Company Report

1Q24 NPAT recorded strong profit growth on a low base compared to the same period. 1Q24 revenue reached VND 213 bn (+2.49x YoY) thanks to strong IP revenue growth. Revenue from industrial land lease was VND 193 bn (+6.35x YoY) with let area of 8.5 ha (+6.2x YoY) at  $95 USD/m2 (+15% YoY), mainly from the lease contract of Sonadezi Corporation (UPCOM: SNZ), and partially from small investors (leased area is 1-2ha). Subsequently, net income reached VND 65 bn (+4.55x YoY).

Signed areas for lease and MOUs in 2023 is a combined 66.23 ha (+65% YoY), with the large customer being Electronic Tripod Vietnam (total investment capital of $250 mn, equivalent to VND 6.25 trillion) with a lease area of 20 ha, and leased price of $95 USD/m2/period

The company held its 2024 AGM on 10 Apr 2024. Approved 2024 guidance for revenue and PBT was VND 61.9 tn (+17.5% YoY) and VND 10.9 tn (+18.2% YoY) respectively. Besides the impressive growth momentum of the global IT segment, FPT targets the continual expansion of its education segment during 2024-2025, as well as the recovery of the online advertising subsegment, with an expected jump from a 2023 low base. FPT also plans to launch its new data center during between late 2024 and early 2025, and expects the improving profit margin of domestic IT through the Made-by-FPT ecosystem. On the other hand, the 2023 cash dividend was also approved at VND 2,000/share (20% of charter capital). According to FPT, the company might maintain this cash dividend level (VND 2,000/share) due to the need to hold onto excess retained earnings to fund for investments to power its long-term growth.

For 2024, we expect a broad-based recovery across all segments.  We believe that revenue growth from consumer retail chain subsidiary, Wincommerce (WCM), could come from rapid new store openings, restructuring during the 2022-23 period that should start yielding fruit, and a recovery in consumer spend. Subsidiary Masan Consumer (HOSE: MCH) has consistently proven resilience and outperformed peers since 2019 (CAGR of 10% in revenue and 11% in NPAT). We believe that the company will maintain this momentum through 2024, levering synergies of the retail platform (WCM) and the innovative product innovations.

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.

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).

Taseco Land (TAL) was established in 2009 with its main business in real estate development. In early 2018, TAL restructured the organization and increased the chartered capital to VND 900 bn. Thanks to profit retained in the last several years along with capital raising from current shareholders, currently, the charter capital of TAL stands at VND 2.97 tn (US$123 mn). For FY2023, we estimate the Company will achieve VND 3.29 tn in revenue and VND 480 bn in NPAT. For FY2024, we expect the Company will i) launch for sale in residential area in Hai Yen Resettlement area, Nghi Son town, ii) sale continuation in the Alacarte Ha Long, Central Riverside and Luong Son Riverview project and iii) recognition of unbilled bookings revenue in N01-T6 apartment building in Hanoi and one-off financial income from the divestment of office building in land lot B2-CC4, Starlake Urban Area, Hanoi. As a result, TAL is expected to achieve revenue and PAT for FY2024 of VND 3.37 tn (+3% YoY) and VND 631 bn (+31% YoY) respectively.

Given the weaker-than-expected 9M23 results, we slash our NPATMI estimate to VND608bn (-83% YoY; from VND2.05tn) for 2023, due primarily to the underperformance of the retail, meat, and mining business lines. For 2024, we expect a broad-based recovery across all segments.  We believe that revenue growth from WCM (consumer retail chain) could come from a rapid pace of new store openings during 2022-23 that should start yielding fruit, along with the recovery in consumer spending. For the mining business, we admit that uncertainty in ore grade poses too much of a challenge to estimate MSR’s margin - prompting us to take a more conservative view. Associate TCB is estimated to post 15% PBT growth for 2024, with encouraging credit growth and a higher NIM. Meanwhile, interest expenses have already established a high base for 2023 and will likely not increase during 2024 (as we expect MSN will partly reduce its outstanding debt). Our 2024F net sales and NPATMI estimates are set at VND90.1tn (+9.3% YoY) and VND1.58tn (+160% YoY), respectively.

During 3Q 2023, Viettel Post continued to record positive results. Consolidated revenue was VND 4.8 bn ( -7% YoY) and NPATMI of VND 103 bn (+82% YoY and +5% QoQ). Core delivery revenue grew 25% YoY to VND 2.6 tn for 3Q 2023, as it capitalized on both e-commerce industry growth and an increase in market share. ASP still under pressure. We expect VTP’s 2023F and 2024F profit before tax to reach VND 471 bn (+46% YoY) and VND 560 bn (+18.8% YoY), respectively. Our estimate for 2023F is on par with the company’s PBT target of VND 470 bn. This translates to 4Q 2023F PBT estimate of VND 135 bn (compared with breakeven PBT in 4Q 2022).

In 9M 2023 BCM’s PAT decreased sharply. BCM posted revenue and PAT of VND 3.012 tn (-46.5% YoY) and VND 264 bn (-84.1% YoY), respectively, completing 31.8% and 14% of the company's respective targets. BCM’s earnings decreased sharply, due to: (1) the demand for leased land decreased; (2) Cay Truong IP's operating start date was delayed from 3Q23 to 2024; and (3) profit from joint venture companies decreased 97% YoY. Profit after tax is forecast to increase sharply in 4Q23. We estimate that 4Q23 revenue and profit after tax at VND 7.601 tn (+7.5x YoY) and VND 2.386 tn (+344x YoY) respectively, mainly from recognizing land sales of 18.9 ha at Binh Duong New City project for Capitaland, with revenue reaching VND 5.05 tn and gross profit reaching VND 2.102 tn.

Being foreign debt free could allow NT2 to avoid the impact of FX risks. However, as EVN is facing financial issues, NT2’s cash conversion cycle has surpassed 100 days in 2023 due to Vietnam Electricity Group’s (EVN) deferral in power sale payment. To ensure the adequate working capital for operations, NT2 has raised its short-term debt to VND 926 bn (as of end-September 2023, vs VND 630 bn of 3Q22). Therefore, NT2 might unlikely declare the attractive dividends for 2023 and 2024 as 2022 (VND 2,500/share or 8.7% of dividend yield). We also forecast 2023 NPAT to decline by -52% YoY. However, we anticipate the earnings recovery in 2024 (+37% YoY per our estimate) as NT2’s utilization rate should improve on the back of no major maintenance and less extreme gas shortage as in 2023. NT2’s 4Q23 performance could be a catalyst in the short-term as NT2 has finished the maintenance at the end-October, implying a QoQ profit growth. We estimate a 6.3% YoY growth of 4Q23 NPAT. Usually, the annual power demand is usually solid in November and December. With a 12-month DCF target price of VND 27,620 (equivalent to 12.7% upside potential), we call an Outperform rating for the stock.

Despite the slowdown of the economy and a rattled consumer, VRE continues to take advantage of stable growth and operational efficiencies in its core business of mall leasing. Given the weak growth expectations for 2024 due to management’s postponement of new mall openings and the decline in property sales YoY, reflecting the overall strategy of VRE to focus on Vincom Megamall type development which do not have shophouses for sales component as Vincom Plaza/Vincom Plus projects have, we are lowering our 1Y target price to VND 31,300/share (from VND 38,700/share). Our reduced TP reflects the use of a more conservative capitalization rate of higher 0.25%-1.0% than the previous valuation. Nevertheless, despite the level of stress that the counter is experiencing, we feel much of the bad news is already priced in and are maintaining our BUY rating on the shares given the implied 30.7% upside.

For 3Q23 VFS posted vehicle sales of USD 319mn (+1% QoQ), total revenue of USD 343 mn (+4% QoQ), and gross losses of USD 102 mn (-9% QoQ). Its gross margin stands at -30% (QoQ increase of 420 bps) due to an increase in sales and a decrease in inventory write-downs.  However, these gains were offset by a financial cost of USD 145 mn (+25% QoQ). Overall, VFS increased its loss during the quarter to -USD 623 mn (see fig 4). Through the first three quarters of 2023, the net loss is -USD 1.7 bn, with an accumulated loss of -USD 7 bn.

We had initially anticipated a double digit decline in revenue and earnings for both 2Q23 and 3Q23. However, 2Q23 results surprised, with revenue declining by -17% YoY and net income by -8% YoY. In July, the decrease in revenue eased to -4% YoY, while net income increased by 10% YoY. This is explained by: (1) more rapid new store opening pace and (2) better-than-expected gross profit margins on product mix changes. Taking recent developments into account, we increase our 2023 and 2024 net income forecasts to VND 1.84 tn (+2% YoY, from VND 1.74 tn) and VND 2.04 tn (+11% YoY, from VND 1.96 tn), respectively. As such, 2H23 earnings may post YoY growth (+4% YoY).  Our higher EPS forecasts prompt us to increase our target price for the shares of PNJ to VND 90,200 per share (previously VND 86,000/share), representing 13.5% upside. We reiterate our OUTPERFORM rating on the shares. 

Becamex (HOSE: BCM) remains a leading industrial park developer, with total available land of 888.5 ha for lease. At the same time, the commercial land area is 1,250 ha in Binh Duong New City (100% owned by Becamex), and profit margin at 43%, according to Capitaland. The VSIP-Warburg Pincus joint venture is forecasted to be quite profitable due to the growth in leasing demand for land and factories. Using RNAV method, we rate the shares of BCM as OUTPERFORM, with a target price of VND 88,700/share (upside 9.6%). Over the short-term, information about the transfer of land to sub-developers in the Binh Duong New City project and the start of Cay Truong Industrial Park should support the share price going forward.