Company Report

At VND 130,500 per share, MWG trades at a 2021F PE of 11.6x (compared to a three-year historical P/E of 13.3x). We lower our 2021 revenue forecast -10% to VND 126 tn (+16% YoY) and net income -3% to VND 5.086 tn (+30% YoY) - taking the sales disruption during the upgrade month into account, and the possibility of revenue dilution associated with store upgrades in various provinces. Given 2021 earnings growth, abundant market liquidity, and MWG’s ability to gain market share during tough times, we raise our target P/E for the ICT segment from 9x to 10x in our SOTP valuation. As a result, we raise our target price to VND 165,000 per share (from VND 147,000). With a 26% upside potential, we reiterate our BUY recommendation on the shares of MWG.

Our revenue estimates for 2021 and 2022 are VND 9.3 tn (+11.7% YoY) and VND 10.4 tn (+12% YoY), respectively, while we anticipate NPATMI of VND 2.64 tn (+11% YoY) and VND 3.1 tn (+17.8% YoY) over the same time periods. Improvement in the current leasing portfolio along with new mall openings could be key growth drivers. Assuming a slower expansion plan between the 2022-2026 period, we lower our 1Y target price on the shares to VND 37,300/share. At the current share price of VND 34,100, VRE is trading at an EV/EBITDA of 17.1x, which is relatively lower than the regional peer average of 21.5x. With upside of 9% compared with the current share price, we reiterate our OUTPERFORM rating for the stock at present. 

2020 earnings was -1.8% below our estimates, due to higher-than-expected provision costs. Despite a 21% TOI growth, PBT increased   just +15.9% YoY to  VND 5.8 tn, as credit costs rose from 0.96% in 2019 to 1.1% in 2020. After an aggressive write-off of VND 1.4 tn (+63% YoY), asset quality ratios were in pretty good shape. NPLs declined to 1.32% (from 1.36% in 2019), and LLCR  improved to 82% (from 81% in 2019). The limelight for this year’s result is the increase in NFI to TOI to 7% (vs. 5% in 2019), as  bancassurance sales began accelerating in 4Q 2020.

HDB is amongst the very few banks which still has available room for foreign investors, and a potential exclusive bancassurance deal. We think the Bank’s diversification of income streams in 2020 is the way to go, which opens greater possibilities for strong TOI growth in 2021. A good track record of bancassurance sales may also prove its sales capability, as well as a bargaining power in negotiating an exclusive bancassurance contract in the future. Our 1Y target price for the shares of HDB is VND 29,500/share, representing an upside of 13.7% - allowing us to upgrade the shares to an Outperform rating.  

VHC experienced a worse-than-expected Q4 2020 result, completing just 66% of the Company’s low annual net profit target. Pangasius ASP in December has now declined to its lowest level in 2020 versus consensus forecast of a Q3 recovery. Both pangasius and wellness exports face difficulties due to weak demand in major export markets, increasing transportation costs, and more aggressive seafood inspections at Chinese seaports. The gloomy outlook is expected to continue until Q2 2021. In addition, the final tariff-related POR16 results on anti-dumping pose potential risks to VHC after an extended US waiver, making VHC a stand-out exception vis a vis the anti-dumping tariff. As we expect the recovery to be fully reflected in VHC’s results by H2 2021, we downgrade the stock from Outperform to MARKET PERFORM, with a 1Y target price of VND 43,600 (+6.7% upside).

VCB reported strong 4Q20 earnings results, with TOI and PBT reaching VND 14.4 tn (+35% YoY) and VND 7.1 tn (at +28.5% YoY), respectively. For 2020, consolidated TOI and PBT came in at VND 49 tn (+7.1% YoY) and VND 23 tn (-0.3% YoY), respectively, and in line with our forecast. In 2020, VCB took advantage of competitive pricing to acquire more creditworthy customers, pushing it to become the largest lender for the year. Bancassurance sales are behaving according to plan. For the first time, VCB’s PPOP ranked first within the sector (outstripping BID), and even pulling ahead of the pack. VCB was also incredibly proactive with respect to credit provisioning during the year, clearing a path for above trend-line earnings growth post-Covid.  We increase our forecast for VCB 2021 PBT to VND 29.3 tn (+27.3% YoY). We also raise our 1Y target price on the shares of VCB to VND 108,600 (from VND 97,400) reflecting our assumption that the private placement pricing will come in at VND 100,000 per share, +11.1% higher than our initial forecast. With total upside potential of 11.4%, we maintain our OUTPERFORM rating on the stock.

We reiterate our Outperform rating on the shares of PVS, particularly given the oil price outlook. Brent crude reached the USD 65/bbl threshold in recent days due OPEC+ deep supply cut, a sudden decrease in shale oil production in the US (due to an unlikely winter storm in Texas), and gradual demand recovery on the back of vaccine availability. Accordingly, we lift our oil price assumption for Brent in 2021 from USD 52/bbl to USD 60/bbl (+40% YoY).  As a result, we are increasing our target price on the shares of PVS from VND 20,800/share to VND VND 24,500/share, implying 5% upside or 10% inclusive of the dividend yield from current market price. Our 2021 earnings forecast is VND 704 bn (+8.6% YoY), which is 12.6% higher than our previous forecast. M&C revenue from the confirmed backlog (-42% YoY) and improved earnings from JVs (additional profit from FSO Sao Vang, and no more expenses for MV12) should support the bottom line. Expectations of a strong oil price recovery in 2021 (+40% YoY), should also enhance revenue and margin of other segments. Please note that we only account for remaining contract value from ongoing projects such as LNG Thi Vai and Dai Nguyet WHP in our 2021 estimates, intimating that there could be potential upside to our 2021 forecast if PVS can win the new EPC contracts that are being bid for.

During 4Q 2020, BID’s NIM expanded by 33 bps (QoQ), pushing NII and TOI to increase 10.3% and 11.7% YoY, respectively. However, 4Q 2020 PBT plunged to VND 2.2 tn (-42% YoY) driven by a +93% surge in credit provisions. PBT in 2020 was only VND 9.21 tn (-14.1% YoY), and ROE declined to a 15-year low of 9.45%. The increase in provisioning and bad debt write-offs had quite a positive impact on BID’s asset quality, as the NPL (including VAMC bonds) and LLC ratios were each at their strong levels over the past six years. For 2021, we have increased our pretax profit forecast by 2.2% to VND 13.5 tn (+46.4% YoY). Our 2021 earnings forecast has not changed significantly, the cash dividend payment of 8% was higher than our expectation of 5%. This higher dividend negatively impacts our 2021 BVPS estimate. As a result, we lower our 1-year target price by 1.5% to VND 46,430/share, based on an unchanged P/B target multiple of 2.2x applied to our 2021F BVPS. Although earnings may surge in 2021, the possibility of growth beyond 2021 depends on the ability to raise capital and it will be the key upside catalyst for the stock. Our new price target on the shares of BID implies upside of +5.5%, and we recommend a MARKET PERFORM rating.

Stronger provisioning buffer to allow robust earnings growth in 2021. Despite a +15% YoY increase in TOI during 4Q 2020, MBB’s pretax profit grew +5.6% YoY - reaching VND 2.6 tn during the period. This comes as the bank had aggressively provided against problem loans. For 2020, the Bank achieved a VND 10.7 tn PBT (+6.5% YoY). At the end of 2020, NPLs fell to 1.09%, lowest level seen in 13 years whilst the LLCR stood at an all-time high of 134%. Restructured loans also dropped from VND 7 tn (2.7% of total loans) at the end of June 2020 to VND 2.5 tn (0.8% of total loans) at the end of Dec 2020. Given the Bank’s efforts to resolve problem assets in 4Q 2020, we’d anticipate loss provisioning to be lighter in the coming year with the bank expected to achieve VND 13.6 tn in pretax profit (+27.5% YoY) in 2021. With consistently improved fundamentals in recent quarters and a 2021 ROE of 21%, we believe that MBB deserves a higher target P/B ratio of 1.6x (from the current 1.4x). Hence, we increase our target price on the shares of MBB by 14.7% to VND 31,900/share (+19% upside), and reiterate our Buy recommendation.

We are reiterating our BUY rating for IMP with the target price of VND 73,000/share, an upside of 30% from current price in Feb 5^th, 2021. We see strong improvement in IMP 4Q20 earnings, combined with a potential for substantial increase in revenue and profit in 2021 due to (1) low base of revenue in FY20, which were affected by the pandemic situation and (2) profitability improvement in FY21 as IMP upgrade its bidding drugs onto higher value categories. We expect IMP total revenue and core NPAT (excluding R&D) for FY21 to reach VND 1.9 trillion (+35.4% YoY) and VND 296 billion (+40.9% YoY), respectively.

We reiterate our Outperform rating on the shares of SAB and trim our 12-month target price to VND214,000/share (implied 18% upside potential). At a 2021E P/E of 22.8x, SAB now trades at a lower valuation to its 2016-20 average of above 30x. In 2020, SAB delivered an encouraging profit despite the challenges of both Decree 100 and the pandemic. An impressive expansion in the gross margin was a nice surprise, especially considering the 26% decline in sales. We believe that SAB is prepared for a comeback in 2021 (provided that COVID-19 is controlled by 1H21). For 2021, we forecast the company to post 21.8% revenue growth and 14.9% NPAT growth. While revenue would still be lower compared to pre-Covid levels, earnings are likely to surpass that of 2019. 

We like OCB’s strategy of targeting the niche micro-SME market, as well as the detail-oriented approach to risk management which effectively weeds out risks with small enterprises. Constant investment in digital banking has yielded tangible results, such as improved operating efficiency and a boost in retail CASA. As a small bank, room for growth remains significant. However, large exposure to construction and real estate (18%), hospitality (13%), and energy (10%) are a concern. A nearly full foreign ownership limit of the bank is a drawback for OCB as well. Our target price for the bank is VND 25,300 per share, representing 29% upside from the closing price as at 29 Jan 2021. Hence, we initiate coverage on the shares of OCB with a BUY rating.

In light of an improvement in new deals in late 2020 along with our expectations of an economic recovery in 2021, we raise our 2021 PBT forecast for FPT’s global IT services by 4.6% over our previous estimate.  PBT growth from the FPT technology segment is forecasted to rebound by 22% (+24% from the global IT services and +10% from domestic IT services). Overall we forecast FPT’s FY21 EPS to grow approximately 17%. As we are more confident about a 2021 growth recovery, we increase our P/E target for the FPT technology segment and raise our 1Y TP 16% to VND 72,500 – translating to 16% upside. With 19% total ROI (including 3% dividend yield), we maintain our BUY rating on the shares of FPT.