4 January 2018

VIETNAM MARKET OUTLOOK 2018

The Re-rating time

A MACRO OUTLOOK FOR 2018 & BEYOND

This year, we want to view 2018 in the prism of a 3-year journey to 2020. The current favorable macro conditions are somewhat
reminiscent of the nostalgic days when Vietnam was applying to join the WTO in 2006. However, as we know history is more apt
to rhyme than it is to repeat. This time around, there is a sense of a positive outlook that dwarfed previous growth periods.
Projected growth for the 3 years ahead reflects even stronger fundamentals than previous economic cycle, characterized by
robust foreign inflows, low interest rates, a stable VND, strong demand growth, and an ongoing improvement in productivity.
Vietnam’s macro performance improvements are due to no small effort from reform in the SOE sector.

Growth projection evident across all sectors of the economy

We expect 2018 GDP growth to be 6.7% YoY (considered the upper range of the government target of 6.5-6.7% YoY), retaining
impressive growth from last year in relation to regional peers. Please note that growth should be high in 1H 2018 due to a low base
effect; this anomaly is expected to normalize in the second half. Private investment will likely maintain its strong momentum exhibited
so far, thanks to better demand recovery and a stable interest rate. Vietnam FDI continued to display an encouraging barometer of
future growth, as 2017 foreign investment clocked in at a blazing $29.7 bn USD (+44.2% YoY). Furthermore, the proportion of locally-
made components pumped out by foreign-invested FDI firms have been on the rise. In 2017, Vietnam has had three big FDI projects in
thermal power (Nghi Son 2 – $2.79 bn USD, Van Phong 1 - $2.58 bn USD and Nam Dinh 1 – $2.07 bn USD). Other notable projects
during the year include Samsung Display (additional investment of $2.5 bn USD), as well as the Block B – Omon gas pipeline project
($1.27 bn), Eco smart city Thu Thiem ($890 mn), and the Polytex Far Eastern factory (polyester yarn, $490 mn). For public
investment, our chips are stacked towards the current cycle giving way towards a new beginning in 2018, as USD inflows become
more abundant. See below for details.

In addition beyond the torrential pace of the manufacturing sector, tourism has emerged to be the second star of growth. We are very
bullish on Vietnamese tourism prospects and execution in the next 2-3 years for the following reasons: (1) a burgeoning middle class
in Vietnam increasingly with penchant to spend far more on travel, and (2) Vietnam experiencing solid recurring double-digit growth
figures for tourists to Vietnam from 2016 to the present. The positive aura of sustained tourist arrival growth forecasts is based on (1)
the recent implementation of simplified “e-visa’ policy procedures, as well as an extension upon visa exemptions for tourists from the
UK, France, Spain, Germany, and Italy until June 2018 to further boost tourism, (2) increasing tourism interest from neighboring
countries such as China, South Korea, and Japan. In fact, during 2017 international tourists to Vietnam grew by 30% YoY, recording 13
mn arrivals, and tourists traveling by air recorded 8.9 mn arrivals, up 31% YoY.

SOE IPO and divestment at its peak (in terms of deal size)

Vietnam reforms started in 2011, with quite a bit of struggle and brought much distress to all those involved. A lot of lessons have been
learned since then, and the slow but steady approach to development in 2016-2017 signals a new chapter in the development of the
Vietnamese economy. The number of SOEs was slashed significantly over a 10-year period; from around 1500 in 2010 to 583 in

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 2016. This will further be cut during the current period, and possibly reduced to as much as 100-120 SOEs by 2020. Although the
amount of total firms up for divestment and/or IPO for the 2018-2020 period might not be as large as in previous years, the aggregate
deal size for these offerings during this period is expected to be far more significant. The proceeds from 2018-2020 IPOs and
divestment of SOE firms are estimated to be 2.75 times higher than the proceeds from the whole period 2011-2017 (i.e USD 26.3 bn
vs USD 9.5 bn). Vietnam may very well end up being the only country in the world that embarks on a new wave of SOE reform in 2018,
placing a lot of large and profitable SOEs on public offer.

2011 2012 2013 2014 2015 2016 2017

Number of completed SOE equitization 14 26 73 175 220 56 45
Total market value of equitized SOEs (VND trillion) 60.35 5.75 25.96 45.52 158.02 39.12 213.7

VND trillion 2011-2015 2016 2017

Proceeds from SOE divestment 17.74 18.83 134.6
Proceeds from SOE equitization 36.52 7.11 2.58
Number of completed SOE equitization 499 56 45

Source: MoF, HSX, HNX

…led by a new powerful committee

In the resolution 97/2017 issued in Oct, 2017, the government outlined a number of measures in the action plan to implement SOE
reform. One of these is to finalize the proposal to create a ministerial-level committee to manage and supervise state capital in
enterprises (both SOE or joint stock companies) in 2017, so that the committee would start operations in 2018. In fact, under the
Laws on the organization of the government (effective from Jan 1st 2016), Ministries (or ministerial-level government bodies) no longer
have the mandate to represent the state ownership in SOEs. Currently they need to transfer control of SOEs to the SCIC (State Capital
Investment Corporation), but delays have been witnessed. In the initial draft of the proposal, SCIC will become the investment arm of
the committee. Other arms will include back office support, the SOE management & supervision, and the research & strategic
investment. We believe that this committee will be established shortly in 1Q18, as it’s reported the Chairman of the committee has
been assigned to Mr Nguyen Hoang Anh, the former vice chairman of National Assembly Economic Committee.

Many profitable SOEs are also in the pipeline

According to the Ministry of Finance (MoF), by the end of 2016 there were 583 SOEs (with 100% state ownership), with total assets of
$134 bn and owner’s equity of $61.4 bn. Total revenue in USD terms was at $66.5 bn (1% lower than 2015), and PBT was at $6.1 bn
(mostly from Viettel – $1.71 bn, PVN – $1.16 bn, and SCIC – $360 million, while Vinachem and Gtel incurred losses). PVN profit
before tax declined -38% YoY on decreased oil prices compounded by lower profits from Vietsovpetro (from a higher profit allocation to
the Russian partner since 2016). Average ROE (i.e PBT/average owner’s equity) was just 10% (2015: 12%). Best performers have
been RESCO (38%), Viettel (34%), Mobifone (30%), VEAM (24.69%) and SATRA (25%).

Also, there are 273 other joint stock companies with state ownership status, containing total assets of $21.7 bn and owner’s equity of
$7.4 bn in USD terms. Total revenue was $18.6 bn and PBT at $1.4 bn (+54% YoY). ROE for those companies are at 18.9% on
average. We can see that SOE reform resulted in improving levels of profitability, as joint stock SOE enterprises outperformed fully
state-owned enterprises in terms of ROE.

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 Strong USD inflow is expected

Given the plethora of IPOs and divestment opportunities, including flagship market leader firms by sector offering a high proportion of
divestment, we hold the belief that this wave of IPOs will be greatly welcomed by investors. In our estimates, total IPO value during
2018-2020 could reach $9.7 bn, while the total value of divestment could reach $16.6 bn USD. Please find below table for a further
overview. To be successful, a clear ownership structure with active participation of the private sector will help the SOEs to improve
their profitability, which is a good reason for investors to make buy decisions. We might even see portfolio investment to come back to
the heyday of the 2005-2007 period, during which time the SBV failed to sterilize fund inflows. We believe that the SBV is now more
experienced in handling new capital inflows, adopting an expansionary but prudent approach to avoid any new bubble formations.

Vietnam portfolio investment 2006-2020

6 Portfolio investment

0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
-1

Source: IMF

Capital inflows will tamp down interest rates, while fueling credit growth

While interest rate hikes are simply not an option, as the government is keen on lowering the lending rate further from its current
benchmark rates, a strong foreign inflow would be more than enough to lower short-term interest rates and keep medium and long-
term interest rates stable at this low level. Such a low interest rate environment is likely to be quite conducive to further credit growth.
Indeed, we see credit playing a major role in creating 2018 growth; not only being supplemented by way of a more dovish monetary
policy stance, but also in allowing banks to transition their loan structuring by expanding their retail loan books, which in turn pushes
domestic consumption to grow even more. We are seeing a shift towards a mix of more retail, less corporate loans. As individual
credit cycle is still in early stage, we see that the overall risk profile might be more manageable and diversified in the next one or two
years. Vietnam has a relatively unique opportunity to shine here, largely from its comparatively underbanked population that possesses
a low penetration in retail loans, and we see that low and stable interest rates are fostering a higher degree of mortgage originations as
well.

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 Vietnam 5-year bond yields at lowest level in the last 5 years Consumer lending still has room for growth

14.00% 30 16%
26.6
14%
12.00% 25
20.6 12%
10.00% 20
10%
15 8%
8.00%
10.5
8.9 6%
10 7.38
6.00% 6.26
4%
5
4.00% 2%
0 0%
2.00% 2011 2012 2013 2014 2015 2016

0.00% Consumer Lending

3-Jan-12

4-Nov-15
2-Mar-16

10-Feb-17
19-Nov-14
20-Mar-15

14-Oct-16
10-May-12

29-Jul-14

15-Jul-15

6-Jun-17
29-Aug-12

13-Aug-13
3-Dec-13
3-Apr-14

24-Jun-16
19-Dec-12
18-Apr-13

26-Sep-17
% Consumer Lending/ Loan Book
% Consumer Lending/ GDP

Source: IMF

IPOs and divestments expected to free up resources for fiscal expansion

Given the wave of IPOs and divestments which started in 2017,the government’s fiscal balance is expected to be on ease in the next 3
years, freeing its hands for more flexibility in fiscal policy and project implementation. The proceeds from the Sabeco deal that came in
during the last days of 2017 is an example of a significant burden lifted from the fiscal budget, as it is equal to 44% of the total
expected proceeds from SOE divestment as detailed in the 2016-2020 plan for medium term public investment. This frees up
resources for the government to act in regards to public investment, which has been comparatively lacking vs. expectations in the last
2 years.

For the 2018 budget plan in USD terms, 2018 state revenue is projected to be $58 bn, while expenditures are estimated at $67
bn, resulting in a budget deficit at $9 bn or 3.7% of GDP (slightly higher than the 2017 level of 3.5% GDP)

 For development-related investments such as infrastructure, the 2018 plan is still high (at $17.6 bn USD). While the target
only increased 12% against the 2017 plan, we noted that in 2017 disbursements for development-related investments may
end up at just 80% of the original annual plan, so in sum the 2018 plan is 32% higher than the expected actual 2017
disbursement figure. If we assume that 20% of the 2017 plan would be carried over to 2018, and the 2018 plan is fully
disbursed, YoY growth would be much higher, i.e about 65%.

 For the government borrowing plan, it plans to borrow about $9 bn USD to finance its budget deficit, and about $7 bn USD to
repay its debt principal.

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 VND bn (1USD=22750 VND) 2018 plan 2017 plan
State budget revenues and grants 1,319,200 1,212,180
Taxes and Fees 1,278,300 1,144,631
Capital revenues 35,900 63,949
Grants 5,000 3,600
Total state expenditures 1,523,200 1,390,480
Investment and development expenditures 399,700 357,150
Current expenditures 940,748 1,004,030
Contingencies 32,097 29,300
Budget deficit 204,000 178,300
Budget deficit/GDP (%) 3.70% 3.50%
Principal repayment 159,744 163,846

Source: National Assembly

Banking system clean-up process on a realistic path, helping capital-raising activities to accelerate

The banking reform roadmap for 2016-2020 stipulates 2017-2018 to be the deadline for the sector’s legal framework, kick off of Basel
II across 10 commercial banks, SOE divestment from banks, and VAMC chartered capital rising to $5 trillion ($ 220 mn). For 2019-
2020, Basel II compliance is to be implemented across 12-15 banks (standardized approach compliance), with all bank CAR ratios
over Basel II prescribed levels. By then the VAMC will have a chartered capital of VND 10 trillion, and will need to complete the full
resolution of its purchased bad debt. Banking system NPLs (including bad debt sold to the VAMC and restructured debt) need to be
lower than 3%. (Please note that the IMF estimated that this NPL was 8.4% at the end of 2016).

For 2018 specifically, we see 10 banks who have to comply with the Basel II deadline will start preparing for raising capital, including:
BID, CTG, VCB, TCB, ACB, VPB, MBB, Maritime Bank, STB, and VIB. Our estimate for 14 SOCBs and JSBs to raise further capital in
2018 is set at $3.8 bn USD.

Estimates on capital-raising of banks in 2018

Increase in charter capital in 2018

Ticker Charter capital (VND bn) Estimated capital raise (VND bn)
Tier 1 (VND bn) Tier 2 (VND bn)
CTG 37,234 10,000 10,000.00
VCB 35,978 3,598 14,391.07
BID 34,187 6,837.43 13,674.86
STB 18,852 - -
MBB 17,127 -
VPB 15,706 1,712 7,703.91
EIB 12,355 - -
SHB 11,197 -
ACB 10,273 - -
HDB 9,810 -
LPB 6,460 1,615 1,000 3,261.00
TPB 5,842 876.32 2,103.16
VIB 5,644 - -
TCB 11,655 4,300 34,400.00
Total 232,322 85,534

Source: SSI Research estimate

Last but not least, we believe that Resolution 42 and the revised Banking Law seen below will be the key tools to effect real change in
order to clean up bank balance sheets in 2018-2020, which in turn will be useful for those banks who need to raise more capital.

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  Resolution 42, effective for five years from August 15th 2017, supports credit institutions and the VAMC in dealing with bad debt
through a market mechanism, by granting to credit institutions and organizations that buy and sell bad debt the right of collateral
asset seizure. This might help to clear the bottleneck, as VAMC has been able to resolve only 20% of its purchased bad debt since
2013. Resolution 42 also stipulates two more important issues: (1) permitting the VAMC and participating banks to sell bad debt
at prices lower than book value and (2) allowing banks to allocate into expenses the receivable interest of unsold bad debt, within
the duration period of 10 years maximum, and to allocate into expenses the difference between the book value of the bad debt and
the transaction price, plus specific provisions made in relation to the debt within a maximum five year period. These accounting
treatments will help banks avoid recording an accounting loss from selling bad debt lower than book value. Therefore, it will
encourage banks to sell more bad debt.

 The revised banking law, effective from Jan 15th, 2018, revolves around the so-called “special control regime”, in which the bank
will be put under special control. There are five types of plans to restructure credit institutions classified under special control: 1)
recovery plan; 2) consolidation and transfer of all shares; 3) dissolution plan; 4) transfer plan 5) bankruptcy plan. Regarding so-
called zero-bill banks, in the event of a sale of said bank, the central bank will prepare the divestment proposal for the Prime
Minister’s approval. The sale price will be negotiable, and not lower than the real value of chartered capital plus reserve funds
(that are independently audited) and based on market mechanisms. In our opinion, the revision of the Law eliminates the common
depositor belief that banks are by default guaranteed by the government against any crash. If the resolution for weak banks,
especially zero-bill banks, is streamlined in a smooth fashion under the new regulation, the banking system clean-up process
could accelerate.

 Deeper integration into the global economy, along with an expected upgrade in the medium term

We expect that in 2018-2020, we are to see a milestone for Vietnam’s openness to the world economy, when the EU Vietnam FTA
(EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) are likely to be signed and ratified.

In addition, credit rating agencies might upgrade Vietnam sovereign ratings by one notch (from BB- to BB), granted after exhibiting vast
progress in regards to Vietnam’s economic reform. At this gradual upgrade approach (one year, one notch), by 2020 Vietnam could be
rated at investment grade (BBB-). Regarding market status, we do not expect for Vietnam to be in the 2018 MSCI review list for
emerging market upgrade eligibility. 2019 might be a better bet, as the revised Law of Securities is set to be effective by then, and we
could see more developments in the foreign ownership limit extension (even for sensitive sectors like banking).

Risk

We overall do not see major risks for 2018, though we do see a possible risk in terms of SOE reform failure. Expectations on SOE
reform are running high, and failure in this regards (e.g. failed IPO, lower interest from foreign or local investors) might be damaging to
widespread market sentiment as a whole. Aside from that, a peripheral risk exists in the form of inflation. Besides the impacts
emanating from a gradual removal in education or healthcare subsidies, or the second-round impact from an electricity price hike, a
spike in the oil price would compound the issue of controlling inflation. If this occurred, it would render the government’s target of 4%
YoY quite challenging to attain.

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 IMPLICATION FOR EQUITY MARKET

1. Significant amount of money to be raised via Stock Market

Given the heavy calendar of new IPOs, a large amount of money will be raised via the Stock Market. Our rough estimate is $9.7 bn
USD via SOE IPOs and USD 16.6 bn from SOE divestments for 2018-2020. Furthermore, banks are in need of raising capital to finance
strong credit growth expectations, and 10 banks will need to kick-off Basel II compliance. Our capital raise estimate compiled from our
banking industry sample set in 2018 comes to $3.8 bn. This has not yet taken into account new capital raises undertaken on behalf of
other banks outside this sample set in order to prepare for Basel II. In total, the total amount of capital to be raised via the Stock Market
in the next 3 years might add up to roughly $30 bn USD, which is equal to 19.6% of the HOSE market cap and 26.1% of the total
market cap of HOSE, HNX, and UPCOM by the end of 2017.

Exchanges Market cap (bn USD, as of 29 Dec 2017)

HOSE 115,064
HNX 9,779
UPCOM 28,580
Total 153,423

Source: Bloomberg

2. 15 stocks could be added into the Top market cap in 2018

Listing after the IPOs has become not only a requirement, but is encouraging industry best practices to attract investor participation.
The new Decree 126/2017, effective from 1 Jan 2018, requires that IPO documentation should be accompanied with depository and
listing documents, plus a listing at the UPCOM 90 days after completing the IPO process. In case the IPO is executed and the listing
occurs at the same time, a minimum bidding volume must be set in advance to meet the listing requirement.

We anticipate that in 2018, 15 new stocks will be added into the Top market cap list with market cap of each stock being higher than
USD 1bn as noted in the below table. Among this list, HDB will be the first large cap to be listed on January 5th. Investibility of the
banking sector might improve with many new listings, but choices for foreign investors primarily are the most attractive with HDB and
possibly TCB if they unlock a 30% allocation for foreign ownership and VPB if they unlock 7% allocation for foreign ownership. In total,
the aggregate market cap might increase by a factor of 20% with these new listings.

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 Top Market cap stocks with potential new listing (in red) in 2018

New Market cap (USD Free float Floating market cap (USD 1Y Target
Company Sector
Rank mn) (%) mn) price
1 VNM Consumer 13,325 35.00% 4,664 222,000
2 ACV (UPCOM) Industrials 10,398 4.60% 478 115,000
3 VIC Real Estate 8,975 25.12% 2,254 94,400
4 VCB Financials 8,599 10.00% 860 58,000
5 GAS Energy 8,203 5.00% 410 115,000
6 SAB Consumer 7,037 5.00% 352 N.a
7 Mobifone Telecom 4,581 N.a N.a N.a
8 CTG Financials 3,966 10.00% 396.61 N.a
9 VRE Real Estate 3,945 49.10% 1,937.20 N.a
10 BID Financials 3,837 4.72% 181.12 N.a
11 PLX Energy 3,825 5.10% 195.10 89,200
12 ROS Industrials 3,783 30.00% 1,135 N.a
13 MSN Consumer 3,536 20.00% 707.26 80,000
14 HPG Materials 3,128 47.44% 1,483.97 60,000
15 VJC Industrials 2,916 51.53% 1,502.81 168,100
16 VPB Financials 2,702 N.a N.a N.a
17 TCB (OTC) Financials 2,619 30.00% 416.4 N.a
18 HVN (UPCOM) Industrials 2,334 5.06% 118 39,400
Vietnam Rubber
19 Materials 2,289 11.88% 271.93 N.a
Group
20 Genco 3 Utilities 2,220 13.00% 288.6 N.a
21 MBB Financials 2,030 55.00% 1,116 29,500
22 Binh Son Refinery Energy 2,002 8.00% 160.16 N.a
23 SATRA Consumer 1,982 N.a N.a N.a
24 BVH Financials 1,956 10.00% 196 N.a
25 MWG Consumer 1,826 55.00% 1,005 162,500
26 GENCO 2 Utilities 1,804 N.a N.a N.a
27 Becamex (OTC) Industrials 1,799 N.a N.a N.a
28 NVL Real Estate 1,785 26.40% 471 67,000
29 ACB Financials 1,601 75.00% 1,201 42,200
30 MCH (UPCOM) Consumer 1,588 2.00% 31.76 N.a
31 PV Power Utilities 1,500 20.00% 300 N.a
Information
32 FPT 1,334 16.12% 215.08 70,000
Technology
33 HDB (HOSE) Financials 1,296 85.00% 1,102 N.a
34 GENCO 1 Utilities 1,263 N.a N.a N.a
35 RESCO Real Estate 1,123 N.a N.a N.a
36 VEAM (OTC) Industrials 1,112 13.00% 144.56 N.a
37 Saigon Tourist Consumer 1,013 N.a N.a N.a
38 Vicem Materials 1,000 N.a N.a N.a

Source: SSI Research estimates

3. We believe private companies that display a strong execution capability will become dominant

Along with the IPOs and divestment, the market will accordingly classify the attractiveness of the companies. Those without
competitive edges, or those that operate at weak efficiency will lose market share to their privately-own competitors. Those with a
new, clear ownership structure will result in improved efficiency. We believe that the whole process will help improve the productivity
of the overall economy.

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 This has us more inclined to back the batch of top-notch private companies in the public market such as HPG, VIC, VJC, or FPT.
Monopoly SOEs that might improve their efficiency are worth watching, including GAS and ACV.

4. Market valuation is still low thanks to high growth, with an anticipated re-rating of the big cap towards regional level is
anticipated

Our estimate for 2018 net earnings growth of 64 companies under our coverage list is 17.8%, driven by Consumer Discretionary,
Financial, and the Energy sector. The 2018 PER level is at 16.25x on 22 December 2017. We don’t see the market valuation to be a
particularly demanding factor given the background of high growth prospects. We also expect that valuation of large cap stocks with a
sizable market share will be re-rated to that of regional level. This is the reason why we believe that large-cap, growth stocks will take
the lead in 2018. Among top growth sectors, we see the banking industry as outstanding in 2018, and is expected to be the sector to
garner the most attention for the coming year ahead. Among the large market cap stocks, we like HPG, VIC, FPT, GAS, PLX, VJC,
MWG, ACB and MBB. Among the newly listed stocks with clear timeline we like HDB and keep watching the IPOs/listing of PV Power,
Resco, TCB, Mobifone, Satra and Saigon Tourist among others.

Net profit growth 2016A 2017E 2018E

27.80% 10.60% 17.80%

Source: SSI Research estimates

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 NOTABLE IPO PLAN 2018-2019

Company Name Sector Market cap IPO ratio IPO size Timeline
Mobifone Telecom 4,581 30.00% 1,374 2018
Agribank Bank 3,436 30.00% 1,031 2019
VNPT Telecom 3,084 30.00% 925 2019
Vietnam Rubber Group Commodities 2,291 25.00% 573 2018
GENCO 3 Utilities 2,255 13.00% 293 2018
Binh Son Refinery Oil and gas 2,021 7.79% 157 2018
SATRA Retail 1,982 30.00% 595 2018
GENCO 2 Utilities 1,804 13.00% 235 2018
Becamex Real Estate 1,799 24.00% 432 2018
Vinacomin Mining 1,648 30.00% 494 2019
PV Power Utilities 1,486 20.00% 297 2018
GENCO 1 Utilities 1,263 13.00% 164 2018
RESCO Real Estate 1,123 30.00% 337 2018
Saigon Tourist Hospitality 1,013 30.00% 304 2018
VICEM Construction Material 1,000 40.00% 400 2018
Vinataba Consumer 881 49.00% 432 2018
PV Oil Oil retail 610 20.00% 122 2018
Ben Thanh Group Real Estate 458 49.00% 224 2018
Sawaco Utilities 344 49.00% 168 2018
HUD Real Estate 330 49.00% 162 2018
Khatoco Conglomerate 264 30.00% 79 2018
Vinafood 2 Agriculture 222 49.00% 109 2018
Song Da Corporation Construction 218 49.00% 107 2018

Source: SSI Research estimates

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 DIVESTMENT PLAN 2018-2020

USD mil (price as of Dec 31st, 2017) Market cap Divestment ratio Divestment size Timeline
VNM 13,325 36% 4,797 2018-2019
ACV 10,398 30.40% 3,161 2018-2019
SAB 7,037 36% 2,533 2018-2019
VEAM 1,282 88.50% 1,135 2018-2019
GAS 8,203 30% 2,461 2018-2019
BHN 1,302 82% 1,068 2018-2019
PLX 3,825 24.90% 953 2018-2019
HVN 2,334 35.20% 822 2018-2019
DHG 662 43% 285 2018-2019
VGC 496 56.70% 281 2018-2019
VCG 424 58% 245 2018-2019
TVN 239 93.90% 224 2018-2019
MBB 2,030 10% 203 2018-2019
DVN 216 65% 140 2018-2019
VGT 227 53.50% 121 2018-2019
NTP 275 37% 102 2018
BMP 308 30% 93 2018
FPT 1,334 6% 80 2018
TRA 213 36% 77 2018
BMI 143 51% 73 2018-2019
VNR 132 48% 63 2018-2019
DMC 177 35% 62 2018
BVH 1,956 3% 59 2018-2019
VOC 107 36% 38 2018-2019

Source: SSI Research estimates

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 SUMMARY OF VIETNAM MACRO FORECAST

2014 2015 2016 2017 2018F 2019F

GDP growth (%- 2010p) 5.98 6.68 6.21 6.81 6.70 6.80
Agriculture (%) 3.49 2.41 1.36 2.90 3.00 3.70
Industry & Construction (%) 7.14 9.64 7.57 8.00 7.90 8.50
Construction (%) 7.07 10.82 10.00 8.70 8.90 9.50
Manufacturing (%) 8.45 10.60 11.90 14.40 12.10 14.10
Service (%) 5.96 6.33 6.98 7.44 7.50 8.05
Retail Sale (%) 10.60 9.50 10.20 10.86 11.70 12.60
Industrial Production Index (%) 7.60 9.80 7.50 9.40 9.10 9.70
CPI (average, % YoY) 4.09 0.72 2.66 3.53 4.30 4.70
CPI (year-end, % YoY) 1.86 1.34 4.74 2.60 4.95 4.17
Exports (USD bn) 150.00 162.40 175.94 213.77 253.35 302.67
Imports (USD bn) 148.00 165.60 173.26 211.1 248.47 295.56
Trade Balance (USD bn) 2.00 -3.20 2.68 2.70 4.88 7.11
% of Export 1.33% -1.97% 1.52% 1.26% 1.93% 2.35%
Exchange rate (USD/VND) 21,250 22,520 22,790 22,750 22,980 23,200
Current Account Balance (USD bn) 9.36 1.00 9.60 4.00 9.00 9.00
Foreign reserve (USD bn) 34.30 28.40 36.70 50.00 56.00 65.00
Foreign reserve/imports (weeks) 12.05 8.92 11.01 12.29 11.72 11.44
Credit growth (%) 14.00 17.29 18.80 18.00 18.00 17.00
Deposit rate (VND -%) 6.00 6.00 6.00 6.00 6.00 6.00

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 1. 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.

2. RATING

Within a 12-month horizon, SSI Research rates stocks as either BUY, HOLD or SELL determined by the stock’s expected return relative
to the market required rate of return, which is 18% (*). A BUY rating is given when the security is expected to deliver absolute returns
of 18% or greater. A SELL rating is given when the security is expected to deliver returns below or equal to -9%, while a HOLD rating
implies returns between -9% and 18%.

In addition, SSI Research also provides a Short-term rating where the stock price is expected to rise/reduce within three months
because of a stock catalyst or event. The short-term rating may be different from 12-month rating.

Industry Rating: We provide the analyst’s industry rating as follows:

 Overweight: The analyst expects the performance of the industry over the next 6-12 months to be attractive vs. the relevant broad
market

 Neutral: The analyst expects the performance of the industry over the next 6-12 months to be in line with the relevant broad market

 Underweight: The analyst expects the performance of the industry over the next 6-12 months with caution vs. the relevant broad
market.
*The market required rate of return is calculated based on 5-year Vietnam government bond yield and market risk premium derived from using Relative Equity
Market Standard Deviations method. Our rating bands are subject to changes at the time of any significant changes in the above two constituents.

3. 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. This report also does not recommend to U.S. recipients the use of
SSI to effect trades in any security and is not supplied with any understanding that U.S. recipients will direct commission business to
SSI. SSI and other companies in 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.

This document is for private circulation only and is not for publication in the press or elsewhere. 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.

WWW.SSI.COM.VN SAIGON SECURITIES INC. HO CHI MINH CITY HANOI

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Stock Exchange, Regulated by
the State Securities Commission
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Tel: (84-28) 3824 2897
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Page 13
 4. CONTACT INFORMATION

Institutional Research & Investment Advisory

Phuong Hoang Deputy Managing Director Strategy 409 phuonghv@ssi.com.vn
Hung Pham Associate Director Macro 637 hungpl@ssi.com.vn
Giang Nguyen, ACCA Associate Director Equity Research 430 giangntt@ssi.com,vn
Trang Pham Research Manager Consumer Goods & Services, Oil & Gas 537 trangph@ssi.com.vn
Linh Nguyen Research Manager Fixed income & Banking 679 linhntt1@ssi.com.vn
Anh Dinh Senior Analyst Real Estate 670 anhdtm@ssi.com.vn
Thu Le Senior Analyst Consumer Goods & Services, Pharmaceutical 2154* thula@ssi.com.vn
Kim Nguyen Analyst Fisheries, Natural Rubber, Airlines 2140* kimntt@ssi.com.vn
Giang Hoang Nguyen Analyst Transportation & Logistics 676 giangnh@ssi.com.vn
Nga Nguyen Analyst Fertilizer 2153* ngantp@ssi.com.vn
Chau Dao Analyst Steel, Cement 624 chaudm@ssi.com.vn
Huy Nguyen Analyst Banking 680 huynd1@ssi.com.vn
Ny Nguyen Analyst Real Estate 2137* nyntn@ssi.com.vn
Bao Doan Analyst Real Estate & Construction 2154* baodv@ssi.com.vn
Phuong Nguyen Analyst Consumer 688 phuongnt1@ssi.com.vn
Viet Luong Team Assistant 775 vietlt@ssi.com.vn

Those extension with (*) please dial (84-28) 3 824 2897

Those extension without (*) please dial (84-24) 3 936 6321

WWW.SSI.COM.VN SAIGON SECURITIES INC. HO CHI MINH CITY HANOI

Member of the Ho Chi Minh
Stock Exchange, Regulated by
the State Securities Commission
72 Nguyen Hue Street,
District 1
Ho Chi Minh City
Tel: (84-28) 3824 2897
Fax: (84-28) 3824 2997
Email: info@ssi.com.vn
1C Ngo Quyen Street, Ha Noi City
Tel: (84-24) 3936 6321
Fax: (84-24) 3936 6311
Email: info@ssi.com.vn

Page 14