Company Report

Given the stronger than expected 2Q24 (VND503bn in NPATMI vs. our expectation of VND 300- 400bn) thanks to higher financial income and good sales growth at WCM; and with the SK deal’s most recent development, we have slightly increased our estimates. Accordingly, we estimate the group to achieve NPATMI in 2024E of VND1.9tn (+361% YoY), up from VND1.1tn previously, and in 2025E of VND3.1tn (+61% YoY), up from VND2.8tn. Please note that we have not included one-off earnings of USD40m from the HCS divestment for 2024. Earnings growth in 2025 should come from continued improvement across key businesses. Our SOTP-based 12-month TP is now VND90,800/share (previously VND93,400/share) as we assume higher net debt at the holding company level due to the USD200m payment to SK and a lower valuation for MHT on lower estimated revenue and ebitda in 2025. Despite the reduction to our TP, we reiterate our Outperform rating on shares of MSN.

Compared to our previous estimates, we revise up our 2024-2025 NPATMI forecasts by 15%-20%, mainly due to successful negotiations in reducing the offshore loan guarantee fee for the company’s 7A plant, as well as the margin of interest rate for the loan of the Song Tranh 4 plant. Despite such an earnings upward revision, we maintain our 1-year TP of VND 34,200/share as we revise up our discount rate assumptions to reflect the recent increase of Vietnam interest rates. Following a respective 20% upside potential in the share price, we change our rating from OUTPERFORM to BUY for HDG.

Our 12-month target price is VND 25,200/share (down from VND 29,500/share) due to: i) our forecast of lower occupancy and rental price growth during 2025; ii) higher net debt at 2Q24; and iii) a valuation discount due to investor concerns on asset lending to Vinhomes and debts providing to Vinfast. We maintain an OUTPERFORM rating for VRE, with an upside potential of 27.9%.

VRE remains the market leader in the mall leasing segment, with 86 existing shopping malls as well as additional new malls in development across Vietnam. The Company stands to benefit from the growth of the middle-income population in the country. 

We maintain our MARKET PERFORM rating on the shares of IDC with 1-year target price of VND 65,000/share (+4% from previous TP due to higher valuation for Tan Phuoc 1 Industrial Park).

During 2024-2025, IDC faces headwinds when MOUs declines: (1) Phu My II IP and Phu My II expansion IP (which represent 40% of IDC’s total leased area per year) lack of large contiguous available land for leased ( >30 ha per tenant); (2) Tenants remain cautious in the context that leased price  is only 15%-18% lower than that of IPs in Indonesia. In 2Q24, newly signed MOUs was 43ha (-58% YoY), which should transpire in to lower revenue in the coming quarters. Therefore, NPAT growths are estimated at  6% YoY and -10% YoY in 2H24 and 2025 respectively, which are not exciting.

We reiterate our BUY rating for the shares of ACB with 1Y TP of VND 31,200/share, representing a 25.8% upside. At the early stage of the economic recovery when many banks are struggling to clear bad debt and diminish inherent risk, ACB nowadays stands out as possessing top-notch asset quality. Moreover, having low funding costs would also allow ACB to be more proactive in attracting new customers by offering an incentive package, while still leaving room for NIM improvement. With a consistent business philosophy, we believe that earnings growth will not wow in the near-term but rather be profitably sustainable with ROE of above 20% over the medium-term and the foreseeable future.

We raise our rating on the shares of KDH from OUTPERFORM to BUY, along with our new target price of VND 45,700/share (+21.2% upside), up 10.7% from our previous target of VND41,300/share. Our upgrades are predicated on 1) our expectation for successful sales launches on two projects in Thu Duc City during 2H24; 2) expected strong, above trend-line earnings growth through 2025; and 3) the roll forward our valuation to 2025. 

For the 2H 2024, the prolonged disruption in the Red Sea, which is expected to sustain the shift from sea to air shipping should indirectly benefit SCS. We slightly revise up 4% our estimates, translating to revenue and PBT at VND 949 bn (+34.6% YoY) and VND 760 bn (+33.5% YoY) for 2024. In 2025, we expect volume growth to return to a normalized level and PBT to grow 9.5% YoY, to reach 833 bn VND. However, it is important to note that NPAT growth is expected to be constrained by the expiration of the preferential tax deduction of 50% on liable income from 2025.  In the longer term, the availability of capacity expansion at TSN airport and Long Thanh international airport drives growth potential. SCS is trading at a forward P/E of 12.x, which aligns with the 5-year average level. Our DCF model, reflecting the company's long-term potential, estimates an target price for SCS at VND 91,900 per share, translating to the upside of 11.7%. We maintain a MARKET PERFORM rating for SCS.

We reiterate our Outperform rating on CTG’s shares with an unchanged 1Y TP of VND 38,500/share, representing an upside of 10.5%. CTG has a long-term competitive edge as the third largest bank in Vietnam by assets, credit, and deposit market share with nationwide network and over 20 mn customers. The improvement in fundamentals should continue with improved asset quality and stronger earnings growth through 2025. The bank has also been actively digitizing, on top of implementing initiatives to improve its CASA and CIR over the past several years.

Although CTG ended 2Q24 on a low note (PBT of VND 6.75 tn, up +3% YoY), it was primarily due to the frontloaded provision (VND 7.8 tn, up 21% YoY). This led us to believe that 2H24 will have lower provisioning and better earnings growth (VND 16.2 tn, +29% YoY under our current estimate).

Despite poor July results, we note that 3Q earnings is characteristic of being the low season, and may not affect whole year estimate much (13-14% of 2022-2023 earnings). We believe the gross profit margin of retail sales to improve in Q4 when the high season comes, thereby allowing PNJ to introduce new collection and adjust sticker prices to compensate for the rise in gold input costs. We hence maintain our net income estimate for 2024-2025 at VND 2.2 tn (+13% YoY) and VND 2.57 tn (+16% YoY). We now roll over to 2025 (from average average 2024-2025), and derive a new target price at VND 120,000 per share (from VND 112,000), thereby maintaining an OUTPERFORM rating for PNJ.

We maintain Market Perform rating on TCB shares with a 1Y TP of VND 26,800/share – representing 19% upside. Despite a supportive valuation, the expected deceleration in earnings growth in the coming 2 quarters might lead to a lower level of excitement from retail investors for the shares in our view.

2H24 could be challenging given the slower-than-expected recovery of the HCMC real estate market, which accounts for 1/2 of the bank’s exposure to the property sector. Under these circumstances, TCB likely will prioritize stabilizing NPLs over NIM expansion, with the resumption of flexible pricing to enable easier repayments. Accordingly, NPLs are expected to be controlled with management expecting 1.2% by year-end. We believe that NIMs will drop to 4.18% for FY 2024. Our earnings estimate for FY24 and FY25 is VND 27.8 tn (+21.5% YoY) and VND 32.3 tn (+16% YoY) respectively, down by -3% and -4% vs. previous estimate.

Strong 2Q24 top line growth, bottom-line declined. For 2Q24, IMP posted revenue and NPAT of VND 517 bn (+18% YoY) and VND 66 bn (-17% YoY), respectively, which is lower than our NPAT estimate of VND 80 bn due to lower-than-expected GPM improvement. Gross profit margin declined on a YoY basis (stagnant demand in the over-the-counter market, API increased ~3% on average, new IMP4 production plant depreciation only kicked in 3Q23), but GPM also improved on a QoQ basis. SG&A expense decreased -22% YoY as new cost-saving policies are put into place. As of 1H24, IMP reached 43% and 38% of its target revenue and PBT respectively.

Coupled with policy tailwinds in public hospital bidding channel. Ministry of Health (MoH) recently issued Circular 03& 07/2024 (TT03&07/2024/TT-BYT) providing a list of 93 drugs manufactured by at least three domestic companies on EU-GMP standard production lines that meet the MoH's technical criteria, and quality, price, and supply capacity requirements. Foreign companies are not allowed to enter the public hospital bidding for these drugs. IMP currently has 12 qualifying SKUs in the list, which should lessen the competition for these products going forward.

Investment view: Considering the quiet market in southern Vietnam at the moment, coupled with NLG’s need to compromise profits to boost sales via marketing campaigns and the current valuation already reflected the company’s landbanks as well as its reputation, we maintain our Market Perform for the shares of NLG and a target price of VND 43,000/share (+5.7% upside).

Downside risks: (1) Lower absorption rate at multiple second tier city projects; and (2) Delay of legal project licensing that affects company presales.

Short-term view: POSITIVE, as performance is expected to be strong during 2H24 relative to 1H24 with nearly 6x growth in NPATMI given unbilled bookings value at Southgate and Akari City to be recognized along with sales and recognition of Nam Long 2 project. Furthermore, retail investors are favouring property stocks after a long correction period.

GMD revenue was VND 1.2 tn +30% YoY, in line with our forecast, with volume improvement being the key. Volume from the Haiphong area (Nam Dinh Vu port) is up 15% YoY to 305k TEU during 2Q 2024, while Gemalink volume is 380k TEU, +48% YoY due to a recovery in exports to both the EU and the US, and additional volume from ad-hoc services from Singapore. Excluding the large one-off gain from Nam Hai Dinh Vu port divestment of VND 1.8 tn during 2Q 2023, GMD’s 2Q 2024 PBT growth would have been 33% YoY, pushing 1H 2024 core PBT growth to 27.5% YoY, meeting our previous expectation.

Jan-July number shows strong volume growth for Vietnam port (+20% YoY in the North, +24% YoY in the South). This reflects expected recovery from low base of manufacturing and import/export sectors of Vietnam. On the supply side, we see capacity growth to be more limited in Southern area (HCMC/Cai Mep) while quite abundant in the North (Hai Phong/Lach Huyen), with +50% capacity growth in next 2 years, posing strong price competition landscape in this area.

On Aug 15, the Government agreed to reduce registration fee policy by 50% for three months, despite Ministry of Finance’s suggestion not to go forward with the policy. As a result, we expect better-than-expected car sales for VEA’s JVs (Toyota, Honda and Ford VN) in 2H24. Coupled with other catalysts such as consumer spending recovery and an attractive dividend yield (2024F and 2025F dividend yields for VEA are 11% and 10%, respectively) lead us to believe that VEA could provide upside from here. We maintain our 1-year target price of VND 46,500/share. Given the forecasted return of 15% (including 11% dividend yield), we maintain our OUTPERFORM rating on the shares of VEA.

According to Circular 03/2024/TT-BTTTT and Circular 04/2024/TT-BTTTT, the Ministry of Information and Communications (MIC) plans to terminate the support for 2G-only mobile subscriptions from 16 Sep 2024, encouraging the replacement with more advanced mobile technologies. At June 2024, there are still over 10 mn 2G-only mobile subscribers in Vietnam, which are required to be phased out or switched to new electronic devices before that date. For CTR, the company plans to build/synchronize infrastructure of between 4,000-5,000 BTS (base transceiver station) sites during 2024 but it has only completed 30% of this target during H1 2024. We expect that this mobile technology transition will require CTR to accelerate even more BTS sites construction, and we believe that the company will meet the above target before end-2024. Such an estimate also indicates that the number of new BTS sites built in H2 2024 (~3,100 sites) might not generate immediate revenue growth for 2024 (as they will not be under operation on a full year basis). We expect they will support 2025 revenue and earnings growth. Nevertheless, our earnings forecast for 2024 remains nearly unchanged. Specifically, we forecast 2024 and 2025 NPATMI growth of 11% and 17% YoY, respectively, mainly driven by the infrastructure leasing and construction segments. Further, we expect the 5G rollout in Vietnam during late 2024 or 2025 to support CTR’s growth outlook over the long-term. We maintain our estimates but change our rating from MARKET PERFORM to OUTPERFORM on the shares of CTR. Our 12-month DCF target price is VND 135,000/share (equivalent to 13% upside).