FPT – Financial Performance Update 5M-2024 and Projections Update for 2024F
24-06-2024
: FPT
: Technologies
: Tung Do
Tags:
- 5M-2024 Business update. FPT reported a revenue of VND 23.9 trillion for 5M-2025, marking a 20% YoY increase. Net profit reached VND 3.1 trillion, reflecting a 21% YoY growth. These figures represent 38% and 39% of our full-year 2024 projections of VND 63.1 trillion in revenue (20% growth) and VND 7.8 trillion in net profit (21% growth).
- Forecast adjustments for 2024F. Given the financial results of the first five months, we have revised our assumptions and increased our forecasted net profit for 2024F by 1% to VND 7.9 trillion, a 21.5% YoY growth.
- Valuation and recommendation. Using a sum-of-the-parts valuation method, we estimate FPT's fair value at VND 142,400 per share, implying a total expected return of 9% (including a cash dividend of VND 2,000). We recommend ACCUMULATING FPT. Despite the rapid valuation increase potentially limiting short-term upside, we remain confident in FPT’s robust and stable profit growth prospects, supporting a long-term positive trend for its stock price.
Seafood Industry – The Competitive Situation of the Pangasius and Whiteleg Shrimp Sectors
21-06-2024
: VHC
: Fishery
: Hien Le
Tags:
- According to the June 2024 Food Outlook report by the Food and Agriculture Organization of the United Nations (FAO), farmed seafood is expected to grow strongly due to increasing consumption trends, which will support the aquaculture industry in Vietnam in the long term.
- The pangasius industry has seen year-to-date growth compared to the same period last year, primarily driven by increased production in key markets, while the average selling price remains lower than the previous year. Pangasius products in the U.S. are facing increasing competition in fresh salmon consumption despite high salmon prices. However, we expect pangasius production to gradually improve month by month until August, benefiting from gaining market share over tilapia, which is currently priced lower, thus creating a competitive advantage. Additionally, the gradual increase in tilapia prices also supports the gradual increase in pangasius selling prices
- The shrimp sector experienced growth in the first four months of the year compared to the same period last year, primarily due to increased production, while the average selling price remained lower than the same period. In the whiteleg shrimp segment, selling prices in various markets are still low and have not shown strong recovery trends. However, the Japanese market has maintained competitiveness compared to other countries, while the Chinese and US markets face more difficulties due to Ecuador gradually gaining market share.
PVD – All rigs under firm contract until the end of 2025
20-06-2024
: PVD
: Oil & Gas
: Ngan Le
Tags: PVD 1Q2024
- In 1Q24, PVD recorded revenue of VND 1,756 bn (+43% YoY), driven by the drilling services segment. For 2024, projected revenue is VND 7,305 bn (+26% YoY), with NPAT-MI reaching VND 1,098 bn (+88% YoY). EPS FY2024 is VND 1,974.
- The prolonged high oil prices have boosted exploration and drilling activities in Southeast Asia. Consequently, all of PVD's rigs have fixed contracts until the end of 2025, with rental price reaching USD 105,000/day (+11% YoY). We estimate that PVD's profit in 2025 could increase by 22% YoY to VND 1,343 bn, with EPS and BVPS come at VND 2,389 and VND 30,718, respectively.
- Drilling activities in the domestic market are expected to pick up in 2025-2027 period, driven by key oil and gas projects such as Block B, Su Tu Trang 2B, and Lac Da Vang. However, we believe that the current price already reflects the company's profit growth prospects for the next 12 months, so we maintain our target price at VND 34,000/share, which is 8% higher than the closing price on June 19, 2024, corresponding to a NEUTRAL recommendation for this stock.
According to MSCI's assessment, what are the prospects for market upgrades and how extensive is the path to emerging markets?
19-06-2024
: VDS
: Financial Services
: Hung Le / Thao Phan
Tags:
- Opportunity to elevate the market status to "emerging".
- Vietnam's stock market is progressing along the upgrade path.
- What impedes progress and how can it be addressed? - Enhancing the transparency of foreign ownership and the efficiency of market operations for foreign investors are critical areas for improvement.
Seaport industry – The demand for imports and exports is forecasted to continue its uptrend in 2H2024
18-06-2024
: GMD, VSC, HAH
: Seaports
: Quan Cao
Tags:
- Accumulated 5M2024, the estimated value of container via sea ex-im of goods were USD 84 billion (+10% YoY) and USD 56 billion (+9% YoY), respectively.
- Accumulated 5M2024, the container throughput in Hai Phong and Vung Tau regions were 2.9 mn TEUs (+21% YoY) and 2.5 mn TEUs (+36% 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.
Update on trade growth in May 2024
17-06-2024
: VDS
: Macroeconomics
: Ha My
Tags: Trade
- The trade deficit in May 2024 narrows compared to the GSO’s estimate.
- Exports of machinery and equipment increased sharply in May 2024.
- Comments on some events related to Vietnam's trade prospects
ICT/CE retailing giants – Declining market share in the ICT/CE pie gradually losing its flavored taste
14-06-2024
: MWG, FRT
: Retailing
: Hung Nguyen
Tags: MWG FRT
- The ICT/CE main segments (laptop, tablet, phone, air-conditioner, refrigerator, washing machine, TV) come to the mature phase, demonstrating by the high penetration rate and the stagnant sales volume, thus all players concentrate on expanding its pie like the way to beat the one-digit market growth.
- The fast change of consuming habit from offline to online, much hurting ICT/CE retailers mainly depended on physical store chain like MWG, FRT. Although they start to shift business model to one that is more reliant on online sales, we are viewing that MWG, FRT are hard to prevail over E-Commerce platforms (ECPs) due to its much smaller finance ability to build up the large scale of economics (customer base), supporting the cost optimization (such as delivery cost) and wide revenue expansion, led to take a big profit like Shopee.
- In addition, ICT/CE retailing giants will also face the hard rock in offline channel, owing to the higher positioning of smaller retailers (such as CellPhoneS, HoangHaMobile, Shopdunk), setting the cheaper price (due to the low operating exp/net sales than that of MWG, FRT per our estimation) but provide the similar customer experience (pre & post-service)
ECB's initial rate cut and the 2024 outlook for further reductions
13-06-2024
: VDS
: Macroeconomics
: Luân Phạm
Tags:
- ECB cut interest rate amid rising inflation.
- Cautious on short-term inflation projection due to wage pressure.
- Geopolitical tensions and interest rate divergence: risks for the Euro.
REE – Strong real estate sales to catapult 2024F earnings growth
12-06-2024
: REE
: Power
: Thang Hoang
Tags:
- REE reported weak Q1 2024 results with revenue of VND 1,837 bn (-22% YoY) and NPAT-MI of VND 362 bn (-36% YoY). The power generation segment’s Q1 NPAT-MI slumped by 52% YoY to VND 238bn due to unfavorable weather conditions and lower participation in competitive generation market.
- We forecast 2024F revenue of VND 9,480 bn VND (+7% YoY) NPAT-MI of VND 2,411 bn (+10% YoY), which is mainly driven by strong results of real estate segment with 2024F revenue of VND 2,040bn (+95% YoY).
- Based on on the Sum of the Parts (SoTP) method, we value REE at VND 64,000/share based equivalent to a forward P/E of 12.5x and expected return of 1% based on the closing price on June 12th, 2024. We noted that REE share price increased 29% since our previous BUY recommendation on Feburary 16th. Looking forward to 2025, we expect REE to main growth as (1) Hydropower plants recover as La Nina returns and (2) higher occupancy rate of Etown 6 office building.
GDA – Prospect of recovery with attractive valuation
11-06-2024
: VDS
: Materials
: Thach Lam Do, CFA
Tags: GDA
- In 1Q2024, GDA recorded revenue of VND 4,099bn (USD 165mn, +4%YoY, -11%QoQ), with galvanized steel‘s volume has recovered, compared to same period last year, and reached 203 thousand tons (+12%YoY, -7%QoQ). The recover was owing to the volume in foreign markets (especially from North America and EU, with restocking activites after holiday period, accounting for 70% of total output). Gross profit reached VND 347bn (USD 14mn, +18% YoY, +12%QoQ) and 1Q24 net profit after tax (NPAT) of VND 95bn (USD3.8mn, +16% YoY, +375%QoQ)
- The company plans to pay 2023 cash dividends at a rate of 10% (VND 1,000/share) and stock dividends at a rate of 20% (100 shares receive 20 new shares). It maintains the plan to establish a new galvanized steel factory (capacity of 1.2 million tons/year), and also issuing shares to existing shareholders, in order to supplement capital for the capital expenditure
- For the whole year 2024, we expect the average export output to be maintained at 40,000 tons/month (14% higher than in 2023, with recovery of export markets), while the domestic output can record significant growth, owing to real estate projects to promote construction activities (average domestic output to reach 35,000 tons/month, 21% higher than in 2023). Therefore, GDA can achieve sales output of 900 thousand tons (+16%YoY). Revenue and NPAT in 2024 can reach VND 21tn (+20%Yoy) and VND 360bn (+27%YoY), respectively. EPS 2024 can reach VND 3,075.
- The PE/PB forward of GDA are 9.4x/0.8x, respectively, showing that the company's recovery prospects in 2024 are not fully reflected in the stock price. With highlights from: 1/ The company has the second largest market share in the field of galvanized steel production and also has plans to establish a new factory, 2/ Market consumption has recovered; we think this stock is currently trading at an attractive valuation compared to other listed steel companies.
VIB – Provisioning and Operating Expenses Continue to Pressure Q2-2024 Profit Growth
10-06-2024
: VIB
: Banking
: Tung Do
Tags: VIB
- For Q2-2024, we estimate a 14% YoY decline in pre-tax profit to VND 2.5 trillion due to increased pressure from provisioning expenses and operating costs, while total operating income remains flat compared to the same period last year
- We have revised down our 2024F NPAT forecast by 8% from previous projections to VND 9.4 trillion (+10% YoY), reflecting a 30-bps reduction in NIM from the previous projection to 4.2%
- We have adjusted our target price for VIB down by 4% to VND 25,100 per share. Combined with the assumption of a cash dividend payout ratio to par value of 12.5% over the next 12 months (equivalent to a payout ratio of 40%), the total expected return is 17%. We downgrade our recommendation on VIB from BUY to ACCUMULATE
Vietnam's textile industry is gradually losing its competitive edge in the US and domestic markets
07-06-2024
: TNG, MSH, STK
: Textile & Garment
: Hien Le
Tags:
- The global textile and garment industry is estimated to have an CAGR of 4% from 2022 to 2030, with high growth rates in the Chinese and Canadian markets, while other markets maintain a growth rate of 3%. The CAGR in 2021-2023 for the export of apparel and bedding items is projected to be 4%, higher than that of yarn, fabric, and other items.
- For the period 2024-2030, we expect Vietnam's textile and garment industry to grow at a higher rate than the global CAGR of 4% as capturing market share from China in the US market. Companies with a high proportion of export revenue to the US, such as TNG and MSH, will benefit. However, in the long term, Vietnam will find it challenging to gain market share in the US as declining competitive advantages.
- The domestic market, according to data from the Ministry of Industry and Trade, Vietnam's retail revenue of textiles and garments in 2023 reached 246 trillion VND (or USD 9,84 bn), equivalent to a CAGR of 6% for the period 2018-2023. According to Euromonitor data, the CAGR of retail revenue in textiles and garments and the expansion of fashion stores in Vietnam for the period 2022-2027 is 3.8%/2.1%.
- The OBM (Original Brand Manufacturing) segment in Vietnam faces fierce competition from foreign rivals as consumers tend to purchase foreign brands and the demand for online shopping is increasing. The domestic market is highly fragmented, with each fashion brand holding a market share of less than 3%. However, companies can still enter the OBM segment if they can build a strong brand image and boost online sales with a diverse range of products that suit consumer preferences.
24-06-2024
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