TLG – Stand steadfast in the face of macro headwinds
23-01-2024
: TLG
: Consumer Durables
: Hung Nguyen
Tags: TLG
- In 10M-2023, TLG’s net revenue reached VND 3,036 bn (or USD 127 mn, +0.8% YoY). Of which, domestic & export sales recorded by +0.9% YoY and +0.4% YoY, respectively. This growth was due to the stable demands for writing instruments & school supplies, even in the context of an economic slowdown.
- 10M net profit margin narrowed by -250 bps compared to the same period last year, mainly driven by an increase in SG&A expenses of +9.4% YoY. Since Q4-FY22, TLG has boosted their branding activities, such as a debut of Clever Box stores, proceeding Mega Color events & “key store program”, or recruiting more marketing and sales staff.
- In 2024, we expect that TLG‘s profitability would improve YoY in the pillar of (1) the continuous efficiency of “brand-repositioning strategies”, (2) the recovery of office supplies and art material’ consumption in both domestic and export markets, (3) the low levels of input material’ prices, and (4) optimizing the sales channel structure and product portfolio.
- TLG is currently trading at trailing P/E ratio of 12.5x, which is higher than its 10y-historical average of 11.6x. We believe the company’s PER has been re-rated in recent years owing to its strategies to expand its market share in both domestic and export markets and improving the profit margin. Hence, investors should closely monitor the company’s sales and profit margin improvements in the upcoming quarters for the stock investment timing. Last but not least, the company’s ability to maintain a cash dividend of at least 20% (even during the Covid-19 years) is a plus which investors should be noticed.
IMP - Expectations for the ETC channel to be a driving force for sustaining growth in 2024
22-01-2024
: IMP
: Pharmaceuticals, Biotechnology
: Quan Cao
Tags: IMP
- In Q4-FY23, revenue and NPAT were VND 608 billion (+9% YoY) and VND 72 billion (-8% YoY), respectively. In which, revenue from self-produced pharmaceuticals accounted for 92% of total net revenue. The two main sales channels, ETC and OTC, reported revenues of VND 300 billion (+28% YoY) and VND 257 billion (-2% YoY), respectively.
- Forecast for 2024F, revenue and NPAT will be VND 2,229 billion (+13% YoY) and VND 367 billion (+36% YoY), EPS is 4,458 VND. In which, revenue from ETC and OTC will be VND 1,016 billion (+20% YoY) and VND 1,116 billion (+7% YoY).
- We maintain a target price of 74,000 VND/share, implying a P/E valuation for 2024F at the target price of 16.6x. We are changing our recommendation from BUY to ACCUMULATE due to the market price having increased by 16% since the previous recommendation.
ANV – High growth opportunities from Chinese market
19-01-2024
: ANV
: Fishery
: Hien Le
Tags: ANV
- According to Argomonitor, although 2023 is a challenging year for the pangasius industry with export turnover reach nearly USD 1.9bn (-24% YoY), ANV's export value only decreased by 9% YoY as Chinese market grew (+74% YoY). We estimate that ANV's revenue and NPAT-MI will reach VND 4,577bn (USD 188mn, -6.5% YoY) and VND 103 bn (USD 4.2mn, -85% YoY), respectively. EPS 2023 is equivalent of VND 773 (-85% YoY).
- In 2024, we estimate that NPAT-MI will reach VND 4,902bn (USD 201.7mn, +7.1% YoY) and VND 261bn (USD 10.7mn, +154% YoY), respectively. This is based on the expectation that volume and average price (ASP) will increase by 6% YoY and a 2% YoY, respectively, as (1) a reduction in pangasius supply and (2) recovery in demand in the second half of 2024 in the US and China as the holiday season comes. The gross margin is expected to improve from 10.3% to 13.8% as the decrease in feed cost. This supports NPAT-MI to reach VND 261 bn (USD 10.7 mn, +154% YoY). EPS 2024 is equivalent of VND 1,961 (+154% YoY).
- We are reviewing carefully the valuation for ANV as we need to observe additional factors affecting the export prospects of the industry and the company. ANV’s current price is trading at a P/E ratio of 25x, higher than the 5-year average P/E ratio of 11x.
LHG – Signs of Revival
18-01-2024
: LHG
: Industrial Land RE
: Hung Le
Tags:
- In a marked rebound, the Q4/2024 business results of Long Hau Corporation (HSX: LHG) have shown strong recovery compared to previous quarters and the same period last year. Specifically, revenues in Q4/2023 reached VND 145 billion (USD 6 million, +40YoY). NPAT also surged by 104% YoY to VND 62 billion (USD 3 million). For the full year of 2023, the company’s revenue totaled VND 395 billion (a 37% decrease year-over-year, achieving 43% of the annual plan), with a NPAT of VND 166 billion (an -18% YoY, completing about 131% of the annual target). The EPS for 2023 was VND 3,329.
- In the baseline scenario for 2024, LHG’s revenue is estimated to reach VND 539 billion (up 37% YoY; USD 22 million) and a net profit of VND 192 billion (up 15% YoY; USD 8 million), driven by the recovery in sales pace and new lease in the new RBFs expansion. The estimated EPS for 2024 is VND 3.837.
- We maintain our target price at VND 50,000 per share. Combined with a cash dividend of VND 1,900 per share over the next 12 months, the total expected return is +72.5% compared to the closing price on January 18, 2024.
ACV – Q4-2023 Results Preview: The international aviation market continues to underpin the robust earnings growth
17-01-2024
: ACV
: Aviation
: Tung Do
Tags: Q4-2023 Business Results Preview
- In Q4-2023, the total number of air passengers decreased by 17% QoQ, reaching 25.5 million passengers. Of these, international passenger volume increased by 5% QoQ to 9.2 million, while the domestic market declined by 26% QoQ, down to 16.3 million passengers. The divergent trends in the international and domestic markets were partly influenced by seasonal factors and reflect the still weak domestic demand for travel spending.
- For Q4-2023, we estimate revenue and net income (excluding profits from the Landing/Take-off activities) to reach VND 4.6 trillion (+13% YoY) and VND 2.0 trillion (+88% YoY), respectively. Consequently, the forecast for the full year of 2023F for revenue and core net income are VND 19.6 trillion (+41% YoY) and VND 8.0 trillion (+29% YoY), respectively.
- The forecast for flat net income growth in 2024F compared to 2023 is primarily due to (1) a decrease in financial income (reduced deposit interest as disbursements begin for the Long Thanh airport project, while a further steep depreciation of the JPY is unlikely); (2) gradual normalization of international market growth.
- The projected EPS for 2023F/24F is VND3,700 / VND3,670, corresponding to the current 2023F/24F P/E of 17.8x/17.9x.
Hopes of restoring export growth face many challenges
16-01-2024
: VDS
: Macroeconomics
: My Tran
Tags:
- A slowdown in export turnover in 2023, but we saw a gradual improvement toward the year-end.
- The decline in exports differed by product group in 2023.
- Hopes of restoring export growth face many challenges.
- Impact of the Red Sea crisis on Vietnam
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 PVS PVD
- 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.
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