Company Report

Although we anticipated a turnaround from Q2 to Q3 in our latest update, year-to-date import-export data indicates that the volume recovery of the operating segment may exceed our expectations. Meanwhile, global containership freight rates continue to be firm in both spot and chartering markets. It is notable that the WCI has entered the pandemic-level territory, while 1700-TEU time charter rate is up by 65% YTD. This higher-for-longer shipping rate situation should continue to lead to further YoY upward revision of charter contracts for the period of from 4Q24 onwards, as well as spot freight on domestic routes, which has yet to have strong pickup since early 2024. We think the QoQ turnaround in terms of earnings performance should appear from this Q2, given the favorable shipping freight environment and demand growth that recently reflected in import-export data in April and mid-May.

Between 2022-2023, the real estate revenue stream was solely supported by the handover of sold units of the Hado Charm Villas. At 1Q24, HDG sold and handed over 420 units (out of 528 units of the project). HDG also targeted to launch the third phase sales of this project to sell the remaining 108 units during H2 2024. We forecast this phase to start realizing revenue during 2025. Meanwhile, we are concerned that legal issues related to Hado Green Lane and Hado Minh Long could take longer to be resolved and expect that these projects will realize revenue from 2026. For the electricity segment, we may not have significant surprises during 2024, as hydropower plants in Vietnam continue to face unfavorable weather. Further, according to HDG, its 7A wind power plant is seeing poorer wind conditions compared to 2023, which has led to a 28% YoY volume decrease during 1Q24. However, we believe that the electricity segment should generate the most stable cash flows and earnings compared to other segments. We also expect lower interest costs due to HDG’s repayment of electricity segment-related debt. 2025 NPAT growth is estimated at 112% YoY, due primarily to the recognition of Hado Charm Villas Phase 3. We arrive at 1-year TP of VND 36,900/share, implying a 12% upside from current market price, and reiterate our OUTPERFORM rating on the shares of HDG.

We reiterate our Outperform rating on the shares of TPB and roll forward our valuation to mid-2025 with 1Y TP of VND 22,700/share, presenting an upside of 23.7%. We expect that bad debt will not increase strongly in the near-term due to the bank's debt restructuring policy and proactive bad debt resolution. This should allow TPB to reduce its provisioning for both 2024 and 2025. Although the NIM will be under pressure during 2024, we believe that the turnaround story will be clearer during 2025 with a higher NIM and lower NPL ratio. For the medium period, we believe that the business environment will be more supportive and enable TPB to improve ROE to around 16%.

We are lowering our rating on TCB shares to Market Perform from Outperform, as the shares have risen 10% over the past month alone. We are, however, maintaining our 1Y TP at VND 54,700/share. The 1Q24 result was strong with improvement in the NIM (+19 bps QoQ) and controlled asset quality (NPL 1.13%, LLCR 106%). Despite the increase in accruals during 1Q24, we believe the risk to asset quality is mitigated given the 1-2 year tenure of bullet payment loans. Therefore, with a better-than-expected NIM in 1Q24, we revise our NIM assumption for TCB by 40 bps and 35 bps for 2024 and 2025 respectively. We also adjust non-NII upward to reflect the one-off Govt bond trading gain in 1Q24. On the other hand, we increase the credit cost assumption given the higher-than-expected risk from NPL from CIC across the system. Accordingly, PBT for 2024-25 is finetuned by 5-8% to VND 28.6 tn (+25% YoY) and VND 33.7 tn (+18% YoY) respectively.

We maintain our cautious view for 2024, with consumption continuing to be impacted by the zero-tolerance legislation for drunk driving, a slower rate of change for consumer habits, and consumers tightening their belts. However, we increased our 2024E net sales and NPAT forecasts to VND 32.2 tn (+5.8% YoY) and VND 4.6 tn (+9% YoY), respectively, given the better-than-expected Q1 sales results and small increase in ASP in the first few months. These forecasts are 8.5% and 4% higher than our previous revenue and profit forecasts respectively. We also introduce our 2025F forecast for net revenue at VND 33 tn (+3% YoY) and net profit at VND 4.97 tn (+7% YoY). We assume that the 2025 GPM will increase, while A&P spend will continue to be tightly controlled given the uncertainty surrounding the beer sector’s growth.

2024 business plan: For 2024, PLX set conservative PBT guidance at VND 2.9tn, implying a decline of 29% YoY. However, it should be noted that PLX’s actual results have usually exceeded the guidances for the past nine years with the exception of 2020 amid the response to Covid-19.  

1Q24 achieved impressive results driven by the petroleum segment: PBT soared 72% YoY and 70% QoQ to VND 1.44 tn, already accomplishing 50% of the 2024 guidance. Most notably, gross profit increased a considerable 31.2% YoY to a record-high of VND 4.67 tn, fueled by the petroleum segment.  Domestic petroleum sales volume arrived at 2.6 mn tons, increasing slighly by 2% compared to the relatively high base of 1Q23, while still increasing 2.4% QoQ. However, earnings for the segment soared 260% YoY to VND 1.06 tn driven by a 9% increase in petroleum prices during the quarter which benefited the company through low-cost inventory, and the shortening of price adjustment cycle from 10 days to 7 days from the end of 2023.

April 2024 sales were better than expected. VNM reported 4% y/y growth in sales for 4M24 (including +16% y/y for exports), and growth of 10% y/y in sales specifically for April. For reference, 1Q24 revenue and NPAT rose by 1.4% (VND14.1tn) and 15.8% y/y (VND2.2tn), respectively (slightly better than our estimate of a 15% y/y NPAT increase). The Vietnam dairy sector recorded a pullback of 2.8% y/y in terms of value during 1Q24, with the infant-formula-milk category decreasing c.20% y/y, according to AC Nielsen. Through 1Q24, VNM has completed 22% and 24% of its annual respective net sales and net income targets. We maintain our forecast for 2024F net sales and net profit of VND63.7tn (+6% YoY) and VND10.1tn (+12% YoY), respectively. We are still optimistic about VNM’s ability to grow despite headwinds, and are assuming lower ingredient prices and restructuring efforts to improve the bottom line. The selling expense/sales ratio is expected to remain at around 21.5% to allow for business development activities (ie, rebranding, e-commerce), while financial income is likely to decrease given the lower interest rate environment. We introduce our 2025F forecast for net sales and net profit to increase at 6% (VND67.5tn) and 7.5% y/y (VND11tn), respectively, with the assumption that consumption should recover more firmly and operating margins will be better optimized via digital transformation process.

1Q24 results were within our expectation as volume in the quarter declined 86% YoY, which weighed on NT2’s performance accordingly. We expect this output figure will somehow improve QoQ in 2Q24, supported by the peak power demand season in Vietnam. Nevertheless, due to the limited contracted volume (Qc) (at ~1 bn kWh) (the actual Qc might change, depending on the actual electricity mobilization conditions) planned by the National Load Dispatch Center (NLDC), we are concerned such improvement might not help NT2 to breakeven in 2024. We project a loss of VND 255 bn (nearly unchanged compared to our previous update) for the company in 2024. After our SELL recommendation on 29 Mar 2024, stock price declined by 12%.  With a 12-month target price of VND 23,000 (equivalent to a 5% upside potential) (based on DCF and EV/EBITDA valuation methods), we upgrade our rating to MARKET PERFORM for the stock.

2023 was an impressive and significant year for Viettel Post (VTP), as the company managed to post impressive earnings growth of 48% YoY, partially on top of the low base in earnings in 2022. PBT reached VND 480 bn (+48% YoY), and NI reached VND 381 bn (+48% YoY). 2023 EPS is VND 2,654/share. Key growth drivers: market share +3%, core revenue +12% YoY, gross margin improvement: + 1.9 percentage points.

During 1Q 2024, VTP posted a slowdown in both top line and bottom line growth, with revenue -2.1% YoY and PBT -22.4% YoY, only completing 16% of the company’s 2024 PBT target after the first quarter and in line with our expectations. Key reasons: trading segment cutback by 30% YoY, higher cost from new capex investment, gross margin decline by 2.4 percentage points.

AGM held successfully with some key targets: revenue -33% YoY due to trading segment cutback, PBT 462 bn flat YoY, cash dividend of 15% on par

Viewing 1Q 2024 results going forward, we are confident that PVT can continue its growth path for the core tanker business in 2024 as we have previously forecasted (around 18% YoY). We also notice that the recent time charter market has improved again back to its previous peak for the oil/chemical MR (medium range) tanker segment, so a sudden weakness of the tanker market is not imminent. Thus, we maintain our OUTPERFORM rating for PVT with a 1Y TP of VND 30,000/share, and the stock remains our top pick for the transportation sector in 2024.

As Viettel Group (Viettel) and Vietnam Posts and Telecommunications Group (VNPT) were awarded the usage right of 5G wavebands in March 2024, we believe that CTR will require significant capital for BTS (base transceiver station) sites investment, which means a conservative dividend payout level accordingly should be reasonable to accumulate a strong enough retained earnings balance as a safe equity source. However, we observe that CTR intends to pay out higher cash dividends than before. Specifically, during 2016-2021, CTR had maintained a conservative VND 1,000/share cash dividend despite consistent earnings growth. However, that level then increased to VND 2,919/share in 2022 and was approved at VND 2,720/share in 2023 (during the 2024 AGM) (nearly a threefold increase compared to past years). Therefore, we believe that CTR might have to increase its debt component in the capital structure. Additionally, we witnessed lower-than-expected gross profit margin of construction segment and financial income during 1Q24 and expect that 2024 NPATMI will perform a slower growth of 11.6% YoY growth than that of 2023 (16.5% YoY). Nevertheless, we forecast a solid NPAT growth of 19.8% YoY in 2025, mainly driven by the long-term outlook of 5G rollout, which should support infrastructure leasing segment to continue to improve CTR’s overall profit margin. We call for a MARKET PERFORM rating on CTR, with a 12-month DCF target price of VND 133,200/share (equivalent to 3% upside potential).

MBB held an investor meeting on Friday to address investors’ concern over 1Q24 results. As expected, the burning issue was the deterioration in asset quality during the period. Another issue which also garnered much attention was the NIM trend in the coming quarters. MBB appears confident that asset quality will improve during 2Q24 as the large corporate client which was downgrades during 1Q24 is expected to recover during May 2024. NIM is expected to either be stable, or experience a slight improvement in the next 2 quarters.

We believe that the aforementioned corporate client will return to the normal loan group in 2Q24 via negotiation. As such, we do not adjust our current credit cost assumption of 1.5% for 2024. However, MBB’s NIM may not be as favorable as we had previously anticipated due to inherent credit risk and client loan rate support. Accordingly, we finetune our estimate for MBB to VND 29.1 tn (+10.6% YoY) from VND 30 tn (+13.7% YoY).

MWG released upbeat 1Q24 results, flipping back to solid profitability with net income of VND903bn (+4,143% YoY). This beat our expectation thanks to faster-than-expected profit margin expansion of both the ICT & CE and grocery segments. Although we had initially expected a notable improvement in the profit margin of ICT & CE chains after a period of de-stocking and certain cost-cutting measures by the company, the results came in even better than our expectation due to (1) abnormal sales of air conditioners which generate larger profit margins than mobile phones, and (2) the de-stocking pressure which has been released and lifted profit margins for ICT & CE retailers – we observed a correction in inventory balance of competitor FPT Shop from 1Q24. With better-than-expected 1Q24 results of the both ICT & CE and grocery segment, we revise up our 2024-25F net income to VND3.47tn (+1,968% YoY, from VND2.5tn) and VND4.5tn (+30% YoY, from VND3.4tn). With unchanged target multiples on our revised 2025F financials (from average 2024-25F), we derive our new SOTP-based 12-month target price for MWG at VND65,800 per share (from VND56,200), and maintain our OUTPERFORM rating.

We maintain our Market Perform rating on the shares of HT1. We apply a target P/E of 12x (15x previously) and EV/EBITDA of 6x (7x previously), resulting in a one-year target price of VND 11,600/share (from VND 11,300/share), as we roll forward our price target to mid-2025F. 1Q24 results: HT1 recorded net sales of VND 1.5 tn (-12% YoY, -16% QoQ) and a net loss of VND 25 bn (compared to net loss of VND 86 bn in 1Q23 and net profit of VND 54 bn in 4Q23) on weak cement demand. Sales volume decreased 6% YoY (-22% QoQ) due to seasonal effects and persistent weak demand from 2023. ASP decreased 6% YoY (-6% QoQ), as: (i) higher percentage of bulk cement sales; and (ii) new cheaper cement brand “PowerCement” launched late 2023. GPM has improved to 6.9% during 1Q24 compared to 4.5% during 1Q23 due to 30% YoY lower input coal prices.

2023 performance: Affected by the economic slowdown during the 2022-2023 period, real estate developers, such as DXG, were negatively impacted by project approval delay, and overall was held back as the market was recoiling from the real estate market crunch. Also, the real estate market was suffering from tight liquidity which impacted DXG’s brokerage services segment (DXS) during 2023.

For FY2024 Outlook, as per DXG management, the company is expected to continue to sell units in Gem Skyworld, the landed properties project in Dong Nai province and launch other two projects: DXH Riverside in Thu Duc City, HCMC; and Opal Luxury, Di An, Binh Duong province.  With good progress of these projects, we expect that the company will commence selling at DXH Riverside and Opal Luxury during 2H2024, given that the condo units can meet housing needs. Gems Skyworld, on the other hand, is more for investment with landed units where we expect a sales restart from 2025. Therefore, we estimate DXG presale value during 2024 will reach VND 5.4 tn from two projects: DXH Riverside and Opal Luxury.