Company Report

We upgrade our rating for HDB shares to Outperform with a 1Y TP of VND 27,700/share as we revise upward our forecast for 2024 PBT by 5% to VND 16.4 tn (+25.8% YoY) and apply a higher target P/B of 1.4x (from 1.0x) to reflect the positive impact from strong credit growth (over 20% YoY) that could continue in the medium-term, allowing HDB to (i) improve its market share, (ii) retain NIM at above 5%, and (iii) withhold NPLs at a reasonable level (less than 2%). However, we reckon that the acceleration of loan growth, particularly in the property sector, could pose certain credit risks to asset quality if the market recovers more slowly than expected.  

The 2024FY business plan received shareholder approval, with two scenarios just as for the previous year: Lower bound net profit for 2024FY is targeted at VND 400 bn (+13x YoY), whereby sales volume is assumed to increase 13.3% to 1.63 mn tons. For the upper-bound plan, net income is targeted to increase by 17x YoY to VND 500 bn if sales volume increases by a higher rate of 20.7% to 1.73 mn tons. ASP is assumed to decline 5.2% YoY during the first case and by 5.7% YoY during the second case, primarily due to the high base during the first quarters of the last fiscal year. Returning to cash dividends: After many years of stock dividends, HSG is poised to begin the payment of cash dividends for FY 2023 at 5% on par (VND 500/share – equivalent to a dividend yield of 2.3%).

In 4Q23, DGC achieved net sales and net income of VND 2.39 tn (-23% YoY) and VND 746 bn (-34% YoY), falling short of our forecasts due to slower than expected recovery in ASP and the increase in electricity costs. Even though global semiconductor sales have shown early recovery signals in 4Q23 (+5% YoY), it may need some more time for yellow phosphorus prices to regain in tandem with semiconductor demand. We hence lower our 2024 net income estimates to VND 4.23 tn (+30% YoY, from VND 4.34 tn) on lower yellow phosphorus ASP (VND 118 mn/ton, + 12% YoY, from VND 123 mn/ton). We introduce our 2025 net income estimates (VND 5.7 tn, +35% YoY), driven by (1) 7-23% YoY sales volume growth, (2) 4% YoY increase in ASP and (3) lower raw materials costs, thanks to higher usage of in-house phosphate rock (80%/90%/100% in 2023/2024/2025) on the back of Mine Site 25 expansion. As such, 2024-2025 earnings growth will be primarily determined by (1) sales volume and ASP recovery of phosphorus-related finished products and (2) reduction in phosphate rock material costs. Despite lowering 2024F earnings, we increase our 1 year target price to VND 142,000/share (from VND 100,000/share) as we apply a higher target P/E (12x, from 10x) and roll over to average 2024F-2025F earnings (from 2024F). As the stock price has rallied recently, we call for MARKET PERFORM rating on DGC.

Poor 4Q results as people skip hospital visits during economic slowdown. For 4Q23, TNH recorded unaudited revenue and net profit decrease of 7% and 24% YoY, respectively. For 2023, TNH recorded unaudited revenue and net profit of VND 532 bn (+15% YoY) and VND 133 bn (-6% YoY), which is 9% higher than our revenue estimate but 15% lower than our NPAT estimate. If excluding one-off revenue, core revenue increased 3% only, which is 3% lower than our estimate. According to management, total outpatient visits saw 5% decrease while inpatient visits saw 9% increase compared to 2022. Continued expansion projects laid out for medium- to long-term. Management expects the commencement of its 3^rd hospital TNH Viet Yen during 2Q24. The fourth hospital - TNH Lang Son - also saw groundbreaking during Feb 24, which was faster than expected. The new hospital is expected go into operation during 4Q25.

For residential development, KBC still works towards determining calculation of the land use right fee (LUR) payment for Phuc Ninh Urban Area in Bac Ninh province. We expect that this may be delayed through 2025, thus 10 ha of saleable land which KBC sold before would be recorded during 2025 only. As such, we expect KBC to lease around 102 ha of industrial land in total in 2024, of which 30 ha has been secured to lease by new investors during 2023, 50 ha from Trang Due 3 IP and 22 ha from Tan Phu Trung IP. Accordingly, KBC is forecast to achieve VND 4.92 tn (-12.8% YoY) in net revenue and VND 1.36 tn (-38.5% YoY) in NPAT for FY2024. This forecast is lower than our previous forecast of the optimistic case due to the delay of revenue recognition from residential sales in Phuc Ninh Urban Area to 2025 as discussed above.

During the final quarter of 2023, PLX’ PBT reached VND 850 bn - a decline of 48.5% from the high base in 4Q22 and 28% QoQ mainly due to the petroleum segment. Domestic petroleum sales volume during 4Q23 dropped 11% YoY to 2.6 mn m3/tons compared to the peak in 4Q22, of which retail sales volume dropped -7.7% YoY to 1.7 mn m3/tons. Earnings from the petroleum segment declined 55% YoY and 33% QoQ to VND 322 bn due to the drop of petroleum prices of over 10% during the quarter which had a negative impact on the company’s trading activities. Cumulatively, 2023 PBT was VND 3.93 tn, recovering 73.2% YoY and exceeding company guidance 22%. The volume from the retail channel increased 6.9 % YoY to 7.02 mn m3/tons, increasing 40% over 2021.

as Viettel Group (Viettel) was awarded the usage right of 2,500-2,600 MHz waveband to commercialize 5G mobile technology on 8 March 2024, we forecast CTR’s total number of BTS (base transceiver station) sites should enjoy a 70% YoY growth in 2024, benefited from 2G gradual shutdown and 5G rollout, which could generate a 53% YoY sales growth of infrastructure leasing segment. In the longer term, we expect the profit contribution from this segment could be higher. In fact, we forecast its gross profit to account for ~27% of total gross profit by 2026 (vs 15% in 2023) despite its minimal improvement of revenue contribution (8% of total revenue from 4% in 2023), which we attribute to is relatively higher gross profit margin (~31% in 2023) than others’ (5%-20%). Furthermore, due to higher-than-expected 4Q23 signed contracted value of residential construction (which accounted for over 40% of contracted value in 2023), we revise up our sales growth estimate for CTR’s construction segment (from 6% YoY to 17% YoY) in 2024. We expect NPATMI will perform well at 16.4% YoY in 2024 (vs 16.6% YoY of 2023), held up by the solid pillars of the construction, operation, and infrastructure leasing segments. We call for an OUTPERFORM rating on CTR, with a 12-month DCF target price of VND 123,000/share (equivalent to 9% upside potential).

4Q 2023 revenue reached VND 1 tn, on par with last year’s fourth quarter, while PBT was VND 253 bn and on par with last year's level. This brings FY2023 revenue to VND 3.8 tn, -1.3% YoY (a bit lower than our estimate of VND 4 tn) and pretax profit to VND 3.1 tn, +140% YoY (exactly in line with our estimates). Excluding the one-off gain from the Nam Hai Dinh Vu port divestment, 2023 core-PBT reached VND 1.3 tn, flat YoY. Total volume of GMD during 4Q 2023 reached 857k TEU (+37% YoY), and is the highest quarterly volume level for GMD historically.

Jan-Feb 2024 volume exhibited a strong sign of recovery: According to Vinamarine, total Vietnam container throughput during this time reached 4 mn TEU, +27% YoY. International throughput growth is 20% YoY, but this is a an early sign for a recovery year for Vietnamese exports/imports and seaport volume.

We lower our rating on the shares of ACB to Market Perform (from Outperform) with a 1Y TP of VND 30,800/share, as we believe that the current price partly reflects forward-facing 2024 business performance. However, we still prefer the shares of ACB over the medium- and long-term horizon due to its conservative lending approach, which will assist the bank in preserving its sector’s best asset quality. Further, a healthy NIM and sustainable ROE of over 20% are also achievable goals over the medium-term. 

On the other hand, we think the current price has discounted the bad news. Saigon beer remains the dominant brand in Vietnam and we expect SAB to post growth when the sector recovers. SAB is trading at a 2024E P/E of 18x, which is 1SD lower than its past-5-year average (23x). Our revised 12-month target price is VND63,900/share (from VND76,000/share), based on a mix of DCF methodology (WACC: 9.53%, growth: 2%) and a lower PER of 20x (from 23x). With potential upside of 10% to our new TP, we maintain our MARKET PERFORM rating.

While other retailer earnings lost their luster during 2023, PNJ managed to outshine with net income of VND 1.97 tn (+9% YoY) for the year. This was made possible by market share gains associated with new outlets and tapping a new customer demographic, along with gross profit margin improvement. During 2024, we expect that the macroeconomic headwinds to subside, which should further boost jewelry purchases. We expect PNJ’s retail sales growth to increase at a faster pace (+17% YoY) than the jewelry industry’s expected recovery during 2024 due to market share gains. PNJ’s net income during 2024 is estimated at VND 2.3 tn (+17% YoY, from VND 2.17 tn). During  2024, we expect PNJ to open 35 new gold stores (increasing store count 9%). 

HAH is trading at 2024F forward P/E forward of 12x, which is relatively high compared to its historical P/E range of between 6x-9x. We believe that the current valuation is justified by the improvement in the industry fundamentals due to Red Sea and geopolitical tensions increasing TEU-mile demand for the whole industry, as well as long-term contribution of the new capacity from 2024.

We utilize the DCF method to fully reflect the potential of HAH (while our previous valuation applies the P/E method). Considering the earnings outlook from 2024, our forecast results in a target price of VND 45,100 per share (reflecting 7.5% upside), and assign a MARKET PERFORM rating. The stock price has partially priced this that we would recommend buying on dips. 

For 2024E, we expect net sales and net profit to reach VND63.7tn (+5.6% YoY) and VND10.1tn (+12.1% YoY), respectively. This is 2% and 3% lower than our previous net sales and net profit forecasts. We are still optimistic about a 2H24 recovery but reduce our forecasted gross margin improvement from 250bps to 160bps, as well as assuming no price increase during 2024. The selling expenses/sales ratio is expected to stay at c.21.5%, while financial income is expected to decrease given the lower interest rate environment. VNM is trading at a 2024E P/E of 17x. Our new 12-month target price is VND82,000/share (from VND87,400/share), based on our unchanged DCF and P/E methodology. With upside potential of 15% to our new TP, we reiterate our OUTPERFORM rating.

4Q 2023 revenue of VND 1.7 tn, +19.8% YoY and +26.5% QoQ due to higher day and utilization rates of rigs. 4Q 2023 NPATMI: VND 195 bn, +261% YoY (due to low base) and 29.6% QoQ due to a higher day rate. This brings 2023 NPATMI to VND 575 bn (compared to a loss of VND 96 bn for 2022) and 10% higher than our estimate of VND 507 bn due to earlier than expected improvements in the 4Q23 day rate. On investment: The company turned its attention from a newer USD 130 mn rig to an older USD 90 mn rig (15 years old), which can be put into operation at year-end 2024 if the company proceeds with this purchase