Company Report

VTP is trading at a 2021F and 2022F P/E of 20x and 16x, respectively, which are low compared to the regional average of 25x. We think Vietnam’s delivery market remains attractive over the long-term, as the 5-year growth rate is expected to reach between 20%-25% YoY according to a Google-Temasek report. As such, we maintain our target P/E of 20x for VTP and arrive at a 1Y target price of 94,500/share (3% upside) - down 25% from our previous TP of VND 126K/share. We cut our rating on the shares of VTP to MARKET PERFORM from OUTPERFORM, as we expect 1H 2021 growth to decelerate off of a high base (VTP reduced its pricing scheme from 2H 2020). The stock might underperform the market in the short-term (3-6 months). We see near-term volatility in the shares as an opportunity for accumulation, however, as the stock remains as our favorite long-term play in Vietnam e-commerce fast growing outlook, and we expect double-digit growth might come back from 2022 forward.

Dabaco held its analyst meeting recently to update about its impressive 2020 results, as well as providing details for the business plan in 2021. Overall, we had some positive takeaways from the meeting. Fruitful results in 2020 represented the Group’s long-term strategy to invest in its core business and expand the farming capacity and sow herd, even during difficult years in 2016-2018. DBC plans to expand aggressively in terms of sales volume in 2021 by raising the utilization rate of its current factory, as well as contract farming. A high and stable hog price is expected in 2021, which will still support its core business tremendously. In the period 2022-2023, new breeding and farming projects are in the pipeline, which will help expand the scale even further. With its currently strong financial position, the Group is at an advantage to exploit its HORECA and real estate segments to earn extraordinary profits in 2021, very likely to exceed management’s prudent net profit plan for the year. In 2021, we estimate net revenue and net profit to reach VND 11.9 tn (+18.9% YoY) and VND 980 bn (-30% YoY) respectively. At the current price of VND 60,900/share, DBC is being traded at 2021F P/E of 6.9x and EV/EBITDA of 5.1x, which is lower than peers’ average P/E of 10x and EV/EBITDA of 6x. We applied an unchanged target P/E of 8x to 2021F EPS of VND 8,797, to arrive at a 1Y-target price of VND 70,400/share (15.6% upside). As such, our rating for the stock is OUTPERFORM. 

We raise our PBT forecast to VND 3.5 tn (+39.2% YoY), driven by credit growth of 22.9% YoY, NIM improvement of +10 bps YoY to 3.47%, and 15.3% YoY growth in non-interest income. The bank has sold all of its 56 mn MBB shares, recording VND 400 bn of relevant gain in 1Q2021. We assume that the bank will book ~VND 600 bn of upfront fees in 2021, CIR to decrease further to 49.5%, and provisions to increase +5.5% at the bank while the NPL ratio declines to 1.7% and LLC increases to 93%. At VND 21,900 per share, MSB is trading at a 2021F P/E and P/B of 9.2x and 1.3x, respectively. Given that profitability and asset quality are both improving, we increase our targeted P/B ratio from 1.1x to 1.4x, which brings our 1Y target price to VND 23,500 per share (from VND 19,714 per share after dilution). With implied upside of just 7.3%, we lower our recommendation on the shares of MSB from Outperform to Market Perform. 

For 2021, we adjust our input cost assumptions with raw milk and sugar prices to advance 12% and 25% YoY, respectively (vs. +4% and +5% previously). Accordingly, we calculate that VNM’s NPAT will arrive at VND11.5tn (+2.5% YoY), which is lower than our previous forecast of VND12.1tn. Between 2020-24, we forecast net profit CAGR to also be lower, at 5% vs. our previous estimate of 6.9%. As such, our 12-month target price for VNM, based on P/E and DCF methods, is reduced by 7.6% to VND121,000/share (from VND131,000/share). We do, however, maintain our Outperform rating on the shares of VNM given the 18% potential upside. 

We reiterate Outperform rating on the shares of QNS with a new target price of VND 50,600/share (from VND 41,800/share) or 19% upside from the current market price.  We are of the opinion that QNS financial results will turn around in 2021, led by the sugar business. Taking a broader view, we see that the implementation of the anti-dumping tax on Thai sugar will help protect domestic sugar from cheap imported sugar, as well as smuggled sugar and boost domestic sugar industry in the long-term for the food security purpose. Should the anti-dumping tax be officially imposed (now it is just temporarily in place, for a 120 day period), this would be a gamechanger for the Vietnamese sugar industry, and QNS as the second largest one will be amongst the top beneficiaries. Strong sugar price recovery and volume growth should help spur sugar and biomass performance this year, from a loss (-35 bn) in 2020 to a PBT of c.300 bn VND in 2021. Overall, we look for 24% NPAT growth for the company in 2021. 

BID’s AGM was held on 12 March 2021, putting forward an optimistic PBT target for 2021 of VND13tn (+44% YoY). It also proposed a stock dividend equivalent to 12.2% for 2019 and 2020. We estimate BID’s 2021 PBT at VND13.5tn (+49.4% YoY), based on respective credit and deposit growth of 10% and 12% YoY, respectively, as well as a well-contained NPL ratio of 1.6%. Although earnings may surge in 2021, the possibility of growth beyond 2021 depends on the ability to raise capital and it will be the key upside catalyst for the stock. We reiterate our 12-month target price of VND46,430/share, which represents 7% upside. We maintain our Market Perform rating on BID. 

At VND 130,500 per share, MWG trades at a 2021F PE of 11.6x (compared to a three-year historical P/E of 13.3x). We lower our 2021 revenue forecast -10% to VND 126 tn (+16% YoY) and net income -3% to VND 5.086 tn (+30% YoY) - taking the sales disruption during the upgrade month into account, and the possibility of revenue dilution associated with store upgrades in various provinces. Given 2021 earnings growth, abundant market liquidity, and MWG’s ability to gain market share during tough times, we raise our target P/E for the ICT segment from 9x to 10x in our SOTP valuation. As a result, we raise our target price to VND 165,000 per share (from VND 147,000). With a 26% upside potential, we reiterate our BUY recommendation on the shares of MWG.

Our revenue estimates for 2021 and 2022 are VND 9.3 tn (+11.7% YoY) and VND 10.4 tn (+12% YoY), respectively, while we anticipate NPATMI of VND 2.64 tn (+11% YoY) and VND 3.1 tn (+17.8% YoY) over the same time periods. Improvement in the current leasing portfolio along with new mall openings could be key growth drivers. Assuming a slower expansion plan between the 2022-2026 period, we lower our 1Y target price on the shares to VND 37,300/share. At the current share price of VND 34,100, VRE is trading at an EV/EBITDA of 17.1x, which is relatively lower than the regional peer average of 21.5x. With upside of 9% compared with the current share price, we reiterate our OUTPERFORM rating for the stock at present. 

2020 earnings was -1.8% below our estimates, due to higher-than-expected provision costs. Despite a 21% TOI growth, PBT increased   just +15.9% YoY to  VND 5.8 tn, as credit costs rose from 0.96% in 2019 to 1.1% in 2020. After an aggressive write-off of VND 1.4 tn (+63% YoY), asset quality ratios were in pretty good shape. NPLs declined to 1.32% (from 1.36% in 2019), and LLCR  improved to 82% (from 81% in 2019). The limelight for this year’s result is the increase in NFI to TOI to 7% (vs. 5% in 2019), as  bancassurance sales began accelerating in 4Q 2020.

HDB is amongst the very few banks which still has available room for foreign investors, and a potential exclusive bancassurance deal. We think the Bank’s diversification of income streams in 2020 is the way to go, which opens greater possibilities for strong TOI growth in 2021. A good track record of bancassurance sales may also prove its sales capability, as well as a bargaining power in negotiating an exclusive bancassurance contract in the future. Our 1Y target price for the shares of HDB is VND 29,500/share, representing an upside of 13.7% - allowing us to upgrade the shares to an Outperform rating.  

We maintain a MARKET PERFORM rating for VEA, with the target price of VND 46,000/share. This equal to a total return of 16% from both capital gain of 3% from the current price as of March 2^nd, 2021 and 13% from expected dividend payment of VND 6,000/share in FY21. We expect VEA gross revenue and net profit in FY21 to reach VND 3.93 trillion (+7% YoY) and VND 6.23 trillion (+10% YoY) respectively. While VEA profit may recover sluggishly in FY21, we see an attractive dividend yield of 13% in FY21 from the current share price, and an average dividend yield of 9 - 11% in the years following thereafter.

VHC experienced a worse-than-expected Q4 2020 result, completing just 66% of the Company’s low annual net profit target. Pangasius ASP in December has now declined to its lowest level in 2020 versus consensus forecast of a Q3 recovery. Both pangasius and wellness exports face difficulties due to weak demand in major export markets, increasing transportation costs, and more aggressive seafood inspections at Chinese seaports. The gloomy outlook is expected to continue until Q2 2021. In addition, the final tariff-related POR16 results on anti-dumping pose potential risks to VHC after an extended US waiver, making VHC a stand-out exception vis a vis the anti-dumping tariff. As we expect the recovery to be fully reflected in VHC’s results by H2 2021, we downgrade the stock from Outperform to MARKET PERFORM, with a 1Y target price of VND 43,600 (+6.7% upside).

VCB reported strong 4Q20 earnings results, with TOI and PBT reaching VND 14.4 tn (+35% YoY) and VND 7.1 tn (at +28.5% YoY), respectively. For 2020, consolidated TOI and PBT came in at VND 49 tn (+7.1% YoY) and VND 23 tn (-0.3% YoY), respectively, and in line with our forecast. In 2020, VCB took advantage of competitive pricing to acquire more creditworthy customers, pushing it to become the largest lender for the year. Bancassurance sales are behaving according to plan. For the first time, VCB’s PPOP ranked first within the sector (outstripping BID), and even pulling ahead of the pack. VCB was also incredibly proactive with respect to credit provisioning during the year, clearing a path for above trend-line earnings growth post-Covid.  We increase our forecast for VCB 2021 PBT to VND 29.3 tn (+27.3% YoY). We also raise our 1Y target price on the shares of VCB to VND 108,600 (from VND 97,400) reflecting our assumption that the private placement pricing will come in at VND 100,000 per share, +11.1% higher than our initial forecast. With total upside potential of 11.4%, we maintain our OUTPERFORM rating on the stock.

We reiterate our Outperform rating on the shares of PVS, particularly given the oil price outlook. Brent crude reached the USD 65/bbl threshold in recent days due OPEC+ deep supply cut, a sudden decrease in shale oil production in the US (due to an unlikely winter storm in Texas), and gradual demand recovery on the back of vaccine availability. Accordingly, we lift our oil price assumption for Brent in 2021 from USD 52/bbl to USD 60/bbl (+40% YoY).  As a result, we are increasing our target price on the shares of PVS from VND 20,800/share to VND VND 24,500/share, implying 5% upside or 10% inclusive of the dividend yield from current market price. Our 2021 earnings forecast is VND 704 bn (+8.6% YoY), which is 12.6% higher than our previous forecast. M&C revenue from the confirmed backlog (-42% YoY) and improved earnings from JVs (additional profit from FSO Sao Vang, and no more expenses for MV12) should support the bottom line. Expectations of a strong oil price recovery in 2021 (+40% YoY), should also enhance revenue and margin of other segments. Please note that we only account for remaining contract value from ongoing projects such as LNG Thi Vai and Dai Nguyet WHP in our 2021 estimates, intimating that there could be potential upside to our 2021 forecast if PVS can win the new EPC contracts that are being bid for.