Company Report

We attended DPM’s AGM during which management increased their 2022 net income guidance to VND3.5tn (+10% YoY, 268% higher than the initial plan) and DPM’s cash dividend of 50% on par value (9.4% dividend yield, higher than the initial plan of 35% on par value). The AGM did not approve the proposal to raise transportation tariff costs for the 2014-18 period. As such, DPM may not have to pay an additional USD18m or VND430bn to GAS. DPM’s earnings closely track urea price trends, ie having achieved the highest net income in terms of absolute value in 1Q22, only then to decline gradually in 2Q22 and 3Q22, while it could improve in 4Q22 as the high season begins. In terms of YoY growth, DPM still targets to deliver positive earnings growth in 2Q22 (up 60-70% YoY on our estimates) and 3Q22 but could post negative earnings growth in 4Q22. As such, we believe that the share price may continue to exhibit positive momentum over the short term. We now estimate DPM’s 2022E net income to reach VND5.1tn (+59% YoY, from VND2.25tn) and introduce our 2023E net income of VND4.1tn (-18% YoY).

VRE started its turnaround in 4Q21 and continued the recovery momentum in 1Q22. We expect its performance to further improve with the country’s full reopening as the sustained and significant uptick in footfall would expedite the cessation of mall relief. Our earnings forecast for 2022 is VND 7.8 tn (+32.7% YoY) and PAT of VND 2.2 tn (+65% YoY), primarily due to strong growth in leasing revenue given the expected decline in support packages and the contribution of three new malls opening this year. For 2023, we forecast earnings of VND 8.5 tn (+9.2% YoY) and PAT of VND 2.6 tn (+30% YoY) with expectations that leasing revenue continue to recover to pre-Covid levels. Meanwhile, new mall openings in 2022 – 2023 will push organic growth in leasing revenue as well. We reaffirm our OUTPERFORM rating with a SOTP-based 12-month target price for VRE is VND 33,900/share.

We raise our 1Y TP on the shares of REE to VND 105,300 (from VND 86,400), and reiterate our Outperform rating. We increase our FY22 NPATMI 16% to VND 2.4 tn (+27% YoY), driven by the hydropower segment. Per draft of Power Development Plan 8 which requires wind capacity of 13,616 MW by 2025, there are still approx. 7,180 MW to be developed. REE could be one of the potential names, given its strong financial condition and high credit rating.

At the recent AGM, PLX set a conservative 2022 earnings target of VND 3.1 tn, declining 19% YoY. PLX’s PBT dropped -44% YoY during 1Q22, mainly due to weak performance in the petroleum segment associated with high oil price volatility and input supply disruptions at the Nghi Son refinery. However, we expect a rebound in earnings in the upcoming quarter given the increase in oil prices and the stabilization in input sources. According to management, the PBT between Jan-May ‘22 is estimated at VND 1.3 tn, accomplishing 44% of annual guidance. This implies a PBT of VND 770 bn in Apr and May and signals a significant improvement over 1Q22 results.

The shares of NT2 have achieved our target price of VND 26,800 (as our 18-Apr-2022 update), and we adjust the company’s 2015-2019 FX loss claim to our estimates to derive the new target price of VND 29,300 (+5.4% upside). The shares offer a 2022 dividend yield of 6.5% while the current 12-month deposit rate range is 5.0%-5.2% at the SOCBs and JSCBs. Over the next 12M, an estimated +100bps increase in deposit rates is assumed and NT2’s dividend yield may not be as attractive given the stock’s limited upside. With total ROI of 12.1% including dividend yield, we call for Market perform rating on the shares.  

We are reiterating our BUY rating on the shares of HAH, and increase our 1Y-TP to VND 110,000/share (target P/E of 8x), which implies 22.4% upside. We continue to believe that HAH can maintain a high level of earnings throughout the cycle. Over the near term, we believe that HAH will maintain strong earnings growth due to capacity expansion. Taking the ZIM – Haian JV into account, we are increasing our 2022 and 2023 NPATMI estimates to VND 855 bn (+92% YoY) and VND 1.13 tn (+32% YoY), respectively.

We are upgrading the shares of PVT to BUY from Market Perform, which tracks our 1-year target price of VND 26,200/share (previously VND 32,500/share) using target P/E forward of 11x – intimating 22% upside in the shares. Over the short-term, we expect a catalyst in the form of the PVT Athena liquidation which should translate into a gain of USD 6 mn (expected in 2H 2022F). PVT has solid assets, stable earnings growth, a D/E ratio of 0.5x, and a strong cash buffer of VND 3 trillion at 1Q 2022. As the Vietnamese economy is in recovery, we also believe that increased tanker demand is on the near-term horizon. These factors suggest that PVT will return to its pre-COVID core earnings growth path of 15% p.a. over 2022F-2023F, given renewed and growing fleet of vessels.

GAS remains our top pick in the oil & gas sector, which is one of the top domestic beneficiaries of high oil prices. We also lift our 12-month target price for GAS from VND 134,000/share to VND 143,000/share (20% potential upside) as we roll our EPS base to mid-2023 tracking our belief of even higher fuel oil and LPG prices. We base our target price on blended target PE of 20x (from 22x) and DCF valuation. For 2022, we raise our NPAT forecast for GAS from VND11.6 tn (+35% YoY) to 13.4 tn (56% YoY) on higher oil price assumptions (from USD480/ton to USD500/ton for fuel oil and from USD700/ton to USD800/ton for LPG) and a higher dry gas volume forecast, from 8.1bcm to 8.2bcm (+13% YoY) in 2022.

We are downgrading the shares of OCB from Outperform to Market Perform, and we aggressively cut our 1Y TP on the shares -28.2% to VND 23,200. Our reduced TP reflects both the rising interest rate environment and potential credit exposure to FLC Group’s loans and corporate bonds, and the increased risk of restructured construction and the real estate loans. 1Q 2022 results were disappointing, highlighted by -34.5% YoY decrease in pretax profit. Strong NII growth of +22% fueled by credit growth of 5.9% YTD, but was simply not enough to offset for the -50% YoY decrease in non-interest income and doubling of credit costs. While OCB was able to collect VND 400 bn from FLC Group in May, this loan balance still tallies 1.9% of total credit at 1Q22. 

BID performed well during 1Q22, as operational efficiency and profitability indicators exhibited improvement, with well-managed credit. For full-year 2022, we expect that the bank would garner +52% YoY growth in pre-tax profit, fueled primarily by a lighter provisioning burden (-19% YoY). ROE would rise to 16% (from 9-13% over the past three years). However, long-term growth potential for BID is still limited by capital (CAR of around 9% only), while fee-based services lack a critical growth driver. Although the bank is reviewing its strategy/ownership structure regarding its life insurance arm BIDV MetLife, we do not expect it to be finalized soon (at least not within 2022). With an adjusted 12-month TP of VND41,200 (from VND42,300), we maintain our MARKET PERFORM rating on the shares of BID.

MWG recently hosted an online analyst meeting to discuss its 1Q22 financial results. Net income in the quarter increased by only 8% YoY, as the revenue of BHX was still negatively affected by lower household income in rural areas. However, we believe that restructuring back-end activities and the gradual recovery in household income towards the end of this year will help MWG to perform better in the remaining quarters. We now forecast 2022E net income at VND6.34tn (+29% YoY, from VND6.7tn). Our new 2022E net income is 5.4% lower than our previous estimate, as we take into account the loss from the pharmacy chain and trim our estimates for the grocery chain. Besides focusing on opening DMX Supermini and Topzone stores, MWG plans to accelerate new openings of An Khang-branded pharmacy stores. As we now add the pharmacy segment into our valuation, we lift our SOTP-based 12-month target price to VND197,500 per share (from VND196,000). We reaffirm our BUY rating. Downside risk: possibility of store closures due to renewal of lockdown measures.

In 2018-2020, VTP has been a favorite mid-cap high growth stock mainstay for investors, with earnings growth ranging between 40-50% p.a. thanks to its direct exposure to the Vietnam e-commerce growth story. However, even after COVID-19 has sped up ecommerce market growth significantly, the express delivery market after 2020-2021 period has been further sculpted and is continually refined. It is thus of little surprise the market has been heading into a new period, with more competition and with higher expectations of better infrastructure and customers’ demand for higher service quality. In that context, VTP needs some time to retool its approach towards a new growth strategy, with an initial focus on infrastructure investment before it can reap the fruit of reward, and see high growth yet again. At the current market price, VTP is trading at a 2022F and 2023F forward P/E of 20x and 17x respectively, compared to the regional peers’ average of 24x. We maintain our target P/E of 20x, but lower our estimates for VTP as discussed below. As such, we revise our VTP 1Y target price to VND 74,000/share (12.8% upside), with an MARKET PERFORM rating for the stock.

We attended the PHR AGM, where the company set its 2022 PBT parent company guidance growth target of 150% YoY to VND 899 bn, solely due to a one-off land compensation related to the VSIP 3 project. We forecast that 2022 consolidated net income will increase 117% YoY to VND 1.1 tn. Over the long-term, PHR is expected to diversify away from its core rubber business and become a developer of industrial parks. As such, PHR has begun the process of obtaining the necessary legal approval to develop Tan Lap Industrial Park (400 ha) and the second iteration of the Tan Binh Industrial Park (Tan Binh 2; 1,055 ha) in Binh Duong province. We raise target price to VND 74,000 per share (from VND 59,600) to reflect the increase in lease rate of industrial parks in Binh Duong province. Post-broader market sell-off over the past several weeks, the shares of PHR now look quite attractive. With an ROI of 30% (6.7% dividend yield), we call for BUY rating on the shares.

1Q22 results remained solid with strong credit growth, improved NIM, a better CASA, and stable asset quality. We are raising our 2022E PBT by 14% to reflect our higher lending yield assumptions from better NIMs. For full-year 2022, we now expect the bank’s PBT to grow by 24% YoY to VND34tn. VCB’s limited exposure to the real estate sector and the corporate bond market alike are also a distinct advantage during this tumultuous period. Lending to developers & corporate bonds of developers accounted for a mere 3% of total credit – amongst the lowest in the sector. Further, the mandatory transfer by the SBV of a weak bank to VCB is perceived to be net neutral given the broad array of financial incentives that VCB could potentially receive as consideration for this transaction.

After posting fruitful earnings results in 2021, MSN continues to set high growth targets for 2022. MSN targets between VND 90-100 tn in revenue (+22%-36% YoY) and core NPATMI of between VND 4.8- 6.2tn (+26%-63% YoY). These targets take the deconsolidation of the feed business into account. For 2022, our forecasts are broadly unchanged, and we estimate MSN to post VND 93.4 bn revenue (+5.4% YoY) and VND 5.76 tn NPATMI (-33% YoY) or core NPATMI growth of 37% YoY. For 2022, strong growth likely will come from: (1) continued growth momentum of MCH and TCB; and (2) profitability improvement at WCM and MHT.  Our SOTP-based 12-month target price is adjusted to VND130,000/share (from VND172,000), after taking into account the recent 20% stock dividend. With 18% upside potential to our TP, we maintain our Market Perform rating.