STRATEGIC

CONSULTING REPORT

GROUP 30
Nguyễn Mai Anh
Đào Minh Quang
Nguyễn Quang Kiệt
Lê Khánh Linh
 TABLE OF CONTENTS
1. Customer Analysis.................................................................................................................3
2. Macroeconomic & Vietnamese Stock Market Analysis......................................................3
3. Vingroup (VIC) Overview.....................................................................................................4
a. About Vingroup...................................................................................................................4
b. Vingroup stock’s recent trends.............................................................................................4
c. Vingroup’s next year outlook:.............................................................................................5
4. Steel Industry Analysis..........................................................................................................6
a. Steel industry’s stagnation (2020-2023)..............................................................................6
b. Steel industry’s 2025 outlook..............................................................................................7
c. Forecast on steel prices........................................................................................................7
5. Banking Industry Analysis....................................................................................................7
a. The banking industry’s indispensable role in our economy................................................7
b. Banking industry’s 2025 outlook.........................................................................................8
6. Conclusion............................................................................................................................12

2
 1. Customer Analysis
 Observing that the customer’s NAV is 430.000.000₫, which means a small-sized budget,
we decide to focus on a limited number of companies
 Based on the customer’s selection of two large-cap stocks, we believe his focus is on
long-term growth, and his risk-taking willingness is low
 Based on the customer’s occupation being engineer, we believe his interest is in the
industries of steel producing and real estate
2. Macroeconomic & Vietnamese Stock Market Analysis
 For 2025, it is planned that the Vietnamese economy is going to expand by 8%, with
strong drives from multiple industries, including banking & finance, and steel
production
 The Vietnamese stock market is also forecasted to witness a remarkable growth in 2025
thanks to reasons listed below:
 Firstly, the market’s rating is expected to be upgraded from “frontier” to “emerging”.
From this event, we believe the increasing credibility of the whole market will attract
more investors, leading to a boost in trading volume
 Secondly, on the technical side, VN-Index is expected to experience a breakthrough in
2025, after undergoing an ascending triangle pattern as to be seen on this chart:

 Thirdly, each industry has its own perks and potentials, most notably the banking and
steel industry, which will be analysed below

3. Vingroup (VIC) Overview

a. About Vingroup
Vingroup, founded in 1993 as Technocom in Ukraine, is now a leading Vietnamese
conglomerate. In the early 2000s, the company came back to Vietnam with two key brands:

3
Vincom and Vinpearl. In 2012, it merged these brands to form Vingroup Joint Stock Company.
In 2007, the company was listed on the Ho Chi Minh City Stock Exchange under ticker VIC.
The corporation operates across three core areas: Industrials & Technology, Real Estate &
Services, and Social Enterprises. Among them, the property sales and industrial segments
contribute the most to its revenue structure (54% and 25% respectively in 2024). It is recognized
as one of Vietnam's most successful and well-capitalized companies, driving innovation and
international growth.
b. Vingroup stock’s recent trends
Figure…:

Source:
Overall, the price of VIC shares has been declining over the past 3 years. From 2022 to 7/2023,
VIC's share price dropped significantly by 46.35% (96,000 VND/share on January 3, 2024, to
51,500 VND on July 3, 2024). The price then rebounded strongly, reaching a 15-month high of
75,200 VND/share on August 16, before quickly falling back to 46,500 VND per share within
just one month. This was the lowest price for VIC shares since November 2017. In 2024, the
price of VIC shares continued to remain low, and by January 2025, VIC held at the level of
around 40,000 VND per share.
The continuous decrease in price was due to several reasons:
 VinFast's losses:
VinFast, a subsidiary of Vingroup specializing in electric vehicles, plays a crucial role in the
manufacturing sector.
Despite achieving impressive revenue, mainly from car sales, VIC's manufacturing sector has
continued to report negative gross profit in recent years and nearly 42 trillion VND pre-tax loss
in 2024. VinFast is losing billions of dollars from its operations, net loss in 2022 and 2023 was
50 and 57 trillion VND respectively, putting the pressure on Vingroup.

4
To explain this, VinFast's sales were almost exclusively in Vietnam - its domestic market, while
the foreign markets only accounted for 10% (Reuters). This indicates that Vinfast is struggling to
attract foreign customers against the giants like Tesla, despite massive financial backing from its
parent company. In the U.S, the project to build a $4 billion EV and batteries manufacturing
facility in North Carolina was postponed due to faltered demand for EVs amid high borrowing
costs, and customers shifting to cheaper gasoline-electric hybrids
After facing many difficulties in the U.S. market and having to postpone the construction of a
factory in California until 2028, VinFast is shifting its focus to Asian countries such as India and
Indonesia with substantial investments. Although these are emerging markets with high growth
potential, this investment will require significant time and resources, making it difficult to
achieve results in the short term.
 Reduced foreign investment:
In recent years, Vingroup has witnessed major foreign shareholders divesting their investments.
According to Reuters, since VinFast's listing on Nasdaq, the value of foreigners' combined
holdings in Vingroup has dropped by nearly 60% to 15.7 trillion VND, faster than local
investors. The reduction of foreign investment reflects a decline in the investors' confidence in
Vingroup's future prospects, and this negatively impacts the price of VIC shares on the stock
market
c. Vingroup’s next year outlook:
In the upcoming year, Vingroup faces a bleak outlook as one of its two major pillars, VinFast,
has yet to generate profit. It continues to require massive amounts of capital, not only to offset
losses from previous years but also to sustain its expansion efforts in new markets.
On one hand, the conglomerate and its founder, Pham Nhat Vuong have consistently injected
additional capital, including $13.5 billion in loans and grants in October, and nearly $3.5 billion
in November, 2024.
On the other hand, Vingroup has to take on more debt at higher interest rates to cover cash
shortfalls and invest in the group's automaker.

5
 Figure: Vingroup’s debt in 2024

Source: Vingroup
In 2024, Vingroup’s total liabilities increased significantly by 166 trillion VND (a 32% rise),
double that of 2023. Of that, over 113 trillion VND is short-term debt. Vingroup also focused on
increasing its long-term debt: In 2023, long-term debt decreased by 8.41 billion VND (-5.87%)
while in 2024, long-term debt surged by 52.72 billion VND. In addition, in May, it issued two-
year bonds worth 8 trillion VND that paid 12.5% interest, above the average 10.6% in 2023 and
9.6% in 2022 for slightly longer maturities. According to Fitch estimation earlier in January, its
debt was expected to be above 55%, close to risk levels of 60% for Vinhomes' ratings "due to
rising investments in the group's automaker, and our expectations of a sustained operating cash
burn". Fitch also noted that if the figure exceeded 60% on a sustained basis, it could result in a
downgrade of Vinhomes' current rating, making its debt even costlier.
Thus, given the massive loans with high interest rates, VinFast's continuous losses, and the fact
that investment projects require time to complete and become operational, Vingroup's short-term
outlook is not favorable. The group is unlikely to experience a strong recovery in the near future.
4. Steel Industry Analysis
a. Steel industry’s stagnation (2020-2023)
The Chinese property sector has taken a hard hit after the crisis regarding the default of the
Evergrande group in 2020 till now as the corporation was reported to be in debt of over 300
billion dollars. This would ultimately hit the steel industry as many real estate projects have
come to a halt as steel consumption experienced a decline of 4.7% compared to the previous
year, influenced by stricter real estate policies and COVID-19-related uncertainty in 2021. All of
these would also affect the exports of steels from companies in Vietnam and cause a downtrend
in stock prices.
b. Steel industry’s 2025 outlook
The forecast for Vietnam’s steel industry in 2025 indicates a positive growth outlook, driven by
increasing domestic demand and government infrastructure investment projects. The Vietnam

6
Steel Association (VSA) expects steel production to rise by 8% in 2025, reflecting the recovery
of domestic industries.
Demand for construction steel and hot-rolled coil is projected to grow by 7% and 8%,
respectively, during the 2025-2026 period, supported by rising demand and reduced pressure
from China. Domestic manufacturers may expand their market share as anti-dumping measures
take effect from December. However, Vietnam’s steel industry also faces challenges from
international trade protection policies. The U.S. imposing a 25% tariff on imported steel could
impact Vietnam’s steel exports, requiring businesses to enhance product quality and improve
production processes to meet stringent international standards. To protect domestic production,
VSA has proposed imposing tariffs on galvanized steel imports from China and South Korea, as
imports from these two markets accounted for approximately 64-67% of total imports during the
2022-2023 period, putting pressure on the local industry. Moreover, Vietnamese steel companies
are investing in green steel production to meet the requirements of the EU and U.S. markets. Hòa
Phát has announced plans to partially transition to electric arc furnace (EAF) steel production to
reduce carbon emissions.
Overall, with support from public investment projects and increasing domestic demand,
Vietnam’s steel industry is expected to achieve significant profit growth in 2025 despite
challenges from the international market.
c. Forecast on steel prices
Global steel prices may recover from the low levels of 2023-2024 due to reduced production in
China and increased demand from the construction sector.
Domestic hot-rolled coil (HRC) prices are expected to range between $590 - $634 per ton, an
increase of approximately 8% - 9% compared to 2024.
Major steel-producing companies especially Hòa Phát (HPG) may benefit from this upward price
trend.
5. Banking Industry Analysis
a. The banking industry’s indispensable role in our economy
The banking sector’s prominent roles:
 Providing liquidity to the stock market
 Bridging the gap between investors and businesses
 Ensuring the sustainable development of the economy
 Managing risks and long-term investments
As of Q4/2024, the banking industry accounts for 30.94% of market capitalization, making it one
of the industries with the highest capitalization. This reflects the important role of banks in the
economy, with a large contribution to the financial market.
b. Banking industry’s 2025 outlook
7
Despite being affected by macroeconomic fluctuations, the banking industry continues to affirm
its high growth potential. In general, the outstanding features in the past period include:
Credit growth rate of over 18%, the highest since 2018. Compared to 2022 and 2023 - the period
when the banking industry was negatively affected by domestic and international
macroeconomic factors - credit growth in 2024 showed more stability.
The income structure of the banking industry mainly comes from net interest with nearly 80%.
The industry's overall profit remained stable in 2024, but the difference between banking groups
is increasingly evident.
The risk management process has been significantly improved thanks to the application of the
Basel II process according to Circular 41, contributing to improving the safety coefficient for the
banking system.
Opportunities Threats
 Public investment is invested, real  Incomplete recovery from real estate
estate gradually recovers market despite government support
 Production and trade sectors are  Pressure from exchange rate, Fed's
vibrant rate cut rate slows
 Domestic investors support foreign  Domestic consumption momentum
selling pressure, bright spots in the needs more time to recover
month come from the Banking, Port  President Trump's unpredictable
& Shipping and Public Investment policies will pose risks to export
groups channel growth.
 Upgrading can attract large foreign  Many small and medium-sized
capital flows from ETFs and active enterprises (SMEs) continue to face
investors. Large bank stocks are difficulties in meeting lending
likely to benefit from high liquidity standards, especially collateral
and meeting international standards requirements, despite a significant
decrease in interest rates in 2024.
 Bad debt pressure and liquidity still
need to be addressed

c. Credit Growth On The Way Up:

The Loan-to-Deposit Ratio (LDR), which sits at a low of 90%, continues to maintain a high
value, suggesting that the banks have strategically formulated their lending policies. There were
notable events in credit growth like a steep reduction during the start of 2024 as well as
noticeable increase in Q2, with the latter part of the year loitering in stagnation.
Focusing on a singular aspect, there has been significant diminishing of deposit growth ever
since Q3 of 2023 which shows that the capital allocation from households and firms into banks is
possibly decelerating. If this continues, it can cause a strain on the capital available for lending.

8
Focus has shifted to commercial banks for the 2025 credit growth target of 16% which would
complement an 8% GDP rise. To achieve this, they need to be more aggressive focusing on
digital transformation while trying to mitigate bad debt through active monetary policy.
Figure: Credit growth and LDR of banking sector

Sources: Authors, Finnpro

d. Liquidity Pressure Eases:
As for the discrepancy between the augmentation in credit relative to the increase in deposits, the
bank seems to be issuing loans aggressively while capital collection from the consumers is
lagging behind. This has resulted to liquidity pressure, as there may be restrictions on short term
funds to service long-term credit obligations. In the year 2024, the composite Current Account
Savings Account (CASA) ratio stood at 21% but the larger and smaller banks’ ratios differ quite
a lot.
Relatively, USD has been on the rise partly because of the tight pressure from Donald Trump’s
import tariffs, however, the depreciation of VND has been contained to a certain extent due to
the intervention of the State Bank of Vietnam. Going forward, with the closing of the interest rate
gap, liquidity pressure should subside, but smaller banks with VND term deposits have a greater
dependence on short-term funds from the market and weaker liquid assets and so continue to
experience liquidity strain. The one-year term deposit rate is expected to be at level of 5 percent.
e. Net Interest Margin (NIM):
The considerable difference between credit growth versus deposit growth is now at historic
levels, which indicates that banks have to look for capital from other sources apart from deposits
in order to fulfill the demand for loans. Should such trends continue, the interest rates offered on
deposits will most likely increase.
As we enter Q4 2024, NIM has fallen to 3.31%, which is the lowest in four years. This comes
after a cut in lending rates to stimulate credit growth. However, with the government
encouraging spending on public projects and the real estate sector potentially recovering, credit
demand is likely to increase. This, in turn, is expected to improve NIM and its numbers will also
improve towards the end of 2025.

9
 f. Non-Performing Loans (NPL) and Loan Loss Coverage Ratio (LLCR):
The industry’s NPL ratio saw a slight improvement, declining to 2.25%, compared to previous
ratios. A number of prominent banks are proactively implementing strategies to manage risk as
well. With the expiration of Circular 2 in Q4 2024, a number of banks have increased their
provisioning activities preemptively in the second half of the year alongside tightening their
controls on bad debts compared to 2023.
The notable trend in industry wide LLCR is its improvement ratio which is at an astonishing
91%, an increase from 83% in the previous quarter. During the 2024 period, banks set aside an
additional total credit risk provision of VND 133.237 trillion which is an 8.1% increase relative
to the prior year, as compared to -0.8% and 2.6% in 2022 and 2023 respectively. While most
state-owned banks did realize some signs of NPL recovery in 2024, private banks were still
behind the curve.
The gradual reduction of overdue NPLs and the absence of an extension to Circular 2 should put
slight downward pressure on the NPL ratio in 2025. All considerations aside, banks still need to
be cautious regarding the provisioning burden.
Figure: NPL rate in the whole banking industry is dropping significantly

Source: Authors, Finnpro

g. Sustained Profit Growth:

For the fourth quarter of 2024, the banking sector is projected to achieve an astonishing increase
in pre tax profits by 22%. Categorically, total operating income rose 16%, courtesy of two
primary reasons. One, net interest income continued to expand with a marked increase in interest
earning assets and two, net income from bad debt previously sold as off-balance sheet items has
grown. This not only served as a catalyst for profit improvement but also reflected the recovery
of the real estate market and the overall enhancement of asset quality across the banking sector.
Figure: Total income of banking industry in 10 quarters

10
 Source: Authors, Finnpro

h. Valuation Suitable for Long-Term Investment:

The market’s P/E ratio fluctuates around 12.4–12.5x, presenting an attractive valuation relative
to an expected return of approximately 8–8.3%. This makes bank stocks well-suited for long-
term investment.
Currently, bank stocks are trading at a P/B ratio of 1.5x, aligning with the historical median.
However, it is important to note that the banking sector's profitability and asset quality are
significantly stronger than in most previous periods. Therefore, we believe that P/E is a more
appropriate valuation metric at this stage.

6. Conclusion
All in all, thanks to the prominent potential of both banking and steel production industry, and
the negative outlook of Vingroup (VIC), we have come up with the two following scenarios:
a. If the customers want to lower his portfolio’s risk as much as possible:
 Firstly, TO SELL 2900 VIC stocks for 119.480.000₫ in cash

11
  Secondly, TO BUY 6200 TCB stocks for 161.820.000₫
 Thirdly, TO BUY an additional 1000 HPG stocks for 28.000.000₫
or:
 TO SELL 2900 VIC stocks at the market price of 41.200₫/stock
 TO BUY 6200 TCB stocks at the market price of 26.100₫/stock
 TO BUY an additional 1000 HPG stocks at the market price of 28.000₫/stock

b. If the customers want a better balance between risk and return:

12