GEG – 3Q2020 Update: Attempting to reach its 2020 target

Revenue in 3^rd increased by 21% YoY and 17% QoQ thanks to hydropower bouncing back and contribution from the rooftop solar power segment. EBIT increased 20% YoY and 7% QoQ due to higher increase of COGS and selling expenses. More importantly, financial expenses surged by 31% YoY, 18% QoQ. Financial expenses increased due to the Truc Son project. This was generated by a prepayment penalty of VND 470 billion on that project.  It will eventually benefit the company with interest rates down by 2%, thus expenses will fall in the following quarter. Year to date the company has completed 67% and 62% of its target revenue and NPAT, respectively. (Table 1)

ACV – Waiting for the recovery

Q3-2020 revenue and net profit of ACV fell considerably by 69% YoY and 94% YoY, respectively. Accumulated 9M-2020, revenue and net profit plummeted by 55% YoY and 77% YoY, respectively. ACV’s Q3-2020 results relatively better than our previous quarterly forecast.

We estimate total passenger volume in Q3-2020 decreased sharply by 48% YoY. Accordingly, international pax plummeted 99% YoY, reaching nearly 70 thousands pax, but advanced by +20% QoQ primarily due to repatriate flights. Meanwhile, domestic pax extended its of recovery, rising 28% QoQ but still decreasing by 30% YoY, and reached 14 million pax (99% of ACV’s Q3-2020 total pax volume). The Q3-2020 growth rate of domestic volume was less severe compared to Q2-2020’s decrease of nearly 50% YoY.

VSC – Q3-2020 Update: Recovery process

VSC announced its Q3-2020 results with the visible recovery process compared to the previous quarter. Total revenue reached VND 429 billion (-6% YoY, + 9% QoQ). Operating profit and EBT recovered, reaching VND 81 billion (-6% YoY, + 16% QoQ) and VND 86 billion (+1% YoY, +17% QoQ), respectively. Accumulated 9M-2020, net income increased by 20% YoY compared to the low of FY2019.

Fertilizer Industry – New VAT Policy: Benefits are not for everybody

The Ministry of Finance has proposed to the government the draft of the amendment to Tax Law No. 71, in which fertilizer is changed from being not liable to a value-added tax (VAT) to become liable to a VAT of 5%. The draft is going to be discussed and ratified in the ongoing Session 10, National Assembly XIV. If ratified, the new law will come into effect on January 1^st, 2021. We expect the new policy to be a historical breakthrough for the industry, enhancing domestic companies’ competitiveness with imported fertilizer to support a sustainable growth. However, not all companies could benefit from the new policy. It will depend on their types of business and products.

FPT Q3-2020 AM: Growth decelerated due to subdued backlog value signed in the 1H-2020

FPT’s revenue grew by 6%, amounting to VND 7,553 bn, while NPAT went flat at VND 929 bn in Q3-2020. Accumulated 9M-2020, PBT was generally in-line with our estimate, reaching VND 3,814 bn (+9% YoY) and completing 75% of our full-year forecast.

TCB - In hope of robust growth in the next quarter

We expect TCB to maintain good results in Q4 and look forward to solid earnings growth in 2021. In 9M the bank had moderate credit growth, compared to the “room” given by SBV. However, growth in income was still robust. TCB also took prudent action to write off bad debts and record extensive provision expenses. This will relieve some pressure on NPL and LLR, in precaution for probable bad debt formation in the Q4. We think TCB will be resilient to this crisis and be able to recover strongly upon the end of the pandemic.

STK – 3Q2020 Update: Recovery better than expected

The strategy of focusing on recycled yarn continues to prove its efficiency amid the adverse effects of the pandemic. Given the better-than-expected recovery of the yarn demand in 3Q2020, especially recycled yarn that has been backed up by the accelerating “green-lifestyle” post-pandemic, we revise up our target price for STK from VND 15,600/share to VND 18,700/share. With an expected cash dividend of VND 1,500/share in the next 12 months, the total return is 14%. We recommend to ACCUMULATE this stock.

Highlights from the year-end meeting of the National Assembly

The 10^th session of the 14^th tenure of the National Assembly (NA) opened on 20 Oct 2020 and is scheduled to last for more than three weeks until 17 Nov 2020. As usual, the year-end meeting will focus on reviewing socio-economic development in 2020 then the NA will decide important matters related to socio-economic issues and the state budget for the next year. The main points of the reports that have been submitted to the NA can be summarized as follows:

VTP – Viettel Group’s divestment and VTP’s competitive advantage assessment

HNX announced  that on November 11^st, 2020, around five million shares of VTP will be publicly auctioned on HNX with a starting price of VND 105,500 per share, up from the previous starting price of VND 104,800 per share. Thus, the divestment rate is 6% of VTP's charter capital, equivalent to the total starting value of about VND 530 billion. We believe that Viettel Group's divestment would attract little attention from potential strategic investors due to its relatively low divestment rate and lack of information about next phase of Viettel Group’s divestment.

High service coverage with extensive postal network reaching rural areas is the core competitive advantage of VTP in providing traditional delivery service. However, for e-commerce last-mile delivery service in Hanoi and Ho Chi Minh City, VTP is losing its market share to start-up companies.

We appreciate VTP's strategy of focusing on fulfillment technology instead of developing their warehouses network and participating in burn-money race in providing delivery service for e-commerce companies. 

VPB – 9M2020 – Growth led by the parent bank

VPB achieved a 30% PBT YoY growth in 9M2020 (+15% normalized), with mostly flat YoY earnings in 3Q upon downside impact from the virus. The 9M growth was predominantly led by the parent bank, who’s normalized 9M profits (excluding dividend income and VAMC provision) expanded by 32% YoY. Meanwhile, FE Credit is estimated to shrink by 9% YTD due to impacted NII, fee income and asset quality. This is pretty much in line with expectations, though.

Our current target price for VPB is VND27,000, equivalent to an 11% upside compared to the current market price. This translates to an ACCUMULATE recommendation. We will have more detailed forecasts and revised target price (if any) in subsequent reports upon VPB’s earnings call this early November.

PNJ Q3-2020 Results Track Our Forecast

PNJ announced Q3-2020 with flat growth in revenue while NPAT slightly declined by -2.8% YoY. Although accumulated 9M-2020 revenue and NPAT have fulfilled 75% and 72% of our 2020 forecast respectively, these results were rather in line with our full-year estimate as Q4, besides Q1, is often a high season for the jewelry business. We are currently review 2020 forecast with revenue of VND15,470 (-9.0% YoY), net profit of VND896 (-24.7% YoY) together with 2021 forecast with revenue of VND18,547 (+19.9% YoY), net profit of VND1,115 (+24.4% YoY). Our current target price is VND73,000, equivalent to a 2020/21 P/E of 18.4x/14.8x, and is under review.