IMP – 2019’s bidding results and prospects for 2020

MP’s story in the coming years will be the ETC channel and the EU-GMP plants. We forecast when the three EU-GMP plants run at designed capacities (in 2023 according to our forecast), they will contribute around VND 2,000 bn in revenue while the two old WHO-GMP plants will contribute VND 800 bn (unchanged).

IMP’s stock has increased 10% since our BUY call in Dec/2019. For now we have an ACCUMULATE recommendation with an expected return of 18%. Target price in 2020 is VND 67,000/share.

DPM - Result Update Report

We have an ACCUMULATE with a target price of VND13,600 per share, based on the FCFF and P/E method. Including the VND1,000 cash dividend, we arrive at a total return of 17.7%, based on the closing price on March 03^rd, 2020.

NKG - 2019 updates

NKG’s financial and operating performance did not improve in 2019 as net income dropped by 17.5% to just VND 47 billion and total selling volume decreased by 9%. Especially, net income was supported by pre-tax profits of VND 254 billion from selling fixed assets and financial investments.

NKG’s 2020 preliminary plans are ambitious compared to what it achieved in 2019 as net income target is 326% higher than net income in the previous year while selling volume target is just 11% higher. Besides, for 2020, NKG’s management expects that HRC prices will vary between USD 480-500/ton and gross margin will increase to 6.0% from 2.8% (2019). We expect that in Q1/2020, NKG can benefit from its low-price HRC inventory, which was bought in November 2019 at USD 420-430/ton.

TCB – Update on 2019 Business Performance

Without any one-off income, TCB still achieved a desirable earnings growth of 20% YoY in 2019 (core growth should be 31% YoY). The bank was able to maintain solid credit growth with an active approach in combining customer lending and corporate bonds to fit available credit room, along with a NIM expansion thanks to funding cost saving. Besides, high operating efficiency and easing provision have supported earnings retention. We estimate that an earnings growth of at least 20% YoY should be achievable in 2020.

Mr. Quoc Anh – the current CEO is going to leave in Sep 2020. The bank has been preparing for the transition by delegating each Division Head to make their own decision on daily operations since late 2019. As per the bank, the “Customer Centric” strategy will be retained as its strategic focus.

We maintain our target price at 28,000 VND/share, 25% higher than the closing market price in 28^th Feb (VND 22,250/share), thereby reiterating a BUY rating on the stock.

KSB updates

Opinion: We believe that KSB's earning in 2020 will be slightly affected by the decline from the contribution of Tan Dong Hiep mine due to the inventory from this field and the higher contribution from Dat Cuoc’s industrial park. However, in the long term, from 2021, revenue and profit from Tan Dong Hiep will decrease significantly. Therefore, the long-term prospect of the company will be determined by the possibility of M&A in the same industry. By contrast, debt will put pressure on cash flow in the short term. KSB's current share price is VND 19,150 per share, a 25% decrease compared to the end of 2018. The 12-month trailing PE is 3.6x, around its PE of 2013. We believe that this currently reflects the decline in profits from the Tan Dong Hiep mine, but it does not reflect business expectations in case of a successful M&A deal.

VHC – Update on 2019 results and 2020 forecast

In 2019, export prices have dropped sharply and the weak export to the US market significantly pulled down the company's revenue and profit. VHC recorded net revenue and profit before tax of VND 7,867 billion and VND 1,309 billion respectively, decreasing by 15% YoY and 22% YoY. Adjusted for abnormal revenues and financial expenses from divestments in 2018 and 2019, PBT from core operation in 2019 reached VND 1,203 billion, down 32% YoY.

Summary of LTG's performance in 2019

2019 was a difficult year in all business segments for LTG. As a result, both LTG's revenue and profit recorded a decrease compared to 2018. In 2020, we expect two segments- pesticides and seeds to hardly grow due to a saturated and competitive market. The negative impact from the Coronavirus will also impact earnings this year. Meanwhile, the revenue of the rice segment will decrease compared to 2019 as LTG no longer sells non-branded rice.

Earnings results of listed companies in 2019

According to the results from 651 listed companies in HSX and HNX, revenue and NPAT for 2019 increased by 9% YoY and 12% YoY, respectively. In particular, HSX contributed to 93% of the whole market’s NPAT increase.

HSX’s NPAT in 2019 rose 12% YoY, mainly from the contributions of VHM, CTG, VCB and VIC. The increase in NPAT of these four companies contributed nearly 77% of the HSX NPAT’s increase. The rise in revenue of these four ones only contributed about 34% of the total increment of the HSX

PTB 2019 updates

PTB posted its 2019 results with net sales of VND 5,552 Bn (+18% YoY) and NPAT of VND435 Bn (+13% YoY), which were rather in line with our expectations of VND5,552 Bn for net sales and VND475 Bn for NPAT. As of results, the company fulfiled 95% profit guidance in 2019.

SCS – Update on 2019 results and 2020 forecast

SCS posted its 2019 results with net sales of VND748 Bn (+11% YoY) and NPAT of VND503 Bn (+15% YoY), which were rather in line with our expectations of VND753 Bn for net sales and VND502 Bn for NPAT.

VPB – Updates on 2019 Business Performance

The parent bank acted as growth driver in 2019 with a 38.2% YoY core earnings growth. FE Credit also maintain its recovery with a decent credit expansion (+13.8% YoY), NIM improvement (from 28.4 to 31.3%), CIR improvement (from 32.1 to 31.3%), and reasonable provision expense growth (15% YoY).

FE Credit has just received SBV’s approval to transfer into a joint stock company. This is a step towards its IPO/placement plan, expected to complete within this year, which can act as a driver for stock price in near term.

The stock has performed well with a 40% increase YTD to VND 28,050/share (PB 2020f of 1.2x.), reaching our target price set in Strategy Report 2020. Considering the bank’s potential high growth, we raise VPB’s target price to VND34,000/share, equivalent to a 21% upside compared to the current market price. We thereby recommend to BUY the stock.

Which opportunities for DRC in 2020?

The production of radial tires is on an uptrend. The production scale, price and product quality of FDI tire manufacturers is outperforming domestic tire enterprises. Therefore, exporting is an opportunity for DRC to maintain its growth. The markets which are currently applying additional import duties in order to limit Chinese tires, are DRC’s existing markets such as the US, Brazil and India. In 2020, we believe that DRC will accelerate the negotiation process with European partners in order to take advantage of restricted Chinese goods as well as the reduced import tax when the FTA Vietnam - EU comes into effect. The short-term demand from existing markets such as the US, Brazil and the potential market - EU – will allow DRC to operate at its highest capacity. Thereby, the company can reach its planned revenue and profit.