Z cars car sales

The Hanoitimes – With the Covid-19 impacts still looming on local economy, domestic car prices have gone down but remained nearly double the prices of vehicles sold in Thailand and Indonesia, mainly due to high fees and taxes for locally made cars.

Rising domestic production capacity and existing government’s support policies to cut fees and taxes for locally made cars are expected to be major factors dragging down car prices in Vietnam in the coming time.

Car production at Hyundai Thanh Cong manufacturing plant. Photo: Hoang Giang

A representative from the Truong Hai Auto Corporation (Thaco), one of Vietnam’s leading car manufacturers, expected the country’s participation in free trade agreements (FTAs) with major partners, including the EU, Japan, UK and South Korea, would help further abate costs for importing car parts with import duty at 0%.

With the Covid-19 impacts still looming on local economy, domestic car prices have gone down but remain nearly double the prices of vehicles sold in Thailand and Indonesia, mainly due to high fees and taxes for locally made cars.

“High product quality and low base cost are essential for Vietnam cars to compete with their foreign peers,” said auto expert Nguyen Minh Dong, adding only a bigger market size could attract more investors to come in to produce cars in the country and enhance localization rate.

Director of Hien Toyota noted while car manufacturers can streamline operation to drive down the production cost, taxes and fees are dependent on state policies.

“Lowering taxes and fees for cars will no doubt reduce prices and bring more benefits for customers,” she said.

Booming market demand

A recent report from the SSI Securities Corporation suggested Vietnam’s income per capita is on the rise and set to grow at an average of 8-10% in the next decade.

“Compared to regional countries, the current income per capita is fast approaching to a point of bursting demand for cars,” asserted the SSI, adding cars would soon move from the luxury category with a passenger vehicle density of 34 per 1,000 to a more ordinary one with a density level comparable to countries in the region.

The SSI also pointed to a key factor that the domestic car market is big enough for car manufacturers to shift from importing cars to assembling/manufacturing domestically.

At present, six major car manufacturers of Thaco, Huyndai, Toyota, Mitsubishi, Ford and Honda account for 90% of the market share in Vietnam with a combined production capacity of 30,000-60,000 units per year, exceeding the break-even point for domestically-produced cars of 30,000-40,000 cars per year for an assembling plant, or 10,000-20,000 units for each car model.

According to the SSI, domestic car production capacity  is increasing rapidly to meet customers demand, a key step to lower car prices.

With more cars manufacturing and assembling plants scheduled to complete in the 2022-23 period, the SSI expects a heating up car markets with steep discount policies would drive up domestic car demands.

Along with existing Vietnam’s support policies for the automobile industry, the National Assembly is currently discussing a possibility of reducing the excise tax rate for locally made cars, in which the specific reduced rate would be in line with the localization rate, aiming to boost sales of affordable car models.

The Hanoitimes – Cargo flights and vehicles are not affected by this ban.

The Vietnamese Ministry of Transport decided to suspend all passenger transport services to and from Danang from 12am of July 28, complying with a social distancing order in the resort city.

Local tourists are waiting to check in at Danang airport on July 26. Photo: VnExpress

The decision will be in place in next 15 days to deter the outbreak of the novel coronavirus in the city.

As such, all passenger flights between Danang and other localities are suspended.

Regarding road transport, the ministry requested all inter/intra-provincial transport services including contracted cars, taxis, and buses from/to the city to stop, except for special cases. Passenger vehicles going through Danang are not to be allowed to stop and park in the city.

Train services to Danang are also suspended. North-South passenger trains are not allowed to pick up or drop off passengers at Danang station. Ships and river boats must stop transporting passengers from and to Danang, except for special cases.

Cargo flights and vehicles are not affected by this ban.

In the evening of July 27, Vietnamese air carriers were ordered by the Civil Aviation Administration of Vietnam to increase the number of airplanes to airlift tourists out of the city before 12pm of the same day.

From 12am of July 28, six districts with around one million people in Danang have been put under lockdown and transport services are banned in the city.

As the first local virus infection was detected in Danang after months without community transmission, measures during the social distancing period will include wearing of face masks in public places and public means of transport, the suspension of non-essential services, entertainment activities and public transport, and limiting private vehicles.

Meanwhile, three hospitals namely Danang Hospital, Danang C Hospital, and Danang Orthopedics and Rehabilitation Hospital, and residential areas nearby will be put under lockdown.

In the past three days, Vietnam reported 15 new SARS-CoV-2 infections in Danang city and Quang Ngai, raising the country’s caseload to 431.

The Hanoitimes – The evacuation helps minimize infections and save the health staff.

As a large number of new Covid-19 infections are linked to Danang Hospital that is under lockdown, Acting Health Minister Nguyen Thanh Long on August 1 urged that evacuation of must be done soon to prevent it from being a worse coronavirus hot spot.

Acting Health Minister Nguyen Thanh Long at a teleconference on August 1. Photo: VnExpress

It means that a number of health workers, patients, and caregivers will be quickly evacuated from the hospital to minimize transmission and save the medical force in case the battle against the pandemic lasts longer than expected.

Long said medical staff will stay at hotels and travel between their hospital and hotels by cars provided by authorities like the measure taken at Bach Mai Hospital in Hanoi a few months ago. He added that the Ministry of Health will support Danang in this issue.

In March, Vietnam’s largest hospital Bach Mai was put under lockdown after dozens of local were infections detected and traced back there.

Some high-risk wards need to stop receiving patients, Long made the request at a teleconference with the health task force for Danang following a surge in the community infections.

Health workers at University Medical Center of Ho Chi Minh City. Photo: Congan

Since the first locally-infected case was confirmed in Danang on July 25, the majority of new infections are linked to three hospitals in this beach city, especially Danang Hospital.

Long also asked the the task force which includes dozens of leading health professionals to keep patients under hemodialysis treatment separate from Covid-19 sufferers to prevent casualties among those with kidney failure.

Danang Hospital, with 6,000 people including health workers, patietns, and patients’ relataives, has been relieved. So far, around 4,000 people have been relocated since the site was put under isolation on July 26.

A hospital representative said only people who tested negative for SARS-CoV-2 would be relocated to other places and must undergo 14-day quarantine, VnExpress reported.

All treatment activities at the hospital are going on with strict safety rules in place.

Earlier, Danang’s mayor Huynh Duc Tho warned of transmission among health workers. So far, up to eight health workers in Danang have been infected with the coronavirus.

JP Morgan, May Bank selected TCB share as the top pick among Vietnam’s listed banks

In a report, JP Morgan has stated that Vietnamese banks offer the best combination of growth and Return on Equity (ROE) in ASEAN. High nominal GDP growth and resilience in the last 12 months provide visibility on credit and earnings growth over the next few years.

In particular, JP Morgan has reiterated its “overweight” rating on Techcombank – Vietnam’s leading commercial lender – with an upbeat outlook on the bank’s performance. The target price for the bank’s share is VND55,000 ($2.4) per share as of December 2021, calculated via JP Morgan’s two-stage dividend discount model.

The rally in the bank’s share price as the top pick among Vietnam’s listed banks is fuelled by multiple indicators.

According to the US-based financial group, Techcombank is the most profitable bank in the country on ROA despite having a low deposit market share of 3 per cent.

Expecting a 16 percent EPS CAGR for the sector, led bay TCB

The bank’s zero-fee programme and 1 per cent cash back debit card have led to sharp improvements in current accounts saving accounts (CASA) and to deposits going from 22 per cent in 2017 to 44 per cent in 2020. The brokerage also expects further improvement in CASA ratio to 50 per cent by 2023, leading to higher net interest margin (NIM).

Specifically, Techcombank has the highest capital (16.1 per cent capital adequacy ratio [CAR]) and lowest NPL (0.5 per cent), allowing for a 20 per cent CAGR for loans over the 2020-2023 period.

Techcombank is also one of the rare banks across the region that is making money on both sides of the balance sheet, as well as on fee income, adjusted for all allocated costs. This allows for longer-term visibility on returns.

Increasing PTs after EPS changes

The lender also rolled out a system to regulate total credit. This is due to a large corporate bond book and a 63 per cent loans-to-assets ratio. Further, high capital and low NPL holdings have allowed credit quotas in the 20 per cent range for the next three years, according to JP Morgan.

JP Morgan also expects the bank to be on a self-sustained capital level, given its combination of solid Return on Equity (RoE) and growth.

Sharing the same boat, Maybank Kim Eng Securities has recently voted Techcombank as Vietnam’s No.1 private-sector bank with a strong brand, deposit franchise, and a solid banking platform for high-profile companies in Vietnam.

The lender is considered the top player in bond underwriting and bancassurance competition, with a high-calibre management and execution team.

On the other hand, Techcombank has maintained consistent, robust profit growth in 2020, up 23 per cent on-year.

“We forecast Techcombank’s profit will grow 26 and 22 per cent in 2021 and 2022, respectively. Accordingly, ROE will improve to 19 per cent, with stronger credit growth and faster-than-expected easing in provisioning bringing about significant upsides,” noted Maybank.

The lender’s strategy is to focus on top private-sector companies, upper SMEs and affluent retail, and is run by a highly capable team. All of these factors enabled it to stay resilient through the unprecedented health crisis.

“Techcombank is now being traded at 1.4x price-to-book value (P/BV) in our 2021 expectation, which is in line with local peers’ average, despite its banking platform, earnings power, and quality being superior. We believe the bank’s robust profit growth outlook on the back of a strong balance sheet, along with improved market sentiment towards the bank’s stock in recognition of the bank’s strengths, will support further rerating,” the brokerage added.

Maybank also recommends investors to buy Techcombank stocks, with higher target price of VND43,700 ($1.9) as of December 2021, up 21 per cent compared to the current price.

The brokerage believes the market’s stronger sentiment towards Techcombank, in recognition of its strengths and improving ROE, will drive up its valuation close to that of industry-leading banks.

Earlier this month, Techcombank is also one of the nine Vietnamese lenders topping the Brand Finance Banking 500 list, with its brand value increasing from 327th in 2020 to 270th in 2021.

Bloomberg recently also stated that Southeast Asian stocks could be safe havens amid the disruption in global risk assets led by spiking yields. Thus, Techcombank – as the most dynamic, profitable bank in Vietnam – is among the best shelters from the global yield havoc.

Techcombank has the highest upside of 42 per cent (followed by ACB with 29 per cent) according to JP Morgan. Analysts also raised target price on resilience observed in 2020. Particularly, JP Morgan raised earning per share for the 2021-2022 financial year and target price for ACB, TCB, and VPB by 8-11