Company Report

We attended PVS’AM held on 20th April. Based on 1Q 2021 prelim results and management discussion on PVS’ outlook, we maintain our forecast for the company as mentioned in our last report, with 2021 revenue and PBT estimated at VND 16 tn (-19.1% YoY) and VND 1 tn (-2.2% YoY), respectively. Our assumptions are predicated on a Brent oil price of USD 60/bbl (+37% YoY). YTD average Brent oil prices have hovered around USD 61.30/bbl. Thus, as our 2021F PBT estimate remains flat YoY, our 1Y TP remains VND 24,500/share and we reiterate our OP rating on the shares based on our stable oil price assumption of USD 60/bbl beyond 2021F. Please note that the 2020 dividend is expected at 10% of par, translating to a 4.8% dividend yield.

STK held the AGM today with highlights being the positive results in Q1 2021 and the approval of the Unitex factory and its financing plan. The new factory will benefit the company tremendously in the long-term, where STK can expand sales by 50% from the period 2023-2024 onwards. In the short-term, we keep our estimates for STK that in 2021, net sales and net profit will reach VND 2.39 tn (+35.2% YoY) and VND 250 bn (+74.5% YoY). For 2022, we expect net sales of VND 2.6 tn (+8.7% YoY) and net profit of VND 295 bn (+17.9% YoY). At the current price of VND 33,800/share, STK is trading at 2021 and 2022 P/E of 9.2x and 7.8x. We derive our 1Y TP for STK of VND 34,800/share (+3% upside), using an unchanged target P/E of 9x. We downgrade STK from Outperform to Market perform, as the stock price has increased by 15% since our last call.

Given the weak demand from gas-fired plants in 1Q21, we trim our full-year forecast for dry-gas volume from 9.4bcm to 9.1bcm in 2021E. In contrast, we raise our assumption for fuel-oil prices from USD300/ton to USD330/ton (presently at USD361/ton). Accordingly, we fine-tune down our 2021E net profit by 3%. Our forecasts reveal 18.4% y-y top-line growth and 20.9% y-y growth in NPAT for GAS in 2021E. We trim our 12-month target price for GAS to VND97,500/share (from VND98,000/share), based on an unchanged 2021E PER of 19x, EV/EBITDA of 11x and DCF approach. Our TP implies 12% upside potential from the current market price. We reiterate our Outperform rating on the shares of GAS.

BMP recently announced its 1Q21 earnings, which declined 18% YoY due to higher plastic resin input prices. For 2021, the company has set a flat net profit target of VND 523 bn. However, our net profit forecast is more conservative than the Company’s, as we envisage VND 418 bn or a 20% YoY decline due to soaring input costs. BMP is currently trading at 2021 P/E of 12x. We rate the shares of BMP as Market Perform, with a 1-year target of VND 55,300/share based on a target P/E of 11x. Despite the expected drop in 2021 earnings, the cash dividend yield of 8% can help to support the share price. 

We recently attended DGW’s AGM and we came away substantially more bullish on the shares. Although management set a very conservative 2021 net income growth target of just 19% YoY (despite the 1Q21 +113% YoY earnings increase), we are raising our 2021 earnings forecast 25% to VND 391 bn (+54% YoY). For 2022, we estimate net income will increase another 31%. With a further market share gain by Xiaomi, long term potential from implementation of 5G, and positive market sentiment in terms of the stock option, we rerate our target P/E from 11x to 14x. By using revised 2021-2022 estimates and a re-rated P/E of 14x (from 11x), we derive a new target price at VND 139,000, equivalent to a ROI of 14% (inclusive of a dividend yield of 0.8%). We call for OUTPERFORMANCE rating. Risks to our call include DGW’s over-reliance on Xiaomi and short term profit taking pressure.

After taking a big hit to its bottom line in 2020 due to the acquisition of VCM, MSN’s outlook appears to be significantly improved. For 2021, the group targets between VND92-102tn in revenue (+19-32% YoY) and NPAT of VND2.5-4tn (+103-225 % YoY). We believe that MSN can end up scoring somewhere in the mid-point. We anticipate MCH and TCB to continue to post impressive growth; with VCM’s restructuring exhibiting positive initial results (2020 sales growth of 15%, despite more than 700 store closures). MML’s feed business is expected to rebound while achieving strong growth in meat + farm. MSR should also a benefit from strong rallies in metal prices. As such, we look for the group to post VND97bn in revenue (+25.8% YoY) and VND3.79tn (+207% YoY) in NPATMI, respectively. Of note, in order to finance its acquisition of VCM and TCX, MSN aggressively added leverage to the tune of VND54tn in net debt (+140% YoY) at end-2020. As such, deleveraging progress will be a key focus going forward. According to a corporate release, SK Group will invest USD410mn to acquire a 16.26% stake in VCM. The transaction thus values VCM at USD2.5bn. Prior to the transaction, MSN held an 80.1% economic interest in VCM and would sell a 10% stake in VCM to SK in this deal and receive USD225mn in cash proceeds (SK Group would purchase the remaining 6.3% from a 3rd party). We view this transaction as a positive move for the group as it would help to reduce some debt for the group. At VND93,000/share, MSN shares are trading at a respective 2021E P/E and EV/EBITDA of 28.9x and 12.1x. Our new 12-month target price of VND104,000/share is based on the SOTP method. As our new target price offers 12% upside from the current market price, we maintain our Market Perform rating on the shares of MSN.

DXS is set to IPO this April, and its listing on the HOSE is expected to occur in May 2021. The charter capital of DXS prior to the IPO is VND 3.2 tn. A total of 71.7 mn shares (equivalent to a 20% stake post-IPO), which comprises of 35.8 mn new shares from the Company and 35.8 mn existing shares from current shareholders, will be on offer at a price of VND 32,000/share. 

In the coming time, DXS plans to further strengthen its leading position in the primary real estate agency industry, by further expanding its capabilities to provide end-to-end real estate brokerage services. As such, the Company will continue to focus on primary brokerage, while further expanding to the secondary brokerage by utilizing its “online to offline” technology platform. For the 2021 – 2023 period, the Company ambitiously forecasts its revenue and NPATMI to grow at a CAGR of 53% and 45%, respectively. Such an impressive feat of growth is predominantly driven by its growing the primary brokerage business, with an increasing number of units to be distributed during the period. According to the firm’s management, approximately 70% of units have been committed by developers, and they are quite confident to achieve the plan. Provided that the real estate market continues its positive momentum, coupled with the increase in income from full-service brokerage, secondary brokerage and non-cyclical fee-based services to total income, we believe that DXS could achieve its target in 2021. 

Vigorous income growth helped SHB whittle down its bad debt load in 2020. Improvement of both NIM and non-interest income helped TOI to soar 30% YoY to VND 12.2 tn, but PBT grew just 8% YoY to VND 3.3 tn – along the  Bank’s 2020 plan. Provision expenses increased sharply to VND 4.6 tn (+92.5% YoY), while the NPL ratio (including VAMC bonds and legacy debt) dropped from 4.02% (2019) to 3.35% (2020). 2021 earnings projected to surge +70% YoY, reaching VND 5.6 tn. Growth is expected to come from 15% credit growth, NIM expansion of +34 bps, CIR reduction to 34.7%, and a provision reduction of -14% YoY. We raise our 1-year target price to VND 20,100/ share (from VND 18,500/ share), tracking higher EPS (+68% YoY) in 2021 due to the flourishing of profit. With implied upside of 7%, we maintain our MARKET PERFORM rating on the shares of SHB.

We reiterate our OUTPERFORM rating on the shares of GMD, and increase our target price to VND 38,500/share (from VND 30,800/share) – implying 11% upside. Our positive stance on the shares is supported by an improving outlook on Company performance in 2021 and beyond led by Gemalink port trends, hence we revised up our 2021 earnings forecast for GMD by 22% from our last report. From a broader perspective, we observe that a strong recovery in Vietnamese trade is well underway, which support GMD’s seaport and logistic businesses. Being one of the few logistic providers in Vietnam that possesses a fully integrated logistics network nationwide, GMD should benefit from a rapidly growing Vietnamese economy that is increasingly integrating into global manufacturing and supply chain. 

For 2021, we adjust our input cost assumptions with raw milk and sugar prices to advance 12% and 25% YoY, respectively (vs. +4% and +5% previously). Accordingly, we calculate that VNM’s NPAT will arrive at VND11.5tn (+2.5% YoY), which is lower than our previous forecast of VND12.1tn. Between 2020-24, we forecast net profit CAGR to also be lower, at 5% vs. our previous estimate of 6.9%. As such, our 12-month target price for VNM, based on P/E and DCF methods, is reduced by 7.6% to VND121,000/share (from VND131,000/share). We do, however, maintain our Outperform rating on the shares of VNM given the 18% potential upside. 

We reiterate Outperform rating on the shares of QNS with a new target price of VND 50,600/share (from VND 41,800/share) or 19% upside from the current market price.  We are of the opinion that QNS financial results will turn around in 2021, led by the sugar business. Taking a broader view, we see that the implementation of the anti-dumping tax on Thai sugar will help protect domestic sugar from cheap imported sugar, as well as smuggled sugar and boost domestic sugar industry in the long-term for the food security purpose. Should the anti-dumping tax be officially imposed (now it is just temporarily in place, for a 120 day period), this would be a gamechanger for the Vietnamese sugar industry, and QNS as the second largest one will be amongst the top beneficiaries. Strong sugar price recovery and volume growth should help spur sugar and biomass performance this year, from a loss (-35 bn) in 2020 to a PBT of c.300 bn VND in 2021. Overall, we look for 24% NPAT growth for the company in 2021. 

BID’s AGM was held on 12 March 2021, putting forward an optimistic PBT target for 2021 of VND13tn (+44% YoY). It also proposed a stock dividend equivalent to 12.2% for 2019 and 2020. We estimate BID’s 2021 PBT at VND13.5tn (+49.4% YoY), based on respective credit and deposit growth of 10% and 12% YoY, respectively, as well as a well-contained NPL ratio of 1.6%. Although earnings may surge in 2021, the possibility of growth beyond 2021 depends on the ability to raise capital and it will be the key upside catalyst for the stock. We reiterate our 12-month target price of VND46,430/share, which represents 7% upside. We maintain our Market Perform rating on BID. 

2020 earnings was -1.8% below our estimates, due to higher-than-expected provision costs. Despite a 21% TOI growth, PBT increased   just +15.9% YoY to  VND 5.8 tn, as credit costs rose from 0.96% in 2019 to 1.1% in 2020. After an aggressive write-off of VND 1.4 tn (+63% YoY), asset quality ratios were in pretty good shape. NPLs declined to 1.32% (from 1.36% in 2019), and LLCR  improved to 82% (from 81% in 2019). The limelight for this year’s result is the increase in NFI to TOI to 7% (vs. 5% in 2019), as  bancassurance sales began accelerating in 4Q 2020.

HDB is amongst the very few banks which still has available room for foreign investors, and a potential exclusive bancassurance deal. We think the Bank’s diversification of income streams in 2020 is the way to go, which opens greater possibilities for strong TOI growth in 2021. A good track record of bancassurance sales may also prove its sales capability, as well as a bargaining power in negotiating an exclusive bancassurance contract in the future. Our 1Y target price for the shares of HDB is VND 29,500/share, representing an upside of 13.7% - allowing us to upgrade the shares to an Outperform rating.