VNM – High input costs remain an obstacle for profit margin improvement
16-03-2023
: VNM
: Food, Beverage & Tobacco
: An Nguyen
Tags: Result Update Consumer staple
- In Q4 2022, VNM had net revenue of VND15,069 bn
(or USD647 mn; -6.3% YoY; -4.7% QoQ), of which, both of domestic and overseas
channel went down. Due to strongly rising input costs, the net profit margin
dropped to the lowest level (12.4%) since the last decade, equivalent to
VND1,869 bn (or USD79 mn; -18.7% QoQ; -15.5% YoY).
- 2022 net sales of VNM was VND59,957 bn (or USD2,540 mn; -1.6% YoY) and NPAT of VND8,516 bn (or USD360 mn; -19.2% YoY), completing 94% and 88% revenue and profit targets respectively under rising inflation environment. 2022 results were below our expectations, thus we lowered 2023 expected sales and net profit to VND62,532 Bn (or USD2,661 mn, +4.3% YoY) and VND9,263 Bn (or USD394 mn, +8.8% YoY), respectively. The equivalent EPS comes at VND3,989 (+9.8% YoY).
- Our new target price for VNM is VND83,400, which is lower by 11% compared to the latest target price (VND93,800) on Jan-2023. Adding a cash dividend of VND3,850, the 12-months expected return is 13% compared to the closing price on Mar 15th 2023. We recommend to ACCUMULATE Vinamilk as a defensive investment with a stable cash dividend yield (~5%) and positive growth outlook.
Comments on the SBV’s cut on the regulatory interest rates
15-03-2023
: VDS
: Macroeconomics
: My Tran
Tags: interest rate
- The SBV’s cut on the regulatory interest rates
- The deposit interest rates cooled down
- A "timely and thoughtful" policy action in the current macro context
Vietnam’s T&G sector – Remain cautious despite seeing glimmers of export recovery
14-03-2023
: STK, TNG, MSH, TCM
: Textile & Garment
: Hoai Trinh
Tags:
- In the first two months of 2023, Vietnam's garment export turnover was USD 4,549 mn (-19.6% YoY), mainly due to high inventories and weak demand in main export markets which led brands to turn more conservative in placing orders for 1Q23. Yarn export turnover also plummeted, recording USD 565mn (-38.4 % YoY) due to a significant decrease in imports from China (-42.6% YoY).
- The US is by far Vietnam's largest textile importer. We expect US apparel imports to recover after the strong imports in May 2022 (bullwhip effect), bolding bleak for downstream inventory digestion in 4Q22. Meanwhile, CAFTA-DR members gained market share primarily as a result of a sharper decline in US apparel imports from the rest of the world. However, we believe this trend will not last long.
- We believe that 2023 could not be a rocky ride for Vietnam exporters when China reopens because US fashion companies continue to diversify their sourcing base. While there are some glimmers of hope, we still recommend investors wait on the sidelines for 2Q23 (after 1Q23 results are fully priced in) or stock prices drop further to provide some valuation support.
Tech Industry Layoffs Should Be a Clearer Signal for The Deceleration of IT Services Revenue In 2023
13-03-2023
: FPT, CMG
: Technologies
: Tung Do
Tags: IT Industry
- Mass job cuts in the technology sector have occurred since mid-2022 and remain more elevated in early 2023, especially in the US.
- Reasons behind massive tech layoffs consist of an unsupportive macro backdrop (economic downturn, high inflation, higher interest rates) and, particularly, overhiring during the pandemic.
- B2B tech companies specializing in software, IT infrastructure, IT services, which largely support businesses’ DX progress, also witnessed notable layoffs recently, signaling the temporary deceleration of DX-related revenue growth in 2023.
- We expect that businesses will most likely prefer lower-cost IT vendors, including Vietnam players, amid an economic downturn.
CTG – PBT growth is expected to slowdown
10-03-2023
: CTG
: Banking
: Thao Nguyen
Tags: CTG 4Q22 update
- PBT reached VND 5.3 tn (or USD 220 bn) in 4Q22 and VND 21.1 tn (or USD 880 bn) in FY22, equivalent to an increase of 45.4% YoY and 20% YoY, respectively. FY2022 earnings growth was mainly driven by growth in interest income (15% YoY) and non-interest income (46% YoY) despite the surge of provision expenses (+31.5% YoY)
- Asset quality showed the improvement on both quarterly and yearly basis yet we should keep eyes on asset quality in the coming quarters. In terms of provisioning buffer, bad debt coverage ratios declined to 188.4% in 4Q after reaching the peak of 222.4% in 3Q22, and was flat compared to last year.
- We foresee NIM to decline by roughly 3bps in 2023 as asset yield might not outpace funding cost. Coupled with credit growth of 11%, we expect NII to inch up by 11% YoY. Bancassurance continues boosting service income (+12% YoY) but (1) bad debt recover income might decline during this tough year and (2) FX trading income might not remain high as of 2022, resulting in a 2% decline in NoII. As a result, TOI and PBT are forecasted to grow by 8% YoY and 12% YoY, respectively. We expect CTG will back to its growth trajectory from 2024.
- The forecast of PBT for 2023-2024 are VND 23,600 bn (or USD 983mn, +12%) and VND 29,684 bn (or USD 1.3 tn, +26%), respectively. Correspondent book value will be 25,400 and 29,000, respectively. We revise up our target price by 11% to VND 29,300 to reflect an increase of earnings in medium term, and we are NEUTRAL to this stock at the closing price as of Mar 10th, 2023.
GMD – Q4-FY22 seaport operations are less prosperousbut investment plan in 2023
09-03-2023
: GMD
: Seaports
:
Tags:
- In Q4/2022, revenue and NPATMI of GMD were VND 1,066 billion ( +8% QoQ, +3% YoY) and VND 189 billion (-23% QoQ, 0% YoY), respectively. In 2022, net revenue and NPATMI reached VND 3,916 billion (+22% YoY) and VND 995 billion (+65% YoY). For 2022, EPS was VND 3,302 (+65% YoY).
- GMD recorded a deposit worth 1,000 billion VND in Q4/2022 for divestment in Nam Hai Dinh Vu (NHDV) and expects to complete the deal in Q1/2023. The proceeds will be used for the purpose of investing in the expansion of two ports, Nam Dinh Vu (NDV) phase 3 and Gemalink (GML) phase 2.
PHR – Core businesses are expected to be flat in 2023
08-03-2023
: PHR
: Industrial Land RE
: Hung Le
Tags:
- PHR's 4Q2022 revenue reached VND 577 billion (-3% YoY), and NPAT skyrocketed to VND 528 billion (+168% YoY). For FY2022. Revenue was VND 1,710 billion, down 12% YoY, while NPAT climbed 85% YoY to VND 881 billion. Earnings growth was mainly driven by abnormal income from the VSIP3 deal.
- Compensation income from the VSIP 3 deal will continue to be PHR's profit fulcrum in 2023 in the context that (1) the rubber business is expected to have a slight improvement as the impact of China's reopening is slower than expected. which may cause rubber prices to recover later this year. In addition, input costs are expected to cool down this year as commodity prices have plunged, which will help PHR improve gross profit margin. (2) The wood processing segment has not yet shown signs of recovery. (3) the industrial park business is expected to be flat when PHR only records a leased area equivalent to 2022. Accordingly, revenue is estimated at VND 1,749 billion (+2.4% YoY) and NPAT is estimated at VND 528 billion (- 40.4% YoY). 2023 EPS is expected to be VND 3,899.
- Target price was adjusted down by 34.7% to VND 41,000/share due to temporarily eliminate IP projects including Tan Lap 1 and Tan Binh Expansion as they have yet to be approved and related issues to Binh Duong 2021-2025 master plan. Combined with an annual cash dividend of VND4,000/share, the total expected return is +10.7% (based on the closing price as of March 07th, 2022).
PNJ - January 2023 results – Resilient in the face of challenges
07-03-2023
: PNJ
: Retailing
: Loan Nguyen
Tags: Monthly update Jewelry retail
- In 2022, net revenue and NPAT at VND 33,876 Bn (or USD 1.4 Bn, +73% YoY) and VND 1,807 Bn (or USD 76 Mn, +76% YoY). In January 2023, the company recorded net revenue of VND 4,129 Bn (or USD 174 Mn, +19% YoY) and NPAT of VND 302 Bn (or USD 13 Mn, +12% YoY), partly supported by the Lunar New Year coming earlier than usual, helping to increase gold bar consumption, while retail sales were flat YoY.
- We forecast that PNJ will achieve VND 36 Tn (+6% YoY) and VND 2 Tr (+8% YoY) in revenue and NPAT, respectively, in FY2023. The corresponding 2023 EPS will be VND5,942.
- Since 2022 earnings are close to our forecast and the 2023 outlook remains unchanged, we maintain our target price of VND96,000 (adjusted by stock dividend), implying an upside of 22% on the closing price of March 06th, 2023.
Unlikely consumption growth in 2023 as steelmakers stay idle
06-03-2023
: HPG
: Materials
: Trinh Nguyen
Tags:
- Capacity utilization has yet to recover fully across steel segments, as many depend on exports.
- Steelmakers are conservative in setting output guidance for FY2023
HND – Below-expected Q4/2022 profit, expecting a recovery after Q1/2023
03-03-2023
: HND
: Utilities
: Hoai Trinh
Tags: HND 2023 outlook 4Q22 results Utilities
- HND announced its 4Q22 electricity sales volume of 1,106 mn kWh (-30% QoQ, -29% YoY), lower than our expectation due to the No.4 generator of the HP2 plant’s overhaul in Q4. Despite the fact that the production of electricity decreased QOQ and YoY, the revenue reached VND 2,238 bn/ USD 94.3 mn (-27% QOQ, +1% YoY) as a result of rising input coal costs, which led to an increase in the electricity’s ASP. However, NPAT recorded a loss of VND 7.6 bn/ USD 0.3 mn (Q4/2021: VND 259.9 bn/ USD 11.0 mn), primarily due to the low volume, which was insufficient to cover its fixed costs and generate a profit on the CGM.
- However, we expect better earnings in 2023 based on the assumptions (1) a sharp decline YoY in interest expenses and depreciation costs, (2) Qc and Qm will be higher from Q2, and (3) In 2H23, HND expects to gain more profit on CGM as hydropower gradually exits a favorable phase, even though coal prices remain high.
- We have an ACCUMULATE rating with the one-year target price of VND 15,600/share. With an expected cash dividend of VND 1,000/share in the next 12 months, it implies a total return of 19%, based on the closing price of Mar 3rd, 2023.
FPT – Q4-2022 Profit Unexpectedly Decelerated But The 2023 Growth Outlook Remains Intact
02-03-2023
: FPT
: Technologies
: Tung Do
Tags: 4Q22 Results update FPT
- Q4-2022 revenue reached VND 13 trillion (+22% YoY), mainly driven by Technology and Education & other investments segments. However, NPAT inched up by only 4% YoY, reaching VND 1.4 trillion, due to a contracted PBT margin in key segments after the Group recorded high operating expenses (bonus expenses, provision expenses and FX losses) and gains from joint ventures was down by 64% YoY.
- 2022 Revenue and NPAT recorded growth of 23% YoY and 22% YoY, respectively. For 2023, FPT targets revenue and EBT growth of 19% YoY and 18% YoY respectively. Currently, We forecast that 2023F revenue/PBT will grow by 18% YoY/22% YoY.
- Current TP is VND 100,500, offering a total expected return of 28% (as of March 2nd, 2023), equivalent to a 2023F/24F P.E of 16.8x/13.7x.
Vietnam’s food & beverage sector is expected to see less pressure on profit margins from 2H2023
02-03-2023
: VNM
: Retailing
: An Nguyen
Tags:
- On Feb 27th, the price index of agriculture & livestock commodities was 103.4 USD (+0.4 %MoM; -1.5 %YoY), driven by lower production costs and weak global demand, helping to improve the gross margin of Vietnam F&B companies. We predict that the margin improvement effect will be more visible from 2H2023 because almost all F&B producers locked raw material contracts in the beginning of 2022 and Q4 2022, resulting in high-priced inventory in 1H2023.
- We expect that Vietnam’s F&B industry also saved costs through the decline of logistic costs which is a result of sluggish demand in the global economy. On Feb 24th, the Baltic Dry Index (BDI) was 883 points (+22.5% MoM; -59.6% YoY).
- Vietnam’s F&B companies also enjoy the benefits from higher top-line, supported by stable sales volume and higher average selling prices (ASP). According to Kantar Worldpanel, in 2022, the ASP of Vietnam FMCG products grew each quarters. We believe that this effect will make 2023 ASP of these products trade at a higher level than a year ago. As a result, net profit of F&B companies will show a positive growth in 2023.
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