MBB - Clearer Recovery Prospects in the Second Half of 2023
06-10-2023
: MBB
: Banking
: Dang Chinh
Tags:
- In Q2/2023, MBB experienced a slowdown in its primary revenue sources within the backdrop of the industry's general difficulties, with a total operating income (TOI) of VND 11.5 trillion (+3% YoY). Net interest income (NII) was the driving force with a 6% growth, reaching VND 9.4 trillion and contributing 82% total income. For the first half of 2023, TOI and PBT amounted to VND 23.4 trillion (+3% YoY) and VND 12.7 trillion (+7% YoY), respectively, completing 49% of the guideline.
- Moving into Q3/2023, there were signals of interest rate cuts across the entire system, including MBB, in recent months the interest rates on deposit for certain tenures were adjusted downward in March. Therefore, the expected reduction in funding costs in the upcoming quarters is likely to contribute positively to the recovery of the net interest margin (NIM) due to stable asset interest rates.
- We estimate that MBB's interest income will become more positive in the latter half of 2023 (H2 2023) as credit growth continues to be strong compared to the industry, and NIM shows signs of recovery. However, the pace of TOI growth remains slow due to securities brokerage and insurance activities, which require more time to recover. In our baseline scenario, we project that MBB will achieve a 19% credit growth for the full year 2023, combined with a gradual NIM recovery from H2 2023 (+14 bps compared to the first half of the year). As a result, for the last six months of the year, net interest income is estimated to grow by 9% compared to the first half (+15% YoY), serving as the main driver for TOI (+17% YoY and +13% HoH). PBT for the second half of the year is estimated at VND 13.8 trillion, representing a 9% increase compared to the first half and a 28% increase compared to the same period in the previous year. For the full year 2023, TOI and PBT are projected to be VND 50.1 trillion (+10% YoY) and VND 26.6 trillion (+17% YoY), respectively. The estimated net profit after tax and earnings per share (EPS) for the corresponding period are VND 20.5 trillion and VND 4,214.
- MBB is currently trading at a price-to-book (P/B) ratio of 1.2, which represents a 21% discount compared to the 5-year average of 1.43 for this stock. Therefore, at a target price of VND 22,600 per share, corresponding to a P/B forward (fwd) ratio of 1 for 2023, we recommend buying MBB shares for medium to long-term holding with a potential profit of 19.7% compared to the closing price on October 6, 2023.
IDC - The outcomes following the gradual restructuring are becoming more evident
05-10-2023
: IDC
: Industrial Land RE
: Hung Le
Tags:
- The consolidated revenue for the first half of 2023 reached VND 3,554 billion (a 29% decrease compared to the same period last year and approximately 43% of the full-year 2023 plan), while the Net Profit beforer Tax (NPBT) was VND 1,034 billion (a 52% decrease compared to the same period last year and 41% of the annual plan). The primary reason for this discrepancy is the one-time revenue recorded in the first half of 2022 for the Nhon Trach 5 IP.
- We hold a positive outlook on IDICO (HNX: IDC) due to several key factors. Firstly, their substantial inventory of 677 hectares of leaseable land ready for lease guarantees at least 5 more years of business performance while pursuing additional projects ranging from 1,893 to 2,283 hectares. This is complemented by a significant improvement in asset turnover since 2020, evident in impressive land leasing figures for 6T2023. Secondly, the return to normal operations of the Dak Mi 3 hydropower plant and the operation of the Huu Thanh sub station Phase 1 contribute added value to their energy business segment. Thirdly, IDC's ready built- factories business segment exhibits potential, with the development of approximately 2.6 hectares out of an estimated 36 hectares in two strategic locations, Nhon Trach and Huu Thanh Industrial Parks, aimed at diversifying revenue streams and expanding their customer base.
- With a substantial backlog of remaining contracts from 2022 and new agreements signed in 6M2023, including large contracts with the Giant manufactures like PepsiCo (20 hectares) and Hyosung (25 hectares), we believe that IDC can successfully achieve its annual plan upon the completion of land handovers under these lease contracts. Additionally, IDC has plans to distribute cash dividends over the next 12 months at a rate not lower than 4,000 VND per share, equivalent to a dividend yield of approximately 8.8% at the closing price on October 4, 2023.
PVD - High rig day rate boost 2023-2024 business results
04-10-2023
: PVD
: Oil & Gas
: Ngan Le
Tags:
- We increase our estimates for 2023’s revenue and net profit by 2%/27% respectively, with VND 5,101 bn in revenue (or USD 223.6 mn, -6.1% YoY) and VND 460 bn in NPAT-MI (or USD 19.4 mn), compared to a loss of VND 99 bn in 2022. The 2023 correspondent EPS will be VND 827.
- We anticipate the day rate of PVD Jackups to rise to USD 92,700 (+14% YoY) in 2024.
- With the target PBR of 1.20x, we come up with a BUY recommendation with the target price of VND 30,900 per share, equivalent to a return of 26% as of the closing price on Oct 3rd, which is higher by 15% compared to the latest target price (VND 26,800) on Aug-2023.
DRC - Cost reduction is key for profit expansion
03-10-2023
: DRC
: Automobiles
: An Nguyen
Tags: Result Update Q2 2023 truck tires
- Q2 2023 sales and net profit reached VND1,162 bn (+4.4% QoQ; +1.2% YoY) and VND50.9 bn (+100.4% QoQ; -39.3% YoY), respectively. Despite showing signs of improvement due to low raw material costs, the gross profit margin narrowed compared to the same period last year because of 1) lower selling prices to boost revenue growth and 2) a high proportion of exports (reaching 69.1% in Q2 2023).
- Revenue is expected to recover as the economic outlook for 2H2023 is projected to be more favorable. Domestic revenue will be boosted by increased goods and passenger rotation activities, while export revenue is expected to remain stable thanks to the US and other new markets offsetting the decline from Brazil. Benefiting from reduced raw material prices and transportation costs will also create additional room for DRC to improve profitability.
- We forecast 2023 revenue and net profit to reach VND4,959 bn (+1.2% YoY) and VND200 bn (-35.2% YoY), respectively, equivalent to a projected EPS of VND1,581 (-35.2% YoY).
- Our target price is VND21,500. DRC's current P/E ratio is at 11.8x, which is higher than the 5-year average P/E of 10.4x. Therefore, we believe that the positive outlook for DRC has already been reflected in the upward trend of the stock price. However, DRC offers a stable annual cash dividend payment ranging from 15-18% per par per share. Therefore, we consider DRC to be a suitable investment for a "dividend investment strategy."
SCS – Q3-2023 Preview: Profit is forecasted to be flat compared to the previous quarter
02-10-2023
: SCS
: Aviation
: Tung Do
Tags: SCS
- For Q3-2023, we forecast revenue and PAT to reach VND 177 billion (-8% YoY) and VND 127 billion (-14% YoY), respectively, mainly due to low import-export output, forecast to reach 34.7 thousand tons (-13% YoY). Accumulated 9M-2023 revenue and PAT are estimated to reach VND511 billion (-22% YoY) and VND371 billion (-24% YoY), respectively completing 70% and 72% of our full-year forecast.
- We maintain our 2023F forecast with revenue of VND 732 billion (-14% YoY), NPAT of VND 513 billion (-21% YoY), corresponding to basic EPS of 5,100 VND. For the 2024F forecast, revenue VND is 803 billion (+10% YoY), PAT is VND 558 billion (+9% YoY), equivalent to basic EPS of 5,570 VND.
- We reiterate our ACCUMULATE recommendation for SCS with a target price of VND 74,800 with an expected total return (including cash dividends) of 19%, based on the P/E valuation method (target multiple of 15x@ 2024F EPS) and FCFE (Ke: 10.8% and g: 1.8%). In the base case scenario, we don’t factor the possibility that SCS will participate in air cargo terminal at Long Thanh airport (after 2026). As of October 2nd, 2023, SCS is trading at a 2023F/24F P/E of 14.4x/13.1x.
DBD – Results of Q3-FY23 and plan to issue a private placement to strategic shareholders
29-09-2023
: DBD
: Pharmaceuticals, Biotechnology
: Quan Cao
Tags: Pharmaceuticals DBD
- Expected results in Q3-FY23:net revenue and PBT are VND 410 billion VND (-1% QoQ, +4% YoY) and VND 79 billion (-11% QoQ, 10% YoY), respectively. Accumulated 9M2023, net revenue and PBT are VND 1,206 billion (+11% YoY) and VND 207 billion (+22% YoY), respectively completing 67% and 84% of the annual plan and 69%, 68% of our forecast.
- DBD is negotiating with eights foreign strategic partners and has not yet decided on an official investor. The company is currently expected the price to be referenced with historical deals such as Taisho with DHG, SK with IMP, Stada with PME, and Abbott with DMC,... According to DBD, the mean valuation of EV/EBITDA, P/E, P/S deals in history are 19.6x, 26.5x and 3.5x, respectively.
- For 2023F, we maintain our revenue and NPAT forecasts at VND 1,753 billion (+13% YoY) and VND 298 billion (+22% YoY) respectively. EPS for 2023 is VND 3,980. For 2024F, net revenue and NPATMI are VND 1,973 billion (+13% YoY) and VND 333 billion (+12% YoY), respectively, EPS is VND 4.441.
- Forecast CAGR 4Y of NPATMI from 2023F – 2027F of 15%, a forward PEG ratio of 0.9x, and a stable 20% cash dividend, we believe that DBD is an attractive investment for the long-term. We recommend to BUY.
STK – On a bumpy track
28-09-2023
: STK
: Textile & Garment
: Hoai Trinh
Tags:
- Q3/2023 business results are expected to have negative growth QoQ and YoY. According to STK, the actual order placement is still slow in 3Q23, and recovery is expected to be in 4Q23. According to our update, the muted growth of sportswear brands will continue in the short run (until around March 2024), especially the US and EMEA markets where promotions continue to ramp up, but demand remains weak. Our forecast for Q3 revenue and NPAT-MI will reach about VND 360 bn (-12% QoQ, -30% YoY) and VND 25 bn (-20% QoQ, -40% YoY), respectively.
- For FY23, we lower our forecast for business (adjusting down 17% of profit compared to the previous forecast), with expected revenue and NPAT-MI of VND 1,635 bn (-22.7% YoY) and VND 135 bn, respectively, reflecting slow recovery prospects for the second half of the year. The equivalent EPS in 2023 is 1,591 VND.
- Neutral rating on STK stock. We arrive at our one-year target price of VND 31,700/share, based on a blend of the DCF method and P/E multiple (a target PER of 8.7x). STK’s stock price is currently trading at a TTM P/E of 20.8x. Accordingly, we downgrade our recommendation to NEUTRAL. Besides, STK’s stock price has done well YTD. Our rating reflects the view that the recovery expectation has been priced in.
US: Federal Reserve held interest rates steady
28-09-2023
: VDS
: Macroeconomics
: Bernard Lapointe
Tags:
- The September Fed meeting was a non-event: no rate hike
- Consensus among market observers is for no more hike this year
- US 10-yr bond yields did not react (Figure 1)
GDA – A notable company in the steel industry
27-09-2023
: NKG, HSG
: Materials
: Thach Lam Do
Tags: GDA
- Ton Dong A (GDA) – one of the largest galvanized steel manufacturers has been traded on the Upcom market since September 2023. According to VSA, the company has the second-largest sales market share in Vietnam (the market share in 2022 and 8M2023 reached 17.11% and 18.44%, respectively) which illustrate the company's significant position in the steel market. Export volume accounts for ~56% of total volume; with the main markets being the EU, North America and Southeast Asia countries, which are also Vietnam's main export markets.
- In 1H2023, GDA recorded revenue of VND 8,734bn (USD 361mn, -33%YoY), with sales volume of 376.6 thousand tons (-8%YoY, fulfilled ~50% of its business plan); and ~65% consumed volume was to foreign markets (ASEAN, EU) owing to rising demand in these countries, especially from 2Q23. The 1H gross profit margin (GPM) recovered to 7% and gross profit reached VND 610bn. In terms of the bottom line, GDA recorded a 1H NPAT-MI of VND 204bn (-38%YoY, after recording a net loss in 2H22). The result fulfilled ~102% of its profit plan.
- For 2H2023, company expects that the average export volume can be at 30,000-35,000 tons/month (equivalent to the 1H23 average export volume), which showed the stable demand from their main markets. As a result, we expect that GDA can reach the 2H23 sale volume of 350 thousand tons (2023 total sale volume can reach 726.6 thousand tons, fulfilled ~97% of its business plan). Our hypothesis is that the average HRC price could be at the low-level of USD 600/ton, hence the 2H23 revenue would be VND 8,117bn (2023 total revenue at VND 16.8tn, fulfilled ~100% of its business plan).
- Currently, the stock is trading at a PBR of 0.8x, which is relatively lower than peers (galvanized steel companies are trading at 1.0x). With the following points: 1/ Company with second-largest market share on galvanized steel production, 2/ Recovering in foreign markets, we think that the stock is currently trading at an attractive valuation, compared to other listed steel companies.
Update on monetary market in Sep 2023
26-09-2023
: VDS
: Macroeconomics
: Ha My
Tags: Monetary market
- Interbank interest rates are stable at a low level.
- The exchange rate is retesting the threshold of 24,500 VND/USD.
- Credit recovered slowly
PVT – Better results in 2023 than previous forecast
25-09-2023
: PVT
: Oil & Gas
: Vu Tran
Tags:
- PVT has announced its audited financial results for the first half of 2023, reporting revenue and net profit of VND 4,158 bn (-2.8% YoY) and VND 630 bn (+39.4% YoY), respectively. These figures were higher than previous estimates because PVT recorded additional profits from compensation - consolidated from its subsidiary, Nhat Viet.
- We expect 2023 earnings to show growth compared to the previous stable earnings forecast despite the abnormal profits of VND 215bn from selling Athena vessel in 2022. As a result, we have adjusted the NPATMI of PVT from VND 861 bn to VND 978 bn for the full year 2023, representing a growth rate of 13.5%.
- We still maintain a positive outlook for PVT's stock this year as core profits are expected to grow by 18% in 2023. Assuming current freight rates remain stable in 2024 and the fleet continues to expand, we believe profits will continue to grow in 2024. However, the stock price has already increased significantly, so we only recommend HOLD stock with the target price of VND 26,400. Currently, the stock is trading at a P/E ratio of 9.2x for 2023.
VCB - Pioneering Recovery Initiatives
22-09-2023
: VCB
: Banking
: Chinh Nguyen
Tags: VCB
- VCB reported total operating income (TOI) of VND 17.4 trillion (+9.4% YoY) in Q2/23, driven by a growth in net interest income (NII) reaching VND 14 trillion (+9.6% YoY) combined with non-interest income of VND 3.4 trillion (+8.6% YoY). Effective cost control measures led to a decrease in the cost-to-income ratio (TTM) by 100 bps to 30.6%, and a 7.2% YoY reduction in provision expenses, resulting in a maintained PBT at a high level of 9.2 trillion VND (+25% YoY). For the first 6 months of 2023, the total TOI and PBT reached 35.9 trillion VND (+10% YoY) and 20.5 trillion VND (+18% YoY), respectively.
- Sources of non-interest income were different as income from net fee reached 1.6 trillion VND (+133% YoY), offsetting the slowdown in foreign exchange and collection activities. Fee income recorded significant growth in the second quarter due to changes in insurance fee income recognition. Card and payment activities remained strong, compensating for the decline in trade finance and insurance activities.
- The second half of 2023 is expected to see stronger credit growth as demand from individual businesses and large enterprises in utility, construction, and infrastructure sectors pick up. Combined with long-term relationships with major importers and exporters, VCB has maintained its advantage in non-interest income sources such as payments, transfers, trade finance, and foreign exchange. In the base case scenario, we estimate that net interest income will grow by 8% to reach VND 57.5 trillion, with credit growth of approximately 11% and NIM maintained at 3.2%. Non-interest income is expected to reach VND 16.8 trillion (+13% YoY). Consequently, the estimated total TOI and PBT are VND 74.4 trillion (+9.3% YoY) and VND 43.4 trillion (+16.2% YoY), respectively.
- We recommend to ACCUMULATE VCB with a target price of VND 99,500, equivalent to a 11,42% return compared to the closing price on September 22, 2023
06-10-2023
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