TCB – Capitalizing on the advantages

• The 2021-2025 strategy marks an acceleration phase capitalizing on competitive advantages: invested infrastructure, thick capital base and strong ecosystem. Its firmly established funding structure which is backed by a leading retail franchise focusing on high-profile customers is the foundation for cross-board expansion in various scenarios.
• Enabled by the potential recovery of economic backdrop in 2022, TCB has solid foundation to deliver extensive organic growth and continuous improvement in efficiency. Besides the widening NIM and high credit growth, financial ability of the customers and good provisions buffer helped TCB deliver robust growth across the board in 9M2021. We expect TCB to have good growth when capitalizing on its competitive advantages in a favorable macro environment, thereby improving its ROE with an intact top-tier capital base.
• We maintain the estimated 2021-2022 PBTs of VND 23,010 bn (USD 1.0 bn, +46% YoY) and VND 29,357 bn (USD 1.3 bn, +28% YoY). The 2021-2022 book value per share figures are VND 26,224 and VND 32,746 respectively. We currently have a target price of VND 71,000/share and a BUY This translates to an upside of 45% from the closing price of December 27 2021.

HPG – NPAT remains high in 4Q owing to stronger selling volume

• Steel production costs can remain stable in 4Q as iron ore and coking coal prices moved in opposite direction.
• Construction steel segment’s GPM will be flat, while HRC’s can decrease caused by weakening selling prices in 4Q.
• NPAT can remain high in 4Q as selling volume has been recovering.
• For 1H2022, while the construction steel segment’s gross margin can remain stable, profitability in the flat steel segment is forecasted to decrease.
• Regarding Dung Quat 2 steel plant, the company is processing the land cleaning stage and plans to start the building stage in early-2022. The first one is expected to come into operation in the second half of 2023.
• Based on the FCFF and PER methods, we recommend investors BUY this stock with a target price of roughly VND 63,000/share. Together with a cash dividend in the next 12 months of VND 500/share, the total return is 40% as of the closing price of VND 45,100 on December 22^nd, 2021.

GEG - Growth from wind power

• Revenue was VND 313 bn (or USD 14 mn) in 3Q2021, -11% YoY and -2% QoQ. Hydropower’s revenue increased 20% YoY in line with our expectations while that of solar power experienced a decline of 10% YoY due to volume curtailment during 3Q2021. Earnings in 3Q2021 were relatively low, VND 53 bn (or USD 2.3 mn), -1% YoY and -17% QoQ.
• The hydropower segment will perform well in 4Q2021 because the volume curtailment is expected to ease for solar power plants. We forecast earnings in 4Q2021 to be VND 109 bn (or USD 4.7 mn), +37% YoY.
• Our target price for GEG is VND 23,000, implying a total return of 10% compared to the closing price on Dec 22^nd, 2021. Hence, we recommend to ACCUMULATE this stock. The company has numerous potential projects in its pipeline consisting of wind and solar power. This could be a strong catalyst for this stock.

Sugar industry – Domestic sugar volume to increase in 2022

• After dropping to the 20-year low in the previous harvest, we expect the domestic sugarcane area to be scaled in the harvest of 2021/2022, on the back of effective tax tariff instrument, domestic sugar price improvement, and Vietnam’s efforts to prevent smuggled sugar. In which, the coming tax imposition on indirect imported Thailand-origin sugar via five ASEAN countries excluding Thailand will be one bright key point in the coming year.
• Backed by the expansion of Vietnam's sugarcane area, companies able to expand their owned sugarcane area in the current harvest will absorb better the volume growth story, facing less pressure of increasing sugarcane price and maintain profit growth in the context of coming selling price deceleration. According to 2021/2022 business guidance, we see all the top four companies (SBT, QNS, LSS, SLS) target to increase their sugarcanes and sugar production by at least 15% YoY.

Tech stocks: where to?

The Nasdaq Index has rolled over (Figure 1).

Navigating the post-pandemic economy

After more than two months of reopening, economic activities have gradually revived with the resumption of factories and the improvement of citizens’ commuting. Along with this, key behaviors proved to be last beyond the pandemic. Basically, the disruption triggered by COVID-19 created a perfect storm in which some shifts in consumer behaviors were matched by changes in business operations and government regulations. On the other hand, changes in consumer behaviors also lead to business transformations. To navigate the post-pandemic economy, we first investigate consumer and firm behaviors. Most importantly, digitalization is expected to be a key driver of economic recovery. Of which, firms will deploy more on digital and automation technologies while consumers have turned to digital channels for many aspects of their lives. Due to the pandemic, many MNEs thought about reorganizing their supply chains in a more flexible and agile way. Thanks to the improving Covid-19 situation and stable fundamentals, Vietnam could grab the opportunities of the reshaping, nearshoring, and regionalization of supply chains.

REE – Embark on new growth phase

• In 3Q2021, revenue was VND 1,093 bn (or USD 47.5 mn), -27% YoY and -33% QoQ because of severe social distancing. M&E services and trading experienced a decline of more than 70% YoY. The leasing segment fell by 19% YoY in revenue (Figure 1). Meanwhile, the energy sector doubled its revenue thanks to VSH’s consolidation. NPAT was VND 264 bn (or USD 11.5 mn), -24% YoY and -31% QoQ. Cumulatively, the company has fulfilled 69% its target NPAT in 2021.
• REE is going to enter to a new growth phase Power segment and Etown6 are going to fuel the company’s growth in the long run. Our target price is VND 84,300, implying a total return of 25% compared to the closing price on Dec 16^th, 2021. Hence, we recommend to BUY this stock.

NLG – Izumi project sale launching is main highlight in Q4 2021

• In 9M 2021, NLG recorded revenue and NPAT-MI of VND 787 Bn (-39% YoY) and VND 709 Bn (+241% YoY), respectively. Profit surged thanks to the revaluation gain from Southgate and Izumi projects. Meanwhile, the handover activities were slower-than-expected (Akari project) given the prolonged social distancing in HCMC.
• For Q4 2021, we expect Akari project to spur the earnings when NLG started to deliver units since November 2021 (around 1,200 units). Consequently, the projected revenue and NPAT-MI of NLG arrive at VND 5,209 Bn (+135%) and VND 1,091 Bn (+31% YoY), respectively.
• In 2022F, we expect that the handover of Southgate, Akari, Can Tho would support the top line while Izumi would be delivered from 2023 given the longer-than-expected launching (from Q3 to Q4 2021) caused by social distancing. Moreover, the stake transfer of 50% ownership in Dai Phuoc project would add VND 300 Bn profit into the bottom line. Overall, we estimate 2022F revenue to reach VND 5,063 bn (-3% YoY) and NPAT-MI of VND 1,062 bn (-3% YoY).

HDB – Lower-than-expected quota but positive surprise in asset quality

• After 11M2021, HDB reached approximately 13% credit growth. This is in line with the lower-than-expected granted credit quota. SBV is expected to approve for more credit growth in December 2021. We factor in a 20% credit growth for 2021, equivalent to another raise during the rest of the year.
• We revise down NIM estimates. Asset quality was slightly impacted in 3Q21. The NPL ratio rose and restructured loans decreased to the lowest level among our bank coverage. Combined with the guidance on provisioning policy, we revise down the forecasts on credit cost. 2021-2022 PBTs are adjusted upward to VND 8.0 trillion (USD 346 mn, +37% YoY) and VND 10.3 trillion (USD 448 mn, +29% YoY).
• We maintain our cautious view on the provisioning policy and its buffer. 2021-2022 book values per share are at VND 14,343 and VND 18,128 respectively. We expect HDB to regain growth momentum in the next few quarters thanks to a low base effect and easing pressure on credit cost margin. We increase the target price by 11% to VND 32,000/share. This translates to an upside of 6% from the closing price of December 14, 2021 and an ACCUMULATE recommendation.

VPB – Many catalysts for NIM improvement in coming quarters

• In Q3, mother bank performed resiliently while FE Credit struggled with a loss.
• Small business and low-income customers will recover more slowly than other groups, causing adjustments in our expectations for NIM and credit costs at both the parent bank and FE Credit. The revised forecast includes new factors that could help the mother bank improve its NIM margin in the coming quarters, including profit from partly divestment at FE Credit and the preferential syndicated loans received in October-end while the international bonds issued in 2019 with high interest rate will mature in 2022.
• 2021 consolidated PBT is expected to come at VND 17,181 bn (+32%), with FE Credit PBT VND 1,136 bn (-69%). In 2022, consolidated PBT is expected to come at VND 21,874 bn (+27%), with FE Credit PBT VND 2,518 bn (+121%). The revised book value per share figures are VND 15,846 for 2021 and VND 19,255 for 2022.
• The target price is adjusted from VND 37,200/share to VND 42,800/share. Based on the closing price as of December 12th, 2021, we recommend to BUY VPB with a total return of 21%.

VSC – Earnings Growth to Rely Mostly on Streamlining Costs

• In Oct 2021, VSC’s revenue was VND 156 Bn, up 13.8% YoY and PBT 45 Bn, growing by 42% YoY. 10M 2021 revenue and PBT respectively amounted to VND 1,541 Bn (+ 12.7% YoY) and VND 403 Bn (+ 48.6% YoY).
• We attribute the solid growth of PBT to streamlining operating costs through scaling down outsourcing activities, which, we believe, was better managed following the participation of new major shareholder group recently.
• We expect continued profit margin expansion to drive NPAT to reach VND 355 Bn (+47.6% YoY)/ VND 410 Bn (+17.5% YoY) in 2021F/22F. However, limited headroom in capacity of VIP Green and Green Port and the likelihood of incurring loss from VIMC Dinh Vu in the early phase of operation remain hindrances for earning growth with 3Y CAGR 2021F-24F projected to be at 6%.