Company Report

In 1Q21, the group posted revenue of VND20tn (+13.3% YoY) and NPATMI of VND187bn (vs. a loss of VND78bn in 1Q20), which are quite in line with our expectations. Growth was driven by various subsidiaries, such as improved profitability at VCM, higher profit sharing at TCB (+78.9% YoY), decent MCH performance, and a recovery at MML. These positive forces, however, were offset by higher interest expenses and losses at the mining business. In order to finance the previous acquisitions of VCM and TCX, MSN aggressively added leverage resulting in VND56tn of net debt by the end of 1Q21 (vs. just VND22tn at end-2019). The de-leveraging progress will likely be a key focus going forward and serve as a key catalyst for the share price. Post-1Q21, however, we increase our 2021E net sales by 3% and lower our NPATMI by 13.1%. Our revised 2021E revenue and NPATMI now amount to VND100tn (+29.6% YoY) and VND3.3tn (+167% YoY), respectively. We do expect subsidiaries that drove 1Q21 financial results will continue to perform in the coming quarters. We lift our SOTP-based 12-month target price for MSN to VND108,000/share (from VND104,000), using average 2021-22E as our valuation basis. Our new TP implies potential upside of 13%. We maintain our Market Perform rating. 

DCM recently held its Annual General Meeting, wherein the management sought approval to pay a cash dividend of 8% on par (5% dividend yield). For 2021, the company set a revenue and pretax profit of VND 7.8 tn (+2% YoY) and VND 210 bn (-71% YoY), respectively, and attributable to the rise in oil prices   and the commencement of the NPK plant (expected in 2Q21). Despite the uptrend in the urea sales price and expected improvement in net financial income, we forecast 2021 earnings to decline -12% YoY, due the increase in oil prices and an expected loss from the new NPK plant (commercial operation expected by May 2021, running at 36% expected utilization rate, below break even utilization rate of ~70%). At VND 16,150 per share, DCM trades at 2021 P/E, P/B and EV/EBITDA of 17.1x, 1.4x and 3.1x, respectively. DCM still incurs high non-cash depreciation expenses (VND 1.4 tn vs a pretax profit of VND 627 bn for 2021F), explaining its high PE and low EV/EBITDA. We view DCM as a cash rich company, which likely will enjoy huge earnings growth from 2023 once the urea plant is fully depreciated. 

We attended the VNM 2021 AGM held on 26 April. The company set out a conservative 2021 plan, with net sales growth targeted at just 4.1% YoY (not including ASP hikes) and NPAT being flat YoY. We are downgrading our rating on the shares of VNM from Outperform to Market Perform, and lowering our 12-month target price to VND109,000/share (from VND121,000), based on P/E and DCF methodologies – as we trim our 2021E sales and NPAT by 1% and 1.3%, respectively, on the back of the weaker-than-expected 1Q21 results (net sales and NPAT decreases of 6.4% YoY and 6.5% YoY). Our new TP implies upside potential of 13.5%. Strong raw material input increases are also key contributing factors leading to their discouraging plan. Management did explain that the weak demand was the result of complications from the COVID-19 pandemic situation. Given that we expect very low earnings growth in 2021 with a modest growth outlook in the coming years, VNM is now lagging the growth expected at other listed companies. 

Given the weak demand from gas-fired plants in 1Q21, we trim our full-year forecast for dry-gas volume from 9.4bcm to 9.1bcm in 2021E. In contrast, we raise our assumption for fuel-oil prices from USD300/ton to USD330/ton (presently at USD361/ton). Accordingly, we fine-tune down our 2021E net profit by 3%. Our forecasts reveal 18.4% y-y top-line growth and 20.9% y-y growth in NPAT for GAS in 2021E. We trim our 12-month target price for GAS to VND97,500/share (from VND98,000/share), based on an unchanged 2021E PER of 19x, EV/EBITDA of 11x and DCF approach. Our TP implies 12% upside potential from the current market price. We reiterate our Outperform rating on the shares of GAS.

TPB reported respectable 2020 earnings results, with TOI and PBT amounting to VND 10.4 tn (+22.4% YoY) and VND 4.5 tn (at +13.5% YoY), respectively. This was driven by strong credit growth (+30.4% YoY) and NIM improvement (+16 bps YoY). We forecast TPB to achieve a 2021 PBT of VND 5.5 tn, increasing +24.7% YoY due to robust growth in both net interest income and bancassurance. With strong business results recorded in 2020 and ROE improvement expected to continue beyond 2021, we raise our 1Y share price target to VND 32,000 (from VND 28,200) – representing 10% upside potential. We reiterate our OUTPERFORM rating on the shares of TPB. 

We recently attended DGW’s AGM and we came away substantially more bullish on the shares. Although management set a very conservative 2021 net income growth target of just 19% YoY (despite the 1Q21 +113% YoY earnings increase), we are raising our 2021 earnings forecast 25% to VND 391 bn (+54% YoY). For 2022, we estimate net income will increase another 31%. With a further market share gain by Xiaomi, long term potential from implementation of 5G, and positive market sentiment in terms of the stock option, we rerate our target P/E from 11x to 14x. By using revised 2021-2022 estimates and a re-rated P/E of 14x (from 11x), we derive a new target price at VND 139,000, equivalent to a ROI of 14% (inclusive of a dividend yield of 0.8%). We call for OUTPERFORMANCE rating. Risks to our call include DGW’s over-reliance on Xiaomi and short term profit taking pressure.

After taking a big hit to its bottom line in 2020 due to the acquisition of VCM, MSN’s outlook appears to be significantly improved. For 2021, the group targets between VND92-102tn in revenue (+19-32% YoY) and NPAT of VND2.5-4tn (+103-225 % YoY). We believe that MSN can end up scoring somewhere in the mid-point. We anticipate MCH and TCB to continue to post impressive growth; with VCM’s restructuring exhibiting positive initial results (2020 sales growth of 15%, despite more than 700 store closures). MML’s feed business is expected to rebound while achieving strong growth in meat + farm. MSR should also a benefit from strong rallies in metal prices. As such, we look for the group to post VND97bn in revenue (+25.8% YoY) and VND3.79tn (+207% YoY) in NPATMI, respectively. Of note, in order to finance its acquisition of VCM and TCX, MSN aggressively added leverage to the tune of VND54tn in net debt (+140% YoY) at end-2020. As such, deleveraging progress will be a key focus going forward. According to a corporate release, SK Group will invest USD410mn to acquire a 16.26% stake in VCM. The transaction thus values VCM at USD2.5bn. Prior to the transaction, MSN held an 80.1% economic interest in VCM and would sell a 10% stake in VCM to SK in this deal and receive USD225mn in cash proceeds (SK Group would purchase the remaining 6.3% from a 3rd party). We view this transaction as a positive move for the group as it would help to reduce some debt for the group. At VND93,000/share, MSN shares are trading at a respective 2021E P/E and EV/EBITDA of 28.9x and 12.1x. Our new 12-month target price of VND104,000/share is based on the SOTP method. As our new target price offers 12% upside from the current market price, we maintain our Market Perform rating on the shares of MSN.

We recently attended the DGC AGM, where a very conservative earnings growth guidance of only 16% YoY for 2021 was approved. Guidance does not take into account new projects such as Mine Site 25 (commercial operation expected in 2Q21), and electronic-grade phosphoric acid (commercial operations expected in August 2021). Considering that, we estimate 2021 earnings will increase 40% YoY. For 2022, we expect the Nghi Son project to begin operation, generating earnings of approx VND 140 bn (assuming 70% utilization rate). With the current undersupply of caustic soda in Vietnam, Nghi Son will be a long term earnings driver for DGC. At VND 68,800 per share, DGC trades at a 2021 P/E of 8.6x. With an expected earnings growth of 40% YoY in 2021 and double digit EPS growth expected in 2022 and 2023, we believe that DGC deserves a P/E of 10x. As a result, we derive a 1-year target price at VND 80,000 per share, equivalent to an ROI of 16% - including a 4% dividend yield.  Our recommendation for the stock is Outperform.

DXS is set to IPO this April, and its listing on the HOSE is expected to occur in May 2021. The charter capital of DXS prior to the IPO is VND 3.2 tn. A total of 71.7 mn shares (equivalent to a 20% stake post-IPO), which comprises of 35.8 mn new shares from the Company and 35.8 mn existing shares from current shareholders, will be on offer at a price of VND 32,000/share. 

In the coming time, DXS plans to further strengthen its leading position in the primary real estate agency industry, by further expanding its capabilities to provide end-to-end real estate brokerage services. As such, the Company will continue to focus on primary brokerage, while further expanding to the secondary brokerage by utilizing its “online to offline” technology platform. For the 2021 – 2023 period, the Company ambitiously forecasts its revenue and NPATMI to grow at a CAGR of 53% and 45%, respectively. Such an impressive feat of growth is predominantly driven by its growing the primary brokerage business, with an increasing number of units to be distributed during the period. According to the firm’s management, approximately 70% of units have been committed by developers, and they are quite confident to achieve the plan. Provided that the real estate market continues its positive momentum, coupled with the increase in income from full-service brokerage, secondary brokerage and non-cyclical fee-based services to total income, we believe that DXS could achieve its target in 2021. 

Vigorous income growth helped SHB whittle down its bad debt load in 2020. Improvement of both NIM and non-interest income helped TOI to soar 30% YoY to VND 12.2 tn, but PBT grew just 8% YoY to VND 3.3 tn – along the  Bank’s 2020 plan. Provision expenses increased sharply to VND 4.6 tn (+92.5% YoY), while the NPL ratio (including VAMC bonds and legacy debt) dropped from 4.02% (2019) to 3.35% (2020). 2021 earnings projected to surge +70% YoY, reaching VND 5.6 tn. Growth is expected to come from 15% credit growth, NIM expansion of +34 bps, CIR reduction to 34.7%, and a provision reduction of -14% YoY. We raise our 1-year target price to VND 20,100/ share (from VND 18,500/ share), tracking higher EPS (+68% YoY) in 2021 due to the flourishing of profit. With implied upside of 7%, we maintain our MARKET PERFORM rating on the shares of SHB.

We reiterate our OUTPERFORM rating on the shares of GMD, and increase our target price to VND 38,500/share (from VND 30,800/share) – implying 11% upside. Our positive stance on the shares is supported by an improving outlook on Company performance in 2021 and beyond led by Gemalink port trends, hence we revised up our 2021 earnings forecast for GMD by 22% from our last report. From a broader perspective, we observe that a strong recovery in Vietnamese trade is well underway, which support GMD’s seaport and logistic businesses. Being one of the few logistic providers in Vietnam that possesses a fully integrated logistics network nationwide, GMD should benefit from a rapidly growing Vietnamese economy that is increasingly integrating into global manufacturing and supply chain.