MBB – 2022/2023 outlook: credit growth and credit cost margin are solid growth factors

• The consumer finance segment of the group has expanded to make up circa 6% of the consolidated loan book. Despite the growing contribution of riskier segments, we expect operating costs control and easing credit cost margin to prevail to contribute significantly to earnings growth in the 2022-2023 period.
• Notwithstanding the potential of exclusive quota granted, we conservatively factor in a 26% consolidated credit growth in 2022. Given that, we have a 2022-2023 PBT forecasts at VND 21.8 trillion (USD 948 mn, 32% YoY) and VND 27.0 trillion (USD 1.2 bn, 24% YoY), respectively. TOI is projected to expand 21% in 2022 and 18% in 2023 despite robust NIM and NFI due to the static growth of other non-II.
• The forward 2022 book value per share is VND 19,802, translating to a forward P/B of 1.6x. We anticipate tailwinds in 1H2022 and see sustainable enhancement in credit cost margin and CIR in the next few years, which should lead to stably high ROE. Therefore, we raise our target price to VND 42,800/share and maintain a BUY This translates to an upside of 36% from the closing price of March 28, 2022.

Updates on monetary market in Mar 2022

• Credit demand continues to improve.
• M2 increased more than credit in Jan 2022.
• Strong capital demand in the interbank market.
• USD/VND exchange rate fluctuates in a narrow range despite the pressure of the Fed to raise interest rates.

Dairy industry – Ongoing rising raw material prices and logistic costs are taking a toll on dairy producers

• Global prices of raw milk and sugar (two main raw materials of dairy producers) have increased since 2020 (the first year of Covid-19 pandemic era) to the present. In 2022, rising energy prices are accelerating leaving dairy producers (e.g. VNM, IDP or MCM) under weaker gross margin in 2H2022. MCM is expected to suffer a lower effect from rising raw milk prices but a higher impact from rising sugar prices as it does not import raw milk. In contrast, VNM will bear a lower negative effect from higher sugar prices since it owns a sugar company – Vietnam Sugar Jsc.
• Vietnamese dairy makers are expected to have weaker net profit margin in 2022 due to 1) upward trend of raw milk prices because of increasing demand from China, decreasing dairy cow herds, and cost-push inflation; and 2) the risk of rising logistic cost from Russia’s war in Ukraine and the unknowns about the Covid-19 pandemic. In case of soaring energy prices, we expect that Vietnamese dairy producers will experience negative growth in 2022.

DXG – The possibility of Gem Riverside relaunching and landbanks expansion are main catalysts 

• 2021 results posted strong recovery from the loss in 2020 thanks to the handover of more than 1,000 products at GSW and 1,500 products at Opal Boulevard.
• In 2022, management targets to reach revenue/NPAT-MI of VND 12,000 – 13,000 Bn/VND 1,400 Bn (+19% YoY) supported by the handover of St Moritz, GSW (shophouse), Opal Skyline and the recovery in the brokerage segment with NPAT-MI of about VND1,300 bn (+49% YoY).
• We give a positive view for DXG based on the following key points: (1) New changes in the legality of the Gem Riverside project and the selling price is expected to double as much as in 2018 from 30-40 million/m2 to over 70-80 million/m2 if the sale takes place as expected this year. DXG expects to soon get a construction permit at this project. However, the location of the Gem Riverside project is quite special (next to the 160ha Thu Thiem resettlement area, which is in a state of dispute), there is still a potential risk of the time to issue a construction permit for the project. Therefore, investors pursuing the story of DXG need to closely follow the developments of the above event; (2) Adding new land banks in the medium term; (3) The recovery of the brokerage segment when the base 2021 is low and the risk of social distancing is not high.

Power industry – Growth on the back of the economic recovery

• Electricity volume in the first two months in 2022 grew 6.1% compared to that in 2021 on the back of the economic recovery.
• The thermal group benefits from high contracted volume and high selling price on CGM. Among those stocks in our coverage list, HND and QTP are coal thermal plants that will experience a high growth in contracted volume compared to 2021, and we also have positive view to those stock.
• Hydropower plants continue to benefit from hydrology conditions.
• Renewable energy group to wait for the new scheme to expand capacity. Beneficiaries are REE, GEG, PC1.

MWG – Entering Promising Indonesia Consumer Electronics Retail Industry

• The partnership should be a good match for both as ERAA hasn’t been selling white goods and the JV could leverage MWG’s experience and cutting-edge retail execution in the consumer electronics field.

ACB – 2022/2023 outlook: capture the advantage in retail with digitalization

• 2021 results were slightly under our expectations. NII was up to our projections, but TOI and PBT missed our estimates. We appreciate the quality improvement in CASA base and the conservative provisioning policy for restructured debts.
• The 2022-2023 PBT forecasts are almost unchanged despite the under-than-expected 2021 results, landing at VND 15.4 trillion (USD 669 mn, 28% YoY) and VND 18.7 trillion (USD 813 mn, 22% YoY), respectively for 2022 and 2023. 2023 revenue is revised upward by 3%. We anticipate pressure on CIR as ACB allocates more funds to technology investments and incurs operating costs to maintain a high CASA base. We maintain our projections on the 2022-2025 credit cost margin curve.
• The revised forward 2022 book value per share is VND 20,478, translating to a forward P/B of 1.6x. We maintain a target price of VND 42,000/share and a BUY recommendation. This translates to an upside of 28% from the closing price of March 18, 2022.

FMC – New factories likely to drive profits stronger than expected

• We revise our TP by 14% from the latest valuation to VND 69,500, implying an expected return (including cash dividend yield) of 15%. Our increased target price is driven by: (1) a 21% upward revision in 2022F-2026F NPAT-MI as we increase our projected shrimp export volume and gross margin; (2) raising 2022 target PER from 10.5x to 12.0x due to improving long-term NPAT growth outlook and the current growth cycle of the seafood industry. We have an ACCUMULATE rating for this stock.  
• In 2M-2022, FMC’s export revenue grew strongly by 70% YoY, mainly driven by high shrimp demand and the contribution of Tam An factory.
• In 2022, we forecast FMC’s revenue and NPAT-MI to be VND 6,551 Bn (or USD 285 Mn, +26% YoY) and VND 360 Bn (or USD 16 Mn, +35% YoY). We believe that a double-digit NPAT growth will be seen in 2022 due to the contribution of two new factories. Our upside risk is better-than-expected new factory capacity while downside risk comes from cooling-down global shrimp demand, higher logistics costs and increasing raw material prices. Our projected EPS in 2022 will be VND 5,536. 

Rising commodity prices have clouded trade outlook

• Export growth improved in Feb 2022.
• Rising raw material prices could affect the prospect of trade balance.
• Exports of non-tech products continued to improve in Feb 2022.
• Import of raw materials for production is on the rise.

Export growth improved in Feb 2022

Trade activities continued to their positive growth during last month. Specifically, export growth continued to improve to 15.5% yoy in Feb 2022, higher than the 8.1% increase in Jan 2022. On a month-on-month basis, export turnover decreased by 24.1%, mainly due to the impact of the Lunar New Year holiday. On the other hand, import turnover recorded a stronger rise, increasing by 22.3% over the same period (compared with an increase of 11.3% in Jan 2022). In the first two months of the year, Vietnam's exports and imports grew by 11.2% and 16.1% respectively over the same period.

Equity markets face an era of discomfort

• As this author mentioned before: the era of easy money is over.
• Equity markets are correcting. Ukraine is / was the trigger point.
• Sounds like 2008-09

DPM – Bottom line to hike on the back of increasing Urea price

• Revenue and profit grew 64.7% and 350.8% respectively in 2021 thanks to the strong increase of fertilizers price and chemicals as well as extraordinary profits.
• 1Q2022 business results are expected to remain high thanks to positive fertilizer prices in the context of the Russia-Ukraine conflict, which may lead to a global shortage of urea.
• We believe that 2022 business results will post growth instead of decline as previous forecast, and raise the 2022 earnings forecast from VND1,676 bn (USD 73.5 mn) to VND5,004 bn (USD 219.4 mn), up 60% YoY due to the change in fertilizer price forecast. 2022 EPS is VND12,674.
• In addition, DPM's business results is expected to be positive in 1Q2022 and can last till 2Q2022 thanks to the short-term shortage of Urea supply due to the tension between Russia and Ukraine, leading to high Urea prices. Therefore, we believe that DPM's stock price can benefit from this and recommend BUY with a target price of VND73,100/share in the short term.
• Investors should be cautious with fertilizer price movements related to geopolitical fluctuations surrounding the Russia-Ukraine war. In the event of a positive change from Russia's export activities, the fertilizer price may reverse sharply.
• Downside risk from restricting fertilizer export.