Company Report

Given the above estimates, EPS would likely attain VND 3,465 in 2020 after excluding the 12% bonus and welfare fund. IMP is being traded at a 2020 P/E of 16.2x at a market price of VND 56,100. The stock has increased by 16% YTD, partially thanks to good market sentiment for the pharma sector as well as IMP positive prospects. Based on a target P/E of 20x equivalent to the median of the comparable peers, we raise our target price for IMP in a one-year investment horizon to VND 69,300/share. We recommend an Outperform for the stock, complete with a 23.5% upside.

In 4Q19, total sales expanded by 16.6% YoY to VND 9.182 tn, but NPAT decreased by -13.2% YoY due to significantly higher G&A expenses. According to POW, provision expenses for account receivables (EPTC/EVN) incurred approx. VND 400 bn, which led in turn to higher G&A expenses. And 4Q19 NPAT would rise by 74% YoY if excluding this one-off provision expense. The stock is trading at an EV/EBITDA 2020 of 5.2x. At the moment, we call for a BUY recommendation, with a current target price for POW is VND 13,100/share, implying a 33% upside vs. the closing price as of 11 Feb 2020. The target EV/EBITDA is assumed at 6.5x vs. the domestic average of 8x and regional average of 9.5x, given low earnings prospect in 2020. 

We downgrade our rating for the sector to Negative from Neutral due to the short-term impact of Coronavirus outbreak combined with the strict implementation of Decree 100. In Q4 2019, SAB recorded net sales and net profit of VND 9.7 tn (-6.5% YoY) and VND 1.1 tn (+18.7% YoY). Cumulatively, the company recorded net sales and net profit of VND 37.9 tn (+5.4% YoY) and VND 5.4 tn (+22% YoY) in 2019, having achieved 97% and 114% of its annual sales and net profit target for the year. Given the current uncertain situation, management emphasized further on slashing costs to compensate for the expected decline in sales for the short term. We currently forecast net sales and net profit to reach VND 37.3 tn (-2% YoY) and VND 5.64 tn (+5.1% YoY) in 2020. We also lower our target price for the stock to VND214,400 (+10.5% upside) using the industry’s current average P/E levels of 27x applied on our 2020F EPS of VND 7,940 (from a target PER of 33x applied on our 2019-20F EPS). As such, we maintain our Market Perform rating. In the next 3 months, the stock price will still likely be affected by unfavorable Q1 result forecasts. 

Net profit well exceeded the 2019 target: HPG posted 2019 revenue of VND63.7tn (+14% YoY), and net profit of VND7.6tn. Net profit for the year dropped by 12%, but still exceeded the company guidance by 13%. HPG’s sales volume of construction steel in 2019 reached 2.77 mn tons, attaining an encouraging growth of 16.7% YoY. After remaining flat at nearly 24% for about 2 years, HPG’s market share increased to 26% in 2019. For 2020, we expect HPG’s revenue and net profit to increase by 15.9% YoY and 23.8% YoY to VND73.8tn and VND9.3tn, respectively, with construction steel and steel pipe volume assumptions of 3.7mn tons (+33% YoY) and 828k tons (+10% YoY), respectively. At the current price, HPG is trading at 2020E P/E and EV/EBITDA ratios of 7.2x and 5.4x, respectively. We maintain our BUY rating on the stock, with a 12-month target price of VND29,500/share (previously VND 30,900) based on an unchanged 2020E target P/E and EV/EBITDA metrics of 9x and 6.5x, respectively, on our new 2020E estimates. 

Phase 3 of the Di An water plant will kick off in February 2020, helping the plant’s designed capacity to double to 200,000 m3/ day. It is expected that the consumption at the Di An plant in 2020 will reach 190,000 m3/day (+ 31% YoY), and operate at a maximum capacity by 2021. TDM is a very efficient water company, as can be seen by comparative data. Gross margin’s TDM is 59% in 2019, which was higher than the average of water plants, recording 44%. TDM is trading at a 2020 P/E at 7.79x. We positively estimate that the clean water production industry - one of the public utilities industries with a stable growth demand of 5-7% p.a. to aid TDM in the 2020-2022 period thanks to the Di An water plant put into operation from February 2020, helping TDM revenue and profit increase by more than 30% in 2020. Therefore, we recommend BUY for TDM, with a 1-year target price of VND 34,700/share, equivalent to a P/E of 12x.

KDH announced its 2019 business results, wherein net sales achieved VND 2.8 trillion (-3.5% YoY) with delivery of large real estate project such as Jamila condominium and Verosa low-rise villa project,  net income attributable to shareholders rose by 13.2% YoY to VND 915 bn, achieved 101.7% of 2019 management’s target.  At the current price of VND 24,900/share, KDH is trading at 2020 P/E and P/B levels of 10.2x and 1.5x respectively. As such, we reiterate our BUY recommendation for KDH, with a 1Y target price of VND 31,700 (+27.3% upside). The key catalysts for our view are: (1) land bank (~ 515ha) located in HCMC where demand for living space is increasing in line with the development of the city, (2) low leverage (0.12x at the end of 2019), (3) KDH’s sustainable sales driven by Khang Dien brand and reputation in the market place.

Base on 2018 low base, performance running up to 2019 was very positive. Besides, the bank managed to restructure assets and funding sources as described above.  In the positive scenario, a turnaround in profit from 2022 is possible, primarily driven by (1) an increase in NIM and stronger credit growth thanks to enhanced Tier 1 capital, (2) strong fee-based income, and (3) well-managed operational costs, despite a huge provision to resolve VAMC bonds. At the current price of VND 27,750 per share, the stock is trading at a 2020E P/B of 1.25x and a P/E of 7.8x, lower than the sector average of 1.41x and 8.93x respectively.  We estimate CTG fair value to be VND 31,100 per share, based on a targeted P/B of 1.4x and 2020E BVPS of VND 22,224. As the potential upside is +12.1%, we place a OUTPERFORM rating on this stock. 

ACB’s 2019 prelim results and 2020 plans were exactly in line with our previous forecast of VND 7.5 tn and VND 8.7 tn respectively. In 2019, ACB was lagging peers in term of profit growth (+18% YoY) even though it still had good write-back income and a drop in provision expenses. However, we do see that the Bank started to pay more attention to expanding its individual customer base after years of slow growth, and we expect fruitful results to come in the medium term from this approach. We also appreciate ACB’s current solid customer base, and its ability to efficiently distribute insurance products. ACB is trading at P/B and P/E forward ratios of 1.1x and 5.4x, which is attractive given its ROE for 2020 of 23%. Hence, we maintain our BUY recommendation for ACB stock.

Vietinbank has recently held an analyst meeting, and below are the key takeaways:

Strong earnings result in 2019 with separate PBT of VND 11.5 tn, at +83% YoY. This was driven by improved NIM thanks to retail segment and strong growth in Non-NII at +28% YoY. Although credit growth was only +7.2% YoY, SME and individual lending, which yield higher than other loans, rose by +23% YoY. CIR reduced significantly from 48.6% in 2018 to 37% in 2019.

Improved asset quality: NPL ratio reduced to less than 1.2% from 1.59% in 2018 while the loan-loss-coverage ratio surged to 128% from 93% in 2018. The bank completed book provision for 54% of the gross VAMC bond.

For 2020, the bank targets a PBT of VND 12.6 tn at a 10% YoY rise. Growth of total assets, credit, and deposits are targeted at 6-7% YoY, 8-10% YoY, and 10-12% YoY, respectively, based on the scenario that its capital will be raised by stock dividend. CIR is expected at less than 40%, while the NPL ratio will be less than 2%.

We finetune our 2020FY revenue and net profit forecast from VND 28 tn and VND 453 bn to 27.7 tn (-1% YoY) and VND 485 bn (+34% YoY). We assume that sales volume would increase slightly by 2% in FY 2020, whereas the average price dropped by -2.5% compared to a decrease of -6.5% in HRC steel price. HSG shares are currently trading at P/E and EV/EBITDA 2019 levels of 7.5x and 4.5x respectively. We maintain our Outperform rating for the stock, with a 1-year target of VND 9,500/share based on a composite target PE and EV/EBITDA of 7x and 5x respectively. We think the share price in the coming quarter can be supported by the recovery in HSG earnings compared to the low base witnessed in the first quarters.

We arrive at a 1-year fair price for MSN of VND 59,000/share (from VND 86,000/share) via the SoTPs (Masan Consumer Holdings, VCM, MSR, MML, TCB and others), and apply a 15% conglomerate discount to take into account the short-term financial impact from consolidating VCM. As our target price implies only limited upside from the current market price, it falls to our Underweight rating range at the moment.  We will update our recommendation once there are material changes to the company business/structure/outlook in the coming time.

For the parent bank, as 2020 ROE is forecasted to reach 18%, we apply a target P/B of 1.20x and arrive at a book value of VND 50 tn, or VND 20,700/share. With FeCredit, we apply both P/B and the residual income method, resulting in a total book value of VND 30 tn or VND 34,000/share, which is equivalent to a forward P/B of 1.46x. Therefore, on a consolidated basis our 1Y target price for VPB stock is VND 25,200. As the burden of suffocating regulation elements that were considered adverse conditions to the bank's growth regulation were lifted, with the final version of the Circular much less restrictive than the Draft, FeCredit can breathe a sigh of relief. With this new tailwind behind the Bank, we recommend an OUTPERFORM rating for VPB stock. The forecast and valuation has not taken into account any possible impact related to the sale of FeCredit in the foreseeable future. 

At the current price, HPG is trading at 2019E and 2020E P/E forward ratios of 8.4x and 6.8x respectively, which is quite attractive in our view. We maintain our BUY rating for the stock, with a 1-year target price of VND 30,900/share (previously VND 31,950) based on unchanged 2020E target P/E and EV/EBITDA metrics of 9x and 6.5x respectively on our new 2020E estimates. Key risks: Lower ASP and higher input costs than our assumptions; further delay in the Dung Quat Integrated Steel complex.

At the current price of VND 27,400 per share, FRT is traded at a 2019-2020 P/E of 6.8x and 6.4x respectively, much lower than the regional average of 15.3x. With a target P/E ratio of 7.5x (down from 10x) on a 2020 diluted EPS of VND 4,234, we derive a 1-year target price at VND 31,800 per share, giving an upside of 16% from the current price. Our rating for the stock is MARKET PERFORM.