Company Report

Company Report
DBD VN (Market Perform; TP VND 58,000): Lower-than-expected 4Q results as consumers tighten purse strings

4Q23 performance missed estimates. DBD posted 4Q23 revenue and NPAT of VND 444 bn (-4.4% YoY) and VND 59 bn (-25% YoY), respectively, which were 10% and 40% lower than our estimates. The company saw lower sales as consumers skipped OTC drugs/supplements, as well as increased competition from imported brands. For FY23, the company recorded net sales and NPAT of VND 1.65tn (+6% YoY) and VND 269bn (+11% YoY), respectively. This result is 3% and 8% lower than our estimates. The increase is largely credited to the robust performance in the prescription drugs, including antibiotics and cancer drugs. Significant facility upgrades underway mobilizing aggressive growth plan. As DBD aims to reach VND 2.6tn in manufactured drug revenue before 2026 and 4.5tn before 2030 (from current revenue of VND 1.65tn), the company has been investing heavily in its production capabilities. DBD recently broke ground on the construction of a small volume injection drug factory (Nov 2023), focusing on production of new dosage forms/packaging such as sterile injectable and eye drops. Scheduled for completion during 2025, the factory aims to commence production before 2027.

29/03/2024

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PTB VN (Market Perform; TP VND 64,800): Stone demand recovered, energized by public investment projects

PTB operates at a higher growth rate than the wood industry thanks to its large customers (Masterband, and Melissa & Doug, GigaCloud). In addition, the company’s stable earnings reflect optimized labor productivity – allowing the wood segment’s gross profit margin to exceed the industry average by 3% to 4%. We see stone production recovering in both 2024-2025, energized by public investment projects such as expanding terminal T3 of Tan Son Nhat Airport and Long Thanh Airport with a total value of VND 600 bn. PTB trades at a 2024 and 2025 forward P/E of 12.6x and 10.8x respectively, which are slightly lower than peers (12.8x in 2024). Using a blended average P/E for the wood industry of 12x and the stone industry of 11x, we derive a 1Y target price for PTB of VND 64,800/share (downside -1%). We maintain our MARKET PERFORM rating.

27/03/2024

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PC1 VN (Outperform; TP VND 30,700): A turnaround year

4Q23 earnings updates: During 4Q 2023, PC1 reported sales of VND 2.6 tn (+11% YoY, reaching 113% of our forecast) and net earnings of VND 137 bn (-50% YoY, reaching 86% of our forecast). Gross profit margin was YoY thinner, at 17.2%, (vs. 21.7% of 4Q22), given the lower margin of construction segment associated with higher weight of public power projects.

Outlook: PC1 continues to diversify its sales mix. We expect FY24 sales to reach approximately VND 9,008 bn (+ 15.4% YoY) while NPAT is projected to reach VND 135 bn.

26/03/2024

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PNJ VN (Outperform; TP VND 114,000): Early recovery signal flashing for topline

Within the aim to keep gaining new clients, PNJ did not raise prices amid rising gold input costs during the period, hence the gross profit margin was compressed in the short term. However, we believe the company may eventually adjust its prices in tune with the increase in gold prices, and we believe it is able to do so given its leading position in jewelry retail business, not to mention that the Vietnamese public appreciates gold’s property as a store of value. In addition, PNJ frequently releases new jewelry collections, whereby the company will likely increase sticker prices to offset the increase in the price of gold. We hence maintain 2024 revenue and net income estimates of VND 37.7 tn (+14% YoY) and VND 2.3 tn (+17% YoY). We introduce 2025 estimates with revenue and net income at VND 41.5 tn (+10% YoY) and VND 2.57 tn (+12% YoY). Earnings growth in 2025 is driven by full year operation of stores opened in 2024 (+9%), on top of the expected increase in overall jewelry consumption (+5% YoY). With an unchanged target P/E of 17x on average 2024F-2025F financials (from 2024F), we derive a new target price at VND 114,000 per share (from VND 107,500). With 16% upside potential, we maintain an OUTPERFORM rating for PNJ.

25/03/2024

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VRE VN (BUY; TP VND 33,600): Entering a new era

On 18 Mar 2024, Vingroup Jsc, the parent company of VRE decided to fully divest from SDI Trading Development and Investment Company Limited (“SDI”). SDI owns more than 99% of charter capital of Sado Trading Commercial Jsc (“Sado”) – which in turn is a significantly large shareholder of VRE with a 40.5% stake (41.5% effective holding due to VRE having 56.5 million treasury shares). The transaction is expected to be completed in the third quarter this year. With the new major shareholders, we expect VRE will operate more effectively when having more contributions from upcoming shareholders who have consumer retail experience. Also, VRE still works with Vingroup and its ecosystem as the strategic partner. We reiterate our BUY rating for VRE, while bumping up our target price to VND 33,600/share (+29% upside), which is slightly higher than our previous target price of VND 31,300/share as we roll forward our valuation.

25/03/2024

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QNS VN (Outperform; TP VND 57,400): Sugar high yield

We upgrade our rating on the shares of QNS to Outperform (from Market Perform) with a target price of VND 57,400/share, representing +19% upside (total ROI 23%). We believe that QNS is capable of maintaining single-digit earnings growth through 2025, as the sugar business maintains its profit level, the soymilk segment returns to normal, and the company’s financial income grows due to its substantial net cash balance (24% of market capitalization). Further, QNS's unforeseen earnings surge during 2023 resulted in a 50% net profit distribution. We note that QNS paid between 60-80% of net profit between 2020 and 2022. Thus, given the strong earnings level, we anticipate that QNS likely will increase cash dividends for 2025, which is expected at between VND 4,500-5,000/share (10-11% dividend yield for 2025).

24/03/2024

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BMP VN (Market Perform; TP VND 112,000): High earnings help maintain high dividend yield

We maintain our MARKET PERFORM rating on the shares of BMP. Our new target price for BMP is VND 112,000/share (from VND 103,400/share), as we revise up the 2024F NPAT by 8% compared to our previous forecast, representing a +1% upside (dividend yield of 10%). 4Q23 results: BMP posted net sales and NPAT of VND 1.5 tn (+3% YoY, +57% QoQ) and VND 257 bn (+3% YoY, +23% QoQ), respectively, which are in line with our expectations. We estimate that the sales volume during 4Q23 reached 24k tons (+2% YoY, +57% QoQ), as BMP sold at discounted prices to distributors during the second half of 4Q23. The ASP was flat QoQ and YoY. The gross profit margin reached 40.6% during 4Q23, compared to 43% and 33.7% during 3Q23 and 4Q22, respectively. During 4Q23, the expense-to-sales ratio increased to 15.4% compared to 12.8% during 3Q23. For 2023, BMP reported net sales of VND 5.2 tn (-11% YoY) and NPAT of VND 1 tn (+50% YoY).

23/03/2024

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KDH VN (Outperform; TP VND 41,300): Private placement deal to enable land clearance completion, large project dev. in HCMC

We raise our rating on the shares of KDH to OUTPERFORM, along with our new target price of VND 41,300 (+11.3% upside) [previous target price of VND 30,950/share]. This reflects a change in our assumptions of market value of Tan Tao Township and Green Village Urban Area, which are expected to launch over the next two years. That being said, FY 2023 marked the third year of downtrend for KDH’s financial performance, with net revenue of VND 2.09 tn (-28.1% YoY) and NPAT of VND 730.5 bn (-32.5% YoY). This is much lower than our 2023 forecasts of VND 2.39 tn and VND 1.03 tn, respectively.  The shortfall was due to lower actual property sales recognition in the Classia project in HCMC.

22/03/2024

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HDB VN (Outperform; TP VND 27,700): A rising tide

We upgrade our rating for HDB shares to Outperform with a 1Y TP of VND 27,700/share as we revise upward our forecast for 2024 PBT by 5% to VND 16.4 tn (+25.8% YoY) and apply a higher target P/B of 1.4x (from 1.0x) to reflect the positive impact from strong credit growth (over 20% YoY) that could continue in the medium-term, allowing HDB to (i) improve its market share, (ii) retain NIM at above 5%, and (iii) withhold NPLs at a reasonable level (less than 2%). However, we reckon that the acceleration of loan growth, particularly in the property sector, could pose certain credit risks to asset quality if the market recovers more slowly than expected.  

21/03/2024

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HSG VN (Outperform; TP VND 25,000): AGM: Strong earnings recovery in 2QFY24

The 2024FY business plan received shareholder approval, with two scenarios just as for the previous year: Lower bound net profit for 2024FY is targeted at VND 400 bn (+13x YoY), whereby sales volume is assumed to increase 13.3% to 1.63 mn tons. For the upper-bound plan, net income is targeted to increase by 17x YoY to VND 500 bn if sales volume increases by a higher rate of 20.7% to 1.73 mn tons. ASP is assumed to decline 5.2% YoY during the first case and by 5.7% YoY during the second case, primarily due to the high base during the first quarters of the last fiscal year. Returning to cash dividends: After many years of stock dividends, HSG is poised to begin the payment of cash dividends for FY 2023 at 5% on par (VND 500/share – equivalent to a dividend yield of 2.3%).

19/03/2024

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DGC VN (Market Perform; TP VND 142,000): Re-rating on long term prospects

In 4Q23, DGC achieved net sales and net income of VND 2.39 tn (-23% YoY) and VND 746 bn (-34% YoY), falling short of our forecasts due to slower than expected recovery in ASP and the increase in electricity costs. Even though global semiconductor sales have shown early recovery signals in 4Q23 (+5% YoY), it may need some more time for yellow phosphorus prices to regain in tandem with semiconductor demand. We hence lower our 2024 net income estimates to VND 4.23 tn (+30% YoY, from VND 4.34 tn) on lower yellow phosphorus ASP (VND 118 mn/ton, + 12% YoY, from VND 123 mn/ton). We introduce our 2025 net income estimates (VND 5.7 tn, +35% YoY), driven by (1) 7-23% YoY sales volume growth, (2) 4% YoY increase in ASP and (3) lower raw materials costs, thanks to higher usage of in-house phosphate rock (80%/90%/100% in 2023/2024/2025) on the back of Mine Site 25 expansion. As such, 2024-2025 earnings growth will be primarily determined by (1) sales volume and ASP recovery of phosphorus-related finished products and (2) reduction in phosphate rock material costs. Despite lowering 2024F earnings, we increase our 1 year target price to VND 142,000/share (from VND 100,000/share) as we apply a higher target P/E (12x, from 10x) and roll over to average 2024F-2025F earnings (from 2024F). As the stock price has rallied recently, we call for MARKET PERFORM rating on DGC.

18/03/2024

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TNH VN (Outperform; TP VND 25,900): New hospitals to fuel revenue growth

Poor 4Q results as people skip hospital visits during economic slowdown. For 4Q23, TNH recorded unaudited revenue and net profit decrease of 7% and 24% YoY, respectively. For 2023, TNH recorded unaudited revenue and net profit of VND 532 bn (+15% YoY) and VND 133 bn (-6% YoY), which is 9% higher than our revenue estimate but 15% lower than our NPAT estimate. If excluding one-off revenue, core revenue increased 3% only, which is 3% lower than our estimate. According to management, total outpatient visits saw 5% decrease while inpatient visits saw 9% increase compared to 2022. Continued expansion projects laid out for medium- to long-term. Management expects the commencement of its 3rd hospital TNH Viet Yen during 2Q24. The fourth hospital - TNH Lang Son - also saw groundbreaking during Feb 24, which was faster than expected. The new hospital is expected go into operation during 4Q25.

14/03/2024

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KBC VN (Market Perform; TP VND 34,400): Trang Due 3 Industrial Park expected to launch during 2024 and fuel KBC’s long-term growth

For residential development, KBC still works towards determining calculation of the land use right fee (LUR) payment for Phuc Ninh Urban Area in Bac Ninh province. We expect that this may be delayed through 2025, thus 10 ha of saleable land which KBC sold before would be recorded during 2025 only. As such, we expect KBC to lease around 102 ha of industrial land in total in 2024, of which 30 ha has been secured to lease by new investors during 2023, 50 ha from Trang Due 3 IP and 22 ha from Tan Phu Trung IP. Accordingly, KBC is forecast to achieve VND 4.92 tn (-12.8% YoY) in net revenue and VND 1.36 tn (-38.5% YoY) in NPAT for FY2024. This forecast is lower than our previous forecast of the optimistic case due to the delay of revenue recognition from residential sales in Phuc Ninh Urban Area to 2025 as discussed above.

13/03/2024

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PLX VN (Outperform; TP VND 40,800): Earnings can maintain growth momentum during 2024

During the final quarter of 2023, PLX’ PBT reached VND 850 bn - a decline of 48.5% from the high base in 4Q22 and 28% QoQ mainly due to the petroleum segment. Domestic petroleum sales volume during 4Q23 dropped 11% YoY to 2.6 mn m3/tons compared to the peak in 4Q22, of which retail sales volume dropped -7.7% YoY to 1.7 mn m3/tons. Earnings from the petroleum segment declined 55% YoY and 33% QoQ to VND 322 bn due to the drop of petroleum prices of over 10% during the quarter which had a negative impact on the company’s trading activities. Cumulatively, 2023 PBT was VND 3.93 tn, recovering 73.2% YoY and exceeding company guidance 22%. The volume from the retail channel increased 6.9 % YoY to 7.02 mn m3/tons, increasing 40% over 2021.

11/03/2024

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CTR VN (Outperform; TP VND 123,000): Earnings growth to benefit from Viettel’s successful auction of 4G/5G waveband

as Viettel Group (Viettel) was awarded the usage right of 2,500-2,600 MHz waveband to commercialize 5G mobile technology on 8 March 2024, we forecast CTR’s total number of BTS (base transceiver station) sites should enjoy a 70% YoY growth in 2024, benefited from 2G gradual shutdown and 5G rollout, which could generate a 53% YoY sales growth of infrastructure leasing segment. In the longer term, we expect the profit contribution from this segment could be higher. In fact, we forecast its gross profit to account for ~27% of total gross profit by 2026 (vs 15% in 2023) despite its minimal improvement of revenue contribution (8% of total revenue from 4% in 2023), which we attribute to is relatively higher gross profit margin (~31% in 2023) than others’ (5%-20%). Furthermore, due to higher-than-expected 4Q23 signed contracted value of residential construction (which accounted for over 40% of contracted value in 2023), we revise up our sales growth estimate for CTR’s construction segment (from 6% YoY to 17% YoY) in 2024. We expect NPATMI will perform well at 16.4% YoY in 2024 (vs 16.6% YoY of 2023), held up by the solid pillars of the construction, operation, and infrastructure leasing segments. We call for an OUTPERFORM rating on CTR, with a 12-month DCF target price of VND 123,000/share (equivalent to 9% upside potential).

11/03/2024

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