Company Report

We have a BUY rating on the shares of QNS with 1-year target price of VND 61,000/share. We slash our 2022 earnings estimate by 3.6% as we (1) take into account of a continued high soybean price trend that impacts the soymilk margin and (2) lowered sugar volume forecast (mostly Refined Extra type sugar). However, we raise target P/E from 12x to 13x for the shares.  Fundamentally, we keep the view that QNS financial results had turned around since 2021 on the back of strength of the sugar business, while the soymilk segment has posted resilient sales growth despite the Covid-19 pandemic. Soymilk volume growth of 20% in the first 2 months of 2022 encourages us to stay with our view. Down side risk: Lower than expected demand for QNS products, due to a variety of factors such as the complicated pandemic situation/higher than expected soybean price/lower than expected refined extra (RE) sugar volume.

In our view, the supply chain disruption could carry through into 2023 longer than we initially expected, due to a trifecta of factors: (i) the surge in Omicron cases and the potential for new variants; (ii) China’s zero-Covid policy; and (iii) rising tensions between Russia – Ukraine, which will exert more pressure on global trade. Additionally, new vessel deliveries in 2022 are limited to only 3.1% of the current fleet. Thus, we expect both international and domestic container shipping to perform well with favorable conditions through 2023.With six new vessels to be added to the fleet between 2022 – 2024, HAH is ambitiously expanding into the Intra-Asia market to take advantage of the favorable market environment. We believe that the company’s new services will be profitable, given advantages of their low-cost fleet (8 out of 14 vessels having been invested into at low cost). We estimate that HAH will maintain high earnings growth during 2022 and 2023, and revise our NPATMI forecast to VND 744 bn (+67% YoY, +12.7% from our previous forecast) and VND 902 bn (+21% YoY) respectively, translating to an EPS of VND 14,641 in 2022 and VND 17,742 in 2023. We reiterate our BUY rating for HAH, with a revised 1Y TP of VND 106,000/share (unchanged target P/E of 7x), implying a 28% upside.

We are upgrading our rating on the shares of STK from OUTPERFORM to BUY, and our 1Y target price of VND 70,300/share (+26% upside). Our upgrade reflects the improved recycled yarn to total revenue ratio to 54% in 2022, as sales volume has now begun to recover to pre-pandemic levels in 1Q22. In 2022, we expect the company to post net sales and net profit of VND 2.62 tn (+28% YoY) and VND 318 bn (+14.1% YoY) respectively. With respect to 2021, STK recorded a decline in net sales and gross profit margins during 4Q21 due to less recycled yarn in the total sales mix (37% in Q4 vs 57% in 1H21) given the continued labor shortage. Nevertheless, STK still hit its target of 50% of its sales comprised of recycled yarn for 2021.

We are upgrading our rating on the shares of NKG from Market Perform to Outperform, along with our  1-year target price to VND 50,000/share (from 45,800/share) given our 9% 2022 earnings forecast increase. We are maintaining our Market Perform rating on the shares of HSG. Quarterly net profit at both HSG and NKG continued to fall in the last quarter, yet each posted growth YoY basis of 11.6% and 194%, respectively. Despite the between 14%-30% decline in domestic sales, both companies did experience high export demand. For 2022, we expect that export volume will increase between 2%-3%, as the slowdown in the US market should be offset by demand by the EU market provided the Ukraine war is prolonged. The rebound in steel prices coupled with the EU’s potential demand could act as a positive catalyst for the shares over the short-term. However, we believe that the shares are more suitable to investors with a short-term trading horizon and high-risk tolerance, given the likely downside to 2022 earnings by 27-30% YoY resulting from margin normalization from 2021 high base.

Despite the 4Q 2021 earnings underperformance, we are maintaining our Outperform rating on the shares of VPB with our 1Y TP of VND 44,500. With the upcoming private placement and gradual economic recovery, we believe that bank fundamentals will undergo a sea change in 2022. Pretax profit for 2022 is projected at VND 18.9 tn (+30% YoY), of which VND 16.7 tn (+18.9% YoY) is expected to be attributed to the parent bank with the remainder from FeCredit. Despite the expected 300%+ YoY PBT growth at FeCredit in 2022, the subsidiary’s returns will lower than pre-Covid levels (of over VND 4 tn). Our model has not been adjusted for the bank’s investment in a brokerage company, ASC, and its potential 2022 profit. While a PBT of VND 630 bn may be feasible considering capital of VND 8.7 tn, we do not reflect such in our model and will only do so if management provides clarity on their long-term vision for this investment. For the time being, we assume VND 8.7 tn for bank lending activities at an average asset yield of 8.2%.

We attended the MWG online analyst meeting, where management provided 2022 guidance of a 30% YoY increase in net income. As a result, we revise our 2022E revenue and net income to VND141.6tn (+15% YoY) and VND6.9tn (+40% YoY, -3.4% lower than our previous estimate). While we lower our SOTP-based 12-month target price to VND174,000 (from VND176,000), we are reiterating our BUY rating on the shares of MWG. The company did decide not to open BHX stores in 2022 and has instead opted to focus on improving the revenue of existing stores with the addition of SKUs and improving the quality of fresh food. Coupled with cost optimization measures, the grocery segment should break even sometime in late 2022. With respect to DMX and TGDD, a recovery in household income and market share gains should improve growth prospects. Downside risks: Possibility of store closures due to lockdown measures; the post-pandemic recovery in household income taking longer than expected.

We reiterate our Outperform rating on the shares of STB, following our 1Y TP increase from VND 35,200/share to VND 40,000/share - representing upside of 18.7%. Our target price upgrade reflects our belief that the legacy asset balance will be aggressively reduced, on top of the successful sales of STB shares pledged at VAMC and the Phong Phu Industrial Park during the year. STB remains on track to clearing legacy assets despite Covid-19 interruptions. We estimate net legacy assets to be roughly VND 26.6 tn at year-end 2021 (-31% YoY).  Core business activities remained in good shape with the individual customer base having gradually expanded over the last several years, bancassurance sales moved up to the Top 4 in the system in 4Q 2021, and payment & settlement income in the Top 3 amongst JSCBs (after TCB and MBB). Credit metrics of the current loan book were stable, with NPLs and a restructured loan ratio of 1.47% and 0.26% respectively. Downside risk: The delay in selling the remaining collateral is the STB’s biggest risk. Under our bear case where sales are not executed in 2022, our 1Y TP would decline to VND 33,000/share.

We are initiating coverage on the shares of pre-IPO (February 2022) Nova Consumer Group Joint Stock Company (NCG) with our 1Y target price for the shares of NCG is VND 53,200/share, implying a 22% upside relative to the IPO starting price. NCG is a leader in the animal health, feed, and farm market segment, having long-established customer relationships with the ability to create a full “3F” supply chain. It also has the advantage of being a part of the Nova Group ecosystem (including Novaland, Nova Consumer Services and six other members), which should allow potential future synergies and sharing resources. There is also the potential for strong growth in the FMCG business, from both organic growth and M&A perspective (on-going transactions:  Anco Family Food, a well-established beverage company, and a nutrition company). From 2022, NCG is widely anticipated to consolidate the consumer business, including Anco Family Food (sausage), milk, energy drink and coffee. Excluding one-off items in 2021, NCG should post strong core profit growth of 109% YoY in 2022. Through 2021-2026, however, we estimate that NCG will continue to post a net profit CAGR of 26.8%.

We are upgrading our rating on BMP from Market Perform to Outperform, with a higher 1-year target price of VND 67,000/share (previously VND 52,700/share). Our upgrade reflects an improved earnings outlook for 2022, which we revise up by 27% to VND 439 bn (+105% YoY) on the back a 15% recovery in sales volume and a 9% increase in ASP. The company’s business recovered in 4Q21 with net profit arriving at VND 114 bn, significantly recovering from the VND 26 bn loss in 3Q21 driven by higher selling price and a correction in input prices between December and January.

In 4Q21, VHC recorded its strongest quarterly sales and earnings over the past three years. Net sales and net profit reached VND 2.7 tn (+38.5% YoY) and VND 461 bn (+201% YoY), respectively, and well-exceeded consensus estimates. Pangasius exports continued to lead growth, especially in Dec’21 where sales surged 62% YoY off of a low base in Dec’20. Management is optimistic about another year of solid growth for 2022, a time when the market demand stabilizes as most economies fully reopen and reduce coronavirus-related restrictions. Meanwhile, shipping costs in 2022 will remain high, although we expect them to decline from the peak season in Q4’21. For 2022, we forecast net sales and net profit to reach VND 11.5 tn (+26.8% YoY) and VND 1.48 tn (+33.5% YoY), respectively. Our 1Y target price for VHC is VND 86,800/share (+18.3% upside), and we reiterate our OUTPERFORM rating.

4Q 2021 results exhibited a recovery, with rebounding credit growth and fee income of 7.6% (or +16.2% YTD) and +17.5% QoQ (or +84.1% YoY), respectively. As such, we are reiterating our Outperform rating on the shares of ACB, however, we finetune of our 1Y TP to VND 42,100 (from VND 41,750). Further, while Covid-impacted loans rose 27% QoQ to VND 17 tn (~ 4.7% of total loans), ACB has already fully provided for restructured loans in 2021 – leaving a wide berth for 2022 earnings growth.  For 2022, we expect ACB to achieve a VND 14.8 tn in pretax profit (+24% YoY), fueled by credit and deposit growth of 16% and 7%, respectively, NIM expansion of 14 bps, and a lower credit cost of 0.75%. Over the longer-term, ACB’s aggressive expansion in digitalization, new strategic client segments, and expansion to cities in northern Vietnam should also bear fruit.

After DGW’s reporting of record high earnings of VND 327 bn (+234% YoY) for 4Q21, we are upgrading the shares from Market Perform to OUTPERFORM as we increase our 1 YR target price VND 10,000/share (8.3%) to VND 130,000/share -representing 18% upside. We are also upgrading our net income forecast 4% over our previous estimate to VND 806 bn (+22% YOY). We expect earnings growth from the following: (i) the new product line (home appliances); (ii) laptop demand continues to increase, as students have to adapt to a hybrid interchangeable study arrangement; and (iii) a recovery in consumer discretionary spend. We believe that the market is already looking past the news that FPT Synnex became a distributor of Xiaomi products but would be aggressive buyers of the shares on any weakness surrounding this event.  DGW is currently traded at 2022 PE of 12.1x, which is attractive for a company benefiting from the digitalization trend and the recovery in household income, and lower compared with 2-year historical PE of 15x.

We reiterate our Buy rating on the shares of TCB, and our 1Y TP of VND 64,000/share which are supported by solid 2021 performance and a solid growth outlook for 2022. Boasting a 21% ROE for the year and CAR of 15%, TCB remains an attractive investment. The bank delivered VND 23.2 tn (+47% YoY) pre-tax profit in 2021, fueled by the strongest credit growth within the sector (+26.5% YTD), a significant boost in the NIM (+89 bps YoY, as CASA reached a new record high), and solid non-financial income, which includes a performance bonus for bancassurance for 4Q 2021. For 2022, we project that TCB will achieve a pre-tax profit of VND 27.9 tn (+20% YoY). Slower growth compared to 2021 could arise from a less vibrant corporate bond market, and a narrowed NIM of 19 bps. Downside risk: Slower-than-expected growth of the property market; and a higher-than-expected NPL formation rate. Upside surprise: Divestment of subsidiaries; and better-than-expected economic recovery.

HPG’s 4Q21 net profit was VND 7.4 tn, increasing 59% YoY but declining -28% QoQ due to the drop in hot rolled coil steel (HRC) prices from their 3Q21 high base and the increase in coking coal price. Revenue during the quarter was VND 45 tn (+73% YoY and 16% QoQ), of which 95.3% came from the steel segment as nearly all steel product lines recovered during the quarter. Cumulatively, the company’s net profit for 2021 arrived at VND 34.5 tn, achieving substantial growth of 156% YoY.In 2022, we expect HPG’s crude steel volume to grow 11%, while the net margin contracts from the 2021 peak, given the drop in steel prices and high coking coal input costs. Accordingly, 2022 revenue is estimated to increase 9.8% YoY to VND 164 tn, while net profit drops 10.3% to VND 31 tn.

We attended SAB’s earnings call on Feb 11th to update on its 4Q21 results and the reopening outlook for the company. In 4Q21, SAB’s results beat expectations with its top-line performance, with sales reaching VNB9tn (+14.5% YoY), the highest quarterly sales since the pandemic. However, net profit was in line with the consensus estimate of -8.7% YoY, due to squeezed GPM (-370 bps) and higher advertising and promotion expenses. SAB gained market share in 2021 thanks to its dominance in the mainstream segment. However, competition will become more aggressive once the economy fully reopens and the mass-premium demand quickly catches up. For 2022, we forecast net sales and net profit to reach VND 32 tn (+21.6% YoY) and VND 4.7 tn (+19.6% YoY), respectively. Our 1Y target price for the shares of SAB is lowered slightly from VNB 190,000 to VND 188,000 (+17.8% upside), and we reiterate our OUTPERFORM rating.