Company Report

We are upgrading our stock rating from OUTPERFORM to BUY due to our strong belief that the potential introduction of new U.S. import tariffs by President Trump could lead to a significant surge in import demand before the tariffs take effect. This anticipated increase in demand is likely to extend the upcycle of the container shipping industry into 2026, rather than peaking in 2025 as previously expected. As a result, we expect this change to positively impact the earnings of container shipping companies in 2025.

Accordingly, for 2025, HAH’s NPATMI are projected to grow by 17% YoY, reaching VND 649 bn fueled by higher charter rates and increased spot rates driven by strong shipping demand. For 2026, assuming that container shipping rates reach peak within the year, a significant freight decline is expected, as a consequence of the new tariffs. This could lead to less favorable growth, with 2026 earnings projected to decrease by around 13% YoY.

We are downgrading our rating on the shares of VNM from OUTPERFORM to MARKET PERFORM due to the lack of short-term catalysts, along with unattractive top- and bottom-line growth. Our updated forecasts indicate NPATMI growth is expected to only reach 7.7% and 3% YoY during 2024 and 2025, respectively. Based on the 3Q24 earnings miss, we believe that VNM will be challenged to achieve growth of over 10% for both the top- and bottom-lines during 4Q24 as domestic consumption has recovered very slowly. As such, we now arrive at a DCF-based 12-month target price of VND75,000/share (+14% upside potential; from VND82,000/share).

With a 12-month target price of VND 24,700 (equivalent to 30.7% upside potential), we reiterate our BUY rating on the shares of NT2, as we expect an earnings recovery between 2025-2026. For 3Q24, we witnessed a slightly higher-than-expected NPAT for NT2 at VND 44 bn (vs. a net loss of VND 124 bn during 3Q23), primarily due to slightly lower-than-expected maintenance and outsourcing costs. As expected, 9M24 NPAT turned a positive VND 8 bn (vs. a net loss of VND 36 bn for 6M24). Hence, we believe that NT2 could realize higher-than-expected earnings for 2024. Following that, we revise up 2024 NPAT to VND 49 bn (-90% YoY) (from VND 20 bn) and project 2025 NPAT to be VND 392 bn (+695% YoY) (supported by the ease of gas supply shortage). On the other hand, we expect NT2’s machinery and equipment to fully depreciate during late 2025, further supporting accelerated earnings growth for 2026.

We forecast EPS for 2024 and 2025 at VND 1,840/share (+46.9% YoY) and VND 2,313/share (+25.7% YoY), respectively. SZC is well-positioned to capitalize on several factors: (1) The company has over 400 ha remaining available for lease, with 250 ha fully cleared for compensation; (2) Lease prices in SZC are projected to increase compared to other industrial parks in Ba Ria - Vung Tau. Currently, these other IPs are leased at 13% - 15% lower. The connectivity improvements provided by the Bien Hoa-Vung Tau Expressway further enhance SZC's appeal. We maintain OUTPERFORM rating with 1-year target price of VND 43,200/share, representing a 12.9% upside based on the SOTP valuation method.

The expansion in international passenger volume is projected to significantly boost AST’s performance over the next three years. While we expect net profit to surpass 2019 levels in absolute terms by 2024, net margins are likely to remain compressed and adjust to a lower level due to increased rental fees.

In addition, dividends are expected to resume this year following the disruption caused by the pandemic, at VND 3,000-3,500 per share (yielding around 6%), equivalent to the payout ratio of around 75%. For 2024F and 2025F, we estimated NPAT at VND 217 bn (+44% YoY) and VND 252 bn (+16% YoY) translating to the P/E forward of 13x and 12x respectively. Based on the P/E target of 15x, our 1-year target price is VND 64,500/share, indicating a potential upside of 13% and an OUTPERFORM rating for the stock. We believe that revising target P/E down from 17x in our latest is reasonable, given the trend of thinner net margins moving forward.

DBC should benefit from higher hog price. As 2H is usually high season and a consumption recovery is expected, we believe that the price may not dip to last year’s level of between VND 52,000-56,000/kg.

Farming business witnessed low feed costs and higher sow productivity (from the import of new pig breeds from France). Average production costs at DBC are c. VND 50,000 /kg (down from VND 55,000/kg in 2022), with new farms in Thanh Hoa province achieving as low as VND 48,000/kg, according to management.

With assumptions of continued favorable pork prices through year-end and low production costs, we expect that 2024 revenue and net profit will be VND 11.7 tn (+6% y/y) and VND 472 bn (+1,789% y/y), respectively. While DBC has improved protection against ASF, we are more conservative than management given the unpredictability of disease post-typhoon. For 2025, we forecast revenue and net profit of VND 12.9 tn (+10% y/y) and VND 721 bn (+53% y/y), given the continued expansion of 3F’s operations and a GPM increase due to higher productivity breeds.

GVR holds a unique advantage of possessing a vast rubber land bank of 394,782 ha spreading across various provinces in Vietnam, including Binh Duong, Dong Nai, Ba Ria Vung Tau, Tây Ninh, et al. For the long run, the conversion of over 23,000 ha of rubber plantation land to industrial park land between 2025-2030 will enable the company to record significant earnings from land conversation, which we have counted in our forecasts. However, the stock price has increased by 68% YTD to reflect those future earnings. Therefore, we reiterate our MARKET PERFORM rating with 1-year target price for GVR of VND 36,100/share (+1.5% upside) based on SOTP method.

HDB shares have risen 21.7% from our latest report, reaching our previous target price of VND 27,700, and might have partially reflected the strong earnings growth & improved fundamentals in 2Q24. For 2H24, we believe the YoY growth in pretax profit of the bank might cool down to +4.3% YoY compared to +49% YoY in 1H24 due to the high base in 2H23 as well as a narrower NIM under a higher CoF environment. We, hence, lower our rating for HDB to MARKET PERFORM (from Outperform) with a revised 1Y TP of VND 29,800 per share (+10.2% upside), equivalent to target PB of 1.4x vs. sector P/B of 1.37x. The higher 1Y TP was a result of removing the discount related to asset quality risk as we notice NPLs amongst retail clients showed improvement in 2Q24.

Earnings for 2Q24 were in line with our estimates, and we maintain our 2024 net profit forecast for GAS at VND 11.1 tn (-3.7% YoY), based on dry gas volume of 6.9 bn m3 (-7% YoY) and a slight price increase of 2% YoY. For 2025, we expect earnings to decline -5% due to a -3.6% YoY drop in dry gas sales volume due to the depletion of the old fields, although the increase in LNG consumption can help to partially offset the decline in total dry gas volume. GAS is finalizing a GSA with POW for the Nhon Trach 3 & 4 power plants, which have achieved 87% progress of the EPC contract and are expected to commence operation during the first half of 2025.

We maintain our MARKET PERFORM rating on the shares of GAS, with a 1-year target price of VND 79,000/share (from VND 84,000/share before the cash dividend of VND 6,000/share paid in Sept) now based on our 2025 EPS forecasts (previously average 2024-2025 EPS forecasts) and an unchanged 1-year target PE of 17.5x. Over the short-term, the decline in gas prices follows the decline in oil prices and could exert pressure on the company’s earnings and share price over the near-term. In addition, the mobilization from gas-fired power plants in Q3 and Q4 is usually lower than in the second quarter, which can also lead to lower dry-gas demand in the coming quarter.

DBD reported modest revenue growth in 2Q24, with VND 433 billion (+5% YoY). Prescription drugs grew by 7% YoY, while trading products declined by 23% YoY. Net income fell short of expectations, decreasing by 3% YoY. The net profit margin contracted by 130 basis points (from 18% to 16.7%) compared to 2Q23. We revised down its revenue and NPAT estimates by 6% due to weaker performance in 1H24 and expected slight improvement in 2H24. Revised 2024 forecast for revenue is VND 1.74 trillion (+6% YoY) and for NPAT is VND 284 billion (+6% YoY). For 2025, we forecast net revenue of VND 1.9 trillion (+9% YoY) and NPAT of VND 318 billion (+12% YoY), expecting growth in both Rx and OTC channels to exceed 2024 levels. Improved GPM is anticipated, aided by tax waiver for cancer drugs manufactured at the newly opened factory. We increase our target price to VND 45,000/share (from VND 43,500/share post issuance), as we roll forward our valuation to 2025. With only 8% potential upside (no dividend), we maintain our MARKET PERFORM rating on the shares of DBD.

2Q results are lower than our expectation due to higher labor and material cost. During 2Q, the top line continued its upward trend with 60% YoY and 28% QoQ growth. Both the drilling segment (59% YoY) and services segment (43% YoY) were solid contributors toward strong revenue growth. The average day rate for jack-up rigs during 2Q 2024 is USD 98k/day (+5% QoQ, +25% YoY), 10% higher than our assumption due to the inclusion of the new hired rigs. 2Q 2024 and 1H 2024 results were lower than our expectations, especially in terms of profitability (gross margin of 23% during 1H compared to 29% for our full year estimate), due to higher operating cost.

Reiterate OUTPERFORM rating for the stock, with revised TP of VND 32,000/share, based on 3 upcoming potential catalysts: Block B reaching a final investment decision (FID), PVD’s finalizing rig investment and their long-term contracting. Recommend to accumulate on dip to minimize downside risk from current oil price decline trend.

Given the stronger than expected 2Q24 (VND503bn in NPATMI vs. our expectation of VND 300- 400bn) thanks to higher financial income and good sales growth at WCM; and with the SK deal’s most recent development, we have slightly increased our estimates. Accordingly, we estimate the group to achieve NPATMI in 2024E of VND1.9tn (+361% YoY), up from VND1.1tn previously, and in 2025E of VND3.1tn (+61% YoY), up from VND2.8tn. Please note that we have not included one-off earnings of USD40m from the HCS divestment for 2024. Earnings growth in 2025 should come from continued improvement across key businesses. Our SOTP-based 12-month TP is now VND90,800/share (previously VND93,400/share) as we assume higher net debt at the holding company level due to the USD200m payment to SK and a lower valuation for MHT on lower estimated revenue and ebitda in 2025. Despite the reduction to our TP, we reiterate our Outperform rating on shares of MSN.

We maintain our MARKET PERFORM rating on the shares of IDC with 1-year target price of VND 65,000/share (+4% from previous TP due to higher valuation for Tan Phuoc 1 Industrial Park).

During 2024-2025, IDC faces headwinds when MOUs declines: (1) Phu My II IP and Phu My II expansion IP (which represent 40% of IDC’s total leased area per year) lack of large contiguous available land for leased ( >30 ha per tenant); (2) Tenants remain cautious in the context that leased price  is only 15%-18% lower than that of IPs in Indonesia. In 2Q24, newly signed MOUs was 43ha (-58% YoY), which should transpire in to lower revenue in the coming quarters. Therefore, NPAT growths are estimated at  6% YoY and -10% YoY in 2H24 and 2025 respectively, which are not exciting.

Strong 2Q24 top line growth, bottom-line declined. For 2Q24, IMP posted revenue and NPAT of VND 517 bn (+18% YoY) and VND 66 bn (-17% YoY), respectively, which is lower than our NPAT estimate of VND 80 bn due to lower-than-expected GPM improvement. Gross profit margin declined on a YoY basis (stagnant demand in the over-the-counter market, API increased ~3% on average, new IMP4 production plant depreciation only kicked in 3Q23), but GPM also improved on a QoQ basis. SG&A expense decreased -22% YoY as new cost-saving policies are put into place. As of 1H24, IMP reached 43% and 38% of its target revenue and PBT respectively.

Coupled with policy tailwinds in public hospital bidding channel. Ministry of Health (MoH) recently issued Circular 03& 07/2024 (TT03&07/2024/TT-BYT) providing a list of 93 drugs manufactured by at least three domestic companies on EU-GMP standard production lines that meet the MoH's technical criteria, and quality, price, and supply capacity requirements. Foreign companies are not allowed to enter the public hospital bidding for these drugs. IMP currently has 12 qualifying SKUs in the list, which should lessen the competition for these products going forward.

According to Circular 03/2024/TT-BTTTT and Circular 04/2024/TT-BTTTT, the Ministry of Information and Communications (MIC) plans to terminate the support for 2G-only mobile subscriptions from 16 Sep 2024, encouraging the replacement with more advanced mobile technologies. At June 2024, there are still over 10 mn 2G-only mobile subscribers in Vietnam, which are required to be phased out or switched to new electronic devices before that date. For CTR, the company plans to build/synchronize infrastructure of between 4,000-5,000 BTS (base transceiver station) sites during 2024 but it has only completed 30% of this target during H1 2024. We expect that this mobile technology transition will require CTR to accelerate even more BTS sites construction, and we believe that the company will meet the above target before end-2024. Such an estimate also indicates that the number of new BTS sites built in H2 2024 (~3,100 sites) might not generate immediate revenue growth for 2024 (as they will not be under operation on a full year basis). We expect they will support 2025 revenue and earnings growth. Nevertheless, our earnings forecast for 2024 remains nearly unchanged. Specifically, we forecast 2024 and 2025 NPATMI growth of 11% and 17% YoY, respectively, mainly driven by the infrastructure leasing and construction segments. Further, we expect the 5G rollout in Vietnam during late 2024 or 2025 to support CTR’s growth outlook over the long-term. We maintain our estimates but change our rating from MARKET PERFORM to OUTPERFORM on the shares of CTR. Our 12-month DCF target price is VND 135,000/share (equivalent to 13% upside).