Recommendations

Vietnam Dairy Products JSC (Vinamilk, HOSE: VNM) is the dairy company with the leading market share in Vietnam along with the largest distribution system and cow herd. In addition, the company is also continuously expanding to large territories such as China and the Middle East. At the current price, VNM is a worthy investment to consider because: (1) High dividend payout ratio and strong financial potential are enough to meet future expansion investment needs, (2) Growth momentum comes from export markets and overseas companies and (3) Growth potential in Vietnams dairy industry is still there when the compound growth is forecast at 3.0%/year in the period 2025-2029 (according to Euromonitor 2024) and milk consumption per capita is still low compared to other countries in the Southeast Asian region, although there are still many barriers to expanding production and heavy dependence on imported raw materials.  Based on the FCFF and P/E methods, we update our valuation and recommend BUY for VNM with a target price of VND 72,700, equivalent to an expected return of 30.8%.  

▶ Continuing the upward momentum, VN-Index continued to record a breaking session in excitement with significant contributions from the Securities group and many Bluechip stocks. Improved liquidity indicated that investors’ confidence has improved. Concurrently, foreign investors also reversed to net buy with a relatively large net value. ▶ At the end of the trading session, the VN-Index increased by 10.95 points (+0.82%), reaching 1,347.25 points; HNX-Index increased by 2.77 points (+1.22%), reaching 228.94 points. Market liquidity reached VND 29.01 trillion, which was equivalent to more than 1.3 billion shares being traded. Foreign investors reversed to net buy VND 853 billion, mostly focusing on APG, VND and SHB. On the other hand, FPT, VRE and STB were the three stocks the suffered the strongest selling pressure. ▶ Technical perspective: After returning to test EMA9 at around 1,333 points, VN-Index showed a positive recovery when it increased by nearly 11 points and closed the session just below 1,350 points. Liquidity improved but the price increase slowed down and the spread was small, showing that the market is still quite balanced around this old peak. - In the positive scenario: The market manages to maintain the EMA50 against short-term profit-taking pressure, supported with positive information from tax negotiations. This will serves as a positive signal to help investors improve their confidence.  - In the base scenario: Vietnam has no new progress on tax agreements, the main trend would remain trading sideways and waiting for clearer signals from the market. Strategy: Investors should temporarily stop buying new stocks that have experienced significant increases, because short-term cash flow can take profits and move to stocks that are trading below MA200/MA50. For new buying positions, priority can be given to real estate and banking groups that are moving in low price base with an accumulation base, however, the disbursement ratio should maintain at a low level.  

Positive movements across multiple markets. US stock futures were little changed on Tuesday after equities began the new trading month on a positive note. In Monday’s regular session, the S&P 500 gained 0.41%, the Nasdaq Composite rose 0.67%, and the Dow edged up 0.08%. These gains came despite rising trade tensions between the US and China. Beijing pushed back against President Donald Trump’s accusation that it had breached a temporary trade agreement. Markets are closely watching for a potential call this week between Trump and Chinese President Xi Jinping, which could offer much-needed clarity on the trade front. Meanwhile, the EU criticized Trumps proposal to double steel tariffs to 50%, warning the move could undermine ongoing negotiations with the US. Investors now turn their attention to key economic reports due Tuesday, including data on job openings, durable goods, and factory orders.   Resistance around the recent peak. VNINDEX closed at 1,336.30 (+3.70 points, +0.28%) with liquidity around the average level. The market had 201 stocks increasing and 165 stocks decreasing, the energy and real estate groups increased well during the session. The stocks contributing the most to the markets increase were TCB, GVR, STB while VPL, VHM, BID contributed to the markets decrease. Foreign investors net sold more than 200 billion, the value mainly concentrated in HPG and MSB stocks.   Trading Strategy: Investors are temporarily holding off on buying stocks that have already seen strong gains, as capital may shift toward stocks trading below their 200-day or 50-day moving averages. For new buying positions, priority can be given to real estate and banking stocks that are trading at low levels with a consolidation base; however, the allocation should remain modest.   Buy Recommendation: BVH MBB  

Macroeconomic outlook We believe Vietnams economy will adapt to the new situation as the U.S. imposes reciprocal tariffs on countries worldwide. In all scenarios, these U.S. tariffs could impact Vietnams import-export growth. While export pillars may not maintain their historical growth momentum, we expect Vietnams economy to continue growing based on its internal strength. Given the results achieved in the first four months of the year, we estimate that GDP for 2025 could reach a growth rate of over 6%, inflation will be controlled below 4%, and the VND may continue to depreciate by another 2-3%.   Stock market outlook Even with the headwinds from the global economy, the Vietnamese stock market holds substantial promise. Recent sharp pullbacks have opened doors to acquire stocks at attractive valuations. A clear positive is the resurgence of foreign investment in May, following a period of outflows, indicating a notable turnaround. Additionally, the potential upgrade to an Emerging Market by FTSE in September 2025 serves as a significant catalyst for market growth. Besides this, the stock market will be driven by the internal strength of the economy, with estimated earnings growth for listed companies reaching nearly 15% in 2025. The target P/E is 12x, corresponding to a reasonable range for the VNIndex of 1,380. In a positive scenario, we expect the VNIndex to approach its old peak of 1,500 points (target P/E 13x, -1 standard deviation from the 10-year average).   Potential Sectors Our investment strategy for the second half of 2025 centers on three key thematic stock groups: (1) Export group, (2) Domestic group, and (3) Stocks benefiting from emerging market upgrade. For the export theme, were selecting companies with inherent competitive strengths and the agility to capture new investment flows. Within the domestic theme, were honing in on sectors that will thrive from government policies stimulating local demand and increased public investment. Lastly, our preference for the upgrade theme is for large-cap companies well-positioned to attract significant foreign capital if the market status improves.

▶ The market welcomed June with a session featured by moves within a narrow-trading range, and managed to close in the green color with the remarkable support of Energy and Real Estate sectors. Liquidity remained stable compared to the previous session and foreign investors continued their net selling streak were the highlights of todays session. ▶ At the end of the trading session, the VN-Index increased by 3.7 points (+0.28%), reaching 1,336.30 points; the HNX-Index increased by 2.95 points (+1.32%), reaching 226.17 points. Market liquidity reached VND23.15 trillion, which was equivalent to more than 1.1 billion shares being traded. Foreign investors net sold VND 211 billion on HOSE, mostly concentrated in HPG, VIC and MSB. On the contrary, typical net buying directions included SHB, EIB and VIX… ▶ Technical perspective: The market is generally in an accumulation phase around the old peak, liquidity has decreased slightly and is relatively stable. We expect the VN-Index to fluctuate around 1,300-1,330 points before being able to surpass the old peak. RSI is at a neutral level around 60 points. In the positive scenario: The market manages to maintain the EMA50 against short-term profit-taking pressure, supported with positive information from tax negotiations. This will serves as a positive signal to help investors improve their confidence.  In the base scenario: Vietnam has no new progress on tax agreements, the main trend would remain trading sideways and waiting for clearer signals from the market. Strategy: Investors should temporarily stop buying new stocks that have experienced significant increases, because short-term cash flow can take profits and move to stocks that are trading below MA200/MA50. For new buying positions, priority can be given to real estate and banking groups that are moving in low price base with an accumulation base, however, the disbursement ratio should maintain at a low level.