Company Report

NLG recorded net sales of VND 205 bn (-13.0% YoY, -87.5% QoQ) and a net loss of VND 65 bn (reversal from net profit during 1Q23 and 4Q23). Fewer units in the Izumi City, Southgate, and Mizuki Park project were handed over during 1Q24 than earlier during 1Q23 and 4Q23. During 1Q24, due to the low property sales, the SG&A exp/revenue ratio was high, at 70.6% but still lower than 1Q23. For the past few years, NLG has witnessed an increasing trend of selling and administrative expenses SG&A/ revenue ratio from 16.7% during 2019 to 30.8% during 2023, and the SG&A expenses/ratio during 2023 was the highest among listed Vietnam developers.

We downgrade our rating to Market Perform (from Outperform) on the shares of QNS, with an increased target price to  VND 56,700/share (from VND 55,400/share), as we roll forward our price target to mid-2025F. QNS trades at a 2024F P/E of 6.3 and 2025F P/E of 6.1x, which is lower than its five-year historical range of between 6.3x-11.5x. However, we believe that QNS’s earnings growth will be lower for 2H24 and flat for 2025, as the sugar business suffers lower growth, and the soymilk segment takes more time to return to normal.

We reiterate our Outperform rating on the shares of CTG, although with a reduced 1Y TP of VND 38,500/share (from VND 41,400). As there is no timeline for state divestment below 65%, a resolution for raising capital by CTG remains blurry and is hindering long-term growth. All the while, the earnings outlook for 2024-25 remains exceptional compared to peer, with PBT growth of +17% YoY and +35% YoY, respectively, as we expect the heavier provisioning to come to end during 2024. ROE, therefore, should achieve a more desirable level of 20% during 2025. CTG is the third largest bank in Vietnam with strong brand recognition, solid customer base, and good deposit franchise, all of which would be an advantage for CTG to maintain a resilient NIM and expand fee-based services. A capital raising is the key to the growth puzzle for this bank.

Net profit for 1Q24 fell 25.6% YoY to VND 2.5 tn primarily due to the decline in sales volume amid the depletion of outstanding gas fields in Cuu Long & Nam Con Son 1 &2 basins. According to management, Jan-May PBT is estimated at VND 5.2 tn. This translates to a PBT in Apr-May of VND 1 tn/month, equivalent to the average monthly level for 1Q24, and -20% lower than the average level of 2Q23.

As GAS’s earnings for 1Q24 were in line with our estimates, we maintain our 2024 net profit forecast of VND 11.1 tn (-3.7% YoY) based on dry gas volume of 6.95 bn m3 (-6% YoY) and a slight price increase of 2% YoY.  We expect the company’s earnings to remain flat in 2025 given that the contribution of LNG and the new fields should offset the depletion of old fields.

Our 2024-25F revenue are estimated at VND23.9tn (+19.4% YoY) and VND27.5tn (+15% YoY), while 2024-25F PBT are estimated at VND14.5tn (+38% YoY) and VND17.6tn (+21.5% YoY) which is a historical high level, based on assumed 14% YoY of total passenger growth in 2024F and normalized long-term growth of 10% YoY in 2025F. We have an OUTPERFORM rating, with a higher 12-month target price of VND136,000/share, based on an unchanged target multiple of 16x applied to our 2025F EV/EBITDA (from 2024F). Short-term catalyst would be continuation of strong growth based on passenger recovery, lower airline-related provisions, and ACV getting approval to pay pending stock dividends from 2019 until now.

As we increase our 12-month target price from VND84,800/share to VND93,400/share (20% upside potential) – rolling over our SOTP valuation to mid-2025E and reflecting SSI’s higher valuation for TCB, we also upgrade the shares of MSN to OUTPERFORM (from Market Perform). 2024-25 should be an eventful period for MSN group: Upcoming milestones include the divestment from mineral processing unit H.C. Starck, the plan to list Masan Consumer Corporation (MCH: currently trading on UPCoM) on HOSE, and the possible stake sales. These recent moves/plans suggest that the Group is actively restructuring to focus on its core consumer business. During 2024, we expect a broad-based recovery across all segments. We believe that revenue growth from its consumer retail chain subsidiary, Wincommerce (WCM), will be achieved via rapid new store openings, a payoff from the restructuring during the 2022-23 period, and a recovery in consumer spend. Subsidiary Masan Consumer (MCH) has consistently proven resilience, having outperformed peer since 2019 (CAGR of 10% in revenue and 11% in NPAT). We believe that the company will maintain this momentum through 2024, leveraging synergies of the retail platform (WCM) and other product innovations.

We believe that POW’s earnings witnessed a low base during 1Q24, unlikely to be replicated in the upcoming quarters. In fact, we observe that the company suffered the lowest volume and NPAT in 1Q24 compared to the same quarter during 2018-2023 as: 1) Nhon Trach 2 plant (NT2: HOSE) was assigned insignificant contracted volume (Qc) (at 1 mn kWh vs 750-1,000 mn kWh for every first quarter during 2018-2023); and 2) the Hua Na (HNA: HOSE) and Dakdrinh plants had to undergo limited operations to reserve adequate water levels for peak power demand season. Specifically, compared to 2018-2023 period, Hua Na’s 1Q24 volume was only higher than that of 1Q20, and this figure for Dakdrinh was higher than that of 1Q19 and 1Q20. Nevertheless, the company’s 1Q24 results were in line with our expectations. Hence, our 2024 earnings forecast remains nearly unchanged. For 2025, due to the successful compensation negotiation related Vung Ang 1’s Generator 1 technical issue, we assume/factor a compensation amount of ~VND 1 tn to be recorded during 2025-2026. Specifically, we expect a 22% YoY decline for 2024 (vs 50% YoY fall for 2023) and 104% YoY recovery for 2025 from 2024 low base for NPATMI. We change our rating for POW to OUTPERFORM (from MARKET PERFORM), with a 12-month target price of VND 13,900/share (equivalent to 14.9% upside potential; based on DCF and EV/EBITDA multiple valuation methods).

We maintain our cautious view for 2024, with consumption continuing to be impacted by the zero-tolerance legislation for drunk driving, a slower rate of change for consumer habits, and consumers tightening their belts. However, we increased our 2024E net sales and NPAT forecasts to VND 32.2 tn (+5.8% YoY) and VND 4.6 tn (+9% YoY), respectively, given the better-than-expected Q1 sales results and small increase in ASP in the first few months. These forecasts are 8.5% and 4% higher than our previous revenue and profit forecasts respectively. We also introduce our 2025F forecast for net revenue at VND 33 tn (+3% YoY) and net profit at VND 4.97 tn (+7% YoY). We assume that the 2025 GPM will increase, while A&P spend will continue to be tightly controlled given the uncertainty surrounding the beer sector’s growth.

Despite the above, overall KBC reported poor financial results for 1Q2024, with net sales totaling VND 152 bn (-93.1% YoY & -82% QoQ) and net loss of VND 76.7 bn, reversal from high net profit during 1Q23 and 4Q23. The lack of industrial land leases (which were recorded during 1Q24) is the main reason for the poor results. For FY2024, we expect KBC to lease around 102 ha of industrial land in total, of which 30 ha was secured to lease by new investors during 2023, 50 ha from Trang Due 3 Industrial Park, and 22 ha from the Tan Phu  Trung Industrial Park. Accordingly, KBC is forecast to achieve VND 4.92 tn (-12.8% YoY) in net revenue and VND 1.36 tn (-38.5% YoY) in NPAT for FY2024.

2024 business plan: For 2024, PLX set conservative PBT guidance at VND 2.9tn, implying a decline of 29% YoY. However, it should be noted that PLX’s actual results have usually exceeded the guidances for the past nine years with the exception of 2020 amid the response to Covid-19.  

1Q24 achieved impressive results driven by the petroleum segment: PBT soared 72% YoY and 70% QoQ to VND 1.44 tn, already accomplishing 50% of the 2024 guidance. Most notably, gross profit increased a considerable 31.2% YoY to a record-high of VND 4.67 tn, fueled by the petroleum segment.  Domestic petroleum sales volume arrived at 2.6 mn tons, increasing slighly by 2% compared to the relatively high base of 1Q23, while still increasing 2.4% QoQ. However, earnings for the segment soared 260% YoY to VND 1.06 tn driven by a 9% increase in petroleum prices during the quarter which benefited the company through low-cost inventory, and the shortening of price adjustment cycle from 10 days to 7 days from the end of 2023.

1Q24 results were within our expectation as volume in the quarter declined 86% YoY, which weighed on NT2’s performance accordingly. We expect this output figure will somehow improve QoQ in 2Q24, supported by the peak power demand season in Vietnam. Nevertheless, due to the limited contracted volume (Qc) (at ~1 bn kWh) (the actual Qc might change, depending on the actual electricity mobilization conditions) planned by the National Load Dispatch Center (NLDC), we are concerned such improvement might not help NT2 to breakeven in 2024. We project a loss of VND 255 bn (nearly unchanged compared to our previous update) for the company in 2024. After our SELL recommendation on 29 Mar 2024, stock price declined by 12%.  With a 12-month target price of VND 23,000 (equivalent to a 5% upside potential) (based on DCF and EV/EBITDA valuation methods), we upgrade our rating to MARKET PERFORM for the stock.

As Viettel Group (Viettel) and Vietnam Posts and Telecommunications Group (VNPT) were awarded the usage right of 5G wavebands in March 2024, we believe that CTR will require significant capital for BTS (base transceiver station) sites investment, which means a conservative dividend payout level accordingly should be reasonable to accumulate a strong enough retained earnings balance as a safe equity source. However, we observe that CTR intends to pay out higher cash dividends than before. Specifically, during 2016-2021, CTR had maintained a conservative VND 1,000/share cash dividend despite consistent earnings growth. However, that level then increased to VND 2,919/share in 2022 and was approved at VND 2,720/share in 2023 (during the 2024 AGM) (nearly a threefold increase compared to past years). Therefore, we believe that CTR might have to increase its debt component in the capital structure. Additionally, we witnessed lower-than-expected gross profit margin of construction segment and financial income during 1Q24 and expect that 2024 NPATMI will perform a slower growth of 11.6% YoY growth than that of 2023 (16.5% YoY). Nevertheless, we forecast a solid NPAT growth of 19.8% YoY in 2025, mainly driven by the long-term outlook of 5G rollout, which should support infrastructure leasing segment to continue to improve CTR’s overall profit margin. We call for a MARKET PERFORM rating on CTR, with a 12-month DCF target price of VND 133,200/share (equivalent to 3% upside potential).

MWG released upbeat 1Q24 results, flipping back to solid profitability with net income of VND903bn (+4,143% YoY). This beat our expectation thanks to faster-than-expected profit margin expansion of both the ICT & CE and grocery segments. Although we had initially expected a notable improvement in the profit margin of ICT & CE chains after a period of de-stocking and certain cost-cutting measures by the company, the results came in even better than our expectation due to (1) abnormal sales of air conditioners which generate larger profit margins than mobile phones, and (2) the de-stocking pressure which has been released and lifted profit margins for ICT & CE retailers – we observed a correction in inventory balance of competitor FPT Shop from 1Q24. With better-than-expected 1Q24 results of the both ICT & CE and grocery segment, we revise up our 2024-25F net income to VND3.47tn (+1,968% YoY, from VND2.5tn) and VND4.5tn (+30% YoY, from VND3.4tn). With unchanged target multiples on our revised 2025F financials (from average 2024-25F), we derive our new SOTP-based 12-month target price for MWG at VND65,800 per share (from VND56,200), and maintain our OUTPERFORM rating.

We maintain our Market Perform rating on the shares of HT1. We apply a target P/E of 12x (15x previously) and EV/EBITDA of 6x (7x previously), resulting in a one-year target price of VND 11,600/share (from VND 11,300/share), as we roll forward our price target to mid-2025F. 1Q24 results: HT1 recorded net sales of VND 1.5 tn (-12% YoY, -16% QoQ) and a net loss of VND 25 bn (compared to net loss of VND 86 bn in 1Q23 and net profit of VND 54 bn in 4Q23) on weak cement demand. Sales volume decreased 6% YoY (-22% QoQ) due to seasonal effects and persistent weak demand from 2023. ASP decreased 6% YoY (-6% QoQ), as: (i) higher percentage of bulk cement sales; and (ii) new cheaper cement brand “PowerCement” launched late 2023. GPM has improved to 6.9% during 1Q24 compared to 4.5% during 1Q23 due to 30% YoY lower input coal prices.