Company Report

2018 consolidated revenue reached VND 2.858 tn, up 23% YoY and NPAT reached VND 252bn, up 41% YoY, yet reached only 82% and 93% of the business guidance, respectively. The result was in line with our expectations, since in the last 5 years, FCN reached in average only 86% of the revenue guidance and 93% of the NPAT guidance. EPS of VND 3,009 was essentially flat due to the increase of 33mn outstanding shares resulting from the right issuance at ratio 10:6 in March 2018. Given current price of VND 14,700 /share and 2019-2020F diluted core EPS, FCN is trading at 2019-2020F PER of 8.2x and 6.2x, which is in line with the Vietnamese construction company average. On the other hand, FCN is trading at current P/B ratio of 0.8x given 2018 ROE of 15.3%, which is low comparing to peers.

GEX business results in 4Q18 maintained positive growth, with revenue and PBT increasing by 10.1% and 23.2% YoY. Key growth drivers come from the growth in CAV fueled by a lower input price, the recovery in transformers thanks to an extraordinary event, and the consolidation of VCW starting from Apr 2018. At the current price, GEX is trading at PER 2019 levels of 9.4x. Our rating for the stock is Market Perform (from Outperform), with a 1-year target price of VND 24,900 deriving from the Sum-of-the-parts method. Our target PER for electrical equipment, logistics, and utility are unchanged at 11x, 9x, and 8x respectively. In our view, GEX is an interesting stock to watch given its exposure to the stable growth electricity industry and the company‘s potential asset base.

HDBank (HDB: HOSE) posted VND 4 tn in consolidated PBT in 2018, translating into a robust 65.7% growth, having completed its yearly guidance. Upbeat earnings came from higher than industry average gross loans (17.8% YoY compared to roughly 13.9% YoY), higher pure LDR, and roughly flat provision expense growth. Parent bank PBT grew 59.3% YoY to VND 3.25 tn, while HD Saison PBT grew 73% YoY to VND 901 bn. Consolidated NIM slightly compressed due to a lower HD Saison NIM. At VND 31,000 per share, HDB is trading at 2019E PBR metrics of 1.8x, higher than the industry average of 1.5x.

At the current price of VND 31,400/share, ACB is trading at 2019F PBRs of 1.47x, which is equal to the sector average of 1.53x. We like ACB because of its strong outlook for profitability and high-quality assets profile. However, given rising uncertainty in the market, we adjust down our targeted PBR from the previous 2.0x to 1.8x.

At the current price of VND 52,800/share, MSH is trading at 2019 and 2020 PER levels of 6.7x and 6.4x respectively. Our 1Y-target price for the stock is VND 59,500/share (+13% upside), based on the unchanged target PER level of 7.5x. Our rating for the stock is OUTPERFORM, as the stock price has increased significantly since our last call (+31% upside from our last call). MSH is still our top pick in the garment sector with solid results, a high dividend yield, and a positive outlook of expanding capacity in 2020.

In 2018, PHR consolidated revenue reached VND 1557.8 bn (-5.8% YoY), in which net sales from the parent company was VND 1044 bn (-13% YoY), fulfilling only 65% of 2018 parent company target. Since our BUY call in August 2018 and upgrading call in January 2019, PHR share price has rocketed by 95%. The current share price of VND 49,200 per share more than fully reflected 2019 core earnings (for which we apply a target PE of 8.5x), land compensation income from VSIP 3 and Nam Tan Uyen, and profit from NTC divestment. It is only the potential benefits from developing Tan Binh II industrial park (1,055 ha) which may have not been reflected in the share price due to lack of information at the moment.

VNM on 12 March 2019 announced its decision to purchase 46.7% stake in GTN Foods (GTN: HOSE), equivalent to 117 mn shares at a price of VND 13,000/share via tender offer (total value: VND 1.521 tn or $65.4 mn USD). At this offer price, GTN is valued at 2018 P/E of 812.5x and 2018 P/B of 1.22x. We currently have an Underperform recommendation on the stock, with a 1-yr target price of VND 131,500/share, based on a target P/E of 23x.

DPM’s net sales increased notably to VND 9.297 tn (+16.3% YoY) in 2018, surpassing its 3.8% guidance in December 2018. Gross profit margin fell to 20.4% from 26.4% in 2017 on the back of a 28% YoY hike in gas input cost. In Q4, following comments from the state audit, DPM revised its 2016 and 2017 numbers. While there were little changes for 2016, 2017 net income was raised by 26%. 2018 net income came to VND 712.5 bn (-20% YoY, based on the post-state audit financials of 2017). At the current price of VND 20,500 per share, DPM is trading at 2019F PER multiple of 12.8x.

In 2018, PV Power (POW) generated a total of 21 bn kWh, +2% YoY, on par with SSI Research’s estimate. That leads to revenue increasing by 9.9% YoY, reaching VND 32.6 trillion. Overall, firm-wide ASP increased by 7.7% YoY to VND 1,555/kWh, which is accountable to lower rainfall leading to higher electricity market spot price. We maintain our EV/EBITDA target of 6x for POW. Our 1Y target price is revised up to VND 18,200/share (+11% upside) as we lower forex loss estimate. As upside is now lower, we change our recommendation to OUTPERFORM for POW. In 2019, we see strong earnings growth as the main catalyst for the stock price.

VJC recently held their FY2018 analyst meeting, and the following are the key takeaways. We use parent company results for comparison, which purely reflects performance of the core aviation business. At the current price of VND 120,500/share, VJC is trading at 2019F-2020F core lease-adjusted EV/EBITDAR metrics of 7.9x and 6.7x respectively. We also want to mention that a flat consolidated 2019 NPAT growth of 2.9% YoY might negatively affect retail investor sentiment.

VEA recorded VND 2.391 tn in net sales (+0.1% YoY and +81.5 % QoQ) in Q4. This sales figure is higher than our expectation, due to VEA having accomplished the bulk sale of more than 1.7k trucks at the end of December 2018. The stock price has increased by 29% since our last call on 7^th Jan, thanks to its impressive earnings for Q4 2018. At the current price of VND 49,000, VEA is trading at 2019 PER of 8.1x and its dividend yield is expected at 7.14%.

2018 PBT declined by 7.7% YoY due to the deterioration in construction materials, whereas the property segment attained strong growth with PBT increasing by 37% YoY. In 2019, VGC’s 2019 revenue and profit are expected to reach VND 9.953 tn (+10.8% YoY) and VND 928 bn (+9.3% YoY) in 2019, which is driven by the the growth momentum of industry park segment and the rebound in construction materials. At the current price, VGC is trading at 2019 PE metrics of 13.2x, which in our view is not very compelling for financial investors. However, the full state divestment in particular may still support the stock price in the coming year ahead. Our rating for the stock is Market Perform, with a 1-year target of VND 23,400/share based on SoTP method.

In 2018, PVS posted a slight drop of VND 14.67 tn in revenue (-12.8% YoY), while net profit had a more pronounced decline of VND 549 bn (-29.75% YoY). However, net earnings to parent shareholders reached VND 1.023tn (+27.8% YoY). This was because minority interest incurred a loss of VND 474 bn since its 51% subsidiary PTSC-CGGV incurred a net loss of VND 1.14 tn during 2018. Our 1-year TP for PVS arrives at VND 24,000/share (from VND 20,800/share), anchored on a target P/E of 13x (from 12.5x), equivalent to regional peers and P/B of 1x (17% discount compared to regional peers). Our target price represents a 13% upside from the current market price, triggering an OUTPERFORM recommendation. It should be noted that it is expected that PVS maintains its 10%-12% cash dividend on par in 2018-2019, translating into a dividend yield of 5-6%.