DPR – Passing through the bottleneck

: Industrial Land RE
: Hung Le

  • Decision No. 227/QD-TTg of 2024 removes the bottleneck of industrial land quota in Binh Phuoc until 2025, thereby paving the way for the expansion of the North Dong Phu IP and the South Dong Phu IP to expedite progress.
  • The provincial master plan of Binh Phuoc has been approved, and the draft master plan of Binh Duong province shows clearer prospects for land conversion and opens up many opportunities to materialize projects in the future. The estimated total area of convertible land reserves for site clearance and resettlement until 2030 is up to 1,743 ha.
  • Under the base scenario, we forecast DPR's revenue and net profit for 2024 to reach VND 1,126 million (UDS 45 mn;+11% YoY) and VND 260 bn (USD 10 mn +26% YoY) respectively. Based on the assumption that DPR may receive compensation from the Tien Hung 2 project and the average rubber selling price throughout the year reaches VND 41 million/ton. Corresponding EPS reaches VND 2,988.
  • Based on the sum-of-the-parts (SOTP) method, the target price is adjusted upwards by VND 51,100/share as legal bottlenecks regarding land targets have been removed, and the provincial master plan confirms the feasibility of the land conversion story. Therefore, we reassess the benefits of the two expanded industrial park projects, along with additional income from site clearance and resettlement compensation, reflecting this benefit in this update. Coupled with a cash dividend of VND 1,500/share over the next 12 months, the expected total return is 30.0% (based on the closing price on March 21, 2024), equivalent to a BUY recommendation for long-term investment purposes

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STK – First take on 1Q24 results – tough time

: Textile & Garment
: Hoai Trinh
Tags:  STK

  • In the first quarter of 2024, earnings results are expected to reflect a sluggish recovery in the first half of the year. We forecast that the net revenue and NPAT-MI of STK will approximately reach VND 300 bn (-14.8% QoQ, +4.2% YoY; USD 12 mn) and VND 4 bn (-87.3% QoQ, +145.6% YoY; USD 0.16 mn) in Q1, under the assumptions that (1) the overall yarn production will be around 5.7 thousand tons (+7.5% YoY), of which recycled yarn will account for about 58% of revenue (+1% YoY), and (2) there will be a slight decrease in the average selling price (ASP).
  • For the year 2024, we maintain our viewpoint that STK's recovery pace will decelerate, with the primary recovery occurring in the latter half. We project that the net revenue and NPAT-MI of STK will reach VND 1,979 bn (+38.8% YoY; USD 81 mn) and VND 154 bn (+76% YoY; USD 6 mn), respectively, based on assumptions that (1) the total yarn production will return to growth, increasing by 36% YoY (assuming that the two existing factories will operate at an ultilization rate of 60% and Unitex, starting its operations in Q4, will run at about 10% capacity); (2) the share of recycled yarn will account for approximately 51% of total revenue; and (3) interest expenses are expected to increase by VND 39 bn and depreciation expenses by VND 30 bn as the Unitex factory commences operations in Q4/2023. The corresponding EPS is VND 1,640 per share.
  • We have adjusted the target price to VND 29,000 per share (up from VND 26,200 per share) as we reassess the earnings outlook for the 2025–2028 period. Currently, we believe that expectations for a rapid and strong recovery in order volume have already been reflected in the stock price. Therefore, we have downgraded our recommendation from NEUTRAL to REDUCE for STK

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FRT – Long Chau persists its riding role for FRT’s performance in 2024

: Retailing
: Hung Nguyen
Tags:  FRT Retailing

  • In Q4-2023, FRT's net revenue and NPAT-MI recorded VND 8,690 bn (or USD 364 mn, +5.5% QoQ, +2.7% YoY), and VND -101 bn (net loss of Q3-2023: VND -13 bn), respectively, resulting in 2023 EPS of VND -2,375. It is due to (1) one-off costs regarding FPT Shop closure and inventory expiration processing, and (2) higher-year ago bonuses related to strong performance of Long Chau.
  • In 2024, we project that the company's net revenue will reach VND 41,619 bn (or USD 1,741 mn, +38.0% YoY) and VND 304 bn (or USD 12.7 mn), respectively, resulting in an EPS of VND 2,229. It is driven by (1) the rehabilitation of ICT demand from the 2023 low-base for both revenue and profit margin and (2) the increasing coverage of Long Chau into tier-2,3 provinces with higher performance in each store.
  • Based on the Sum of the Parts (SoTP) valuation method, we have revised our target price for FRT to VND 139,500 per share, up from VND 112,800 per share, on the pillars of (1) raised number of store count to over 3,050 stores by the end of FY27; and (2) revise up Long Chau’s target FY24 P/S from 0.60x to 0.85x on the new expansion plan of Long Chau (enter new market – tier 2,3 provinces).
  • FRT’ stock price has increased by +46% from Dec-2023. Therefore, we suppose that the growth expectations of FRT has partly reflected on its stock price movement. We have NEUTRAL recommendation for FRT stock, downgrading from ACCUMULATE level in our previous report

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Steel industry –Domestic sales to to be the key driver

: Materials
: Lam Do, CFA

  • Overall, 2023 was still a challenging year for the construction steel sector, when domestic consumption decreased by 11% YoY. However, there have been signs of recovery in demand, whereas in 2H2023, consumption output recovered (especially in the fourth quarter) which is the peak construction period, along with demand for materials from public investment projects. For hot rolled coil (HRC) and downstream products (coated steel sheets, steel pipes), sales volume maintains positive growth in 2023, driven by demand from foreign markets (ASEAN, EU, USA).
  • For 2024, we expect the domestic demand to be the key driver for output growth, especially in 2H2024, as: i/ The successful launch of residential projects (especially in 2H2024) will be a factor in promoting construction activities, and thereby increasing demand for steel products; ii/ Key infrastructure projects have started the construction phase, and major items in projects (bridges, elevated roads, etc.) will consume construction steel.
  • In terms of profits, with the expectation that i/ Raw material prices may cool down and trade in a narrow range, ii/ Maintaining a conservative inventory policy, steel companies are expected to record double-digit growth, compared to low levels in 2023 (no longer affected by inventory write-down provision as in the 2H23).
  • We believe that steel enterprises are entering the "early recovery" phase, when the industry's prospects for consumption and profit margin management have bottomed out and are gradually recovering in line with the economic cycle. However, due to the "commodity" factor and high beta characteristics, the stock prices of steel companies often fluctuate, followed with HRC price volatilities. Therefore, when trading stocks in the steel industry, investors need to pay attention to fluctuations in China HRC prices, which can potentially affect global HRC prices, in general, and Vietnam HRC prices, in particular. HPG (Accumulate, TP: 33,000 VND/share) is our favorite stock for long-term investment, while HSG (Accumulate, TP: 23,600 VND/share) and NKG (Neutral, TP: 23,000 VND /share) are stocks that investors can trade flexibly in short-term due to HRC price volatilities

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Trade outperformed in 2M2024 thanks to low base effects

: Macroeconomics
: My Tran
Tags:  VDS

  • Trade outperformed in 2M2024 thanks to low base effects.
  • Exports of technology products led the recovery.
  • Low base effect supports double-digit trade growth in 1H2024

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Prospect for a reversal in the BOJ’s policy

: Macroeconomics
: Luan Pham

  • Japan demonstrates resilience in keeping inflation above the 2% target.
  • Wage-price spiral in Japan.
  • BOJ is leaning toward exiting negative rates by March – April.

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MBB - Stronger Operating Income in 2024

: Banking
: Chinh Dang

  • In Q4/2023, MBB recorded total operating income (TOI) of VND 11.75 trillion (USD 475.71 million), nearly flat compared to the same period last year. Net interest income (NII) was VND 9.1 trillion (USD 368.03 million) (-4.8% YoY. Meanwhile, non-interest income grew by 21.9%, driven by (1) fee income of VND 1.4 trillion (USD 56.99 million) (+19% YoY) attributed to payment activities compensating for the decline in insurance operations, and (2) other non-interest activities amounting to VND 1.1 trillion (USD 44.32 million) (+26% YoY).
  • For the full year 2023, MBB maintained high growth compared to the industry average thanks to cost reductions as total income growth slowed down, with CIR decreasing by 100bps and credit costs by 77bps compared to 2022. Consequently, total operating income and profit before tax (PBT) for the year were VND 57.9 trillion (USD 2.343 billion) (+3.8% YoY) and VND 26.3 trillion (USD 1.064 billion) (+15.7% YoY), achieving 101% of the bank's profit plan.
  • In 2024, we estimate that total operating income will see double-digit growth from the low base of 2023, reaching VND 58.2 trillion (USD 2.344 billion) (+23.1% YoY). Accordingly, we expect most of the bank's core business segments to excel in 2024: (1) Net interest income is forecasted to increase by 26% YoY due to sustained credit growth at high levels and a slight NIM recovery from the second half of 2024; (2) Non-interest income is projected to grow by 6% thanks to brokerage and payment activities compensating for insurance operations (especially life insurance, which requires more time to recover). In the long term, with the advantage of a large corporate customer base in key sectors of the economy, we expect MBB to maintain a compound annual growth rate of profit after tax (5Y CAGR) for the period 2024-2028 at 23% and ROE to remain above 20% as economic activities pick up. Therefore, we have raised our 12-month target price for MBB to VND 28,200 /share and recommend BUY the stock for medium to long-term investment objectives, with a potential return of 20% compared to the closing price on March 14, 2024.

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MWG – Triple-digit net profit growth expected in 2024

: Retailing, Consumer Staples
: An Nguyen

  • We suppose that MWG‘s performance will return to positive growth in 2024 on the back of economic recovery. In detail, we believe that BHX will be the driver of sales growth while TGDD/DMX‘sales will recover at a modest rate. Besides, we forecast that MWG’s investment highlight in 2024 to be profit margins expansion. 2024F sales and NPAT-MI of MWG are VND124,854 bn (or USD5,159 mn, +5.6% YoY) and VND1,729 bn (or USD71 mn, +931% YoY), respectively.
  • For 2024, we forecast BHX’sales to grow by +24.5% YoY to VND39,316 bn (or USD1,625 mn), supported by increases in both average sales per store and number of stores. Equipped with cost optimization strategies, we predict that BHX will reach NPAT break-even point in 2024 after experiencing losses in the last 6 years.
  • For 2024, we adjust up MWG's target price to VND58,500 from VND51,500 using the SoTP method, based on (1) Increase 2024 NPAT-MI to VND1,729 bn (+931% YoY); (2) Raise targeted P/S of BHX to 1.4x; and (3) Reduce WACC to 10.7%.  Adding cash dividend of VND500, the 12-months expected return is +23% compared to the closing price on Mar 12th 2024. We believe that if BHX convinces investors about the ability to grow, MWG’stock price will attract abundant cash flow. In short, we recommend BUY this stock for the long term.


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VHC – Net profit Q4-2023 in bottom and expect to growth from US market

: Fishery
: Hien Le

  • Net revenue in Q4-2023 reached VND 2,396 bn (or USD 104 mn) (-4% YoY; -11% QoQ) as the increase of export volume cannot offset the decrease in selling prices. The main reason for the decrease in net profit after tax of the parent company (NPAT-MI) by 75% YoY to VND 48 bn (or USD 2 mn) was the decrease in selling prices.
  • In 2023, net revenue reached VND 10,039 bn (or USD 436 mn) (-24% YoY), and NPAT-MI reached VND 897 bn (USD 39 mn) (-55% YoY). EPS 2023 was 4,880 VND (-55% YoY).
  • In 2024, we expect revenue to reach VND 11,487 bn (+14% YoY), mainly due to increased production as (1) the supply is reduced by the US ban on Russian-origin fish and the EU's 13.7% tax on Russian fish products, and expandation of C&G. Gross profit margin increase from 14.4% in 2023 to 18.9% which help NPAT-MI in 2024 is expected to reach VND 1,414 bn (or USD 61,4 mn) (+58% YoY). EPS 2024 is estimated at 6,301 VND (after stock dividend of 20% in Jan 4th,2024).
  • We have raised the target price to VND 71,500 per share, a 13% increase from the previous target price (62,800 VND - adjusted price after the 2023 dividend). The current target price is now 4% lower than the closing price on March 12, 2024. We recommend NEUTRAL this stock.

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SCS – New Major Customer to Drive Strong Growth In 2024

: Logistics
: Tung Do
Tags:  SCS

  • We revise 2024 forecasts for revenue and net profit upward by 21% and 14%, respectively, compared to the previous forecast, to VND 911 billion (+29% YoY) and VND 609 billion (+22% YoY).
  • The main reason for this adjustment is the addition of a new major customer, Qatar Airways, since February 2024. We anticipate that this development, coupled with the recovery trend in international trade activities, will drive a 30% YoY growth in SCS's international air cargo volume in 2024.
  • The gross profit margin is projected to improve by approximately 2.4 ppts compared to 2023, reaching 78.3%. This improvement is attributed to the increased share of international cargo to 75%, up from 72% in 2023, and additional revenue from concession fees charged to airlines.
  • Based on the P/E and FCFE valuation methods, we estimate the fair value of SCS to be VND 90,300 per share. Considering a 50% cash dividend, the total expected return is 20%. We recommend a BUY rating for SCS

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NT2 – Turn negative

: NT2
: Power
: Hoai Trinh

  • In 2024, gas-fired power is predicted to account for a smaller share of total power output. According to Plan 4A, the Ministry of Industry and Trade's strategy for 2024, coal power is expected to be used at a reasonably high rate. This estimate is backed by the steady stabilization of coal prices during a period when no new major power plants have been constructed. In contrast, the percentage of gas power is expected to fall by 12% compared to the actual power generation capacity mobilized in 2023, owing to a drop in the supply of gas for electricity production.
  • 2024 is expected to be a challenging year for NT2. Based on the 2024 electricity market operation plan, we project that NT2's total power production in 2024 will be 2.3 bn kWh, a 22% decrease YoY. Assuming contracted electricity output (Qc) of 2.0 bn kWh (below the multi-year average) and an average gas price of 9.1 USD/mm BTU (an increase of 0.9% YoY), we expect NT2 to report net revenue of VND 5,047 bn (USD 206 mn) (+20% YoY) and a net loss of VND 87 bn (USD 4 mn).
  • We are downgrading our recommendation for NT2 from NEUTRAL to REDUCE. By combining two valuation methods, the Dividend Discount Model (DDM) and the Discounted Cash Flow (DCF) analysis (equally weighted at 50/50), we have revised our target price for NT2 to VND 22,100 per share, down from VND 23,900 per share, following a reassessment of its business performance outlook for the 2024-2028 period

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VTP - Improving service quality is the key to growth

: Logistics
: Quan Cao
Tags:  Logistics VTP

  • In Q4-FY23, revenue and NPAT were VND 5,107 billion (-3% YoY) and VND 104 billion (+9771% YoY), respectively. In which, The revenue of the service segment (delivery and logistics) reached VND 3,004 bn (+27% YoY) and commercial revenue was VND 2,102 bn (-27% YoY).
  • For 2024, VTP sets revenue and PBT targets at VND 13,000 VND (-34% YoY) and VND 480 bn (flat compared to the SPLY), respectively. Despite double-digit negative revenue growth, PBT is expected to stay flat as VTP plans to shut down the unprofitable phone card business.
  • Based on the 2024 projections, VTP is currently trading at a forward P/E ratio of 24.2x, equivalent to a standard deviation compared to the mean 5Y. We believe that the current valuation already reflects the growth potential of VTP in 2024, along with the catalyst of listing on the Ho Chi Minh City Stock Exchange. Therefore, investors should observe further before making a decision to invest in VTP stocks.

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