Company Report

We recently attended the MWG AGM, wherein the management guided for 2022 earnings to increase by 30% YoY. As a result, we increase our SOTP-based 12-month target price to VND196,000 (from VND174,000) – for upside potential of 31.4%. While the revenue recovery for its grocery chain (BHX) is slow, 2022 earnings growth should be supported by: (1) a recovery of DMX/TGDD off of a low base in 2021; and (2) improvement to BHX’s bottom line due to cost optimization measures. Our 2022 revenue and net income estimates are now VND138.8tn (+13% YoY) and VND6.7tn (+37% YoY), respectively. The AGM pledged a maximum of 20% toward a capital raise to expand the grocery segment beginning 2023 - a positive catalyst for the shares, in our opinion. We, hence, raise our target PS for the grocery segment from 0.8x to 1.3x, which is decent compared with the PS of 2x based on the most recent stake sale of Wincommerce (a competitor grocery chain). We reiterate our BUY rating on the shares of MWG. Downside risk: possibility of store closures due to renewal of lockdown measures.

From our recent call in November 2021, HAX share price has increased 25% and reached our previous target, with better-than-expected growth in its 2021 earnings result. However, after attending recent 2022 AGM, we saw a possible peak in HAX earnings in Q2 & Q3 2022. We have also seen stricter requirements in terms of Mercedes’ dealer standards, which has pressured the company to raise significant equity for expansion, and dilute earnings growth in the near term. The impact of worsening chip shortage also causes us to lower 2022 and 2023 earnings forecast. Thus, we decided to rerate HAX to UNDERPERFORM, with a revised 1-yr target price at VND 32,000/share after taking into account the dilution impact, which equates to total return of -4% from capital gain of -6% and expected dividend yield of 2%. We expect 2022 total sales and net profit to reach VND 5.8 tn (+5% YoY) and VND 218 bn (+36% YoY), respectively.  Dilution ratio is 21% if the right issue is fully absorbed and recent convertible bonds is fully converted in 1-yr, in our estimate.

BID reported a 2021 profit before tax of VND13.6tn, and we raise our 12-month target price on BID to VND42,300 from VND41,100 (adjusted for dividends), based on an unchanged target PBR of 2.2x applied to our 2022E BVPS and assuming 5% in additional share issuance. With better-than expected safety indicators and with NPLs and LLCs at all-time highs of 0.98% and 219%, respectively, the CAR improved to nearly 9%. We believe that high provisioning in 2021 will reduce bad debt and help relax credit growth for 2022. We project pre-tax profit for 2022E at VND19.4tn (+42.4% YoY), primarily fueled by credit and deposit growth of 10% and 10.4% YoY, respectively, a NIM reduction of 12bps YoY, and a lower credit cost of 1.76%.  The capital raise plan set in 2020 is likely to be more favorable this year, when the impact of the COVID-19 pandemic has taken on a milder form. We maintain our MARKET PERFORM rating on the stock.

Despite the 4Q 2021 earnings underperformance, we are maintaining our Outperform rating on the shares of VPB with our 1Y TP of VND 44,500. With the upcoming private placement and gradual economic recovery, we believe that bank fundamentals will undergo a sea change in 2022. Pretax profit for 2022 is projected at VND 18.9 tn (+30% YoY), of which VND 16.7 tn (+18.9% YoY) is expected to be attributed to the parent bank with the remainder from FeCredit. Despite the expected 300%+ YoY PBT growth at FeCredit in 2022, the subsidiary’s returns will lower than pre-Covid levels (of over VND 4 tn). Our model has not been adjusted for the bank’s investment in a brokerage company, ASC, and its potential 2022 profit. While a PBT of VND 630 bn may be feasible considering capital of VND 8.7 tn, we do not reflect such in our model and will only do so if management provides clarity on their long-term vision for this investment. For the time being, we assume VND 8.7 tn for bank lending activities at an average asset yield of 8.2%.

Credit quality remained a challenge for CTG during 3Q 2021, with provisions remaining quite elevated. As a result, we are lowering our: (a) PBT forecast for 2021 and 2022 by 3% (to VND 17.7 tn, +3.6% YoY) and 14% (VND 21.6 tn, +22% YoY), respectively; (b) Target price on the shares to VND 39,700 (from VND 42,300) – implying 23% upside; and (c) Rating to OUTPERFORM from BUY. All three changes applied to the shares of CTG reflect our belief that the credit quality and restructured loans might be a challenge to profitability for CTG over the next couple of quarters. Downside risk: Higher-than-expected credit costs and NPL-formation. Upside potential: The divestment from Vietinbank Leasing and completion of the exclusive bancassurance contract with Manulife may support the bank’s profitability and its capital buffer.

As we roll forward our valuation basis to 2022, we increase our 1Y target price to VND 49,000/share (from the current VND 46,400/share), intimating just 14% potential upside. With such limited potential upside, we are lowering our rating on the shares of TPB from Buy to Market Perform, as the shares have risen 20% since our most recent upgrade in August. Although we remain positively pre-disposed to the shares of TPB, the shares have already priced-in the recent private placement and above peer earnings momentum. Pretax profit for 2021 and 2022 are projected at VND 5.8 tn (+33% YoY) and VND 7.2 tn (+23% YoY), respectively. Upside surprise: Stronger capitalization after the recent private placement (CAR improved to 14.63%), should be supportive for the bank to gain an even higher credit quota. Downside risk: Higher-than-expected NPL formation.

We maintain our Market Perform rating for the shares of BID, despite the increase in our 12-month TP to VND50,000 (from VND48,000). 3Q21 results exceeded expectations from a credit growth, NIM sustainability (at 2.97%), and bad debt perspective. The bank wrote off VND5.4tn in bad debt during 3Q21, on top of providing an additional VND7.5tn against problem loans. This caused PBT to inch lower by 1% YoY to VND2.7tn, although asset quality metrics have clearly stabilized. Through 9M21, pretax profit for BID reached VND10.7tn (+52% YoY), completing 79% of our in-house full-year estimate. As restructured loans have more than doubled in 3Q21, we still see some pressure on credit costs going forward which likely will impact the bottom line. We maintain our PBT estimates for 2021E and 2022E at VND13.5tn (+50% YoY), and VND15.5tn (+14% YoY), respectively. An upside risk to our call would be a better-than-expected recovery in restructured loans, as well as any firm progress in its new share issuance of 8.5% pre-money charter capital. Improved capital would enable the bank better growth potential. We also expect that the stock dividend will be finalized by December. Downside risks include macroeconomic weakness.

We reiterate our OUTPERFORM rating on the shares of VPB with 1Y target price of VND 70,700/share. Even though FeCredit is going through a hard time with aggressive writing off and low profitability in 2021, gradual recover should be expected in 2022. Besides, we do see better than expected income generating capacity at  the parent bank in 2022, fueled by the upcoming capital infusion. Net profit from the FeCredit divestiture and proceeds of the planned private placement support the bank’s ambitious long-term expansion. On a consolidated basis, PBT for 2021 and 2022 are projected at VND 16.8 tn (+29% YoY) and VND 21.4 tn (+27% YoY). 

FY21 NPAT growth is forecast at 23% YoY. According to management, CTR expects higher growth of 30% YoY under base case. Our forecast is a bit more conservative, given the potential impact from Covid-19. Key CTR growth drivers are from ‘defensive’ segments such as telecom infrastructure operations, telecom infrastructure leasing segment, and telecom construction which likely will be less sensitive to Covid-19, and are a good defensive play. CTR also offers more attractive EPS growth in FY21/FY22/FY23 of 22%/15%/25%, respectively, comparing favorably to Asian peers of 20%/10%/8% over the same timeframe. With 1Y target price of VND 88,900 - representing 6% upside, we call for Market Perform rating on the shares of CTR. 

At the current price of VND 49,000/share, VEA is trading at a 2021 P/E forward of 10.8x and 2022 P/E forward of 10.0x. From our last call in Feb, VEA share price has risen 10% and reached our target price. Therefore, combined with a lower-than-expected dividend payout for 2021 – 2022, possible prolonged pandemic impact up to 2022, and a further delay on the HNX listing plan, we decided to rerate VEA from MARKET PERFORM to UNDERPERFORM. We keep our earnings estimate for VEA similar to previous report at VND 6.02 tn (+9% YoY) in FY21 and 6.52 tn (+9% YoY) in FY22, thus result in 1-yr target price for the stock of VND 42,000/share using both P/E and DCF valuation method (equal to total return of -3% from capital loss of -13% & expected dividend yield of 10%). 

The Bank has been delivering strong earnings results over the past several years, backed by robust credit growth, improved NIM, and lower CIR, thanks to digitalization. The 2021 business plan is ambitious but feasible, reinforced by 1Q 2021 business results and the prolonged low-rate environment which lowers overall funding costs. However, a capital raise (equivalent to 9.3% of the Bank’s pre-money charter capital) could register a minor dilutive impact. We raise our PBT forecast +6% for TPB 2021F to VND 5.8 tn (+32% YoY). 2022F PBT is forecast at VND 7.1 tn (+21.9% YoY). We roll forward our valuation to June 2022, and raise our 1Y target price for TPB to VND 37,600/share, which implies 17.7% upside. We reiterate our Outperform rating on the shares of TPB.