Company Report

as Viettel Group (Viettel) was awarded the usage right of 2,500-2,600 MHz waveband to commercialize 5G mobile technology on 8 March 2024, we forecast CTR’s total number of BTS (base transceiver station) sites should enjoy a 70% YoY growth in 2024, benefited from 2G gradual shutdown and 5G rollout, which could generate a 53% YoY sales growth of infrastructure leasing segment. In the longer term, we expect the profit contribution from this segment could be higher. In fact, we forecast its gross profit to account for ~27% of total gross profit by 2026 (vs 15% in 2023) despite its minimal improvement of revenue contribution (8% of total revenue from 4% in 2023), which we attribute to is relatively higher gross profit margin (~31% in 2023) than others’ (5%-20%). Furthermore, due to higher-than-expected 4Q23 signed contracted value of residential construction (which accounted for over 40% of contracted value in 2023), we revise up our sales growth estimate for CTR’s construction segment (from 6% YoY to 17% YoY) in 2024. We expect NPATMI will perform well at 16.4% YoY in 2024 (vs 16.6% YoY of 2023), held up by the solid pillars of the construction, operation, and infrastructure leasing segments. We call for an OUTPERFORM rating on CTR, with a 12-month DCF target price of VND 123,000/share (equivalent to 9% upside potential).

4Q 2023 revenue reached VND 1 tn, on par with last year’s fourth quarter, while PBT was VND 253 bn and on par with last year's level. This brings FY2023 revenue to VND 3.8 tn, -1.3% YoY (a bit lower than our estimate of VND 4 tn) and pretax profit to VND 3.1 tn, +140% YoY (exactly in line with our estimates). Excluding the one-off gain from the Nam Hai Dinh Vu port divestment, 2023 core-PBT reached VND 1.3 tn, flat YoY. Total volume of GMD during 4Q 2023 reached 857k TEU (+37% YoY), and is the highest quarterly volume level for GMD historically.

Jan-Feb 2024 volume exhibited a strong sign of recovery: According to Vinamarine, total Vietnam container throughput during this time reached 4 mn TEU, +27% YoY. International throughput growth is 20% YoY, but this is a an early sign for a recovery year for Vietnamese exports/imports and seaport volume.

We lower our rating on the shares of ACB to Market Perform (from Outperform) with a 1Y TP of VND 30,800/share, as we believe that the current price partly reflects forward-facing 2024 business performance. However, we still prefer the shares of ACB over the medium- and long-term horizon due to its conservative lending approach, which will assist the bank in preserving its sector’s best asset quality. Further, a healthy NIM and sustainable ROE of over 20% are also achievable goals over the medium-term. 

On the other hand, we think the current price has discounted the bad news. Saigon beer remains the dominant brand in Vietnam and we expect SAB to post growth when the sector recovers. SAB is trading at a 2024E P/E of 18x, which is 1SD lower than its past-5-year average (23x). Our revised 12-month target price is VND63,900/share (from VND76,000/share), based on a mix of DCF methodology (WACC: 9.53%, growth: 2%) and a lower PER of 20x (from 23x). With potential upside of 10% to our new TP, we maintain our MARKET PERFORM rating.

While other retailer earnings lost their luster during 2023, PNJ managed to outshine with net income of VND 1.97 tn (+9% YoY) for the year. This was made possible by market share gains associated with new outlets and tapping a new customer demographic, along with gross profit margin improvement. During 2024, we expect that the macroeconomic headwinds to subside, which should further boost jewelry purchases. We expect PNJ’s retail sales growth to increase at a faster pace (+17% YoY) than the jewelry industry’s expected recovery during 2024 due to market share gains. PNJ’s net income during 2024 is estimated at VND 2.3 tn (+17% YoY, from VND 2.17 tn). During  2024, we expect PNJ to open 35 new gold stores (increasing store count 9%). 

HAH is trading at 2024F forward P/E forward of 12x, which is relatively high compared to its historical P/E range of between 6x-9x. We believe that the current valuation is justified by the improvement in the industry fundamentals due to Red Sea and geopolitical tensions increasing TEU-mile demand for the whole industry, as well as long-term contribution of the new capacity from 2024.

We utilize the DCF method to fully reflect the potential of HAH (while our previous valuation applies the P/E method). Considering the earnings outlook from 2024, our forecast results in a target price of VND 45,100 per share (reflecting 7.5% upside), and assign a MARKET PERFORM rating. The stock price has partially priced this that we would recommend buying on dips. 

For 2024E, we expect net sales and net profit to reach VND63.7tn (+5.6% YoY) and VND10.1tn (+12.1% YoY), respectively. This is 2% and 3% lower than our previous net sales and net profit forecasts. We are still optimistic about a 2H24 recovery but reduce our forecasted gross margin improvement from 250bps to 160bps, as well as assuming no price increase during 2024. The selling expenses/sales ratio is expected to stay at c.21.5%, while financial income is expected to decrease given the lower interest rate environment. VNM is trading at a 2024E P/E of 17x. Our new 12-month target price is VND82,000/share (from VND87,400/share), based on our unchanged DCF and P/E methodology. With upside potential of 15% to our new TP, we reiterate our OUTPERFORM rating.

4Q 2023 revenue of VND 1.7 tn, +19.8% YoY and +26.5% QoQ due to higher day and utilization rates of rigs. 4Q 2023 NPATMI: VND 195 bn, +261% YoY (due to low base) and 29.6% QoQ due to a higher day rate. This brings 2023 NPATMI to VND 575 bn (compared to a loss of VND 96 bn for 2022) and 10% higher than our estimate of VND 507 bn due to earlier than expected improvements in the 4Q23 day rate. On investment: The company turned its attention from a newer USD 130 mn rig to an older USD 90 mn rig (15 years old), which can be put into operation at year-end 2024 if the company proceeds with this purchase

Net profit during 1Q24 came in at a sterling VND 103 bn, turning the tables on the prev. loss of VND 680 bn at 1Q23. However, it declined -76% QoQ from the high base of the previous quarter due to a drop in export price and higher SG&A expenses. The company’s sales volume increased 16.3% QoQ and 33.7% YoY to 454k tons during 1Q24, the highest level since 2Q22, in which domestic sales volume increased 18.6% QoQ and 24.8% YoY to 250k tons, while export also increased 45.7% YoY and 13.1% QoQ to 202k tons. We maintain our FY2024 earnings forecast for HSG at VND 775 bn (+24.8x YoY). We expect the company’s sales volume to increase 14.6% YoY to 1.6 mn tons for FY 2024, whereby export and domestic volume are expected to increase 16% and 13% YoY to 891k tons and 711k tons, respectively. The FY2024 gross margin to improve to 11.3% from 9.7% during FY2023 due to: (1) the low base of 1Q23 with a loss of VND 680 bn, as mentioned earlier; (2) improvement in the capacity utilization rate from 58% to 67%; and (3) a slight increase in the contribution of the domestic channel from 55% during FY2023 to 56% for FY2024.

During 4Q 2023, Saigon Cargo Service (HOSE: SCS) posted revenue of VND 198.8 bn (+1.7% YoY and +15.9% QoQ) and profit before tax of VND 146.1 bn (-13.8% YoY and +0.2% QoQ), meeting our in-house expectations. It is notable that 4Q 2023 witnessed a 6% YoY increase in international cargo volume, marking the first quarter since 4Q2022 to experience YoY growth. 2024 should be an optimistic year for SCS as they have secured a 3-year contract of cargo handling services at Tan Son Nhat International Airport for Qatar Airways, commencing from this quarter (i.e. Feb 2024). This contract should boost both SCS’ market share (from 35% to nearly 50%) and earnings. This deal should contribute around 25%-30% of 2024 PBT. We do not expect any significant changes to cost structure, but a slight increase in concession fees from 1.5% to 2% from 2H24.

We maintain our 2024 net profit forecast at VND 11.2 tn, implying an increase of 64% YoY and driven by the recovery in both sales volume and steel prices. We assume that the company’s construction steel and HRC volume will reach 4.5 mn tons (+17.8% YoY) and 3 mn tons (+8.3% YoY), respectively, for 2024. Over the longer-term, we expect that the company’s earnings will achieve average growth of over 30%/year between 2025 to 2027. This should be driven by the commencement of Dung Quat 2 project, which would allow HRC sales volume to more than double from 2.8 mn tons during 2023 to 7.5 mn tons for 2027. The current domestic supply shortage between 4-5 mn tons/year, along with the more recent growth in exports should enable the company to boost its HRC segment after the project commences operation.

In 1Q FY24, CTD reported revenue of VND4.124tn (+14.1% QoQ and +32.5% YoY) and pre-tax earnings of VND86bn (+118.9% QoQ, despite incurring a loss in 1Q FY23). In terms of profitability, CTD achieved a gross profit margin of 2.4% and a pre-tax margin of 2.1% in 1Q FY24. In the face of challenging conditions, the growth of the backlog in 1Q FY24 demonstrates strong resilience, indicating a potential recovery in FY24. The company’s total backlog has consistently reached VND24tn, including 40% for residential and 20% for industrial construction. In addition, CTD aims to target the international market, and the net margin is expected to be at most 3%.

Taseco Land (TAL) was established in 2009 with its main business in real estate development. In early 2018, TAL restructured the organization and increased the chartered capital to VND 900 bn. Thanks to profit retained in the last several years along with capital raising from current shareholders, currently, the charter capital of TAL stands at VND 2.97 tn (US$123 mn). For FY2023, we estimate the Company will achieve VND 3.29 tn in revenue and VND 480 bn in NPAT. For FY2024, we expect the Company will i) launch for sale in residential area in Hai Yen Resettlement area, Nghi Son town, ii) sale continuation in the Alacarte Ha Long, Central Riverside and Luong Son Riverview project and iii) recognition of unbilled bookings revenue in N01-T6 apartment building in Hanoi and one-off financial income from the divestment of office building in land lot B2-CC4, Starlake Urban Area, Hanoi. As a result, TAL is expected to achieve revenue and PAT for FY2024 of VND 3.37 tn (+3% YoY) and VND 631 bn (+31% YoY) respectively.

For 2024, we estimate revenue at VND 5.2 tn (+12% YoY, from VND 5.08 tn) and net income at VND 281 bn (+15% YoY, from VND 250 bn). While we expect the demand in export market to be warmer in 2024, the gross profit margin may not improve much as the depreciation expense from the new radial production line kicks in. Our new 2024 earnings estimates are 12% higher than the previous as we take into account the recent increase in sales order from the US market (from 22K units/month to 25K units/month, accounting for 33% of the total radial tire sales volume), while the sales order from the Brazil market is to be remained unchanged (35K units/month, accounting for 47% of the total radial tire sales volume). With an unchanged target P/E of 12x on 2024F revised financials, we derive a new target price for DRC at VND 28,400 per share (from VND 25,300). We maintain MARKET PERFORM rating on DRC.