Asian markets equity performance year-to-date

• Equity returns ytd in Asia are all-over the place. North Asia and ASEAN offer mixed results. India outperforms.
• Philippines’s uncertainty about President Duterte subsides as he announces that he retires from politics.
• In ASEAN, Singapore 10-yr yields reach their lowest level in almost four months.

HSG – Domestic demand is going to recover and exports can remain positive in FY2021-2022

• The company expects selling volume in September to be flat compared to August, reaching roughly 160,000-170,000 tons of products. The demand from foreign markets is still strong as the company is receiving orders for production in January 2022.
• HSG’s NPAT can increase strongly in 1Q/FY2021-2022 as domestic demand is likely to recover after easing social distancing and.  Steel price movements in foreign markets are going to favor HSG.
• We adjust FY2020-2021 NPAT forecast to VND 4,240 billion (-3.4% compared to the previous projection) and FY2021-2022 NPAT forecast to VND 4,500 billion (+26% compared to the previous projection).
• We recommend to investors to ACCUMULATE this stock with a target price of roughly VND 52,000/share,  implying a total return of 12% as of the closing price on September 30th, 2021.

HDC – Favorable outlook led by the Light City project.

• In Q2/2021, HDC achieved revenue of VND 342.8 Bn (+65% YoY) and NPAT of VND 64.7 Bn (+78% YoY). For 1H 2021, HDC recorded revenue of VND 638.7 Bn (+78% YoY) and NPAT of VND 142 Bn (+83% YoY).
• Management believes that HDC will exceed the target business plan of 2021 with a revenue of VND 1,300 Bn (+55% YoY) and NPAT of VND 256 Bn (+11% YoY). In which, the projects The Light City phase 1, Ngoc Tuoc 2 will make major contributions.
• The 2021F EPS is estimated at VND 2,963/share based on management NPAT target, corresponding to a forward P/E of ~24.8x and P/B of ~4.9x (closing price on September 30, 2021). This is a relatively high level comparing to HDC's own 5-year average P/E and P/B at 9.2x and 1.4x, and the average P/E, P/B of industry at 15-16x and 2.4x, respectively. However, we will evaluate in more detail and come up with an appropriate valuation in the near future

DGC – Yellow phosphorus price is skyrocketing, driving the stock price recently

• 2Q2021 revenue of VND2,039bn (USD90.6mn) (+29.3% YoY) while NPATMI of VND322bn (USD14.3mn) (+26.2% YoY).
• DAP is estimated to contribute the most to total sales in 2Q2021 as well as 1H2021.
• ASP of P4 to improve in 2H2021 but the output may be lower owing to the Apatite shortage for production.
• Long term catalysts from real estate project and Nghi Son project.
• 3Q2021 net profit is estimated to increase by 90.6% YoY - 99.1% YoY to VND450bn – VND470bn (USD20mn – USD20.9mn). At this current price, DGC stock is being traded at PE trailing of 24x

NT2 – Benefiting from high Qc in 3Q2021

• 8M 2021 volume was 2,294 mn kWh, -27% YoY due to thermal industry difficulties. For the first two months in 3Q2021, volume reached 385 mn kWh, accounting for 67% of the contract volume. We estimate that the company will only provide roughly 50 mn kWh due to the low demand and its maintenance. Thus, we forecast that 3Q2021’s volume to be 435 mn kWh, lower than its contract volume of 907 mn kWh.
• 8M 2021 revenue was VND 4,149 bn (or USD 180 mn) -12% YoY. For 2 months in 3Q2021, revenue reached 948 bn (or USD 41 mn) thanks to high contract volume. Hence, PBT for 2 months in 3Q2021 was 145 bn while 3Q2020 was a loss.
• For the longer term NT2 will become a cash cow., It will pay dividends for shareholders owing to no investing activity and debt payment obligation. The company is going to pay VND 1,000 per share in 2020 dividends in Oct 2021.
• Our latest target price for NT2 is VND 22,900, we will update our new target price in the next report as the 3Q2021’s result and 2021’s EPS maybe higher than our previous forecast. For the current target price with VND 1,000 dividends will be paid in Oct, implying total return of 14% compared to the closing price on Sep 28^th, 2021 we recommend to ACCUMULATE this stock.

VHC – High fillet ASP boosted revenue to grow 19% YoY in August

• We revise up our TP to VND 60,000/share, driven by increasing fillet ASP to fully offset surging SG&A costs and high fillet demand to maintain its business growth in FY22, leading to a strong YoY NPAT-MI growth of 24%/32% in the FY21-FY22 period. With an expected return of 27% including a 2% cash dividend yield for a one-year horizon, we recommend to BUY.
• August revenue grew 19% YoY mainly driven by increasing fillet ASP (+25% YoY). We expect that VHC could recover its normal processing capacity in mid-Oct. In 3Q-FY21, we project revenue and NPAT to be VND 2,249 Bn (or USD 98 Mn, +25% YoY) and VND 233 Bn (or USD 10 Mn, +33% YoY), respectively.
• For FY21, we project revenue and NPAT to reach VND 8,771 Bn (or USD 381 Mn, +25% YoY) and VND 872 Bn (or USD 38 Mn, +24% YoY), respectively. Correspondent 2021 EPS will be VND 4,717 and 2021 forward PER will be 12.7x
• Preliminary POR17 anti-dumping duty results determined VHC to continue enjoying 0.00 USD/kg. NTSF will be granted a 0.00 USD/kg duty but we find that little effect on VHC because of already low tax of 0.15 USD/kg and insignificant market share in the US. ANV currently keeps the zero tax but it may be changed in the final POR17 results due to being subject to continued review.

HAH – Chartering services to primarily drive strong earnings growth in 2H-2021

• We expect HAH’s charter revenue to reach VND 185 Bn in 2H2021, rising by 346 % YoY, strongly backed up by doubling charter rates from Hai An East and leasing out one more vessel named Hai An West.
• Growth in average domestic transported volume per shipping trip will get tight in Q3-2021 due to strict distancing measures, followed by a recovery in Q4-2021. Meanwhile, export-import volume will decline in Q4-2021 as HAH cut off HCMC-Singapore service. Overall, we expect container transportation revenue to reach VND 500 Bn in 2H2021 (+6% YoY).
• Considering the strong growth of chartering segment, we project that revenue/ NPAT in 2021F will amount to VND 1,700 Bn (+ 43% YoY)/392 VND Bn (+ 183% YoY).
• HAH plans to sell 1.39 Mn treasury shares, equal 2.9% of total outstanding shares, leading to a diluted 2021F EPS of VND 8,035. The gain from selling treasury stocks will not be recorded in financial income. Applying PE target of 9.0x to 2021F EPS, we come up with a target price of VND 72,300, implying a total return of 20% based on the closing price Sep 24^th 2021. We then recommend “BUY” the stock.

FPT 8M 2021 Update: Global IT services continue to post positive signals. Domestic services are likely to pick up in Q4-2021.

• 8M-2021 revenue and PBT posted VND 21,842 bn and VND 4,005 bn, up 19% YoY and 20% YoY, accomplishing 63% and 61% of our full-year forecast.
• Tech sector revenue grew by 23% YoY to VND 12,476 bn in 8M 2021, while PBT jumped by 30% YoY to VND 1,805 bn on the back of an expanded PBT margin (+75 bps YoY). In which, global IT services led the growth in August (+23% YoY in PBT) given recovering demand from clients in the US (+49% YoY in revenue). At the same time, domestic IT services PBT’s growth rate decelerated to 4% due to strict social distancing.
• Pay TV’s profit and investment delays continued to prop up the telecom sector’s 8M-2021 PBT margin (+195 bps YoY), driving PBT to increase by 24% YoY.
• We maintain our forecasts for 2021F/22F, with a NPAT-MI growth rate of 24% YoY/19% YoY, equivalent to respective EPS of VND 4,828/VND 5,751. FPT is trading at a forward 2021F/22F P/E of 21.4x/18.0x. We reiterate our ACCUMULATE recommendation with a TP of VND 108,800.

TRA – Maintaining positive growth despite strict social distancing measures in 3Q

• Although strict measures were applied in key cities, Traphaco still performed well in 3Q. The company anticipates revenue and NPAT to be 560 billion VND (+22% YoY) and 70 billion VND (+37% YoY), respectively in 3Q2021.
• Revenue and NPAT in 9M are estimated at VND 1,585 billion (+21% YoY) and VND 195 billion (+38% YoY), completing 75% and 81% of the annual plan, respectively.
• The company sets an average annual growth target of 15% during the 2020-2025 period. Having high-quality products and a strong brand name, the herbal medicine segment will still be the main growth driver.
• The synthetic medicine segment can gradually play a more important role owing to the new factory and products transferred from Deawoong.

August exports decreased less than initially estimated

• FDI sector remained resilient despite of harsh Covid-19 restrictions.
• Tech exports were in the spotlight amid the pandemic headwinds.
• Are FDI companies moving out of Vietnam? Not really!

FDI sector remained resilient despite of harsh Covid-19 restrictions

According to Vietnam Customs, August’s export growth only dropped by 1.7% yoy and 2.3% mom compared to the previous estimate of 5.4% yoy decline by GSO. The FDI sector maintained positive export growth of 3.3% yoy in the face of pandemic headwinds. In contrast, exports of the domestic sector fall by 13.3% yoy due to the impact of the fourth outbreak. Imports continued to outpace exports, growing at 20.4% yoy but decreasing by 6.1% mom. The trade deficit narrowed to US$109mn, from US$1.2bn a month earlier. In 8M21, total exports and imports grew at 21.8% yoy and 33.5% yoy, respectively. The accumulated trade deficit was about US$2.3bn, compared to a surplus of US$13.7bn in the same period last year.