Company Report

During 4Q 2020, BID’s NIM expanded by 33 bps (QoQ), pushing NII and TOI to increase 10.3% and 11.7% YoY, respectively. However, 4Q 2020 PBT plunged to VND 2.2 tn (-42% YoY) driven by a +93% surge in credit provisions. PBT in 2020 was only VND 9.21 tn (-14.1% YoY), and ROE declined to a 15-year low of 9.45%. The increase in provisioning and bad debt write-offs had quite a positive impact on BID’s asset quality, as the NPL (including VAMC bonds) and LLC ratios were each at their strong levels over the past six years. For 2021, we have increased our pretax profit forecast by 2.2% to VND 13.5 tn (+46.4% YoY). Our 2021 earnings forecast has not changed significantly, the cash dividend payment of 8% was higher than our expectation of 5%. This higher dividend negatively impacts our 2021 BVPS estimate. As a result, we lower our 1-year target price by 1.5% to VND 46,430/share, based on an unchanged P/B target multiple of 2.2x applied to our 2021F BVPS. 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. Our new price target on the shares of BID implies upside of +5.5%, and we recommend a MARKET PERFORM rating.

We recently joined an analyst meeting with the management of DGW. During the meeting, management reviewed 4Q20 financial results and discussed its 2021 earnings growth outlook. Following our meeting, we are increasing our 2021 net sales forecast to VND 15.6 tn (+24% YoY, 27% higher our previous estimates) and net income at VND 313 bn (+24% YoY, 23% higher than our previous estimates). At VND 79,400 per share, DGW trades at 2021 P/E level of 11.1x. We do, however, believe that the shares of DGW deserve an upward re-rating due to: (1) increased brand awareness after becoming an authorized Apple distributor; and (2) a beneficiary of the long term upgrade to 5G, as 2G becomes obsolete. As such, we raise our target P/E for DGW from 8.4x to 11x, and increase our target price to VND 80,800 - implying an ROI of 24% (including the dividend yield of 1.4%). We call for a MARKET PERFORMANCE rating.

As the share price of AAA increased 21.4% since our last report (August 27th, 2020), we are lowering our rating on the shares from Outperform to Market Perform. AAA did post encouraging results for 3Q20, complete with net profit growth of 16.7% YoY due to the trading and industrial park segments. However, the result fell short of our original expectation given the delay in the industrial park segment, as Covid-19 made it difficult for prospective customers to make production base decisions. As a result, we lower our net profit forecast for 2020 from VND 450 bn to VND 322 bn (-35.8% YoY). That being said, we fully expect that net profit will recover to VND 449 bn (+39.5% YoY) in 2021, given the likelihood of full-year revenue generation within the industrial park segment. We also see growth in the jumbo bag business line, from An Vinh Industrial Packaging. AAA is trading at 2020 and 2021 P/E of 11.2x and 8.1x, respectively. Our 1-year target price for the stock is VND 14,600/share (upside: +3.5%) based on the SoTP method.

We arrive at target price on the shares of MCM of VND 77,500/share, based on 2021 EPS and a target P/E of 15x. We apply a discounted P/E for MCM compared to dairy peer, due to: (1) much more limited scale; and (2) the anticipated limited trading liquidity in the shares. This implies an impressive return on investment of 168% (including dividend yield of 8.3% for 2020). We initiate coverage on the shares of MCM with a BUY recommendation.  

We are holding the line on our 2020 and 2021 forecasts as discussed in our previous report.  Please note that our forecast do not take into account the bad debt provision linked to Ca Mau in Q4 nor the one-off gain from PVM divestment.  We reiterate our Market Perform rating on the shares of POW, with a 1Y TP of VND 11,300 which represents 12% upside.  Risk to our call. We’re keeping our eyes peeled regarding potential downside risk associated with the Luang Prabang hydropower plant. Although POW’s stake has now been finalized (previously reported at 38%), additional details have not as of yet been disclosed. The project has been in the works since 2007 but has been delayed in the pipeline until now which gives us concerns over the possibility of ballooning capex, or the project’s overall profitability.

We downgrade our rating on the shares of TCM to SELL from Neutral, as our recently revised target price of 29,200 VND per share represents a -17.7% downside. We raised our earnings forecast for TCM for both 2020 and 2021 by +30%/+21%, respectively, on the back of increasing personal protective equipment (PPE – fabric masks and protective clothes) and domestic fabric sales in 2021, and maintain our target P/E 7.0x for TCM shares. While believing that ongoing mounting Covid-19 infections in the US may continue boosting the PPE sales, we are skeptical that such a growth momentum achieved during 2020 is sustainable through 2021.

We are downgrading the shares of DPM from Outperform to Market Perform, reflecting the recent share price strength which, in our view, now fully reflects both the better-than-expected 3Q20 bottom-line result and market talk of a change in VAT regulation for fertilizer firms. Even after rolling over our valuation basis to reflect our respective 2021E net sales and pretax profit of VND8.7tn (+9% YoY) and VND956bn (-5% YoY due to the consensus rise in global oil price), our new SOTP-based 12-month target price of VND18,400 (previously VND16,900) only offers a 4% upside potential. In addition, on 17 November, the National Assembly ended without a concrete resolution on the VAT, leaving any potential resolution to the next National Assembly session in May 2021, and which will likely present some overhang. The key downside risk to our call would be a greater-than-expected increase in production by other fertilizer suppliers, while the key upside risk would come from a decrease in oil prices. 

Solid 3Q 2020 earnings growth. The third quarter brought good fortune and welcome news to BVH. A previous provision for investment losses was reversed reflecting the rise in the Vietnam share market. BVH also benefited from cheaper government bond repo expenses (-32.4% YoY). Both factors led to strong growth of +31.5% YoY in financial income during 3Q 2020, allowing BVH to post a solid +27.9% YoY NPAT-MI increase. Cumulatively through 9M 2020, BVH posted VND 1.1 tn in NPAT-MI (+3.3% YoY), completing 92% of its annual target. A Market Perform rating, with a 1Y target price of VND 62,700. Given the 18% run that the shares of BVH have had since last call on September 10, 2020, the share would appear to reached fair value. As a result, we have downgraded the shares of BVH from Outperform to Market Perform even though our target price increases +4.5% to VND 62,700/share as we roll our valuations to 2021.

Upgrade rating to BUY: With the increase to our NIM forecast and adjusting credit costs for 2020 and 2021, we are aggressively increasing our 2020F and 2021F PBT forecast to VND 10.8 tn (-8.1% YoY) and VND 15.5 tn (+43.1% YoY), respectively. Our 2020 and 2021 PBT forecasts are now +11.1% and +42.8% higher, respectively. Our forecast does account for the potential bancassurance deal being re-negotiated. We have our adjusted P/B target from 1.2x to 1.6x, which has resulted in 1Y target price for the shares of CTG to VND 38,700 (up from previous 27,200). Our revised share price target represents potential of 16.6% upside, plus the cash dividend yield of 1.5%. An ROI of this magnitude causes us to upgrade our rating on the shares of CTG from Outperform to BUY.

We maintain our estimates for 2020/2021, with net sales of VND 112.4 tn (+10% YoY) in 2020 and VND 140.8 tn (+25% YoY) in 2021, whereas net income for 2020 and 2021 should reach VND 3.9 tn (+1% YoY) and VND 5.3 tn (+36% YoY), respectively. At VND 110,600 per share, MWG trades at a 2021F P/E of 9.7x, which we believe is very attractive. We maintain our BUY rating with an unchanged SOTP-based target price of VND 147,000, offering 33% potential upside. Risks: longer-than-expected impact of COVID-19 and possible lockdown at the national level.

As PLX’s share price has retraced to a more attractive level, we are now upgrading our rating on the shares of from Market Perform to Outperform with a 1-year target price of VND 55,700/share – implying  upside of 15%. PLX earnings through 9M20 amounted to just VND 193 bn, cratering -96% YoY and  meeting just 12% of its annual guidance due primarily to large losses in 1Q20. We believe that PLX’s core business will continue their path to recovery as noted by 3Q20 PBT on a standalone basis which amounted to VND 1.1 tn – up 41% linke quarter. As 3Q20 PBT was in line with our forecast, we are maintaining our 2020 PBT forecast of VND 1.6 tn. Given the recovery in petroleum demand during the month, we expect that 2021 PBT will nearly triple YoY (on 2020 low base) to VND 4.8 tn. As PBT has returned to positive, PLX can also be cleared from the HOSE margin lending ineligibility list after audited financial reports are released.

3Q2020 revenue + 137% YoY, PBT +5% YoY, due to new pricing cut. Jan-Oct PBT growth +14.9% YoY, completing 62% of the 2020 target. Divestment of Viettel Group (6% stake in VTP) is successful on 11^th Nov 2020. Further investment is not yet planned. Reiterate OUTPERFORM rating. New 1Y TP: VND 121,000/share (12% upside) (from previous TP of VND 112,000/share), based on 2021 PBT new estimated growth of 35% YoY (old estimates of 44.8% YoY).

HDG posted its Q3 financial results, with total consolidated net revenue through 9M 2020 of VND 3.8 tn (+23% YoY) and NPAT of VND 962 (+21% YoY), which fulfilled 71% and 82% of their respective targets for 2020. These positive results were mainly driven from the delivery of the Centrosa project, as well as from improved performance of the energy segment with new projects such as Hong Phong and Infra Solar. For 2020, due to the accelerated handover schedule of the Centrosa project, we raise our 2020 NPAT-MI estimate by 16% since our last forecast to VND 1.1 tn (+ 17% YoY). Next year, we expect that the company’s NPAT-MI will be flat, with recognition of the first batch of the Charm Villa project, while the profitable renewable segment will grow further from 15% of weight in 2020 to  30% of 2021 total revenue. We consider the Company’s strategy to shift its business toward renewable energy a solid move forward. However, the likelihood of extended power generation for HDG depends heavily on the support mechanism of the government, as well as the ability to find a suitable project for M&A purposes in the near future. Based on current portfolio projects, we reiterate our Market Perform rating for HDG, with an unchanged 1-Y target price of VND 25,000/ share. 

We upgrade our rating on BID to OUTPERFORM from Market Perform, and raising our target price to VND 47,100/share (from 43,650/share) – representing 20% upside. Our upgrade reflects both the reality that COVID-19 has not been nearly as severe as initially forecast, and a positive outlook for NIM in the upcoming quarters thanks to a more favourable interest-spread environment. This is best reflected in BID’s 3Q 2020 PBT of VND 2.7 tn (up 16.6% YoY) which was slightly higher than our forecast. In addition, BID’s non-interest income was quite robust given the favorable market environment for foreign exchange and fixed income. As a result, we have increased our pretax profit forecasts by +5.1% and +2.4% for 2020 and 2021, respectively, to VND 9.1 tn (-14.8% YoY) and VND 13.2 tn (+44.4% YoY).