Company Report

We maintain our Market Perform rating on MSN: At the current market price, MSN shares trade at a 2020E P/E of 71.1x and EV/EBITDA of 9.2x, respectively. We maintain our Market Perform view on MSN, with a 12-month target price of VND64,900/share before dilution, or VND59,000/share after dilution should we take the private placement plan into account, though we would also have to evaluate the impact of the above-mentioned M&A deal. Downside risk: lower-than-expected domestic demand for packaged foods and meat products; upside risk: higher-than-expected VCM revenue growth. 

The previous lockdown order in Vietnam coupled by unrecovered demand by way of pandemic-related lower income brought VEA profit down. Moreover, VEA is going to make a provision for uncollectible loans. Therefore, VEA might experience a contraction in consolidated profit for Q2. We consider reviewing our forecast after its 1H financial statement is announced. Until then, we maintain our previous forecast for VEA. Net sales is forecasted to come in at VND 4.508 tn (+0.3% YoY) and VND 4.811 tn (+6.7% YoY) in 2020 and 2021. Net income reached VND 6.633 tn (-9.4% YoY) in 2020 and VND 7.157 tn (+7.9% YoY) in 2021. We continue to provide a Market Perform rating for the stock, with a 1 year TP of VND 48,300 (+11% upside in capital again and +23% in total return including 12% dividend yield), and we reiterate our buy-the-dip recommendation. 

Target for 2020 is set and approved at conservative level: total revenue is planned at VND 11.3 trillion, -38% YoY, and PBT is planned at VND 2 trillion, -80% YoY. 2Q2020 might see core loss of VND 400 bn (excluding the financial income), with about VND 120 bn loss in June. Long Thanh Airport project’s feasibility study is still under review process and not approved yet. Downgrade to OUTPERFORM rating which tracks our EPS downgrade. We do maintain our 1Y target price at VND 68,600/share, however. ACV still remains a great play on the long-term growth in Vietnam’s tourism sector.

2020 consolidated revenue is planned at VND 6.2 trillion, -23% YoY, and pretax profit is conservatively planned to decline by -45.8% YoY. 1H2020 PBT is estimated at VND 350 bn, -33% YoY, due to lower demand for petroleum products and lower volume from BSR.  The company’s CAPEX plan for 2020 is rather aggressive, at about $300 million USD, with a debt/ equity ratio of 2.3x. This consists of about 4 new vessels at the parent company, and 8 new vessels at subsidiaries. Besides investing in used vessels, PVT is also considering investing in some brand new vessels through BCC collaboration contracts with international partners, as new vessels will have more suitable specifications for newer market situation (like low-sulfur-fuel compatible…). PVT is also in the midst of an investment cycle (2018-2020) which suggests a much longer plank to become profitable. Case in point, PVT’s capex plan for 2020 is and aggressive $300 million USD, as the company aims to rejuvenate and expand its fleet in order to more effectively compete internationally. Coupled with weaker global oil demand, both factors have weighed substantially on PVT’s share price performance of late. 

In 2020, we expect handling volume of GMD ports to be flat at 1.7 million TEU in total, though revenue and profit from this segment might be contracted due to high competition. We also assume Gemalink will operate in the last 2 months of 2020 and make a small loss with expected utility of 10% capacity. We estimate GMD net sales and PBT to reach VND 2,372 bn (-10% YoY) and VND 537 bn (-24%) in 2020, translating to 1,273 VND (-20%) in EPS. Looking forward into 2021, we assume Gemalink might fulfill 50% its capacity in 2021, lower than the management expectation (60% capacity). At this level, Gemalink might make sizeable loss and drag down consolidated results of GMD to VND 567bn (+5% YoY) in PBT, estimated EPS is 1,345 VND in 2021. Combining 3 valuation methods including DCF, and PE and PB multiples, we arrive at target price of VND 22,300/share at the end of 2021. With 18% upside, we rate the stock OUTPERFORM.

No organic growth officially guided by VNM for 2020; we disagree: At the 2020 AGM, VNM set a revenue and earnings target of VND 59.6 tn (+5.7% YoY) and VND 10.69 tn (+1% YoY), respectively. The plan included GTN Foods (GTN: HOSE), which is starting to become consolidated to VNM from the beginning of 2020; excluding GTN, organic growth for VNM sales and net profit will be flat YoY. This is quite a conservative plan, in our view, especially when taking H1 results into account. As such, we maintain our current estimate of VND 61.5 tn in revenue (+9.1% YoY) and VND 11.35 tn in net profit (+7.6% YoY) for 2020. Positive Q2 results: Management disclosed that its interim H1 2020 results had sales advancing by 7% YoY, totaling VND 29.73 tn. Meanwhile, net profit slightly rose 3% YoY, reaching VND 5.87 tn. For Q2 2020 alone, net sales and net profit grew 6.7% YoY and 6.6% YoY. We reiterate our Outperform rating for VNM with a new 1-year target price at VND 135,000/share (from VND 116,000) based on our forward H2 2020 - H1 2021 EPS estimates and a target P/E of 23x (27% discount compared to peers), combined with the DCF method. 

At the current price of VND 19,400 per share, DRC is trading at a 2020 PE and EV/EBITDA of 11.3x and 4.4x. Nevertheless, considering 2021 strong growth on the back of fully depreciated radial I factory, the stock is traded at 2021 PE and EV/EBITDA of 7.5x and 3.86x. With a target PE and EV/EBITDA of 9x and 4.5x on average 2020-2021 financials, we derive a 1-year target price at VND 21,800 per share (including a dividend yield of 7.7%), offering a total return of 12% from the current price. We hence maintain our MARKET PERFORM rating. 2019 bonus and welfare fund is approved at 9% of 2019 net income, while the cash dividend was decided to be at 15% on par value (7.7% dividend yield).

We recently attended the BMP 2020 AGM, where the Company set an encouraging target for 2020 revenue and net profit to increase by 5% and 10%, respectively. We are even more optimistic on BMP earnings prospects than management as our resin input price assumptions are predicated on the current realities of the market versus substantially the higher pre-COVID-19 assumptions of BMP. As such, we maintain our net profit forecast of VND 523 bn (+23.6% YoY), which exceeds the Company’s annual guidance (VND 465 bn) by 12.4%. In fact, net profit up to 5M20 this year has shown a positive bump of 18% YoY, and surpassing the earlier guidance on a Jan-May comparative basis by +15%. At the current price, BMP is trading at 2020 PE forward of 8.5x, which is quite fair in our view. However, strong net profit growth 2020 on the back of low input costs can still support the stock price in the short term. 

Given PVD’s updates on the PV Drilling rig workload, our expected JU-rig’s utilization rate decline to 73% in 2020 (vs. our previous estimate of 91% and the 2019 rate of 90%). We revise down our 2020 forecasts for PVD, where revenue and NPATMI equate to VND 5.05 bn (+15.6% YoY) and VND 54 bn (-70.5% YoY) - lower than our previous estimates of 7.0% and 58.4%, respectively. At the price of VND 10,450/share, PVD is trading at a 2020 P/B and an EV/EBITDA of 0.32x and 7.9x. We therefore maintain our MARKET PERFORM rating for the stock but lower our 1-year target price to VND 11,300 per share (vs. our previous target price of VND 12,700 per share, because of new changes in earnings results).

AAA reported 1Q20 net profit of VND 63 bn, flattish when compared to the previous quarter - although declining significantly by -72% YoY due to the absence of new industrial park sales. We expect AAA’s consolidated revenue and net profit in 2020 to reach VND 7.49 tn (-19% YoY) and VND 451 bn (-10% YoY), respectively. Although the 2020 EPS is expected to drop by 36% YoY due to the dilution affect from the upcoming conversion of APH’s warrant, AAA net profit and EPS can recover by 7.6% in 2021 thanks to the interest expense saving from the new share issuance. We maintain our Outperform rating for the stock, with a target price of VND 15,100/share. The recovery in the company’s earnings on the back of the industrial park lease, attractive PE forward of 7.0x and 6.5x for 2020 and 2021 respectively, along with a cash dividend yield of 8%, can be a supportive catalyst for the stock price going forward.

At the starting price in the upcoming public auction of VND 25,000/share, APH is currently trading at a 2020 P/E forward of 10x, under the assumption that the company is to accomplish its net profit target of VND 650 bn, and successfully issue 20 mn new shares as planned. We think that given their long experience in producing plastic bags along with their shift in focus to biodegradable products, APH can find itself in a good position to take advantage of the growth potential of biodegradable products in the coming time. In addition, with their strategic JV with Vinfast, the company can also benefit from the government’s plan to boost the domestic automobile industry in the coming years. 

PNJ shares are now being traded at the price of VND 60,500 per share, equivalent to a 1Y forward P/E ratio of 14.72x, higher than the median of regional peers (14.28x). We maintain our target P/E for shares at 13.0x and use 1-year forward EPS (ending June 2021) for valuation. Our target price for the share arrives at VND 53,400 per share (-11.7% downside). Hence, we downgrade our ratings for PNJ shares to SELL from Market Perform.

Taking (i) the supporting package and flat rent reversion which will reflect in lower net operating income in 2020, and (ii) increased GFA secured in the pipeline we trim our 1Y target price by -11% to VND 39,000/share. Hence, we call for an OUTPERFORM rating for the stock at present. At the current share price of VND 27,900/share, VRE is trading at an EV/EBITDA of 13.1x, which is relatively lower than the regional peer average of 17.9x. While becoming less of a risk every day as Vietnam has passed 54 consecutive days without identified cases in the community thanks to strict control measures, we still feel the need to mention the tail-risk of another wave of Covid-19 in Vietnam causing another lockdown, which we emphasize is a slim tail-risk scenario. We would also consider the mall expansion plan falling behind schedule to be a possible associated tail- risk, though we have been more cautious than the company in terms of the timing of mall openings.