Company Report

We expect the company to post net sales and net profit of VND 5.8 tn (+22% YoY) and VND 434 bn (-2% YoY), respectively, in 2022, reflecting  preliminary 1Q22 results. At VND 91,600/share, MSH trades at a 2022 P/E of 11.2x on SSI Research estimates and 12x on company guidance. This is lower than peer average of 13x. Our rating on the shares of MSH remains MARKET PERFORM, as does our 1Y target price of VND 97,800/share (+7% upside) based on our target P/E of 12x. Despite the short-term headwinds, we believe that the recent capacity expansion from two new factories are supportive medium-term catalysts for the shares, as orders continue to shift from China to Vietnam.

Given that raw material prices (raw milk, feed, sugar, packaging costs) have remained at elevated levels for longer than we had expected, we lower our 2022E revenue and NPAT by 1% and 10%, respectively. We trim our 12-month TP for VNM to VND82,000/share (from VND90,000/share), based on a blended DCF valuation (with a higher WACC to reflect a higher risk-free rate) and a lower P/E target of 18x (from 19x). We are of the view that the negative growth outlook for 2022 has been largely flagged by the market. Given upside potential of 13% to our new TP, we reiterate our Outperform rating on the shares of VNM.

We recently attended the MWG AGM, wherein the management guided for 2022 earnings to increase by 30% YoY. As a result, we increase our SOTP-based 12-month target price to VND196,000 (from VND174,000) – for upside potential of 31.4%. While the revenue recovery for its grocery chain (BHX) is slow, 2022 earnings growth should be supported by: (1) a recovery of DMX/TGDD off of a low base in 2021; and (2) improvement to BHX’s bottom line due to cost optimization measures. Our 2022 revenue and net income estimates are now VND138.8tn (+13% YoY) and VND6.7tn (+37% YoY), respectively. The AGM pledged a maximum of 20% toward a capital raise to expand the grocery segment beginning 2023 - a positive catalyst for the shares, in our opinion. We, hence, raise our target PS for the grocery segment from 0.8x to 1.3x, which is decent compared with the PS of 2x based on the most recent stake sale of Wincommerce (a competitor grocery chain). We reiterate our BUY rating on the shares of MWG. Downside risk: possibility of store closures due to renewal of lockdown measures.

VHC continued to post solid quarterly results, as net sales and net profit advanced 83% and 336% YoY, respectively, in 1Q22. As a result, we are reiterating our OUTPERFORM rating on the shares of VHC and are increasing our 1Y target price to VND 101,300/share (+14% upside) from VND 86,800/share. VHC remains highly confident with its strong demand in nearly all markets. Going forward, VHC expects export prices to anchor at this current high level, given the rising fish material and aqua feed costs. The AGM approved accelerating net sales and net profit guidance of VND 13 tn (+43.6% YoY) and VND 1.6 tn (+44% YoY), respectively, for 2022. Although, SSI Research is substantially more sanguine than management, expecting VHC to post net sales and net profit of VND 13.4 tn (+48.2% YoY) and VND 1.9 tn (+71.1% YoY), respectively, over the same period.

We reiterate our Outperform rating for GAS, with our 12-month target price maintained at VND134,000/share (16.2% upside potential), based on a blend of a target PE of 22x and DCF valuation. Although we raise our base-case assumption for the Brent crude oil price from USD80/bbl to USD90/bbl in USD terms (or the fuel oil price from USD430/tonne to USD490/tonne), we lower our gas volume forecast to reflect the fact that high oil prices might dampen demand. Accordingly, we estimate dry gas volume to reach 8.1 bcm (+12% YoY, from our previous estimate of 8.5 bcm). Therefore, our revenue and NPAT for GAS in 2022E are almost unchanged: VND88.6tn in revenue (+15.7% YoY) and VND11.56tn in NPAT (+34.9% YoY).

We reinitiate another strong BUY rating for TRA. From our recent call in August 2021, TRA share price has increased 28% and reached our previous target, with strong earnings growth confirming our previous forecast. After attending recent 2022 AGM, we saw another buying opportunity as the company: (1) continue to post double-digit sales growth, with increasing number of R&D and transferred products, (2) benefit from strong demand on drug store and hospital channel due to less severe Covid-19 cases and recovery of nationwide hospital visits, (3) persist improvement in profit margin as SG&A expenses on sales continue to decline.  Thus, we upgrade our 1-yr target price for TRA to VND 124,400/share as we roll out our earnings forward for 2022, equal to 24% upside from the current price of April 6^th 2022, plus an expected 3% dividend yield for 2022. We keep our earnings estimate similar to previous report, with total sales and net profit in FY22 to reach VND 2.6 tn (+19% YoY) and VND 343 bn (+29% YoY), respectively, and raise our target P/E from 17.5x to 18.0x to reflect the high-growth period of the company.

1Q2022E exciting PBT growth of approx. 29% YoY could be catalyst. Aside from waiting for 5G development guidance, residential construction sales (+40% YoY) has been pushed to be one of company growth driver along with telecom infrastructure leasing segment (+142% YoY). Per latest investor meeting, management set an internal target for 2022 PBT of VND 653 bn (+38% YoY) which is 10% above our forecast.  On back of FY22E/FY23E EPS growth of 25.9%/32.2%YoY, CTR currently trades at FY22E/FY23E P/E of 20x/15x respectively. Meanwhile, global telecom infrastructure leasing companies currently trade at FY22E/FY23E P/E of 25.5x/22.6x but at lower EPS growth of 18.1%/10.2%YoY. We thus call for BUY rating on these shares with 1Y TP of VND VND135,900 with 24% upside. 

We reiterate our BUY rating on the shares of FPT and raise our 1Y TP to VND136,900 (vs. previous TP of VND112,500) – implying 28% upside along with a 2% dividend. Our higher target price reflects the strong growth in the technology segment. The 2022 PBT growth for technology is estimated at +30% YoY supported by both global (+29.9%) and domestic IT segments (+32.1%). Further, management believes that a 30% growth for domestic IT can also be achieved over the next three years, which is the same for the education segment. FPT could also likely be shielded from commodity volatility and deliver 20% plus YoY growth for 2022.

FY21’s strong backlog and attractive new order book in 2022 are very supportive to the shares of HTN. In 2021, HTN’s ending backlog reached approx. VND 29.8 tn (+36% YoY). The strong backlog should solidify revenue, NPAT, and also post-money EPS growth for 2022. Our FY22E & FY23E EPS has factored in the dilution from the 25 mn new share private placement since 2H2022. We call our Outperform rating on the shares of HTN, along with our 1Y TP of VND 69,300 (25% upside) on back of a strong backlog in 2021 that will secure 2022 revenue (+60%yoy), NPAT (+44.3%yoy) and also post-money EPS growth (+26.6%yoy).

If excluding the one-off, non-cash gain from the revaluation of Tan Phat JSC in 2Q 2021, PC1 could offer an approx. NPATMI of 29% YoY in FY22 (VND 552 bn) - led by three wind power projects (Lien Lap, Phong Nguyen, and Phong Huy) and the Dinh Cong properties project. PC1 should also enjoy attractive long-term growth in 2023 NPATMI (+55% YoY), driven by Dinh Cong, Vinh Hung & Bac Tu Liem projects and Tan Phat’s new nickel project. We reiterate our Outperform rating on the shares of PC1, along with our 1Y TP of VND 48,800 (+15% upside). 

In our view, the supply chain disruption could carry through into 2023 longer than we initially expected, due to a trifecta of factors: (i) the surge in Omicron cases and the potential for new variants; (ii) China’s zero-Covid policy; and (iii) rising tensions between Russia – Ukraine, which will exert more pressure on global trade. Additionally, new vessel deliveries in 2022 are limited to only 3.1% of the current fleet. Thus, we expect both international and domestic container shipping to perform well with favorable conditions through 2023.With six new vessels to be added to the fleet between 2022 – 2024, HAH is ambitiously expanding into the Intra-Asia market to take advantage of the favorable market environment. We believe that the company’s new services will be profitable, given advantages of their low-cost fleet (8 out of 14 vessels having been invested into at low cost). We estimate that HAH will maintain high earnings growth during 2022 and 2023, and revise our NPATMI forecast to VND 744 bn (+67% YoY, +12.7% from our previous forecast) and VND 902 bn (+21% YoY) respectively, translating to an EPS of VND 14,641 in 2022 and VND 17,742 in 2023. We reiterate our BUY rating for HAH, with a revised 1Y TP of VND 106,000/share (unchanged target P/E of 7x), implying a 28% upside.

We are upgrading our rating on the shares of STK from OUTPERFORM to BUY, and our 1Y target price of VND 70,300/share (+26% upside). Our upgrade reflects the improved recycled yarn to total revenue ratio to 54% in 2022, as sales volume has now begun to recover to pre-pandemic levels in 1Q22. In 2022, we expect the company to post net sales and net profit of VND 2.62 tn (+28% YoY) and VND 318 bn (+14.1% YoY) respectively. With respect to 2021, STK recorded a decline in net sales and gross profit margins during 4Q21 due to less recycled yarn in the total sales mix (37% in Q4 vs 57% in 1H21) given the continued labor shortage. Nevertheless, STK still hit its target of 50% of its sales comprised of recycled yarn for 2021.

We reiterate our Outperform rating on the shares of STB, following our 1Y TP increase from VND 35,200/share to VND 40,000/share - representing upside of 18.7%. Our target price upgrade reflects our belief that the legacy asset balance will be aggressively reduced, on top of the successful sales of STB shares pledged at VAMC and the Phong Phu Industrial Park during the year. STB remains on track to clearing legacy assets despite Covid-19 interruptions. We estimate net legacy assets to be roughly VND 26.6 tn at year-end 2021 (-31% YoY).  Core business activities remained in good shape with the individual customer base having gradually expanded over the last several years, bancassurance sales moved up to the Top 4 in the system in 4Q 2021, and payment & settlement income in the Top 3 amongst JSCBs (after TCB and MBB). Credit metrics of the current loan book were stable, with NPLs and a restructured loan ratio of 1.47% and 0.26% respectively. Downside risk: The delay in selling the remaining collateral is the STB’s biggest risk. Under our bear case where sales are not executed in 2022, our 1Y TP would decline to VND 33,000/share.

We are initiating coverage on the shares of pre-IPO (February 2022) Nova Consumer Group Joint Stock Company (NCG) with our 1Y target price for the shares of NCG is VND 53,200/share, implying a 22% upside relative to the IPO starting price. NCG is a leader in the animal health, feed, and farm market segment, having long-established customer relationships with the ability to create a full “3F” supply chain. It also has the advantage of being a part of the Nova Group ecosystem (including Novaland, Nova Consumer Services and six other members), which should allow potential future synergies and sharing resources. There is also the potential for strong growth in the FMCG business, from both organic growth and M&A perspective (on-going transactions:  Anco Family Food, a well-established beverage company, and a nutrition company). From 2022, NCG is widely anticipated to consolidate the consumer business, including Anco Family Food (sausage), milk, energy drink and coffee. Excluding one-off items in 2021, NCG should post strong core profit growth of 109% YoY in 2022. Through 2021-2026, however, we estimate that NCG will continue to post a net profit CAGR of 26.8%.

In 4Q21, VHC recorded its strongest quarterly sales and earnings over the past three years. Net sales and net profit reached VND 2.7 tn (+38.5% YoY) and VND 461 bn (+201% YoY), respectively, and well-exceeded consensus estimates. Pangasius exports continued to lead growth, especially in Dec’21 where sales surged 62% YoY off of a low base in Dec’20. Management is optimistic about another year of solid growth for 2022, a time when the market demand stabilizes as most economies fully reopen and reduce coronavirus-related restrictions. Meanwhile, shipping costs in 2022 will remain high, although we expect them to decline from the peak season in Q4’21. For 2022, we forecast net sales and net profit to reach VND 11.5 tn (+26.8% YoY) and VND 1.48 tn (+33.5% YoY), respectively. Our 1Y target price for VHC is VND 86,800/share (+18.3% upside), and we reiterate our OUTPERFORM rating.