Company Report

We maintain our MARKET PERFORM rating on the shares of BMP. Our new target price for BMP is VND 112,000/share (from VND 103,400/share), as we revise up the 2024F NPAT by 8% compared to our previous forecast, representing a +1% upside (dividend yield of 10%). 4Q23 results: BMP posted net sales and NPAT of VND 1.5 tn (+3% YoY, +57% QoQ) and VND 257 bn (+3% YoY, +23% QoQ), respectively, which are in line with our expectations. We estimate that the sales volume during 4Q23 reached 24k tons (+2% YoY, +57% QoQ), as BMP sold at discounted prices to distributors during the second half of 4Q23. The ASP was flat QoQ and YoY. The gross profit margin reached 40.6% during 4Q23, compared to 43% and 33.7% during 3Q23 and 4Q22, respectively. During 4Q23, the expense-to-sales ratio increased to 15.4% compared to 12.8% during 3Q23. For 2023, BMP reported net sales of VND 5.2 tn (-11% YoY) and NPAT of VND 1 tn (+50% YoY).

We raise our rating on the shares of KDH to OUTPERFORM, along with our new target price of VND 41,300 (+11.3% upside) [previous target price of VND 30,950/share]. This reflects a change in our assumptions of market value of Tan Tao Township and Green Village Urban Area, which are expected to launch over the next two years. That being said, FY 2023 marked the third year of downtrend for KDH’s financial performance, with net revenue of VND 2.09 tn (-28.1% YoY) and NPAT of VND 730.5 bn (-32.5% YoY). This is much lower than our 2023 forecasts of VND 2.39 tn and VND 1.03 tn, respectively.  The shortfall was due to lower actual property sales recognition in the Classia project in HCMC.

as Viettel Group (Viettel) was awarded the usage right of 2,500-2,600 MHz waveband to commercialize 5G mobile technology on 8 March 2024, we forecast CTR’s total number of BTS (base transceiver station) sites should enjoy a 70% YoY growth in 2024, benefited from 2G gradual shutdown and 5G rollout, which could generate a 53% YoY sales growth of infrastructure leasing segment. In the longer term, we expect the profit contribution from this segment could be higher. In fact, we forecast its gross profit to account for ~27% of total gross profit by 2026 (vs 15% in 2023) despite its minimal improvement of revenue contribution (8% of total revenue from 4% in 2023), which we attribute to is relatively higher gross profit margin (~31% in 2023) than others’ (5%-20%). Furthermore, due to higher-than-expected 4Q23 signed contracted value of residential construction (which accounted for over 40% of contracted value in 2023), we revise up our sales growth estimate for CTR’s construction segment (from 6% YoY to 17% YoY) in 2024. We expect NPATMI will perform well at 16.4% YoY in 2024 (vs 16.6% YoY of 2023), held up by the solid pillars of the construction, operation, and infrastructure leasing segments. We call for an OUTPERFORM rating on CTR, with a 12-month DCF target price of VND 123,000/share (equivalent to 9% upside potential).

On the other hand, we think the current price has discounted the bad news. Saigon beer remains the dominant brand in Vietnam and we expect SAB to post growth when the sector recovers. SAB is trading at a 2024E P/E of 18x, which is 1SD lower than its past-5-year average (23x). Our revised 12-month target price is VND63,900/share (from VND76,000/share), based on a mix of DCF methodology (WACC: 9.53%, growth: 2%) and a lower PER of 20x (from 23x). With potential upside of 10% to our new TP, we maintain our MARKET PERFORM rating.

HAH is trading at 2024F forward P/E forward of 12x, which is relatively high compared to its historical P/E range of between 6x-9x. We believe that the current valuation is justified by the improvement in the industry fundamentals due to Red Sea and geopolitical tensions increasing TEU-mile demand for the whole industry, as well as long-term contribution of the new capacity from 2024.

We utilize the DCF method to fully reflect the potential of HAH (while our previous valuation applies the P/E method). Considering the earnings outlook from 2024, our forecast results in a target price of VND 45,100 per share (reflecting 7.5% upside), and assign a MARKET PERFORM rating. The stock price has partially priced this that we would recommend buying on dips. 

For 2024E, we expect net sales and net profit to reach VND63.7tn (+5.6% YoY) and VND10.1tn (+12.1% YoY), respectively. This is 2% and 3% lower than our previous net sales and net profit forecasts. We are still optimistic about a 2H24 recovery but reduce our forecasted gross margin improvement from 250bps to 160bps, as well as assuming no price increase during 2024. The selling expenses/sales ratio is expected to stay at c.21.5%, while financial income is expected to decrease given the lower interest rate environment. VNM is trading at a 2024E P/E of 17x. Our new 12-month target price is VND82,000/share (from VND87,400/share), based on our unchanged DCF and P/E methodology. With upside potential of 15% to our new TP, we reiterate our OUTPERFORM rating.

Highly leveraged position has been the main concern for FRT, especially in the rising interest rate environment (4Q22 and 1Q23). The funding pressure of FRT has eased with borrowing costs in 3Q23 declined by 200 bps from the peak and improved profitability from the pharmacy chain. With lower borrowing costs, FRT can speed up new openings for Long Chau chain to gain market share in the context that competitor An Khang and Pharmacity are still struggling with their business model. Larger scale should eventually help to enlarge the profit margin for Long Chau over the long term. As such, the reduction in borrowing costs is meaningful for a highly levered company like FRT, we hence raise P/S target multiple for the pharmacy chain from 0.8x to 1x. We hence lift our 1-year target price to VND 117,000/share (from VND 105,000). As FRT share price has increased by 35% since our last BUY call, we now call for OUTPERFORM rating on FRT shares with 13.5% upside.

In 9M2023, we witnessed a YoY decline in power volume from all of POW-owned&operated power plants, except for the Vung Ang and Ca Mau plants. We attribute this to unfavorable weather conditions weighing on hydropower plant utilization rates. Furthermore, the gas shortage in Southeast Vietnam led to Nhon Trach 1 and Nhon Trach 2 (NT2: HOSE) failing to meet power demand and running the plants on expensive diesel oil. For 2024, after a 2023 major maintenance schedule for Ca Mau 2, Vung Ang’s Generator 1, Nhon Trach 2 and Dakdrinh’s Generator H2, we anticipate a recovery in terms of both volume (14% YoY in 2024 vs 3% of 2023) and NPAT (+19% YoY vs -52% YoY of 2023) per our estimates. Aside from the long-term gas shortage issue due to depleting gas fields, we see the delay risk of Nhon Trach 3&4 LNG-fired project’s commercial operation date and expect two plants will come online in the foreseeable future: Nhon Trach 3 in H2 2025 and Nhon Trach 4 in H2 2026. We call for a MARKET PERFORM rating for POW, with a 12-month target price of VND 12,980/share (equivalent to 16.4% upside potential; based on DCF and EV/EBITDA multiple valuation methods).

We maintain our MARKET PERFORM rating for KDH, while nudging up our target price to VND 30,950/share (+2% upside), which is slightly higher than our previous target price of VND 30,500/share. This reflects our change of assumptions regarding sales launch performance for The Clarita, The Emeria, and The Solina, which are expected to launch later than previously assumed and we roll forward our valuation to FY2024.

As large construction deals signed during 2022 begin realizing revenue, we believe that the construction segment will be the main driver of 2023 YoY growth (45% YoY revenue growth with 31% revenue contribution per our estimate).  We expect lower YoY NPATMI growth for 2024 (+13.4% YoY vs +17.2% YoY of 2023) as the YoY growth driver likely will come from operation, integrated solutions, and infrastructure leasing segments. Construction segment growth should normalize. Aiming an auction for between 2,500-2,600 MHz waveband usage rights during December 2023, the Ministry of Information and Communications (MIC) targets a 5G rollout during 2024. We believe that enhancing 3G/4G coverage followed by the continuing 2G shutdown and 5G implementation will require more BTS sites, which should benefit CTR’s infrastructure leasing segment during 2024. We call for an OUTPERFORM rating on CTR’s shares with a 12-month DCF target price of VND 102,400 (equivalent to 14% upside potential).

We downgrade our rating to Market Perform (from Outperform) on the shares of VHC, with a target price of VND 77,300/share (from VND 94,700/share), as we cut earnings forecast for 2023 and 2024 by 25% and 17% respectively. The reason is that the ASP recovery pace has been slower-than-expected. Our new target price represents an upside of 13% and VHC now trades at a 2024 P/E of 9x, which is well within the 10-year range of between 6x-12x.

PNJ posted a decline of -6% YoY in net sales but managed to deliver flat net income YoY in 3Q23 thanks to improved gross profit margin. In October 2023, net sales growth came back to positive territory (+2% YoY) in which retail sales rose by +4% YoY. Of note, October 2022 retail sales was high base (increasing by 47% vs the average in 2020-2021). As such, we view the 4% YoY increase in October 2023 retail sales as encouraging. Meanwhile net income surged by 32% YoY thanks to improved gross profit margin and normalized corporate tax expense from last year high base. While the overall jewelry consumption may still take time to regain growth, retail sales of PNJ has picked up before the market recovery thanks to market share gain supported by various long term strategies, such as targeting younger customer group and pioneering proposal trend in Vietnam. We now forecast 2023-2024 net income at VND 1.85 tn (+2.6% YoY, from VND 1.84 tn) and VND 2.17 tn (+17.2% YoY, from VND 2.04 tn). With unchanged target P/E of 16x on revised 2024 earnings, we increase our 1-year target price to VND 96,200 (from VND 90,200) and maintain OUTPERFORM rating (21% upside). 

STB’s intention of becoming a shareholder in Bamboo Airways (OTC: BAV), which is undergoing restructuring, is a concern from both a credit risk, and corporate governance perspective for STB. On the other hand, we continue to believe that STB can complete the restructuring plan prior to the original timeline of 2025. This should enable the bank to resolve 590 mn STB shares locked-up at VAMC. While we reiterate our Outperform rating on the shares of STB, we do reduce our 1Y TP to VND 34,000/share (presenting an upside of 16%). Our 9.3% price target cut reflects both the corporate governance risk and our reduction to our 2024 earnings forecast.

Being foreign debt free could allow NT2 to avoid the impact of FX risks. However, as EVN is facing financial issues, NT2’s cash conversion cycle has surpassed 100 days in 2023 due to Vietnam Electricity Group’s (EVN) deferral in power sale payment. To ensure the adequate working capital for operations, NT2 has raised its short-term debt to VND 926 bn (as of end-September 2023, vs VND 630 bn of 3Q22). Therefore, NT2 might unlikely declare the attractive dividends for 2023 and 2024 as 2022 (VND 2,500/share or 8.7% of dividend yield). We also forecast 2023 NPAT to decline by -52% YoY. However, we anticipate the earnings recovery in 2024 (+37% YoY per our estimate) as NT2’s utilization rate should improve on the back of no major maintenance and less extreme gas shortage as in 2023. NT2’s 4Q23 performance could be a catalyst in the short-term as NT2 has finished the maintenance at the end-October, implying a QoQ profit growth. We estimate a 6.3% YoY growth of 4Q23 NPAT. Usually, the annual power demand is usually solid in November and December. With a 12-month DCF target price of VND 27,620 (equivalent to 12.7% upside potential), we call an Outperform rating for the stock.