Company Report

We reiterate our Outperform rating on the shares of CTG, despite lowering our target price to VND 35,300 per share (from VND 39,700), as we cut our target P/B to 1.6x (vs. 1.8x) resultant of the rising interest rate environment. Despite limited space to issue additional credit in 2Q22, CTG was able to maximize its paltry SBV credit allocation to achieve stellar results. Earnings grew +107% YoY on the back of moderate TOI expansion, improved CIR, and lower provisioning. PBT during 1H22 was VND 11.6 tn (+7% YoY), equivalent to 51% of SSI Research's earnings forecast. However, balance sheet quality underperformed, as both Group 2 loans and other NPLs rose to 1.25% and 1.35% (vs. 1.1% and 1.25% at the end of 1Q22), respectively, intimating that loss provisions could weigh on CTG’s earnings going forward.

Investment summary: We maintain our Outperform rating on the shares MSB. However, we are lowering our 1Y TP to VND 23,000 (from VND 28,400). Our reduced TP reflects: (1) excluding the FCCOM divestment in our forecast; and (2) the reduction of our target P/B to 1.3x (from 1.5x), reflecting the bank’s relatively high exposure to real estate developers. In short-term, we hold a positive view for MSB with strong PBT growth in 2H22 from low base level (+48% YoY), 30% stock dividend in 2H22, and a potential credit extension. During 1H22, MSB posted a pretax profit of VND 3.3 tn (+6.9% YoY), despite declining -6.6% YoY in 2Q22 to VND 1.8 tn. Excluding the one-off bancassurance fees in 2Q21, core profit grew 395% YoY during 2Q22. NII growth jumped +39.5% YoY as credit growth was robust at +8.5% YTD, whilst earnings from FX and securities trading activities were strong. Asset quality improvement exceeded our expectation (NPLs dropped 29 bps to 1.5%), causing a credit provision reversal of VND 115 bn in 2Q22. However, unfavorable results of foreclosed assets liquidation somewhat offset MSB’s earnings during 1H22.

We expect that the company’s plan to re-enter the US market this month will keep 2022 general ASP at a high level of $2.80 USD/kg (from $2.10 USD/kg in 2021) and sales volume growth at 20% YoY (volume growth of 26% YoY in 2H 2022). As a result, we forecast ANV net revenue and net profit to be VND 5.4 tn (+54% YoY) and VND 870 bn (+576% YoY) respectively in 2022, translating into an earnings growth of 948% YoY in 2H22, as 2H21 was a low base due to high cost of COVID-19 prevention. However, the pangasius price might have peaked in 2Q 2022. Accordingly, we forecast ASP to drop to $2.40 USD/kg (-15% YoY) and sales volume growth at 15% YoY in 2023. This leads to GPM decreasing to 21% in 2023 from 29% in 2022.  In 2023, we estimate ANV to post net revenue and net profit at VND 5.3 tn (-1% YoY) and VND 615 billion (-29% YoY). Therefore, 2022/2023 EPS would be VND 6,823/share (+576% YoY) and VND 4,824/share (-29% YoY).

ANV is trading at 2022 and 2023F P/E of 7.6x and 10.7x, respectively, which are fair, in our view, considering ANV earnings will decelerate in 2023. Our target price for ANV arrives at VND 47,700/share based on 2022EPS and a target P/E of 7.0x. Our target price represents a mild 7% downside from current market level. We thus issue a Market Perform rating for ANV.

Estimates and investment view: Given H1 results, we trim our forecasts for 2022 and 2023. Our new estimates foresee a -11.6% decline in NPAT in 2022 before the bottom line increases 11% next year. Next year, the situation could be rosier, with expectations of 7.8% sales growth and margin expansion. Based on our updated estimates, sales growth in H2 2022 is 8.2% with NPAT being flat YoY.

Our new target price is VND 80,000/share based on 2023 EPS (targeted P/E of 18x) and DCF valuation. Given the 10% potential upside, we downgrade our rating to Market Perform on the shares of VNM.

We are downgrading KDH from Buy to Outperform, with a revised 1Y target price to VND 47,000 (+19% potential upside). As such, we revise down our 1Y target price by -26% since our last report, as explained by the change in our valuation method. Not only did we use RNAV methodology to calculate for KDH future expected value, we also incorporate the P/E and P/B method to factor in market sentiment toward real estate stocks during what has been a complex environment in the real estate market.

Among our coverage, we still determine that KDH has some advantages compared to other developers, such as the company’s land plots located in District 2, 9, and Thu Duc area, which usually has higher absorption rate compared other second tier areas. Not to mention, KDH is also a reputable developer with clean legal status projects and good financial health, which can help the company to withstand during difficult times.

We continue to expect KDH earnings in the next 2 years should remain solid, as the company is focusing on developing low-rise and mid-end condominium products, which usually take a short time to absorb. With a strong balance sheet, KDH can seize the opportunity to acquire more land bank and seeking for additional funding for its project pipeline. However, we will continue to keep a close watch on company presales - as the property market is cooling down at the moment.

Investment highlights: We recently attended the STK analyst meeting for an update on 2Q22 results and the company’s demand outlook for 2H22. In 2Q22, STK recorded net sales and net profit of VND 530 bn (+3.8% YoY) and VND 69 bn (-2% YoY), respectively. Given how inflation is affecting apparel demand worldwide, management believes that it will be challenging to meet the net sales target for the year. As such, we lower our forecasts for STK based on the recent slowdown of orders in the sector. In 2022, we expect net sales and net income to reach VND 2.3 tn (+14% YoY) and VND 299 bn (+7.4% YoY), respectively, 14% and 7% lower in net sales and net profit compared to our previous forecast. In 2023, we expect the equivalent to reach VND 2.5 tn (+8.6% YoY) and VND 314 bn (+5.1% YoY) respectively. Our updated 1Y target price for the stock is VND 45,200/share, representing -8.3% downside and prompting us to issue an UNDERPERFORM rating for the shares.

Investment View: We maintain our BUY rating in place for TNH, with a revised target price of VND 53,800/share, representing a 23% upside from the current price on August 4^th.

We note that growth in 2022 is being affected by previous lockdowns in Q1 due to the Omicron outbreak, as well as last year’s high base set in Q3 and Q4. No significant COVID testing revenue is expected to roll in this year. Long-term outlook to 2023 and onwards is looking solid via: (1) additional healthcare workers shifting in from public to private hospitals, while 2022 - 2023 FDI investment could surprise in Thai Nguyen & Bac Giang province, (2) increasing incentive of Vietnamese government for private investors to build more hospitals to increase urbanization rate, and (3) increasing number and valuation of recent hospital M&A deals in Vietnam.

We expect the company gross revenue to reach VND 478 bn (+13% YoY) in 2022 and VND 574 bn (+18% YoY) in 2023. For net profit, we expect it to reach VND 156 bn (+10% YoY) in 2022 and VND 190 bn (+22% YoY) in 2023. During recent market turmoil, we witnessed small downward pressure in global & local healthcare peers’ valuation, standing at forward P/E of 20.3x and forward EV/EBITDA of 14.4x. We also roll our valuation towards H1 2023 and reflect in our new target price.

AST has turned a profit since May 2022. PBT is estimated to reach VND 10 bn in 2Q22, and YTD losses could be reduced to VND 10 bn. The FY2022 PBT target is set at VND 23.5 bn (vs a loss of VND 128.4 bn in 2021), which should be achievable. We estimate that AST’s PBT could reach VND 224 bn (+486% YoY and -15% vs 2019) in 2023, and VND 322 bn (+43% YoY and +22% vs 2019) in 2024 when the market fully recovers. We have an Outperform rating for the shares of AST with a 1Y TP of VND 69,000/share (based on a target 2023 P/E of 20x), implying 19% upside from the current market price, reflecting our positive view on AST strong turnaround along with the recovery of the aviation industry.

We attended DPM’s AGM during which management increased their 2022 net income guidance to VND3.5tn (+10% YoY, 268% higher than the initial plan) and DPM’s cash dividend of 50% on par value (9.4% dividend yield, higher than the initial plan of 35% on par value). The AGM did not approve the proposal to raise transportation tariff costs for the 2014-18 period. As such, DPM may not have to pay an additional USD18m or VND430bn to GAS. DPM’s earnings closely track urea price trends, ie having achieved the highest net income in terms of absolute value in 1Q22, only then to decline gradually in 2Q22 and 3Q22, while it could improve in 4Q22 as the high season begins. In terms of YoY growth, DPM still targets to deliver positive earnings growth in 2Q22 (up 60-70% YoY on our estimates) and 3Q22 but could post negative earnings growth in 4Q22. As such, we believe that the share price may continue to exhibit positive momentum over the short term. We now estimate DPM’s 2022E net income to reach VND5.1tn (+59% YoY, from VND2.25tn) and introduce our 2023E net income of VND4.1tn (-18% YoY).

VRE started its turnaround in 4Q21 and continued the recovery momentum in 1Q22. We expect its performance to further improve with the country’s full reopening as the sustained and significant uptick in footfall would expedite the cessation of mall relief. Our earnings forecast for 2022 is VND 7.8 tn (+32.7% YoY) and PAT of VND 2.2 tn (+65% YoY), primarily due to strong growth in leasing revenue given the expected decline in support packages and the contribution of three new malls opening this year. For 2023, we forecast earnings of VND 8.5 tn (+9.2% YoY) and PAT of VND 2.6 tn (+30% YoY) with expectations that leasing revenue continue to recover to pre-Covid levels. Meanwhile, new mall openings in 2022 – 2023 will push organic growth in leasing revenue as well. We reaffirm our OUTPERFORM rating with a SOTP-based 12-month target price for VRE is VND 33,900/share.

We are upgrading the shares of PVT to BUY from Market Perform, which tracks our 1-year target price of VND 26,200/share (previously VND 32,500/share) using target P/E forward of 11x – intimating 22% upside in the shares. Over the short-term, we expect a catalyst in the form of the PVT Athena liquidation which should translate into a gain of USD 6 mn (expected in 2H 2022F). PVT has solid assets, stable earnings growth, a D/E ratio of 0.5x, and a strong cash buffer of VND 3 trillion at 1Q 2022. As the Vietnamese economy is in recovery, we also believe that increased tanker demand is on the near-term horizon. These factors suggest that PVT will return to its pre-COVID core earnings growth path of 15% p.a. over 2022F-2023F, given renewed and growing fleet of vessels.

We are downgrading the shares of OCB from Outperform to Market Perform, and we aggressively cut our 1Y TP on the shares -28.2% to VND 23,200. Our reduced TP reflects both the rising interest rate environment and potential credit exposure to FLC Group’s loans and corporate bonds, and the increased risk of restructured construction and the real estate loans. 1Q 2022 results were disappointing, highlighted by -34.5% YoY decrease in pretax profit. Strong NII growth of +22% fueled by credit growth of 5.9% YTD, but was simply not enough to offset for the -50% YoY decrease in non-interest income and doubling of credit costs. While OCB was able to collect VND 400 bn from FLC Group in May, this loan balance still tallies 1.9% of total credit at 1Q22. 

BID performed well during 1Q22, as operational efficiency and profitability indicators exhibited improvement, with well-managed credit. For full-year 2022, we expect that the bank would garner +52% YoY growth in pre-tax profit, fueled primarily by a lighter provisioning burden (-19% YoY). ROE would rise to 16% (from 9-13% over the past three years). However, long-term growth potential for BID is still limited by capital (CAR of around 9% only), while fee-based services lack a critical growth driver. Although the bank is reviewing its strategy/ownership structure regarding its life insurance arm BIDV MetLife, we do not expect it to be finalized soon (at least not within 2022). With an adjusted 12-month TP of VND41,200 (from VND42,300), we maintain our MARKET PERFORM rating on the shares of BID.

MWG recently hosted an online analyst meeting to discuss its 1Q22 financial results. Net income in the quarter increased by only 8% YoY, as the revenue of BHX was still negatively affected by lower household income in rural areas. However, we believe that restructuring back-end activities and the gradual recovery in household income towards the end of this year will help MWG to perform better in the remaining quarters. We now forecast 2022E net income at VND6.34tn (+29% YoY, from VND6.7tn). Our new 2022E net income is 5.4% lower than our previous estimate, as we take into account the loss from the pharmacy chain and trim our estimates for the grocery chain. Besides focusing on opening DMX Supermini and Topzone stores, MWG plans to accelerate new openings of An Khang-branded pharmacy stores. As we now add the pharmacy segment into our valuation, we lift our SOTP-based 12-month target price to VND197,500 per share (from VND196,000). We reaffirm our BUY rating. Downside risk: possibility of store closures due to renewal of lockdown measures.