Update on HDG 6M 2021 – Energy sector stayed strong

• 6M 2021 preliminary performance: Per management, HDG estimated its 6M 2021 revenue and NPAT of VND 1,765 Bn (-39% YoY) and VND 549 Bn (-22% YoY), completing 36% of revenue and 44% of net profit target. The lower performance was mainly caused by the real estate sector (-56% YoY) as HDG delivered fewer units of Hado Centrosa in 6M 2021 versus the same period last year.
• Real estate: This segment recorded revenue of VND 932 Bn (-56% YoY) from delivering 210 units at Hado Centrosa. For 2H 2021, management expects to record revenue of VND 200 Bn from 31 remaining units and VND 1,500 – VND 1,900 Bn revenue from Hado Charm Villas. HDG also expects to launch the sale of 221 units in Charm Villas and 35 units of CC1 in 2H 2021.
• Energy: The energy segment experienced a solid performance with revenue of VND 557 Bn (+63% YoY) thanks to the stable operation of existing hydro power plants given the favorable weather condition in 6M 2021. Power plants including Dak Mi 2, Song Tranh 4 and 7A Thuan Nam are expected to come online in Q3/2021 and generate revenue of VND 220 Bn.

KSB – Waiting for strong growth from construction stone and industrial park segments

• Estimated 1H2021 revenue and PBT respectively came at VND 580 billion (-16% YoY) and VND 160 billion (-20% YoY), completing 48% of the revenue target and 46% PBT target.
• KSB has applied for a new license for the Tam Lap quarry phase 1 and expects to be approved in 3Q2021. This quarry can provide 1.2-1.4 million m3 of stone in 2022.
• KSB has compensated roughly 20% of Dat Cuoc Industrial Park – Phase II land area and expects to lease Phase II land from 2022.

GMD 2021 AGM Note: Upbeat results from key terminals

• The AGM approved 2021 business guidance with PBT is targeted to grow at least by 23% YoY and raised cash dividend per share by 20% to VND1,200.
• New scheme for ESPP over 2021-25 vs the previous one over 2014-18.
• We are pending a comprehensive review on GMD as preliminary Q2-2021 business results are better-than-expected. Thus, the current target price of VND 43,600 is under review.

REE – Consolidate VSH in 2Q2021

• Revenue is going to grow thanks to VSH contribution from 2Q2021 because REE just raised its ownership from 49.52% to 50.45% in May. This consolidation is going to boost REE’s revenue yet NPAT contribution nearly unchanged.
• NPAT contribution from VSH is estimated at roughly VND 100 billion (or USD 4 million) during 2021.
• This consolidation might impact REE’s financial leverage given the high leverage of VSH.

TCB – Expecting strong organic growth

• We expect TCB to sustain its earnings trend as credit growth reaches the ceiling and NIM continues to outperform on a year-on-year basis. 2Q2021 PBT is projected at VND 5,671 bn (USD 247 mn, +57% YoY), attributed mainly to the total operating income (+51% YoY).
• We raise the forecast for 2021 PBT to VND 20,437 bn (USD 889 mn, +29% YoY), up 9% from our prior projection, mainly due to controlled credit costs and strong performance in settlement.
• The long-term valuation component is revised up 36% as we roll the price target end date to mid-2022 and raise the terminal multiple due to better sustainable ROE. Combined with the recent rally of banking stocks driving up peers’ valuation, we adjust our target price to VND 67,000/share, 32% higher than our last target. This translates to an upside of 27% from the closing price of June 30, equivalent to a BUY recommendation.

Steel industry update - Flat steel segment outperformed

• Steel consumption has increased positively in 5M2021 YoY in all major segments.
• In construction steel, sales volume grew at a high pace in 5M2021, but the domestic demand can become weaker in the June-September period due to seasonality, high selling price, and COVID-19’s negative impact.
• In the coated steel segment, sales volume has increased strongly in 5M2021 due to strong demand overseas. Exports can remain strong in 2H2021 owing to favorable demand, prices, and trade policies.
• We raise our target price on HPG from VND 50,100/share to VND 55,200/share to account for the better prospect in the hot-rolled coil segment.

Update on credit growth in 1H2021

• Softening credit momentum due to the latest Covid-19 outbreak.
• Credit access by SMEs remained weak in 1H2021.
• More customers received loans with preferential interest rates from banks.
• The SBV remains focused on targeting credit expansion.

Industrial Parks – Vietnam has lots of opportunities to attract more FDI, helping industrial park companies grow

Vietnam has some strong points which presents it as a good option for investors. Therefore, we expect that there will be an increase in FDI flowing into Vietnam in the coming years and IP companies will benefit from this. In the next couple of years, companies owning big land bank in Hai Phong and Vung Tau may have chances to lease out their land quicker than expected with better leasing price. Meanwhile, in the long term, expanding land bank is a sustainable way to develop instead of waiting for leasing price to increase over time.

TCM – 5M2021 Update: Surging Costs Eat Into Profit

• 5M2021 revenue and PAT came at USD 67.5 mn (+19% YoY) and USD 1 mn (+37% YoY). Net margin has kept the downward  trend  from the beginning of the year,  from 7% in Jan to 5.2% in May. Surging garment material costs and transportation costs are the causes.
• The completion rate of 2021 plan is currently 38% in revenue and 33% in PAT. Thereby, it is higly possible that TCM will not achieve its 2021 guidance.
• We forecast 2021 revenue and PAT at VND 4,185 bn (~USD 182 mn, +20.6% YoY) and VND 192 bn (~USD 8.3 mn, -30.3% YoY). The stock is trading at PER 21.5x, far higher than its average PER 7.7x of the 2016-2019 period. Given PER forward of 2021 and 2022 are 35.9x and 20.7x and CAGR of revenue and PAT of 2020-2025 are 8.3% and 11.2%, the stock is overvalued. Thereby, we recommend to OBSERVE.