Company Report

We recently attended the DGC AGM, where a very conservative earnings growth guidance of only 16% YoY for 2021 was approved. Guidance does not take into account new projects such as Mine Site 25 (commercial operation expected in 2Q21), and electronic-grade phosphoric acid (commercial operations expected in August 2021). Considering that, we estimate 2021 earnings will increase 40% YoY. For 2022, we expect the Nghi Son project to begin operation, generating earnings of approx VND 140 bn (assuming 70% utilization rate). With the current undersupply of caustic soda in Vietnam, Nghi Son will be a long term earnings driver for DGC. At VND 68,800 per share, DGC trades at a 2021 P/E of 8.6x. With an expected earnings growth of 40% YoY in 2021 and double digit EPS growth expected in 2022 and 2023, we believe that DGC deserves a P/E of 10x. As a result, we derive a 1-year target price at VND 80,000 per share, equivalent to an ROI of 16% - including a 4% dividend yield.  Our recommendation for the stock is Outperform.

ACV recorded 65 mn passengers in their 23 airports, -43% YoY in 2020, with international declining -85% YoY from border restrictions. Pretax profit bottomed out at VND 2.1 tn, -79% YoY. 2021F outlook rests on vaccination progress and vaccine passport application, which are under consideration by the Government at the moment. CAAV expects to resume regular international flights from 4Q2021, which is in line with our expectation. ACV is trading at a forward EV/EBITDA of 15.3x and 12.9x at 2021F and 2022F, respectively. Reiterate OUTPERFORM for the stock, with 2022F target price of VND 84,400/share (14% upside). Any short-term outbreak can present opportunity to accumulate the shares.

DXS is set to IPO this April, and its listing on the HOSE is expected to occur in May 2021. The charter capital of DXS prior to the IPO is VND 3.2 tn. A total of 71.7 mn shares (equivalent to a 20% stake post-IPO), which comprises of 35.8 mn new shares from the Company and 35.8 mn existing shares from current shareholders, will be on offer at a price of VND 32,000/share. 

In the coming time, DXS plans to further strengthen its leading position in the primary real estate agency industry, by further expanding its capabilities to provide end-to-end real estate brokerage services. As such, the Company will continue to focus on primary brokerage, while further expanding to the secondary brokerage by utilizing its “online to offline” technology platform. For the 2021 – 2023 period, the Company ambitiously forecasts its revenue and NPATMI to grow at a CAGR of 53% and 45%, respectively. Such an impressive feat of growth is predominantly driven by its growing the primary brokerage business, with an increasing number of units to be distributed during the period. According to the firm’s management, approximately 70% of units have been committed by developers, and they are quite confident to achieve the plan. Provided that the real estate market continues its positive momentum, coupled with the increase in income from full-service brokerage, secondary brokerage and non-cyclical fee-based services to total income, we believe that DXS could achieve its target in 2021. 

Vigorous income growth helped SHB whittle down its bad debt load in 2020. Improvement of both NIM and non-interest income helped TOI to soar 30% YoY to VND 12.2 tn, but PBT grew just 8% YoY to VND 3.3 tn – along the  Bank’s 2020 plan. Provision expenses increased sharply to VND 4.6 tn (+92.5% YoY), while the NPL ratio (including VAMC bonds and legacy debt) dropped from 4.02% (2019) to 3.35% (2020). 2021 earnings projected to surge +70% YoY, reaching VND 5.6 tn. Growth is expected to come from 15% credit growth, NIM expansion of +34 bps, CIR reduction to 34.7%, and a provision reduction of -14% YoY. We raise our 1-year target price to VND 20,100/ share (from VND 18,500/ share), tracking higher EPS (+68% YoY) in 2021 due to the flourishing of profit. With implied upside of 7%, we maintain our MARKET PERFORM rating on the shares of SHB.

We reiterate our OUTPERFORM rating on the shares of GMD, and increase our target price to VND 38,500/share (from VND 30,800/share) – implying 11% upside. Our positive stance on the shares is supported by an improving outlook on Company performance in 2021 and beyond led by Gemalink port trends, hence we revised up our 2021 earnings forecast for GMD by 22% from our last report. From a broader perspective, we observe that a strong recovery in Vietnamese trade is well underway, which support GMD’s seaport and logistic businesses. Being one of the few logistic providers in Vietnam that possesses a fully integrated logistics network nationwide, GMD should benefit from a rapidly growing Vietnamese economy that is increasingly integrating into global manufacturing and supply chain. 

VTP is trading at a 2021F and 2022F P/E of 20x and 16x, respectively, which are low compared to the regional average of 25x. We think Vietnam’s delivery market remains attractive over the long-term, as the 5-year growth rate is expected to reach between 20%-25% YoY according to a Google-Temasek report. As such, we maintain our target P/E of 20x for VTP and arrive at a 1Y target price of 94,500/share (3% upside) - down 25% from our previous TP of VND 126K/share. We cut our rating on the shares of VTP to MARKET PERFORM from OUTPERFORM, as we expect 1H 2021 growth to decelerate off of a high base (VTP reduced its pricing scheme from 2H 2020). The stock might underperform the market in the short-term (3-6 months). We see near-term volatility in the shares as an opportunity for accumulation, however, as the stock remains as our favorite long-term play in Vietnam e-commerce fast growing outlook, and we expect double-digit growth might come back from 2022 forward.

Dabaco held its analyst meeting recently to update about its impressive 2020 results, as well as providing details for the business plan in 2021. Overall, we had some positive takeaways from the meeting. Fruitful results in 2020 represented the Group’s long-term strategy to invest in its core business and expand the farming capacity and sow herd, even during difficult years in 2016-2018. DBC plans to expand aggressively in terms of sales volume in 2021 by raising the utilization rate of its current factory, as well as contract farming. A high and stable hog price is expected in 2021, which will still support its core business tremendously. In the period 2022-2023, new breeding and farming projects are in the pipeline, which will help expand the scale even further. With its currently strong financial position, the Group is at an advantage to exploit its HORECA and real estate segments to earn extraordinary profits in 2021, very likely to exceed management’s prudent net profit plan for the year. In 2021, we estimate net revenue and net profit to reach VND 11.9 tn (+18.9% YoY) and VND 980 bn (-30% YoY) respectively. At the current price of VND 60,900/share, DBC is being traded at 2021F P/E of 6.9x and EV/EBITDA of 5.1x, which is lower than peers’ average P/E of 10x and EV/EBITDA of 6x. We applied an unchanged target P/E of 8x to 2021F EPS of VND 8,797, to arrive at a 1Y-target price of VND 70,400/share (15.6% upside). As such, our rating for the stock is OUTPERFORM. 

We raise our PBT forecast to VND 3.5 tn (+39.2% YoY), driven by credit growth of 22.9% YoY, NIM improvement of +10 bps YoY to 3.47%, and 15.3% YoY growth in non-interest income. The bank has sold all of its 56 mn MBB shares, recording VND 400 bn of relevant gain in 1Q2021. We assume that the bank will book ~VND 600 bn of upfront fees in 2021, CIR to decrease further to 49.5%, and provisions to increase +5.5% at the bank while the NPL ratio declines to 1.7% and LLC increases to 93%. At VND 21,900 per share, MSB is trading at a 2021F P/E and P/B of 9.2x and 1.3x, respectively. Given that profitability and asset quality are both improving, we increase our targeted P/B ratio from 1.1x to 1.4x, which brings our 1Y target price to VND 23,500 per share (from VND 19,714 per share after dilution). With implied upside of just 7.3%, we lower our recommendation on the shares of MSB from Outperform to Market Perform. 

For 2021, we adjust our input cost assumptions with raw milk and sugar prices to advance 12% and 25% YoY, respectively (vs. +4% and +5% previously). Accordingly, we calculate that VNM’s NPAT will arrive at VND11.5tn (+2.5% YoY), which is lower than our previous forecast of VND12.1tn. Between 2020-24, we forecast net profit CAGR to also be lower, at 5% vs. our previous estimate of 6.9%. As such, our 12-month target price for VNM, based on P/E and DCF methods, is reduced by 7.6% to VND121,000/share (from VND131,000/share). We do, however, maintain our Outperform rating on the shares of VNM given the 18% potential upside. 

We reiterate Outperform rating on the shares of QNS with a new target price of VND 50,600/share (from VND 41,800/share) or 19% upside from the current market price.  We are of the opinion that QNS financial results will turn around in 2021, led by the sugar business. Taking a broader view, we see that the implementation of the anti-dumping tax on Thai sugar will help protect domestic sugar from cheap imported sugar, as well as smuggled sugar and boost domestic sugar industry in the long-term for the food security purpose. Should the anti-dumping tax be officially imposed (now it is just temporarily in place, for a 120 day period), this would be a gamechanger for the Vietnamese sugar industry, and QNS as the second largest one will be amongst the top beneficiaries. Strong sugar price recovery and volume growth should help spur sugar and biomass performance this year, from a loss (-35 bn) in 2020 to a PBT of c.300 bn VND in 2021. Overall, we look for 24% NPAT growth for the company in 2021. 

BID’s AGM was held on 12 March 2021, putting forward an optimistic PBT target for 2021 of VND13tn (+44% YoY). It also proposed a stock dividend equivalent to 12.2% for 2019 and 2020. We estimate BID’s 2021 PBT at VND13.5tn (+49.4% YoY), based on respective credit and deposit growth of 10% and 12% YoY, respectively, as well as a well-contained NPL ratio of 1.6%. Although earnings may surge in 2021, the possibility of growth beyond 2021 depends on the ability to raise capital and it will be the key upside catalyst for the stock. We reiterate our 12-month target price of VND46,430/share, which represents 7% upside. We maintain our Market Perform rating on BID. 

At VND 130,500 per share, MWG trades at a 2021F PE of 11.6x (compared to a three-year historical P/E of 13.3x). We lower our 2021 revenue forecast -10% to VND 126 tn (+16% YoY) and net income -3% to VND 5.086 tn (+30% YoY) - taking the sales disruption during the upgrade month into account, and the possibility of revenue dilution associated with store upgrades in various provinces. Given 2021 earnings growth, abundant market liquidity, and MWG’s ability to gain market share during tough times, we raise our target P/E for the ICT segment from 9x to 10x in our SOTP valuation. As a result, we raise our target price to VND 165,000 per share (from VND 147,000). With a 26% upside potential, we reiterate our BUY recommendation on the shares of MWG.

Our revenue estimates for 2021 and 2022 are VND 9.3 tn (+11.7% YoY) and VND 10.4 tn (+12% YoY), respectively, while we anticipate NPATMI of VND 2.64 tn (+11% YoY) and VND 3.1 tn (+17.8% YoY) over the same time periods. Improvement in the current leasing portfolio along with new mall openings could be key growth drivers. Assuming a slower expansion plan between the 2022-2026 period, we lower our 1Y target price on the shares to VND 37,300/share. At the current share price of VND 34,100, VRE is trading at an EV/EBITDA of 17.1x, which is relatively lower than the regional peer average of 21.5x. With upside of 9% compared with the current share price, we reiterate our OUTPERFORM rating for the stock at present. 

2020 earnings was -1.8% below our estimates, due to higher-than-expected provision costs. Despite a 21% TOI growth, PBT increased   just +15.9% YoY to  VND 5.8 tn, as credit costs rose from 0.96% in 2019 to 1.1% in 2020. After an aggressive write-off of VND 1.4 tn (+63% YoY), asset quality ratios were in pretty good shape. NPLs declined to 1.32% (from 1.36% in 2019), and LLCR  improved to 82% (from 81% in 2019). The limelight for this year’s result is the increase in NFI to TOI to 7% (vs. 5% in 2019), as  bancassurance sales began accelerating in 4Q 2020.

HDB is amongst the very few banks which still has available room for foreign investors, and a potential exclusive bancassurance deal. We think the Bank’s diversification of income streams in 2020 is the way to go, which opens greater possibilities for strong TOI growth in 2021. A good track record of bancassurance sales may also prove its sales capability, as well as a bargaining power in negotiating an exclusive bancassurance contract in the future. Our 1Y target price for the shares of HDB is VND 29,500/share, representing an upside of 13.7% - allowing us to upgrade the shares to an Outperform rating.