Company Report

Since our Buy call on 18 April, PNJ shares increased by 13%. At VND 101,900/share, PNJ is respectively trading at 2021 and 2022 P/E of 17x and 15.3x. Our 1Y target price for the stock is VND 115,800 (+14% upside), using a targeted P/E of 18.5x (historical average P/E of 18.3x). We reiterate our OUTPERFORM rating on the stock. The private placement of 15 mn shares (6.6% of outstanding shares) taking place in Q3’21 should act as a short-term catalyst for the shares. 

We reiterate our BUY rating on the shares of SZC with our 1Y target price of VND 42,700/ share – which represents a 23.9% upside. With its large available land for lease at low compensation cost, coupled with a sharp increase in rental demand due to the shift in production from China to Vietnam, SZC should be a primary beneficiary. 1Q 2021 results.  Revenue in the quarter was VND 179 bn VND (+ 48.3% YoY) and net income was VND 79.5 bn (+ 48.2% YoY). Majority of land lease revenue was from Chau Duc IP, reaching VND 174.5 bn (+69% YoY) with 20 ha of total leased land. Gross profit margin reached 57% (+7.1% YoY) due to lease price increase of 8% YoY. The cumulative leased area is 470.13 ha, equivalent to an occupancy rate of 43%.

From our previous call in March 2021, HAX share price has increased 28%, given astounding 1Q21 earning results. Demand for Mercedes cars grow strong, aligned with the overall increase in Vietnamese automobile demand, and has been soaring high from the low point set from last year’s pandemic impact. Further, given the prolonged impact of global chip shortage to Mercedes car supply in Vietnam, auto dealers like HAX are gaining significant benefit in terms of higher price bargaining over customers and better margin per car, which could result in a big earnings surprise for FY21. As a result, we upgrade our target price for HAX to VND 40,500/share, which implies 43% upside and equal to a strong BUY rating. We expect HAX total sales and net profit in FY21 to reach VND 6.5 tn (+16% YoY) and VND 215 bn (+75% YoY), respectively. 

We recently attended MWG’s online analyst meeting and annual general meeting, where 2020 earnings distribution and ESOP was approved. At the meeting, management also discussed its 1Q21 financial results and provided updates on new developments, including the wholesale distribution business, a new product type (bicycles), and labor cost optimization. Although 1Q21 net income growth was modest (+18% YoY compared with Company guidance of 21% YoY), we believe that: 1) the expected gross profit margin expansion (from April 2021); 2) labor cost cutting measures for BHX (from July 2021); and (3) new store openings will enable better net income growth for the remainder of the year for MWG. As a result, we hold our 2021 net sales and net income estimates at VND 126 tn (+16% YoY) and VND 5.1 tn (+30% YoY), respectively, and maintain our target price of VND 165,000 per share. With a 16% potential upside, we reiterate our BUY recommendation with an unchanged SOTP-based target price of VND165,000. Key risks to our call include, longer-than-expected duration of COVID-19 impacting spending on discretionary products and possible lockdown at the national level.

HSG posted 2Q21 revenue of VND 10.8 tn, increasing 87.7% YoY. Meanwhile, net profit also reached a new record high of VND 1.0 tn, causing net profit to surge 415% YoY due to strong volume growth and soaring steel prices. We revise our 2021F net profit forecast to VND 2.9 tn (+151% YoY). HSG trades at a 2021 P/E and EV/EBITDA of 6.5x and 4.8x, respectively.  We change our rating for the stock from Outperform to Market perform, albeit revising up our 1-year target price to VND 40,800/share (from VND 28,350) based on a respective target P/E and EV/EBITDA of 7x and 5x. Strong earnings in the 3Q21 (or 2Q21 based on calendar year), driven by a surge in steel price might support share price over the short term. However, a normalization in profit margin is likely in the subsequent quarters, as we do not expect the recent increase in steel price to be sustainable. 

DRC recently held its AGM wherein a very conservative 2021 plan with net sales of VND 3.9 tn (+6% YoY) and pretax profit of VND 300 bn (-6% YoY) was approved. We estimate 2021 net sales and pretax profit of VND 4.2 tn (+14% YoY) and VND 471 bn (+47% YoY, 12% higher our previous estimates), respectively, driven by radial tire sales volume growth and reduction in depreciation expense. Being aware of the current radial factory is approaching full capacity,   management proposed to raise radial production capacity from 600K units to 1 mn units, driving earnings growth for the company from 2024. With a higher 2021 earnings and target multiple (from P/E of 9x and and EV/EBITDA of 4.5x to P/E of 10x and EV/EBITDA of 5x), we derive a new target price at VND 27,900 per share (from VND 23,500), representing potential upside of 6%. We maintain our MARKET PERFORM rating on the shares of DRC. 

VHC’s core pangasius export business has encountered difficulties over the past two years, caused by both cyclical factors and pandemic-related vulnerable demand. As a result, the company plans to diversify away from its core business and become more of a F&B company, investing heavily in several projects that should generate sustainable cash flow for the future. VHC has invested in three main projects, namely: (i) increasing its ownership in Sa Giang (SGC); (ii) establishing Thanh Ngoc Fruit (TNG Food Ltd); and (iii) constructing an aqua-feed factory. Meanwhile VHC’s Q1 2021 results were rather disappointing. Most notably, net profit has declined -13.5% YoY. We have nevertheless revised our 2021 forecast to reflect: (i) higher SG&A; and (ii) the acquisition of SGC. We expect VHC to post net income and net profit of VND 8.9 tn (+26.3% YoY) and VND 946 bn (+34.2% YoY), respectively, equivalent to a 3.5% increase in net sales and net profit unchanged compared to our previous forecast. Our 1Y target price on the shares of VHC is VND 43,600/share (+20.8% upside), which represents an ROI of 25% and equivalent to an OUTPERFORM rating

In 1Q21, the group posted revenue of VND20tn (+13.3% YoY) and NPATMI of VND187bn (vs. a loss of VND78bn in 1Q20), which are quite in line with our expectations. Growth was driven by various subsidiaries, such as improved profitability at VCM, higher profit sharing at TCB (+78.9% YoY), decent MCH performance, and a recovery at MML. These positive forces, however, were offset by higher interest expenses and losses at the mining business. In order to finance the previous acquisitions of VCM and TCX, MSN aggressively added leverage resulting in VND56tn of net debt by the end of 1Q21 (vs. just VND22tn at end-2019). The de-leveraging progress will likely be a key focus going forward and serve as a key catalyst for the share price. Post-1Q21, however, we increase our 2021E net sales by 3% and lower our NPATMI by 13.1%. Our revised 2021E revenue and NPATMI now amount to VND100tn (+29.6% YoY) and VND3.3tn (+167% YoY), respectively. We do expect subsidiaries that drove 1Q21 financial results will continue to perform in the coming quarters. We lift our SOTP-based 12-month target price for MSN to VND108,000/share (from VND104,000), using average 2021-22E as our valuation basis. Our new TP implies potential upside of 13%. We maintain our Market Perform rating. 

The 2021 AGM held on Apr 27 approved the annual plan, featuring 20% PBT growth and a 38% increase in charter capital. The Bank also released its 1Q 2021 earnings, which exceeded consensus with total operating income (TOI) of VND 9.1 tn (+45% YoY) and pretax profit of VND 4.6 tn (+109% YoY and 79% QoQ). Solid performance was fueled by all income streams, and reasonably controlled asset quality. The customer base continued to expand by 1 mn (+17% YTD) during 1Q 2021. We forecast MBB to achieve VND 13.6 tn in pretax profit (+28% YoY, completing 106% of the AGM plan) for 2021. For 2022, PBT is expected to reach VND 16.4 tn (+20% YoY). We also roll forward our valuation to June 2022, and our 1Y target price for the shares of MBB is VND 36,000/share (+20% upside). We reiterate our BUY rating on the shares of MBB.

We attended the VNM 2021 AGM held on 26 April. The company set out a conservative 2021 plan, with net sales growth targeted at just 4.1% YoY (not including ASP hikes) and NPAT being flat YoY. We are downgrading our rating on the shares of VNM from Outperform to Market Perform, and lowering our 12-month target price to VND109,000/share (from VND121,000), based on P/E and DCF methodologies – as we trim our 2021E sales and NPAT by 1% and 1.3%, respectively, on the back of the weaker-than-expected 1Q21 results (net sales and NPAT decreases of 6.4% YoY and 6.5% YoY). Our new TP implies upside potential of 13.5%. Strong raw material input increases are also key contributing factors leading to their discouraging plan. Management did explain that the weak demand was the result of complications from the COVID-19 pandemic situation. Given that we expect very low earnings growth in 2021 with a modest growth outlook in the coming years, VNM is now lagging the growth expected at other listed companies.