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MCM – 2024 performance is expected to show continued positive growth

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image23-02-2024
: MCM
: Food, Beverage & Tobacco
: An Nguyen
Tags:

  • 2023 net sales and net profit reached VND3,135 bn (or USD131 mn; +0.1% YoY) and VND374 bn (or USD16 mn; +8% YoY), respectively. The abundant interest income is the growth driver of the bottom-line. This result met 91% of 2023 revenue target but exceeded 2023 net profit target by 3%.
  • We believe that sales growth will be the backbone of MCM‘s 2024 performance. The two main pillars of the top-line are (1) Larger distribution network; and (2) Rebranding project. Along with the cost optimization abilities, we predict that net profit will grow at the same pace as the revenue. MCM‘s 2024 net sales and net profit are forecast to reach VND3,286 bn (or USD137 mn, +4.8% YoY) and VND397 bn (or USD17 mn, +6.1% YoY), respectively. The equivalent EPS is VND3,610.
  • MCM stock is trading at trailing P/E of 15.x - higher than MCM ‘s 3Y-Average P/E (13.7x). We believe that positive expectations about MCM's growth have been partly reflected in the stock’s price movement. However, MCM also pays a regular annual cash dividend (VND2,000/share). Therefore, we suggest investors interested in MCM stock to wait for the right buying point to make profitable profits.

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HAX – Looking forward to the recovery of luxury car consumption and the new MG business

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image22-02-2024
: HAX
: Automobiles
: Hung Nguyen
Tags:  HAX

  • In Q4-2023, HAX's net revenue and NPAT gained VND 1,077 bn (or USD 45 mn, -3.4% QoQ, -32.6% YoY), and VND 22 bn (or USD 0.9 mn, +170% QoQ, -96% YoY), respectively, resulting in 2023 EPS of VND 375. It is due to the bleak purchasing power for luxury automobiles despite the support from the decision to cut car registration fee by 50%.
  • In 2024, we project that the company's net revenue and NPAT will reach VND 5,237 bn (or USD 219 mn, +31.5% YoY) and VND 119 bn (or USD 5.0 mn, +244% YoY), respectively, resulting in an EPS of VND 1,275. It is driven by (1) the rehabilitation of luxury automobile demand from the 2023 low-base; and (2) NPM will improve by +162 bps YoY thanks to the end of the pressure from “difficult-to-sell” inventories and high interest rate level.
  • We recommend to ACCUMULATE this stock with a one-year target price of VND 16,100/share, based on two methods: FCFF and P/E (12.5x), with respective weights of 50% and 50%. Combined with an expected cash dividend of VND 300 per share over the next 12 months, the total expected return is 10.8% compared to the closing price on Feb 22nd, 2024

 

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GMD - Gemalink Port’s leap forward in 2024 is the main driver of growth

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image21-02-2024
: GMD
: Seaports
: Quan Cao
Tags:

  • In Q4-FY23, the container throughput in Hai Phong and the Southern region (including Gemalink (GML)) was 271 thousand TEUs (-6% YoY) and 653 thousand TEUs (+53% YoY), respectively, with GML contributing 350 thousand TEUs (+70% YoY).
  • In Q4-FY23, revenue and NPATMI were VND 1,034 bn (-3% YoY) and VND 115 bn (-39% YoY), respectively. In which, the revenue from container handling and logistics segment were VND 825 bn (+5% YoY), and VND 209 bn (-25% YoY), respectively.
  • Forecast for 2024, revenue and NPATMI will be VND 4,139 bn (+8% YoY) and VND 1,324 bn (-40% YoY), respectively. The NPATMI from core business segment is projected to be VND 1,124 bn (+46% YoY), with an abnormal profit of VND 200 bn from the divestment at Nam Hai port. The EPS for 2024 is projected to be 4,000 VND.
  • We have raised the target price to 80,600 VND/share, implying a P/E for 2024F at the target price of 20.2x, equivalent to the adjusted mean 5Y P/E ratio. We recommend an ACCUMULATE.

 

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NKG – The recovery potential has already priced-in

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image20-02-2024
: NKG
: Materials
: Thach Lam Do, CFA
Tags:  NKG

  • In 4Q2023, NKG recorded revenue of VND 4,459bn (USD 184mn, +4%YoY, +5%QoQ), with sales volume of 220 thousand tons (+20%YoY, +6%QoQ). In general, the sales output has improved compared to the 3Q2023, largely coming from: 1/ Peak construction period, 2/ Restocking activities of commercial companies before the price increased in January 2024. The 4Q gross profit margin (GPM) was increased to 6.1% (from the level of 4.8% in 3Q23), and gross profit reached VND 273bn (USD 11.2mn, +33%QoQ). However, due to higher-than-expected SG&A costs and lower-than-expected financial income, NKG recorded 4Q NPAT-MI of VND 22bn (USD 0.9mn, -5%QoQ). For the whole year of 2023, the NPAT-MI reached VND 117bn (USD 4.8mn), with corresponding EPS to reach VND 446.
  • In terms of output for 2024, we expect the sales volume can reach 941 thousand tons (increased by 9.5% compared to 2023), with 10% output growth in terms of domestic market, supported by: 1/ The real estate market is showing signs of recovery in Q4/2023 (in major cities) and real estate projects are accelerating to pre-sale in 2024, with the construction process and rising demand for materials; 2/ Foreign Direct Investment (FDI) enterprises are boosting capital disbursement, constructing factories/warehouses in industrial zones.  
  • With the expectation that HRC prices will trade in a narrower range and around the average price of USD 614/ton (+ 4%YoY), NKG can maintain the GPM of 6.1% in 2024 (the same level as in 2023). In terms of the bottom-line, NKG's 2024 NPAT-MI could reach VND 261 bn, an increase of 123% compared to 2023. The corresponding EPS will be VND 913.
  • We use two methods (FCFE and PB) to evaluate the stock; our fair value comes at VND 23,000 value per share, implying a total return of -5% as of the closing price on February 20th, 2024, equivalent to a NEUTRAL recommendation for Nam Kim Group Jsc. At the 2024 PE/PB forward of 26.3x/1.1x respectively, it shows that the company's prospect of recovering in 2024 has begun to priced-in. However, in 2024, the steel industry is expected to be one of the industries that will benefit from public investment, the partial recovery of the real estate sector and the positive trend of industrial park sector. We believe that the short-term trading opportunities will always exist in this industry group. Therefore, investors can consider NKG shares for short-term investment when the market price adjusts relative to our TP.

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Persistent US CPI inflation maintains the Fed’s reluctant to cut rate

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image19-02-2024
: VDS
: Macroeconomics
: Luan Pham
Tags:

  • Inflation is running hotter than expected
  • Key factors in the inflation equation
  • Persistent US CPI inflation maintains the Fed’s unwillingness to cut the rate.

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REE – Stable growth and attractive valuation

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image16-02-2024
: REE
: Power
: Hoai Trinh
Tags:  REE

  • For 2024, we expect REE's profits to grow owing to (1) The hydropower group's business results are expected to be positive, with output recovering when La Nina is likely to return from mid-2024; (2) Etown 6 will come into operation from Q2/2024, contributing an additional 26% to the existing leasing floor area; (3) The real estate segment will record additional contributions from The Light Square residential real estate project phase 1 (opening for sale in Q1 and expected handover in Q2); (4) The M&E segment in 2023 was a low base when REE has made a provision for bad debts (VND 200 bn) in Q4/2023. Accordingly, we forecast that REE's net revenue and NPAT-MI will reach VND 9,478 bn/USD 386 mn (+11% YoY) and VND 2,519 bn/USD 103 mn (+15% YoY), respectively.
  • We maintain a BUY recommendation with a target price of VND 74,200/share based on the Sum of the Parts (SoTP) valuation method, equivalent to an expected return of 26% based on the closing price on Feb 16th, 2024

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Vietnam's FDI in 2024 to maintain upbeat

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image15-02-2024
: VDS
: Macroeconomics
: My Tran
Tags:  FDI

  • Vietnam is an exception in attracting FDI in the world in 2023
  • The Northern Industrial Cluster is the destination for Chinese investors
  • FDI in January 2024: positive in terms of capital disbursement. 

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DPM – Accept high gas prices as the new normal

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image07-02-2024
: DPM
: Oil & Gas
: Ngan Le
Tags:  DPM 4Q2023

  • DPM announced 4Q2023 net revenue and NPAT-MI were VND 3,382 bn (USD 143 mn, -13% YoY, +5% QoQ) and VND 108 bn (USD 4.5 mn; -91% YoY; +68% QoQ), respectively.
  • We expect FY2024 revenue to be flat compared to 2023 while the blended gross margin will be slightly widen to 13.1% from 12.2% in 2023 thanks to the cooling down in FO price. As a result, FY2024 NPAT-MI is expected to reach VND 752 bn (USD 32 mn; +41% YoY). Corresponding EPS is VND 1,906. Previously, DPM has released 2024 guidance with VND 12,755 bn (USD 538 mn) revenue and VND 660 bn (USD 28 mn) PBT.
  • We maintain a NEUTRAL recommendation with an 11% lower one-year target price of VND 30,100/share (from VND 32,200/share). The lower target price is primarily driven by downward earnings revisions.

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NTC – Heading toward a bright future

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image06-02-2024
: NTC
: Industrial Land RE
: Hung Le
Tags:  NTC

  • In a marked rebound, the Q4/2024 business results of Nam Tan Uyen Joint Stock Corporation (UPCOM: NTC) have shown improvement compared to the last quarter but slight deterioration compared to the same period last year. Specifically, revenues in Q4/2023 reached VND 63bn (USD 2.57 mn, -21% YoY). In contrast, NPAT improved by 41% YoY to VND 68 bn (USD 2.8 mn) thanks to the increase in financial income, namely dividend and interest income. For the full year of 2023, the company’s revenue reached VND 235bn (USD 9.5 mn, -12% YoY, achieving 36% of annual plan), with NPAT of VND 300 bn (USD 12.6 mn, +17% YoY, completing about 106% of the annual target). The EPS for 2023 was VND 12,486.
  • In the baseline scenario for 2024, NTC’s revenue is estimated to reach VND  750 bn (up 219% YoY; USD 30.6 mn) and a net profit of VND 484 bn (up 52% YoY; USD 20 mn), driven by the handover of over 90 hectares of land in NTU3 project.
  • We expect major bottlenecks of new projects of NTC’s associate investments in Binh Phuoc to possibly resolved as Decision No. 326/QĐ-TTg revision is under discussion.
  • We maintain our BUY recommendation with the target price increasing to VND 276,000 per share as NTU 3 is more likely to start this year. Combined with a cash dividend of VND 6,000 per share over the next 12 months, the total expected return is 34.1% compared to the closing price on Feb 6, 2024

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C&G Market (Collagen and Gelatin) and growth prospect

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image05-02-2024
: VHC, ANV
: Fishery
: Hien Le
Tags:

  • According to a report by Precedence Research, the global collagen market is estimated to reach a capitalization of USD 10.08 bn in 2022, with a projected Compound Annual Growth Rate (CAGR) of 8.9% during the 2023-2032 period as (1) the increasing demand for collagen to enhance joint and skin health as the world's average age rises, and (2) the gradual increase in individual incomes, which is expected to stimulate higher spending on health care products.
  • US, Germany, Japan, and Canada are major importer of C&G powder products, while China is the largest exporter of C&G powder. The C&G powder market has achieved a compound annual growth rate (CAGR) of 5% during the 2013-2022 period. Among the top importing countries, the volume of collagen powder imports has surpassed that of Gelatin. The prices of C&G range from approximately USD 7-9/kg in major importing countries.
  • The entry of VHC into the C&G market (since 2015, primarily in powder form) and ANV (since 2023) is expected to optimize by-products from pangasius. We anticipate that the C&G segment of VHC and ANV will achieve double-digit CAGR for the 2024-2032 period as companies increase their factory capacities to meet consumer demand.

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ACB - Sustaining growth focused on quality and efficiency

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image02-02-2024
: ACB
: Banking
: Chinh Dang
Tags:

  • ACB announces its Q4 operational results with consolidated total operating income (TOI) reaching VND 8.4 trillion (USD 381.82 million) (+5.7% YoY and -0.5% QoQ) and profit before tax (PBT) reaching VND 5 trillion (USD 227.27 million) (+39.7% YoY and +0.2% QoQ), attributed to sustained growth in income and effective cost control
  • For the entire year of 2023, the cumulative total operating income and profit before tax are VND 32.7 trillion (USD 1.485 billion) (+14% YoY) and VND 20 trillion (USD 909.09 million) (+17% YoY), successfully achieving the bank's 100% profit plan for 2023. Key drivers for income and profit growth include (1) a 6% YoY increase in net interest income, (2) a 48% YoY increase in non-interest income, and (3) a 6% YoY reduction in operating expenses
  • The non-performing loan ratio for customer loans is 1.22%, up 1 basis point from the previous quarter, partly influenced by the CIC. Regarding the internal portfolio, the non-performing loans for personal customers stand at 1.1%, and for business customers, it is 1.11%. ACB's structured debt as of the end of 2023 is VND 2.2 trillion (USD 100 million), compared to VND 1.8 trillion (USD 81.82 million) in September
  • Looking ahead to 2024, we anticipate the bank's total income to grow at a faster rate than in 2023, driven by net interest income. Additionally, we expect the bank to effectively manage internal non-performing loans, while the impact of CIC gradually diminishes, maintaining profit growth in the double digits as in previous years. The current target price is VND 29,000 per share, and we are reviewing adjustments to better reflect recent positives

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PVD – “April showers bring May flowers”

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image01-02-2024
: PVD
: Oil & Gas
: Ngan Le
Tags:  PVD oil&gas

  • In 4Q2023 PVD reported revenue of  VND 1,747 bn (USD 74 mn; +20% YoY), led by drilling services. Overall, PVD recorded revenue of VND 5,812 bn (USD 245 mn; +7% YoY) and NPAT-MI of VND 579 bn (USD 24 mn, 2022: loss of VND 103 bn) for FY2023. 2023 EPS is VND 803.
  • Thanks to the high demand for rigs in SEA, all of PVD’s drilling rigs have secured contracts for 2024 with a day rate of USD 90k – USD 100k (+11% YoY). This will partly ensure the company’s bottom line in 2024, which is anticipated to increase by 12% YoY to VND 646 bn (USD 27 mn). Correspondent EPS and BVPS are VND 1,161 and VND 27,508.
  • In 2025-2026, drilling activities in the domestic market are anticipated to become vibrant thanks to major O&G projects such as Block B, Su Tu Trang 2B and Lac Da Vang. The well services segment is also expected to boom  as a result.
  • We remain ACCUMULATE and raise PVD’s target price by 7% to VND 33,000/share to reflect PVD’s NPAT growth outlook in 2024.

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