June 14, 2016
Disclaimer: the opinions expressed herein are that of RongViet Securities and not of VietnamAdvisors. This is NOT a solicitation to buy or sell securities.
Automobile market cool down in the 1H2016
Looking back at the first 4M2016, sale volume remain uptrend but unable to achieve impressive growth rate as last year. Particularly, for 4M2016, total sale volume reached 85,410 cars (+10% y-o-y); while 2014 and 2015 reached 28% and 37% respectively. Notably, in Febuary, both passenger and commercial cars recorded an negative growth rate for the first time in the last 36 months. For 4M2016, passenger cars and commercial vehicle achieved 47,525 cars (+14% y-o-y) and 31,668 cars (+24% y-o-y)
As automobile market seems cool down, surprisingly, sale volume from Thailand into Vietname booomed for the first 4M2016.
According to Customs Vietnam, ThaiLan exported about 10,169 cars (+48.1% y-o-y) and currently ranked as top car exporters to Vietnam. In fact, 70% Thai Cars that were exported in Vietnam are pick up cars such as Ford Ranger, Toyota Hilux, , Mazda BT-50, ….The aboved lines are enjoyed tax incentives as import tax are about 5% while the rest are about 50%. Besides, registration free for Thai cars are about 2% while the rest are about 10-12%.
High expectation for passenger cas in 2H2016
In our opinion, sale volume of passenger cas is expected to remain uptrend thanks to adjustment of special tax rate. Specifically, as mentioned in analyst pinboard 22/03/2016, from 1/07/2016, special tax rate (STR) for passenger cars for 9 seats and under would be adjusted. In fact, STR would be adjusted down for low volume capacity cas and vice versa for high one. Looking at the nearest table below, selling price of popular cars such as Kia, Ford would be down from 20 to 30 million dong. Thus, cheap cars are expected to boom from Q32016 as people awaits for the ajustment.
The impact of tax adjustment on HAX and PTB
Hang Xanh JSC (HAX – HSX). HAX is well know as a distrbutor of Mercedes cars. Based on our study, the majority of Mercedes cars are either equal or greater than 2.0L. Thus, they would be negatively impacted from the tax adjustment. Notably, selling prices of certain cars such as S500 and Maybach would be up from VND 1.5 bn to nearly VND 5 bn. By comparing, a buyer whom buy a Maybach (after adjust) would be the same as someone who buy a Maybach + a S500 cars ( before adjust). Thus, we believe that business results of 1H2016 would be better than the peak season, 2H2016. Till 7th Jun, HAX stock price go up 39.2% compared with the end of Q1.The Increase strongly reflect high expectation of investors to Q2 business result.
Phu Tai JSC (PTB – HSX). One of the three main segments of PTB is distributing Toyota cars. Based on our study, apart from Toyota Land Cruiser, selling prices of Toyota cars would either remain unchanged or slightly down after the adjustment. As the absolute selling price down only by 20-30 million dong, we expect demand would slightly up. Our analyst keeps the same outlook and valuation as in the company report, which was published in 27/04/2016 and the target price is 130,000 dong per share. As closing price in 7/6/2016, we recommend ACCUMULATE this stock in INTERMEDIATE.
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