Company Report

On a consolidated basis, our revised 1-year target price for the VPB stock is VND 25,020. As our target price offers +9.7% upside potential from current levels, we therefore reiterate our Market Perform rating. The key upside surprise to our call outside our immediate expectations would be an earlier-than-expected containment of Covid-19 (before the end of Q2 both within Vietnam and at least regionally), and a better recovery rate in relation to restructured loans. The key downside risk to our call would be a prolonged pandemic situation, which would trend down our estimates potentially lower than the aforementioned forecasts.

We estimate VNM to post VND61.55tn in revenue (+9.3% YoY) and net profit of VND11.36tn (+7.6% YoY). Factoring in the forecast revisions, we raise our 1-yr target price for VNM to VND 116,000/share (from VND 108,000/share), based on a bended 2020F target P/E of 21x (25% discount to regional peers) and DCF methodology (with an increased WACC on higher equity risk premium for Vietnam). As our target price represents 14% upside potential from current market price, we upgrade VNM from Market Perform to Outperform. Downside risks to our call: higher-than-expected raw material prices and lower-than-expected sales growth.

We maintain our BUY rating on the stock, with a 12-month target price of VND 29,300/share (previously VND 29,500), based on unchanged P/E and EV/EBITDA targets of 9x and 6.5x respectively. We believe that deteriorating market conditions in the short term can be an opportunity for HPG to gain more market share, thereby attaining higher growth in the long term when the market recovers. In addition, the expected boost for public investment in the latter half of the year can also help to support steel demand. Key risks: Lower ASP and higher input costs than our assumptions; further delay in the Dung Quat Integrated Steel Complex.

For 2020, we expect that ACB would report VND 7.921 tn in pretax profit, up by +5.4% YoY, with the main changes in assumptions being slower credit growth (10%), a NIM contraction by 18 bps, stagnant fee growth, modest write-back income, and soaring provision expenses (+231% YoY). This estimate has not taken into account the possible bancassurance upfront fee, which might be realized in 2H2020. For 2021 under our base case, we expect a strong bounce back in the bottom line for ACB to 19.5% YoY. Our target price for ACB is VND 25,300. Given an upside potential of 19% from the current market price, our rating for the stock is OUTPERFORM. ACB is currently our top call in the banking sector given the bank’s prudent lending practice, featuring a strong customer base of high quality. These features would help ACB performance to be more resilient during an economic downturn than that of other banks.

MBB is currently traded at forward P/B of 0.83x. Even if we adjust downward the total equity of MBB by the whole loan book of MBShinsei, the current market price would be equivalent to a P/B ratio of 1.01x, which is still attractive given an ROE of 17.8% for 2020 and 18.7% for 2021. As the market price has tumbled 24% YTD while the projected PBT growth in 2020 and 2021 are 7% and 22% respectively, we believe that most of the risk has been priced in under our base case. Hence, we recommend BUY for MBB with a target price of VND 21,000.

We remain positive in our view toward NLG, with a revised target price of VND 33,400/ share by RNAV method (+49% upside), and with a FY2020 P/E of 6.0x.  This target price is 13% lower than the target price in our previous report dated 25 Feb 2020, as we have updated our estimates, and apply a discount rate to reflect uncertainty of cashflow in the future.

On our higher earnings base and target P/E (from 14.5x to 16x) and an EV/EBITDA multiple of 9x (equivalent to regional peers) using 2020E as our valuation basis, we boost our 12-month target price of GAS to VND71,000/share (from VND64,500/share). As our target price offers 3.5% upside potential from current levels, we therefore we reiterate our Market Perform rating. The key upside risks to our call would be higher fuel-oil prices and unpredictable one-off profit events that would serve to boost GAS’s earnings. The key downside risk to our call would be lower dry gas volume, lower fuel-oil prices and unpredictable one-off expenses.

We expect revenue in 2020 to hold down the fort and grow by 2.1% to 4.485 trillion VND (+2.3% YoY), whereas PBT is expected to attain strong growth of 23.5% YoY, reaching 653 billion VND. At the current price, BMP is trading at a 2020 PE forward of 7x, which is quite attractive for industry leaders like BMP that feature a 5-year historical average of 9.5x. Besides strong earnings growth in 2020, the expected stable annual cash dividend of 40% on par (equivalent to a dividend yield of 8.9%) can act as a supportive catalyst for the stock. In addition, with a healthy balance sheet with net cash of VND 1.1 tn (or VND 13,430 per share), the company looks likely to have a strong capacity to withstand market headwinds, well positioned regardless of whether or not the outbreak rears its head in Vietnam again in the future.

For 2020, HT1 set its sales volume target of cement to flatline at 7.28mn tons. Revenue and PBT are targeted more conservatively at VND8.839tn (-2.9% YoY) and 830bn (-10.6% YoY). At the current price, HT1 is trading at a 2020 PE and EV/EBITDA of 7.1x and 4.0x respectively. We maintain our OUTPERFORM rating for the stock, with a 1-year target price of VND15,600/share based on a target PE and EV/EBITDA of 8x and 5x respectively. In addition to a minor growth outlook, a stable cash flow, a healthy balance sheet, and a dividend yield of 9% can be a supportive catalysts for the stock. 

At the current market price of VND 15,500/share, PLC is traded at 2020/2021 P/E of 10.3x and 6.2x based on our estimate. We arrive at 1-yr target price for PLC at VND 18,600/share using H2 2020 - H1 2021 EPS and applying an 8x P/E multiple (equivalent to PLC average P/E in 2014-2019) and the DCF approach. It should be noted that as PLC has almost completed its investment in future production output capacity for both lubricants and the asphalt businesses, we expect no high capex in the coming years. Traditionally, the pay- out ratio is high (above 80%). 2019 dividend yield is at 8.8% based on the current market price (ex-right date is normally in June). As our target price represents 20% upside from current market price, we recommend to Overweight the stock at current market price.

STB released its earnings results for 1Q 2020, with a +9.6% YoY growth in total operating income and a -6.9% YoY growth in pretax profit. Although much lower than 1Q 2019 at 5.6% YTD, credit growth in 1Q 2020 of STB was still decent (+3.5% YTD), and higher than the equivalent of the whole banking system (+1.3% YTD). However, slow growth in non-interest income and a VND 303 bn provisioning for receivables relating to legacy loans washed out all the growth in the bottom line. We reiterate our view that it is still not the right time to purchase STB stock. For legacy debt with a remaining balance of VND 55.7 tn, we believe that STB still needs at least 2 years to clear them, assuming favorable market conditions for this time horizon. For STB, the risk of increasing NPLs is apparent via the impact from Covid-19. Negative impacts on the operation of STB could also slow down the process of clearing legacy debt, as less resources to do so is currently available. The Bank set a pretax profit growth of +20% YoY for 2020, but might revise this down after 1H 2020 to reflect the impact of the pandemic. STB is trading at TTM P/B and P/E metrics of 0.57x and 6.87x.

As a result of this agreement, we revise our respective 2020E net sales and pretax profit to VND7,922bn (+3.1% YoY; from VND9,643bn) and VND870bn (+86% YoY, from VND578bn). Since September 2019, DPM’s share price has rallied by 11% despite weak market sentiment. At the current price of VND14,850/share, DPM trades at a 2020E PER of 10x, compared with its 2018-19 PER range of 15.1-16.2x. Despite unfavorable weather conditions this year, DPM will likely post a strong bottom line growth thanks to (1) a higher utilization rate of all plants compared to the low base last year, (2) less intense competition and (3) shallow gas input costs. In addition, DPM’s high cash position (net cash per share of VND7,081 as of 4Q19) and a decent dividend yield (10% on par value; effectively a 7% dividend yield) may attract investors during the weak market sentiment caused by COVID-19. Nevertheless, due to the adverse impact from the drought in the Mekong Delta, we lower our target PER, PBR, and EV/EBITDA multiples to 8x, 0.7x and 3.5x (from 9x, 0.8x, and 4.5x), respectively. With an equal weighting assigned to each valuation method and using our revised earnings for 2020E (from average 2019-20E), we derive our new 12-month TP of VND16,900/share (from VND15,500), which implies 14% upside potential. We thus maintain our OUTPERFORM rating. 

The 2020 AGM has approved the target of sales and pretax earnings of VND 8.3 tn (-2.6% YoY) and VND 765 bn (-50% YoY). 1Q20 reported sales amounted to VND 2.2 tn (30.7% YoY). And the reported NPAT recorded VND 135 bn (-44.3% YoY). If excluding the claim of FX loss in 1Q19, NPAT only descended by -11.8% YoY. With the closing price as of 17-Apr-2020, PPC is trading at a FY20 EV/EBITDA of 5.3x. Given the current price, PPC offers a FY20 dividend yield of 8.4% (based on a FY20 dividend of 20% par) vs. the regional average of 5.9%. At the end of FY20, net cash per share is estimated at VND 3,700/share, still quite affordable for the FY20 dividend payment thanks to being debt-free and possessing a stable cashflow. In the long term, the dividend payment might be lower because of saving up cash for capex in Pha Lai 3. We call for a MARKET PERFORM recommendation for PPC, with a 1Y target price of VND27,600/share, implying an upside of 16% vs. the closing price as of 17-Apr-2020.   

The company held its online AGM on 08-Apr-2020 via Cisco’s Webex platform. The 2020 approved guidance for sales and PBT were VND 32.45 tn (+17.1% YoY) & VND 5.51 tn (+18.1% YoY) respectively. However, the FY20 guidance targets had been set before the black swan outbreak of Covid-19 and it is necessary to have them re-adjusted by the BOD. Within our base case, we estimate VND 29.9 tn for total net sales (+8% YoY) and VND 5.1 tn (+8.7% YoY) for pretax earnings, implying a FY20 EPS growth of 8.2% YoY. Growth from outsourcing, for sales and PBT, is forecasted to ease back to a 14.3% YoY expansion rate in comparison with the previous projection of 25%-28% YoY. The escalated tension due to the pandemic in FPT’s overseas markets casts a shadow upon our expectation over the global IT spending budget in the short term - especially in Japan. In the long term though, we still believe that corporations overall would still spend on IT services and digitalization to improve their operating efficiency. For our base case, FY20 EPS growth is estimated to be 8.2%. According to the closing price as of April 8th, FPT traded at a FY20 P/E of 9.4x in comparison to a regional average of 20x. We reiterate our BUY recommendation, with a new target price of VND 64,000, offering a 37% upside potential. Our new target price was revised downwards by 10% vs. the previous target of VND 71,300 to factor in the impact of Covid-19.

PHR 2019 parent company pretax profit came to VND 534 bn (-14% YoY), fulfilling only 43% of the 2019 target. This came from the dual factors of: (1) a lack of divestment from NTC (PHR owns 32.85% stake in NTC) and (2) land compensation income relating to the NTU3 and VSIP3 projects not yet recognized. If we were to exclude those 2 sources of estimated income for the period (VND 350 bn for the divestment from NTC and VND 651 bn for land compensation), the 2019 pretax profit plan would have otherwise been VND 245 bn. Factoring in the enterprise as a whole, with a pretax profit for the parent company of VND 534 bn (-14% YoY), PHR regardless of these dual factors had well accomplished its 2019 plan, driven by the natural rubber business, financial income, and wood disposal.