Company Report

2018 total loans were at VND 230.3 tn, +17.1% YoY, PBT at VND 9.199 tn, +13.1% YoY. In particular: Parent bank total loans and PBT are projected at VND 177 tn, at +16.6% YoY and VND 7.934 tn,  +41% YoY. FE Credit total loans and PBT are forecasted at VND 53.3 tn, +18.9% YoY and VND 4.14 tn, -1.4% YoY. Our current forecast for VPB in 2019 includes growth in total assets, deposits, and credit at 14.3%, 16.2% and 16.3% respectively. We expect 2019F PBT at VND 10.16 tn, a +10.5% YoY rise. EPS and BVPS are forecast at VND 3,308 and VND 17,563 respectively.

The bank has become the #1 private bank in terms of absolute PBT figure being VND 10.661 tn (+32.66% YoY), which is fairly in line with our expectation of VND 10.5 tn in our previous report. Net interest income (NII) being VND 11.1 tn (+24.6% YoY) was responsible for 66% of TOI while non-NII brought in 34% of TOI. At VND 26,650 per share, TCB is currently trading at 2018 and 2019 PBR of 1.8x and 1.5x respectively, which is higher than industry average of 1.3x-1.4x.

VCB announced that it has successfully issued 111.1m shares by way of private placement, increasing its charter capital by 3.088% to VND37.089tn. The buyers are GIC Private Limited (GIC – the investment arm of Singapore government) and Mizuho Bank Ltd (VCB’s current strategic shareholder). VCB would receive proceeds of VND6.2tn, or c.USD265m from the issuance. We estimate an issuance price of VND55,500 per share, which is equal to a 2018E PBR of 3.22x. We raise our 12-month TP to VND68,600 (from VND63,100), based on an unchanged 2019E PBR of 3.0x. As our new TP offers some 25% potential upside from the current price and given SSI’s view of 10% return for the VNIndex in 2019, our rating bands call for a BUY rating (from NEUTRAL).

Up to 9M2018, PHR achieved VND 884 bn (-21% YoY) in net sales, in which net sales from the parent company was VND 667 bn (-22% YoY), accomplishing only 41.5% of the 2018 parent company target. At the current price of 31,800, PHR is being traded at 2018-19 PER levels of 10.6x and 9.2x based on core EPS, which are more than fair for a commodity stock given an expected moderate growth of 15% YoY in 2019 earnings. This gives an upside of 12% from the current price, equivalent to an OUTPERFORM rating.

Q3 business results look quite positive, with revenue and profit before tax arriving at VND 3.83 tn and VND 483 bn, growing by 15.4% YoY and 37.6% YoY respectively.  Cumulatively, GEX revenue and PBT up to 9M 2018 reached VND 10.049 tn (+16% YoY) and VND 1.103 tn (+45% YoY). At the current price, GEX is trading at PER 2018 and 2019 levels of 9x and 8.7x respectively. Our rating for the stock is Outperform, with a 1-year target price of VND 26,600 deriving from the Sum-of-the-parts method. We revise down the PER targets electrical equipment and utility from the levels of 12.5x and 10x respectively to 11x and 8x respectively due to weaker market condition.

Electricity sales volume up to 11M 2018 is 4.523 bn kWh in total (+10.7% YoY), of which Pha Lai 1 (PL1) plant is 1.556 bn kWh, and Pha Lai 2 (PL2) plant is 2.967 bn kWh. At the current market price, PPC is trading at 2019 PE forward levels of 5.8x and PB forwards of 1x (core PE 2019 is 6.7x). Using a target PER of 7x to reflect stable earnings outlook, we reach a 1Y target price of VND 21,300/share (+20% upside), and set an OUTPERFORM rating for the stock. Dividend yield at this market price is also very attractive, at 14%.

ACV is targeting to list on HOSE by 1Q19. The Ministry of Transport (MT) is expected to finalize its maneuvering area regulations by this time, and ACV will list on HOSE right after finalizing the maneuvering area with the MT. A possible concession fee increase is being considered at Danang International Airport (DIA) and Cam Ranh International Airport (CIA), to start in 2019. At DIA and CIA, ACV holds only a minority stake of 10%. Nevertheless, ACV concession fees are expected to increase from 6% to 12% (in % of revenue) from 2019. If we were to include the concession fee hike in 2019, ACV’s 2019E EBITDA would increase from VND12.804tn to VND13.190, up 10% YoY, and our 12-month TP would increase from VND95,200/share to VND100,500 share. This note marks a transfer of analyst coverage.

According to GAS, the company targets its consolidated revenue and net profit for 2018 to come in at VND74tn (+15.6% YoY) and VND11.33tn (+14% YoY), respectively, which are near our forecasts. We revise down our 12-month target price for GAS to VND95,500 from VND120,000 after taking into account our lower earnings forecasts. Our blended target price (50/50 weighting) is anchored to a lower target PER of 17x (from 19x) and a lower EV/EBITDA of 10x (from 10.5x) and using 2019E earnings as our valuation basis.

PC1 posted revenue amounting to VND 3.578 tn (+55.5% YoY), achieving 63.4% of its 2018 annual plan. This was mainly attributed to the growth of the property segment, the trading segment, and the hydropower segment, while revenue from power construction segment conversely experienced a slowdown. At the current price of VND 23,400, based on 2018 and 2019 plan, PC1 is trading at PE 2018 and 2019 at 7x and 7.5x respectively. We think that the company is traded at cheap level compared to Vietnam market’s 2019F PE of 12.4x in our estimates.

Viettel Global is the first of its kind in the Vietnam stock market. It largely relies on its parent group (Viettel Group) and its sibling companies (Viettel Telecom) to leverage their expertise and resources in order to invest in global markets. At the current moment, profitability has been a bumpy ride due to forex losses and high capex incurred in new markets. It might take a while before the company can erase its retained losses and to start paying dividends to its shareholders. Political and regulatory changes in these markets are also very hard to predict. 

The company recorded VND 1.318 tn in net sales (-11.3% YoY), but ramped up to VND 1.848 tn in terms of net income (+26.8% YoY) in Q3. Such a strong result was contributed by great earnings for the company’s joint ventures. For Q3, JV-sourced income for the company amounted to VND 1.799 tn (+28.5% YoY), in which contribution from HVN might total as high as VND 1.559 tn (~ 86.7% of total JV-related income). Meanwhile, TMV and FVL might only make up 10.8% and 2.56% of total income from JVs. Given our forecasts on its 3 JVs, we apply SOTP methodology to value the company, and the average regional PER at current is lower than that of the previous report. Hence, we applied a lower PER targets in this report. As a result, our SOTP-based 12-month target price is VND 43,700, equivalent to a 2019 PER of 8.0x. Given a 17.2% upside, we provide our rating of OUTPERFORM for the stock. VEA expects that the divestment by the Government will be implemented in 2019 to lower state ownership to 51% from 88.47%, while the HOSE listing will be slower than investor expectations, as VEA needs to wait for its audited 2018 financial statement.