Company Report

At the current price of VND 18,600/share, STK is trading at 2019 and 2020 P/E levels of 6.2x and 5.5x respectively, which is rather attractive. Our 1Y target price is VND 21,400 (+15 % upside) based on the target P/E of 6.3x (current industry average P/E), equivalent to an OUTPERFORM recommendation. Downside risk to our call includes the possibility of Chinese firms dumping even lower prices than expected into the market, which will be more detrimental to the volume and ASP of virgin-type yarn, impacting the results of STK in 4Q 18 and 1Q 19. As such, this uncertainty will negatively affect the stock price in the next 3-6 months. 

In Q3, PVD posted VND 1.07 tn in net sales (-20% YoY), and a net profit post MI of VND 27 bn (-76% YoY). Excluding the impacts of depreciation methodology change, provision reversals, and impact of lower JV profit, Q3 2019 operating profit would have theoretically decreased by -60% YoY. We maintain our 1-year target price of VND 18,200 (+11% from current market price) based on target unchanged P/B of 0.55x and reiterate Market perform recommendation for the time-being. Based on our estimate, we expect PVD to post a NPATMI of VND 33 bn in Q4 2019; much lower than VND 386 bn in Q4 2018. The high base from Q4 2019 was mostly from changes in depreciation methodology as mentioned above, and PVD did not retrospectively apply for the first 3 quarters of 2018, and recorded in Q4 instead. Besides earnings, the PVD price movement is largely correlated with the oil price, which is under pressure of expected weak demand caused by a global economy slowdown as well as the rising trend of using renewable energy in the future. The Brent crude-oil consensus forecast (Bloomberg polls, EIA, Goldman Sachs) is $60 USD/bbl (-6% YoY).

MBB posted its consolidated financial statements, complete with total operating income (TOI) and pre-tax profit for Q3 having respectively attained VND 6.345 trillion (+32.2% YoY) and VND 2.741 trillion (+25.4% YoY). Slower growth of PBT compared to TOI was mainly driven by an upsurge in provision expenses at +103.2% YoY, which raised the LLCR to 103% while kept NPLs tamed amongst peers (1.54%). Though Mcredit helped MBB achieve a higher NIM (+30 bps YoY), we need to keep an eye on mounting NPL formation rate from the last two quarters (7.21% in Q2 and 7.58% in Q3). Cumulatively up to 9M2019, despite +60.5% YoY in provisioning, consolidated pre-tax profit achieved VND 7,616 bn (+26.6% YoY) fueled by +14.3% YTD in credit and +10.8% YTD in total deposits. We like MBB, as it possesses unique advantages in terms of a low-cost funding source from its large corporate client base, while the Bank is taking advantage of the burgeoning consumer finance sector to continually expand its lending yield. The Bank thus can achieve a PBT growth higher than its pace of credit growth. Its ROE and ROA for 2020 are forecast to be 21.6% and 2.1%, rendering a current valuation at a 2019 and 2020 P/B of 1.25x and 1.16x look very attractive. With our target price of VND 30,000/share (+31% upside), we reiterate our BUY recommendation for MBB stock.

PetroVietnam Gas (GAS) has released its Q3 2019 results: net sales totaled VND 19.04 tn (+3.3% YoY) and net profit dropped -10% YoY to VND 2.88 tn as a result of decreases in the fuel oil price (-14% YoY) and LPG price (-30% YoY). Compared to preliminary results, the reported number came in slightly higher, as GAS has not recorded a decommissioning expense of approximately VND 200 bn in Q3, and instead it will book an amount of c. VND 400 bn of that expense in Q4. We revised our 1-year target price to VND 109,000 (from VND 114,500), based on an unchanged target P/E of 17x (on our lower EPS estimate) and EV/EBITDA of 11x as we roll over our valuation basis to 2020F. Given only 6.7% upside from the current market price, we change our recommendation from Outperform to Market Perform.

VCB has released its Q3 business results, which demonstrated vigorous growth overall. Consolidated PBT posted VND 6.31 tn, a +72% YoY rise. Cumulatively, consolidated PBT in the first 9 months of the year achieved VND 17.61 tn, a +50.8% YoY performance driven in turn by credit growth of +11.8% through 9M19, as well as deposit growth at +12.2% through 9M19. The stock is trading at 2019E and 2020E P/B ratios of 3.73x and 2.76x respectively. With remaining upside of +5.3% to our target price from the current trading price of VND 88,000 per share, we reduce our rating to Market Perform from OUTPERFORM.

3Q19 financial results of the parent company were within our expectation, but consolidated figures beat our expectation due to the change in the method of recording revenue and profit for industrial park business. We change our 2019-2020 consolidated net sales estimates at VND 1,755 bn (+13% YoY) and VND 1,564 bn (-11%% YoY), and 2019-2020 consolidated pretax profit estimates at VND 1,642 bn (+116% YoY) and VND 1,517 (-8% YoY). 2019-2020 earnings will mainly come from land compensation income, while natural rubber business may only contribute 5%. As the change in 2019-2020 estimates was based on accounting method change, we retain our target price at VND 69,000 per share based on SOTP valuation method. This gives an upside of 11% from the current price, equivalent to MARKET PERFORMANCE rating.

PNJ recently released its Q3 results, wherein net sales reached VND 3.9 tn (+24.7% YoY) and net profit attained VND 208 bn (+17% YoY). This greatly exceeds our expectations, especially given the fact that net profit recorded in July and August declined by -5% YoY. We estimate that in September 2019 alone, net profit surged by 60% YoY. Cumulatively up to 9M 2019, PNJ recorded net sales of VND 11.7 tn (+11.1% YoY) and net profit of VND 811 bn (+16.1% YoY). This performance in turn achieved 64% and 68% of the annual sales and net profit target for the year.We maintain our forward-looking estimates for PNJ in 2019 to achieve sales of VND 15.9 tn (+9.1% YoY) and net profit of VND 1.15 tn (+19.9% YoY). In 2020, we look for net sales of VND 17.6 tn (+10.8% YoY) and net profit of VND 1.3 tn (+15.5% YoY). At the current price of VND 82,800/share, PNJ is trading at a 2019 and 2020 P/E of 16.9x and 14.6x respectively. Our 1Y target price for the stock is VND 93,600 (+13% upside), using our current full year 2020 estimates and an unchanged target P/E ratio of 16.5x, equivalent to an OUTPERFORM rating.

According to Hoa Phat Group (HPG), Q3 revenue and net profit posted VND 15.35 trillion (+8% YoY) and VND 1.794 trillion (-26% YoY), in line with our expectation. Cumulatively, 9M 2019 revenue and net profit would reach VND 45.9 tn and VND 5.65 tn, accomplishing 66% and 84% of its annual target. At the current price, HPG is trading at 2019E and 2020E forward P/E ratios of 8.1x and 6.2x respectively, which is quite attractive in our view. We maintain our BUY rating for the stock, with a 1-year target price of VND 31,950/share based on target P/E and EV/EBITDA metrics of 9x and 6.5x respectively (revised from VND 32,100 based on 9x and 7.5x).

Hanoi Plastic JSC (UPCOM: NHH) was formerly a SOE established in 1972 under the Hanoi Department of Industry. The company was transformed into a JSC in 2008, with an initial charter capital of VND 65 bn. The company listed its shares in the UPCOM in Sept 2017. After the government fully divested in Dec 2017, NHH was acquired by Cadivi Dong Nai, a subsidiary of Vietnam Electric Cable Corporation (HOSE: CAV). In late 2018, Anphat Holdings purchased the stake of NHH from Cadivi Dong Nai, thereby having NHH become a member of An Phat Holdings (APH). In January 2019, the company increased its charter capital from VND 65 bn to VND 168 bn by way of a 1:1 stock bonus, and a rights issuance at the ratio of 65:38. In Sept 2019, the company continued to increase its charter capital from VND 168 bn to VND 344.4 bn by issuing stock bonuses, stock dividends, and rights issuances at a 1:1 ratio.

At the current price and estimates, the stock is trading at 2019 and 2020 P/E ratios of 8.3x and 6.3x respectively. We maintain our target price of VND 21,090/share as per our last report, based on a P/E target of 7.5x applied to our 2019 and 2020 average EPS of VND 2,812. Since the stock price has increased by 11.5% since our last call, we change our recommendation to Market Perform for the stock.

At the current price, the company is trading at 2019 and 2020 P/E ratio of 8.8x and 7.7x respectively based on our estimates. We maintain our target price for PVT at VND 17,500/share, and keep our rating at Market Perform at the moment. We might revise our valuation and target price after the financial results for 3Q 2019 comes out. In our view, signing a long-term contract with NSR will be a positive catalyst for PVT, which can be expected in 2020.

PTB benefits directly from the ongoing China-US trade war through its furniture business and upcoming quartz surface business. In the granite business, PTB is maintaining a solid growth (through export expansion) despite a weak domestic real estate market. We roll over our mid-2019-2020F valuation, and revise upwards our 1-year target price (TP) to VND 87,000/share (from VND 80,000/share). Our TP is based on the SOTP-Method, and is equivalent to a 2019-2020F PER of 9.5x and 8.0x respectively. We recommend to BUY the stock.

At the current market price of VND 79,400/share, MSN is trading at a 2019 P/E of 23x and 2020P/E of 19x. Due to our lower earnings forecast for 2019 & 2020, we lower our 1-year SOTP-based target price to VND 91,000/share from VND97,500/share. As our TP offers 15% upside potential from the current market price over the next 12 months, we maintain our Market Perform rating.

Based on the annual plan of NLG, we estimate that 2019F EPS and 2019F BVPS is equivalent to VND 3,798/share and VND 19,275/share. At the current price of VND 27,500/share, NLG is trading at a 2019 PER level of 7.9x and PBR level of 1.4x. Our fair value estimated by RNAV methodology is VND 46,300/share. This is 19% higher than our previous valuation, mainly due to the premium paid to Paragon Dai Phuoc project, as well as a higher sales price of most projects.