Company Report

We upgrade our rating on BID to OUTPERFORM from Market Perform, and raising our target price to VND 47,100/share (from 43,650/share) – representing 20% upside. Our upgrade reflects both the reality that COVID-19 has not been nearly as severe as initially forecast, and a positive outlook for NIM in the upcoming quarters thanks to a more favourable interest-spread environment. This is best reflected in BID’s 3Q 2020 PBT of VND 2.7 tn (up 16.6% YoY) which was slightly higher than our forecast. In addition, BID’s non-interest income was quite robust given the favorable market environment for foreign exchange and fixed income. As a result, we have increased our pretax profit forecasts by +5.1% and +2.4% for 2020 and 2021, respectively, to VND 9.1 tn (-14.8% YoY) and VND 13.2 tn (+44.4% YoY). 

Reflecting a hydropower recovery from 3Q ’20 onwards, we lift our 2020 and 2021 NPATMI forecasts by 14% and 9%, respectively, under our base case.  As such, we increase our 1Y TP 11% to VND 46,200, which implies a 13% ROI (including 4% dividend yield). Additionally, given upside surprises for our earnings forecast under best case, we see that the 2021 NPATMI growth will potentially register 14.1% YoY if La Nina expands until the end of 2021. We reiterate our Outperform rating on the shares of REE.  

After the resilient 3Q20 results, we raise our 2020-21E net income by 15-37%. Our 2020E net sales and net income now rise to VND112.4tn (+10% YoY) and VND3.872tn (+1% YoY), respectively. For 2021E, we are raising our top line to VND140.8tn (+25% YoY), while we expect strong net income, up by 36% YoY to VND5.3tn, to be driven by: (1) the recovery in discretionary spending; (2) additional market share gained in the ICT segment during the pandemic; and (3) continuous improvement in profitability of the grocery segment. At the current price of VND106,800, MWG trades at 2020-21E PERs of 12.3x and 9.3 x, respectively, which we consider attractive. Using unchanged target multiples (PER of 9x for the ICT segment and P/S of 0.3x for grocery segment), and rolling over our valuation basis to 2021E earnings, we derive our new SOTP-based 12-month target price of VND147,000 (previously VND113,700), which implies 38% upside potential. Hence, we are reiterating our BUY rating on the shares.

Earnings beat. Profit through Q3 amounted to VND 6.4 tn, increasing +15% YoY. This translates into a robust Q3 PBT growth of +34% YoY to VND 2.6 tn. This impressive result was led by YTD increases of +10.6% and +8.5%, respectively, in credit and deposit growth. The NIM also expanded 28 bps QoQ to 3.7% and was disciplined with expenses. We are, however, concerned that ACB’s over the LLCR decline from 175% to 113% since 2019. PBT revised upwards by 3.7% and 4.3% for 2020 and 2021 to VND 8.2 tn and VND 9.5 tn. Rationale for such revision include credit growth acceleration of 300 bps to 14.75% (the new credit growth quota granted by the SBV). Further, the NIM was fine-tuned 20 bps to 3.58% due to better-than-expected savings in funding costs YTD. Upgrading to Buy. An exclusive bancassurance deal is currently under negotiation, and we are incorporating upfront fees paid which should boost equity during 2021. We also increase our target P/B multiple from 1.3x to 1.5x, given the drop in market interest rates. Accordingly, the target price for ACB is VND 30,800/share, which is equivalent to a Buy rating.

We are upgrading the shares of DRC from OUTPERFORM to BUY, as we increase our 1-year target price 21% to VND 23,500 per share – representing a 21% return on investment (inclusive of a 7.7% dividend yield). Our upgrades reflect  increases to our 2020 and 2021 net sales estimates to VND 3.2 tn (-17% YoY) and VND 3.5 tn (+8% YoY), respectively, and our pretax profit estimates to VND 268 bn (-14% YoY) and VND 421 bn (+57% YoY). We have grown more positive on the shares of DRC given that depreciation expense is declining more than expected while radial export sales recovered by an impressive 37% QoQ – which are very supportive to future earnings. From a 3Q20 perspective, however, results were in line with SSI Research, as net sales and pretax profit declined -2.5% YoY and -24.9% YoY. Yet, the earnings decline was a bit less when compared to Q2 (-39% YoY).

VRE reported its Q3 results, which included a net revenue of VND 1.8 tn (-20.3% YoY) and a NPATMI of VND 572 bn (-20.3% YoY). The declines were largely attributed to: (1) -11.1% YoY decline in leasing revenue, due to a support package of VND 145 bn offered to selected tenants which were most impacted by Covid-19;  (2) -68.5% YoY decline in sales in inventory due to timing of unit deliveries; and  (3) -25.5% YoY decline in other revenue, as the entertainment business and operation of Condotel Da Nang was heavily impacted by the Covid-19. Our current rating is OUTPERFORM for the shares of VRE. 

VIB posted envious earnings results for 3Q 2020, with a PBT of VND 1.7 tn (+52.3% YoY) due to strength in TOI (+55.6% YoY) to both provisional expenses (+19.7% YoY) and OPEX (+23% YoY). The overdue loan ratio was showing improvement as compared to the end of June 2020 (3.8% vs. 4.6%) as credit growth recovered. However, the weak provision buffer is a real challenge for VIB. Despite VIB’s positive narrative, loss provisioning pressures is very likely over the near-term. We rate the shares of VIB as Underperform, and reiterate our target price of VND 28,800/share.

HPG posted preliminary 3Q20 record high revenue and net profit of VND 24,900 bn and VND 3,785 bn, respectively, achieving remarkable growth YoY rates of 62% and 110%. The net margin improved from 11.6% in 3Q19 to 15.2% in 3Q20, which is also the highest level since 4Q18 given the full utilization of the current furnace. Cumulatively, HPG’s revenue and net profit in 9M20 amounted to VND 65 tn and VND 8,845 bn, respectively, surging by 40% and 56% YoY. At the current price, HPG is trading at attractive 2020E and 2021E PE of 8x and 6.8x respectively. Given the aforementioned longer-term momentum in revenue and net profit, we are raising our 12-month price target to VND39,300/share (previously VND32,400/share before adjustment for 2019 dividend paid in Jul). As such, we also reiterate our BUY rating on the shares of HPG. 

Given the protectionist measures expected to be implemented which should positively impact domestic sugar consumption along with the return to profitability for the biomass segment in 2021, we are increasing our share price target on the shares of QNS to VND 43,100 per share – representing 28.7% upside and an ROI of 37.6% when the dividend yield is included.   In addition, our OUTPERFORM rating on the shares is supported by: i) soymilk sales exceed industry average; ii) in 2021, both sugar and biomass segments are anticipated to benefit from a higher sugarcane yield and higher ASP troughing during the COVID-19 pandemic; iii) the completion of an enormous CAPEX plan for sugar/biomass.

We lower our 1-yr target price for MSN to VND 60,500 (from VND 64,900) - which represents 9% upside potential - after accounting for the recent acquisition of a 12.6% stake in The CrownX (TCX). Nevertheless, we retain our Market Perform stance on the shares, as we believe that the likely significant earnings decline for 2020-2021 associated with the VCM consolidation is mostly priced in. The likely decent performance of the consumer and banking segments would be a plus, while we expect a recovery from H2 2020 in the feed business of MML. On the negative side, MSN faces significant challenges: a) its consumer retail business has yet to reach break-even EBITDA; b) the impact of low commodity prices on its mining business; and c) increased leverage which will act as a drag on the 2020-2021 earnings. 

We are upgrading the shares of VCB from Underperform to MARKET PERFORM, as the share price has declined by approximately -8% over the past three months (-1.2% decline in HOSE over that period). Supportive of our call, VCB’s 2H2020 and 2021 TOI outlook has become even more compelling given its renewed focus on mortgage lending and bancassurance, and impressive credit growth – exceeding that of peer - given the impact of Covid-19. VCB is also planning on issuing 6.5% additional shares. Although this share issuance will be modestly EPS dilutive, we estimate it will be BVPS accretive by 10.9% (expected issuance price VND 70,000 per share while pre-money BVPS around VND 25,275 per share) which is important as the shares trade more on a BV basis than EPS. That said, we lower our 12-month target price to VND 89,200 (from VND 89,900) due to lower forecast for 2020F and 2021F earnings as a result of higher Covid-driven newly formed NPL and restructured loans. 

AAA’s 2Q20 revenue and net profit significantly declined -25.5% YoY and -47.2% YoY, respectively, to VND 1.811 trillion and VND 74 billion due primarily to the fall in oil prices and the absence of new industrial park leases. As earnings from AAA’s core business was is in line with our expectation, we maintain our 2020 after-tax profit call of VND 450 bn (-10.4% YoY). We expect the company’s earnings to recover in 2H20 and 2021 due to the improvement in industrial park bookings during the second half of this year, and also from the consolidation of An Vinh Industrial Packaging. We maintain our OUTPERFORM rating for the stock, with a 1-year target of VND 14,850/share.

We reiterate Outperform rating for PLC, with an ROI of 20.5% (7.4% dividend yield) as we revise our target price to VND 23,700 per share (previously VND 18,600 per share). Our new target price is derived from improved 2020/2021 earnings growth outlook post-Q2 bottom-line performance. In Q2 we witnessed +46.7% YoY NPAT improvement or the achievement of 74% of PLC’s annual profit target which were boosted by the resilience of both the lubricant segment and Vietnam Dong forcing us to upgrade our EPS forecast by 23% and 5% for 2020 and 2021, respectively. Coupled with PLC’s positive 2021 (and beyond) outlook driven by a new cycle of public investment, the shares have advanced 36% since our April 29, 2020 upgrade. Considering the current operating environment of aggressive public investment, not to mention about weaker USD, we believe that PLC’s outperformance will continue.  

MWG continues to be adversely affected by the decline in discretionary consumer spend. That said, MWG is likely to be the primary beneficiary of other retailers exiting the market as it continues to absorb market share. MWG is well-poised to quickly resume strong growth when the pandemic no longer poses public health risks, which SSI believes will occur by mid-2021. We also find that a more deliberate grocery store openings pace by BHX (ie, slow down opening speed and only open stores in provinces where it has an existing footprint) will aid in its ability to break even on a pre-general and administrative expense basis by year-end 2020. A substantially more efficient grocery operation should enable MWG to be a beneficiary of the long-term shift in consumer shopping habits from wet markets to the more modern trade grocery stores. In addition, our constructive view on the shares is supported by our new price target of VND 113,700 (from VND 129,560) which implies upside of 30%. Our TP is predicated on combination of a target P/E of 9x per average 2020-2021 ICT financials estimates, as well as on a target P/S of 0.3x on average 2020-2021 estimates for grocery financials (unchanged multiples on our new estimates detailed on page 6; previously on 2020E).