Company Report

At the current price, HSG is trading at a 2020 P/E forward of 7.5x. Our rating for the stock is Outperform, with a 1-year target of VND 9,000/share based on a target PE and EV/EBITDA of 8x and 5x respectively. We think the company’s net profit in the coming quarter would show significant recovery compared to the low base in 1H of FY 2019. However, difficulties encountered in the company’s various export markets, along with the company’s thin net margin, could still mean a volatile ride along the way to growth and returns.

In 2019, we estimate net sales and net profit to reach VND 4.44 tn (+12.3% YoY) and VND 437 bn (+18.1% YoY), with a GPM of 20.6%. In 2020, we estimate net sales and net profit to reach VND 5 tn (+13% YoY) and VND 467 bn (+6.8% YoY), with a GPM of 20.5% assuming a lower gross profit margin recorded for CMT orders due to competitiveness. Revenue growth is assumed to be higher than net profit growth in 2020 due to higher expected SG&A expenses, such as marketing costs involved to promote new bedding collections. At the current price of VND 54,300/share, MSH is trading at 2019 and 2020 P/E levels of 6.3x and 5.9x respectively, which is rather attractive. Our 1Y target price for the stock is VND 64,000 (+17.9% upside) based on the current industry average PE of 7x, equivalent to an OUTPERFORM rating.

This leaves us at no other option but using the P/B method. We opt to choose a target P/B ratio of 3.3x, which is the average P/B of BVH over the last 5 years. The standard deviation of this is 0.66x, which is much lower compared to the standard deviation of P/B amongst peer companies. With a post-money BVPS in 2020 of VND 25,795, our 1Y target price for BVH stock is VND 85,130 (+19.2% upside from the current market price). We therefore issue an OUTPERFORM rating for the stock.

At the current price of VND109,000 per share, MWG shares are trading at 2019E and 2020E P/E ratios of 12.8x and 10.0x, respectively. We continue to use the SOTP valuation method, with a target P/E of 14x for the ICT segment (down from 16x due to the shrinking of mobile phone industry growth) and a target P/S of 0.53x (unchanged) on 2020E financials (rolled over from average 2019-20E). As such, we derive our new 12-month target price of VND192,800 (from VND160,300), implying 77% upside potential from the current price. We maintain our BUY rating on the stock.

At the current market price of VND 30,500/share, QNS is trading at 2019 P/E and 2020 ratios of 7.3x and 7.3x, which is around a 50% discount compared to overall market valuations. We consider these price levels to be relatively cheap, despite the fact that we agree that the stock should be traded at some discount as it is traded on Upcom, and because of its large exposure of a commodity business like sugar. Our 1-year target price for QNS arrives at VND 37,000/share (from VND 35,300/share), based on a target P/E of 6x for sugar & biomass, and 10x for soymilk and other consumer businesses (confectionery, beer and beverages). With a 21% upside, we continue our Outperform rating for the stock at the moment.

At the current price of VND 23,350/share, TCB is trading respectively at 2019E and 2020E P/B ratios of 1.33x and 1.13x, lower than the sector average of 1.56x and 1.28x respectively. We like the bank’s business model, which has focused on retail products for affluent clients, and possesses core competencies in banking for the housing, FMCG, and the auto industries, etc. TCB is also the dominant player in corporate bonds, with more than 80% of bond distribution market shares residing on the HOSE.We maintain the targeted P/B ratio for the stock at 1.3x and the 1Y targeted price of VND 26,900 per share. This is equivalent to an upside of +15.2% from the current price. Therefore, we maintain our OUTPERFORM rating on TCB.

At the current market price, GMD is trading at P/E 2019 and 2020 of 13.3x and 12.4x respectively, and a P/B 2019 and 2020 of 1.22x and 1.2x. We think this level of earnings multiple is fair, but we feel that the book value multiple could be higher, as GMD has some non-operating assets like Gemalink port. We apply a combination of a 2020 P/E target of 13x (reduced from 15x for lower earnings growth) and 2020 P/B target of 1.5x (unchanged) to reach a 2020 target price of VND 28,300/share (+15.5% upside). We revise our rating for the stock to Market Perform (from Outperform), as we see not much catalysts for 2020 and 2021 when Gemalink might only reach the breakeven point, not to mention that other ports might have reached full capacity.

Accordingly, 2019 and 2020 EPS are estimated at VND 1,937 and VND 2,579 respectively. At the current price of VND 14,900/share, KBC is being traded at 2019 P/E and P/B of 7.7x and 0.76x, and a 2020 P/E and P/B of 5.7x and 0.65x. Our1Y target price is VND 18,250/share, representing a 22.4% upside compared with the current price and reiterate our OUTPERFORM rating.

At the current price, PLX is trading at 2019 and 2020 P/E forwards of 17.4x and 16.2x respectively. We use the regional peer’s P/E average of 19x as our target, which is adjusted down from 21x in the previous report due to the lower valuation of the peer group. This target PE is also close to the 2-year historical average of 19.1x of PLX share itself. Accordingly, our 1Y TP for the stock arrives at VND 70,100/share. As the TP implies an upside of 17% from the current price, our rating for the stock is Outperform. Although we have not factored in the one-time profit from the divestment from PG Bank in the TP, any confirmation about this deal can be a supportive catalyst for the stock in the next 6 months.

Based on the above estimates, EPS would likely reach VND 2,736 in 2019 and VND 3,148 in 2020 after excluding the 12% bonus and welfare fund. At the market price of VND 54,000, IMP is being traded at a 2019 and 2020 P/E of 19.7x and 17.6x. Based on a target P/E of 18x, average when compared to comparable peers, we recommend a Market Perform for the stock, with a 1-year TP of VND 56,600/share, a 5% upside. Annually, IMP often generally books about 10% of its PBT in administrative expenses for its R&D fund, as has been the case since 2012. The Company intends to not distribute this fund until the latest factory completely obtains the EU-GMP certification standard.  Hence, IMP perhaps may not record this expense next year, and may get higher growth in terms of its bottom line in 2020 that exceeds our estimates. At present, we have not opted to factor this assumption into our model.

MSN Q3 2019 revenue totaled VND 8.97 tn (-2.2% YoY), and NPATMI reached VND 2.23 tn (+197.8% YoY). It should be noted that in Q3, MSN recorded a VND 1.65 tn gain in the ‘Other Income’ category before tax from the settlement of the arbitration case with Jacobs. Thus, core NPATMI actually was only VND 577 bn (-24.7% YoY). A slight decrease in revenue of the MSN Group was largely due to a -31.3% drop in mining revenue, while MCH revenue was up 5.2%, and MML revenue went flat (+0.6% YoY). Meanwhile, a sharp drop in NPATMI for Q3 could be mainly traced to disappointing MSR results, in which its EBITDA decreased by -61% YoY and incurred a loss of VND -320 bn in Q3 (vs. a net profit of VND 61 bn in Q3 2018). At the current market price of VND 74,400/share, MSN is trading at a 2019F P/E of 24.9x and 2020F P/E of 21x. Due to our lower earnings forecast for 2019 and 2020, we lower our 1-year SOTP-based target price for MSN to VND 86,000/share from VND 91,000/share. Since our TP offers a 16% potential upside from the current market price, we maintain our Market Perform rating.

At the current market price, VTP is trading at a 2020 forward P/E of 16.1x. With an expected growth rate still in the range of more than 30% in the next 2 years, we think this level of valuation is still attractive. We still apply a 20x P/E target for 2020, and revise down our 2020 target price to VND 160,000/share (from VND 170,000) marking a 24% upside from current market price. Accordingly, we maintain our BUY rating for the stock. Downside catalysts for the stock might come from slower than expected market growth, and losing of market shares to new players.

HDB released its Q3 financial statements, where total operating income (TOI) and pre-tax profit (PBT) were VND 2.871 tn (+35.7% YoY) and VND 1.238 tn (+50.7% YoY). It’s worth noting that the growth rate, which appears impressive, actually came from a low base set back in Q3 ‘18. Cumulatively up to 9M2019, TOI and PBT grew at +18.6% YoY and +19.6% YoY reaching VND 8.044 tn and VND 3.448 tn respectively. This was fueled primarily by the 25.1% YoY growth in net interest income, as NIM of the parent bank expanded +55 bps at the cost of using short-term funding to finance longer term loans. Given the targeted P/B metrics of 1.3x for the parent bank and 3.0x for HD Saison, using 2020 book value, we arrive at the target price of VND 33,000. This is equivalent to a 2020E consolidated P/B ratio of 1.52x and an 1Y upside of +14.9%. Therefore, we issue a MARKET PERFORM rating for the stock.

At the current price, DHC is trading at 2019 and 2020 P/E forward ratios of 17.4x and 9.6x respectively. Our rating for the stock is BUY, with a 1-year target price of VND 46,200/share, giving an upside potential of 20% from the current price based on the target PE of 11.5x, which is the 4-year historical average. We think that the earnings growth driven by the new factory can support the stock price in the coming time.

At the current market price of VND 98,700/share, VHM is being traded at 2019 P/E and 2020 P/E metrics of 17.5x and 14.4x, which is relatively lower than industry peers. Regarding valuation, given the above-mentioned adjustment, our target price is raised to VND 110,200/share using RNAV approach, implying an upside of 13% compared with the current market price. Hence, we reiterate our OUTPERFORM rating for the stock at present. In the short-term, the share buyback plan of up to 60 million shares (equivalent to 1.79% of total charter capital) is expected to have a positive impact on the share price. In our opinion, VHM has ample financial resources to execute this deal considering its debt/equity ratio of 0.46x, and its 9.4 trillion VND cash and cash equivalent balance for Q3.