Company Report

We reiterate our BUY rating for the shares of ACB with 1Y TP of VND 31,200/share, representing a 25.8% upside. At the early stage of the economic recovery when many banks are struggling to clear bad debt and diminish inherent risk, ACB nowadays stands out as possessing top-notch asset quality. Moreover, having low funding costs would also allow ACB to be more proactive in attracting new customers by offering an incentive package, while still leaving room for NIM improvement. With a consistent business philosophy, we believe that earnings growth will not wow in the near-term but rather be profitably sustainable with ROE of above 20% over the medium-term and the foreseeable future.

We raise our rating on the shares of KDH from OUTPERFORM to BUY, along with our new target price of VND 45,700/share (+21.2% upside), up 10.7% from our previous target of VND41,300/share. Our upgrades are predicated on 1) our expectation for successful sales launches on two projects in Thu Duc City during 2H24; 2) expected strong, above trend-line earnings growth through 2025; and 3) the roll forward our valuation to 2025. 

For the 2H 2024, the prolonged disruption in the Red Sea, which is expected to sustain the shift from sea to air shipping should indirectly benefit SCS. We slightly revise up 4% our estimates, translating to revenue and PBT at VND 949 bn (+34.6% YoY) and VND 760 bn (+33.5% YoY) for 2024. In 2025, we expect volume growth to return to a normalized level and PBT to grow 9.5% YoY, to reach 833 bn VND. However, it is important to note that NPAT growth is expected to be constrained by the expiration of the preferential tax deduction of 50% on liable income from 2025.  In the longer term, the availability of capacity expansion at TSN airport and Long Thanh international airport drives growth potential. SCS is trading at a forward P/E of 12.x, which aligns with the 5-year average level. Our DCF model, reflecting the company's long-term potential, estimates an target price for SCS at VND 91,900 per share, translating to the upside of 11.7%. We maintain a MARKET PERFORM rating for SCS.

We reiterate our Outperform rating on CTG’s shares with an unchanged 1Y TP of VND 38,500/share, representing an upside of 10.5%. CTG has a long-term competitive edge as the third largest bank in Vietnam by assets, credit, and deposit market share with nationwide network and over 20 mn customers. The improvement in fundamentals should continue with improved asset quality and stronger earnings growth through 2025. The bank has also been actively digitizing, on top of implementing initiatives to improve its CASA and CIR over the past several years.

Although CTG ended 2Q24 on a low note (PBT of VND 6.75 tn, up +3% YoY), it was primarily due to the frontloaded provision (VND 7.8 tn, up 21% YoY). This led us to believe that 2H24 will have lower provisioning and better earnings growth (VND 16.2 tn, +29% YoY under our current estimate).

We maintain Market Perform rating on TCB shares with a 1Y TP of VND 26,800/share – representing 19% upside. Despite a supportive valuation, the expected deceleration in earnings growth in the coming 2 quarters might lead to a lower level of excitement from retail investors for the shares in our view.

2H24 could be challenging given the slower-than-expected recovery of the HCMC real estate market, which accounts for 1/2 of the bank’s exposure to the property sector. Under these circumstances, TCB likely will prioritize stabilizing NPLs over NIM expansion, with the resumption of flexible pricing to enable easier repayments. Accordingly, NPLs are expected to be controlled with management expecting 1.2% by year-end. We believe that NIMs will drop to 4.18% for FY 2024. Our earnings estimate for FY24 and FY25 is VND 27.8 tn (+21.5% YoY) and VND 32.3 tn (+16% YoY) respectively, down by -3% and -4% vs. previous estimate.

Investment view: Considering the quiet market in southern Vietnam at the moment, coupled with NLG’s need to compromise profits to boost sales via marketing campaigns and the current valuation already reflected the company’s landbanks as well as its reputation, we maintain our Market Perform for the shares of NLG and a target price of VND 43,000/share (+5.7% upside).

Downside risks: (1) Lower absorption rate at multiple second tier city projects; and (2) Delay of legal project licensing that affects company presales.

Short-term view: POSITIVE, as performance is expected to be strong during 2H24 relative to 1H24 with nearly 6x growth in NPATMI given unbilled bookings value at Southgate and Akari City to be recognized along with sales and recognition of Nam Long 2 project. Furthermore, retail investors are favouring property stocks after a long correction period.

On Aug 15, the Government agreed to reduce registration fee policy by 50% for three months, despite Ministry of Finance’s suggestion not to go forward with the policy. As a result, we expect better-than-expected car sales for VEA’s JVs (Toyota, Honda and Ford VN) in 2H24. Coupled with other catalysts such as consumer spending recovery and an attractive dividend yield (2024F and 2025F dividend yields for VEA are 11% and 10%, respectively) lead us to believe that VEA could provide upside from here. We maintain our 1-year target price of VND 46,500/share. Given the forecasted return of 15% (including 11% dividend yield), we maintain our OUTPERFORM rating on the shares of VEA.

According to Circular 03/2024/TT-BTTTT and Circular 04/2024/TT-BTTTT, the Ministry of Information and Communications (MIC) plans to terminate the support for 2G-only mobile subscriptions from 16 Sep 2024, encouraging the replacement with more advanced mobile technologies. At June 2024, there are still over 10 mn 2G-only mobile subscribers in Vietnam, which are required to be phased out or switched to new electronic devices before that date. For CTR, the company plans to build/synchronize infrastructure of between 4,000-5,000 BTS (base transceiver station) sites during 2024 but it has only completed 30% of this target during H1 2024. We expect that this mobile technology transition will require CTR to accelerate even more BTS sites construction, and we believe that the company will meet the above target before end-2024. Such an estimate also indicates that the number of new BTS sites built in H2 2024 (~3,100 sites) might not generate immediate revenue growth for 2024 (as they will not be under operation on a full year basis). We expect they will support 2025 revenue and earnings growth. Nevertheless, our earnings forecast for 2024 remains nearly unchanged. Specifically, we forecast 2024 and 2025 NPATMI growth of 11% and 17% YoY, respectively, mainly driven by the infrastructure leasing and construction segments. Further, we expect the 5G rollout in Vietnam during late 2024 or 2025 to support CTR’s growth outlook over the long-term. We maintain our estimates but change our rating from MARKET PERFORM to OUTPERFORM on the shares of CTR. Our 12-month DCF target price is VND 135,000/share (equivalent to 13% upside).

We maintain our Market Perform rating on the shares of  VIB with 1Y TP of VND 22,800 (+11% upside), but reduce our earnings estimates for 2024 and 2025. Given the still low liquidity in the property market, especially in southern Vietnam on top of intense competitive pressure, we believe that VIB is facing significant challenges resolving bad debt and boosting disbursements. The NIM is expected to remain under pressure due to a loan rate cut amid a gradual rate hike from deposits. Credit costs should remain high to counter asset quality deterioration. As such, ROE is expected to hover at between 18% - 19% over the medium-term, a decline from the peak of 30% during 2022.

Recent sharp JPY movement is not material to the company’s fundamental and valuation. It has been all over recent news that the Yen has appreciated sharply against the USD as well as the VND due to the BOJ’s sudden rate hike. Specifically, we observe that from its trough, the JPY has appreciated by 9.5% against the VND to VND 172/yen. This has effectively erased all JPY depreciation YTD, and brought the JPY/VND back to the level at the beginning of 2024. In our view, even though the JPY movement is large and sudden, we do not see the impact as too material to ACV. Upgrade to BUY, maintain target price of VND136,000/share. The recent stock price movement is not exactly linked to the fundamentals of the company, and thus presents an attractive opportunity to accumulate the stock. In terms of fundamentals, we maintain our estimate that ACV’s PBT would grow by 38% YoY in 2024F and 20% YoY p.a. in 2025-26F as in our last report. We maintain our 12-month TP of VND136,000/sh (+23.7% upside potential) based on a 2025F EV/EBITDA target of 16x, and upgrade our rating for ACV to BUY (from OUTPERFORM) on valuation grounds.

During 2Q24, STK posted rather disappointing results where net sales and net losses reached VND 303 bn (-26% YoY, +14% QoQ) and -VND 56 bn (2Q23 net profit of VND 38 bn), respectively. This is mainly attributable to: (i) volume shortfall due to weak demand; (ii) failure in the operation of the automated product-checking and packaging lines; and (iii) unrealized FX losses of VND 42bn associated with the USD-denominated debt to fund the Unitex factory. During 1H24, the company reported net sales and net losses of VND 569 bn (-18% YoY) and -VND 55 bn (1H23 net profit of VND 39bn), respectively. During 2H24, the company expects to book net sales of VND 1.3 tn (+78% YoY and +128% vs. 1H24), assuming that sales volume will increase +110% vs. 1H24 and recycled yarn sales volume increases +192% during the period. For 2024, we expect STK to book net sales and net profit of VND 1.6 tn (+11% YoY) and VND 42 bn (-52% YoY), respectively. This is -14% and -70% lower than our previous net sales and net profit forecasts, respectively, following weaker-than-expected 1H24 results. For 2025, we expect net sales and net profit to reach VND 2.1 tn (+36% YoY) and VND 145 bn (+243% YoY), respectively. We expect STK to catch up with the sector’s recovering sales volume momentum during 2025. Our 1Y target price for the stock is VND 26,300/share (+6% upside). We rate the shares as MARKET PERFORM.

With a 12-month target price of VND 24,700 (equivalent to 26% upside potential), we upgrade our rating from MARKET PERFORM to BUY for the shares of NT2. We witnessed a higher-than-expected NPAT for 2Q24 due to higher-than-expected contracted volume (Qc) for June, which resulted in the quarter’s earnings nearly offsetting the loss of -VND 158 bn for 1Q24 (the company recorded a net loss of -VND 36 bn during H1 2024). At June 2024, EVNGenco 3’s (PGV: HOSE) gas price surpassed that of NT2. Therefore, we believe that NT2 could witness higher-than-expected volume for H2 2024 (vs. that being initially planned), benefiting from a potentially higher priority of electricity mobilization for the national power system. For 2025, we expect that the gas shortage issue will somehow ease in Southeast Vietnam and support an NT2 volume recovery. We project a profit of VND 20 bn for 2024 and VND 399 bn for 2025. Our earnings increase primarily came from our respective upward revisions of 2024 and 2025 volume, following our projection of higher-than-expected volume during H2 2024. We believe that NT2 could somehow achieve a profit during H2 2024, offsetting the H1 2024 loss.

During 2Q24, FMC reported net sales and net profit of VND 1.2tn (+20.3% YoY) and VND 83bn (+10% YoY), respectively. This is impressive considering Vietnam shrimp exports by value remained flat YoY during 2Q24. Largely due to the solid gross margin improvement, FMC earnings advanced +46% QoQ. We attribute FMC’s cost effectiveness to its new farming area in Vinh Thuan, which employed more efficient farming operations and resulted in greater fecundity. We note that FMC’s survival rate of its aquaculture is 80%, drastically higher than the Vietnam avg. of 50%. During 2H24, management expects higher volume and ASP compared to 1H24, due to seasonal impacts. For 2024, we expect net sales and NPATMI to reach VND 5.9tn (+16% YoY) and VND 312 bn (+13% YoY), respectively. For 2025, we expect net sales and NPATMI to reach VND 6.4 tn (+9.1% YoY) and VND 362 bn (+16% YoY), respectively. Our 1Y target price for FMC is VND 55,400/share (+16.5% upside), and reiterate our OUTPERFORM rating for the stock.

KBC’s business performance is heavily dependent on legal approvals of new projects, thus, even with a strong 35.8% upside from the current price, we upgrade our rating on the shares of KBC from MARKET PERFORM to OUTPERFORM, with a target price of VND 33,600/share. Although we lean toward our bear case for FY2024, the share price has decreased more than 19.6% since our previous report (17 May 2024), then, we upgrade our rating on the shares of KBC.

We reduce our rating on the FPT shares to MARKET PERFORM (from OUTPERFORM), with a 12-month SOTP-based TP of VND 141,500/share (equivalent to 7% upside potential). The company’s 5M24 results exhibited double-digit growth in both revenue and earnings. On 23 Apr 2024, FPT formed an AI (artificial intelligence)-related partnership with NVIDIA, which we believe is the first step toward joining the global AI value chain, especially given FPT’s already well-placed background in AI. Further, we expect that the establishment of AseanConnect.One alliance will help improve FPT’s telecom services quality (especially data center) and enhance customer access.