Company Report

We revised upwards our forecast for ACB 2019 PBT to VND 7.58 tn, at +18.7% YoY and +2.9%, elevated compared to our previous forecast of VND 7.37 tn. This raised outlook comes from higher forecasts of credit growth from the previous 13% YoY to 16.5% YoY. For 2020, we expect ACB to earn VND 8.79 tn of PBT at +16% YoY, given credit and deposit growing by 16% YoY and 15% YoY respectively. Using average BVPS of 2019F & 2020F and the target PBR of 1.8x, we arrive at a 1Y target price of VND 44,000 per share, which is equivalent to a dynamic upside of 46.2% from the current price. Therefore, we reiterate our BUY recommendation on the stock.

At the current price of VND 23,300 per share, LTG is being traded at a 2019 PER of 4.2x on total earnings and 5.7x on core earnings. We think that the main business (CPC – making up 53% of net sales and 77% of gross profit in 2018) will face more competition from cheaper generic products imported from China, while the improvement in rice and seed businesses may not be adequate to offset the decline in CPC earnings in the near term. In the longer term, LTG growth will depend on the potential of the rice business, which is quite uncertain at the moment. Nevertheless, LTG is traded at a cheaper valuation compared with industry peers, with a decent dividend yield (6.9%). For valuation, we use a target PER of 6x, lower than the peer average owing to high D/E ratio amid thin net profit margin. As such, we arrive at 1Y target price of VND 25,500, which is equivalent an upside of 9% from the current price and a MARKET PERFORMANCE rating.

In 2018, Vicem delivered a net sales of VND 27.9 tn, an increase by 11.3% fueled by the increase of 9% in sales volume. Although the gross margin declined slightly by 0.8 ppts to 17.6% due to the increase in the coal price by 15%, PBT in 2018 attained strong growth of 20.6% thanks to significant savings in financial expenses. More specifically, financial expenses dropped to VND 986 bn from VND 1.496 tn in 2017, mainly thanks to a net exchange rate gain of VND 29 bn, compared to an exchange rate loss of VND 563 bn in 2017. In addition, the company’s debt repayment of VND 3.3 tn in 2018 also helped to cut interest rate expenses by VND 146 bn in 2018 compared to 2017.

We maintain our 20x PE target for 2020, and revise upwards our target price for VTP to VND 170,900/share (an upside of 26%) as we roll forward our valuation using our 2020 earnings estimate, and reiterate our OUTPERFORM rating for the stock. In a nutshell, we believe the market reaction is overblown regarding the news of the new businesses, and if continues, we feel this creates a buying opportunity for long-term investors.

Based on audited financial statements, 2018 BVPS and EPS of BVH were VND 22,065 and VND 1,612 respectively. At the current price of VND 81,300 per share, the stock is trading at 2018 PBR and PER of 3.7x and 50.4x respectively. Based on the company’s 2019 plan, 2019 BVPS and EPS of BVH on a respective basis are estimated at VND 22,748 and VND 1,676, with current PBR and PER at 3.57x and 48.5x. We estimate that if the capital issuance is implemented in 2H 2019, at the price equal to 3 times BVPS as of June 2019 at VND67,220 per share, BVH would have the proceeds of VND 2.785 tn. 2019F BVPS would pop up at +11% to VND 25,231. The PBR at current price would then be 3.22x.

At the current price, VGC is trading at 2019 PER of 13.6x. Our rating for the stock is Outperform, with a 1 year target price of VND 23,600/share, imlying an upside of 16% from the current price. We think that encouraging earnings growth in 2019, as well as the government divestment, would together be supportive catalysts for the stock in the next 12 months. Used to be mainly regarded as a construction material manufacturer, VGC should be rather viewed as a property developer in the next 12 months given the tremendous growth of the industrial park segment and the expected contribution of around 60% of consolidated PBT in 2019.

Given the decline in the book-to-bill ratio to just 1.2x, we lower our expectations for 2020F regarding revenue and NPAT by -4%. At the current price of VND 15,450/share, HBC is trading at 2019F PER levels of 5.9x, which is considered fair in our view. HBC is trading at a lower PER than its average ASEAN peers’ PER level of 8.0x, yet possesses characteristics of (1) a higher D/E (1.48x as of 31 Dec 2018), (2) a higher DOR and (3) a 2019-2020F core NPAT CAGR of only 1.5%.

For 5M19, revenue rose by 15.4% YoY (vs. 43% YoY for 5M18) to reach VND42.784tn, achieving 39.4% of the company’s annual plan. This was mainly due to growth in the Dienmayxanh and Bachhoaxanh chains. Net margins reached their highest level since the start of 2017, at 4.2% in 5M19, above the 3.5% level achieved in the same period last year, and the 3.3% for 2018. As such, 5M19 net income attributable to shareholders jumped by 39.0% YoY to c.VND1.792tn (vs. +43.9% YoY for 5M18), reaching 50.2% of the annual plan. At the current price of VND91,400, shares of MWG are trading at 2019E and 2020E PERs of 10.3x and 8.4x, respectively, which compares to SSI’s year-end target 2019E PER of 14.5x for the VN-Index. Following the upward revision to our earnings, we lift our SOTP-based 12-month TP for MWG to VND160,300/share (previously VND148,500). As our new TP offers some 75% upside potential, we reiterate our BUY rating on MWG. The key downside risk to our call would be fiercer-than-expected competition in the grocery business.

We maintain our 1Y-TP for ACV at VND 95,200/share (10% upside), based on a target EV/EBITDA of 16x (15% premium compared with the global average). Given the limited potential upside to current market price, our rating is Neutral. We will give further updates in our upcoming 2Q19 earnings report.

For 1Q19, VNM reported VND13.19tn in revenue (+8.8% YoY) and VND2.797tn in net profit (+4.3% YoY). The rise in revenue was triggered by 10.3% YoY growth in domestic sales, while export sales grew by only 7.9% YoY. At the current price of VND125,500/share, VNM shares are trading at a 2019E PER of 22.7x, an EV/EBITDA of 14.1x, a 2020E PER of 21.1x, and an EV/EBITDA of 13.1x, respectively, which are not expensive yet not attractive enough (given our low-single-digit growth outlook), in our view. On the heels of our earnings revisions, we lower our 12-month target price for VNM to VND127,000 (previously VND 131,500) based on an unchanged target P/E of 23x applied to our 2019E EPS. We see no strong catalysts that would trigger an upgrade of our call in the short-term. As our new TP offers only 1% upside potential, and is lower than SSI’s overall market expected return from now until end-2019 of 6.8%, we reiterate our Underperform rating.

We have updated our earnings forecast for 2019F/2020F after adjusting margin assumptions for the M&C segment and earnings from associated JVs. Accordingly, we forecast PVS to post VND 16.37 tn in net revenue (+11.6% YoY) and VND 1.176 tn in net profit (+114.2% YoY) in 2019, which does not significantly vary from our previous estimates. For 2020, we forecast a net sales and net profit growth of 14.6% YoY and 19.2% YoY respectively. 2019-2023 net earnings CAGR is estimated at 12.3%, thanks to a potential backlog amounting to approx. $2.5 bn USD amounted during the period. At the current market price of VND 23,200/share, PVS is traded at 2019P/E and 2020P/E of 10.9x and 9.3x respectively, which are lower than regional peer P/E equivalents of 13x. We maintain our 1-year target price of VND 27,000/share based on an unchanged target P/E of 13x and P/B of 1x, and reiterate an Outperform rating on the ticker for the time being.

Revenue reached VND 491 bn, up 15% YoY, while NPAT reached VND 28 bn, up 18% YoY. 1Q2019 NPAT arrived in line with our expectations, and reached 13% of our 2019E operating NPAT of VND 212 bn and reached 8% of 2019P NPAT company guidance. Q1 is normally a low season for the construction sector, due to the Tet Holiday. We maintain our OUTPERFORM rating for FCN, yet lower our TP to VND 17,000/share (from VND18,600/share). The stock has an upside of 19.7% to our target price.

At its current price, AAA is trading at a 2019 PE forward level of 7.8x. We estimate the fair price of AAA based on the Sum-of-the-parts method. Accordingly, the separate fair value for the An Phat Hi-tech IP is at VND 1.2 tn, equivalent to VND 7,200/share based on the Rnav method with a cap rate of 10%. Total net profit from this project from 2019-2021 is estimated at VND 443 bn. On the other hand, the fair value of other segments are estimated at VND 12,900/share, based on a target PE of 9x. Accordingly, our 1-year target price for AAA is VND 20,100/share, equivalent to an upside potential of 12.6% from the current price. Our rating for the stock is Outperform.