These materials are analytical frameworks, not recommendations to buy or sell securities.
METHOD
Analysing Vietnam stocks: from macro to capital flows
A good company is not automatically a good investment at every price and at every point in the cycle. Analysis should therefore move from the big picture to an executable plan.
1. Start with macro
Track interest rates, system liquidity, FX, credit growth, commodity prices and policy. The goal is to identify whether the environment favours risk assets and which sectors are most sensitive.
2. Locate the sector in its cycle
Assess supply and demand, the earnings cycle, policy support, competition and catalysts. A credible sector thesis needs a visible path to better company earnings.
3. Test the thesis at company level
Examine the business model, asset quality, margins, cash flow, balance sheet and governance. Separate recurring earnings from one-offs and define what could invalidate the forecast.
4. Build a valuation range
Compare history, peers and required returns. Valuation works better as a range across positive, base and negative scenarios than as a single target.
5. Wait for flow confirmation
Observe trend, liquidity, relative strength, foreign activity and reactions around support and resistance. Flows do not replace fundamentals; they improve timing and risk control.
Required output
A concise thesis, catalysts, risks, three scenarios, invalidation conditions and appropriate position size.
BANKS
Reading bank stocks: NIM, asset quality and valuation
A low P/B multiple is not automatically cheap. Bank valuation only becomes meaningful when read alongside ROE, asset quality and sustainable growth.
Credit growth and loan mix
Look beyond headline loan growth. Retail, corporate, real-estate and bond exposures carry different yields and risks.
NIM and funding cost
Track CASA, deposit competition, lending rates and the share of earning assets to judge whether margins are sustainable.
Asset quality
Connect NPLs, group-2 loans, coverage, credit costs and collateral. Fast profit growth may not deserve a premium if achieved through greater credit risk.
Fees and efficiency
Separate recurring service fees from one-off gains. A low CIR is useful only when it does not reflect underinvestment in technology and risk controls.
Comparison framework
Read P/B with expected ROE, earnings growth, asset quality, capital and disclosure. Quality may justify a premium; a cheap bank still needs a catalyst.
VALUATION
Valuation is not one number: build a reasonable range
Company value changes with assumptions. A practical process builds a range and identifies which assumptions drive the result.
Choose the right tool
P/E suits relatively stable earnings; P/B is useful for banks and asset-heavy firms; EV/EBITDA helps compare capital structures; DCF fits reasonably forecastable cash flows.
Use three scenarios
The base case uses the most likely assumptions. The positive case captures successful catalysts. The negative case tests slower growth, weaker margins or a higher cost of capital.
Demand a margin of safety
The gap between market price and fair-value range must compensate for forecast error. Require a larger buffer when leverage, cash-flow volatility or disclosure risk is higher.
RISK MANAGEMENT
Three questions before committing capital
Why am I buying?
Write the earnings driver, catalyst and rerating logic in a few sentences. If the case is unclear, emotion may be driving the decision.
What would prove me wrong?
Define invalidation through evidence: results, policy, asset quality, technical levels or flow structure. Do not move the standard simply to protect an old view.
How much could I lose?
Size the position from the portfolio's loss tolerance and distance to invalidation. Even an attractive idea can cause major damage when oversized.
Principle
Risk management does not eliminate losses. It keeps one wrong decision from ending your ability to continue investing.