Company Report

BIDV recently released its 2019 financial statements, with 2019 consolidated TOI and PBT of VND48.2tn and VND10.876tn, respectively, which grew by 8.8% YoY and 15.8% YoY, respectively. The results fulfilled 105.6% of management’s annual plan. There was also decent credit expansion towards retail lending: total credit increased by 12.4% YoY (vs. +13.56% YoY of the sector), with individual and SME loans up by 21.5% YoY and 18% YoY, respectively, and corporate bonds (which are counted as credit according to regulations in Vietnam) down by 11.3% YoY in 2019. We revise down our 2020E earnings by 15%, mainly to factor in the negative impact of the coronavirus outbreak and our more prudent assumptions on higher new NPL formation as well as higher-than-expected provision costs for VAMC bonds in the year. For 2020E, we forecast PBT of VND14.01tn, up 28.8% YoY. We estimate ROAA and ROAE at 0.6% and 13.6%, respectively, and our 2020E BVPS is at VND20,088 (before charter-capital increase). In 2020, the bank plans to issue an additional 5% of shares to increase its charter capital (post-money). Although we don’t include the additional capital plan in our model, we include it in our valuation. As we assume an issuance price of VND45,000 per share and with our new target PBR of 2.5x (from 2.0x), we derive a higher 12-month target price of VND53,300 (previously VND42,900). With upside potential of 2.5%, we downgrade our rating on the stock to Market Perform (from Outperform). Downside risk: higher-than-expected NPL formation; upside risk: faster-than-expected divestment of BIDV MetLife Insurance.

Base on 2018 low base, performance running up to 2019 was very positive. Besides, the bank managed to restructure assets and funding sources as described above.  In the positive scenario, a turnaround in profit from 2022 is possible, primarily driven by (1) an increase in NIM and stronger credit growth thanks to enhanced Tier 1 capital, (2) strong fee-based income, and (3) well-managed operational costs, despite a huge provision to resolve VAMC bonds. At the current price of VND 27,750 per share, the stock is trading at a 2020E P/B of 1.25x and a P/E of 7.8x, lower than the sector average of 1.41x and 8.93x respectively.  We estimate CTG fair value to be VND 31,100 per share, based on a targeted P/B of 1.4x and 2020E BVPS of VND 22,224. As the potential upside is +12.1%, we place a OUTPERFORM rating on this stock. 

Vietinbank has recently held an analyst meeting, and below are the key takeaways:

Strong earnings result in 2019 with separate PBT of VND 11.5 tn, at +83% YoY. This was driven by improved NIM thanks to retail segment and strong growth in Non-NII at +28% YoY. Although credit growth was only +7.2% YoY, SME and individual lending, which yield higher than other loans, rose by +23% YoY. CIR reduced significantly from 48.6% in 2018 to 37% in 2019.

Improved asset quality: NPL ratio reduced to less than 1.2% from 1.59% in 2018 while the loan-loss-coverage ratio surged to 128% from 93% in 2018. The bank completed book provision for 54% of the gross VAMC bond.

For 2020, the bank targets a PBT of VND 12.6 tn at a 10% YoY rise. Growth of total assets, credit, and deposits are targeted at 6-7% YoY, 8-10% YoY, and 10-12% YoY, respectively, based on the scenario that its capital will be raised by stock dividend. CIR is expected at less than 40%, while the NPL ratio will be less than 2%.

At the current market price of VND 98,700/share, VHM is being traded at 2019 P/E and 2020 P/E metrics of 17.5x and 14.4x, which is relatively lower than industry peers. Regarding valuation, given the above-mentioned adjustment, our target price is raised to VND 110,200/share using RNAV approach, implying an upside of 13% compared with the current market price. Hence, we reiterate our OUTPERFORM rating for the stock at present. In the short-term, the share buyback plan of up to 60 million shares (equivalent to 1.79% of total charter capital) is expected to have a positive impact on the share price. In our opinion, VHM has ample financial resources to execute this deal considering its debt/equity ratio of 0.46x, and its 9.4 trillion VND cash and cash equivalent balance for Q3.

At the current price of VND60,500/share, FPT is trading at 2019E and 2020E P/E ratios of 13.9x and 11.7x, which looks attractive. We roll forward our valuation to 2020E net profit in our SOTP valuation, with the same target multiple for each segment. Accordingly, we derive a new 12-month target price of VND74,500/share (+23% upside), from VND67,000, and reiterate our BUY call. FPT remains one of only a few large-cap companies to consistently attain high earnings growth, and also possesses an attractive valuation. In the next 3-6 months, we expect earnings to continue to beat expectations, which should be supportive for the share price. 

With the current hog supply shortages running up to Tet holiday as well as the recent rapid hog price increase since October 2019, we expect the company’s net profit to turn around, at least in the next 2 quarters. DBC share price has also recently recovered by ~6.7% since early October, in line with the hog price increase. At the current price of VND 23,700/share, DBC is trading at 2019 and 2020 P/E ratio of 9x and 7x respectively. In 2019, we estimate that net sales and net profit might reach VND 7.6 tn (+13.3% YoY) and VND 256 bn (-28.9% YoY). In 2020, we estimate net sales and net profit might reach VND 8.1 tn (+7.7% YoY) and VND 332 bn (+29.7% YoY). Our forecasts have not taken into account any additional real estate revenue that might already be booked. Our 1Y target price for the stock is VND 27,300 (+15.1% upside), equivalent to an OUTPERFORM rating.

Hanoi Plastic JSC (UPCOM: NHH) was formerly a SOE established in 1972 under the Hanoi Department of Industry. The company was transformed into a JSC in 2008, with an initial charter capital of VND 65 bn. The company listed its shares in the UPCOM in Sept 2017. After the government fully divested in Dec 2017, NHH was acquired by Cadivi Dong Nai, a subsidiary of Vietnam Electric Cable Corporation (HOSE: CAV). In late 2018, Anphat Holdings purchased the stake of NHH from Cadivi Dong Nai, thereby having NHH become a member of An Phat Holdings (APH). In January 2019, the company increased its charter capital from VND 65 bn to VND 168 bn by way of a 1:1 stock bonus, and a rights issuance at the ratio of 65:38. In Sept 2019, the company continued to increase its charter capital from VND 168 bn to VND 344.4 bn by issuing stock bonuses, stock dividends, and rights issuances at a 1:1 ratio.

Using an unchanged target PBR of 3.0x applied to our 2020E post-money BVPS, we derive our new 12-month target price of VND92,700 (from VND82,400), which offers upside potential of 11.7% from the current trading price of VND83,000 per share. Please note that this does not take into account cash dividends of 8% at par in 2019E and 2020E that we had previously assumed. Therefore, we upgrade our rating on the stock from Market Perform to OUTPERFORM.

At the current price of VND 51,000 per share, VEA is only trading at a 2019 & 2020 PER level of 8.4x and 7.4x, which is a much lower valuation compared to the overall market of ~14.5x. Meanwhile, the dividend yield came to 7.6% for 2019 and 9.8% for 2020. Our target price for VEA is VND 65,000/share (from VND 63,500/share after accounting to its 2020 forecast) for the 12-month investment horizon, with an upside of about +27%. Therefore, we changed our rating to BUY from MARKET PERFORM given the recent drop. We believe this is a great opportunity to accumulate the stock for long term investors, with attractive dividend yields as well as potential capital gain.

We raise our 12-month target price to VND82,400, based on an unchanged PBR target of 3.0x applied to our 2020E BVPS of VND27,452 (previously VND81,300 using 2020E BVPS of VND27,093), for a potential upside of 2.36% from the current price of VND80,500. Please note that this does not consider the cash dividend of 8% at par in 2019E and 2020E. Given the limited potential upside, we maintain our Market Perform rating.

Based on audited financial statements, 2018 BVPS and EPS of BVH were VND 22,065 and VND 1,612 respectively. At the current price of VND 81,300 per share, the stock is trading at 2018 PBR and PER of 3.7x and 50.4x respectively. Based on the company’s 2019 plan, 2019 BVPS and EPS of BVH on a respective basis are estimated at VND 22,748 and VND 1,676, with current PBR and PER at 3.57x and 48.5x. We estimate that if the capital issuance is implemented in 2H 2019, at the price equal to 3 times BVPS as of June 2019 at VND67,220 per share, BVH would have the proceeds of VND 2.785 tn. 2019F BVPS would pop up at +11% to VND 25,231. The PBR at current price would then be 3.22x.

BIDV (BID: HOSE) posted VND9.473tn in PBT, translating into 9.3% YoY growth in 2018. This level of PBT growth is quite weak compared to the industry average of 31.6%, but this was not a surprise as the bank was still making progress in resolving its legacy bad debt, while desperately lacking capital to fuel credit growth. At the market price of VND32,850 per share, BIDV is trading at a 2019E PBR of 2x and a post-money 2019E PBR of 1.7x.

VCB announced that it has successfully issued 111.1m shares by way of private placement, increasing its charter capital by 3.088% to VND37.089tn. The buyers are GIC Private Limited (GIC – the investment arm of Singapore government) and Mizuho Bank Ltd (VCB’s current strategic shareholder). VCB would receive proceeds of VND6.2tn, or c.USD265m from the issuance. We estimate an issuance price of VND55,500 per share, which is equal to a 2018E PBR of 3.22x. We raise our 12-month TP to VND68,600 (from VND63,100), based on an unchanged 2019E PBR of 3.0x. As our new TP offers some 25% potential upside from the current price and given SSI’s view of 10% return for the VNIndex in 2019, our rating bands call for a BUY rating (from NEUTRAL).

At VND 23,100 per share, CTG is trading at 2018 and 2019 PBRs of 1.3x and 1.2x respectively, which is lower than the industry 2019 PBR average of 1.5x. The lower than average valuation is reflected upon possible 2018 losses the bank may have to absorb. We expect Vietinbank will have to deal with additional NPLs in 2019, while credit growth is expected to be capped due to the inherent difficulty in raising Tier 1 capital. Taking into consideration all of the facts at hand, we recommend a stance of Underperform for the stock, with a 1Y target price of VND 23,000 per share, equivalent to a 2019 PBR of 1.2x.