Company Report

We attended PNJ Analyst meeting on July 21^st to update on the 2Q22 results and management view’s on the demand outlook going forward. Given inflationary pressure already affected some consumer discretionary sectors, PNJ management has not found significant impact on jewelry sales given June and July sales remained strong. In 2Q22, PNJ recorded net sales and net profit of VND 8.1 tn (+81.1% YoY) and VND 367 bn (+64.8% YoY), respectively. In 2022, we expect net sales and net profit to reach VND 29.1 tn (+49% YoY) and VND 1.7 tn (+66% YoY), respectively. This translates to 2H22 NPAT growth of 107% YoY since PNJ made losses in 3Q21. In 2023, we expect PNJ to post net sales and net profit of VND 33.4 tn (+14.5% YoY) and VND 2.0 tn (+15% YoY), respectively. Our updated 1Y target price for the shares of PNJ is VND 136,800/share (from VND 142,300/share), which is equivalent to a 20% upside. We lower our target P/E from 20x to 19x, reflecting the demand slowdown attributed to inflationary pressure which is expected to occur from 4Q22. We reiterate our OUTPERFORM rating for the shares of PNJ, given that 3Q22 is the strongest earnings growth quarter.

We are upgrading both our rating on the shares of HDG to Outperform, and our 1Y target price to VND 52,800 (+18% potential upside). During the 2022- 2023 period, the sale and handover of the Charmvilla project (plus the operational cash flow from the 462 MW within the renewable portfolio) should be quite supportive to HDG results. In addition, HDG’s diversification away from real estate has exhibited progress, especially considering macroeconomic conditions and real estate market headwinds. According to the draft of Power Development Plan 8 (which targets for wind capacity of 13,616 MW by 2025), there remain approx. 7,180 MW to be developed, which is a potential business opportunity for HDG. As such, we believe that HDG has an interesting opportunity in the real estate/renewable energy space given its diversified source of earnings plus the power segment expansion strategy to achieve 1,000 MW over the next five years.

We maintain our view that PVT would benefit from the current lucrative tanker market situation, which might last even after the Ukraine conflict is over, because of associated sanctions from the war. We maintain our current forecast regarding 2022 and 2023 at the moment (NPATMI growth of 23% YoY and 6% YoY). We see some upside for our forecast, but more information would be needed to pinpoint new estimates. In our view, as PVT current time charter contracts will expire one by one from time to time, it might take some time to see full reflection of these recently lucrative market rates on the company’s P&L sheet. Thus, we maintain our current 1Y TP of VND 26,200/share and BUY rating for PVT at this time.

AST has turned a profit since May 2022. PBT is estimated to reach VND 10 bn in 2Q22, and YTD losses could be reduced to VND 10 bn. The FY2022 PBT target is set at VND 23.5 bn (vs a loss of VND 128.4 bn in 2021), which should be achievable. We estimate that AST’s PBT could reach VND 224 bn (+486% YoY and -15% vs 2019) in 2023, and VND 322 bn (+43% YoY and +22% vs 2019) in 2024 when the market fully recovers. We have an Outperform rating for the shares of AST with a 1Y TP of VND 69,000/share (based on a target 2023 P/E of 20x), implying 19% upside from the current market price, reflecting our positive view on AST strong turnaround along with the recovery of the aviation industry.

The shares of NT2 have achieved our target price of VND 26,800 (as our 18-Apr-2022 update), and we adjust the company’s 2015-2019 FX loss claim to our estimates to derive the new target price of VND 29,300 (+5.4% upside). The shares offer a 2022 dividend yield of 6.5% while the current 12-month deposit rate range is 5.0%-5.2% at the SOCBs and JSCBs. Over the next 12M, an estimated +100bps increase in deposit rates is assumed and NT2’s dividend yield may not be as attractive given the stock’s limited upside. With total ROI of 12.1% including dividend yield, we call for Market perform rating on the shares.  

We are reiterating our BUY rating on the shares of HAH, and increase our 1Y-TP to VND 110,000/share (target P/E of 8x), which implies 22.4% upside. We continue to believe that HAH can maintain a high level of earnings throughout the cycle. Over the near term, we believe that HAH will maintain strong earnings growth due to capacity expansion. Taking the ZIM – Haian JV into account, we are increasing our 2022 and 2023 NPATMI estimates to VND 855 bn (+92% YoY) and VND 1.13 tn (+32% YoY), respectively.

We are upgrading the shares of PVT to BUY from Market Perform, which tracks our 1-year target price of VND 26,200/share (previously VND 32,500/share) using target P/E forward of 11x – intimating 22% upside in the shares. Over the short-term, we expect a catalyst in the form of the PVT Athena liquidation which should translate into a gain of USD 6 mn (expected in 2H 2022F). PVT has solid assets, stable earnings growth, a D/E ratio of 0.5x, and a strong cash buffer of VND 3 trillion at 1Q 2022. As the Vietnamese economy is in recovery, we also believe that increased tanker demand is on the near-term horizon. These factors suggest that PVT will return to its pre-COVID core earnings growth path of 15% p.a. over 2022F-2023F, given renewed and growing fleet of vessels.

GAS remains our top pick in the oil & gas sector, which is one of the top domestic beneficiaries of high oil prices. We also lift our 12-month target price for GAS from VND 134,000/share to VND 143,000/share (20% potential upside) as we roll our EPS base to mid-2023 tracking our belief of even higher fuel oil and LPG prices. We base our target price on blended target PE of 20x (from 22x) and DCF valuation. For 2022, we raise our NPAT forecast for GAS from VND11.6 tn (+35% YoY) to 13.4 tn (56% YoY) on higher oil price assumptions (from USD480/ton to USD500/ton for fuel oil and from USD700/ton to USD800/ton for LPG) and a higher dry gas volume forecast, from 8.1bcm to 8.2bcm (+13% YoY) in 2022.

In 2018-2020, VTP has been a favorite mid-cap high growth stock mainstay for investors, with earnings growth ranging between 40-50% p.a. thanks to its direct exposure to the Vietnam e-commerce growth story. However, even after COVID-19 has sped up ecommerce market growth significantly, the express delivery market after 2020-2021 period has been further sculpted and is continually refined. It is thus of little surprise the market has been heading into a new period, with more competition and with higher expectations of better infrastructure and customers’ demand for higher service quality. In that context, VTP needs some time to retool its approach towards a new growth strategy, with an initial focus on infrastructure investment before it can reap the fruit of reward, and see high growth yet again. At the current market price, VTP is trading at a 2022F and 2023F forward P/E of 20x and 17x respectively, compared to the regional peers’ average of 24x. We maintain our target P/E of 20x, but lower our estimates for VTP as discussed below. As such, we revise our VTP 1Y target price to VND 74,000/share (12.8% upside), with an MARKET PERFORM rating for the stock.

After posting fruitful earnings results in 2021, MSN continues to set high growth targets for 2022. MSN targets between VND 90-100 tn in revenue (+22%-36% YoY) and core NPATMI of between VND 4.8- 6.2tn (+26%-63% YoY). These targets take the deconsolidation of the feed business into account. For 2022, our forecasts are broadly unchanged, and we estimate MSN to post VND 93.4 bn revenue (+5.4% YoY) and VND 5.76 tn NPATMI (-33% YoY) or core NPATMI growth of 37% YoY. For 2022, strong growth likely will come from: (1) continued growth momentum of MCH and TCB; and (2) profitability improvement at WCM and MHT.  Our SOTP-based 12-month target price is adjusted to VND130,000/share (from VND172,000), after taking into account the recent 20% stock dividend. With 18% upside potential to our TP, we maintain our Market Perform rating.

We are upgrading the shares of ACB to BUY, while maintaining our 1Y TP at VND 43,000/share - representing 45.8% upside. During 1Q 2022, strong earnings momentum (+33% YoY and +36% QoQ) was the result of solid credit growth, robust non-interest income, and a reversal in provisions due to a recovery in troubled loans. A notable improvement in CASA was another highlight of ACB’s interim results. We believe that 2022 will be quite a favorable year for ACB, given our estimated PBT of VND 16.9 tn, +41% YoY led by solid credit growth (+16% YoY), NIM expansion of 25 bps, and lower provision expenses. Notably, ACB veered away from the corporate bond market, and likely will remain unscathed during this period of market turbulence. 

VIB stands out as the bank with the highest concentration of retail loans, at approx. 86.5% of total loans. Corporate bond balances have been maintained at around 1% of total credit (VND 2.6 tn as of 1Q 2022; less than TPB and OCB). VIB, as a result, has minimized its exposure and was quite conservative with corporate bond issuance, an enviable spot to be in with the current corporate bond crackdown. During 1Q2022, VIB posted a significant pretax profit growth of +26% YoY to approx. VND 2.3 tn, which is backed by an improvement in CIR pf 360 bps YoY to 35.3%, and strong mortgage lending growth of 7.4% YTD to VND 91 tn. However, bancassurance income witnessed a long slide by -36.2% YoY due to acute competition. A close eye needs to kept on asset quality, given the bank’s relatively low credit risk buffer compared to peers (51.8% vs. 148.3% on average). As such, we call for Market Perform rating on the shares of VIB, along with our 1Y TP of 30,700 per share.Downside risk: Higher-than-expected inflation, pressuring the bank to increase its deposit rates. Possible slowing consumer demand. Upside risk: Significant decline in restructured loans.

SAB posted encouraging 1Q22 results, as net sales and net profit each advanced 25% YoY. An expansion of the company’s market share has also been encouraging, as has its the economic reopening which enabled SAB to recover despite intense competition. We maintain our estimates for SAB, and expect 2022 net sales and net profit to reach VND 32 tn (+21.6% YoY) & VND 4.7 tn (+19.6% YoY), respectively. We also reiterate our 1Y target price for the shares of SAB at VND 188,000/share (+14% upside potential), as well as our OUTPERFORM rating.

GMD posted strong 1Q22 revenue and PBT of VND 880 bn (+28% YoY) and VND 350 bn (+82% YoY), respectively, which is the highest quarterly core earnings result ever recorded by the company - although Q1 is normally the industry’s low season. We believe that growth momentum can be sustained in 2022 given Gemalink’s contribution and the cost efficiency improvement, which should lead to GMD posting a PBT of VND 1.2 tn (+50.7% YoY) for 2022. Beyond 2022, however, GMD’s growth outlook remains very bright with the contribution of Nam Dinh Vu Phase 2 beginning 2023 and Gemalink’s Phase 2 from 2025. We reiterate OUTPERFORM rating on the shares of GMD with a revised 1Y TP of VND 65,000/share, which implies 16% upside.  Downside risks include: (i) prolonged Covid-19 lockdowns in China to affect shipping volume; (ii) weakened global demand as a result of high inflation and/or economic downturn; and (iii) higher competition in the Northern port system.