Company Report

DPM’s 2Q19 net sales reached VND1.931tn, down 28% YoY due to (1) an unexpected shutdown of its plants, (2) adverse weather conditions, and (3) a fall in prices of main agricultural products. Gross margin was squeezed from 17.2% in 2Q18 to 13.6% in 2Q19 due to the (i) low utilization of its urea, NPK, and NH3 plants, and (ii) 9.5% YoY rise in gas input costs, mainly due to a hike in transportation tariffs. At the current price of VND13,300, DPM shares are trading at 2019F and 2020F PERs of 18.0x and 13.5x, respectively.

At the current market price of VND 30,300/share, QNS is trading at 2019P/E and 2020 ratios of 7.7x and 7.4x, which is around a 50% discount compared to overall market valuation. We consider these price levels to be relatively cheap, despite the fact that we agree that the stock should be traded at some discount given its irregular approach to investor relations activities, and because of its large exposure on a commodity business like sugar. Our 1-year target price for QNS arrives at VND 35,400/share (from VND 37,500/share), based on a target P/E of 6x for sugar & biomass, and 10x for soymilk and other consumer businesses (confectionery, beer and beverages). With a 16.8% upside, we continue our Outperform rating for the stock at the moment.

KIDO Corporation (KDC) posted VND 3.22 tn in revenue (-14.7% YoY) and VND 113 bn of net profit (+135% YoY) for H1 2019. In terms of sales, a decline came about because of lower edible oil revenue (-28.9% YoY), while ice cream sales advanced 8.8% YoY. In contrast, strong growth in net profit on a low base from H1 2018 was thanks to (1) a general recovery seen for KDF, its frozen food operations (NPAT reached VND 92 bn vs. VND 45 bn in H1 2018) and consolidation of Golden Hope (GH) of approximately VND 11.5 bn in PBT, as KDC increased its stake in Golden Hope to 51% in November 2018, and then further to 76% in Q1 2019. Net earnings to parent shareholders totaled VND 49 bn, representing only 43% of net profit in H1 2019, yet was a turnaround from a loss of VND -11 bn in H1 2018.

In terms of earnings, we expect that after a strong earnings growth recorded in 2019, 2020 earnings growth will be flat and 2021 earnings might also go down because of the lack of one-off land compensation and the fact that IP rents are amortized equally over the rental period of 50 years. However, in the short term, strong growth of 2H 2019 earnings and a dividend yield of 40% and 50% on par value (dividend yield of 7.3% and 9.1%) for 2019 and 2020 are the supportive factors for the stock. Our rating for the stock is OUTPERFORM for 1-year horizon.

At the current price, GEX is trading at a 2019 PER forward level of 12.3x. We maintain our Market Perform rating for the stock, with a 1-year target of VND 22,500/share based on the unchanged target PERs of electrical equipment, logistics, and utility segments of 11x, 9x and 8x respectively. Our valuation does not take into account the property segment until further project details and clear pipeline are provided.

At the current market price, VTP is trading at 2019F and 2020F P/E ratio of 21x and 15x respectively. We maintain our estimates that VTP earnings can grow at 41% YoY in 2019 and 40% YoY in 2020, thanks to strong growth in e-commerce activity driving delivery business forward. We also maintain our OUTPERFORM rating for the stock, with a target price for VTP at VND 170,900/share, based on a 2020 P/E target of 20x.

BID posted a Q2 PBT of VND 2.19 tn, -11.9% YoY. While pre-provision operating profit rose by +19.2% YoY, that gain was offset by higher provisioning costs to account for the treatment of credit losses, which rose by +38.5% YoY. We raise our target P/B ratio for BID from 1.8x to 2.0x, which results in a target price of VND 42,900 per share using 2020E BVPS (previously VND 35,700 based on 2019E BVPS). With a 1-year upside potential of 11.4%, we upgrade our rating on BID to OUTPERFORM from Market Perform.

At the current price of VND 51,000 per share, VEA is only trading at a 2019 & 2020 PER level of 8.4x and 7.4x, which is a much lower valuation compared to the overall market of ~14.5x. Meanwhile, the dividend yield came to 7.6% for 2019 and 9.8% for 2020. Our target price for VEA is VND 65,000/share (from VND 63,500/share after accounting to its 2020 forecast) for the 12-month investment horizon, with an upside of about +27%. Therefore, we changed our rating to BUY from MARKET PERFORM given the recent drop. We believe this is a great opportunity to accumulate the stock for long term investors, with attractive dividend yields as well as potential capital gain.

At current price of VND 84,200/share, VHM is being traded at 2019 P/E metrics of 13.7x, which is low compared with industry peers. Regarding to valuation, after reviewing actual unit prices and sale progress (including both retail and bulk sales) at the three mega projects which are better than our previous assumptions, our target price is raised from VND 91,400/share to VND 99,000/share, implying an upside of 17.6% compared with the current market price. Hence, our rating is OUTPERFORM for the stock at present.

At the current price of VND 23,450/share, KDH is trading at 2019F and 2020F PE of 12.7x and 9.6x respectively, with a 2019F and 2020F PB of 1.7x and 1.5x. Our RNAV estimation for KDH is VND 30,167, a 29% upside compared to the market price. At this RNAV price, KDH is traded at a PE and PB target 2019 of 16.3x and 2.1x. We have a BUY rating on the stock.

At the current market price of VND 52,200/share, FPT’s shares are trading at 2019E and 2020E PER’s of 12.0x and 10.1x respectively, which we think are still attractive for long-term investors. We revise up our 2019 & 2020 estimates, mainly on higher software outsourcing sales from all export markets. We roll-over our valuation, and use the average net profit of 2019 & 2020 in our SoTP valuation, using the same target multiples for each segment. Accordingly, we derive a new 12-month target price of VND 67,000/share, which offers +28% upside potential from current levels, and reiterate our BUY call.