Company Report

VCB reported its 1Q2020 earnings, with TOI reaching VND12.29tn (+4.4% YoY) and a PBT of VND5.22tn (-11.1% YoY). The difference in the top line and the bottom line was because of the surge in provision expense of +42.9% YoY. In our base case where we expect Covid-19 pandemic to not return in winter, we forecast VCB to deliver 2020 & 2021 PBT of VND22.16tn and VND26.15tn, -4.2% YoY and +18% YoY, respectively due to lower growth in TOI and a strong upsurge in credit costs. We project 2020/2021 BVPS at VND 28,059/ VND 31,886, with the assumption that VCB will successfully issue 5.88% of post-money capital at VND 65,000 per share in 2020. At the current price, VCB is trading at 2020E P/B of 3.19x and 2021E P/B of 2.80x. We lower our 12-month target price to VND 89,900 (from VND92,700) and downgrade the stock to UNDERPERFORM (from Market Perform).

Assuming FRT will be able to accomplish its 2020 financial targets, FRT is being traded at a 2020 P/E of 12.7x, which is expensive in our view given the expected 2020 earnings drop of -21% YoY caused by negative impact of COVID-19 compounded by losses associated from a rapid pace of Long Chau store openings. Meanwhile, close peer MWG is currently trading at a P/E of around only 10x. We will provide a detailed valuation in our coming report. 

We revise down our forecast for CTG earnings to VND 9.22 tn, at -21.7% YoY to reflect more comprehensively the impact of Covid-19. For 2021, we expect CTG to achieve VND 13.42 tn of PBT, at +45.5% YoY. 2020E and 2021E ROAE is projected at 9.4% and 12.8% respectively.  At the current price of VND 23,050 per share, the stock is trading at a 2020E and 2021E P/B ratios of 1.06x and 0.98x respectively. Our 1Y target price of CTG is VND 27,200 per share. As the potential upside is +18.0%, we maintain our OUTPERFORM rating on this stock. 

An Gia Investment (AGG) listed its 75mil shares on HOSE on 9 January.   AGG was established in 2008 as a private company specializing in providing brokerage and real estate services. Since 2014, the company has expanded into the real estate development sphere, and has become an active developer in mid-end segment primarily located in HCMC.  AGG’s products are highly favored by the middle-affluent class. In our opinion, AGG’s business model is agile, able to adapt to changes and evolutions in the competitive matrix of the real estate market. Outlook: Revenue earned from residential project handover is An Gia’s core business. Most projects launched by An Gia have been well-favored by its customers, with an average absorption rate of 80-90% after just 3 months. Currently, An Gia is executing some mid-end residential projects in HCMC and nearby provinces, such as: The Song project (1 ha) in Vung Tau, the New Tech (VND 1.3 ha) and the West Water Gate  (3.1 ha) In District 7, as well as two large potential projects ( D7 and BC  27, with a total site area ~ 32.4 ha) which are under process for license finalization with the local government. Based on the project pipeline schedule, we estimate An Gia 2020 revenue and net profit will strongly increase compare to its low base set in 2019, achieving nearly VND 2.77 trillion (+622.7% YoY) and VND 386 bn (+16% YoY) respectively from the handover of 2 sites (River Panorama 1 & 2). With the finalization of of the Sky89 unit blocks from the Lacasa project come 2021, we expect An Gia will continue to record positive growth of more than VND 4.4 tn in terms of revenue (+59.5% YoY), and a net profit of VND 668 bn (+73% YoY). In term of financing, the company maintains a healthy capital structure with a low debt/equity ratio all the while as it moves towards adding new plots to its landbank in Long An, Phan Thiet, and Binh Duong. This will be done in collaboration with foreign investors, such as Creed Group and Hossier. Valuation: At a current price of 26,350 VND /share, An Gia is trading at a 2019 and 2020 P/E level of 5.8x and 5.7x respectively which are lower than industry peers. Investment risks include: (1) Cyclical nature characteristics of the real estate industry, (2) Lack of clarity in legal framework (3) Developer competition (4 ) Lower pre-sales than expected (5) Possibility off tightened credit market conditions (6) Possibility of lacking additional capital for expansion. 

Impacts of Covid-19: By the end of February 2020, credit growth outperformed the sector at +7% YoY compared to the cap for 11.75% YoY, much higher than the zero-growth at many peers, thanks to corporate loans in the staple consumer goods manufacturing sectors and retail mortgage loans. In our base case scenario, we assume that Covid-19 outbreak will be contained by end of 1H 2020. Demand for retail home and auto loans will gradually recovers in 2H 2020. For 2020, we forecast credit and deposit growth at 15.2% YoY and 13.7% YoY respectively, slowing down compared to 2019. Opinion: TPB has been a true pioneer in the rapidly-evolving space of digital banking deployment across Vietnam, and this trend is becoming increasingly more popular amidst Covid-19. TPB has completed cleaning-up its legacy VAMC bonds and is well-prepared for a take-up in retail banking including consumer finance and bancassurance, beside its traditional home and auto loans. 2020F PBT is estimated at VND 4.76 tn, at +23.1% YoY, highlighting the highest ROE of 25.5% across our banking coverage. TPB is trading respectively at a 2020E P/B and P/E of 1.07x and 4.73x respectively, compared to the industry average of 1.00x and 6.64x. Our 1Y target price is VND 25,800 per share, which is equivalent to an upside of 21.1% from the current price. Therefore, we maintain our OUTPERFORM rating for TPB.

In 2019, net sales totaled VND 5.842 tn (+14.9% YoY), fulfilling 97% of guidance while NPAT posted VND 375 bn (-23.7% YoY), only fulfilling 88% of guidance. Overall, the significant drop of net earnings was mostly due to lack of property projects in 2019, while the 2018 real estate sector was backed by My Dinh Plaza 2 and My Dinh 1.  We estimate the top and bottom line to both be brighter at VND 6.746 tn (+15.5% YoY) & VND 457 bn (+22.0% YoY), compared to company guidance of VND 7.222 tn and VND 501 bn. PC1 is trading at FY20 P/E of 5.3x and a compelling PEG ratio of 0.3x (given 2020-2021 EPS growth at 19.7%). We see some earnings drivers in 2020, including (1) recognition of Thanh Xuan real estate project in 2Q 2020 and Vinh Hung in 2021; (2) new online production from 3 hydropower plants (Mong An, Bao Lac B & Song Nhiem 4). But our projection hasn’t been factored in the other two new wind power projects recently disclosed on 12 Feb 2020 (as discussed above), and we will provide detailed a recommendation in coming research reports. 

MBB has recently released its 4Q 2019 earning results, featuring total operating income and pretax profit of VND 6.7 tn and VND 2.4 tn. This was a welcome rise upwards by +17.1% YoY and +38.1% YoY respectively. For full year 2019, pretax profit reached VND 10.036 tn (+29.2% YoY), surpassing the goal of the annual plan, at 106%. While great performance, this was -2% below our forecast, as actual provision expenses for 2019 escalated to VND 4.89 tn (vs. our forecast of VND 4.25 tn). For 2020, we expect MBB to post a respective VND 28.5 tn and VND 12.1 tn in total operating income and pretax profit, which is equivalent to a growth rate of +15.7% YoY and +20.6 % YoY. As the result of the capital raise to the present date has been lower than initially planned, we made an adjustment to the total equity of the bank. We therefore account for only the sales of 21.43 mn treasury shares and the new isssuance of 64.3 mn shares (instead of 47 million treasury shares and 141 mn new shares). Through this adjustment, the BVPS of MBB nudged to VND 19,641 (-2% compared to our previous estimate), and the target price for MBB was slightly adjusted to VND 29,460, which is still +43.7% higher than the current market price. We therefore maintain our BUY recommendation for MBB stock.  

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.