Banking sector – Expected recovery in credit – deposit growth and ample liquidity
05-04-2022
05-04-2022:
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: Thanh Nguyen Ngoc
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- The expansion of credit and deposit in the economy was in line with our expectations regarding pace and driver. As the banks update on their guidance, we review and specify our target range and average expected value of the industry’s credit and deposit growth rate. Particularly, our projections for credit and deposit growth are revised to 14.3% and 11.8% respectively.
- Despite several disruptions, the situation on the interbank market falls within our expected scenarios, including the movement of rates and market liquidity. We continue to observe ample VND and USD liquidity in the market and expect that the level of interbank rates will slightly ease if those disruptions are resolved or mitigated. We keep our view that deposit rate hikes will occur in the second half of 2022.
21 Dairy industry – Vietnamese Dairy Companies Set A Conservative Plan for 2022 Period
04-04-2022
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: An Nguyen
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- Vietnamese dairy companies set a conservative 2022 business plan due to rising input costs. In detail, 2022 expected net profit of VNM, IDP and MCM – the three largest market capitalization listed dairy companies – are VND9,775 bn (-7.2% YoY), VND452 bn (-45.1% YoY), and VND344 (+7.7% YoY), respectively.
- Consumer behavior towards dairy products has changed because of Covid-19 pandemic. Mentioned by Kantar Worldpanel, dairy products are one of the categories have presented a sustain growth during the outbreak of Covid-19 pandemic in Vietnam. We believe that there is still a room for Vietnam dairy industry to grow in the future.
- To prepare for future growth, Vietnamese dairy companies will focus on strengthening their inner capacity. We suggest that those investing in production capacity, distribution system, and cow herds, such as VNM or MCM, will show further improved business performance, leading to higher ROE, when the pressures of rising input costs fade.
ANV – Turnaround in 2022
01-04-2022
: ANV
: Fishery
: Loan Nguyen
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- We expect ANV’s earnings to bounce back strongly in 2022 and reach the level of 2018 – 2019, driven by (1) Pangasius industry is entering a new growth cycle; (2) Both ANV’s export volume and export price to recover in 2022, (3) Gross margin to improve driven by the advantage of self-supplied raw materials. Consequently we forecast ANV’s revenue and NPAT to be VND 5,169 Bn (or USD 225 Mn, +48% YoY) and VND 673 Bn (or USD 29 Mn, +426% YoY). 2022 EPS will be VND 5,294.
- In 1Q-FY22, we forecast revenue and NPAT to reach VND 1,283 Bn (+81% YoY) and VND 192 Bn (+201% YoY). Per AgroMonitor, in 2M-2022, ANV’s export volume and export price witnessed strong recovery by 58% YoY and 109% YoY, respectively.
- Updated TP comes at VND 53,000, implying a 2022F P/E of 10x. We have a BUY recommendation on ANV with an expected return of 27% (including 2% cash dividend yield) for a one-year horizon.
PVT – Continue its fleet rejuvenation and expansion strategy in 2022
31-03-2022
: PVT
: Transportation
: Vu Tran
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- Core business grew but the bottom line was impacted by financial income and other profit.
- The company continues its fleet expansion strategy with a focus on chemical vessels. In addition, profit from liquidating vessel, especially PVT Athena, will boost PVT's earnings, especially in 2Q2022. Revenue and NPATMI are expected to reach VND 8,554 bn (USD371.9mn) (16.1% YoY) and VND 896 bn (USD 38.9 mn) (34.5% YoY).
- Revenue and NPATMI are forecasted to post VND 2,197 bn (USD95.5 mn) (27.9% YoY) and VND 209 bn (USD9.1mn) (53% YoY) in 1Q2022.
- We see a rerate in PVT’s valuation. Plus 34.5% earnings growth forecast, we believe that PVT should have a higher valuation. So we raise the target P/E for PVT from 11x to 12x then come to a target price of VND 30,800, equivalent to an upside of 19% from the current market price. Or ACCUMULATE for PVT
HDC – Strong profit growth outlook in 2022 led by the Light City project
30-03-2022
: HDC
: Real Estate
: Tran Hoang The Kiet
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- In 2021, HDC posted positive outcome with revenue and NPAT-MI of VND 1,352 Bn (+61% YoY) and NPAT-MI of VND 309 Bn (+34% YoY), respectively thanks to the recognition of The Light City phase 1, Ngoc Tuoc 2, Ecotown and Tay 3/2.
- Management sets the target business plan of 2022 with a revenue of VND 1,913 Bn (+41% YoY) and NPAT of VND 430 Bn (+38% YoY). In which, the projects The Light City, Ngoc Tuoc 2, Tay 3/2 will make major contributions. In 2021, HDC reflected its commitment when they are completing legal procedures to acquire 24 ha of Long Dien project (Vung Tau) and acquired 60% stake of company holding Ke Ga project (8,6 ha in Binh Thuan). If this business plan is completed, EPS 2022 is equivalent to VND 4,970.
- From our view, key stories of HDC include: (1) The success of private placement in 2022 (min price of VND 100,000/share) with maximum of 8,6 mn shares, (2) The legal progress of mid to long-term projects namely Phuoc Thang, Long Dien, Dong 3/2, etc. HDC stock is currently trading at a P/B of 6.2x, higher than the industry average (~3.7x). We will need to observe for further progress of these stories in the upcoming time. Therefore, we recommend OBSERVING the stock.
HSG – Surging Steel Prices are likely to Bring Another Good Year
29-03-2022
: HSG
: Materials
: Tam Pham
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- HSG is trading at a TTM PER of 4.3x, lower than its three-year average PER of 7.6x. With FY 2021-2022 EPS and BVPS of VND7,863/share and VND29,718/share, respectively, the equivalent PER forward is 4.8x. We revise up our target price by 15% from the latest valuation to VND 47,000/share, to reflect the bright outlook for profits of the coming quarters. This translates into a total expected return of 25%, compared to the closing price of March 29th, 2022. We have a BUY rating for this stock.
MBB – 2022/2023 outlook: credit growth and credit cost margin are solid growth factors
28-03-2022
: MBB
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: Thanh Nguyen Ngoc
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- The consumer finance segment of the group has expanded to make up circa 6% of the consolidated loan book. Despite the growing contribution of riskier segments, we expect operating costs control and easing credit cost margin to prevail to contribute significantly to earnings growth in the 2022-2023 period.
- Notwithstanding the potential of exclusive quota granted, we conservatively factor in a 26% consolidated credit growth in 2022. Given that, we have a 2022-2023 PBT forecasts at VND 21.8 trillion (USD 948 mn, 32% YoY) and VND 27.0 trillion (USD 1.2 bn, 24% YoY), respectively. TOI is projected to expand 21% in 2022 and 18% in 2023 despite robust NIM and NFI due to the static growth of other non-II.
- The forward 2022 book value per share is VND 19,802, translating to a forward P/B of 1.6x. We anticipate tailwinds in 1H2022 and see sustainable enhancement in credit cost margin and CIR in the next few years, which should lead to stably high ROE. Therefore, we raise our target price to VND 42,800/share and maintain a BUY This translates to an upside of 36% from the closing price of March 28, 2022.
Updates on monetary market in Mar 2022
25-03-2022
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: Macroeconomics
: Ha My
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- Credit demand continues to improve.
- M2 increased more than credit in Jan 2022.
- Strong capital demand in the interbank market.
- USD/VND exchange rate fluctuates in a narrow range despite the pressure of the Fed to raise interest rates.
Dairy industry – Ongoing rising raw material prices and logistic costs are taking a toll on dairy producers
24-03-2022
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: An Nguyen
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- Global prices of raw milk and sugar (two main raw materials of dairy producers) have increased since 2020 (the first year of Covid-19 pandemic era) to the present. In 2022, rising energy prices are accelerating leaving dairy producers (e.g. VNM, IDP or MCM) under weaker gross margin in 2H2022. MCM is expected to suffer a lower effect from rising raw milk prices but a higher impact from rising sugar prices as it does not import raw milk. In contrast, VNM will bear a lower negative effect from higher sugar prices since it owns a sugar company – Vietnam Sugar Jsc.
- Vietnamese dairy makers are expected to have weaker net profit margin in 2022 due to 1) upward trend of raw milk prices because of increasing demand from China, decreasing dairy cow herds, and cost-push inflation; and 2) the risk of rising logistic cost from Russia’s war in Ukraine and the unknowns about the Covid-19 pandemic. In case of soaring energy prices, we expect that Vietnamese dairy producers will experience negative growth in 2022.
Yen weakens, bond yields rise
23-03-2022
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: Macroeconomics
: Bernard Lapointe
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- Big move on USD/JPY in the past few trading sessions.
- Economists (or practitioners of what is often called “the dismal science”) have failed to anticipate some of the most severe recessions and best economic recoveries of the last century.
- Mark Twain once wrote, "history doesn't repeat itself, but it often rhymes."[1] Baby boomers who remember the mid-1970s and the pain a commodity shock caused most likely understand that today's turmoil is far from over
DXG – The possibility of Gem Riverside relaunching and landbanks expansion are main catalysts
23-03-2022
: DXG
: Real Estate
: Tran Hoang The Kiet
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- 2021 results posted strong recovery from the loss in 2020 thanks to the handover of more than 1,000 products at GSW and 1,500 products at Opal Boulevard.
- In 2022, management targets to reach revenue/NPAT-MI of VND 12,000 – 13,000 Bn/VND 1,400 Bn (+19% YoY) supported by the handover of St Moritz, GSW (shophouse), Opal Skyline and the recovery in the brokerage segment with NPAT-MI of about VND1,300 bn (+49% YoY).
- We give a positive view for DXG based on the following key points: (1) New changes in the legality of the Gem Riverside project and the selling price is expected to double as much as in 2018 from 30-40 million/m2 to over 70-80 million/m2 if the sale takes place as expected this year. DXG expects to soon get a construction permit at this project. However, the location of the Gem Riverside project is quite special (next to the 160ha Thu Thiem resettlement area, which is in a state of dispute), there is still a potential risk of the time to issue a construction permit for the project. Therefore, investors pursuing the story of DXG need to closely follow the developments of the above event; (2) Adding new land banks in the medium term; (3) The recovery of the brokerage segment when the base 2021 is low and the risk of social distancing is not high.
Power industry – Growth on the back of the economic recovery
22-03-2022
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: Utilities
: Nguyen Ngoc Thao
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- Electricity volume in the first two months in 2022 grew 6.1% compared to that in 2021 on the back of the economic recovery.
- The thermal group benefits from high contracted volume and high selling price on CGM. Among those stocks in our coverage list, HND and QTP are coal thermal plants that will experience a high growth in contracted volume compared to 2021, and we also have positive view to those stock.
- Hydropower plants continue to benefit from hydrology conditions.
- Renewable energy group to wait for the new scheme to expand capacity. Beneficiaries are REE, GEG, PC1.
