Company Report

Given the decline in the book-to-bill ratio to just 1.2x, we lower our expectations for 2020F regarding revenue and NPAT by -4%. At the current price of VND 15,450/share, HBC is trading at 2019F PER levels of 5.9x, which is considered fair in our view. HBC is trading at a lower PER than its average ASEAN peers’ PER level of 8.0x, yet possesses characteristics of (1) a higher D/E (1.48x as of 31 Dec 2018), (2) a higher DOR and (3) a 2019-2020F core NPAT CAGR of only 1.5%.

For 5M19, revenue rose by 15.4% YoY (vs. 43% YoY for 5M18) to reach VND42.784tn, achieving 39.4% of the company’s annual plan. This was mainly due to growth in the Dienmayxanh and Bachhoaxanh chains. Net margins reached their highest level since the start of 2017, at 4.2% in 5M19, above the 3.5% level achieved in the same period last year, and the 3.3% for 2018. As such, 5M19 net income attributable to shareholders jumped by 39.0% YoY to c.VND1.792tn (vs. +43.9% YoY for 5M18), reaching 50.2% of the annual plan. At the current price of VND91,400, shares of MWG are trading at 2019E and 2020E PERs of 10.3x and 8.4x, respectively, which compares to SSI’s year-end target 2019E PER of 14.5x for the VN-Index. Following the upward revision to our earnings, we lift our SOTP-based 12-month TP for MWG to VND160,300/share (previously VND148,500). As our new TP offers some 75% upside potential, we reiterate our BUY rating on MWG. The key downside risk to our call would be fiercer-than-expected competition in the grocery business.

We maintain our 1Y-TP for ACV at VND 95,200/share (10% upside), based on a target EV/EBITDA of 16x (15% premium compared with the global average). Given the limited potential upside to current market price, our rating is Neutral. We will give further updates in our upcoming 2Q19 earnings report.

For 1Q19, VNM reported VND13.19tn in revenue (+8.8% YoY) and VND2.797tn in net profit (+4.3% YoY). The rise in revenue was triggered by 10.3% YoY growth in domestic sales, while export sales grew by only 7.9% YoY. At the current price of VND125,500/share, VNM shares are trading at a 2019E PER of 22.7x, an EV/EBITDA of 14.1x, a 2020E PER of 21.1x, and an EV/EBITDA of 13.1x, respectively, which are not expensive yet not attractive enough (given our low-single-digit growth outlook), in our view. On the heels of our earnings revisions, we lower our 12-month target price for VNM to VND127,000 (previously VND 131,500) based on an unchanged target P/E of 23x applied to our 2019E EPS. We see no strong catalysts that would trigger an upgrade of our call in the short-term. As our new TP offers only 1% upside potential, and is lower than SSI’s overall market expected return from now until end-2019 of 6.8%, we reiterate our Underperform rating.

We have updated our earnings forecast for 2019F/2020F after adjusting margin assumptions for the M&C segment and earnings from associated JVs. Accordingly, we forecast PVS to post VND 16.37 tn in net revenue (+11.6% YoY) and VND 1.176 tn in net profit (+114.2% YoY) in 2019, which does not significantly vary from our previous estimates. For 2020, we forecast a net sales and net profit growth of 14.6% YoY and 19.2% YoY respectively. 2019-2023 net earnings CAGR is estimated at 12.3%, thanks to a potential backlog amounting to approx. $2.5 bn USD amounted during the period. At the current market price of VND 23,200/share, PVS is traded at 2019P/E and 2020P/E of 10.9x and 9.3x respectively, which are lower than regional peer P/E equivalents of 13x. We maintain our 1-year target price of VND 27,000/share based on an unchanged target P/E of 13x and P/B of 1x, and reiterate an Outperform rating on the ticker for the time being.

Revenue reached VND 491 bn, up 15% YoY, while NPAT reached VND 28 bn, up 18% YoY. 1Q2019 NPAT arrived in line with our expectations, and reached 13% of our 2019E operating NPAT of VND 212 bn and reached 8% of 2019P NPAT company guidance. Q1 is normally a low season for the construction sector, due to the Tet Holiday. We maintain our OUTPERFORM rating for FCN, yet lower our TP to VND 17,000/share (from VND18,600/share). The stock has an upside of 19.7% to our target price.

At its current price, AAA is trading at a 2019 PE forward level of 7.8x. We estimate the fair price of AAA based on the Sum-of-the-parts method. Accordingly, the separate fair value for the An Phat Hi-tech IP is at VND 1.2 tn, equivalent to VND 7,200/share based on the Rnav method with a cap rate of 10%. Total net profit from this project from 2019-2021 is estimated at VND 443 bn. On the other hand, the fair value of other segments are estimated at VND 12,900/share, based on a target PE of 9x. Accordingly, our 1-year target price for AAA is VND 20,100/share, equivalent to an upside potential of 12.6% from the current price. Our rating for the stock is Outperform.

At the current price of VND 58,100, PHR is being traded at 2019-2020 PER levels of 10x and 10.6x (including one-off income), but displays a 2019-2020 PER of 17.6x on core activities, which we believe to be expensive. However, due to uncertainty on value and timing, our valuation does not take into account the valuation of Tan Binh Phase II (1,055 ha), nor the benefit of gradually transferring itself from a pure commodities oriented firm to one which sells land to industrial park developers to capture the booming trend of industrial park development. Nevertheless, we maintain our recommendation to TAKE PROFIT for the time being.

We maintain our previous forecast, and view PTB as one of the few listed companies which benefits from the expansion of the US-China trade war. PTB’s furniture segment profits directly from the current tension, which is reflected in increasing orders from existing US clients such as Walmart, as well as new clients such as Masterbrand. PTB exports to the US accounted for only 25% of total furniture revenue in 2017, raised to 40% in 2018, and is expected to bring in over 50% of revenue in 2019. We feel justified in maintaining our BUY recommendation for PTB, with an upside of 27%. Our unchanged 1Y-target price is VND 80,100 / share (adj. for cash dividend: VND 3,200 / share). Our TP is based on the SOTP-Method, and is equivalent to either a 2019F PER of 9.6x or a 2019F EV/EBITDA 4.9x, both of which is considered low in our view.

At the current price of VND 50,700, shares of FRT are trading at 2019 and 2020 forward PER levels of 8.7x and 8.5x respectively. This is compared to our estimate of industry incumbent leader MWG at 10.6x 2019F PE, coupled with a projected 2019E PE of 14.1x for the VN-Index. We apply a target PER of 10x (down from 12x due to slower growth of ICT segment and low liquidity of the stock) for FRT to arrive at a price of VND 58,330/share, a 15% upside. Therefore, we reiterate a MARKET PERFORM rating for the stock in 2019.

FPT released its 4M19 results, which were mostly within our general expectations. Net sales and pretax profit recorded YoY growth of 19.4% and 22.8%, respectively. For performance in further detail, software outsourcing revenue and PBT were ahead of our forecasts, whereas telecom services were in line with our expectations, while distribution and retail fell short of our estimates. At the current price of VND44,850/share, FPT shares are trading at a 2019E PER of 10.8x. We reiterate our BUY rating on FPT, with a new SOTP-based 12-month target price of VND55,800 (+24% upside potential) (previous VND63,000). The change in our TP takes into account FPT’s recent stock dividend payout of 10%. FPT remains one of the more attractive growth stocks in our universe, and features a compelling valuation, in our view. However, we note that as FPT’s foreign ownership allocation is full, foreign institutions will likely have to pay a premium to purchase the stock.

1Q19 net sales reached VND 1.574 tn (-24.5% YoY), accomplishing 18.5% of the 2019 target. The gross profit margin shrunk notably from 22.3% in 1Q18 to 17.1% in 1Q19 this year, due to 14% YoY rise in gas input cost, and from the low utilization of urea, NPK, and NH3 plants. The data marks the lowest GPM the company has experienced since 2015. At the current price of VND 18,550 per share, DPM is trading at 2019E PER of 19.5x on 2019E earnings, which would be hit by (1) the decline in sales volume of urea, NH3 and NPK and (2) the increase in transportation tariffs. With equal weight assigned to PER, PBR, and EV/EBITDA multiples of 9.5x, 1x and 5x (unchanged) on our 2019 forecasts, our TP remains unchanged at VND 17,600 per share. We maintain our UNDERPERFORM rating.

At the current price of VND 23,900/share, TPB is trading at 2019F& 2020F PBRs of 1.55x and 1.24x respectively. The bank’s 2019F PBR is equal to the sector average of 1.5x. Using the average of 2019F & 2020F BVPS, the 1Y target price would then be VND 27,800 per share, which is equivalent to a dynamic upside of 16.3% from the current price. Therefore, we hold an OUTPERFORM recommendation on the stock.