Company Report

Sales and PBT targets for the year are projected to be VND 8.4 tn (+9.4% YoY) and VND 1.1 tn (-28.7% YoY). PBT of soymilk and sugar are expected to settle at VND 1 tn (-20.6% YoY) and VND 20 bn (-78.5% YoY). Refined sugar (RS) volume is estimated at 80,000 tons, declining by -44% YoY but still slightly higher than the previous management’s estimate of 70,000 tons. Low profit targets are no surprise, as is traditionally the case with QNS conservatively estimating its annual performance. Indeed, we have observed often QNS setting up an extremely low PAT target (2018 target: VND 194 bn and actual: VND 1.24 tn; 2019 target: VND 199 bn and actual: VND 1.292 tn). While this year their profit targets became more pragmatic, they are still quite conservative nonetheless. The cash dividend for 2019 has been raised to 30% on par (the AGM 2019 plan having been 15% at least), of which 15% on par has already been paid and the remaining 15% which will be paid on May 8th, 2020 (record date: April 17th, 2020). The payout ratio for 2019 is equivalent to 68%. No stock dividend is issued this year, which is different from the company’s tradition of a 20-30% stock dividend each year for the last six years. No ESOP plan in 2020.

QNS shares are now trading at the price of VND 23,200 per share, equivalent to a 2020 P/E in our base case of 5.73x. We consider this to be rather attractive in our view, especially given the more clarified outlook for the sugar segment, backed by the Company’s strong financial position with a relatively sizable mountain of cash on hand (net cash of VND 1.2 tn as of the end of 2019). With our target P/E being revised down to 8.0x (formerly 9.0x) in response to a recent fall in market-wide valuation, accompanied with a -15% discount for: (1) being listed on UPCOM, (2) difficulties of the sugar segment in recent years and (3) ESOP history, our target price for QNS shares arrives at VND 27,500 per share, equivalent to an upside of 18.5%. We reiterate our OUTPERFORM rating for the shares. 

PNJ reported strong recovery in Q4/2019, wherein net sales and net profit achieved VND 5.321 tn (+30.9% YoY) and VND 384.8 bn (+44.8% YoY). Cumulatively, the company achieved VND 17 tn (+16.7% YoY) of net sales and VND 1.194 tn (+24.4% YoY) of net profit, accomplishing 93% and 101% of its annual targets in respective order. While the crash in Q2 caused by the ERP system brought lower-than-expected sales, a higher-than-expected GPM (20.4% actual vs. 19.0% planned) was the key driver of growth in the bottom line. For 2020, we expect PNJ to open 30 new stores and post a net sales figure of VND 18.512 tn (+8.9% YoY) and net profit of VND 1.303 tn (+9.2% YoY), equivalent to 97% of the company’s annual targets. Major assumptions include a 9.2% YoY growth in retail sales of gold jewelry and 15% growth in sales of gold bars. The shares are now trading at VND 54,900 per share, equivalent to a 2020F P/E of 10.19x – the lowest since 2017. Our new target price arrives at VND 70,000 per share (target P/E of 13.0x), representing an upside of 27.5%. The dividend yield for 2020 is 3.3% at this price. Hence, we upgrade our recommendation for PNJ to BUY from Outperform.

Impacts of Covid-19: By the end of February 2020, credit growth outperformed the sector at +7% YoY compared to the cap for 11.75% YoY, much higher than the zero-growth at many peers, thanks to corporate loans in the staple consumer goods manufacturing sectors and retail mortgage loans. In our base case scenario, we assume that Covid-19 outbreak will be contained by end of 1H 2020. Demand for retail home and auto loans will gradually recovers in 2H 2020. For 2020, we forecast credit and deposit growth at 15.2% YoY and 13.7% YoY respectively, slowing down compared to 2019. Opinion: TPB has been a true pioneer in the rapidly-evolving space of digital banking deployment across Vietnam, and this trend is becoming increasingly more popular amidst Covid-19. TPB has completed cleaning-up its legacy VAMC bonds and is well-prepared for a take-up in retail banking including consumer finance and bancassurance, beside its traditional home and auto loans. 2020F PBT is estimated at VND 4.76 tn, at +23.1% YoY, highlighting the highest ROE of 25.5% across our banking coverage. TPB is trading respectively at a 2020E P/B and P/E of 1.07x and 4.73x respectively, compared to the industry average of 1.00x and 6.64x. Our 1Y target price is VND 25,800 per share, which is equivalent to an upside of 21.1% from the current price. Therefore, we maintain our OUTPERFORM rating for TPB.

NT2 is currently traded at FY20 EV/EVBITDA at 4.0x (compared to the regional avg. at 7.7x). At the current market price, NT2 will likely offer an attractive FY20 dividend yield of 15% (with an expected FY20 dividend rate at 23% on par) which is quite attractive vs. regional peers avg. of 6.3%. At the end of 2020-2021 and after dividend & debts paid, net cash per share is expected at VND 780 and VND 1,073; coupled with a 2020-2021 average dividend coverage ratio at 1.1x. We reiterate a BUY recommendation, with a new target price of VND 22,000 that offers a potential upside of 29% versus the closing price as of 18-Mar-2020. We apply 40% discount to regional peers to arrive at 2020 target EV/EBITDA at 4.5x to factor in the company’s small business scale and limited capacity expansion versus regional peers. Along with attractive valuation and a high dividend yield, we see some positive catalysts from a lower gas price in the short-term; being debt-free from 2021 will render a more stable cashflow and solid future dividend payment. 

We lower our SOTP-based 12-month target price from VND192,800 to VND129,560 (previously VND192,800), with a target P/E of 9x for the ICT segment (previously 14x) and a target P/S of 0.3x for the grocery segment (previously 0.53x) applied to our revised 2020E earnings. Nonetheless, we reiterate our BUY rating given the 70% upside potential to our new TP. Key downside risks: possible negative growth in the mobile industry, affecting MWG’s mobile phone segment, and fierce competition in the e-commerce segment.  

As of 11 March, Vietnam had 38 confirmed cases of Covid-19 infection. Although it is hard to exactly quantify the impact of the epidemic, we can easily observe that the epidemic along with Decree 100 have eroded beer demand significantly. In particular, on-premise sales have been hit due to the measures to contain the virus. People have increasingly opted to stay clear of public gatherings due to concerns about the virus spreading, and the tourism sector has been hit significantly as a result. In our previous report, we initially estimated a 3% YoY decline in SAB’s sales volume in 2020 as we partially took into account a potential ‘zero-tolerance’ driving law. Combined with the current coronavirus outbreak in Vietnam, we consider the adverse effect to be even more intense due to the global spread of the virus, combined with the expectation of a decline in disposable income later. Given the current situation, we would like to provide 3 scenarios for SAB. Our assumptions are principally based on the timing of when the epidemic is stamped out in Vietnam, and that consumers gradually adapt to the new drink-driving law. At the current price of VND152,000, SAB is trading at a 2020E P/E of 22.3x and 2021 P/E of 20.4x respectively, and a 2020E and 2021E EV/EBITDAs of 12.2x and 11.2x, respectively, on our base case forecasts. Applying a premium target P/E of 27x to our 2020 EPS, thanks to its better fundamentals compared to peers, we derive a new 12-month target price of VND183,800 (from VND214,400). Our TP offers a potential upside of 21%, leading us to upgrade our rating on SAB to OUTPERFORM (from Market Perform). 

Highlights: Recently BVH posted its 4Q 2019 financial statements with pretax profit of VND 128 bn. For full year 2019, pretax profit attained VND 1.392 tn, which was relatively flat as compared to 2018 despite a -23% YoY drop in financial income. For 2020, we expect that BVH records VND 1.255 tn NPAT-MI, up by +15.3% YoY, with the assumption that the life and non-life insurance premium segments post a respective of 17% YoY and 11% YoY growth. We also expect the technical reserve rate to be further reduced by -5 bps. This is -18% lower than our previous estimate, given the total change in technical rate assumption of -13 bps for 2019 and 2020. The technical rate we use for 2019 is 3.37% (vs. the previous 3.45%) and for 2020 is 3.32% (also previously 3.45%). As for Covid-19, we view this situation as a positive net impact to BVH in the long-term. Opinion: The stock price of life insurance companies in Asia Pacific experienced a plunge of -20% from Jan 2019 to date in the midst of a low interest rate environment. For BVH, the fall was -34.3%. As we expect the interest rate to remain low in 2020, we revise our target P/B to 2.5x and attain a target price for BVH stock of 65,900 VND, which is equivalent to a rating of Outperform. The new target P/B ratio is lower than our previous target of 3.3x (5-year average P/B) as well as the 10 year average P/B of BVH of 2.81x, as we made a further discount for the current perplexing mismatch situation when analyzing the Company’s duration gap. Even in the worst case under our scenario analysis where the technical rate is theoretically adjusted downward 65 bps, the downside for BVH stock is limited from the current price. Meanwhile, we see more upside potential for the stock, as new business premiums are expected to outgrow assumptions of +10% YoY.

In 2019, KBC posted net sales of VND 3.25 trillion, up 29.7% YoY. Such performance was mostly in line with our forecast. Accordingly, 2020 EPS is estimated at VND 2,078 (+14.2% YoY) given higher revenue from Nam Son Hap Linh IP and Phuc Ninh UA, an industrial park and urban area that KBC fully owns. At the current price of VND 14,900/share, KBC is being traded at 2020 P/E and P/B of 7.2x and 0.67x which is relatively lower than average multiples of listed IP developers with a P/E of 9.5x and 1.2x. Our 1Y target price is VND17,400/share deriving from a combination of target P/E of 9x and P/B of 0.7x, representing a 16.8% upside compared with the current price and our rating is Market Perform over the stock. 

Our analysis may be a bit contrarian given the current jitters in global markets. Overall, at the current market price, we discover through our analysis the downside risk is actually not that much, even for our worst case (-9% downside), while the base case and best case upsides are high. In the long-term, after COVID-19 fades away into the distance, ACV is still the main beneficiary of the expanding passenger growth of Vietnam, and thus still makes for a good long-term investment. At the current market price, we think it represents a good opportunity to acquire ACV for long-term investors. Using our base-case estimates and valuation, we upgrade our rating from OUTPERFORM to BUY, with a lower 12-month target price of VND68,600/share (from VND100,500), which offers 29% potential upside. Note that our valuation has not taken into consideration income from landing area prospects.

QNS has released its 4Q 2019 report, in which it claims to have achieved a net sales of VND 1.63 tn (-13.4% YoY) and PAT of VND 472 bn (+4.5% YoY). Cumulatively, 2019 net sales and PAT have reached VND 7.68 tn (-4.4% YoY) and VND 1.28 tn (+3.2% YoY) respectively. While net sales only achieved 93% of our estimate due to a lower-than-expected sugar price, after-tax profit beat our estimate by +1.6% from financial and other miscellaneous income. For 2020, we expect QNS to reach a net sales position of VND 7.46 tn (-2.9% YoY) and PAT of VND 1.23 tn (-4.0% YoY) on the assumptions that soymilk sales growth would continue at a 10% level. However, overall performance is likely to be dragged down by sugar sales, which may experience a sharp contraction of -41% YoY. QNS shares are now trading at the price of VND 25,500 per share, equivalent to 2020F P/E and P/B ratios of 6.4x and 1.07x, still attractive in our view given the high proportion of soymilk that comprise total sales. Therefore, the drop in sugar sales shouldn’t dent company performance results too much. Given the stable soymilk business of QNS, we opt to maintain our target P/E ratio of 9.0x for 2020 together with a discount of -15% on the target price to reflect the market’s disfavor for the share as explained below. When calculated in this way, we arrive at a 1Y target price of VND 30,500 per share (+19.6% upside), equivalent to an OUTPERFORM rating. 

PVD released its 2019 earnings results, in which net revenue, gross profit, and NPATMI recorded VND 4.369 tn (-20.6% YoY), VND 449 bn (+13.1% YoY), and VND 189 bn (-3.9% YoY) respectively. PVD exceeded its revenue target by 14%, and recorded a profit that far exceeds the net-neutral target it set for 2019. For 2020, we estimate PVD net revenue and NPATMI can achieve VND 5.237 tn (+19.9% YoY) and VND 236 bn (+24.7% YoY) respectively. At a price of VND 12,100 per share, PVD is trading at 2020 and 2021 P/E ratio of 21.6x and 16.3x respectively. P/E ratio will have positive improvement thanks to the growth of earnings. Its 2020 P/B ratio is at 0.36x, which is lower than the 3-years historical P/B and regional peer P/B of 0.50x. We set our target 2020 P/B to be 0.45x, thus arriving at the target price of VND 15,000 per share (23.9% upside). We accordingly have a BUY rating for the stock for the time being. 

For 2020, we forecast the bank’s total assets, credit, and customer deposits to grow by 17.2%, 17.3% and 17.7% respectively. In 2020, Vinhomes plans to launch 3 new projects with 1,100 low-rise units in Vinhomes Wonder Park (~133 ha, Hanoi), ~2,000 high-rise units in Vinhomes Galaxy (~11 ha, Hanoi) and ~800 low-rise units in Vinhomes Dream City (Hung Yen) to be offered on an initial basis. It is expected to generate a greater presales value of ~VND 110 trillion (vs. VND 91.1 trillion in 2019). Together with the Grand Park project in HCMC which was launched in June 2019, we estimate demand for mortgages to range from VND 80 tn to VND 120 tn 2020-2021. Techcombank thus possesses ample room for mortgage loan expansion. At the current price of VND 22,500/share, TCB is trading at 2020E P/B and P/E of 1.08x and 7.02x respectively, lower than the sector average of 1.36x and 8.43x respectively. We like the bank’s business model, which has focused on retail products for affluent clients, and possesses core competencies in banking for the housing, FMCG, and auto industries, etc. TCB is also the dominant player in corporate bonds, with more than 80% of bond distribution market shares residing on the HOSE. We maintain the targeted P/B ratio for the stock at 1.3x, which yields the 1Y targeted price of VND 27,100 per share. This is equivalent to an upside of +20.4% from the current price. Therefore, we maintain our OUTPERFORM rating on TCB. 

MWG held an analyst meeting on 21 February 2020. January 2020 performance: net sales and net income were VND 12.56 tn (+21% YoY) and VND 553 bn (+22%YoY), accomplishing 10% and 11% of the 2020 target, respectively. The company focused more on sales in preparation for Tet-holiday rather than store openings. As a result, all three chain outlets witnessed an increase in daily revenue per store, despite lower working days. 2020 company guidance: despite the concern over consumption of discretionary products amid the coronavirus outbreak, management still kept its 2020 target unchanged, with a net sales and net income at VND 122.445 tn (+20% YoY) and VND 4.835 tn (+26% YoY), respectively. Other discussions were focused on the impact of coronavirus outbreak, competition with e-commerce players, mobile phone industry growth prospects on 5G launch and discontinuing of 2G, and 2022 market share target for mobile phone (55%) and consumer electronics (50%). At the current price of VND 106,200 per share, MWG is trading at a 2020F P/E of 9.8x. We maintain our BUY recommendation, with an unchanged target price of VND 192,800 per share, implying 81% upside potential from current levels. We continue to use the SOTP valuation method to derive the target price, with a target P/E of 14x for the ICT segment (down from 16x due to the shrinking of mobile phone industry growth) and a target P/S of 0.53x (unchanged) on 2020E financials (rolled over from average 2019-20E). Key downside risks: possible negative growth in mobile industry, affecting MWG’s mobile phone segment and fierce competition in the e-commerce segment

VHC released its Q4 earnings results, in which net sales and PAT reached VND 2.171 tn (-19.7% YoY, yet +15.3% QoQ) and VND 199 bn (-50.9% YoY and -21.5% QoQ). Cumulatively, net sales and PAT of 2019 reached VND 7.867 tn (-15.1% YoY) and VND 1.180 tn (-18.2% YoY), having achieved 78% and 94% of the Company’s annual targets and slightly below our estimate of VND 1.254 tn for PAT. For 2020, we expect net sales and net profit to achieve VND 8.476 tn (7.7% YoY) and VND 831.9 bn (-29.5% YoY). In our assumption, ASP will pick up gradually towards year-end on warming demand, and 2020 ASP may stand at $3.30 USD per kg (-18.1% YoY). Total export volume of fish fillet may recover by 25%, as demand in the US may resume itself to normal levels. Sales of collagen & gelatin may surge by 40%, owing to an increase in designed capacity, from 2,000 tons to 3,500 tons in 2H 2020. Despite the company's efforts towards improving productivity, a stable price at the current low levels may still translate into a lower profit margin nonetheless. VHC shares are now trading at a price of VND 31,450 per share, which is equivalent to a 2020F P/E forward ratio of 7.0x – quite fair in our view. We maintain our target P/E ratio for VHC at 7.5x, thus arriving at the target price of VND 33,550 per share (+6.7% upside). We consequently maintain our rating Market perform for the share.