Company Report

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). 

We maintain our estimates for 2020/2021, with net sales of VND 112.4 tn (+10% YoY) in 2020 and VND 140.8 tn (+25% YoY) in 2021, whereas net income for 2020 and 2021 should reach VND 3.9 tn (+1% YoY) and VND 5.3 tn (+36% YoY), respectively. At VND 110,600 per share, MWG trades at a 2021F P/E of 9.7x, which we believe is very attractive. We maintain our BUY rating with an unchanged SOTP-based target price of VND 147,000, offering 33% potential upside. Risks: longer-than-expected impact of COVID-19 and possible lockdown at the national level.

As PLX’s share price has retraced to a more attractive level, we are now upgrading our rating on the shares of from Market Perform to Outperform with a 1-year target price of VND 55,700/share – implying  upside of 15%. PLX earnings through 9M20 amounted to just VND 193 bn, cratering -96% YoY and  meeting just 12% of its annual guidance due primarily to large losses in 1Q20. We believe that PLX’s core business will continue their path to recovery as noted by 3Q20 PBT on a standalone basis which amounted to VND 1.1 tn – up 41% linke quarter. As 3Q20 PBT was in line with our forecast, we are maintaining our 2020 PBT forecast of VND 1.6 tn. Given the recovery in petroleum demand during the month, we expect that 2021 PBT will nearly triple YoY (on 2020 low base) to VND 4.8 tn. As PBT has returned to positive, PLX can also be cleared from the HOSE margin lending ineligibility list after audited financial reports are released.

HDG posted its Q3 financial results, with total consolidated net revenue through 9M 2020 of VND 3.8 tn (+23% YoY) and NPAT of VND 962 (+21% YoY), which fulfilled 71% and 82% of their respective targets for 2020. These positive results were mainly driven from the delivery of the Centrosa project, as well as from improved performance of the energy segment with new projects such as Hong Phong and Infra Solar. For 2020, due to the accelerated handover schedule of the Centrosa project, we raise our 2020 NPAT-MI estimate by 16% since our last forecast to VND 1.1 tn (+ 17% YoY). Next year, we expect that the company’s NPAT-MI will be flat, with recognition of the first batch of the Charm Villa project, while the profitable renewable segment will grow further from 15% of weight in 2020 to  30% of 2021 total revenue. We consider the Company’s strategy to shift its business toward renewable energy a solid move forward. However, the likelihood of extended power generation for HDG depends heavily on the support mechanism of the government, as well as the ability to find a suitable project for M&A purposes in the near future. Based on current portfolio projects, we reiterate our Market Perform rating for HDG, with an unchanged 1-Y target price of VND 25,000/ share. 

One-off earnings (negative goodwill of VND880bn) and a strong Techcombank (TCB) result in 3Q20 push us to raise our 2020E NPATMI from VND914bn to VND1.9tn (-65.7% YoY). For 2021E, we forecast NPATMI at VND2.8tn (+48.8% YoY), as we expect results from consumer retail platform (VCM), Masan Meatlife (MML) and the mining business (MHT) each improved, while MSN should benefit from lower interest costs from debt repayment. On the positive front, we see: (1) continued strong momentum in the consumer business (MCH), with sales advancing by 29% YoY in 9M20 combining with stable margins; (2) improving performance of MML following a recovery in the pig feed business in 3Q20, improving profit in the meat business in terms of EBITDA margins; and (3) VCM narrowed its EBITDA margin loss during 3Q20 of to -2.8%, vs. -5.6% in 1H20. On the other hand: (1) MHT continues to struggle with weak commodity prices; and (2) a high overall leverage ratio with net debt/EBITDA increasing to 4.5x at end-3Q20.

At VND84,900 per share, the shares of VCB trade at 2020E and 2021E P/B ratios of 3.28x and 2.61x, respectively, which is more than double the sector average of 1.45x and 1.31x. 

Our new 12-month target price of VND97,400 (previously VND89,200) is derived from our unchanged target P/B ratio of 3.0x applied to our 2021E BVPS (previously average 2020-21E BVPS) and implies upside potential of 14.7%. Our analysis does not take into account the cash dividend yield of 1.9% for 2019 and 2020 to be paid out in 2020-21. As a result, on valuation grounds we are upgrading our rating on the shares of VCB from Market Perform to Outperform. Key downside risk: higher-than-expected NPLs.

TPB reported its 3Q2020 earnings results, with TOI attaining VND 2.2 tn (+13.1% YoY) and a PBT of VND 989 bn (+26.1% YoY), rendering PBT through 9M2020 of VND 3.0 tn - fulfilling 74.3% of annual guidance. At VND 24,000 per share, TPB is trading at 2020F and 2021F P/B ratios of 1.26x and 1.02x, respectively, which is lower than sector average of 1.44x and 1.30x. Our 1Y share price target is VND 28,200, and we maintain our OUTPERFORM rating on the shares.

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.