ACV - Q2-FY24 results stayed positive due to growth in international pax, exchange rates, and bad debt control : ACV : Aviation : Quan Cao Tags: ACV Aviation
In Q2-FY24, net revenue and net profit (excluding take-off/landing activities) were VND 5.5 trillion (+12% YoY) and VND 2.9 trillion (+26% YoY), respectively. The number of international passenger reached 9.8 mn x (+31% YoY) and 17.2 mn domestic passenger (-21% YoY). The shift in the international/domestic passenger ratio to 36%/64% from 26%/74% in the same period last year drove ACV's growth. ACV's financial operations recorded VND 287 billion in deposit interest and VND 435 billion in net foreign exchange gain due to the JPY/VND exchange rate depreciating by about 4% compared to the previous quarter. During the period, ACV reversed VND 21 billion for Pacific Airline and VND 211 billion for Vietjet. Thus, ACV has fully reversed the provision for receivables from Vietjet. Airlines such as Bamboo Airways, Vietravel, and Air Mekong maintained a 100% provision rate, with immediate provisions for receivables from these airlines. For the 6 months of 2024, cumulative revenue and pre-tax profit (excluding take-off/landing activities) were VND 11.1 trillion (+16% YoY) and VND 5.5 trillion (+53% YoY), respectively, completing 56% and 86% of the annual plan. We are currently revising the forecast for 2024 and valuation, which will be updated in the next report.
HDG – Anticipating Recovery in the Second Half of 2024 : HDG : Real Estate, Utilities : Thach Lam Do, CFA Tags: HDG
For 2024, we maintain our expectation that the energy segment will see a slight recovery, particularly from Q3/2024, with the probability of La Niña increasing significantly during August-September. Along with the company's reduction in SG&A expenses and interest costs, we estimate that the NPAT–MI for H2/2024 and the entire year will be VND 405 billion (+24% YoY, +37% HoH) and VND 700 billion (+5% YoY, equivalent to 90% of the company's business plan) In a recent meeting with HDG, the company shared updates on its current projects. Renewable energy projects are awaiting regulatory guidance on pricing negotiation mechanisms to officially launch. Regarding residential real estate projects, the company plans to proceed with sales of the Charm Villa project – Phase 03 by the end of 2024, but will assess market absorption levels to develop a suitable sales strategy. Using the Sum-of-the-Parts (SoTP) valuation method, we maintain a target price of VND 28,300 per share (total expected return of +6% compared to the closing price on August 12, 2024, including a cash dividend of VND 500 per share), corresponding to an ACCUMULATE recommendation for HDG shares. We expect HDG's real estate and energy projects to potentially restart in 2025, with regulatory guidance on the pricing negotiation mechanism serving as a basis for determining the value of the company's pending renewable energy projects.
Major players in Essential Consumer Goods – Entering the Second Half of 2024 with many Advantages : VNM, MCH : Consumer Services : Hung Nguyen Tags:
In H1-2024, the value of essential consumer goods across most key segments (dairy, food, beverages) declined YoY, indicating continued weak purchasing power. Consequently, YoY growth for major players like VNM and MCH has relied heavily on their ability to expand market share domestically and tap deeper into international markets. In H2-2024, we believe these giants are well-positioned to sustain their prior YoY growth, driven by the broader economic recovery in consumer spending and the increased market share they secured in H1-2024.
FMC – The significant increase In JPY/VND exchange rate supports strong growth In 2H2024 : FMC : Fishery : Hien Le Tags:
Q2-2024: Revenue reached VND 1,243 billion (or USD 49.7 mn) (+20% YoY) as a 21% increase in shrimp sales, with a 22% YoY rise in volume, while the average shrimp selling price in VND decreased by 1% YoY. Gross margin improved significantly, exceeding our projections, with a + 4.7 pps YoY due to a substantial rise in self-sufficiency, as self-farmed shrimp output increased with the harvest from 200 hectares of newly developed farming areas (bringing the total farming area to 525 hectares) in Q1/2024. However, the absence of anti-dumping duty refunds and the recognition of provisions for countervailing duties led to higher selling expenses. Consequently, NPAT-MI slightly decreased by 7% YoY, reaching VND 66 billion (or USD 2.64 mn) . For the second half of 2024, we anticipate strong revenue growth driven by a 12% YoY increase in shrimp volume and a gradual recovery in selling prices, supported by the rising JPY/VND exchange rate. As a result, we revise our full-year 2024 revenue forecast upward to VND 6,435 billion (or USD 257mn) (+26% YoY) and increase the gross margin from 10.1% to 11% due to higher selling prices in VND. Consequently, we project NPAT-MI to rise to VND 342 billion (or USD 13.6mn) (+24% YoY). Adjusted 2024 EPS, after welfare fund adjustments, is expected to reach VND 5,185 (+22.84% YoY). We increase our 12-month target price by 6% from VND 52,600 per share to VND 55,800 per share , representing a 2024 forward P/E of 10.8x and a potential return of 18% compared to the closing price on August 8, 2024. We recommend ACCUMULATE for this stock.
REE – Earnings bottoming out from Q2 2024 : REE : Utilities : Thang Hoang Tags:
REE announced weak Q2/2024 financial results with revenue flat at VND 2,183bn (USD 87mn) and NPAT-MI of VND 450bn (USD 18mn; -8% YoY). The underperformance of the energy segment, which contributes 40% of revenue and 80% of NPAT, outweighed strong performance of other segments such as mechanical and electrical (M&E) and real estate. We believe REE’s earnings have already hit bottom in Q2/2024 and that would recover in Q3 and Q4 due to (1) a greater contribution from the real estate segment and (2) the company's hydroelectricity cycle, which peaks in Q3 and especially in Q4. We forecast full-year 2024F revenue of VND 8,509bn (USD 338mn; -1% YoY) and NPAT-MI of 2,021bn (USD 80mn; -8% YoY). Looking foward to 2025, we anticipate REE’s business to gradually recover, driven by (1) a recovery in hydroelectricity production due to the La Niña cycle and (2) a higher occupancy rate at the Etown 6 building. Using the sum-of-the-parts (SoTP) valuation method, we derive 12-month target price for REE at VND 71,300 per share, equivalent to a forward P/E of 16.5x and an expected return of 8% based on the closing price as of August 6, 2024.
US: The softness in the labor market casts doubts on the possibility of an economic recession : VDS : Macroeconomics : Luan Pham Tags: VDS
The job market in the US is showing clear signs of slowing down. Concerns about an economic recession are growing, but still too soon to conclude that the US is slipping into a recession. The market is predicting the Fed to cut interest rates by 125 basis points in 2024.
VIB – Profit Growth Potential in 2H-2024 Looks Promising with Reduction in Provisioning Pressure : VIB : Banking : Tung Do Tags:
Q2-2024 Pre-Tax Profit decreased by 29% YoY, weaker than previously anticipated (-17% YoY) due to slower-than-expected income from bad debt recoveries, while operating and provisioning expenses slightly exceeded forecasts. Credit growth reached 4.6%, lower than the industry average of 6%, with the growth rate in personal loans remaining slow (+1.2% YTD), while corporate lending was emphasized more, achieving a growth of 22% YTD. We have revised down our 2024 projections for Total Operating Income and PBT by 1% and 2%, respectively, to VND 22.4 trillion (+1% YoY) and VND 11.5 trillion (+7% YoY) after adjusting the NIM down 10 bps to 4.1% and the credit cost ratio down 20 bps to 1.3%. With PBT growth implied at 36% YoY in 2H-2024, we maintain a BUY recommendation for VIB with a target price of VND 23,800 per share, adjusted down by 5% from the previous target price. The total expected return (including a 10% cash dividend) is 23%. This target price implies a 2024F/2025F P/B valuation of 1.6x/1.4x.
BSR – Back to the runway after major maintenance : BSR : Oil & Gas : Ngan Le, ACCA Tags:
Due to the production halt for plant maintenance (March 15 – May 1), 2Q24 sales volume decreased by 29% YoY, leading to a 27% YoY decrease in revenue. Additionally, the crack spread remained low, and the incurred maintenance costs further contributed to the LNG margin decreasing to 2% (2Q23: 3%). NPAT-MI dropped by 43% YoY, to VND 768 bn. Revenue and NPAT-MI were recorded at VND 55,118 bn (-19% YoY) and VND 1,912 bn (-36% YoY) respectively, at 44%/46% of our projections. Although business results were impacted by periodic maintenance, a highlight in 2Q24 was the the Quang Ngai People's Court’s approval of bankruptcy proceedings for the subsidiary BSR BF, which facilitated the transfer of BSR's stock listing from UPCoM to HoSE.
Seaport industry – Positive outlook maintained for the second half : GMD, VSC, HAH : Seaports : Quan Cao Tags: Seaports Shipping
Accumulated 1H2024, the estimated value of container via sea ex-im of goods were USD 103 bn (+10% YoY) and USD 68 bn (+8% YoY), respectively. Accumulated 1H2024, the container throughput in Hai Phong and Vung Tau regions were 3.5 mn TEUs (+20% YoY) and 3 mn TEUs (+37% YoY), respectively. The demand for trade flow is forecasted to continue its growth trend as manufacturing enterprises receive many new orders for the peak season in the second half of 2024.
Jewelry Market - Slow Growth Expected in the Coming Years : PNJ : Retailing : Quyen Nguyen Tags:
After a slowdown from 2020 to 2022, the jewelry market has seen a modest recovery in 2023, following the macroeconomic rebound. We project the jewelry market to grow at an annual rate of 2.4% from 2023 to 2030. Although Vietnamese disposable income is forecasted to rise rapidly at a rate of 7.7% per year, we believe the spending ratio on jewelry/disposable income will decrease from 1.4% in 2023 to 1.0% in 2030. This is due to continued government regulation of the jewelry market, competition from attractive investment channels (such as stocks and real estate), and an aging population prioritizing health and welfare over beauty and social status.
NLG – Pre-sales show improvement in 2H2024 : NLG : Real Estate : Giao Nguyen Tags: NLG
In Q2 2024, NPAT-MI improved compared to the previous quarter, reaching VND 144 billion (+19% YoY, compared to a loss in Q1 2024). This improvement is attributed to NLG's continued delivery of projects on schedule and revenue from the sale of a 25% stake in the Paragon Dai Phuoc project to a Japanese partner, generating financial gains of VND 230 billion. For the full year of 2024, we estimate that the revenue and NPAT-MI will be VND 7,389 billion (+132% YoY) and VND 453 billion (-6% YoY), respectively, primarily from the delivery of the Akari (Phase 2) and Nam Long 2 – Can Tho projects. The EPS for 2024 is forecast at VND 1,169. Sales in Q2 2024 amounted to VND 1,510 billion (+29% QoQ), coming from projects such as Akari, Waterpoint, and Mizuki, with a cumulative total for the first half of 2024 reaching VND 2,678 billion (+209% YoY, achieving 28% of the annual plan). Given the warming up of the real estate market, we expect sales to continue to rise in 2H2024 due to: 1/ affordable housing options to meet actual demand from the EhomeS Can Tho project, Can Tho land plots, and Ehome Southgate, which are expected to have good absorption rates; 2/ NLG's continued policy of supporting homebuyers; and 3/ sustained low interest rates. Based on the RNAV valuation method, we estimate NLG's fair value at VND 43,900/share, providing a 12-month expected total return of 6% compared to the closing price on July 30, 2024 (including a cash dividend of VND 500 per share). We recommend an ACCUMULATE rating for NLG.
Flat steel – Industrial steel set to grow : HPG, NKG : Materials : Thach Lam Do, CFA Tags: GDA
According to Market Research Future, the 2023 global flat steel market value reached USD 484bn, and it is expected to reach USD 817bn by 2032 (equivalent to a CAGR of 6% in the period 2024-2032). Rapid industrialization, widespread use of mechanical, automotive, and construction equipment, and increased infrastructure investment, are the key market drivers that are enhancing the market growth. In particular, the North American, Asian and European markets are the main consumer markets, where the manufacturing hub of automobiles, household appliances and machinery is concentrated. The Vietnamese flat steel market is still in the early stages of the development cycle, with: 1/ Input materials (HRC) still need to be imported, especially for high-quality steel grades; 2/ Domestic galvanized steel companies did not have flat steel grades for household appliances and industrial equipment (with higher profit margins). However, domestic manufacturers are beginning to realize the potential of this sector and have specific investment plans, including: 1/ Hoa Phat with Dung Quat Complex 02 (DQ02) with the development of high-quality steel grades; 2/ Some leading galvanized steel companies (NKG, GDA) are preparing to invest in large-scale flat steel factories and also diversify into industrial steel product segment
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