Animal husbandry - Part 1: 3F model will help Vietnamese animal feed companies to be more competitive

In the series of animal husbandry, we will have three analyst pinboards to analyze each stage of 3F model (Feed - Farm - Food) and the contribution of them to the results of DBC, MSN and HPG. At this analyst pinboard, we will analyze the current stage and future prospects of the animal feed industry. The other segments such as farm and food will be analyzed in the next analyst pinboards.

The animal feed market still has a lot of potentials to develop; that is an opportunity for businesses to expand revenue and profit. However, Vietnamese companies are facing difficulties as they are less competitive than FDI companies due to the lack of control of their input costs. Therefore, the 3F (feed - farm - food) model is the best direction for domestic businesses to go in the future.

HCMC’s residential real estate market: strong yearly recovery

• HCMC’s residential market in the first quarter of 2021 recorded a better performance versus Q1 2020 but still slower than Q4 2020.
• The high-end and luxury segments were key supply contributors.
• The effectiveness of ‘Law on amendments to the Construction 2020’ , and ‘Decree 148/2020/ND-CP’ along with commitment of the HCMC People’s Committee to reduce legal procedures will be key driver to gradually uplift market supply.
• For infrastructure development, the ground breaking ceremony of Long Thanh Airport is the most notable news along with the update on Tan San Nhat Airport (runway upgrade), Trung Luong My Thuan Expressway, Metro Line 2 Ben Thanh – Tham Luong, etc.

NT2 - Modest earnings yet prosperous cash flow in 2021

We maintain our target price for NT2 at VND 25,600, offering a 16% upside from the closing price on April 13^th, 2021. Though NT2 is going to pay the 2020 dividend of VND 1,000 as stated in AGM's proposal, we believe NT2 will soon pay out most of its spare cash as a 2021 dividend under POW’s domination (59% ownership) when the company finishes its debt obligation in 2021. Thus, we recommend investors, particularly those seeking high dividend yield, to ACCUMULATE NT2  this year.

Monetary policy spillovers towards emerging markets.

• Monetary policy actions by the US Federal Reserve have a significant influence on financial condition in global emerging markets, whereas spillovers from policies of the European Central Bank (ECB) are smaller and affecting mostly emerging Europe.
• Positive growth news in the US is associated with improved growth prospects in emerging markets, leading to higher expected monetary policy rates in these countries.
• Given the economic significance of USD lending by global banks to emerging markets firms, US monetary policy plays an important role as a “push factor”.

GMD – Aggressive Expansion Plans Ahead to Manage Resilient Throughput Volume

• GMD plans to kick off the construction of the next phase at Gemalink and Nam Dinh Vu terminals this year.
• We estimate that the Gemalink terminal has handled 70-80k TEUs since the official operation on Jan 19^th, 2021 (~5% designed capacity).
• Nam Dinh Vu Terminal in Hai Phong has successfully attracted new services in early 2021. Consequently, we expect GMD terminals in Hai Phong to post solid performance in 2021.
• We are reviewing the forecast and valuation for GMD, pending an update on the situation. GMD’s stock price has reached our current TP of VND 35,300.

TCB – Ambitious technology-enabled growth

• The 2020 results beat our expectation by 2%.
• 2021 projected PBT is revised up to VND 18,870 bn (USD 820 mn, +19%), lower than the proposed PBT in the annual plan (VND 19,800 bn).
• The 2021-2025 plan is ambitious. We revise our estimation to match the strategic plan, but our projected NFI to TOI ratio will be not in line with the target.
• We raise the target price to VND 50,900/share and maintain a BUY This translates to an upside of 21% from the closing price of April 7 2021.

The 2020 results were better-than-expected, and lead to some revisions for 2021. Actual PBT was VND 15,800 bn (USD 687 mn, +23%), higher than our projection (VND 15,562 bn, +21%). We raise our projection for credit growth in the 2021-2025 period, due to rapid expansion of loans and the confidence of the BOM in receiving top credit limit. NII and net service income are revised upward also. 2021 PBT is expected at VND 18,870 bn (USD 820 mn, +19%).

We appreciate the ambitious strategic plan for the 2021-2025 period. We think that TCB will be able to scale up strongly in the next five years, given its solid capital base (CAR) and high efficiency (ROE and NIM). The credit book will see robust growth with diversification of customer segments. We think the target for NFI growth is hazard, and would wait for the execution to make further reassessment. The conservative leverage ratio is expected to be higher.

Sustainable ROE is li

FRANCE: GDP growth revised down.

President Emanuel Macron had hoped to steer France out of the pandemic without having to impose a third national lockdown. That did not happen as strict measures are now been put in place to attempt, again, to stem the rapid rise of new Covid-19 cases. French schools and non-essential stores such as clothing chains will now be shut for four weeks.

DXS – IPO of the biggest real estate broker

Dat Xanh Services (“DXS”) – the brokerage arm of Dat Xanh Group (“DXG”) is currently the golden-egg laying hen by contributing 70-90% of DXG’s gross profit. With a leading position in real estate brokerage and impressive growth potential, DXS is expected to attract the attention of investors in this IPO (IPO price is VND 32,000) from three main highlights include:

(1) Undisputed champion in real estate brokerage

(2) Superior financial performance above other players

(3) Solid growth prospect thanks to its efforts to become a fully integrated broker  

Pig prices are unlikely to decline much

China re-herd of pigs went well, causing the price of animal feed materials to increase strongly and it is expected to stay at high level in the future. Although the supply of pigs in Vietnam is increasing rapidly, the breeding cost increased together with the animal feed prices, causing the price of pork (live weight) to not decrease much. This situation will help large companies who have their own breeding pigs like Dabaco to grow their profits by expanding their sale volume.

HSG update – Strong performance in 2Q and 3Q FY2020-2021

Favorable market conditions will be supportive factors for HSG’s 2Q and 3Q bottom line. Therefore, we think investors can consider a short-term trading opportunity. Per our estimation, HSG’s TTM EPS at the end of 3Q will be VND 4,300. Assuming a 7.7x PE (20% discounted from HPG’s PER), the share price can go up to VND 33,000. However, in the longer term, NPAT can revert to the normal level. At the current market price, the FY2020-2021 forward PE is 8.7x, which we think is already fair, somewhat overpriced considering that next year's NPAT growth will be -39%. Therefore, we recommend to MONITOR the stock to see if there is an investment opportunity for the long term.

REE: AGM update

We maintain our target price for REE at VND 54,000, offering an upside of 3% compared to the closing price on March 31^st, 2021. Hence, we recommend to accumulate this stock. Our new target price for REE will be published in our next report.