Company Report

IDC is one of the largest industrial park developers in Vietnam, with 727 ha of available lettable land in Long An, Ba Ria Vung Tau, and Thai Binh provinces. Low compensation and clearance costs should enable IDC to maintain its gross profit margin of IP segment at above 50% between 2023 to 2026.  IDC trades at a 2023 P/E of 10.2x and P/B of 2.5x, and 2024 P/E and PB of 8.9x and 2.4x - lower than industry average of 14.8x and 3x, respectively. We have OUTPERFORM rating for the shares of IDC, wherein our 1-year target price is adjusted to VND 53,200/share (from VND 51,400/share), representing an upside of 8.8% from current market price. With 101.76 ha new signings and a payment schedule to be accelerated from one year to six months, as we observed amongst large clients, IDC’s cash flow should continue to improve.  We believe that IDC can maintain its cash dividend at 40% of par value during 2023 and 2024, with the dividend yield of 8.3%.

Reflecting positive performance on YoY basis and stable growth outlook of VRE’s core business of mall leasing, we reiterate our BUY rating on the shares of VRE with 1Y target price of VND 38,700/share (28.8% upside), a slight decline of 4% compared with our previous TP due to the rescheduling of new mall openings. Valuation (2023E EV/EBITDA of 8.8x, both below historical and regional peer average of 15x) is also attractive, in our view. Key downside risks to the shares of VRE include: (i) delay in development of Vinhomes mega projects which could impact the company’s expansion; and (ii) weaker-than-expected consumption which may lead to a slowdown of tenant expansion plans.

HPG trades at a 2024F P/E and EV/EBITDA ratio of 12.5x and 7.2x, respectively. We maintain our MARKET PERFORM rating, but raise our 12-month target price to VND28,500/share (from VND19,800), as we roll over our valuation basis to 2024F (from 2023F) and increase our target PE and EV/EBITDA to 13x and 7.5x, respectively, given the recent significant decline in the market interest rate. We expect a more significant recovery to take place from late 2023 or early 2024.  As the current price has already reflected part of the earnings recovery in the coming year, we believe investors should wait for a price correction to accumulate the stock over a longer-term investment horizon. Upside risk: stronger-than-expected demand for steel products in the domestic market; downside risk: lower-than-expected steel prices.

We increase our 2023 NPAT estimate by 32% over our previous forecast, encouraged by lower-than-expected PVC input prices. Our new one-year price target for the shares of BMP is VND 99,200/share (from VND 84,300/share) as we roll forward our price target to 2024F - representing +13% upside. We reiterate our MARKET PERFORM rating for the shares of BMP. 2Q23 earnings surpassed the prior quarter records due to resilient ASP and lower-than-expected PVC input prices despite lower sales volume. Net sales and NPAT were VND 1.3 tn (-14% YoY, -7% QoQ) and VND 295 bn (+103% YoY, +5% QoQ), respectively.

VHC posted 2Q23 results, wherein net profit reached VND 412 bn, declining -48% YoY but improving +88% QoQ due to gross margin expansion and lower selling expenses. While sales were in line with our expectation, 2Q23 NPAT was better than expected. For 2023, we expect net sales and net profit to reach VND 11 tn (-16.9% YoY) and VND 1.46 tn (-26% YoY). This is 11.4% higher than our previous net profit forecast. For 2024, we expect net sales and net profit to reach VND 12.4 tn (+12.6% YoY) and VND 1.7 tn (+17.8% YoY), respectively.  Our 1Y target price for VHC is VND 80,500/share (from 71,500/share), representing an upside of 3.9%. We maintain our MARKET PERFORM rating on the shares of VHC.

We reiterate our Outperform rating on the shares of QNS, citing our improved outlook on the company. We revise up estimated 2023 NPAT by 35% compared to our previous forecast, encouraged by higher domestic sugar prices and higher refined sugar (RS) production volume. Our target price for QNS is VND 65,000/share (from VND 58,000/share), representing a +22% upside (total ROI 27%).

During 2Q23, STK reported net sales and net profit of VND 407 bn (-23% YoY; +41% QoQ) and VND 38 bn (-47% YoY) respectively, beating our estimates. Going forward, the company is confident that orders will continue to improve in terms of volume during 3Q23 and 4Q23 on QoQ basis. The declining trend of average PET chip prices should continue to help widen the price gap, and lead to a higher GPM during 2H23. During 2023, we expect net sales and net profit to reach VND 1.8 tn (-14.7% YoY) and VND 167 bn (-31% YoY), respectively. During 2024, net sales and net profit are estimated to reach VND 2.2 tn (+19.7% YoY) and VND 225 bn (+34.4% YoY), respectively. We applied the  historical average P/E of 14x to 2024 EPS to reach our new target price for the shares of VND 33,400/share (up from VND 26,800/share), indicating upside of 5%. We reiterate our MARKET PERFORM rating. As STK operates in the upper stream of the sector value chain, we expect sales results to be the first sign of a sector recovery, followed by other garment manufacturers. 

GAS is trading at 2024F PE of 15.5x. We maintain our MARKET PERFORM rating for the shares of GAS and raise our 12-month target price to VND106,000/share (from VND 103,000/share), based on 2024F EPS (from 2023F EPS) and an unchanged 1-year target PE of 16.5x. Key upside/ downside risks to our call include: stronger-/weaker-than-expected dry-gas volume; and higher/lower-than-expected fuel prices.

Becamex (HOSE: BCM) remains a leading industrial park developer, with total available land of 888.5 ha for lease. At the same time, the commercial land area is 1,250 ha in Binh Duong New City (100% owned by Becamex), and profit margin at 43%, according to Capitaland. The VSIP-Warburg Pincus joint venture is forecasted to be quite profitable due to the growth in leasing demand for land and factories. Using RNAV method, we rate the shares of BCM as OUTPERFORM, with a target price of VND 88,700/share (upside 9.6%). Over the short-term, information about the transfer of land to sub-developers in the Binh Duong New City project and the start of Cay Truong Industrial Park should support the share price going forward.

Although we are not raising our earnings forecasts for 2023-2024, we are now more positive on VNM versus the overall market given the impact of lower input costs as well as a lower WACC in our DCF valuation. Therefore, we are upgrading the shares of VNM from Market Perform to Outperform, and increasing our target price to VND 82,000/share (from VND 74,700/share), which represents an upside of 14%. We are of the opinion that the share price has already priced in previous difficulties, and therefore might have bottomed out. Looking ahead, a likely return to profit growth in coming quarters and demand recovery in 2024 support our view on VNM.

Given the uncertainty of a full recovery and an upside of just 2% (VND 36,700/share price target) based on our new target price, we downgrade our rating on the shares of ANV from Outperform to Market Perform. At the AGM, management provided net revenue and PBT guidance for 2023 of VND 5.2 tn (+6% YoY) and VND 300 bn (-61% YoY), respectively. PBT guidance was revised down 40% from VND 500 bn (-35% YoY) during April 2023 to VND 300 bn (-61% YoY) during the June 2023 meeting, reflecting management's much less sanguine view on the recovery of fishery exports and gross profit margin contraction in less than two months. Reflecting management’s perception, we too lower our 2023 NPAT forecast 34%  given the: (1) longer-than-expected ASP recovery; and (2) lower-than-expected order volume from the Chinese market.

Reiterate OUTPERFORM, with new 1Y TP of VND 52,900/share. Raise 2024F NPATMI estimates to VND 554 bn, flat YoY given the recent positive development and expectation of further reocvery of freight rates, leading to a possible re-rating for the industry. AGM set target for NPATMI 2023F of VND 490 bn, - 40% YoY, 10% lower than our estimates. Industry see some positive developments on charter rates (+15-20% from trough) so we expect inventory de-stocking to end around 3Q2023 and industry fundamental to improve from that point on.

NTC is trading at a forward 2023 P/E and P/B at 13.1x and 5.0x, respectively – higher than the average industrial park developer P/E of 11.5x and P/B of 2.1x. We recommend an OUTPERFORM on the shares of NTC, with a target price of VND 185,900/share (upside 11%) based on RNAV valuation. We believe that the NTC3 industrial park will start operating at the end of 2023 with a commercial land area of 254 ha, while industrial parks in Binh Duong have run out of leased land with occupancy rates reaching over 92%. NTC3 Industrial Park should be the main source of revenue for NTC, with a forecasted gross profit margin of over 45% and project NPV of VND 2.5 tn.

Phu Nhuan Jewelry’s (PNJ) financial performance trailed behind our expectations, with net income in April declining by -24% YoY. However, we think the results more truly reflected the state of the general economy. We expect earnings of the company may still decline by double digits in 2Q23 and 3Q23, as the economic downturn may still weigh on jewelry consumption. Rate cut action by the Vietnamese central bank brought on a decline in policy rates by a range of 200-300 bps YTD, but it may take time for this to aid multisector economic recovery. We expect overall consumption demand to recover in 4Q23. As such, earnings may only swing back to positive territory from 4Q23. With worse-than-expected April performance, we revise down our 2023-2024 net income assumptions by -8% and -5% respectively to VND 1.74 tn (-4% YoY) and VND 1.96 tn (+13% YoY). We derive a new target price at VND 81,400 (from VND 86,000) per share based on 2024 financials (from average 2023-2024) and unchanged target P/E of 15x. With an upside of 11.1% from the current share price, we downgrade our rating to MARKET PERFORM (from OUTPERFORM). PNJ may only be suitable for investors with a long term investment horizon, wherein investors can get exposure to the jewelry retail industry which benefits over time through the expected rise in disposable income, and the transition from traditional trade to modern trade outlets.

We upgrade the share of STB to a BUY rating from Outperform, as we roll-forward our valuation to mid-2024 and arrive at a 1Y TP of VND 34,500 per share (up from VND 29,000). Our double upgrade reflects asset quality holding up well, as STB hasn’t any corporate bond investment exposure and only limited exposure to real estate developers. In addition, pretax profit growth looks appealing for 2023 and 2024, even without one-off income from the sale of legacy assets. Given the potential upside of 22.3%, we recommend to accumulate STB shares at price weakness.  For 2023, we reduce our pretax profit 9.2% forecast from our previous estimate to VND 9.5 tn (+50% YoY), due to weaker-than-expected NFI growth (-26.4% YoY) as sluggishness in credit demand weakened cross-selling activities, as well as a lack in other income (-71% YoY). However, it should be noted that if we exclude the one-off income item from bancassurance during 2022, NFI is expected to increase 3.5% YoY for 2023.