PNJ 2M-2021 Results: Solid retail and gold bar sales led the growth

• Revenue jumped by +37.4% YoY to VND5.0Tn, primarily driven by significant gold bar sales of VND1.6Tn (+94% YoY) while retail sales hit VND2.6Tn (+15.9% YoY).
• Feb-2021 Retail sales growth accelerated to 21.5% YoY from 10.0% YoY in the previous month partly owing to surging promotion activities.
• Given the larger contribution of gold bar sales and higher marketing spending, GPM and net profit margin contracted by -3.8 pps and -1.8 pps, respectively, to 18.4% and 7.6%.
• 2M-2021 net sales/NPAT have completed 26%/30% of our full-year forecast. Pending a review on the current TP of VND 94,000, implying a total stock return of 14% consisting of a 2% dividend yield, as of Mar 24^th, 2021.

VHC – 2021: Profit recovery may be limited due to pressure in the pangasius segment and the product diversification strategy

The US market will lead the pangasius segment's growth in 2021. Volume increase will be the main factor driving sales growth, while pangasius selling prices will only recover slightly. Profit margin will shrink under the pressure of high raw material prices due to the material shortage and rising feed prices. The year 2021 is also a pivotal year for the product diversification strategy with large investments and expenses. We are going to reflect the effects of the new strategy on the stock valuation when detailed information is revealed. At this point in time, our valuation for VHC is around VND 46,200/share. With an expected cash dividend in the next 12 months of VND 1,000/share, the total return will reach 14% based on the closing price on March 23, 2021. We recommend ACCUMULATING VHC.

Robust trade growth in 2021 thanks to the US stimulus and the vaccine rollout

• Buoyant trade growth in Jan-Feb 2021.
• Manufactured products were a major reason for the surge of exports.
• Uneven recovery of external demand.
• The US stimulus package will be a boon for Vietnam’s exports.

BID – Expecting robust growth in 2021, but issues remain

• BID sets a target for 2021 PBT at VND 13,000 billion, credit and mobilization growth at 10-12% and 12-15% respectively.
• We estimate that BID could reach VND 13,300 billion in PBT or even higher.
• The capital raising is pivotal, but we think the enhancement in asset and growth quality is more crucial for a sustainable expansion.

PVB – Staying idle until large projects kickstart

• 2021 results will depend mostly on minor projects outside of the Oil & Gas industry.
• Long-term prospects rely on major domestic projects, which are expected to remain idle until 2022.
• Some quarters might experience weak bottom line.

Worth monitoring inflation expectations

Two measures of inflation expectations, the US 10-year breakeven inflation rate and the US 5-year 5-year forward inflation expectations are now at their highest level since August 2014 (Figure 1). It is perhaps sending a message that long-term bond yields are heading higher.

NLG –Stake divestment at Waterfront boosted 2020 profit

• A 34.9% stake divestment at Waterfront has primarily driven 2020 results amid the scarcity of product handover.
• Financial income continue to be the profit driver in 2021 as NLG expects to transfer a 50% stake in Dai Phuoc and revaluate current shares at Dong Nai Waterfront following an additional 30% stake acquisition recently.
• Key deliveries in 2021 include Akari, Southgate and Can Tho projects.

DCM – 1Q2021 to Surge due to High Fertilizer Selling Price

The input gas price for urea production is recovering rapidly but due to its weight of 60% in the production cost of Ca Mau Fertilizer (DCM), the adverse impact will be partially limited. For the output, the selling prices of urea have risen sharply following world prices because of the supply shortage from China while the demand for global agricultural production is returning quickly. We believe that DCM's results could grow dramatically in 1Q2021 with revenue and profit after tax increasing by 32% YoY and 99% YoY, respectively. However, fertilizers selling prices in the following quarters will likely decrease gradually while oil prices will remain high or continue to increase, gradually reducing the positive effect on profits.

According to the high-profit scenario of 1Q2021, the most recent 12-month EPS at the end of 1Q2021 will reach VND 1,435/share and DCM's stock is trading at a trailing PER of 12x, approximately the five-year average. As investor sentiment is being supported by the information of high fertilizer prices, we expect the trailing PER to reach a similarly high level as in 2020, 13.5x, corresponding to a target price of VND 19,300/share in the short term. Valuation could decrease gradually when fertilizer prices cool down.

Semiconductor stocks. Where are we?

• In the current context of semiconductor having performed so well in the past 15 months and being way above their 200-EMA, we think a correction/ retracement is necessary.
• The semiconductor industry was one of the most insulated from the Covid-19 crisis in 2020.
• There will be a better time to buy some of these stocks in the next few months. Our favorites remain Xilinx, TSMC and ASML.

NKG – Favorable steel price and strong export to Europe and North America will boost NPAT in 1H

We think increasing HRC price and a high export volume to European and American markets, which have high profitability, will boost NKG’s performance in the 1H. Because factories will run at full capacity until June, NKG’s selling volume can reach 400.000 tons in 1H, growing by 35% YoY. The quarterly HRC average price is expected to increase by roughly 17% QoQ in 1Q, which will support NKG’s gross margin at roughly 9%  this quarter, which will be similar to that in 4Q2020. Therefore, we expect  NPAT will not be lower compared to 4Q2020. For 2H, NKG’s performance can be highly uncertain as the HRC price is at a high level and highly volatile. Regarding its financial health, we think NKG is becoming safer as its long-term debt decreased by 31%, and the interest burden also decreased as interest expenses fell by 17% YoY in 2020.