Company Report

NLG has announced its 2019 financial results, in which it achieved its bottom line target for the year. Net revenue only achieved VND 2.5 tn (-27% YoY), mainly attributed to the fact that the unit handovers for Mizuki Park were not consolidated to NLG financial results. Additionally, project transfer delays for Nguyen Son, Hoang Nam, and Waterpoint were longer than expected due to a prolonged legal approval process. Meanwhile, net income reached VND 960 bn (+24% YoY) via profit from associates and JVs, further aided by an additional bonus of a one-off accounting goodwill income event from the Paragon Dai Phuoc project. These factors culminated in a result of fulfilling 100% of the 2019 annual target. For 2020, we expect 10%-15% growth in terms of net profit, backed by the delivery and stake sale in ongoing projects such as Southgate (Waterpoint phase 1), Akari City, and Mizuki Park. At the current price of VND 24,950/share, NLG is trading at a 2020F P/E and P/B of 5.7x and 1x respectively.  Our fair value estimated by RNAV methodology is VND 37,800/share. As such, we reiterate our BUY recommendation for NLG, with a 1Y target price of VND 37,800 (+51.5% upside).

PetroVietnam Gas (GAS) for Q4 2019 delivered VND 17.32 tn in net revenue (-8.9% YoY) and VND 3.1 tn in NPAT (-5.2% YoY). While both dry gas and LPG volumes remained flat YoY, a dive in both the top line and bottom line YoY were attributed to a -38% YoY lower fuel oil (FO) price and a -21% YoY liquified petroleum gas (LPG; e.g. propane) price. For 2019 on a consolidated basis, GAS achieved VND 75.35 tn in net revenue (flat YoY) and VND 12.16 tn in net profit (+3.8% YoY). Dry gas volume growth of 1.6% YoY and LPG volume growth of 16.6% helped compensate for a lower FO price (-13% YoY) and LPG price (-21% YoY). We revise downward our 1-year target price to VND 96,000 (from VND 109,000), based on lower 2020E estimates and target P/E of 17x (unchanged) and target EV/EBITDA of 10x (from 11x) in line with the recent correction of regional peers. As such, our 1Y target price for GAS arrives at VND 96,000/share, a 12.4% upside from the current market price. The share price has dropped 9% YTD, largely reflecting the lower oil price outlook, and thus we reiterate a Market Perform rating.

BIDV recently released its 2019 financial statements, with 2019 consolidated TOI and PBT of VND48.2tn and VND10.876tn, respectively, which grew by 8.8% YoY and 15.8% YoY, respectively. The results fulfilled 105.6% of management’s annual plan. There was also decent credit expansion towards retail lending: total credit increased by 12.4% YoY (vs. +13.56% YoY of the sector), with individual and SME loans up by 21.5% YoY and 18% YoY, respectively, and corporate bonds (which are counted as credit according to regulations in Vietnam) down by 11.3% YoY in 2019. We revise down our 2020E earnings by 15%, mainly to factor in the negative impact of the coronavirus outbreak and our more prudent assumptions on higher new NPL formation as well as higher-than-expected provision costs for VAMC bonds in the year. For 2020E, we forecast PBT of VND14.01tn, up 28.8% YoY. We estimate ROAA and ROAE at 0.6% and 13.6%, respectively, and our 2020E BVPS is at VND20,088 (before charter-capital increase). In 2020, the bank plans to issue an additional 5% of shares to increase its charter capital (post-money). Although we don’t include the additional capital plan in our model, we include it in our valuation. As we assume an issuance price of VND45,000 per share and with our new target PBR of 2.5x (from 2.0x), we derive a higher 12-month target price of VND53,300 (previously VND42,900). With upside potential of 2.5%, we downgrade our rating on the stock to Market Perform (from Outperform). Downside risk: higher-than-expected NPL formation; upside risk: faster-than-expected divestment of BIDV MetLife Insurance.

Given the above estimates, EPS would likely attain VND 3,465 in 2020 after excluding the 12% bonus and welfare fund. IMP is being traded at a 2020 P/E of 16.2x at a market price of VND 56,100. The stock has increased by 16% YTD, partially thanks to good market sentiment for the pharma sector as well as IMP positive prospects. Based on a target P/E of 20x equivalent to the median of the comparable peers, we raise our target price for IMP in a one-year investment horizon to VND 69,300/share. We recommend an Outperform for the stock, complete with a 23.5% upside.

In 4Q19, total sales expanded by 16.6% YoY to VND 9.182 tn, but NPAT decreased by -13.2% YoY due to significantly higher G&A expenses. According to POW, provision expenses for account receivables (EPTC/EVN) incurred approx. VND 400 bn, which led in turn to higher G&A expenses. And 4Q19 NPAT would rise by 74% YoY if excluding this one-off provision expense. The stock is trading at an EV/EBITDA 2020 of 5.2x. At the moment, we call for a BUY recommendation, with a current target price for POW is VND 13,100/share, implying a 33% upside vs. the closing price as of 11 Feb 2020. The target EV/EBITDA is assumed at 6.5x vs. the domestic average of 8x and regional average of 9.5x, given low earnings prospect in 2020. 

We downgrade our rating for the sector to Negative from Neutral due to the short-term impact of Coronavirus outbreak combined with the strict implementation of Decree 100. In Q4 2019, SAB recorded net sales and net profit of VND 9.7 tn (-6.5% YoY) and VND 1.1 tn (+18.7% YoY). Cumulatively, the company recorded net sales and net profit of VND 37.9 tn (+5.4% YoY) and VND 5.4 tn (+22% YoY) in 2019, having achieved 97% and 114% of its annual sales and net profit target for the year. Given the current uncertain situation, management emphasized further on slashing costs to compensate for the expected decline in sales for the short term. We currently forecast net sales and net profit to reach VND 37.3 tn (-2% YoY) and VND 5.64 tn (+5.1% YoY) in 2020. We also lower our target price for the stock to VND214,400 (+10.5% upside) using the industry’s current average P/E levels of 27x applied on our 2020F EPS of VND 7,940 (from a target PER of 33x applied on our 2019-20F EPS). As such, we maintain our Market Perform rating. In the next 3 months, the stock price will still likely be affected by unfavorable Q1 result forecasts. 

KDH announced its 2019 business results, wherein net sales achieved VND 2.8 trillion (-3.5% YoY) with delivery of large real estate project such as Jamila condominium and Verosa low-rise villa project,  net income attributable to shareholders rose by 13.2% YoY to VND 915 bn, achieved 101.7% of 2019 management’s target.  At the current price of VND 24,900/share, KDH is trading at 2020 P/E and P/B levels of 10.2x and 1.5x respectively. As such, we reiterate our BUY recommendation for KDH, with a 1Y target price of VND 31,700 (+27.3% upside). The key catalysts for our view are: (1) land bank (~ 515ha) located in HCMC where demand for living space is increasing in line with the development of the city, (2) low leverage (0.12x at the end of 2019), (3) KDH’s sustainable sales driven by Khang Dien brand and reputation in the market place.

Base on 2018 low base, performance running up to 2019 was very positive. Besides, the bank managed to restructure assets and funding sources as described above.  In the positive scenario, a turnaround in profit from 2022 is possible, primarily driven by (1) an increase in NIM and stronger credit growth thanks to enhanced Tier 1 capital, (2) strong fee-based income, and (3) well-managed operational costs, despite a huge provision to resolve VAMC bonds. At the current price of VND 27,750 per share, the stock is trading at a 2020E P/B of 1.25x and a P/E of 7.8x, lower than the sector average of 1.41x and 8.93x respectively.  We estimate CTG fair value to be VND 31,100 per share, based on a targeted P/B of 1.4x and 2020E BVPS of VND 22,224. As the potential upside is +12.1%, we place a OUTPERFORM rating on this stock. 

We arrive at a 1-year fair price for MSN of VND 59,000/share (from VND 86,000/share) via the SoTPs (Masan Consumer Holdings, VCM, MSR, MML, TCB and others), and apply a 15% conglomerate discount to take into account the short-term financial impact from consolidating VCM. As our target price implies only limited upside from the current market price, it falls to our Underweight rating range at the moment.  We will update our recommendation once there are material changes to the company business/structure/outlook in the coming time.

At the current price of VND 27,400 per share, FRT is traded at a 2019-2020 P/E of 6.8x and 6.4x respectively, much lower than the regional average of 15.3x. With a target P/E ratio of 7.5x (down from 10x) on a 2020 diluted EPS of VND 4,234, we derive a 1-year target price at VND 31,800 per share, giving an upside of 16% from the current price. Our rating for the stock is MARKET PERFORM. 

In 2019, we estimate net sales and net profit to reach VND 4.44 tn (+12.3% YoY) and VND 437 bn (+18.1% YoY), with a GPM of 20.6%. In 2020, we estimate net sales and net profit to reach VND 5 tn (+13% YoY) and VND 467 bn (+6.8% YoY), with a GPM of 20.5% assuming a lower gross profit margin recorded for CMT orders due to competitiveness. Revenue growth is assumed to be higher than net profit growth in 2020 due to higher expected SG&A expenses, such as marketing costs involved to promote new bedding collections. At the current price of VND 54,300/share, MSH is trading at 2019 and 2020 P/E levels of 6.3x and 5.9x respectively, which is rather attractive. Our 1Y target price for the stock is VND 64,000 (+17.9% upside) based on the current industry average PE of 7x, equivalent to an OUTPERFORM rating.

This leaves us at no other option but using the P/B method. We opt to choose a target P/B ratio of 3.3x, which is the average P/B of BVH over the last 5 years. The standard deviation of this is 0.66x, which is much lower compared to the standard deviation of P/B amongst peer companies. With a post-money BVPS in 2020 of VND 25,795, our 1Y target price for BVH stock is VND 85,130 (+19.2% upside from the current market price). We therefore issue an OUTPERFORM rating for the stock.

At the current price of VND109,000 per share, MWG shares are trading at 2019E and 2020E P/E ratios of 12.8x and 10.0x, respectively. We continue to use the SOTP valuation method, 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). As such, we derive our new 12-month target price of VND192,800 (from VND160,300), implying 77% upside potential from the current price. We maintain our BUY rating on the stock.

At the current market price of VND 30,500/share, QNS is trading at 2019 P/E and 2020 ratios of 7.3x and 7.3x, which is around a 50% discount compared to overall market valuations. We consider these price levels to be relatively cheap, despite the fact that we agree that the stock should be traded at some discount as it is traded on Upcom, and because of its large exposure of a commodity business like sugar. Our 1-year target price for QNS arrives at VND 37,000/share (from VND 35,300/share), based on a target P/E of 6x for sugar & biomass, and 10x for soymilk and other consumer businesses (confectionery, beer and beverages). With a 21% upside, we continue our Outperform rating for the stock at the moment.

At the current price of VND 23,350/share, TCB is trading respectively at 2019E and 2020E P/B ratios of 1.33x and 1.13x, lower than the sector average of 1.56x and 1.28x 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 the 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 and the 1Y targeted price of VND 26,900 per share. This is equivalent to an upside of +15.2% from the current price. Therefore, we maintain our OUTPERFORM rating on TCB.