Power sector – Electricity consumption maintained a two digit growth in early months of 2024

: PC1, TV2
: Power
: Lam Nguyen
Tags:  PC1 TV2

  • Electricity consumption in 2024 is projected to grow positively from the low base in 2023. We expect coal-fired and hydroelectric power plants to play an important role in the electricity generation.
  • The development of power infrastructure and transmission networks will also carry on in 2024 to ensure that there is no risk of capacity shortages at the peak times. Accordingly, companies involved in consulting, design, construction, and material supply for these infrastructure projects are expected to see additional backlog in 2024

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VHC - The challenging period has passed and we expect gradual growth quarter by quarter

: Fishery
: Hien Le
Tags:  VHC

  • Net revenue for Q1-2024 reached VND 2,856 billion (or USD 112.8 mn) (+29% YoY; +19% QoQ), with pangasius sale volume estimated to increase by 45% YoY, while selling prices decreased by 22% YoY. The decrease in selling prices was the main reason for the NPAT-MI declining by 23% YoY to VND 170 billion (or USD 6.71 mn).
  • For Q2-2024, we expect revenue to reach VND 3,354 billion (or USD 132 mn) (+23% YoY) as a 30% YoY increase in export volume and the average selling price of pangasius reaching USD 2.88/kg (-21% YoY; +5% QoQ). The gross profit margin is expected to reach 15% (-629 bps YoY; +568 bps QoQ) as gradually improving selling prices in the US market and reduced raw fish prices. Consequently, PAT is estimated to reach VND 313 billion (or USD 12.3 mn) (-32% YoY; +65% QoQ).
  • For 2024, we adjust our revenue forecast upward to VND 12,090 billion (or USD 477.8 mn) (+21% YoY) as a higher-than-expected volume and reduce the NPAT-MI to VND 1,145 billion (or USD 45.2 mn) (+25% YoY) as a slower-than-expected recovery in selling prices. Adjusted volume is expected to increase by 22.2% YoY, and selling prices in USD are projected to decrease by 8.5% YoY. The equivalent EPS for 2024 is VND 5,102.
  • We raise the target price to VND 76,900 per share, a 7% increase from the previous target price (VND 71,500 per share in the April 2024 sector report), based on the expectation that the trend of gross margin recovery will continue over the next 12 months. The target price currently 5% higher than the closing price on May 24, 2024, and aligns with a NEUTRAL recommendation for this stock.

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SAB – Waiting for the recovery of beer consumption after a stagnant year 2023

: Food, Beverage & Tobacco, Retailing
: Hung Nguyen

  • In Q1-2024, SAB's net revenue and NPAT-MI gained VND 7,184 bn (or USD 283 mn, -15.7% QoQ, +15.6% YoY), and VND 997 bn (or USD 39.3 mn, +5.3% QoQ, +3.1% YoY). It is driven by the different timing of Tet holiday amidst 2023 and 2024, supporting the larger portion of beer sales volume recorded in the first quarter of 2024 than that of 2023.  
  • In 2024, we expect SAB to show growth in both revenue and NPAT, driven by the recovery from a low base in 2023. However, we suppose that SAB's middle-term sales will set at one-digit growth by some negative factors like the prolonged strict enforcement of drunk driving laws, a fiercer competition, and a draft Law on Excise Tax related to alcohol beverages.  
  • SAB stock is trading at a trailing P/E of 18.2x - lower than SAB‘s 5Y-Average P/E (24.1x). It remains lag compared to the Asian peers (21.4x). In spite the growth outlook is not attractive due to our conservative outlook for beer sales volume, SAB’s valuation is cheap, combining with an attractive dividend yield, we suppose that SAB is the suitable stock for investors prefer investment strategy of stable dividends in the middle-term

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PVT – Investing in the chemical tanker is a sound strategy

: Oil & Gas
: Ngan Le
Tags:  1Q2024 Business results

  • 1Q2024 revenue reached VND 2,536 bn or USD 104 mn (+ 24% YoY), driven by the benefits from a new fleet and supported by positive charter rate developments. The gross profit margin (GPM) increased by 500 bps YoY, leading to a 27% YoY rise in NPAT, which totaled VND 231 bn (USD 9 mn).
  • For 2024, revenue in the chemical transportation segment surged by 49% YoY, offsetting declines in crude oil and LPG segments, resulting in an overall company revenue growth of 4% YoY, reaching VND 9,931 bn (USD 405 mn). Consequently, GPM improved by 300 bps YoY, boosting net profit by 27% YoY. The corresponding EPS increased to VND 2,838 (2023: VND 2,829).
  • We maintain a NEUTRAL recommendation with a one-year target price of VND 27,000 per share, based on a three-year average target P/E ratio of 9.5x.

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HSG – Outstanding output growth

: Materials
: Thach Lam Do, CFA
Tags:  HSG

  • In 2Q of fiscal year (FY) 2024 (From 01/10/2023 to 30/09/2024), HSG recorded revenue of VND 9,248bn (USD 377mn, +32%YoY, +2%QoQ), with galvanized steel‘s volume of 375 thousand tons (+62%YoY, +4%QoQ); owing to the volume in foreign markets (accounting for 70% of total output). The 2Q gross profit margin (GPM) was maintained at 12.1% (equal to the level of 2HFY23), with gross profit reached VND 1,117bn (USD 45.6mn, +18%QoQ, +24%YoY) and the 2QFY24 NPAT-MI of VND 319bn (USD13mn, +209%QoQ, +27%YoY).
  • For the last 06 months of FY 2024,  we expect the sales volume growth to be the key driver, with the sales volume can reach 700 thousand tons (+13%YoY, with an averave volume of 116 thousand tons/month), as domestic demand is expected to recover (especially at the end of the fiscal year, when it starrts to enter the peak construction period). As a result, the revenue may reach VND 20tn (USD 816mn, +20%YoY).
  • In terms of material (HRC), we expect HRC prices (along with finished product price) to recover to average price of USD 600/ton. For the 2HFY24, HSG can maintain GPM of 12.5%, and gross profit of VND2,500 bn (USD102mn, +27%YoY). HSG's 2HFY2024 NPAT-MI could reach VND 501bn (USD 20.4mn, +11%YoY); and for full-year of FY2024, NPAT-MI could reach VND 923bn (x40 compared to previous year). 2024EPS can reach VND 1,393.
  • We use two methods (FCFE and PB) to evaluate the stock. Our fair value comes at VND 24,300 value per share, implying a total return of +14% as of the closing price on May 21st, 2024 (including cash dividend of VND500/share), equivalent to an ACCUMULATE recommendation for Hoa Sen Group Jsc. The stock is traded at the forward P/E for the 2024-2025 period of 15x/9x respectively, which is relatively attractive compared to the recovery prospect, and investors can consider HSG shares as the short-term investment opportunity when the market price adjusts relative to the TP.

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CTG – Profit maintains positive growth

: Banking
: Chinh Dang

  • In Q1/2024, total operating income reached VND 19,000 bn (+12% yoy; USD 754 mn). Net interest income saw a robust increase (+19.8% yoy) to VND 15,100 bn (USD 599 mn), offsetting a 10.6% yoy decline in non-interest income, which included (1) fee income at VND 1,700 bn (USD 67 mn; -11% yoy) and (2) “other incomes” (primarily debt recovery) at VND 778 bn (USD 31 mn; -23.7% yoy). However, fx trading emerged as a bright spot, recording a 14.6% yoy growth to VND 1,300 bn (USD 52 mn).
  • The non-performing loan (NPL) ratio was controlled at 1.35%, compared to 1.13% at the end of 2023. Group 2 loans slightly increased by 4 basis points from the previous quarter to 1.59%
  • For 2024, we estimate total operating income to grow to VND 83,000 bn (+18% yoy; USD 3,294 mn). We believe most of the bank's core business segments to thrive in 2024: (1) Net interest income is projected to rise by 20% yoy, driven by credit growth maintained at 15% and a continued recovery in net interest margin (NIM) to 3.04%; (2) Non-interest income is expected to grow by 12%, thanks to improved activities in payment services, trade finance, and debt recovery
  • We believe that asset quality improvements will accelerate CTG’s profit growth during 2024-2028, with a compound annual growth rate (CAGR) of 20%, and ROE improving over time to 19%, helping revalue the bank. Therefore, at the target price of VND 36,800 per share, corresponding to a forward P/B of 1.22 for 2024, we recommend to ACCUMULATE CTG

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VPB – Reduced Provision Pressure Boosts Profit Growth Outlook for 2024

: Banking
: Tung Do
Tags:  banking VPB

  • Q1-2024 PBT reaches VND 4.2 trillion, up 64% YoY: The growth is attributed to a 20% increase in the parent bank's PBT and a 52% YoY reduction in FE Credit's losses, achieving 18% of the full-year PBT target.
  • Projected 2024 Consolidated PBT to amount to VND 20.6 trillion, up 87% YoY: This growth is primarily driven by FE Credit's projected PBT of VND 700 billion (versus a VND 3.7 trillion loss in 2023) and a 36% YoY increase in the parent bank's PBT. Key growth drivers include a 15% YoY reduction in consolidated provisioning expenses due to stricter credit policies and a 30 bps YoY expansion in the consolidated NIM to 5.9%.
  • Target Price and Recommendation: Using the Residual Income and P/B valuation methods, we arrive at a target price of VND 23,100, implying a 24% total expected return (including a VND 1,000 cash dividend per share). We recommend BUY for VPB

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GMD - A bright picture in Q1-FY24

: Seaports
Tags:  Seaports GMD

  • In Q1-FY24, the throughput of GMD's port system reached 908 thousand TEU (+55% YoY). This significant increase in volume was driven by contributions from the southern port segment. During this period, GMD did not have any new service from shipping lines.
  • In Q1-FY24, revenue and NPATMI reached VND 1,006 billion (+11% YoY) and VND 559 billion (+171% YoY), respectively, completing 24%/36% of our forecast.
  • For 2024, the forecast revenue will reach VND 4,154 billion (+8% YoY). We have increased NPATMI to VND 1,540 billion (-31% YoY), as GMD recorded higher abnormal profits than our previous forecast.
  • Given the better-than-expected Q1-FY24 results, we use the sum-of-the-parts (SOTP) valuation method, raising the TP for GMD to VND 91,200 per share, with a cash dividend of VND 1,200, equivalent to an expected total return of 11%. We maintain the recommendation to ACCUMULATE for GMD.

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TNG – Attractive story with high order

: Textile & Garment
: Hiển Lê

  • Q1-2024 revenue reached VND 1,354 billion (or USD 54.16 mn) (+1.4% YoY) due to improvements in both volume and selling prices. The gross profit margin increased by 60 bps compared to the same period last year. However, total selling and administrative expenses rose by 10% YoY, resulting in a 4% YoY decline in NPAT-MI to VND 42 billion (or USD 1.68 mn).
  • The company has already secured sufficient orders until Q4-2024. We estimate that Q2-2024 revenue and NPAT-MI will be VND 2,256 bn (or USD 90 (+18% YoY) and VND 109 billion (or USD 4.36 mn) (+88% YoY), respectively, assuming that the number of production lines reaches 346 in Q2-2024 and that revenue per production line increases by 5% YoY due to a 5% YoY increase in order selling prices.
  • For 2024, we project revenue to reach VND 7,866 bn (or USD 314 mn) (+11% YoY), assuming the total number of production lines reaches 367 with an increase of 3-4 lines per month and selling prices rise by 5% YoY. Consequently, NPAT-MI is projected to reach VND 299 bn (or USD 11.9 mn) (+37% YoY). Adjusted EPS for 2024, accounting for the equivalent bonus and welfare fund, is VND 2,367 (+23% YoY).
  • We recommend a NEUTRAL rating with a target price of VND 25,500 per share for a 1-year outlook, based on an average 4-year target P/E of 8.5x. Plus expected cash dividend of 400 VND/share, the expected 12-month return is 6% compared to the closing price of VND 24,500 per share as of May 15, 2024. The target price currently does not include the potential revenue from leasing 10 hectares in the Son Cam Industrial Zone.

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Decelerating Job Growth Sparks Talk of Rate Cuts in 2024 for the US

: Macroeconomics
: Luân Phạm

  • The slowdown in job growth is a welcome moderation.
  • The potential downturn in the labor market over the coming months.
  • Increasing inflation continues to warrant consideration for rate cuts.

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MSN – The potential growth of the consumer-retail segments is the highlight

: Consumer Staples, Food, Beverage & Tobacco
: An Nguyen

  • Based on the improvement of Q1 2024 results and business strategies of the consumer-retail businesses, we believe that MCH, WCM, and MML will keep growing in the next three quarters of 2024. The positive sales growth of the consumer-retail segments will compensate for the weak sales growth of the non-consumer-based segment (MHT).
  • We believe that the 2024 net profit will grow at a higher pace than the revenue thanks to (1) cost optimization strategies; and (2) 2023 low base effect. 2024 Net sales and NPAT-MI is predicted to be VND81,545 bn (or USD3,210 mn; +4.2% YoY) and VND1,761 bn (or USD69 mn; +320% YoY), respectively. 
  • Based on SoTP valuation method, our 2024 target price for MSN stock is VND85,600. Based on the 12-months expected return of +21% compared to the closing price on May 13rd 2024, and the rationale of 1) 2024 net profit should grow at triple-digits; and 2) the potential strong growth of consumer-retail business in the upcoming years, we have a BUY recommendation on this stock for the long term.

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Is gold an attractive investment for now?

: Macroeconomics
: Ha My

  • China is the center of the global gold rally.
  • Factors that impact the gold price.
  • Will global gold prices rise higher for longer?

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