Company Report

According to Hoa Phat Group (HPG), Q3 revenue and net profit posted VND 15.35 trillion (+8% YoY) and VND 1.794 trillion (-26% YoY), in line with our expectation. Cumulatively, 9M 2019 revenue and net profit would reach VND 45.9 tn and VND 5.65 tn, accomplishing 66% and 84% of its annual target. At the current price, HPG is trading at 2019E and 2020E forward P/E ratios of 8.1x and 6.2x respectively, which is quite attractive in our view. We maintain our BUY rating for the stock, with a 1-year target price of VND 31,950/share based on target P/E and EV/EBITDA metrics of 9x and 6.5x respectively (revised from VND 32,100 based on 9x and 7.5x).

With the current hog supply shortages running up to Tet holiday as well as the recent rapid hog price increase since October 2019, we expect the company’s net profit to turn around, at least in the next 2 quarters. DBC share price has also recently recovered by ~6.7% since early October, in line with the hog price increase. At the current price of VND 23,700/share, DBC is trading at 2019 and 2020 P/E ratio of 9x and 7x respectively. In 2019, we estimate that net sales and net profit might reach VND 7.6 tn (+13.3% YoY) and VND 256 bn (-28.9% YoY). In 2020, we estimate net sales and net profit might reach VND 8.1 tn (+7.7% YoY) and VND 332 bn (+29.7% YoY). Our forecasts have not taken into account any additional real estate revenue that might already be booked. Our 1Y target price for the stock is VND 27,300 (+15.1% upside), equivalent to an OUTPERFORM rating.

At the current price, VGC is trading at 2019 and 2020 PER levels of 12.6x and 10.5x respectively. Given the above information, our rating for the stock is Outperform with a 1-year target of 23,050 VND/share, implying an upside of 19% from the current price. Besides the encouraging earnings growth thanks to the strong performance of industrial park and the potential recovery of sanitary wares in 2020, the coming state divestment and a cash dividend yield of 5.5% can also be supportive catalysts for the stock over the next 12 months.

Hanoi Plastic JSC (UPCOM: NHH) was formerly a SOE established in 1972 under the Hanoi Department of Industry. The company was transformed into a JSC in 2008, with an initial charter capital of VND 65 bn. The company listed its shares in the UPCOM in Sept 2017. After the government fully divested in Dec 2017, NHH was acquired by Cadivi Dong Nai, a subsidiary of Vietnam Electric Cable Corporation (HOSE: CAV). In late 2018, Anphat Holdings purchased the stake of NHH from Cadivi Dong Nai, thereby having NHH become a member of An Phat Holdings (APH). In January 2019, the company increased its charter capital from VND 65 bn to VND 168 bn by way of a 1:1 stock bonus, and a rights issuance at the ratio of 65:38. In Sept 2019, the company continued to increase its charter capital from VND 168 bn to VND 344.4 bn by issuing stock bonuses, stock dividends, and rights issuances at a 1:1 ratio.

Using an unchanged target PBR of 3.0x applied to our 2020E post-money BVPS, we derive our new 12-month target price of VND92,700 (from VND82,400), which offers upside potential of 11.7% from the current trading price of VND83,000 per share. Please note that this does not take into account cash dividends of 8% at par in 2019E and 2020E that we had previously assumed. Therefore, we upgrade our rating on the stock from Market Perform to OUTPERFORM.

At the current price and estimates, the stock is trading at 2019 and 2020 P/E ratios of 8.3x and 6.3x respectively. We maintain our target price of VND 21,090/share as per our last report, based on a P/E target of 7.5x applied to our 2019 and 2020 average EPS of VND 2,812. Since the stock price has increased by 11.5% since our last call, we change our recommendation to Market Perform for the stock.

At the current price, the company is trading at 2019 and 2020 P/E ratio of 8.8x and 7.7x respectively based on our estimates. We maintain our target price for PVT at VND 17,500/share, and keep our rating at Market Perform at the moment. We might revise our valuation and target price after the financial results for 3Q 2019 comes out. In our view, signing a long-term contract with NSR will be a positive catalyst for PVT, which can be expected in 2020.

PTB benefits directly from the ongoing China-US trade war through its furniture business and upcoming quartz surface business. In the granite business, PTB is maintaining a solid growth (through export expansion) despite a weak domestic real estate market. We roll over our mid-2019-2020F valuation, and revise upwards our 1-year target price (TP) to VND 87,000/share (from VND 80,000/share). Our TP is based on the SOTP-Method, and is equivalent to a 2019-2020F PER of 9.5x and 8.0x respectively. We recommend to BUY the stock.

At the current market price of VND 79,400/share, MSN is trading at a 2019 P/E of 23x and 2020P/E of 19x. Due to our lower earnings forecast for 2019 & 2020, we lower our 1-year SOTP-based target price to VND 91,000/share from VND97,500/share. As our TP offers 15% upside potential from the current market price over the next 12 months, we maintain our Market Perform rating.

At the current trading price of VND 26,650 per share, HDB is trading at 2019E & 2020E PBRs of 1.40x and 1.32x, lower than the sector average of 1.56x for 2019 and 1.28x for 2020. Given the targeted PBR metrics of 1.3x for the parent bank and 3.5x for HDSaison, using 2020 book value, we arrive at the target price of VND 31,100. This is equivalent to 2020E conso PBR of 1.54x and an 1Y upside of +16.7%. Therefore, we issue an OUTPERFORM rating for the stock.

Vietnam Travel and Marketing JSC – Vietravel (VTR: UpCom) was established in 1995 initially as a state-owned enterprise (SOE) under the Ministry of Transport. Since the beginning, VTR’s core business has been organizing travel tours for group tours and single travelers alike. In 2018, tours accounted for 77% of total revenue. Besides its core business, VTR provides other services such as car rental, labor export, air tickets, and its overseas study consultancy, which accounted for 23% in total. At a listing price of VND 40,000/share and according to the company’s 2019 guidance, VTR is trading at a 2019 forward PER level of 7.8x. VTR valuation seems to be low when compared to peers. Yet, it should be noted that the market price of Fidi Tour (FDT VN Equity) and Ben Thanh Tourist (BTV VN Equity) has a low trading volume and is not representative as a current market price.

At the current price, POW is trading at 2019 and 2020 P/E ratio of 11.1x and 10.9x respectively. In our view, given the expected strong growth of earnings in 3Q2019, we are positive in the short-term for the stock. However, as mentioned above, 2020 outlook is not clear yet until current negotiations can come to terms. So for now we remain neutral for 2020. Our current target price for the stock is VND 18,200/share, and we might consider revising down our target given the uncertainty in long-term outlook.

Based on the annual plan of NLG, we estimate that 2019F EPS and 2019F BVPS is equivalent to VND 3,798/share and VND 19,275/share. At the current price of VND 27,500/share, NLG is trading at a 2019 PER level of 7.9x and PBR level of 1.4x. Our fair value estimated by RNAV methodology is VND 46,300/share. This is 19% higher than our previous valuation, mainly due to the premium paid to Paragon Dai Phuoc project, as well as a higher sales price of most projects.

Q2 business results continued to be strong, with PBT growth of 49.9% YoY to VND 767 bn. 1H PBT achieved VND 1.62 tn, +58% YoY. At the current price of VND 22,350/share, TPB is trading respectively at a 2019E and 2020E PBR of 1.45x and 1.15x. The P/B ratio is equal to the industry average of 1.45x for 2019, and lower than the industry average of 1.21x for 2020.

DPM’s 2Q19 net sales reached VND1.931tn, down 28% YoY due to (1) an unexpected shutdown of its plants, (2) adverse weather conditions, and (3) a fall in prices of main agricultural products. Gross margin was squeezed from 17.2% in 2Q18 to 13.6% in 2Q19 due to the (i) low utilization of its urea, NPK, and NH3 plants, and (ii) 9.5% YoY rise in gas input costs, mainly due to a hike in transportation tariffs. At the current price of VND13,300, DPM shares are trading at 2019F and 2020F PERs of 18.0x and 13.5x, respectively.