NLG – Housing demand is the premise for recovery in 2024
15-01-2024
: NLG
: Real Estate
: Thach Lam Do, CFA
Tags: NLG
- In 3Q2023, NLG recorded revenue of VND 357bn (USD 14.7mn, -63%YoY), due to the handover of units in the Southgate project (high-rise and low-rise units). With income from associates of VND 89bn (from the Mizuki project, with handover of 227 units in block Flora Panorama) and deferred tax income of VND 81bn (during the period, company has tax-deductible expenses), NLG reported 3Q2023 NPAT-MI of VND 66bn (USD 2.7mn, -45%QoQ, +739%YoY). For 9M2023, the company recorded revenue of VND 1,546bn (USD 63.6mn, -43%YoY), and NPAT-MI of VND 194bn (USD 8mn, +63%YoY).
- In 4Q, we expect the company to have positive business result, with: 1/ In December, the presales value is expected to record sales of VND 1,500 bn (2023 pre-sales could reach ~ VND 4,500 bn, fullfiled 47% of 2023 business plan), 2/ An estimated revenue of VND 1,512 bn from the Izumi project (corresponding to delivering ~70% of total units), and the 4Q NPAT-Mi is expected to reach VND 258 bn (USD 10.6mn, -41%YoY). For the whole year 2023, the revenue and corresponding EPS are expected to reach VND 452 bn (USD 18.6mn, -19% YoY) and VND 1,131, respectively.
- For 2024, with expectation that NLG's product segments are in accordance with real housing needs, the company can record significant growth in sales (presales value can be recorded at VND 8,400 bn, +87%YoY), from Waterpoint urban area (Long An) with The Pearl subdivision (~250 villas), block CC5 – the Mizuki Park, and Nam Long Can Tho project with diverse products (land-lot, EHomeS social housing). Revenue and NPAT – MI in 2024 are forecast to reach VND 7,066 bn (USD 291mn, +75%YoY) and VND 750 bn (USD 31mn, +66%YoY), respectively. The corresponding EPS is 1,940 VND.
- Using the RNAV method, we have a target price of VND 38,400/share (upside +8%, including cash dividend of VND 500/share), equivalent to an ACCUMULATE recommendation.
Oil and Gas sector – “Block B is on everyone’s lips”
12-01-2024
: PVD, PVS
: Oil & Gas
: Ngan Le
Tags: oil&gas PVD PVS
- After many delays in FID approval, the Government has made notable movements to accelerate the project. It can be said that Block B is the center of attention for Vietnam’s O&G industry in 2024, and hence upstream will reap the benefits first. PVD (ACCUMULATE; TP: VND 30,900/share) and PVS (ACCUMULATE; TP: VND 40,100/share) are our favourable stock picks for 2024 strategy investment.
- Lac Da Vang (oil field) and Su Tu Trang – 2B (gas field) are two other notable projects in 2024-2026.
- Nevertheless, with the significant decline of domestic gas resources, imported LNG will be the optimal option to secure national energy security in short-term.
PPC – Normal growth from a low base
11-01-2024
: PPC
: Power
: Hoai Trinh
Tags: PPC
- In 4Q23, PPC recorded a commercial electricity output of 1.024 bn kWh (+34% QoQ, +24% YoY), thanks to the S6 unit resuming operations in September 2023, aligning with our prior expectations. We forecast PPC's revenue in 4Q23 to reach VND 1,920 bn (USD 79 mn) (+44% QoQ, +22% YoY). However, PPC's net profit in Q4 is expected to record a loss of VND 112 bn (USD 5 mn) due to (1) one-time expenses for the repair of the S6 unit and (2) low FMP prices in Q4 impacting the company's profit. Accordingly, we project PPC's 2023 net revenue and NPAT to be VND 6,015 bn (USD 247 mn) (+14% YoY) and VND 174 bn (USD 7 mn) (-32% YoY), respectively, equivalent to an EPS of VND 542 per share.
- In 2024, we believe that (1) the rebound in electricity demand, (2) contributions from the S6 unit, and (3) dividend income from associated companies will be key factors driving PPC's performance. We forecast that (1) the commercial electricity output for 2024 will reach 4 bn kWh (+34% YoY), with the average selling price decreasing to VND 1,698 per kWh (-11% YoY), assuming that the average coal price will cool down in 2024. Accordingly, we project PPC's total revenue and NPAT in 2024 to reach VND 7,142 bn (USD 293 mn) (+19% YoY) and VND 497 bn (USD 20 mn) (+186% YoY), respectively, equivalent to an EPS of VND 1,354 per share.
- We maintain an ACCUMULATE rating with a one-year target price of VND 15,500/share. With an expected cash dividend of VND 2,150/share in the next 12 months, the total return is determined at 12% based on the closing price on Jan 11th 2024.
Maritime industry – Rapidly rising transportation costs put pressure on export demand recovery
10-01-2024
: HAH
: Seaports
: Quan Cao
Tags:
- The Suez Canal plays a crucial role in the global supply chain, with 21% number call of container and 30% of global cargo passing through the area, according to Clarkson.
- Container freight rates on routes from Shanghai to Europe and the US have risen for three consecutive weeks, experiencing a sharp surge last week to offset higher fuel costs, prolonged shipping distances, labor costs and war risk insurance.
- The recovery in trade demand continues to face challenges as the potential of sustained high shipping rates could prolong the struggle against inflation in the US and the EU.
Banking Sector - Strong credit growth at the end of 2023 and credit growth target for 2024
09-01-2024
: ACB, VCB, MBB, CTG
: Banking
: Chinh Nguyen
Tags: banking
- Credit growth of the whole banking sector was recorded to be strong in the last quarter of 2023. Specifically, credit growth of the whole sector was reported by the representative of the SBV to reach 13.7%, while in Q4 it grew by 6.3% QoQ and the growth rate of November and December recorded outstandingly higher than the previous months, reaching 1.83% MoM and 4.17% MoM respectively.
- SBV set the credit growth target for 2024 at 15%, and allocated the credit quota for the year to credit institutions. By allocating and directing the allocation clearly announced by the State Bank at the beginning of the year, we believe that credit institutions will have better proactivity in business planning and credit disbursement regulation in 2024, avoiding concentration at certain times during the year.
Vietnam Smartphone Market – It is difficult to reach the breakthrough growth in the long-term
08-01-2024
: MWG, FRT, DGW, PET
: TCGs Retailing
: Hung Nguyen
Tags:
- In 10M-2023, total sales volume of Vietnam smartphone market in offline & online channels declined by -22.2% & -17.3% YoY, respectively under the pressure of macroeconomic headwinds and consumer weakness. However, we expect that smartphone market will create the signal of rebounce in Q4-2023 by the boost from iPhone 15 and the end-year shopping season.
- For 2024, Vietnam smartphone market is set to return to grow in 2024 after two years of decline, driven by a recovering Vietnam consumer confidence & purchasing power. Nevertheless, this market has showed saturated signals for a long time, so it is difficult to expect that these corporates (smartphone retail chains/distributors) will reach the breakthrough growth in the long-term.
- Apple emerged as a rare highlight in the midst of market saturation. We believe that, in the long run, the growth of the market value will be largely driven by Apple's development, particularly as the Vietnamese Apple user community grows stronger.
WCM – Signs of recovery have appeared in Q3 2023 performance
05-01-2024
: MSN
: Retailing
: An Nguyen
Tags:
- Q3 2023, Wincommerce (WCM) record sales of VND7,884 bn (or USD329 mn, +9.8% QoQ; +3.3% YoY). WCM continued presenting positive EBITDA since Q4 2020, witnessed at VND228 bn (or USD10 mn, +47% QoQ; -9% YoY) in Q3 2023. We find out some positive signals from the Q3 2023 performance, including (1) Sales per store per month recovered by quarter; and (2) Stable profitability
- We suppose that the fruitful result of the technology applications is hard to realize in the short-term because of the processing time. However, based on the performance of the global retailers who have applied AI & ML to operations; and the recent performance of WCM, we believe that applying AI & ML to retail operation is the right decision for long-term growth
- We believe that the positive net profit stage of WCM is coming. We suppose that when WCM completes their store expansion plan, then improving average sales per store per month to the NPAT breakeven level (expected at VND1.0 bn in general by RongViet Securities), equipped by costs optimization, they would record positive net profit
Overview of the MSCI Stock Market Reclassification Process and Its Impacts on the Stock Market
04-01-2024
: VDS
: Financial Services
: Tung Do
Tags:
- Typically, MSCI's upgrade process comprises four stages and, at the fastest, spans approximately two years.
- The phase of significant market rally usually occurs in the period from when a market is added to MSCI's watchlist for potential upgrade until MSCI begins consulting with investment institutions globally. Ideally, this process takes about 9-10 months.
- In the case of the inclusion of China's A-shares in the MSCI Emerging Markets Index, mid and small-cap indices exhibited superior growth compared to larger-cap indices.
- Excluding Saudi Arabia, the initial weightings of newly upgraded stock markets in MSCI Emerging Markets Index are generally below 1.0%.
MARKET IN JANUARY – THE 4TH QUARTER EARNINGS SEASON
03-01-2024
: VDS
: Financial Services
: Hung Le
Tags:
- In December, the stock market continued to exhibit a positive trend. However, both the momentum of growth and market liquidity experienced a slowdown. Foreign investors marked the month with their strongest net selling of the year.
- In our baseline scenario, we estimate that: (1) Fourth-quarter revenue may achieve a growth rate of 6.9% YoY, aligning with the GDP growth rate of the Q4; (2) Profit margins are expected to remain consistent with the levels seen in the first nine months of the year, corresponding to a +24% change YoY, and Q4 profits are anticipated to grow by approximately 31% YoY, with a 12-month cumulative change of 7% QoQ. Additionally, (3) We assume that the impact of the issuance of additional shares will be negligible and, with the VNIndex at 1,131 as of January 2, 2023, the P/E ratio could adjust downward by 7% to 13.15x, or an earnings yield (E/P) of 7.6%. This yield is significantly attractive compared to Vietcombank's 12-month savings rate of 4.80%.
VHC – Expect recovery in H2-2024
02-01-2024
: VHC
: Fishery
: Hiển Lê
Tags:
- In Q4-2023, we estimate the revenue and NPAT-MI to be VND 2,509bn (or USD 105mn) (+1% YoY; -7% QoQ) and VND 174bn (or USD 7,2mn) (-9% YoY; -9% QoQ), respectively, assuming volume and average price (ASP) to decrease by 1% QoQ and 13% QoQ, respectively. The gross profit margin for Q4-2023 is expected to reach 12.8% (-10,900 bps YoY; +230 bps QoQ) due to (1) a decrease in feed costs QoQ and (2) raw fish price decreasing faster than selling price.
- In summary, the revenue and NPAT-MI for the year 2023 to be VND 10,152bn (or USD 423mn) (-23% YoY) with volume and selling price decease 17.7% YoY and 21.3% YoY, respectively. NPAT-MI will be VND 1,022bn (-48% YoY), equivalent to an EPS of VND 5,575 (-48% YoY).
- In 2024, we forecast the revenue at VND 11,577bn (or USD 482mn) (+14% YoY) with assumptions of volume and ASP increasing by 15% YoY and 5% YoY, respectively, as (1) demand rebounds in the U.S. and EU markets in the second half of 2024, and (2) the supply of raw fish decreases. The gross profit margin improves from 15.1% to 18.5% due to (1) a reduction in feed costs and (2) selling price increasing faster than raw fish price. This supports NPAT-MI to achieve VND 1,420bn (or USD 59mn) (+39% YoY). The EPS for 2024 is expected to be VND 7,746 (+39% YoY).
- We reduce our target price to VND 76,900 per share, a 2.7% reduction from the previous target of VND 79,000 in August 2023. Combined with a dividend of 2,000 VND, the expected return for the next 12 months is 4.9% compared to the closing price on January 02, 2024. This adjustment is made by (1) reducing the WACC from 14.1% to 12.6%; (2) using the 2024 valuation year for the SoTP valuation method, and (3) decrease forecasted profits for 2023 & 2024 compared to the previous forecast. We recommend ACCUMULATE this stock for the long term.
HPG – The domestic market to drive growth in 2024
29-12-2023
: HPG
: Materials
: Thach Lam Do
Tags: HPG
- In 3Q2023, HPG recorded revenue of VND 28.5tn (USD 1.2bn, -16%YoY, -3%QoQ), with the recovery of construction steel volume (with 3Q volume of 919 thousand tons, +17%QoQ); supported by demand from public investment projects, when major projects (ring road and expressway systems) have handed over 70% of the land and moved into the construction phase. The 3Q gross profit margin (GPM) continued to improve to 12.6%, and gross profit reached VND 3,595bn (USD 148mn, +13%QoQ, +259% YoY), when the imported material (coking coal and iron ore) was at low-level.
- In 4Q23, we expect HPG's construction steel volume to reach 1.15 million tons (+25%QoQ), when public investment projects increase disbursement in the 4Q. Thereby, revenue can reach VND 33.3 tn (USD 1.4bn, +17%QoQ, +29%YoY); gross profit to reach VND 3,240 bn (USD 133mn, -10%QoQ), with GPM of 9.7% (impacted by the surge of raw material prices). In term of profit, NPAT can reach VND 1,868 bn (USD 76.9mn, -7%QoQ, continuing to improve compared to net loss in the 4Q22).
- For 2024, we expect HPG's business results to record significant growth in domestic market, supported by: 1/The real estate projects will promote sales in 2024, along with the construction phase which increases demand for materials; 2/ Major public investment projects will accelerate the construction process in the period 2024-2025. Thereby, we expect HPG's revenue in 2024 to reach VND 145.1 tn (USD 6bn, +23%YoY) and gross profit of VND 18.3 tn (USD 753mn, +60%YoY). In term of the bottom line, we estimate HPG’s 2024 net profit of VND 11tn (USD 453mn, +94%YoY). The corresponding EPS in 2024 will be VND 1,782.
- We use two methods (FCFF and PB) to evaluate the stock; our fair value comes at VND 29,100 per share, implying a total return of +4% as of the closing price on December 29th, 2023, equivalent to a NEUTRAL recommendation for Hoa Phat Group Jsc. However, with the prospect of long-term recovery, investors can accumulate shares during the correction sessions.
Global Macro Economics in 2023: A Year of Resilience Growth
29-12-2023
: VDS
: Macroeconomics
: Luan Pham
Tags:
- The outperforming US economy.
- China: recovered less than expected.
- Japan: Long-term weakness.
- Eurozone: Modest growth.
- Impact of War: Economic and Oil Price Dynamics.
15-01-2024
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