Company Report

AGM highlights: The company has set a conservative net income guidance of VND 3 trillion for 2025, which is flat year-over-year. This cautious outlook is attributed to a shortage of apatite ore and a longer-than-expected licensing process for expanding capacity at Mine Site 25. Consequently, we expect DGC to experience lower sales volumes of phosphoric acid.

2025 CAPEX Capital expenditures for 2025 will primarily focus on the construction of a Chlo-alkali plant in Nghi Son, which is anticipated to commence operations in Q2 2026. Once fully operational, this plant is projected to generate VND 2 trillion in revenue and VND 200 billion in net income annually, representing approximately 6% of the company's 2024 net income.

Impact of US reciprocal tariff: Exports to the US account for approximately 2% of DGC's total revenue and could be subject to a reciprocal tax of less than 46%, in addition to existing import duty. Given the relatively small contribution of the US market to DGC's overall revenue, the impact is expected to be marginal.

Earnings rebounded to positive growth in 4Q24, driven by the recovery in yellow phosphorus sellingprice. We anticipate that this earnings growth will continue into 2025, supported by favorable selling price, resilient sales volume growth across most product categories, and increased usage of in-house apatite ore. However, due to the current apatite ore shortage in Vietnam, DGC may experience lower sales volumes of phosphoric acid. As a result, we have revised our 2025 net income estimate to VND 3.5 trillion (a 14% year-over-year increase, down from our previous estimate of VND 4.3 trillion).

We have revised our 2025 net income forecast to VND 610 bn (+49% YoY, from the previous VND 529 bn), driven by stronger-than-expected 4Q24 results. Consequently, we have raised our one-year target price for FRT shares to VND 220,000 (from VND 215,000), representing an 24% upside, and we maintain our OUTPERFORM rating. Long Chau pharmacy, which constitutes 89% of FRT's total valuation, continues to be the fastest-growing chain among listed retailers in Vietnam, benefiting from its competitive edge and the relatively low penetration of modern trade (less than 15% of the drug market). The anticipated capital raising at Long Chau could serve as a catalyst for the stock, alongside the positive earnings outlook.

FRT achieved net sales of VND 11.4 tn (32% YoY) and PBT of VND 169 bn, rebounding from a loss of -VND 97 bn for 4Q23 due to improved performance at both FPT Shop and Long Chau pharmacy chains. FPT Shop has been profitable for two consecutive quarters largely due to cost optimization and less intense competition from rival MWG. Meanwhile, pharmacy chain Long Chau continued to deliver upbeat results, driven by store network expansion and improved profitability with existing stores ramping up.

The Commonwealth Bank of Australia (CBA) has recently proposed to offer and reduce its stake in VIB. This follows CBA's successful divestment of a 15.35% stake in 2024. On March 5th, 130.9 million shares of VIB were transferred via throughput at a price of VND 21,100 per share, translating to a total transaction value of VND 2.76 tn (USD 108 mn).

With CBA no longer a strategic shareholder of VIB, we believe the bank will have greater opportunities to seek a new strategic partner through a private placement in the foreseeable future. This move would not only strengthen its capitalization but also provide valuable expertise and operational synergies, supporting its long-term business expansion and competitiveness in our view. The capital adequacy ratio (CAR) of VIB at the end of 2024 was 11.9%, reflecting the need for additional capital to support long-term future growth.

We currently hold Market Perform rating for VIB shares with 1Y TP of VND 21,100/share. VIB is trading at forward P/B of 1.26x as compared to the historic average of 1.8x since 2020.

2025 growth should likely converge to an organic level, without outliers.

Between 2025-2026, HHV plans to issue around VND 1 tn in charter capital to support new BOT infrastructure projects, while potential BOT projects likely require substantial additional funding.

With stable operations and the government's ambitious public investment plans, we believe that the shares of HHV are  well-positioned to benefit from accelerated public investment.

Our 2025 sales and NPAT estimates are approximately VND 3.7 tn (+11% YoY) and VND 519 bn (+9.7% YoY), respectively. Our DCF model provides a one-year target price of VND 15,100 per share, and we reiterate our Outperform rating on the shares of HHV.

While the company's operations remain stable, supported by a robust construction backlog and the government's ambitious infrastructure development targets, we believe that the stock is an opportune vehicle to capitalize on the theme of public investment acceleration, which could boost infrastructure development-related stocks.

Becamex IDC (BCM) is the undisputed leader in Vietnam’s industrial and urban development, uniquely positioned to capitalize on surging land values, rapid industrial expansion, and strategic joint ventures. With an extensive land bank in Vietnam’s top manufacturing hub, BCM is set to deliver significant earnings growth fueled by upcoming land price adjustments, high industrial demand, and a thriving partnership with VSIP. Notably, in a market where major deals have been scarce in recent years, BCM’s current proposition stands out as an exceptional entry point for investors. We believe BCM is at the early stages of a multi-year growth cycle, making this a rare and compelling investment opportunity. Given these outstanding fundamentals, our rating for the stock is OUTPERFORM with 1-year target price of VND 89,900/share.

On February 4, 2025, BCM had received approval from the State Securities Commission for its public offering of 300 million shares through an open auction at the Ho Chi Minh Stock Exchange. This is expected to be one of the largest deals in the history of Vietnam’s capital market. According to the prospectus, the total proceeds from the offering, at an estimation of VND 15 trillion, will be allocated to:

Investment in Cay Truong Industrial Park and Bau Bang-Expanded Industrial Park in Binh Duong province.

Capital increases for affiliate companies, including Vietnam-Singapore Industrial Park Joint Venture Co., Ltd. (VSIP); Becamex Binh Phuoc Infrastructure Development Joint Stock Company; Becamex-VSIP Power Investment and Development Joint Stock Company (BVP); Vietnam-Singapore Smart Energy Solutions Joint Stock Company (VSSES); and Becamex Binh Dinh Joint Stock Company.

Financial restructuring, including repayment of current bonds and loans totaling VND 5.06 trillion.

We forecast EPS for 2024 and 2025 at VND 1,840/share (+46.9% YoY) and VND 2,313/share (+25.7% YoY), respectively. SZC is well-positioned to capitalize on several factors: (1) The company has over 400 ha remaining available for lease, with 250 ha fully cleared for compensation; (2) Lease prices in SZC are projected to increase compared to other industrial parks in Ba Ria - Vung Tau. Currently, these other IPs are leased at 13% - 15% lower. The connectivity improvements provided by the Bien Hoa-Vung Tau Expressway further enhance SZC's appeal. We maintain OUTPERFORM rating with 1-year target price of VND 43,200/share, representing a 12.9% upside based on the SOTP valuation method.

Due to high capital expenditures, the free cash flow for 2024-2025 is relatively small compared to the period from 2026 onward. Consequently, changes in earnings and cashflow forecast, primarily in the 2024-2025 period, only resulted in a modest 0.5% increase in our target price compared to our latest estimates.  Our DCF model now projects a 1-year target price of VND 47,200 per share, indicating an 16.7% upside. We maintain our OUTPERFORM rating for the stock.

Strong 2Q24 top line growth, bottom-line declined. For 2Q24, IMP posted revenue and NPAT of VND 517 bn (+18% YoY) and VND 66 bn (-17% YoY), respectively, which is lower than our NPAT estimate of VND 80 bn due to lower-than-expected GPM improvement. Gross profit margin declined on a YoY basis (stagnant demand in the over-the-counter market, API increased ~3% on average, new IMP4 production plant depreciation only kicked in 3Q23), but GPM also improved on a QoQ basis. SG&A expense decreased -22% YoY as new cost-saving policies are put into place. As of 1H24, IMP reached 43% and 38% of its target revenue and PBT respectively.

Coupled with policy tailwinds in public hospital bidding channel. Ministry of Health (MoH) recently issued Circular 03& 07/2024 (TT03&07/2024/TT-BYT) providing a list of 93 drugs manufactured by at least three domestic companies on EU-GMP standard production lines that meet the MoH's technical criteria, and quality, price, and supply capacity requirements. Foreign companies are not allowed to enter the public hospital bidding for these drugs. IMP currently has 12 qualifying SKUs in the list, which should lessen the competition for these products going forward.

GMD revenue was VND 1.2 tn +30% YoY, in line with our forecast, with volume improvement being the key. Volume from the Haiphong area (Nam Dinh Vu port) is up 15% YoY to 305k TEU during 2Q 2024, while Gemalink volume is 380k TEU, +48% YoY due to a recovery in exports to both the EU and the US, and additional volume from ad-hoc services from Singapore. Excluding the large one-off gain from Nam Hai Dinh Vu port divestment of VND 1.8 tn during 2Q 2023, GMD’s 2Q 2024 PBT growth would have been 33% YoY, pushing 1H 2024 core PBT growth to 27.5% YoY, meeting our previous expectation.

Jan-July number shows strong volume growth for Vietnam port (+20% YoY in the North, +24% YoY in the South). This reflects expected recovery from low base of manufacturing and import/export sectors of Vietnam. On the supply side, we see capacity growth to be more limited in Southern area (HCMC/Cai Mep) while quite abundant in the North (Hai Phong/Lach Huyen), with +50% capacity growth in next 2 years, posing strong price competition landscape in this area.

The company’s leverage is FRT’s main concern. However, the financial pressure of FRT has eased, reflected in the improvement in the interest coverage ratio (2.5x at 1Q24 vs 0.5x at 4Q23 and 1.0x at 1Q23) on the back of lower borrowing costs (-350 bps YoY and -100 bps QoQ in  1Q24) and improved earnings. With lower borrowing costs, Long Chau can speed up new openings of vaccine centers. FRT also plans to raise capital to scale the vaccine business. The company aims to raise a 10% stake via private placement during late 2024. We now apply higher multiples for the ICT business (from 9x to 11x) on narrower loss and a safer inventory level during 1Q24. As Long Chau now delivers sustainable profit, and the chain is the key growth driver for FRT in the long term, we now use DCF to value the chain. We derive a new target price for the shares of FRT at VND 211,000 (from VND 139,000), and reiterate our OUTPERFORM rating. Long Chau chain accounts for 98% of FRT valuation and 91% of 2025 earnings (vs only 10% in 2022). As such, we view FRT as a pharmacy retail company.

PC1 announced their strategical priority to the properties and construction segment, while mineral exploration and power generation serve as secondary focal points. For 2024 guidance, the company sets ambitious target, of 38.5% growth in sales and 77% increase in net earnings, to VND 10.8 tn and VND 525 bn. PC1 expected to distribute a stock dividend in 2023, of 15% on its chartered capital. We see effort of the company in maintaining growth, under the challenging circumstances of the industry. The turnaround of properties should have a stronger impact on earnings, thanks to the size and the low base of performance during the 2022-2024 period. However, the possibility of residential properties projects to generate sales from 2025 (expected by the company) might be hard to accomplish, and we incline towards residential projects could contribute to earnings growth from 2026 onwards. We expect FY24 sales and NPATMIO to reach approx. VND 9 tn (+ 15.4% YoY) and VND 220 bn (+124% YoY). Although our estimates are lower than the company’s guidance, they indicate our expectation in 2024 to witness strong growth in earnings performance following two years of contraction. For 2025F, sales and NPATMI are estimated at VND 8,759 bn (+19.7% YoY) and VND266 bn (+20% YoY).

We reiterate our Outperform rating on the shares of CTG, although with a reduced 1Y TP of VND 38,500/share (from VND 41,400). As there is no timeline for state divestment below 65%, a resolution for raising capital by CTG remains blurry and is hindering long-term growth. All the while, the earnings outlook for 2024-25 remains exceptional compared to peer, with PBT growth of +17% YoY and +35% YoY, respectively, as we expect the heavier provisioning to come to end during 2024. ROE, therefore, should achieve a more desirable level of 20% during 2025. CTG is the third largest bank in Vietnam with strong brand recognition, solid customer base, and good deposit franchise, all of which would be an advantage for CTG to maintain a resilient NIM and expand fee-based services. A capital raising is the key to the growth puzzle for this bank.

As we increase our 12-month target price from VND84,800/share to VND93,400/share (20% upside potential) – rolling over our SOTP valuation to mid-2025E and reflecting SSI’s higher valuation for TCB, we also upgrade the shares of MSN to OUTPERFORM (from Market Perform). 2024-25 should be an eventful period for MSN group: Upcoming milestones include the divestment from mineral processing unit H.C. Starck, the plan to list Masan Consumer Corporation (MCH: currently trading on UPCoM) on HOSE, and the possible stake sales. These recent moves/plans suggest that the Group is actively restructuring to focus on its core consumer business. During 2024, we expect a broad-based recovery across all segments. We believe that revenue growth from its consumer retail chain subsidiary, Wincommerce (WCM), will be achieved via rapid new store openings, a payoff from the restructuring during the 2022-23 period, and a recovery in consumer spend. Subsidiary Masan Consumer (MCH) has consistently proven resilience, having outperformed peer since 2019 (CAGR of 10% in revenue and 11% in NPAT). We believe that the company will maintain this momentum through 2024, leveraging synergies of the retail platform (WCM) and other product innovations.

As Viettel Group (Viettel) and Vietnam Posts and Telecommunications Group (VNPT) were awarded the usage right of 5G wavebands in March 2024, we believe that CTR will require significant capital for BTS (base transceiver station) sites investment, which means a conservative dividend payout level accordingly should be reasonable to accumulate a strong enough retained earnings balance as a safe equity source. However, we observe that CTR intends to pay out higher cash dividends than before. Specifically, during 2016-2021, CTR had maintained a conservative VND 1,000/share cash dividend despite consistent earnings growth. However, that level then increased to VND 2,919/share in 2022 and was approved at VND 2,720/share in 2023 (during the 2024 AGM) (nearly a threefold increase compared to past years). Therefore, we believe that CTR might have to increase its debt component in the capital structure. Additionally, we witnessed lower-than-expected gross profit margin of construction segment and financial income during 1Q24 and expect that 2024 NPATMI will perform a slower growth of 11.6% YoY growth than that of 2023 (16.5% YoY). Nevertheless, we forecast a solid NPAT growth of 19.8% YoY in 2025, mainly driven by the long-term outlook of 5G rollout, which should support infrastructure leasing segment to continue to improve CTR’s overall profit margin. We call for a MARKET PERFORM rating on CTR, with a 12-month DCF target price of VND 133,200/share (equivalent to 3% upside potential).