Global Asset Fund Flows

• Flows so far year-to-date demonstrated a return to risk aversion.
• Within equities, Emerging Markets, Europe and Financials have seen noticeable liquidation.
• We expect a bit of a reversal in the next few months as shorts will be covering positions.

Trade performance remained positive in Apr 2022

• Trade performance remained positive in Apr
• Exports of key products continued to be steady.
• China's zero-Covid policy exposed more risks to Vietnam in terms of imports.

Trade performance remained positive in Apr 2022

Despite heightening external risks, Vietnam's export activities still maintained growth momentum in Apr 2022. Total export turnover reached US$33.3 bn, down 4.0% mom but increased by 25.2% yoy. The FDI and domestic sectors recorded an increase of 24.5% and 27.0% respectively over the same period. In Jan-Apr 2022 period, Vietnam's exports reached US$122.5 bn, up 16.5% yoy. Meanwhile, the total import turnover reached US$32.5 bn, down 0.6% mom but up 16.1% yoy. Imports of the FDI and domestic sectors grew by 18.3% and 12.3% yoy, respectively. In 4M22, Vietnam's imports reached approximately US$120.0 bn, up 15.3% yoy. Trade performance in Vietnam remained robust, the trade surplus is estimated at US$849 mn in Apr 2022. As a result, the trade surplus reached US$2.3 bn in Jan-Apr 2022 period, 65.0% higher than the same period of last year.

NVL – Financial gains to boost high earnings growth in Q1 2022

• The company reported net revenue of VND 1.96 Tn (or USD 85 Mn, -57% YoY) and NPAT of VND 1.05 Tn (or USD 45 Mn, +49% YoY), fulfilling 5.4% and 16.2% of its 2022 revenue and profit guidance, respectively.
• In the worst case, the company expects that sales in 2022 will be at VND 35 Tn, in which 57% from presales units, securing cash flow for its due debt in 2022.
• NVL’s market price has decreased by 14.8% (VNIndex down by 23% at the same time) since early April 2022 due to the stock market in general, making its current PBR down to 4.0x.
• In the short-term, on the one hand, the SBV has showed its intention to loosen monetary policy for the manufacturing sectors while strictly control speculative money to real estate and the stock market. On the other hand, the sales and earnings season of real estate companies is often in Q3 and Q4. Therefore, we believe opportunities to accumulate real estate stocks are still ahead.

We joined the NVL analyst meeting last weekend to get an update on the company’s Q1 2022 business results.

VNM – Wait to see a further improvement in operations since 3Q2022

• 1Q2022 NPAT Post-MI dropped to VND2,266 bn (-12.1% YoY), driven by the stronger-than-revenue growth in total costs, especially input costs. By the end-2021, the whole milk powder (WMP) price reached USD 3,867/MT (+20.5% YoY) before moving to roughly USD 4,757/MT (+9% YoY) in the beginning of Mar-2022. Therefore, 1Q22 profit margins sharply declined.
• 2022 revenue and NPAT Post-MI of VNM are forecasted at VND64,564 (+6.0% YoY) and VND10,731 bn (+1.9% YoY), respectively, driven by the growth of both parent and subsidiaries. We expect the gross margin to improve from 3Q22 thanks to the operation of Lao-Jargo farms which will add 8,000 new cows in 2Q22. The higher self-produced rate of raw milk will partly compensate for the increase in total raw milk costs.
• We suggest that Vinamilk is not clearly a good investment opportunity in 1H22 due to the deterioration in profitability. However, based on the rosy outlook in the next five years, and the target price of VND91,100, we recommend Waiting To See positive signals of the operation improvements which we expect to happen in 3Q22 such as the profit margins recovery, or the organic sales grows at a high single-digit rate.

We live in the most chaotic, hard-to-predict macroeconomic times in decades

• Inflation today compared to the 1980s is a completely different animal and the situation is so beyond what the various central banks can do.
• In the US, social and political disharmony is at the highest level since the onset of the Civil War.  With the world suffering various economic and geopolitical challenges, it does not paint a great picture for the near future.
• Generally, global stocks have had a phenomenal run since 2008-09 but are overdone now.

ACB – 1Q22 review: Strong buffer paid off

• ACB managed to deliver strong earnings growth (33% YoY) in 1Q22, a rebound from the weak performance in 2H2021. Total operating income expanded steadily (21% YoY). CIR contributed negatively due to the high base effect. Notably, ACB posted net provision reversals thanks to the over-expected repayment of restructured loans. It became a major growth component.
• We factored in a recovery of restructured customers on a sector-wide basis in all our models, which will be reflected via weak demand for further Covid restructuring along with a modest rebound in NPL formation, and robust repayment of restructured debt. The forward 2022 book value per share is VND 21,181, translating to a forward P/B of 1.4x. The bank’s three-year and five-year P/B average are 1.8x and 1.9x, respectively. We see valuation pressure coming from the weak market sentiment as well as the re-rating due to the concern of earlier-than-expected policy rate hike. We maintain our target price at VND 42,000/share. This is equivalent to a BUY recommendation with an upside of 42% from the closing price of May 12, 2022.

PVT - Revenue of transportation keeps rising in 1Q2022

• Revenue and NPATMI in 1Q2022 grew 17.8% YoY and 11.8% YoY, respectively.
• Transportation revenue increased by 22.9% but gross profit margin decreased slightly due to the crude oil tanker.
• In 2022, we estimate that revenue and NPATMI will reach VND 8,577 bn (up 15.0%) and VND 880 bn (up 33.3%), respectively. In which, profit will mainly be in 3Q2022 when PVT liquidates the Athena vessel.
• The stock price has witnessed a deep dive recently and is staying at an attractive valuation. The current PE 2022 is at 7.4x, lower compared to the average of 10x from the beginning of the year. We reiterate our BUY recommendation for PVT stock with the target price of VND30,500, equivalent to PE forward of 11.9x.

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.