Company Report

We lower our 1-year TP on the shares of HDG to VND 33,100/share (from VND 34,200/share) as we delay our earnings projections for Hado Charm Villas, Hado Minh Long and Hado Green Lane projects. With an 17% upside potential, we lower our rating from BUY to OUTPERFORM for the stock.

3Q24 results exceeded our expectations, as we witnessed stronger-than-expected hydropower recovery. We note that 3Q24 hydropower volume impressed with 32% YoY and 177% QoQ growth, while that of renewables (excl. hydropower) remained stable. We expect the transition from El Niño to La Niña or neutral weather pattern will continue to be supportive to the electricity segment in 2025.

Overall, we estimate 2024-2025 net income of DGW to increase to VND 457 bn (+26% YoY) and VND 598 bn (+31% YoY). As such, DGW earnings may still take time to revisit the all time high of VND 683 bn in 2022. With such a recovery pace, DGW trades at 2024-2025F P/E of 19x and 15x, which is rather full for a company with high exposure to products with saturated demand, like mobile phones and laptops. The current valuation also looks full compared with 5-year historical P/E of 14x. We derive our 1Y. target price for DGW at VND 41,300 per share, and call for MARKET PERFORM rating (downside -0.4% from the current share price). 

Slight recovery in 3Q24 net profit driven by sales volume recovery, lower input prices, and interest expenses. HT1 delivered an encouraging recovery during 3Q24 with net income posting at VND 23 bn compared to a loss of -VND 10 bn during. Cement sales volume in 3Q24 posted at 1.3 mn tons, recovering 8.5% YoY off the low base in 3Q23. Although the average sales price is estimated to drop over -4% due to strong competition and the company’s income coming through cheaper product lines, the gross margin rebounded slightly to 9.9% from 9% during 3Q23, largely due to the decline of over -10% for the coal input price. 

At the current price, HT1 is trading at 2025 PE and EV/EBITDA forwards of 36x and 6x respectively. We maintain our Market perform rating on the shares of HT1 with a 1-year target price of VND 12,000/share based on a target EV/EBITDA of 6.5x. Although we expect the company’s core business to have bottomed-out, we think the upside from the current price is limited in the short term as valuations are not attractive yet, and the intense domestic competition can still push some pressure on the volume growth and profit margin.

With a 12-month target price of VND 12,600/share (representing 11% upside potential), we lower our rating from OUTPERFORM to MARKET PERFORM on the shares of POW as we are concerned about uncertainties related to the Nhon Trach 3&4 project. In fact, we expect the project to commence operation during 2025, and its significant depreciation and financing costs might place pressure on performance during early years of operation. Nevertheless, we might see the recovery from Nhon Trach 2 and Dakdrinh plants in 2025. On the other hand, we witnessed higher-than-expected 3Q24 earnings, mainly supported by higher-than-expected net FX income and lower-than-expected G&A. Hence, for 2025-2026, we forecast a 15%-16% YoY decline for core NPATMI (excluding the one-off income related to compensation for Vung Ang 1’s Generator 1 technical issues). In the long-term, a sufficient long-term Qc commitment with EVN for the Nhon Trach 3&4 project could be an impetus for earnings recovery. We believe that it is normal for a project to suffer poor performance during early operational years

We reiterate our OUTPERFORM rating on the shares of KBC, with a target price of VND 33,600 per share (+24.9% upside). Despite weaker results during the first three quarters of 2024 due to a shortage of industrial land for lease, we anticipate significant profit growth at KBC once key real estate projects receive legal approvals, which is expected anytime between now and the first half of 2025. During 3Q24, KBC reported revenue and NPAT of VND 950.4 bn (+284.5% YoY and 6.6% QoQ) and VND 201.5 bn (980% YoY & -26.1% QoQ), respectively, driven by the delivery of industrial park land in Nam Son Hap Linh IP and Quang Chau IP. For 4Q24, we expect KBC to lease industrial lands of total 21 ha in Nam Son Hap Linh IP, Quang Chau IP, and Tan Phu Trung IP. This should lead to revenue of VND 916.5 bn (+8% YoY) and NPAT of VND 301 bn (+129% YoY). KBC is projected to achieve FY2024 revenue and NPAT of VND 2.91 tn (-48.2% YoY) and VND 698 bn (- 69% YoY), respectively.

We reiterate our BUY rating on the shares of ACB, with a 1Y TP of VND 31,100/share - representing an upside of 27% plus a potential dividend yield of 4%. Solid asset quality combined with conservative lending distinguishes ACB from other private commercial banks, which should enable ACB to have its NPL peak earlier than peers and reduce provisions for the next several years. Profit growth likely will not be as strong in the near future, but a healthy ROE of more than 20% would appear sustainable.

For 2024, we lower our expectation for pretax profit to VND 21.1 tn (+5% YoY), equivalent to a -4.4% decline from our previous estimate, owing mostly to NIM compression. We believe that pricing competition will continue in the near-term with the gradual rise in deposit rates, putting pressure on NIM. As a result, we lowered the NIM forecast to 3.8% for 2024 (-11 bps from our previous estimate).

We recently attended SAB’s 3Q24 earnings call and noted management’s renewed confidence in a recovery, driven by a better macroeconomic environment and optimism about Tet prep shopping being recognized during 4Q24. We note that 4Q23 was a low base as Tet sales were recorded during 1Q24. During 3Q24, SAB achieved sales growth of 3.4% YoY, indicating market share gains. Despite the difficult market environment and strict regulations, including the zero tolerance anti-drunk driving law, we note that the company has gained market share over the past several consecutive quarters. Advertising and promotion expenses remain well-controlled, due largely to the switch from traditional marketing to B2B e-commerce. The consolidation of SABIBECO is expected to be completed during 1Q25 and is expected to strengthen the parent company’s canning capacity. We also expect one-off financial gains from the consolidation of SABIBECO to be recorded during 1H25, although we have not quantified this in our model.

We maintain our Market Perform rating on the shares of NLG, with a target price of VND 43,000 per share (reflecting a 11.4% upside). Despite the short-term underperformance due to market conditions and slower than expectation of new project’s sales, NLG is well-positioned to benefit from its land plots over the long-term, as land prices are anticipated to rise with the implementation of the new land law.

Like the first quarter of 2024, NLG reported net losses of -VND 40 bn during 3Q24, primarily due to low property deliveries. Additionally, presales values slowed to VND 845 bn, marking a -6% YoY decrease. Given these results, we do not expect NLG to meet their 2024 presale target of VND 9.55 tn and our previous presales forecast.  The real estate market in provinces near Ho Chi Minh City continued to be sluggish, prompting us to lower our forecast for NLG’s NPATMI -4% YoY during 2024.

TNH reported disappointing Q3 results, with weak revenue and net profit of VND 110 bn (-41% y/y) and VND 9 bn (-81% y/y), given the unexpected typhoon and severe flooding throughout September; slower hiring activity across nearby industrial zones, which constrained patient intake; and the lack of one-off real estate sales. We lower our 1-year target price of VND 23,000/share (from 25,100/share), and maintain MARKET PERFORM rating on the shares, reflecting an 11.1% upside.

For the longer-term, we anticipate improvement in TNH’s performance driven by new hospital openings. However, we are lowering both 2024 and 2025 forecasts due to: low results thus far, and a lower gross profit margin as the constructions for new hospitals are likely to exceed initial expectations.

We are upgrading our stock rating from OUTPERFORM to BUY due to our strong belief that the potential introduction of new U.S. import tariffs by President Trump could lead to a significant surge in import demand before the tariffs take effect. This anticipated increase in demand is likely to extend the upcycle of the container shipping industry into 2026, rather than peaking in 2025 as previously expected. As a result, we expect this change to positively impact the earnings of container shipping companies in 2025.

Accordingly, for 2025, HAH’s NPATMI are projected to grow by 17% YoY, reaching VND 649 bn fueled by higher charter rates and increased spot rates driven by strong shipping demand. For 2026, assuming that container shipping rates reach peak within the year, a significant freight decline is expected, as a consequence of the new tariffs. This could lead to less favorable growth, with 2026 earnings projected to decrease by around 13% YoY.

We are downgrading our rating on the shares of VNM from OUTPERFORM to MARKET PERFORM due to the lack of short-term catalysts, along with unattractive top- and bottom-line growth. Our updated forecasts indicate NPATMI growth is expected to only reach 7.7% and 3% YoY during 2024 and 2025, respectively. Based on the 3Q24 earnings miss, we believe that VNM will be challenged to achieve growth of over 10% for both the top- and bottom-lines during 4Q24 as domestic consumption has recovered very slowly. As such, we now arrive at a DCF-based 12-month target price of VND75,000/share (+14% upside potential; from VND82,000/share).

We upgrade our rating on the shares of HPG from OUTPERFORM to BUY, with a 1-year TP of VND 31,700/share. Over the short-term, the recent recovery of steel prices, the increase in sales volume, and update on AD tariffs for imported HRC should be supportive to the share price.

Revenue and net profit in 3Q24 came in at VND 34 tn and VND 3.02 tn, respectively, achieving strong growth of 19% and 51% YoY. This was driven by strong growth in long steel sales volume of 39% YoY, as well as through a substantial increase in earnings from agriculture and real estate of 206% YoY to VND 583 bn, which equated to 19.3% of total earnings during the quarter. On the other hand, HRC volume was resilient with a slight increase of 4% YoY, despite strong competition from China and a slowdown of exports.

With a 12-month target price of VND 24,700 (equivalent to 30.7% upside potential), we reiterate our BUY rating on the shares of NT2, as we expect an earnings recovery between 2025-2026. For 3Q24, we witnessed a slightly higher-than-expected NPAT for NT2 at VND 44 bn (vs. a net loss of VND 124 bn during 3Q23), primarily due to slightly lower-than-expected maintenance and outsourcing costs. As expected, 9M24 NPAT turned a positive VND 8 bn (vs. a net loss of VND 36 bn for 6M24). Hence, we believe that NT2 could realize higher-than-expected earnings for 2024. Following that, we revise up 2024 NPAT to VND 49 bn (-90% YoY) (from VND 20 bn) and project 2025 NPAT to be VND 392 bn (+695% YoY) (supported by the ease of gas supply shortage). On the other hand, we expect NT2’s machinery and equipment to fully depreciate during late 2025, further supporting accelerated earnings growth for 2026.

We forecast EPS for 2024 and 2025 at VND 1,840/share (+46.9% YoY) and VND 2,313/share (+25.7% YoY), respectively. SZC is well-positioned to capitalize on several factors: (1) The company has over 400 ha remaining available for lease, with 250 ha fully cleared for compensation; (2) Lease prices in SZC are projected to increase compared to other industrial parks in Ba Ria - Vung Tau. Currently, these other IPs are leased at 13% - 15% lower. The connectivity improvements provided by the Bien Hoa-Vung Tau Expressway further enhance SZC's appeal. We maintain OUTPERFORM rating with 1-year target price of VND 43,200/share, representing a 12.9% upside based on the SOTP valuation method.