Company Report

We are upgrading our stock rating from OUTPERFORM to BUY due to our strong belief that the potential introduction of new U.S. import tariffs by President Trump could lead to a significant surge in import demand before the tariffs take effect. This anticipated increase in demand is likely to extend the upcycle of the container shipping industry into 2026, rather than peaking in 2025 as previously expected. As a result, we expect this change to positively impact the earnings of container shipping companies in 2025.

Accordingly, for 2025, HAH’s NPATMI are projected to grow by 17% YoY, reaching VND 649 bn fueled by higher charter rates and increased spot rates driven by strong shipping demand. For 2026, assuming that container shipping rates reach peak within the year, a significant freight decline is expected, as a consequence of the new tariffs. This could lead to less favorable growth, with 2026 earnings projected to decrease by around 13% YoY.

We upgrade our rating on the shares of HPG from OUTPERFORM to BUY, with a 1-year TP of VND 31,700/share. Over the short-term, the recent recovery of steel prices, the increase in sales volume, and update on AD tariffs for imported HRC should be supportive to the share price.

Revenue and net profit in 3Q24 came in at VND 34 tn and VND 3.02 tn, respectively, achieving strong growth of 19% and 51% YoY. This was driven by strong growth in long steel sales volume of 39% YoY, as well as through a substantial increase in earnings from agriculture and real estate of 206% YoY to VND 583 bn, which equated to 19.3% of total earnings during the quarter. On the other hand, HRC volume was resilient with a slight increase of 4% YoY, despite strong competition from China and a slowdown of exports.

We forecast EPS for 2024 and 2025 at VND 1,840/share (+46.9% YoY) and VND 2,313/share (+25.7% YoY), respectively. SZC is well-positioned to capitalize on several factors: (1) The company has over 400 ha remaining available for lease, with 250 ha fully cleared for compensation; (2) Lease prices in SZC are projected to increase compared to other industrial parks in Ba Ria - Vung Tau. Currently, these other IPs are leased at 13% - 15% lower. The connectivity improvements provided by the Bien Hoa-Vung Tau Expressway further enhance SZC's appeal. We maintain OUTPERFORM rating with 1-year target price of VND 43,200/share, representing a 12.9% upside based on the SOTP valuation method.

Although VHC earnings began rebounding during 3Q24 after seven consecutive quarters of negative earnings growth, we are reducing our target P/E on the stock from 12x to 11x, as the ASP recovery has been slower than expected. While we expected a stronger recovery in ASP leading to margin expansion, the improvement in GPM this quarter primarily came from lower input costs. We believe segment share prices remain very sensitive to pangasius ASP. Despite the multiple reduction, we reiterate our OUTPERFORM rating on the shares, with a 1Y target price of VND 83,000/share (+15.4% upside) [previous target of VND 88,000/share]. Our estimates for 2024 and 2025 remain unchanged, as gross profit margin expansion remains on track. Sales for 2024 and 2025 are expected to reach VND 12 tn (+20% YoY) and VND 13.7 tn (+13% YoY), respectively, whereas NPATMI is expected to reach VND 1.2 tn (+34% YoY) and VND 1.58 tn (+29% YoY).

We maintain our PBT projection of VND 27.8 tn (+21.5% YoY) for 2024 and VND 32.3 tn (+16.2% YoY) for 2025. We believe that the pricing competition as well as the impact from the flexible pricing scheme for corporate clients will continue to impede NIM expansion despite credit growth remaining solid. As such, NIM is expected to reach 4.18% in 2024 before improving slightly to 4.22% in 2025. With that support, asset quality should be under control with NPL ratios at 1.2% for 2024 and 2025.

We believe that the property market is gradually recovering, starting from the Northern Vietnam, and focusing on project with healthy legal status, which will be a positive catalyst for TCB. However, we think that the high-end and luxury property segments will need more time to fully recover. Although the cash flow of property developers is still slow, we think the flexible pricing scheme will continue to support these clients fulfilling debt obligations. Therefore, we maintain OUTPERFORM rating and keep target P/B of 1.2x for TCB shares with 1Y TP of VND 28,700 – equivalent to an upside of 18.6%.

We lower our estimate of 2024 new BTS sites from 4,500 to 3,500 sites as 1) 8M24 respective progress (2,011 sites) is trailing our previous forecast (as well as CTR’s own 2024 target of 4,000-5,000 sites) and 2) the company’s focus on dealing with the aftermath of Typhoon Yagi in northern Vietnam during September might weigh on its further acceleration of BTS site construction in the remainder of the year. On the other hand, we maintain our respective estimate (4,500 BTS sites) for 2025 as we believe that the 1-month extension of deadline for discounting 2G-only service (through the Circular 10/2024/TT-BTTTT) will not create significant delay to the implementation of more advanced mobile technologies in Vietnam. We also maintain our view of 5G commencement during late 2024 or early 2025 to support the long-term growth potential. Hence, we forecast that NPATMI will experience a single-digit growth for 2024 (+7% YoY) but a double-digit growth (+18% YoY) for 2025, mainly be driven by the infrastructure leasing and construction segments (equivalent to 3%-4% lower 2024-2025 NPATMI estimates compared to previous projections).Despite earnings downward revision, we maintain our 12-month DCF target price of VND 135,000/share as we roll over to 2025 (from average 2024-2025). With 3% upside potential, we lower our rating from OUTPERFORM to MARKET PERFORM on the shares of CTR.

DBC should benefit from higher hog price. As 2H is usually high season and a consumption recovery is expected, we believe that the price may not dip to last year’s level of between VND 52,000-56,000/kg.

Farming business witnessed low feed costs and higher sow productivity (from the import of new pig breeds from France). Average production costs at DBC are c. VND 50,000 /kg (down from VND 55,000/kg in 2022), with new farms in Thanh Hoa province achieving as low as VND 48,000/kg, according to management.

With assumptions of continued favorable pork prices through year-end and low production costs, we expect that 2024 revenue and net profit will be VND 11.7 tn (+6% y/y) and VND 472 bn (+1,789% y/y), respectively. While DBC has improved protection against ASF, we are more conservative than management given the unpredictability of disease post-typhoon. For 2025, we forecast revenue and net profit of VND 12.9 tn (+10% y/y) and VND 721 bn (+53% y/y), given the continued expansion of 3F’s operations and a GPM increase due to higher productivity breeds.

HDB shares have risen 21.7% from our latest report, reaching our previous target price of VND 27,700, and might have partially reflected the strong earnings growth & improved fundamentals in 2Q24. For 2H24, we believe the YoY growth in pretax profit of the bank might cool down to +4.3% YoY compared to +49% YoY in 1H24 due to the high base in 2H23 as well as a narrower NIM under a higher CoF environment. We, hence, lower our rating for HDB to MARKET PERFORM (from Outperform) with a revised 1Y TP of VND 29,800 per share (+10.2% upside), equivalent to target PB of 1.4x vs. sector P/B of 1.37x. The higher 1Y TP was a result of removing the discount related to asset quality risk as we notice NPLs amongst retail clients showed improvement in 2Q24.

DBD reported modest revenue growth in 2Q24, with VND 433 billion (+5% YoY). Prescription drugs grew by 7% YoY, while trading products declined by 23% YoY. Net income fell short of expectations, decreasing by 3% YoY. The net profit margin contracted by 130 basis points (from 18% to 16.7%) compared to 2Q23. We revised down its revenue and NPAT estimates by 6% due to weaker performance in 1H24 and expected slight improvement in 2H24. Revised 2024 forecast for revenue is VND 1.74 trillion (+6% YoY) and for NPAT is VND 284 billion (+6% YoY). For 2025, we forecast net revenue of VND 1.9 trillion (+9% YoY) and NPAT of VND 318 billion (+12% YoY), expecting growth in both Rx and OTC channels to exceed 2024 levels. Improved GPM is anticipated, aided by tax waiver for cancer drugs manufactured at the newly opened factory. We increase our target price to VND 45,000/share (from VND 43,500/share post issuance), as we roll forward our valuation to 2025. With only 8% potential upside (no dividend), we maintain our MARKET PERFORM rating on the shares of DBD.

As the 2Q24 earnings are higher than our expectation, we revise up our 2024 PBT estimate 12% to VND 4.95 tn (+25% YoY) mainly due to our profit margin increase. We maintain our forecast of domestic petroleum sales volume at 10.76 mn tons (+4.1% YoY) and retail sales volume at 7.3 mn tons (+4.5% YoY). For 2025, we expect PBT to increase 6% to VND 5.25 tn (+12.7% from previous esimate) on the back of an increase of 4.1% in petroleum sales. Earnings growth may decelerate due to the high base of this year.  We maintain our Market Perform rating for the stock, with 1-year target price of VND 48,000/share (previously VND 40,800/share as we increase earnings and roll our valuation base to 2025). Over the short-term, the correction in petroleum price over -9% between Jul-Aug exert pressure on both the company’s earnings and its share price the third quarter.

Given the stronger than expected 2Q24 (VND503bn in NPATMI vs. our expectation of VND 300- 400bn) thanks to higher financial income and good sales growth at WCM; and with the SK deal’s most recent development, we have slightly increased our estimates. Accordingly, we estimate the group to achieve NPATMI in 2024E of VND1.9tn (+361% YoY), up from VND1.1tn previously, and in 2025E of VND3.1tn (+61% YoY), up from VND2.8tn. Please note that we have not included one-off earnings of USD40m from the HCS divestment for 2024. Earnings growth in 2025 should come from continued improvement across key businesses. Our SOTP-based 12-month TP is now VND90,800/share (previously VND93,400/share) as we assume higher net debt at the holding company level due to the USD200m payment to SK and a lower valuation for MHT on lower estimated revenue and ebitda in 2025. Despite the reduction to our TP, we reiterate our Outperform rating on shares of MSN.

We reiterate our BUY rating for the shares of ACB with 1Y TP of VND 31,200/share, representing a 25.8% upside. At the early stage of the economic recovery when many banks are struggling to clear bad debt and diminish inherent risk, ACB nowadays stands out as possessing top-notch asset quality. Moreover, having low funding costs would also allow ACB to be more proactive in attracting new customers by offering an incentive package, while still leaving room for NIM improvement. With a consistent business philosophy, we believe that earnings growth will not wow in the near-term but rather be profitably sustainable with ROE of above 20% over the medium-term and the foreseeable future.

For the 2H 2024, the prolonged disruption in the Red Sea, which is expected to sustain the shift from sea to air shipping should indirectly benefit SCS. We slightly revise up 4% our estimates, translating to revenue and PBT at VND 949 bn (+34.6% YoY) and VND 760 bn (+33.5% YoY) for 2024. In 2025, we expect volume growth to return to a normalized level and PBT to grow 9.5% YoY, to reach 833 bn VND. However, it is important to note that NPAT growth is expected to be constrained by the expiration of the preferential tax deduction of 50% on liable income from 2025.  In the longer term, the availability of capacity expansion at TSN airport and Long Thanh international airport drives growth potential. SCS is trading at a forward P/E of 12.x, which aligns with the 5-year average level. Our DCF model, reflecting the company's long-term potential, estimates an target price for SCS at VND 91,900 per share, translating to the upside of 11.7%. We maintain a MARKET PERFORM rating for SCS.

We reiterate our Outperform rating on CTG’s shares with an unchanged 1Y TP of VND 38,500/share, representing an upside of 10.5%. CTG has a long-term competitive edge as the third largest bank in Vietnam by assets, credit, and deposit market share with nationwide network and over 20 mn customers. The improvement in fundamentals should continue with improved asset quality and stronger earnings growth through 2025. The bank has also been actively digitizing, on top of implementing initiatives to improve its CASA and CIR over the past several years.

Although CTG ended 2Q24 on a low note (PBT of VND 6.75 tn, up +3% YoY), it was primarily due to the frontloaded provision (VND 7.8 tn, up 21% YoY). This led us to believe that 2H24 will have lower provisioning and better earnings growth (VND 16.2 tn, +29% YoY under our current estimate).

Despite poor July results, we note that 3Q earnings is characteristic of being the low season, and may not affect whole year estimate much (13-14% of 2022-2023 earnings). We believe the gross profit margin of retail sales to improve in Q4 when the high season comes, thereby allowing PNJ to introduce new collection and adjust sticker prices to compensate for the rise in gold input costs. We hence maintain our net income estimate for 2024-2025 at VND 2.2 tn (+13% YoY) and VND 2.57 tn (+16% YoY). We now roll over to 2025 (from average average 2024-2025), and derive a new target price at VND 120,000 per share (from VND 112,000), thereby maintaining an OUTPERFORM rating for PNJ.