Company Report

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%). 

PVD’s consolidated revenue declined -67% YoY in 1Q 2021. NPATMI was a negative -VND 104 bn compared to a +VND 24 bn profit in 1Q 2020, due to lower JU rigs utilization rate and lower day rate. PVD has VND 107 bn receivables from Kris Energy (KE) Cambodia, whose parent company (KE Singapore) just announced filing for liquidation. KE Cambodia remains solvent at the moment, but there are stills some risk of some provision booking in 2021. As our valuation for PVD rests on DCF valuation, it is not much impacted by this possible provision. We maintain our target price of VND 23,000/share and Market perform rating on the shares of PVD.  PVD trades at a 2021F EV/EBITDA and P/B ratio of 0.56x and 0.67x, respectively.

PLX delivered positive earnings in 1Q21 at 1.013 tn VND, a difference between night and day compared to the loss of -1.702 tn VND in 1Q20. Such impressive recovery is mainly driven by the recovery in the petroleum segment. Despite the emergence of Covid-19 in Jan, PLX domestic sales volume growth maintained a positive level of 4.7% YoY in 1Q21, and even accelerated in the first half of the second quarter as the government is tightening control over petroleum smuggling. Given a better than expected sales volume in the second quarter, we fine-tune our 2021 PBT estimate from VND 5.07 tn to VND 5.15 tn (+268% YoY). At the current price, PLX is trading at 2021 and 2022 P/E forwards of 19.2x and 16.9x respectively. We maintain our Outperform rating for the stock, with an unchanged 1-year target price of VND 67,000 based on a 1-year target P/E of 22x in accordance with regional peers. Besides the earnings recovery, the divestment from non-core businesses and the sales of treasury shares can be supportive catalysts for the stock price in the coming time. 

Improved underwriting profitability. It was well telegraphed that BVH would achieve a substantial profit increase (+292% YoY) for 1Q 2021, achieving VND 590 bn. A great windfall came in the form of a huge provision made on equity investments for same period last year (VND 340 bn). There were, however, improvements in BVH core business. Life insurance premiums grew +13.3% YoY, new business value margins soared to roughly 30%, and non-life insurance underwriting profitability jumped.  Earnings growth could recover from 2022. We believe that the downward trend in interest rates will reverse in 2H 2021. However, this will only impact BVH’s earnings during 2022, as the benchmark rate for mathematical reserves calculation would increase from 1H 2022. Accordingly, NPATMI for 2021 and 2022 are projected to be VND 1.5 tn (-2% YoY) and VND 1.9 tn (+27% YoY), respectively. Reiterate Outperform rating, with increased 1Y target price to VND 71,000/share (from VND 62,700) as we roll our valuation basis to mid-2022 and apply a target P/B ratio of 2.4x (10% lower than the historical average P/B of BVH since listing).

From our previous call in March 2021, HAX share price has increased 28%, given astounding 1Q21 earning results. Demand for Mercedes cars grow strong, aligned with the overall increase in Vietnamese automobile demand, and has been soaring high from the low point set from last year’s pandemic impact. Further, given the prolonged impact of global chip shortage to Mercedes car supply in Vietnam, auto dealers like HAX are gaining significant benefit in terms of higher price bargaining over customers and better margin per car, which could result in a big earnings surprise for FY21. As a result, we upgrade our target price for HAX to VND 40,500/share, which implies 43% upside and equal to a strong BUY rating. We expect HAX total sales and net profit in FY21 to reach VND 6.5 tn (+16% YoY) and VND 215 bn (+75% YoY), respectively.