Company Report

We maintain our MARKET PERFORM rating on the shares of VNM, however, we modestly cut our 1-year target price to VND 103,000/share (from VND 107,000/share) based on an unchanged target PER of 21x applied to our 2021-2E EPS as we lower our forecasts for 2021/2022 period given the impact of the fourth resurgence of Covid-19. In addition to reduced consumption by low-income consumers-who have been hit the hardest during the pandemic, the strict social distancing measures applied in many cities/provinces throughout Vietnam since May have also placed some difficulties in product distribution via the general trade (GT) channel (which accounts for about 85% of VNM’s domestic sales). As such, we are of the view that the initial plan for 2.5% growth in revenue and flat YoY earnings for 2021 becomes a bit more challenging for VNM  - unless the pandemic can be contained by the Aug-Sept period.  

HAH posted impressive NPATMI growth of 127% YoY in 1H 2021, due to two new vessels added in Q2. As global supply chain disruptions are expected to go unresolved through 2023, market conditions will continue to be favorable for container shipping companies. HAH is poised to be one of the primary beneficiaries of this dynamic. Though the current Covid-19 outbreak could affect shipping volume in Q3, we believe that HAH will continue to post strong earnings growth through 2022. We increase our NPATMI forecast for 2021 and 2022 to VND 279 bn (+102% YoY) and VND 339 bn (+21% YoY), respectively, based on higher charter rates and higher freight rates. We reiterate our BUY recommendation for HAH, with a revised 1Y TP of VND 55,900/share (from last TP of VND 43,800/share) implying a 18.5% upside. 

2Q21 results broke previous records: HPG’s revenue and net profit hit new record highs in 2Q21 at VND 35.1 tn and VND 9.745 tn, surging by 72% YoY and 254% YoY respectively. The surge was driven by both strong volume growth, and a rising price from the steel segment. Cumulatively, the company’s revenue and net profit in 1H21 posted VND 66.26 tn (+67% YoY) and VND 16.71 tn (+230% YoY), accomplishing 55% and 93% of its annual target.  We forecast HPG’s revenue and net profit to reach VND143 tn (+59% YoY) and VND 29.5 tn (+118% YoY) respectively in 2021. Although the resurgence of Covid-19 may put pressure on volumes and ASP in the short term, we expect that net profit in 2H21 may still attain strong growth of 51% YoY thanks to resilient HRC demand, as flat-steel exports are expected to maintain strong growth in the upcoming 2 quarters. HPG is trading at 2021E and 2022E P/E of 7.5x and 7.9x respectively, which we still consider to be attractive. We maintain our Outperform rating for HPG, with a 1-year target price of VND54,000/share based on a consistent target P/E and EV/EBITDA of 9x and 6.5x respectively. In this note, we adjust the EPS and target price following the company’s 35% stock dividend and 5% cash dividend paid in May 2021.

Despite robust earnings recorded in 2021 through May, June results recorded a net profit decline of -39% YoY due to the 4th Covid resurgence. The lockdown in Hanoi, HCMC, and some southern provinces will continue to have a detrimental impact on Q3 earnings. Our base case assumes that if the 4th resurgence can be contained by the end of August and that if the population is fully vaccinated in Q2’22, we revised our PNJ earnings growth forecast for 2021 and 2022.  As difficult as this situation is, the Covid resurgence likely will result in PNJ consolidating the market and gaining a greater share of the pie primarily from the closure of weaker mom-and-pop shops. At VND 95,800/share, PNJ trades at a 2021 and 2022 P/E of 17.9x and 15.2x, respectively. Our 1Y target price for the shares of PNJ is VND 116,500/share (+21.6% upside), and we reiterate our BUY recommendation.

In light of these positive results, we keep maintain our 2021 estimate and rollover our target price using the 2021- 2022 estimates for VHC. In 2021, we estimate net sales and net profit of VND 8.9 tn (+26.3% YoY) and VND 946 bn (+34.2% YoY), respectively. For 2022, we forecast net sales and net profit to reach VND 10.2 tn (+14.6% YoY) and VND 1.28 tn (+36% YoY), respectively, predicated on the assumption that ASP will reach USD 3.20/kg. As such, we increase our 1Y target price on the shares of VHC to VND 50,000/share (+13% upside) [from VND 43,700/share] using an average of our forecasted 2021-2022 EPS. Since our last call on 10/5/2021, the shares of VHC have increased 22%. We reiterate our OUTPERFORM rating on the shares of VHC. At VND 44,250/share, VHC reads at a 2021 and 2022 P/E of 8.5x and 6.3x, respectively. 

PLX delivered positive earnings in 1Q21 at 1.013 tn VND, a difference between night and day compared to the loss of -1.702 tn VND in 1Q20. Such impressive recovery is mainly driven by the recovery in the petroleum segment. Despite the emergence of Covid-19 in Jan, PLX domestic sales volume growth maintained a positive level of 4.7% YoY in 1Q21, and even accelerated in the first half of the second quarter as the government is tightening control over petroleum smuggling. Given a better than expected sales volume in the second quarter, we fine-tune our 2021 PBT estimate from VND 5.07 tn to VND 5.15 tn (+268% YoY). At the current price, PLX is trading at 2021 and 2022 P/E forwards of 19.2x and 16.9x respectively. We maintain our Outperform rating for the stock, with an unchanged 1-year target price of VND 67,000 based on a 1-year target P/E of 22x in accordance with regional peers. Besides the earnings recovery, the divestment from non-core businesses and the sales of treasury shares can be supportive catalysts for the stock price in the coming time. 

ANV has the complete pangasius value chain. Its production capacity runs the spectrum includes: fingerlings, aqua-feed, high-technology farming sites, and processing workshops. As a result, ANV maintains a competitive advantage over competitors and should benefit from the recovery in pangasius demand this year. The final POR16 result is expected to be announced in June 2021, which is a key determinant for the stock. However, we do remain of the view that ANV will receive a reduced anti-dumping (AD) tariff from the US – which should be drastically reduced from the current USD 2.39/kg to merely USD 0.09/kg. Given this favorable assessment, we believe that the Company is poised for a return to the US market. These are strong catalysts for the shares. At VND 24,000/share, ANV is trading at 2021 P/E of 7x (2021 company guidance), which is lower than peer of 8x. 

Improved underwriting profitability. It was well telegraphed that BVH would achieve a substantial profit increase (+292% YoY) for 1Q 2021, achieving VND 590 bn. A great windfall came in the form of a huge provision made on equity investments for same period last year (VND 340 bn). There were, however, improvements in BVH core business. Life insurance premiums grew +13.3% YoY, new business value margins soared to roughly 30%, and non-life insurance underwriting profitability jumped.  Earnings growth could recover from 2022. We believe that the downward trend in interest rates will reverse in 2H 2021. However, this will only impact BVH’s earnings during 2022, as the benchmark rate for mathematical reserves calculation would increase from 1H 2022. Accordingly, NPATMI for 2021 and 2022 are projected to be VND 1.5 tn (-2% YoY) and VND 1.9 tn (+27% YoY), respectively. Reiterate Outperform rating, with increased 1Y target price to VND 71,000/share (from VND 62,700) as we roll our valuation basis to mid-2022 and apply a target P/B ratio of 2.4x (10% lower than the historical average P/B of BVH since listing).