I met a range of companies at the conference, but the banking sector seemed most confident on their growth outlook as the non-performing loan issues of the past have been settled and the strong economic growth has led to a big uptick in loans, while consumer and retail finance continue to be untapped. The latter seems to be the next big opportunity with a few of the banks such as VP Bank and HD Bank having developed a strong franchise and network to build a consumer and retail finance business. Having said that, a few state-run banks do not have a very strong capital base and will probably look to raise a large amount of capital going forward, which would most likely come via a strategic investor.
The other sectors which saw a lot of interest from investors at the conference were the retail and aviation sectors. Given the consumer confidence and a largely unorganised industry, there are a few listed companies such as Mobile World, FPT Retail, and Vincom Retail who are now looking to tap the organised retail market by entering into or expanding businesses such as convenience stores, pharma/beauty retail, and malls.
On the aviation front, besides rising international visitor arrivals, low cost carrier Vietjet has made flying both domestic and international routes more affordable for the average Vietnamese with expectations of doubling their passenger volumes in the next three years by 2020. Having said that, these numbers could be adjusted if there is a new player that enters the airline market, but lack of capacity at the airports currently makes this difficult to see happening. The growth of the aviation sector, as well as the increase in tourism has made the Airports Corporation of Vietnam one of the better longer-term stories in Vietnam as it looks to increase capacity, wield its pricing power, and increase its revenues from other sources such as retail, which are still very low compared to other larger airports in the region such as Hong Kong, Singapore, or Bangkok.
Besides growth in passenger numbers, the increase in trade from Vietnam, both export and import, due to the rise of Vietnam as a low-cost manufacturing hub should also be positive for businesses which provide ancillary services to support this trade. As such, Saigon Cargo Services, a cargo handler at Ho Chi Minh City airport, is expected to see robust volume growth over the next few years.
Besides meeting companies, conference participants also did a few site visits to various companies’ manufacturing facilities with the stand out being Masan Consumer’s research and development centre an hour or so outside of Ho Chi Minh City. This research centre looks to produce the next big selling product for the company and there was enough for everyone to sample.