Company Report

We are downgrading our rating on the shares of VNM from OUTPERFORM to MARKET PERFORM due to the lack of short-term catalysts, along with unattractive top- and bottom-line growth. Our updated forecasts indicate NPATMI growth is expected to only reach 7.7% and 3% YoY during 2024 and 2025, respectively. Based on the 3Q24 earnings miss, we believe that VNM will be challenged to achieve growth of over 10% for both the top- and bottom-lines during 4Q24 as domestic consumption has recovered very slowly. As such, we now arrive at a DCF-based 12-month target price of VND75,000/share (+14% upside potential; from VND82,000/share).

With a 12-month target price of VND 24,700 (equivalent to 30.7% upside potential), we reiterate our BUY rating on the shares of NT2, as we expect an earnings recovery between 2025-2026. For 3Q24, we witnessed a slightly higher-than-expected NPAT for NT2 at VND 44 bn (vs. a net loss of VND 124 bn during 3Q23), primarily due to slightly lower-than-expected maintenance and outsourcing costs. As expected, 9M24 NPAT turned a positive VND 8 bn (vs. a net loss of VND 36 bn for 6M24). Hence, we believe that NT2 could realize higher-than-expected earnings for 2024. Following that, we revise up 2024 NPAT to VND 49 bn (-90% YoY) (from VND 20 bn) and project 2025 NPAT to be VND 392 bn (+695% YoY) (supported by the ease of gas supply shortage). On the other hand, we expect NT2’s machinery and equipment to fully depreciate during late 2025, further supporting accelerated earnings growth for 2026.

We forecast EPS for 2024 and 2025 at VND 1,840/share (+46.9% YoY) and VND 2,313/share (+25.7% YoY), respectively. SZC is well-positioned to capitalize on several factors: (1) The company has over 400 ha remaining available for lease, with 250 ha fully cleared for compensation; (2) Lease prices in SZC are projected to increase compared to other industrial parks in Ba Ria - Vung Tau. Currently, these other IPs are leased at 13% - 15% lower. The connectivity improvements provided by the Bien Hoa-Vung Tau Expressway further enhance SZC's appeal. We maintain OUTPERFORM rating with 1-year target price of VND 43,200/share, representing a 12.9% upside based on the SOTP valuation method.

Although VHC earnings began rebounding during 3Q24 after seven consecutive quarters of negative earnings growth, we are reducing our target P/E on the stock from 12x to 11x, as the ASP recovery has been slower than expected. While we expected a stronger recovery in ASP leading to margin expansion, the improvement in GPM this quarter primarily came from lower input costs. We believe segment share prices remain very sensitive to pangasius ASP. Despite the multiple reduction, we reiterate our OUTPERFORM rating on the shares, with a 1Y target price of VND 83,000/share (+15.4% upside) [previous target of VND 88,000/share]. Our estimates for 2024 and 2025 remain unchanged, as gross profit margin expansion remains on track. Sales for 2024 and 2025 are expected to reach VND 12 tn (+20% YoY) and VND 13.7 tn (+13% YoY), respectively, whereas NPATMI is expected to reach VND 1.2 tn (+34% YoY) and VND 1.58 tn (+29% YoY).

We maintain our PBT projection of VND 27.8 tn (+21.5% YoY) for 2024 and VND 32.3 tn (+16.2% YoY) for 2025. We believe that the pricing competition as well as the impact from the flexible pricing scheme for corporate clients will continue to impede NIM expansion despite credit growth remaining solid. As such, NIM is expected to reach 4.18% in 2024 before improving slightly to 4.22% in 2025. With that support, asset quality should be under control with NPL ratios at 1.2% for 2024 and 2025.

We believe that the property market is gradually recovering, starting from the Northern Vietnam, and focusing on project with healthy legal status, which will be a positive catalyst for TCB. However, we think that the high-end and luxury property segments will need more time to fully recover. Although the cash flow of property developers is still slow, we think the flexible pricing scheme will continue to support these clients fulfilling debt obligations. Therefore, we maintain OUTPERFORM rating and keep target P/B of 1.2x for TCB shares with 1Y TP of VND 28,700 – equivalent to an upside of 18.6%.

The expansion in international passenger volume is projected to significantly boost AST’s performance over the next three years. While we expect net profit to surpass 2019 levels in absolute terms by 2024, net margins are likely to remain compressed and adjust to a lower level due to increased rental fees.

In addition, dividends are expected to resume this year following the disruption caused by the pandemic, at VND 3,000-3,500 per share (yielding around 6%), equivalent to the payout ratio of around 75%. For 2024F and 2025F, we estimated NPAT at VND 217 bn (+44% YoY) and VND 252 bn (+16% YoY) translating to the P/E forward of 13x and 12x respectively. Based on the P/E target of 15x, our 1-year target price is VND 64,500/share, indicating a potential upside of 13% and an OUTPERFORM rating for the stock. We believe that revising target P/E down from 17x in our latest is reasonable, given the trend of thinner net margins moving forward.

We upgrade our rating for DGC from MARKET PERFORM to OUTPERFORM, with a target price of VND 137,000 per share (upside 19%) as we expect earnings of DGC to come back to positive growth territory from 2H24 (+23% YoY), a rebound in the making after 7 consecutive quarters of decline. Meanwhile, valuation now looks cheap for a commodities company operating a vertically integrated value chain, enabling DGC to command a much higher gross profit margin. Earnings rebound is to be fueled by (1) recovery in ASP and sales volume by fertilizer and semiconductor clients, (2) cost saving benefits by utilizing more in-house phosphate rock from Mine Site 25  and (3) the gradual transition into downstream products (such as LCD phosphoric acid, currently accounting for 10% of the phosphoric acid at the moment). 2024-2025 net income is estimated at VND 3.5 tn (+7% YoY) and VND 4.8 tn (+37% YoY). DGC stands amongst the prime candidates which could attract EM flows in case of FTSE Russell upgrade (expected in late 2025).

We lower our estimate of 2024 new BTS sites from 4,500 to 3,500 sites as 1) 8M24 respective progress (2,011 sites) is trailing our previous forecast (as well as CTR’s own 2024 target of 4,000-5,000 sites) and 2) the company’s focus on dealing with the aftermath of Typhoon Yagi in northern Vietnam during September might weigh on its further acceleration of BTS site construction in the remainder of the year. On the other hand, we maintain our respective estimate (4,500 BTS sites) for 2025 as we believe that the 1-month extension of deadline for discounting 2G-only service (through the Circular 10/2024/TT-BTTTT) will not create significant delay to the implementation of more advanced mobile technologies in Vietnam. We also maintain our view of 5G commencement during late 2024 or early 2025 to support the long-term growth potential. Hence, we forecast that NPATMI will experience a single-digit growth for 2024 (+7% YoY) but a double-digit growth (+18% YoY) for 2025, mainly be driven by the infrastructure leasing and construction segments (equivalent to 3%-4% lower 2024-2025 NPATMI estimates compared to previous projections).Despite earnings downward revision, we maintain our 12-month DCF target price of VND 135,000/share as we roll over to 2025 (from average 2024-2025). With 3% upside potential, we lower our rating from OUTPERFORM to MARKET PERFORM on the shares of CTR.

Due to high capital expenditures, the free cash flow for 2024-2025 is relatively small compared to the period from 2026 onward. Consequently, changes in earnings and cashflow forecast, primarily in the 2024-2025 period, only resulted in a modest 0.5% increase in our target price compared to our latest estimates.  Our DCF model now projects a 1-year target price of VND 47,200 per share, indicating an 16.7% upside. We maintain our OUTPERFORM rating for the stock.

GVR holds a unique advantage of possessing a vast rubber land bank of 394,782 ha spreading across various provinces in Vietnam, including Binh Duong, Dong Nai, Ba Ria Vung Tau, Tây Ninh, et al. For the long run, the conversion of over 23,000 ha of rubber plantation land to industrial park land between 2025-2030 will enable the company to record significant earnings from land conversation, which we have counted in our forecasts. However, the stock price has increased by 68% YTD to reflect those future earnings. Therefore, we reiterate our MARKET PERFORM rating with 1-year target price for GVR of VND 36,100/share (+1.5% upside) based on SOTP method.

HDB shares have risen 21.7% from our latest report, reaching our previous target price of VND 27,700, and might have partially reflected the strong earnings growth & improved fundamentals in 2Q24. For 2H24, we believe the YoY growth in pretax profit of the bank might cool down to +4.3% YoY compared to +49% YoY in 1H24 due to the high base in 2H23 as well as a narrower NIM under a higher CoF environment. We, hence, lower our rating for HDB to MARKET PERFORM (from Outperform) with a revised 1Y TP of VND 29,800 per share (+10.2% upside), equivalent to target PB of 1.4x vs. sector P/B of 1.37x. The higher 1Y TP was a result of removing the discount related to asset quality risk as we notice NPLs amongst retail clients showed improvement in 2Q24.

DBD reported modest revenue growth in 2Q24, with VND 433 billion (+5% YoY). Prescription drugs grew by 7% YoY, while trading products declined by 23% YoY. Net income fell short of expectations, decreasing by 3% YoY. The net profit margin contracted by 130 basis points (from 18% to 16.7%) compared to 2Q23. We revised down its revenue and NPAT estimates by 6% due to weaker performance in 1H24 and expected slight improvement in 2H24. Revised 2024 forecast for revenue is VND 1.74 trillion (+6% YoY) and for NPAT is VND 284 billion (+6% YoY). For 2025, we forecast net revenue of VND 1.9 trillion (+9% YoY) and NPAT of VND 318 billion (+12% YoY), expecting growth in both Rx and OTC channels to exceed 2024 levels. Improved GPM is anticipated, aided by tax waiver for cancer drugs manufactured at the newly opened factory. We increase our target price to VND 45,000/share (from VND 43,500/share post issuance), as we roll forward our valuation to 2025. With only 8% potential upside (no dividend), we maintain our MARKET PERFORM rating on the shares of DBD.

In 2024-2025, we expect global demand for fertilizer to recover gradually after being hit by a severe El Nino weather pattern during 2023, enabling fertilizer prices to increase over 2023 prices. While revenue is projected to grow by 11% YoY to VND 14 tn in 2024 on both sales volume and ASP growth, the reduction in depreciation expense and one-off income related to the acquisition of Han Viet Fertilizer should help earnings of DCM to rebound significantly during 2024 (net income of VND 1.98 tn, +82% YoY). Revenue in 2025 will likely remain flat at VND 14.3 tn (+2% YoY), as urea sales volume may decline due to maintenance, while the increase in NPK revenue is quite small (12-14% of the 2024-2025 revenue). Meanwhile, 2025 net income may decline to VND 1.85 tn (-6% YoY) due to the absence of one-off income. Our new target price now is VND 39,000/share (from VND 38,700). With an upside of 5% and ROI of 10% (including 5% dividend yield), we maintain a MARKET PERFORM (unchanged) rating.

Compared to our previous estimates, we revise up our 2024-2025 NPATMI forecasts by 15%-20%, mainly due to successful negotiations in reducing the offshore loan guarantee fee for the company’s 7A plant, as well as the margin of interest rate for the loan of the Song Tranh 4 plant. Despite such an earnings upward revision, we maintain our 1-year TP of VND 34,200/share as we revise up our discount rate assumptions to reflect the recent increase of Vietnam interest rates. Following a respective 20% upside potential in the share price, we change our rating from OUTPERFORM to BUY for HDG.

Our 12-month target price is VND 25,200/share (down from VND 29,500/share) due to: i) our forecast of lower occupancy and rental price growth during 2025; ii) higher net debt at 2Q24; and iii) a valuation discount due to investor concerns on asset lending to Vinhomes and debts providing to Vinfast. We maintain an OUTPERFORM rating for VRE, with an upside potential of 27.9%.

VRE remains the market leader in the mall leasing segment, with 86 existing shopping malls as well as additional new malls in development across Vietnam. The Company stands to benefit from the growth of the middle-income population in the country.