LHG – Earning will go back to growth trajectory in 2H2022

• In Q2 22, LHG recorded a plunge of 58% YoY in revenue to VND 233 billion (~ USD10 million). NPAT plummeted by 81% to VND 41 billion (USD ~1.9 million). The YoY decline was due to (1) high base of 2Q2021 as LHG recorded a historical high in earnings owing to leasing contract of 10 hectares with LOGOS, and (2) deteriorating GPM of the industrial land leasing segment to 18% in the last quarter.
• In the long-term, we are confident that LHG will perform well as (1) the historical performance shows an absorption rate of above 10 hectares annually, the remaining leasable are in LH 3.1 ensuring enough inventory (~ 60 ha) for Long Hau until 2026, LH 3.2 (90 ha) and An Dinh (200 ha) will be commercialized in 2024, (3) the leasing price will keep going increase due to its prime location close to key infrastructures.
• In 2022, we estimate that the total revenue and net income will be VND 865 billion (or ~USD 37 million, +10.7%YoY) and VND 256 billion (or ~USD 11 million, -14% YoY), respectively. Correspondingly, the EPS will be VND 4,758. Based on the sum-of-the-parts valuation (SOTP), the target price is 56,300/share. Adding an annual cash dividend of VND 1,700 per share, the total expected return will be +60.2% (compared to the closing price of 08/11/2021).

PPC – Turning a loss from profit in 3Q2022

• PPC’s 2Q 2022 performance is well aligned with our expectations emphasizing the company's predictability of weak results. PPC's sales volume in 2Q 2022 was 827 mn kWh (-11% YoY). Nevertheless, 2Q net revenue slightly increased 6% YoY to VND1290 bn thanks to higher CGM prices. NPAT slumped 38% YoY, to VND75bn, mainly due to a lack of financial income coming from cash dividends of QTP and HND.
• In 2022, we forecast that PPC will provide around 3.7 bn kWh of sales volume, with net revenue and NPAT of VND 5,640 bn (+45.8% YoY) and VND 407 bn (+88.0 % YoY), respectively. Dividend income from associate companies HND (VND 800/share) and QTP (VND 800/share) paid in Q3 2022 will save PPC’s 2H2022 bottom line.

Steel industry – Weak demand is pulling down selling price and output

• Steel prices and raw material prices increased sharply when the Russia-Ukraine war broke out but prices quickly cooled down in June and July. Steel price decline trend is weakening and showing signs of reversal. However, the regain momentum during in the second half of the year could be not strong due to high inflation globally.
• Vietnam's steel industry struggled due to weak demand in 1H2022. Cash flows into the real estate market have slowed down and the disbursement of public investment was slow. High inventory pressures forced factories to both cut capacity and compete fiercely on selling prices, pulling the price level down further.
• The changes in trade policies of major markets such as the US and the EU to be more challenged to Vietnam.
• Construction steel could recover faster than flat steel. Infrastructure investment in the ASEAN region will underpin steel demand growth in 2022 and 2023 with the highest growth rates compared to other regions globally. Flat steel demand is expected to remain weak over the next few quarters due to high inflation.

FMC – 2022 earnings to continue to see double-digit YoY growth

• In 1H2022, FMC recorded revenue and NPAT-MI of VND 2,744 bn (+29% YoY, USD 119 mn) and VND 155 bn (+47% YoY, USD 6.7 mn), respectively. Shrimp export volume and export prices grew by 13% YoY and 15% YoY, respectively. Gross margin improved by 200 bps to 10.3%.
• For FY2022, we forecast FMC’s revenue and NPAT-MI to reach VND 6,105 Bn (or USD 265 Mn, +17% YoY) and VND 340 Bn (or USD 15 Mn, +27% YoY), exceeding 3% and 15% the 2022 revenue and NPAT guidance, respectively. The new factory which will start operating in September 2022 and the new 200 ha farming area that will start farming in 2023 are the main growth drivers for FY2023 onwards.
• Our new one-year target price for FMC is VND60,500/share, 13% lower than the most recent valuation due to: (1) We revise down FY2022/2023 NPAT-MI by 6% and 12%, respectively, to reflect the slowdown in the US market and the new factory put into operation one quarter later than expected; (2) We reduce our 2022 target P/E from 12x to 11x to reflect the uncertainties of the seafood industry in 2H2022. Our target price implies an expected return of 18% as of August 08^th, 2022.

Massive rollout of new Mercedes models boost 2022 sales growth of Mercedes distributors

• According to Mercedes-Benz, 2022 is the year marking the start of their new generation cars. Mercedes-Benz is famous for luxury cars, thus we believe that their customer types will be less affected by inflation, and they will be able to buy new Mercedes cars even at a high price. Therefore, Mercedes cars sales are expected to show an upward trend.  
• 2H2022 ASP of Mercedes cars in Vietnam will be higher than 1H2022 thanks to the contribution of high-priced products. Although there is a risk that 2H2022 sales volume will be lower than that of 1H2022 because the policy of 50 percent reduction in registration fees expired, we expect that higher ASP will totally compensate expected lower sale volume.
• In Vietnam, Hang Xanh Motors (Haxaco, HSX: HAX), is the largest Mercedes-Benz distributor with a market share of ~40%. As a result, we believe that HAX will capture the growing Mercedes ‘sales value.

The ECB finally acted

• A European rate hike has been expected for months.
• The current rally in European stock prices is most likely over. Same for the S&P 500.

The Euro did not reacted much to the ECB rate hike decision with the EUR/USD staying at around 1.02. This seems strange.

PVD – Expect better results in 2H2022

• PVD announced 2Q2022 results with VND1,505 bn in revenue (+36.3% YoY) and loss VND60bn in NPATMI, compared to the VND6bn profit in 2Q2021.
• The drilling segment grew strongly thanks to the operation of PVD V but gross profit still recorded a loss in Q2/2022.
• Financial expenses rose because of FX loss. Joint venture profits decreased. Notably, PVD booked 20% provision of Kris Energy's receivables.
• We think PVD's business will improve in 2H2022 thanks to a full drilling schedule and no more.

Pharmaceutical – Bright outlook for 2H2022

• In the hospital channel, domestic drugs are a lower proportion than foreign drugs, and the percentage of winning bids is only 33% less than 67% of foreign drugs. The brand-name drugs are 100% foreign, accounting for the majority in groups 1, 5 and the same proportion as domestic drugs in group 2. Domestic drug manufacturers focus on competing in groups 2, 3, and 4.
• Market-wide pharmaceutical sales improved in 1H2022 after the Omicron variant. From the low base of 2H/2021, we expect domestic drug manufacturing businesses to grow strongly in the short term.
• The sales channel is expanding through the race for market share and the trend of aging in Vietnam to create favorable conditions for the pharmaceutical industry in the medium and long term.

HDG – Real estate growth motivation in 2H2022   

• In 2H2022, revenue (+116% YoY) and earnings after tax (+427% YoY) witnessed a positive growth. The main growth driver came from the real estate segment started handing over the second phase of the Charm Villas project. Along with the energy segment, it continued to maintain a high growth rate (+82% YoY) due to stable operation of factories and favorable hydrological condition.
• In 2022, we predict that revenue and NPAT will be 3,680 VND billion (+3% YoY) and 1,570 VND billion (+17% YoY), respectively, at EPS of VND6,419/share.
• The positive Q2 results could catalyze HDG's price up 28% over the past month, bringing the P/B to 2.35x and about 9% below our latest target price. However, with the gloomy picture of the real estate market in Ho Chi Minh City, we are considering re-evaluating the implementation progress of some HDG’s projects in the future, thereby reviewing the stock valuation.

REE – Main pillar is the hydropower segment 

• In 2Q2022, the company’s revenue rose by 24% YoY. The main driver was the power segment with a growth of 36% YoY compared to last year. Gross profit margin widen by 373 bps to 44% thanks to margin expansion from the power segment. NPATMI bounced by 56% YoY mostly driven by a doubling of the power segment. Regarding other segments, properties/M&E trading and service/ water rose by 22%/16%/6%.
• In 2022, we forecast revenue and NPATMI to be VND 7,963 bn and 2,319 bn (or USD 346 mn and USD 101 mn, +37% YoY and 25% YoY), respectively.
• Our latest target price is VND 90,700, offering an upside of 15% compared to the closing price as of Aug 02^nd, 2022. Hence, we recommend to ACCUMULATE this stock due to the bright medium-term outlook.

TCB – 2Q22 review: “Flight to quality”

• TCB maintained its growth momentum in 2Q22 despite the limitation on the balance sheet growth capacity as a result of moderate initial credit growth quota. Total operating income grew 20% YoY on the back of solid fee income (43% YoY) while NIM was down sharply from the last quarter. PBT growth was 22% YoY. Risk cost control and non-funded income focused on delivering banking profitability and capital allocation efficiency.
• We revise earnings to reflect growth constraint in 2022. 2022 PBT is not adjusted much, staying at VND 29.0 tn (USD 1.2 bn, 25% YoY). However, the foundation for growth is expected to pivot from balance sheet expansion and NIM stability towards risk cost reduction initiatives and non-funded income sources. The 1H22 results fulfilled 49% of our full-year estimation. The forward 2022 book value per share is VND 32,712. The bank’s historical P/B average is 1.7x. Our target price is revised down by 7% to VND 62,700/share, equivalent to a BUY recommendation with an upside of 62% from the closing price of August 1, 2022.

Industrial Parks – Upcoming trends and key take away

• Industrial Parks including accommodation, social amenities, public services will be pulling factors to both workers and investors in the long - run.
• Including ESG related factors into industrial park planning will be a must.
• Besides leasing land and receiving a one-off payment, IP developers can take a portion of total IP area to build up other higher value – added products that could attract other types of customers. Those products include ready-built factory, ready-built warehouse, cold storage, data center.