Company Report

We attended the PHR AGM, where the company set its 2022 PBT parent company guidance growth target of 150% YoY to VND 899 bn, solely due to a one-off land compensation related to the VSIP 3 project. We forecast that 2022 consolidated net income will increase 117% YoY to VND 1.1 tn. Over the long-term, PHR is expected to diversify away from its core rubber business and become a developer of industrial parks. As such, PHR has begun the process of obtaining the necessary legal approval to develop Tan Lap Industrial Park (400 ha) and the second iteration of the Tan Binh Industrial Park (Tan Binh 2; 1,055 ha) in Binh Duong province. We raise target price to VND 74,000 per share (from VND 59,600) to reflect the increase in lease rate of industrial parks in Binh Duong province. Post-broader market sell-off over the past several weeks, the shares of PHR now look quite attractive. With an ROI of 30% (6.7% dividend yield), we call for BUY rating on the shares.

1Q22 results remained solid with strong credit growth, improved NIM, a better CASA, and stable asset quality. We are raising our 2022E PBT by 14% to reflect our higher lending yield assumptions from better NIMs. For full-year 2022, we now expect the bank’s PBT to grow by 24% YoY to VND34tn. VCB’s limited exposure to the real estate sector and the corporate bond market alike are also a distinct advantage during this tumultuous period. Lending to developers & corporate bonds of developers accounted for a mere 3% of total credit – amongst the lowest in the sector. Further, the mandatory transfer by the SBV of a weak bank to VCB is perceived to be net neutral given the broad array of financial incentives that VCB could potentially receive as consideration for this transaction.

After posting fruitful earnings results in 2021, MSN continues to set high growth targets for 2022. MSN targets between VND 90-100 tn in revenue (+22%-36% YoY) and core NPATMI of between VND 4.8- 6.2tn (+26%-63% YoY). These targets take the deconsolidation of the feed business into account. For 2022, our forecasts are broadly unchanged, and we estimate MSN to post VND 93.4 bn revenue (+5.4% YoY) and VND 5.76 tn NPATMI (-33% YoY) or core NPATMI growth of 37% YoY. For 2022, strong growth likely will come from: (1) continued growth momentum of MCH and TCB; and (2) profitability improvement at WCM and MHT.  Our SOTP-based 12-month target price is adjusted to VND130,000/share (from VND172,000), after taking into account the recent 20% stock dividend. With 18% upside potential to our TP, we maintain our Market Perform rating.

We are upgrading the shares of ACB to BUY, while maintaining our 1Y TP at VND 43,000/share - representing 45.8% upside. During 1Q 2022, strong earnings momentum (+33% YoY and +36% QoQ) was the result of solid credit growth, robust non-interest income, and a reversal in provisions due to a recovery in troubled loans. A notable improvement in CASA was another highlight of ACB’s interim results. We believe that 2022 will be quite a favorable year for ACB, given our estimated PBT of VND 16.9 tn, +41% YoY led by solid credit growth (+16% YoY), NIM expansion of 25 bps, and lower provision expenses. Notably, ACB veered away from the corporate bond market, and likely will remain unscathed during this period of market turbulence. 

VIB stands out as the bank with the highest concentration of retail loans, at approx. 86.5% of total loans. Corporate bond balances have been maintained at around 1% of total credit (VND 2.6 tn as of 1Q 2022; less than TPB and OCB). VIB, as a result, has minimized its exposure and was quite conservative with corporate bond issuance, an enviable spot to be in with the current corporate bond crackdown. During 1Q2022, VIB posted a significant pretax profit growth of +26% YoY to approx. VND 2.3 tn, which is backed by an improvement in CIR pf 360 bps YoY to 35.3%, and strong mortgage lending growth of 7.4% YTD to VND 91 tn. However, bancassurance income witnessed a long slide by -36.2% YoY due to acute competition. A close eye needs to kept on asset quality, given the bank’s relatively low credit risk buffer compared to peers (51.8% vs. 148.3% on average). As such, we call for Market Perform rating on the shares of VIB, along with our 1Y TP of 30,700 per share.Downside risk: Higher-than-expected inflation, pressuring the bank to increase its deposit rates. Possible slowing consumer demand. Upside risk: Significant decline in restructured loans.

SAB posted encouraging 1Q22 results, as net sales and net profit each advanced 25% YoY. An expansion of the company’s market share has also been encouraging, as has its the economic reopening which enabled SAB to recover despite intense competition. We maintain our estimates for SAB, and expect 2022 net sales and net profit to reach VND 32 tn (+21.6% YoY) & VND 4.7 tn (+19.6% YoY), respectively. We also reiterate our 1Y target price for the shares of SAB at VND 188,000/share (+14% upside potential), as well as our OUTPERFORM rating.

HPG’s 1Q22 revenue and net profit came in at VND44.1tn and VND8.2bn, respectively, up by 41% and 17% YoY. Construction steel volume hit a company record 1.34mn tons – growing by 57% YoY or 23% QoQ. HRC-type steel sales volume also increased 15% YoY to 763k tons, while volume of finished flat steel (including pipe and galvanized steel) increased by 20% YoY to 313k tons, driven by the recovery in domestic demand. The 15% YTD increase in construction steel prices has enabled HPG to take advantage of its lower-cost stockpiled inventory and aided in the improvement of its gross margin to 22.9% from 21.4% in 4Q21. As 1Q22 net profit for HPG lines up well with our forecast, we largely maintain our 2022E net profit at VND31tn (-10% YoY). We assume 2022E revenue to increase by 18% YoY thanks to the increase in sales volume and steel prices. We reiterate our Outperform rating on the stock, but lower our 12-month TP from VND54,000/share to VND50,600/share based on a target P/E and EV/EBITDA of 7.5x and 5.5x respectively (revised from 8x and 6x respectively due to the decline in regional valuations). Key downside risks to our call would be lower-than-expected steel prices and the possibility of higher costs for iron ore and coking coal compared to our assumptions.

GMD posted strong 1Q22 revenue and PBT of VND 880 bn (+28% YoY) and VND 350 bn (+82% YoY), respectively, which is the highest quarterly core earnings result ever recorded by the company - although Q1 is normally the industry’s low season. We believe that growth momentum can be sustained in 2022 given Gemalink’s contribution and the cost efficiency improvement, which should lead to GMD posting a PBT of VND 1.2 tn (+50.7% YoY) for 2022. Beyond 2022, however, GMD’s growth outlook remains very bright with the contribution of Nam Dinh Vu Phase 2 beginning 2023 and Gemalink’s Phase 2 from 2025. We reiterate OUTPERFORM rating on the shares of GMD with a revised 1Y TP of VND 65,000/share, which implies 16% upside.  Downside risks include: (i) prolonged Covid-19 lockdowns in China to affect shipping volume; (ii) weakened global demand as a result of high inflation and/or economic downturn; and (iii) higher competition in the Northern port system.

We attended the DCM AGM, where the company set a very conservative net income target of VND 513 bn (-72% YoY). In our view, natural gas and coal prices likely will not decline much over the remainder of 2022 as the Russia-Ukraine war is lasting longer than we had initially expected. We hence estimate that 2022 net income will increase 71% YoY to VND 3.275 tn as we assume higher urea ASP than the guidance. DCM is traded at a 2022 P/E of 6.5x and EV/EBITDA of 2.1x, which are much lower than its historical average of 12.5x and 3.5x. Despite expected strong earnings, the DCM share price has dropped along with the market sell-off, hence creating opportunities to accumulate the stock. With a target EV/EBITDA of 3.5x, we derive a 1Y target price at VND 48,900 per share. We call for an OUTPERFORM rating, with an ROI of 41.5% (including a 5.6% dividend yield).

We expect the company to post net sales and net profit of VND 5.8 tn (+22% YoY) and VND 434 bn (-2% YoY), respectively, in 2022, reflecting  preliminary 1Q22 results. At VND 91,600/share, MSH trades at a 2022 P/E of 11.2x on SSI Research estimates and 12x on company guidance. This is lower than peer average of 13x. Our rating on the shares of MSH remains MARKET PERFORM, as does our 1Y target price of VND 97,800/share (+7% upside) based on our target P/E of 12x. Despite the short-term headwinds, we believe that the recent capacity expansion from two new factories are supportive medium-term catalysts for the shares, as orders continue to shift from China to Vietnam.

Given that raw material prices (raw milk, feed, sugar, packaging costs) have remained at elevated levels for longer than we had expected, we lower our 2022E revenue and NPAT by 1% and 10%, respectively. We trim our 12-month TP for VNM to VND82,000/share (from VND90,000/share), based on a blended DCF valuation (with a higher WACC to reflect a higher risk-free rate) and a lower P/E target of 18x (from 19x). We are of the view that the negative growth outlook for 2022 has been largely flagged by the market. Given upside potential of 13% to our new TP, we reiterate our Outperform rating on the shares of VNM.

After a rough year in 2021 where HT1 earnings dropped to a 12-year historic low, management now targets a revenue and PBT recovery of between 7%-11% in 2022. During the first quarter, earnings continue to experience significant weakness given high coal prices. However, sales volume has regained some positive growth momentum after falling during the past two consecutive quarters. Over time, we expect the recent increase in cement selling prices and cost -cutting measures to enable the company to recover. Accordingly, HT1’s revenue and PBT for 2022 is forecast at VND 7.9 tn and 530 bn, respectively, increasing 14% and 15% YoY. We maintain our 1 YR target price on the shares at VND 17,500/share, based on a 1-year PE and EV/EBITDA of 15x and 6.5x, respectively. However, we are upgrading the shares from Underperform to Market Perform, as the share price has declined by -29% price since our last report.

We recently attended the MWG AGM, wherein the management guided for 2022 earnings to increase by 30% YoY. As a result, we increase our SOTP-based 12-month target price to VND196,000 (from VND174,000) – for upside potential of 31.4%. While the revenue recovery for its grocery chain (BHX) is slow, 2022 earnings growth should be supported by: (1) a recovery of DMX/TGDD off of a low base in 2021; and (2) improvement to BHX’s bottom line due to cost optimization measures. Our 2022 revenue and net income estimates are now VND138.8tn (+13% YoY) and VND6.7tn (+37% YoY), respectively. The AGM pledged a maximum of 20% toward a capital raise to expand the grocery segment beginning 2023 - a positive catalyst for the shares, in our opinion. We, hence, raise our target PS for the grocery segment from 0.8x to 1.3x, which is decent compared with the PS of 2x based on the most recent stake sale of Wincommerce (a competitor grocery chain). We reiterate our BUY rating on the shares of MWG. Downside risk: possibility of store closures due to renewal of lockdown measures.

VHC continued to post solid quarterly results, as net sales and net profit advanced 83% and 336% YoY, respectively, in 1Q22. As a result, we are reiterating our OUTPERFORM rating on the shares of VHC and are increasing our 1Y target price to VND 101,300/share (+14% upside) from VND 86,800/share. VHC remains highly confident with its strong demand in nearly all markets. Going forward, VHC expects export prices to anchor at this current high level, given the rising fish material and aqua feed costs. The AGM approved accelerating net sales and net profit guidance of VND 13 tn (+43.6% YoY) and VND 1.6 tn (+44% YoY), respectively, for 2022. Although, SSI Research is substantially more sanguine than management, expecting VHC to post net sales and net profit of VND 13.4 tn (+48.2% YoY) and VND 1.9 tn (+71.1% YoY), respectively, over the same period.

We reiterate our Outperform rating for GAS, with our 12-month target price maintained at VND134,000/share (16.2% upside potential), based on a blend of a target PE of 22x and DCF valuation. Although we raise our base-case assumption for the Brent crude oil price from USD80/bbl to USD90/bbl in USD terms (or the fuel oil price from USD430/tonne to USD490/tonne), we lower our gas volume forecast to reflect the fact that high oil prices might dampen demand. Accordingly, we estimate dry gas volume to reach 8.1 bcm (+12% YoY, from our previous estimate of 8.5 bcm). Therefore, our revenue and NPAT for GAS in 2022E are almost unchanged: VND88.6tn in revenue (+15.7% YoY) and VND11.56tn in NPAT (+34.9% YoY).