GENCO 3 plans to offer a 12.9% stake to the public and a 36.0% stake to strategic investors in 9 February 2018 via new issuance to reduce State’s stake from 100% to 51%. The IPO price at 19.4x ttm EPS can be justified with its huge growth potenital. 2017 consolidated NPAT (excluding forex translation loss) should grow 110.7% YoY as Buon Kuop hydro plant’s profits nearly quadruple and Mong Duong coal-fired power plants starts to contribute significant profit.
STB released results for FY2017 with bottom line at VND1.2 trillion (USD52 million, +215% Y-o-Y) and 20% higher than our forecasts. We expect to raise our TP in our next update as improvement momentum can be foreseen in 2018. The result is mainly because of: a substantial improvement in net fee and commission income in 2017 at VND2.64 trillion (USD116 million, +85% Y-o-Y), contributed 30% to TOI; and a decrease in CIR to 73% from 83% in 2016.
Starting auction price looks attractive given significant land bank. The VND13,000 price translates to a 2017 P/E of 18.9x, 2016 P/E of 20.9x and 2016 P/B of 1.3x, which we believe appears attractive compared to peers, who are trading at a median TM P/E of 27.5x and a TTM P/B of 1.5x. The investment thesis for VRG is its significant land bank of 492,000ha of mostly rubber plantations, which could be converted to industrial park or real estate developments at low land clearance costs.
Summary – VCB released robust 2017 results with NPAT-MI reaching VND9.1 trillion (USD400.9 million, +33.1% Y-o-Y) driven by (1) a 3.3% fall in provision expense and (2) a 17.1% increase in ancillary income Y-o-Y, which was in part due to one-off investment gains from the sale of positions in Saigon Bank, Cement Finance JSC and OCB Bank.
DHG published its unaudited FY17 financials including net revenue of VND4.1 trillion (USD179 million, +7% vs FY16) and NPAT of VND642 billion (USD28 million, -6% vs FY16). Trading revenue was the major driver of top-line growth, as high-margin in-house product sales only inched up by 0.9% in FY17 vs FY16. These results trailed our expectation and reinforce our conservative view on DHG’s growth outlook against a backdrop of heightening competition in the over-the-counter (OTC)
CTD reported strong 2017 results with revenue and NPAT-MI reaching VND27.2 trillion (USD1.2 billion, +31% vs 2016) and VND1.65 billion (USD72.8 million, +16% vs 2016), respectively. Rising construction material prices (i.e. construction steel) in Q4 2017 compressed gross margins in Q4 2017 as we largely anticipated. On the other hand, slightly higher than expected net financial income and other income helped to keep profits in-line with our full year result forecast.
2017 NPAT reached VND725 billion (USD32 million), surging 41% vs 2016 on a recurring basis and 61% on a reported basis. 2017 NPAT trails our forecast by 5% mainly due to lower-than-expected retailing revenue and GPM. However, we maintain our bullish view on PNJ’s earnings outlook driven by its fast-track store expansion.
NT2 released official Q4 results in which 2017 revenue decreased by 15.3% as sales volume dropped by 16.1% due to major maintenance and heavy rainfall. In addition, the EUR’s appreciation of 14.1% versus the VND as of December 30, 2017 caused forex losses of VND290 billion (USD12.8 million).
We attended HSG’s AGM for 2018 financial year on Tuesday, 16 January 2018. FY18 guidance of 15% revenue growth and 1% PAT growth trails our forecast as management is being cautious about rising competition and margin normalization from FY17’s high base. Other important issues include disclosure of weak Q1 FY18 prelim results, shareholders’ approval of FY17 dividend plan and realistic management growth targets for 2018 – 2023.
We have downgraded TLG to MARKET PERFORM, but raised our target price by 3% to VND110,400 per share as the impact of a slowdown in export sales and rising plastic prices on earnings and, hence, our target price was offset by a lower risk-free rate. Writing instruments and office supplies remained the key growth drivers in 9M 2017, while art supply export sales fell as OEM orders from a US client were lost.