MBB – 2022 Outlook: Healthy Asset Quality Supports Growth
19-01-2022
: MBB
:
: Tam Pham
Tags:
- Healthy asset quality will be consolidated following customer recovery, combined with high provision base and full provision for structured debt in 2021, leading to reduced credit costs significantly in 2022, which is an important growth driver of PBT in 2022.
- Q4/2021 results are expected to rise strongly compared to the same time last year, thanks to strong improvement in NIM. High profit growth in 2022 will start from Q2. Q1/2021 creates a high-comparison base with a spike in one-time income from written-off debt collection.
- We estimate PBT for 2021-2022 to reach VND16,297 billion (+52% YoY) and VND22,443 billion (+38% YoY). Book value per share in 2021-2022 is VND16,080 and VND20,773 respectively, corresponding to forward P/Bs of 1.7x and 1.3x. The target price is VND38,500/share, corresponding to a BUY recommendation with a profit margin of 28% compared to the closing price on January 18, 2022.
The Government's priorities in the economic recovery program 2022-23
18-01-2022
:
: Macroeconomics
: Ha My
Tags:
- The National Assembly approved the stimulus package worth about 4.1% GDP.
- Supporting the demand side is a key part of the economic recovery program.
- The public investment serves as leverage for Vietnam in recovery after the pandemic.
- The majority of the out-of-budget spending package aims to import Covid-19 vaccines.
HAH – Solid Container Vessels Operations to Drive 2021 Results
17-01-2022
: HAH
: Logistics
: Thu Anh Tran
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- Preliminary revenue and net profit for 2021, per management, was respectively estimated VND 1,976 Bn (+ 66% YoY) and VND 440 Bn (+ 219% YoY), ahead of our expectations by 8% and 19%. We attributed the positive business results mainly to solid container vessels operation, which was strongly supported by favorable charter rates and higher domestic freight rates.
- HAH will expand its container fleet by purchasing used vessels and order new-built vessels as well. Notably, the plan was approved for purchasing old vessel named Marine Bia from Fresh South Shipping S.A, which will be handed over in April 2022, followed by a five-month period of chartering and domestic transportation use from September 2022.
- The chartering segment will be the key profit growth driver for 2022F. With long term chartering contracts for 1-2 years and high charter rates, we expect chartering revenue to jump by 175% to VND 623 Bn in 2022F, accounting for 26% of total revenue (vs 12% in 2021E). We project that higher contribution from this high profit margin operation should improve gross margin by 8.3 pps to 45.2% in 2022F. Meanwhile, shortage in domestic transportation capacity supply continues to cement shipping segment in 2022F.
- We expect revenue/NPAT-MI to be VND 2,410 Bn (+ 22% YoY)/VND 696 Bn (+ 58% YoY) in 2022F. EPS for 2021/22F will stay at VND 8,397 (+ 196% YoY)/VND 13,273 (+ 58% YoY).
- Using a P/E multiple of 9x and FCFE with equal weight, we come up with a fair value of VND 89,500 per share, equivalent to return of 51% as of the closing price on January 17th, 2022. Thereby, we
Banking sector – Improved circulation as a driver
14-01-2022
:
:
: Thanh Nguyen Ngoc
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- Credit growth for 2021 met our expectations as demand recovered during the end of the year and the SBV granted more quotas. Deposit growth however missed out on our predictions due to weak retail deposits. We consider ramping up economic activities as a pivotal driver to higher credit and deposit growth in 2022.
- The recent adjustment in quoted deposit rates at several commercial banks is expected to not signal a trend but is due to seasonal factors. We look forward to deposit rates being stable in the first half of 2022. Liquidity constraints caused by the continuously widening gap between credit and deposit growth and regulatory liquidity ratios might lead to upward pressure on rates in the second half.
- The outlook for the banking sector in 2022 continues to improve on the basis of the expansionary monetary policy, the recovery of the economy and improved perceived risks, while the pressure to raise interest rates is expected to arise only at the end of 2022 and will be polarized among banks. We expect the state-owned banks’s performance to be supported by stories such as dividends and private placement to foreign investors expectations in 1Q22, while the private banks are timed to have positive news and pose outstanding growth from 2Q-3Q/22.
MWG – Entering new potential markets
13-01-2022
: MWG
: Retailing
: Tung Do
Tags:
- MWG rolled out five new retail chains on Jan 10th, 2022, namely AVASport, AVAFashion, AVACycle, AVAKids, AVAJi, respectively selling sportswear, clothes, bikes, mom & kids items, and jewelry. Initial results were encouraging with revenue posting USD 1mn after three days.
- Though these new chains are still in the pilot phase, we see interesting upside potential for MWG as the company, a seasoned retailer with top-notch execution, is entering new fragmented markets with most of them are not having clear market leaders.
- In this site visit tour, CEO Doan Van Hieu Em shared new the development plans for TGDD and DMX chains as well, with a rollout of 200 Topzone stores (vs previous plan of 50 stores) and the new supercenter format for DMX in 2022. Both of which are targeting middle to affluent customers, whose income is less negatively impacted post-pandemic.
- The current TP of VND 163,500, equivalent to a 2022F P/E of 14.4x, is under review.
Construction steel industry – Opportunities are coming, but manufacturers’ gross margins can diverge
12-01-2022
:
: Materials
: Tu Pham
Tags:
- Domestic consumption can grow in 2022 owing to public investments and the re-opening of the economy.
- Exports are playing a more important role as a resilient supply and competitive production costs allowed exporters to seize short-term chances in 2021.
- Construction steel companies’ gross margins can diverge as material prices are moving in opposing trends, favoring basic oxygen furnaces. The weak demand-supply in China led to lower iron ore consumption, leading to lower ore prices. Meanwhile, the reducing pollution trend has been boosting the global demand for scrap steel, supporting this material price at a high level.
US first rate hike in March?
12-01-2022
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: Macroeconomics
: Bernard Lapointe
Tags:
- According to the hawkish language of the Fed minutes released last week, market participants seem to believe that the first-rate hike will be in March, not May as previously expected.
- The minutes have also caused the markets to start to focus on the timing of the commencement of Fed balance sheet contraction, otherwise known as Quanto tightening.
- This caused a sell-off in bond markets around the world.
LHG – Industrial land sales drive earnings growth in 2022
11-01-2022
: LHG
: Real Estate
: Hoang Minh Thang
Tags:
- 9M 2021, revenue reached VND 718bn (+56% yoy) and NPAT-MI reached VND 270bn (+101% yoy) thanks to positive land sale progress of Long Hau 3-phase1 Industrial Park (LHG-p1 IP). We expect LHG to record NPAT-MI of VND 18bn (-72% yoy) and VND 288bn (+45% yoy) in Q4 and whole year 2021, respectively.
- In 2022, the industrial park (IP) segment continues to be the main growth driver thanks to the growth of rental area and average selling price (ASP). As a result, revenue and NPAT-MI are expected to grow strongly in 2022, estimated at VND 907bn (+17%) and VND 369bn (+28%) respectively. EPS is estimated to be VND 6,928 per share accordingly.
- Long Hau 3 Industrial Park – Phase 2 (LH3-p2 IP) and An Dinh IP are completing legal procedures. We expect the above industrial zones to be ready for lease by 2024.
- Based on the total valuation method (SOTP), we recommend accumulate LHG with an estimated target price of VND62,300 per share, which translate to expected return of 12.9% (compared to the closing price of January 10, 2021). LHG has 2022 forward PE valuation of 7.5, and forward PB valuation at 1.7.
Real estate – Clear recovery in supply in Q4 2021
10-01-2022
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: Real Estate
: Tran Hoang The Kiet
Tags:
- The HCMC residential market in the last quarter of 2021 surged after the severe lockdowns in Q3 2021. There was a sharp increase in launched and sold units (7,951 units, +126% QoQ and 5,679 units, +93% QoQ, respectively) in condo segment according to DKRA. However, on a full year basis, new supply fell to a five-year low as the number of newly launched units and sold units decreased 22% and 29% YoY, respectively.
- In 2022, we believe that the residential real estate industry will be relatively positive driven by the (1) Step-by-step recovery in supply and (2) Booming infrastructure development in upcoming years.
- Step-by-step recovery in supply. The slow-moving licensing procedures issue would be less severe given the government’s effort in issuing many important decrees/laws in 2021 (c. shortening construction permits granting time). In addition, the high vaccination rate also helps investors to be more confident in organizing offline sale events and contributing to the supply growth of overall market.
- Booming infrastructure development in upcoming years. The total estimated budget for the medium-term public investment plan for the 2021-2025 period is VND 2,870 Trillion (or USD 120 Bn), an increase of 43% compared to the period 2016-2020 (VND 2,000 Trillion, or USD 87 Bn). Developers who have clean land banks in areas having several nearby infrastructures as HCMC, Ha Noi and satellite cities will benefit from the price spike, leading to better ASP.
Power industry - Thermal plants come back
07-01-2022
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: Utilities
: Nguyen Ngoc Thao
Tags:
- The draught is expected to come back as the El Nino probability is gradually higher for 2022, indicating that thermal plants are going to enter a brighter phase.
- Coal thermal plants in the Northern part of the country are expected to benefit sooner than that in the Southern part based on the weather forecast and economic recovery.
- High contract volume in 2022 will ensure thermal companies’ profit. Furthermore, it will capture high price in CGM to earn profit. Hence, earnings from the thermal group are expected to grow in 2022.
FMC – 2021 preliminary results: Earnings beat the guidance
06-01-2022
: FMC
: Fishery
: Loan Nguyen
Tags:
- We maintain our target price of VND 61,000 and have an ACCUMULATE rating for FMC, implying an expected return of 19% on one-year investment horizon, based on the closing price on Jan 06th 2022. We think FMC will be suitable for investors looking to invest in a seafood company with profits that are less volatile compared to the industry and grow steadily year over year.
- FMC announced its preliminary results for FY2021 with export revenue of USD 213 Mn (~VND 4,900 Bn, +12% YoY) and EBT of VND 280 Bn (+18% YoY).
- Key drivers of FY2022-2023 earnings growth are: (1) favorable shrimp sector prospects driven by high demand and the US antidumping duty on Indian shrimp, (2) selling prices to grow faster than raw shrimp prices, (3) two new factories to start operating in 2022. We project revenue and NPAT to reach VND 5,698 Bn (or USD 248 Mn, +16% YoY) and VND 338 Bn (or USD 15 Mn, +28% YoY) in 2022.
MSN – Consumer ecosystem to lead core profit growth in 2022
05-01-2022
: MSN
:
: Toan Dao
Tags:
- We recommend to Accumulate on MSN with the total expected return of 8.7%, including nearly 0% cash dividend.
- We estimate Masan Group’s FY2022 core NPAT to be VND 6,795 Bn (USD 294 Mn, +40% YoY), driven by MCH (+17% YoY), TCB (+28% YoY) while VCM will make positive operating profit. We estimate this retailing chain to record VND 113 Bn in EBIT in FY2022 (versus VND -172 Bn in FY2021) with EBIT margin of +0.3% (+83 bps YoY) in FY2022.
- 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.
- To concentrate on the consumer-focused business, we expect that MSN will soon accelerate the capital divestment from MSR to no longer be exposed to the non-consumer business. In addition, the cash proceeds from the animal feed segment’s spin-off and capital raising for The CrownX will be an important source for acquiring other leading domestic consumer brands to diversify the F&B product portfolio.
19-01-2022
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