Company Report

Despite the above, overall KBC reported poor financial results for 1Q2024, with net sales totaling VND 152 bn (-93.1% YoY & -82% QoQ) and net loss of VND 76.7 bn, reversal from high net profit during 1Q23 and 4Q23. The lack of industrial land leases (which were recorded during 1Q24) is the main reason for the poor results. For FY2024, we expect KBC to lease around 102 ha of industrial land in total, of which 30 ha was secured to lease by new investors during 2023, 50 ha from Trang Due 3 Industrial Park, and 22 ha from the Tan Phu  Trung Industrial Park. Accordingly, KBC is forecast to achieve VND 4.92 tn (-12.8% YoY) in net revenue and VND 1.36 tn (-38.5% YoY) in NPAT for FY2024.

2024 business plan: For 2024, PLX set conservative PBT guidance at VND 2.9tn, implying a decline of 29% YoY. However, it should be noted that PLX’s actual results have usually exceeded the guidances for the past nine years with the exception of 2020 amid the response to Covid-19.  

1Q24 achieved impressive results driven by the petroleum segment: PBT soared 72% YoY and 70% QoQ to VND 1.44 tn, already accomplishing 50% of the 2024 guidance. Most notably, gross profit increased a considerable 31.2% YoY to a record-high of VND 4.67 tn, fueled by the petroleum segment.  Domestic petroleum sales volume arrived at 2.6 mn tons, increasing slighly by 2% compared to the relatively high base of 1Q23, while still increasing 2.4% QoQ. However, earnings for the segment soared 260% YoY to VND 1.06 tn driven by a 9% increase in petroleum prices during the quarter which benefited the company through low-cost inventory, and the shortening of price adjustment cycle from 10 days to 7 days from the end of 2023.

We lower our rating to MARKET PERFORM for the shares MSB and roll forward our valuation to mid-2025 with 1Y TP of VND 16,200/share, presenting an upside of 13%. As asset quality remains a key concern (especially from retail loans, including mortgage and credit card), we believe that 2024 and 2025 will afford MSB the opportunity to clear out various bad debt with higher provisions. Therefore, we do not believe that pretax profit will grow strongly during this time, making ROE likely to hover around 15%. However, we believe that the clear recovery signal should start from 2025 due to NIM recovery, a lower NPL ratio, and reduced credit costs.

We maintain our MARKET PERFORM rating on the shares of BMP. We apply a target P/E of 10x (unchanged), as the company maintains a high cash dividend payout and high earnings level. We raise our target price for BMP to VND 115,900/share, as we roll forward our valuation basis to mid-2025F, representing upside potential of 2% (total ROI of 12%, included 10% dividend yield).

We maintain our MARKET PERFORM rating on the shares of IDC. We increase our 1-year target price of VND 62,300/share (up 15%) due to higher lease prices at Huu Thanh Industrial Park, as guided in the Analyst Meeting on 7 May and the reduction of the discount rate from 12% to 10.5%.  As such, we believe that IDC will maintain its cash dividend at 40% on par value through 2024, which represents an attractive dividend yield of 6.7%. IDC is one of the largest industrial park developers in Vietnam, with 554 ha of available leasable land in Long An, Ba Ria Vung Tau, and Thai Binh province. Low compensation and clearance costs should enable IDC to maintain the industrial park segment gross profit margin above 42% through 2026. 

KDH recorded net sales of VND 334 bn (-21.5% YoY, -28.9% QoQ) and NPAT of VND 64 bn (-68.4% YoY, +1.9% QoQ). Fewer units in the Classia project were handed over during 1Q24. The Classia project has been on sales and delivered since September 2022 with a total of 176 units, and at 1Q24, the Classia project only has between 10-15 units left for sales. Also, we understand KDH sold some land plots in its inventory to other investors which KDH acquired before, and recorded revenue from these sales with a lower margin when compared with retail sales.  As per the 2024 AGM, KDH management is expected to hand over units sold from The Privia project during 4Q24. From now until 4Q24, KDH will have only a few units in The Classia project left for sales and record revenue following the sales. Thus, from Q2 through Q3 2024, we expect KDH to achieve minimal business performance in term of revenue and profit until 4Q24, when KDH is expected to deliver units in The Privia project and record this revenue from the project. As a result, we expect KDH to achieve 2024 revenue and NPATMI of VND 3.47 tn (+66.1% YoY) and VND 825 bn (+15.3% YoY) respectively.

April 2024 sales were better than expected. VNM reported 4% y/y growth in sales for 4M24 (including +16% y/y for exports), and growth of 10% y/y in sales specifically for April. For reference, 1Q24 revenue and NPAT rose by 1.4% (VND14.1tn) and 15.8% y/y (VND2.2tn), respectively (slightly better than our estimate of a 15% y/y NPAT increase). The Vietnam dairy sector recorded a pullback of 2.8% y/y in terms of value during 1Q24, with the infant-formula-milk category decreasing c.20% y/y, according to AC Nielsen. Through 1Q24, VNM has completed 22% and 24% of its annual respective net sales and net income targets. We maintain our forecast for 2024F net sales and net profit of VND63.7tn (+6% YoY) and VND10.1tn (+12% YoY), respectively. We are still optimistic about VNM’s ability to grow despite headwinds, and are assuming lower ingredient prices and restructuring efforts to improve the bottom line. The selling expense/sales ratio is expected to remain at around 21.5% to allow for business development activities (ie, rebranding, e-commerce), while financial income is likely to decrease given the lower interest rate environment. We introduce our 2025F forecast for net sales and net profit to increase at 6% (VND67.5tn) and 7.5% y/y (VND11tn), respectively, with the assumption that consumption should recover more firmly and operating margins will be better optimized via digital transformation process.

1Q24 results were within our expectation as volume in the quarter declined 86% YoY, which weighed on NT2’s performance accordingly. We expect this output figure will somehow improve QoQ in 2Q24, supported by the peak power demand season in Vietnam. Nevertheless, due to the limited contracted volume (Qc) (at ~1 bn kWh) (the actual Qc might change, depending on the actual electricity mobilization conditions) planned by the National Load Dispatch Center (NLDC), we are concerned such improvement might not help NT2 to breakeven in 2024. We project a loss of VND 255 bn (nearly unchanged compared to our previous update) for the company in 2024. After our SELL recommendation on 29 Mar 2024, stock price declined by 12%.  With a 12-month target price of VND 23,000 (equivalent to a 5% upside potential) (based on DCF and EV/EBITDA valuation methods), we upgrade our rating to MARKET PERFORM for the stock.

2023 was an impressive and significant year for Viettel Post (VTP), as the company managed to post impressive earnings growth of 48% YoY, partially on top of the low base in earnings in 2022. PBT reached VND 480 bn (+48% YoY), and NI reached VND 381 bn (+48% YoY). 2023 EPS is VND 2,654/share. Key growth drivers: market share +3%, core revenue +12% YoY, gross margin improvement: + 1.9 percentage points.

During 1Q 2024, VTP posted a slowdown in both top line and bottom line growth, with revenue -2.1% YoY and PBT -22.4% YoY, only completing 16% of the company’s 2024 PBT target after the first quarter and in line with our expectations. Key reasons: trading segment cutback by 30% YoY, higher cost from new capex investment, gross margin decline by 2.4 percentage points.

AGM held successfully with some key targets: revenue -33% YoY due to trading segment cutback, PBT 462 bn flat YoY, cash dividend of 15% on par

Viewing 1Q 2024 results going forward, we are confident that PVT can continue its growth path for the core tanker business in 2024 as we have previously forecasted (around 18% YoY). We also notice that the recent time charter market has improved again back to its previous peak for the oil/chemical MR (medium range) tanker segment, so a sudden weakness of the tanker market is not imminent. Thus, we maintain our OUTPERFORM rating for PVT with a 1Y TP of VND 30,000/share, and the stock remains our top pick for the transportation sector in 2024.

As Viettel Group (Viettel) and Vietnam Posts and Telecommunications Group (VNPT) were awarded the usage right of 5G wavebands in March 2024, we believe that CTR will require significant capital for BTS (base transceiver station) sites investment, which means a conservative dividend payout level accordingly should be reasonable to accumulate a strong enough retained earnings balance as a safe equity source. However, we observe that CTR intends to pay out higher cash dividends than before. Specifically, during 2016-2021, CTR had maintained a conservative VND 1,000/share cash dividend despite consistent earnings growth. However, that level then increased to VND 2,919/share in 2022 and was approved at VND 2,720/share in 2023 (during the 2024 AGM) (nearly a threefold increase compared to past years). Therefore, we believe that CTR might have to increase its debt component in the capital structure. Additionally, we witnessed lower-than-expected gross profit margin of construction segment and financial income during 1Q24 and expect that 2024 NPATMI will perform a slower growth of 11.6% YoY growth than that of 2023 (16.5% YoY). Nevertheless, we forecast a solid NPAT growth of 19.8% YoY in 2025, mainly driven by the long-term outlook of 5G rollout, which should support infrastructure leasing segment to continue to improve CTR’s overall profit margin. We call for a MARKET PERFORM rating on CTR, with a 12-month DCF target price of VND 133,200/share (equivalent to 3% upside potential).

MBB held an investor meeting on Friday to address investors’ concern over 1Q24 results. As expected, the burning issue was the deterioration in asset quality during the period. Another issue which also garnered much attention was the NIM trend in the coming quarters. MBB appears confident that asset quality will improve during 2Q24 as the large corporate client which was downgrades during 1Q24 is expected to recover during May 2024. NIM is expected to either be stable, or experience a slight improvement in the next 2 quarters.

We believe that the aforementioned corporate client will return to the normal loan group in 2Q24 via negotiation. As such, we do not adjust our current credit cost assumption of 1.5% for 2024. However, MBB’s NIM may not be as favorable as we had previously anticipated due to inherent credit risk and client loan rate support. Accordingly, we finetune our estimate for MBB to VND 29.1 tn (+10.6% YoY) from VND 30 tn (+13.7% YoY).

MWG released upbeat 1Q24 results, flipping back to solid profitability with net income of VND903bn (+4,143% YoY). This beat our expectation thanks to faster-than-expected profit margin expansion of both the ICT & CE and grocery segments. Although we had initially expected a notable improvement in the profit margin of ICT & CE chains after a period of de-stocking and certain cost-cutting measures by the company, the results came in even better than our expectation due to (1) abnormal sales of air conditioners which generate larger profit margins than mobile phones, and (2) the de-stocking pressure which has been released and lifted profit margins for ICT & CE retailers – we observed a correction in inventory balance of competitor FPT Shop from 1Q24. With better-than-expected 1Q24 results of the both ICT & CE and grocery segment, we revise up our 2024-25F net income to VND3.47tn (+1,968% YoY, from VND2.5tn) and VND4.5tn (+30% YoY, from VND3.4tn). With unchanged target multiples on our revised 2025F financials (from average 2024-25F), we derive our new SOTP-based 12-month target price for MWG at VND65,800 per share (from VND56,200), and maintain our OUTPERFORM rating.

We maintain our Market Perform rating on the shares of HT1. We apply a target P/E of 12x (15x previously) and EV/EBITDA of 6x (7x previously), resulting in a one-year target price of VND 11,600/share (from VND 11,300/share), as we roll forward our price target to mid-2025F. 1Q24 results: HT1 recorded net sales of VND 1.5 tn (-12% YoY, -16% QoQ) and a net loss of VND 25 bn (compared to net loss of VND 86 bn in 1Q23 and net profit of VND 54 bn in 4Q23) on weak cement demand. Sales volume decreased 6% YoY (-22% QoQ) due to seasonal effects and persistent weak demand from 2023. ASP decreased 6% YoY (-6% QoQ), as: (i) higher percentage of bulk cement sales; and (ii) new cheaper cement brand “PowerCement” launched late 2023. GPM has improved to 6.9% during 1Q24 compared to 4.5% during 1Q23 due to 30% YoY lower input coal prices.

PNJ recently held its AGM, wherein the company set its 2024 net income target at VND 2.09 tn (6% YoY). We think the company set conservative earnings target due to the recent surge in gold material costs. In 1Q24, PNJ achieved net sales and net income of VND 12.6 tn (+29% YoY) and VND 738 bn (-1.4% YoY). While the company posted strong top line growth thanks to the recovery of retail sales (+12% YoY) and record high gold bar sales (+66% YoY), net income was flat as the company has not yet adjusted sticker prices to offset the increase in gold material costs. Although 1Q24 retail sales showed early recovery sign (+12% YoY), the growth mainly came from larger store network (392 gold stores as of 1Q24 vs 357 gold stores as of 1Q23), while retail sales of existing stores increased by single-digit (our estimates). With the slow recovery in retail sales in 1Q24, we think PNJ prioritized gaining market share in 1Q24, hence explaining the flat net income despite resilient top line growth.