Company Report

BID delivered a solid set of results in 2Q 2022, with PBT exceeding our expectations and achieving VND 6.6 tn (+41% YoY). Strong credit expansion, a robust NIM recovery, and a lower provisioning more than offset the decline in fee income and writebacks, allowing BID to enjoy robust growth for the period.

We are bullish on BID’s short- and medium-term outlook, as we expect the bank to post over 80% YoY PBT growth in 2H 2022, and a solid +24% PBT growth for 2023. However, we are concerned that long-term growth could be constrained by BID’s limited capitalization.

We maintain our Market Perform rating for the shares of BID, although we increase our 1Y TP to VND 44,180/share (from VND 41,200/share). The target price change reflects the increase in our 2022 and 2023 earnings by 2.8% and 8.5%, respectively, and valuation rollover impact to mid-2023.

Investment highlights: Following the SAB 2Q22 analyst call, we are increasing our 1Y target price for the shares of SAB to VND 213,000/share (from VND 188,000) – representing 18.2% upside. We are also reiterating our OUTPERFORM rating on the shares. In 2Q22, SAB recorded impressive net sales and net profit of VND 9 tn (+25% YoY) and VND 1.8 tn (+67% YoY), respectively. ASP hikes, a better product mix, and improved production efficiency translated into SAB’s highest ever quarterly net profit expansion. Management continues to focus on the mainstream segment, which resulted in market share gains through 1H22. In light of the encouraging 2Q22 results in 2Q22, we revise up our estimates for SAB. For 2022, we expect net sales and net income to reach VND 33.3 tn (+26.2% YoY) and VND 5.3 tn (+35.4% YoY), respectively, which are 4% and 13% higher than our previous forecasts. In 2023, we expect net sales and net income to reach VND 38.8 tn (+16.5% YoY) and VND 5.95 tn (+12% YoY), respectively.

MBB achieved VND 6 tn (+76% YoY) in pretax profit during 2Q 2022 driven by NIM expansion, robust interest income, and lower provisions. Fee income, however underperformed both for brokerage and insurance activities. As for asset quality, other than rising Group 2 loans at MCredit which need to be monitored, ratios in general remained solid. Despite concerns over MBB exposure to construction and real estate & corporate bonds (17% of total credit), we expect that it should be manageable given the solid collateral backing. Pretax profit in 2022 and 2023 is projected to achieve VND 22.3 tn (+35% YoY) and VND 26.6 tn (+19% YoY), respectively. There is some optionality to our figures, provided that MBB receives credit limit expansion beyond peer. Our 1Y TP for MBB is VND 34,400/share, implying upside of 27.6%. We reiterate our Outperform rating on the shares of MBB.

We attended PNJ Analyst meeting on July 21^st to update on the 2Q22 results and management view’s on the demand outlook going forward. Given inflationary pressure already affected some consumer discretionary sectors, PNJ management has not found significant impact on jewelry sales given June and July sales remained strong. In 2Q22, PNJ recorded net sales and net profit of VND 8.1 tn (+81.1% YoY) and VND 367 bn (+64.8% YoY), respectively. In 2022, we expect net sales and net profit to reach VND 29.1 tn (+49% YoY) and VND 1.7 tn (+66% YoY), respectively. This translates to 2H22 NPAT growth of 107% YoY since PNJ made losses in 3Q21. In 2023, we expect PNJ to post net sales and net profit of VND 33.4 tn (+14.5% YoY) and VND 2.0 tn (+15% YoY), respectively. Our updated 1Y target price for the shares of PNJ is VND 136,800/share (from VND 142,300/share), which is equivalent to a 20% upside. We lower our target P/E from 20x to 19x, reflecting the demand slowdown attributed to inflationary pressure which is expected to occur from 4Q22. We reiterate our OUTPERFORM rating for the shares of PNJ, given that 3Q22 is the strongest earnings growth quarter.

AST has turned a profit since May 2022. PBT is estimated to reach VND 10 bn in 2Q22, and YTD losses could be reduced to VND 10 bn. The FY2022 PBT target is set at VND 23.5 bn (vs a loss of VND 128.4 bn in 2021), which should be achievable. We estimate that AST’s PBT could reach VND 224 bn (+486% YoY and -15% vs 2019) in 2023, and VND 322 bn (+43% YoY and +22% vs 2019) in 2024 when the market fully recovers. We have an Outperform rating for the shares of AST with a 1Y TP of VND 69,000/share (based on a target 2023 P/E of 20x), implying 19% upside from the current market price, reflecting our positive view on AST strong turnaround along with the recovery of the aviation industry.

PAN posted strong performance in 2021, with consolidated net sales increasing 19.7% YoY to VND 10.0 tn, while net income and NPATMI jumped to VND 510 bn (+53% YoY) and VND 295 bn (+57% YoY), respectively. Such strong performance enabled PAN to achieve 99% and 122% of its respective 2021 revenue and profit targets. Subsidiaries which produce and sell staple goods posted resilient revenue growth, including: seeds (NSC; +18% YoY), shrimp, (FMC; +18% YoY), fish sauce (584 NT; +12% YoY), nuts & dried fruit (LAF; +2% YoY), and clam & pangasius (ABT; +7% YoY).  Meanwhile, confectionery revenue (BBC) declined -10% YoY, as confectionery consumption was hard hit by the pandemic. In terms of profitability, ABT, BBC, 584 NT and LAF gross profit margin improved due to: (1) strong rebound in pangasius & clam sales prices; and (2) higher sales from high margin products, such as cakes, premium fish sauce, and value-added nuts & dried fruits.

We attended DPM’s AGM during which management increased their 2022 net income guidance to VND3.5tn (+10% YoY, 268% higher than the initial plan) and DPM’s cash dividend of 50% on par value (9.4% dividend yield, higher than the initial plan of 35% on par value). The AGM did not approve the proposal to raise transportation tariff costs for the 2014-18 period. As such, DPM may not have to pay an additional USD18m or VND430bn to GAS. DPM’s earnings closely track urea price trends, ie having achieved the highest net income in terms of absolute value in 1Q22, only then to decline gradually in 2Q22 and 3Q22, while it could improve in 4Q22 as the high season begins. In terms of YoY growth, DPM still targets to deliver positive earnings growth in 2Q22 (up 60-70% YoY on our estimates) and 3Q22 but could post negative earnings growth in 4Q22. As such, we believe that the share price may continue to exhibit positive momentum over the short term. We now estimate DPM’s 2022E net income to reach VND5.1tn (+59% YoY, from VND2.25tn) and introduce our 2023E net income of VND4.1tn (-18% YoY).

VRE started its turnaround in 4Q21 and continued the recovery momentum in 1Q22. We expect its performance to further improve with the country’s full reopening as the sustained and significant uptick in footfall would expedite the cessation of mall relief. Our earnings forecast for 2022 is VND 7.8 tn (+32.7% YoY) and PAT of VND 2.2 tn (+65% YoY), primarily due to strong growth in leasing revenue given the expected decline in support packages and the contribution of three new malls opening this year. For 2023, we forecast earnings of VND 8.5 tn (+9.2% YoY) and PAT of VND 2.6 tn (+30% YoY) with expectations that leasing revenue continue to recover to pre-Covid levels. Meanwhile, new mall openings in 2022 – 2023 will push organic growth in leasing revenue as well. We reaffirm our OUTPERFORM rating with a SOTP-based 12-month target price for VRE is VND 33,900/share.

At the recent AGM, PLX set a conservative 2022 earnings target of VND 3.1 tn, declining 19% YoY. PLX’s PBT dropped -44% YoY during 1Q22, mainly due to weak performance in the petroleum segment associated with high oil price volatility and input supply disruptions at the Nghi Son refinery. However, we expect a rebound in earnings in the upcoming quarter given the increase in oil prices and the stabilization in input sources. According to management, the PBT between Jan-May ‘22 is estimated at VND 1.3 tn, accomplishing 44% of annual guidance. This implies a PBT of VND 770 bn in Apr and May and signals a significant improvement over 1Q22 results.

We are reiterating our BUY rating on the shares of HAH, and increase our 1Y-TP to VND 110,000/share (target P/E of 8x), which implies 22.4% upside. We continue to believe that HAH can maintain a high level of earnings throughout the cycle. Over the near term, we believe that HAH will maintain strong earnings growth due to capacity expansion. Taking the ZIM – Haian JV into account, we are increasing our 2022 and 2023 NPATMI estimates to VND 855 bn (+92% YoY) and VND 1.13 tn (+32% YoY), respectively.

We are downgrading the shares of OCB from Outperform to Market Perform, and we aggressively cut our 1Y TP on the shares -28.2% to VND 23,200. Our reduced TP reflects both the rising interest rate environment and potential credit exposure to FLC Group’s loans and corporate bonds, and the increased risk of restructured construction and the real estate loans. 1Q 2022 results were disappointing, highlighted by -34.5% YoY decrease in pretax profit. Strong NII growth of +22% fueled by credit growth of 5.9% YTD, but was simply not enough to offset for the -50% YoY decrease in non-interest income and doubling of credit costs. While OCB was able to collect VND 400 bn from FLC Group in May, this loan balance still tallies 1.9% of total credit at 1Q22. 

BID performed well during 1Q22, as operational efficiency and profitability indicators exhibited improvement, with well-managed credit. For full-year 2022, we expect that the bank would garner +52% YoY growth in pre-tax profit, fueled primarily by a lighter provisioning burden (-19% YoY). ROE would rise to 16% (from 9-13% over the past three years). However, long-term growth potential for BID is still limited by capital (CAR of around 9% only), while fee-based services lack a critical growth driver. Although the bank is reviewing its strategy/ownership structure regarding its life insurance arm BIDV MetLife, we do not expect it to be finalized soon (at least not within 2022). With an adjusted 12-month TP of VND41,200 (from VND42,300), we maintain our MARKET PERFORM rating on the shares of BID.

1Q22 results remained solid with strong credit growth, improved NIM, a better CASA, and stable asset quality. We are raising our 2022E PBT by 14% to reflect our higher lending yield assumptions from better NIMs. For full-year 2022, we now expect the bank’s PBT to grow by 24% YoY to VND34tn. VCB’s limited exposure to the real estate sector and the corporate bond market alike are also a distinct advantage during this tumultuous period. Lending to developers & corporate bonds of developers accounted for a mere 3% of total credit – amongst the lowest in the sector. Further, the mandatory transfer by the SBV of a weak bank to VCB is perceived to be net neutral given the broad array of financial incentives that VCB could potentially receive as consideration for this transaction.

After posting fruitful earnings results in 2021, MSN continues to set high growth targets for 2022. MSN targets between VND 90-100 tn in revenue (+22%-36% YoY) and core NPATMI of between VND 4.8- 6.2tn (+26%-63% YoY). These targets take the deconsolidation of the feed business into account. For 2022, our forecasts are broadly unchanged, and we estimate MSN to post VND 93.4 bn revenue (+5.4% YoY) and VND 5.76 tn NPATMI (-33% YoY) or core NPATMI growth of 37% YoY. For 2022, strong growth likely will come from: (1) continued growth momentum of MCH and TCB; and (2) profitability improvement at WCM and MHT.  Our SOTP-based 12-month target price is adjusted to VND130,000/share (from VND172,000), after taking into account the recent 20% stock dividend. With 18% upside potential to our TP, we maintain our Market Perform rating.