Company Report

At the 28 April AGM, guidance for net revenue and NPAT in 2023 was set at VND6.4tn (+9% YoY) and VND651bn (-6% YoY), respectively. Earnings guidance reflects management's conservative view of weak market demand and PVC input price fluctuations. BMP is expected to focus its strategy on sales volume and lowering inventory. For 2022, BMP is set to pay 99% of net profit in a cash dividend, which is equivalent to VND8,400/share (a 10% dividend yield). We increase our net profit for 2023F by 21%, as BMP has a high ASP level and low PVC input prices. We raise our 12-month target price for BMP to VND84,300/share (from VND62,000), based on a 2023F PER of 9x. But given only 2.3% upside potential to our new TP, we downgrade our rating to Market Perform (from Outperform).

At the recent AGM, net revenue and PBT guidance for 2023 was set at VND 9.0 tn (+1% YoY) and VND 345 bn (+6% YoY), respectively. Guidance reflects a cement sales volume target of 6.7 mn tons (+1% YoY) and clinker sales volume target of 530k tons (+8% YoY). HT1 expects to pay a cash dividend of 4% on par for 2022 earnings distribution, translating into a 2.9% dividend yield. We maintain our Market Perform rating on the shares of HT1, and lower our one-year target price to VND 12,000/share (from VND 13,400/share) as we lower our net profit forecast 29% due to: (i) lower cement sales volume; and (ii) higher sales-related expenses.

We attended the PLC AGM on 20^th April and there are some key takeaways: Annual targets of VND 8.9 tn for revenue (+3.5%) and VND 200 bn for PBT (+8.5% YoY) were approved. Management discussed that the asphalt segment should be a key growth driver over the next several years, as it benefits from the current public investment acceleration driving GDP growth. To illustrate, management stated that PLC has supplied and will further supply asphalt to  popular projects, such as 12 sub-projects of the mega project North-South expressway (to be completed no later than 2025), amongst others.

At NKG’s recent AGM, a revenue target of VND 20 tn was set – declining -13.3% YoY. However, the company is expected to turn a profit of VND 400 bn compared to a loss of -VND 107 bn during 2022. Guidance is based on a sales volume target of 940k tons (+7.4% YoY), and an HRC steel price of between USD 600-700/ton. According to management, NKG continued to book a -VND 50 bn loss for 1Q23. Sales volume during 1Q 2023 was 194k tons and fell -25% YoY, but recovering 6.2% QoQ due to a 14.1% rebound in export volume.

We maintain our Outperform rating on QNS, citing our improved outlook on the company. We revise up 2023 NPAT by 8% compared to our previous forecast due to (i) higher sugar prices and (ii) higher refined extra type (RE) production volume. Our target price for QNS is VND 48,500/share (from VND 46,000/share), representing a +14% upside (total ROI 21%). At the April 1^st 2023 QNS AGM, net revenue and net profit guidance for 2023 was set at VND 8.4 tn (+1% YoY) and VND 1 tn (-16% YoY), respectively. We note that the company has a tradition of setting a conservative financial plan.

Our current rating on the shares of HPG is Market Perform with a 1-year TP of VND 20,000/share, predicated on a 2023 net profit forecast of VND 9.7 tn (+14.6% YoY). We expect that the company’s earnings will improve during the second quarter thanks to higher steel prices. However, the company can still post substantial negative earnings growth during 1H23 compared to 1H22.  YoY growth could resume from 2H23 compared to last year’s low base.

During 4Q22, ACB posted a pretax profit of over VND 3.6 tn (+19.2% YoY), which helped the bank achieve PBT for 2022 over VND 17.1 tn (+42.6% YoY). ACB’s profit has exceeded its AGM-set profit target by 14%, amid difficult market conditions. The strong results were supported by strong interest income (+34.6% YoY); robust FX trading income (+111.8% YoY); and a significant decline in loss provisions (-52.2% YoY). The 4Q22 NIM did expand, albeit at a slower pace of 6 bp linked quarter to 4.6%. A notable improvement in NPLs was another key highlight for 4Q22, due to a large bad debt item having been written off. Despite a huge provision reversal during 2022 due to a significant reduction of Covid-era restructured loans (-25% QoQ), ACB still maintained a strong credit buffer, which should enable it to withstand the volatility in the current operating environment.

Being foreign debt-free could allow NT2 to avoid the impact of rising lending rates and FX risks that competitors are facing. A stable dividend yield play is what we are looking forward to, rather than earnings growth. A price correction could offer a more attractive dividend yield. As of the 10-Feb-2023 closing price, NT2 traded at a 5.2x FY23R EV/EBITDA and a 8.9% dividend yield. Compared to deposit rates offered by banks, it would be attractive if the current dividend yield NT2 pays out could deliver more than 10%. Dividend payment in beginning of 2Q23 could be catalyst after the 2023 AGM decision which could offer an outperformance in short-term. With a 1Y TP of VND 30,880 with a projected 9.9% upside, we call for a Market Perform rating for the stock.

Investment summary

We recently attended HCM’s 2022 AGM, and the 2022 capital raise was front and center. Such a focus was the result of the reluctance and restriction preventing one large shareholder, the state-owned HCMC financial investment company or HFIC. Indeed, HCM has lagged on the capital buffer front since last year, and its previous position has been somewhat whittled down. HCM went from a Top 5 brokerage company in total equity at 2019 to ranking ninth at June 2022.

The shares have rebounded over 64% since bottoming in late June. As of Aug 22, 2022, HCM is trading at VND 27,700 per share, with a 2022 forward P/E of 10.5x and P/B of 1.5x, which is in line with its historical valuation. All catalysts, in our view, are now priced mostly into the shares. In the long-term, the complicated relationship between HFIC and HCM’s BOD might restrict HCM in expanding its business activities. 

We maintain our view that PVT would benefit from the current lucrative tanker market situation, which might last even after the Ukraine conflict is over, because of associated sanctions from the war. We maintain our current forecast regarding 2022 and 2023 at the moment (NPATMI growth of 23% YoY and 6% YoY). We see some upside for our forecast, but more information would be needed to pinpoint new estimates. In our view, as PVT current time charter contracts will expire one by one from time to time, it might take some time to see full reflection of these recently lucrative market rates on the company’s P&L sheet. Thus, we maintain our current 1Y TP of VND 26,200/share and BUY rating for PVT at this time.

AST has turned a profit since May 2022. PBT is estimated to reach VND 10 bn in 2Q22, and YTD losses could be reduced to VND 10 bn. The FY2022 PBT target is set at VND 23.5 bn (vs a loss of VND 128.4 bn in 2021), which should be achievable. We estimate that AST’s PBT could reach VND 224 bn (+486% YoY and -15% vs 2019) in 2023, and VND 322 bn (+43% YoY and +22% vs 2019) in 2024 when the market fully recovers. We have an Outperform rating for the shares of AST with a 1Y TP of VND 69,000/share (based on a target 2023 P/E of 20x), implying 19% upside from the current market price, reflecting our positive view on AST strong turnaround along with the recovery of the aviation industry.

We attended DPM’s AGM during which management increased their 2022 net income guidance to VND3.5tn (+10% YoY, 268% higher than the initial plan) and DPM’s cash dividend of 50% on par value (9.4% dividend yield, higher than the initial plan of 35% on par value). The AGM did not approve the proposal to raise transportation tariff costs for the 2014-18 period. As such, DPM may not have to pay an additional USD18m or VND430bn to GAS. DPM’s earnings closely track urea price trends, ie having achieved the highest net income in terms of absolute value in 1Q22, only then to decline gradually in 2Q22 and 3Q22, while it could improve in 4Q22 as the high season begins. In terms of YoY growth, DPM still targets to deliver positive earnings growth in 2Q22 (up 60-70% YoY on our estimates) and 3Q22 but could post negative earnings growth in 4Q22. As such, we believe that the share price may continue to exhibit positive momentum over the short term. We now estimate DPM’s 2022E net income to reach VND5.1tn (+59% YoY, from VND2.25tn) and introduce our 2023E net income of VND4.1tn (-18% YoY).