MWG – Q1-2022 Business Results: Decelerated Earnings Growth

• TGDD/DMX is still the key growth engine, posting a total revenue growth of 21% YoY, mainly driven by the new openings (TGDD, Topzone and DMX Supermini) and a robust increase in online sales of 150% YoY. BHX sales were flat year-on-year despite a 20% YoY increase in the number of stores as sales per store are still being affected. Group-wide revenue, therefore, grew by 18% YoY.
• NPAT growth decelerated to 8% YoY after the estimated loss from subsidiaries, mainly contributed by BHX, increased by 18% YoY to about VND 753 billion as BHX's net profit margin continued to decline following traffic boosting initiatives.
• Gross profit margin and net margin remained high, however, decreased by 50 bps YoY and 30bps YoY respectively.
• Current target price - VND 163,500 - is being updated.

MSN – HSX: Higher Profit Margins Thanks To “Point-Of-Life" Consumer-Tech Model

• 1Q2022 NPAT strongly grew, driven by the improvement of profit margins of MCH, WCM and MHT. On the like-for-like basis, the revenue and NPAT post-MI were VND18,189 billion (-8.9% YoY) and VND1,596 billion (+753.5% YoY), respectively. The main driver of profit growth was improvement in profit margin of The CrownX (TCX) and Masan High-Tech Materials (MHT).
• 2022 revenue and net profit of MSN, excluded MNS Feed, is forecast at VND91.6 tn (+23.5% YoY) and VND6.2 tn (+63.9% YoY), driven by the growth of all of business lines. The top-line growth is supported by favorable business condition. The strong growth of net profit will come from the higher profit margin of MCH; the higher profit growth of VCM thanks to the “Point-of-life” consumer-tech model; and high profit margin of MHT.
• We recommend BUY on MSN share. Using the market price of VND119,000/share on May 05th 2022, forward P/E ratio and trailing P/E ratio (like-for-like basis) are expected to be 27.0x and 45.1x, respectively. With the rosy outlook of strong profit growth, we suggest that MSN is a good stock-pick for 2022.

GEG – Earnings doubled in 1Q2022

• In 1Q2022, GEG posted revenue/NPATMI of VND 570 bn (USD 25 mn)/ VND 142 bn (USD 6 mn), +87% YoY/+119% YoY. The significant growth in revenue and earnings is due to the wind power contribution.
• The company targets its revenue and PBT to be VND 2,073 bn (or USD 90 mn, +37% YoY) and VND 345 bn (or USD 15 mn, -7% YoY). Hydro/Solar/Wind power will contribute roughly 25%/40%/35% to total revenue, respectively. We foresee this plan as relatively conservative compared to our forecast, PBT of VND 433 bn (USD 18.8 mn, +20% YoY) on the back of the full year utilization from the three wind power plants.
• For the longer term, earnings from those renewable energy plants including solar and wind farms, will sustainably grow thanks to the stable debt payment, financial expenses will decrease year over, resulting in the expansion of the net profit margin. In the medium term, the company will capture wind power opportunities to add more projects to its green portfolio.
• Our latest target price is VND 25,000, offering an upside of 14% as of 2022, May 5^th, hence we recommend to ACCUMULATE this stock. We will update our new target price in our next report.

BMP – 2022 AGM Note: A Clear Turnaround

• Selling volume declined -11.4% YoY and -12.5% QoQ to 22,635 tons in 1Q2022, caused by longer Tet vacation and the slow recovery of the construction activities while construction materials prices reached a new high level.
• The increasing average selling price coupled with declining input prices boosted an expansion in Q1 gross profit margin. GPM has recovered quickly from the trough of 4.5% in 3Q2021 to 23.6% in 1Q2022.
• PVC resin prices in 2022 is likely to remain at a higher level than that of 2020 backward due to the recovery of plastic demand after the pandemic. However, compared to 2021, the price of plastic resin may fall significantly with the global supply recovering as plastic factories in the Southeast US have overcome the consequences of natural disasters in 2021.  PVC resin prices have been cooling down quickly in 4Q2021 from the peak of USD 1,950/ton in October 2021 and are fluctuating at a range of 1,350-1400 USD/ton.
• Selling volume may not reach the 10% growth rate target of the company, as the rising price of construction materials is exerting pressure on construction demand. Selling prices also has insignificant headroom to rise after a very strong increase in 2021.  Nevertheless, we maintain a positive view on the company's ability to recover sales volume and gross profit margin in 2022 from the record low level of 2021. Our forecast is being revised to reflect the new development in demand and input prices but we expect that will not make much change to our current target price of VND68,700/share.

Banking sector – A glance at 1Q22 announced results

• The polarized earnings growth among banks for 1Q22 is within our expectations. We think that the trend will continue in 2Q22 before banks benefit from the low comparison base and lifts in credit growth quota in the second half of 2022.
• Quoted deposit rates have been going up at the private banks. This was also reflected in the ramping up of average deposit rates in 1Q22 in comparison to 4Q21. Meanwhile, the state-owned banks have maintained the rate level since mid-2021. We witness a slowdown in the pace of rising deposit rates at top private banks, thereby, expecting quite stable quoted deposit rates in 2Q22. Rates will still go up from this level to the year end.

TNG – 1Q2022 results and AGM updates

• In Q1/2022, TNG achieved revenue and NPAT of VND 1,260 billion (+38% YoY) and VND 38 billion (+74% YoY), respectively. This increase is driven by improving labor productivity and increasing demand for apparel products, especially from Decathlon.
• TNG sets 2022 guidance with revenue and NPAT of 6,000 billion (+10% YoY) and 280 billion (+21% YoY), respectively. This guidance is not included the real estate segment. Son Cam Industrial Park could start contributing to TNG’s profit in 2H2022.
• 2022 – 2025 strategy: (1) increasing by 33% to reach 383 garment lines in 2025, bolstering 2025 revenue to surpass VND 10,000 Bn; (2) expanding orders from existing customers (especially Decathlon and Columbia); (3) developing residential real estate projects.  

Updates on monetary market in Apr 2022

• Bank loan demand to remain strong.
• Deposit interest rates showed signs of rising on a larger scale.
• VND liquidity was less tight, USD demand increased.

Bank loan demand to remain strong

According to the SBV, credit growth reached approximately 2.7% compared to the beginning of the year by the end of Feb 2022, which was a slight increase compared to the increase of 2.5% in Jan 2022. Thus, credit growth in Feb did not change much compared to the previous month, consistent with the normal status when the demand for loans slowed down during the Lunar New Year period. However, credit accelerated significantly in Mar-Apr, according to the SBV, credit growth is estimated at 5.0% by the end of Mar 2022 and at 6.4% as of 19 Apr. Elsewhere, Ho Chi Minh City's credit balance reached VND3 trillion as of the end of Apr 2022 (equivalent to 27% of the system's outstanding loans), recording a strong growth of about 7% compared to the beginning of the year.

MWG – 2022 AGM Note

• 2022 Guidance: revenue and NPAT increase 14% YoY/30% YoY to VND123 trillion/ VND 4,901 billion. This plan implies that net profit margin will improve in 2022, which we believe will come from optimizing the operation of key chains, especially Bach Hoa Xanh (BHX).
• For TGDD & DMX, we believe that the main growth driver will come from the market share consolidation of Apple products and consumer electronics as Topzone and DMX chains to further expand their physical store network amid impacted purchasing power due to inflation, causing the expected growth of the CE market standing at single-digit this year.
• Regarding the BHX chain, 2022 will be the year in which the management will radically revamp back-end operations (ensuring the quality of fresh goods, improving the shopping space, optimizing the inventory forecasting), in order to create a solid foundation for expansion in the following years. The AGM also approved the private placement plan of BHX with a maximum offering rate of 20% to raise investment capital for logistics investment.
• While the plan for TGDD & DMX is in line our expectations, the changes of BHX's operation strategy, as well as the expansion of other chains such as An Khang, AVA Kids, and EraBlue (in Indonesia), are material changes to our projections. Therefore, the current target price – VND 163,500 – is being reviewed for these new development plans.

LHG – Conservative guidance

• In 2021, LHG recorded revenue and NPAT-MI of VND 782bn (+16% yoy) and VND 295bn (+49% yoy), in line with our forecast. The IP segment brought strong growth to LHG in H1 2021, with IP land sale reaching 12 hectares (+20% yoy) and the rent reaching 200 USD per sqm (+5% yoy).
• In 2022, the IP land demand will the growth of the IP segment, as well as LHG’s revenue and earnings growths in total. As a result, revenue and NPAT-MI are expected to grow strongly in 2022, estimated at VND 918 bn (+17%) and VND 373bn (+28%), which translates to an equivalent EPS of VND 7,016 per share.
• LHG's current target price is VND67,500 per share, representing a total return of 27.1% compared to the closing price on April 21^st, 2022. Forward P/E 2022 valuation of 7.6x and P/B of 1.6x, lower than the P/E and P/B levels of 2021 (9.7x and 1.8x).

Vietnamese FMCG producers are expected to continue to show a positive sales outlook in 2022

• FMCG producers continue capturing the increasing trend of FMCG consumption despite of Covid-19 pandemic, resulting in a rosy outlook for top-line performance in 2022. In detail, local FMCG producers such as MSN, KDC, DBC or Nova Consumer will be one of the most beneficiaries from this trend, in lights of 1) more favourable selling price compared to imported FMCG products; 2) more familiar with the taste of Vietnamese consumers; and 3) lower number of imported FMCG products due to potential global supply chain disruption.
• Total sale growth of FMCG producers is expected to present the highest growth rate among the year in 3Q2022. To explain, thanks to the spread of Covid-19 vaccine, on-premise channel is expected to show a strong recovery in 2022. The on-premise activities was shut down due to Covid-19 pandemic in 3Q2021, thus 3Q2022 sales will illustrate a strong growth thanks to the low-base. We expect to see FMCG producers ‘sales growth to reach a high level in 2022, then normalize in 2023.
• However, rising input costs still put pressure on the profitability of FMCG producers. We expect that large companies who own a close value chain, and diversified product portfolio will easily mitigate the negative effects of rising cost as well as passing the higher cost into selling price. Together with the stronger growth in revenue and the advantage of economic of scale as the FMCG giants, their profit growth might show a light positive sign in 2022.