FRT – Long Chau persists its riding role for FRT’s performance in 2024
20-03-2024
: FRT
: Retailing
: Hung Nguyen
Tags: Retailing FRT
- In Q4-2023, FRT's net revenue and NPAT-MI recorded VND 8,690 bn (or USD 364 mn, +5.5% QoQ, +2.7% YoY), and VND -101 bn (net loss of Q3-2023: VND -13 bn), respectively, resulting in 2023 EPS of VND -2,375. It is due to (1) one-off costs regarding FPT Shop closure and inventory expiration processing, and (2) higher-year ago bonuses related to strong performance of Long Chau.
- In 2024, we project that the company's net revenue will reach VND 41,619 bn (or USD 1,741 mn, +38.0% YoY) and VND 304 bn (or USD 12.7 mn), respectively, resulting in an EPS of VND 2,229. It is driven by (1) the rehabilitation of ICT demand from the 2023 low-base for both revenue and profit margin and (2) the increasing coverage of Long Chau into tier-2,3 provinces with higher performance in each store.
- Based on the Sum of the Parts (SoTP) valuation method, we have revised our target price for FRT to VND 139,500 per share, up from VND 112,800 per share, on the pillars of (1) raised number of store count to over 3,050 stores by the end of FY27; and (2) revise up Long Chau’s target FY24 P/S from 0.60x to 0.85x on the new expansion plan of Long Chau (enter new market – tier 2,3 provinces).
- FRT’ stock price has increased by +46% from Dec-2023. Therefore, we suppose that the growth expectations of FRT has partly reflected on its stock price movement. We have NEUTRAL recommendation for FRT stock, downgrading from ACCUMULATE level in our previous report
Steel industry –Domestic sales to to be the key driver
19-03-2024
: HPG, HSG, NKG
: Materials
: Lam Do, CFA
Tags: NKG HPG HSG
- Overall, 2023 was still a challenging year for the construction steel sector, when domestic consumption decreased by 11% YoY. However, there have been signs of recovery in demand, whereas in 2H2023, consumption output recovered (especially in the fourth quarter) which is the peak construction period, along with demand for materials from public investment projects. For hot rolled coil (HRC) and downstream products (coated steel sheets, steel pipes), sales volume maintains positive growth in 2023, driven by demand from foreign markets (ASEAN, EU, USA).
- For 2024, we expect the domestic demand to be the key driver for output growth, especially in 2H2024, as: i/ The successful launch of residential projects (especially in 2H2024) will be a factor in promoting construction activities, and thereby increasing demand for steel products; ii/ Key infrastructure projects have started the construction phase, and major items in projects (bridges, elevated roads, etc.) will consume construction steel.
- In terms of profits, with the expectation that i/ Raw material prices may cool down and trade in a narrow range, ii/ Maintaining a conservative inventory policy, steel companies are expected to record double-digit growth, compared to low levels in 2023 (no longer affected by inventory write-down provision as in the 2H23).
- We believe that steel enterprises are entering the "early recovery" phase, when the industry's prospects for consumption and profit margin management have bottomed out and are gradually recovering in line with the economic cycle. However, due to the "commodity" factor and high beta characteristics, the stock prices of steel companies often fluctuate, followed with HRC price volatilities. Therefore, when trading stocks in the steel industry, investors need to pay attention to fluctuations in China HRC prices, which can potentially affect global HRC prices, in general, and Vietnam HRC prices, in particular. HPG (Accumulate, TP: 33,000 VND/share) is our favorite stock for long-term investment, while HSG (Accumulate, TP: 23,600 VND/share) and NKG (Neutral, TP: 23,000 VND /share) are stocks that investors can trade flexibly in short-term due to HRC price volatilities
Trade outperformed in 2M2024 thanks to low base effects
18-03-2024
: VDS
: Macroeconomics
: My Tran
Tags: VDS
- Trade outperformed in 2M2024 thanks to low base effects.
- Exports of technology products led the recovery.
- Low base effect supports double-digit trade growth in 1H2024
Prospect for a reversal in the BOJ’s policy
15-03-2024
: VDS
: Macroeconomics
: Luan Pham
Tags:
- Japan demonstrates resilience in keeping inflation above the 2% target.
- Wage-price spiral in Japan.
- BOJ is leaning toward exiting negative rates by March – April.
MBB - Stronger Operating Income in 2024
14-03-2024
: MBB
: Banking
: Chinh Dang
Tags:
- In Q4/2023, MBB recorded total operating income (TOI) of VND 11.75 trillion (USD 475.71 million), nearly flat compared to the same period last year. Net interest income (NII) was VND 9.1 trillion (USD 368.03 million) (-4.8% YoY. Meanwhile, non-interest income grew by 21.9%, driven by (1) fee income of VND 1.4 trillion (USD 56.99 million) (+19% YoY) attributed to payment activities compensating for the decline in insurance operations, and (2) other non-interest activities amounting to VND 1.1 trillion (USD 44.32 million) (+26% YoY).
- For the full year 2023, MBB maintained high growth compared to the industry average thanks to cost reductions as total income growth slowed down, with CIR decreasing by 100bps and credit costs by 77bps compared to 2022. Consequently, total operating income and profit before tax (PBT) for the year were VND 57.9 trillion (USD 2.343 billion) (+3.8% YoY) and VND 26.3 trillion (USD 1.064 billion) (+15.7% YoY), achieving 101% of the bank's profit plan.
- In 2024, we estimate that total operating income will see double-digit growth from the low base of 2023, reaching VND 58.2 trillion (USD 2.344 billion) (+23.1% YoY). Accordingly, we expect most of the bank's core business segments to excel in 2024: (1) Net interest income is forecasted to increase by 26% YoY due to sustained credit growth at high levels and a slight NIM recovery from the second half of 2024; (2) Non-interest income is projected to grow by 6% thanks to brokerage and payment activities compensating for insurance operations (especially life insurance, which requires more time to recover). In the long term, with the advantage of a large corporate customer base in key sectors of the economy, we expect MBB to maintain a compound annual growth rate of profit after tax (5Y CAGR) for the period 2024-2028 at 23% and ROE to remain above 20% as economic activities pick up. Therefore, we have raised our 12-month target price for MBB to VND 28,200 /share and recommend BUY the stock for medium to long-term investment objectives, with a potential return of 20% compared to the closing price on March 14, 2024.
MWG – Triple-digit net profit growth expected in 2024
13-03-2024
: MWG
: Retailing, Consumer Staples
: An Nguyen
Tags:
- We suppose that MWG‘s performance will return to positive growth in 2024 on the back of economic recovery. In detail, we believe that BHX will be the driver of sales growth while TGDD/DMX‘sales will recover at a modest rate. Besides, we forecast that MWG’s investment highlight in 2024 to be profit margins expansion. 2024F sales and NPAT-MI of MWG are VND124,854 bn (or USD5,159 mn, +5.6% YoY) and VND1,729 bn (or USD71 mn, +931% YoY), respectively.
- For 2024, we forecast BHX’sales to grow by +24.5% YoY to VND39,316 bn (or USD1,625 mn), supported by increases in both average sales per store and number of stores. Equipped with cost optimization strategies, we predict that BHX will reach NPAT break-even point in 2024 after experiencing losses in the last 6 years.
- For 2024, we adjust up MWG's target price to VND58,500 from VND51,500 using the SoTP method, based on (1) Increase 2024 NPAT-MI to VND1,729 bn (+931% YoY); (2) Raise targeted P/S of BHX to 1.4x; and (3) Reduce WACC to 10.7%. Adding cash dividend of VND500, the 12-months expected return is +23% compared to the closing price on Mar 12th 2024. We believe that if BHX convinces investors about the ability to grow, MWG’stock price will attract abundant cash flow. In short, we recommend BUY this stock for the long term.
VHC – Net profit Q4-2023 in bottom and expect to growth from US market
12-03-2024
: VHC
: Fishery
: Hien Le
Tags:
- Net revenue in Q4-2023 reached VND 2,396 bn (or USD 104 mn) (-4% YoY; -11% QoQ) as the increase of export volume cannot offset the decrease in selling prices. The main reason for the decrease in net profit after tax of the parent company (NPAT-MI) by 75% YoY to VND 48 bn (or USD 2 mn) was the decrease in selling prices.
- In 2023, net revenue reached VND 10,039 bn (or USD 436 mn) (-24% YoY), and NPAT-MI reached VND 897 bn (USD 39 mn) (-55% YoY). EPS 2023 was 4,880 VND (-55% YoY).
- In 2024, we expect revenue to reach VND 11,487 bn (+14% YoY), mainly due to increased production as (1) the supply is reduced by the US ban on Russian-origin fish and the EU's 13.7% tax on Russian fish products, and expandation of C&G. Gross profit margin increase from 14.4% in 2023 to 18.9% which help NPAT-MI in 2024 is expected to reach VND 1,414 bn (or USD 61,4 mn) (+58% YoY). EPS 2024 is estimated at 6,301 VND (after stock dividend of 20% in Jan 4th,2024).
- We have raised the target price to VND 71,500 per share, a 13% increase from the previous target price (62,800 VND - adjusted price after the 2023 dividend). The current target price is now 4% lower than the closing price on March 12, 2024. We recommend NEUTRAL this stock.
SCS – New Major Customer to Drive Strong Growth In 2024
11-03-2024
: SCS
: Logistics
: Tung Do
Tags: SCS
- We revise 2024 forecasts for revenue and net profit upward by 21% and 14%, respectively, compared to the previous forecast, to VND 911 billion (+29% YoY) and VND 609 billion (+22% YoY).
- The main reason for this adjustment is the addition of a new major customer, Qatar Airways, since February 2024. We anticipate that this development, coupled with the recovery trend in international trade activities, will drive a 30% YoY growth in SCS's international air cargo volume in 2024.
- The gross profit margin is projected to improve by approximately 2.4 ppts compared to 2023, reaching 78.3%. This improvement is attributed to the increased share of international cargo to 75%, up from 72% in 2023, and additional revenue from concession fees charged to airlines.
- Based on the P/E and FCFE valuation methods, we estimate the fair value of SCS to be VND 90,300 per share. Considering a 50% cash dividend, the total expected return is 20%. We recommend a BUY rating for SCS
NT2 – Turn negative
08-03-2024
: NT2
: Power
: Hoai Trinh
Tags:
- In 2024, gas-fired power is predicted to account for a smaller share of total power output. According to Plan 4A, the Ministry of Industry and Trade's strategy for 2024, coal power is expected to be used at a reasonably high rate. This estimate is backed by the steady stabilization of coal prices during a period when no new major power plants have been constructed. In contrast, the percentage of gas power is expected to fall by 12% compared to the actual power generation capacity mobilized in 2023, owing to a drop in the supply of gas for electricity production.
- 2024 is expected to be a challenging year for NT2. Based on the 2024 electricity market operation plan, we project that NT2's total power production in 2024 will be 2.3 bn kWh, a 22% decrease YoY. Assuming contracted electricity output (Qc) of 2.0 bn kWh (below the multi-year average) and an average gas price of 9.1 USD/mm BTU (an increase of 0.9% YoY), we expect NT2 to report net revenue of VND 5,047 bn (USD 206 mn) (+20% YoY) and a net loss of VND 87 bn (USD 4 mn).
- We are downgrading our recommendation for NT2 from NEUTRAL to REDUCE. By combining two valuation methods, the Dividend Discount Model (DDM) and the Discounted Cash Flow (DCF) analysis (equally weighted at 50/50), we have revised our target price for NT2 to VND 22,100 per share, down from VND 23,900 per share, following a reassessment of its business performance outlook for the 2024-2028 period
VTP - Improving service quality is the key to growth
07-03-2024
: VTP
: Logistics
: Quan Cao
Tags: VTP Logistics
- In Q4-FY23, revenue and NPAT were VND 5,107 billion (-3% YoY) and VND 104 billion (+9771% YoY), respectively. In which, The revenue of the service segment (delivery and logistics) reached VND 3,004 bn (+27% YoY) and commercial revenue was VND 2,102 bn (-27% YoY).
- For 2024, VTP sets revenue and PBT targets at VND 13,000 VND (-34% YoY) and VND 480 bn (flat compared to the SPLY), respectively. Despite double-digit negative revenue growth, PBT is expected to stay flat as VTP plans to shut down the unprofitable phone card business.
- Based on the 2024 projections, VTP is currently trading at a forward P/E ratio of 24.2x, equivalent to a standard deviation compared to the mean 5Y. We believe that the current valuation already reflects the growth potential of VTP in 2024, along with the catalyst of listing on the Ho Chi Minh City Stock Exchange. Therefore, investors should observe further before making a decision to invest in VTP stocks.
DGW – Preparing to ride the wave of ICT recovery in 2024
06-03-2024
: 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
05-03-2024
: 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.
20-03-2024
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