20161226_BSC_Vietnam Company Research_EN_VGT_ICB 3763

We grant a Hold recommendation for Vinatex’s stock based on the fair price being in the range between VND 11.245 and VND 13.619. Our target price is calculated under net asset value method in which investments’s value is adjusted based on two methods: (1) asset value; (2) income. Vinatex is the representative for Vietnamese textile and garment sector. The firm owns robus subsidiaries and affiliates recorded at low historical value. Besides chances coming from FTAs, shifting in manufacturing method to FOB, ODM is the necessary trend that is expected to gain profit for Vinatex’s subsidiaries and affiliates. If TPP is impasse, growth of the industry could be downgraded, however this could create a lower prices of Vinatex and related stocks which are more attractive for long term investors.
Vietnam textile and garment sector – opportunities coming from FTAs and shifting in manufacturing method. Being a country that was ranked No.8 in value of  textile and garment goods exported to the world in 2008, Viet Nam held the fourth position in 2015. Total export turnover got USD 25 billion in 2015, implying an average growth rate  of 19% during the 2010 – 2015 period. We have stated that Vietnamese textile and garment industry were certain to get back its growth rate thanks to (1) new FTAs, (2) Changes in the global textile production-consumption value chain, (3) Expanding supply chain,  and shifting the manufacturing method to FOB, ODM.
The Group has been the leader in terms of scale and be the representative for the sector. Total consolidated revenue got VND 39.503 billion. The Group has been the leader in localization rate (52%) and in shifting manufaturing method to FOB, ODM. Vinatex is one of the first members getting benefit from the growth and shifting trend in the field thanks to its big scale and activity history.
The Group has owned several leaders in the sector. Vinatex’s memebers are the firms being famous for their strong brand, being headmost in total revenue, production capacity and good customer basis. Lots of investments are recorded at much lower value compared to market evaluation such as Vietien Corp, Garco 10, Duc Giang Corp, Phong Phu Corp, Hoa Tho Spinning Corp,...
Investment risks  (1) Weak demand, (2) Risk of shifting orders from Vietnam to Bangladesh, India, Cambodia, (3) Risk coming from TPP failing which impacts on the activity efficiency of new projects of Vinatex, (4) Risk from operating the big system of member companies, (5) Exchange rate risk, (6) Higher interest rate risk.