Company Report

PC1 announced their strategical priority to the properties and construction segment, while mineral exploration and power generation serve as secondary focal points. For 2024 guidance, the company sets ambitious target, of 38.5% growth in sales and 77% increase in net earnings, to VND 10.8 tn and VND 525 bn. PC1 expected to distribute a stock dividend in 2023, of 15% on its chartered capital. We see effort of the company in maintaining growth, under the challenging circumstances of the industry. The turnaround of properties should have a stronger impact on earnings, thanks to the size and the low base of performance during the 2022-2024 period. However, the possibility of residential properties projects to generate sales from 2025 (expected by the company) might be hard to accomplish, and we incline towards residential projects could contribute to earnings growth from 2026 onwards. We expect FY24 sales and NPATMIO to reach approx. VND 9 tn (+ 15.4% YoY) and VND 220 bn (+124% YoY). Although our estimates are lower than the company’s guidance, they indicate our expectation in 2024 to witness strong growth in earnings performance following two years of contraction. For 2025F, sales and NPATMI are estimated at VND 8,759 bn (+19.7% YoY) and VND266 bn (+20% YoY).

We reduce our rating on the FPT shares to MARKET PERFORM (from OUTPERFORM), with a 12-month SOTP-based TP of VND 141,500/share (equivalent to 7% upside potential). The company’s 5M24 results exhibited double-digit growth in both revenue and earnings. On 23 Apr 2024, FPT formed an AI (artificial intelligence)-related partnership with NVIDIA, which we believe is the first step toward joining the global AI value chain, especially given FPT’s already well-placed background in AI. Further, we expect that the establishment of AseanConnect.One alliance will help improve FPT’s telecom services quality (especially data center) and enhance customer access.

Masan Consumer Corporation (UPCOM: MCH) is a direct subsidiary of Masan Consumer Holdings (excluding the beer business, Masan Brewery). Since being established, the company has expanded its portfolio brands across eight fast-moving consumer goods (FMCG) categories to become one of Vietnam’s foremost consumer staple companies.

MCH food and beverage segment offers a wide range of products, with hundreds of SKUs under six main categories: seasoning, convenience food, coffee, beverage (mainly energy drinks; again, excluding beer), and processed meat (which moved to MML from 2023); of which its seasoning portfolio including fish sauce, chilli and soy sauce have led the market for years (market share of 45%, 64% and 43%, respectively) MCH also penetrated the home & personal care (HPC) market during 2020 via the acquisition of NET Detergent JSC. In the period 2017-2023, each year, the company introduced 50 initiatives on average to their product pipeline to meet consumer’s daily basic needs.

GEX’s 1Q24 PBT arrived at VND 385 bn, soaring by 168% YoY. The gross profit from most segments, especially electrical equipment and construction materials dropped significantly due to weak demand from household channel and higher input cost. However, the gross profit from the industrial park segment increased 34.6% YoY to VND 615 bn during 1Q24, driven by an increase in lease pricing between 7-20% throughout 2023. In addition, GEX recognized a net stock trading profit of VND 111 bn versus a loss of -VND 144 bn for 1Q23 on the back of the positive performance of the stock market during 1Q. We expect GEX’s PBT to increase 67% YoY to VND 2.3 tn, driven by the divestment of renewable projects at an estimated profit of VND 1.1 tn. Management expects the the divestment of most projects can be completed during the second quarter. Excluding the impact of financial income, the PBT would decline by 4% YoY. 

In May 2024, Vietnamese pangasius exports reached $167.3 mn USD (+5% YoY, flat MoM). According to Agromonitor data, this translates into a 21% approximate increase YoY in terms of sales volume growth. Exports to the US declined -2.1% YoY and exports to China inched up by +1% YoY, which is offset by significant gains in other smaller markets such as the Middle East (+31% YoY) and South America (+44% YoY). ASP to major markets such as the US and China remained stagnant at $2.98 USD/kg (-19% YoY) and $1.91 USD/kg (-17% YoY) respectively in May ’24, which weighed on overall gains in terms of volume growth over 20% YoY for each market. However, we still have been noting a slow MoM recovery in terms of ASP to the US since the trough in Dec’ 23.

Given the decelerating retail sales growth in Vietnam, we downgrade our rating on the shares of VRE from BUY to OUTPERFORM, with a reduced 1Y target price of VND 29,500/share (+37.5% upside) from VND 33,600/share. Our target price reduction reflects lower occupancy over the past three quarters from 3Q23 to 1Q24 and sluggish growth of the Vietnam retail market during the first five months of 2024, which has caused us to lower our 2024 net revenue an NPAT forecasts to VND 9.25 tn (-5.6% YoY, 1.7% lower than our previous estimate of VND 9.4 tn) and VND 4.14 tn (-6.2% YoY, 3.2% lower than our previous estimate of VND 4.27 tn), respectively.

NLG recorded net sales of VND 205 bn (-13.0% YoY, -87.5% QoQ) and a net loss of VND 65 bn (reversal from net profit during 1Q23 and 4Q23). Fewer units in the Izumi City, Southgate, and Mizuki Park project were handed over during 1Q24 than earlier during 1Q23 and 4Q23. During 1Q24, due to the low property sales, the SG&A exp/revenue ratio was high, at 70.6% but still lower than 1Q23. For the past few years, NLG has witnessed an increasing trend of selling and administrative expenses SG&A/ revenue ratio from 16.7% during 2019 to 30.8% during 2023, and the SG&A expenses/ratio during 2023 was the highest among listed Vietnam developers.

We reiterate our Outperform rating on the shares of HDB and roll our valuation forward to mid-2025 with 1Y TP of VND 29,000/share - representing upside of 22.4%. Our valuation is presented without considering the potential dividend yield of 6.3%. We believe that solid credit growth (higher than 20%) will hold up during 2025, allowing HDB to maintain NIM over 5%, and manage the NPL ratio between 1.8% and 2.0%. This should facilitate HDB to generate robust earnings growth and uphold ROE above 20%. However, credit expansion, particularly in real estate and related sectors, should be properly monitored if the market recovers more slowly than expected.

We downgrade our rating to Market Perform (from Outperform) on the shares of QNS, with an increased target price to  VND 56,700/share (from VND 55,400/share), as we roll forward our price target to mid-2025F. QNS trades at a 2024F P/E of 6.3 and 2025F P/E of 6.1x, which is lower than its five-year historical range of between 6.3x-11.5x. However, we believe that QNS’s earnings growth will be lower for 2H24 and flat for 2025, as the sugar business suffers lower growth, and the soymilk segment takes more time to return to normal.

DCM’s net income dropped -75% YoY during 2023 to VND 1.09 tn, owing to a sharp correction in urea ASP (-37% YoY), while the reduction in gas input costs (-3% YoY) was not sufficient enough to shield earnings. Looking forward, we expect global demand for fertilizer to gradually recover after being impacted by El Nino during 2023, enabling fertilizer prices to increase from last year low base. While revenue is projected to grow by 11% YoY to VND 14 tn in 2024, the reduction in depreciation expense should help earnings of DCM to rebound significantly during 2024 (net income of VND 1.84 tn, +69% YoY, from VND 2 tn).

Base case: Meanwhile, 2025 revenue and net income could remain flat at VND 14.3 tn (+2% YoY) and VND 1.85 tn (+1% YoY) as current urea capacity is rather full, while the revenue stream from NPK fertilizer remains quite small. Given this earnings outlook, our 1 year target price for the shares of DCM is VND 38,700/share. We call for MARKET PERFORM rating, as  DCM’s share price rallied 22% since our last OUTPERFORM rating. DCM remains our favorite dividend yield name, offering a 5.3% yield.

We reiterate our Outperform rating on the shares of CTG, although with a reduced 1Y TP of VND 38,500/share (from VND 41,400). As there is no timeline for state divestment below 65%, a resolution for raising capital by CTG remains blurry and is hindering long-term growth. All the while, the earnings outlook for 2024-25 remains exceptional compared to peer, with PBT growth of +17% YoY and +35% YoY, respectively, as we expect the heavier provisioning to come to end during 2024. ROE, therefore, should achieve a more desirable level of 20% during 2025. CTG is the third largest bank in Vietnam with strong brand recognition, solid customer base, and good deposit franchise, all of which would be an advantage for CTG to maintain a resilient NIM and expand fee-based services. A capital raising is the key to the growth puzzle for this bank.

Net profit for 1Q24 fell 25.6% YoY to VND 2.5 tn primarily due to the decline in sales volume amid the depletion of outstanding gas fields in Cuu Long & Nam Con Son 1 &2 basins. According to management, Jan-May PBT is estimated at VND 5.2 tn. This translates to a PBT in Apr-May of VND 1 tn/month, equivalent to the average monthly level for 1Q24, and -20% lower than the average level of 2Q23.

As GAS’s earnings for 1Q24 were in line with our estimates, we maintain our 2024 net profit forecast of VND 11.1 tn (-3.7% YoY) based on dry gas volume of 6.95 bn m3 (-6% YoY) and a slight price increase of 2% YoY.  We expect the company’s earnings to remain flat in 2025 given that the contribution of LNG and the new fields should offset the depletion of old fields.

Earnings of DPM plunged by 90% YoY in 2023 due to: (1) the sharp correction in urea prices (-39% YoY); (2) an increase in gas input costs (USD10.60/mmbtu, +22% YoY) as DPM had to source natural gas from more expensive sources; and (3) a deterioration in gross margin from trading and NPK fertilizer in the context of the sharp correction in fertilizer prices in 1H23. For 2024-25F, we expect global demand for fertilizer to recover gradually after being hit by severe El Nino in 2023, enabling improved fertilizer prices. This, together with the normalization in profit margin of trading activities and NPK fertilizer from the low base in 2023, should help earnings rebound to VND875bn (+61% YoY, from previous estimate of VND 1.1 tn) and VND1tn (+15% YoY) for 2024F and 2025F, respectively.

We see significant potential in DPR’s large land bank, which can be converted into industrial parks – a major opportunity for the company to unlock value and revenue. The increase in the demand for industrial parks is particularly pronounced in Binh Phuoc province, given that occupancy rates of Binh Duong and Dong Nai industrial parks have reached 94% and 92%, respectively, and the convenient connecting infrastructure, including North - South expressway in  Gia Nghia - Chon Thanh; Ho Chi Minh City - Thu Dau Mot - Chon Thanh; and Dong Phu road - Binh Duong. We believe that the traditional natural rubber business line will continue to benefit from higher market prices near-term. We rate the shares Outperform with a 1-year target price of VND 47,600/share (up 4% due to an increase in rubber prices of 18% vs 12% from our previous report).