its potential for growth, which simply means
room for improvement is ample, as the serpent secret told us that uncoiling would lead to unleashing the ultimate power to reach the final target.
2025 might give us a serpent secret that uncoiling would unleashing the growth potential for the country.

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VIETNAM SECTOR 2025 OUTLOOK

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Consumer Discretionary - Automobile: Peak performance achieved, now at cruising speed

2025 Outlook: Neutral

Top pick: VEA/Trade idea: HAX

2024 recap
The automobile sector gained 20% during 2024 due primarily to VEA (+31.1%) and HAX (+2.8%) but the remainder of the sector (SVC, CTF, and
TMT) underperformed the VNIndex. After a challenging first half, a recovery during 2H24 was driven by the registration fee reduction policy (effective
Aug ‘24) and aggressive price-cutting measures. This led to YTD growth (as of Nov ’24) of 12% in passenger car sales and 3% growth in motorbike
sales, exhibiting a V-shape recovery. Most companies were able to increase Q1-Q3 2024 NPAT due to a low base last year, such as VEA (4% YoY),
HAX (289% YoY), SVC (260% YoY).

By brand, VinFast has risen to the top spot in Vietnam by sales volume this year, surpassing well-established brands like as Toyota and Mitsubishi.
Its success is attributed to the strong performance of very affordable VF3 and VF5 models, catering to first-time buyers and ride-hailing service
drivers. These models have been instrumental in VinFast’s projection to sell 80,000 vehicles during 2024, commanding approximately 20% of the
passenger car market (see fig 3).

Fig 1. Motorcycle Volume showed Q3 recovery Fig 2. V-shaped recovery in car volume

750,000
CKD CBU
700,000
70,000
650,000 60,000

600,000 50,000

40,000
550,000
30,000
500,000
20,000
450,000 10,000

400,000 -
2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24F 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24F

Source: VAMM (Unit: Units) Source: VAMA (Unit: Units)

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Fig 3. Vinfast took the lead in passenger car market share for 11M24

20% 20%

Vinfast

Toyota

Hyundai
7%
Mitsubishi
17% Ford

Honda
11%
Others

11% 14%

Source: SSI compilation

Fig 4. New Energy Vehicle sales boomed Fig 5. Q1-Q3 ‘24 NPAT saw mixed results

Hybrid Vinfast 9M23 9M24

30000 200
150
25000
100
20000
50
15000 0
-50 HAX SVC CTF TMT GMA
10000
-100
5000 -150

0 -200
1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 Oct-Nov -250

Source: VAMA, VinFast (Unit: Units) Source: SSI Research (Unit: bn VND)

Policy impact: We expect no further supportive government measures to embolden the sector for 2025. Over the longer-term, we expect more
regulations to adhere to the government’s goal of increasing electric car market share to 30% and electric motorbikes to 22% before 2030. Demand
for motorbike replacements could increase, as motor vehicles over five years old will require routine emission testing (exact implementation timeline
is to be determined).

The electric car market is also a medium-term growth opportunity. Manufacturers, such as Honda and Toyota, are already introducing hybrid and
electric car models to meet consumer demand, while companies like PV Power (POW) and Petrolimex (PLX) are experimenting with charging station
business model to prepare for future demand. Currently, limited charging infrastructure and insufficient government support for new energy vehicles
remains a significant growth inhibitor.

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2025 outlook
As many supporting policies have ended, we expect car volume sales growth to peak in Q4/24 (see Fig 1&2) and decelerate during 2025. We expect
profit growth for the passenger car segment to be around 4% only, as new brands, such as Vinfast and MG, challenge incumbents with products
at lower price points and aggressive promotion. Total domestic production capacity is also expected to increase from 750,000 vehicles/year in
2022 to 1.1 mn by year-end 2025 (see table below), which should benefit consumers but increase the pressure on manufacturer and dealer
inventory levels. For motorcycle sales, we expect 2025 volume growth to be 1-2% given a high 2024 base.

Table. List of upcoming auto production/assembly plants in Vietnam

Production plant Location Total capacity Status

1 Skoda Auto Quang Ninh 120,000 Expected 2025
2 TASCO/Geely Thai Binh 75,000 Expected 2026
3 Omoda & Jaecoo Thai Binh 200,000 Expected 2026
4 VinFast Ha Tinh 400,000 Expected 2025

Recommendation: We have a NEUTRAL view for companies within our coverage as 2025 NPATMI growth is only at 3.8%, much lower than overall
market (16%). Our top pick for the sector is VEA given its attractive dividend. While HAX is expected to outperform (2025 NPATMI growth 45%)
during 2025, the company is trading at a higher 12-month forward P/E level compared to its 5-year historical average. As a result, we have HAX on
our trading idea list.

Top pick: Vietnam Engine and Agricultural Machinery Corporation (VEA: UPCOM): Attractive dividend yield
• 1Y target price: VND 48,000/share

• Investment thesis
✓ We expect VEA’s earnings to be stable given Honda’s dominance of the motorbike market. VEA has also begun clearing auditor “qualified
opinions”, which should pave the way for a HOSE listing over the next 3-5 years.

✓ For 2025, the car segment is expected to grow 7% YoY, fueled by a rising economy and the introduction of more affordable models. The
motorbikes segment is expected to rise only 1% due to a high volume of sales during 2024.

✓ While earnings growth is below 5% YoY, the dividend yield for 2025 and 2026 are expected to be at 12.7% and 11.5%, respectively, which
is amongst industry’s highest.

• Risks:
✓ Higher-than-expected provision to resolve auditor “qualified opinions” could result in reduced dividends.

✓ EV sales threaten VEA’s affiliate companies’ economic moat, which rely primarily on traditional ICE vehicles.

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Trading idea: Hang Xanh Motors Service JSC (HAX: HOSE): Affordable segment to be growth catalyst
• 1Y target price: VND 20,000/share

• Investment thesis:
✓ MG cars are growing faster than market due to its attractive price point among peers, with HAX being the top dealership, commanding
38% of all MG car sales. HAX also increased their dominance by selling used MG cars, further bringing down the price of owning an MG
when coming to a HAX-owned dealership.

✓ We expect the company to achieve its 2024 target (NPATMI increase 153% YoY) and 2025 NPATMI to grow 45% YoY, much higher than
sector’s average, aided by some recovery of luxury segment (Mercedes) and continued booming growth of affordable segment (MG).

• Risk:
✓ Slower than expected growth of MG brand.

✓ HAX has recently reduced its holding in its subsidiary, PTM. PTM owns 5 MG showrooms.
Target Price Current Price
% Upside NPATMI Growth P/E ROE Dividend Yield (%)
Ticker (VND) (VND)
in 1yr in 1yr 12/31/2024 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F
VEA 20.6% 48,000 39,800 -18.4% 4.4% 3.2% 7.4 8.1 7.9 24.6% 25.5% 26.0% 12.3% 12.7% 11.5%
HAX 11.4% 20,000 17,950 -85.6% 152.7% 45.2% 37.1 20.8 14.3 3.5% 13.4% 16.7% 3.6% 1.7% 6.7%

Source: SSI Research

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Consumer Discretionary - Retail: Maintaining robust growth

2025 Outlook: Positive

Top picks: MWG, FRT, PNJ

2025 Outlook
2024 recap: Gaining 36% in 2024, the retail sector outperformed the VNIndex which increased by 12.7%. The best performer was FRT (74%),
followed by MWG (43%) and PNJ (16%). Meanwhile, DGW underperformed with an increase of only 1%.

The economic backdrop improved in 2024, helping to boost consumer confidence and hence consumption. However, in the context of high
inflation and uncertainty surrounding the property market, consumption recovery was still rather slow in 2024. The Yagi typhoon adversely impacted
retailers in the path of the storm in terms of extra costs and lost sales (for ICT & CE and jewelry, but not for grocery and pharmacy). Looking forward
into 2025, we note that several macroeconomic factors may still be in play to aid consumption recovery, including (1) export growth of labor
intensive industries, facilitated by the supply chain shift reconcentrating from China to Vietnam; (2) the recovery of the real estate to boost wealth-
effect and (3) extension of VAT cut to June 2025.

Vietnam consumer sentiment (% positive) Exports and retail sales growth (%)

80 40%
70
30%
60
50 20%

40
10%
30
20 0%
Mar 19

Mar 20

Mar 21

Mar 22

Mar 23

Mar 24
Jun 24
Jun 19

Jun 20

Jun 21

Jun 22

Jun 23
Dec 19

Dec 20

Dec 21

Dec 22

Dec 23
Sep 19

Sep 20

Sep 21

Sep 22

Sep 23

Sep 24
10 -10%
0
-20%
Jan 24

May 24
Mar 24
Oct 23

Dec 23

Jun 24

Jul 24

Aug 24

Sep 24
Nov 23

Feb 24

Apr 24

Retail sales growth (%) Export growth (%)

Source: Cimigo Source: GSO

• ICT & CE retail:

ICT sales value remained weak, in which mobile phone and laptop sales declined by -4% YoY and -7% YoY in 9M24 (according to GFK). CE
sales value showed a better performance thanks to strong sales of air conditioners on the back of record hot weather, and TV on the back of
sporting events. Hence, the DMX/TGDD chains owned by MWG performed better than the FPT Shop chain owned by FRT, and this was because
of higher exposure to consumer electronics in the sales mix. The profitability of ICT & CE retailers improved thanks to an effective cost
optimization strategy and less intense price competition. In 9M24, FRT closed 118 FPT Shops (16% of 2023-year end store count), while MWG
closed 213 DMX/TGDD stores (7% of 2023-year end store count) to cut costs.

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DMX & TGDD & Topzone financials FPT Shop financials

30 12.0% 6 3.0%
2.0% 1.8% 2.0%
25 10.3% 10.0% 5 1.0%1.0%
0.0%
20 8.0% 4 -1.0%
7.4% 7.1% -1.5% -1.4%
-1.7% -1.8% -2.0%
6.5% -2.2%
15 6.0% 3
-3.0%
5.1%
10 4.0% 2 -4.0%
3.4% 3.1% -5.0%
2.4% 2.5% -6.0%
5 2.0% 1
-7.0% -7.0%
0 0.0% - -8.0%
3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 1Q24 3Q24 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24

Revenue (VND tn) PBT margin (%) Revenue (VND tn) PBT margin

Source: Company, SSI Research Source: Company, SSI Research

Looking forward into 2025, we expect ICT to perform better (between 5-10% in sales growth) than CE (flat growth) thanks in part to the low
base effect, replacement demand, and technological upgrade of iPhone 17 (expected to launch in September – October period). Mobile phone
and laptop sales peaked in 2021 due to the spike in demand caused by COVID-19. With 4-5 years replacement cycle, we expect replacement
demand to kick in come 2025. The profit margin is expected to increase on the back of cost optimization efforts performed in the prior year
and better demand dynamics.

Mobile phone sales value (USD bn) Laptop sales value (USD bn)

5 0.80

0.70
4.5
0.60
4
0.50
3.5 0.40

0.30
3
0.20
2.5
0.10
2 -
2017 2018 2019 2020 2021 2022 2023 2017 2018 2019 2020 2021 2022 2023

Source: Euromonitor, GFK

• Grocery retail:

BHX revenue recorded remarkable progress, with revenue increasing by 36% YoY in 9M24, much better than 9% YoY revenue growth of
Winmart. BHX recorded SSSG of ~34% in 9M24, while SSSG of Winmart was only 8%. BHX successfully restructured product mix (more
vegetables in urban stores, more imported fruit in rural stores, more branded meat/seafood), hence attracting new customers and posting
upbeat SSSG despite downtrading behavior of consumers. With the increase in SSSG and cost optimization, BHX broke even in 2Q24, while
Winmart broke even in 3Q24. However, Winmart outperformed BHX in terms of new openings. In 9M24, Winmart opened 100 new stores,
whereas BHX opened only 28 new stores.

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BHX financials Winmart financials

12,000 2.0% 9,000 4.0%

1.0% 3.5%
10,000 8,500
0.0% 3.0%
8,000 8,000
-1.0% 2.5%
6,000 -2.0% 7,500 2.0%
-3.0% 1.5%
4,000 7,000
-4.0% 1.0%
2,000 6,500
-5.0% 0.5%
- -6.0% 6,000 0.0%
1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24

Revenue (VND bn) PBT margin Revenue (VND bn) EBITDA margin

Source: MWG, MSN, SSI Research

Looking forward into 2025, we expect cost optimization (essentially digitalization of repetitive tasks at stores to cut labor costs) and store
network expansion to drive earnings growth rather than SSSG (2025 SSSG will likely slow down after upbeat growth of ~30% in 2024). We
expect BHX and Winmart net new openings of 200 and 150 stores (i.e. expanding store network by 12% and 4% respectively), while SSSG is
projected at low single digit. 2025 revenue for BHX and Winmart are estimated at VND 46.4 tn (13% YoY) and VND 35.2 tn (8% YoY).

Grocery store count, by chain BHX monthly revenue per store (VND bn)

4,000 3,633 3,733 2.5

3,398 2.1 2.1 2.1 2.1 2.1
3,500 2.0
1.9
2.0 1.8 1.8
3,000 2,741
2,500 2,106 1.5
2,000 1,728 1,698 1,726
1.0
1,500
1,000 0.5
500
-
-
2021 2022 2023 3Q24

BHX Winmart 2022 2023 2024

Source: MWG, SSI Research

• Pharmacy retail:

The pharmacy retail landscape diverged in 2024, with the winner Long Chau continuing to scale up outlet quantity aggressively, while some
competitors scaled down. In 9M24, Long Chau opened 352 new drugstores. Concurrently, An Khang closed ~200 stores over the same period
(i.e. scaling down store network by ~40%) to mitigate losses, while still looking for a way to refine its business model. The Pharmacity chain
closed only a few stores in 9M24, but compared with the peak in 2022 the chain closed ~22% of its total stores. Concurrently, after receiving
fundings from Korean investor, Trung Son store count has increased from ~150 to ~200 during 2024. With such expansion, Trung Son may
pose certain competition on Long Chau in 14 Southern provinces of Vietnam.

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Apart from selling drugs, Long Chau also started to scale up vaccine service aggressively from 2024, leveraged on existing client base from
drugstores. Long Chau vaccine chain now becomes the second largest modern vaccine chain in Vietnam. The vaccination business of Long
Chau is expected to grow rapidly due to (1) increase in spending on vaccine on the back of currently low vaccination coverage for diseases
not covered by Expanded Program on Immunization (<5%, per FRT) and (2) market share gain by private vaccination service due to
overcapacity at public vaccine centers.

We expect store network expansion of profit margin improvement to secure earnings growth for Long Chau in the near term. Long Chau revenue
in 2025 is estimated at VND 30 tn (26% YoY).

Pharmacy store count by chain Long Chau financials

2,000 1849 7,000 3.0%

6,000 2.5%
1477
1,500 5,000 2.0%

936 4,000 1.5%

937 901 898
1,000 800 3,000 1.0%

511 500 527 2,000 0.5%

500 400
326 1,000 0.0%
252 200
150 178
22 7 7017 68 - -0.5%
- 4Q22
2018 2019 2020 2021 2022 2023 Sep 24 1Q22 2Q22 3Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24

Pharmacity Long Chau An Khang Revenue (VND bn) PBT margin

Source: Companies, SSI compiled data

Regulatory changes affecting pharmacy retail in 2025:

1. National health insurance reimbursement at non-hospital drugstores: Starting Jan 1st 2025, patients will be able to get reimbursed by
national health insurance for drugs purchased outside hospital drugstores in the event of drug shortages. This should benefit non-hospital
drugstores in general, and Long Chau will be the main beneficiary among those. It is worth noting that the drug shortage issue now is not
as severe as it was back in COVID time, so this regulation change might not benefit non-hospital drugstores as much. However, in case
the drug shortage issue worsens (due to tightening control over drugs bidding at hospital), non-hospital drugstores might temporarily gain
customers from hospital drugstores in such cases. We will track the impact of this change on Long Chau revenue, and update on this.

2. Pharmacy law 44/2024/QH15 has been approved in late November (effective from July 2025) allowing certain drugs to be sold online.
Despite the possibility of increased competition from ecommerce drugstores, we believe that the value of drugs approved to be sold online
would be minor. Besides, we think that customers normally consult with pharmacists before making purchases. As such, we think the
competition of e-commerce on physical drugstore chains will be minimal.

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• Jewelry retail:

The gold price increased substantially, by 34% YTD in 2024. In the Gold price (VND mn/tael)
context of a sharp increase in the gold price, customers have the
tendency to stack gold to gain exposure to the price uptrend we 95,000,000
90,000,000
have been seeing lately. This, together with a negligible amount of 85,000,000
gold bars provided to the market by the government via state-owned 80,000,000
75,000,000
commercial banks explains the gold shortage in the market. The 70,000,000
Vietnamese government also made a distinct point to strictly control 65,000,000
60,000,000
gold origin to prevent ‘gold smuggling’ activities, caused by the gap

8/1/2024

5/4/2024
24/1/2024
9/2/2024
27/2/2024
12/3/2024
24/3/2024

23/4/2024
11/5/2024
4/6/2024

8/7/2024
24/7/2024
20/8/2024
20/6/2024

13/9/2024
1/10/2024

5/11/2024
18/10/2024

21/11/2024
between international and domestic gold price. Smaller sole
proprietor gold shops find it difficult to prove the origin of their gold
inventory, and such had to restrict operations. This cascaded to an
SJC gold bar
even bigger gold shortage on the domestic market. However, PNJ
Non-SJC gold (proxy for international gold price)
have legitimate origin for gold sold through PNJ outlets, hence
gained market share from smaller sole proprietor gold shops,
reflected in much better retail sales growth of PNJ (16% YoY in Source: SJC, SSI compiled data
9M24) than the overall jewelry consumption in Vietnam (-12% YoY
in 9M24, according to the World Gold Council). PNJ store network
expansion also outperformed other branded jewelry retail in 9M24,
hence gaining market share.

Due to the gold shortage issue, it was difficult to fully pass the increase in gold raw material cost onto customers via higher prices. PNJ also
decided to melt down long-dated inventory into pure gold, which will be subsequently reused to meet rising demand. As a result, the
company wrote down inventory in 3Q24, hence further compressing the gross profit margin in 2024.

Looking forward into 2025, we expect PNJ to keep gaining market share from smaller sole proprietor gold shops. The gold shortage issue
might still linger, though it might not be as severe as in 2024. With less severe gold shortage and the absence of inventory write down, we
expect the gross profit margin of PNJ to rebound in 2025. For 2025, we estimate retail sales to increase by 14% YoY, while net income might
surge by 18% YoY.

Jewelry store count, by chain Industry and PNJ jewelry sales growth

450 421 30%

400
20%
350
300 10%
250
200 0%
150 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24
105 101 -10%
80
100
36
50 -20%
0
-30%
PNJ Doji SJC Diamond Bao Tin Minh
world Chau
Retail sales growth of PNJ
2021 2022 2023 2024F Jewelry consumption growth in Vietnam

Source: SSI compiled data as of December 20th 2024, World Gold Council

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• Earnings outlook of companies

We expect the consumption recovery to stretch into 2025, aided by more favorable macroeconomics conditions and the recovery of the
property market. We estimate earnings of companies to increase by 34% YoY in 2025, outperforming the net income growth of the market.
Among retailers, we estimate MWG and FRT to post strongest earnings growth, bouncing back since the heavy destocking pressure observed
in 2023, and those also stand to benefit the most in the transition from traditional trade to modern trade (modern trade currently accounts for
<15% of the total market). PNJ also benefits from the transition from traditional trade to modern trade (almost 50% of the total market), but
not as much as grocery and pharmacy. DGW earnings growth looks strong in 2025, though it may take more time to regain its peak in 2022
due to heavy reliance on mobile phones and laptops (collectively account for 74% of revenue).

The main headwinds to our forecasts could be the uncertainty on future income of household, which could be projected lower than expected
in the event of an unfavorable outcome to the protectionist trade policy of Trump presidency. For FRT, high leverage remains the main concern,
especially if considering the possibility of a rising interest rate environment. However, a successful capital raise at subsidiary Long Chau of
FRT could serve as tailwinds for the stock.

• Valuation: We see a significant re-rating for companies operating ICT & CE chains (like MWG and FRT) as 2024-2025 are early years of a new
earnings cycle after the 2023 trough. Apart from the ICT & CE business, MWG and FRT also operate grocery and pharmacy chains which
stands to benefit from the long term transition from traditional trade to modern trade (currently accounts for <15% of the total market), hence
justifying the re-rating of the stock. However, PNJ has been de-rated notably, owing to the concern over gold shortage.

Top Picks:
1. Mobile World Investment Corporation (MWG: HOSE)

• 1Y target price: VND 77,000

• Investment thesis:

✓ The leader in mobile phones and consumer electronics retailing with 50-60% market share, which will benefit from a K-shape recovery.
✓ Notable profit margin expansion of ICT & CE chains after a period of destocking and cost cutting efforts. A cyclical recovery along the
consumption recovery.
✓ The grocery chain turned profitable from 2Q24, and accelerated store network expansion from 2025 to secure long term growth.

• Risks:

✓ Slower-than-expected recovery in discretionary spending

✓ Rising competition from e-commerce
✓ USD appreciation ($250 mn in USD denominated debt as of 1Q24)

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2. Phu Nhuan Jewelry JSC (PNJ: HOSE)

• 1Y target price: VND 117,000

• Investment thesis:

✓ The definitive market leader (c.57% market share among branded retailers), benefits from the sector’s K-shaped recovery
✓ Topline growth driven by new opening and client base expansion (younger demographic customer group)
✓ Solid financial position enabling the company to fund store network expansion to gain market share further
• Risks:

✓ Slower-than-expected recovery in discretionary spending

✓ Sharp increase in gold material costs due to strict control over gold origin by the government may temporarily dampen jewelry profitability.

3. FPT Digital Retail JSC (FRT: HOSE)

• 1Y target price: VND 215,000

• Investment thesis:

✓ Well positioned to benefit from the transition from traditional drugstores (88%) to modern trade drugstores (12%).
✓ Leader in prescription drugs retailing which helps Long Chau to gain new clients not only from mom&pop drugstores, but also from the
hospital channel.
✓ FPT Shop to come back to profitability in 2H24 after a severe loss in 2023 on intense price war.

• Risks:

✓ High leverage may hurt earnings in the rising interest rate environment
✓ Slower-than-expected recovery in discretionary spending
✓ Rising competition from ecommerce
Target Price Current Price
% Upside NPATMI Growth P/E ROE Dividend Yield (%)
Ticker (VND) (VND)
in 1yr in 1yr 12/31/2024 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F
MWG 26.2% 77,000 61,000 -95.9% 2260.9% 43.5% 372.2 22.5 15.7 0.7% 14.9% 18.0% 1.2% 0.8% 0.8%
FRT 15.8% 215,000 185,600 n.a n.a 37.4% n.a 86.7 63.1 -19.1% 18.6% 20.1% 0.0% 0.0% 0.0%
PNJ 19.5% 117,000 97,900 8.9% 7.8% 17.5% 15.8 16.5 14.0 20.1% 19.1% 19.5% 2.3% 2.0% 2.0%
DGW 2.7% 41,300 40,200 -48.2% 28.8% 31.1% 24.2 19.3 14.7 13.8% 15.3% 17.2% 1.0% 1.2% 1.2%

Source: SSI Research

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Consumer Discretionary - Textile & Garment: Acting on opportunities

2025 Outlook: Positive

Top pick: MSH/ Trade idea: TNG

2025 Outlook
• 2024 Recap: Valuations of the Textile & garment sector increased +24% during 2024, outperforming the VNIndex by 12% due to the
outstanding performance of local garment manufacturers, with MSH increasing 54%, TNG 43%, TCM 29%, and VGT 27%. Yarn producers,
however, significantly underperformed, as STK and ADS declined -5% and -28%, respectively. Many garment companies achieved record YoY
quarterly revenue growth during 3Q24, led by MSH at 45%, TNG 12%, and TCM 20%. In our view, this reaffirms Vietnam’s global competitive
advantage. Meanwhile, Chinese companies dumped yarn during the year, which negatively impacted demand from local yarn producers (with
STK and ADS revenue declining -19% YoY).

Chart: Vietnam garment export

4 50%
39%
40%

3 26% 30%

18% 17% 20%

USD bn

13%
2 11%
10%
2% 1% 3%

0%
1 -7%
-10%
-10%

0 -20%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2022 2023 2024 % YoY

Source: Customs, SSI Research

• 2025 Outlook: According to Mckinsey, retailers remain concerned about consumer sentiment and appetite to spend, so global industry growth
should be driven by modest volume growth (mostly in the low single digits), rather than price. Consumers likely will continue to prefer to shop
at outlets or off-price retailers during 2025 as money remains tight. As global trade is shifting over President Trump’s threat of global tariffs,
brands are likely to double down to diversify their sourcing footprint in Asia, laying the foundation for nearshoring.

• Trade policy impacts: Textile and garments is one of the most sensitive sectors to President-elect Trump’s potential tariffs, as the US market
accounts for over 40% of Vietnam’s textile and garment exports. According to OTEXA (chart below), Vietnam ranks second in terms of apparel
imports to the US behind China. While a broad-based approach is widely known, we believe that it is more likely that smart tariffs will be
introduced to target specific trade imbalances. We have a positive outlook for the sector following the continued supply chain relocation trends,
and we believe that it will be difficult for US production to reshore back to the homeland. Under our base case, we assume sector tariffs
(between 10-20%) will be lower than those levied upon China.

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US apparel and textile imports have been diversified away from China at the fastest rate since 2010, down 13% during 2023 vs 2019, in
terms of market share. As a result, markets such as India, Bangladesh, and Vietnam are expected to become key sourcing hubs, as China has
consistently lost cost-competitiveness due to rising labor costs (c.40% between 2019-23). This has made Vietnam’s average hourly labor
costs less than half of those in China. Among these two players, we note that India had the highest percentage of apparel products that failed
quality standards during 2023, while Bangladesh experienced brands shifting nearly 40% of orders during 2H24 to other markets due political
disruptions. We believe that Vietnam’s advantage in cost, speed-to-market, and skills will fuel export demand during 2025 despite the challenges
of potential tariffs.

Therefore, we have a positive view on the sector, illustrated by companies having orders through the end of 1Q25. This is also backed by the
front-loading orders from brands prior to tariffs being reconfigured. The Dollar index could remain strong, which could lead to most export
companies recording net FX gains, except those who have high USD-denominated loans (STK).

Market share of export countries in the US Vietnam's garment export to the US

20,000 3.71 3.73 3.80

40.0% 36.6% 36.6%
32.8% 18,000 3.70
3.59
35.0% 16,000
28.2% 27.7% 3.60
30.0% 24.8% 24.0% 24.3% 14,000
3.43 3.50
25.0% 12,000
10,000 3.32 3.40
20.0% 14.9% 14.9% 14.6% 15.2% 3.28 3.28
13.0% 13.6% 8,000
11.5% 11.7% 3.30
15.0% 8.9% 6,000
7.2% 7.6% 8.6% 8.4% 8.6%
7.0% 6.9% 3.20
10.0% 4,000
5.0% 2,000 3.10
6.5% 7.6% 7.1% 6.9% - 3.00
0.0% 5.0% 5.1% 5.5% 6.0%
2017 2018 2019 2020 2021 2022 2023 2024 2018 2019 2020 2021 2022 2023 2024

China Vietnam India Bangladesh Export value (USD bn) Units (mn) ASP (USD/unit)

Source: OTEXA, SSI Research

• Top line forecast: For 2025, we expect companies under coverage to post low-to-mid-teens sales growth, back to the average CAGR of
between 13-15% for the 2015-2019 period. For the 2019-2023 period, the sector posted ranged between a negative to flat CAGR due to
significant slowdown in global demand post-Covid. Sales growth is expected to be driven by volume growth rather than price, as consumers
remain value-conscious, while Vietnam has little leverage to negotiate higher prices. Although tariffs are borne by retailers, manufacturers likely
will lower prices eventually to share the cost burden with retailers.

• Earnings forecast: As a result, we forecast a rather flat GPM for the sector during 2025 versus 2024. Any GPM improvement should come
from a higher proportion of FOB orders to total sales. On SG&A, shipping costs remain volatile, affecting net margins - especially during 1H25
when front-loading is expected. We assume shipping costs to increase between 5-10% YoY on average during 2025 on the high base of 2024.
This should be offset by net FX gains due to a strong DXY, at least through 1H25. We forecast the USD/VND will depreciate approx. -3% during
2025, after about a -4% depreciation during 2024. Overall, we expect MSH, TNG and TCM to post earnings growth of 18%, 15%, and 15%
YoY, respectively. This is lower than the average historical CAGR of 24% over the 2015-2019 period, as the average GPM declined -500bps,
following retailer declining GPM. Lower price realization fueled by weaker consumer sentiment brought gross margins of the whole supply
chain to low levels.

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Chart: Gross margins

25%

20%

15%

10%

5%

0%
2015 2016 2017 2018 2019 2020 2021 2022 2023

MSH TNG TCM VGT

Source: Companies, SSI Research

• Valuation: The sector has been trading close to its historical average P/E of 10x. We believe that this is quite fair given uncertainty of
tariffs, which is partially reflected in expectations that Vietnam will benefit from the relocation trends under our base case scenario.
Valuation peaked during 2021 at between 15-16x when company earnings witnessed strong earnings growth of over 50% YoY. Given
earnings growth of between 15-18% YoY, we apply a target P/E of between 10-11x to 2025 EPS to arrive at target prices for the sector.

• Recommendation: Our top pick for the sector is MSH, while we recommend TNG for trading ideas.

Top Pick: Song Hong Garment Joint Stock Company (MSH: HOSE)
• Sector Report here

• 1Y target price: VND 61,900/share

• Investment thesis

✓ High exposure to the US market (>70%), which could translate into benefits from order relocation.

✓ Capacity expansion of 25% during 2025 to lever demand for FOB orders.

✓ Consistent and attractive dividend yield of between 7-8%.

✓ Strong fundamentals.

• Risks are associated with actual tax rates between Vietnam, China and other sourcing hubs, which could directly affect sales and
sentiment for the shares.

✓ The tariff differential gap between Vietnam and China could be lower than expected.

✓ There is a possibility (of unknown odds) that Vietnam will be levied with a US tariff in excess of Bangladesh and India.

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Trade Idea: TNG Investment and Trading JSC (TNG: HOSE)

• 1Y target price: VND 29,400/share

• Investment thesis

✓ High exposure to the US (46%) and EU market (38%), which also means greater chance to benefit from order relocation from China and
Bangladesh.

✓ Outstanding revenue CAGR of 15% between 2018-2023, and outperformed peer with flat/low-single digit growth.

✓ Management focused on developing in-house digital transformation to improve productivity. Automation now accounts for over 30% of
production activities.

• Risks

✓ Higher leverage ratio than peer so higher interest rates could likely be detrimental to net margins.

✓ Actual tax rates comparable among Vietnam, China and other sourcing hubs, which could directly affect sales demand and sentiment for
the shares.
Target
Current Price
% Upside Price NPATMI Growth P/E ROE Dividend Yield (%)
No Ticker (VND)
(VND)
in 1yr in 1yr 12/20/2024 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F
1 MSH 19.0% 61,900 52,000 -34.8% 47.6% 16.9% 9.1 10.6 9.0 13.9% 19.4% 21.2% 8.5% 6.7% 6.7%
2 TNG 16.8% 29,400 25,200 -23.0% 46.6% 14.8% 9.9 9.3 8.1 12.9% 16.4% 16.3% 4.1% 3.2% 3.2%
3 TCM 7.0% 51,400 47,850 -52.8% 99.5% 14.8% 28.6 16.9 14.7 6.7% 12.8% 13.5% 4.9% 2.4% 2.4%
4 STK 11.8% 27,500 24,550 -63.8% -42.0% 174.5% 27.8 46.6 17.0 5.5% 3.1% 8.0% 0.0% 0.0% 0.0%

Source: SSI Research

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Consumer Staples – F&B: Cautious sentiment limits growth

2025 Outlook: Neutral

Top pick: MCH/ Trade idea: SAB

2025 Outlook
• 2024 Recap: The F&B sector gained 29% during 2024 due primarily to MCH (239%) and QNS (19%), while VNM (-0.9%), SAB (-3.4%) and
MSN (4.5%) underperformed the VNIndex (+12.1%). Consumers are more mindful of how they spend, i.e. downtrading, postponing purchases,
and only spending on necessities. However, consumers appear to remain comfortable with some discretionary spending on travel and home
and personal care. We note FMCG sales volume growth has returned to positive territory since 2Q24, exhibiting the first sign of consumption
recovery. While most sectors struggled to achieve volume growth, urban dairy and beverage sales witnessed the sharpest drop. This has been
well reflected in the Q1-Q3 ‘24 results of listed companies, where VNM and SAB posted sales growth of 3.5% and 4.6% YoY, respectively.
NPAT growth was 11% and 6% YoY, respectively. VNM achieved these metrics on the back of lower material costs, whereas SAB cut in
marketing expenses. On the other hand, MCH outperformed, with sales and NPAT growth of +11% and 14% YoY, respectively, due largely to
its portfolio of essential necessities, product innovation, convenience, and health benefits.

FMCG growth (YoY) FMCG MAT Q3 2024 (YoY)

8% 7%
6% Urban Rural
9% 9%
10%
4% 3%
8% 2%
2% 1% 1%
6% 0.2% 0%
3% 0%
4% 2%
1% -0.2% -0.1%
2% 1% -2%
-1% -1% -2%
0% -3%
-4%
-2% -4% -6%
-4% -6%
Volume growth ASP growth Sales growth -8%
-6%
Total FMCG Food Beverage Dairy Home care Personal
9M23 9M24 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24
care

Source: Kantar, Nielsen, SSI Research

• 2025 outlook:

✓ Ongoing uncertainty surrounding external conditions makes us believe that consumers will remain price-conscious and prioritize
products with good value. A few recent surveys pointed to improving consumer confidence, but only less than half of households
anticipate a better financial situation within the next 12 months.

✓ As consumers tighten their budgets, demand for staples should recover slowly. Meanwhile, we observe that e-commerce continues to
see robust increases as consumers become familiar with discounts and last-mile delivery. The flush of cheap imports from e-commerce
also adds to the competitive pressure.

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✓ We prefer companies with strong brands that should benefit from structural value share gains due to ongoing product innovation capturing
consumer needs (MCH) and the shift from sub-premium to mainstream products (SAB). Both companies managed to defend (MCH) and
gain (SAB) market share in 2023-2024.

✓ In the milk sector, both local and international players compete aggressively for share.

Vietnam's consumer sentiment

80
mean 2018-19
70
mean 2023-24
60

50

40

30

20

10

0
Oct'23 Nov'23 Dec'23 Jan'24 Feb'24 Mar'24 Apr'24 May'24 Jun'24 Jul'24 Aug'24 Sep'24

Source: Cimigo

• Macro/Policy impact: We note that a few macro factors should directly impact household income: (i) the faster supply chain shift from China
to Vietnam because of tariffs will benefit export and manufacturing and therefore enhancing purchasing power; (ii) the recovery of the real
estate to boost wealth-effect; and (iii) extended VAT cuts and increased public sector salaries. However, we observe that the translation from
income improvement to actual consumption recovery remains weak, as per GSO data. We believe that consumers will choose to increase
savings rather than additional spending.

Retail sales (SA)

VND bn

600,000

500,000

400,000

300,000

200,000
Jul-19

Jul-20

Jul-21

Jul-22

Jul-23

Jul-24
Apr-19

Apr-20

Apr-21

Apr-22

Apr-23

Apr-24
Jan-22
Jan-19

Oct-19
Jan-20

Oct-20
Jan-21

Oct-21

Oct-22
Jan-23

Oct-23
Jan-24

Oct-24

Source: GSO, SSI Research

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For the beer sector, we note that the proposed possible changes to the Decree 100 penalties could have only a minimal impact on beer
consumption. Per the latest proposed revision of the draft decree on administrative penalties for road traffic offenses, there are two major
changes: (i) replacing the license suspension penalty by the penalty point system; and (ii) raising the cash penalty for motorbike riders. For
blood alcohol content (BAC) of less than 0.05% (equivalent to one can of beer within the hours after consumption), the draft decree suggests
six points deduction (12 points deduction equivalent to 1-year license suspension) instead of a one year license suspension. For a BAC over
0.05%, the penalty remains as severe as before. As such, we believe that it will still take some time for drinkers to adapt to the additional
enforcement.

• Top line forecast: Given the aforementioned factors, we forecast a conservative demand recovery for the sector. We expect that the top line
will grow between 4-5% YoY during 2025, except for MCH which we expect will growth 13% YoY. This is all driven by volume growth rather
than price. Between 2019-2023, F&B companies reported top line CAGR between -5% to +2%, versus a CAGR of 11% between 2014-2018.

• Earnings forecast: Key raw material prices have declined YoY or stabilized during 2024, except for imported milk powder (up c.20% YTD) due
to sustained demand from China and concerns that the dry weather in New Zealand could limit output. Other commodities have all fallen in
price, including barley malt (-17% YoY), soybean meal (-28% YoY) and corn (-11% YoY). As F&B companies usually lock prices between 3-9
months in advance, this should serve as a tailwind for GPM expansion at SAB and MCH for next year (at least until 1H25) prior to Trump’s
tariffs and retaliatory measures which could distort trade. We do not bet on further cuts in SG&A spending due to fiercer competition. As a
result, we expect that VNM, SAB and MCH will post 2025 earnings growth of 3%, 10% and 13% YoY, respectively. Between 2019-2023, F&B
companies reported a bottom line CAGR of -5%, as opposed to CAGR of 13% during the 2014-2018 period.

Raw milk powder prices (USD/MT) Global malt prices (USD/MT)

8,000 280
7,000 260
240
6,000
220
5,000 200
4,000 180
160
3,000
140
2,000 120
100
1,000
Jul-21

Jul-22

Jul-23

Jul-24
Apr-21

Apr-22

Apr-23

Apr-24
Jan-21

Jan-22

Jan-23

Jan-24
Oct-21

Oct-22

Oct-23

Oct-24
Jan-20 Jan-21 Jan-22 Jan-23 Jan-24
WMP SMP AMF

Source: GDT, Bloomberg, SSI Research

• Valuation: We witnessed a significant de-rating of the sector in recent years to between 16-20x versus the historical P/E average of between
20-30x. This reflects saturating sales volume for certain companies and a weaker earnings outlook. This is in line with Chinese consumer
staples’ significant de-rating over the 2021-23 period. We maintain a NEUTRAL sector outlook, as we do not see strong catalysts. Nevertheless,
we still apply 16x P/E to 2025 EPS to arrive at our target prices for the shares of VNM and SAB. As for MCH, we believe the stock deserves a
premium P/E of 20x due largely to a sustained earnings CAGR of 9% between 2014-23.

• Recommendation: Our top pick for the sector is MCH, while we recommend SAB for trading ideas for 2025. While there are positive short-
term catalysts for SAB, we have a Neutral view for the stock due to: (i) the zero tolerance law from Decree 100 remains a hindrance to revelers
at drinking establishments, despite income improvement; (ii) consumers may return to mass-premium products as spending recovers; and (ii)
lower profitability due to the proposed increase in special consumption tax set to take effect in 2026.

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Top Pick: Masan Consumer Corporation (MCH: UPCOM)

• 1Y target price: VND 260,000/share

• Investment thesis

✓ Leading R&D capability provides shorter time-to-market innovations to capture rapidly changing consumer needs should enable the
company to maintain and even gain market share.

✓ Premiumization should support margin expansion and sustain double-digit earnings growth.

✓ An upcoming listing on HOSE could improve share liquidity.

✓ A straightforward FMCG business versus MSN’s complicated structure.

• Risks

✓ A slower-than-expected recovery in consumer demand which could pressure sales growth.

✓ Difficulty identifying related party transactions.

Target Price Current Price
% Upside NPATMI Growth P/E ROE Dividend Yield (%)
Ticker (VND) (VND)
in 1yr in 1yr 12/31/2024 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F
MCH 1.00% 260,000 258,000 30.0% 14.0% 13.3% 8.8 23.2 20.4 29.5% 27.2% 24.1% 10.5% 3.9% 0.0%
SAB 18.1% 65,500 55,500 -21.2% 12.5% 10.0% 20.1 15.4 14.0 17.0% 18.8% 20.2% 5.7% 6.3% 6.3%
QNS 14.8% 57,400 50,000 69.7% 7.2% 5.8% 6.4 6.5 6.2 25.4% 22.2% 20.9% 8.7% 7.9% 7.9%
MSN 23.6% 86,500 70,000 -88.3% 352.7% 47.5% 227.9 53.1 36.0 4.9% 9.5% 12.0% 0.0% N.a N.a
VNM 16.2% 73,700 63,400 4.2% 7.7% 2.8% 17.8 15.4 15.0 26.6% 27.4% 27.6% 5.7% 6.1% 6.1%

Source: SSI Research

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Consumer Staples - Fisheries: Volume drives growth

2025 Outlook: Positive

Top pick: VHC

2025 Outlook
• 2024 Recap: The fishery sector gained 10.3%, underperfoming the VNIndex, which rose 12.1% YTD. Despite sales volume achieving
encouraging growth, most listed companies recorded flat or declining NPATMI growth during the first three quarters of 2024 (VHC -5% YoY,
FMC -2% YoY, ANV 0.3% YoY) due to tight margins (lower/flat ASP and higher shipping costs). We noted pangasius exporters outperformed
shrimp exporters with VHC +26%, ANV +33% while MPC -9%, FMC +11%. During the year, the shrimp sector was challenged by the
additional countervailing duty levied by the US Department of Commerce. Despite price weakness, both sub-sectors have achieved significant
volume growth during 2024, especially during 2H24 when monthly export value reached between 70-80% of the monthly peak of 1H22.

Shrimp exports Pangasius exports

100%
500,000 80%
300,000 80%
400,000 60% 60%
40%
300,000 40% 200,000
20%

200,000 20% 0%
100,000
-20%
100,000 0%
-40%

0 -20% 0 -60%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2022 2023 2024 % YoY 2022 2023 2024 % YoY

Source: VASEP, SSI Research

• 2025 Outlook: For 2025, we expect pangasius sales volume growth to be resilient despite the challenges of tariffs due to it fitting within
consumer preference and pricing. Between Jan-Oct ‘24, pangasius import volume into the US surpassed its closest substitute - Chinese tilapia
- for the first time, according the NOAA. We expect this trend to continue through 2025 given the potentially higher tariffs that tilapia is expected
to face. Under our base case, Vietnam should face lower tariffs than China. For shrimp, additional tariffs would have a negative impact on sales
volume, as Vietnamese shrimp ASP is already between 15-20% higher than India and Ecuador.

For the same reason, we expect ASP to remain stable and competitively priced, just in case additional tariffs are imposed.

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US import of shrimp by volume US import volume of tilapia vs pangasius

10M24
2023 10M24 2023

Vietnam China
ECUADOR INDIA INDONESIA VIETNAM OTHERS

Source: NOAA, SSI Research

• Trade policy impact: The fishery sector would be one of the most sensitive sectors to Trump administration tariffs on the Vietnamese seafood
industry, as shrimp and pangasius exports to the US account for nearly 20% of total exports. Under our base case, we assume sector tariffs
(10-20%) to be lower than China’s. In the previous cycle (2026-18) when tilapia faced 20% tariffs vs. 0% for pangasius, demand for pangasius
surged. Although tariffs adversely impact the shrimp sector, we note that FMC recently expanded capacity to focus more on value-added
products to the Japanese market. We have a positive view on the sector’s outlook, and expect that sales volume will continue to drive growth.
This is also backed by the temporary front-loading export orders from wholesalers prior to tariffs being configured. The dollar index should
remain strong, leading to most export companies recording net FX gains (VHC and FMC), except for those who have large USD-denominated
loans, like ANV.

• Top line forecasts: For 2025, we expect companies in our coverage universe to post sales growth of between 10-16% (VHC w/ 14.2% YoY,
FMC w/ 16.4% YoY and ANV w/ 13% YoY) driven by sales volume. We expect that pangasius sales volume to the US will remain resilient,
largely due to more competitive pricing compared to Chinese tilapia. We assume that VHC’s sales volume will advance 10% YoY. Sales for
ANV remain challenging in the Chinese market due to slow consumption recovery. Meanwhile, export volume to the US has not improved since
the company was exempted from the anti-dumping taxes two years ago. Sales to the US continue to account for under 5% of total sales of
ANV. For FMC, capacity expansion drives growth, as we expect the company will focus on developing the Japanese market.

Pangasius ASP Fish material and fingerling prices (VND/kg)

USD/kg
6.0 35,000 55,000
5.0 30,000 45,000
4.0
25,000
3.0 35,000
20,000
2.0 25,000
15,000
1.0
10,000 15,000
-
5,000 5,000
Jul-21

Jul-22

Jul-23

Jul-24
Apr-21

Apr-22

Apr-23

Apr-24
Jan-21

Oct-21
Jan-22

Oct-22
Jan-23

Oct-23
Jan-24

Oct-24

1/21
4/21
7/21

1/22
4/22
7/22

1/23
4/23
7/23

1/24
4/24
7/24
10/21

10/22

10/23

10/24

US China Fish material (LHS) Fingerling (RHS)

Source: Agromonitor, VASEP, SSI Research

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Vanamei export prices to the US (USD/kg) Shrimp mateiral prices (VND/kg)

18.0 120,000
16.0
110,000
14.0
12.0 100,000
10.0
90,000
8.0
6.0 80,000
4.0
2.0 70,000

- 60,000
Jul-21

Jul-22

Jul-23

Jul-24
Apr-21

Apr-22

Apr-23

Jan-24
Apr-24
Jan-21

Jan-22

Jan-23
Oct-21

Oct-22

Oct-23

Oct-24

1/22
3/22
5/22
7/22
9/22

1/23
3/23
5/23
7/23
9/23

1/24
3/24
5/24
7/24
9/24
11/22

11/23

11/24
Source: VASEP, SSI Research

• Earnings forecasts: We forecast VHC to have a NPATMI of 28% YoY, as we expect ASP to gradually improve from USD 3.15/kg during 2024
to USD 3.30/kg (+5% YoY) for 2025. NPATMI for ANV, on the other hand, is expected rebound 104% YoY due to a recovery in the Chinese
market (very low base and accounts for 20% of sales) as well as other markets (70% of sales). For FMC, we expect an NPATMI of 15% YoY,
as we assume a flat GPM and SG&A/sales reflecting our belief that shipping costs will remain elevated and the recording of a countervailing
duty from 3Q24.

• Valuation: The sector is trading at 2025 P/E of 11x, higher than its historical average P/E of 9x and lower than the peak of 15x when pangasius
ASP reached USD 5.00/kg (peak and c.30% higher than current prices). We observe that the sector’s valuation and share price are highly
correlated to ASP movement. As we do not expect a surge in ASP next year, we apply a target P/E of between 10-11x of our 2025 EPS to
arrive our target prices.

• Recommendation: Our top pick for the sector is VHC.

Top Pick: Vinh Hoan Corporation (VHC: HOSE)

• 1Y target price: VND 81,300/share

• Investment thesis
✓ VHC has a dominant position in the US market, with an over 40% share of pangasius market.
✓ Verified historical track record of earnings outperformance of peer.
✓ VHC continued to invest in different business lines (domestic sales, feed, collagen and gelatin) to diversify during periods of export decline.
• Risks
✓ The tariff differential gap between Vietnam and China could be lower than expected.
✓ Lower-than-expected pangasius prices.
Target Price Current Price
% Upside NPATMI Growth P/E ROE Dividend Yield (%)
Ticker (VND) (VND)
in 1yr in 1yr 12/31/2024 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F
VHC 15.2% 81,300 70,500 -53.5% 24.3% 28.3% 18.8 13.9 10.8 12.0% 14.6% 16.6% 2.6% 2.8% 2.8%
FMC 6.4% 50,000 47,000 -10.7% 1.6% 15.2% 10.7 11.0 9.5 13.9% 14.0% 14.9% 4.4% 4.3% 4.3%
ANV -6.5% 18,500 19,800 -93.8% 82.3% 103.9% 98.9 69.1 33.9 1.5% 2.6% 5.4% 1.6% 3.0% 3.0%

Source: SSI Research

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Oil&Gas: Earnings growth divergence to persist despite anticipated lower oil price in 2025
2025 Outlook: Neutral

Top pick: PVD. Watch: PLX, BSR

2025 Outlook
Oil and gas

According to the most recent OPEC forecast, global oil demand is expected to rise 1.6 mn bbl/day during 2025, slowing decelerating from an
increase of 1.61 mn bbl/day during 2024 (which was lowered from the original forecast of 1.82 mn bbl/day last month).

The IEA takes a more conservative stance with global oil demand Brent oil price (USD/bbl)
growing 1.1 mn bbl/day to 103.9 mn bbl/day. However, supply is
expected to grow at a higher rate of 1.9 mn bbl/day for 2025 to 104.8 90
mn bbl/day driven by an increase of 1.5 mn bbl/day from non- 85
Opec+ countries, especially in the Americas, including the US,
80
Canada, Brazil, and Argentina. This has not included a reversal of the
75
OPEC+ production cut of 2.2 mn bbl/day, which was recently
70
delayed another three months and extended the progress by nine
months to Sept 2026. 65

60
As a result, we expect average oil prices to range between USD 70
-75/bbl for 2025. The catalyst for oil prices includes a further delay 55

of the OPEC+ reversal of its production cut, a better-than-expected

Chinese recovery, and/or a faster-than-expected cut in interest rates.

Source: Bloomberg

Update on key investment projects

LNG terminals: The feasibility study for the Thi Vai expansion phase has been approved, which should triple the capacity of Thi Vai terminal capacity.
Completion is expected during 2026.

The feasibility study for LNG Son My project in Binh Thuan province has been approved. The first phase of the project is expected to have a capacity
of 3.6 mn tons and be completed during 4Q27. The second phase is expected to have a larger capacity of 6mn tons and could commence operation
before 2030.

Su Tu Trang (ENG: White Lion), phase 2B: GAS is still working with PVN and gas field owners to develop the project to complete the financial
statement/feasibility studies.

Expansion phase Dung Quat: BSR has finished the land compensation process, and expects to complete the technical design – FEED, and select
EPC general contractors during 2025. The project will increase BSR’s capacity by 15.5% from 148,000 bbl/day to 171,000 bbl/day to satisfy the
Euro B standard.

Block B – O Mon mega project: PQOC (the company owning the upstream part of the project) has already awarded multiple EPC contracts for
most of the components of the upstream parts and midstream parts (including wellhead platform, living quarter and CPP, pipeline and pipe coating)

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to PVS VN (along with its partners) and PVB VN. At the time of writing, EPCI #1 and EPCI #2 have reached 12.8% and 24.4% of the construction
progress. Drilling works are also expected to start from 1Q 2026, so bidding and contracting for drilling would need to finalize in 2025. The
downstream part (electricity plants O Mon II, III, IV) has not begun construction, and the final investment decision (FID) for the project has not been
determined by PVN despite MOECO (one of the investors in the upstream part along with PVN and PTTEP) announcing FID during 2024. If the
downstream portion is delayed despite the first gas extraction expected for 2027, the entire project would need to wait beyond 2027 before delivering
electricity to the national grid system.

The divergence of earnings growth in 2023 continued during 2024 in line with expectation, as it continued to be a year of divergence for oil and
gas stocks. Midstream names like GAS and BSR posted weaker profits/losses due to a decline in: (1) sales volume associated with the depletion
of outstanding fields (for GAS), and the suspension of a plant for scheduled maintenance (for BSR); and (2) a lower sales price. PVS also posted
flat earnings growth due to the lower margin from international EPC contracts for both traditional oil&gas and offshore wind farms compared to
domestic oil&gas contracts. On the other hand, PVD grew, due to the strong improvement in utilization and day rates from the renewal of drilling
contracts under more favorable market conditions. Meanwhile, PLX grew from the increase in volume through the retail channel.

The performance of mid-stream stocks closely tracked earnings. PLX outperformed the market with an 18% increase, while GAS underperformed,
with its price remaining flat in 2024. Upstream stocks like PVS and PVD, however, declined by 10-15% in 2024 after soaring by 60-80% in 2023,
as the progress of Block B was slower than expected.

During 2025, despite the expectation of a decline in oil prices, we expect the earnings outlook to be better than 2024 due to improved E&P
activities. BSR’s earnings are expected to increase 73% YoY to VND 3.1 tn due to a sales volume recovery of 15% YoY after the maintenance during
2024, and the stabilization of the crack spread after the closure of some refinery capacity in the global market. PLX should also achieve single-digit
earnings growth given the 4% organic sales volume growth. On the other hand, we expect GAS to have flat earnings, as the increase in LNG volume
could offset the depletion of traditional gas fields.

On the other hand, upstream companies, such as PVD and PVS, should be able to maintain their growth momentum due to vibrant E&P. These
names are also key beneficiaries of the Block B project. PVD is forecast to maintain strong growth in the industry at around 50% YoY due to a solid
utilization rate and a 10% YoY higher day rate for oil jack-up rigs. PVS is also expected to see 20% YoY growth during 2025 due to strong income
from its EPC contracts for Block B upstream part at an estimated total contract value of around $1 bn.

Southeast Asia Day Rate Volume from key gas basins (bn m3/year) Sales volume

Southeast Asia Jackups 361-400 IC 12,000

5
Average Day Rate vs Total contracted Utilization
4.5 11,000
160000 100 4 10,000
140000 90 3.5 9,000
80 3
120000 8,000
70
100000 2.5
60 7,000
80000 50 2
6,000
40 1.5
60000
30 1 5,000
40000
20 0.5 4,000
20000 10 2019 2020 2021 2022 2023 2024E 2025F
0
0 0
2021 2022 2026F 2027F 2030F
Petroleum - BSR (ths tons)
Aug-24
Oct-24
Sep-21

Sep-22

Sep-23
May-22

May-23

May-24
Jan-22

Jan-23

Jan-24

Cuu Long Nam Con Son 1 Petroleum - PLX (ths tons, m3)

Day rate ($) Utilization (%) Nam Con Son 2 PM3 Dry gas (including LNG)- GAS (mn m3)

Source: SSI Research Source: PVN, GAS, SSI Research

Valuation: The current forward PE of oil and gas is 12.5x, lower than its 5-year average of 13.5x. This is attributed to the slowdown in industry
volume and earnings growth and deceleration of profits/losses of the largest-cap stocks, such as GAS and BSR. There should be a mix of factors

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during 2025, with the decline of oil prices and the expectation of Block B and sales volume growth. As a result, we expect that there could be some
trading opportunities if share prices drop to more attractive levels.

Recommendation: PVD is our top pick, while we closely monitor PLX.

Target Price Current Price
% Upside NPATMI Growth P/E ROE Dividend Yield (%)
Ticker (VND) (VND)
in 1yr in 1yr 12/31/2024 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F
GAS 15.8% 79,000 68,100 -21.7% -4.8% -4.5% 17.5 14.8 15.5 18.6% 16.7% 14.7% 3.4% 4.4% 4.4%
PVS 17.6% 40,000 33,960 3.7% -6.6% 22.8% 27.0 24.2 17.3 8.0% 7.6% 8.8% 2.4% 2.4% 2.4%
PVD 21.1% 28,700 23,700 n.m. 24.5% 50.1% 23.2 19.6 13.1 3.8% 5.1% 7.3% 0% 0% 4.4%
PLX 17.3% 44,000 37,500 61.8% 16.2% 9.7% 15.8 15.0 13.7 10.8% 12.0% 12.7% 4.3% 5.2% 5.2%
BSR 5.3% 24,000 22,800 -42.4% -79.0% 85.4% 6.8 38.9 21.0 15.6% 3.1% 5.7% 3.8% 3.3% 2.4%

Source: SSI Research

Top Pick: PetroVietnam Drilling and Well Service Corporation (PVD: HOSE)
• 1Y target price: VND 28,700/share

• Investment thesis

✓ PVD is a state-owned drilling company, currently owning four jack-up rigs, one semi-submersible, and one land rig. The company is
planning to invest 1-2 more jack-up rigs between 2025-2026, which offers the potential for long-term growth.

✓ Southeast Asia is forecast to reach its peak during 2H2026, giving PVD opportunities to secure contracts at good days rate between 2028-
2030.

✓ 2025 and 2026 NPATMI is forecast to grow 50% and 23% YoY, respectively.

• Risks

✓ Oil prices under USD 60/bbl can lead to cancellations/delays of current drilling campaign in SEA

✓ USD appreciation.

Watch:

1. Vietnam National Petroleum Group (Petrolimex, PLX: HOSE)

• 1Y Target price: VND 44,000/share

• Investment thesis:

✓ Earnings can increase nearly 10% during 2025 due to sales volume growth of 4% from the retail channel during 2025. The finalization of
the new decree in the petroleum business during 2025 should be supportive to the shares of PLX.

✓ Attractive valuation compared to the overall market and stock’s historical range.

• Risk

✓ A significant decline in oil prices can have a negative short-term impact on the company’s profit margin, such as it did for 3Q24.

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2. Binh Son Refinery and Petrochemical Company (BSR: UPCOM)

• 1Y Target price: VND 24,000/share

• Investment thesis:

✓ 2025 sales volume can recover by 15% YoY compared to the low base in 2024 as the company took a periodic maintenance in 2Q24.

✓ Earnings can rebound by 85% in 2025 thanks to the stabilization of crack spread.

✓ The listing transfer to HOSE in Jan can support stock price.

• Risk

✓ The fluctuation of oil price and crack spread can result in high volatily in the company’s earnings.

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Financials - Banking: A ray of sunshine

2025 Outlook: Positive

Top picks: CTG, TCB, VCB, ACB

2024 sector performance: OUTPERFORM thanks to profits recovery.

Industry performance in 2024

Banking stocks surged 22% YoY during 2024, outperforming the VN
Index (12.1%). The income generating capacity improvement has 25%

supported stock prices, especially during 1H24 when NIM revised. 20%
Best performers included LPB (+132%), TCB (+60%), HDB
15%
(+57%), CTG (+39%) and MBB (+38%).
10%
Our top picks for 2024 generated a solid return during 2024 with CTG
(+39%), ACB (+29%), as well as VCB (+14%). 5%

0%

VNIndex Financials Banking

Source: SSI Research

2025 Outlook
Despite the macroeconomic challenges, we expect that 2025 will provide greater economic opportunities than 2024 especially in terms of public
investment activities and the recovery of the real estate market. Further, timely regulatory assistance should allow the banks to support the borrowers
and have more flexible provisioning. However, we believe that rivalry amongst banks, particularly JSCBs, will remain severe during 2025. Given the
gradual rise in deposit rates after a historic low, we project that NIMs will be under pressure at JSCBs yet rebounding marginally at SOCBs. However,
asset quality improvement should be the main theme for the banking sector during 2025. In general, we hold a positive view on the banking
sector with an expected PBT growth of 17.4% YoY during 2025 for our bank coverage.

New catalysts for credit growth: Over the past four years, the Vietnamese market faced a slew of obstacles, including pandemic-related distortions
in manufacturing and services activity, a corporate bond crisis, and real estate freeze. Such turbulent conditions resulted in lower-than-expected
loan demand and consumption. Short-term loans for working capital in business commerce, the manufacturing sector, and the FDI zone were the
primary credit drivers during the first three quarters of 2024. Further, we see a significant increase in short-term lending to securities brokers at
numerous private banks, including MBB, TCB, VPB, HDB, MSB, TPB, and VIB, with a total disbursement of at least VND 27.6 tn. However, we have
seen a credit demand rebound since late 2Q24, with a greater concentration in construction and real estate, particularly in the northern VN market.
In particular, new condominium launches in Hanoi reached 18,800 units (+292% YoY), with prices climbing 26% YoY at 3Q24. We believe that
keeping mortgage rates low (Table 1) is critical for homebuyers to acquire new homes. This increased total transactions to over 20,000 in Hanoi
during the first three quarters of 2024. Mortgage loans increased 7.2% YTD, with the majority in BID (VND 36.7 tn YTD), TCB (VND 22.5 tn YTD),
MBB (VND 13.8 tn YTD), and ACB (VND 10.1 tn). The improvement of the property market is expected to expand to HCM from 4Q24. With such
conditions, we project credit growth to rebound to 15.3% YTD for coverage banks in 2024.

GDP growth during 2025 is expected to be like 2024 (about 7.0%) under our base case, but it may not be limited to that range if positive surprises
occur. The Prime Minister has been advocating an 8% GDP target for next year, which implies high determination from the Government to revise

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the economy. Loans to property developers remained a key driver at the end of 3Q24, up 16% YTD, while mortgage loans increased only 4.6% YTD.
Given the greater supply in 2025 (Table 2) and low mortgage rates, we predict that the retail sector will revise, particularly mortgage debts, at a
time when the Vietnamese central government has demonstrated resolution in resolving legal issues relating to property projects. As a result, credit
growth is estimated to reach 16% YTD for 2025.

Table 1: Mortgage rate as of November 2024 Table 2: New launched condos in 4Q24 and 2025F

Source: SSI Research

Chart 1: Credit & deposit growth Chart 2: Disbursements by loan tenure (VND tn)

20.0% 399
18.0% 326

16.0%
239
209
14.0% 179
165 171
130
12.0% 110 97
73 72 68
10.0%
4
8.0%
2017 2018 2019 2020 2021 2022 2023 2024F 2025F 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24

Credit growth Deposit growth Short-term loans Medium and long-term loans

Source: SSI Research

NIM – Great times go by fast: NIM shone during 1H24 (+7bps YTD to 3.62%) when deposit rates repriced at lower rates (-117 bps YoY). Asset
optimization was also the radical element, supporting NIM during 1H24. At the end of 2Q24, LDR hit the all-time high level at 97.2% (Chart 3) before
cooling down to 96.4% in 3Q24. NIM dropped -22 bps QoQ to 3.47% in 3Q24 due to the gradual rise in deposit rates as well as intense
competition, compressing asset yield by -21 bps QoQ. As credit demand is usually strong during the fourth quarter, we believe that banks are
motivated to fortify liquidity, which will limit LDR expansion. Given that the intense competition will continue, we believe NIM will be under
pressure in 4Q24, achieving 3.48% (-7bps YoY) for FY2024.

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For 2025, monetary policy should remain flexible and moderate as the central bank commits to providing sufficient liquidity, while keeping a close
eye on exchange rate pressure. As such, we project that the 12-mo. deposit rate will increase moderately during 2025, which will lift funding costs
up 17 bps YoY. With the competitive edge of funding costs, we believe that SOCBs will face less pricing competition than JSCBs. Therefore, we
project that NIMs will remain flat YoY at 3.48% but be differentiated from SOCBs (+5 bps YoY to 2.77%) and JSCBs (-7 bps YoY to 4.24%)
during 2025.

Chart 3: Limited room for LDR expansion Chart 4: NIM will be under pressure in near-term

98% 4.3% 9% 4.2%

96% 4.1% 8%
4.0%
3.9% 7%
94%
6% 3.8%
3.7%
92% 5%
3.5% 3.6%
90% 4%
3.3%
3% 3.4%
88%
3.1% 2%
86% 3.2%
2.9% 1%
84% 2.7% 0% 3.0%

1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24
82% 2.5%
1Q18
3Q18
1Q19
3Q19
1Q20
3Q20
1Q21
3Q21
1Q22
3Q22
1Q23
3Q23
1Q24
3Q24

Average funding costs - LHS Average asset yields - LHS

LDR - LHS NIM - RHS NIM - RHS

Source: SSI Research

Chart 5: 12M deposit rates picked up since 2Q24 from the Chart 6: NIM improvement starts from SOCBs while JSCBs’ NIM is
historical low level still under pressure

11% 5.50%
10% 5.00%
9%
4.50%
8%
4.00%
7%
3.50%
6%
5% 3.00%
4% 2.50%
3% 2.00%
1-Jan-18

1-Jan-23
1-Nov-18

1-Oct-21
1-Mar-22

1-Nov-23
1-Jul-20

1-May-21

1-Aug-22

1-Sep-24
1-Jun-18

1-Apr-19
1-Sep-19

1-Dec-20

1-Jun-23

1-Apr-24
1-Feb-20

SOCBs JSCBs SOCBs Tier 1 JSCBs Others

Source: SSI Research SOCBs: VCB, BID, and CTG

Tier-1 JSCBs: ACB, STB, VPB, MBB, and TCB
Others: HDB, TPB, VIB, MSB, and OCB
Asset quality – positive with caution: After soaring to 2.12% at 2Q24, NPL formation rates decreased significantly across banks coverage to
1.22% during 3Q24, excepting for OCB, MBB, TPB, and VIB. During the first three quarters of 2024, banks under our coverage wrote off VND
73.3 tn of bad debts, mainly from VPB (VND 19.4 tn), CTG (VND 17.4 tn), BID (VND 15.9 tn) and MBB (VND 7.1 tn), accounting for 0.84%
customer loans, which was the largest amount recorded. Despite such an aggressive purge of bad debt, the NPL ratio remained high, hovering
at 2% at 3Q24, which was diversified into different segments such as materials, construction, real estate (developers and mortgage), trading and

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manufacturing. We think that the ability of debt settlement remains weak, which has negatively impacted debt collection. However, we believe that
bad debt clearance will accelerate during 4Q24, leading to a reduced NPL ratio of 1.9% at 2024. Interestingly, credit costs were much smaller
than the NPL formation rate since 3Q22 (Chart 8), which should trigger higher credit provisions. However, kicking the can down the road has been
the theme since late 2022, with multiple policies through 2024 enabling more time for banks to smooth out provisions and deal with bad debt
formation. We project that credit costs will decrease -9 bps YoY to 1.28% during 2024.

Chart 7: NPL formation rates vary among banks Chart 8: Credit costs were below NPL formation rates since 3Q22

70,000 3.00%
60,000
2.50%
50,000
2.00%
40,000
30,000 1.50%

20,000 1.00%
10,000
0.50%
-
0.00%
(10,000)

1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24
4Q19
1Q20
2Q20
3Q20
4Q20
1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24

SOCBs Tier-1 JSCBs Tier-2 JSCBs Others Industry Credit costs NPL formation rate

Source: SSI Research

Chart 9: Bad debts written-off hit record high during Q1-Q3 ‘24 Chart 10: Loss coverage ratio is reducing to pre-covid level

45 2.6% 200% 2.2%

40 2.4% 180%
160% 2.0%
35 2.2%
140% 1.8%
30 2.0%
120%
25 1.8%
100% 1.6%
20 1.6%
80%
15 1.4% 60% 1.4%
10 1.2% 40% 1.2%
5 1.0% 20%
- 0.8% 0% 1.0%
1Q19 3Q19 1Q20 3Q20 1Q21 3Q21 1Q22 3Q22 1Q23 3Q23 1Q24 3Q24 1Q19 3Q19 1Q20 3Q20 1Q21 3Q21 1Q22 3Q22 1Q23 3Q23 1Q24 3Q24

Loss coverage ratio NPL ratios

Write-offs (VND tn) NPL ratio NPL ratio before write-off

Source: SSI Research

The government is determined to address the backlog of difficulties in the real estate sector. As a result, we expect that several unsolved legal
projects will be resolved and rebuilt during 2025. This should allow banks to persuade homebuyers to continue to serve their obligations. However,
it is vital to emphasize that the underlying issue is real estate developer cash flow and the trust of existing and prospective homebuyers. If developers
continue to fail to issue sale & purchase contracts and/or handover project houses on schedule, we think that retail bad debt is bound to escalate.
However, under the base case scenario, we still believe that the recovery of the northern VN real estate market and launch of many new
projects (Table 1) with full legal status in the next year, will improve market sentiment and attract new investment – especially in southern
VN. Overall, we expect the NPL ratio to vary during the first half of 2025, before progressively improving to 1.78% during 2H25.

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Chart 11: Risk buffer is not enough to cover trouble loans Chart 12: NPL ratio by sub-groups under coverage

16% 2.50%
14% 3.0%
12% 2.00%
2.5%
10%
2.0% 1.50%
8%
1.5%
6% 1.00%
4% 1.0%
2% 0.50%
0.5%
0%
0.0% 0.00%
VCB BID CTG ACB MBB TCB VPB STB HDB TPB VIB MSB OCB

SOCBs JSCBs
NPL, restructured & Group 2 loans NPL and restructured loans SOCBs Tier 1 JSCBs Others NPL ratios - RHS
Aggregate provision

Source: SSI Research SOCBs: VCB, BID, and CTG

Tier-1 JSCBs: ACB, STB, VPB, MBB, and TCB
Others: HDB, TPB, VIB, MSB, and OCB

Non-NII recovered 11.8% YoY during the first three quarters of 2024 due to the write-back of income (+65.7% YoY) and forex trading income
(+12.6% YoY). During Q1-Q3 ‘24, banks made a great effort to collect bad debt overall amid the gradual recovery of the real estate market.
Particularly, we observed that banks that operate mainly in northern VN witnessed greater recovery income, including SOCBs MBB, TCB, VPB, MSB,
and TPB. We expect recovery income will continue through 2025. The continuous rise of the USD/VND during 1H24 has enabled banks to increase
forex trading income 50.6% YoY. Although this income decreased -39.5% YoY during 3Q24 due to the exchange rate weakening in anticipation of
a Fed rate cut, we predict that it will recover in 4Q24, a time when the exchange rate increased significantly.

On the other hand, banks realized large gains from trading govt bonds during 2023 to support earnings (VND 12.1 tn or 2.4% of TOI). This is not
likely to repeat during 2024. During the first three quarters of 2024, bond trading income decreased roughly -20% YoY. NFI increased +4.7% YoY
during 1H24 mainly due to trade finance and the revival of card services, while bancassurance income remained low. However, the new law on
credit institutions came into effect during July 2024 counting LC as a credit activity, and banks must reclassify trade finance fees as interest income.
As such, fee-based earnings decreased modestly -0.4% YoY during Q1-Q3 ‘24 which could continue through 4Q24.

Chart 13: Non-NII structure Chart 14: Exchange rate movement

14 26000
24% 22% 20% 24%
32% 32% 30% 12 25500
36%
11% 7% 10 25000
17% 16% 4% 24500
15% 11%
12%
15% 19% 21% 8
13%
12% 24000
10% 11% 12% 6
23500
4 23000
46% 50% 51% 50% 48% 2 22500
43% 42% 44%
0 22000
Jul-21

May-22

Mar-23
Aug-23
Jun-19

Apr-20
Sep-20

Dec-21

Jun-24
Feb-21
Jan-19

Nov-19

Oct-22

Jan-24

Nov-24

2017 2018 2019 2020 2021 2022 2023 9M24

NFI Fx trading Investment trading Others VND O/N rate USD O/N rate USDVND (RHS)

Source: SSI Research Source: SSI Research

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Investment thesis
Banks under our coverage are trading at a 2025 P/B of 1.1x vs. average P/B of 1.59x since 2017, largely reflecting the potential credit risk related
to the market turbulence. Although we believe that the risk from project mortgage loans is not fully priced in, we expect that the government support
will gradually mitigate the negative impact.

Table 3: Forecast summary

Source: SSI Research

At the early stage of this economic recovery, we favor banks which have a competitive edge in funding costs. This should preserve NIMs and
capture more market shares at the time when credit demand is gradually recovering. Further, we believe that banks with strong asset quality amid
the timely regulatory support will reduce provision pressure. Key beneficiaries include VCB, CTG and ACB. In addition, we believe that the property
market recovery, focusing on projects with healthy legal status, will be a positive catalyst for TCB.

On the other hand, the Vietnamese government’s determination in resolving legal issues and revitalizing un-finished projects should improve
sentiment and customer trust in the property market, which we expect to gradually flow to southern Vietnam. As such, we put HDB, VPB, and MBB
on our trading list. BID is also our trade idea, as we expect the new capital from the upcoming private placement to be very supportive.

Chart 16: Historical PB under coverage Chart 17: Valuation bank under coverage

2.80
2.60 5.00
2.40
2.20 4.00

2.00
3.00
1.80
1.60
2.00
1.40
1.20
1.00
1.00
-
VCB VIB* BID HDB* ACB VPB TPB* TCB* OCB* MSB* MBB CTG STB

P/B Average +1 std -1 std Min & Max (2017-Now) Current P/B 5Y average

Source: SSI Research

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Top pick: CTG, TCB, VCB, ACB

1. Vietnam Joint Stock Commercial Bank for Industry and Trade (CTG: HOSE)

Current price (31-Dec-2024): VND 37,800; 1Y target price: VND 44,200

• Investment thesis:

✓ Lighter credit costs: Given the VND 85 tn in aggregate bad debt written off since 2019, we expect that the bad debt clearance process
could be completed during 2024, enabling CTG to drastically reduce credit costs to 1.27% during 2025 and optimize its lending structure
over the medium-term.

✓ Fundamental improvement across every aspect: A turnaround in profit is expected to begin during 2025, supported by lighter credit
costs (-50 bps YoY) and a better NIM (4 bps YoY). Accordingly, PBT is estimated to reach VND 39 tn (35.3% YoY) with ROE increasing
to 20% during 2025, making the forward P/B of 1.15x even more attractive.

✓ A more visible solution for CAR is expected from 2026.

• Investment risks:

✓ Longer-than-expected period of heavy provisioning.

✓ Weaker-than-expected NIM.

✓ Absence of a feasible solution for raising capital.

• Table of financial summary

2021 2022 2023 2024F 2025F

TOI (VND bn) 53,157 64,117 70,548 80,081 88,318
TOI growth (%) 17.3% 20.6% 10.0% 13.5% 10.3%
PBT (VND bn) 17,589 21,132 24,990 28,823 39,003
PBT growth (%) 3.0% 20.1% 18.3% 15.3% 35.3%
Credit growth (%) 11.1% 12.1% 15.5% 13.9% 13.9%
Deposit growth (%) 16.8% 9.3% 13.9% 13.2% 14.8%
Pure LDR (%) 93.1% 95.5% 96.9% 97.5% 96.8%
NIM (%) 3.01% 2.98% 2.86% 2.90% 2.94%
CIR (%) 32.3% 29.9% 29.0% 29.0% 30.0%
NPL (%) 1.26% 1.24% 1.1% 1.50% 1.40%
LLCR (%) 180.4% 186.1% 167.2% 131.4% 142.3%
ROA (%) 0.8% 0.8% 0.8% 0.9% 1.0%
ROE (%) 12.67% 16.82% 17.1% 17.2% 20.0%
BVPS (VND) 19,487 22,539 23,440 26,905 31,597
EPS (VND) 2,360 2,835 2,984 3,466 4,691
P/E 13.67 9.61 9.42 10.91 8.06
P/B 1.65 1.21 1.20 1.40 1.20

Source: SSI Research

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2. Vietnam Technological and Commercial Joint Stock Bank (TCB: HOSE)

Current price (31-Dec-2024): VND 24,650; 1Y target price: VND 28,700

• Investment thesis:

✓ After the real estate market crisis, homebuyers favor project houses with healthy legal status, which should benefit TCB. With a stable
NPL ratio (1.2%) and lower credit costs (0.73%), pretax profit is projected to reach VND 32 tn (+15.2% YoY) during 2025. ROE
should be maintained at around 16% with a resilient CAR of 15%. However, the recovery should be more visible in 2026 with PBT
growth of 24.8% YoY thanks to NIM recovery (+10bps YoY) and lighter credit costs (-24bps YoY).

✓ A potential IPO of TCBS.

• Investment risk:

✓ Lower-than-expected NIM

✓ Slower-than-expected property market recovery.

• Table of financial summary

2021 2022 2023 2024F 2025F

TOI (VND bn) 37,076 40,902 40,061 48,703 54,709
TOI growth (%) 37.1% 10.3% -2.1% 21.6% 12.3%
PBT (VND bn) 23,238 25,568 22,888 27,819 32,061
PBT growth (%) 47.1% 10.0% -10.5% 21.5% 15.2%
Credit growth (%) 26.5% 12.5% 21.6% 18.5% 18.4%
Deposit growth (%) 14.1% 12.6% 37.4% 19.0% 19.3%
Pure LDR (%) 117.7% 117.6% 104.0% 103.6% 102.8%
NIM (%) 5.71% 5.29% 4.02% 4.18% 4.15%
CIR (%) 30.1% 32.8% 33.1% 32.5% 32.3%
NPL (%) 0.66% 0.72% 1.16% 1.20% 1.20%
LLCR (%) 162.9% 157.3% 102.1% 106.7% 106.5%
ROA (%) 3.58% 3.18% 2.33% 2.42% 2.44%
ROE (%) 21.5% 19.5% 14.7% 15.7% 15.9%
BVPS (VND) 26,264 31,927 36,994 20,850 23,906
EPS (VND) 5,146 5,739 5,111 3,119 3,598
P/E 10.34 4.50 6.22 7.90 6.85
P/B 2.03 0.81 0.86 1.18 1.03

Source: SSI Research

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3. Bank for Foreign Trade of Vietnam (VCB: HOSE)

Current price (31-Dec-2024): VND 91,200; 1Y target price: VND 120,000

• Investment thesis:

✓ Growth to starting late 2024-25, with 2025 PBT growth of +14.9% YoY. As VCB did not sacrifice asset quality for growth, its earnings
capacity was low. Over the long run, we believe that this approach has paid off in the form of a clean balance sheet with high quality
assets. The bank should benefit once real credit demands returns.

✓ The issuance of 6.5% pre-money charter capital should support medium-term growth. If successful, we estimate that the CAR ratio will
improve by approx. 200 bps.

• Investment Risks:

✓ Slower-than-expected recovery in credit growth.

• Table of financial summary

2021 2022 2023 2024F 2025F

TOI (VND bn) 56,711 68,083 67,723 69,249 78,019
TOI growth (%) 15.6% 20.1% -0.5% 2.3% 12.7%
PBT (VND bn) 27,376 37,368 41,244 44,119 50,675
PBT growth (%) 18.8% 36.5% 10.4% 7.0% 14.9%
Credit growth (%) 15.1% 18.9% 10.8% 13.0% 14.0%
Deposit growth (%) 9.4% 10.1% 11.6% 7.4% 11.3%
Pure LDR (%) 84.4% 91.2% 90.5% 95.2% 97.5%
NIM (%) 3.16% 3.40% 3.01% 2.94% 2.98%
CIR (%) 31.0% 31.2% 32.4% 30.4% 30.0%
NPL (%) 0.64% 0.68% 1.0% 1.15% 1.05%
LLCR (%) 424.4% 317.4% 230.3% 181.2% 183.8%
ROA (%) 1.6% 1.9% 1.8% 1.8% 1.9%
ROE (%) 21.3% 24.2% 21.7% 19.2% 17.2%
BVPS (VND) 30,943 29,422 30,156 35,603 44,438
EPS (VND) 3,522 4,761 5,097 5,449 6,253
P/E 22.38 16.80 15.76 16.74 14.59
P/B 2.55 2.72 2.66 2.56 2.05

Source: SSI Research

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4. Asia Commercial Joint Stock Bank (ACB: HOSE)

Current price (31-Dec-2024): VND 25,800; 1Y target price: VND 31,000

• Investment thesis:

✓ Resilient asset quality, with an NPL ratio hovering at 1.4% during 2025. Balance sheet fortified by conservative lending practices, no
corporate bonds, minimum exposure to developers (4%-5%), and creditworthy customer portfolio.

✓ As ACB dominates the southern VN retail market, the bank can use its competitive funding cost advantage to capture more clients during
2025. Despite the NIM not improving early on during 2025, we believe that market share gains are more important for medium- and long-
term growth.

✓ PBT growth is expected to reach 15.3% YoY for 2025, while ROE ranks amongst the highest under coverage and could be maintained
above 20% over the mid-term.

• Investment risks:

✓ Slower-than-expected economic recovery.

✓ Higher-than-expected NPL formation.

• Table of financial summary

2021 2022 2023 2024F 2025F

TOI (VND bn) 23,564 28,790 32,747 34,274 39,163
TOI growth (%) 29.7% 22.2% 13.7% 4.7% 14.3%
PBT (VND bn) 11,998 17,114 20,068 21,101 24,327
PBT growth (%) 25.0% 42.6% 17.3% 5.1% 15.3%
Credit growth (%) 16.2% 14.3% 17.9% 18.0% 19.0%
Deposit growth (%) 9.4% 11.6% 16.8% 16.9% 17.7%
Pure LDR (%) 88.2% 90.3% 91.1% 92.0% 93.0%
NIM (%) 4.06% 4.30% 3.91% 3.80% 3.73%
CIR (%) 34.9% 40.3% 33.2% 33.1% 33.4%
NPL (%) 0.77% 0.74% 1.2% 1.50% 1.40%
LLCR (%) 209.4% 159.3% 91.2% 77.9% 79.9%
ROE (%) 23.9% 26.5% 24.8% 21.8% 21.3%
ROA (%) 1.98% 2.41% 2.4% 2.2% 2.1%
BVPS (VND) 16,618 17,303 18,269 18,795 22,152
EPS (VND) 3,554 4,053 4,131 3,779 4,357
P/B 2.08 1.27 1.31 1.37 1.16
P/E 9.71 5.40 5.79 6.83 5.92

Source: SSI Research

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Financials - Brokerage: Winds of change

2025 Outlook: Neutral

2025 Outlook

• 2024 Recap: Brokerage stocks outperformed the index during Q1 this year. Subsequently, the sector underperformed when deposit rates
bottomed during Q2 after exchange rate pressure intensified. This resulted in aggressive selling by foreign investors. The sector lost -0.8% in
value during 2024. Brokerages, who have raised capital, were amongst the top performers, including MBS (51%), BVS (48.5%), FTS (33.4%),
and HCM (29.2%). Laggards encountered challenges from corporate governance, such as APG (-45.1%) and VND (-33.3%).

• Revenue during the first three quarters of 2024 primarily came from margin lending (36% of operating revenue, brought on by a 33% YoY
increase in margin lending balance) and prop trading revenue (26%, mostly through fixed income profits). Brokerage income decreased, driven
by fee competition and lower overall stock trading by value during the second half of the year. IB revenue was weak overall, due to lack of large
IPOs and M&A activity during 2024.

Brokerage return performance (%) Revenue structure, 9M24 (%)

25% 100%
20%
80%
15%
10% 60%
5%
40%
0%
-5% 20%
-10%
0%
SSI VCI HCM VPS TCBS VND Market
wise
VNIndex Financials Brokerage Brokerage Margin lending IB Prop Trade Treasury Others

Source: Bloomberg, Company Reports, SSI Research

• 2025 Outlook

We outline our general assumptions as our base-case scenario below, with a slight increase (3% YoY) in expected trading turnover, as the risk of
weak stock market conditions during 1H25 is set to linger given the uncertain policies under the Trump presidency, while liquidity expansion is
expected to kick-in from 2H25 on the back of an EM upgrade decision for Vietnam and better macro conditions:

2021 2022 2023 2024 2025F

Year-end 12 mo. deposit rate (%) 5.5% 10.5% 4.8% 5.5% 6.0%
ADTV (USD mn) 1032 800 688 825 850

Source: SSI Research. Market turnover includes HSX, HNX and Upcom.

Given our conservative view of market liquidity, we expect that top-line growth might be muted for 2025. Bottom-line growth could improve with
lower operating expenses, however. In detail, brokerage fee/commission income is set to remain flat for 2025, whereas the slight increase in
domestic equity trading volume could offset lower commission fees given the fierce competition from brokers backed by banks. Recent capital
raises suggest margin lending will be again a good source of revenue for the sector, although we do not expect growth will be excessive given

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difficult market conditions. The NIM could decline due to fierce competition and the higher interest rate environment. We expect that the investment
banking (IB) segment will recover gradually with some IPOs in the pipeline, and that bond guarantees could increase as the corporate bond market
recovers. For prop trading, fixed income revenue is expected to account for a large part of revenue due to refinancing demand.

ADTV and 12 mo. deposit rates (VND tn, % p.a) ADTV and top brokerages’ PBT (VND bn)

50.0 12.0% 40,000 6,000

10.0% 35,000 5,000
40.0
30,000
8.0% 4,000
30.0 25,000
6.0% 20,000 3,000
20.0
4.0% 15,000 2,000
10.0 2.0% 10,000
5,000 1,000
0.0 0.0%
0 -
May-20

May-21

May-22

May-23

May-24
Sep-20

Sep-21

Sep-22

Sep-23

Sep-24
Jan-20

Jan-21

Jan-22

Jan-23

Jan-24

ADV (LHS) 12M JoCBs deposit rate (RHS) ADV (LHS) PBT (RHS)

Source: HSX, HNX, SSI Research

Theme 1: The return of foreign investors and EM upgrade catalyst

Looking back, we did not expect a high degree of selling from foreign investors through 2024. In total, foreign investors sold around USD 4 bn
equities, flocking instead to the US Equity market and other alternatives, such as gold and crypto. The higher-for-longer theme for interest rates set
the tone most of the year, despite the Fed cutting rates a total of 100 bps during 2024. This did not juice EM as a whole, and Vietnam was no
exception. For 2025, although the outlook for inflows is not terribly upbeat given the slower pace of expected Fed cuts, Trump’s uncertain policies,
or even a potential recession, Vietnam’s foreign ownership has fallen back to the lowest since 2015, and the prospect of further outflows could be
limited.

Estimated foreign ownership of VNINDEX (% total volume) Free float market cap and weight in FTSE EMs

20.0% 160 2.5

19.5% 140
19.0% 2
120
18.5% 100 1.5
18.0%
80
17.5% 1
60
17.0%
40
16.5% 0.5
16.0% 20
15.5% 0 0
15.0% Thailand Indonesia Malaysia Turkey Kuwait Phillipines Việt Nam
03/09

06/10

09/11

12/12

03/14

06/15

09/16

12/17

03/19

06/20

09/21

12/22

03/24

Free float market cap Weight in EM basket

Source: SSI Research Source: EPFR, SSI Research

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On the bright side, one of the key catalysts is that foreign investors could return to Vietnam under the FTSE EM upgrade narrative. We should note
the policy backdrop, including the launch of the KRX trading system, the modification of the Securities Law, and new Decree 155/2020 have set
the stage for future capital market development.

Monitoring failed trading events is crucial, and a key criterion for the FTSE Equity Country Classification Advisory Committee to consider in its
planned meeting during January 2025. Under our base-case scenario, the FTSE could announce possible inclusion during Sept. 2025, with actual
implementation potentially from Mar. 2026. With Vietnam’s net market capitalization of USD 43 bn (by FTSE Russell estimate), total inflows to
Vietnam could be as high as USD 1.6 bn post-inclusion in the FTSE Russell given the rebalancing. There could be additional flows due largely from
other active regional funds. There are some large cap brokers that likely will benefit, including: SSI, VND, VCI and HCM.

Theme 2: Brokers are among the top active fundraisers in the market

The level of competitiveness intensified with the aggressive participation of bank-backed brokerages, and broker rush to raise equity or debt to serve
retail and prepare for the upcoming non-prefunding solutions. Total proceeds collected from potential capital raising deals and bond issuance by
key brokers are around VND 77.8 tn, accounting for 55% of broker margins at 3Q24. Except for a subset of brokers, in which additional capital is
intended to fund corporate bond portfolios, most broker capital should expand margin lending capabilities. On a side note, outstanding margin loans
at 3Q24 reached VND 224 tn. While this is an historical high in absolute value, it represents 81% of equity – stable since 2023 but much lower than
the peak of 120% during 2021. The increase in margin balances has not aligned with the movement of market turnover, implying that an increase
may not result from retail investor leverage, but from deal-based margin. During 2025, we expect that margin loans will continue to increase given
new NPS framework for foreign institutions, the return of domestic retail investors, and further refinancing demand.

Capital/Debt raising deals by key brokerages

Private Placement Rights Issuance ESOP (million IPO (million Bond issuance Total expected
Completed
(mn shares) (million shares) shares) shares) (bn VND) proceeds (bn VND)
SSI 104 151 10 3,925 2,365
VND 287 244 30 2,000 8,175 2,436
HCM 589 16 6,046 1,942
VCI 144 4 4,085 4,085
VPS 19 12,000 12,188 188
TCBS 119 7,862 9,241 2,864
SHS 813 5 8,182 -
KAFI 250 2,500 2,500
VIX 636 20 6,560 6,560
MBS 27 109 656 2,372 2,372
VDS 81 3,089 3,980 3,089
DSE 30 900 900
ACBS 300 3,000 3,000
LPBS 364 3,638 3,638
ORS 302 3,016 1,000
Total 77,808 36,939

Source: SSI Research

Theme 3: Policy backdrops

We believe that policies for this sector will continue to set the tone for 2025 with the aim of establishing the national path to improve market
efficiency, as efforts continue to be underway for Vietnam to be granted an FTSE and MSCI EM upgrade.

The new Securities Law and revised Decree 155/2020 provide a chance for the CCP framework (central counterparty clearing) to activate. In detail,
the revised Securities Law set a legal foothold for CCP to implement, while the impending revised Decree 155 guides on procedure. The
implementation deadline is set for Dec 31, 2027, whereas the State Securities Commission (SSC) is to be responsible for issuing the certificate of
eligibility for custodial bank clearing services with the central bank (SBV) in charge of the subsequent licensing. Further, the revised Decree 155

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likely will remove the clause that allows companies to independently restrict the foreign ownership ratio (FOL) below the legal threshold, with
mandatory disclosure of the main operating business identifying the FOL ratio. In response, public companies will have a 12 mo. deadline instead
6 mo., to notify of the FOL to the SSC. Companies that would like to lower their FOL must first ask the Prime Minister directly for approval. This
should provide attractive flows to FOL limited stocks and clear up the MSCI EM criteria.

On the listing procedure, the MoF allows the merging of the IPO and listing stage, as long as the company satisfies requirements related to charter
capital and financial conditions. As such, IPOs could return during 2025.

The government aims to establish a more transparent market by introducing credit rating services. For public issuance, a new framework was
established that requires all public bonds/issuers to have a credit rating. With privately placed bonds, retail professional investors could be permitted
to buy/sell or transfer private placement bonds if: i) issuers have credit ratings; and ii) if the bonds have collateral or payment guarantees from
banks. Meanwhile, individuals (no requirement to qualify as professional investors) could purchase publicly issued bonds without restriction.

Second, over the medium-to long-term, the introduction of the KRX system (possibly during 2025) would enable the creation of new potential
products and greater interest in market participation. For example, the KRX system features computerized market surveillance that could protect
general investors from manipulation, misconduct, rule violations, and other types of market malpractice. As a result, there is an expectation to have
wider ranging trading functionalities depending on customer risk appetite, such as short selling, day trading, and options. Another positive for the
KRX trading platform is the potential expansion of wider range of market functionalities to include derivatives, commodities, crypto, or investing in
foreign markets.

Valuation

Listed broker valuations have improved significantly from their lows of late 2022, with most are trading around or slightly above their 5Y averages
for most of 2024. Valuations are fair, in our view, from a fundamental perspective. However, as we all know, brokers are very cyclical and high beta
stocks which are highly correlated to market liquidity and index movement. As such, we believe investors should these names when: 1) there is a
clear active trend for market trading value (ADTV); 2) capital raises begin to materialize; or 3) market sentiment improves with a positive policy
announcement.

Listed brokers’ weighted trailing P/B

Brokers' trailing P/B 5Y average

3.5

2.5

1.5

0.5

0
01/19
04/19
07/19
10/19
01/20
04/20
07/20
10/20
01/21
04/21
07/21
10/21
01/22
04/22
07/22
10/22
01/23
04/23
07/23
10/23
01/24
04/24
07/24
10/24
01/25

Source: SSI Research

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Healthcare: Policy changes paving the way for exciting times ahead
2025 Outlook: Positive

Top pick: DBD. Trading idea: IMP

2024 recap
The healthcare sector demonstrated a robust 30% increase in stock performance through 2024, driven by exceptional gains at IMP (85%) and DBD
(32.8%). In contrast, other key players lagged the VNIndex, with DHG increased 11% while TRA dropped -7%.

Pharmaceutical: Following a stellar 2023, growth decelerated during 10M24, particularly during Q1 and Q2. Most pharmaceutical companies
reported weakness in both sales and NPAT (see Fig 1), pressured by adverse market conditions such as a contraction in the OTC market and rising
API costs. However, IMP and DBD were exceptions, maintaining a strong sales growth trajectory. Q4 2024 marked the beginning of a QoQ recovery
in the OTC channel, signaling improved market sentiment going forward.

Hospital: Among the few hospitals to reveal their financial situation, TNH (the only listed private hospital) reported a -38% YoY NPAT decline between
Q1-Q3 ’24, resultant of weak demand and the impact from Yagi flood (see Fig 2). Its share price managed an 21% increase, as foreign investors
accumulated shares after the FOL increase from 40% to 70%.

Fig 1. Most companies recorded lower 9M NPAT performance

9M23 9M24

1000
900
800
700
600
500
400
300
200
100
0
DHG DVN DBD IMP TRA DTP DMC DP1 OPC DP3 TNH

Source: SSI Research (Unit: bn VND)

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Fig 2. Mixed 9M24 results for hospital operators... Fig 3. ... but number of private hospitals expands

Revenue NPAT Revenue growth NPAT growth 450

400
700 120%
111%
600 100% 350
500 80% 300
400
60% 250
300
40%
200 34% 200
20%
100 3% 150
0%
0
100
-100 -20% -11% -20%

-200 -40% 50
-43%
-300 -60% 0
Trieu An hospital TNH TTD 2016 2018 2020 2022 2024

Source: SSI Research (Unit: bn VND) Source: SSI Research compilation

2025 Policy impact

The Ministry of Health (MoH) introduced Circulars 03 and 07/2024 (effective May 2024), which defined the list of drugs eligible for coverage under
the national insurance plan. These circulars prohibit imported drugs from participating in Category 1 and 2 of public hospital bidding for drugs that
at least three local facilities can produce at EU GMP quality standard. This policy shift is expected to significantly boost share of Vietnamese
pharmaceutical companies (e.g. DHG, IMP, DBD, DHT, DHD) in Category 1&2, markets traditionally dominated by imports.

Further bolstering the sector, the government approved the National Pharmaceutical Strategy Execution Plan (effective Feb 2024), other regulatory
changes—including the revised Pharmaceutical Law (effective July 2025), and the revised Health Insurance Law (effective January 2025), and
related decrees and circulars. All of which are poised to transform the industry by:

• Prioritizing the development of the domestic pharmaceutical industry.

• Formalizing policies, adding rights and responsibilities for pharmacy chains and drugs sold through e-commerce platforms.

• Streamlining drug registration procedures to save costs for manufacturers

• Encouraging hospitals to invest in new, high quality value-added services for patients

These reforms provide strong incentives for healthcare companies to invest in the development of new drug and production facilities, intensifying
competitiveness with imported pharmaceuticals and positioning local firms to capture market share. We expect the reform to help the
aforementioned companies to move to higher quality drugs.

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2025 outlook
The outlook for 2025 is more optimistic, with growth anticipated across key channels. The prescription drug channel is expected to maintain its
upward trajectory, supported by favorable policies. The OTC channel, however, exhibits signs of recovery after potentially bottoming, aided by
economic growth. Revenue growth for companies under coverage is forecast at 12%, surpassing the industry average of the past two years.
Earnings growth projected at 22%, rebounding from a challenging 2024. We note the expected forex headwinds during 2025 may increase imported
ingredient prices.

On the other hand, the impact of new investments aligned with policy trends could take between 1-2 years to meaningfully impact top and bottom
lines. Over the short term, Circular 07 remains the most influential driver for top line growth (e.g. DBD, DHG, IMP), as it aims to keep imported drug
companies at bay.

We expect private hospitals to continue to grow, especially private general hospitals with at least 50 beds in the more remote regions of Vietnam.
These provide patients with the much-needed advanced services and better care without traveling to Hanoi or Ho Chi Minh City. The percentage of
private beds currently stands at around 5.8% of both private and public beds, much lower than government’s goal of 10% before 2025.

Valuation/Recommendation: IMP and DBD are set to retain their top spots for top and bottom-line growth due to their investment in EU GMP
production facilities. DBD is our top pick, as we think its product portfolio has strong growth potential, and that there is still upside for the stock.
While IMP also features better growth than average, we recommend IMP for trading only as it is trading at a 12-month-P/E high relative to peers
(25x compared to 17x for companies under coverage).

As for TNH, we expect the company to return to earnings growth (+41% YoY), after a steep decline during 2024, thanks to the opening of its third
hospital, TNH Viet Yen. However, the company is going through an aggressive expansion period, which may increase its expense level in the near-
to-medium term.

Fig 4. Pharma companies forward 12-month P/E multiple

35

30

25

20

15

10

5
IMP DBD TRA

-
1/2/2018 1/2/2019 1/2/2020 1/2/2021 1/2/2022 1/2/2023 1/2/2024

Source: SSI Research

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Top pick: DBD: Specialized drugs as growth catalyst

• Target price: VND 65,000/share

• Investment thesis:
✓ We expect DBD to post 18% CAGR between 2024-2027, with oncology drugs expected CAGR of 35% between 2024-2027 due to the EU
GMP upgrade and the new tablet pill drug production line. DBD’s oncology drugs are the top-seller by volume, and top six by value (first
in value amongst local companies).

✓ Three new production lines over the medium term to increase capacity for best-selling pharmaceuticals.

✓ State divestment before year-end 2025, which opens up potential M&A.

• Risks:
✓ DBD does not have popular targeted therapy or biotech oncology drugs in their portfolio. These imported drugs could threaten DBD’s
current market share.

✓ Further delay in opening new facilities and/or obtaining EU-GMP certification.

Trading Idea: IMP: Positive outlook for 2025 and beyond

• Target price: VND 49,000/share

• Investment thesis:
✓ We expect IMP, with the most EU GMP production lines in Vietnam, to continue benefit from policy tailwinds, with 2025E NPATMI growth
of 31% YoY.

✓ Continued R&D investment, recovery from retail market should unlock growth in the medium term.

• Risks:
✓ Slower than expected demand from OTC as well as fiercer competition from Vietnamese companies with EU GMP production lines (e.g.
DHG, DHT).
Target Price Current Price
% Upside NPATMI Growth P/E ROE Dividend Yield (%)
Ticker (VND) (VND)
in 1yr in 1yr 12/31/2024 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F
DBD 12.8% 65,000 57,600 10.5% 5.7% 17.9% 15.1 21.1 17.9 18.8% 16.8% 16.8% 0.0% 0.0% 0.0%
IMP 4.3% 49,000 47,000 34.0% 6.8% 31.1% 15.6 22.6 17.3 14.4% 14.2% 15.7% 1.8% 2.1% 0.0%
TNH 25.3% 23,000 18,350 -0.9% -37.2% 41.0% 15.0 23.7 18.7 8.1% 4.4% 5.9% 0.0% 0.0% 0.0%
TRA 8.3% 85,000 78,500 -2.2% -4.5% 8.3% 16.1 13.6 12.6 19.2% 17.4% 17.4% 4.5% 5.1% 5.1%

Source: SSI Research

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Industrials - Aviation: Back to growth after full recovery

2025 Outlook: Positive

Top Picks: ACV, SCS

2025 Outlook
Vietnam aviation sector reached full recovery of total passengers during 2024. According to ACV, 2024 passenger throughput of all ACV
terminals reached 109 mn passengers (up 4% YoY, nearly equivalent to 2019 of 116 mn passengers). This is in line with our 2024 expectation and
southeast Asia’s recovery. International passengers were the key component for 2024 volume growth with 41 mn passengers. This was up 26%
YoY and equal to 2019. Domestic passenger volume, on the other hand, declined -15% YoY to 68 mn passengers given the lack of aircraft for
domestic airlines and Bamboo Airways’ downsizing.

Profitability of the sector returning to pre-COVID levels due to the recovery of international passengers and higher domestic ticket prices.
With the full recovery of international passengers, airport and airport-related names profitability surged YoY and have officially returned to or even
surpassed pre-Covid levels, including ACV: (Q1-Q3 2024 PBT up 43% vs. equiv. of 2019), AST (Q1-Q3 2024 PBT up 90% vs. equiv. of Q1-Q3
2019), and SCS (Q1-Q3 2024 PBT up 51% vs. equiv. of 2019). International passengers account for almost all of airport/airport services company
profit. For airlines, we also see a strong rebound in profitability this year due to domestic air ticket price increase (~20% higher than 2023) and
lower oil prices YoY. For example, HVN’s 9M24 parent PBT reached VND 1.9 tn (compared to a loss of -VND 2.9 t for 9M23, and nearly back to
9M19 PBT of VND 2.7 tn). The 2024 air ticket price increase was due to the Vietnamese aircraft fleet decline of -30% YoY (from more than 200
aircrafts to 140 aircrafts), due to Bamboo Airways downsizing from 36 to just 8 aircraft, while Pratt&Whitney (P&W) engine recall led to between
40-45 aircraft being grounded. According to industry players, the impact of the P&W engine recall could last through 2H2025, creating a favorable
undersupply environment for domestic airlines to operate.

Infrastructure upgrade reduces capacity bottlenecks at key airports: The bottleneck for industry growth lies in the capacity of some key terminals
at commercial hub airports (Tan Son Nhat, Noi Bai), limiting new slots for airlines to grow capacity and routes. Recently, we have seen a strong
push from the government and ACV to resolve this problem by kickstarting various key airport projects (Long Thanh International Airport – 25 mn
passengers, Tan Son Nhat T3 – 20 mn, Noi Bai T2 expansion – 5 mn, Phu Bai international terminal- 5 mn), as well as some other smaller airport
expansion. Once these projects are completed between 2025-2026, we expect a capacity upgrade to 55 mn passengers (up 60% from 2019) to
enable Vietnam’s aviation industry to maintain its annual passenger growth path of between 10-12% p.a over the next five years., creating
opportunities for all players, including airport, airport services, airlines, and cargo handlers.

Capacity of the Big 5 domestic airports in 2019, in millions of passengers

Airports Designed capacity Actual capacity % of designed capacity

Noi Bai International Airport (NIA) 25 29.5 118%
-Domestic terminal 15 18 120%
-International terminal 10 11.5 115%
Tan Son Nhat International Airport (TIA) 28 45 161%
-Domestic terminal 15 29.5 197%
-International terminal 13 15.5 119%
Danang International Airport (DIA) 10 10.8 108%
-Domestic terminal 6 8.3 138%
-International terminal 4 7.1 178%
Cam Ranh International Airport (CRIA) 2.5 6.5 260%
Phu Quoc International Airport (PQIA) 4 3.7 93%
Total 21 airports 91 116 127%
Source: SSI Research, ACV

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More welcoming visa policy should be on par with regional competitors: Previously, one of the key disadvantages of Vietnam as a tourist
destination compared to regional peer was its stricter visa policy. However, during Aug 2023, Vietnam leveled the playing field somewhat by
implementing a more welcoming visa policy, including:

• Visa-free entry of up to 45 days (previously 15 days) for 25 countries. This is on par with the current visa-free policy of Thailand (although
with less countries: Thailand exempts 45-day visa for 93 countries including China).

• E-visa application is now available to all countries (previously limited to 80 countries), and visa duration lengthened to a maximum of three
months (previously max. one month).

Lower competition and available aircraft increase average fares and improves profit margins over the short-term: During 2019, we witnessed
the capital raise of Bamboo Airways (increasing its fleet from three aircraft during 2018 to 30 at 2019), pushing the core gross profit margin of
incumbent airlines down -300 bps. Bamboo filled the market gap with a hybrid model, taking share from both HVN (full-service carrier model) and
VJC (low-cost carrier model). At peak growth, Bamboo had 16% market share at 2022 prior to downsizing due to financial hardship and the arrest
of its Chairman. Bamboo is only operating seven aircraft now and has terminated its international routes for restructuring purposes. On the other
hand, Viettravel Airlines entered the market during 2020 operating just three aircraft. Since Jan 2024, about 44 aircraft (~20% of total fleet among
all Vietnamese airliners) are using Pratt & Whitney engines which have been flagged for inspection globally and need to be grounded between 100-
200 days to do a compulsory check and repair. Of those 44 aircraft, VietJet and Vietnam Airlines have 24 (28% of fleet) and 20 (19% of fleet),
respectively. The supply of aircraft is expected to drop -35% YoY, pushing air tickets even higher.

For 2025, we identify three key tailwinds for Vietnamese aviation companies: lower oil prices, solid passenger growth, and undersupply of
aircraft. Headwinds for the sector are intense competition, aircraft supply chain issues, and a strong USD. As fuel cost is about 30% of airlines
cost base, our in-house forecast for oil prices suggests a decline of 4% for 2025 (USD 72.50/bbl Brent average vs 2024 average of USD 75.40/bbl)
could lead to a -1.3% decline in costs or roughly 1% potential improvement in gross margin on average for all airlines. On the demand side, we
continue to see higher demand for both inbound and outbound international travel from China and organic growth from other markets. We expect
18% YoY growth of Vietnamese as international passengers. The domestic market could witness much slower growth due to a lack of aircraft, and
only expect 5% YoY growth in domestic passengers - leading to Vietnamese passenger volume growth of 10% YoY. Given the continued international
passenger growth, we expect airport and airport services names (ACV VN, AST VN) to experience double-digit earnings growth for 2025 (20% and
17% YoY, respectively). For cargo names, we believe that volume growth for Vietnam air cargo will reach 8% YoY, and that SCS VN will benefit with
10% YoY earnings growth. Long Thanh Airport completion is expected at end of 2026, so there are plenty of opportunities for capacity expansion.

For airlines, we see tailwinds of lower oil prices and an undersupply of aircraft that should support the sector’s earnings outlook. However,
compared to airport segment, airlines also face some strong headwinds, as noted by Bamboo Airways’s plan to increase fleet size from 8 currently
to 18 at end of 2025, while Viettravel Airlines received a strategic investment from T&T Group. Another headwind is the slow delivery of aircraft
(2024 delivery pace is half of 2019), which has led to scarcity of aircraft and higher acquisition/lease cost for airline fleet expansion. A strong USD
during 2025 could put pressure on airline servicing of USD-denominated debt and lease payments. In terms of earnings, we expect 2024 earnings
to be the peak and normalize between 2025-2026, as undersupply of aircraft and high domestic ticket prices gradually ease. Specifically, we expect
HVN’s parent net income to decline 14% YoY but remain 37% higher than 2019 levels. We do not rate nor have estimates on the shares of VJC VN.

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Vietnam Air Passenger Throughput forecast, mn pax/year Vietnam International Throughput forecast, mn pax/year

300.0 20% 140.0 200%

18% 180%
250.0 120.0
16% 160%
14% 100.0 140%
200.0
12% 120%
80.0
150.0 10% 100%
8% 60.0 80%
100.0
6% 40.0 60%
4% 40%
50.0
2% 20.0
20%
0.0 0% 0.0 0%
2023 2024F 2025F 2026F 2027F 2028F 2029F 2030F 2023 2024F 2025F 2026F 2027F 2028F 2029F 2030F

Total passengers % YoY International passengers % YoY

Source: SSI Research

Valuation looks fair for airlines due to weak earnings growth prospects while airport/airport services look inexpensive with strong medium-
term earnings growth prospects. We prefer airport names, largely due to their passenger growth resilience, and strong capacity upgrade over the
next few years. Unlike airlines, they are not exposed to pricing and cost uncertainties and have much stronger balance sheets relative to the airlines
post-COVID-19 time. We reiterate our BUY rating on the shares of ACV VN (TP: VND 136,000/share), along with our OP rating on the shares AST
VN (TP: VND 64,500/share) and SCS VN (TP: VND 91,000/share). We maintain our MARKET PERFORM rating on the shares of HVN VN (TP: VND
27,400/share).

Recommendation: Our top pick for the sector is ACV VN, while we watch SCS VN for updates on the business at LTIA and HVN VN for further
restructuring and capital raise.

Top pick:

1. Vietnam Airport Corporation (ACV: UPCOM)

• 1Y target price: VND 153,000/share

• Investment thesis

✓ Monopoly airport operator in Vietnam with 23 airports, with key expansion projects commencing soon: Long Thanh International Airport,
Tan Son Nhat T3 Terminal, and Noi Bai T2 expansion, as well as potential beneficiaries of further airport upgrade in the future.

✓ Potential beneficiary of continued international passenger throughput growth over the next 3-5 years.

✓ Stock dividend is imminent after Decree 167/2024/ND-CP is released allowing for stock dividend payment of state-owned JSC for
investment in project of national importance, which should apply for LTIA investment of ACV.

✓ Potential HOSE listing if landing area issue can be resolved during 2025.

• Risks

✓ Lower than expected passenger volume growth due to weaker economic situation in key markets, especially China.

✓ Another pandemic or geopolitical crisis could lead to passenger disruption and restrictions on a large scale.

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2. Saigon Cargo Services Corporation (SCS: HOSE)

• 1Y target price: VND 91,900/share

• Investment thesis

✓ The increase in front-load demand and the ongoing change in supply chain is expected to sustain the shift from sea to air shipping and
should indirectly benefit SCS.

✓ The capacity expansion at TSN Airport and Long Thanh International Airport should drive future growth. We believe there is a high possibility
that SCS will be the sole partner of ACV for handling cargo services in phase 1 of LTIA. However, since the business model at LTIA has
not yet been finalized, we have not factored this into our forecast and stock valuation.

• Risk:

✓ Unfavorable business model at LTIA air cargo.

Target Price Current Price
% Upside NPATMI Growth P/E ROE Dividend Yield (%)
Ticker (VND) (VND)
in 1yr in 1yr 12/31/2024 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F
ACV 22.7% 153,000 124,734 17.0% 37.0% 21.4% 37.6 26.1 19.4 18.0% 20.8% 20.7% 0.0% 0.0% 0.0%
AST 18.3% 64,500 54,500 550.6% 26.9% 15.7% 19.9 15.7 13.6 28.9% 34.7% 35.3% 0.0% 5.3% 5.3%
SCS 14.9% 91,900 80,000 -22.8% 44.8% 7.7% 13.8 12.5 11.6 34.2% 45.3% 42.4% 6.5% 7.2% 7.2%
HVN -4.4% 27,400 28,650 n.m. n.m. -14.2% n.m. 16.9 18.8 n.m. n.m. n.m 0% 0% 0%

Source: SSI Research

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Industrials – Construction: The backbone of GDP growth in 2025

2025 Outlook: Positive

Top Pick: CTD

2024 Recap
According to the General Department of Statistics, growth in total construction sector by value for 2024 is projected to reach 7.8% - 8.2%. This
marks the highest growth rate since 2020, driven by several major national infrastructure projects such as the North-South highways, two ring
roads around Hanoi and Ho Chi Minh City, and of course the Long Thanh International Airport.

In 2024, the Ministry of Transport (MOT) was allocated a total capital plan for infrastructure development at 75.48 tn VND. Despite a 15% reduction
compared to 2023, this remains substantial. By the end of December 2024, 77.6% of this capital had been disbursed, which is lower than the
81.9% achieved in December 2023. To meet the government's disbursement target of at least 95% within the next two months, the MoT needs to
disburse nearly 23 tn VND.

Highlighted highway projects: 2024 disbursement plan, % completed as of 30 Nov 2024

40000 90.00%

35000 80.00%

70.00%
30000

60.00%
25000
50.00%
20000
40.00%
15000
30.00%

10000
20.00%

5000 10.00%

0 0.00%
North-South Ring road 4 around Ring road 3 around Chau Doc - Can Tho Bien Hoa - Vung Khanh Hoa - Buon Tuyen Quang - Ha Cao Lanh - An Huu Intraprovince
highway, phase 2 Hanoi HCMC - Soc Trang Tau highway, phase Ma Thuot highway, Giang highway highway infrastructure (80
highway, phase 1 1 phase 1 projects)

2024 disbursement plan % completed

Source: Ministry of Finance

Looking into details, the number and size of new infrastructure projects are limited compared to 2023. This may explain the price
outperformance of "infrastructure stocks" in 2023, compared to their poor performance at the stock price decrease of around 15% in 2024:

• 2023: The year was marked by a significant boom in infrastructure development. The MoT successfully initiated 26 projects, including 18
expressways, locating along the country. Major projects included Phase II of the North-South Highway, with a total investment of VND 119
trillion (approximately USD 5 billion at the time of approval), projected to be disbursed from 2021 to 2025. In Northern Vietnam, Ring Road 4
around Hanoi (USD3 bn) was commenced. In Southern Vietnam, Ring Road No. 3 around Ho Chi Minh City (total investment of USD3 billion),

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the Bien Hoa - Vung Tau Highway (USD710 million), and Long Thanh International Airport Phase 1 (USD5.04 billion) were also started. In
Central Vietnam, the Khanh Hoa - Buon Me Thuot Highway was groundbroken in the year.

• 2024: The MoT is expected to initiate 15 strategic projects within the year vs. 26 projects triggered in 2023, with a total investment capital of
VND 51 tn (USD 2 bn), which is considerably lower than investment made in 2023. In addition, some of these projects may not be initiated
within the year as planned.The details are as follows:

Total capital
Project Location (P= province) Timeline
(VND bn)
Cho Moi – Bac Kan Highway Thai Nguyen P – Bac Kan P 5,750 2024/25 -2027
Ho Chi Minh road, Cho Chu – Trung Son T-Junction Thai Nguyen P – Tuyen Quang P 1,665 2024-2025
Dau Giay – Tan Phu Highway, phase 1 Dong Nai P 8,776 2024-2027
Cao Lanh – An Huu Highway, phase 1 Dong Thap P 5,886 2024-2025
My An - Cao Lanh Highway, phase 1 Dong Thap P 6,210 2024/25-2027
Ho Chi Minh Road, Rach Soi – Ben Nhat and Go Quao – Vinh Thuan Kien Giang P 3,904 2024-2026
Upgrading 4B Lang Son highway, Km18-Km80 Lang Son P 2,300 2024
National Road No. 2, Vinh Yen – Viet Tri part Vinh Phuc P 1,258 2024-2026
Ninh Cuong Bridge (alonging National road No. 37) Nam Dinh P 582 2024-2025
Upgrading National Road No. 46, Vinh – Nam Dan Nghe An P 500 2024/25-2025
Hanoi – HCMC Railroad: Renovation Khe Net Pass Quang Binh P 2,011 2024-2026
Upgrading National Road No. 28B Binh Thuan P – Lam Dong P 1,435 2024-2026
Upgrading National Road 53, 62, Nam Song Hau 91B Mekong Delta 9,329 2024-2027
Upgrading Lo Te – Rach Soi Road Can Tho P – Kien Giang P 750 2024-2025
Upgrading Quy Nhon Port Binh Dinh P 694 2024/25-2025

Source: Compiled by SSI Research

2025 Outlook

We expect 2025 to be an OUTPERFORMING year for the construction Public investment disbursement 2010-2025F period (VND bn)
sector. As mentioned in the 2025 Macro Outlook report, intensive
infrastructure investment is expected to play a crucial role in driving 800,000
growth in 2025. The national budget for 2025 allocates VND 87 trillion 700,000
to the MoT, representing a 15% increase compared to the 2024 budget, 600,000
with 12 infrastructure projects set to commence. Furthermore, 2025 500,000
marks the final year of the public investment cycle, during which key 400,000
projects are expected to be accelerated to achieve the target of 3,000 300,000
km of expressway by the end of the year. Although detailed budgeting 200,000
has yet to be disclosed by the MoT, we anticipate a high disbursement 100,000
plan and significant project completions in 2025. Additionally, the 0
recovery in demand and new supply in the residential market will further
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024F
2025F

support this growth. Consequently, the construction sector is anticipated

to be a secondary beneficiary of these trends.
Souce: MOIT, compiled by SSI

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Below are infrastructure development plan in the following years:

• Expressway: Among potential national projects, we believe two major expressway projects are feasible to commence in 2025: the Dau Giay
– Lien Khuong Expressway and the Ninh Binh – Hai Phong Expressway.

o The Dau Giay – Lien Khuong Expressway, which connects Ho Chi Minh City and Dalat (a Central Highland Vietnam), has a significant
investment capital of VND 46 trillion (USD1.8 billion). The project comprises three components and is expected to be developed under the
Public-Private Partnership (PPP) model. Component 2 is anticipated to be the first to start in 2025.

Component project Total investment (VND bn) Potential private investor

(1) China Harbour Engineering Company Limited, or
1. Dau Giay – Tan Phu 8,776 (2) Dai Quang Minh Co., Ltd. and Phuong Thanh Co., Ltd., or
(3) DIC Urbiz
2. Tan Phu – Bao Loc 18,120 JV involving Deoca Group, Hung Thinh Group, Nam Mien Trung group
3. Bao Loc – Lien Khuong 19,521 FUTA GROUP

Source: Compiled by SSI Research

Source: MOT

o The Ninh Binh - Nam Đinh - Thai Binh - Hai Phong expressway aims to directly connect the North-South Highway, passing through
central provinces, to the Lach Huyen Deep Seaport (the only deepwater seaport in Northern Vietnam, located in Hai Phong province). This
project will be executed in multiple phases. Phase 2, which connects Nam Dinh to Thai Binh, is scheduled to be conducted from 2025 to
2027, with an investment capital of VND 19.8 trillion. The project will be developed under the PPP model, with GELEXIMCO as the sole
potential investor.

• Railway: While the 2020-2025 period has been marked by significant expressway development, the period from 2025 onwards is expected to
witness substantial changes in the national railway system. Currently, there are three city railways in operation, two in Hanoi (Cat Linh – Ha
Dong metro and Nhon – Cau Giay metro) and one in Ho Chi Minh City (Ben Thanh – Suoi Tien metro). Future developments will include city
railways, interprovincial railways, and the North-South railway. Typically, these railway projects involve foreign contractors as the main
developers. However, we anticipate that policies will become more attractive to local contractors, allowing them to serve as subcontractors
and material suppliers. Below are the highlighted projects:

o Hanoi City metro No. 2: This project includes three components and will run around Hanoi, directly connecting to Noi Bai International
Airport. Component 2, which spans from Tran Hung Dao Street to Nam Thang Long Station, covers a total distance of 11.5 km, including
a 2.6 km subway section. Total investment capital for this project has been adjusted by 80% after 17 years of delays, bringing it to
approximately VND 35.6 trillion (equivalent to USD1.5 billion). It is expected to break ground in 2025, and be operational by 2030.

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Component project Start – End point

2.1 Nam Thang Long – Tran Hung Dao
2.2 Tran Hung Dao – Thuong Dinh
2.3 Noi Bai – Nam Thang Long

Hanoi City metro No. 2 map (Component 2 is in red)

Source: Tuoitre.vn

o The Lao Cai-Hanoi-Hai Phong railway: This is a key infrastructure project for the 2025-2030 period, with a total investment of
approximately USD11 billion. The railway will span 415 km, passing through 10 provinces, and will connect the port hub to the Chinese
border gate, eventually linking to Yunnan province in China. Typically, the preparation period for such a project takes about 3-4 years.
Therefore, starting the project in 2025 presents a significant challenge for the MoT, requiring an intensive timeline to achieve this target:

Timeline Expected progress

December 2024 Railway Project Management Board to summit pre-feasibility study report to the MOT
Febuary 2025 Establish the State Appraisal Council, completes the appraisal of the pre-feasibility study report
March 2025 Government to propose the project and submit for seeking investment approval of the National Assembly
May 2025 Attain investment approval from the National Assembly session

The Lao Cai-Ha Noi-Hai Phong map:

Source: Dantri.com.vn

o The North-South high-speed railway: The feasibility study for this project is expected to begin in 2025, with construction anticipated to
start in 2027 and completion projected by 2035.

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Lastly, the outlook for residential construction is heavily dependent on Primary condo supply and transactions during 2019-2025 in Hanoi
the recovery of the real estate sector, as detailed in the sector outlook. & HCMC (units) Primary condo supply and transactions during 2019-
We believe that the direct impact on construction firms will come from 2025 in Hanoi & HCMC (units)
the new supply, which is expected to increase significantly in both first-
70,000
tier and second-tier cities in Vietnam during 2025. This should secure a
backlog for contractors. It is indicated that Hanoi and Ho Chi Minh City 60,000

are projected to see around 40,000 condo units of new launch in 2025. 50,000

40,000

30,000

20,000

10,000

0
2019 2020 2021 2022 2023 2024F 2025F

New Launch Sold Units

Source: CBRE, SSI Research

Valuation and Investment recommendation

Q1-Q3 2024 earnings performance: For the 12 companies in our sample, the majority have experienced sufficient sales and earnings growth in
the first 3 quarters of 2024 vs. the same period last year. Companies such as CTD (9M2024 PBT +110% YoY), CC1 (9M2024 PBT +40% YoY),
and LCG (9M2024 PBT +60% YoY) have seen considerable windfalls from the construction segment, while others like VCG (9M2024 PBT +160%
YoY) have benefited from the property segment. Lastly, HHV (9M2024 PBT +20% YoY) and LGC (9M2024 PBT +60% YoY) have found lucrative
inroads through BOT expressway ownership.

Earnings outlook: As 2025 is expected to see a recovery in the residential property market and an acceleration in public investment, marking the
final year of the 2021-2025 public investment cycle, we anticipate significant growth in construction sales and earnings for firms, particularly those
with high backlogs and those involved in mega public projects, including CTD, HHV, and VCG under our coverage. However, thin margins remain a
challenge for the construction sector.

Valuation: In 2024, construction stocks underperformed the index. We believe this adjustment is due to the previously high valuations of
construction stocks. As of the reporting date, P/E valuations have decreased significantly, with the industry P/E dropping from 45x to 20x, driven
by both price adjustments and earnings improvements.

Recommendations: For investment opportunities, we recommend CTD as our top pick. The sector's improvement should drive sales growth and
reduce potential risks from provisions, as property developers are expected to have better solvency. Additionally, the joint investment in the Emerald
68 building (Binh Duong province) is expected to start generating income for CTD in 2026. Further details can be found in our company report.

Meanwhile, we expect public investment to once again be a key driver of economic growth, and with valuations adjusted lower, market sentiment
towards construction stocks, particularly infrastructure construction stocks, may improve in 2025 This signals trading opportunities ahead for
stocks with sufficient liquidity, such as VCG and HHV.

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2024 performance 2024 P/E performance of some Construction names

70%
60% 50

50%
40
40%
30%
30
20%
10% 20
0%
-10% 10
-20%

C4G DPG HHV CTD

VNIndex Industrials Construction VCG CC1 PHC LCG

Source: SSI Research

Top pick: Coteccons Construction JSC (CTD: HOSE) (Outperform, VND 77,100)
% Upside Target Price (VND) Revenue Growth NPAT Growth P/E
Ticker
in 1yr in 1yr 2023 2024 2025 2023 2024 2025 2023 2024 2025
CTD 12.2% 77,100 10.7% 30.8% 20.0% 224.9% 443.5% 39.9% 10.0 13.3 11.6

• Share price (31-Dec-2024): VND 68,700; 1Y Target price: VND 77,100

• Investment thesis:

✓ With a high backlog estimated at VND 25,000 billion, the core business of residential and industrial construction is expected to support
business stability.

✓ Investment in the property segment are expected to generate significant earnings starting in 2026

• Risks:

✓ Dilution impact of the ESOP in FY25, of 1.5 mn stocks at VND 10,000/share.

✓ Unexpected write downs to receivables.

(VND bn) 2022 2023 2024 2025F 2026F

Net sales 14,537 16,088 21,045 25,254 27,275
Net sales growth 60.0% 10.7% 30.8% 20.0% 8.0%
Gross profit 487 361 713 958 911
Gross profit margin 3.3% 2.2% 3.4% 3.8% 3.3%
Financial income 381 332 280 329 320
Financial expense -163 -170 -105 -109 -119
SG&A -735 -479 -581 -631 -682
Net other income 88 68 80 96 304
Profit before tax 35 92 387 642 734
Net income 21 68 367 514 587
Net income growth -14.4% 224.9% 443.5% 39.9% 14.3%
Net income margin 0.1% 0.4% 1.7% 2.0% 2.2%
EPS (VND) 1,158 3,016 6,697 4,953 5,661

Source: SSI Research

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Industrials – Sea port & Logistics: Thriving under uncertainty

2025 Outlook: Positive

Top Picks: HAH, GMD.

2025 Outlook
Between Jan-Nov 2024, Vietnam trade value grew 15.4% YoY, reaching USD 715 bn. The key growth driver this year includes: a banner year
for shipping companies in general, inventory restocking in the US/EU market and the frontloading of orders to avoid several disruption risks: Red
Sea attacks, US East Coast Port strike, and potential Trump administration tariffs. Export growth during the period notched 14.4% YoY growth, and
import growth rose 16.3% YoY. In Nov 2024, exports to the US surged by 17.4% YoY (compared to total export growth of 8.2% YoY in the same
period), clearly showing frontloading activities in action.

Seaport volume growth between Jan-Nov 2024 is a bit higher than trade value growth, signaling that pricing of goods imported/exported
declined YoY. According to the Vietnam Port Association (VPA), total port throughput in Vietnam reached 22 mn TEU, 16.8% YoY. Of which, the
Haiphong port cluster witnessed 16.8% YoY volume growth and reached 6.6 mn TEU, while the southern VN port cluster (HCMC & Cai Mep) reached
14.6 mn TEU, growing 16.8% YoY.

Capacity expansion and uncertainty from Trump 2.0 tariff threat are the two themes for seaports during 2025F. On the supply side, we see
plenty of new capacity coming during 2025, especially in northern VN. Specifically, in Haiphong, where two deep seaport projects commence
operation at the same time, namely Lach Huyen 3+4 (PHP VN) and Lach Huyen 5+6 (HATECO). Nam Dinh Vu phase 3 is expected to commence
operation from the end of 2025, together adding 3.5 mn TEU of capacity (~50% of 2024 volume of Haiphong) at the end of 2025. In southern VN,
we also expect Gemalink Phase 2 to start construction during 1H2025, while Can Gio deepwater seaport and Cai Mep Ha deepwater seaport are
also under discussion. On the demand side, we expect 2025F to be a very uncertain year for volume growth due to the incoming Trump
administration’s threat of tariffs. Our base case assumption is that Vietnam’s volume growth next year is around 9% YoY, in line with pre-COVID
growth rate, but growth can be concentrated during 1H2025 when tariffs are likely announced.

Container shipping: Contrary to our initial expectation, 2024 proved to be a remarkably strong year for container shipping. Favorable events have
consistently supported shipping freight throughout the year, including the Red Sea attacks (absorbed about est. 9% of global capacity), inventory
restocking, and the aforementioned frontloading to avoid tariffs. As we look toward 2025, we anticipate that some of these positive factors will
persist. Although upcoming events make the industry's outlook difficult to predict. Key Factors for 2025, include:

1. Tariff Concerns from the New US Administration: While new tariffs have not been announced, the fear of higher blanket tariffs could lead to
a short period of frontloading, boosting short-term shipping demand. Drawing parallels to the first Trump administration, frontloading began
immediately after the announcement of investigations into target products. We expect similar frontloading during 2025, positively impacting
freight rates, especially for voyages to the US. Over the long term, potential shifts in destination could complicate the supply chain, increasing
TEUxMile demand.

2. Disruption at Choke Points: Our base case of easing of disruption in the Red Sea is expected to cause a normalization of rates during 2025.
While the 2024 rates were elevated, the year-over-year impact should negatively affect shipping rates.

3. Potential port strike and congestion: There is no significant port congestion, but a port strike on the US East Coast has been suspended until
January 15, 2025 for further negotiation. Our base case assumes that an agreement will be reached, and the impact on shipping freight should
be minimal. In the unlikely worst-case scenario, a prolonged port strike could disrupt the supply chain, starting with voyages to the US and
potentially causing a container shortage as shipping shifts to the West Coast, lengthening container turnaround times.

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4. Overcapacity: Overcapacity remains a concern for 2025. During 2024, an additional 10% of 2023 gross capacity of global container ships
was added, with another 7% expected for 2025 to be delivered consistently throughout the year. While 2025 global throughput growth is
expected to falls short by 3.5% vs. container ships capacity growth, if TEUxMile demand for 2025 does not increase and absorb the new
supply, this could pressure container shipping freight rates. On the bright side, oversupply varies by vessel size range, with larger vessels
facing more significant challenges. Local liners with vessels below 5,000 TEU are likely to find this situation less severe.

Delivery Breakdown by size range in TEU Millions Fleet growth and global throughput growth

12%
10.30%
2026F 0.4 0.7 0.4
10%
8.20%
2025F 0.2 0.3 0.5 1.1 8%
6%
2024 0.5 0.8 0.5 1.3 6% 7.20%
4.50%
4.10%
2023 0.5 0.2 0.2 1.4 4% 2.90%
4.50%
2022 0.3 0.3 0.5 2%
2.50%
2021 0.2 0.3 0.6 0%
0.30%
-2% -0.30%
2020 0.2 0.2 0.4 -1.10%
2020 2021 2022 2023 2024F 2025F
0 0.5 1 1.5 2 2.5 3
% annual capacity growth % global throughput growth
<5,100 TEU 5,100-9,999 TEU 10,000-15,099 TEU >= 15,100 TEU

Source: Alphaliner

Tanker shipping is another segment that was supercharged by the disruptions, especially the Russia-Ukraine conflict. Thus, we see a
normalization of tanker freight and charter rates despite being maintained at a high level. From our vantage point, recent events lead us to believe
that tankers have likely reached their cycle peak, given the hope the conflict in Ukraine has higher probability of ending during 2025 with a Trump
victory if we take him at his word of swiftly ending the war.

Express delivery continued to grow in 2024, with 30% YoY growth of parcels and 20% YoY growth of revenue, which is expected to continue
through 2025. This shows that even with a very strong growth of demand, pricing and margin are being pushed downward because of heavy
competition. We expect that parcel volume growth would continue to remain around 20-25% YoY in 2025 along with ecommerce growth path.
However, new forms of ecommerce (for example, crossborder e-commerce….) would require existing players to dynamically change their operation
and investment to facilitate them.

Valuation: The valuations for GMD VN and HAH VN are at a high historical range, but supported by potential catalysts in 2025F. PVT VN is at
reasonable range (9x 2024 P/E), in our view, while VTP’s valuation appears too high (40x 2025 P/E).

Recommendation: Our top pick for 2025 is GMD VN and HAH VN.

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Top picks
1. Hai An Transport and Stevedoring JSC (HAH: HOSE)

• 1Y Target price: VND 56,600

• Investment thesis:

✓ Potential introduction of new U.S. import tariffs by President-elect Trump could lead to a significant increase in import demand prior to
tariffs taking effect.

✓ With the introduction of three new 1,780-TEU vessels and one 3,500-TEU vessel to the market, containership charter segment expected
to drive more earnings growth during 4Q2024 and 2025.

✓ Most charter contracts for 2025 are already secured. Further movement in time-charter rates are to likely positively impact performance
of chartered vessels to be renewed in 1H2025.

✓ 2025F NPATMI is estimated to grow 17% YoY to reach around VND 650 bn, with 2025F EPS of VND 5,132.

• Risks:

✓ Volatility in shipping demand recovery.

✓ Headwinds in the ocean freight market sooner than expected.

2. Gemadept Corporation JSC (GMD: HOSE)

• 1Y Target price: VND 71,200

• Investment thesis:

✓ Second largest in terms of Vietnam seaport capacity and operating a full seaport & logistics ecosystem nationwide, and owns a large sea
port project in Haiphong (Nam Dinh Vu) in northern VN and Cai Mep and southern VN (Gemalink).

✓ Beneficiary of higher container freight rates during 2025F if the Trump administration enacts tariffs. This allows for negotiation to raise
handle tariffs at ports. We assume between 8% YoY ASP increase for Gemadept during 2025F, mostly focused in the South as the North
faces strong new supply this year.

✓ Core PBT is estimated to grow 26% YoY during 2025F due to higher ASP and volume growth.

✓ Potential divestment gain from non-core assets like rubber plantation or real estate would serve as stock price catalyst

• Risks:

✓ Vietnam somehow receives the tariff bullseye and seemingly always gets singled out, usually ending with higher tariffs than other countries
and consequently lower export volume.
Target Price Current Price
% Upside NPATMI Growth P/E ROE Dividend Yield (%)
Ticker (VND) (VND)
in 1yr in 1yr 12/31/2024 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F
HAH 14.3% 56,600 49,500 -53.2% 43.9% 17.1% 11.3 11.3 9.6 11.3% 16.3% 16.2% 0.0% 0.0% 0.0%
GMD 9.6% 71,500 65,200 126.4% -37.4% 8.9% 9.8 28.1 20.0 26.0% 12.6% 12.6% 3.1% 1.5% 1.5%
PVT 8.3% 30,000 27,700 13.4% 6.7% 17.0% 9.3 9.4 7.4 13.5% 13.2% 14.1% 1.1% 3.6% 5.4%
VTP n.a n.a 136,900 48.5% 7.9% 23.2% 21.5 47.2 38.4 24.0% 21.2% 22.5% 2.6% 0.0% 0.7%

Source: SSI Research

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Technology & Telecom: Entering a new growth cycle

2025 Outlook: Positive

Top Pick: FPT. Watch: CTR

2025 Outlook

Vietnamese technology & telecom sector increased 140% during 2024, Industry performance in 2024
outperforming the VN-Index (+12%). This benefited from a re-rating
300%
trend of P/E, like global technology players. This trend has remained in
place since 2023, due to the excitement about the outlook of AI 250%

(especially generative AI).2024 had also marked an important milestone 200%

for Vietnam as mobile network operators officially deactivated support
150%
for 2G-only mobile services, and the leading mobile network operator
100%
Viettel Group (Viettel) became the pioneer in 5G commercially. This is
primarily attributed to TowerCo’s increased P/E (+32%) (globally 50%

elsewhere, this P/E on average remained nearly unchanged). We note

that CTR is currently the only listed TowerCo ticker in Vietnam.
VN-Index Technology/Telecom
Technology/Telecom (excl. VGI) FPT
CTR

Source: Bloomberg, SSI Research

Global TowerCo.'s P/E multiples remained nearly flat, while that in Technology & Telecom sector's top movers & laggards in 2024
Vietnam improved in 2024

45.0 VGI
TTN
40.0
TST
35.0 FPT
30.0 CTR
ITD
25.0
ELC
20.0 ICT
15.0 CMG
VN-Index
10.0
ABC
5.0 ONE
- VTC
POT
VIE
CAB
LTC
FY23 P/E (x) TTM P/E (x)
-100% -50% 0% 50% 100% 150% 200% 250% 300%

Source: Bloomberg, SSI Research Source: Bloomberg, SSI Research

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Fig. 1: Among listed stocks, FPT held the leading position in terms of both sales and PBT throughout 9M24

9M24 sales 9M24 PBT

FPT FPT
VGI VGI
FOX FOX
POT CTR
CTR CMG
CMG TTN
CAB ELC
ICT ICT
ABC ITD
ELC ABC
ITD CAB
TTN POT
ONE ONE
VTC VTC

0 10,000 20,000 30,000 40,000 50,000 -1,000 1,000 3,000 5,000 7,000 9,000
VND bn VND bn

Source: Companies, SSI Research

FPT continued to lead both top-line and bottom-line performance, and we believe that the growth trajectory to continue through 2025. Due to the
maturity of the Vietnamese telecom market, some companies that successfully implemented cost reduction measures during 2024, which supported
PBT margin enhancement. For VGI (a subsidiary of Viettel), the company witnessed overseas expansion (including Mozambique, Haiti, Timor-Leste,
Cambodia, Burundi and Tanzania), which was the main driver for both revenue growth and PBT margin expansion. For CTR, despite double-digit
revenue growth, the company suffered a narrowing PBT margin (mainly driven by the infrastructure leasing and construction segments).

Fig. 2: Improved PBT margin, especially in the telecom sector

IT &Telecom's PBT margins % YoY growth in 9M24 sales and PBT

25%
200%
20%
150%
15%

100%
10%

5% 50%

0% 0%
Total IT F.Soft Telecom Telecom FOX CTR VGI Mix &
(excl. others
VGI)

9M23 PBT margin 9M24 PBT margin %YoY in 9M24 sales %YoY in 9M24 PBT

Source: Companies, SSI Research

*Technology sector includes F.Soft (FPT Software), ONE, ELC and ABC
*Telecom sector includes CTR, FOX, POT, VTC, CAB and VGI
*Mix & others include ICT, TTN and ITD
*We excluded TST, LTC and VIE due to unavailable 3Q24 financial statements.

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Technology sector

AI-related projects are boosting global IT spending. According to US technological research and consulting firm Gartner, the global IT spending
is expected to further increase by 9.3% YoY in 2025 (vs. 7.2% YoY for 2024), of which generative AI will be one of the key drivers. As an important
component for AI infrastructure development, data center is likely to see higher spending during 2025 (+15.5% YoY). We could witness a similar
trend for software and IT services. Especially for IT services, after experiencing sluggishness in spending from global businesses between 2023
and early 2024, we expect a rebound during 2025. Given its low-cost advantage, we expect that this will be supportive to FPT. Particularly, for FPT’s
global IT, our respective 2025 sales growth estimates are as follows: Japan (35% YoY), APAC (excl. Japan, 30% YoY), Americas (17% YoY) and
EU (35% YoY).

Fig. 3: AI-related projects are the main drivers of IT spending worldwide

Global spending for Data center, IT services and Software Global spending for IT services
2,000
1,800 +9.4% 18.0%
2,000 20%
1,600 +5.6%

1,400 13.4% 15%

+14.0% 1,500
1,200 +11.7% 9.4%
USD bn

1,000 10%
6.7% 4.9%

USD bn
800 1,000 4.1% 4.7% 5.6%
3.2% 3.0%
600 5%
400 +15.5%
+34.7% 500
200 -3.5% 0%
-
- -5%
2022 2023 2024F 2025F
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024F2025F
Global spending for Data center Global spending for IT services
Global spending for Software Value (LHS) %YoY (RHS)

Source: “Gartner Forecasts Worldwide IT Spending to Grow 9.3% in

Source: Gartner, SSI Research
2025”, on October 23, 2024, by Matt LoDolce & Catherine Howley.

Fig. 4: Primary focus of Generative AI initiatives (based on purpose percentages of global companies’ Generative AI applications)

Customer experience/retention 38%

Revenue growth 26%

Cost optimization 17%

Business continuity 7%

None of the above or not applicable 12%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Source: Gartner, SSI Research. *Gartner implemented a poll of more than 2,500 executives

The collaboration with NVIDIA will create a pathway for Vietnam to achieve AI breakthroughs in the future. In fact, the global AI chip leader
envisions Vietnam as its “second home” and has entered into a cooperation agreement with the Vietnamese government on 5 December 2024 to
establish the first R&D center in the country (called Vietnam Research and Development Center or VRDC) and Viettel’s AI data center, utilizing
NVIDIA technologies. Through VRDC, NVIDIA aims to foster software development, leverage the Vietnamese skilled STEM (Science, technology,

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engineering, and mathematics) workforce as well as engage with industry leaders, government agencies, startups, universities and students to
promote AI adoption. VRDC is also expected to be NVIDIA’s third global AI research hub (along with other two in the US and Taiwan). In addition,
on the same day, NVIDIA announced the acquisition of VinBrain (value of the deal was not disclosed), being one of its first steps to advance AI in
Vietnam. We note that VinBrain, formerly known as an associate of Vingroup (VIC: HOSE) (49.74% stake as of September 2024), is one of the
pioneering companies in Vietnam leveraging AI, computer vision and machine learning for customized solutions in the healthcare sector, serving
over 180 hospitals worldwide (data provided by the company). On the other hand, NVIDIA is also partnering with Vietnamese leading
technology/telecom companies, such as FPT (FPT AI Factory, see more details in our FPT Update Report, dated 29 Nov 2024), Viettel, CMC Corp
(CMG: HOSE) and Vietnam Post and Telecommunications Group (VNPT).

Related to semiconductors, we see both opportunities and challenges to fulfill the strategy of the field. Specifically, during September 2024,
the Vietnamese government promulgated the strategy (Decision 1018/QD-TTg) to develop the semiconductor industry, outlining “C=SET+1”
formula (Fig. 5) and a three-phase roadmap to 2050 (Fig. 6). Notably, it emphasizes some important targets to achieve by 2030, including 100
chip design companies, one chip fabrication plant, ten packaging & testing facilities and 50,000 semiconductor engineers. Meanwhile, based on
the Ministry of Information and Communications (MIC), as of November 2024, in Vietnam, there has been ~50 chip design companies and seven
packaging and testing facilities (some notable players shown in Fig. 8). The current number of semiconductor engineers nationwide also falls at
~26,000 individuals (including ~6,000 chip designers and ~6,000 engineers in packaging and testing). For the feasibility of the strategy, many
universities in Vietnam (~40) have already been offering semiconductor-related education programs. In which, for FPT only, the company currently
has ~200 chip designers and its education facilities welcomed 1,500 semiconductor students during 2024. Further, in recent years, authorities in
many localities have been quite proactive in semiconductor ecosystem/workforce development, investment attraction and international cooperation
promotion to support the industry, such as HCMC and Danang, and provinces such as Binh Duong, Vinh Phuc, Bac Giang and Bac Ninh. The
Ministry of Planning and Investment even stated that it has engaged with many global technology players (such as Google, Meta, AIChip, Lam
Research, Qorvo and Qualcomm) to shift supply chains to Vietnam. As a result, Vietnam currently has 174 semiconductor-related FDI projects, with
total registered capital of nearly USD 11.6 bn. Additionally, NVIDIA has signed agreements with several partners to shift its production chain to
Vietnam, with an investment commitment from USD 4 bn to USD 4.5 bn over the next four years. We believe that these are significant supporting
factors to develop the semiconductor industry. Nevertheless, the gap between the actual figures and targets of the strategy remains quite significant.
Especially, Vietnam has not involved in the fabrication stage yet (Viettel is assigned by the Vietnamese government to develop a plan to implement
a small-scale fabrication project), and the existing number of semiconductor engineers is only equivalent to just over half of the target of 50,000
individuals. Hence, we are concerned that the semiconductor talents training and the fabrication stage (which requires an intensive degree of
investment capital and high-quality workforce) could be key challenges over the medium-term.

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Fig. 5: “C=SET+1” formula summary

C=SET+1

C S E T +1
Chip Specialized Electronics Talent Vietnam

Chip plays a crucial Specialized semiconductor The Vietnamese Related to human Vietnam is a safe new
role for the products are needed to government aims a resources destination for the
development of core meet the demand of higher comprehensive development in the global supply chain of
technologies of the performance computing development of semiconductor the semiconductor
Fourth Industrial capabilities, big data electronics industry industry
Revolution, such as processing, low latency industry and digital
AI and Internet of and other specific transformation in
Things (IoT) requirements industries to
ensure the demand
for semiconductor
products

Source: Vietnamese government

Fig. 6: Three-phase roadmap of Decision 1018/QD-TTg

Phase 1 Phase 2 Phase 3

(2024-2030) (2030-2040) (2040-2050)
- Master R&D
- Completing self-sufficient semiconductor
Selective FDI Mix of self-reliance
Target industry ecosystem and having leading
attraction and FDI attraction
capabilities in certain stages and segments of
the production chain.
Number of chip design companies 100 200 300
Number of chip fabrication plants 1 (small scale) 2 3
Number of packaging & testing plants 10 15 20
Revenue of semiconductor industry (USD bn/year) >25 >50 >100
Revenue of electronics industry (USD bn/year) >225 >485 >1,045
Value added (%) 10-15 15-20 20-25
Well structured, appropriate number and
Size of semiconductor engineers/graduates >50,000 >100,000
meeting the needs of development

Source: Vietnamese government

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Fig. 7: Semiconductor value chain

Electronic Design Automation (EDA) companies Material vendors

Providing software
and services with Silicon wafers, photomask, Leadframes, ceramic packages,
prerequisite tools chemicals and others organic subsrates and others

Assembly,
Research & Development Design Fabrication Testing and End Use
Packaging

Providing IP cores to
integrate into chip layouts

IP (Intellectual Property)
Equipment and tools vendors
core vendors

Source: Semiconductor Industry Association (SIA), Boston Consulting Group (BCG), SSI Research

Fig. 8: For the assembly, testing and packaging, Vietnam has attracted many foreign investors

Company/investor Headquarter Description

During October 2023, Amkor Technology inaugurated its largest OSAT (Outsourced Semiconductor
Assembly and Test) factory in the world:
Amkor Technology US • Location: Bac Ninh Province
• Total area: 23 ha
• Investment capital: VND 1.6 bn (including three phases, with VND 520 mn for the first phase).
During 2024, the People's Committee of Bac Ninh province granted an investment registration license to
the FCPV Foxconn Bac Ninh project, specializing in producing and assembling printed circuit boards:
• Location: Bac Ninh Province
Foxconn Group Taiwan
• Total area: 14.3 ha
• Investment capital: USD 383 mn.
Foxxcon Group entered the Vietnam market from 2007.
Intel has had a presence in Vietnam since 2006, with a USD 1 bn chip assembly and testing facility (the
Intel US
total investment capital was adjusted to USD 1.5 bn during 2021).
HANA Micron owns two semiconductor companies/factories in Vietnam:
• HANA Micron Vietnam:
✓ Year of commencement: 2016
✓ Location: Bac Ninh Province
✓ Field: Semiconductor packaging & testing
HANA Micron South Korea • HANA Micron Vina:
✓ Year of commencement: 2019
✓ Location: Bac Giang Province
✓ Field: Semiconductor packaging & testing and module assembly & testing
✓ Phase 1 and phase 2 were completed and commenced operation during November 2020 and
September 2023, respectively. The current total registered investment capital falls at nearly USD 600

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Company/investor Headquarter Description

mn. By 2025, HANA Micron targets to invest more into Vietnam by lifting that amount to over USD 1
bn.
During March 2024, Victory Giant Technology signed a land lease contract with VSIP Bac Ninh Industrial
Park to invest in a printed circuit board manufacturing factory in Vietnam:
Victory Giant Technology China • Location: Bac Ninh Province
• Investment capital: over USD 800 mn
• Victory Giant Technology targets to commence the project during mid-2025.
• Since end-2023, Samsung Electro-Mechanics (SEMV) has begun the mass production of flip-chip ball
grid array in its Vietnamese factory.
Samsung South Korea
• Samsung Display plans to invest in a project to produce displays and electronic components in Bac
Ninh Province (USD 1.8 bn of investment capital).
During August 2024, Signetics formed a cooperation agreement with Vietnamese industrial infrastructure
Signetics South Korea and integrated manufacturing service provider CNCTech to develop a semiconductor factory (over USD
100 mn of investment capital) in Vinh Phuc Province.

Source: Companies, MIC, Vietnam Chamber of Commerce and Industry (VCCI), SSI Research

Telecom sector
Vietnam telecom market marked an important milestone during 2024 by officially commercializing the 5G network. On 15 Oct 2024, along
with the national successful support deactivation for 2G-only mobile service, Viettel, the leading mobile network provider, became the pioneer to
launch 5G commercially. The network was initially supported by over 6,500 BTS (base transceiver station) sites, spreading across all provinces
and cities. Afterwards, VNPT followed a similar path on 20 Dec 2024. We expect that MobiFone will also commercialize this advanced mobile
technology in Vietnam, following Viettel and VNPT. Specifically, MobiFone has offered a free 5G experience program since November.

Fig. 9: Viettel, VNPT and MobiFone are three only Vietnamese mobile network providers having usage rights of 5G wavebands

5G band block B1 C2 C3
Frequency range 2,500-2,600 MHz 3,700-3,800 MHz 3,800-3,800 MHz
Auction day 8 Mar 2024 19 Mar 2024 9 Jul 2024
Mobile network generation 4G/5G 5G 5G
Mobile network provider Viettel VNPT MobiFone
Time of usage right (year) 15 15 15
Price (VND tn) 7.5 2.6 2.6

Source: MIC, The Authority of Radio Frequency Management (AFRM), SSI Research

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Fig. 10: Viettel has maintained its leading position for mobile subscribers in Vietnam

Mobile sub. market share

100%

90%

80%

70%

60%

50%

40%

30% 56.39% 56.5% 56.2%

50.00% 52.20% 52.52% 54.20%
20%

10%

0%
2018 2019 2020 2021 2022 2023 6M24
Viettel VNPT MobiFone Others (Vietnamobile, Gmobile and Indochina)

Source: MIC, SSI Research

*The market share data of VNPT, MobiFone is not available in 2023-2024.

5G commercialization plays an important role in building the digital infrastructure and economy. In fact, 5G technology was stated as an
important part in the national digital transformation program (Decision No. 749/QD-TTg, dated 3 Jun 2020). With higher download/upload speeds
and lower latency compared to 4G, these are essential factors of 5G to promote the development of advanced technologies, such as AI, IoT, big
data and blockchain. Along with cloud computing, AI, IoT, big data and blockchain are key digital technologies for digital transformation. Following
that, the Vietnamese government targets the 5G network to cover over 99% of population by 2030. Given this outlook, we expect the higher density
of BTS sites in the future to adapt 5G technology, which should benefit TowerCos and especially CTR as the leading player.

The data center field will also be a growth engine of the telecom sector. Specifically, despite having a moderate internet speed, the Vietnam data
center market is still relatively small compared to other APAC countries. Further, supply has not been sufficient to fill national demand (according
to KPMG), implying growth potential. According to Research and Markets, the Vietnam data center market is expected to achieve a 2024-2029
CAGR of 13%. We believe that data sovereignty, privacy mandates and the ambition of the national digital transformation will be key demand drivers.
Some notable data center players include Viettel IDC (leading position), VNPT, FPT Telecom (FOX: UpCOM) and CMC Corp.

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Fig. 11: Vietnam data center market and internet speed vs. selected APAC countries

Data center market size (USD bn) Fixed broadband download speed (Mbps)
9.7
10 324
350
9
8 300
6.9
7 6.4 238
250 217
6 196
200 180 175
5 4.5 154
4 3.4 150 118
2.6 94
3 1.8 100 78
1.5 64
2 1.0 45 32
0.8 0.8 0.7 50
1
0 0

Source: Research and Markets, SSI Research (estimated data as of 2023) Source: Ookla, SSI Research (data as of November 2024)

Fig. 12: Vietnam has a relatively sparse data center infrastructure compared to many APAC countries

Vietnam internet users and fixed broadband speed vs. selective APAC countries*
350

300 Singapore
Fixed broadband download speed (Mbps)

250 Thailand

200 Taiwan
Japan
New Zealand
150
South Korea Vietnam
100 Malaysia
Philippines India

50 Australia
Cambodia Indonesia
0
-200 0 200 400 600 800 1,000
-50
Number of internet users (mn)

Source: DataReportal, Ookla, DC Byte, SSI Research (data as of end-2023). *Bubble size indicates IT power (in MW).

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Earnings estimates in 2025

Technology sector

As mentioned above, the global technology sector (including Vietnam’s) witnessed the improved P/E in 2024, given the continuing hype on the
outlook of AI. For FPT, the company trades at a 2025 P/E of 24.5x, on the back of a forecasted 27% YoY EPS growth (supported by 24% YoY PBT
growth) (vs. global technology peer P/E of 21x, with 11% YoY EPS growth, which we believe that FPT is still attractive. We expect strong PBT
growth will be mainly driven by the technology segment, of which the launch of FPT AI Factory will contribute ~5% of revenue into the segment.

Fig. 13: Technology P/E increased across most markets under our selected peers

40.0

30.0

20.0

10.0

-
Vietnam FPT VN CMG VN ELC VN TTN VN US med. EU med. South Singapore Japan Israel India Overall
med. Equity Equity Equity Equity Korea med. med. med. med. med.
med.
FY23 P/E (x) TTM P/E (x)

Source: Bloomberg, SSI Research

TowerCo sector

CTR trades at 29.9x 2025 P/E, reflecting 18% YoY EPS growth (vs. global TowerCo peer P/E of 13.4x and 11% YoY EPS growth), which we
believe to be fair. Following the faster-than-expected BTS construction progress during November 2024, we increase our 2024 estimate for CTR’s
built BTS sites to 3,500 (from 3,000). Further, after the 5G rollout, we believe that Viettel’s new BTS sites demand for 5G should have been lower
than expected. In fact, we observe that Viettel implemented 5G commercialization mostly on existing BTS sites rather than new sites. To be
conservative, we lower our 2025 estimate for CTR’s built BTS sites to 2,500 (from 4,500). Nevertheless, we believe that such revisions should only
have a minimal impact on our forecasts (we only reduce our 2025-2026 NPATMI by 3%-4%).

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Top pick: FPT Corporation (FPT: HOSE)

• Share price (31-Dec-2024): VND 152,500/share; 1Y Target price: VND 186,300/share (+22% upside)/Buy.

• Investment thesis

✓ The launch of FPT AI Factory is expected to be a new growth driver.

✓ Strong financial conditions with abundant net cash position and high interest coverage ratio.

✓ A low-cost advantage could help FPT continue to expand overseas. We estimate that Vietnam’s IT staffing costs are between 15%-30%
lower than Chinese and Indian players.

✓ Foreign currency-denominated debt is primarily hedged by direct hedging and foreign currency revenue.

• Risks

✓ The lower-than-expected signed contract value could weigh on the global IT performance.

✓ Further JPY depreciation against the VND could weaken the performance in the Japan market.

Fig. 14: FPT’s key metrics

Unit: VND bn 2021 2022 2023 2024F 2025F 2026F

Net revenue 35,657 44,010 52,618 62,799 77,038 91,238
Gross profit 13,632 17,167 20,320 24,301 29,718 35,382
Pretax income 6,337 7,662 9,203 11,071 13,691 16,474
Net income 5,349 6,491 7,788 9,455 11,692 14,069
EPS (VND) 3,614 4,420 4,652 4,907 6,227 7,640
BVPS (VND) 19,767 19,183 19,663 20,155 24,398 30,056
DPS (VND) 2,000 2,000 2,000 2,000 2,000 2,000
ROA 11.2% 12.3% 13.9% 14.3% 14.8% 14.8%
ROE 26.7% 27.8% 28.2% 28.6% 29.2% 28.7%
Dividend yield 2.2% 2.6% 2.1% 1.3% 1.3% 1.3%
Net cash/Equity (x) 0.3 0.3 0.3 0.4 0.4 0.5
P/E (x) 25.7 17.4 20.7 31.1 24.5 20.0
P/B (x) 4.7 4.0 4.9 7.6 6.3 5.1

Source: FPT, SSI Research

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Watch: Viettel Construction JSC (CTR: HOSE)

• Share price (31-Dec-2024): VND 124,500/share; 1Y Target price: VND 135,000/share (+8% upside)/Market perform.

• Investment thesis

✓ CTR is the only listed and leading TowerCo in Vietnam. We expect the implementation of 5G mobile network in Vietnam to be a long-term
catalyst for the infrastructure leasing segment.

✓ Parent company Viettel proved to have a competitive advantage in 5G technology, compared to other mobile network operators.

✓ CTR is a reputable construction contractor and solar energy solutions provider in Vietnam.

• Risks

✓ Lower-than-expected signed contract value for the construction segment.

✓ Delayed payments from clients (especially B2B construction) could weigh on CTR’s cash conversion cycle and performance.

✓ Slower-than-expected implementation of the capital increase plan.

Fig. 15: CTR’s key metrics

Unit: VND bn 2021 2022 2023 2024F 2025F 2026F

Net revenue 7,447 9,370 11,299 12,550 14,306 15,341
Gross profit 628 741 892 896 1,077 1,185
EBITDA 633 786 988 1,150 1,379 1,499
Net income 375 443 516 531 628 706
EPS (VND) 3,426 3,288 3,417 3,517 4,158 4,678
BVPS (VND) 14,116 14,204 17,380 16,258 18,916 22,094
DPS (VND) 1,000 2,919 2,720 1,500 1,500 1,500
ROA 9.6% 8.9% 8.0% 7.5% 8.1% 8.1%
ROE 31.6% 30.2% 28.6% 27.6% 31.2% 30.1%
Dividend yield 1.1% 5.8% 3.0% 1.2% 1.2% 1.2%
Net cash/Equity (x) 0.4 0.1 0.1 0.0 0.1 0.3
P/E (x) 25.6 15.3 26.9 35.4 29.9 26.6
EV/EBITDA (x) 11.9 7.1 10.4 12.4 10.3 9.5

Source: CTR, SSI Research

Fig. 16: Key metrics of technology stocks under our coverage

Target Price Current Price
% Upside NPATMI growth (%) P/E (x) ROE (%) Dividend yields (%)
Ticker (VND) (VND)
in 1yr in 1yr 12/31/2024 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025
FPT 22% 186,300 152,500 21.8% 22.4% 27.2% 20.7 31.1 24.5 28.2% 28.6% 29.2% 2.1% 1.3% 1.3%
CTR 8% 135,000 124,500 16.5% 2.9% 18.2% 26.9 35.4 29.9 28.6% 27.6% 31.2% 3.0% 1.2% 1.2%

Source: SSI Research

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Materials - Fertilizer: VAT rule change to sustain earnings growth

2025 Outlook: Positive

Top Pick: DGC. Watch: DPM, DCM.

2024 recap
The fertilizer sector outperformed the VNIndex with a rally of 27% in 2024. DPM and DCM share price posted a rally of 11% and 16% respectively.
Meanwhile DGC share price gained 27% despite weak earnings. This could be attributed to the expectation on FTSE Russell upgrade which would
induce passive funds to buy this stock.

In 9M24, domestic urea prices increased slightly by 3% YoY. With a recovery in urea prices and normalization of profitability of the trading segment
earnings of DPM and DCM rebound vs. last year. PBT of DCM rebounded by 64% YoY in 9M24, much faster than the 17% YoY increase of DPM.
This was in part thanks to (1) the reduction in depreciation expense and (2) one-off profit from M&A activities (DCM acquired Han Viet Fertilizer at
a price lower than its fair value). While the one-off M&A profit helped DCM to have stronger earnings growth in 2024, it creates a high bar to clear
in 2025. Meanwhile, DGC PBT in 9M24 declined by -7% YoY, as yellow phosphorus prices remained weak (-16% YoY).

2025 Outlook

Domestic urea price (VND/kg) P4 price (USD/ton)

12,000 6,000

11,000 5,500
10,000
5,000
9,000
4,500
8,000
4,000
7,000

6,000 3,500
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov
23 23 23 23 23 23 24 24 24 24 24 24

Source: SSI compiled data

• 2025 urea price trend is assessed, based on the following drivers:

1. Resilient plantation demand: In order to maintain food stability amid the possibility of a Trump protectionist trade policy vis a vis Vietnam,
we expect the plantation demand to increase slightly in 2025, hence supporting fertilizer demand. Higher rainfall by La Nina cycle might
also aid plantation, and hence fertilizer demand.

2. Export policies by China and Russia are mixed in 2025: China and Russia are the main low cost urea producers in the world, hence
their export policies would affect the pricing power of other countries. China restricted urea export in 1H24, hence helping urea price in
Vietnam to increase. Despite that China has loosened export controls on urea from 2H24, the incremental export volume is still negligible.
Concurrently, export quota of Russia for nitrogen fertilizer (mostly urea) is extended to 11.2 mn tons for Dec 2024 – May 2025 period (vs.

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9.8 mn tons for Dec 2023 – May 2024 period). However, Vietnam mainly imports urea from nearby countries (China, Indonesia, Brunei).
As such, the increase in export quota of Russia might not impact urea price in Vietnam as much.

Urea export of China (ton) Russia nitrogen fertilizer export quota (mn tons)

1,400,000 25.0

1,200,000
20.0
1,000,000

800,000 15.0
600,000
10.0
400,000

200,000
5.0
-
-
2022 2023 2024 1H24 1H25

Source: China Customs, SSI compiled data

3. Freight costs to add on domestic fertilizer price: Given the fact that US importers might front load goods prior to the expected imposition
of tariffs by the incoming Trump administration, freight costs are expected to increase by ~5% YoY for the Southeast Asian intraregional
route in 2025, hence increasing price of imported urea. We estimate freight costs to add 5-7% to the FOB price of imported urea. In such
context, we think domestic urea producers might have chance to raise prices in the domestic market to improve earnings in 2025, even if
global urea price is unchanged. However, urea exporters will still have to sell at global urea price (which we assume to be flat in 2025)
and bear the increase in freight costs, hence hurting the profit margin. Of note, exports account for 5% and 25% of DPM and DCM total
revenue.

With the increase in freight costs, resilient plantation demand and tight export protocols in place by China, we expect urea price on the
domestic market to increase by low single digit in 2025.

• VAT rule change: In late November, the National Assembly approved to change VAT from “non-taxable” to “5% taxable”, effective from July
2025.

From 2014 up to now: VAT tax-exempt From July 2025 onwards: VAT taxable at 5%
Output: End-user customers do not bear VAT Output: End-user customers bear 5% VAT
Input: fertilizer producers cannot claim back VAT on Input: fertilizer producers can claim back 10% on production
production costs (e.g. 10% on natural gas) costs (e.g. 10% on natural gas)

Impact on end-customers: In theory, changing from “tax exempt” to “5% taxable” would add to the final price that end-users (e.g. farmers)
pay. However, DPM and DCM shared that in case of intense competition between domestic and imported fertilizers, domestic companies may
choose to lower ASP before adding 5% VAT, hence somehow supporting farmers. As such, the effective increase in ASP of domestically
produced fertilizer would be less than that of imported substitutes, hence encouraging farmers to use domestically produced fertilizer.

Impact on fertilizer producers: We believe domestic fertilizer would be more competitive by way of price (as mentioned above) against
imported fertilizer, hence supporting sales volume growth. The Imported fertilizer is currently 3-5% cheaper than domestic fertilizer. In case of
intense competition with imported fertilizer like in 2015-2019 (please see the chart above), domestic fertilizer producers who can claim back
VAT on production costs may choose to lower ASP before adding 5% VAT, hence narrowing the 3-5% price gap and encouraging farmers to

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use domestically produced fertilizer. Fertilizer producers can also claim back VAT on production costs. This should predominantly benefit urea
and DAP producers, which produce fertilizer from natural resources (natural gas, coal, phosphate rock). Meanwhile, the impact on NPK
producers is minimal. As raw materials for NPK-based products are mainly single fertilizer (urea, single phosphate and kali), either the tax-
exempt or taxable VAT rule would zero out impact on raw material costs.

• Earnings of companies: In 2025, we expect urea price to increase by low single digit, while the recovery in profit margin through the trading
business may still continue, though at a softer pace than in 2024. However, the change in VAT rule from “non-taxable” to “5% taxable” should
help urea producers DPM and DCM to sustain 50% YoY and 29% YoY earnings growth respectively. We do note that earnings growth of DPM
and DCM would mainly falls into 2H25, as the change in VAT rule becomes effective from that time frame. Regarding DGC, we estimate revenue
to increase by 18% assuming yellow phosphorus increases by 4%, and that the company still has capacity to increase sales volume across
all product categories. We also expect a margin expansion in 2025 for DGC on the back of higher utilization of in-house raw materials, hence
explaining an expected net income growth of 32% YoY.

• Headwinds and tailwinds: The main headwind to our forecast is the gas depletion from cheaper oil basin, which might induce DPM and DCM
to source natural gas from more expensive sources. Meanwhile, the La Nina cycle might induce power generators to tap hydropower rather
than gas-fired power, hence relieving the natural gas shortage issue and serving as a tailwind to fertilizer companies in the short term. Another
tailwind could be geopolitical tensions, which might lead to supply suspension in Egypt and EU, hence creating export opportunities for
Vietnamese fertilizer companies. As for DGC, the fluctuation of utilization of in-house raw materials could make earnings of DGC volatile.

• Valuation: Fertilizer companies are trading at higher than historical average P/E, which could be attributed to the upcoming application of
fertilizer rule change. This would help domestic fertilizer companies more competitive against imported substitutes. And both 2024 and 2025
are years in a recovery phase from the trough in 2023, hence explaining high growth and valuation. Regarding DGC, the stock could be added
by passive funds in case of FTSE Russell (expected in 2025), hence explaining higher valuation.
Target Price Current Price
% Upside NPATMI Growth P/E ROE Dividend Yield (%)
Ticker (VND) (VND)
in 1yr in 1yr 12/31/2024 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F
DCM 19.9% 42,700 35,600 -74.3% 39.1% 28.9% 18.0 12.2 9.5 11.1% 14.7% 17.4% 6.2% 5.6% 5.6%
DGC 14.1% 133,000 116,600 -44.3% -0.1% 32.0% 12.3 15.1 11.4 27.0% 23.2% 25.0% 3.2% 2.6% 2.1%
DPM 9.7% 38,400 35,000 -90.7% 36.0% 50.1% 32.3 22.0 14.7 4.6% 6.3% 9.2% 3.0% 5.7% 4.3%

Source: SSI Research

Top pick: DGC

• 1Y target price: VND 133,000

• Investment thesis:
✓ Possessing a vertically integrated value chain for phosphate-related chemicals, which differentiates itself from other yellow phosphorus
exporters

✓ Earnings to rebound in 2025, largely thanks to sales volume growth and profit margin expansion on the back of increase in in-house raw
materials from 80% in 2024 to 90% in 2025

✓ Main beneficiaries in case of FTSE Russell upgrade

• Risks:
✓ Slower-than-expected increase in sales volume

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Materials - Steel: Domestic channel to be the key driver for earnings growth
2024 Outlook: Positive.

Top pick: HPG

2025 Outlook

Steel stocks outperformed the VNIndex during 1H24, largely due 2024 key development
to strong earnings growth. However, momentum lost steam
during the second half of the year, as earnings growth 25%

decelerated, and some companies started posting a significant 20%

QoQ decline or even incurred loss(es) during the third quarter. In 15%

10%
addition, steel stocks have already achieved a considerable
5%
recovery during 2023. Thus, although nearly all steel companies
0%
achieved strong YoY growth for the whole year 2024 compared to
-5%
2023, the stock prices at Dec. still underperformed the overall
market, increasing just over 5%.
VNIndex Materials Steel

Source: SSI Research

Steel consumption experienced positive recovery during 2024: Quarterly net profit (VND bn)
According to Vietnam Steel Association (VSA), the demand for
3,320
construction steel increased by around 12% YoY to 10.9 mn tons 3,500
3,023
2,973 2,871
in 11M24, while galvanized steel increased at a higher rate of 3,000

32.8% YoY to 5.05 mn tons fueled by a 43% surge in exports. The 2,500
2,005
pipe segment was rather stable with an increase of 4.8%. On the 2,000
1,460
other hand, HRC volume declined slightly by 2% YoY due to 1,500

remained flat, as the 28% recovery in domestic sales was offset 1,000
by the -31% decline in the export channel. 397
500

-
Domestic demand can maintain solid growth in the coming
1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24
time: We further expect domestic steel demand to grow by 10% (500)

for 2025, fueled by the strong recovery of the property market HPG HSG NKG

during 2024, resultant of the doubling of condominium new

launches YoY. In addition, the acceleration of public investment in Source: SSI compilation
the final year of 2021-2025 term would also help to boost the
consumption of steel. The major infrastructure projects in the long
term might include expressways (from North to South, and also
East-West for better connection), airports and seaports (Can Gio
in HCMC and South Do Son in Haiphong), and railway.

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Export volume can slow down due to the increase in tariff barriers globally: According to the World Steel Association, global steel demand is
expected to recover 1.2% during 2025 after dropping 0.9% during 2024. Demand from key export markets, such as the EU, the US, and ASEAN,
are expected to increase between 2%-3.5%YoY next year due to the expectation of global monetary policy easing.

However, steel exports could face more pressure from protectionism globally. One noticeable case is the anti-dumping investigation by the US
Department of Commerce into corrosion-resistant steel (CORE) imported from Vietnam, alongside nine other countries. The US accounted for 14.4%
of Vietnamese steel exports in 9M24, behind the EU (22.4%) and ASEAN (25.2%). The final result is expected to be released during Oct 2025, but
preliminary duties can be implemented during the first half of next year.

Competition from China is closely watched: Chinese steel exports reached a nine year high of 11.2 mn tons during Oct., soaring 40.8% YoY and
10.1% MoM before correcting to 9.3 mn tons during Nov. Export volume increased 22.6% YoY to 101.15 mn tons in 11M24 after a 36% increase
for 2023. Although Vietnamese steel manufacturers remain able to boost exports over the past two years, a continuous rise of Chinese steel exports
has been still exerting downward pressure on steel prices and triggering a wave of global protectionist measures.

According to the World Steel Association, Chinese demand is expected to drop another -1% during 2025, after falling -3% during 2024. The
construction segment is likely to remain weak considering that property sales and new construction started through 11M24 fell -14.3% and -23 %
YoY, respectively.

However, home prices have either increased or stabilized in several cities in China. In addition, production volume in China through 11M24 dropped
-2.7% YoY to 929 mn tons and is expected to drop another -1.3% YoY for 2025. This could lead to a decline in Chinese export volume of -9%
compared to 2024, according to Mysteel. The decline in Chinese production volume can reduce competitive pressures on Vietnamese steel globally,
support steel prices, and result in lower raw materials prices. However, given the poor demand, we do not expect steel prices to increase significantly
through 2025, unless the Chinese government implements a series of tremendous measures that can bring actual impact on its domestic property
market.

China production volume and export volume (mn tons)

Production Export
120.0 12

100.0 10

80.0 8

60.0 6

40.0 4

20.0 2

- 0
1/1/2023

2/1/2023

3/1/2023

4/1/2023

5/1/2023

6/1/2023

7/1/2023

8/1/2023

9/1/2023

1/1/2024

2/1/2024

3/1/2024

4/1/2024

5/1/2024

6/1/2024

7/1/2024

8/1/2024

9/1/2024
10/1/2023

11/1/2023

10/1/2024

11/1/2024
12/1/2023

China prodution volume China export volume

Source: SSI Research

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The pressure from imports can be mitigated with protectionist measures: Imports of steel products in Vietnam through 11M24 increased strongly
by 33% YoY to 16.17 mn tons, in which import volume from China soared 48.4% YoY and accounts for 68% of total imports.

Import volume of galvanized steel accounts for 26.7% of domestic sales and was equivalent to 15% of industry-wide production volume between
Jan-Oct ‘24. The import volume of HRC accounts for 75% of domestic sales and was equivalent to 182% of industry-wide production volume over
the same period.

For 2025, we would expect competitive pressures to decline if Vietnam can impose greater protectionist measures. The Ministry of Industry and
Trade has launched the investigation to impose anti-dumping duties on galvanized steel imported from China & Korea in Jun, and HRC imported
from China & India, and in Jul. We expect the final results of this investigation to be made during mid 2025. However, preliminary duties can still be
administered in advance.

Import volume vs domestic steel sales of galvanized steel and HRC (k tons) in 10M24

12,000

10,000

8,000

6,000

4,000

2,000

-
Galvanized steel HRC

Domestic sales volume Export Import

Source: Vietnam Steel Association, SSI Research

Earnings are expected to maintain positive growth but at a slower rate compared to 2024. We anticipate that steel companies will continue to
see positive earnings growth in 2025. HPG is likely to benefit the most from the recovery in the property market, increased public investment, and
protectionist measures. Additionally, construction steel and HRC are less reliant on exports, with export proportions of 20% and 35% of total sales,
respectively, from 11M2024, compared to 56% for galvanized steel.

HSG earnings are expected to grow 37% to VND 700 bn for 2025 due largely to the stabilization of the gross margin after a huge loss during 4QFY24
(HSG considers 4Q to span from July to Sept.). Growth is expected from a recovery in steel prices and greater domestic sales (that carries a higher
margin than exports do). On the other hand, NKG earnings are expected to go flat due to its higher dependence on the export channel and a higher
base of earnings during 2024.

Valuation: Steel stocks are trading at a 1-year forward P/E between 11-16x, which is higher than their 5-year historical average of between 8-10x.
HPG is our favorite stock for 2025 given its lower forward P/E, higher exposure to the domestic market, strong competitive advantage, and being
the prime beneficiary of potential protectionist measures.
% Upside Target Price (VND) Current Price (VND) NPATMI Growth P/E ROE Dividend Yield (%)
Ticker
in 1yr in 1yr 12/31/2024 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F
HPG 25.7% 33,500 26,650 -19.5% 75.0% 28.0% 23.8 14.8 11.6 6.8% 11.0% 12.5% 0.0% 0.0% 0.0%
HSG 8.4% 20,000 18,450 -88.7% 1697.9% 37.1% 435.0 33.2 16.3 0.3% 4.7% 6.2% 2.5% 1.8% 1.8%
NKG 11% 16,000 14,450 -194.2% 357.4% 2.2% 55.3 12.7 12.5 2.2% 8.3% 7.0% 0.0% 0.0% 0.0%

Source: SSI Research

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Top picks: Hoa Phat Group JSC (HPG: HOSE)

• BUY - 1Y Target price: VND 33,500

• Investment thesis:

✓ Earnings are expected to increase by 28% to VND 15.3 tn in 2025, due to various catalysts, such as the recovery in property market, the
acceleration of public investment, and potential enhancement of protectionist measures for steel imports.

✓ HPG’s share of construction steel continued to improve from 35% during 2023 to 38% during 2024 on the back of a recovery in exports,
and the reduction of produced steel volume at some domestic steel companies after incurring large losses.

✓ The first furnace of Dung Quat has run a pilot test and can officially commence operation from 1Q25, which would increase HPG’s HRC
production and crude capacity 93% and 33%, respectively. The second furnace, with the same capacity, is expected to follow from late
2025 or early 2026. We expect HPG’s sales volume to increase substantially from 3 mn tons during 2024 to 7.5 mn tons during 2026.

• Risk:

✓ Recovery in demand could materialize later than expected.

✓ The company could cut selling price of HRC more aggresively to achieve a reasonable utilization rate for new capacity.

✓ Volatility in price of steel and raw materials can affect the company’s margin.

(VND bn) 2021 2022 2023 2024F 2025F

Net sales 149,680 141,409 118,953 133,805 160,917
Net sales growth (YoY) 66.09% -5.53% -15.88% 12.49% 20.26%
Gross profit 41,108 16,763 12,938 18,847 24,463
Gross profit margin 27.46% 11.85% 10.88% 14.09% 15.20%
Financial income 3,071 3,744 3,173 2,420 2,629
Financial expense -3,732 -7,027 -5,192 -4,196 -5,491
SG&A -3,444 -3,685 -3,269 -4,014 -4,586
Profit before tax 37,057 9,923 7,793 13,525 17,175
Net income 34,521 8,444 6,800 11,902 15,286
Net income growth (YoY) 156.34% -75.39% -19.44% 74.14% 28.43%

Source: HPG, SSI Research

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Real Estate - Industrial Parks: Supply improvement amidst demand slowdown in 2025
2025 Outlook: Neutral

Top picks: DPR, KBC, BCM

2025 Outlook
• The industrial park real estate developer sector experienced a 17.7% increase during 2024, outperforming the VN Index by 12.1%. This
performance aligns with the commentary in our previous report. Notable stock performers include:

✓ GVR: Shares appreciated by 44.5% YTD, driven by a 38% YTD rise in rubber prices and income from transferring rubber land to land for
industrial park development. Net profit after tax and minority interest (NPATMI) increased by 38% YoY through the first nine months of
2024.

✓ SZC: Shares increased by 18.8% YTD, due to a 39% profit increase for the first three quarters of 2024 compared to the same period last
year, alongside a record high in signed memorandums of understanding (MOU).

• The supply of new industrial parks is projected to expand before the end of 2025. During 2024, eight new industrial parks commenced
operations, encompassing 3,029 hectares, reflecting a 3.3% increase compared to the total area of operating industrial parks, as reported by
the Ministry of Planning and Investment.

Moreover, there were 27 approved investment projects for industrial parks across the nation, with a total area of 8,886 hectares, increasing
the total area in Vietnam's industrial parks to 18,800 hectares, a 9% YoY growth. New industrial parks are expected to commence operations
by the end of 2025. However, there is a notable shift from Tier 1 to Tier 2 industrial parks, as most new projects are located in provinces such
as Bac Giang, Ha Nam, Binh Phuoc, Ba Ria Vung Tau, and Tay Ninh.

New industrial park approved for investment during 2024

IP Total area (ha) Toal capital investment (bn VND) Industrial Park developer Location
Thinh Phat 113 1443 Thinh Phat Investment JSC Long An
Expanded Viet Han 147 1237 Fuji Phuc Long Bac Giang
Dong Anh 299 6338 Vinaconex Ha Noi
Hiep Thanh -stage 1 495 2350 Vietnam Rubber Group Tay Ninh
Doc Da Trang 300 1807 Viglacera Yen My Khanh Hoa
Song Cong II 296 3985 Viglacera Thai Nguyen Thai Nguyen
Phuc Son 124 1836 Le Delta Bac Giang
Tan Phuoc 1 470 5937 Idico Tien Giang Tien Giang
Hiep Phung 175 2938 Hoa Phu Invest Ha Noi
Expanded Phuc Long 329 5642 Phuc Long investment Long An
Tho Hoang 250 3095 An Thi Hung Yen
Dong Van V stage 1 237 2911 Ha Nam Infrastructure JSC Ha Nam
Chau Minh - Bac Ly - Huong Lam 106 1256 Hightech Infrastructure JSC Bac Giang
Nam Tan Lap 245 2590 Saigontel Long An Long An
Vinhomes Vung Ang 965 13276 Vinhomes IP JSC Ha Tinh
Hoa Yen 269 3745 Fecon Hoa Yen Bac Giang
WHA Smart Technology 179 1320 WHA Thanh Hoa
Gia Lach 257 3745 Thang Long Import Export Investment Ha Tinh
Yen Lu 120 1543 Western Pacific Bac Giang
Dong Van VI 250 3000 Ha Nam International Port JSC Ha Nam
Xuan Que - Song Nhan 1000 Xuan Que IP Dong Nai
Bau Can - Tan Hiep 1000 9252 Tan Hiep IP Dong Nai

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IP Total area (ha) Toal capital investment (bn VND) Industrial Park developer Location
Expanded My Xuan B1 110 1989 Idico Conac BR-VT
Nam Dinh Infrastructure Development
Trung Thanh 200 1657 Nam Dinh
Investment JSC
Cam Lien 450 1840 Campella Quang Binh Quang Binh
Hung Phu 350 1939 Geleximco Hung Phu Thai Binh
Tran Yen 255 2184 Viglacera Yen Bai

Source: SSI RS

• The procedures for licensing the establishment of new industrial park are anticipated to accelerate in 2025. In November 2024, the
National Assembly enacted legislation amending and supplementing four distinct laws (planning, investment, PPP, bidding). Notably, this
amendment to the Investment Law mandates the delegation of authority to grant investment policies for industrial parks to the Provincial
People's Committee, rather than the Prime Minister. It is believed that this decentralization of industrial land management will expedite the
establishment of new industrial parks, particularly benefiting companies with substantial converted land resources, such as rubber plantation
enterprises.

The conversion of rubber plantation land into industrial parks has yielded positive outcomes. In 2024, three new industrial parks—Hiep Thanh
in Tay Ninh province, Xuan Que Song Nhan in Dong Nai province, and Bau Can Tan Hiep, also in Dong Nai province—received investment
approval for conversion from rubber plantation land, encompassing a total area of 2,495 ha. It is anticipated that rubber companies like GVR,
TRC, and DPR (with expanded Bac Dong Phu IP and expanded Nam Dong Phu IP) will commence revenue generation from the transfer of
rubber plantation land to industrial parks starting in 2025.

• The forecast for industrial land area available for lease is projected to decrease in 2025. However, during 2024, Vietnam's FDI inflows
have decelerated. The total registered FDI reached USD 31.4 billion, representing a year-on-year increase of merely 1% from January to
November 2024.

FDI disburse and register (USD mn) Newly registered FDI (USD mn) Dec 2013 – Nov 2024

35,000 25,000

30,000
20,000
25,000

20,000 15,000

15,000
10,000
10,000

5,000 5,000

-
-

FDI Disburse FDI Register Manufacturing Electricity, Gas Real Estate Others Scientific, Tech

Source: MPI

Key reasons for a slowdown in Foreign Direct Investment (FDI) expansion in industrial parks during 2024 include:

(1) Exchange rate volatility: Fluctuations in exchange rates may significantly impact the overall performance of projects, creating uncertainties
for enterprises with FDI. FDI policy reform is crucial to attract foreign capital to targeted sectors. Presently, Vietnam faces competition for
FDI inflows from neighboring countries such as Indonesia, which has implemented the Omnibus Law, and Thailand, which has established

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a competitiveness enhancement fund and applied a 10% corporate income tax rate. Furthermore, the implementation of global minimum
tax (GMT) rules in Vietnam began in 2024. The Decree on the investment support fund, which is known for providing solutions to address
GMT issues, is also expected to be released this December.

Foreign exchange rates FDI into Indonesia (by trillion IDR) 4Q2019 – 3Q2024

120 240

215
110
190
100
165

90 140

115
80
12/31/2020 12/31/2021 12/31/2022 12/31/2023 90

4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
2Q2022
3Q2022
4Q2022
1Q2023
2Q2023
3Q2023
4Q2023
1Q2024
2Q2024
3Q2024
USDINR USDVND USDTHB USDMYR USDIDR

Source: Bloomberg Source: Tradingeconomics, SSI Research

(2) Infrastructure limitations in southern Vietnam: The development of infrastructure has been gradual, leading to increased logistics costs
that could impact the attractiveness of investments. Nonetheless, Vietnam is making efforts to enhance its infrastructure to better connect
industrial hubs, such as through the construction of the North-South expressway and the railway linking China and Vietnam.

(3) Limited available land in industrial park hubs creates challenges in selecting the optimal investment locations: The availability of ready-
to-lease land in key industrial parks has decreased, with average occupancy rates reaching 81% in northern Vietnam and 92% in southern
Vietnam as of the third quarter of 2024 (CBRE).

We anticipate that demand for industrial park leases will decline during 2025 due to various factors affecting major tenants from the United
States and China.

Selected large foreign tenants in Vietnamese industrial parks in 2024

Total value of investment
Company Nationality Industry Location IP IP developer Size (ha)
(mn USD)
Trina Solar Cell China Solar 454 Bac Giang Van Trung FuGiang 25
Kokin Solar Hongkong Solar 275 Quang Ninh Texhong Hai Ha Texhong Vietnam
Hyosung Korea Bio BDO 730 Ba Ria - Vung Tau Phu My II IDICO 50
Hyosung Korea PP and LPG 49 Ba Ria - Vung Tau Phu My II IDICO
Electronic Tripod Taiwan Semiconductor 250 Ba Ria - Vung Tau Chau Duc Sonadezi Chau Duc 18
TVP Japan Semiconductor 176 Ba Ria - Vung Tau Phu My III Thanh Binh Phu My 12
BOE China Semiconductor 277.5 Ba Ria - Vung Tau Phu My III Thanh Binh Phu My 20
Advanced Optics USA Semiconductor 83 Dong Nai Nhon Trach I IDICO
Regza China Electronic 40 Dong Nai Long Thanh Sonadezi Long Thanh 6
Jeil E&C Korea Logistic 35.4 Dong Nai Long Thanh Hightech Amata 4.1
Manufacturing plastic
ZQ Vietnam China 12 Dong Nai Long Thanh Hightech Amata 1.3
components
Kiswire Vietnam Korea Steel 22.7 Binh Duong Bau Bang Becamex IDC 8.9
Pahong Vietnam Taiwan Textile 65 Binh Duong Bau Bang Becamex IDC 16
Giant Manufacturing Taiwan Manufacturing bicycles 23 Binh Duong VSIP II VSIP
Amkor Korea Semiconductor 1070 Bac Ninh Yen Phong 2C Viglacera 23
Bearings and linear
IKO Thompson Japan 57 Quang Ninh Amata Song Khoai Amata 3
motion equipment

Source: SSI

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Our analysis reveals that the areas under MOU and new lease agreements by listed industrial park developers have decreased by 30% to
65% year-on-year during the first nine months of 2024. This decline is expected to adversely affect revenue and profit in 2025.

MOUs area (ha) of some listed IP developers

180
160
140
120
100
80
60
40
20
0
IDC VGC SZC KBC LHG

9M23 9M24

Source: SSI

• Lease prices are anticipated to experience a modest increase of between 3% and 5% during 2025. According to CBRE, lease prices are
expected to increase between 3% and 9% annually over the next three years in northern Vietnam industrial parks, and between 3% and 7% for
southern Vietnam during the same period. The average rental price in the northern Vietnam industrial parks is expected to reach USD 145/m2/
term, with an expected occupancy rate of 82% for 2025. Additionally, the average lease price in southern Vietnam’s industrial parks is
forecasted to reach USD 178/m2/term, with an occupancy rate of 89% for 2025.

According to Colliers, lease prices in key industrial areas in Indonesia, including Karawang, Bekasi, and Tangerang, averaged USD 176 per square
meter per term for the third quarter of 2024. These rates are 14% higher than the average prices found in northern Vietnamese industrial parks, with
no difference relative to southern Vietnamese industrial parks.

Therefore, it is anticipated that the rate of rental price increases for industrial parks will decelerate to enhance competitiveness with other markets
such as Indonesia, India, and Malaysia.

Leased price (USD/m2/term), Vietnam ind. parks Leased industrial land (ha), Vietnam ind. parks

200 700
180 600
160
500
140
400
120
100 300
80 200
60 100
40
0
1Q20
2Q20
3Q20
4Q20
1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
2Q23
3Q23
4Q23
1Q24
2Q24

1H22 2H22 1H23 2H23 1H24

North IPs South IPs Northern IPs Southern IPs

Source: CBRE Source: CBRE

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We recognize that the industrial park sector faces certain challenges, including: (i) The diminishing competitive advantage in rental prices within
Vietnam's industrial parks, as the average rental prices across various areas have converged; and (ii) The rising investment costs for new
industrial parks due to the complexities of land compensation for site clearance. The recent implementation of updated land price tables across
multiple locations, since late 2024, has resulted in a substantial increase in land compensation costs for new industrial parks. This price surge
is anticipated to decrease profit margins on new projects to between 30-35%, compared to over 50% for existing industrial parks.

Accordingly, we continue to prefer developers of industrial parks who possess a significant amount of readily available land for lease, as
illustrated in the chart below.

Total area and remaining GLA (ha) of listed ind. parks

7,000

6,000

5,000

4,000

3,000

2,000

1,000

-
KBC SIP BCM IDC VGC SZC TID NTC ITA SZG VRG DTD IDV LHG BAX SZL MH3 TIP D2D

Total area GLA

Source: SSI

• We also recognize certain headwinds in the industrial park sector, including: (i) the competitive advantage in rental prices in Vietnam’s
industrial parks is gradually diminishing as average rental prices across different regions converge; and (ii) the investment costs for new
industrial parks are rising due to the difficulties associated with land compensation for site clearance. The implementation of updated land price
tables in various locations since late 2024 has significantly increased land compensation costs for new industrial parks, which is expected to
reduce profit margins on new projects to between 30-35%, compared to over 50% for existing industrial parks. Consequently, we continue to
favor industrial park developers who possess a substantial amount of readily available land for lease, as illustrated in the chart below.

• The earnings of listed industrial parks vary widely for 2025. We forecast that the NPAT for listed industrial park enterprises in 2025 will grow
by 21% YoY. However, some companies are expected to outperform the industry's average growth rate, such as: (a) NTC, with an expected
NPAT of VND 479 billion (77% YoY) due to the expanded Nam Tan Uyen Phase 2 Industrial Park commencing operation in 2025 with an
expected rental area of 30 hectares; and (b) SZC, for which we forecast a profit of VND 416 billion (26.8% YoY) in 2025. Key assumptions
include a projected leased area of 45 hectares (unchanged from 2024), with 25 hectares allocated to Tripod-related companies and Hoa Phat
Container; and the resumption of operations for BOT Road 768, with anticipated revenue and gross profit of VND 58 billion and VND 27 billion,
respectively; (c) GVR’s NPAT is expected to increase by 33.2% YoY, primarily due to rubber tree land compensation converting to industrial
land, reaching VND 1.7 billion (+112% YoY).

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Top Picks
1. DPR (Outperform - Target Price: VND 46,100/share)
DPR's extensive land bank in various locations represents a substantial opportunity for conversion into industrial parks, which could unlock
significant value. The demand for industrial parks in Binh Phuoc province is expected to rise given the high occupancy rates in Binh Duong
(94%) and Dong Nai (92%). Additionally, infrastructural enhancements, such as the North-South Expressway from Gia Nghia to Chon Thanh
and the route from Ho Chi Minh City to Chon Thanh in Binh Phuoc province (running through Thu Dau Mot), further bolster DPR’s prospects.
Moreover, DPR’s traditional natural rubber business is expected to benefit from favorable market prices, which have increased by 8% YoY
during 2025. Downside risks include: (1) a slow licensing process for the Bac Dong Phu and Nam Dong Phu expansion projects; and (2) a
potential correction in natural rubber prices.

2. BCM (Outperform - Target Price: VND 83,400/share)

BCM continues to solidify its position as a leading industrial park developer in Vietnam. The company holds a total of 357 ha of available land
for lease, supplemented by an additional 128 ha of residential and commercial land in Binh Duong New City, which is fully owned by BCM.
Further, the VSIP joint venture, in which BCM holds a 49% stake, is expected to see profit growth when VSIP Can Tho, VSIP Bac Ninh 2, VSIP
Nghe An 2, and VSIP 3 become profitable, and when VSIP Lang Son and Son My 2 Industrial Park commence operations in 2026. We forecast
BCM's net income to increase by 35% YoY in 2025, primarily driven by land transfers in Binh Duong New City and profit from the VSIP joint
venture. Risks include: (1) the transactional liquidity of Binh Duong New City; and (2) potential delays in the implementation of new industrial
parks due to legal issues and high compensation costs.

3. KBC (Outperform - Target Price: VND 33,600/share)

Despite a slowdown in business results during the first three quarters of 2024 due to a shortage of industrial land for lease, we anticipate
significant profit growth for KBC once key real estate projects receive legal approval, which is expected between now and the first half of 2025.
In the short term, we expect KBC to lease industrial land totaling 21 hectares in industrial parks such as Nam Son Hap Linh, Quang Chau, and
Tan Phu Trung, to record revenue of VND 916.5 bn (8% YoY) and NPAT of VND 301 bn (129% YoY). In the longer term, we anticipate that the
Trang Due 3 Industrial Park in Haiphong (687 hectares) and the Phuc Ninh Urban Area in Bac Ninh province (114 hectares) will complete
paperwork procedures during 2025 and start leasing, leading to an NPAT of VND 1.77 tn (154% YoY).
% Upside Target Price (VND) NPAT Growth P/E ROE Dividend Yield (%)
No Ticker
in 1yr in 1yr 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025
1 IDC 12.3% 63,000 -19.4% 25.7% -10.3% 10.2 11.3 12.4 22.8% 26.0% 25.3% 10.3% 6.7% 6.7%
2 BCM 23.2% 83,400 26.1% -25.5% 37.8% 29.8 41.9 29.2 14.5% 11.1% 14.4% 1.3% 1.2% 1.2%
3 SZC 0.9% 43,100 10.9% 50.0% 26.8% 38.1 21.1 16.8 12.6% 10.1% 11.5% 3.7% 3.1% 3.1%
4 KBC 21.7% 33,600 33.0% -70.1% 154.2% 12.0 35.0 13.8 11.8% 3.4% 8.1% 0.0% 0.0% 0.0%
5 DPR 21.3% 46,100 -13.3% 16.4% 67.7% 40.2 18.0 12.1 8.3% 9.2% 13.9% 5.7% 6.8% 6.8%
6 GVR 16.8% 36,100 -12.1% 20.2% 33.2% 54.0 33.5 24.7 3.4% 3.7% 5.8% 1.1% 1.1% 1.1%
7 VGC 23.8% 54,100 -22.1% -17.7% 14.3% 17.3 21.9 19.4 14.5% 10.7% 10.5% 3.6% 3.6% 3.6%

Source: SSI Research

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Real Estate - Residential Property: Strong pre-sale growth driven by demand recovery and new
supply
2025 Outlook: Positive

Top picks: KDH, NLG (2H25). Watch: DXG, TCH

1. The market remained hot in Hanoi, while HCMC market showed signs of recovery in 2024.

According to CBRE, the Hanoi condo market continued its strong growth during 3Q24, with total primary transactions reaching 8,009 units, a 120%
increase YoY. New units launched during this period totaled 8,227, a 174% YoY increase, resulting in a 97% absorption rate. Over the first three
quarters of 2024, Hanoi saw 19,068 new condos on sale (up 175% YoY) and 20,217 primary condo transactions (up 155% YoY), indicating that
inventory from previous years was sold during the period.

In Ho Chi Minh City (HCMC), the condo market showed signs of recovery, with primary condo transactions outpacing new supply, mainly driven
by very low new supply, which was similar to Hanoi’s market for 2023. During 3Q24, CBRE reported 1,953 primary transactions (down -26% YoY)
and only 127 new units launched (down -96% YoY). During 2023, Hanoi’s condo market had 11,283 primary transactions, exceeding the new
supply of 10,278 units.

Total condo transaction volume in Hanoi and HCMC increased 82.7% YoY to nearly 24,000 units during the first three quarters of 2024, driven
primarily by the Hanoi market.

For the landed property segment, according to CBRE, Hanoi warmed with the launch of the Vinhomes Global Gate project in Dong Anh District,
where 2,510 units were sold (up 124% YoY) out of 3,217 units launched. In contrast, the HCMC market remained quiet, with only 167 units sold
(up 542% YoY) during the quarter.

The growth in Hanoi and the early recovery in HCMC supported the presale performance of listed developers, like Vinhomes (VHM) and Nam Long
Group (NLG). Vinhomes introduced Vinhomes Royal Island in Haiphong during 1Q24, along with ongoing projects in Hung Yen province, leading to
presales of VND 89.6 tn during the first three quarters of 2024, surpassing the total presales value for 2023. Similarly, Nam Long Group achieved
presales of VND 3.5 tn, a 99% YoY increase, through current projects on sale.

Figure 1: Primary transactions in Hanoi & HCMC condo market Figure 2: Presales value of developers - 1Q-3Q’24 (VND bn)

50,000
100,000 89,600
40,000 80,000
56,700
30,000 60,000

20,000 40,000

20,000
10,000 1,769 3,523
0
- VHM NLG
2020 2021 2022 2023 9M2023 9M2024

Hanoi HCM City 1Q-3Q'23 1Q-3Q'24

Source: CBRE, SSI Research Source: VHM, NLG, SSI Research

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2. Demand growth and new regulatory changes are expected to keep real estate prices on an upward trend

During 3Q24, both Hanoi and HCMC saw price increases in the primary and secondary condo markets, reflecting strong demand from homebuyers
and investors. According to CBRE, the average condo price in Hanoi’s primary and secondary markets rose 26% YoY. In HCMC, the average condo
price increased 8% in the primary market and 5% YoY in the secondary market.

Figure 3: Hanoi & HCMC condo market, Avg price (VNDmn/sqm)

80.0 Hanoi - Secondary HCMC - Secondary

Hanoi - Primary HCMC - Primary

60.0

40.0

20.0
2019 2020 2021 2022 2023 1Q2024 2Q2024 3Q2024

Source: CBRE

The new Land Law, effective August 1, 2024, was also a contributing factor of the price increase. It replaced the old land price framework, with an
annually updated price table reflecting market values. Provinces, including HCMC, Hanoi, Hai Duong, Bac Giang and Lam Dong have issued new
land price tables, leading to significant price hikes ranging from 20% to 50x. By 2025, all provinces are expected to issue new land price tables to
be applied from 2026.

During late September 2024, the Ministry of Construction (MoC) reported a significant surge in real estate prices. The MoC expressed concern that
the new land price table would raise housing prices between 15-20%. In fact, Land use right fees, which vary significantly, constitute a large portion
of housing project costs, ranging from between 7-20% for high-rise apartments and between 25-50% for villas and townhouses.

For 2025, CBRE expects new condo prices in both Hanoi and HCMC to continue rising by around 5%. With an estimated 30,100 new condos
entering the market in Hanoi, slightly surpassing the 2024 figures, we expect new condo prices to stabilize after a 26% YoY surge during 3Q24.
This primary price stabilization is attributed to several factors:

• The significantly higher price levels compared to 2024, which may limit real demand.

• Mortgage rates are expected to remain stable and lower than pre-COVID levels, continuing to support demand.

• Developers are likely to implement more extensive sales and marketing strategies to boost demand without affecting primary condo prices.

In Hanoi’s secondary condo market, a calming trend is expected with fewer transactions and slightly lower prices compared to the end of 2024.
This is attributed to limited seller support and the high average value of condos, approximately $150,000 for a 75 sqm unit.

In contrast, HCMC might experience higher prices due to a lower new supply compared to the previous cycle.

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3. Mortgage rates are expected to be slightly higher but still at low levels

Incentive mortgage rates were at historic lows, ranging from 5.3% to 7.2% per year during 2024. These low rates were driven by intense competition
amongst local banks to attract homebuyers and reasonable funding costs.

• Since early November 2024, several local banks (Agribank, Techcombank, VIB, and MBB) have increased deposit rates. The average deposit
rate rose from a low of 4.8% per year to 5.5% per year during the second half of 2024. This increase was due to: i) higher YoY credit growth
(10% during 10M24 compared to 7.39% during 10M23), leading to potential cash shortage during the high credit season (4Q24 – 1Q25); and
ii) higher returns from other investment channels, including gold and real estate.

• With slightly higher funding costs, average mortgage rates could rise from early 2025. However, we expect stable deposit rates and low inflation
during 2025 to keep incentive mortgage rates lower than pre-COVID levels, supporting real estate market growth. If incentive mortgage rates
rise significantly during 2025, reaching 9-10% per annum, the real estate market might slow down due to the high mortgage values, making
debt and interest payments burdensome for homebuyers.

Figure 4: Avg. 12 mo. deposit rate and lending rate (%) Figure 5: Incentive mortgage rates ranged for the first 12 mo.

Lending rate Deposit rate

15.0%

11.8%
10.8% 9.5%
10.0%
8.5% 7.2% 7.2%
10.0%
5.5 8.8%
4.8 7.5% 8.0%
6.2% 6.7%
5.5% 5.3%

Pre-covid Covid 1H22 2H22 1H23 2H23 1H24 2H24

2020

4Q22
2011
2012
2013
2014
2015
2016
2017
2018
2019

2021
1Q22
2Q22
3Q22

1Q23
2Q23
3Q23
4Q23
1Q24
2Q24
3Q24

Source: SSI Research Source: SSI Research

4. More supply is expected to launch across the market during 2025, as developers capitalize on better market conditions.

• With a low and stable mortgage rate environment, effective new land-related laws, government support to increase supply (land price
calculations or issuing pilot resolution to convert non-residential land to commercial projects), and continued economic growth, the real estate
market is expected to strongly recover with increased supply during 2025.

• In Hanoi, the market is expected to perform well with an increase in new supply. According to CBRE, the new condo supply in Hanoi may reach
30,100 units, slightly higher than in 2024. However, given the stronger-than-expected supply in 2024 (29,700 units versus the forecasted
16,000) and government support, the market may see even stronger supply in 2025, potentially reaching 40,000-45,000 new condos.
However, due to a 28% increase in pricing YoY during 2024 as estimated by CBRE, primary prices are expected to stabilize with a lower
absorption rate over the next two years, similar to the healthy period from 2016-2020.

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Figure 6: Hanoi new condos and absorption rate during 2016-2020 period (units & % of units sold)

50,000 100%

40,000 80%

30,000 60%

20,000 40%

10,000 20%

0 0%
2016 2017 2018 2019 2020

New condos sales Absorption rate

Source: Savills

• Given the improved new condo supply in Ho Chi Minh City (HCMC) but still at low levels, absorption rates and pricing are expected to be
higher relative to 2024.

Figure 7: Hanoi primary condo market forecast unit & Figure 8: HCMC primary condo market forecast (unit &
VNDmn/sqm) VNDmn/sqm)

40,000 80 40,000 100

80
30,000 60 30,000

60
20,000 40 20,000
11,000
40
8,707 9,500
10,000 20 10,000
5,000 20

0 0 - 0
2019 2020 2021 2022 2023 2024F 2025F 2026F 2019 2020 2021 2022 2023 2024F 2025F 2026F

New Launch Sold Units Estimated primary price New Launch Sold Units Estimated primary price

Source: CBRE & SSI Research estimates Source: CBRE & SSI Research estimates

• Further, the real estate market in second-tier cities is also expected to see increased supply, offering additional options for real estate investment
in Vietnam. Please refer to the table below for our new supply forecasts for first-tier and second-tier cities in Vietnam during 2025:

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Project Name Location Developer Expected supply (units) Expected launch time
Hanoi & HCM City
Vinhomes Global Gate Hanoi VEFAC 4,100 low rise units & 12,600 high rise units 4Q2024
Vinhomes Wonder Park Hanoi VIC 2,300 low rise units & 600 high rise units 2025
Central Residence Gamuda Hanoi Gamuda Land ~2,605 high rise units 2025
A3/CT2, Long Bien, Hanoi Hanoi TAL ~480 high rise units 2025
The Matrix Premium Hanoi MIK Group ~990 high rise units 2025
Kepler Land - Ha Dong Hanoi TSQ ~1,280 high rise units 4Q2024
Thap Vang Hanoi PC1 182 low rise units 2025
Foresta HCMC KDH 226 low rise units & 600 high rise units 2025
Gem Riverside HCMC DXG ~3,175 high rise units 2025
Eaton Park HCMC Gamuda Land ~700 high rise units 4Q2024
The second-tier cities
Vinhomes Duong Kinh - 240 ha Haiphong VHM ~6,300 low rise units 2025
Vinhomes Green Ha Long - 4,110 ha Quang Ninh VHM N/A 2025
Vinhomes Phuoc Vinh Tay -1,089 ha Long An VHM N/A 2025
Izumi City -170 ha Dong Nai NLG ~2,600 low rise units 2025
Gem Skyworld - 92 ha Dong Nai DXG 1,700 low rise units 2025
Nam Long 2 - 43.8 ha Can Tho NLG 881 low rise units 4Q2024
Do Muoi Hoang Huy - 49 ha Haiphong TCH 1,185 low rise units & 2,494 high rise units 2025
Cai Gia township - 176 ha Haiphong VCR 1,547 low rise units 2025
Thuan An 1 & 2 Binh Duong PDR 5,954 condos 2025
Olalani Riverside Towers Danang Sungroup 1,425 condos 2025

Source: SSI Research collected

5. The pre-sales value of listed developers is expected to grow in double digits, although earnings have not yet followed suit.

During 2024, the real estate market received significant government support, leading to the approval of many delayed projects. Some projects that
achieved better legal progress, such as Wonder Park in Hanoi and Gems Riverside in HCMC, are expected to be ready for sales during 2025.
Additionally, new projects like Phuoc Vinh Tay in Long An province, A3/CT2 condo in Hanoi and Thap Vang project in Hanoi, granted through
auctions or investor biddings between late 2023-2024 are also set to launch in 2025.

We anticipate stronger pre-sale activities across the country throughout 2025 from both new and ongoing projects. VHM plans to launch several
projects during the year, including Phuoc Vinh Tay in Long An province, and Duong Kinh in Haiphong City - along with ongoing sales from projects
like Royal Island and Ocean Park 2 & 3. KDH is expected to launch a new project in Thu Duc City, called Foresta, with 226 low-rise and 600 high-
rise units, merged from the Clarita and Emeria projects. After receiving the construction permit during 3Q24, DXG also plans to sell Gem Riverside
in HCMC during early 2025.

While VHM has achieved strong presales growth during 2024 with an estimated 48% YoY growth, leading to a lower presales growth forecast of
8.1% during 2025, other listed developers like KDH, NLG, TCH, and DXG are expected to see double-digit presales growth for 2025. Presale growth
is anticipated to result in strong earnings from 2025 onward as projects are delivered.

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Figure 8: Presales value of listed developers during 2024-2025 period (VND bn)

150,000

100,000

50,000

0
VHM NLG KDH TCH DXG

2024F 2025F

Source: SSI estimates

The earnings outlook for 2025 is expected to surpass 2024 earnings for our coverage universe, with the exception of VHM. This is due to VHM’s
strong earnings between 2023-2024, driven by unit deliveries in Ocean Park 2 & 3 and the Royal Island project. Specifically, during FY2025, we
estimate that revenue and NPATMI will be VND 102.5 tn (+ 3.8% YoY) and VND 34.2 tn (-0.4% YoY), respectively. We anticipate that the 2025
project launches will not recognize revenue, resulting in our flat NPATMI YoY forecast.

Given KDH’s lack of new launches during 2024, we expect that the Foresta project will launch early 2025, with the sale of low-rise units recorded
during the year, along with the remaining units of The Privia. Consequently, KDH’s 2025 revenue and NPATMI are projected at VND 6.28 tn (+72%
YoY) and VND 1.18 tn (+22% YoY), respectively.

For NLG, we anticipate earnings growth during 2025, driven by stronger presale activities in Long An and Can Tho City. With favorable legal progress
in Bien Hoa City, where the Izumi City project is located, we expect NLG to relaunch Izumi City during 2H25. Based on these assumptions, our
revenue and NPATMI forecast for NLG are VND 5.5 tn (-4.4% YoY) and VND 627 bn (+35.0% YoY), respectively.

Gem Riverside received the necessary construction permit during 3Q24, allowing DXG to launch the project during 1H2025. With the low new condo
supply in HCMC over the past few years, we expect DXG to successfully launch this project. During 2025, DXG remains dependent on revenue from
Gem Skyworld, which we expect to relaunch during 2H25. Along with the recovery of the real estate brokerage services, DXG is expected to achieve
revenue and NPATMI of VND 2.8 tn (-29.2% YoY) and VND 180 bn (+13.7% YoY), respectively.

Presales value (VND bn) Revenue (VND bn) NPATMI (VND bn)
Ticker Expected new projects launched
2023 2024F 2025F 2023 2024F 2025F 2023 2024F 2025F
VHM 87,000 129,100 139,633 103,557 98,738 102,522 33,371 34,363 34,241 Phuoc Vinh Tay, Long An
NLG 3,920 5,205 9,283 3,181 5,760 5,508 484 464 627 Izumi city - Dong Nai province
KDH 3,716 1,320 8,145 2,088 3,657 6,285 716 971 1,183 Foresta – HCMC
TCH 2,285 3,810 7,021 3,803 3,873 5,448 744 849 1,173 Do Muoi- Haiphong
DXG 150 0 13,043 3,725 3,973 2,814 172 158 180 Gems Riverside – HCMC
Total 97,071 139,434 177,125 116,354 116,001 122,577 35,487 36,805 37,404

Source: SSI Research

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6. Sector Valuation

During 2024, residential real estate stocks declined 8.3%, despite the VN-Index increasing 12.1%.

The sector’s P/B ratio continued to decline from 1.27x at the beginning of the year to 1.08x at year-end 2024 after declining during 2023. We
consider this attractive for long-term holdings, as we believe the real estate market is expected to continue growing through 2025.

Figure 8: Stock performance – Residential Real Estate Sector Figure 9: Historical P/E & P/B – Residential Real Estate Sector

40 4

30 3

20 2

10 1

0 0
Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Jan-24

P/B P/E

Source: SSI Research Source:Fiinpro, SSI Research

7. Recommendation

Considering the stronger macroeconomic outlook and the anticipated increase in new supply following legals, we expect that the residential real
estate sector will strengthen during 2025. As such, we recommend being OVERWEIGHT the sector.

% Upside Target Price (VND) Current Price (VND) Revenue Growth NPATMI Growth
Ticker
in 1yr in 1yr 12/31/2024 2023 2024 2025 2023 2024 2025
VHM 18.5% 47,400 40,000 66.0% -4.7% 3.8% 15.7% 3.0% -0.4%
NLG 17.6% 43,000 36,550 -26.7% 81.1% -4.4% -13.0% -4.0% 35.0%
KDH 15.0% 41,500 36,100 -28.3% 75.2% 71.9% -35.1% 35.6% 21.9%

Source: SSI Research

Catalyst to watch

• New project launches and better absorption rates of the new launches.

• Continued supportive government policies which enhance market liquidity.

• Successful land auction and investor bidding for new projects.

Risks

• Higher interest rates.

• Tighter regulations to limit supply and demand.

• Potential regulation on personal income tax for real estate transactions.

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8. Top picks/most preferred:

Given our POSITIVE outlook for the sector, we favor KDH and NLG which have upcoming launches in the south for 2025, along with a strong
landbank to support future growth. Additionally, we have added DXG and TCH to our watchlist, as their new projects are set to launch during 2025
which could act as share catalysts.

8.1. Khang Dien House JSC (KDH: HOSE) - BUY

• 1Y Target price: VND 41,500

• Investment thesis:

✓ We favor KDH due to its extensive landbank in HCMC and its solid real estate development experience. KDH is renowned for projects in
both the east and west of HCMC, with a total land area of 524 ha, making it the second largest developer in the city.

✓ With the real estate market in HCMC recovering, KDH is well-positioned to benefit from several key projects nearing the completion of their
legal processes which are expected to be ready for sale during 2025. These include the Foresta (11.8 ha in Thu Duc City) and Phase 1 of
the Solina (16.4 ha in Binh Tan district).

✓ Looking ahead, KDH plans to lease the expanded Le Minh Xuan IP (110 ha) and launch the Tan Tao Township in Binh Tan district (330
ha). The project has received key approvals, including the investment license in principle and the 1/500 master plan scale. KDH is working
closely with the local government to complete land compensation, which is 85% complete. The project is expected to be ready for sales
during 2026 after achieving 90% land clearance.

✓ For 2025, we expect KDH’s revenue and NPATMI to reach VND 6.28 tn (+71.9% YoY) and VND 1.18 tn (+21.9% YoY), respectively,
driven by sales and revenue recognition from Foresta’s low-rise components, along with the revenue from The Privia.

• Risks:

✓ Difficulties encountered during the land compensation process, and higher costs associated with large projects.

✓ Delay of legal project licensing could affect company presales.

(VND bn) 2020 2021 2022 2023 2024F 2025F

Net sales 4,532 3,738 2,912 2,088 3,657 6,285
Net sales growth 61.1% -17.5% -22.1% -28.3% 75.2% 71.9%
Gross profit 1,964 1,794 1,460 1,587 1,804 3,351
Gross profit margin 43.3% 48.0% 50.1% 76.0% 49.3% 53.3%
Financial income 35 21 18 50 65 107
Financial expense -85 -73 -91 -148 -75 -92
SG&A -416 -387 -394 -367 -468 -600
Net other income -39 185 419 -53 -55 -63
Profit before tax 1,458 1,540 1,411 1,069 1,271 2,703
NPATMI 1,153 1,202 1,103 716 971 1,183
NPATMI growth 26.0% 4.3% -8.3% -35.1% 35.6% 21.9%
Net income margin 25.4% 32.2% 37.9% 34.3% 26.5% 18.8%
EPS (VND) 1,992 1,870 1,539 895 1,022 1,147

Source: SSI Research

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8.2. Nam Long Group (NLG: HOSE) - OUTPERFORM (2H25)

• 1Y Target price: VND 43,000

• Investment thesis:

✓ NLG is set to benefit over the long term from rising land prices, and projects with a total land bank of 681 ha (located in Long An
and Dong Nai province) which have already fulfilled their financial obligations. This enhances future business efficiency as
investment costs remain low.

✓ FY2025 is expected to mark a potential recovery for NLG, with the launch of new projects, including Izumi City in Dong Nai province.
We anticipate a recovery during 2025, with NPATMI reaching VND 626.7 bn, growing 35% YoY. This is driven by revenue recognition
from Southgate in Long An province and the Nam Long 2 project in Can Tho City.

✓ Over the longer term, NLG plans to launch the next phase of Waterpoint in Long An province, covering a total area of 190 ha, and
Paragon Dai Phuoc in Dong Nai province, covering 45 ha.

✓ NLG has a strong balance sheet and solid risk management, with a low debt-to-equity ratio. This should enable the company to
further develop projects and maintain creditworthiness by delivering products on time.

• Risks:

✓ Lower absorption rates at multiple second tier city projects, such as the Southgate in Long An province, the Izumi in Dong Nai
province, and Nam Long 2 in Can Tho City.

✓ A prolonged project approval process (such as revised master plans in Izumi City and Paragon Dai Phuoc) could impact presales.

(VND bn) 2021 2022 2023 2024F 2025F

Net sales 5,206 4,339 3,181 5,760 5,508
Net sales growth 134.8% -16.6% -26.7% 81.1% -4.4%
Gross profit 1,778 1,984 1,562 2,246 2,657
Gross profit margin 34.16% 45.73% 49.10% 38.99% 48.23%
Financial income 445 386 238 321 111
Financial expense -112 -199 -296 -398 -374
SG&A -997 -1155 -980 -1322 -1264
Net other income 435 29 27 21 28
Profit before tax 1,640 1,070 968 931 1,217
Net income 1,478 866 800 745 974
Net income growth 73.8% -41.4% -7.5% -7.0% 30.8%
Net income margin 28.4% 19.9% 25.2% 12.9% 17.7%
EPS (VND) 2,871 1,448 1,257 1,122 1,515

Source: SSI Research

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8.3. Hoang Huy Group (TCH: HOSE)

• Investment thesis:

✓ TCH owns prime residential land plots totaling over 94 hectares, located near the CBD of Haiphong, North Vietnam’s leading port
city. The company’s projects have secured key legal approvals, including for its master plan and investment approval. This should be
ready for sales within six months of development.

✓ With a conservative balance sheet and a net cash position at Q3 2024, TCH is well-positioned to acquire additional projects.

✓ During 2025, TCH is expected to launch sales for the low-rise component of the project on Do Muoi Street, which spans 49.4 ha,
along with continued sales at Hoang Huy Commerce (a condo building in Haiphong) and Hoang Huy New City (8 ha of low-rise units
in Haiphong). Consequently, TCH is expected to achieve 2025 revenue of VND 7.46 tn (+107.1% YoY) and NPATMI of VND 1.6 tn
(+110.5% YoY).

• Risks:

✓ Lower absorption rate at Haiphong due to high price/units.

✓ Delay in project licensing affecting company presales.

(VND bn) 2021 2022 2023 2024F 2025F

Net sales 2,756 2,093 3,803 3,605 7,466
Net sales growth -37.6% -24.0% 81.7% -5.2% 107.1%
Gross profit 647 561 1,529 1,379 3,477
Gross profit margin 23.5% 26.8% 40.2% 38.3% 46.6%
Financial income 327 442 366 146 112
Financial expense -18 -94 -38 55 -168
SG&A -131 -153 -339 -316 -540
Net other income -9 -6 16 -7 -75
Profit before tax 816 751 1,534 1,257 2,806
NPATMI 401 246 744 759 1,598
NPATMI growth -55.8% -38.6% 202.4% 2.1% 110.5%
Net income margin 14.5% 11.8% 19.6% 21.1% 21.4%
EPS (VND) 599 368 1,113 1,114 2,344

Source: SSI Research

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8.4. Dat Xanh Group (DXG: HOSE)

• Investment thesis:

✓ Sales Launch of Gems Riverside Project, District 2, HCMC: During 3Q24, DXG received a construction permit to restart the Gems
Riverside project, which includes 3,175 condos on 6.71 ha in District 2, HCMC. Given its prime location and the current shortage of
new supply, we expect high sales prices and strong absorption rates, resulting in high profitability for DXG.

✓ Recovery of Property Brokerage Services: With the real estate market in the south expected to recover during 2025, we anticipate
a 60% YoY increase in DXG’s brokerage services segment, which follows VND 1.2 tn (100%) YoY revenue growth during 2024.

✓ Potential Relaunch of Gems Skyworld during 2025: As Opal Skyline and some units of Gems Skyworld sold during the 2021-2022
period are expected to be fully handed over during 2024, 2025 revenue is contingent on sales and revenue recognition at Gems
Skyworld and brokerage services. Presales of Gems Riverside will not be recognized until 2026 when units are delivered.

• Risks:

✓ Delays in sales relaunching and launch at Gems Sky World and Gems Riverside, respectively.

✓ The real estate market is not recovering as expected.

(VND bn) 2020 2021 2022 2023 2024F 2025F

Net sales 2,891 10,089 5,512 3,725 3,973 2,814
Net sales growth -50.28% 249.03% -45.37% -32.42% 6.67% -29.18%
Gross profit 1,875 5,598 2,970 1,710 1,931 1,687
Gross profit margin 64.85% 55.48% 53.89% 45.92% 48.60% 59.96%
Financial income 72.6 352.7 464.4 409.2 33.1 (269.1)
Financial expense (858.3) (543.6) (521.1) (593.3) (400.3) (318.7)
SG&A (1,082.6) (2,885.1) (2,139.8) (976.5) (993.3) (619.0)
Net other income 31.1 (6.1) (7.3) 15.8 0.5 0.3
Profit before tax 27 2,516 768 453 571 481
NPATMI -496 1,157 215 172 158 180
NPATMI growth -140.8% -333.4% -81.4% -20.0% -8.1% 13.7%
NPATMI margin -17.1% 11.5% 3.9% 4.6% 4.0% 6.4%
EPS (VND) -957 1,942 352 282 219 250

Source: SSI Research

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Utilities - Power: Hydropower recovery will help reduce the power shortage risk
2025 Outlook: Positive

Top Picks: NT2, REE, HDG

2025 Outlook

The Vietnamese electricity sector increased 7% during 2024, slightly Industry performance in 2024
underperforming against the VN-Index (+12%).
140%
Most hydropower-related companies were the top performers: REE
130%
(+40%), CHP (+40%), SBA (+23%), SHP (+21%), HDG (+15%),
S4A (+15%) and VSH (+13%). We mainly attribute this to the market 120%
expectation on the gradual weather transition from El Niño to La Niña 110%
pattern, which is expected to support the hydropower source. We
100%
observe that this transition began from 3Q24, which might continue in
2025. 90%

POW (+7%) closely followed the electricity sector performance. We 80%

note that POW’s investment portfolio is quite diversified, including gas- 70%
fired power, coal-fired power and renewables.
60%

Mar-24

May-24

Jun-24

Jul-24

Aug-24
Dec-23

Apr-24

Sep-24

Dec-24
Jan-24

Feb-24

Oct-24

Nov-24
Thermal power-related companies, on the other hand, underperformed:
HND (-1%), PPC (-8%), NBP (-4%), BTP (-12%), PGV (-13%) and NT2
VN-Index Utilities Electricity
(-12%), primarily due to higher input prices and gas shortages. We PC1 POW NT2
believe that input prices will continue to increase in 2025, due to the HDG
supply shortage.
Source: Bloomberg, SSI Research

The power shortage did not take place in 2024 due to increased reliance on coal-fired electricity
Supply has caught up with demand. Electricity consumption during 2024 witnessed 9% YoY growth (per Vietnam Electricity Group (EVN)), which
we mainly ascribe to 1) H1 2023 low base due to the power shortage; and 2) gradual economic recovery. Despite the demand rise, Vietnam no
longer faced a power shortage like 2023 (11M24 electricity output increased 10% YoY). As expected, EVN relied more on coal-fired power, which
has been cheaper and had a more stable input than gas-fired. In fact, during 11M24, coal-fired power output was nearly 50% to the total output (vs.
46% during 11M23), while the respective figure for gas-fired power fell to 7% (vs. 10% during 11M23). Additionally, to partially offset the current
gas field depletion, PV GAS (GAS: HOSE) imported ~0.4 bn m3 of liquefied natural gas (LNG) (from mid-April 2024), serving the peak electricity
demand season as well as test run of Nhon Trach 3&4, the first-ever LNG-fired project in Vietnam.

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Fig. 17: The gradual economic recovery supported the electricity output in 2024

35 %YoY monthly changes in nationwide power output, IIP and manufacturing IIP 25
30.6
30 20

25
15
20
10
14.3 13.3
15

%
%

10.6 11.6
10.3 5
10 8.2 7.7 8.1

3.7 0
5

0 -5

-5 -2.5 -10
Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24
Power output %YoY IIP % YoY Manufacturing IIP % YoY

Source: EVN, General Statistics Office of Vietnam (GSO), Ministry of Industry and Trade (MoIT), SSI Research

Despite YoY decline during H1, the full market price (FMP) still managed to recover during H2 2024, which we mainly attribute to the higher
electricity demand. We estimate that 11M24 average FMP achieved VND 1,411 VND/kWh (nearly flat YoY).

Fig. 18: Vietnam FMP (VND/kWh) narrowed in H1 but recovered in H2 2024

Vietnam electricity sector full market price (VND/kWh)

2,100 1,964
1,915 1,943
2,000
1,900
1,697 1,748
1,800
1,700 1,626 1,566
1,560
1,600 1,635 1,507 1,497
1,464
1,500 1,456 1,422
1,400 1,441 1,289
1,300
1,200 1,126
1,100 1,032
998
1,000
900 829
783 987 794
800
700
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2023 2024

Source: EVN, NSMO (the National Electricity System and Market Operation Company Limited), Electricity Regulatory Authority of Viet Nam (ERAV), SSI Research
(as of November 2024)

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2025: Sufficient power supply amid projected higher demand

We forecast a 10.5% YoY growth for the national electricity consumption in 2025, based on our assumption of energy elasticity of 1.5 and
respective GDP growth estimate of 7% YoY. This projection is also close to the base case guidance of the Vietnamese government (11%-12% YoY).

Fig. 19: Nationwide power consumption forecast

350 12%
304.9
300 276.0 10.5%
10%
8.9% 253.1
242.7
250 225.3 9.0%
209.4 216.8 8%
200 7.7%
6%
150
4.3% 4%
100 3.9%
3.5%
50 2%

0 0%
2019 2020 2021 2022 2023 2024E 2025F
Power consumption (bn kWh) Power consumption growth - RHS

Source: EVN, NSMO, GSO, SSI Research

Despite higher demand, we expect supply will continue to keep up, mainly driven by the hydropower turnaround, completion of 500 kV Circuit-3
power transmission line and continuing sufficient coal supply for electricity production. However, we see that power shortage risk still exists, due
to the continuing gas fields depletion and higher dependence on the international coal supply (domestic coal production might not catch up with
electricity demand). According to MoIT, during 2024, Vietnamese coal-fired plants consumed ~47.2 mn metric tons of domestic/mixed coal and
~24.1 mn metric tons of imported coals.

The prevalence of La Niña or neutral weather will benefit hydropower plants. El Niño ended during May 2024 and has gradually transformed to
neutral weather pattern. Along with the rainy season (starting from end-H1 2024), these supported hydropower with more favorable weather
conditions. In fact, EVN has relied more on hydropower since June. We expect that this weather pattern will persist or gradually shift towards La
Niña during 2025, continuing to aid in the hydropower recovery.

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Fig. 20: High probability for neutral weather and La Niña implies the dominance of these weather patterns in 2025

ENSO forecast

100% 0% 1% 1% 3% 4% 7%
90% 14%
22% 24%
80%
52% 49%
70% 57%
60% 68%
77% 75% 64%
50% 56% 51%
40%
30%
48% 50%
20% 42%
29% 25%
10% 19% 18% 22% 22%
0%
Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25 May-25 Jun-25 Jul-25

La Niña Neutral El Niño

Source: National Oceanic and Atmospheric Administration (NOAA), International Research Institute for Climate and Society (IRI), SSI Research (as of November
2024)

On 29 Aug 2024, the National Power Transmission Corporation (EVNNPT) inaugurated the 500 kV Circuit-3 power transmission line.
Specifically, the transmission line is 519 km long, spanning nine provinces (Quang Binh, Ha Tinh, Nghe An, Thanh Hoa, Ninh Binh, Nam Dinh, Thai
Binh, Hai Duong and Hung Yen). According to the Vietnamese government, this is expected to increase the electricity transmission capacity from
Central to Northern Vietnam (to 5,000 MW from 2,500 MW). We anticipate that this transmission line will somehow reduce the power shortage risk
in Northern Vietnam.

Fig. 21: Some details about the 500 kV Circuit-3 power transmission line project

Details
Day of inauguration 29 Aug 2024
Total length 519 km, from Quang Binh Province to Hung Yen Province
Investment capital Over VND 22.3 tn (USD 897 mn)
• Nam Dinh I - Thanh Hoa: 74 km (completed on 30 Jun 2024)
• Nam Dinh I thermal power plant - Pho Noi: 127 km (completed on 19 Aug 2024)
Four sections of the project
• Quynh Luu - Thanh Hoa: 92 km (completed on 19 Aug 2024)
• Quang Trach - Quynh Luu: 226 km long (completed on 27 Aug 2024)

Source: EVN, SSI Research

Coal-fired electricity will continue to be an important power source, as renewable energy highly depends on weather conditions, and gas fields
are still under ongoing depletion. Nevertheless, we are concerned that mixed coal prices will keep rising in Vietnam, given the relatively higher
international coal prices than domestic source and higher international coal weight in the coal mixture. We believe that such an outlook will continue
to weigh on coal-fired plants’ performance.

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Fig. 22: Despite cooling down from 2022-2023 high bases, global coal prices are still 20%-30% higher than domestic coal prices (per our estimates)

Notable global coal prices

500
Indonesia HBA coal 6322kcal/kg
450

400 Australia Newcastle Port Thermal Coal 6000 kcal/kg

350 China Qinhuangdao Port Thermal coal

5500 kcal/kg
300
USD/metric ton

250

200

150

100

50

Mar-24
Mar-21

May-21

Jul-21

Mar-22

May-22

Jul-22

Mar-23

May-23

Jul-23

May-24

Jul-24
Sep-21

Sep-22

Sep-23

Sep-24
Jan-21

Nov-21

Jan-22

Nov-22

Jan-23

Nov-23

Jan-24

Nov-24
Source: Bloomberg, SSI Rsearch

We are concerned that the natural gas supply shortage will become more intense during 2025. Specifically, we estimate that the gas supply
capacity in Southeast Vietnam reached 2.8 - 3 bn m3 p.a. during 2024 (vs. 4.3 bn m3 p.a. during 2023). This might continue to fall to 2.06 bn m3
in 2025 (per MoIT), implying a more extreme natural gas shortage. For Southwest Vietnam, we observe that the situation could be less severe, with
1.2-1.4 bn m3 p.a. of 2024 capacity (similar to that of 2023). MoIT also targets a steady level for this region with nearly 1.35 bn m3 p.a. during
2025. Nevertheless, Vietnamese natural gas fields are depleting, threatening the performance of gas-fired plants as well as the stability of gas-fired
power source. To partially offset this situation, LNG was imported in 2024 (as mentioned above). We expect that this trend will continue into 2025
as we anticipate the launch of Nhon Trach 3 and 4 LNG-fired plants (1,624 MW). POW, the investor of these plants, targets the kickoff of Nhon
Trach 3 plant in June and Nhon Trach 4 plant in September. We expect that the launch of this project will play an important part in mitigating the
power shortage risk.

Fig. 23: Gas and coal prices assumption

Year Fuel Oil Brent Nhon Trach 1 and NT2’s gas price Ca Mau 1&2’s gas price Vung Ang 1’s coal price
Unit USD/metric ton USD/bbl USD/MMBTU USD/MMBTU VND/kg
2023E 445 82 9.06 8.98 2,303
2024F 455-465 78-82 9.46 8.95 2,702
2025F 426-434 74-77 9.40 8.49 2,759

Source: Bloomberg, POW, NT2, SSI Research

On the other hand, we forecast a higher FMP YoY, which could partially support the performance of thermal power plants. Our assumption is
based on the following expectations:

• Hydropower is currently less expensive than thermal sources (including coal-fired and gas-fired power). We expect EVN’s greater usage of
this source could allow it to utilize more on thermal sources, implying a potential of higher FMP. In fact, we believe that this is the most viable
solution to maximize the power supply and reduce the power shortage risk.

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• In October 2024, EVN lifted up its average retail electricity price to VND 2,103/kWh (+4.8%). We estimate that such level should have
been enough for EVN to breakeven during 2025 and could encourage it to rely more on thermal electricity. We note that EVN suffered a loss of
nearly VND 27 tn in 2023. In that year, the average retail electricity price was adjusted twice to VND 1,920/kWh (on 4 May) and VND 2,007/kWh
(on 9 Nov).

Fig. 24: Vietnam FMP forecasts

1,800

1,600 1,539 1,500

1,396 1,410
1,400
1,208
1,200 1,093
1,045
1,001
1,000
VND/kWh

897 886
806
800
665
600

400

200

0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024F 2025F

Source: EVN, NSMO, ERAV, SSI Research

Fig. 25: EVN’s average retail electricity prices*

2,500

2,028
2,000 1,864 1,864 1,864 1,914
1,834
1,721
1,599 1,622 1,630
1,467 1,509
1,500
VND/kWh

1,000

500

0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Source: EVN, SSI Research. *The data is adjusted, taking into account the day effect. On 11 Oct 2024, EVN increased its average retail electricity price to VND
2,103/kWh (from VND 2,007/kWh).

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Turning to renewables, there have been some key policy developments. During 2024, only less than 380 MW of new transitional renewable
capacity (per our estimate) was added to the national electricity system (still quite small when compared to over 80,000 MW of the national power
capacity). We primarily ascribe this to the lack of new regulations encouraging renewable project developments. However, several key regulations
related to the electricity sector were enacted, which we anticipate to be key catalysts over the long-term:

• DPPA (Direct Power Purchase Agreement) mechanism: With two primary forms of direct trading (Fig. 26 and Fig. 27), this should help
reduce the dependence on EVN and the national grid, encourage more investment in renewables and enhance the feasibility of the Power
Development Plan (PDP) VIII) (see more details in our Vietnam Electricity Sector Update Note, dated on 12 Jul 2024). During 2025, we expect
further regulations from the Vietnamese government to implement this mechanism.

Fig. 26: Illustration of direct trading through the private connection line

Mutual contract
Renewable power generator (Seller) Large electricity user (Buyer)

Source: SSI Research

Fig. 27: Illustration of direct trading through the national grid

Forward contract Large electricity user (or Electricity

Renewable power generator retailer in the authorized models of zones
and clusters)

Power purchase agreement –

Electricity is purchased at
spot market price/full market
price (FMP) Retail power
purchase agreement

Spot market

EVN/EPTC Power Corporations

Source: SSI Research

• Amended Electricity Law: this Law addresses some bottlenecks within the electricity sector, suggests the application of multi-component
electricity pricing structure and emphasizes the relevance of the long-term minimum contracted volume commitment with power plants as well
as the importance of renewables and new power sources development (such as hydrogen and ammonia). We expect that it could help ensure
national energy security, promote further mechanisms for each power source development, such as a new price mechanism for renewables.
In fact, the latest price mechanism was enacted nearly two years ago, only for transitional solar and wind power plants (Decision No. 21/QD-
BCT, enacted on 7 Jan 2023). Further, to diversify the power sources, through this Law, the National Assembly agreed to reactivate the nuclear
power development plan (see more details in our Vietnam Electricity Sector Update Note, dated on 5 Dec 2024).

• Decree on self-production and self-consumption rooftop solar power: Enacted in October (Decree No. 135/2024/ND-CP), this decree shall
be applied to various buildings/developers, including households/residential houses, offices, industrial parks, industrial clusters, export
processing zones, high-tech parks, economic zones, and manufacturing/business facilities. In our point of view, similar to the two above
regulations, this Decree could encourage more investments into renewables (specifically rooftop solar electricity under this decree) to

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ease/solve the power shortage. Nevertheless, we believe that it might not significantly benefit current listed electricity companies due to two
following key reasons (which could result in unattractive profitability):

✓ For projects under this decree that are eligible to sell the unused electricity to EVN, they are only allowed to sell up to 20% of installed
capacity.

✓ The average System Marginal Price (SMP) in the previous year (for example: ~VND 1,100/kWh in 2023, per our estimate) will be the
applied electricity price for such electricity sale (unattractive electricity tariff). We note that SMP is one of the important components (along
with Capacity Add on price or CAN) in the FMP of Vietnam competitive wholesale electricity market (VWEM).

Fig. 28: Summary of key features of Decree No. 135/2024/ND-CP on self-production and self-consumption rooftop solar power development

Reverse
Installed
Excess/unused power PDP VIII Electricity
Project connection status capacity SCADA Notes
power sale protection quota license
(MW)
system
Installation Not • The developer must notify the provincial
Not connected to the national power grid No Unlimited Unlimited Exempt
not required required Department of Industry and Trade (DoIT),
Not the local relevant electricity unit, and
< 0.1 Unlimited Exempt
required authorities related to construction and fire
Installation
No Required, protection.
required
≥ 0.1 Unlimited approved Exempt • The building deployed for power type
by EVN development must comply with
Only regulations on investment, construction,
exempt for land, environment, safety and fire
Not household protection.
< 0.1 Unlimited
required and • Power type development must comply
individual with regulations on electrical safety,
residences investment, construction, land,
Limited Required, environment and fire protection.
≥ 0.1
to PDP approved Required • Deploying imported second-hand
and < 1
VIII by EVN Photovoltaic (PV) panels and equipment
that converts DC (direct current) power to
AC (alternating current) power is not
allowed.
• The installation of the reverse power
Conncted to the national power grid protection system prevents the power
flow onto the national grid.
Up to 20% of
No • Self-production and self-consumption
actual installed
installation rooftop power installed on roofs of public
capacity
offices or facilities are not allowed for
excess/unused power sales.
Limited Required, • To conduct excess/unused power sale,
≥1 to PDP approved Required developers are required to perform
VIII by EVN technical inspections and installations of
electricity meters (measurement of
outputs) and SCADAs.
• The installation of the energy storage
systems is encouraged.
• The only eligible buyer of excess/unused
power is Vietnam Electricity Group (EVN)
or member units authorized by EVN.
• The Decree specifies average System
Marginal Price (SMP) for the previous
year as the applied electricity price.

Source: Vietnamese government, SSI Research

*SCADA: Supervisory Control and Data Acquisition

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The average cost to build and operate renewable plants (excluding hydropower) is declining, which is favorable to expand this power source.
The cost is often measured as the levelized cost of energy (LCOE), by dividing the present value of total costs incurred over the project lifetime
(initial investment capital and operating expenses) by the present value of all the expected electricity produced during the same period.

Fig. 29: The average cost to build and operate renewable plants (excluding hydropower) has been declining over the last ten years

Global weighted average LCOE for renewables during 2013-2023

0.2

0.2
USD/kWh

0.1

0.1

0.0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Solar photovoltaic Onshore wind Offshore wind Hydropower

Source: IRENA, SSI Research (as of end-2023)

Looking forward, we anticipate an updated version of PDP VIII

On 15 May 2023, the Prime Minister approved the PDP VIII (through Decision No. 500/QD-TTg), laying out a roadmap for the national electricity
development and pursuing net-zero carbon emissions by 2050. Following that, in early April 2024, its Implementation Plan was enacted (followed
by Decision No. 1682/QD-TTg, dated 28 Dec 2024, to approve further updates), outlining more details for the implementation, including the
specification of projects required to develop for each power source in each locality/region as well as transmission projects. However, major power
sources are facing difficulties of development, requiring a revision for PDP VIII:

• Gas-fired: Among ten projects (7,900 MW) required to develop by 2030, O Mon I is the only operating plant (with FO as inputs, expected to
switch to gas, as a part of Block B - O Mon gas-to-power project). Along with Block B, the implementation of both the Ca Voi Xanh and Bao
Vang gas fields are also needed to pursue the target, which we expect to take time.

Fig. 30: Ten gas-fired projects to develop by 2030

Project Capacity (MW) Location Expected year of commercial operation Note

O Mon I 660 Can Tho The plant is currently using FO as inputs
O Mon II 1,050 Can Tho 2027 Plants are expected to deploy gas
O Mon IV 1,050 Can Tho 2028 from Block B gas field as inputs
O Mon III 1,050 Can Tho 2030
Dung Quat I 750 Quang Ngai 2028
Dung Quat II 750 Quang Ngai 2028
Plants are expected to deploy gas
Dung Quat III 750 Quang Ngai 2028
from Ca Voi Xanh gas field as inputs
Mien Trung I 750 Quang Nam 2030
Mien Trung II 750 Quang Nam 2030
Plants are expected to deploy gas
Quang Tri 340 Quang Tri 2030
from Bao Vang gas field as inputs
Total 7,900

Source: PDP VIII, Implementation Plan of PDP VIII, SSI Research

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• LNG-fired: with 13 projects (22,524 MW) to develop by 2030, we are concerned that Nhon Trach 3&4 might be the only feasible project,
accounting for 7% of the required LNG-fired capacity development, while others are still facing delay. We mainly attribute this to the lack of
investment incentives and LNG-related mechanisms, especially the long-term minimum contracted volume commitment.

Fig. 31: 13 LNG-fired projects to develop by 2030

Capacity Expected year of commercial

Project Location Note
(MW) operation
June 2025 (Nhon Trach 3) and Investor: POW (see more details in our POW Update Report,
Nhon Trach 3&4 1,624 Dong Nai
September 2025 (Nhon Trach 4) dated 21 Nov 2024)
Hiep Phuoc Phase I 1,200 HCMC 2025 Under construction
Bac Lieu 3,200 Bac Lieu 2027-2029 Investor: Delta Offshore Energy (DOE)
Son My II 2,250 Binh Thuan 2027-2029 Investor: AES Corporation
Investor: a consortium between EDF, Sojitz, Kyushu and Pacific
BOT Son My I 2,250 Binh Thuan 2027-2029
Corporation
Investor: a consortium between POW, Vietnam Mechanical
Quang Ninh 1,500 Quang Ninh 2028-2029
Assembly JSC (Colavi), Tokyo Gas and Marubeni Corporation.
Investor: a consortium between T&T Group, Hanwha Energy
Hai Lang phase 1 1,500 Quang Tri 2028-2029 Corporation, Korea Gas Corporation (KOGAS) and Korea
Southern Power (KOSPO)
Investor: a consortium between Tokyo Gas, Kyuden Group and
Thai Binh 1,500 Thai Binh 2029
Truong Thanh Viet Nam Group
Nghi Son 1,500 Thanh Hoa 2029-2030 Selecting investors
Ca Na 1,500 Ninh Thuan 2029-2030 Selecting investors
Investor: EVN
Quang Trach II 1,500 Quang Binh 2029-2030 Investment policy approved in September 2024. The project
was initially planned to be a coal-fired plant (1,200 MW)
Quynh Lap 1,500 Nghe An 2029-2030 Selecting investors
Long An I 1,500 Long An 2029-2030 Investors: VinaCapital and GS Energy
Total 22,524

Source: PDP VIII, Implementation Plan of PDP VIII, ERAV, EVN SSI Research

• Coal-fired: the source is facing more stringent environmental requirements, difficulties in capital arrangement and lack of support from local
authorities.

• Hydropower: remaining water reservoirs in Vietnam are limited, posing burdens for the source development.

• Renewables: as of end-2023, this source achieves 21,664 MW of capacity, which is still very far behind the 50,741 MW of 2030 target.
Especially, as of end-2024, we have not witnessed any offshore wind project under operation, while its respective 2030 capacity target is
6,000 MW.

Fig. 32: Power capacity targets by 2030, based on PDP VIII and the Implementation Plan of PDP VIII

Unit: MW 2020 2023 2030

Hydropower 20,789 22,872 29,346
Coal-fired power 19,825 26,576 30,127
Gas-fired power 7,076 7,152 14,930
LNG-fired power 0 0 22,524
Renewables 17,430 21,664 50,741
Solar 16,491 NA 20,591
Wind 539 N/A 27,880
Other renewables 400 N/A 2,270
Others 4,218 N/A 10,700
Total installed capacity 69,338 80,555 158,368

Source: EVN, PDP VIII, Implementation Plan of PDP VIII, SSI Research

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Top pick: NT2, REE, HDG

We like NT2 for its likely volume (+13% YoY) and earnings (over 7x YoY) recovery story during 2025 (from 2024 low base). In fact, NT2 could
enjoy the higher priority of electricity mobilization from EVN, supported by the deployment of natural gas as a primary input, instead of expensive
LNG. Additionally, we project NT2’s machinery and equipment to fully depreciate during late 2025. For REE, we forecast a 35% YoY of 2025
NPATMI growth for its electricity segment, primarily driven by the hydropower volume recovery (+16% YoY). This could also be a similar catalyst
for HDG. However, we believe that the main growth driver for HDG for 2025 could come from the new sales phases of Hado Charm Villas project.
On the other hand, despite a growth outlook for one of its subsidiaries NT2 (as mentioned above), we project that POW might suffer overall earnings
decline in 2025 due to the poor performance of Nhon Trach 3&4 project during early years of operation.

1. PVPower NT2 (NT2: HOSE)

• Share price (31-Dec-2024): VND 20,950/share; 1Y Target price: VND 24,700/share (+18% upside)/Outperform.

• Investment thesis

✓ Despite gas field depletion in Southeast region, NT2 is one of the few gas-fired plants that still has a natural gas supply commitment with
PV GAS.

✓ We expect the handover of Phu My 2.2 BOT (Build-Operate-Transfer) plant in February 2025 to partially ease the natural gas shortage.

✓ We expect NT2’s machinery and equipment to fully depreciate during late 2025 and support earnings from 2026 onwards.

• Risks

✓ Weaker-than-expected electricity demand could result in lower contracted volume (Qc).

✓ Unexpected fluctuations in natural gas prices.

✓ More extreme-than-expected natural gas shortage.

✓ EVN’s financial issues could last longer than expected.

Fig. 33: NT2’s key metrics

Unit: VND bn 2021 2022 2023 2024F 2025F 2026F

Net revenue 6,150 8,788 6,386 5,974 7,085 6,957
Gross profit 676 1,082 510 14 465 581
EBITDA 1,284 1,647 1,235 781 1,029 756
Pretax income 566 943 514 58 435 575
Net income 534 883 473 53 391 460
EPS (VND) 1,756 2,960 1,546 174 1,296 1,524
BVPS (VND) 14,706 16,027 15,062 13,736 15,032 16,556
DPS (VND) 1,650 2,500 1,500 0 0 1,500
ROE 12.5% 20.0% 10.6% 1.3% 9.5% 10.1%
Dividend yield 6.3% 10.8% 6.1% 0.0% 0.0% 7.2%
Net debt/Equity 0.0 -0.2 -0.2 -0.3 -0.2 -0.5
P/E 15.0 9.7 15.9 120.3 16.2 13.7
EV/EBITDA 6.1 4.6 5.0 6.2 4.7 6.5

Source: NT2, SSI Research

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2. REE Corporation (REE: HOSE)

• Share price (31-Dec-2024): VND 67,900/share; 1Y Target price: VND 76,900/share (+13% upside)/Outperform.

• Investment thesis

✓ More favorable weather conditions should benefit the hydropower during 2025-2026. This power source accounts for nearly 50% of the
company’s total power capacity and ~70% of its power segment NPATMI (per our estimates). We also note that the power segment
accounts for over 50% of REE’s NPATMI.

✓ Further sales launch of The Light Square project and higher occupancy rate of E.town 6 could drive the real estate segment.

✓ We expect economic recovery to aid the performance for the M&E services segment.

• Risks

✓ Less-than-expected favorable weather conditions for hydropower plants.

✓ Slower-than-expected sales launch progress of The Light Square project.

✓ Unexpected technical issues at power plants.

Fig. 34: REE’s key metrics

Unit: VND bn 2021 2022 2023 2024F 2025F 2026F

Net revenue 5,810 9,372 8,570 8,117 9,701 9,506
Gross profit 2,310 4,330 3,710 2,902 3,823 3,656
EBITDA 3,956 5,987 5,259 4,065 4,873 5,053
Net income 2,135 3,515 2,787 1,764 2,473 2,650
EPS (VND) 6,003 7,576 5,354 3,259 4,367 4,553
ROA 8.2% 10.7% 8.1% 5.0% 6.8% 7.2%
ROE 14.9% 19.8% 13.9% 8.2% 10.7% 10.5%
Debt/Equity 0.7 0.6 0.5 0.5 0.4 0.3
P/E 11.5 9.4 10.6 20.8 15.6 14.9
EV/EBITDA 8.5 6.3 6.3 9.8 8.2 7.9

Source: REE, SSI Research

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3. Ha Do Group (HDG: HOSE)

• Share price (30-Dec-2024): VND 28,500/share; 1Y Target price: VND 33,100/share (+16% upside)/Outperform.

• Investment thesis

✓ Like REE, we expect the more favorable weather conditions to benefit HDG’s hydropower portfolio. As the company has not implemented
any new real estate projects, the electricity segment currently accounts for over 60% of its total revenue, in which hydropower accounts
for over 70% of electricity volume.

✓ HDG has a pipeline of ~800 MW of renewable capacity pending implementation. We have not factored this into our forecast.

✓ Further sales launch of the Hado Charm Villas project could support the earnings recovery in the real estate segment.

• Risks

✓ Less-than-expected favorable weather conditions for hydropower plants.

✓ Unexpected technical issues at power plants.

✓ Slower-than-expected implementation of the next sale phases of the Hado Charm Villas project.

✓ Slower-than-expected implementation of Hado Green Lane and Hado Minh Long projects.

✓ Legal issue related to Hong Phong 4 solar farm (we have applied 10% valuation discount to reflect this risk). The plant currently accounts
for ~13% of HDG’s annual electricity revenue.

Fig. 35: HDG’s key metrics

Unit: VND bn 2021 2022 2023 2024F 2025F 2026F

Net revenue 3,777 3,581 2,889 2,765 3,314 3,563
Gross profit 2,320 2,212 1,723 1,617 2,129 2,281
EBITDA 2,346 2,634 1,970 1,964 2,434 2,574
Net income 1,344 1,362 866 992 1,383 1,535
EPS (VND) 5,614 4,507 2,175 2,327 3,243 3,600
ROA 9.0% 8.8% 5.9% 7.0% 9.6% 10.2%
ROE 28.7% 22.8% 12.6% 13.0% 16.0% 15.5%
Debt/Equity 1.4 0.9 0.8 0.6 0.4 0.3
P/E 11.8 7.0 12.7 12.2 8.8 7.9
EV/EBITDA 8.8 5.4 7.4 7.6 6.2 5.8

Source: HDG, SSI Research

Fig. 36: Key metrics of some electricity stocks under our coverage

Target Price Current Price

% Upside NPATMI growth (%) P/E (x) ROE (%) Dividend yields (%)
Ticker (VND) (VND)
in 1yr in 1yr 12/31/2024 2023 2024 2025 2023 2024 2025 2023 2024 2025 2023 2024 2025
NT2 18% 24,700 20,950 -46.4% -88.9% 644.5% 15.9 120.3 16.2 10.6% 1.3% 9.5% 0.0% 0.0% 7.2%
REE 13% 76,900 67,900 -18.7% -29.9% 34.0% 10.6 20.8 15.6 13.9% 8.2% 10.7% 1.8% 1.5% 1.5%
HDG 16% 33,100 28,500 -39.3% 19.4% 39.3% 12.7 12.2 8.8 12.6% 13.0% 16.0% 1.8% 1.8% 1.8%
POW 5% 12,600 12,000 -49.6% 81.0% -7.6% 30.3 16.5 17.9 3.8% 5.6% 5.3% 0.0% 0.0% 0.0%

Source: SSI Research

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ANALYST CERTIFICATION

The research analyst(s) on this report certifies that (1) the views expressed in this research report accurately reflect his/her/our own personal views about the
securities and/or the issuers and (2) no part of the research analyst(s)’ compensation was, is, or will be directly or indirectly related to the specific recommendation
or views contained in this research report.

RATING

Buy: Expected to provide price gains of at least 10 percentage points greater than the market over next 12 months

Outperform: Expected to provide price gains of up to 10 percentage points greater than the market over next 12 months.

Market Perform: Expected to provide price gains similar to the market over next 12 months.

Underperform: Expected to provide price gains of up to 10 percentage points less than the market over next 12 months.

Sell: Expected to provide price gains of at least 10 percentage points less than the market over next 12 months

In some cases, the recommendation based on 1Y return could be re-adjusted by the analysts after considering a number of market factors that could have impact
on the stock price in the short and medium term.

DISCLAIMER

The information, statements, forecasts and projections contained herein, including any expression of opinion, are based upon sources believed to be reliable but their
accuracy completeness or correctness are not guaranteed, Expressions of opinion herein were arrived at after due and careful consideration and they were based
upon the best information then known to us, and in our opinion are fair and reasonable in the circumstances prevailing at the time, and no unpublished price sensitive
information would be included in the report. Expressions of opinion contained herein are subject to change without notice. This document is not, and should not be
construed as, an offer or the solicitation of an offer to buy or sell any securities, SSI and other companies in the SSI and/or their officers, directors and employees
may have positions and may affect transactions in securities of companies mentioned herein and may also perform or seek to perform investment-banking services
for these companies.

The report may not be used in connection with any commercial purposes, and is not for publication in the press or elsewhere except as specifically approved by
SSI. You can, without permission, quote or display the report, for non-commercial uses. Commercial use and re-distribution agreements may be available from
SSI for an additional fee.

SSI accepts no liability whatsoever for any direct or consequential loss arising from any use of this document or its content. The use of any information, statements
forecasts and projections contained herein shall be at the sole discretion and risk of the user.

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