Company Report

FY21 NPAT growth is forecast at 23% YoY. According to management, CTR expects higher growth of 30% YoY under base case. Our forecast is a bit more conservative, given the potential impact from Covid-19. Key CTR growth drivers are from ‘defensive’ segments such as telecom infrastructure operations, telecom infrastructure leasing segment, and telecom construction which likely will be less sensitive to Covid-19, and are a good defensive play. CTR also offers more attractive EPS growth in FY21/FY22/FY23 of 22%/15%/25%, respectively, comparing favorably to Asian peers of 20%/10%/8% over the same timeframe. With 1Y target price of VND 88,900 - representing 6% upside, we call for Market Perform rating on the shares of CTR. 

We maintain our MARKET PERFORM rating on the shares of VNM, however, we modestly cut our 1-year target price to VND 103,000/share (from VND 107,000/share) based on an unchanged target PER of 21x applied to our 2021-2E EPS as we lower our forecasts for 2021/2022 period given the impact of the fourth resurgence of Covid-19. In addition to reduced consumption by low-income consumers-who have been hit the hardest during the pandemic, the strict social distancing measures applied in many cities/provinces throughout Vietnam since May have also placed some difficulties in product distribution via the general trade (GT) channel (which accounts for about 85% of VNM’s domestic sales). As such, we are of the view that the initial plan for 2.5% growth in revenue and flat YoY earnings for 2021 becomes a bit more challenging for VNM  - unless the pandemic can be contained by the Aug-Sept period.  

We are raising our target price on the shares of QNS to VND 52,000/share (from VND 47,300/share), given both the improvement seen in the sugar segment and a roll forward of our forecasts to mid-2022. This upgrade, implies an ROI on the shares of 27%, and results in a reiteration of our Outperform rating. Despite the fourth Covid-19 outbreak from the May-June period, QNS still managed to post encouraging Q2 results, with top line and bottom line growth performance of 11.5% and 12.8%, respectively. We remain very encouraged that QNS’ financial results will stage a 2021 turnaround on the back of strength of the sugar business.

HSG and NKG earnings reached records of VND 1.7 tn and 848 bn in the recent quarter, respectively, jumping 5x and 49x relative to the same quarter last year due to considerable export volume growth and a surge in steel prices. Over time, the export channel can help both companies maintain a full capacity utilization rate despite the lingering negative impact of Covid-19 on domestic demand. Both HSG and NKG have obtained pre-export orders for a full capacity utilization through November. We expect HSG revenue and net profit performance to reach VND 54.1 tn (+96.5% YoY) and VND 4.26 tn (+272% YoY) in FY2021, respectively, driven by sales volume growth of 51% YoY and ASP growth of 27.8% YoY. On the other hand, NKG 2021 revenue and net profit should reach VND 26.4 tn (+129%YoY) and VND 2.03 tn (+587% YoY), respectively, with sale volume growth of 48% YoY and with an ASP growth of 54% YoY. HSG is trading at FY 2021 and FY 2022 forward P/E of 4.3x and 6.0x, respectively, while NKG is trading at 3.2x and 4.5x. Valuation remains attractive, in our view, even when taking into account the potential earnings correction next year. Our rating for NKG is BUY, with a 1-year target price of VND 42,500/share,  predicated on a target P/E of 5.5x. We rate HSG as Outperform, with a 1-year target price of VND 43,100/share, predicated on a target P/E of 7x. For both stocks, we expect that the stock rise will be more likely to happen in 2021 before cooling down in 2022 together with earnings normalization.

HAH posted impressive NPATMI growth of 127% YoY in 1H 2021, due to two new vessels added in Q2. As global supply chain disruptions are expected to go unresolved through 2023, market conditions will continue to be favorable for container shipping companies. HAH is poised to be one of the primary beneficiaries of this dynamic. Though the current Covid-19 outbreak could affect shipping volume in Q3, we believe that HAH will continue to post strong earnings growth through 2022. We increase our NPATMI forecast for 2021 and 2022 to VND 279 bn (+102% YoY) and VND 339 bn (+21% YoY), respectively, based on higher charter rates and higher freight rates. We reiterate our BUY recommendation for HAH, with a revised 1Y TP of VND 55,900/share (from last TP of VND 43,800/share) implying a 18.5% upside. 

Despite robust earnings recorded in 2021 through May, June results recorded a net profit decline of -39% YoY due to the 4th Covid resurgence. The lockdown in Hanoi, HCMC, and some southern provinces will continue to have a detrimental impact on Q3 earnings. Our base case assumes that if the 4th resurgence can be contained by the end of August and that if the population is fully vaccinated in Q2’22, we revised our PNJ earnings growth forecast for 2021 and 2022.  As difficult as this situation is, the Covid resurgence likely will result in PNJ consolidating the market and gaining a greater share of the pie primarily from the closure of weaker mom-and-pop shops. At VND 95,800/share, PNJ trades at a 2021 and 2022 P/E of 17.9x and 15.2x, respectively. Our 1Y target price for the shares of PNJ is VND 116,500/share (+21.6% upside), and we reiterate our BUY recommendation.

For 2Q 2021, TOI and PBT of MBB achieved VND 8.9 tn (+36% YoY) and VND 3.4 tn (+16.5% YoY), respectively. Earnings growth was lower than peer, as the bank made provisions for restructured loans, resulting in a 100% YoY surge in provisioning. Aggregate provisions for credit losses rose to VND 6 tn, which is enough to cover both current NPLs of VND 2.5 tn (0.76%) and restructured loans of VND 2.7 tn. Liquidity ratios returned to a healthier level, as deposit growth was strong (+9.3% YTD vs. credit growth of +10.7% YTD). For full year 2021, we lower our PBT estimate -3% to VND 15.4 tn to reflect the newly announced program of lending rate cuts for clients impacted by Covid-19. Meanwhile, our earnings forecast for 2022 remains unchanged at VND 18.5 tn. As ROE for 2021 and 2022 are expected to reach 23% and 22%, respectively, we believe that a target P/B ratio of 2x remains valid and we maintain our BUY rating on the shares of MBB along with our TP of VND 35,300/share. Downside risk: Higher-than-expected NPL formation rate; high exposure to solar farm projects (8% of total outstanding loans). 

We are upgrading our rating on the shares of TCB to OUTPERFORM from Market Perform, but maintaining our 1Y target price of VND 58,200/share, which implies a 17.6% upside. The Bank’s bond issuance and distribution segment should continue to benefit from the prolonged low interest rate environment amid the complicated recent developments with Covid-19. However, TCB does have a high degree of exposure to real estate developers who also invested in the riskier hospitality real estate segments, which could potentially impact credit quality. TCB posted stellar 2Q21 earnings results, with TOI and PBT delivering VND 9.2 tn (+58.3% YoY) and VND 6 tn (+66.4% YoY), respectively. This was attributable to high credit growth (+12.6% YTD, +35% YoY), a sharp increase in NIM to 5.90% (+157 bps YoY), strong fee revenue growth (+24% YoY), and robust trading/investment returns (foreign currencies and securities, +241% YoY), as well as improved CIR & lower cost of credit. Cumulatively, 1H 2021 PBT reached VND 11.5 tn (+71.2% YoY), fulfilling 58.3% of 2021F full-year guidance (VND 19.8 tn). The parent bank’s PBT aggregated VND 9.6 tn (+69.2% YoY), whereas subsidiaries’ PBT amounted to VND 2 tn (+82% YoY). ROA and ROE in 1H21 remained elevated at 3.9% and 23.6% respectively.

At the current price of VND 49,000/share, VEA is trading at a 2021 P/E forward of 10.8x and 2022 P/E forward of 10.0x. From our last call in Feb, VEA share price has risen 10% and reached our target price. Therefore, combined with a lower-than-expected dividend payout for 2021 – 2022, possible prolonged pandemic impact up to 2022, and a further delay on the HNX listing plan, we decided to rerate VEA from MARKET PERFORM to UNDERPERFORM. We keep our earnings estimate for VEA similar to previous report at VND 6.02 tn (+9% YoY) in FY21 and 6.52 tn (+9% YoY) in FY22, thus result in 1-yr target price for the stock of VND 42,000/share using both P/E and DCF valuation method (equal to total return of -3% from capital loss of -13% & expected dividend yield of 10%).