DGW – Preparing to ride the wave of ICT recovery in 2024 : DGW : Technologies : Hung Nguyen Tags:
Q4-2023, DGW's net revenue and NPAT-MI gained VND 4,849 bn (or USD 203 mn, -10.4% QoQ, +19.0% YoY), and VND 90 bn (or USD 3.8 mn, -12.5% YoY, -42.5% QoQ), respectively, resulting in 2023 EPS of VND 2,121. In general, ICT demand remained weak in Q4, and this result only reflected the seasonal nature of ICT business: the surge of Mobile Phones based on iPhone season and the drop of Laptop & Tablets after “back-to-school” period. In 2024, we expect DGW to improve both revenue and NPAT, driven by the recovery from a low base in 2023. However, ICT market has been saturated for years, making it difficult to create breakthrough growth. Therefore, DGW's middle-term prospects are closely tied to its ability to scale-up new business models. DGW stock is trading at a trailing P/E of 27.2x - higher than DGW‘s 5Y-Average P/E (12.8x). We believe that expectations about the recovery in both DGW's revenue and NPAT have been fully reflected in the stock price’s movement. We recommend that investors monitor the transformation of ICT purchasing power in the upcoming quarters to make an efficient decision to DGW shares
KDH – Expanding the land bank in Ho Chi Minh city : KDH : Real Estate : Thach Lam Do, CFA Tags:
In 4Q23, KDH recorded revenue of VND 470bn (USD 19.2mn, -24%QoQ, -62%YoY), due to the handover of high-value townhouse at the Classia project (~25 units as estimated). The parent company's profit after tax (NPAT-MI) reached VND 62bn (USD 2.5mn, -48% YoY), lower-than-expected due to payment discounts for buyers. For the whole year of 2023, the NPATMI reached VND 717bn (USD 29.3mn, -35% YoY), equivalent to ~72% of the company's business plan, and 2023EPS reached VND831. In terms of assets, notably the company's inventory balance increased to VND18.7 tn (compared to VND17tn in the third quarter), especially from Phong Phu 2 residential area (Low-rise project in Binh Chanh, with a deployment area of ~40ha). The investment acceleration in the Phong Phu 2 residential project shows that the company maintains its strategy of expanding its land fund in Ho Chi Minh City, which is an appropriate strategy when the tier-I market shows signs of recovery relatively early compared to other markets. In terms of revenue, we maintain the 2024 expected revenue of VND 4,700bn (USD 196mn, +125%YoY), mainly from the handover of the Privia project in 2H24. The NPAT-MI could reach VND 981bn (USD 40bn, +37% YoY) and NPM at 21% because high-rise units have lower margin than low-rise unis. 2024EPS could reach 1,137. In 2024, the company focuses on completing the legal process of potential projects in HCMC, so that it can deploy construction and sales process in the period 2025-2026 (when the real estate market completely recovers). Notably, KDH has potential projects in the Binh Chanh area, include: 1/Solina urban area project (16.5ha) is expected to be complete land use fee payment in 2024; 2/ Phong Phu 02 residential area (~40ha) has cleared ~90% of the area, and expected to complete site clearance and pay land use fees in 2024. Using the SOTP (Sum-of-the-parts) method, we increase the target price at VND 40,300 per share (Upside +12% from the closing price on March 05, 2024), which is equivalent to an ACCUMULATE recommendation for long-term investment purpose.
KBC – Wait to see royal poinciana blooming : KBC : Industrial Land RE : Hung Le Tags:
KBC has announced its Q4 2023 financial results, reporting a revenue of VND 847 bn (USD 35 mn), marking a 630% YoY increase. NPAT-MI was nearly VND 70 bn (USD 3 mn), a significant turnaround from the adjusted loss of VND 482 bn in the corresponding period of 2022. The results fell short of expectations due to KBC's inability to deliver 33 ha of land as scheduled. For the full year of 2023, KBC achieved a revenue of VND 5,885 bn (USD 240 mn; +319% YoY), net income of VND 1,996 bn (USD 81.5 mn; +29% YoY), and EPS of VND 2,600. Phuc Ninh project is highly likely to resume investment and sales activities in 2024, while the Trang Cat project is expected to show positive signals for a restart in the second half of the year and commence sales in 2025. The bottleneck in land-use expenditure at the Nam Son Hap Linh IP has been resolved, laying the groundwork for accelerating sales processes in 2024 amid high demand for industrial land in the North, whereas Trang Due 3 is poised to contribute to the financial results. For 2024 results, KBC forecasts revenue and NPAT-MI to reach VND 8,683 bn (USD 354 mn; +54% YoY) and VND 2,453 bn (USD 100 mn; +23% YoY), respectively, with an EPS of VND 3,196. These projections are based on the scenario that (1) KBC will deliver 187 ha of industrial land, (2) restart the Phuc Ninh project after fulfilling legal land obligations, (3) and generate VND 200 bn (USD 8 mn) in revenue from approximately 216,000 m2 of operational factory floor space at an average price of USD 4.5/m2/month. However, a significant portion of the business results are expected to be realized in the latter half of 2024. In the first half of the year, we anticipate that KBC may deliver the remaining 33 hectares. Consequently, the business performance in the first half of 2023 is projected to be lower than the same period due to the high baseline of the first half of 2023. Based on the Sum of the Parts (SOTP) valuation method, we have raised our target price to VND 41,800 per share upon reevaluating the revenue prospects of KBC's ready-built factories. The expected yield over the next 12 months is +34.0 % (based on the closing price on March 1, 2024).
OCB - Favorable performance paves the way for stable growth in 2024 : OCB : Banking : Chinh Dang Tags:
For the year 2023, the bank maintained high growth compared to the industry, thanks to the expansion of non-interest income (+41.9%) and effective cost control, with CIR decreasing by 280bps and credit costs decreasing by 11 bps compared to 2022. Therefore, the total operating income and net profit for the year were VND 9.5 tn (USD 388 mn) (+11.6% yoy) and VND 5.2 tn (USD 212 mn) (+19% yoy), respectively, achieving 87% of the bank's profit plan for 2023. According to our estimates, the bank's funding cost and asset yield witnessed a slowdown in Q4, with funding cost decreasing by 57 bps, lower than the decrease of 79 bps in asset yield. This led to a 25 bps decrease in the bank's NIM (annualized) compared to Q3, down to 3.47%. We believe the faster decline in asset yields was due to (1) strong credit growth towards the end of the year leading to shorter interest collection period, (2) the bank reducing support interest rates for customers, and (3) stronger growth in the corporate loan portfolio. However, we consider the decline in NIM to be temporary and expect NIM to improve in 2024. For 2024, we expect OCB to achieve a credit growth rate of 20% combined with an improved NIM of 3.73%, thanks to (1) improving demand from the retail sector since late 2023, and (2) better cash flows from well-performing businesses as support packages end, leading to a 20.5% increase in OCB's net interest income. Additionally, fee income sources (such as card services and corporate account management) and the recovery of bad debts through asset liquidation will continue to improve, compensating for the weakening effect from investment securities income. Therefore, OCB's estimated total income and net profit for 2024 are projected to be VND 11.3 tn (USD 461 mn) (+19.6%) and VND 6.2 tn (USD 253 mn) (+19.3%), respectively. Our target price is VND 18,100 per share, corresponding to a PBR of 1.09 and a return of 20% compared to the closing price on 01/03/2024. Therefore, we recommend a Buy for OCB.
PVT – 2024: NPAT-MI is anticipated to increase 25% YoY : PVT : Oil & Gas : Ngan Le Tags:
For FY2023, PVT recorded revenue of VND 9,487 bn (USD 400 mn, +5% YoY) and net profit of VND 980 bn (USD 41 mn, +14% YoY), completing 97%/100% of our forecast. The corresponding EPS was VND 3,029. Given the strong fleet expansion in 2023 and the TC rates are anticipated to be favourable in 2024, we expect FY2024 NPAT-MI to increase by 25% YoY to VND 1,227 bn (USD 52 mn). The corresponding EPS is VND 3,563. Although we maintain a positive outlook for PVT’s 2024 business results, PVT's current share price has been priced in the growing potential. Therefore we only recommend a NEUTRAL with the target price of VND 26,200, with PE fwd of 7.5x, nearly the same as 5-yrs average level of 7.8x.
ELC – Q4-2023 Result Update: Profit surged on Investment revaluation gain : ELC : Technologies : Tung Do Tags:
A robust 120% year-on-year surge in revenue to VND 523 bn was driven by the delivery of high-value contracts in the Telecommunications and Intelligent Transport System (ITS) sectors. This marks the highest quarterly revenue recorded since 2020. The provision of VND 27 bn for warranty and doubtful receivables impacted the operating profit, resulting in a 76% QoQ decline to VND 11 bn. ELC recognized VND 35 bn in financial revenue from the revaluation of its investment in the Vietnam Computer and Communication Jsc (Vietcom). This followed an increase in ownership to 50.5% and the reclassification of Vietcom as a subsidiary in November 2023. Previously, by the end of Q3/2023, ELC owned 34% of Vietcom, which was an associate company of ELC. Due to this extraordinary financial revenue, profit before tax reached VND 45 bn, reflecting an 11% QoQ increase. Cumulatively for the year, the revenue reached VND 980 bn, marking a 14% YoY increase, and NPAT-MI amounted to VND 77 bn, showing a whopping 146% YoY growth, equivalent to a basic EPS of VND 937. ELC is currently outlining business plans for 2024, anticipating revenue and profit growth from the high levels achieved in 2023. The momentum stems from executing signed contracts totaling VND 500 bn and participating in tenders for ITS and Telecommunications projects with an estimated total tender size of around VND 1,400 bn.
FMC - Expecting double-digit growth compared to the same period : FMC : Fishery : Hien Le Tags: FMC
Net revenue in Q4-2023 reached VND 1,253 bn (or USD 51.5 mn) (+3% YoY; -30% QoQ) as a shrimp export volume increase 22% and shrimp selling price in VND decrease 14% YoY. Net profit after majority interests (NPAT-MI) in Q4-2023 reached VND 82 bn (or USD 3.3 mn), increase 5% YoY due to higher financial profit and lower G&A expenses. For the year 2023, revenue reached VND 5,087 bn (or USD 209.3 mn) (-11% YoY) and NPAT-MI reached VND 276 bn (USD 11.3 mn) (-10% YoY), equivalent to 101%/100% of our forecast. EPS for 2023 is VND 4,221 (-10% YoY). Revenue for Q1-2024 is estimated to reach VND 1,008 bn (or USD 41.4 mn), equivalent to the same period last year, as shrimp export volume is expected to increase by 10% YoY while selling price decreases by 10% YoY. NPAT-MI in Q1-2024 is estimated to reach VND 56 bn (or USD 2.3 mn) (+10% YoY) as gross profit margin is 10% (+200bps YoY) due to the harvest of in-house shrimp in January 2024. For the year 2024, we increase the forecasted revenue and NPAT-MI are VND 5,598 bn (USD 230.3 mn) (+10% YoY) and VND 346 bn (USD 14.2 mn) (+25% YoY), respectively, with assumptions of a 9.8% YoY increase in shrimp production and a 0.6% YoY increase in selling price. The gross profit margin is expected to reach 11% due to a 29% YoY increase in in-house shrimp production. EPS for 2024 is expected to be VND 5,244 (+24% YoY).The target price is adjusted to VND 52,600/share , up 1,3% from the previous valuation on December 4, 2023. Combined with an cash dividend of 2,000 VND, the expected profit in the next 12 months is 12.5% compared to the closing price of VND 48,500/share on February 26, 2024. We recommend ACCUMULATE this stock for the long term.
Update on monetary market in Feb 2024 : VDS : Macroeconomics : My Tran Tags:
A hike in interbank interest rates might be in the short term. Credit and capital mobilization were weak in the first two months of the year. The SBV allows the extension of Circular 02 as expected
MCM – 2024 performance is expected to show continued positive growth : 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.
HAX – Looking forward to the recovery of luxury car consumption and the new MG business : 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
GMD - Gemalink Port’s leap forward in 2024 is the main driver of growth : 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.
NKG – The recovery potential has already priced-in : 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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