Company Report

At the AGM, net revenue and PBT guidance for 2023 was set at VND 11.5 tn (-13% YoY) and VND 1 tn (-50% YoY), respectively. Earnings guidance reflects management's conservative stance, including weak market demand and gross profit margin contraction. For 2023, we expect that net sales and net profit of VND 11 tn (-17% YoY) and VND 1.3 tn (-34% YoY), respectively. At VND 59,000/share, VHC trades at a 2023 P/E of 8.2x. We maintain our Market Perform rating for the shares of VHC, with a 1Y target price of VND 61,000/share (from VND 63,000/share previously) as we lower our net profit forecast by 9%. During 1Q23, VHC reported net sales and net profit of VND 2.2 tn (-32% YoY) and VND 226 bn (-59% YoY), respectively.  VHC suffered a larger revenue decline than rivals ANV (-5% YoY) and IDI (-6% YoY), as the US market saw the largest drop in pangasius exports from Vietnam. However, in terms of net profit, VHC outperforms other exporters due to the US market's higher gross profit margin. VHC’s earnings peak occurred during 2022, especially during 2Q22 with a net profit of VND 802 bn (+207% YoY).

GAS’s revenue for 1Q23 declined by 20.5% YoY primarily due to an average decline in oil prices of 18% YoY. However, net income attributable to parent shareholders during 1Q23 decreased 2.3% YoY to VND3.4tn due to resilient volume for electricity and fertilizer clients. In addition, the tripling of net financial income has also been supportive to earnings. For 2023, according to the company’s annual report, net profit is conservatively targeted at VND6.5tn (a significant decline of 56.6% YoY), which is largely attributed to the drop in oil prices. Guidance is likely based on a Brent oil price assumption of USD70/bbl (-30% YoY). Shares in GAS are trading at a 2023E P/E of 15x. We maintain our Market Perform rating and 12-month target price of VND103,000/share, based on a 2023F P/E of 16.5x (from 18.5x), the past-10-year average. 

1Q 2023 results: revenue up 124% YoY and 15% QoQ, while PBT was up 86% YoY and 29% QoQ, as its pretax margin expanded to 43% from 38% in the previous quarter. We note that the company is on track to meet our PBT estimate of VND 10.6 trillion for 2023. The company served 36.5 million passengers in the first 4 months of 2023 (+6% compared to pre-Covid), and international passengers have recovered to 77% of pre-Covid levels (4M 2019 international volume was 12 mn passengers). We maintain our current 1Y TP of VND 98,000/share based on 2024F EV/EBITDA-ex landing charge with a target of 16x, and maintain our OUTPERFORM rating for the stock. The catalyst for the stock price in the short term would be the approval for extension of the visa-exemption period for tourism, which would significantly boost Vietnam’s attractiveness and accessibility compared to regional peers like Thailand or Indonesia.

PBT target decreases sharply in 2023. The consolidated revenue target for 2023 has been set at VND 14.5 tn (8% higher than 2022’s actual performance), whereas the consolidated PBT target is set at VND 1.2 tn (48% lower than the company’s performance for 2022). Viglacera (VGC) is one of the leaders in the field of building materials, including glass, tiles, and sanitary ware. Concentrated in northern and central Vietnam, VGC has attracted large customers for IP segment, including Samsung, Accor, BYD amongst others. We expect that VGC will maintain a stable income from leasing existing industrial parks over the long term. VGC is trading at a 2023 P/E and P/B of 13.6x and 1.8x, respectively.

Following the MWG analyst meeting on May 12 2023 and the worse-than-expected 1Q23 results, we trim our 2023 and 2024 net income forecasts by -24% and -8%, respectively, to VND 3 tn (-27% YoY) and VND 4.6 tn (+52% YoY). However, we believe that MWG’s earnings bottomed out in 1Q23, with April revenue recovering by 20% MoM. We believe earnings could recover over the remainder of the year QoQ, powered by: (i) higher demand for white goods due to the unexpected hot weather; (ii) lower interest rates; and (iii) recovery in external and domestic demand from 4Q23. We also expect earnings to return to YoY growth from 4Q23. Using unchanged target multiples applied on our revised 2024F estimates (from averarge 2023F-2024F), we derive a new SOTP-based target price of VND 43,900/share (from VND 44,400) which offers 15% upside from the current share price. We maintain MARKET PERFORM rating. 

We find VCB’s 1Q23 results solid, with decent profitability and well-controlled credit quality. Its NPL formation and ‘Group 2’ tier of other orbiting loans were amongst the lowest in the industry in 1Q 2023. During April, the base NPL ratio increased just 4 bps to 0.89%, while the satellite Group 2 loan ratio remained flat MoM, without any further write-offs. This proved the bank’s capability in risk management. Despite the bank considering another rate cut package with an impact on NII of between VND 600-700 bn, the impact on the 2023 PBT should be offset by the curtailment of credit cost. Therefore, our PBT estimate for 2023 remains broadly unchanged at VND 44.5 tn (+19% YoY) and we introduce our 2024 forecasts. However, we are rolling forward our valuation basis to mid-2024 which results in a new 1Y TP of VND 109,400/share (from VND 103,750/share). This is equivalent to a 2024F P/B ratio of 2.4x (from 2023F P/B ratio of 2.6x). We reiterate our Outperform rating.

For 2023, MSN guided for a range-bound revenue target of VND 90-100 tn (between +18% to 31% YoY) and a NPAT target of VND 4-5 tn (between -15% to +6% YoY). The group targets revenue growth across all segments, of which WCM’s revenue growth is expected at between 23%-38% YoY. Management believes that a higher loan cost structure coupled with weak consumer demand will weigh on the group’s bottom-line for 2023, but it is confident about the long-term outlook. MSN estimates financial expense to increase appox. VND 2 tn (+41% YoY) during 2023 given the higher borrowing rates.

2Q23 was a return profitability, posting earnings of VND 251 bn (+7.1% YoY) driven by an inventory provision reversal of VND 466 bn due to a steel price recovery. However, the company’s sales volume remains weak, especially in the domestic channel with 2Q23 volume declining -37% YoY to 167k tons (equivalent to the 4Q21 bottom amid the Covid-19 lockdown). However, export volume has stabilized at around 50k tons between Feb and Mar versus the bottom of around 32k ton between Jul-Sep 2022, albeit still between 50%-60% lower than the peak of 2H21. We lower our rating on the shares of HSG from Market Perform to Underperform, along with our 1-year target price of VND 14,300/share based on target PB of 0.8x. HSG’s earnings have already bottomed out, which can serve as a supportive factor for the share price.

At the 28 April AGM, guidance for net revenue and NPAT in 2023 was set at VND6.4tn (+9% YoY) and VND651bn (-6% YoY), respectively. Earnings guidance reflects management's conservative view of weak market demand and PVC input price fluctuations. BMP is expected to focus its strategy on sales volume and lowering inventory. For 2022, BMP is set to pay 99% of net profit in a cash dividend, which is equivalent to VND8,400/share (a 10% dividend yield). We increase our net profit for 2023F by 21%, as BMP has a high ASP level and low PVC input prices. We raise our 12-month target price for BMP to VND84,300/share (from VND62,000), based on a 2023F PER of 9x. But given only 2.3% upside potential to our new TP, we downgrade our rating to Market Perform (from Outperform).

Per management, sluggish consumer spending continued to weigh on April sales. With worse-than-expected macroeconomic conditions during 1Q23, (inflation above the annual target, dismal exports, and rising unemployment) April sales were sluggish. We lower our 2023 and 2024 net income forecasts -7% and -10%, respectively, to VND 1.89 tn (+4.4% YoY) and VND 2.08 tn (+10% YoY). Despite lowering our earnings forecast, we apply 2024F financial data (from 2023F) and an unchanged target P/E of 15x to derive a new target price of VND 86,100 (from VND 85,800). With an upside of 13% from the current share price, we reiterate our OUTPERFORM rating on the shares of PNJ.

We maintain our 2023 revenue and net income estimates at VND 19.6 tn (-11% YoY) and VND 456 bn (-33% YoY), respectively. In the context of weak discretionary spending, DGW likely will offer additional promotions (affecting both gross profit margin and SG&A to sales ratio) to clear inventory and protect market share. We expect revenue growth to recover from 4Q23, led by: (i) more favorable macroeconomic conditions (lower interest rates, lower unemployment); (ii) higher credit offered by consumer finance companies; and (iii) continuously adding brands. This should help to expand the net profit margin. As such, 2024 net sales and net income are estimated at VND 22.3 tn (+14% YoY) and VND 585 bn (+28% YoY), respectively. Our new 1Y target price on the shares of DGW is VND 32,300 per share (from VND 28,700), and we maintain our MARKET PERFORM rating.

At the recent AGM, net revenue and PBT guidance for 2023 was set at VND 9.0 tn (+1% YoY) and VND 345 bn (+6% YoY), respectively. Guidance reflects a cement sales volume target of 6.7 mn tons (+1% YoY) and clinker sales volume target of 530k tons (+8% YoY). HT1 expects to pay a cash dividend of 4% on par for 2022 earnings distribution, translating into a 2.9% dividend yield. We maintain our Market Perform rating on the shares of HT1, and lower our one-year target price to VND 12,000/share (from VND 13,400/share) as we lower our net profit forecast 29% due to: (i) lower cement sales volume; and (ii) higher sales-related expenses.

In 1Q 2023, revenue of the company went down by -33% YoY reaching VND 162 bn, correlating with the -34% YoY volume decline during the quarter. 1Q 2023 PBT declined by -35% YoY and reached VND 129 bn, turning in a pretax margin of 79%, which is superb but lower than 82% level last year. 1Q 2023 NPAT posted at VND 113 bn (-40% YoY). Even though the company faces short-term challenges due to external weak demand, the company remains sound in terms of financial and management quality, and thus serves as a good investment choice for the long-term, at the right price. The recent delay of Long Thanh International Airport construction is certainly good news, as it would extend the time Tan Son Nhat Airport serves as the sole gateway for air cargo in Southern Vietnam, which is definitely a positive for SCS.

HPG’s earnings reversed during 1Q23 and were positive at VND383bn. Much of the earnings recovery during the quarter likely took place during March, led by the 3-10% MoM increase in steel prices, and a sales volume increase of 5% MoM. On the other hand, furnace utilization rates at HPG continued to decline to a record low of 65% from 70% during 4Q22 and 100% during 1Q22. Construction steel volume during 1Q23 was 868k tons, falling 35% YoY given the high base effect of 1Q22 (historical quarter of high volume), but recovering 6% QoQ. The volume of other steel segments, including HRC, steel pipe, galvanized steel and billet also dropped between 27-59% YoY.

We attended the PLC AGM on 20^th April and there are some key takeaways: Annual targets of VND 8.9 tn for revenue (+3.5%) and VND 200 bn for PBT (+8.5% YoY) were approved. Management discussed that the asphalt segment should be a key growth driver over the next several years, as it benefits from the current public investment acceleration driving GDP growth. To illustrate, management stated that PLC has supplied and will further supply asphalt to  popular projects, such as 12 sub-projects of the mega project North-South expressway (to be completed no later than 2025), amongst others.