Company Report

We are upgrading SAB from Market Perform to Outperform, as we raise our 12-month target price to VND227,000 (from VND191,000) on the roll over to our 2021 forecast. Our new price target represents a return on investment of 22% (including a 1.8% dividend yield). The upgrade is predicated on our improved outlook for earnings, as we increase our forecasts for 2020 and 2021 by +6.1% and +7.5%, respectively, to VND 4.5 tn (-16.1% YoY) and 5.4 tn (+19.4% YoY). SAB appears to be turning a corner with its Q3 results, as beer revenue dropped by only 13.4% YoY (vs.  -45% YoY in Q1 and -21% YoY in Q2). Meanwhile, NPAT during 3Q20 has already bounced back to pre-Covid levels (Q2, Q3 2019). 

We are downgrading the shares of DPM from Outperform to Market Perform, reflecting the recent share price strength which, in our view, now fully reflects both the better-than-expected 3Q20 bottom-line result and market talk of a change in VAT regulation for fertilizer firms. Even after rolling over our valuation basis to reflect our respective 2021E net sales and pretax profit of VND8.7tn (+9% YoY) and VND956bn (-5% YoY due to the consensus rise in global oil price), our new SOTP-based 12-month target price of VND18,400 (previously VND16,900) only offers a 4% upside potential. In addition, on 17 November, the National Assembly ended without a concrete resolution on the VAT, leaving any potential resolution to the next National Assembly session in May 2021, and which will likely present some overhang. The key downside risk to our call would be a greater-than-expected increase in production by other fertilizer suppliers, while the key upside risk would come from a decrease in oil prices. 

Net profit during 4Q20 jumped to VND 450 bn, skyrocketing 436% YoY and 41% QoQ. This is the largest profit level since 1Q17, and close to the record high of VND 451 bn reached in 4Q16. Such tremendous results were driven by strong export sales volume, coupled with the uptrend in HRC that supported margins thanks to low-cost inventory. Cumulatively, HSG revenue in FY 2020 was flattish at VND 27.5 tn, while net profit rocketed +219% YoY to VND 1.2 tn, which exceeded annual guidance by 188%. For FY2021, we expect that while revenue can increase 13% YoY, net profit would remain flat at VND 1.134 tn due to normalization in the gross margin. As HSG stock price has now run 58% higher since our last call dated July 20, 2020, we are now lowering our rating on the shares of HSG from Outperform to Market Perform, as the stock has only limited upside to our unchanged 1-year target price of VND 18,350/share of 3.7%.

Solid 3Q 2020 earnings growth. The third quarter brought good fortune and welcome news to BVH. A previous provision for investment losses was reversed reflecting the rise in the Vietnam share market. BVH also benefited from cheaper government bond repo expenses (-32.4% YoY). Both factors led to strong growth of +31.5% YoY in financial income during 3Q 2020, allowing BVH to post a solid +27.9% YoY NPAT-MI increase. Cumulatively through 9M 2020, BVH posted VND 1.1 tn in NPAT-MI (+3.3% YoY), completing 92% of its annual target. A Market Perform rating, with a 1Y target price of VND 62,700. Given the 18% run that the shares of BVH have had since last call on September 10, 2020, the share would appear to reached fair value. As a result, we have downgraded the shares of BVH from Outperform to Market Perform even though our target price increases +4.5% to VND 62,700/share as we roll our valuations to 2021.

Upgrade rating to BUY: With the increase to our NIM forecast and adjusting credit costs for 2020 and 2021, we are aggressively increasing our 2020F and 2021F PBT forecast to VND 10.8 tn (-8.1% YoY) and VND 15.5 tn (+43.1% YoY), respectively. Our 2020 and 2021 PBT forecasts are now +11.1% and +42.8% higher, respectively. Our forecast does account for the potential bancassurance deal being re-negotiated. We have our adjusted P/B target from 1.2x to 1.6x, which has resulted in 1Y target price for the shares of CTG to VND 38,700 (up from previous 27,200). Our revised share price target represents potential of 16.6% upside, plus the cash dividend yield of 1.5%. An ROI of this magnitude causes us to upgrade our rating on the shares of CTG from Outperform to BUY.

We maintain our estimates for 2020/2021, with net sales of VND 112.4 tn (+10% YoY) in 2020 and VND 140.8 tn (+25% YoY) in 2021, whereas net income for 2020 and 2021 should reach VND 3.9 tn (+1% YoY) and VND 5.3 tn (+36% YoY), respectively. At VND 110,600 per share, MWG trades at a 2021F P/E of 9.7x, which we believe is very attractive. We maintain our BUY rating with an unchanged SOTP-based target price of VND 147,000, offering 33% potential upside. Risks: longer-than-expected impact of COVID-19 and possible lockdown at the national level.

As PLX’s share price has retraced to a more attractive level, we are now upgrading our rating on the shares of from Market Perform to Outperform with a 1-year target price of VND 55,700/share – implying  upside of 15%. PLX earnings through 9M20 amounted to just VND 193 bn, cratering -96% YoY and  meeting just 12% of its annual guidance due primarily to large losses in 1Q20. We believe that PLX’s core business will continue their path to recovery as noted by 3Q20 PBT on a standalone basis which amounted to VND 1.1 tn – up 41% linke quarter. As 3Q20 PBT was in line with our forecast, we are maintaining our 2020 PBT forecast of VND 1.6 tn. Given the recovery in petroleum demand during the month, we expect that 2021 PBT will nearly triple YoY (on 2020 low base) to VND 4.8 tn. As PBT has returned to positive, PLX can also be cleared from the HOSE margin lending ineligibility list after audited financial reports are released.

We reiterate our Outperform rating for GMD, and raise our 1-year target price from VND 22,300/share to VND 30,800/share after taking into account the recent re-rating of the industry average given the expectations of a brighter outlook for Vietnamese trade activity and low-interest rate environment.  We estimate 2020 and 2021 PBT at VND 616 bn (-12.6% YoY) and VND 555 bn (-9.9% YoY), respectively. Gemalink will be the key growth driver for GMD in the long-term as it goes live in 2021. Over the short-term there are some risks, however, including: its ability to compete with current ports to fill up its capacity; and the timing of break-even. Both factors will be critical to success, and thus should be closely monitored. Over the long-term, GMD should bring good exposure to trade activity, being one of the few non-state companies owning a deepwater seaport. GMD also touts a strong nationwide network with its logistics facility.

Given the 20% run in the shares since our previous call on June 24^th, 2020, we believe that the shares of PVS are fairly valued and have downgraded the shares to Market Perform from Outperform. This, despite increasing our 1-yr target price to VND 16,200 (from VND 15,300/share) [representing an ROI of 16%, including a dividend yield of 6.6%], as we roll valuations over to 2021and raise target P/E to 12x from 11x combing with DCF method . For Q3, PVS posted a strong set of results, as net sales reached VND 6.0 tn (+28.4% YoY) and net profit reached VND 223 bn (+165% YoY). Cumulatively through 9M 2020, revenue amounted to VND 14.7 tn (+8.5% YoY) with NPAT of VND 635 bn (flat YoY) and NPATMI of VND 575 bn (-11% YoY). This upbeat set of results through Q3 allowed us to revise our forecasts for PVS, as 2020 and 2021 NPAT are now VND 764 (-5.5% YoY) and VND 685 bn (-10.4% YoY), respectively. The 2021 earnings forecast decline is attributed to the sharp decrease in the confirmed backlog for M&C (-44% YoY). We only account for remaining contract value from ongoing projects such as LNG Thi Vai, and Dai Nguyet WHP and others. This suggests that there could be upside to our 2021 forecast if PVS can win the new EPC contracts that it is currently bidding for. 

3Q2020 revenue + 137% YoY, PBT +5% YoY, due to new pricing cut. Jan-Oct PBT growth +14.9% YoY, completing 62% of the 2020 target. Divestment of Viettel Group (6% stake in VTP) is successful on 11^th Nov 2020. Further investment is not yet planned. Reiterate OUTPERFORM rating. New 1Y TP: VND 121,000/share (12% upside) (from previous TP of VND 112,000/share), based on 2021 PBT new estimated growth of 35% YoY (old estimates of 44.8% YoY).

HDG posted its Q3 financial results, with total consolidated net revenue through 9M 2020 of VND 3.8 tn (+23% YoY) and NPAT of VND 962 (+21% YoY), which fulfilled 71% and 82% of their respective targets for 2020. These positive results were mainly driven from the delivery of the Centrosa project, as well as from improved performance of the energy segment with new projects such as Hong Phong and Infra Solar. For 2020, due to the accelerated handover schedule of the Centrosa project, we raise our 2020 NPAT-MI estimate by 16% since our last forecast to VND 1.1 tn (+ 17% YoY). Next year, we expect that the company’s NPAT-MI will be flat, with recognition of the first batch of the Charm Villa project, while the profitable renewable segment will grow further from 15% of weight in 2020 to  30% of 2021 total revenue. We consider the Company’s strategy to shift its business toward renewable energy a solid move forward. However, the likelihood of extended power generation for HDG depends heavily on the support mechanism of the government, as well as the ability to find a suitable project for M&A purposes in the near future. Based on current portfolio projects, we reiterate our Market Perform rating for HDG, with an unchanged 1-Y target price of VND 25,000/ share. 

One-off earnings (negative goodwill of VND880bn) and a strong Techcombank (TCB) result in 3Q20 push us to raise our 2020E NPATMI from VND914bn to VND1.9tn (-65.7% YoY). For 2021E, we forecast NPATMI at VND2.8tn (+48.8% YoY), as we expect results from consumer retail platform (VCM), Masan Meatlife (MML) and the mining business (MHT) each improved, while MSN should benefit from lower interest costs from debt repayment. On the positive front, we see: (1) continued strong momentum in the consumer business (MCH), with sales advancing by 29% YoY in 9M20 combining with stable margins; (2) improving performance of MML following a recovery in the pig feed business in 3Q20, improving profit in the meat business in terms of EBITDA margins; and (3) VCM narrowed its EBITDA margin loss during 3Q20 of to -2.8%, vs. -5.6% in 1H20. On the other hand: (1) MHT continues to struggle with weak commodity prices; and (2) a high overall leverage ratio with net debt/EBITDA increasing to 4.5x at end-3Q20.

At VND84,900 per share, the shares of VCB trade at 2020E and 2021E P/B ratios of 3.28x and 2.61x, respectively, which is more than double the sector average of 1.45x and 1.31x. 

Our new 12-month target price of VND97,400 (previously VND89,200) is derived from our unchanged target P/B ratio of 3.0x applied to our 2021E BVPS (previously average 2020-21E BVPS) and implies upside potential of 14.7%. Our analysis does not take into account the cash dividend yield of 1.9% for 2019 and 2020 to be paid out in 2020-21. As a result, on valuation grounds we are upgrading our rating on the shares of VCB from Market Perform to Outperform. Key downside risk: higher-than-expected NPLs.

TPB reported its 3Q2020 earnings results, with TOI attaining VND 2.2 tn (+13.1% YoY) and a PBT of VND 989 bn (+26.1% YoY), rendering PBT through 9M2020 of VND 3.0 tn - fulfilling 74.3% of annual guidance. At VND 24,000 per share, TPB is trading at 2020F and 2021F P/B ratios of 1.26x and 1.02x, respectively, which is lower than sector average of 1.44x and 1.30x. Our 1Y share price target is VND 28,200, and we maintain our OUTPERFORM rating on the shares.

Maintaining Market Perform rating. We increase our estimated credit growth for 2020 to 22.1% (23% of the parent bank and 13% at HDSaison), reflecting parent bank credit growth of roughly +20% YTD through Oct 2020. As the bank continues to extend its restructured loan balance, the 2020 provisioning burden will be partially lifted and carried over to 2021 and onwards. Accordingly, PBT for 2020 and 2021 is expected to attain VND 6 tn (+18.1% YoY) and VND 7 tn (+17.7% YoY), respectively. Our target price for the stock is VND 29,000 and represents 13.7% upside. We reiterate our Market Perform rating.