Company Report

PetroVietnam Gas (GAS) has released its Q3 2019 results: net sales totaled VND 19.04 tn (+3.3% YoY) and net profit dropped -10% YoY to VND 2.88 tn as a result of decreases in the fuel oil price (-14% YoY) and LPG price (-30% YoY). Compared to preliminary results, the reported number came in slightly higher, as GAS has not recorded a decommissioning expense of approximately VND 200 bn in Q3, and instead it will book an amount of c. VND 400 bn of that expense in Q4. We revised our 1-year target price to VND 109,000 (from VND 114,500), based on an unchanged target P/E of 17x (on our lower EPS estimate) and EV/EBITDA of 11x as we roll over our valuation basis to 2020F. Given only 6.7% upside from the current market price, we change our recommendation from Outperform to Market Perform.

VCB has released its Q3 business results, which demonstrated vigorous growth overall. Consolidated PBT posted VND 6.31 tn, a +72% YoY rise. Cumulatively, consolidated PBT in the first 9 months of the year achieved VND 17.61 tn, a +50.8% YoY performance driven in turn by credit growth of +11.8% through 9M19, as well as deposit growth at +12.2% through 9M19. The stock is trading at 2019E and 2020E P/B ratios of 3.73x and 2.76x respectively. With remaining upside of +5.3% to our target price from the current trading price of VND 88,000 per share, we reduce our rating to Market Perform from OUTPERFORM.

3Q19 financial results of the parent company were within our expectation, but consolidated figures beat our expectation due to the change in the method of recording revenue and profit for industrial park business. We change our 2019-2020 consolidated net sales estimates at VND 1,755 bn (+13% YoY) and VND 1,564 bn (-11%% YoY), and 2019-2020 consolidated pretax profit estimates at VND 1,642 bn (+116% YoY) and VND 1,517 (-8% YoY). 2019-2020 earnings will mainly come from land compensation income, while natural rubber business may only contribute 5%. As the change in 2019-2020 estimates was based on accounting method change, we retain our target price at VND 69,000 per share based on SOTP valuation method. This gives an upside of 11% from the current price, equivalent to MARKET PERFORMANCE rating.

PNJ recently released its Q3 results, wherein net sales reached VND 3.9 tn (+24.7% YoY) and net profit attained VND 208 bn (+17% YoY). This greatly exceeds our expectations, especially given the fact that net profit recorded in July and August declined by -5% YoY. We estimate that in September 2019 alone, net profit surged by 60% YoY. Cumulatively up to 9M 2019, PNJ recorded net sales of VND 11.7 tn (+11.1% YoY) and net profit of VND 811 bn (+16.1% YoY). This performance in turn achieved 64% and 68% of the annual sales and net profit target for the year.We maintain our forward-looking estimates for PNJ in 2019 to achieve sales of VND 15.9 tn (+9.1% YoY) and net profit of VND 1.15 tn (+19.9% YoY). In 2020, we look for net sales of VND 17.6 tn (+10.8% YoY) and net profit of VND 1.3 tn (+15.5% YoY). At the current price of VND 82,800/share, PNJ is trading at a 2019 and 2020 P/E of 16.9x and 14.6x respectively. Our 1Y target price for the stock is VND 93,600 (+13% upside), using our current full year 2020 estimates and an unchanged target P/E ratio of 16.5x, equivalent to an OUTPERFORM rating.

With the current hog supply shortages running up to Tet holiday as well as the recent rapid hog price increase since October 2019, we expect the company’s net profit to turn around, at least in the next 2 quarters. DBC share price has also recently recovered by ~6.7% since early October, in line with the hog price increase. At the current price of VND 23,700/share, DBC is trading at 2019 and 2020 P/E ratio of 9x and 7x respectively. In 2019, we estimate that net sales and net profit might reach VND 7.6 tn (+13.3% YoY) and VND 256 bn (-28.9% YoY). In 2020, we estimate net sales and net profit might reach VND 8.1 tn (+7.7% YoY) and VND 332 bn (+29.7% YoY). Our forecasts have not taken into account any additional real estate revenue that might already be booked. Our 1Y target price for the stock is VND 27,300 (+15.1% upside), equivalent to an OUTPERFORM rating.

At the current price, VGC is trading at 2019 and 2020 PER levels of 12.6x and 10.5x respectively. Given the above information, our rating for the stock is Outperform with a 1-year target of 23,050 VND/share, implying an upside of 19% from the current price. Besides the encouraging earnings growth thanks to the strong performance of industrial park and the potential recovery of sanitary wares in 2020, the coming state divestment and a cash dividend yield of 5.5% can also be supportive catalysts for the stock over the next 12 months.

Using an unchanged target PBR of 3.0x applied to our 2020E post-money BVPS, we derive our new 12-month target price of VND92,700 (from VND82,400), which offers upside potential of 11.7% from the current trading price of VND83,000 per share. Please note that this does not take into account cash dividends of 8% at par in 2019E and 2020E that we had previously assumed. Therefore, we upgrade our rating on the stock from Market Perform to OUTPERFORM.

At the current market price of VND 79,400/share, MSN is trading at a 2019 P/E of 23x and 2020P/E of 19x. Due to our lower earnings forecast for 2019 & 2020, we lower our 1-year SOTP-based target price to VND 91,000/share from VND97,500/share. As our TP offers 15% upside potential from the current market price over the next 12 months, we maintain our Market Perform rating.

At the current trading price of VND 26,650 per share, HDB is trading at 2019E & 2020E PBRs of 1.40x and 1.32x, lower than the sector average of 1.56x for 2019 and 1.28x for 2020. Given the targeted PBR metrics of 1.3x for the parent bank and 3.5x for HDSaison, using 2020 book value, we arrive at the target price of VND 31,100. This is equivalent to 2020E conso PBR of 1.54x and an 1Y upside of +16.7%. Therefore, we issue an OUTPERFORM rating for the stock.

At the current market price of VND 30,300/share, QNS is trading at 2019P/E and 2020 ratios of 7.7x and 7.4x, which is around a 50% discount compared to overall market valuation. We consider these price levels to be relatively cheap, despite the fact that we agree that the stock should be traded at some discount given its irregular approach to investor relations activities, and because of its large exposure on a commodity business like sugar. Our 1-year target price for QNS arrives at VND 35,400/share (from VND 37,500/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 16.8% upside, we continue our Outperform rating for the stock at the moment.

BID posted a Q2 PBT of VND 2.19 tn, -11.9% YoY. While pre-provision operating profit rose by +19.2% YoY, that gain was offset by higher provisioning costs to account for the treatment of credit losses, which rose by +38.5% YoY. We raise our target P/B ratio for BID from 1.8x to 2.0x, which results in a target price of VND 42,900 per share using 2020E BVPS (previously VND 35,700 based on 2019E BVPS). With a 1-year upside potential of 11.4%, we upgrade our rating on BID to OUTPERFORM from Market Perform.

At the current price of VND 51,000 per share, VEA is only trading at a 2019 & 2020 PER level of 8.4x and 7.4x, which is a much lower valuation compared to the overall market of ~14.5x. Meanwhile, the dividend yield came to 7.6% for 2019 and 9.8% for 2020. Our target price for VEA is VND 65,000/share (from VND 63,500/share after accounting to its 2020 forecast) for the 12-month investment horizon, with an upside of about +27%. Therefore, we changed our rating to BUY from MARKET PERFORM given the recent drop. We believe this is a great opportunity to accumulate the stock for long term investors, with attractive dividend yields as well as potential capital gain.

At current price of VND 84,200/share, VHM is being traded at 2019 P/E metrics of 13.7x, which is low compared with industry peers. Regarding to valuation, after reviewing actual unit prices and sale progress (including both retail and bulk sales) at the three mega projects which are better than our previous assumptions, our target price is raised from VND 91,400/share to VND 99,000/share, implying an upside of 17.6% compared with the current market price. Hence, our rating is OUTPERFORM for the stock at present.