Company Report

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.

We are upgrading the shares of ACB to BUY, while maintaining our 1Y TP at VND 43,000/share - representing 45.8% upside. During 1Q 2022, strong earnings momentum (+33% YoY and +36% QoQ) was the result of solid credit growth, robust non-interest income, and a reversal in provisions due to a recovery in troubled loans. A notable improvement in CASA was another highlight of ACB’s interim results. We believe that 2022 will be quite a favorable year for ACB, given our estimated PBT of VND 16.9 tn, +41% YoY led by solid credit growth (+16% YoY), NIM expansion of 25 bps, and lower provision expenses. Notably, ACB veered away from the corporate bond market, and likely will remain unscathed during this period of market turbulence. 

VIB stands out as the bank with the highest concentration of retail loans, at approx. 86.5% of total loans. Corporate bond balances have been maintained at around 1% of total credit (VND 2.6 tn as of 1Q 2022; less than TPB and OCB). VIB, as a result, has minimized its exposure and was quite conservative with corporate bond issuance, an enviable spot to be in with the current corporate bond crackdown. During 1Q2022, VIB posted a significant pretax profit growth of +26% YoY to approx. VND 2.3 tn, which is backed by an improvement in CIR pf 360 bps YoY to 35.3%, and strong mortgage lending growth of 7.4% YTD to VND 91 tn. However, bancassurance income witnessed a long slide by -36.2% YoY due to acute competition. A close eye needs to kept on asset quality, given the bank’s relatively low credit risk buffer compared to peers (51.8% vs. 148.3% on average). As such, we call for Market Perform rating on the shares of VIB, along with our 1Y TP of 30,700 per share.Downside risk: Higher-than-expected inflation, pressuring the bank to increase its deposit rates. Possible slowing consumer demand. Upside risk: Significant decline in restructured loans.

HPG’s 1Q22 revenue and net profit came in at VND44.1tn and VND8.2bn, respectively, up by 41% and 17% YoY. Construction steel volume hit a company record 1.34mn tons – growing by 57% YoY or 23% QoQ. HRC-type steel sales volume also increased 15% YoY to 763k tons, while volume of finished flat steel (including pipe and galvanized steel) increased by 20% YoY to 313k tons, driven by the recovery in domestic demand. The 15% YTD increase in construction steel prices has enabled HPG to take advantage of its lower-cost stockpiled inventory and aided in the improvement of its gross margin to 22.9% from 21.4% in 4Q21. As 1Q22 net profit for HPG lines up well with our forecast, we largely maintain our 2022E net profit at VND31tn (-10% YoY). We assume 2022E revenue to increase by 18% YoY thanks to the increase in sales volume and steel prices. We reiterate our Outperform rating on the stock, but lower our 12-month TP from VND54,000/share to VND50,600/share based on a target P/E and EV/EBITDA of 7.5x and 5.5x respectively (revised from 8x and 6x respectively due to the decline in regional valuations). Key downside risks to our call would be lower-than-expected steel prices and the possibility of higher costs for iron ore and coking coal compared to our assumptions.

GMD posted strong 1Q22 revenue and PBT of VND 880 bn (+28% YoY) and VND 350 bn (+82% YoY), respectively, which is the highest quarterly core earnings result ever recorded by the company - although Q1 is normally the industry’s low season. We believe that growth momentum can be sustained in 2022 given Gemalink’s contribution and the cost efficiency improvement, which should lead to GMD posting a PBT of VND 1.2 tn (+50.7% YoY) for 2022. Beyond 2022, however, GMD’s growth outlook remains very bright with the contribution of Nam Dinh Vu Phase 2 beginning 2023 and Gemalink’s Phase 2 from 2025. We reiterate OUTPERFORM rating on the shares of GMD with a revised 1Y TP of VND 65,000/share, which implies 16% upside.  Downside risks include: (i) prolonged Covid-19 lockdowns in China to affect shipping volume; (ii) weakened global demand as a result of high inflation and/or economic downturn; and (iii) higher competition in the Northern port system.

We recently attended the MWG AGM, wherein the management guided for 2022 earnings to increase by 30% YoY. As a result, we increase our SOTP-based 12-month target price to VND196,000 (from VND174,000) – for upside potential of 31.4%. While the revenue recovery for its grocery chain (BHX) is slow, 2022 earnings growth should be supported by: (1) a recovery of DMX/TGDD off of a low base in 2021; and (2) improvement to BHX’s bottom line due to cost optimization measures. Our 2022 revenue and net income estimates are now VND138.8tn (+13% YoY) and VND6.7tn (+37% YoY), respectively. The AGM pledged a maximum of 20% toward a capital raise to expand the grocery segment beginning 2023 - a positive catalyst for the shares, in our opinion. We, hence, raise our target PS for the grocery segment from 0.8x to 1.3x, which is decent compared with the PS of 2x based on the most recent stake sale of Wincommerce (a competitor grocery chain). We reiterate our BUY rating on the shares of MWG. Downside risk: possibility of store closures due to renewal of lockdown measures.

From our recent call in November 2021, HAX share price has increased 25% and reached our previous target, with better-than-expected growth in its 2021 earnings result. However, after attending recent 2022 AGM, we saw a possible peak in HAX earnings in Q2 & Q3 2022. We have also seen stricter requirements in terms of Mercedes’ dealer standards, which has pressured the company to raise significant equity for expansion, and dilute earnings growth in the near term. The impact of worsening chip shortage also causes us to lower 2022 and 2023 earnings forecast. Thus, we decided to rerate HAX to UNDERPERFORM, with a revised 1-yr target price at VND 32,000/share after taking into account the dilution impact, which equates to total return of -4% from capital gain of -6% and expected dividend yield of 2%. We expect 2022 total sales and net profit to reach VND 5.8 tn (+5% YoY) and VND 218 bn (+36% YoY), respectively.  Dilution ratio is 21% if the right issue is fully absorbed and recent convertible bonds is fully converted in 1-yr, in our estimate.

We reinitiate another strong BUY rating for TRA. From our recent call in August 2021, TRA share price has increased 28% and reached our previous target, with strong earnings growth confirming our previous forecast. After attending recent 2022 AGM, we saw another buying opportunity as the company: (1) continue to post double-digit sales growth, with increasing number of R&D and transferred products, (2) benefit from strong demand on drug store and hospital channel due to less severe Covid-19 cases and recovery of nationwide hospital visits, (3) persist improvement in profit margin as SG&A expenses on sales continue to decline.  Thus, we upgrade our 1-yr target price for TRA to VND 124,400/share as we roll out our earnings forward for 2022, equal to 24% upside from the current price of April 6^th 2022, plus an expected 3% dividend yield for 2022. We keep our earnings estimate similar to previous report, with total sales and net profit in FY22 to reach VND 2.6 tn (+19% YoY) and VND 343 bn (+29% YoY), respectively, and raise our target P/E from 17.5x to 18.0x to reflect the high-growth period of the company.