Company Report

PC1 posted revenue amounting to VND 3.578 tn (+55.5% YoY), achieving 63.4% of its 2018 annual plan. This was mainly attributed to the growth of the property segment, the trading segment, and the hydropower segment, while revenue from power construction segment conversely experienced a slowdown. At the current price of VND 23,400, based on 2018 and 2019 plan, PC1 is trading at PE 2018 and 2019 at 7x and 7.5x respectively. We think that the company is traded at cheap level compared to Vietnam market’s 2019F PE of 12.4x in our estimates.

The company recorded VND 1.318 tn in net sales (-11.3% YoY), but ramped up to VND 1.848 tn in terms of net income (+26.8% YoY) in Q3. Such a strong result was contributed by great earnings for the company’s joint ventures. For Q3, JV-sourced income for the company amounted to VND 1.799 tn (+28.5% YoY), in which contribution from HVN might total as high as VND 1.559 tn (~ 86.7% of total JV-related income). Meanwhile, TMV and FVL might only make up 10.8% and 2.56% of total income from JVs. Given our forecasts on its 3 JVs, we apply SOTP methodology to value the company, and the average regional PER at current is lower than that of the previous report. Hence, we applied a lower PER targets in this report. As a result, our SOTP-based 12-month target price is VND 43,700, equivalent to a 2019 PER of 8.0x. Given a 17.2% upside, we provide our rating of OUTPERFORM for the stock. VEA expects that the divestment by the Government will be implemented in 2019 to lower state ownership to 51% from 88.47%, while the HOSE listing will be slower than investor expectations, as VEA needs to wait for its audited 2018 financial statement.

At VND 23,100 per share, CTG is trading at 2018 and 2019 PBRs of 1.3x and 1.2x respectively, which is lower than the industry 2019 PBR average of 1.5x. The lower than average valuation is reflected upon possible 2018 losses the bank may have to absorb. We expect Vietinbank will have to deal with additional NPLs in 2019, while credit growth is expected to be capped due to the inherent difficulty in raising Tier 1 capital. Taking into consideration all of the facts at hand, we recommend a stance of Underperform for the stock, with a 1Y target price of VND 23,000 per share, equivalent to a 2019 PBR of 1.2x.