DPM – Deductible input VAT helps boost profits in 2025
06-06-2024
: DPM
: Fertilizer
: Ngan Le
Tags: DPM VAT 2Q2024
- In 1Q24, the revenue of the Urea/NPK segment grew by 17% YoY and 23% YoY, respectively, compensating for the decline in the import segment, resulting in a net revenue of VND 3,307 bn (+1% YoY). Thanks to the cooling of input material costs, the NPK and import businesses achieved a gross profit margin (2% to 5%), leading to an increase in the overall gross profit margin to 18% compared to 16% in 2023. However, NPAT-MI in 2024 remained equivalent to last year, reaching VND 264 bn, due to an increase in SG&A expenses.
- For Q2/2024, we estimate revenue and net profit after tax (NPAT) to be VND 2,841 billion (USD 113 million; -23% YoY) and VND 276 billion (USD 11 million; +162% YoY), respectively. For the full year 2024, we estimate revenue to reach VND 13,809 billion (USD 548 million; +2% YoY), assuming stable selling prices and Urea output compared to 2023. The NPAT attributable to shareholders is expected to increase by 55% YoY to VND 826 billion (USD 33 million), driven by profitable operations in the NPK and Kali segments following underperformance in 2023. The corresponding EPS is VND 2,094.
- DPM's stock price has surged over 24% from its low in April, largely reflecting positive investor expectations regarding the potential approval of the amended VAT law in the October session of the National Assembly, which is anticipated to benefit businesses. According to our estimates, if the VAT law is passed as expected, the NPAT for 2025 will increase by more than 50% compared to the scenario where it is not passed (assuming stable prices and sales volume). Under this scenario, the fair value based on the discounted cash flow (DCF) method is VND 47,500 per share, compared to a fair value of VND 38,500 (based on DCF) in the scenario where the law is not passed.
- DPM's stock price is highly sensitive to news about the amended VAT law, though this is not the only factor impacting the company's business results. Therefore, we believe that investors might consider waiting for more concrete information regarding the VAT law amendments being discussed by the National Assembly in the May session before making investment decisions on this stock.
Vietnam Dairy Market – Sales growth will slow down in the long-term
05-06-2024
: VNM
: Food, Beverage & Tobacco
: Hung Nguyen
Tags: VNM
- Vietnam dairy consumption continues to be weak in Q1-2024 with a decline of 2.8% YoY attributed to the bleak consumer sentiment from the end-2022 until now.
- In period of 2024-28, dairy market sales growth will slow down due to the higher-and-higher milk consumption per capita compared to Asian peers’ and the birth rate decreased in Vietnam.
- Dairy companies' 2024 profits will benefit from the downward trend in prices of raw milk powder, but will be offset by decelerating revenue growth and increased SG&A expenses/revenue due to fierce competition
1H2024 steel industry outlook – Output sales to recover
04-06-2024
: HPG, HSG, NKG
: Materials
: Thach Lam Do, CFA
Tags: GDA
- In 1Q24, construction steel consumption was flat compared to the same period last year, when the residential real estate projects (main consumption sector) have not promoted sales/construction phase in the 1Q. For hot-rolled coil (HRC) and downstream products (coated steel sheets, steel pipes), sales volume maintained positive growth compared with 2023, owing to demand from foreign markets (ASEAN, EU, US). Notably, the EU market has surpassed ASEAN to become Vietnam's key export market.
In April, we noticed that the domestic market showed clear signs of recovery compared to the 1Q24, especially in the northern market. - We believe that the recovery comes from: 1/ Residential real estate projects and public investment projects are pushing construction activities and 2/ Inventory accumulation activities before the rainy season. Thereby, we expect that domestic sales output of steel companies can remain at a high level in the 2Q 2024, which is a supprtive factor for the business results, in the context of expectations for the stable profit margin (expected output price is relatively stable in 2Q).
- For 2024, HPG (Buy, target price: VND 33,900) is our top pick due to its leading industry position and investment plans to take advantage of the sector's recovery cycle. In addition, GDA (Non-rated) is a stock that investors can pay attention to, with: 1/Expectation of domestic output to recover in the 2Q; 2/ The stock is trading at a PBR of 0.8x, relatively low compared to peers (galvanized steel sheet companies are traded at a PBR of 1.2x). Coated steel stocks, including HSG (Accumulate, target price: VND 24,300) and NKG (Neutral, target price: VND 24,600), with the anticipated recovery in 2Q has started to be reflected in stock prices, which are more suitable for short-term trading strategies when the market price adjusts relatively to our TP.
ACV - 2024 AGM Update: International passenger volume to surpass pre-pandemic levels
03-06-2024
: ACV
: Aviation
: Quan Cao
Tags: ACV Aviation
- The AGM has set a plan for total passenger volume to reach 113 million pax (+1% YoY) this year. Within this, ACV expects international passenger volume to increase by 23% from 2023 levels, approximately 41 million pax. The plan for domestic passenger volume is to reach only 72 million pax (-10% YoY).
- Regarding financial plans, total revenue is expected to be 20,325 billion VND (+2% YoY), and pre-tax profit is projected to be 9,378 billion VND (-11% YoY). Excluding profit from airfield management of 1,464 billion VND, ACV's PBT is projected to be 7,900 billion VND (+11% YoY).
- Distribution plan: The Ministry of Finance has issued a document proposing amendments to Decree No. 140/2020/ND-CP, which is expected to be approved in July 2024. This will allow ACV to distribute retained earnings from 2019 by stock dividends.
QNS – Continue to benefit from high sugar prices in the first half of 2024
31-05-2024
: QNS
: Sugar
: An Nguyen
Tags:
- In 4M2024, the local sugar trading prices have been maintained at a high level compared to the same period last year, which is the main growth driver for both sales and profits of QNS.
- For 2024, the forecast revenue and net profit to reach VND 11,194 billion (+12% YoY) and VND 2,194 billion (+0% YoY), respectively in 2024. The equivalent EPS is VND 7,134.
- Using SoTP method, we raise QNS's target price to VND 55,800 from VND 54,000, based on the adjustment to increase net profit to VND 2,194 billion (+0% YoY) from VND 2,062 billion (-7% YoY). New/old EPS equivalent is 7,132/6,506 VND. The main reason is that we adjusted the forecast for soymilk segment revenue in 2024 to VND 4,217 billion (+5% YoY) from VND 4,068 billion (-5% YoY) of the previous forecast.
- Compared to the stock market price on May 30th 2024, the expected stock price return is calculated at +13%. Based on the expectation that (1) the sugar prices might increase in Jun 2024 before slowing down in 2H2024; (2) 2024 outlook of QNS; and (3) attractive dividend policy (VND4,000/share), we recommend that the investors who follow the arbitrage strategy can execute short-term trading on QNS shares collerating with sugar price movements, while investors who prefer stable dividend can ACCUMULATE QNS shares.
A View On Latest US's new tariffs
30-05-2024
: VDS
: Macroeconomics
: Luân Phạm
Tags: US-China
- Have US-China economic relations reached a point with no return?
- Short-Term Limited Impact of US Tariffs, Long-Term Risks Looming.
NTC – Pivot point is near to come
29-05-2024
: NTC
: Industrial Land RE
: Hung Le
Tags:
- Decree No. 12/2024/ND-CP and Document 06/2024/QD-UBND issued by Binh Duong Province signal positive developments regarding the calculation of land use fees for the NTU3 project. The estimated additional land fee is VND 5.2 billion per hectare (marking a 62% decrease compared to the previous update on February 5, 2024.
- In our base scenario for 2024, we project total revenue to reach VND 757 billion (USD 30 million, +222%YoY). Net profit is forecasted to hit VND 535 billion (USD 21 million, +79%YoY). Correspondingly, the EPS is expected to be VND 22,310.
- We maintain our BUY recommendation with an adjusted target price of VND 346,000 per share. This adjustment reflects the reduced additional land use fees needed to be paid. Combined with an expected cash dividend of VND 6,000 per share over the next 12 months, the total anticipated return is 65% relative to the closing price on May 28, 2024.
A view from the domestic gold market
28-05-2024
: VDS
: Macroeconomics
: My Tran
Tags:
- Despite limited supply, Vietnam ranks third in Asia regarding gold bar consumption demand.
- Amending Decree 24 is necessary, but it took time to agree on a solution and implementation steps.
- The SBV halted the gold auction to deploy another strategy.
Power sector – Electricity consumption maintained a two digit growth in early months of 2024
27-05-2024
: PC1, TV2
: Power
: Lam Nguyen
Tags: TV2 PC1
- 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
VHC - The challenging period has passed and we expect gradual growth quarter by quarter
24-05-2024
: VHC
: 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.
SAB – Waiting for the recovery of beer consumption after a stagnant year 2023
23-05-2024
: SAB
: Food, Beverage & Tobacco, Retailing
: Hung Nguyen
Tags:
- 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
PVT – Investing in the chemical tanker is a sound strategy
22-05-2024
: PVT
: 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.
06-06-2024
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