We initiate PLX with a MARKET PERFORM rating, -0.3% TSR including 4.4% dividend yield. We project 2017 revenue growth of 8.7% and an NPAT decline of 10.9% as the benefit from a low import tariff from South Korea peters out. Expanding its network by 100-150 owned stations p.a. to widen the high-margin COCO (Company-Own-Company-Operate) segment will ensure 2017-2020 revenue and EPS CAGRs of 8.6% and 10.8%, respectively.
Summary – We upgrade BID from MARKET PERFORM to BUY with a TP of VND24,678 (25% upside and 68.9% upgrade compared to our previous TP of VND14,614) as it is poised to be a leading beneficiary of the new NPL draft regulations. We believe that BID is potentially the most attractive turnaround story in the Vietnamese banking sector (subject to execution risks).
We visited SBV during June 2017 and were warmly welcomed by the management team. SBV is a leader in the fishing cordages market in Vietnam, primarily supplying anchoring ropes, fishing ropes and fishing nets to offshore fishing vessels.
According to management, SBV holds a 40% share of the total fishing cordage market and a 90% share of the offshore segment, and is a price leader due to its strong brand.
We attended HVN’s AGM on June 20, 2017. Investors focused on its competition with Vietjet Air and the expected negative growth in earnings. Net revenue grew 6.4% in 2016 to VND70.5 trillion (USD3.1 billion) driven by strong passenger and cargo growth (21.2% and 30.6%, respectively) and a sharp drop in airfare related to a decrease in fuel price.
We joined HAG’s tour to Gia Lai Province (Vietnam), Laos and Cambodia to visit its fruit plantations, which are HAG’s latest bid to improve its financial condition. We were impressed with the scale and the quality of HAG’s plantations, whose output is being exported to China.
C32 mainly operates in Binh Duong Province, where FDI has grown sustainably since 2013. The company has maintained strong, stable profit for the last five years due to high demand and high gross profit margin from the construction stone mining segment. C32 is targeting to expand its business through strategic M&A. Recent transition in ownership following State divestment may provide better strategic direction.
We visited PHR on June 16, 2017 and were warmly welcomed by the management team. According to management, PHR expects to realize compensation of VND1 billion-VND1.5 billion (USD44,000-USD66,000) per hectare on 700 ha land transferred to Vietnam-Singapore Industrial Park (VSIP) over the next two to three years. The transfer terms are being negotiated this week.
Background - MBB has reported a foray into consumer finance with a tie-up with Shinsei. We reiterate our BUY recommendation on the stock with a TP of VND23,025 excluding the potential impact of MCredit, which we discuss below.
We upgrade our recommendation for QNS from MARKET PERFORM to OUTPERFORM while keeping our target price unchanged, driven by an 11% dip in QNS’s share price since our initiation on May 10, 2017. We stated in that report that moderate growth prospects in the soymilk segment (75% of 2017F NPAT) and QNS’s heavy investments in sugar and biomass power drove our neutral view on the company. However, we believe QNS has become attractive as the share price correction has brought its FY17F PER down to 14x
We attended KDC’s AGM today. Shareholders expressed a lot of interest in the restructuring of the newly acquired edible oil subsidiaries, new products and potential foreign partners. FY17 PBT target is VND490 billion (USD22 million) vs VND1.51 trillion (USD66 million) in 2016, which included one-off profits. This target is mostly driven by KDC’s core business. KDC also announced its foray into dipping sauces with the help of a Thai partner.