A strategy slide presenation of Vietnam's stock makert and Macro economy for 4Q2016. This is a property of BSC (BIDV Securities Company) and presented to Buyside clients by Mr. Tran Thang Long Head of Reseearch.

1. Vietnam Outlook Update
Q4 2016
Long Tran Head of research
Please feel free to contact me at
E Longtt@bsc.com.vn
P +84 4 39352722 (118)
M +84 906 959 034
S rongbeo
BSC

2. Content List
• Investment themes 03
• Economy backdrop 04
• Global factors 06
• Domestic factors 09
• Stock market outlook 12
• Performance and liquidity 16
• Fearless forecast 2016 -2018 19
• Sector outlook 23
• Case to consider 24
• New kids on the block 29

3. Investment themes
3
Real Estate
push
building
material
FDI benefit
but caution
with TPP (may
false) with new
US President
Rerate on
the rise
Upcom, Hnx,
low P/E
Largecap
Privatization
& FOL will
dominate in
2016 – 2017.
New Kids on
the block
Local grow
oriented.
Low Beta
and high
dividend
yield
1 2 3 4 5

4. Economy backdrop
Challenging 30 years since “Doi Moi”
4

5. Key take away points
• Eventful Q4 2016: US President election 2016 (8th Nov), FOMC meeting
(02nd Nov, 14th Dec) and Opec meeting (30th Nov) will be on the spotlight
(all on Q4 2016)
• What happen if TPP false ?
• Vietnam fall short of GDP target (6.7%) while there is only 3 months left
• Liquidity is great, foreign reserve climb to USD 40 billion
• New PM want to support growth and push privatization, prove that he is
more Pro-business. Party leader’s anti corruption campaign.
• Pros: strong FDI, stable interest rate, liquidity, positive export
• Cons: State own enterprise restructuring, Banking system and fiscal deficit,

6. You don’t want to be any where else
Source: BSC, Blackrock
Emerging economies
• China Slowdown
• BRIC slow down
• Commodities price recovery
Developed economies
• FED hike
• Election year and anti TPP
•Brexit & EU
Geopolitical risks
• Conflict and violence
(Russia, East Sea, IS)
• Cyber Security
Vietnam
• USD/VND
• Fiscal Policies
• FTA & investment (TPP)
BSC’s relevant reports: Brexit before & after, Lanina, Oil, commodity

7. Major risks from Fed hike and US President Election
FOMC meeting on 02nd Nov and 14th Dec:
The probability of a hike by December
jumps to 61 percent. Commodities to
recover further more until then.
US President election on 08th Nov: Clinton
vs Trump. Hillary Clinton is well-aware of
the dynamics of the South China Sea
dispute while Donald Trump has spoken
against free trade agreements (he hate
TPP)
What it mean for Vietnam:
• Clinton is better, Trump is so uncertainty
• A hike is not a big problem as everyone
expect it happen in Dec.
Source: Project forecast
BSC’s relevant reports: FED hike & How long how low

8. If TPP false, we still have 16 other FTAs
• The possible failure of TPP if Mr. Obama
can not push Congress to pass TPP in the
two-month Nov 2016 to Jan 2017.
• The main affected sectors are textiles,
garments and footwear which accounted
for 21.6% of exports but less than 10%
of FDI.
• What it mean for Vietnam:
• If No TPP, stay away from textiles,
garments and footwear (direct benefit
from TPP)
• Anyway, FDI trends still very strong and
good news is we still have 16 other FTAs.
Indirect sector still have positive grow.
Source: Bloomberg
BSC’s relevant reports: TPP and sectors

9. GDP grow in 2016 & 2017 • 2015: GDP 6.68% ranked 4th in EM, thanks
to strong FDI and private sector recovery.
Bad new is VN’s GDP always slowdown
after election years (2005, 2010)
• 2016 : With stable interest rate, Strong
FDI, FTAs, We expect:
• GDP: 6.1% - 6.3% (Q4 need min 6.4%)
• FDI: USD 13.5 to 17 billion ( USD 12
billion ytd)
• CPI: ~ 3.5 % (3.14% ytd)
• Budget deficit: 6%
• export grow ~7% (net export USD 2.8
billion ytd, export rise 6.5% ytd)
• USD/VND: up to +2% (-0.8% ytd)
• Credit growth: 16%-18% (10% ytd)
• Interest rate: flat and fall slightly
Source: Bloomberg
8.4
5.32
6.78
5.03
6.3
6.5
6.68
4
4.5
5
5.5
6
6.5
7
7.5
8
8.5
9
Actual Historical Median Forward High Low

10. Stock market Outlook
Alpha seeking rather than Beta
12

11. Key take away points
• Vietnam is look a lot like a turnaround stock with new leaders, restructuring plan
and receiving huge foreign investment (start slow but improve fast)
• What if Vnindex can grow at the same speed as Asean stock indexes from 2009
to 2012 ? 2016 market up +16.8% thanks to abundant liquidity.
• Valuation multiples is higher than 5 years average but still attractive compare to
Asian peers. Q4, P/E is high (16.2) and need a correction.
• Market earning which can be similar to 2015 (due to slower than expect GDP
and earning in big stocks does not increase fast enough)
• In medium term, Stock market will have new kids on the block thanks to IPO,
divestment and listing process is pushed; market cap and liquidity will increase
• In short term, Q4 is full of events such as OPEC, FOMC, US president election,
high profile corruption trial in Vietnam … which can create fluctuation.

12. VN-
Index,
8.5%
MXEF,
9.5%
MXFM, 1.4%
MXWO,
4.0%
(4.00)
(2.00)
-
2.00
4.00
6.00
8.00
10.00
12.00
6/30/16 7/31/16 8/31/16
MXWO Index MXFM Index MXEF Index VNINDEX Index
FM & EM suffer a hard year opening
• 2015: Vnindex in the greenzone while
FM and EM close in dark red.
• Vnindex outperform the EM, FM and
world index first half 2016 (+8.3%), Q3
(+8.5%) despite 2 major incidents:
• China slowdown
• Brexit
• Vietnam stock market look like China
2014 when the stock market about to
rocket or Asean 5 in 2009. USA
election 2016 will be the main risk in
Q4
• Lead us to conclude “you don’t want to
be any where else”.
Source: Bloomberg

13. Valuation and market size
Source: Bloomberg, BSC Research
As of 30 Sep 2016
56.20
7.28
4.96
Index market cap (billion USD)
VN-Index (306
members)
HNX-Index (383
members)
UPCOM-Index
(306 members)
P/E ratio of Asian stock Index
Lead us to investment theme number 3 Re-rate: buy bluechip in HNX, Upcom and wait for a
rerate when HNX joint HSX. Listed market cap will rise (Decision No 51) Upcom should not be
overlooked. Vnallshare will be announced on 24th Nov 2016 (208 Vnindex + 180 Hnindex)
• HSX: ~ 1/3 stocks have current P/E less than 10, P/B less than 1.0
• HNX: ~ 2/3 stocks have current P/E less than 10, P/B less than 1.0
10.89
16.40
0
5
10
15
20
25
30

14. Foreign Investors net sell strongly in Q3
9M2016: foreign investor net sell (mostly
VIC, VNM) and ETF cash out.
• Top buy Q3: NT2, PVT, SSI, GAS, DRC,
BVH, CTG, CTI, EVE,
• Top Sell Q3 : FIT, VNM, VIC, VCB, PVD,
HBC, HPG,
• Market still up +16% thanks to
abundant liquidity in VND lead to high
and cheap margin lending
• If foreign investor don’t turn net buyer,
it wont be good for the market
Source: Bloomberg
Country Net transaction
September
Net transaction
Q3
2016
India 917 4069 7025
Indonesia -279 1611 2596
Japan (6759) (14212) (65860)
Phillipine (274) 110 571
Korea 1325 6065 9414
Sri Lanka 5 21.7 (20.3)
Taiwan 231 8017 14262
Thailand 510 2764 3802
Pakistan (33) (30) (71)
Vietnam (123) (152) (230)
BSC’s relevant reports: Pnote 1 & Pnote 2

15. Liquidity improved 9M2016 : Liquidity is slightly higher than
in 2015 around USD 150 million.
• Stable interest rate and exchange
rate,
• FOL rise in number of stocks,
• T+2 applied
• High beta stocks have drier liquidity
(FLC, KLF, TSC…)
• Margin lending rise in more FA
stocks
• VN start to allow day trading (buy
and sell stock at the same time),
Q4 2016: Liquidity stable
• T+0, index future (2017).
• Stable interest rate, liquiditySource: Bloomberg
BSC’s relevant reports: Upcom Premium & Upcom Top 30
2,613
2,646 2,973
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Average Turnover 3 per.Mov.Avg
Bil.VND

16. Privatization & divestment to be pushed
• Privatization process will be pushed
due to fiscal budget after 9 month of
slow IPO (only 40/120 planned).
• Divestment in Sabeco, Habeco, FPT,
FPT telecom, VNR, BMI, BMP, NTP,
HGM, SGC, VIID in 2016 - 2017
• Number of state own companies to
be IPO and divest is around 1100
(2016 to 2020)
• Market cap will increase vastly
thanks to new stocks
• Lead us to Investment themes number
4 “Privatization & FOL”. Big
divestments and hidden gems are
expected (Blue chips & mid cap), so be
prepared.
Source: Chinh Phu
109
180
0
100
200
300
400
500
600
700
800
900
DNNN CPH

17. 752.03
621.88
699.31
880.58
400
500
600
700
800
900
1000
1100
1200
01/15 07/15 01/16 07/16 01/17 07/17 01/18 07/18
Bear Bull Average
Fearless forecast 2016 -2018
• Vnindex is the biggest loser compare to
Asean stock markets. Vnindex broke 8
year high of 680 points.
• Since 2009, Asean stock market
passed 2007’s top by a huge
percentage.
• Indonesian index has increased the
most, while Singapore performed
the least.
• What if Vnindex can recover at the
same speed as Asean indexes 2009
- 2012
• Let your imagination go wild:
• Vnindex 699 at the end of 2016
• Vnindex 752 to 880 at the end of
2017Source: BSC

18. 10.33
16.18
9.13
15.21
12.17
14.01
5
10
15
20
1/4/10 1/4/11 1/4/12 1/4/13 1/4/14 1/4/15 1/4/16
Vnindex P/E Avg -1.65Sdtv Avg +1.65Sdtv
Avg Avg -1Sdtv Avg +1Sdtv
Fearless forecast 2016 -2018: Valuation
• PE index broke the downtrend since 2014
and above the +1.65 SD (@ 15.21).
• Short term correction or accumulation
are likely to happen when P/E index
move toward + 1 SD (14) or +1.65 SD
(15.2).
• Long term view, Vietnam market is still
deeply discounted compare to peers in
Asean.
• 2016-2017: The multiple is likely to be flat
at 14 if USD/VND and VND interest rate
stable.
• Bull case: P/E 15.21 (+1.65 SD)
• Base case: P/E 14.01 (+1 Sdtv)
• Bear case: P/E 12.17 (5 years average)Source: BSC

19. Fearless forecast 2016 -2018: growth
• 2015: Market trailing EPS has been
improving steadily in the last 4 years.
Market is driven by earning more than
multiples.
• 2016 : We expect EPS ~ in 2015 due to:
• Lower GDP growth 6.1% to 6.2%
• Lower Credit growth
• Commodities price recover sooner
• World economy is weaker than expected
• Elnino have strong effect to agriculture
• Vnindex can vary from :
• Bull case: 699
• Base case: 644Source: BSC
46.18
45.96
42.05
30
35
40
45
50
55
60
01/10 01/11 01/12 01/13 01/14 01/15 01/16
TRAIL_12M_EPS Predict EPS (+) Predict EPS (-)

20. What make the market feeling hope and fear
• New big stock will be listed
• ETF Foreigner inflow season (yes or no)
• Earning season and shareholder meeting
and promising (4th Quarter)
• Foreign Ownership limitation list (more
stocks to applied)
• State divest good companies
• Market upgrade is long journey (Quatar
need 7 years)
• New policies: buy and sell at the same
time, T+0, Future (2017)
• Commodities fall again
• China tension in East sea
• Foreigner net sell (ETF, Pnote) (Dec 2016)
• FED, PBOC and exchange rate (Dec 2016)
• Rising interest rate scare margin
• TPP false, new US President (NOV 2016)
• State divest too fast and too many
• Anti corruption trial

21. Sector Outlook
Alpha Seeking
23

22. Key take away points
• Vnindex P/E is quite high (16.2) and need a correction to more
attractive level in Q4 (or earning need massive rise which is not likely
to happen)
• Top 10 and top 15 market caps looks quite expensive, mostly 22 to
40 time P/E (except MBB, CTG, BID, FPT, MWG and HPG)
• In Q4, low beta, seasonal, divestment or out-of-favor stocks/sectors
can be interesting
• In 2017-2018, you will need new kids on the blocks (1/3 top 15 will be
replaced). Be prepared, don’t wait until they all show up in the listed
exchange.

23. Cases to consider
Blue Chips: VNM, FPT, MBB, DPM, GMD, REE, BMP, MWG, FPT
Blue Chips for bottom
fishing:
HPG, HSG, PVS, VCG, SCR
Mid Caps: VSC, DXG, KDH, HBC, CMG, ITD, BFC, NT2, VNR,
VGC, VGG, CTI, DGC, DGL, RAL, BMI, NTP, VNS
Mid Caps for bottom
fishing:
LCG, PVG, PGI, BCC, SAM, PPC, PTI, TNG, PVT,
BHS, NCS, TCM, LAS
Small Caps: HDC, LIX, NET, CHP, SJD, VIP, PGS, ITC, CSV, PGC,
C32, SMC, BTP, PET, HAH, SHP
Penny: LIG, L10, SAV, TTC, VIT, HNM, TCR, VCA, AGM
Caution: HAG, HNG, FLC, HVG, MSR, DRH, ROS, TCH
• 9M2016: Most of
previous stocks on our list
is outperformed Vnindex.
• Out of favor stocks: REE,
SAM, PPC, BCC, TRC,
LAS, VGG, VNS can be
interesting
• Low beta: PTI, PGI, BHS,
BFC, CSV, NET, DGL, NCS
• Seasonal: CHP, SHP, SJD
• Divestment: VNM, FPT,
VNR, BMI, NTP, BMP, VCG
• New kids on the block:
Sabeco, ACV, Habeco,
VEAM, Vinatex, Vietnam
Airlines…

24. How news and macro policies affect sectors
Sectors
Marine
transport
Realestate
Constructio
n
Cement
Textile
Electricity
Pharmaceut
ical
Plastic
Tire
Bank
Steel
Aquaculture
Sugar
Oil&gas
Fertilizer
Rubber
Ceramic
tiles
IT
Seaport
Automobile
Insurance
Milk
Material
recovery
(+) (-) (-) (-) (-) (+) (+) (+) (+) (-) (-)
Fed hikes (+) (+) (-)
USD/VND (-) (+) (-) (-) (+) (-) (+) (-) (+)
Euro / Brexit (+) (-) (+) (-) (-)
Japan/ JPY (-) (+) (-) (-)
China / RMB (-) (-) (-) (-) (-) (-) (-) (-) (+)
Interest rate (-) (-) (-) (+) (-) (-) (+)
TPP Risk (-) (+) (-) (-) (+) (-) (+) (+) (-) (-)

25. How discount P/E Vnindex vs Asean 4
56%
54%
43%
39%
50%
52%
45%
24%
14%
0%
10%
20%
30%
40%
50%
60%
0
10
20
30
40
50
60
Health care Consumer
Service
Technology Utility Industrials Oil & Gas Consumer
goods
Basic
materials
Financials
PE comparison by sectors
Regional PE PE of Vietnam Median Discount

26. Sector rating 2016
No Sector Rating 2016 Buy Hold/tracking
1 Real Estate Outperform DXG, ITC KDH, SCR, VIC,
2 Construction Outperform CTI CTD, HBC, FCN
3 Tiles Outperform TLT, TTC, VGC VIT, CVT
4 Technology Outperform FPT, CMG, ITD ELC
5 Sea Port Outperform HAH, VSC GMD
6 Power Outperform SJD, CHP NT2, BTP, PPC
7 Steel Outperform HSG, HPG, NKG VIS, SMC
8 Dairy Market perform VNM, HNM, VLC
9 Textile Market perform TNG, VGG TCM, EVE
10 Fertilizer Market perform BFC, DPM, LAS
11 Cement Market perform BCC HT1, BTS
12 Automobile Market perform SVC, HTL, TMT
13 Insurance Market perform BMI PGI, VNR, PVI
14 Plastic Market perform NTP BMP, AAA
15 Sugar Market perform BHS SBT, LSS, SLS, KTS
16 Tire Market perform DRC, CSM
17 Banking Market perform MBB VCB, ACB
18 Pharmacy Market perform DHG, IMP, DMC
19 Rubber Market perform TRC DPR, PHR
20 Oil & Gas Market perform PGS, PGC CNG, PXS, PVD, GAS
21 Aquaculture Underperform HVG, VHC, FMC
22 Marine Transport Underperform VTO, PVT GSP
• OUTPERFORM: Real Estate,
Construction, Building materials
(tiles, plastic, cable), Technology,
Sea Ports, Textile, Electric power.
• MARKET PERFORM: Plastic,
Steel, Sugar, Tires, Cement,
Automotive, Insurance and
Banking, Pharmacy and Oil & Gas
and Natural Rubber, Fertilizer,
Dairy.
• UNDERPERFORM: Marine
Transportation and Aquaculture

27. New kids on the block
• If the IPO and listing process are push
hard enough, we will have USD 12
billion market cap increase .
• 2 New members in top 10
• 1/3 top 15 will be replaced
• What it mean for the market:
• ETF and index tracking fund will
busy with rebalancing portfolio
• Index will be strongly affected (big
cap with small floating shares)
• You should be hurry If you haven’t had
few name in your portfolio,
Source: Bloomberg
No
Market Cap
(bil USD)
Perce
ntage
add
Percentag
e Ticker
1 9,255
14,6
% 14,6%VNM
2 6,209 9,8% 24,5%VCB
3 6,122 9,7% 34,1%GAS
4 5,151 8,1% 42,3%VIC
5 2,941 4,7% 46,9%CTG
6 2,661 4,2% 51,1%BID
7 2,378 3,8% 54,9%MSN
8 2,248 3,6% 58,5%BVH
9 1,629 2,6% 61,0%HPG
10 1,090 1,7% 62,8%MBB
11 0,963 1,5% 64,3%FPT
12 0,898 1,4% 65,7%MWG
13 0,863 1,4% 67,1%ROS
14 0,779 1,2% 68,3%STB
15 0,570 0,9% 69,2%EIB
No Company
Market
Cap
1Sabeco 3,00
2ACV 2,25
3BSR 1,58
4Vietnamairlines 1,12
5Petrolimex 1,02
6VEAM 0,85
7PV Power 0,64
8PV Oil 0,50
9Habeco 0,50
10Vissan 0,29
11Vinatex 0,25
12Vinafor 0,16
13Hancorp 0,06
14SCB 0,06
15Nhabeco 0,00

28. Thanks for your supports
and confidence in us
Long Tran Head of research
Please feel free to contact me at
E Longtt@bsc.com.vn
P +84 4 39352722 (118)
M +84 906 959 034
S rongbeo
BSC