Company Report

We are initiating coverage on the shares of SZC with a BUY recommendation and are establishing a target price of VND 38,300/share – which represents 19.7% upside. SZC has a large amount of available land for lease which benefit from an increase of FDI’s production shifting to Vietnam. At the same time, SZC’s low compensation cost enables it to maintain high profit margins. In addition, SZC features strong cash flows from its toll collection business.  Revenue and NPAT are forecast at VND 730 bn (+ 58% YoY) and VND 292 bn (+48% YoY) in 2021, respectively.

Underlining the big change in the CTR business model with the new Telecom infrastructure segment, we see long term earnings growth of over 20% per annum through 2025. Following with capex to fuel new business expansion, the Company should be able to maintain its average interest coverage ratio at 5.3x between 2021-2025. As a result, we initiate coverage on the shares of CTR with a OUTPERFORM rating and a base case 1Y TP of VND 81,400 – implying +13% upside vs. the 04-Jan-2021 closing price.   

For 2020, we forecast the growth of total assets, customer deposits, and credit to reach 18.8%, 12.2%, and 26.8% YoY, respectively. NIM is forecast to improve to 3.29% from 2.47% last year, while NPL is expected to be decline to 1.95% from 2.04% in 2019. PBT is projected at VND 2.4 tn in 2020 (+86.3% YoY), translating to a ROAA and ROAE of 1.12% and 11.75%, respectively. In 2021, we forecast PBT to expand 30.5% YoY to VND 3.13 tn. EPS is expected to surge from VND 971 in 2019 to VND 1,634 in 2020 (+68.3% YoY) and to VND 2,123 in 2021 (+30% YoY). BVPS is VND 16,588 (+20% YoY) in 2020 and VND 18,598 (+12.1% YoY) in 2021. We estimate the fair value of MSB at VND 20,500 per share, equivalent to the targeted 2021F P/B metrics of 1.1x. This is equivalent to our OUTPERFORM recommendation, with an upside potential of 18.5%.

As the share price of AAA increased 21.4% since our last report (August 27th, 2020), we are lowering our rating on the shares from Outperform to Market Perform. AAA did post encouraging results for 3Q20, complete with net profit growth of 16.7% YoY due to the trading and industrial park segments. However, the result fell short of our original expectation given the delay in the industrial park segment, as Covid-19 made it difficult for prospective customers to make production base decisions. As a result, we lower our net profit forecast for 2020 from VND 450 bn to VND 322 bn (-35.8% YoY). That being said, we fully expect that net profit will recover to VND 449 bn (+39.5% YoY) in 2021, given the likelihood of full-year revenue generation within the industrial park segment. We also see growth in the jumbo bag business line, from An Vinh Industrial Packaging. AAA is trading at 2020 and 2021 P/E of 11.2x and 8.1x, respectively. Our 1-year target price for the stock is VND 14,600/share (upside: +3.5%) based on the SoTP method.

We forecast 2021 EPS at VND 1,454 (+107% YoY) given higher revenue attributed to Nam Son Hap Linh IP and Phuc Ninh UA, an industrial park and urban development owned by KBC. At VND 16,150/share, KBC trades at 2021 P/E and P/B of 11x and 0.7x which is relatively lower than average multiples of listed IP developers with a P/E of 14.7x and P/B of 1.6x. We rate the shares of KBC as OUTPERFORM, given our 1Y target price of VND 18,700/share which is derived from a combination of a target P/E of 14x and P/B of 0.8x, and represents 15.8% upside. 

We upgrade our rating on the shares of PVD to Outperform, reflecting an increase in our 1Y target price to VND 15,400/share (from VND 11,450/share) - suggesting 18.5% upside in the shares. We are also raising our 2020 and 2021 NPATMI forecasts by 88% and 47% to VND 136bn and VND 178 bn, respectively, reflecting higher JV earnings and better bad debt collection. PVD should also benefit from a brighter global oil price outlook in 2021, given the increasing optimism that a COVID-19 vaccine will be widely available beginning Q1 next year. Our base case suggests that OPEC+ will extend its supply curb of 7.7 mn bbls per day for another quarter from its meeting on Thursday, December 3rd. Such a production curb will support Brent crude towards USD 50/bbl in 2021E (up from previous assumption of USD 47/bbl). PVD has navigated well through this double headwind of Covid-19 and low oil prices and is set to achieve solid profitability in 2020. PVD has an efficient and transparent cost structure and lower gearing than that of offshore drilling peer should be supportive to valuation. 

We are holding the line on our 2020 and 2021 forecasts as discussed in our previous report.  Please note that our forecast do not take into account the bad debt provision linked to Ca Mau in Q4 nor the one-off gain from PVM divestment.  We reiterate our Market Perform rating on the shares of POW, with a 1Y TP of VND 11,300 which represents 12% upside.  Risk to our call. We’re keeping our eyes peeled regarding potential downside risk associated with the Luang Prabang hydropower plant. Although POW’s stake has now been finalized (previously reported at 38%), additional details have not as of yet been disclosed. The project has been in the works since 2007 but has been delayed in the pipeline until now which gives us concerns over the possibility of ballooning capex, or the project’s overall profitability.

We reiterate our OUTPERFORM rating on the shares of QNS, as our TP is slightly recalibrated at 41,800 VND/share (-3% from previous TP, +19.8% upside). We have lowered our 2021F EPS target, as we trimmed numbers for the soymilk segment. The soymilk segment was more negatively impacted by local lockdowns while the sugar segment improved. The soymilk segment continues to be impacted by the storms and flooding in Q4 (late October-early November), resulting in soymilk sales declining between 7%-8% YoY in October. For 2021, we expect that the sugar and biomass segments to drive +27% YoY bottom-line growth at QNS. 

We are downgrading the shares of DPM from Outperform to Market Perform, reflecting the recent share price strength which, in our view, now fully reflects both the better-than-expected 3Q20 bottom-line result and market talk of a change in VAT regulation for fertilizer firms. Even after rolling over our valuation basis to reflect our respective 2021E net sales and pretax profit of VND8.7tn (+9% YoY) and VND956bn (-5% YoY due to the consensus rise in global oil price), our new SOTP-based 12-month target price of VND18,400 (previously VND16,900) only offers a 4% upside potential. In addition, on 17 November, the National Assembly ended without a concrete resolution on the VAT, leaving any potential resolution to the next National Assembly session in May 2021, and which will likely present some overhang. The key downside risk to our call would be a greater-than-expected increase in production by other fertilizer suppliers, while the key upside risk would come from a decrease in oil prices. 

Net profit during 4Q20 jumped to VND 450 bn, skyrocketing 436% YoY and 41% QoQ. This is the largest profit level since 1Q17, and close to the record high of VND 451 bn reached in 4Q16. Such tremendous results were driven by strong export sales volume, coupled with the uptrend in HRC that supported margins thanks to low-cost inventory. Cumulatively, HSG revenue in FY 2020 was flattish at VND 27.5 tn, while net profit rocketed +219% YoY to VND 1.2 tn, which exceeded annual guidance by 188%. For FY2021, we expect that while revenue can increase 13% YoY, net profit would remain flat at VND 1.134 tn due to normalization in the gross margin. As HSG stock price has now run 58% higher since our last call dated July 20, 2020, we are now lowering our rating on the shares of HSG from Outperform to Market Perform, as the stock has only limited upside to our unchanged 1-year target price of VND 18,350/share of 3.7%.

Upgrade rating to BUY: With the increase to our NIM forecast and adjusting credit costs for 2020 and 2021, we are aggressively increasing our 2020F and 2021F PBT forecast to VND 10.8 tn (-8.1% YoY) and VND 15.5 tn (+43.1% YoY), respectively. Our 2020 and 2021 PBT forecasts are now +11.1% and +42.8% higher, respectively. Our forecast does account for the potential bancassurance deal being re-negotiated. We have our adjusted P/B target from 1.2x to 1.6x, which has resulted in 1Y target price for the shares of CTG to VND 38,700 (up from previous 27,200). Our revised share price target represents potential of 16.6% upside, plus the cash dividend yield of 1.5%. An ROI of this magnitude causes us to upgrade our rating on the shares of CTG from Outperform to BUY.

We maintain our estimates for 2020/2021, with net sales of VND 112.4 tn (+10% YoY) in 2020 and VND 140.8 tn (+25% YoY) in 2021, whereas net income for 2020 and 2021 should reach VND 3.9 tn (+1% YoY) and VND 5.3 tn (+36% YoY), respectively. At VND 110,600 per share, MWG trades at a 2021F P/E of 9.7x, which we believe is very attractive. We maintain our BUY rating with an unchanged SOTP-based target price of VND 147,000, offering 33% potential upside. Risks: longer-than-expected impact of COVID-19 and possible lockdown at the national level.

As PLX’s share price has retraced to a more attractive level, we are now upgrading our rating on the shares of from Market Perform to Outperform with a 1-year target price of VND 55,700/share – implying  upside of 15%. PLX earnings through 9M20 amounted to just VND 193 bn, cratering -96% YoY and  meeting just 12% of its annual guidance due primarily to large losses in 1Q20. We believe that PLX’s core business will continue their path to recovery as noted by 3Q20 PBT on a standalone basis which amounted to VND 1.1 tn – up 41% linke quarter. As 3Q20 PBT was in line with our forecast, we are maintaining our 2020 PBT forecast of VND 1.6 tn. Given the recovery in petroleum demand during the month, we expect that 2021 PBT will nearly triple YoY (on 2020 low base) to VND 4.8 tn. As PBT has returned to positive, PLX can also be cleared from the HOSE margin lending ineligibility list after audited financial reports are released.