Company Report

BVH reported weak numbers this quarter, reporting a pretax profit of VND 187 bn (-67% YoY) despite total insurance premiums rising to VND 8.6 tn (+5.9% YoY). Life insurance total premiums increased by +11.2% YoY (vs. +19.7% YoY in 1Q 2019), and non-life direct written premiums dropped -5.1% YoY (vs. +10.5% YoY in 1Q 2019). We expect Vietnam life insurers to be net beneficiaries from Covid-19, as this pandemic would accelerate the change in community awareness toward life insurance products. BVH is the sole local life insurer, as well as the only listed stock with a prominence life insurance subsidiary. Insurance sales activities are projected to resume fully by June, hence a strong recovery in 2H 2020 would largely offset the weakness in late March and April. Under our estimate, BVH is expected to post a respective VND 1.196 tn (+9.9% YoY) and VND 1.502 tn (+25% YoY) in NPAT-MI for 2020 and 2021. Accordingly, our target price for BVH is VND 62,500, and our rating for the stock is BUY.

We raise 1-yr target price for MSN to VND 64,900 (from VND 59,000) based on the SOTP approach applied to 2020-2021 earnings projections, plus the application of a 15% conglomerate discount. Our recommendation is Market perform.  We forecast group NPATMI growth of -83.2% / +89.1% in 2020F/2021F.   The consolidation of VCM and lack of extraordinary income look to undermine 2020 earnings, while a decent rebound in NPATMI from the 2020 low base is likely for 2021 although the 2020/2021 P/Es look pricey at 76.9x/40.6x. Downside risks: Lower-than-expected domestic demand for packaged foods and meat products, as well as higher than-expected commodity prices (raw fish sauce, wheat, maize, soymeal, etc.) and metal prices (tungsten, copper, etc.). In addition, there are risks for the meat deli business in the form of a lower-than-expected conversion ratio from wet-market pork to chilled pork, as well as possible diseases at hog farms that impact pork consumption and the hog price. Upside surprises: Stronger-than-expected demand for MSN products, higher-than-expected VCM revenue growth, or any unpredictable one-off income. The consolidation of the mid-stream tungsten platform in 2020, which we have not taken into account yet, could also be an upside to our forecasts.

PNJ shares are now trading at VND 64,000 per share, equivalent to a 2020F P/E of 14.7x, lower than the median 2020E P/E of regional peers of 17.2x. With the target P/E remaining at 13x and projected EPS rolled over to the TTM ending at the June 2021 period, our target price for the share stands at VND 69,500 per share (+8.6% upside). Hence, we downgrade our recommendation for PNJ from BUY to Market Perform. 

We revise down our forecast for CTG earnings to VND 9.22 tn, at -21.7% YoY to reflect more comprehensively the impact of Covid-19. For 2021, we expect CTG to achieve VND 13.42 tn of PBT, at +45.5% YoY. 2020E and 2021E ROAE is projected at 9.4% and 12.8% respectively.  At the current price of VND 23,050 per share, the stock is trading at a 2020E and 2021E P/B ratios of 1.06x and 0.98x respectively. Our 1Y target price of CTG is VND 27,200 per share. As the potential upside is +18.0%, we maintain our OUTPERFORM rating on this stock. 

We maintain our 2020 earnings estimate, with consolidated net sales of VND 1.712 trillion (+4% YoY) and pretax profit of VND 1.378 trillion (+127% YoY). We estimate 2021 consolidated net sales and pretax profit at VND 1.621 trillion (-5.3% YoY) and VND 1.293 trillion (-6.2% YoY), slightly less than 2020 as Tan Binh phase I is expected to be fully leased by 2020 year end (PHR apply the policy of booking total revenue from a new tenant at the beginning of the rent period). We maintain our base case target price at VND 50,000. 

We revise down our forecast for 2020 PBT to VND 13.4 tn (+4.5% YoY), a decline of -5.8% compared to the previous forecast of VND 14.23 tn. For 2021, we forecast the bank will post VND 15.22 tn of PBT, at +13.5% YoY. 2020E and 2021E ROAE is projected at 15.7% and 15.3% respectively. At the current price, TCB is trading at 2020E and 2021E P/B ratios of 1.07x and 0.91x respectively. Our 1Y target price is VND 24,600 per share, which is equivalent to an upside of +11.8% from the current price. Therefore, we revise down our rating on TCB from Outperform to MARKET PERFORM.

HSG shares are currently trading at a P/E and EV/EBITDA 2020 levels of 6.3x and 4.5x respectively. We maintain our Outperform rating for the stock, with a 1-year target of VND 11,400/share based on an unchanged composite target PE and EV/EBITDA of 7x and 5x respectively. HSG is a potential stock to consider, given its substantial earnings recovery so far in FY2020. However, we think the stock is more suitable to investors with a higher risk appetite considering the volatile profit margin of the company. 

For 2020, we expect net sales of VND 8.357 tn (+6.2% YoY) and net profit of VND 922.6 bn (-21.8% YoY). Our assumptions are more prudent than the Company’s plans, as we remain concerned about price recovery prospects in the US as well as demand for collagen & gelatin given a weaker appetite for consumption of non-necessity products. For 2021, we expect net sales of VND 8.887 tn (+6.3% YoY) and net profit of VND 946.5 bn (+2.6% YoY). We maintain our Market Perform rating for VHC share with a new target price of VND 36,100 per share (+5.9% upside), using a target P/E ratio of 7.5x and an average EPS 2020-2021 of VND 4,812.

At the current price, HPG is trading at 2020E P/E and EV/EBITDA ratios of 7.1x and 5.7x respectively. We reiterate our BUY rating on the stock, with a 12-month target price of VND 29,300/share, based on unchanged P/E and EV/EBITDA targets of 9x and 6.5x respectively. Key risks: Lower ASP and higher input costs than our assumptions; further delay in the Dung Quat Integrated Steel Complex.

In 2020, we expect company revenue to reduce by -7.1% YoY, reaching VND 695 bn, and NPAT to reach VND 438 bn, - 12.8% YoY. In 2021, we expect SCS revenue to increase by 14% YoY to VND 792 bn, and NPAT to grow by 20.6% YoY to VND 528 bn. At the current market price, SCS is trading at 2020F and 2021F P/E ratio of 13.7x and 11.3x respectively, which is in the lower range of its historical band (10-18x). In the short-term, 2Q2020 might be the lowest quarter as explained above. In the long-term, we think SCS is a safe investment case, complete with a net cash position, operation in a growing duopoly market, and paying a dividend yield of 7% at the current market price. We initate an OUTPERFORM rating for SCS, with a 1Y target price of VND 129,500/share (upside of 15%) based on a DCF model with a WACC of 14.89%, and a terminal growth rate of 3% (including 2% of long-term inflation and 1% of real growth rate).

We forecast net revenue to reach VND 35.1 tn (+25.6% YoY) on the back of a +23% YoY growth in beer sales volumes and a +2% rise in ASP. We forecast net income to reach VND 5.01 tn (+17.9% YoY). At the current price of VND 172,200/share, SAB is trading at a 2020E P/E of 28.8x and 2021E P/E of 24.5x, which is at a discount to its relatively high average historical P/E levels of over 30x. We raise our 1Y target price for the stock to VND 191,000 (+11% upside) based on a target P/E of 30x, which is -7% lower than the average industry PE of 32x. Given the above upside, we recommend a Market Perform rating for SAB (from Outperform). Upside surprise potential: Stronger-than-expected demand for Sabeco beer products; Downside risks: Softer-than-expected sales volumes; lower-than-expected consumer confidence.

At the current market price of VND 73,500/share, VHM is trading at 2020 P/E metrics of 9.4x which is lower than industry peers. The key downside risks to VHM mainly includes slower-than-expected cash flow from project sales and weaker-than-expected residential demand impacting home buyers’ affordability, both of which could occur in the case of a potential GDP slowdown caused by the prolonged Covid-19 outbreak. 

On a consolidated basis, our revised 1-year target price for the VPB stock is VND 25,020. As our target price offers +9.7% upside potential from current levels, we therefore reiterate our Market Perform rating. The key upside surprise to our call outside our immediate expectations would be an earlier-than-expected containment of Covid-19 (before the end of Q2 both within Vietnam and at least regionally), and a better recovery rate in relation to restructured loans. The key downside risk to our call would be a prolonged pandemic situation, which would trend down our estimates potentially lower than the aforementioned forecasts.

We estimate VNM to post VND61.55tn in revenue (+9.3% YoY) and net profit of VND11.36tn (+7.6% YoY). Factoring in the forecast revisions, we raise our 1-yr target price for VNM to VND 116,000/share (from VND 108,000/share), based on a bended 2020F target P/E of 21x (25% discount to regional peers) and DCF methodology (with an increased WACC on higher equity risk premium for Vietnam). As our target price represents 14% upside potential from current market price, we upgrade VNM from Market Perform to Outperform. Downside risks to our call: higher-than-expected raw material prices and lower-than-expected sales growth.