Company Report

We reiterate our Outperform rating on the shares of STB, following our 1Y TP increase from VND 35,200/share to VND 40,000/share - representing upside of 18.7%. Our target price upgrade reflects our belief that the legacy asset balance will be aggressively reduced, on top of the successful sales of STB shares pledged at VAMC and the Phong Phu Industrial Park during the year. STB remains on track to clearing legacy assets despite Covid-19 interruptions. We estimate net legacy assets to be roughly VND 26.6 tn at year-end 2021 (-31% YoY).  Core business activities remained in good shape with the individual customer base having gradually expanded over the last several years, bancassurance sales moved up to the Top 4 in the system in 4Q 2021, and payment & settlement income in the Top 3 amongst JSCBs (after TCB and MBB). Credit metrics of the current loan book were stable, with NPLs and a restructured loan ratio of 1.47% and 0.26% respectively. Downside risk: The delay in selling the remaining collateral is the STB’s biggest risk. Under our bear case where sales are not executed in 2022, our 1Y TP would decline to VND 33,000/share.

We are initiating coverage on the shares of pre-IPO (February 2022) Nova Consumer Group Joint Stock Company (NCG) with our 1Y target price for the shares of NCG is VND 53,200/share, implying a 22% upside relative to the IPO starting price. NCG is a leader in the animal health, feed, and farm market segment, having long-established customer relationships with the ability to create a full “3F” supply chain. It also has the advantage of being a part of the Nova Group ecosystem (including Novaland, Nova Consumer Services and six other members), which should allow potential future synergies and sharing resources. There is also the potential for strong growth in the FMCG business, from both organic growth and M&A perspective (on-going transactions:  Anco Family Food, a well-established beverage company, and a nutrition company). From 2022, NCG is widely anticipated to consolidate the consumer business, including Anco Family Food (sausage), milk, energy drink and coffee. Excluding one-off items in 2021, NCG should post strong core profit growth of 109% YoY in 2022. Through 2021-2026, however, we estimate that NCG will continue to post a net profit CAGR of 26.8%.

We are upgrading our rating on BMP from Market Perform to Outperform, with a higher 1-year target price of VND 67,000/share (previously VND 52,700/share). Our upgrade reflects an improved earnings outlook for 2022, which we revise up by 27% to VND 439 bn (+105% YoY) on the back a 15% recovery in sales volume and a 9% increase in ASP. The company’s business recovered in 4Q21 with net profit arriving at VND 114 bn, significantly recovering from the VND 26 bn loss in 3Q21 driven by higher selling price and a correction in input prices between December and January.

In 4Q21, VHC recorded its strongest quarterly sales and earnings over the past three years. Net sales and net profit reached VND 2.7 tn (+38.5% YoY) and VND 461 bn (+201% YoY), respectively, and well-exceeded consensus estimates. Pangasius exports continued to lead growth, especially in Dec’21 where sales surged 62% YoY off of a low base in Dec’20. Management is optimistic about another year of solid growth for 2022, a time when the market demand stabilizes as most economies fully reopen and reduce coronavirus-related restrictions. Meanwhile, shipping costs in 2022 will remain high, although we expect them to decline from the peak season in Q4’21. For 2022, we forecast net sales and net profit to reach VND 11.5 tn (+26.8% YoY) and VND 1.48 tn (+33.5% YoY), respectively. Our 1Y target price for VHC is VND 86,800/share (+18.3% upside), and we reiterate our OUTPERFORM rating.

4Q 2021 results exhibited a recovery, with rebounding credit growth and fee income of 7.6% (or +16.2% YTD) and +17.5% QoQ (or +84.1% YoY), respectively. As such, we are reiterating our Outperform rating on the shares of ACB, however, we finetune of our 1Y TP to VND 42,100 (from VND 41,750). Further, while Covid-impacted loans rose 27% QoQ to VND 17 tn (~ 4.7% of total loans), ACB has already fully provided for restructured loans in 2021 – leaving a wide berth for 2022 earnings growth.  For 2022, we expect ACB to achieve a VND 14.8 tn in pretax profit (+24% YoY), fueled by credit and deposit growth of 16% and 7%, respectively, NIM expansion of 14 bps, and a lower credit cost of 0.75%. Over the longer-term, ACB’s aggressive expansion in digitalization, new strategic client segments, and expansion to cities in northern Vietnam should also bear fruit.

After DGW’s reporting of record high earnings of VND 327 bn (+234% YoY) for 4Q21, we are upgrading the shares from Market Perform to OUTPERFORM as we increase our 1 YR target price VND 10,000/share (8.3%) to VND 130,000/share -representing 18% upside. We are also upgrading our net income forecast 4% over our previous estimate to VND 806 bn (+22% YOY). We expect earnings growth from the following: (i) the new product line (home appliances); (ii) laptop demand continues to increase, as students have to adapt to a hybrid interchangeable study arrangement; and (iii) a recovery in consumer discretionary spend. We believe that the market is already looking past the news that FPT Synnex became a distributor of Xiaomi products but would be aggressive buyers of the shares on any weakness surrounding this event.  DGW is currently traded at 2022 PE of 12.1x, which is attractive for a company benefiting from the digitalization trend and the recovery in household income, and lower compared with 2-year historical PE of 15x.

We reiterate our Buy rating on the shares of TCB, and our 1Y TP of VND 64,000/share which are supported by solid 2021 performance and a solid growth outlook for 2022. Boasting a 21% ROE for the year and CAR of 15%, TCB remains an attractive investment. The bank delivered VND 23.2 tn (+47% YoY) pre-tax profit in 2021, fueled by the strongest credit growth within the sector (+26.5% YTD), a significant boost in the NIM (+89 bps YoY, as CASA reached a new record high), and solid non-financial income, which includes a performance bonus for bancassurance for 4Q 2021. For 2022, we project that TCB will achieve a pre-tax profit of VND 27.9 tn (+20% YoY). Slower growth compared to 2021 could arise from a less vibrant corporate bond market, and a narrowed NIM of 19 bps. Downside risk: Slower-than-expected growth of the property market; and a higher-than-expected NPL formation rate. Upside surprise: Divestment of subsidiaries; and better-than-expected economic recovery.

HPG’s 4Q21 net profit was VND 7.4 tn, increasing 59% YoY but declining -28% QoQ due to the drop in hot rolled coil steel (HRC) prices from their 3Q21 high base and the increase in coking coal price. Revenue during the quarter was VND 45 tn (+73% YoY and 16% QoQ), of which 95.3% came from the steel segment as nearly all steel product lines recovered during the quarter. Cumulatively, the company’s net profit for 2021 arrived at VND 34.5 tn, achieving substantial growth of 156% YoY.In 2022, we expect HPG’s crude steel volume to grow 11%, while the net margin contracts from the 2021 peak, given the drop in steel prices and high coking coal input costs. Accordingly, 2022 revenue is estimated to increase 9.8% YoY to VND 164 tn, while net profit drops 10.3% to VND 31 tn.

We attended SAB’s earnings call on Feb 11th to update on its 4Q21 results and the reopening outlook for the company. In 4Q21, SAB’s results beat expectations with its top-line performance, with sales reaching VNB9tn (+14.5% YoY), the highest quarterly sales since the pandemic. However, net profit was in line with the consensus estimate of -8.7% YoY, due to squeezed GPM (-370 bps) and higher advertising and promotion expenses. SAB gained market share in 2021 thanks to its dominance in the mainstream segment. However, competition will become more aggressive once the economy fully reopens and the mass-premium demand quickly catches up. For 2022, we forecast net sales and net profit to reach VND 32 tn (+21.6% YoY) and VND 4.7 tn (+19.6% YoY), respectively. Our 1Y target price for the shares of SAB is lowered slightly from VNB 190,000 to VND 188,000 (+17.8% upside), and we reiterate our OUTPERFORM rating.

PNJ continued to post solid results in Dec ’21, as net sales and net profit increased 29% and 43% YoY, respectively, due to pent-up demand for jewelry and gold bars. Overall, PNJ recorded net sales and net profit of VND 19.6 tn (+11.9% YoY) and VND 1 tn (-3.7% YoY), respectively, slightly ahead of SSI NPAT estimate of -5% YoY and consensus NPAT estimates of -8% YoY. The gross profit margin was -140 bps lower than the prior year, due to a higher proportion of gold bars as a percentage of sales and a lower GPM within the wholesale segment. For 2022, we forecast net sales and net profit to reach VND 23.6 tn (+20.3% YoY) and VND 1.42 tn (+37.4% YoY), respectively. Strong growth should be supported by new store openings and market share gains. Our 1Y target price for the shares of PNJ is VND 117,300/share (+13.5% upside), and we reiterate our OUTPERFORM rating.

We are upgrading our rating on the shares of GAS from Market Perform to Outperform, reflecting our increased 12-month target price of 134,000/share (from VND 130,000/share) – implying 17% upside potential (based on a target P/E of 22x and DCF approach). Our optimism stems from (1) increasing our 2022E Brent oil price assumption to USD80/bbl (from previous assumption of USD75/bbl) and (2) a dry-gas volume recovery of 18.5% YoY to 8.5bcm, which is expected to be driven by strong demand recovery from power plants and increased gas volume sold to industrial users. As a result, we estimate that GAS’ parent company will report revenue of VND90tn (+17.5% YoY) and NPAT of VND11.6tn (+35.3% YoY) for 2022E.

Listing on the HOSE and a better than expected 4Q 2021 PBT should act as short-term catalysts. On back of recent government 5G guidance, this could support our view that 5G deployment could gradually occur beginning 2023. CTR trades at a FY22 and FY23 EV/EBITDA of 12.5x and 8.7x, respectively, compared to peer of 14.5x and 13.2x. Rolling over our DCF-based valuation to FY22, we raise our 1Y TP for the shares of CTR to VND 104,500 (+19%). We call for our Outperform rating.

We reiterate our OUTPERFORM rating on the shares of KDH, while raising our 1Y target price 51% to VND 57,000 (+18% upside). In addition to land price revaluation for KDH’s key projects of KDH, the company’s strategic landbank in the center of HCMC is superior to other developers in southern Vietnam. Between 2022-2025, we believe that company’s key assets will continue to be re-rated given the lack of quality new land bank for upcoming projects in HCMC. While we remain quite optimistic about KDH outlook, 3Q21 results (revenue of VND 1.2 tn [-32% YoY] and net profit of VND 317 bn [-12.4% YoY] were uninspiring relative to 2020’s high base. As such, KDH revenue was mostly related to the deliveries of 580 units at the Lovera Vista high-rise project pre-lockdown. In 4Q21, the company will continue to focus on the handover of the remaining units in this project. Cumulativley, 9M 21 net profit was VND 788 bn (+2.4% YoY), with revenue of VND 3.2 tn (-2.9%  YoY), achieving 69% and 67% of our FY21 forecasts, respectively.

We maintain our Market Perform rating on the shares of BVH and increase slightly our 1Y TP to VND 71,900/share (from VND 71,000). 3Q 2021 results were positive with improved underwriting profit. This was driven by an unprecedented low claim ratio given the higher level of non-reported incidents (lack of filing formal claims during the lockdown). BVH’s performance was in line with sector trends, as direct written premium decreased -4% YoY (to VND 9.3 tn) and PBT surged +85.4% YoY (to VND 543 bn). The claims and combined ratio improved to 26% and 102% (vs. 53% and 105% during 3Q 2020), respectively. We do expect a pullback in the shares for 4Q 2021 profit when the claim ratio returns to normal, and mathematical reserve expenses rise in-line with a recovery in NBP. As we anticipate a growth recovery in 2022, with pretax profit projected at VND 2.5 tn (+21.9% YoY), we would be buyers post-4Q 2021 result. Downside risk: A larger-than-expected decline in interest rates and VN government bond yields.Upside surprise: A stronger-than-expected uptick in VN government bond yields; SCIC divestment from BVH could create short-term positive sentiment.

HT1 recorded a before-tax loss of -51 bn VND in 3Q21, the first time since 2014. Revenue dropped by -48% YoY, as sales volume fell by 46% YoY due to the lockdown in 19 provinces in southern Vietnam from Jul to Sept. In addition, the increase in cost of raw materials, also had a negative impact on the company’s margin. Cumulatively, HT1 revenue and PBT posted at VND 5.04 tn (-12.4%YoY) and 375 bn (-35.9% YoY), respectively accomplishing 62% and 46% of annual guidance. Although we had previously expected and already priced into our estimates a tumble in 3Q21 earnings, we still revise our 2021 PBT forecast from 728 bn to VND 481 bn (-37% YoY), due to the high coal price.   However, we expect that business results will recover in 2022, with revenue and PBT increasing by 13% and 48% to VND 8 tn and 710 bn respectively on the back of the recovery in both sale volume and gross margin. At the current price, HT1 is trading at 2021 and 2022 P/E forwards of 28x and 19x, which is much higher than the historical 5-year average of 10x. We believe that the share price has more than reflected the potential earnings recovery in 2022. As a result, we maintain our Underperform rating for the stock, with a 1-year target of VND 17,500/share based on P/E and EV/EBITDA targets of 13x and 5.5x respectively.