Company Report

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.

For 2024, along with the revenue recognition from Vinhomes OCP 2 and 3, Vinhomes Royal Island is expected to hand over its first units to retail buyers during the second half of 2024. We anticipate VHM to achieve revenue of VND 81.6 tn (-21.2% YoY) and NPATMI of VND 35.2 tn (+5.5% YoY), surpassing the company’s 2024 business plan targets and our previous NPATMI forecast of VND27.1 tn due to higher revenue recognition from Vinhomes Royal Island. For FY2025, revenue and NPATMI are forecast to be VND 92.4 tn (+13.3% YoY) and VND 40.9 tn (+16.2% YoY), respectively, with major earnings streams from Vinhomes Co Loa and Royal Island. We arrive at a valuation for VHM of VND 55,400/share, which lower than our previous valuation of VND 69,400/share due to a change in our valuation method. We reiterate our OUTPERFORM rating on the shares of VHM.

As the 2Q24 earnings are higher than our expectation, we revise up our 2024 PBT estimate 12% to VND 4.95 tn (+25% YoY) mainly due to our profit margin increase. We maintain our forecast of domestic petroleum sales volume at 10.76 mn tons (+4.1% YoY) and retail sales volume at 7.3 mn tons (+4.5% YoY). For 2025, we expect PBT to increase 6% to VND 5.25 tn (+12.7% from previous esimate) on the back of an increase of 4.1% in petroleum sales. Earnings growth may decelerate due to the high base of this year.  We maintain our Market Perform rating for the stock, with 1-year target price of VND 48,000/share (previously VND 40,800/share as we increase earnings and roll our valuation base to 2025). Over the short-term, the correction in petroleum price over -9% between Jul-Aug exert pressure on both the company’s earnings and its share price the third quarter.

In 2024-2025, we expect global demand for fertilizer to recover gradually after being hit by a severe El Nino weather pattern during 2023, enabling fertilizer prices to increase over 2023 prices. While revenue is projected to grow by 11% YoY to VND 14 tn in 2024 on both sales volume and ASP growth, the reduction in depreciation expense and one-off income related to the acquisition of Han Viet Fertilizer should help earnings of DCM to rebound significantly during 2024 (net income of VND 1.98 tn, +82% YoY). Revenue in 2025 will likely remain flat at VND 14.3 tn (+2% YoY), as urea sales volume may decline due to maintenance, while the increase in NPK revenue is quite small (12-14% of the 2024-2025 revenue). Meanwhile, 2025 net income may decline to VND 1.85 tn (-6% YoY) due to the absence of one-off income. Our new target price now is VND 39,000/share (from VND 38,700). With an upside of 5% and ROI of 10% (including 5% dividend yield), we maintain a MARKET PERFORM (unchanged) rating.

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.

Compared to our previous estimates, we revise up our 2024-2025 NPATMI forecasts by 15%-20%, mainly due to successful negotiations in reducing the offshore loan guarantee fee for the company’s 7A plant, as well as the margin of interest rate for the loan of the Song Tranh 4 plant. Despite such an earnings upward revision, we maintain our 1-year TP of VND 34,200/share as we revise up our discount rate assumptions to reflect the recent increase of Vietnam interest rates. Following a respective 20% upside potential in the share price, we change our rating from OUTPERFORM to BUY for HDG.

Our 12-month target price is VND 25,200/share (down from VND 29,500/share) due to: i) our forecast of lower occupancy and rental price growth during 2025; ii) higher net debt at 2Q24; and iii) a valuation discount due to investor concerns on asset lending to Vinhomes and debts providing to Vinfast. We maintain an OUTPERFORM rating for VRE, with an upside potential of 27.9%.

VRE remains the market leader in the mall leasing segment, with 86 existing shopping malls as well as additional new malls in development across Vietnam. The Company stands to benefit from the growth of the middle-income population in the country. 

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.

We reiterate our BUY rating for the shares of ACB with 1Y TP of VND 31,200/share, representing a 25.8% upside. At the early stage of the economic recovery when many banks are struggling to clear bad debt and diminish inherent risk, ACB nowadays stands out as possessing top-notch asset quality. Moreover, having low funding costs would also allow ACB to be more proactive in attracting new customers by offering an incentive package, while still leaving room for NIM improvement. With a consistent business philosophy, we believe that earnings growth will not wow in the near-term but rather be profitably sustainable with ROE of above 20% over the medium-term and the foreseeable future.

We raise our rating on the shares of KDH from OUTPERFORM to BUY, along with our new target price of VND 45,700/share (+21.2% upside), up 10.7% from our previous target of VND41,300/share. Our upgrades are predicated on 1) our expectation for successful sales launches on two projects in Thu Duc City during 2H24; 2) expected strong, above trend-line earnings growth through 2025; and 3) the roll forward our valuation to 2025. 

For the 2H 2024, the prolonged disruption in the Red Sea, which is expected to sustain the shift from sea to air shipping should indirectly benefit SCS. We slightly revise up 4% our estimates, translating to revenue and PBT at VND 949 bn (+34.6% YoY) and VND 760 bn (+33.5% YoY) for 2024. In 2025, we expect volume growth to return to a normalized level and PBT to grow 9.5% YoY, to reach 833 bn VND. However, it is important to note that NPAT growth is expected to be constrained by the expiration of the preferential tax deduction of 50% on liable income from 2025.  In the longer term, the availability of capacity expansion at TSN airport and Long Thanh international airport drives growth potential. SCS is trading at a forward P/E of 12.x, which aligns with the 5-year average level. Our DCF model, reflecting the company's long-term potential, estimates an target price for SCS at VND 91,900 per share, translating to the upside of 11.7%. We maintain a MARKET PERFORM rating for SCS.

We reiterate our Outperform rating on CTG’s shares with an unchanged 1Y TP of VND 38,500/share, representing an upside of 10.5%. CTG has a long-term competitive edge as the third largest bank in Vietnam by assets, credit, and deposit market share with nationwide network and over 20 mn customers. The improvement in fundamentals should continue with improved asset quality and stronger earnings growth through 2025. The bank has also been actively digitizing, on top of implementing initiatives to improve its CASA and CIR over the past several years.

Although CTG ended 2Q24 on a low note (PBT of VND 6.75 tn, up +3% YoY), it was primarily due to the frontloaded provision (VND 7.8 tn, up 21% YoY). This led us to believe that 2H24 will have lower provisioning and better earnings growth (VND 16.2 tn, +29% YoY under our current estimate).

Despite poor July results, we note that 3Q earnings is characteristic of being the low season, and may not affect whole year estimate much (13-14% of 2022-2023 earnings). We believe the gross profit margin of retail sales to improve in Q4 when the high season comes, thereby allowing PNJ to introduce new collection and adjust sticker prices to compensate for the rise in gold input costs. We hence maintain our net income estimate for 2024-2025 at VND 2.2 tn (+13% YoY) and VND 2.57 tn (+16% YoY). We now roll over to 2025 (from average average 2024-2025), and derive a new target price at VND 120,000 per share (from VND 112,000), thereby maintaining an OUTPERFORM rating for PNJ.