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FMC – September revenue recovered strongly as expected

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image14-10-2021
: FMC
: Fishery
: Loan Nguyen
Tags:

  • We revise up our target price by 17% from the latest valuation to VND 55,000/share as we expect high shrimp demand and two new factories coming online in FY22 to accelerate NPAT growth of 26%/30% in FY22-FY23. With an expected cash dividend in the next 12 months of VND 2,000/share, the total return will reach 15% based on the closing price of October 14th, 2021. We recommend to ACCUMULATE
  • FMC’s export revenue rose 21% YoY in September driven by full capacity recovery. However, due to a significant drop in August revenue (-56% YoY), 3Q-FY21 export revenue declined 21% YoY to reach USD 56 Mn. In 3Q-FY21, we forecast revenue and NPAT to be VND 1,280 Bn (or USD 56 Mn, -21% YoY) and VND 58 Bn (or USD 2.5 Mn, -17% YoY), respectively.   
  • For 2021, we forecast revenue and NPAT to reach VND 4,980 Bn (or USD 217 Mn, +13% YoY) and VND 256 Bn (or USD 11 Mn, +12% YoY). The 2021 EPS will be VND 4,270 and 2021 forward PER will be 11.7x.
  • CP Vietnam - the largest animal feed company in Vietnam bought 16.56% of FMC’s shares, of which 9,18% stake was transferred from PAN Group. CP's participation is expected to fulfill FMC's value chain in the long run. 

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NKG – Positive signs from both foreign and domestic markets

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image13-10-2021
: NKG
: Materials
: Tu Pham
Tags:

  • Selling volume in the domestic market recovered from roughly 10,000 tons in August to roughly 20,000 tons in September. Meanwhile, export volume was stable at roughly 82,000 tons in September, of which 85%-90% were exported to Europe and North America.
  • The company sold roughly 275,000 tons of products in 3Q, rising by 32% YoY. Export volume increased strongly by 39% QoQ and 128% YoY to reach 224,000 tons in 3Q, contributing 81.5% to total selling volume.
  • NKG plans to expand the steel pipe production capacity from 180,000 tons per year (tpy) to 300,000 tpy and increase coated steel production capacity by 30% from 1.0 million tpy to 1.3 million tpy in 2Q/2022.
  • We adjust the 2021 NPAT forecast to VND 2.890 billion (USD 126.8mn, +28% compared to the previous projection) due to increasing gross margin in foreign markets.
  • Based on the FCFF and PER methods, we recommend investors BUY this stock with a target price of roughly VND 62,000/share. Together with a cash dividend in the next 12 months of VND 1,000/share, the total return is 30% as of the closing price of VND 48,550 on October 13th, 2021.

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VSH – Growth momentum from the Thuong Kon Tum plant

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image12-10-2021
: VSH
: Utilities
: Nguyen Ngoc Thao
Tags:

  • Volume in 3Q2021 was 328 mn kWh, two-and-a-half times more compared to last year thanks to the contribution from the Thuong Kon Tum plant and -37% QoQ.
  • Revenue in 3Q2021 is estimated to be VND 314 billion (or USD 14 mn), triple compared to the previous year, and lower than the previous quarter because the company fully provided electricity in 2Q2021.
  • Because of high fixed expenses including depreciation and interest, results in 3Q2021 will hover around the break-even point. The new contract price for the Thuong Kon Tum plant will be the company’s growth momentum in the future. The company is  negotiating with EVN and expects to apply a new price in 2022.  The new contract price and full year utilization from the Thuong Kon Tum plant in 2022 will boost 

 

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HDB – Credit growth is the key

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image11-10-2021
: HDB
:
: Thanh Nguyen Ngoc
Tags:

  • Contrary to the first year-half, credit growth was resilient in the third quarter while deposit growth slowed down. HDB has applied for a significant raise in credit growth quota in the fourth quarter, at over 25% in comparison to about 10% currently.
  • We maintain our conservative view on the provision buffer. However, we think the provisioning level will be sustained in the short-term despite the social distancing impact.
  • In spite of the decline in restructured debt at the end of August compared to the end of June 2021, we revise up our projections for credit costs for the 2021-2022 period. Hence, 2021-2022 PBTs are revised down, at VND 7,843 bn (USD 341 mn, +35% YoY) and VND 9,692 bn (USD 421 mn, +24% YoY), decreasing -3% and -6% respectively from the prior estimations. 2021 book value per share is at VND 14,290 while that of mid-2022 is VND 16,070. Combined with the sector’s decreasing growth momentum, we lower the target price by -2% to VND 28,800/share. This translates to an upside of 12% from the closing price of October 11, 2021 and an ACCUMULATE recommendation.

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KDH – 2022-2023 would be tipping point

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image08-10-2021
:
: Real Estate
: Tran Hoang The Kiet
Tags:

  • In Q2/2021, KDH achieved revenue of VND 1,112 Bn (or USD 49 Mn, +42% YoY) and NPAT-MI of VND 267 Bn (or USD 12 Mn, +5% YoY). For 1H 2021, KDH recorded revenue of VND 1,948 Bn (or USD 86 Mn, +31% YoY) and NPAT-MI of VND 472 Bn (or USD 21 Mn, +16% YoY).
  • Management expects to fully deliver Lovera Vista – key projects in 2021 units in Q4 2021 given the strict lockdown in HCMC, impacting the handover progress. Per managament, KDH has delivered 36% of total 1,310 units in this project.
  • We maintain our forecasts for 2021F/22F, with a NPAT-MI growth rate of +5% YoY/23% YoY, equivalent to respective EPS of VND 1,870/VND 2,302. We adjust our target price to VND 43,400/share by factoring the number of new shares outstanding when KDH sold treasury shares in September 2021, equivalent to NEUTRAL

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PGI – High profit growth will not be maintained in 2022

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image07-10-2021
: PGI
: Insurance
: Tam Pham
Tags:

  • 9M2021 gross written premium fell because of the pandemic. PBT surged 52% YoY owing to the sharper drop of health insurance sales, the product that has the highest expense ratio.
  • 2021 combined ratio is expected to keep improving like in 1H, meaning the insurance business is more profitable. However, we do not expect that to be maintained next year, as total sales will recover following the economic recovery and health insurance sales will rise from the low base of 2021.
  • We forecast sales and PBT for 2021 to be VND 3,336 bn (USD 145 mn, -5.3% YoY) and VND 294 bn (USD 12.7 mn, +35.7% YoY). For 2022, sales and PBT will be VND 3,595 (USD 156 mn, +7.8% YoY) and VND 229 bn (USD 10 mn, -21.7% YoY). Equivalent EPS for 2021 and 2022 are VND 2,253/share and VND 1,781/share, respectively. P/B forward for 2021 and 2022 are 1.4x and 1.3x.
  • We raise our target price from VND 22,800/share to VND 27,000/share. This translates to a NEUTRAL recommendation based on the closing price of October 7, 2021 and a cash dividend of VND 500/share within the next 12 months. Market price may rise in the short-term when  Q3 results are announced but the 2022 performance is not attractive for a higher valuation. Current PBR is 1.5x, higher than the average of 1.2x of the last three years.

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Nutrition segment – The rural market to lead the growth from FY2022

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image06-10-2021
:
:
: Toan Dao
Tags:

  • Spending value of dairy products grew 13% and 14% in the urban and rural areas, respectively, which we attributed to the change in consumer spending behavior amid social distancing. Liquid milk, yogurt, sweetened condensed milk, milk powder and fruity milk achieved the highest YoY and QoQ growth.
  • The rural market will become the key region driven by the fact that it remains a low spending value per household.

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Mexico’s competitiveness versus South East Asia

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image05-10-2021
:
: Macroeconomics
: Bernard Lapointe
Tags:

  • International trade and investment have been buffeted over the past three years by the US-China trade war, high-technology export controls and other economic sanctions targeting Chinese policies.
  • Firms needing to diversify from China are now considering whether to reorganize production across Asia or to shift investment out of Asia to shorten supply chains serving the US market. For those wanting to access the US market, Mexico seems like a natural choice. But is it? No.
  • Mexico needs to outcompete southeast Asian competitors if it is to benefit from new investments in manufacturing shifting from Asia.

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Asian markets equity performance year-to-date

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image04-10-2021
:
:
: Bernard Lapointe
Tags:

  • Equity returns ytd in Asia are all-over the place. North Asia and ASEAN offer mixed results. India outperforms.
  • Philippines’s uncertainty about President Duterte subsides as he announces that he retires from politics.
  • In ASEAN, Singapore 10-yr yields reach their lowest level in almost four months.

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HSG – Domestic demand is going to recover and exports can remain positive in FY2021-2022

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image01-10-2021
:
: Materials
: Tu Pham
Tags:

  • The company expects selling volume in September to be flat compared to August, reaching roughly 160,000-170,000 tons of products. The demand from foreign markets is still strong as the company is receiving orders for production in January 2022.
  • HSG’s NPAT can increase strongly in 1Q/FY2021-2022 as domestic demand is likely to recover after easing social distancing and.  Steel price movements in foreign markets are going to favor HSG.
  • We adjust FY2020-2021 NPAT forecast to VND 4,240 billion (-3.4% compared to the previous projection) and FY2021-2022 NPAT forecast to VND 4,500 billion (+26% compared to the previous projection).
  • We recommend to investors to ACCUMULATE this stock with a target price of roughly VND 52,000/share,  implying a total return of 12% as of the closing price on September 30th, 2021.

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HDC – Favorable outlook led by the Light City project.

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image30-09-2021
: HDC
: Construction
: Tran Hoang The Kiet
Tags:

  • In Q2/2021, HDC achieved revenue of VND 342.8 Bn (+65% YoY) and NPAT of VND 64.7 Bn (+78% YoY). For 1H 2021, HDC recorded revenue of VND 638.7 Bn (+78% YoY) and NPAT of VND 142 Bn (+83% YoY).
  • Management believes that HDC will exceed the target business plan of 2021 with a revenue of VND 1,300 Bn (+55% YoY) and NPAT of VND 256 Bn (+11% YoY). In which, the projects The Light City phase 1, Ngoc Tuoc 2 will make major contributions.
  • The 2021F EPS is estimated at VND 2,963/share based on management NPAT target, corresponding to a forward P/E of ~24.8x and P/B of ~4.9x (closing price on September 30, 2021). This is a relatively high level comparing to HDC's own 5-year average P/E and P/B at 9.2x and 1.4x, and the average P/E, P/B of industry at 15-16x and 2.4x, respectively. However, we will evaluate in more detail and come up with an appropriate valuation in the near future

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DGC – Yellow phosphorus price is skyrocketing, driving the stock price recently

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image29-09-2021
: DGC
: Chemicals
: Vu Tran
Tags:

  • 2Q2021 revenue of VND2,039bn (USD90.6mn) (+29.3% YoY) while NPATMI of VND322bn (USD14.3mn) (+26.2% YoY).
  • DAP is estimated to contribute the most to total sales in 2Q2021 as well as 1H2021.
  • ASP of P4 to improve in 2H2021 but the output may be lower owing to the Apatite shortage for production.
  • Long term catalysts from real estate project and Nghi Son project.
  • 3Q2021 net profit is estimated to increase by 90.6% YoY - 99.1% YoY to VND450bn – VND470bn (USD20mn – USD20.9mn). At this current price, DGC stock is being traded at PE trailing of 24x

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