Company Report

BID delivered a solid set of results in 2Q 2022, with PBT exceeding our expectations and achieving VND 6.6 tn (+41% YoY). Strong credit expansion, a robust NIM recovery, and a lower provisioning more than offset the decline in fee income and writebacks, allowing BID to enjoy robust growth for the period.

We are bullish on BID’s short- and medium-term outlook, as we expect the bank to post over 80% YoY PBT growth in 2H 2022, and a solid +24% PBT growth for 2023. However, we are concerned that long-term growth could be constrained by BID’s limited capitalization.

We maintain our Market Perform rating for the shares of BID, although we increase our 1Y TP to VND 44,180/share (from VND 41,200/share). The target price change reflects the increase in our 2022 and 2023 earnings by 2.8% and 8.5%, respectively, and valuation rollover impact to mid-2023.

BMP continued on a strong growth trajectory in Q2, with revenue and net profit of VND 1.6 tn and VND 145 bn, respectively, translating into YoY growth of 9.5% and 27%. As such, we are reiterating our Outperform rating on the shares of BMP, and raising our 1-year target price to VND 71,500/share (from VND 67,000), representing 12.6% upside potential.

The share price in the short term can be supported by strong earnings growth in the second half fueled by the downtrend in input costs. PVC resin prices have dropped by another 20% since July to USD 1,000-1,100/ton, which is 20%-30% lower than the average price in 2Q22. As a result, we expect the net profit in 2H22 to increase by 20% HoH and 270% YoY thanks to the low base in 2H21. Accordingly, we increase our 2022 net profit forecast to VND 599 bn, up 179% YoY.

In 2023, despite the expectation of a 7% YoY growth in sales volume, we forecast net profit to decline slightly by 4.4% to VND 572 bn from the likely high base in 2022, under the assumption that the ASP will drop by 4% YoY.

Estimates and investment view: Given H1 results, we trim our forecasts for 2022 and 2023. Our new estimates foresee a -11.6% decline in NPAT in 2022 before the bottom line increases 11% next year. Next year, the situation could be rosier, with expectations of 7.8% sales growth and margin expansion. Based on our updated estimates, sales growth in H2 2022 is 8.2% with NPAT being flat YoY.

Our new target price is VND 80,000/share based on 2023 EPS (targeted P/E of 18x) and DCF valuation. Given the 10% potential upside, we downgrade our rating to Market Perform on the shares of VNM.

Investment highlights: Following the SAB 2Q22 analyst call, we are increasing our 1Y target price for the shares of SAB to VND 213,000/share (from VND 188,000) – representing 18.2% upside. We are also reiterating our OUTPERFORM rating on the shares. In 2Q22, SAB recorded impressive net sales and net profit of VND 9 tn (+25% YoY) and VND 1.8 tn (+67% YoY), respectively. ASP hikes, a better product mix, and improved production efficiency translated into SAB’s highest ever quarterly net profit expansion. Management continues to focus on the mainstream segment, which resulted in market share gains through 1H22. In light of the encouraging 2Q22 results in 2Q22, we revise up our estimates for SAB. For 2022, we expect net sales and net income to reach VND 33.3 tn (+26.2% YoY) and VND 5.3 tn (+35.4% YoY), respectively, which are 4% and 13% higher than our previous forecasts. In 2023, we expect net sales and net income to reach VND 38.8 tn (+16.5% YoY) and VND 5.95 tn (+12% YoY), respectively.

We are downgrading KDH from Buy to Outperform, with a revised 1Y target price to VND 47,000 (+19% potential upside). As such, we revise down our 1Y target price by -26% since our last report, as explained by the change in our valuation method. Not only did we use RNAV methodology to calculate for KDH future expected value, we also incorporate the P/E and P/B method to factor in market sentiment toward real estate stocks during what has been a complex environment in the real estate market.

Among our coverage, we still determine that KDH has some advantages compared to other developers, such as the company’s land plots located in District 2, 9, and Thu Duc area, which usually has higher absorption rate compared other second tier areas. Not to mention, KDH is also a reputable developer with clean legal status projects and good financial health, which can help the company to withstand during difficult times.

We continue to expect KDH earnings in the next 2 years should remain solid, as the company is focusing on developing low-rise and mid-end condominium products, which usually take a short time to absorb. With a strong balance sheet, KDH can seize the opportunity to acquire more land bank and seeking for additional funding for its project pipeline. However, we will continue to keep a close watch on company presales - as the property market is cooling down at the moment.

MBB achieved VND 6 tn (+76% YoY) in pretax profit during 2Q 2022 driven by NIM expansion, robust interest income, and lower provisions. Fee income, however underperformed both for brokerage and insurance activities. As for asset quality, other than rising Group 2 loans at MCredit which need to be monitored, ratios in general remained solid. Despite concerns over MBB exposure to construction and real estate & corporate bonds (17% of total credit), we expect that it should be manageable given the solid collateral backing. Pretax profit in 2022 and 2023 is projected to achieve VND 22.3 tn (+35% YoY) and VND 26.6 tn (+19% YoY), respectively. There is some optionality to our figures, provided that MBB receives credit limit expansion beyond peer. Our 1Y TP for MBB is VND 34,400/share, implying upside of 27.6%. We reiterate our Outperform rating on the shares of MBB.

Investment highlights: We recently attended the STK analyst meeting for an update on 2Q22 results and the company’s demand outlook for 2H22. In 2Q22, STK recorded net sales and net profit of VND 530 bn (+3.8% YoY) and VND 69 bn (-2% YoY), respectively. Given how inflation is affecting apparel demand worldwide, management believes that it will be challenging to meet the net sales target for the year. As such, we lower our forecasts for STK based on the recent slowdown of orders in the sector. In 2022, we expect net sales and net income to reach VND 2.3 tn (+14% YoY) and VND 299 bn (+7.4% YoY), respectively, 14% and 7% lower in net sales and net profit compared to our previous forecast. In 2023, we expect the equivalent to reach VND 2.5 tn (+8.6% YoY) and VND 314 bn (+5.1% YoY) respectively. Our updated 1Y target price for the stock is VND 45,200/share, representing -8.3% downside and prompting us to issue an UNDERPERFORM rating for the shares.

Investment View: We maintain our BUY rating in place for TNH, with a revised target price of VND 53,800/share, representing a 23% upside from the current price on August 4^th.

We note that growth in 2022 is being affected by previous lockdowns in Q1 due to the Omicron outbreak, as well as last year’s high base set in Q3 and Q4. No significant COVID testing revenue is expected to roll in this year. Long-term outlook to 2023 and onwards is looking solid via: (1) additional healthcare workers shifting in from public to private hospitals, while 2022 - 2023 FDI investment could surprise in Thai Nguyen & Bac Giang province, (2) increasing incentive of Vietnamese government for private investors to build more hospitals to increase urbanization rate, and (3) increasing number and valuation of recent hospital M&A deals in Vietnam.

We expect the company gross revenue to reach VND 478 bn (+13% YoY) in 2022 and VND 574 bn (+18% YoY) in 2023. For net profit, we expect it to reach VND 156 bn (+10% YoY) in 2022 and VND 190 bn (+22% YoY) in 2023. During recent market turmoil, we witnessed small downward pressure in global & local healthcare peers’ valuation, standing at forward P/E of 20.3x and forward EV/EBITDA of 14.4x. We also roll our valuation towards H1 2023 and reflect in our new target price.

Despite 7% revenue growth, HPG’s 2Q22 net profit was VND 4.0 tn, declining -59% YoY due to significant margin contraction amid high input costs and falling steel prices. As a result, we lower our HPG 2022 forecast for revenue and net profit to VND 147.5 tn (-1.5% YoY) and VND 21.6 tn (-37.4% YoY), respectively. Nevertheless, we reiterate our Outperform rating and 1-year target price of 27,600/share, as we believe that HPG’s earnings are bottoming due to the recovery in regional steel prices and the decline in coking coal input costs. HPG’s construction steel volume experienced modest growth of 6% YoY to 1.0 mn tonnes, driven by the export channel which grew 40% YoY in 2Q22. This performance was, however, offset by a slight volumes declines of HRC, billet, and pipe of -1.3%, -47%, and -17% YoY, respectively. The decline in construction steel prices and the surge in coking coal prices by over 200% YoY led to HPG’s YoY gross margin contraction from 32.7% to 17.5%. In addition, HPG recorded an extraordinary net forex loss of VND 1.1 tn due to the depreciation in VND versus USD. In 2023, we expect that HPG earnings will rebound 11% to VND 24 tn due to our projected 9% increase in volume from the main steel product line and stabilization of the gross margin. We believe that HPG will maintain positive volume growth, despite a market slowdown, as it grabs additional market share.

Investment highlights: In 2Q22, VHC recorded net sales and net profit of VND 4.2 tn (+80.4% YoY) and VND 788 bn (+202% YoY), respectively. VHC recorded earnings growth of 242% YoY in 1H22 - a record high level – which we believe to be the peak. Pangasius fillet US export growth has begun decelerating, while China exports began accelerating. Our 1Y target price for the shares of VHC is VND 82,400/share (+0.2% upside), and we maintain our MARKET PERFORM rating given the likely earnings deceleration through 2023.

Earnings in 2Q22 were in line with expectations, as pretax profit was VND 7.4 tn (+50.2% YoY), reflecting vigorous credit growth (+14.4% YTD); strong non-interest income (+76% YoY); and reduced loss provisions (-15.2% YoY). Balance sheet quality remains the sector’s best. NPLs and restructured loans both dropped to 0.61% and 0.36%, respectively, whilst provision coverage of NPLs jumped to 506%. It should be noted that there were hardly any write-offs during the period, suggesting that the VND 4 tn drop in restructured loans was resultant of a recovery in affected clients. In 1H22, PBT aggregated VND 17.4 tn (+28% YoY) and represents 50.5% of our current full year forecast.

As VCB continues to deliver, we maintain our Outperform rating on the stock, with an unchanged 1Y TP of VND 90,700.

We attended PNJ Analyst meeting on July 21^st to update on the 2Q22 results and management view’s on the demand outlook going forward. Given inflationary pressure already affected some consumer discretionary sectors, PNJ management has not found significant impact on jewelry sales given June and July sales remained strong. In 2Q22, PNJ recorded net sales and net profit of VND 8.1 tn (+81.1% YoY) and VND 367 bn (+64.8% YoY), respectively. In 2022, we expect net sales and net profit to reach VND 29.1 tn (+49% YoY) and VND 1.7 tn (+66% YoY), respectively. This translates to 2H22 NPAT growth of 107% YoY since PNJ made losses in 3Q21. In 2023, we expect PNJ to post net sales and net profit of VND 33.4 tn (+14.5% YoY) and VND 2.0 tn (+15% YoY), respectively. Our updated 1Y target price for the shares of PNJ is VND 136,800/share (from VND 142,300/share), which is equivalent to a 20% upside. We lower our target P/E from 20x to 19x, reflecting the demand slowdown attributed to inflationary pressure which is expected to occur from 4Q22. We reiterate our OUTPERFORM rating for the shares of PNJ, given that 3Q22 is the strongest earnings growth quarter.

We are upgrading both our rating on the shares of HDG to Outperform, and our 1Y target price to VND 52,800 (+18% potential upside). During the 2022- 2023 period, the sale and handover of the Charmvilla project (plus the operational cash flow from the 462 MW within the renewable portfolio) should be quite supportive to HDG results. In addition, HDG’s diversification away from real estate has exhibited progress, especially considering macroeconomic conditions and real estate market headwinds. According to the draft of Power Development Plan 8 (which targets for wind capacity of 13,616 MW by 2025), there remain approx. 7,180 MW to be developed, which is a potential business opportunity for HDG. As such, we believe that HDG has an interesting opportunity in the real estate/renewable energy space given its diversified source of earnings plus the power segment expansion strategy to achieve 1,000 MW over the next five years.