Market recovers well with motivation from banking sector, FCN - A stock each day


- Vn-Index opened reducing sharply, but recovered well  during the day.
- Except VNM/VNM reduced strongly by 2.6% and 1.6%, most others big-cap stocks closed sideway the reference price.
- Good point here is that banking sector recovered well after correcting yesterday.
- Liquidity reduced a little bit: 31% higher than 20-day average, but 8% lower than last trading day.
- Foreigners slightly net sell today, still buy VNM (36 bill), and sell HPG (36 bill).


- Global steel price reduced to 7 month lowest due to afraid of lower demand.
- U.S treasury bond yield curve has inverted for the 1st time in more than a decade as 3-year bond yield is higher than 5-year bond yield on Monday. It can be a long-range predictor of a future recession. In fact, even not all inversions automatically lead to a recession, but all recessions have been preceded by a yield curve inversion

- Prime Minister: Vietnam GDP growth in 2018 is estimated to be 7%


Business model:
- FCN is leading company in ground treatment before making construction with big clients such as CTD, HBC, Samsung, and LG. In revenue structure, ground construction, infrastructure, and ground treatment account for 73%, 8%, and 6% respectively.
- Main market is in the North with ~ 70% revenue. FCN just penetrate the South market from 2016 with lower profit margin.
- FCN’s competitive advantage is its most modern technologies in the industry: 1) production of centrifugal concrete piles and 2) ground treatment with cohesive vacuum.
- Currently, FCN is investing in 2 big projects namely Vinh Hao 6 Solar Power Plant and BT project for Road  No.9 in HCMC. Prospects of the 2 projects is Neutral due to its large capital requirement, and long time horizon, however, two projects is quite safe as serving the stable demand.

Investment catalysts:
- Prospect for construction and ground treatment is high: according to the urban railways planning for HN and HCMC by 2020, with a vision to 2030, about 174 km of underground urban railway will be built, with investment capital of $ ~$170 mill per km underground, total construction value up to $29 bill (~ 670K billion VND)
- In near future, many big contracts will help FCN to ensure stable revenue: 1) National key projects such as Nghi Son Thermal Power Plant, Long Son Petrochemical Plant, Hoa Phat - Dung Quat Plant and VinFast in Hai Phong; and 2) Infrastructure development projects such as BT road No.9 in HCMC, BT prevention-tide drains...
- However, FCN has high borrowing balance which will create high financial and liquidity risk
- Furthermore, FCN faces with stock dilution risk: 1) convertible bonds valued VND280 bill will be converted in 2019; and 2) FCN plans to issue 25million shares to strategic shareholders in 2019 to raise capital. 

Financial Statement Analysis:
Financial position is NEUTRAL due to high borrowing balance at 1,162 bill (~27.5% total assets), not good receivables management with high balance up to 2K bill (47.5% total assets), and negative cash flow from operation in 5 consecutive years.