FMC: Brighter outlook in 4Q21 driven by production recovery

• We revise up our target price by 16% from latest valuation to VND 47,000/share as we increase our 2021F-2022F NPAT-MI by 22% owing to positive shrimp demand and increasing selling prices, and a rollover of our TP to mid-2022. With an expected cash dividend in the next 12 months of VND 2,000/share, the total return will reach 10% based on the closing price of September 08^th, 2021. We recommend to ACCUMULATE.

Banking sector – Flattened credit growth sees short-term lending as the driver

• Credit growth was almost flat in July as well as in the first half of August. It picked up in the second half due to short-term lending. After a weak performance in July, deposit growth seemed to gain its momentum back in August.
• Credit and deposit growth were more resilient in Hanoi, contrary to the development in Ho Chi Minh City.
• Deposit growth is lagging our forecast while credit expansion is still on track. We standby until witnessing an unclouded prospect of the reopening strategy to revise our projections.

Inflation expectations

• Inflation expectations in the US have risen steadily.
• 10-year real Treasury yields are now negative.
• Big tech stocks have benefited from the recent rally in bond prices.

The latest University of Michigan survey showed a rise in long-term inflation expectations in the US. The survey’s 5-year inflation expectations rose from 2.8% in July to 3.0% in early August, matching the recent high reached in May (Figure 1).

PVS – Hit by gloomy upstream activities in the short term

• Q2021 revenue of VND3,063bn (-43.6% YoY) while NPATMI of VND152bn (-42.8% YoY).
• PVS recorded VND10bn for provisions in 2Q2021, translating to total provisions of VND20bn in 1H2021.
• JV profit was VND151 bn in 2Q2021, compared to VND129bn in 2Q2021.
• For 2021, revenue and NPATMI are anticipated at VND13,289bn (-34.1% YoY) and VND796bn (+27.5% YoY), respectively. 2021 EPS of VND 1,499 and 2021 book value of VND26,256.
• We recommend NEUTRAL for the stock with the target price of VND 24,400/share.

Steel industry update: Can coated steel exports remain positive until next year?

• Coated steel export volume emerged to net off the weak domestic consumption in July as expected. Leading coated steel companies, such as HSG, NKG, recorded strong export volume.
• We believe coated steel export volume to Europe will be robust until 2022 owing to favorable trade policies and increasing demand. Besides, competitive production costs can support the profitability in the mid-term. Challenges can come in 2023 as the EU plans to introduce carbon border mechanism.
• Construction steel and steel pipes consumption remained weak due to the pandemic. We expect sales volume will still stable at low level in August, similar to in July. Gross margins in the construction steel segment will decrease in 3Q.

MWG – 7M 2021 Update

• BHX reached EBITDA breakeven in Q2 2021 as stockpiling behavior  drove sales per store (quarterly SSSG: 15%) amid the wet market ban and stringent social distancing measures.
• Solid iPhone sales and big sport events helped TGDD/DMX to post a SSSG of 14% in the quarter.
• While the management is concerned about the outlook of TGDD/DMX chain as weak demand for non-essential products may linger even after social distancing is lifted, they expect the BHX chain to sustain the EBITDA breakeven level for the whole year.
• 7M 2021 revenue of TGDD/DMX and BHX have respectively accomplished 62% and 55% of our full-year forecasts, while net profit reached 66% of the forecast. 2021F projected revenue and NPAT are VND120,332 (11% YoY) and VND4,190 (7% YoY), respectively. Maintaining a BUY recommendation with the TP of VND 148,400.

QNS – Sugar price hike to continue in 2H-FY21

• We maintain a bright look on QNS’s business results in FY2021, driven by the leading role of sugar segment to lift the company’s overall income. On the back of global sugar production deficit and prospect of tax barrier imposed on five ASEAN countries excluding Thailand, we expect Vietnam’s domestic sugar price will keep its solid price hike in 2H-FY21.
• In 3Q-FY21, we estimate QNS’s revenue at VND 2,092 Bn (USD 91 Mn, +13% YoY) and NPAT at VND 279 Bn (USD 12 Mn, +19% YoY). Premised by sugar price increase of 43% YoY, sugar segment will maintain the earning pillar with VND 84 Bn (USD 4 Mn) in NPAT, accounting for 30% of the company’s total NPAT.
• FY2021 estimated revenue and NPAT to be VND 7,607 Bn (or USD 329 Mn, +17% YoY) and VND 1,275 Bn (or USD 55 Mn, +21% YoY) respectively, completing 95% revenue target and 140% NPAT target. Correspondent 2021 EPS will be VND 4,147, and 2021 forward PER will be 11.7x. In which, we estimate sugar segment to reach VND 1,909 Bn revenue (USD 83 Mn, +92% YoY) and VND 446 Bn NPAT (USD 19 Mn), versus VND -9 Bn (USD -0.4 Mn) in FY2020.
• Based on the 50%:50% valuation mix of DCF and SoTP, we recommend to ACCUMULATE QNS share at TP of VND 53,400, equivalent to expected return of 16% with 6% cash dividend yield.

A continued ramp-up in vaccination progress could help HCMC to reopen

• The quicker vaccination progress gives us hope for the future.
• The reopening will be uneven across different provinces.

The quicker vaccination progress gives us hope for the future

According to the Plan No. 2715/KH-UBND for Covid-19 Prevention and Control issued on 15 Aug, HCMC’s authorities aimed to control the pandemic with two phases. In the first phase (from 15 Aug to 31 Aug), the city will focus on reducing the mortality rate, ensuring that all serve cases are treated, expanding “green zone” and striving to control the pandemic in Can Gio, Nha Be, Cu Chi, Phu Nhuan, 5, 7 and 11 districts. In the second phase (from 1 Sep to 15 Sep), the city will strive to reduce fatalities and the number of severe cases by 20%, the number of hospitalized patients per day should not exceed the number of discharged patients per day and the number of hospitalized patients should not exceed 2,000 per day. In addition, the city set the target that until 15 Sep, 70% of the population (over 18 years old) receives the first dose of vaccination and 15% of the people receives the second dose of vaccination.

KBC - Growth slowed down in Q2 but remains strong for now

• Target price is revised up from VND 46,200/share to VND 48,100/share. We maintain BUY recommendation with a total upside of 33% based on the closing price of August 25, 2021.