Company Report

At the current share price of VND 34,700/share, VRE is trading at an EV/EBITDA of 17.5x which is relatively lower than the regional peer average of 19.8x. On a growth perspective, VRE is attractive with its valuation trading at a discount vs peers while it boasts stronger projected growth for the medium term.  As such, with 26.2% upside compared with current price, we recommend to BUY the stock. 

At the current price, HT1 is trading at 2019 and 2020 P/E forwards of 8.5x and 7.1x respectively. We upgrade our rating from Market perform to Outperform, with a 1-year TP of VND 17,600/share (after adjusted for the TP from the ex-dividend date on Nov 11 2019) with target PE and EV/EBITDA of 8x and 5x respectively. In the next 3-6 months, the expectation of gross margin improvement and on the company’s positive earnings growth in 2020 can be a supportive catalyst for the company’s business results and stock price going forward.

At the current price of VND 18,600/share, STK is trading at 2019 and 2020 P/E levels of 6.2x and 5.5x respectively, which is rather attractive. Our 1Y target price is VND 21,400 (+15 % upside) based on the target P/E of 6.3x (current industry average P/E), equivalent to an OUTPERFORM recommendation. Downside risk to our call includes the possibility of Chinese firms dumping even lower prices than expected into the market, which will be more detrimental to the volume and ASP of virgin-type yarn, impacting the results of STK in 4Q 18 and 1Q 19. As such, this uncertainty will negatively affect the stock price in the next 3-6 months. 

In Q3, PVD posted VND 1.07 tn in net sales (-20% YoY), and a net profit post MI of VND 27 bn (-76% YoY). Excluding the impacts of depreciation methodology change, provision reversals, and impact of lower JV profit, Q3 2019 operating profit would have theoretically decreased by -60% YoY. We maintain our 1-year target price of VND 18,200 (+11% from current market price) based on target unchanged P/B of 0.55x and reiterate Market perform recommendation for the time-being. Based on our estimate, we expect PVD to post a NPATMI of VND 33 bn in Q4 2019; much lower than VND 386 bn in Q4 2018. The high base from Q4 2019 was mostly from changes in depreciation methodology as mentioned above, and PVD did not retrospectively apply for the first 3 quarters of 2018, and recorded in Q4 instead. Besides earnings, the PVD price movement is largely correlated with the oil price, which is under pressure of expected weak demand caused by a global economy slowdown as well as the rising trend of using renewable energy in the future. The Brent crude-oil consensus forecast (Bloomberg polls, EIA, Goldman Sachs) is $60 USD/bbl (-6% YoY).

With the current hog supply shortages running up to Tet holiday as well as the recent rapid hog price increase since October 2019, we expect the company’s net profit to turn around, at least in the next 2 quarters. DBC share price has also recently recovered by ~6.7% since early October, in line with the hog price increase. At the current price of VND 23,700/share, DBC is trading at 2019 and 2020 P/E ratio of 9x and 7x respectively. In 2019, we estimate that net sales and net profit might reach VND 7.6 tn (+13.3% YoY) and VND 256 bn (-28.9% YoY). In 2020, we estimate net sales and net profit might reach VND 8.1 tn (+7.7% YoY) and VND 332 bn (+29.7% YoY). Our forecasts have not taken into account any additional real estate revenue that might already be booked. Our 1Y target price for the stock is VND 27,300 (+15.1% upside), equivalent to an OUTPERFORM rating.

At the current price, VGC is trading at 2019 and 2020 PER levels of 12.6x and 10.5x respectively. Given the above information, our rating for the stock is Outperform with a 1-year target of 23,050 VND/share, implying an upside of 19% from the current price. Besides the encouraging earnings growth thanks to the strong performance of industrial park and the potential recovery of sanitary wares in 2020, the coming state divestment and a cash dividend yield of 5.5% can also be supportive catalysts for the stock over the next 12 months.

At current price of VND 84,200/share, VHM is being traded at 2019 P/E metrics of 13.7x, which is low compared with industry peers. Regarding to valuation, after reviewing actual unit prices and sale progress (including both retail and bulk sales) at the three mega projects which are better than our previous assumptions, our target price is raised from VND 91,400/share to VND 99,000/share, implying an upside of 17.6% compared with the current market price. Hence, our rating is OUTPERFORM for the stock at present.

At the current price of VND 103,700, shares of MWG are trading at 2019E and 2020E PERs of 12.0x and 10.1x respectively. The stock price has increased by 14% in the past one month. We think the main reasons for the good performance of the stock include: (i) the impressive business results of the company in 5M19, especially Bachhoaxanh; and (ii) the impressive performance of its covered warrants. We maintain our SOTP-based 12-month TP for MWG of VND160,300/share for a 54.6% upside potential, and reiterate our BUY rating.

At the current price, HSG is trading at 2019 and 2020 PER forward metrics of 9.4x and 9x respectively. We maintain our Market Perform rating on the stock, with a target price of VND 8,100/share based on consistent PE, PB and EV/EBITDA targets of 7x, 0.6x and 6.5x respectively. We think that the recovery in profit margin and the stabilization in the galvanized steel market can be supportive factors for HSG in the coming time. However, we think that the stock can be more attractive in case the company shows improvement in sales volume and market share.

At the current price, PLX is trading at 2019 level of 20.6x, which is equivalent to regional peers. We apply the SoTP method to estimate fair value of the stock price, with the target PE of 21x for the parent company thanks to its strong market position and 9-10x multiple for PLX subsidiaries. Accordingly, our 1-year target price arrives at VND 73,100 share, implying an upside of 14% from the current share price. Our rating for the stock is Outperform.

At the current price, VGC is trading at a 2019 and 2020 PERs of 13.5x and 12.1x respectively. We maintain our Outperform rating for the stock, with a 1- year target price of VND 22,800/share, implying an upside of 13.2% from the current price. We think that encouraging earnings growth in 2019, as well as upcoming government divestment, would together be supportive catalysts for the stock over the next 12 months.

At the current price of VND 23,300 per share, LTG is being traded at a 2019 PER of 4.2x on total earnings and 5.7x on core earnings. We think that the main business (CPC – making up 53% of net sales and 77% of gross profit in 2018) will face more competition from cheaper generic products imported from China, while the improvement in rice and seed businesses may not be adequate to offset the decline in CPC earnings in the near term. In the longer term, LTG growth will depend on the potential of the rice business, which is quite uncertain at the moment. Nevertheless, LTG is traded at a cheaper valuation compared with industry peers, with a decent dividend yield (6.9%). For valuation, we use a target PER of 6x, lower than the peer average owing to high D/E ratio amid thin net profit margin. As such, we arrive at 1Y target price of VND 25,500, which is equivalent an upside of 9% from the current price and a MARKET PERFORMANCE rating.

Based on audited financial statements, 2018 BVPS and EPS of BVH were VND 22,065 and VND 1,612 respectively. At the current price of VND 81,300 per share, the stock is trading at 2018 PBR and PER of 3.7x and 50.4x respectively. Based on the company’s 2019 plan, 2019 BVPS and EPS of BVH on a respective basis are estimated at VND 22,748 and VND 1,676, with current PBR and PER at 3.57x and 48.5x. We estimate that if the capital issuance is implemented in 2H 2019, at the price equal to 3 times BVPS as of June 2019 at VND67,220 per share, BVH would have the proceeds of VND 2.785 tn. 2019F BVPS would pop up at +11% to VND 25,231. The PBR at current price would then be 3.22x.

At the current price of VND 50,700, shares of FRT are trading at 2019 and 2020 forward PER levels of 8.7x and 8.5x respectively. This is compared to our estimate of industry incumbent leader MWG at 10.6x 2019F PE, coupled with a projected 2019E PE of 14.1x for the VN-Index. We apply a target PER of 10x (down from 12x due to slower growth of ICT segment and low liquidity of the stock) for FRT to arrive at a price of VND 58,330/share, a 15% upside. Therefore, we reiterate a MARKET PERFORM rating for the stock in 2019.