Company Report

Given the stellar 2Q21 earnings result, we are upgrading the shares of TPB from Outperform to BUY. As we increase our 2021F and 2022F PBT +3.9% to VND 6 tn (+37.4% YoY) and +4.2% to VND 7.4 tn (+22.2% YoY), respectively, we are also raising our 1Y target price for TPB to VND 46,400 per share (from VND 37,600/share) - implying upside of 29.2%. 2Q2021 results were driven by strong growth in NII (+43.2% YoY), non-interest income (+32.5% YoY), and a reduction in CIR (despite a rise in credit cost). Asset quality improved reflective of a lower NPL ratio and higher coverage ratio. TPB is also in the process of a private placement of VND 1 tn (9.3% of pre-money capital) which would be incredibly supportive for the bank’s growth outlook.

SAB held an investor briefing to discuss its Q2 2021 results, and provide an update on the competition and production status during the fourth Covid wave. SAB recorded net sales and net profit of VND 13.1 tn (+8.7% YoY) and VND 2.1 tn (+6.4% YoY) in H1 2021, respectively, completing 39% of the 2021 targets. Management believes that achieving its net profit target for the year will be a challenge, given the continued uncertainty of Covid-19. However, if the restrictions are lifted over the next several weeks, SAB believes that it can meet what we believe to be an aggressive target. We have updated our estimates to reflect the poor results we expect for Q3 2021 where sales volume growth in July and August month-to-date have been negatively impacted (usually SAB’s high season but not this year). In 2021, we anticipate net sales growth of 9.2% YoY and net profit growth of 4.3% YoY (2.6% lower than our previous forecast). For 2022, we expect net sales and net profit to reach VND 33.8 tn (+10.8% YoY) and VND 5.8 tn (+12.1% YoY), respectively; our new net profit forecast is equivalent to a 1.2% increase over our previous forecast. We are rolling forward our valuation basis to 2022E EPS to derive a new target price of VND183,000/share (from VND173,800/share using the average 2021E-2022E EPS), based on our unchanged equally weighted target P/E of 25x and DCF approach. The 12-month target price represents an 18% upside potential. We reiterate our MARKET PERFORM rating on the shares of SAB. 

We issue a MARKET PERFORM rating on the shares of HDB with 1Y TP of VND 40,000 (from VND 34,000), representing 14.6% upside. With very little room to maneuver given the low initial credit growth quota, HDB has done a pretty good job of delivering pretax profit of VND 2 tn (+26.3% YoY) for 2Q 2021. In 1H 2021, pretax profit achieved VND 4.2 tn (+44.2% YoY), fulfilling 56% of our in-house forecast. This was achievable given new loan disbursements to higher-yielding individual loans and vigorous fee-based services (+89.2% YoY). Asset quality improved, with NPLs and restructured loans declining to VND 2.3 tn (-18% QoQ) and VND 989 bn (-78% QoQ), respectively. We are concerned about HDB’s difficulty in reducing its cost of funding relative to peer.  Average cost of funding for HDB during 2Q 2021 was 4.25% (+15 bps QoQ and -82 bps YoY), which was higher than the peer average of 3.4%. Provided HDB is granted a higher credit growth quota during 2H 2021, the company has ample room to expand the NIM given its low LDR (68% vs. cap of 85%) and short-term funding used for MLT (medium and long-term) loans (22% vs. cap of 37% from Oct 2021) are still at a low level. 

DRC’s share price has recently declined due to negative market sentiment due to the resurgence of COVID-19 in the Southern region of Vietnam. We believe that the recent wave of the pandemic may not affect Danang (where DRC’s factory is located) as people from the South are restricted from travelling to other provinces since early of July. In May 2021, the US announced to impose countervailing duty (6.23% - 7.89%) and antidumping tax (22.3%) on some light truck tires producers in Vietnam. This raised a concern that the US may impose antidumping tax on DRC in the future. In our view, DRC’s selling price is quite high compared with other exporters, so it may not be subject to antidumping tax. At VND 28,300 per share, the shares of DRC are trading at a P/E and EV/EBIBTDA of 9.8x and 5.2x, respectively, and we believe that 2021 earnings growth is now been priced in. Meanwhile, 2022 P/E and EV/EBITDA metrics remain attractive at 8.5x and 4.2x, respectively. By applying our unchanged target P/E and EV/EBIBTDA of 10x and 5x to 2022 metrics, respectively, we increase our target price to VND 33,400 (from our previous TP of VND 27,900). With an upside potential of 17% from the current share price (including the 5% dividend yield), we upgrade our call to OUTPERFORM rating. 

Gemalink port is due to become profitable in its first year of operation, which is in line with our expectation. On the other hand, GMD’s Haiphong area ports are recovering well, and have exceeded our expectation. Both Gemalink and Nam Dinh Vu port are expected to run at full capacity since 2H, which will fuel growth for GMD. We estimate 2021 PBT of VND 762 bn (+49%) and 2022 PBT of VND 1.1 tn (+39%), representing an 11% and 25% increase over our previous forecasts, respectively. We arrive at our new 1Y TP of VND 50,300/share (21% higher than previous TP), implying 13% upside in the shares of GMD. We recommend OUTPERFORM rating on the shares of GMD as the company is among main beneficiaries of the growing trend of Vietnamese trades activities in the next few years.

HAH represents a good investment into Vietnam logistics sector, with integrated business model (port-shipping-warehousing-logistics) and good management capability. The shipping segment has been the main growth driver for HAH in recent years. The company has largest container vessel fleet in Vietnam, invested with low capex during the trough of the shipping industry cycle, and are well positioned to benefit from the upswing of the industry and the increasing demand of container shipping in domestic market. 2021 and 2022 core PBT growth are estimated at 54% YoY and 35% YoY, driven by capacity expansion of the shipping segment volume and higher freight rates in favourable market conditions. Over the short term, rising oil prices remain the largest risk for HAH, however, we believe that higher freight rates and strong volume growth could keep HAH on a growth trajectory despite the margin squeeze. Looking forward, the container shipping industry is facing a key risk of downward pricing as port congestion starts to ease and further exacerbated by additional capacity since 2023. However, this downside is not significant in domestic market as freight rates have increased at a much lower pace. We recommend a BUY rating on the shares of HAH with a 1Y TP of VND 43,800/share, implying 36.4% upside, resting our call on the company’s strong financial position, good management capability, solid integrated business model and good growth prospects in the next 2 years.  

We maintain our Market Perform rating on the shares of MSB on the back of our 1Y target price increase of 25.1% to VND 29,400/share, which implies 7.7% upside. Provided MSB can dispose of at least 50% of FCCOM for VND 1 tn or more, which doesn’t appear to be a stretch, our 1Y target price could increase further. Post-strong 1Q21 earnings results, we raise our PBT forecast +10.3% for MSB 2021F to VND 3.86 tn (+53% YoY). During the quarter, PBT amounted to VND 1.2 tn (+296% YoY), fulfilling 35% of 2021F full-year guidance (VND 3.3 tn). Excluding one-off income of VND 200 bn from an equity divestment, MSB’s core business rocketed +227% YoY driven by solid net interest income (NII) growth (+58.8% YoY), non-interest income growth (+20.4% YoY) and the sharp fall in CIR. Further, MSB now sits atop the Top 3 for credit growth over the past three years, and we see no change in its growth trajectory. MSB has also cleared its VAMC bonds last year, enabling long-term credit costs to be in a downtrend.