Steel industry – Positive signs for coated steel exports to Europe. Surging coking coal price puts pressure on basic oxygen furnaces’ gross margin.

• Europe’s steel prices have been rising fast with pressures from increasing energy prices and the potential disruption of steel supply from Russia and Ukraine. HRC prices in this area have increased by 35% from USD 1,054/ton to USD 1,419/ton in the last month. Hence, exporting to Europe can bring a higher gross margin in 1H2022 for Vietnamese producers, such as HSG, NKG, HPG.
• Due to the demand recovery after the winter and the increasing HRC price gap between Europe and Vietnam, the orders from Europe have improved strongly since January/2022 after decreasing during 4Q/2021. Currently, NKG has received sufficient exporting orders for production until end-May/2022.
• HPG and Formosa can face short-term difficulties from surging coking coal prices, which can harm their gross margin. Rising risks of the disruption in supply from Russia encouraged coal importers to find alternative sources from Australia or Indonesia. Australia coking coal prices have increased sharply by 43% from the beginning of February 2022 to USD 570/ton last month.

PPC – Dividends from associates saved the business in 2021

• In 4Q2021, revenue/NPAT posted VND 539 bn (or USD 23 mn)/ VND 64 bn (or USD 2.8 mn), significantly lower than that in 2020. Operating profit was negative due to technical problems.    
• In 2021, PPC faced both external and internal difficulties. Revenue and NPAT were VND 3,885 bn (or USD 169 mn) and VND 285 bn (or USD 12 mn), -51% YoY and 72% YoY. This is a record low earnings since 2015 even though the company recorded a high financial income of VND 452 bn (or USD 20 mn).
• In 2022, core business is expected to recover. Based on its contracted volume of roughly 3.2 bn kWh, we forecast revenue and NPAT to be VND 6,414 bn (or USD 279 mn) and VND 484 bn (USD 21 mn), +65% YoY and + 70% YoY, respectively. 
• Potential growth for this stock in the medium term is limited because Pha Lai 3 plant will be  constructed in the period from 2026 to 2030. Hence, cash dividends is the only catalyst to hold this stock. Our latest target price for PPC is VND 23,000. For the current target price with VND 500 dividend, implying a total return of 6% as of March 10^th, 2022. We have a NEUTRAL rating.

KBC – Strong growth thanks to cheap real estate landbank

• Q4-2021, KBC has not achieved strong growth compared to expectations, with revenue and NPAT-MI reaching VND1,232 billion (+0.1%) and VND 212 billion (+9.3%) , due to delays in handover and revenue recognition from Nam Son Hap Linh IP.
• In 2021, revenue reached VND 4,093bn (100% yoy) and NPATI-MI reached VND 783bn (+250% yoy), with positive industrial park (IP) land sale progress. Gross profit margin improved from 32% to 57% thanks to a large contribution from Quang Chau IP, which has high leasing prices and low costs.
• In 2022, we estimate that revenue and NPAT-MI will grow strongly, reaching VND10,694 billion (+148%) and VND 3,409bn (+335%) respectively. Residential real estate will be the main growth catalyst, bolstered by unlocking Trang Cat landbank.
• KBC has a forward EPS of VND 5,980 and a  forward BVPS of VND 39,260, corresponding to a forward P/E of 12.7x and a forward P/B of 1.4x based on the closing price on March 9^th. These are pretty attractive valuations compared to the market valuations with P/E of 38.3x and P/B of 2.2x. We have an optimistic view for KBC based on the strong catalyst of unlocking the Trang Cat real estate project.
• KBC will issue 150 million shares, corresponding to 26.3% chartered capital. We assume the private placement will take place in the second half of 2022. We are reviewing our forecasts, and KBC's valuation will be updated in the near future, to include the effect of the private placement.

VPB – High Credit Growth on Strong Capital Base

• VPB announced 2021’s consolidated PBT was roughly VND 14,580 billion (+12% YoY), completing 88% of the year’s guidance, with the parent bank playing a leading role in growth while the unsecured consumer finance segment at FEC struggled in 2H2021. In detail, PBT of the parent bank surged by 50% YoY to VND 14,011 billion (excluding one-off income) and PBT of FE Credit (FEC) plummeted by 84% YoY to VND 610 billion. Thus, the parent bank contributed 96% and FC added 4% to the total PBT of VPB.
• The strong increase in equity thanks to the sale of 50% of FEC at 2021-end and the private placement of 15% in 1H2022 will support credit growth. However, it still temporarily put pressures on ROE this year. VPB will announce the plan to use new capital sources in the near future and that may affect our forecast.
• The target price of VPB, adjusted for the dilution after the private placement, was adjusted from VND 42,800/share to VND 46,200/share. Comparing the forward P/B at the end of 2022 of 1.7x and the end of 2023 of 1.5x with the current P/B of 2.0x, VPB is now trading at an attractive valuation. Based on the closing price on March 9, 2022, we recommend to BUY VPB with a total return of 26%.

PNJ – Cemented Market Leadership to Underpin Record High Retail Sales

• Expanding market share, tailored marketing strategy, coupled with resilient purchasing power of targeted customer segmentation, help PNJ keep posting record-high monthly retail sales post lockdown.
• Soaring gold prices lend support to average selling prices, bolstering profit margins expansion.
• The private placement is likely to be completed in Q2-2022, providing necessary capital of up to VND 1.4 trillion for the company to intensively expand its store network and production capacity in 2022-23.
• On the back of solidified market leadership position and potential margin expansion, we revise our forecasts upward, resulting in respective projected net sales and NPAT of VND23,044 bn (+18% YoY) and VND1,394 (+35% YoY), equivalent to 2022F diluted EPS of VND5,745. Consequently, updated TP comes at VND118,500, implying a 2022F P/E of 20.6x. We reiterate ACCUMULATE recommendation on PNJ.

HDG – Hado Charm Villas project is main driver in 2022

• In 2021, HDG recorded revenue and NPAT-MI of VND 3,841 Bn (-23% YoY) and VND 1,090 Bn (+11% YoY), respectively. The gross profit margin strongly improved thanks to the handover of 82 units at Hado Charm Villas, remaining units of Hado Centrosa along with resilient Energy segment.
• In Q1 2022, HDG would focus on finishing the rough construction of villas and preparing for third phase sale in Hado Charm Villas (currently the construction rate reached 70%). Regarding to Energy segment, the power segment is stable when power output in January reached 132 million KwH thanks to the favorable weather per management.
• In 2022F, we expect that the handover of Hado Charm Villas 150 units to uplift the overall business results. Our current 2022F revenue and NPAT forecast for HDG are VND 4,271 billion and VND 1,552 billion, respectively. Current forecasts and TP of VND 69,300 are under review.

BMP – The recovery signs are clearer

• The demand has recovered strongly after easing social distancing. BMP’s selling volume increased from roughly 10,500 tons in 3Q/2021 to reach 25,920 tons in 4Q2021.
• The company raised the average selling price by roughly 11% QoQ to VND 55.9 million per ton of product, boosting the gross margin to 20% in 4Q/2021 from only 4% in 3Q/2021.
• PVC resin prices are fluctuating at a range of 1,400-1,450 USD/ton, after reaching a peak of USD 1,950/ton in October/2021. Although the recent oil price rally can lift PVC resin prices, we think BMP’s profitability will be good due to higher selling prices and lower material prices.
• We forecast that BMP’s NPAT can reach VND 405 billion in 2022, increasing by 89% YoY. Based on the 2022 EPS forecast of roughly VND 4,500, the forward P/E ratio is 13.5x. We recommend investors ACCUMULATE this stock with a target price of roughly VND 68,700/share. Together with a cash dividend in the next 12 months of VND 4,000/share, the total expected return is 17% as of the closing price of VND 62,200 on March 03rd, 2022.

NT2 – Oil price surge is a short-term downside risk

• In 4Q2021, revenue grew by 23% YoY to VND 1.635 bn (or USD 71 mn) while NPAT experienced an adverse trend, declining by 40% YoY to VND 121 bn (or USD 5.3 mn).  For the year 2021, the company exceeded its guideline by 16% to VND 534 bn (or USD 23 mn).
• In 2022, the company has contracted volume of 3.55 bn kWh, +8% YoY. Core business earnings in 2022 might not be attractive for investors yet the cash flows and FX revenue will be. We forecast NPAT to be VND 567 bn (or USD 25 mn), +6% YoY.  However, in the short-term, the geopolitical tensions might push gas prices up that will make the company be less competitive in CGM to earn profit. Hence, the company will encounter difficulties to earn profit in the time to come.     
• Our latest target price for NT2 is VND 25,300. For the current target price with VND 1,500 dividends, implying a total return of 16% as of March 1^st, 2022 we recommend to ACCUMULATE this stock for long-term potential.

TCB – 2022/2023 outlook: expect solid growth amid headwinds

• We see factors to support NIM during the deposit rate raises. Implicit costs on CASA, including technology investments and promotion expenses should be considered when assessing the stability and growth potential of these non-maturity deposits.
• The 2021 operating results were in line with our forecasts. We make changes in the medium-term growth projections given the faster-than-expected improvement of CASA and yields. We also incorporate the on-going diversification of the funding structure towards offshore borrowings and the potential positive impact of the socio-economic recovery to the balance sheet forecasts. The new 2022 PBT estimate is down 1% from the prior one, at VND 29.1 trillion (USD 1.3 bn, 25% YoY).
• The revised forward 2022 book value per share is VND 32,721, indicating a forward P/B of 1.5 today. This presents an attractive risk reward balance despite the lack of short-term catalysts and concerns about NIM. We maintain the target price of VND 71,000/share and a BUY This translates to an upside of 41% from the closing price of March 1, 2022.

Updates on monetary market in Feb 2022

• Credit increased sharply in the first month of the year.
• Liquidity in the banking system is no longer abundant.
• Highlights of the 2% interest rate support program.
• The USD/VND exchange rate remained stable.

Credit increased sharply in the first month of the year

According to the State Bank, as of the end of January 2022, credit growth reached 2.74% compared to the end of 2021, which is the highest level in many years, reflecting the acceleration in demand for loans in the economy even during the first months of the year. On a year-over-year basis, credit growth increased by more than 16.3%. According to the SBV’s survey in December 2021, credit is expected to expand by 5.3% in the first quarter of 2022 and to grow by about 14.1% in 2022. Rising credit demand also led to an increase in deposit interest rates of some non-state commercial banks with a change of 0.1 to 0.8 percentage points compared to the previous month.

MSN – Core NPAT growth to be robust in FY2022 driven by the consumer ecosystem pillar

• We recommend to Accumulate MSN with the total expected return of 14%, including nearly 0% cash dividend.
• We estimate Masan Group’s FY2022 core NPAT to be VND 7,349 Bn (USD 318 Mn, +50% YoY). Phuc Long will contribute around VND 535 Bn (USD 23 Mn) to total consolidated NPAT, while WCM will reach VND 114 Bn in EBIT and VND 1,737 Bn in EBITDA in FY2022, equivalent to EBIT margin and EBITDA margin of +0.3% and +4.6% in FY2022, respectively.
• We view that the capital divestment from the animal feed segment is a decision with a long-term growth perspective, driven by (1) supporting business to decrease exposure to the commodity-based segment given the fact that Vietnam’s animal feed industry is in a saturation phase, and (2) the restructuring of capital investment to the branded meat industry, possessing growth potential to provide higher business upside in the long term for both MML and MSN.