Company Report

The stock market has benefitted from the low-rate environment, and it is not surprising that brokerage companies are readily taking advantage of this market. For 2021, HCM targets a 68% YoY and 82% YoY respective growth in total revenue and PBT. This should be driven by all income streams, including brokerage fees (+67% YoY), margin lending (+77% YoY), prop trade (+53% YoY), and investment banking (112% YoY). 1Q 2021 business results were stunning, with PBT reaching VND 402 bn – increasing +219% YoY and fulfilling 33% of its annual plan. At VND 30,000 per share, HCM is trades at a 2021P P/E and P/B ratios of 15.0x and 1.96x, respectively. The 2021P dividend yield is 6.3%. Currently, we do not have a rating for this stock. 

STK held the AGM today with highlights being the positive results in Q1 2021 and the approval of the Unitex factory and its financing plan. The new factory will benefit the company tremendously in the long-term, where STK can expand sales by 50% from the period 2023-2024 onwards. In the short-term, we keep our estimates for STK that in 2021, net sales and net profit will reach VND 2.39 tn (+35.2% YoY) and VND 250 bn (+74.5% YoY). For 2022, we expect net sales of VND 2.6 tn (+8.7% YoY) and net profit of VND 295 bn (+17.9% YoY). At the current price of VND 33,800/share, STK is trading at 2021 and 2022 P/E of 9.2x and 7.8x. We derive our 1Y TP for STK of VND 34,800/share (+3% upside), using an unchanged target P/E of 9x. We downgrade STK from Outperform to Market perform, as the stock price has increased by 15% since our last call.

Given the weak demand from gas-fired plants in 1Q21, we trim our full-year forecast for dry-gas volume from 9.4bcm to 9.1bcm in 2021E. In contrast, we raise our assumption for fuel-oil prices from USD300/ton to USD330/ton (presently at USD361/ton). Accordingly, we fine-tune down our 2021E net profit by 3%. Our forecasts reveal 18.4% y-y top-line growth and 20.9% y-y growth in NPAT for GAS in 2021E. We trim our 12-month target price for GAS to VND97,500/share (from VND98,000/share), based on an unchanged 2021E PER of 19x, EV/EBITDA of 11x and DCF approach. Our TP implies 12% upside potential from the current market price. We reiterate our Outperform rating on the shares of GAS.

We recently attended DGW’s AGM and we came away substantially more bullish on the shares. Although management set a very conservative 2021 net income growth target of just 19% YoY (despite the 1Q21 +113% YoY earnings increase), we are raising our 2021 earnings forecast 25% to VND 391 bn (+54% YoY). For 2022, we estimate net income will increase another 31%. With a further market share gain by Xiaomi, long term potential from implementation of 5G, and positive market sentiment in terms of the stock option, we rerate our target P/E from 11x to 14x. By using revised 2021-2022 estimates and a re-rated P/E of 14x (from 11x), we derive a new target price at VND 139,000, equivalent to a ROI of 14% (inclusive of a dividend yield of 0.8%). We call for OUTPERFORMANCE rating. Risks to our call include DGW’s over-reliance on Xiaomi and short term profit taking pressure.

After taking a big hit to its bottom line in 2020 due to the acquisition of VCM, MSN’s outlook appears to be significantly improved. For 2021, the group targets between VND92-102tn in revenue (+19-32% YoY) and NPAT of VND2.5-4tn (+103-225 % YoY). We believe that MSN can end up scoring somewhere in the mid-point. We anticipate MCH and TCB to continue to post impressive growth; with VCM’s restructuring exhibiting positive initial results (2020 sales growth of 15%, despite more than 700 store closures). MML’s feed business is expected to rebound while achieving strong growth in meat + farm. MSR should also a benefit from strong rallies in metal prices. As such, we look for the group to post VND97bn in revenue (+25.8% YoY) and VND3.79tn (+207% YoY) in NPATMI, respectively. Of note, in order to finance its acquisition of VCM and TCX, MSN aggressively added leverage to the tune of VND54tn in net debt (+140% YoY) at end-2020. As such, deleveraging progress will be a key focus going forward. According to a corporate release, SK Group will invest USD410mn to acquire a 16.26% stake in VCM. The transaction thus values VCM at USD2.5bn. Prior to the transaction, MSN held an 80.1% economic interest in VCM and would sell a 10% stake in VCM to SK in this deal and receive USD225mn in cash proceeds (SK Group would purchase the remaining 6.3% from a 3rd party). We view this transaction as a positive move for the group as it would help to reduce some debt for the group. At VND93,000/share, MSN shares are trading at a respective 2021E P/E and EV/EBITDA of 28.9x and 12.1x. Our new 12-month target price of VND104,000/share is based on the SOTP method. As our new target price offers 12% upside from the current market price, we maintain our Market Perform rating on the shares of MSN.

We recently attended the DGC AGM, where a very conservative earnings growth guidance of only 16% YoY for 2021 was approved. Guidance does not take into account new projects such as Mine Site 25 (commercial operation expected in 2Q21), and electronic-grade phosphoric acid (commercial operations expected in August 2021). Considering that, we estimate 2021 earnings will increase 40% YoY. For 2022, we expect the Nghi Son project to begin operation, generating earnings of approx VND 140 bn (assuming 70% utilization rate). With the current undersupply of caustic soda in Vietnam, Nghi Son will be a long term earnings driver for DGC. At VND 68,800 per share, DGC trades at a 2021 P/E of 8.6x. With an expected earnings growth of 40% YoY in 2021 and double digit EPS growth expected in 2022 and 2023, we believe that DGC deserves a P/E of 10x. As a result, we derive a 1-year target price at VND 80,000 per share, equivalent to an ROI of 16% - including a 4% dividend yield.  Our recommendation for the stock is Outperform.

BID’s AGM was held on 12 March 2021, putting forward an optimistic PBT target for 2021 of VND13tn (+44% YoY). It also proposed a stock dividend equivalent to 12.2% for 2019 and 2020. We estimate BID’s 2021 PBT at VND13.5tn (+49.4% YoY), based on respective credit and deposit growth of 10% and 12% YoY, respectively, as well as a well-contained NPL ratio of 1.6%. Although earnings may surge in 2021, the possibility of growth beyond 2021 depends on the ability to raise capital and it will be the key upside catalyst for the stock. We reiterate our 12-month target price of VND46,430/share, which represents 7% upside. We maintain our Market Perform rating on BID. 

HPG’s 2Q20 revenue and net profit were strong at VND20,422tn and VND2.756tn, up 35% and 34% YoY, respectively. Performance was led by steel volume growth, high pork prices, and a reversal of F/X losses. Results were also close to HPG’s estimate from its recent AGM, and in line with our forecast. Our going-in 2020E called for VND79.9tn (+26% YoY) in revenue and VND9.27tn (+22% YoY) in net income. We lift our revenue to VND80.1tn (+26% YoY) and net income to VND9.51tn (+26% YoY). We reaffirm our BUY call with a new 12-month TP of VND32,400/share (previously VND29,300), based on unchanged respective P/E and EV/EBITDA targets of 9x and 6.5x, and 2H20-1H21E earnings. Our EPS forecasts and TP do not take into account the 2019 dividend, including 5% cash (VND 500/share) and 20% stock dividend. The ex-dividend date is 29 July 2020. 

Our current estimates for SAB are VND 27.96 tn (-26% YoY) in net sales and VND 4.25 tn (-21% YoY) in NPAT in 2020, which is a more generous outlook than the Company itself - implying 26% higher net sales and 31% higher net income vs. SAB’s plan. For 2021, we forecast net revenue of VND 35.1 tn (+25.6% YoY) and net income of VND 5.01 tn (+17.9% YoY), which means the pre-Covid level.   However, our forecasts are under review.because the demand after the social distancing period has recovered better than our expectation.  Our rating on the stock is Market Perform.  

We recently attended PLX ‘s online 2020 AGM. The Company set the PBT target for 2020 at VND 1.57 tn, which drops by -72% YoY. We think that the guidance justifiable given the significant impact of the Covid-19 epidemic on fuel demand, and the severe plunge in the oil price in the first half of the year. However, it is noteworthy that the guidance implied improving PBT in the last 3 quarter of 2020 at VND 3.27 tn, which drops by a lower rate of 20% YoY. If Covid-19 does not come back to Vietnam and the oil price stabilizes in the coming time, we believe the Company’s earnings can recover positively in 2021. At the current price, PLX is trading at a P/E for 2020 and 2021 of 43x and 16x. We will update to full estimates and valuation after the company releases its official financial reports for 2Q20.

2020 consolidated revenue is planned at VND 6.2 trillion, -23% YoY, and pretax profit is conservatively planned to decline by -45.8% YoY. 1H2020 PBT is estimated at VND 350 bn, -33% YoY, due to lower demand for petroleum products and lower volume from BSR.  The company’s CAPEX plan for 2020 is rather aggressive, at about $300 million USD, with a debt/ equity ratio of 2.3x. This consists of about 4 new vessels at the parent company, and 8 new vessels at subsidiaries. Besides investing in used vessels, PVT is also considering investing in some brand new vessels through BCC collaboration contracts with international partners, as new vessels will have more suitable specifications for newer market situation (like low-sulfur-fuel compatible…). PVT is also in the midst of an investment cycle (2018-2020) which suggests a much longer plank to become profitable. Case in point, PVT’s capex plan for 2020 is and aggressive $300 million USD, as the company aims to rejuvenate and expand its fleet in order to more effectively compete internationally. Coupled with weaker global oil demand, both factors have weighed substantially on PVT’s share price performance of late. 

No organic growth officially guided by VNM for 2020; we disagree: At the 2020 AGM, VNM set a revenue and earnings target of VND 59.6 tn (+5.7% YoY) and VND 10.69 tn (+1% YoY), respectively. The plan included GTN Foods (GTN: HOSE), which is starting to become consolidated to VNM from the beginning of 2020; excluding GTN, organic growth for VNM sales and net profit will be flat YoY. This is quite a conservative plan, in our view, especially when taking H1 results into account. As such, we maintain our current estimate of VND 61.5 tn in revenue (+9.1% YoY) and VND 11.35 tn in net profit (+7.6% YoY) for 2020. Positive Q2 results: Management disclosed that its interim H1 2020 results had sales advancing by 7% YoY, totaling VND 29.73 tn. Meanwhile, net profit slightly rose 3% YoY, reaching VND 5.87 tn. For Q2 2020 alone, net sales and net profit grew 6.7% YoY and 6.6% YoY. We reiterate our Outperform rating for VNM with a new 1-year target price at VND 135,000/share (from VND 116,000) based on our forward H2 2020 - H1 2021 EPS estimates and a target P/E of 23x (27% discount compared to peers), combined with the DCF method. 

We recently attended the BMP 2020 AGM, where the Company set an encouraging target for 2020 revenue and net profit to increase by 5% and 10%, respectively. We are even more optimistic on BMP earnings prospects than management as our resin input price assumptions are predicated on the current realities of the market versus substantially the higher pre-COVID-19 assumptions of BMP. As such, we maintain our net profit forecast of VND 523 bn (+23.6% YoY), which exceeds the Company’s annual guidance (VND 465 bn) by 12.4%. In fact, net profit up to 5M20 this year has shown a positive bump of 18% YoY, and surpassing the earlier guidance on a Jan-May comparative basis by +15%. At the current price, BMP is trading at 2020 PE forward of 8.5x, which is quite fair in our view. However, strong net profit growth 2020 on the back of low input costs can still support the stock price in the short term. 

Given PVD’s updates on the PV Drilling rig workload, our expected JU-rig’s utilization rate decline to 73% in 2020 (vs. our previous estimate of 91% and the 2019 rate of 90%). We revise down our 2020 forecasts for PVD, where revenue and NPATMI equate to VND 5.05 bn (+15.6% YoY) and VND 54 bn (-70.5% YoY) - lower than our previous estimates of 7.0% and 58.4%, respectively. At the price of VND 10,450/share, PVD is trading at a 2020 P/B and an EV/EBITDA of 0.32x and 7.9x. We therefore maintain our MARKET PERFORM rating for the stock but lower our 1-year target price to VND 11,300 per share (vs. our previous target price of VND 12,700 per share, because of new changes in earnings results).