NT2 – Benefiting from high Qc in 3Q2021

• 8M 2021 volume was 2,294 mn kWh, -27% YoY due to thermal industry difficulties. For the first two months in 3Q2021, volume reached 385 mn kWh, accounting for 67% of the contract volume. We estimate that the company will only provide roughly 50 mn kWh due to the low demand and its maintenance. Thus, we forecast that 3Q2021’s volume to be 435 mn kWh, lower than its contract volume of 907 mn kWh.
• 8M 2021 revenue was VND 4,149 bn (or USD 180 mn) -12% YoY. For 2 months in 3Q2021, revenue reached 948 bn (or USD 41 mn) thanks to high contract volume. Hence, PBT for 2 months in 3Q2021 was 145 bn while 3Q2020 was a loss.
• For the longer term NT2 will become a cash cow., It will pay dividends for shareholders owing to no investing activity and debt payment obligation. The company is going to pay VND 1,000 per share in 2020 dividends in Oct 2021.
• Our latest target price for NT2 is VND 22,900, we will update our new target price in the next report as the 3Q2021’s result and 2021’s EPS maybe higher than our previous forecast. For the current target price with VND 1,000 dividends will be paid in Oct, implying total return of 14% compared to the closing price on Sep 28^th, 2021 we recommend to ACCUMULATE this stock.

VHC – High fillet ASP boosted revenue to grow 19% YoY in August

• We revise up our TP to VND 60,000/share, driven by increasing fillet ASP to fully offset surging SG&A costs and high fillet demand to maintain its business growth in FY22, leading to a strong YoY NPAT-MI growth of 24%/32% in the FY21-FY22 period. With an expected return of 27% including a 2% cash dividend yield for a one-year horizon, we recommend to BUY.
• August revenue grew 19% YoY mainly driven by increasing fillet ASP (+25% YoY). We expect that VHC could recover its normal processing capacity in mid-Oct. In 3Q-FY21, we project revenue and NPAT to be VND 2,249 Bn (or USD 98 Mn, +25% YoY) and VND 233 Bn (or USD 10 Mn, +33% YoY), respectively.
• For FY21, we project revenue and NPAT to reach VND 8,771 Bn (or USD 381 Mn, +25% YoY) and VND 872 Bn (or USD 38 Mn, +24% YoY), respectively. Correspondent 2021 EPS will be VND 4,717 and 2021 forward PER will be 12.7x
• Preliminary POR17 anti-dumping duty results determined VHC to continue enjoying 0.00 USD/kg. NTSF will be granted a 0.00 USD/kg duty but we find that little effect on VHC because of already low tax of 0.15 USD/kg and insignificant market share in the US. ANV currently keeps the zero tax but it may be changed in the final POR17 results due to being subject to continued review.

HAH – Chartering services to primarily drive strong earnings growth in 2H-2021

• We expect HAH’s charter revenue to reach VND 185 Bn in 2H2021, rising by 346 % YoY, strongly backed up by doubling charter rates from Hai An East and leasing out one more vessel named Hai An West.
• Growth in average domestic transported volume per shipping trip will get tight in Q3-2021 due to strict distancing measures, followed by a recovery in Q4-2021. Meanwhile, export-import volume will decline in Q4-2021 as HAH cut off HCMC-Singapore service. Overall, we expect container transportation revenue to reach VND 500 Bn in 2H2021 (+6% YoY).
• Considering the strong growth of chartering segment, we project that revenue/ NPAT in 2021F will amount to VND 1,700 Bn (+ 43% YoY)/392 VND Bn (+ 183% YoY).
• HAH plans to sell 1.39 Mn treasury shares, equal 2.9% of total outstanding shares, leading to a diluted 2021F EPS of VND 8,035. The gain from selling treasury stocks will not be recorded in financial income. Applying PE target of 9.0x to 2021F EPS, we come up with a target price of VND 72,300, implying a total return of 20% based on the closing price Sep 24^th 2021. We then recommend “BUY” the stock.

FPT 8M 2021 Update: Global IT services continue to post positive signals. Domestic services are likely to pick up in Q4-2021.

• 8M-2021 revenue and PBT posted VND 21,842 bn and VND 4,005 bn, up 19% YoY and 20% YoY, accomplishing 63% and 61% of our full-year forecast.
• Tech sector revenue grew by 23% YoY to VND 12,476 bn in 8M 2021, while PBT jumped by 30% YoY to VND 1,805 bn on the back of an expanded PBT margin (+75 bps YoY). In which, global IT services led the growth in August (+23% YoY in PBT) given recovering demand from clients in the US (+49% YoY in revenue). At the same time, domestic IT services PBT’s growth rate decelerated to 4% due to strict social distancing.
• Pay TV’s profit and investment delays continued to prop up the telecom sector’s 8M-2021 PBT margin (+195 bps YoY), driving PBT to increase by 24% YoY.
• We maintain our forecasts for 2021F/22F, with a NPAT-MI growth rate of 24% YoY/19% YoY, equivalent to respective EPS of VND 4,828/VND 5,751. FPT is trading at a forward 2021F/22F P/E of 21.4x/18.0x. We reiterate our ACCUMULATE recommendation with a TP of VND 108,800.

TRA – Maintaining positive growth despite strict social distancing measures in 3Q

• Although strict measures were applied in key cities, Traphaco still performed well in 3Q. The company anticipates revenue and NPAT to be 560 billion VND (+22% YoY) and 70 billion VND (+37% YoY), respectively in 3Q2021.
• Revenue and NPAT in 9M are estimated at VND 1,585 billion (+21% YoY) and VND 195 billion (+38% YoY), completing 75% and 81% of the annual plan, respectively.
• The company sets an average annual growth target of 15% during the 2020-2025 period. Having high-quality products and a strong brand name, the herbal medicine segment will still be the main growth driver.
• The synthetic medicine segment can gradually play a more important role owing to the new factory and products transferred from Deawoong.

August exports decreased less than initially estimated

• FDI sector remained resilient despite of harsh Covid-19 restrictions.
• Tech exports were in the spotlight amid the pandemic headwinds.
• Are FDI companies moving out of Vietnam? Not really!

FDI sector remained resilient despite of harsh Covid-19 restrictions

According to Vietnam Customs, August’s export growth only dropped by 1.7% yoy and 2.3% mom compared to the previous estimate of 5.4% yoy decline by GSO. The FDI sector maintained positive export growth of 3.3% yoy in the face of pandemic headwinds. In contrast, exports of the domestic sector fall by 13.3% yoy due to the impact of the fourth outbreak. Imports continued to outpace exports, growing at 20.4% yoy but decreasing by 6.1% mom. The trade deficit narrowed to US$109mn, from US$1.2bn a month earlier. In 8M21, total exports and imports grew at 21.8% yoy and 33.5% yoy, respectively. The accumulated trade deficit was about US$2.3bn, compared to a surplus of US$13.7bn in the same period last year.

BID – Maintaining stable short-term outlook

• We expect BID to have stable credit growth momentum in the third quarter, reaching 8.0-8.5% YTD. The nationwide network helps the bank to survive the impact of social distancing in several regions.
• The 2021 annual provisions plan is adjusted upward to VND 24.3 trillion (USD 1.1 bn), up over VND 1 trillion from the previous forecast due to the latest pandemic outbreak. We also revise up credit costs for 2022 to factor in the additional provisions following the potential restructured loans and NPL. Therefore, we revise down the 2021-2022 PBT to VND 16,844 bn (USD 732 mn, +83% YoY) and VND 21,596 bn (USD 939 mn, +28% YoY) respectively.
• We maintain our conservative view regarding medium and long term prospect of the bank. However, BID is expected to have top-tier growth in 2H2021, which might drive the share price in short term. Book value per share is expected to reach VND 21,498 at the end of 2021. We adjust our target price to VND 40,500/share, down -2% from our prior valuation. This translates to an upside of +3% from the closing price of September 16, equivalent to a NEUTRAL recommendation.

Real estate market – Awaiting for excitement in a post-Covid-19 period.

• Market squeezed in Q3 2021 from strict lockdown given the escalation of Covid-19.
• Developers utilized online channel to sell their products.
• Market previously recovered quickly in post-Covid period, but the timing is strongly dependent on vaccination progress.

Equity market correction?

• The S&P 500 Index closed below 4500 on Friday (Sep 10). We look for a 31.8% Fibonacci retracement to 3750 (Figure 1) in the next few months. US stocks are overdone.
• The bond market is telling us that inflation is not a ‘transitory’ phenomenon, as various central banks are trying to say. It is a sticky issue.
• South Korea’s central bank raised its base interest rate late August after 15 months of keeping it at a record low. Brazil and Russia have already raised interest rates three times this year. China has been in a tightening mode while Mexico, the Czech Republic and Hungary have all just made their first moves in years.

GEG – Capacity expansion while earnings slightly increase because of oversupply

• Revenue and NPATMI are estimated to be VND 1,550 billion (or USD67 mn) and VND 273 billion (or USD12 mn), +4% and 6% YoY, respectively in 2021. EPS and book value in 2021 are forecasted to be VND 982 and VND 12,950, respectively.
• The three-wind power will commercially operate in 4Q2021 and will boost the company’s earnings in the medium term.
• The supply-demand imbalance in the power industry has curbed the company’s growth in 2021. Both current and incoming renewable energy farms continue being cut volume in this year. In 2022, the full-year utilization of wind power plants will drive the company’s earnings.
• We adjust our target price for GEG at VND 18,200 because of stock dividend (4%) and existing shareholders’ public offering (6%). It comes down to a 3% upside from the closing price on Sep 13^th.  Thus, we rate NEUTRAL for this stock.