ACB – Sustainable growth from high base
24-02-2023
24-02-2023: ACB
: Banking
: Thao Nguyen
Tags: ACB banking 4Q results update
- Q4 PBT reached VND 3.6 tn (or USD 150 mn, +19% YoY) driven by both interest income (35% YoY), non-interest income (+24% YoY) and a slump of provision expenses (-52% YoY). However, on a quarterly basis, PBT dropped by 20% due to operating expenses surging by 61% QoQ. CIR increased to 40.3% in 4Q22, mainly due to a VND 1,000 bn (or USD 41 mn) expense for the science and technology development fund.
- Asset quality improved on both quarterly and yearly basis. NPL was 0.74% in 4Q22, down from 1.01% in 3Q and 0.8% at the end of 2021. Bad debt coverage ratio increased to 159.3% compared to 3Q2022 (137.8%) yet decreased from 209.4% at the end of 2021.
- The bank prudent approach with Covid-19 related debts in 2021 has paid off in 2022. The low provision expense in 2022 is mostly due to reversal income from Covid-related restructuring loans. Coupled with a climb of 24% YoY and 14% YoY in net interest income and non-interest income, respectively, PBT reached VND 17,114 bn (or USD 713 mn) in 2022, +43%YoY, in line with our expectation of a high profit growth during this year.
- The forecast of PBT for 2023-2024 are VND 20,431 bn (or USD 851mn, +19%) and VND 24,314 bn (or USD 1 mn, +19%), respectively. The book value per share are estimated at VND 18,453 and VND 22,253. Our latest target price is VND 30,000/share, implying an upside of 21% from the closing price as of Feb 22nd, 2023 and a BUY recommendation.
91 Seafood industry – Signs of recovery in pangasius exports to China from Q2/2023
23-02-2023
: VHC, ANV, IDI
: Fishery
: Loan Nguyen
Tags: China's reopening Industry update
- Pangasius exports to the US market continue to remain low, stemming from a high base in FY2022, weak demand and excessive inventories.
- In contrast, China is the silver lining, with demand for seafood rising after the market's reopening. While the extent of the impact of this event is still a wild card, there are some indications that exports to the Chinese market could gradually improve from Q2/2023.
- The recovery of the Chinese market does not necessarily mean that the industry will be immune to the bust cycle. Although short-term trading strategies based on relevant news may exist, we advise against adopting a long-term holding strategy in 2023.
IDC – Speed up
22-02-2023
: IDC
: Industrial Land RE
: Hung Le
Tags: Industrial Land RE IDC
- IDC reported that revenue increased 11% year on year to VND 1,208 billion in Q4 2022, and NPAT increased to VND 202 billion compared to VND 1 billion in 4Q2021. The growth was thanks to the low base of the fourth quarter of 2021. IDC's revenue for 2022 was VND 8,242 billion, a 92% increase year on year. NPAT increased by 826% year on year to VND 2,286 billion. The growth was led by the energy segemnt and IP leasing activities.
- For 2023, we estimate that the revenue and NPAT will reach VND 7,387 billion (-10%YoY) and VND 1,888 billion (-17% YoY) respectively. The results are expected to be lower than 2022, owing to the fact that IDC may no longer record one-time revenue from leasing as they did in 2022. Except for this surge, revenue and NPAT in the main business segments are expected to grow by ~20.3% and ~12.9%, respectively, in 2023.
- In the short-term, IDC could record one – off revenue as IDC complete transfers 21,870 m2 of Urban projects in Ward 6, Tan An, Long An to Aeon mall, the deal is expected to earn approximately VND 400 billion in NPAT after all procedures are completed in 2023. However, the unearned revenue adjusted P/B of IDC is 1.7, which is higher than Peers’s P/B average of 1.26. We believe that expected earnings from the deal has been priced in the current market value.
- We maintain a positive long-term outlook for IDICO (HNX: IDC) due to (1) its large available leasable land bank (751 ha), which will ensure IDC performance for at least five years, (2) new projects of the energy segment will lift up earnings, (3) the asset turnover has improved significantly since 2020 as IDC accelerated leasing activities. For 2023, we estimate that the revenue and NPAT will reach VND 7,387 billion (-10%YoY) and VND 1,888 billion (-17% YoY) respectively. Besides, IDC plans to pay a cash dividend in next 12 months at no less than VND 4,000/ shares, equivalent to a dividend yield of ~9.5% compared to the closing price of 21/02/2023.
VSC – Q4/2022 results are not prosperous and story from the M&A deal in the seaport industry
21-02-2023
: VSC
: Seaports
: Quan Cao
Tags:
- Q4/2022 results was net revenue and NPATMI of VND 520 billion (+3% YoY, +2% QoQ) and VND 53.4 billion (-42% YoY, -34% QoQ), respectively. In 2022, net revenue and NPATMI recorded VND 2,007 billion (+6% YoY) and VND 314 billion (-10% YoY), EPS was 2,451 VND (-45% YoY).
- VSC is in the execution process of an M&A deal. We believe that VSC's target company is Nam Hai Dinh Vu Port Joint Stock Company, which owns Nam Hai Dinh Vu Port (NHDV) in Hai Phong as GMD has announced the decision to transfer all shares in NHDV and recorded a deposit of VND1,000 billion in Q4/2022. In Q4/2022, VSC together with Doan Huy Investment and Trading Co., Ltd. made a deposit of VND 1,000 billion to buy back the target port, of which VSC contributed VND 300 billion. According to the draft of the plan to use capital from the issuance, the value of this deal is expected to be about VND 2,250 billion. In which, the remaining VND 1,200 billion is expected to be mobilized by VSC through the share issuance to existing shareholders at the ratio of 1:1 and the offering price is VND10,000/share.
- The seaport industry's outlook for 2023 is quite challenging as GDP growth rate of main trade partners such as the US and EU is forecasted to slow down and inflation will remain high. In fact, the PMI of Vietnam has not shown any positive signal in recent months.
- We are conducting a more thorough assessment of the potential from the NHDV port M&A deal and projection for 2023. Currently, VSC stock is trading at a P/B valuation of 1.4x, equivalent to a 5-year average of 1.4x, and a P/E TTM of 12.2x, and is 33% above the 5-year average of 9.2x.
Steel material prices and cost-push inflation
20-02-2023
: HPG, HSG, NKG
: Materials
: Trinh Nguyen
Tags: NKG HPG HSG
- Coking coal prices are on the rise as supply in 2023 is expected to decrease
- Iron ore prices increase due to news from China market and seasonal factors
- High scrap price make it difficult for electric arc furnaces
STK – Still not out of the wood, but getting better
17-02-2023
: STK
: Textile & Garment
: Hoai Trinh
Tags: STK Textile 4Q22 results
- STK announced its 4Q22 net revenue of VND 430 bn/USD 18.1 mn (-16% QoQ; -13% YoY). NPAT-MI was VND 43 bn/ USD 1.8 mn (-14% QoQ; -43% YoY), mainly due to (1) a sharp decline in total yarn volume, and (2) a higher CIT expense in Q4/2022. Overall, STK’s 2022 net revenue and NPAT-MI were VND 2,115 bn /USD 89.8 mn (+3.5% YoY) and VND 240 bn/USD 10.7 mn (-13.7% YoY), achieving 97% and 98% of our full-year forecasts.
- For 2023, we expect earnings to rebound, particularly in the second half. Due to the subbed demand in 1H23, we lower our 2023 net revenue and NPAT-MI forecasts to VND 2,232 bn/ USD 93.7 mn (+5.4 % YoY) and VND 259 bn/USD 10.9 mn (+7.6% YoY), respectively. 2023 EPS is VND 3,154.
- STK is currently trading at a 2023 forward PER of 9.2x. We have an ACCUMULATE rating with the one-year target price of VND 32,500/share. With an expected cash dividend of VND 1,500/share in the next 12 months, it implies a total return of 12%, based on the closing price of Feb 17th, 2023.
DRC – Expensive input costs remains an obstacle
16-02-2023
: DRC
: Automobiles
: An Nguyen
Tags:
- In Q4 2022, Danang Rubber Jsc. (HSX: DRC) posted net sales of VND1,114 bn (or USD47 mn; -17.6% QoQ; -16.4% YoY), dragged down by lower domestic tire consumption and Q4 2021 high-based performance. Higher input costs and lower selling expense/sales ratio produced a net profit of VND82 bn (or USD 3 mn, +6.2% QoQ; -6.3% YoY).
- Backed by 9M2022 strong performance, DRC had a 2022 rosy business result with revenue and net profit of VND4,899 bn (+12% YoY) and VND308 bn (+6% YoY), respectively. The key growth driver was high double-digit sales growth of exports (+25% YoY). 2022 EPS was VND2,337 (+6.0% YoY).
- In the context of expensive raw material costs and weak tire consumption in the domestic market, we predict that the 2023 performance will grow in the single-digit rate, predicting revenue and net profit of VND5,233 bn (or USD223 mn, +6.8% YoY) and VND331 bn (or USD14 mn, +7% YoY), respectively. 2023 EPS is expected to be VND2,509 (+7.4% YoY).
Trade outlook: Glimmers of hope in the new year
15-02-2023
: VDS
: Macroeconomics
: Ha My
Tags: Trade
- Trade in Jan 2023 declined sharply but not too seriously.
- Exports to the EU market was steady.
- The world economy started the year with some bright spots.
SCS – Q4-2022 Profit grew better-than-expected on aggressive costs cutting
14-02-2023
: SCS
: Logistics, Non-aviation Services
: Tung Do
Tags: SCS
- Total throughput fell by 32% YoY (international - 32% YoY, domestic -6% YoY) in Q4-2022, which led to a 26% YoY drop in revenue. The weakening trend in Q4 is in line with our forecast as full-year throughput/revenue fulfills 101%/99% of our forecasts.
- COGS and G&A expenses have been significantly cut, down 56% YoY and 63% YoY respectively. Thereby, Q4-2022 NPAT was flat y/y. 2022 NPAT increased 15% YoY, 12% higher than our forecast.
- The weak trade flow prospect between Vietnam and key partners will be challenging for SCS to create a meaningful growth in 2023F. Revenue and NPAT are forecasted to reach VND900 billion (+5% YoY) and VND655 billion (+1% YoY) respectively, equivalent to an 2023F EPS of VND6,300.
- SCS is trading at a 2023F P/E of 11.6x. We reiterate ACCUMULATE recommendation with a TP at VND81,000.
Retail industry – Q4/2022 Review: A bleak quarter for retailers
13-02-2023
: MWG, PNJ, FRT, DGW, PET
: Retailing, TCGs Retailing, Consumer Staples
: Loan Nguyen
Tags:
The spillover effects of global the economic downturn on the retail industry began to hit financial performance in Q4/2022 in the aftermath of poor consumption demand amidst squeezing disposable income. This negative scenario is likely to persist through 1H 2023.
We anticipate that the retail market will experience a stronger rebound in 2024. This means that retailers’ financial performance can get back on track in 2H 2023.
Except for PNJ, the rest of the retail companies in our coverage experienced negative year-over-year growth in Q4/2022.
PVD – Rising rig day rate to accelerate the earnings
10-02-2023
: PVD
: Oil & Gas
: Vu Tran
Tags: Drilling market 4Q22 Results update rising rig day rate
- PVD posted positive results in the fourth quarter compared to the previous three quarters in spite of recording VND30 bn provision from Kris Energy and a sharp increase in financial expenses following the rise of interest rates. Specifically, the company booked VND 54 bn in NPATMI compared to the loss in the first 3 quarters of the year.
- PVD has signed the full contract for its 4 jack-up rigs in 2023 with minimum average rig day rate of 75,000 USD/day. At this day rate, we think the core business of PVD can gain profit after getting loss in many years before.
- The company is actively looking for new contracts for 2024. We believe that acquiring contracts for 2024 at the this time will help PVD receive a better day rate compared to the 2023 level. Currently, the rig day rate in Southeast Asia (SEA) has reached 120,000 USD/day and is forecasted to reach 160,000 USD/day by 2024.
- For 2023, we forecast that PVD can reach VND6,834 bn in revenue and VND344 bn in NPATMI, higher than our previous forecast. We remain BUY recommendation and raise PVD's target price from VND21,500 to VND26,800 to reflect PVD's positive outlook in 2024 thanks to a day rate that closes to the SEA level.
TCB – The bottom line witnessed a YoY negative growth rate in 4Q22
09-02-2023
: TCB
: Banking
: Thao Nguyen
Tags: TCB
- In Q4, TCB’s PBT reached VND 4.7 tn (or USD 199 mn), -23% YoY and -33% QoQ, dragged down by (1) Decreasing of TOI and (2) the rising of both operating and provision expense.
- Credit and deposit growth reached 12.5% YTD and 12.6% YTD, respectively. The ratios of CASA and term deposits have changed sharply since 4Q, in which, the former dropped and the latter rose, making NIM decrease by 42bps to 5.29% in 2022.
- In 2023, we expect credit and deposit to grow 13.2 % and 12.2%, respectively. Funding cost will keep high in the early quarters, so its NIM will not improve until Q3 2023. Given the headwinds in the current corporate bond market, TCB's underwriting and bond issuance-related fees will be under downward pressure until the bond market shows signs of improvement in new issuance. Nevertheless, NFI might sustainably grow thanks to L/C and settlement activities. Therefore, we expect TOI and PBT to growth 6% and 3% YoY. NPATMI is forecasted at VND 21 Tn (or USD890 bn, 3%) and correspondent EPS is VND 5,852.
- Our current target price is VND 33,000, offering an upside of 19% compared to the closing price of Feb 09th, 2023. However, TCB’s advantages in the past, such as low funding cost or bond market-maker role, have been on the challenging period and would result a slowdown in its income in 2023. Therefore, market sentiment to the stock is temporary less positive than it was. We believe that as soon as the mentioned bottlenecks are released, TCB with extensive experience in retail banking will quickly recover. Investors should closely observe to see positive developments in relevant events to make investment decisions.
