Company Report

The 2021 AGM held on Apr 27 approved the annual plan, featuring 20% PBT growth and a 38% increase in charter capital. The Bank also released its 1Q 2021 earnings, which exceeded consensus with total operating income (TOI) of VND 9.1 tn (+45% YoY) and pretax profit of VND 4.6 tn (+109% YoY and 79% QoQ). Solid performance was fueled by all income streams, and reasonably controlled asset quality. The customer base continued to expand by 1 mn (+17% YTD) during 1Q 2021. We forecast MBB to achieve VND 13.6 tn in pretax profit (+28% YoY, completing 106% of the AGM plan) for 2021. For 2022, PBT is expected to reach VND 16.4 tn (+20% YoY). We also roll forward our valuation to June 2022, and our 1Y target price for the shares of MBB is VND 36,000/share (+20% upside). We reiterate our BUY rating on the shares of MBB.

DXS is set to IPO this April, and its listing on the HOSE is expected to occur in May 2021. The charter capital of DXS prior to the IPO is VND 3.2 tn. A total of 71.7 mn shares (equivalent to a 20% stake post-IPO), which comprises of 35.8 mn new shares from the Company and 35.8 mn existing shares from current shareholders, will be on offer at a price of VND 32,000/share. 

In the coming time, DXS plans to further strengthen its leading position in the primary real estate agency industry, by further expanding its capabilities to provide end-to-end real estate brokerage services. As such, the Company will continue to focus on primary brokerage, while further expanding to the secondary brokerage by utilizing its “online to offline” technology platform. For the 2021 – 2023 period, the Company ambitiously forecasts its revenue and NPATMI to grow at a CAGR of 53% and 45%, respectively. Such an impressive feat of growth is predominantly driven by its growing the primary brokerage business, with an increasing number of units to be distributed during the period. According to the firm’s management, approximately 70% of units have been committed by developers, and they are quite confident to achieve the plan. Provided that the real estate market continues its positive momentum, coupled with the increase in income from full-service brokerage, secondary brokerage and non-cyclical fee-based services to total income, we believe that DXS could achieve its target in 2021. 

We reiterate our OUTPERFORM rating on the shares of GMD, and increase our target price to VND 38,500/share (from VND 30,800/share) – implying 11% upside. Our positive stance on the shares is supported by an improving outlook on Company performance in 2021 and beyond led by Gemalink port trends, hence we revised up our 2021 earnings forecast for GMD by 22% from our last report. From a broader perspective, we observe that a strong recovery in Vietnamese trade is well underway, which support GMD’s seaport and logistic businesses. Being one of the few logistic providers in Vietnam that possesses a fully integrated logistics network nationwide, GMD should benefit from a rapidly growing Vietnamese economy that is increasingly integrating into global manufacturing and supply chain. 

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. 

We maintain a MARKET PERFORM rating for VEA, with the target price of VND 46,000/share. This equal to a total return of 16% from both capital gain of 3% from the current price as of March 2^nd, 2021 and 13% from expected dividend payment of VND 6,000/share in FY21. We expect VEA gross revenue and net profit in FY21 to reach VND 3.93 trillion (+7% YoY) and VND 6.23 trillion (+10% YoY) respectively. While VEA profit may recover sluggishly in FY21, we see an attractive dividend yield of 13% in FY21 from the current share price, and an average dividend yield of 9 - 11% in the years following thereafter.

During 4Q 2020, BID’s NIM expanded by 33 bps (QoQ), pushing NII and TOI to increase 10.3% and 11.7% YoY, respectively. However, 4Q 2020 PBT plunged to VND 2.2 tn (-42% YoY) driven by a +93% surge in credit provisions. PBT in 2020 was only VND 9.21 tn (-14.1% YoY), and ROE declined to a 15-year low of 9.45%. The increase in provisioning and bad debt write-offs had quite a positive impact on BID’s asset quality, as the NPL (including VAMC bonds) and LLC ratios were each at their strong levels over the past six years. For 2021, we have increased our pretax profit forecast by 2.2% to VND 13.5 tn (+46.4% YoY). Our 2021 earnings forecast has not changed significantly, the cash dividend payment of 8% was higher than our expectation of 5%. This higher dividend negatively impacts our 2021 BVPS estimate. As a result, we lower our 1-year target price by 1.5% to VND 46,430/share, based on an unchanged P/B target multiple of 2.2x applied to our 2021F BVPS. 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. Our new price target on the shares of BID implies upside of +5.5%, and we recommend a MARKET PERFORM rating.

We like OCB’s strategy of targeting the niche micro-SME market, as well as the detail-oriented approach to risk management which effectively weeds out risks with small enterprises. Constant investment in digital banking has yielded tangible results, such as improved operating efficiency and a boost in retail CASA. As a small bank, room for growth remains significant. However, large exposure to construction and real estate (18%), hospitality (13%), and energy (10%) are a concern. A nearly full foreign ownership limit of the bank is a drawback for OCB as well. Our target price for the bank is VND 25,300 per share, representing 29% upside from the closing price as at 29 Jan 2021. Hence, we initiate coverage on the shares of OCB with a BUY rating.

Upgrade rating to BUY: With the increase to our NIM forecast and adjusting credit costs for 2020 and 2021, we are aggressively increasing our 2020F and 2021F PBT forecast to VND 10.8 tn (-8.1% YoY) and VND 15.5 tn (+43.1% YoY), respectively. Our 2020 and 2021 PBT forecasts are now +11.1% and +42.8% higher, respectively. Our forecast does account for the potential bancassurance deal being re-negotiated. We have our adjusted P/B target from 1.2x to 1.6x, which has resulted in 1Y target price for the shares of CTG to VND 38,700 (up from previous 27,200). Our revised share price target represents potential of 16.6% upside, plus the cash dividend yield of 1.5%. An ROI of this magnitude causes us to upgrade our rating on the shares of CTG from Outperform to BUY.

We are initiating coverage on the shares of BCM with a SELL rating with a target price of VND 40,600 per share, representing a 13.6% downside. BCM is one of the five largest industrial park developers in Vietnam with an ecosystem that includes industrial park services and residential areas. Its real estate inventory had a value of VND 22.895 tn (53% of total assets), with VND 2.85 tn (12.4% of total assets) located in Binh Duong New City - representing a substantial opportunity for BCM. Upon the completion of the metro (subway) between Binh Duong and HCMC, we anticipate that the demand for real estate in Binh Duong will intensify - and BCM is well positioned to benefit from this demand shift. We estimate that land transfer revenue in Binh Duong New City in the 2021-2023 period to be around VND 1.5 trillion each year, growing to approximately 16.2% of BCM’s current revenue. Further, new industrial parks should enable BCM to lease 120-150 ha/year with an average rate of $80-90 USD/sqm/term. This is equivalent to annual revenue of between VND 2.5 – 3.0 tn between 2021-2025. While excited about BCM’s long-term prospects, BCM is increasing its charter capital via a 5:1 rights issuance (4Q20) and and a private placement of up to 758 mn shares (37.9% of outstanding) (2021) which should cause EPS dilution of 36.5% - hampering upside for the shares.  Other risks to our call include low liquidity concerns of real estate projects in Binh Duong New City, temporarily weakened demand for industrial park rental from new clients as affected by Covid-19, slow legal procedures in new industrial park such as Cay Truong and Lai Hung and debt payment pressure. These factors are expected to negatively affect the company's earnings in 2H2020 and might prolong through 2021.

Capacity expansion to spur long-term growth for Moc Chau Milk (MCM): In recent years, MCM revenue was constrained due to a lack of capacity: namely full factory utilization and limited dairy farms. After Vinamilk (VNM: HOSE) took over the controlling right indirectly via GTNfoods (GTN: HOSE) in MCM, it put forth an ambitious capex plan of VND 1.6 tn to develop a 4,000 head dairy farm and a new dairy factory in order to address these constraints. Capex is expected to be funded by an increase in charter capital. Post-deal, Vinamilk is anticipated to hold over a 51% stake in MCM  - up from its current indirect stake of 28.3%. In 2020, we forecast MCM to post VND 2.76 tn in revenue (+8% YoY) and VND 201 bn in net profit (+20.2%), which should translate into 2020 EPS of VND 3,003 pre-capital raise. Growth is likely to come from restructuring of MCM’s distribution network, and changes in sales mix. Moc Chau Milk is a household name in Northern Vietnam given its higher quality milk products.  Over the long-term, we are of the opinion that MCM could post stronger-than-industry growth (i.e double-digit bottom line growth) in the coming years thanks to capacity expansion and margin improvement in premium products and synergies with Vinamilk, especially in terms of market development. MCM expects to list on HOSE within 9 months.

The previous lockdown order in Vietnam coupled by unrecovered demand by way of pandemic-related lower income brought VEA profit down. Moreover, VEA is going to make a provision for uncollectible loans. Therefore, VEA might experience a contraction in consolidated profit for Q2. We consider reviewing our forecast after its 1H financial statement is announced. Until then, we maintain our previous forecast for VEA. Net sales is forecasted to come in at VND 4.508 tn (+0.3% YoY) and VND 4.811 tn (+6.7% YoY) in 2020 and 2021. Net income reached VND 6.633 tn (-9.4% YoY) in 2020 and VND 7.157 tn (+7.9% YoY) in 2021. We continue to provide a Market Perform rating for the stock, with a 1 year TP of VND 48,300 (+11% upside in capital again and +23% in total return including 12% dividend yield), and we reiterate our buy-the-dip recommendation. 

Given the current market price, VTP is trading at 2020F and 2021F P/E ratios of 17.7x and 13.1x respectively, which shows that 2020 growth prospects have been reflected quite fully into the current stock price. As the stock price has advanced recently, we change our recommendation to an OUTPERFORM rating, with a new 1Y target price of VND 160,000/share (17% upside) based on a new target PE of 18x (a switch from the old target of 20x due to higher short-term-risk from the pandemic). We still prize this stock when looking at its potential for long-term growth. We believe the pandemic has sped up the consumer transition in behavior toward e-commerce, and this benefits VTP. A downside tail risk from our call comes from the risk that COVID might come back in a 2nd wave, or that a new competitor might increase pricing pressure for VTP. Currently, barrier of entry is high for international companies in this sector, as foreign ownership limit for domestic transportation firm is 49%. Also, it takes very large capital and time in order to establish a nationwide network like that of VTP.