Company Report

TCB reported solid 4Q20 earnings results with TOI and PBT attaining VND 7.8 tn (+17.1% YoY) and VND 5.1 tn (at +27.9% YoY), respectively. For 2020, consolidated TOI and PBT achieved VND 27.0 tn (+28.4% YoY) and VND 15.8 tn (23.1% YoY), respectively. Robust revenues enable TCB to be aggressive with its provisioning effort to the point that credit quality is the sector’s best with highly robust reserve cover. The lower for longer interest rate environment has boost TCB’s fixed income business. At the same time, the digitalization strategy enabled TCB to improve its CASA ratio and transform into more of a transaction banking model. We maintain our 2021 PBT forecast of VND 18.5 tn (+17.1% YoY), although we raise our 1Y target price to VND 43,000 (from VND 38,200) as we raise our target P/B ratio from 1.5x to 1.7x. We maintain our OUTPERFORM rating on the shares of TCB.

We are reiterating our BUY rating for IMP with the target price of VND 73,000/share, an upside of 30% from current price in Feb 5^th, 2021. We see strong improvement in IMP 4Q20 earnings, combined with a potential for substantial increase in revenue and profit in 2021 due to (1) low base of revenue in FY20, which were affected by the pandemic situation and (2) profitability improvement in FY21 as IMP upgrade its bidding drugs onto higher value categories. We expect IMP total revenue and core NPAT (excluding R&D) for FY21 to reach VND 1.9 trillion (+35.4% YoY) and VND 296 billion (+40.9% YoY), respectively.

We reiterate our Outperform rating on the shares of SAB and trim our 12-month target price to VND214,000/share (implied 18% upside potential). At a 2021E P/E of 22.8x, SAB now trades at a lower valuation to its 2016-20 average of above 30x. In 2020, SAB delivered an encouraging profit despite the challenges of both Decree 100 and the pandemic. An impressive expansion in the gross margin was a nice surprise, especially considering the 26% decline in sales. We believe that SAB is prepared for a comeback in 2021 (provided that COVID-19 is controlled by 1H21). For 2021, we forecast the company to post 21.8% revenue growth and 14.9% NPAT growth. While revenue would still be lower compared to pre-Covid levels, earnings are likely to surpass that of 2019. 

We recently joined an analyst meeting with the management of DGW. During the meeting, management reviewed 4Q20 financial results and discussed its 2021 earnings growth outlook. Following our meeting, we are increasing our 2021 net sales forecast to VND 15.6 tn (+24% YoY, 27% higher our previous estimates) and net income at VND 313 bn (+24% YoY, 23% higher than our previous estimates). At VND 79,400 per share, DGW trades at 2021 P/E level of 11.1x. We do, however, believe that the shares of DGW deserve an upward re-rating due to: (1) increased brand awareness after becoming an authorized Apple distributor; and (2) a beneficiary of the long term upgrade to 5G, as 2G becomes obsolete. As such, we raise our target P/E for DGW from 8.4x to 11x, and increase our target price to VND 80,800 - implying an ROI of 24% (including the dividend yield of 1.4%). We call for a MARKET PERFORMANCE rating.

We like OCB’s strategy of targeting the niche micro-SME market, as well as the detail-oriented approach to risk management which effectively weeds out risks with small enterprises. Constant investment in digital banking has yielded tangible results, such as improved operating efficiency and a boost in retail CASA. As a small bank, room for growth remains significant. However, large exposure to construction and real estate (18%), hospitality (13%), and energy (10%) are a concern. A nearly full foreign ownership limit of the bank is a drawback for OCB as well. Our target price for the bank is VND 25,300 per share, representing 29% upside from the closing price as at 29 Jan 2021. Hence, we initiate coverage on the shares of OCB with a BUY rating.

In light of an improvement in new deals in late 2020 along with our expectations of an economic recovery in 2021, we raise our 2021 PBT forecast for FPT’s global IT services by 4.6% over our previous estimate.  PBT growth from the FPT technology segment is forecasted to rebound by 22% (+24% from the global IT services and +10% from domestic IT services). Overall we forecast FPT’s FY21 EPS to grow approximately 17%. As we are more confident about a 2021 growth recovery, we increase our P/E target for the FPT technology segment and raise our 1Y TP 16% to VND 72,500 – translating to 16% upside. With 19% total ROI (including 3% dividend yield), we maintain our BUY rating on the shares of FPT.

Underlining the big change in the CTR business model with the new Telecom infrastructure segment, we see long term earnings growth of over 20% per annum through 2025. Following with capex to fuel new business expansion, the Company should be able to maintain its average interest coverage ratio at 5.3x between 2021-2025. As a result, we initiate coverage on the shares of CTR with a OUTPERFORM rating and a base case 1Y TP of VND 81,400 – implying +13% upside vs. the 04-Jan-2021 closing price.   

For 2020, we forecast the growth of total assets, customer deposits, and credit to reach 18.8%, 12.2%, and 26.8% YoY, respectively. NIM is forecast to improve to 3.29% from 2.47% last year, while NPL is expected to be decline to 1.95% from 2.04% in 2019. PBT is projected at VND 2.4 tn in 2020 (+86.3% YoY), translating to a ROAA and ROAE of 1.12% and 11.75%, respectively. In 2021, we forecast PBT to expand 30.5% YoY to VND 3.13 tn. EPS is expected to surge from VND 971 in 2019 to VND 1,634 in 2020 (+68.3% YoY) and to VND 2,123 in 2021 (+30% YoY). BVPS is VND 16,588 (+20% YoY) in 2020 and VND 18,598 (+12.1% YoY) in 2021. We estimate the fair value of MSB at VND 20,500 per share, equivalent to the targeted 2021F P/B metrics of 1.1x. This is equivalent to our OUTPERFORM recommendation, with an upside potential of 18.5%.

We arrive at target price on the shares of MCM of VND 77,500/share, based on 2021 EPS and a target P/E of 15x. We apply a discounted P/E for MCM compared to dairy peer, due to: (1) much more limited scale; and (2) the anticipated limited trading liquidity in the shares. This implies an impressive return on investment of 168% (including dividend yield of 8.3% for 2020). We initiate coverage on the shares of MCM with a BUY recommendation.  

BCM’s Q3 revenue grew 11.6% YoY mainly driven by the bulk residential land sales to sub-developer.  Although revenue from industrial parks declined -27% YoY due to the absence of new investors, the segment’s GPM improved to 54.3% due to an increase in leasing prices. In 9M2020, Industrial park revenue reached VND 1.216 tn (-27% YoY) while residential revenue reached VND 2.7 tn (+165% YoY). In 2021, we expect that BCM’s business performance is set to improve, as demand for industrial park (IP) land post-Covid is set to increase. In particular, we estimate that BCM will let 136 ha (+ 35% YoY) of IP land due to Expanded Bau Bang IP and Cay Truong IP. Further, we also anticipate that interest expense will decline -29% YoY after the paydown of VND 3.1 tn in debt from the proceeds rights issue in 2021. Net income attributable to shareholders in 2021 is expected to grow 44.7% YoY to VND 2.3 tn. As BCM stock price declined 10.5% from our last report dated September 9, we are upgrading the rating on the shares of BCM from SELL to Market Perform, and reiterating our target price of VND 40,700 on the shares (-3.2% downside).  

We reiterate our OUTPERFORM rating on the shares of QNS, as our TP is slightly recalibrated at 41,800 VND/share (-3% from previous TP, +19.8% upside). We have lowered our 2021F EPS target, as we trimmed numbers for the soymilk segment. The soymilk segment was more negatively impacted by local lockdowns while the sugar segment improved. The soymilk segment continues to be impacted by the storms and flooding in Q4 (late October-early November), resulting in soymilk sales declining between 7%-8% YoY in October. For 2021, we expect that the sugar and biomass segments to drive +27% YoY bottom-line growth at QNS. 

We are upgrading SAB from Market Perform to Outperform, as we raise our 12-month target price to VND227,000 (from VND191,000) on the roll over to our 2021 forecast. Our new price target represents a return on investment of 22% (including a 1.8% dividend yield). The upgrade is predicated on our improved outlook for earnings, as we increase our forecasts for 2020 and 2021 by +6.1% and +7.5%, respectively, to VND 4.5 tn (-16.1% YoY) and 5.4 tn (+19.4% YoY). SAB appears to be turning a corner with its Q3 results, as beer revenue dropped by only 13.4% YoY (vs.  -45% YoY in Q1 and -21% YoY in Q2). Meanwhile, NPAT during 3Q20 has already bounced back to pre-Covid levels (Q2, Q3 2019).