Company Report

VNM reported 1Q23 net sales and net profit of VND13.9tn (+0.3% YoY, -7.6% QoQ) and VND1.9tn (-16.5% YoY, +2% QoQ), respectively, trailing our expectations. Domestic sales continued to struggle, given weak consumer sentiment and aggressive competition in the market. For 2023, the company has set an annual sales and net profit target of VND63.4tn (+5.5% YoY) and VND8.6tn (+0.5% YoY), respectively, which we believe to be rather conservative. We also lower our 2023E earnings to reflect challenging overall market conditions. We expect 2023E net sales and net profit to reach VND63.8tn (+6.4% YoY) and VND9.2tn (+7.3% YoY), respectively. Our new earnings are 3% lower than our previous net profit estimates. For 2024E, we expect net sales and net profit to reach VND67.8tn (+6.3% YoY) and VND10.2tn (+11.3% YoY), respectively. We lower our DCF/PER-based 12-month target price for VNM to VND74,700/share (from VND82,900/share) as we now use a lower target PER of 16x (from 18x) to reflect the gradual loss of market share. Our new TP implies 13.5% upside potential. We maintain our Market Perform rating on the shares of VNM. 

We attended the analyst meeting hosted by SAB. The overall message from the CEO is that despite some short-term headwinds due to unfavorable macro conditions, the company is well prepared for growth once demand recovers (which is expected during H2 or early 2024). While the 2023 sales target appears to be a bit of a stretch against the prospect of uncontrollable outside factors, management sees a path forward to meet its annual NPAT target by controlling costs. Given weak Q1 2023 results as well as expectation of weak consumer sentiment to remain in the coming quarter, we cut our 2023 sales estimate by 6% to VND 37 tn (+4.7% YoY), while estimated NPAT remains almost unchanged at VND 5.8 tn (+5.2% YoY). We cut our target price for SAB to VND 182,000/share (from VND 198,500/share) based on a PER of 23x (from 24x) applied on our 2023F EPS due to the soft outlook for 2023, combined with our DCF model. With 13% forecasted upside in the shares of SAB, we maintain our Market Perform rating.

Following the MWG analyst meeting on May 12 2023 and the worse-than-expected 1Q23 results, we trim our 2023 and 2024 net income forecasts by -24% and -8%, respectively, to VND 3 tn (-27% YoY) and VND 4.6 tn (+52% YoY). However, we believe that MWG’s earnings bottomed out in 1Q23, with April revenue recovering by 20% MoM. We believe earnings could recover over the remainder of the year QoQ, powered by: (i) higher demand for white goods due to the unexpected hot weather; (ii) lower interest rates; and (iii) recovery in external and domestic demand from 4Q23. We also expect earnings to return to YoY growth from 4Q23. Using unchanged target multiples applied on our revised 2024F estimates (from averarge 2023F-2024F), we derive a new SOTP-based target price of VND 43,900/share (from VND 44,400) which offers 15% upside from the current share price. We maintain MARKET PERFORM rating. 

At the 28 April AGM, guidance for net revenue and NPAT in 2023 was set at VND6.4tn (+9% YoY) and VND651bn (-6% YoY), respectively. Earnings guidance reflects management's conservative view of weak market demand and PVC input price fluctuations. BMP is expected to focus its strategy on sales volume and lowering inventory. For 2022, BMP is set to pay 99% of net profit in a cash dividend, which is equivalent to VND8,400/share (a 10% dividend yield). We increase our net profit for 2023F by 21%, as BMP has a high ASP level and low PVC input prices. We raise our 12-month target price for BMP to VND84,300/share (from VND62,000), based on a 2023F PER of 9x. But given only 2.3% upside potential to our new TP, we downgrade our rating to Market Perform (from Outperform).

Per management, sluggish consumer spending continued to weigh on April sales. With worse-than-expected macroeconomic conditions during 1Q23, (inflation above the annual target, dismal exports, and rising unemployment) April sales were sluggish. We lower our 2023 and 2024 net income forecasts -7% and -10%, respectively, to VND 1.89 tn (+4.4% YoY) and VND 2.08 tn (+10% YoY). Despite lowering our earnings forecast, we apply 2024F financial data (from 2023F) and an unchanged target P/E of 15x to derive a new target price of VND 86,100 (from VND 85,800). With an upside of 13% from the current share price, we reiterate our OUTPERFORM rating on the shares of PNJ.

We maintain our Outperform rating on QNS, citing our improved outlook on the company. We revise up 2023 NPAT by 8% compared to our previous forecast due to (i) higher sugar prices and (ii) higher refined extra type (RE) production volume. Our target price for QNS is VND 48,500/share (from VND 46,000/share), representing a +14% upside (total ROI 21%). At the April 1^st 2023 QNS AGM, net revenue and net profit guidance for 2023 was set at VND 8.4 tn (+1% YoY) and VND 1 tn (-16% YoY), respectively. We note that the company has a tradition of setting a conservative financial plan.

We derive a new target price at VND 77,400 (from VND 60,000) as we roll over to average 2023-2024 financials and use higher target P/S for Long Chau. With an upside of 19% from the current share price, we upgrade our rating to OUTPERFORM (from UNDERPERFORM) as we believe that the recent share price weaknesses reflected the poor 1H23 performance to some extent. Besides, Long Chau deserves rerating given the recent slow down in new openings of competitors Pharmacity and An Khang. Pharmacity faces internal restructuring issues, while MWG preserves cash for other business lines other than An Khang. As a result, FRT is well positioned to benefit from the transition from traditional trade to modern trade, with less intense competition from other modern trade pharma retailers. Long Chau can tailor its product mix suited to customers’ needs in each region, enabling the chain to generate higher revenue and hence profit margin than peers. Amongst the 3 largest pharmacy retailer chains, Long Chau is the only chain which is currently profitable.

Due to the worse-than-expected macroeconomic indicators in 1Q23 and the sluggish sales of ICT & CE in Jan-Feb 2023, we revise down our 2023 net income forecast by -11% to VND 4 tn (-3% YoY), with earnings expected to come bouncing back in 4Q23. We introduce our 2024 net income estimate of VND 5 trillion (+26% YoY). We now use our average 2023F-2024F financials (from 2023F) for valuation and unchanged price multiples, and derive a new target price at VND 44,400 (from VND 44,600). With 9% upside from the current share price, we maintain our MARKET PERFORM rating. MWG currently trades at 2023-2024F P/Es of 15x and 12x respectively, which is lower than 3-year historical P/E of 16.3x. However, the stock price may not have yet priced in the uncertainty on the earnings trough in 1H23F and the economic recovery pace.

Earnings continued to normalize from the brief upcycle with NPATMI declining -21% QoQ and -16% YoY, leading to our lowering of 2023 earnings forecast by 24%. Lingering high inflation and overstocked inventories issue needs some time to correct and shipping volumes are expected to remain weak within 1H 2023, before improvement can be expected from 2H 2023.We change our rating for the stock to OUTPERFORM (from BUY) with a revised 1Y P/E target of 6x and a revised 1Y TP of VND 40,500/share (~16.9% upside). We believe even though earnings outlook might be negative in short-term, the industry dynamics have passed its worst time, as evidence in the recent recovery of charter rate. We expect 2H 2023 industry dynamics to improve, which can lay a good foundation for market re-rating for the sector.

We downgrade our rating on STB shares to Outperform from Buy with a 1Y TP of VND 29,000 share (+11.5% upside). During 2023, we expect that strong growth momentum will continue, with PBT growth of 65.4% YoY or to approx. VND 10.5 tn. Such stellar growth is expected to be supported by a significant 4.4% improvement in NIM (+96 bps YoY), and the clearance of legacy assets. As the bank has a different growth cycle than other banks due to M&A back in 2016, we expect that 2023 will be the last chapter of its restructuring plan, with full VAMC bond provisioning - a milestone that is likely to unbridle the bank from its previous burden, and free it towards more promising earnings growth ahead.

We reiterate our BUY rating on the shares of VRE reflecting our belief of a stronger recovery in mall leasing this year and upgrade our 1Y TP to VND 40,400/share (previously VND 35,200/share) - representing 37.9% upside. We believe that VRE, as the largest mall operator nationwide, should continue to benefit from the rising middle-class incomes and the continuous expansion of both international and domestic retail brands in Vietnam. Further, we do not exclude the possibility of potential asset sales that could act as a catalyst for the shares. Key downside risks to VRE may include: (i) delay in development of Vinhomes mega projects could impact the Company’s expansion; and (ii) weaker-than-expected consumption could decelerate tenants’ expansion plans.

We maintain our positive outlook on TDM’s operations, given the stable growth in consumption demand and TDM’s most efficient clean water enterprise due to its low water loss rate and stable source of raw materials from both the Dong Nai River and Phuoc Hoa Lake. Additionally, the Bau Bang factory is expected to surpass 10% of the average demand for Binh Duong province between 2022-2025 to cater to future demand in the Bau Bang Industrial & Residential Area, as well as additional industrial customers setting up shop at VSIP 3. We recommend an Outperform rating for the shares of TDM, with a target price of VND 39,600 (6.5% upside) based on our DCF valuation. Dividend payout ratio will reach 45% in 2023, translating to an yield of 3.6%. In the long term, we expect that the M&A of Gia Tan - Dong Nai water plants and Can Tho Water Supply JSC to be the main drivers for TDM's profit growth  when demand growth in Binh Duong slows down.

We upgrade our rating on the shares of ANV from Market Perform to Outperform given our improved outlook on the company. We expect that ANV will outperform other fishery companies in terms of profit growth with expected 5% YoY NPAT growth. We revise up 2023 NPAT by 33% compared to our previous forecast, mostly due to (1) higher ASP to China market and (2) higher new order from the US market. Our target price for the shares of ANV is now at VND 33,300/share (+11% upside), up from VND 25,100/share.

We reiterate our OUTPERFROM rating on the shares of PVT despite lowering our 1Y TP to VND 23,200/share (~17% upside) from VND 24,000/share. 4Q 2022 revenue and gross profit increased 17% and 33% YoY, respectively, due to 25% YoY growth in transportation segment revenue associated with higher charter rates, as the FSO segment stabilized. We see a strong tanker charter market supported by sanctioning measures on Russia oil&oil products increasing ton-mile demand for oil transport. Full year 2022 PBT thus reached VND 1.5 tn (+40% YoY), which is 8% higher than SSI Research estimates due to a surprising asset disposal gain during 4Q. Excluding all asset disposal gains, 2022 PBT would have been VND 1.2 tn (+17% YoY), slightly higher than its PBT CAGR of 15.6% over the past ten years.