Company Report

PVS has released its financial results for Q1, and in short, it’s a stunner. While net sales totaled a respectable VND 4.09 tn (+22.8% YoY), net profit exploded, posting a remarkable VND 385 bn (+103.7% YoY). Net earnings to parent shareholders was also quite welcome news, reaching VND 369 bn (+45.8% YoY). Although we have expected strong profit growth for Q1, results exceeded even our own estimates. Our 1-year target price for PVS arrives at VND 27,000/share (from VND 24,000/share) based on an unchanged target P/E of 13x and P/B of 1x. With an 7% upside from the current market price, we reiterate our Outperform rating for the stock.

At the current price of VND 23,250, PC1 is traded at PE 2019F of 8.0x and 2020F of 6.1x. For 2019 results, we think that the company is traded at a reasonable PE compared to its historical PE. However, given the expectation of a strong growth of NPAT in 2020 at 31.6% YoY, the stock is traded at an undervalued price. We apply a PE of 8x to average 2019 and 2020 EPS of VND 3,345 to arrive at a 1-year target price of VND 26,760, a 15% upside. Therefore, we issue an Outperform rating for PC1 in 2019.

At the current price of VND 87,000, shares of MWG are trading at 2019E and 2020E forward PERs of 10.7x and 8.8x respectively, compared to our 2019E PER estimate of 14.1x for the VN-Index. Taking into account dilution from ESOP, MWG is trading at 2019E and 2020E forward PERs of 10.9x and 9.3x. We derive a 12-month SOTP-derived TP for MWG of VND 148,500/share, offering a 70.7% upside potential to the current price of VND 87,000. We reiterate our BUY rating for MWG.

At the current price of VND246,000/sh, SAB is trading at 2019E and 2020E PERs of 34x and 31.1x, respectively, and a 2019E and 2020E EV/EBITDA of 20.6x and 18.9x, respectively, on our forecasts. This is slightly above the industry average PER of 31.7x and EV/EBITDA of 12.5x. We note that SAB’s EBITDA margin improved from 16.9% in 2018 to 18.8% in 1Q19, and think that with the aforementioned cost-saving initiatives, the EBITDA margin will likely further improve going forward. Applying a target PER of 33x to our average 2019-20E EPS, we derive our 12-month TP of VND246,700/sh (from VND199,000). With 0.3% upside potential to our new TP, our rating bands call for a Market Perform rating on the stock. Upside risk: stronger-than-expected demand for Sabeco’s beer products; downside risks: higher-than-expected cost of imported malt and hops, and softer-than-expected sales volumes.

At the current price, HSG is trading at 2019 PE, PB and EV/EBITDA metrics of 10.2x, 0.6x and 6.3x respectively. We update our rating for the stock from Underperform to Market Perform, with a 1-year target price of VND 8,300/share based on target PE, PB and EV/EBITDA of 7x, 0.6x and 6.5x respectively. We are of the opinion that the company’s business results may recover in the long term given the company’s willingness to execute cost-cutting measures and others in order to improve the company’s financial health. In addition, we think that domestic competitive pressure can gradually be mitigated in 2020, especially when factoring in that less new capacity is coming online in the domestic market during the next year. However, we still remain concerned about the company’s loss of market share and high interest expenses. We will closely monitor the company’s sales volume and financial health, and provide an update in later reports.

Net sales recorded at VND 823.6 bn (+12.3% YoY), accomplishing 20% of 2019 target. Bias sales volume drop by -13% YoY as customer are still unfamiliar with the new Euro 4 compatible tire, while radial sales volume surged by 38% YoY thanks to the contribution from radial II factory. Gross profit margin remained fairly flat at 10%. Pretax profit arrived at VND 21 bn (-19% YoY), fulfilling only 13% of 2019 target. In 1Q19, selling expenses increased by 23% YoY, higher than +12.3% rise in net sales as the company booked several expenses for the following quarter. At the current price of VND 22,000/share, DRC is being traded at 2019 PER of 19.1x which is expensive given 2019-2020 single digit growth. The current high valuation reflects the market expectation upon the Vinachem divestment from 50.5% to 36% this year.

At VND 21,500 per share, MBB is traded at 2019E PBR of 1.3x. In general, management’s plan is along line with our expectations. Besides, the fact that the management expect to issue new shares at a higher valuation is a positive sign to the market. We reiterate our BUY recommendation, with a 1-year target price of VND 32,000 per share, equivalent to 2019E PBR of 2x.

At the current price of VND 19,050/share, VPB is trading at a 2019F PBR of 1.09x based on the bank’s plan of 2019F PBT at VND 9.5 tn, at 3.3% YoY. The PBR is lower than peers average of 1.5x.