MSB 3Q-2024 Update: Foreign exchange trading activities caused 3Q-2024 PBT to drop sharply by 28% YoY but should drive the profit growth in the next quarter, in addition to lower credit cost

• 3Q-2024 PBT reached VND 1.2 trillion, down sharply by -43.9% QoQ and -27.6% YoY due to (1) NIM (quarterly) narrowing by -20bps QoQ and -60bps YoY as funding cost increased, and (2) foreign exchange trading recorded a loss of VND 131 billion.
• Accumulated 9M-2024 PBT to VND 4.9 trillion, completing 72% of the 2024 plan (VND 6.8 trillion). ROA and ROE ratios reached 1.5% and 13.2%, respectively.
• Regarding asset quality, net bad debt formation (before write-off) has decreased in the last two quarters, which is a positive signal. Outstanding loans of group 2, 3 and 4 all decreased compared to the previous quarter, which may continue to support the improving trend of asset quality in the short term. The bad debt ratio decreased slightly to 2.0% compared to 2.1% in 2Q. MSB also expects that bad debt has peaked and the bad debt ratio will be kept at 2% at the end of 2024.
• MSB maintains its full-year PBT plan at VND 6.8 trillion (+16.6 YoY). This profit target implies that 4Q-2024 PBT will reach VND 1.9 trillion (up 56.6% QoQ and 213.0% YoY) driven by: (1) Profit from foreign exchange trading activities returning to profitability in 4Q based on expectations that exchange rates will continue to be anchored high, (2) Credit costs will cool down as MSB is on a trend of improving asset quality, (3) Profit from bad debt recovery of about VND 1 trillion.

The Seafood Industry from the Perspective of Trump's President

• VHC will benefit the most if US imposes an import tax of 60-100% on China and 10-20% on other countries, as the US is its primary export market, while ANV and IDI will benefit less, as the US market accounts for only about 10% and below 5% of their revenue, respectively. In the best-case scenario, VHC's NPAT-MI in 2026 could reach 1,872 billion VND (or USD 74 mn), equivalent to an EPS of 9,307 VND/share (+12% compared to our previous estimate).
• The likelihood of imposing these taxes is still uncertain, but the expected rates may not be too high due to the low trade volume of seafood imports and exports in the US
• Before the tax period begins, seafood export volumes are likely to increase sharply as US buyers stock up in advance to avoid high taxes. However, rising transportation costs are expected to erode profits.
• After the new tax rates take effect, the market share of pangasius in the US will increase or decrease depending on price competitiveness post-tax. Meanwhile, the shrimp industry is expected to neither benefit nor be negatively impacted, as shrimp exporters to the US are primarily India, Ecuador, and Indonesia, and the price of Vietnamese shrimp is also higher than domestically produced shrimp in the US

KDH – Foresta is a key project for presales in 2025

• Business results in Q3/2024 are relatively modest with NPAT-MI reaching VND 70 billion; and revenue and profit in 2024 are expected to be recorded in 4Q2024 when the company hands over The Privia project, with revenue and profit expected to reach VND 3,694 billion and VND 895 billion. For the whole year of 2024, we estimate total revenue and PNAT-MI reach VND 4,523 billion (+116% YoY) and VND 1,058 billion (+48% YoY), respectively, with the focus on handing over The Privia project (Binh Tan). EPS 2024 is expected to reach VND 979.
• Inventory in 3Q2024 recorded the 6th consecutive quarter growth, reaching more than VND 22,400 billion with a large contribution from growth by projects preparing to be handed over (Privia) and projects under development of land funds (Solina, BT-BTD, BT-BTD,...).
• Using the RNAV method, we offer a target price of VND 41,200/share, equivalent to an expected total return of 23% compared to the closing price on November 13, 2024, with a BUY recommendation for long-term investment purposes.

MWG – Performance decelerated due to end of peak air-conditioning season and high one-off costs

• Q3-2024 business results of core segments in line with our forecast, except for one-off costs from store closures were higher than expected. Net revenue reached VND 34,147 bn (flat QoQ, +12.7% YoY), NPAT-MI reached VND 800 bn (-31.7% QoQ, x20 times YoY).
• In the long term, the trend of trimming the stores system in saturated and highly competitive segments such as TGDD&DMX will continue, while BHX will gradually become a pillar in expanding revenue (~35% supermarket market share), net margin (0.8%).
• As reported in MWG's valuation report on October 21st, 2024, the current stock price relatively reflects long-term growth prospects with a fair value of VND 63,700, equivalent to a projected PE of 20.8x in 2025

IDC – Expanding Land Bank to Sustain Growth

• For 9M2024, IDC reported revenue of VND 6.9 trillion (USD 274 million; +38% YoY), with industrial park (IP) land lease revenue reaching VND 3 trillion (USD 119 million; +52% YoY). During this period, the company recorded lease revenue for 88 ha, of which 46 ha were from MOUs signed in 2023, and 32 ha were from new contracts signed in 2024. 
• For 2024, IDC’s NPAT is projected to reach VND 2.2 trillion (USD 87 million; +57% YoY); EPS for 2024 is estimated at VND 6,600, with a maintained cash dividend of VND 4,000/share. Q4 revenue and NPAT could reach VND 2.3 trillion (USD 91 million) and VND 554 billion (USD 22 million), respectively, comparable to the same period in 2023
• IDC plans to advance operations with IPs that have completed investment policy approvals, increasing the total leaseable land area to 961 ha, including Tan Phuoc 01 IP (Tien Giang, 65% owned by IDC) and My Xuan B1 IP expansion (Vung Tau, 51% owned by IDC).
• Using SOTPs method, we set the IDC’s target price of VND 60,100/share (with a +12% upside from the closing price on November 11, 2024, inclusive of a cash dividend of VND 4,000/share), corresponding to an ACCUMULATE recommendation. 

VPB - Q3-2024 AM Update: Net Interest Income and Bad Debt Recovery Drive Total Operating Income; Asset Quality Begins to Improve

• Consolidated Pre-Tax Profit (PBT) for Q3-2024 reached VND 5.2 trillion (+66% YoY), falling about 7% below expectations. Cumulatively for the first nine months of 2024, consolidated PBT reached VND 13.9 trillion (+67% YoY), achieving 70% of the full-year forecast.
• Key drivers contributing to PBT growth this quarter aligned well with expectations, including: (1) credit growth (8.7% consolidated and 10.4% for the parent bank); (2) a 90 bps YoY expansion in NIM to 5.8% from last year’s low base, along with positive bad debt recovery at both the parent bank (over VND 800 billion, +82% YoY) and FE Credit (VND 750 billion, triple the 2022-2023 average); (3) a 29% reduction in credit risk provisioning compared to the previous quarter, as VAMC bond repurchase pressures eased, resulting in a consolidated credit cost ratio of 1.0%, on par with the same period in 2023.
• Looking ahead to the end of the year, VPB anticipates credit growth of 15-17%, with potential for a slight increase in funding costs (due to accelerated credit growth by year-end), which could put NIM under pressure in Q4. While income from bad debt recovery is expected to remain positive, VPB remains cautious, forecasting a flat NPL ratio compared to Q3.
• Forecasts for 2024F-2025F and target price for VPB are under review and will be updated in the forthcoming report

PNJ – Gold supply shortage remains a major risk

We attended the investor meeting of Phu Nhuan Jewelry JSC (Ticker: PNJ), with the company's management team present. Key points we would like to highlight are as follows:

DGW – Xiaomi's products led growth in Q3-2024

• DGW's Q3-2024 business results are consistent with our previous forecast, with net revenue of VND6,226 bn (24.3% QoQ, +15.0% YoY), and NPAT-MI of VND122 bn (+36.7% QoQ, +18.9% YoY).

IMP – Returning to the growth trajectory

We attended the IMEXPHARM Pharmaceutical JSC investor meeting (Ticker: IMP), with the company's Investor Relations team representing IMP. Here are some key takeaways from the meeting:

REE – Hydropower segment’s results exceed our expectations in Q3 as hydropower cycle returns

• In Q3/2024, REE achieved revenue of VND 2,029bn (USD 80mn; +3% YoY; -7% QoQ) and NPAT-MI of VND 480bn (USD 19mn; -8% YoY; +34% QoQ), mainly driven by the recovery of its core power segment (which accounted for 40% of revenue and 80% of NPAT-MI). Other segments’ results remained flat.
• As the most challenging period for REE has passed, we forecast that the company’s NPAT-MI to continue recovering in Q4 due to (1) higher contributions from the real estate segment and (2) hydropower cycle returnsd, with REE’s peak typically in Q3 and notably Q4. For FY2024, we forecast revenue of VND 7,992bn (USD 317mn; -7% YoY) and NPAT-MI of VND 1,911bn (USD 76mn; -13% YoY). Looking forward to 2025, we expect REE’s growth to resume as (1) hydropower output recovers with the La Niña cycle and (2) the occupancy rate of the Etown 6 building increases.
• Based on the SoTP method, we set a 12-month target share price for REE at VND 71,700, corresponding to a forward P/E of 16.5x and an expected return of 17%, based on the closing price as of November 5, 2024.

The US economy is still expanding because of private consumption

• The US economy is still expanding as a result of private consumption
• An increase in US bond yields affects prospects of a Fed rate drop
• The Fed and other major central banks are cutting interest rates at different rates

International jewelry market update – China and US down, India grew

• We have observed that economic growth (affecting actual spending power and consumer confidence) had a significant impact on retail jewelry sales in major global markets, including China and India.
• In the U.S. market specifically, despite favorable GDP growth, retail jewelry sales have been affected, possibly due to uneven wealth distribution and/or economic growth not being driven by consumer spending.
• Based on the latest financial performance data, the operational efficiency of all companies have been impacted by gold prices (except for Pandora).