Company Report

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.

At the current market price, GMD is trading at P/E 2019 and 2020 of 13.3x and 12.4x respectively, and a P/B 2019 and 2020 of 1.22x and 1.2x. We think this level of earnings multiple is fair, but we feel that the book value multiple could be higher, as GMD has some non-operating assets like Gemalink port. We apply a combination of a 2020 P/E target of 13x (reduced from 15x for lower earnings growth) and 2020 P/B target of 1.5x (unchanged) to reach a 2020 target price of VND 28,300/share (+15.5% upside). We revise our rating for the stock to Market Perform (from Outperform), as we see not much catalysts for 2020 and 2021 when Gemalink might only reach the breakeven point, not to mention that other ports might have reached full capacity.

Accordingly, 2019 and 2020 EPS are estimated at VND 1,937 and VND 2,579 respectively. At the current price of VND 14,900/share, KBC is being traded at 2019 P/E and P/B of 7.7x and 0.76x, and a 2020 P/E and P/B of 5.7x and 0.65x. Our1Y target price is VND 18,250/share, representing a 22.4% upside compared with the current price and reiterate our OUTPERFORM rating.

At the current price, PLX is trading at 2019 and 2020 P/E forwards of 17.4x and 16.2x respectively. We use the regional peer’s P/E average of 19x as our target, which is adjusted down from 21x in the previous report due to the lower valuation of the peer group. This target PE is also close to the 2-year historical average of 19.1x of PLX share itself. Accordingly, our 1Y TP for the stock arrives at VND 70,100/share. As the TP implies an upside of 17% from the current price, our rating for the stock is Outperform. Although we have not factored in the one-time profit from the divestment from PG Bank in the TP, any confirmation about this deal can be a supportive catalyst for the stock in the next 6 months.

Based on the above estimates, EPS would likely reach VND 2,736 in 2019 and VND 3,148 in 2020 after excluding the 12% bonus and welfare fund. At the market price of VND 54,000, IMP is being traded at a 2019 and 2020 P/E of 19.7x and 17.6x. Based on a target P/E of 18x, average when compared to comparable peers, we recommend a Market Perform for the stock, with a 1-year TP of VND 56,600/share, a 5% upside. Annually, IMP often generally books about 10% of its PBT in administrative expenses for its R&D fund, as has been the case since 2012. The Company intends to not distribute this fund until the latest factory completely obtains the EU-GMP certification standard.  Hence, IMP perhaps may not record this expense next year, and may get higher growth in terms of its bottom line in 2020 that exceeds our estimates. At present, we have not opted to factor this assumption into our model.

MSN Q3 2019 revenue totaled VND 8.97 tn (-2.2% YoY), and NPATMI reached VND 2.23 tn (+197.8% YoY). It should be noted that in Q3, MSN recorded a VND 1.65 tn gain in the ‘Other Income’ category before tax from the settlement of the arbitration case with Jacobs. Thus, core NPATMI actually was only VND 577 bn (-24.7% YoY). A slight decrease in revenue of the MSN Group was largely due to a -31.3% drop in mining revenue, while MCH revenue was up 5.2%, and MML revenue went flat (+0.6% YoY). Meanwhile, a sharp drop in NPATMI for Q3 could be mainly traced to disappointing MSR results, in which its EBITDA decreased by -61% YoY and incurred a loss of VND -320 bn in Q3 (vs. a net profit of VND 61 bn in Q3 2018). At the current market price of VND 74,400/share, MSN is trading at a 2019F P/E of 24.9x and 2020F P/E of 21x. Due to our lower earnings forecast for 2019 and 2020, we lower our 1-year SOTP-based target price for MSN to VND 86,000/share from VND 91,000/share. Since our TP offers a 16% potential upside from the current market price, we maintain our Market Perform rating.

At the current market price, VTP is trading at a 2020 forward P/E of 16.1x. With an expected growth rate still in the range of more than 30% in the next 2 years, we think this level of valuation is still attractive. We still apply a 20x P/E target for 2020, and revise down our 2020 target price to VND 160,000/share (from VND 170,000) marking a 24% upside from current market price. Accordingly, we maintain our BUY rating for the stock. Downside catalysts for the stock might come from slower than expected market growth, and losing of market shares to new players.

HDB released its Q3 financial statements, where total operating income (TOI) and pre-tax profit (PBT) were VND 2.871 tn (+35.7% YoY) and VND 1.238 tn (+50.7% YoY). It’s worth noting that the growth rate, which appears impressive, actually came from a low base set back in Q3 ‘18. Cumulatively up to 9M2019, TOI and PBT grew at +18.6% YoY and +19.6% YoY reaching VND 8.044 tn and VND 3.448 tn respectively. This was fueled primarily by the 25.1% YoY growth in net interest income, as NIM of the parent bank expanded +55 bps at the cost of using short-term funding to finance longer term loans. Given the targeted P/B metrics of 1.3x for the parent bank and 3.0x for HD Saison, using 2020 book value, we arrive at the target price of VND 33,000. This is equivalent to a 2020E consolidated P/B ratio of 1.52x and an 1Y upside of +14.9%. Therefore, we issue a MARKET PERFORM rating for the stock.

At the current price, DHC is trading at 2019 and 2020 P/E forward ratios of 17.4x and 9.6x respectively. Our rating for the stock is BUY, with a 1-year target price of VND 46,200/share, giving an upside potential of 20% from the current price based on the target PE of 11.5x, which is the 4-year historical average. We think that the earnings growth driven by the new factory can support the stock price in the coming time.

At the current market price of VND 98,700/share, VHM is being traded at 2019 P/E and 2020 P/E metrics of 17.5x and 14.4x, which is relatively lower than industry peers. Regarding valuation, given the above-mentioned adjustment, our target price is raised to VND 110,200/share using RNAV approach, implying an upside of 13% compared with the current market price. Hence, we reiterate our OUTPERFORM rating for the stock at present. In the short-term, the share buyback plan of up to 60 million shares (equivalent to 1.79% of total charter capital) is expected to have a positive impact on the share price. In our opinion, VHM has ample financial resources to execute this deal considering its debt/equity ratio of 0.46x, and its 9.4 trillion VND cash and cash equivalent balance for Q3.

At the current market price, POW is trading at 2020 P/E and EV/EBITDA ratios of 11.4x and 5.5x respectively. Even though 2019 growth is strong as we had expected earlier, we foresee an increasing policy risk going forward into 2020, as NT2 and CM1+2 PPA negotiations with EVN are currently still ongoing. We maintain our EBITDA target of 6.6x (20% discount from regional peer average), and reach a 1-year target price of VND 15,800/share (+18% upside). Given the above information, we accordingly change our rating to Market Perform for POW.

At the current price of VND60,500/share, FPT is trading at 2019E and 2020E P/E ratios of 13.9x and 11.7x, which looks attractive. We roll forward our valuation to 2020E net profit in our SOTP valuation, with the same target multiple for each segment. Accordingly, we derive a new 12-month target price of VND74,500/share (+23% upside), from VND67,000, and reiterate our BUY call. FPT remains one of only a few large-cap companies to consistently attain high earnings growth, and also possesses an attractive valuation. In the next 3-6 months, we expect earnings to continue to beat expectations, which should be supportive for the share price. 

At the current share price of VND 34,700/share, VRE is trading at an EV/EBITDA of 17.5x which is relatively lower than the regional peer average of 19.8x. On a growth perspective, VRE is attractive with its valuation trading at a discount vs peers while it boasts stronger projected growth for the medium term.  As such, with 26.2% upside compared with current price, we recommend to BUY the stock. 

At the current price of VND 18,600/share, STK is trading at 2019 and 2020 P/E levels of 6.2x and 5.5x respectively, which is rather attractive. Our 1Y target price is VND 21,400 (+15 % upside) based on the target P/E of 6.3x (current industry average P/E), equivalent to an OUTPERFORM recommendation. Downside risk to our call includes the possibility of Chinese firms dumping even lower prices than expected into the market, which will be more detrimental to the volume and ASP of virgin-type yarn, impacting the results of STK in 4Q 18 and 1Q 19. As such, this uncertainty will negatively affect the stock price in the next 3-6 months. 

VHC posted its Q3 earnings results, with net sales and PAT having dropped significantly on both an annual and quarterly basis. In specific, net sales declined to VND 1.882 trillion (-25.5% YoY) and PAT of VND 254 billion (-58.3% YoY). Cumulatively, net sales and PAT up to 9M 2019 reached VND 5.699 trillion (-13.3% YoY) and VND 981 billion (-5.3% YoY), completing 57% and 78% of the respective listed annual targets. VHC shares are now trading at the price of VND 80,800 per share, equivalent to 2019F and 2020F P/E forward ratios of 6.0x and 6.7x respectively – which is in the range of historical forward P/E ratio of VHC shares. To factor in our forecast of a drop in the VHC bottom line for 2020, we reduce our target P/E ratio from the previous 8.5x to 7.5x, and arrive at the target price of VND 90,000 per share (+11.4% upside) for VHC. We consequently downgrade our rating for the shares, from BUY to Market Perform.