Company Report

VCB announced that it has successfully issued 111.1m shares by way of private placement, increasing its charter capital by 3.088% to VND37.089tn. The buyers are GIC Private Limited (GIC – the investment arm of Singapore government) and Mizuho Bank Ltd (VCB’s current strategic shareholder). VCB would receive proceeds of VND6.2tn, or c.USD265m from the issuance. We estimate an issuance price of VND55,500 per share, which is equal to a 2018E PBR of 3.22x. We raise our 12-month TP to VND68,600 (from VND63,100), based on an unchanged 2019E PBR of 3.0x. As our new TP offers some 25% potential upside from the current price and given SSI’s view of 10% return for the VNIndex in 2019, our rating bands call for a BUY rating (from NEUTRAL).

Up to 9M2018, PHR achieved VND 884 bn (-21% YoY) in net sales, in which net sales from the parent company was VND 667 bn (-22% YoY), accomplishing only 41.5% of the 2018 parent company target. At the current price of 31,800, PHR is being traded at 2018-19 PER levels of 10.6x and 9.2x based on core EPS, which are more than fair for a commodity stock given an expected moderate growth of 15% YoY in 2019 earnings. This gives an upside of 12% from the current price, equivalent to an OUTPERFORM rating.

Electricity sales volume up to 11M 2018 is 4.523 bn kWh in total (+10.7% YoY), of which Pha Lai 1 (PL1) plant is 1.556 bn kWh, and Pha Lai 2 (PL2) plant is 2.967 bn kWh. At the current market price, PPC is trading at 2019 PE forward levels of 5.8x and PB forwards of 1x (core PE 2019 is 6.7x). Using a target PER of 7x to reflect stable earnings outlook, we reach a 1Y target price of VND 21,300/share (+20% upside), and set an OUTPERFORM rating for the stock. Dividend yield at this market price is also very attractive, at 14%.

The company recorded VND 1.318 tn in net sales (-11.3% YoY), but ramped up to VND 1.848 tn in terms of net income (+26.8% YoY) in Q3. Such a strong result was contributed by great earnings for the company’s joint ventures. For Q3, JV-sourced income for the company amounted to VND 1.799 tn (+28.5% YoY), in which contribution from HVN might total as high as VND 1.559 tn (~ 86.7% of total JV-related income). Meanwhile, TMV and FVL might only make up 10.8% and 2.56% of total income from JVs. Given our forecasts on its 3 JVs, we apply SOTP methodology to value the company, and the average regional PER at current is lower than that of the previous report. Hence, we applied a lower PER targets in this report. As a result, our SOTP-based 12-month target price is VND 43,700, equivalent to a 2019 PER of 8.0x. Given a 17.2% upside, we provide our rating of OUTPERFORM for the stock. VEA expects that the divestment by the Government will be implemented in 2019 to lower state ownership to 51% from 88.47%, while the HOSE listing will be slower than investor expectations, as VEA needs to wait for its audited 2018 financial statement.