Company Report

At the current price, VGC is trading at 2019 PER of 13.6x. Our rating for the stock is Outperform, with a 1 year target price of VND 23,600/share, imlying an upside of 16% from the current price. We think that encouraging earnings growth in 2019, as well as the government divestment, would together be supportive catalysts for the stock in the next 12 months. Used to be mainly regarded as a construction material manufacturer, VGC should be rather viewed as a property developer in the next 12 months given the tremendous growth of the industrial park segment and the expected contribution of around 60% of consolidated PBT in 2019.

For 5M19, revenue rose by 15.4% YoY (vs. 43% YoY for 5M18) to reach VND42.784tn, achieving 39.4% of the company’s annual plan. This was mainly due to growth in the Dienmayxanh and Bachhoaxanh chains. Net margins reached their highest level since the start of 2017, at 4.2% in 5M19, above the 3.5% level achieved in the same period last year, and the 3.3% for 2018. As such, 5M19 net income attributable to shareholders jumped by 39.0% YoY to c.VND1.792tn (vs. +43.9% YoY for 5M18), reaching 50.2% of the annual plan. At the current price of VND91,400, shares of MWG are trading at 2019E and 2020E PERs of 10.3x and 8.4x, respectively, which compares to SSI’s year-end target 2019E PER of 14.5x for the VN-Index. Following the upward revision to our earnings, we lift our SOTP-based 12-month TP for MWG to VND160,300/share (previously VND148,500). As our new TP offers some 75% upside potential, we reiterate our BUY rating on MWG. The key downside risk to our call would be fiercer-than-expected competition in the grocery business.

We maintain our 1Y-TP for ACV at VND 95,200/share (10% upside), based on a target EV/EBITDA of 16x (15% premium compared with the global average). Given the limited potential upside to current market price, our rating is Neutral. We will give further updates in our upcoming 2Q19 earnings report.

For 1Q19, VNM reported VND13.19tn in revenue (+8.8% YoY) and VND2.797tn in net profit (+4.3% YoY). The rise in revenue was triggered by 10.3% YoY growth in domestic sales, while export sales grew by only 7.9% YoY. At the current price of VND125,500/share, VNM shares are trading at a 2019E PER of 22.7x, an EV/EBITDA of 14.1x, a 2020E PER of 21.1x, and an EV/EBITDA of 13.1x, respectively, which are not expensive yet not attractive enough (given our low-single-digit growth outlook), in our view. On the heels of our earnings revisions, we lower our 12-month target price for VNM to VND127,000 (previously VND 131,500) based on an unchanged target P/E of 23x applied to our 2019E EPS. We see no strong catalysts that would trigger an upgrade of our call in the short-term. As our new TP offers only 1% upside potential, and is lower than SSI’s overall market expected return from now until end-2019 of 6.8%, we reiterate our Underperform rating.

Revenue reached VND 491 bn, up 15% YoY, while NPAT reached VND 28 bn, up 18% YoY. 1Q2019 NPAT arrived in line with our expectations, and reached 13% of our 2019E operating NPAT of VND 212 bn and reached 8% of 2019P NPAT company guidance. Q1 is normally a low season for the construction sector, due to the Tet Holiday. We maintain our OUTPERFORM rating for FCN, yet lower our TP to VND 17,000/share (from VND18,600/share). The stock has an upside of 19.7% to our target price.

At its current price, AAA is trading at a 2019 PE forward level of 7.8x. We estimate the fair price of AAA based on the Sum-of-the-parts method. Accordingly, the separate fair value for the An Phat Hi-tech IP is at VND 1.2 tn, equivalent to VND 7,200/share based on the Rnav method with a cap rate of 10%. Total net profit from this project from 2019-2021 is estimated at VND 443 bn. On the other hand, the fair value of other segments are estimated at VND 12,900/share, based on a target PE of 9x. Accordingly, our 1-year target price for AAA is VND 20,100/share, equivalent to an upside potential of 12.6% from the current price. Our rating for the stock is Outperform.

We maintain our previous forecast, and view PTB as one of the few listed companies which benefits from the expansion of the US-China trade war. PTB’s furniture segment profits directly from the current tension, which is reflected in increasing orders from existing US clients such as Walmart, as well as new clients such as Masterbrand. PTB exports to the US accounted for only 25% of total furniture revenue in 2017, raised to 40% in 2018, and is expected to bring in over 50% of revenue in 2019. We feel justified in maintaining our BUY recommendation for PTB, with an upside of 27%. Our unchanged 1Y-target price is VND 80,100 / share (adj. for cash dividend: VND 3,200 / share). Our TP is based on the SOTP-Method, and is equivalent to either a 2019F PER of 9.6x or a 2019F EV/EBITDA 4.9x, both of which is considered low in our view.

At the current price of VND 50,700, shares of FRT are trading at 2019 and 2020 forward PER levels of 8.7x and 8.5x respectively. This is compared to our estimate of industry incumbent leader MWG at 10.6x 2019F PE, coupled with a projected 2019E PE of 14.1x for the VN-Index. We apply a target PER of 10x (down from 12x due to slower growth of ICT segment and low liquidity of the stock) for FRT to arrive at a price of VND 58,330/share, a 15% upside. Therefore, we reiterate a MARKET PERFORM rating for the stock in 2019.

FPT released its 4M19 results, which were mostly within our general expectations. Net sales and pretax profit recorded YoY growth of 19.4% and 22.8%, respectively. For performance in further detail, software outsourcing revenue and PBT were ahead of our forecasts, whereas telecom services were in line with our expectations, while distribution and retail fell short of our estimates. At the current price of VND44,850/share, FPT shares are trading at a 2019E PER of 10.8x. We reiterate our BUY rating on FPT, with a new SOTP-based 12-month target price of VND55,800 (+24% upside potential) (previous VND63,000). The change in our TP takes into account FPT’s recent stock dividend payout of 10%. FPT remains one of the more attractive growth stocks in our universe, and features a compelling valuation, in our view. However, we note that as FPT’s foreign ownership allocation is full, foreign institutions will likely have to pay a premium to purchase the stock.

At the current price of VND 23,900/share, TPB is trading at 2019F& 2020F PBRs of 1.55x and 1.24x respectively. The bank’s 2019F PBR is equal to the sector average of 1.5x. Using the average of 2019F & 2020F BVPS, the 1Y target price would then be VND 27,800 per share, which is equivalent to a dynamic upside of 16.3% from the current price. Therefore, we hold an OUTPERFORM recommendation on the stock.

PVS has released its financial results for Q1, and in short, it’s a stunner. While net sales totaled a respectable VND 4.09 tn (+22.8% YoY), net profit exploded, posting a remarkable VND 385 bn (+103.7% YoY). Net earnings to parent shareholders was also quite welcome news, reaching VND 369 bn (+45.8% YoY). Although we have expected strong profit growth for Q1, results exceeded even our own estimates. Our 1-year target price for PVS arrives at VND 27,000/share (from VND 24,000/share) based on an unchanged target P/E of 13x and P/B of 1x. With an 7% upside from the current market price, we reiterate our Outperform rating for the stock.

At the current price of VND 23,250, PC1 is traded at PE 2019F of 8.0x and 2020F of 6.1x. For 2019 results, we think that the company is traded at a reasonable PE compared to its historical PE. However, given the expectation of a strong growth of NPAT in 2020 at 31.6% YoY, the stock is traded at an undervalued price. We apply a PE of 8x to average 2019 and 2020 EPS of VND 3,345 to arrive at a 1-year target price of VND 26,760, a 15% upside. Therefore, we issue an Outperform rating for PC1 in 2019.