Company Report

We maintain Market Perform rating on TCB shares with a 1Y TP of VND 26,800/share – representing 19% upside. Despite a supportive valuation, the expected deceleration in earnings growth in the coming 2 quarters might lead to a lower level of excitement from retail investors for the shares in our view.

2H24 could be challenging given the slower-than-expected recovery of the HCMC real estate market, which accounts for 1/2 of the bank’s exposure to the property sector. Under these circumstances, TCB likely will prioritize stabilizing NPLs over NIM expansion, with the resumption of flexible pricing to enable easier repayments. Accordingly, NPLs are expected to be controlled with management expecting 1.2% by year-end. We believe that NIMs will drop to 4.18% for FY 2024. Our earnings estimate for FY24 and FY25 is VND 27.8 tn (+21.5% YoY) and VND 32.3 tn (+16% YoY) respectively, down by -3% and -4% vs. previous estimate.

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.

Investment view: Considering the quiet market in southern Vietnam at the moment, coupled with NLG’s need to compromise profits to boost sales via marketing campaigns and the current valuation already reflected the company’s landbanks as well as its reputation, we maintain our Market Perform for the shares of NLG and a target price of VND 43,000/share (+5.7% upside).

Downside risks: (1) Lower absorption rate at multiple second tier city projects; and (2) Delay of legal project licensing that affects company presales.

Short-term view: POSITIVE, as performance is expected to be strong during 2H24 relative to 1H24 with nearly 6x growth in NPATMI given unbilled bookings value at Southgate and Akari City to be recognized along with sales and recognition of Nam Long 2 project. Furthermore, retail investors are favouring property stocks after a long correction period.

GMD revenue was VND 1.2 tn +30% YoY, in line with our forecast, with volume improvement being the key. Volume from the Haiphong area (Nam Dinh Vu port) is up 15% YoY to 305k TEU during 2Q 2024, while Gemalink volume is 380k TEU, +48% YoY due to a recovery in exports to both the EU and the US, and additional volume from ad-hoc services from Singapore. Excluding the large one-off gain from Nam Hai Dinh Vu port divestment of VND 1.8 tn during 2Q 2023, GMD’s 2Q 2024 PBT growth would have been 33% YoY, pushing 1H 2024 core PBT growth to 27.5% YoY, meeting our previous expectation.

Jan-July number shows strong volume growth for Vietnam port (+20% YoY in the North, +24% YoY in the South). This reflects expected recovery from low base of manufacturing and import/export sectors of Vietnam. On the supply side, we see capacity growth to be more limited in Southern area (HCMC/Cai Mep) while quite abundant in the North (Hai Phong/Lach Huyen), with +50% capacity growth in next 2 years, posing strong price competition landscape in this area.

On Aug 15, the Government agreed to reduce registration fee policy by 50% for three months, despite Ministry of Finance’s suggestion not to go forward with the policy. As a result, we expect better-than-expected car sales for VEA’s JVs (Toyota, Honda and Ford VN) in 2H24. Coupled with other catalysts such as consumer spending recovery and an attractive dividend yield (2024F and 2025F dividend yields for VEA are 11% and 10%, respectively) lead us to believe that VEA could provide upside from here. We maintain our 1-year target price of VND 46,500/share. Given the forecasted return of 15% (including 11% dividend yield), we maintain our OUTPERFORM rating on the shares of VEA.

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).

MWG released solid 2Q24 financial results, with net sales of VND 34.1 tn (+16% YoY) and net income of VND 1.17 tn (vs. only VND 17 bn in 2Q23), which was ahead of our full-year estimates. In 2Q24, the company resumed closing poor-performing ICT & CE stores (last time the company closed ICT & CE stores was in 4Q23) to further optimize costs in the coming quarters. This, together with a lower inventory balance, further helped to revive the profitability of the ICT & CE segment. Meanwhile, the performance of the grocery segment tracks our annual estimate, with continually rising sales per store and hence profitability. The chain managed to deliver positive earnings in 2Q24 (PBT of VND 7 bn), though the new openings pace remained slow in 1H24. Nevertheless, once revenue per grocery store stabilizes, the company will focus more on optimizing costs (digitalize operational activities to reduce labor and logistics costs) to enhance the profit margin and also accelerate new openings. MWG expects its grocery store count (~1,700 store outlets in Vietnam as of 2Q24) to well surpass the ICT & CE store count (~3200) in the midterm (2027-2028). With better-than-expected 2Q24 results of the ICT & CE segment, we revise up our 2024-25F net income to VND 4.3 tn (+26x YoY, from VND 3.47 tn) and VND 6.0 tn (+39% YoY, from VND 4.5tn). We derive a new SOTP-based 1Y target price for MWG at VND 76,000 (from VND 65,800) based on 2025F financials and maintain the OUTPERFORM rating.

We maintain our Market Perform rating on the shares of  VIB with 1Y TP of VND 22,800 (+11% upside), but reduce our earnings estimates for 2024 and 2025. Given the still low liquidity in the property market, especially in southern Vietnam on top of intense competitive pressure, we believe that VIB is facing significant challenges resolving bad debt and boosting disbursements. The NIM is expected to remain under pressure due to a loan rate cut amid a gradual rate hike from deposits. Credit costs should remain high to counter asset quality deterioration. As such, ROE is expected to hover at between 18% - 19% over the medium-term, a decline from the peak of 30% during 2022.

2Q24 NPAT reaches highest level since 3Q21: 2Q24 Revenue from land lease was VND 233 bn (-11% YoY) with leased area of 7.2 ha (-18% YoY) at USD 92/m2 (+7.8% YoY). The gross profit margin increased sharply to 61.8% (+7.8% YoY), as the company commanded the highest lease prices since the industrial park began operating. Subsequently, net income reached VND 102 bn (+6% YoY). For 2024, we expect lease price increases of 12% YoY, with an MOU expected to be inked from Tripod and other small investors totaling 45 ha (+12% YoY) - higher than the company's annual total leasing plan of 40 ha. In 2H24, SZC's net income is forecast to reach VND 141 bn (+14% YoY). Accordingly, total revenue is estimated at VND 1.08 tn (+32.8% YoY), and net income at VND 308 bn (+ 40.5% YoY) - higher than the company's targets of VND 881 bn in revenue and VND 228 bn in net profit. EPS is VND 1,724 /share, and is equivalent to a forward P/E of 19.8x for 2024 - higher than the industry average P/E of 10.9x.

Recent sharp JPY movement is not material to the company’s fundamental and valuation. It has been all over recent news that the Yen has appreciated sharply against the USD as well as the VND due to the BOJ’s sudden rate hike. Specifically, we observe that from its trough, the JPY has appreciated by 9.5% against the VND to VND 172/yen. This has effectively erased all JPY depreciation YTD, and brought the JPY/VND back to the level at the beginning of 2024. In our view, even though the JPY movement is large and sudden, we do not see the impact as too material to ACV. Upgrade to BUY, maintain target price of VND136,000/share. The recent stock price movement is not exactly linked to the fundamentals of the company, and thus presents an attractive opportunity to accumulate the stock. In terms of fundamentals, we maintain our estimate that ACV’s PBT would grow by 38% YoY in 2024F and 20% YoY p.a. in 2025-26F as in our last report. We maintain our 12-month TP of VND136,000/sh (+23.7% upside potential) based on a 2025F EV/EBITDA target of 16x, and upgrade our rating for ACV to BUY (from OUTPERFORM) on valuation grounds.

FPT continued its impressive growth path during the first half of 2024, with revenue and NPAT achieving of VND 29.3 tn (+21.4% YoY) and VND 4.4 tn (+21.2% YoY), mainly driven by the technology segment.

Overall, the 1H24 results were in line with our expectations. Our respective 2024 and 2025 NPAT forecasts for FPT are VND9.3tn (+19% YoY) and VND11.1tn (+19% YoY). Our SOTP-based 12-month target price for FPT is VND142,800/share (from VND141,500) and we upgrade our rating to OUTPERFORM (from Market Perform).

During 2Q24, STK posted rather disappointing results where net sales and net losses reached VND 303 bn (-26% YoY, +14% QoQ) and -VND 56 bn (2Q23 net profit of VND 38 bn), respectively. This is mainly attributable to: (i) volume shortfall due to weak demand; (ii) failure in the operation of the automated product-checking and packaging lines; and (iii) unrealized FX losses of VND 42bn associated with the USD-denominated debt to fund the Unitex factory. During 1H24, the company reported net sales and net losses of VND 569 bn (-18% YoY) and -VND 55 bn (1H23 net profit of VND 39bn), respectively. During 2H24, the company expects to book net sales of VND 1.3 tn (+78% YoY and +128% vs. 1H24), assuming that sales volume will increase +110% vs. 1H24 and recycled yarn sales volume increases +192% during the period. For 2024, we expect STK to book net sales and net profit of VND 1.6 tn (+11% YoY) and VND 42 bn (-52% YoY), respectively. This is -14% and -70% lower than our previous net sales and net profit forecasts, respectively, following weaker-than-expected 1H24 results. For 2025, we expect net sales and net profit to reach VND 2.1 tn (+36% YoY) and VND 145 bn (+243% YoY), respectively. We expect STK to catch up with the sector’s recovering sales volume momentum during 2025. Our 1Y target price for the stock is VND 26,300/share (+6% upside). We rate the shares as MARKET PERFORM.

SAB posted 2Q24 business results, where net revenue reached VND 8.1 tn (-2.7% YoY) and NPAT reached VND 1.3 tn (+9% YoY). While this is rather disappointing as on-trade consumption remained weak during the Euro football season, we note that SAB did regain its market leadership position, as consumers have continued downtrading. Compared to the previous quarter, sales and NPAT advanced 12.6% and 28.8% QoQ, respectively. We note that 2Q is the high season for SAB, and that this quarter proved no different. SG&A/Sales reached 13.3% compared to 2Q23 of 16.4% and 1Q24 of 14.6%, as we believe that SAB intentionally delayed certain A&P expenses during the beer consumption slowdown, especially given the strict enforcement of zero tolerance drunk driving. During 1H24, the company recorded revenue of VND 15.3 tn (+5.1% YoY) and NPAT of VND 2.3 tn (+5.8% YoY), fulfilling 44.4% and 51.2% of the annual targets, respectively.

With a 12-month target price of VND 24,700 (equivalent to 26% upside potential), we upgrade our rating from MARKET PERFORM to BUY for the shares of NT2. We witnessed a higher-than-expected NPAT for 2Q24 due to higher-than-expected contracted volume (Qc) for June, which resulted in the quarter’s earnings nearly offsetting the loss of -VND 158 bn for 1Q24 (the company recorded a net loss of -VND 36 bn during H1 2024). At June 2024, EVNGenco 3’s (PGV: HOSE) gas price surpassed that of NT2. Therefore, we believe that NT2 could witness higher-than-expected volume for H2 2024 (vs. that being initially planned), benefiting from a potentially higher priority of electricity mobilization for the national power system. For 2025, we expect that the gas shortage issue will somehow ease in Southeast Vietnam and support an NT2 volume recovery. We project a profit of VND 20 bn for 2024 and VND 399 bn for 2025. Our earnings increase primarily came from our respective upward revisions of 2024 and 2025 volume, following our projection of higher-than-expected volume during H2 2024. We believe that NT2 could somehow achieve a profit during H2 2024, offsetting the H1 2024 loss.

During 2Q24, FMC reported net sales and net profit of VND 1.2tn (+20.3% YoY) and VND 83bn (+10% YoY), respectively. This is impressive considering Vietnam shrimp exports by value remained flat YoY during 2Q24. Largely due to the solid gross margin improvement, FMC earnings advanced +46% QoQ. We attribute FMC’s cost effectiveness to its new farming area in Vinh Thuan, which employed more efficient farming operations and resulted in greater fecundity. We note that FMC’s survival rate of its aquaculture is 80%, drastically higher than the Vietnam avg. of 50%. During 2H24, management expects higher volume and ASP compared to 1H24, due to seasonal impacts. For 2024, we expect net sales and NPATMI to reach VND 5.9tn (+16% YoY) and VND 312 bn (+13% YoY), respectively. For 2025, we expect net sales and NPATMI to reach VND 6.4 tn (+9.1% YoY) and VND 362 bn (+16% YoY), respectively. Our 1Y target price for FMC is VND 55,400/share (+16.5% upside), and reiterate our OUTPERFORM rating for the stock.