Company Report

We maintain a MARKET PERFORM rating for VEA, with the target price of VND 46,000/share. This equal to a total return of 16% from both capital gain of 3% from the current price as of March 2^nd, 2021 and 13% from expected dividend payment of VND 6,000/share in FY21. We expect VEA gross revenue and net profit in FY21 to reach VND 3.93 trillion (+7% YoY) and VND 6.23 trillion (+10% YoY) respectively. While VEA profit may recover sluggishly in FY21, we see an attractive dividend yield of 13% in FY21 from the current share price, and an average dividend yield of 9 - 11% in the years following thereafter.

VHC experienced a worse-than-expected Q4 2020 result, completing just 66% of the Company’s low annual net profit target. Pangasius ASP in December has now declined to its lowest level in 2020 versus consensus forecast of a Q3 recovery. Both pangasius and wellness exports face difficulties due to weak demand in major export markets, increasing transportation costs, and more aggressive seafood inspections at Chinese seaports. The gloomy outlook is expected to continue until Q2 2021. In addition, the final tariff-related POR16 results on anti-dumping pose potential risks to VHC after an extended US waiver, making VHC a stand-out exception vis a vis the anti-dumping tariff. As we expect the recovery to be fully reflected in VHC’s results by H2 2021, we downgrade the stock from Outperform to MARKET PERFORM, with a 1Y target price of VND 43,600 (+6.7% upside).

VCB reported strong 4Q20 earnings results, with TOI and PBT reaching VND 14.4 tn (+35% YoY) and VND 7.1 tn (at +28.5% YoY), respectively. For 2020, consolidated TOI and PBT came in at VND 49 tn (+7.1% YoY) and VND 23 tn (-0.3% YoY), respectively, and in line with our forecast. In 2020, VCB took advantage of competitive pricing to acquire more creditworthy customers, pushing it to become the largest lender for the year. Bancassurance sales are behaving according to plan. For the first time, VCB’s PPOP ranked first within the sector (outstripping BID), and even pulling ahead of the pack. VCB was also incredibly proactive with respect to credit provisioning during the year, clearing a path for above trend-line earnings growth post-Covid.  We increase our forecast for VCB 2021 PBT to VND 29.3 tn (+27.3% YoY). We also raise our 1Y target price on the shares of VCB to VND 108,600 (from VND 97,400) reflecting our assumption that the private placement pricing will come in at VND 100,000 per share, +11.1% higher than our initial forecast. With total upside potential of 11.4%, we maintain our OUTPERFORM rating on the stock.

We reiterate our Outperform rating on the shares of PVS, particularly given the oil price outlook. Brent crude reached the USD 65/bbl threshold in recent days due OPEC+ deep supply cut, a sudden decrease in shale oil production in the US (due to an unlikely winter storm in Texas), and gradual demand recovery on the back of vaccine availability. Accordingly, we lift our oil price assumption for Brent in 2021 from USD 52/bbl to USD 60/bbl (+40% YoY).  As a result, we are increasing our target price on the shares of PVS from VND 20,800/share to VND VND 24,500/share, implying 5% upside or 10% inclusive of the dividend yield from current market price. Our 2021 earnings forecast is VND 704 bn (+8.6% YoY), which is 12.6% higher than our previous forecast. M&C revenue from the confirmed backlog (-42% YoY) and improved earnings from JVs (additional profit from FSO Sao Vang, and no more expenses for MV12) should support the bottom line. Expectations of a strong oil price recovery in 2021 (+40% YoY), should also enhance revenue and margin of other segments. Please note that we only account for remaining contract value from ongoing projects such as LNG Thi Vai and Dai Nguyet WHP in our 2021 estimates, intimating that there could be potential upside to our 2021 forecast if PVS can win the new EPC contracts that are being bid for.

During 4Q 2020, BID’s NIM expanded by 33 bps (QoQ), pushing NII and TOI to increase 10.3% and 11.7% YoY, respectively. However, 4Q 2020 PBT plunged to VND 2.2 tn (-42% YoY) driven by a +93% surge in credit provisions. PBT in 2020 was only VND 9.21 tn (-14.1% YoY), and ROE declined to a 15-year low of 9.45%. The increase in provisioning and bad debt write-offs had quite a positive impact on BID’s asset quality, as the NPL (including VAMC bonds) and LLC ratios were each at their strong levels over the past six years. For 2021, we have increased our pretax profit forecast by 2.2% to VND 13.5 tn (+46.4% YoY). Our 2021 earnings forecast has not changed significantly, the cash dividend payment of 8% was higher than our expectation of 5%. This higher dividend negatively impacts our 2021 BVPS estimate. As a result, we lower our 1-year target price by 1.5% to VND 46,430/share, based on an unchanged P/B target multiple of 2.2x applied to our 2021F BVPS. 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. Our new price target on the shares of BID implies upside of +5.5%, and we recommend a MARKET PERFORM rating.

Stronger provisioning buffer to allow robust earnings growth in 2021. Despite a +15% YoY increase in TOI during 4Q 2020, MBB’s pretax profit grew +5.6% YoY - reaching VND 2.6 tn during the period. This comes as the bank had aggressively provided against problem loans. For 2020, the Bank achieved a VND 10.7 tn PBT (+6.5% YoY). At the end of 2020, NPLs fell to 1.09%, lowest level seen in 13 years whilst the LLCR stood at an all-time high of 134%. Restructured loans also dropped from VND 7 tn (2.7% of total loans) at the end of June 2020 to VND 2.5 tn (0.8% of total loans) at the end of Dec 2020. Given the Bank’s efforts to resolve problem assets in 4Q 2020, we’d anticipate loss provisioning to be lighter in the coming year with the bank expected to achieve VND 13.6 tn in pretax profit (+27.5% YoY) in 2021. With consistently improved fundamentals in recent quarters and a 2021 ROE of 21%, we believe that MBB deserves a higher target P/B ratio of 1.6x (from the current 1.4x). Hence, we increase our target price on the shares of MBB by 14.7% to VND 31,900/share (+19% upside), and reiterate our Buy recommendation.

PLX is trading at a 2021 and 2022 P/E forwards of 19.4x and 16.0x respectively. We increase our 1-year target PE from 19x to 23x given the strong market sentiment on the back of low interest rate environment and the positive growth in the next 2 years. Accordingly, we maintain our OUTPERFORM rating for the stock with 1-year target price of VND 67,000/share. Besides the recovery in the company’s business results, the sales of treasury shares, the re-inclusion of PLX in the HOSE margin lending eligibility list (post-audit release), and the disposal of various investment stakes should act as supportive catalysts for the shares in the short term of 3-6 months.

TCB reported solid 4Q20 earnings results with TOI and PBT attaining VND 7.8 tn (+17.1% YoY) and VND 5.1 tn (at +27.9% YoY), respectively. For 2020, consolidated TOI and PBT achieved VND 27.0 tn (+28.4% YoY) and VND 15.8 tn (23.1% YoY), respectively. Robust revenues enable TCB to be aggressive with its provisioning effort to the point that credit quality is the sector’s best with highly robust reserve cover. The lower for longer interest rate environment has boost TCB’s fixed income business. At the same time, the digitalization strategy enabled TCB to improve its CASA ratio and transform into more of a transaction banking model. We maintain our 2021 PBT forecast of VND 18.5 tn (+17.1% YoY), although we raise our 1Y target price to VND 43,000 (from VND 38,200) as we raise our target P/B ratio from 1.5x to 1.7x. We maintain our OUTPERFORM rating on the shares of TCB.

We are reiterating our BUY rating for IMP with the target price of VND 73,000/share, an upside of 30% from current price in Feb 5^th, 2021. We see strong improvement in IMP 4Q20 earnings, combined with a potential for substantial increase in revenue and profit in 2021 due to (1) low base of revenue in FY20, which were affected by the pandemic situation and (2) profitability improvement in FY21 as IMP upgrade its bidding drugs onto higher value categories. We expect IMP total revenue and core NPAT (excluding R&D) for FY21 to reach VND 1.9 trillion (+35.4% YoY) and VND 296 billion (+40.9% YoY), respectively.

We reiterate our Outperform rating on the shares of SAB and trim our 12-month target price to VND214,000/share (implied 18% upside potential). At a 2021E P/E of 22.8x, SAB now trades at a lower valuation to its 2016-20 average of above 30x. In 2020, SAB delivered an encouraging profit despite the challenges of both Decree 100 and the pandemic. An impressive expansion in the gross margin was a nice surprise, especially considering the 26% decline in sales. We believe that SAB is prepared for a comeback in 2021 (provided that COVID-19 is controlled by 1H21). For 2021, we forecast the company to post 21.8% revenue growth and 14.9% NPAT growth. While revenue would still be lower compared to pre-Covid levels, earnings are likely to surpass that of 2019. 

We continue to rate the shares of VNM as Outperform given its attractive valuation with a slightly higher 12-month TP of VND 131,000. VNM is trading at a 2021 P/E of 20.4x, which is more than a 20% discount to regional peers. VNM has navigated the pandemic well, while strengthening its competitive edge for future growth. We expect the company to post 7.1%/7.4% revenue/NPAT YoY growth in 2021, driven by a recovery in domestic sales of the parent company, as well as growth momentum via GTN and MCM. 

We recently joined an analyst meeting with the management of DGW. During the meeting, management reviewed 4Q20 financial results and discussed its 2021 earnings growth outlook. Following our meeting, we are increasing our 2021 net sales forecast to VND 15.6 tn (+24% YoY, 27% higher our previous estimates) and net income at VND 313 bn (+24% YoY, 23% higher than our previous estimates). At VND 79,400 per share, DGW trades at 2021 P/E level of 11.1x. We do, however, believe that the shares of DGW deserve an upward re-rating due to: (1) increased brand awareness after becoming an authorized Apple distributor; and (2) a beneficiary of the long term upgrade to 5G, as 2G becomes obsolete. As such, we raise our target P/E for DGW from 8.4x to 11x, and increase our target price to VND 80,800 - implying an ROI of 24% (including the dividend yield of 1.4%). We call for a MARKET PERFORMANCE rating.